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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended: DECEMBER 31, 1995 Commission file number: 1-9699
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BORDEN CHEMICALS AND PLASTICS
LIMITED PARTNERSHIP
Delaware 31-1269627
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(State of organization) (I.R.S. Employer
Identification No.)
Highway 73, Geismar, Louisiana 70734 (614) 225-4482
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(Address of principal executive offices) (Registrant's telephone
number)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of each class Name of each exchange on which registered
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Depositary Units Representing New York Stock Exchange
Common Units
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
NONE
__________________________________
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No _____.
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Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein. [x]
__________________________________
Aggregate market value in thousands of the Common Units held by non-
affiliates of the Registrant based upon the average sale price of such Units on
February 9, 1996 was approximately $505 million.
Number of Common Units outstanding as of the close of business on February 9,
1996: 36,750,000.
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The Exhibit Index is located herein at sequential page 36.
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PART I
ITEM I. BUSINESS
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GENERAL
Borden Chemicals and Plastics Limited Partnership (the "Company" or
"Partnership") is a limited partnership formed in 1987 to acquire, own and
operate polyvinyl chloride resins ("PVC"), methanol and other chemical plants
located in Geismar, Louisiana, and Illiopolis, Illinois, that were previously
owned and operated by Borden, Inc. ("Borden"). The three principal product
groups manufactured at these facilities are (i) PVC Polymers Products, which
consist of PVC resins and feedstocks (such as vinyl chloride monomer ("VCM") and
acetylene), (ii) Methanol and Derivatives, which consist of methanol and
formaldehyde, and (iii) Nitrogen Products, which consist of ammonia and urea.
During 1995, PVC Polymers Products, Methanol and Derivatives and Nitrogen
Products accounted for 61%, 25% and 14%, respectively, of the Company's
revenues.
The Company seeks to increase its productive capacity through selective
expansions of its existing facilities and "debottlenecking" of production
facilities at its plants. From 1988 to 1995, the Company increased overall
capacity of the Geismar and Illiopolis plants by 22.5% through various
expansions and "debottlenecking" projects at a cost of approximately $55
million.
On May 2, 1995, the Company, through its subsidiary operating partnership (the
"Operating Partnership"), completed the purchase of Occidental Chemical
Corporation's ("OxyChem") Addis, Louisiana PVC manufacturing facility and
related assets ("Addis Facility"). The Addis Facility has an annual proven
production capacity of 450 million pounds per year, which increased the
Company's stated annual capacity for PVC resin production by approximately 50%.
The cash purchase price for the Addis Facility was $100.4 million (see
"Acquisition").
The Company's production complex at Geismar, Louisiana, its plant at
Illiopolis, Illinois, and the Addis Facility produce products for the following
applications:
<TABLE>
<CAPTION>
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PRODUCTS LOCATION PRINCIPAL APPLICATIONS
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<S> <C> <C>
PVC POLYMERS PRODUCTS
PVC Geismar Water distribution pipe, residential
Illiopolis siding, wallcoverings, vinyl flooring
Addis
VCM Geismar Raw material for the Company's
PVC operations
METHANOL AND DERIVATIVES
Methanol Geismar Formaldehyde, MTBE, adhesives and
fibers or raw materials for the
Company's formaldehyde operations
Formaldehyde Geismar Pressed wood products, adhesives,
fibers
NITROGEN PRODUCTS
Ammonia Geismar Fertilizers, fibers, plastics,
explosives
Urea Geismar Fertilizers, animal feeds, adhesives
plastics
</TABLE>
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The Company's plants generally can be operated at rates in excess of stated
capacity to take advantage of market opportunities without undue adverse
effects. References to capacity assume normal operating conditions, including
downtime and maintenance. The Company's objective is to operate the Geismar,
Illiopolis and Addis plants at or near full capacity because of the reduced
operating costs per unit of output at full operation.
The integrated design of the Company's plants provides it with a high degree
of flexibility to shift production volumes according to market conditions
efficiently utilize by-product streams. The Company's products are produced
through the highly integrated lines set below:
PVC POLYMERS PRODUCTS
PVC Resins - PVC is the second largest volume plastic material produced in the
world. The Company produces general purpose and specialty purpose PVC resins at
three plants - one located at the Geismar complex, one at Illiopolis and another
at Addis - with stated annual capacities of 500 million, 380 million and 450
million pounds of PVC resins, respectively. The PVC resin plants operated at
approximately 98% and 107% of combined capacity in 1995 and 1994, respectively.
Although there have been year-to-year fluctuations in product mix, the Company
has over time concentrated on the higher margin grades of PVC resin and reduced
its dependence on commodity pipe grade PVC resins, which have historically
experienced lower margins. Based on data from the Society of the Plastics
Industry, the Company believes its production currently accounts for
approximately 10% of total industry domestic capacity of PVC resins.
The PVC resin industry experienced strong demand during 1994 and the first
half of 1995. Producer inventories during this time were reduced to minimal
levels, while plants were operating at maximum capacities. As a result,
published prices for PVC resins increased from an average of $0.32 per pound
during the fourth quarter of 1993 to an average of $0.40 per pound during the
third quarter of 1995. Beginning in the fourth quarter of 1994, the continued
buildup of PVC inventories worldwide by converters peaked resulting in reduced
PVC purchases during the second half of 1995. This has caused the published
prices of PVC resins to drop to approximately $0.31 per pound during the fourth
quarter of 1995. The Company anticipates PVC pricing will improve during the
second half of 1996.
During 1995 and 1994, approximately 10% and 12%, respectively, of the
Company's total production of PVC resins was sold to Borden for use in its
downstream vinyl conversion operations. The balance was purchased by many
customers, none of which accounted for more than 8% of total PVC sales dollars.
Unless there is a shortage of PVC resin capacity in the industry, demand for PVC
resins generally tends to be seasonal with higher demand during spring months
and lower demand during winter months.
Production Process. PVC resins are produced by the polymerization of VCM, a
raw material produced by the Company. The production by the Company of certain
specialty grades of PVC resins also involves the use of certain quantities
(approximately 8.7 million pounds annually) of vinyl acetate monomer, a raw
material not produced by the Company. The Company purchases quantities of vinyl
acetate monomer from Borden (which in turn purchases such raw material in bulk
from third parties) or from unrelated third parties. Purchases from Borden have
been and will be at prices that do not exceed the market price of vinyl acetate
monomer.
All the VCM used by the Company's Geismar and Illiopolis PVC resin plants is
obtained from the Company's two Geismar VCM plants discussed below.
Substantially all of the production of such VCM plants is consumed by the
Company's PVC resins
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plants at Geismar and Illiopolis. The Geismar PVC resin plants obtain VCM from
the Company's adjacent VCM plants in the Geismar complex and the Illiopolis PVC
resin plant obtains VCM from the Company's Geismar plant via rail. The VCM
requirement at the Addis Facility is currently supplied by OxyChem which has
arranged for physical delivery to the Addis Facility by pipeline via exchange,
but which may also be supplied by rail car from OxyChem's plant in Deer Park,
Texas or from OxyChem's joint venture facility ("OxyMar") in Corpus Christi,
Texas.
VCM is principally used in the production of PVC resins. The Company produces
VCM by two processes: an ethylene process and an acetylene process. The
finished product of both of these processes is essentially identical but the
production costs vary depending on the cost of raw materials and energy. The
ability to produce VCM by either process allows the Company the flexibility of
favoring the process that results in the lower cost at any particular time.
Ethylene-Based VCM. Ethylene-based VCM ("VCM-E") is produced by the Company
at a 630 million pound stated annual capacity plant at the Geismar complex. The
plant operated at approximately 106% and 103% of capacity during 1995 and 1994,
respectively. Substantially all of the production of the VCM-E plant is
consumed by the Company's PVC resin plants at the Geismar complex and
Illiopolis.
Ethylene and chlorine constitute the principal feedstocks used in the
production of VCM-E. Both feedstocks are purchased by the Geismar plant from
outside sources.
Acetylene-Based VCM. Acetylene-based VCM ("VCM-A") is produced at a 320
million pound stated annual capacity plant at the Geismar complex. During both
1995 and 1994, the plant operated at approximately 88% of capacity. All of the
VCM-A produced at the Geismar complex is consumed by the PVC resin plants at
Geismar and Illiopolis.
The Geismar complex contains the only VCM-A plant in the United States. The
integration of the VCM-A plant with the other plants on site provides stability,
cost and efficiency benefits to the plants located at the Geismar complex.
Although ethylene has generally been regarded as a lower cost feedstock for the
production of VCM, the VCM-A plant reduces the overall processing costs of the
Geismar complex because the acetylene plant produces as a by-product acetylene
off-gas, which is used as a feedstock in the production of methanol. In
addition, hydrochloric acid, a feedstock used in the production of VCM-A, is
produced as a by-product by the adjacent VCM-E plant. Furthermore, certain
industrial plants located near the Geismar complex have excess supplies of
hydrochloric acid that the Company is generally able to purchase at relatively
low cost.
In addition to hydrochloric acid, acetylene is a primary feedstock used in the
production of VCM-A.
Acetylene. Acetylene is primarily used as a feedstock for VCM-A and for other
chemical intermediates. The Company has a 50% interest in a 200 million pound
stated annual capacity acetylene plant at the Geismar complex, with the
remaining 50% interest held by BASF Corporation ("BASF"). During 1995 and 1994,
the plant operated at approximately 103% and 96%, respectively, of capacity,
with all production being consumed by either the Company or BASF.
During 1995, approximately 58% of the total production of the acetylene plant
was used internally as a principal feedstock of the Geismar VCM-A plant. BASF
accounted for approximately 42% of the plant's 1995 production, less than its
full 50% share of production. Acetylene not required by BASF is available to
the Company at cost.
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It is anticipated that excess acetylene will be available at cost to the Company
through at least 1996.
The principal feedstocks used in the production of acetylene are natural gas
and oxygen. Oxygen is obtained from certain air separation units and related
air compression systems, which are jointly owned by the Company, BASF and Air
Liquide America Corporation pursuant to joint venture arrangements. For a
description of the Company's arrangements for the purchase of natural gas, see
"Raw Materials".
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As long as a subsidiary of Borden is the general partner of the Company, the
plant will be operated and managed by employees of such general partner pursuant
to an operating agreement with BASF. The agreement provides that, if a Borden
subsidiary ceases to be the general partner, BASF will have the exclusive right
to become the operator of the plant and the personnel necessary to operate the
plant will be encouraged to accept employment with BASF. The Company's interest
in the acetylene plant and the air separation systems is subject to certain
rights of first refusal and limitations on transfer. In addition, the Company
and the third parties who hold the other interests in such assets have mutual
rights under certain circumstances, to require the other party to purchase its
interests.
The Company's principal competitors in the sale of PVC include Shintech,
Formosa Plastics, OxyChem and Geon.
METHANOL AND DERIVATIVES
Methanol - Methanol is used primarily as a feedstock in the production of
other chemicals. Such chemicals include formaldehyde, which is used in the
manufacture of wood building products and adhesives, and MTBE, which is used as
a gasoline additive. During the fourth quarter of 1995, the Company completed
an expansion of its existing methanol plant. This expansion increased the
Company's stated annual capacity by 30 million gallons to 330 million gallons
per year. During 1995 and 1994, the plant operated at approximately 108% and
102%, respectively, of capacity.
From early 1994 through early 1995, market conditions for methanol improved
significantly due to limited growth in the supply of methanol and industry
consolidation during the past several years as well as strong demand for MTBE
and formaldehyde. Methanol sales prices have declined since early 1995 and
recent industry announcements indicated sales at contract prices in the range of
$0.40 to $0.45 per gallon. The outlook for methanol continues to be uncertain,
but the Company believes that its methanol sales prices during 1996 are likely
to remain at current levels. The Company believes its stated annual capacity
represents approximately 14% of total domestic capacity. The Company's main
competitors in the sale of methanol include Methanex, Terra Industries, Hoechst
Celanese and Lyondell.
In 1995, approximately 42% of methanol production was sold to third parties
(other than Borden). Borden accounted for approximately 28% of such production
for its downstream formaldehyde production. Approximately 19% of production was
used internally in the production of formaldehyde and the remaining
approximately 11% was used primarily to satisfy tolling and exchange
arrangements. No customer (other than Borden) accounted for more than 12% of
total methanol sales dollars in 1995.
The primary raw material feedstock used in the production of methanol is
natural gas. The efficiency of the Geismar methanol plant has been enhanced by
using the by-product of the Geismar acetylene plant, acetylene off-gas, as a
partial substitute feedstock for purchased natural gas. Natural gas represented
approximately 65% of the Company's total cost of producing methanol during 1995.
Formaldehyde. Formaldehyde is a chemical intermediate used primarily in the
production of plywood and other pressed wood products. The Company produces
50%-
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concentration formaldehyde (which is 50% formaldehyde and 50% water) at
three units at the Geismar complex. The formaldehyde plants have annual
capacities of 270, 190 and 180 million pounds per year, respectively, for the
50%-concentration formaldehyde. During 1995 and 1994, the three plants operated
at approximately 102% and 99%, respectively, of combined capacity. The smaller
plant also is capable of producing urea-formaldehyde concentrate for the
fertilizer industry. If operated for production of urea-formaldehyde, the
smaller plant's stated annual capacity would be 125 million pounds.
Formaldehyde demand generally is influenced by the construction industry and
housing starts. Total United States production capacity of 50%-concentration
formaldehyde is approximately 7.4 billion pounds, with the formaldehyde units at
the Geismar complex representing 640 million pounds, approximately 9%, of such
total. Major competitors of the Company include Georgia Pacific and Neste.
During 1995, approximately 32% of formaldehyde production was sold to Borden
and approximately 2% was utilized by the Company in the production of urea-
formaldehyde concentrate for the fertilizer industry. The remaining 66% was
purchased by an unaffiliated third party pursuant to a ten-year supply contract
signed in 1989. The contract requires the Company to supply in the future up to
78% of its annual capacity to the third party to the extent necessary to satisfy
that party's formaldehyde requirements.
The principal feedstock used in the production of formaldehyde is methanol.
The Geismar formaldehyde plants obtain all such feedstock from the adjacent
methanol plant.
Borden produces formaldehyde and urea-formaldehyde concentrate at other
facilities located in the United States and facilities outside the United
States. The Company does not have any interest in such other facilities and,
accordingly, Borden may be a competitor of the Company with respect to
formaldehyde and urea-formaldehyde concentrate. The Partnership Agreement
provides that the Company may not significantly expand the capacity of the
Geismar formaldehyde plants without special approval. The Company is intended
to be a limited purpose partnership and the Partnership Agreement provides that
the General Partner shall have no duty to propose or approve, and in its sole
discretion may decline to propose or approve, any such expansion.
NITROGEN PRODUCTS
Ammonia. Ammonia is a commodity chemical used primarily for fertilizer
applications and as an intermediate for other agricultural chemicals such as
pesticides and herbicides. Approximately 85% of domestic ammonia production is
consumed directly or indirectly in fertilizer applications. The Company
produces ammonia at a 400,000 ton stated annual capacity plant located at the
Geismar complex. During 1995 and 1994, the Company operated at approximately
109% and 96%, respectively, of capacity.
In the latter half of 1993 and continuing throughout 1994 and 1995, the
worldwide supply of ammonia experienced a series of disruptions and reductions
due to plant shutdowns, operating problems and interruptions in the supply of
natural gas, the primary feedstock in the production of ammonia. At the same
time, demand for ammonia, particularly in Asia (China, India and Pakistan),
increased for both industrial and fertilizer applications. These factors
combined to cause occasional shortages of ammonia in the United States, which is
a net importer of nitrogen products, and increase selling prices for ammonia.
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Demand for ammonia is seasonal, with prices tending to be higher in the spring
and fall months than during the remainder of the year. In addition, fertilizer
demand is sharply affected by swings in crop acreage.
During 1995, approximately 64% of ammonia production was sold to third parties
(other than Borden), approximately 35% of production was used by the Company's
adjacent urea plant, and approximately 1% of production was sold to Borden.
During 1995, five customers accounted for approximately 60% of total ammonia
sales dollars with no customer accounting for more than 22% of total ammonia
sales dollars.
The Company's stated annual capacity represents just under 2% of total North
American capacity. The Company's major competitors include Arcadian, Farmland
and Terra Industries.
Urea. Urea is a commodity chemical which is used primarily in fertilizer
applications. Approximately 80% of domestic production of urea is consumed in
fertilizer applications. Urea's high nitrogen content (46%) makes it an
effective and popular dry nitrogen fertilizer. In addition, urea is used in the
production of urea-formaldehyde resins used in the wood building products
industry.
The Company produces granular urea at a 250,000 ton stated annual capacity
plant at the Geismar complex. During 1995 and 1994, the plant operated at
approximately 103% and 91%, respectively, of capacity.
Because of the importance of the agricultural chemical industry as a market
for urea, demand is affected sharply by swings in crop acreage. In addition,
like ammonia, demand for urea is seasonal, with prices tending to be higher in
the spring and fall months than during the remainder of the year. Worldwide
urea production has expanded rapidly over the past 20 years, particularly in
countries with abundant supplies of low cost natural gas. Like ammonia, urea
demand has suffered during recent years from reduced United States fertilizer
demand. It also has been affected even more severely than ammonia by imports
from third world countries because storage and shipping of urea is easier and
less costly than is the case with ammonia. Competition from imports has
moderated recently as the declining value of the United States dollar has made
United States markets less attractive.
Urea prices remained stable in 1995 due to many of the same factors which
influenced the price of ammonia. However, unlike ammonia, the supply of urea
has increased during this time period as several new world scale plants came on
stream. This factor has kept urea prices at relatively stable levels in spite of
the increasing demand.
During 1995, approximately 61% of the Company's urea was sold to third
parties, approximately 38% to Borden, and the remaining approximately 1% was
used internally by the Company in the production of urea-formaldehyde
concentrate.
The Company's stated annual capacity represents approximately 3% of total
North American capacity. The Company's major competitors include Arcadian,
Unocal and CF Industries.
The principal feedstocks used in the production of urea are ammonia and carbon
dioxide, which the Company obtains from its adjacent ammonia plant.
RAW MATERIALS
The principal purchased raw material used in the Company's operations is
natural gas. In 1995, the Company purchased over 65 million MMBTUs of natural
gas for feedstock and as an energy source. Currently, the Company is one of the
largest industrial purchasers of natural gas in the state of Louisiana. Natural
gas is
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supplied by pipeline to the Geismar complex by six major natural gas suppliers.
In 1995, natural gas represented 30%, 56% and 65% of total production costs for
acetylene, ammonia and methanol, respectively, and 26% of the Company's total
production costs. The Company purchases the majority of its natural gas under
long-term, market sensitive supply contracts. The cost of purchasing natural
gas is, in general, greater in winter months, reflecting increased demand for
natural gas by consumers and industry during such months. Although the Company
has diversified its suppliers and does not currently anticipate any difficulty
in obtaining adequate natural gas supplies, there can be no assurance that the
Company will in the future be able to purchase adequate supplies of natural gas
at acceptable price levels.
The Company purchases other raw materials for its operations, principally
ethylene and chlorine. Ethylene is currently supplied by pipeline to the
Geismar facility by several suppliers. Chlorine is supplied by rail car to the
Geismar complex by various suppliers. The major raw material for the Illiopolis
PVC plant, VCM, is supplied by rail car from the Geismar facility. In addition,
in connection with the production of certain specialty grades of PVC resins, the
Company purchases certain quantities of vinyl acetate monomer. See "-PVC
Polymers Products-Production Process". The Company purchases its VCM
requirements for the Addis Facility under a VCM supply agreement entered into
with OxyChem at the closing of the Acquisition. The Company does not believe
that the loss of any present supplier would have a material adverse effect on
the production of any particular product because of numerous, competitive
alternate suppliers.
Because raw materials have accounted for a high percentage of the Company's
total production costs, and are expected to continue to represent a high
percentage of such costs for the Company, the Company's ability to pass on
increases in costs of these raw material feedstocks will have a significant
impact on operating results. The ability to pass on increases in feedstock and
fuel costs is, to a large extent, dependent on the then existing market
conditions. Because of the large volume of purchases of natural gas, any
increase in the price of natural gas or a shortage in its availability could
materially adversely affect the Company's income and cash flow from operations
and its ability to service its debt obligations.
INSURANCE
The Company maintains property, business interruption and casualty insurance
which it believes is in accordance with customary industry practices, but it is
not fully insured against all potential hazards incident to its business. The
Company also maintains pollution legal liability insurance coverage. However,
because of the complex nature of environmental insurance coverage and the
rapidly developing case law concerning such coverage, no assurance can be given
concerning the extent to which its pollution legal liability insurance, or any
other insurance that the Company has, may cover environmental claims against the
Company. Insurance, however, generally does not cover penalties or the costs of
obtaining permits. See "Legal Proceedings".
The Company is included in Borden's master insurance program, which includes
property damage and liability insurance. Under its risk retention program,
Borden maintains deductibles of $2.5 million, $0.5 million and $0.5 million per
occurrence for property and related damages at the Geismar, Illiopolis and Addis
facilities, respectively, and deductibles ranging from $1.0 million to $3.0
million per event for liability insurance.
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MARKETING
The Company's PVC resin sales are conducted through a professional staff of
nine trained personnel geographically located in nine territories, supported by
a regional sales office located in Northbrook, Illinois. In addition to the
regional sales managers, there are three product sales managers performing
marketing functions. All are employees of Borden.
The Company's other products are similarly marketing through a professional
field sales organization of three Borden employees and two additional marketing
managers under the management of the director of non-PVC resins sales and
marketing located at Geismar. The professionals involved in this sales function
are geographically positioned in three locations covering the United States.
The Company's sales activity is based on customer contact on a regular basis
to secure and maintain long-term supply relationships. A substantial portion of
the Company's sales is made under contracts with annual negotiations relating to
specific conditions of sales.
UTILITIES
The Geismar complex operates three high thermal efficiency co-generation units
providing the site with low cost electricity, steam and high temperature
reformer combustion air. Each unit is composed of a natural gas burning
turbine/generator unit combined with a steam producing heat recovery system
(i.e., the "co-generation" of electricity and steam).
The co-generation units are designed to provide 100% of the electricity, a
significant portion of the steam, and a portion of the reformer combustion air
requirements of the Geismar complex at full production levels. These units have
electrical outputs of 20, 35 and 35 megawatts, respectively. The electricity
supplied by the units through a substation owned by Monochem, Inc. ("Monochem"),
a corporation of which the Partnership owns 50% of the capital stock, usually
exceeds the requirement of the Geismar complex with the excess production being
sold to Gulf States Utilities at its "avoided cost" rate. The Company's
interest in Monochem is subject to certain rights of first refusal and
limitations on transfer.
Water requirements at the Geismar complex are obtained through Monochem from
the Mississippi River. At Illiopolis, a municipal water company supplies the
facility with its water requirements. Because the Illiopolis facility
represents a significant portion of the demand for water supply from the
municipal water company, the Company manages the operations of the water company
on a cost-reimbursed basis. The Addis Facility obtains its electricity and water
requirements from local public utilities. Natural gas is purchased by pipeline
from various intrastate suppliers.
PURCHASE AND PROCESSING AGREEMENTS
In connection with the formation of the Company in 1987, Borden entered into
certain purchase agreements ("Purchase Agreements") and processing agreements
("Processing Agreements") with the Company covering the following products: PVC
resins, methanol, ammonia, urea, formaldehyde and urea-formaldehyde concentrate.
The Purchase and Processing Agreements expire in November 2002, subject to
termination by Borden in the event BCPM ceases to be the general partner of the
Company, other than by reason of (i) the withdrawal of BCPM as general partner
under circumstances where such withdrawal violates the Partnership Agreement,
(ii) removal of BCPM as general partner by the Unitholders under circumstances
where cause exists or (iii) any other event except (x) voluntary withdrawal by
BCPM as general partner of the Company under circumstances where such withdrawal
does not violate the Partnership Agreement and such withdrawal is approved by a
Majority Interest or (y)
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the removal of BCPM as general partner of the Company by action of the
Unitholders under circumstances where cause does not exist.
The Purchase Agreements require Borden to purchase from the Company and the
Company to supply to Borden, subject to certain monthly quantity limits, at
least 85% (and at the option of Borden up to 100%) of the quantities of PVC
resins, methanol, ammonia and urea required by Borden for use in its plants in
the continental United States. Under the Purchase Agreements, the price for PVC
resins, ammonia, urea and methanol generally will be an amount equal to the
monthly weighted average price per unit that the Company charges its lowest-
priced major customer (other than Borden). If the Company does not make any
sales to any major customers other than Borden, then the price to Borden will be
the lowest prevailing price in the relevant geographic area. The Purchase
Agreements also provide that the Company is required to meet competitive third-
party offers or let Borden purchase the lower-priced product from such third
parties in lieu of purchases under the Purchase Agreements.
The Processing Agreements for formaldehyde and urea-formaldehyde concentrate
essentially require Borden to utilize the processing capacity of the
formaldehyde plants so that the formaldehyde plants operate at no less than 90%
of capacity, after taking into account the purchases of formaldehyde by an
unaffiliated third party under a long-term requirements contract. Although such
third party's current requirements for formaldehyde exceed 200 million pounds
per year, in the event that such third party's annual requirements are less than
such amount, Borden has the option of reducing or terminating its obligation to
utilize such processing capacity. Under the Processing Agreements, Borden is
required to pay the Company a fee for each pound of formaldehyde and urea-
formaldehyde concentrate processed equal to the Company's processing costs plus
a per pound charge. The per-pound charge is subject to increase or decrease
based on changes in the Consumer Price Index from October 1987. The Processing
Agreements also require the Company to meet competitive third party offers
covering formaldehyde unless meeting such offer would impose a significant
economic penalty on the Company, in which case Borden will be permitted to
accept such offer and reduce its obligations under the Processing Agreements by
a corresponding amount.
The Company believes that the pricing formulas set forth in the Purchase and
Processing Agreements have in the past provided aggregate prices and processing
charges that Borden would have been able to obtain from unaffiliated suppliers,
considering the magnitude of Borden's purchases, the long-term nature of such
agreements and other factors. The Company believes that this will continue to
be the case in the future. There may be conditions prevailing in the market at
various times, however, under which the prices and processing charges set under
the Purchase and Processing Agreements could be higher or lower than those
obtainable from unaffiliated third parties.
The Company is free to sell or otherwise dispose of, as it deems appropriate,
any quantities of PVC resins, ammonia, urea, methanol or formaldehyde which
Borden is not required to purchase. In addition, the Purchase and Processing
Agreements do not cover acetylene, VCM or industrial gases, which are either
consumed internally by the Company or have not been historically purchased by
Borden.
Because the foregoing Purchase and Processing Agreements are requirements
contracts, sales of products thereunder are dependent on Borden's requirements
for such products. Such requirements could be affected by a variety of factors,
including a sale or other disposition by Borden of all or certain of its
manufacturing plants to unaffiliated purchasers (in which event such agreements
shall not apply to such purchasers unless otherwise agreed to by such
purchasers).
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In the event that, whether as a result of the change of control of Borden or
otherwise, Borden were to sell or otherwise dispose of all or certain of its
plants or otherwise reorient its businesses, Borden's requirements for products
sold or processed by the Company under the Purchase and Processing Agreements
could be diminished or eliminated. The Company anticipates that if Borden were
to sell all or certain of its chemical manufacturing facilities, a purchaser may
be interested in negotiating the continuation of all or certain of the Purchase
and Processing Agreements.
COMPETITION
The business in which the Company operates is highly competitive. The Company
competes with major chemical manufacturers and diversified companies, a number
of which have revenues and capital resources exceeding those of the Company.
Because of the commodity nature of the Company's products, the Company is not in
a position to protect its position by product differentiation and is not able to
pass on cost increases to its customers to the extent its competitors do not
pass on such costs. In addition to price, other significant factors in the
marketing of the products are delivery, quality and, in the case of PVC resins,
technical service. The Company believes that the overall efficiency,
integration and optimization of product mix of the facilities at Geismar,
Illiopolis, and Addis make the Company well positioned to compete in the markets
it serves.
Borden has agreed that, so long as BCP Management, Inc. ("BCPM") is the
general partner of the Company, Borden will not engage in the manufacture or
sale in the United States of methanol, ammonia, urea, acetylene, VCM or PVC
resins. However, if BCPM (i) is removed as general partner by the Unitholders
under circumstances where cause exists or (ii) withdraws as general partner
under circumstances where such withdrawal violates the existing partnership
agreements ("Partnership Agreements"), Borden shall not engage in such
manufacture or sale for a period of two years from the date of such removal or
withdrawal. If Borden were to sell any of its manufacturing facilities to an
unaffiliated purchaser that is not a successor to Borden, the purchasers of such
facilities would be free to compete with the Company.
TRADEMARKS
The Company entered into a Use of Name and Trademark License Agreement ("Use
of Name and Trademark License Agreement") with Borden pursuant to which the
Company is permitted to use in its name the Borden name and logo. The Use of
Name and Trademark License Agreement and the right to use the Borden name and
logo shall terminate in the event that BCPM ceases to be the General Partner.
MANAGEMENT
The General Partner, BCPM, manages and controls the activities of the Company
and the Holding Company and the General Partner's activities are limited to such
management and control. Neither the Holding Company nor the Unitholders
participate in the management or control of the Company. The General Partner
has fiduciary duties to Unitholders. Notwithstanding any limitation on
obligations or duties, the General Partner will be liable, as general partner,
for all the debts of the Company (to the extent not paid by the Company) other
than any debt incurred by the Company that is made specifically nonrecourse to
the General Partner.
The Company does not directly employ any of the persons responsible for
managing or operating the business of the Company, but instead relies on the
officers of the General Partner and employees of Borden who provide support to
or perform services for the General Partner and reimburses Borden (on its own or
on the General Partner's behalf) for their services.
11
<PAGE>
ENVIRONMENTAL AND SAFETY REGULATIONS
General. The Company's operations are subject to federal, state and local
environmental, health and safety laws and regulations, including laws relating
to air quality, hazardous and solid wastes, chemical management and water
quality. The Company has expended substantial resources, both financial and
managerial, to comply with environmental regulations and permitting
requirements, and anticipates that it will continue to do so in the future.
Although the Company believes that its operations generally are in material
compliance with these requirements, there can be no assurance that significant
costs, civil and criminal penalties, and liabilities will not be incurred. The
Company holds various environmental permits for operations at each of its
plants. In the event a governmental agency were to deny a permit application or
permit renewal, or revoke or substantially modify an existing permit, such
agency action could have a material adverse effect on the Company's ability to
continue the affected plant operations. Plant expansions are subject to
securing necessary environmental permits. Environmental laws and regulations
have changed substantially and rapidly in recent years, and the Company
anticipates continuing changes. The trend in environmental regulations is to
place more restrictions and limitations on activities that may affect the
environment, such as emissions of pollutants and the generation and disposal of
wastes. Increasingly strict environmental regulations have resulted in increased
operating costs for the Company, and it is possible that the costs of compliance
with environmental, health and safety laws and regulations will continue to
increase. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations-Liquidity and Capital Resources-Environmental
Expenditures."
The Company maintains an environmental and industrial safety and health
compliance program and conducts internal regulatory audits at its Geismar,
Illiopolis and Addis plants. The Company's plants have had a history of
involvement in regulatory, enforcement and variance proceedings in connection
with safety, health and environmental matters. Risks of substantial costs and
liabilities are inherent in certain plant operations and certain products found
at and produced by the plants, as they are with other enterprises engaged in the
chemical business, and there can be no assurance that significant costs and
liabilities will not be incurred.
Air Quality. The Geismar, Illiopolis and Addis plants emit air contaminants
and are subject to the requirements of the Clean Air Act and comparable state
statutes. Many of the existing requirements under these laws are embodied in
permits issued to the plants by state environmental agencies. The Company
believes that the Geismar, Illiopolis and Addis plants generally are in material
compliance with these requirements.
The 1990 Amendments to the Clean Air Act (the "1990 Clean Air Act Amendments")
substantially revised and expanded the air pollution control requirements
throughout the United States. As discussed below, certain of these new or
revised requirements may impact the Geismar, Illiopolis and Addis plants.
The 1990 Clean Air Act Amendments require more stringent controls on volatile
organic compounds ("VOC") emissions in ozone non-attainment areas and also
require, subject to certain exceptions, the control of nitrogen oxide ("NOx")
emissions in such areas. The Geismar and Addis plants are located in a
"nonattainment area" for ozone under the 1990 Clean Air Act Amendments.
Additional capital expenditures may be required at the Geismar and Addis plants
in order to upgrade existing pollution control equipment and/or install
additional control equipment to comply with the new, more stringent regulations
for VOC and NOx.
12
<PAGE>
The 1990 Clean Air Act Amendments and state laws and regulations also require
certain sources to control emissions of hazardous air pollutants, including
vinyl chloride. In particular, the EPA promulgated a rule in April 1994, which
may require the modification of the existing emission control equipment at the
Geismar facility. Capital expenditures may be necessary to comply with these
control standards.
The 1990 Clean Air Act Amendments further require "enhanced monitoring" of the
emissions from certain pieces of equipment. Although monitoring systems are
already in place at the Geismar, Illiopolis and Addis plants, capital
expenditures may be necessary to upgrade the systems to comply with the
"enhanced monitoring" requirement.
Based on the information currently available to the Company, the Company does
not believe that the capital expenditures that may be required at the Geismar,
Illiopolis and Addis plants to comply with the 1990 Clean Air Act Amendments and
corresponding state regulations will be material. However, because all the
regulatory requirements under the 1990 Clean Air Act Amendments are not yet
final, and the Company is continuing to evaluate the impact of such amendments
on it, there can be no assurance that the actual costs will not exceed the
Company's estimates.
The United States Department of Justice ("DOJ"), at the request of the
Environmental Protection Agency ("EPA"), has brought an enforcement proceeding
against the Company and BCPM for alleged violation of the Clean Air Act, and
other environmental statutes, at the Geismar facility. See "Legal Proceedings".
OSHA and Community Right to Know. The Geismar, Illiopolis and Addis plants
are subject to the requirements of the federal Occupational Safety and Health
Act ("OSHA") and comparable state statutes. The Company believes that the
Geismar, Illiopolis, and Addis plants generally are in material compliance with
OSHA requirements, including general industry standards, vinyl chloride exposure
requirements, recordkeeping requirements and chemical process safety standards.
It is possible that changes in safety and health regulations, or a finding of
noncompliance with current regulations, could result in additional capital
expenditures or operating expenses for the Geismar, Illiopolis and Addis plants.
The OSHA hazard communication standard and the EPA community right-to-know
regulations under the Emergency Planning and Community Right-to-Know Act
("EPCRA") require the Company to organize information about the hazardous
materials in the plants and to communicate that information to employees and
certain governmental authorities. The Company has prepared a detailed hazard
communication program and will continue this program as a part of its industrial
safety and health compliance program. The Company is a member of the Community
Awareness and Emergency Response ("CAER") program of the Chemical Manufacturers
Association, as well as the Association's Responsible Care initiative. At
Geismar, membership in such programs includes participation in the Geismar Area
Mutual Aid organization, which maintains a community warning system for
notification of chemical releases through the local sheriff's department. The
Company believes that it generally is in material compliance with EPCRA.
The Company is currently subject to a proceeding for alleged violations at the
Illiopolis facility of release reporting requirements under EPCRA. This
proceeding is discussed under "Legal Proceedings".
Solid and Hazardous Waste. The Geismar, Illiopolis and Addis plants generate
hazardous and nonhazardous solid waste and are subject to the requirements of
RCRA and comparable state statutes. The Company believes that the Geismar,
Illiopolis and Addis plants generally are in material compliance with RCRA.
However, see "Legal Proceedings".
13
<PAGE>
A primary trigger for RCRA requirements is the designation of a substance as a
"hazardous waste". It is anticipated that additional substances will in the
future be designated as "hazardous waste", which likely would result in
additional capital expenditures or operating expenses for the Company.
The Geismar complex is operating under RCRA interim status and has filed a
permanent RCRA permit application for its valorization of chlorinated residuals
("VCR") unit and related tanks. However, the Company does not believe that the
Geismar facility must obtain a RCRA permit and is challenging the applicability
of the RCRA permit requirements to it. The Company's challenge to those permit
requirements, the potential permitting costs, civil penalties and corrective
action costs that it may incur if that challenge is unsuccessful, are discussed
under "Legal Proceedings".
The DOJ, at the request of the EPA, has brought an enforcement proceeding
against the Company and BCPM for alleged violations of RCRA, and other
environmental statutes, at the Geismar facility. See "Legal Proceedings".
During the early 1990s, the Company shipped partially depleted mercuric
chloride catalyst to the facility of Thor Chemicals S.A. (PTY) Limited ("Thor")
in Cato Ridge, South Africa for recovery of mercury. In 1993 the Louisiana
Department of Environmental Quality ("LDEQ") determined that the partially
depleted catalyst was not a hazardous waste, although LDEQ reversed this
position in 1994. The Company disagrees with this reversal. See "Legal
Proceedings."
Superfund. CERCLA, also known as the "Superfund" law, imposes liability,
without regard to fault or the legality of the original conduct, on certain
classes of persons that are considered to have contributed to the release of a
"hazardous substance" into the environment. These persons include the owner or
operator of the disposal site or sites where the release occurred and the
companies that disposed, or arranged for the disposal of, the hazardous
substances found at the site. Persons who are or were responsible for releases
of hazardous substances under CERCLA may be subject to joint and several
liability for the costs of cleaning up the hazardous substances and for damages
to natural resources. In the ordinary course of the Company's operations,
substances are generated that fall within the CERCLA definition of "hazardous
substance". If such wastes have been disposed of at sites which are targeted
for cleanup by federal or state regulatory authorities, the Company may be among
those responsible under CERCLA or analogous state laws for all or part of the
costs of such cleanup. The Geismar, Illiopolis and Addis plants have in the
past and are expected to continue to generate hazardous substances and dispose
of such hazardous substances at various offsite disposal sites.
The DOJ, at the request of the EPA, has brought an enforcement proceeding
against the Company and BCPM for alleged violation of CERCLA's reporting
requirements, and other environmental requirements, at the Geismar facility.
See "Legal Proceedings".
Toxic Substances Control Act. The Company is subject to the Toxic Substances
Control Act ("TSCA"), which regulates the development, manufacture, processing,
distribution, importation, use, and disposal of thousands of chemicals. Among
other requirements, TSCA provides that a chemical cannot be manufactured,
processed, imported or distributed in the United States until it has been
included on the TSCA Chemical Inventory. Other important TSCA requirements
govern recordkeeping and reporting. For example, TSCA requires a company to
maintain records of allegations of significant adverse reactions to health or
the environment caused by chemicals or chemical processes. The Company believes
that it generally is in material compliance with TSCA. Violations of TSCA can
result in significant penalties.
14
<PAGE>
Water Quality. The Geismar, Illiopolis and Addis plants maintain wastewater
discharge permits for their facilities pursuant to the Federal Water Pollution
Control Act of 1972 and comparable state laws. See Item 3 "Legal Proceedings"
for a discussion of the Company's challenge to a wastewater permit for the
Geismar facility. Where required, the Company and the Addis Facility also have
applied for permits to discharge stormwater. The Company believes that the
Geismar, Illiopolis and Addis plants generally are in material compliance with
the Federal Water Pollution Act of 1972 and comparable state laws. In cases
where there are excursions from the permit requirements, the Geismar and
Illiopolis plants are taking action to achieve compliance, are working in
cooperation with the appropriate agency to achieve compliance or are in good
faith pursuing their procedural rights in the permitting process.
The EPA has issued effluent regulations specifying amounts of pollutants
allowable in direct discharges and in discharges to publicly owned treatment
works. The Geismar, Illiopolis and Addis plants manufacture or use as raw
materials a number of chemicals subject to additional regulation. Both federal
and state authorities continue to develop legislation and regulations to control
the discharge of certain toxic water pollutants. Passage of such legislation or
regulations could necessitate additional capital expenditures to reduce
discharges of these substances into the environment either during routine or
episodic events. The Company does not believe that these legislative
developments would have a material adverse impact on the Company's operations.
It is common for chemical plants from time to time to encounter areas of
groundwater contamination during the ordinary course of business. Typically,
some of these contamination events are historical and cannot be documented as to
the causal circumstances. While some contamination events have been identified
at the Company's plants, it is the Company's policy, where possible and
appropriate, to address and resolve these contamination events. The Company
believes that environmental indemnities available to it would cover a
substantial portion of these known or unknown contamination events. The Company
does not believe that the known contamination events will have material adverse
impact on the Company's operations. The Company believes that the Geismar,
Illiopolis and Addis plants generally are in material compliance with all laws
with respect to known groundwater contamination events. At the Geismar complex,
Borden and the Company have complied with the Settlement Agreement with the
state of Louisiana for groundwater remediation. See "Legal Proceedings" for
further discussion.
Present and Future Environmental Capital Expenditures. Although it is the
Company's policy to comply with all applicable environmental, health and safety
laws and regulations, in many instances the implementing regulations have not
been finalized. Even where regulations or standards have been adopted, they are
subject to varying and conflicting interpretations and implementation. In many
cases, compliance with environmental regulations or standards can only be
achieved by capital expenditures, some of which may be significant. Capital
expenditures for environmental control facilities were approximately $1.4
million in 1995 and $1.7 million in 1994. To the extent estimates are
available, capital expenditures for environmental control facilities are
expected to total approximately $4.2 million in 1996 (although such estimate
could vary substantially depending on the outcome of the various proceedings and
matters discussed herein, and no assurance can be given that greater
expenditures on the part of the Company will not be required as to matters not
covered by the environmental indemnity from Borden).
BORDEN ENVIRONMENTAL INDEMNITY
Under the Environmental Indemnity Agreement, subject to certain conditions,
Borden has agreed to indemnify the Company and the Holding Company in respect of
environmental liabilities arising from facts or circumstances that existed and
15
<PAGE>
requirements in effect prior to November 30, 1987, the date of the initial sale
by Borden of the Geismar and Illiopolis plants to the Company (the "Transfer
Date"). The Company is responsible for environmental liabilities arising from
facts or circumstances that existed and requirements in effect on or after the
Transfer Date. With respect to certain environmental liabilities that may arise
from facts or circumstances that existed and requirements in effect both prior
to and after the Transfer Date, Borden and the Company will share liabilities on
an equitable basis considering all of the facts and circumstances including, but
not limited to, the relative contribution of each to the matter and the amount
of time each has operated the asset in question (to the extent relevant). No
claims can be made under the Environmental Indemnity Agreement after November
30, 2002, and no claim can, with certain exceptions be made with respect to the
first $0.5 million of liabilities which Borden would otherwise be responsible
for thereunder in any year, but such excluded amounts shall not exceed $3.5
million in the aggregate. Excluded amounts under the Environmental Indemnity
Agreement have aggregated approximately $3.0 million through December 31, 1995.
If the United States is successful in requiring the Company to perform
corrective action at the Geismar facility or the LDEQ requires the Company to
take further remedial measures in connection with the Settlement Agreement (see
"Legal Proceedings"), the Company anticipates that a substantial portion of its
corrective action costs would be covered by the Environmental Indemnity
Agreement. The extent to which any penalties or permit costs that the Company
may incur as a result of pending environmental proceedings will be subject to
the Environmental Indemnity Agreement will depend, in large part, on whether
such penalties or costs are attributable to facts or circumstances that existed
and requirements in effect prior to the Transfer Date.
ADDIS ENVIRONMENTAL INDEMNITY
OxyChem has indemnified the Company for environmental liabilities arising from
the manufacture, generation, treatment, storage, handling, processing, disposal,
discharge, loss, leak, escape or spillage of any product, waste or substance
generated or handled by OxyChem prior to the closing of the Acquisition, any
condition resulting therefrom relating to acts, omissions or operations of
OxyChem prior to such date, and any duty, obligation or responsibility imposed
on OxyChem prior to such date under environmental laws in effect prior to such
date to address such condition. However, except with regard to claims arising
from OxyChem's disposal of waste at sites other than the Addis Facility, OxyChem
has no indemnification obligation if the claim for indemnification is the result
of a change in applicable law after the closing of the Acquisition. OxyChem's
obligation to indemnify the Company for environmental liabilities is subject to
certain limitations. There can be no assurance that the indemnification
provided by OxyChem will be sufficient to cover all environmental liabilities
existing or arising at the Addis Facility.
PRODUCT LIABILITY AND REGULATION
As a result of the Company's manufacture, distribution and use of different
chemicals, the Company is, and in the future may be, subject to various lawsuits
and claims, such as product liability and toxic tort claims, which arise in the
ordinary course of business and which seek compensation for physical injury,
pain and suffering, costs of medical monitoring, property damage, and other
alleged harms. See "Legal Proceedings-General Proceedings". New or different
types of claims arising from the Company's various chemical operations may be
made in the future.
16
<PAGE>
The United States Food and Drug Administration ("FDA") is proposing new
regulations providing for the safe use of vinyl chloride polymers in food-
contact articles. According to the FDA, such regulations are required because
vinyl chloride monomer, a component of vinyl chloride polymer, has been shown to
be a carcinogen. However, the FDA concludes in its proposal that there is a
reasonable certainty of no harm from the exposure to the small amounts of vinyl
chloride monomer that may result from the use of vinyl chloride polymers in food
packaging which complies with the FDA's proposed regulations. Thus, the FDA
proposal would continue to allow substantially all presently allowable uses,
including all products currently made using products produced by the Company.
While the FDA has tentatively concluded that such action will not have a
significant effect on the human environment, it is considering whether to
develop a full environmental impact statement to consider the potential effect
on the environment of the disposal of these food-contact articles. The EPA has
authority with respect to the safe use of vinyl chloride polymer pipe in
municipal water systems and has not imposed any restrictions on its use. It is
possible, however, that the FDA, the EPA, or other federal and state agencies
may seek to impose additional restrictions on the use or disposal of vinyl
chloride polymer. Moreover, while Borden has agreed to indemnify the Company in
respect of liabilities arising from products (including but not limited to vinyl
chloride polymer) shipped prior to the Transfer Date, the Company will be
responsible for any subsequent product liabilities.
EMPLOYEES
The Partnership does not directly employ any of the persons responsible for
managing and operating the Partnership, but instead reimburses BCPM for their
services. On December 31, 1995 BCPM employed approximately 850 individuals.
CASH DISTRIBUTIONS
The Partnership distributes 100% of its Available Cash as of the end of each
quarter on or about 45 days after the end of such quarter to Unitholders of
record as of the applicable record date and to the General Partner. "Available
Cash" means generally, with respect to any quarter, the sum of all cash receipts
of the Partnership plus net reductions to reserves established in prior
quarters, less cash disbursements and net additions to reserves in such quarter.
The General Partner has broad discretion in establishing reserves, and its
decisions regarding reserves could have a significant impact on the amount of
Available Cash. The timing and amounts of additions and reductions to reserves
may impact the amount of incentive distributions payable to the General Partner.
As a result, distributions to Unitholders may over time be reduced from levels
which would have been distributed if the General Partner were not able to
control the timing of additions and reductions to reserves.
Distributions by the Partnership of Available Cash are generally made 98% to
the Unitholders and 2% to the General Partner, subject to the payment of an
incentive distribution to the General Partner to the extent that a target level
of cash distributions to the Unitholders is achieved for any quarter. The
Amended and Restated Agreement of Limited Partnership of the Partnership (the
"Partnership Agreement") provides that, after an amount equal to $0.3647 per
Unit (the "Target Distribution") has been distributed for any quarter to
Unitholders, the General Partner will receive 20% of any then remaining
Available Cash for such quarter as an incentive distribution (in addition to its
2% regular distribution).
ITEM 2. PROPERTIES
- ------------------
Construction of the Geismar complex began over thirty years ago. Acetylene,
methanol and VCM-A plants were completed in the early 1960s and ammonia and urea
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plants were added during the period 1965 to 1967. A VCM-E plant and a
formaldehyde plant were added in the mid 1970s, a second formaldehyde plant was
brought on stream in 1986, and a third formaldehyde plant was brought on stream
in 1991. In 1983 Borden completed construction of a PVC resin plant at the
Geismar complex. During the early 1980s, the methanol, ammonia, and urea plants
were modernized, which reduced energy consumption and expanded capacity. The
urea plant was further modified to produce granular rather than prill product in
1993. The PVC resin facility at Illiopolis became operational in 1962, and was
significantly upgraded in the late 1980s. The Addis Facility began operations
in 1979.
The Geismar complex is located on approximately 490 acres in Ascension Parish,
Louisiana, adjacent to the Mississippi River between Baton Rouge and New
Orleans. The Illiopolis PVC resin facility is located on approximately 45 acres
in central Illinois between Springfield and Decatur. The Addis Facility is
located on approximately 40 acres of a 220 acre site adjacent to the Mississippi
River, approximately 20 miles from the Geismar complex.
The following table sets forth the approximate annual capacity of each of the
principal manufacturing plants at the Geismar complex and the PVC plants at
Illiopolis and Addis, all of which are owned by the Company except as noted.
<TABLE>
<CAPTION>
1988 1995
ANNUAL STATED CAPACITY ANNUAL STATED CAPACITY 7 YEAR CAPACITY
PLANTS (STATED IN MILLIONS) (STATED IN MILLIONS) PERCENTAGE INCREASE
- ----------------------------- -------------------- ----------------------- --------------------
<S> <C> <C> <C>
Geismar, LA:
PV Polymers Products
PVC Resins............... 400 lbs. 500 lbs. 25.0%
Acetylene-based VCM(1).. 320 lbs. 320 lbs. --
Ethylene-based VCM....... 550 lbs. 630 lbs. 14.5%
Acetylene................ 190 lbs. 200 lbs. 5.3%
Methanol and Derivatives
Methanol................. 230 gals. 330 gals. 43.5%
Formaldehyde I........... 210 lbs. 270 lbs. 28.6%
Formaldehyde II(2)....... 160 lbs. 180 lbs. 12.5%
Formaldehyde III......... -- 190 lbs. N/M
Nitrogen Products
Ammonia.................. .40 tons .40 tons --
Urea..................... .22 tons .25 tons 13.6%
Illiopolis, IL:
PVC Resins................. 350 lbs. 380 lbs. 8.6%
Addis, LA:
PVC Resins................. 450 lbs. 450 lbs. --
Total equivalent lbs.(3)..... 5,395 6,608 22.5%
</TABLE>
(1) 50% owned by the Company
(2) Also capable of producing urea-formaldehyde concentrate at an annual stated
capacity of 125 million pounds.
(3) Equivalent pounds is based on 6.63 pounds per gallon of methanol.
Item 3. Legal Proceedings
- ------- -----------------
Louisiana Groundwater Remediation Settlement Agreement
- ------------------------------------------------------
In 1985, LDEQ and Borden entered into a settlement agreement ("Settlement
Agreement") that called for the implementation of a long-term groundwater and
soil remediation program at the Geismar complex to address contaminants,
including ethylene dichloride ("EDC"). Also during this time frame, Borden
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<PAGE>
commenced closure of various units identified to have been contributors to the
EDC contamination underlying the Geismar complex. Borden and the Company have
implemented the Settlement Agreement, and have worked in cooperation with the
LDEQ to remediate the groundwater and soil contamination. The Settlement
Agreement contemplated, among other things, that Borden would install a series
of groundwater monitoring and recovery wells, and recovery trench systems. The
Company is addressing issues raised by LDEQ concerning whether the extent of the
groundwater contamination has been identified. Borden has paid substantially
all of the costs to date associated with the Settlement Agreement. It is
unknown how long the remediation program will continue or whether the LDEQ will
require the Company to incur costs to take further remedial measures in response
to data generated by the planned additional testing. If the LDEQ requires the
Company to take further remedial measures, the Company anticipates that a
portion of such costs would be covered by the Environmental Indemnity Agreement.
The extent to which any costs for further remedial measures required by LDEQ
will be covered by the Environmental Indemnity Agreement will depend, in large
part, on whether such remedial measures respond to facts or circumstances that
existed and requirements in effect prior to November 30, 1987, the date of the
initial sale by Borden of the Geismar and Illiopolis plants to the Partnership.
See Item 1 "Borden Environmental Indemnity."
Federal Environmental Enforcement Proceeding
- --------------------------------------------
On October 27, 1994, the DOJ, acting at the request of the EPA, filed an
action against the Operating Partnership, the Partnership, and the General
Partner in the United States District Court for the Middle District of Louisiana
("Geismar Enforcement Proceeding"). The complaint seeks civil penalties for
alleged violations of RCRA, CERCLA and the Clean Air Act at the Geismar
facility, as well as corrective action at that facility. Prior to the filing of
the complaint, the Company and DOJ had engaged in settlement discussions, and
the Company expects that such discussion will continue.
The federal government's primary allegations for which it seeks penalties
include claims that (i) the Company's international export to South Africa of a
partially depleted mercuric chloride catalyst for recycling violated RCRA; (ii)
the Company should have applied for a RCRA permit for operation of its VCR unit
and related tanks before August 1991; and (iii) the Company should have applied
for a RCRA permit for the north trench sump at the Geismar complex because such
sump allegedly stored, or disposed of, hazardous waste. The government's
allegations include other claims related to these and other alleged RCRA
violations, as well as claims of alleged violations of immediate release
reporting requirements under CERCLA and requirements governing particulate
matter emissions under the Clean Air Act. The Company plans to vigorously
defend itself against all of the above allegations.
During the early 1990's, the Company sent partially depleted mercuric chloride
catalyst to a facility in South Africa for recovery of the mercury. See the
following "Export of Partially Depleted Mercuric Chloride Catalyst." In 1993,
-------------------------------------------------------
LDEQ had determined that the catalyst was not a hazardous waste. However,
because of a belief by the EPA that the partially depleted catalyst could be a
hazardous waste and a reversal of LDEQ's 1993 determination, and pending the
outcome of the Geismar Enforcement Proceeding, the Company has ceased exporting
the partially depleted mercuric chloride catalyst for recycling and is currently
handling it as if it were a hazardous waste. Accordingly, even if a court
should determine that the partially depleted catalyst was a hazardous waste when
it was exported, the Company does not anticipate that it would incur material
additional expenditures to continue to manage the partially depleted catalyst as
a hazardous waste.
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<PAGE>
In 1991, as a protective filing, the Company applied for a hazardous waste
permit for the VCR unit and related tanks. In January 1994, in response to a
petition from the Company to LDEQ for a determination that the VCR unit does not
require a RCRA permit, LDEQ determined that the VCR unit is subject to RCRA.
The Company continues to maintain that the VCR unit is not subject to RCRA and
has filed appeals of LDEQ's determination in Louisiana State Courts.
In May 1994, the Company filed a Complaint for Declaratory Judgment in the
U.S. District Court in Baton Rouge seeking a determination that (i) the
partially depleted mercuric chloride catalyst was not a hazardous waste when it
was exported for recycling, (ii) the materials entering the VCR unit and related
tanks are not hazardous waste and (iii) the north trench sump does not require a
RCRA permit.
In May 1995, certain adjoining landowners at the Geismar complex filed a
motion to intervene in the Geismar Enforcement Proceedings claiming rights under
CERCLA and RCRA to protect their property interests. The court granted a limited
intervention on November 15, 1995 and the Company is vigorously defending
against this intervention.
If the Company is unsuccessful in prosecuting its May 1994 Declaratory
Judgment Action, or in defending itself against the Geismar Enforcement
Proceedings, it could be subject to three types of costs: (i) penalties, (ii)
corrective action, and (iii) costs needed to obtain a RCRA permit. As to
penalties, although the maximum statutory penalties that would apply in a
successful enforcement action by the United States would be in excess of $150.0
million, the Company believes that, assuming the Company is unsuccessful and
based on information currently available to it and an analysis of relevant case
law and administrative decisions, the more likely amount of any liability for
civil penalties would not exceed several million dollars.
If the Company is unsuccessful in either the Declaratory Judgement Action or
the Geismar Enforcement Proceedings, it may also be subject to costs for
corrective action. The federal government can also require corrective action
for a facility subject to RCRA permit requirements. Corrective action could
require the Company to conduct investigatory and remedial activities at the
Geismar complex concurrently with the groundwater monitoring and remedial
program that the Company is currently conducting under the Settlement Agreement
with LDEQ. The DOJ is seeking facility-wide corrective action to address the
contamination at the Geismar complex. EPA has indicated that it intends to
evaluate the adequacy of the existing groundwater remediation project performed
under the Settlement Agreement with LDEQ, and to determine the potential for
other areas of contamination on or near the Geismar complex. The cost of any
corrective action could be material, depending on the scope of such corrective
action. However, the actual cost of a facility-wide corrective action cannot be
identified until the EPA provides substantially more information to the Company
or until additional studies are done.
If the Company is unsuccessful in either proceeding concerning its challenge
to the applicability of the RCRA permit requirements to the VCR unit and related
tanks, or the north trench sump, it will have to incur additional permitting
costs. The Company estimates that its costs to complete the permitting process
for the VCR unit and related tanks would be approximately $1.0 million. The
Company believes that the costs for amending its pending RCRA permit application
to include the north trench sump would not be material.
20
<PAGE>
Because of the complex nature of environmental insurance coverage and the
rapidly developing case law concerning such coverage, no assurance can be given
concerning the extent to which insurance may cover environmental claims against
the Company. However, insurance generally does not cover penalties or the cost
of obtaining permits.
Export of Partially Depleted Mercuric Chloride Catalyst
- -------------------------------------------------------
During the early 1990s, the Company shipped partially depleted mercuric
chloride catalyst to the facility of Thor Chemicals S.A. (PTY) Limited ("Thor")
in Cato Ridge, South Africa for recovery of mercury. In 1993 the LDEQ
determined that the partially depleted catalyst was not a hazardous waste,
although LDEQ reversed this position in 1994. The Company disagrees with this
reversal. The Company did not send mercury-containing sludge to the Thor
facility.
The Company believes that Thor's operations have included the production of
mercuric chloride catalyst and the recovery of mercury from partially depleted
catalyst. Recovery of mercury at Thor's facility was discontinued in March 1994
when the Department of Health in South Africa refused to renew a temporary
license that had been granted to Thor. At such time, there were approximately
2,900 drums of partially depleted catalyst at the facility which had been
shipped by the Company to Thor. In addition, in the spring of 1994 there were
approximately 7,400 drums of other materials at the Thor facility which the
Company had not sent there.
In February 1995, Thor and three of its management personnel were tried by
South Africa for the common law crime of culpable homicide and a number of
alleged violations of the Machinery Occupational Safety Act of 1983 ("MOSA"),
because of the deaths of two Thor employees. The prosecution alleged that the
deaths were the result of mercury poisoning. In exchange for a plea by Thor
that it had violated provisions of MOSA, the prosecution dropped the homicide
charges against Thor and all the charges against Thor's management personnel.
The court has sentenced Thor to a fine of R13,500.00, which is equivalent to
approximately $3,800. The Company is aware that relatives of two deceased Thor
employees, and a Thor employee allegedly suffering from mercury poisoning, have
filed suit in the United Kingdom against Thor's parent company for negligence.
A Commission of Inquiry, appointed by the President of South Africa,
commenced hearings in February 1996, and published the following terms of
reference: (1) to investigate the history and background of the acquisition of
mercury catalyst stockpiled by Thor as well as additional mercury-containing
sludge on the premises and to report on the further utilization or disposal
thereof; (2) to recommend the best practical environmental option to address the
problem of mercury-containing catalyst and/or waste currently on Thor's
premises; (3) to report the results of the Commission's inquiry to the President
of the Republic of South Africa as soon as conveniently possible; (4) to
investigate deficiencies in the regulation and enforcement relating to the
monitoring and control of mercury processing; and (5) to recommend steps which
could contribute to the minimization of risk and to the protection of workers
and the environment. In addition, the Minister of Water Affairs and Forestry has
instructed his department's regional office to investigate alleged water
pollution at and near the Thor facility. The Government of South Africa has not
made any allegations or asserted any claims against the Company.
The contract between the Company and Thor provides that title to, risk of
loss, and all other incidents of ownership of the partially depleted catalyst
would pass from the Company to Thor when the catalyst reached South Africa. The
Company does not believe that it is liable for disposing of the approximately
2,900 drums of partially depleted catalyst remaining at the Thor facility.
21
<PAGE>
Nonetheless, in the event that the Company should be required to dispose of the
approximately 2,900 drums at the facility shipped by the Company, the Company
estimates that such cost would not be in excess of $4 million.
With regard to the environmental condition of the Thor facility, the Company
has not been notified by the Government of South Africa that the Company would
be liable for any contamination or other conditions at that facility, although
it is impossible to determine what, if any, allegations any party may make in
connection with the Thor facility in the future. It is unclear under current
South African environmental law as to whether any such allegations, if made,
would be sustained against the Company, and the Company would vigorously defend
against any such allegations.
In connection with a federal grand jury investigation in the U.S. District
Court in New Jersey, the Company is providing documents with respect to the
partially depleted catalyst matter.
Emergency Planning and Community Right-to-Know Act Proceeding
- -------------------------------------------------------------
In February 1993, an EPA Administrative Law Judge held that the Illiopolis
facility had violated CERCLA and EPCRA by failing to report certain relief valve
releases, which occurred between February 1987 and July 1989, that the Company
believes are exempt from CERCLA and EPCRA reporting. The Company's petition for
reconsideration was denied, a penalty hearing will be scheduled, and further
appeals are possible. Management does not believe that any ultimate penalty
arising from this proceeding would have a material adverse effect on the results
of operations for the Company. The proposed penalty in EPA's administrative
complaint initiating this proceeding in 1991 was $1.0 million.
Borden Environmental Indemnity
- ------------------------------
Under the Environmental Indemnity Agreement ("EIA"), subject to certain
conditions, Borden has agreed to indemnify the Company in respect of
environmental liabilities arising from facts or circumstances that existed and
requirements in effect prior to November 30, 1987, the date of the initial sale
of the Geismar and Illiopolis plants to the Company (the "Transfer Date"). The
Company is responsible for environmental liabilities arising from facts or
circumstances that existed and requirements in effect on or after the Transfer
Date. With respect to certain environmental liabilities that may arise from
facts or circumstances that existed and requirements in effect both prior to and
after the Transfer Date, Borden and the Company will share liabilities on an
equitable basis considering all of the facts and circumstances including, but
not limited to, the relative contribution of each to the matter and the amount
of time each has operated the asset in question (to the extent relevant). No
claims can be made under the EIA after November 30, 2002, and no claim can, with
certain exceptions, be made with respect to the first $500,000 of liabilities
which Borden would otherwise be responsible for thereunder in any year, but such
excluded amounts shall not exceed $3.5 million in the aggregate. Excluded
amounts under the EIA have aggregated approximately $3.0 million through
December 31, 1995.
If the United States is successful in requiring the Company to perform
corrective action at the Geismar facility or the LDEQ requires the Company to
take further remedial measures in connection with the Settlement Agreement, the
Company anticipates that a substantial portion of its corrective action costs
would be covered by the EIA. The extent to which any penalties or permit costs
that the Company may incur as a result of pending environmental proceedings will
22
<PAGE>
be subject to the EIA will depend, in large part, on whether such penalties or
costs are attributable to facts or circumstances that existed and requirements
in effect prior to the Transfer Date.
Federal Wastewater Permit
- -------------------------
The Geismar facility has a permit for each of its two wastewater outfalls. The
Company is challenging conditions in one of these permits. As a result of the
government's delay in responding to this challenge, the challenged permit has
expired and, prior to the expiration, the Company applied for a new permit.
Depending on the result of that permit application, the Company's current permit
challenge may be irrelevant.
Other Legal Proceedings
- -----------------------
The Company manufactures, distributes and uses many different chemicals in its
business. As a result of its chemical operations the Company is subject to
various lawsuits in the ordinary course of business which seek compensation for
physical injury, pain and suffering, costs of medical monitoring, property
damage and other alleged harm. New or different damage claims arising from the
Company's various chemical operations may be made in the future.
In addition, the Company is subject to various other legal proceedings and
claims which arise in the ordinary course of business. The management of the
Company believes, based upon the information it presently possesses, that the
realistic range of liability to the Partnership of these other matters, taking
into account the Partnership's insurance coverage, including its risk retention
program, and the EIA with Borden, would not have a material adverse effect on
the financial position or results of operations of the Company.
Item 4. Submission of Matters to a Vote of Security Holders
- ------- ---------------------------------------------------
No matter was submitted during the fourth quarter of 1995 to a vote of
security holders, through the solicitation of proxies or otherwise.
PART II
Item 5 Market for the Registrant's Common Equity and Related
- ------ -----------------------------------------------------
Stockholder Matters
-------------------
The high and low sales prices for the Common Units on February 9, 1996 were
$13 3/4 and $13 1/2, respectively. As of December 31, 1995, there were
approximately 6,868 holders of record of Common Units.
The following table sets forth the 1995 quarterly Common Unit data:
<TABLE>
<CAPTION>
1995 Quarters
--------------------------------
First Second Third Fourth
----- ------ ----- ------
<S> <C> <C> <C> <C>
Cash distribution declared $ 1.77 $ 1.42 $ .90 $ .57
Market price range:
High 25 1/2 18 3/8 19 3/4 18 1/2
Low 15 1/8 15 1/2 16 12 1/4
</TABLE>
23
<PAGE>
The high and low prices for the Units during the first quarter of 1996
(through February 9) were $14 7/8 and $12 5/8, respectively.
<TABLE>
<CAPTION>
1994 Quarters
--------------------------------
First Second Third Fourth
----- ------ ----- ------
<S> <C> <C> <C> <C>
Cash distributions declared $ .21 $ .65 $ 1.02 $ 1.64
Market price range:
High 13 1/4 15 1/8 25 7/8 26 3/8
Low 9 7/8 10 7/8 13 1/4 19 1/4
</TABLE>
Item 6. Selected Financial Data
- ------- -----------------------
The following table sets forth selected historical financial information for
the Company for each of the five years ended December 31, 1995.
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
-------- -------- --------- -------- --------
(in thousands except per Unit data, which is
net of 1% General Partner interest)
<S> <C> <C> <C> <C> <C>
Net revenues $739,587 $657,752 $433,297 $401,803 $410,005
Income (loss) before
extraordinary item 150,926 146,405 (1,435) 27,085 51,553
Net income (loss) 144,014 146,405 (1,435) 27,085 51,553
Income (loss) per unit
before extra-
ordinary item 4.07 3.94 (.04) .73 1.39
Net income (loss)
per Unit 3.88 3.94 (.04) .73 1.39
Cash distributions
declared per Unit 4.66 3.52 .78 1.59 1.98
Total assets 568,507 542,904 444,304 466,729 507,042
Long-term debt 200,000 120,000 150,000 150,000 150,000
</TABLE>
Item 7. Management's Discussion and Analysis of Financial
- ------- -------------------------------------------------
Condition and Results of Operations
-----------------------------------
OVERVIEW AND OUTLOOK
The Company's revenues are derived from three principal product groups: (1) PVC
Polymers Products, which consist of PVC resins, VCM, the principal feedstock for
PVC resins, and acetylene, (ii) Methanol and Derivatives and (iii) Nitrogen
Products, which consist of ammonia and urea.
The markets for and profitability of the Company's products have been, and are
likely to continue to be, cyclical. Periods of high demand, high capacity
utilization and increasing operating margins tend to result in new plant
investment and increased production until supply exceeds demand, followed by
periods of declining prices and declining capacity utilization until the cycle
is repeated. In addition, markets for the Company's products are affected by
general economic conditions and a downturn in the economy could have a material
adverse effect on the Company, including, but not limited to, its ability to
service its debt obligations. The demand for the Partnership's PVC products is
24
<PAGE>
primarily dependent on the construction and automotive industries. Methanol
demand is also dependent on the construction industry, as well as the demand for
MTBE. Demand for the Company's Nitrogen Products is dependent primarily on the
agricultural and industrial industries.
The principal raw material feedstock for the Company's products is natural gas,
the price of which has been volatile in recent years. The other principal
feedstocks are ethylene and chlorine. Prices for these raw materials may change
significantly from year to year.
The Company experienced strong demand for its PVC Polymers Products in the
first half of 1995, particularly for its rigid and general purpose resins.
Increased activity in the construction industry resulted in increased demand for
rigid grade resin for end use in pipe and siding production. The automotive
industry requirements resulted in increased demand for general purpose resins.
Beginning the fourth quarter of 1994, PVC customers began to build up their PVC
inventory in anticipation of rising PVC sales prices. This inventory buildup
peaked during the second quarter of 1995, resulting in reduced PVC purchases
during the second half of 1995. This led to a sharp decrease in PVC sales
prices which continued through the end of 1995. The Company anticipates PVC
pricing will improve during the second half of 1996.
During 1994, due to strength in the construction industry, the Company
experienced increased demand for methanol and formaldehyde in downstream
applications, such as adhesives for plywood and other pressed wood products.
Methanol demand has also been affected by the use of MTBE to comply with certain
requirements of the Clean Air Act. The Company expects continued strong demand
for methanol products into 1996, subject to the extent of implementation and
enforcement of the Clean Air Act and the substitution of other products for
MTBE. Published methanol prices increased from approximately $0.47 per gallon
during the fourth quarter of 1993 to approximately $1.50 per gallon during the
fourth quarter of 1994, but there has been a sharp decline in methanol sales
prices since early 1995 and current published methanol prices are in the range
of $.40 to $.45 per gallon. The outlook for methanol continues to be uncertain,
but the Company believes that its methanol sales prices during 1996 are likely
to remain at current levels.
In Nitrogen Products, ammonia selling prices increased significantly during
1994 due primarily to a tighter worldwide supply resulting from restricted
production in the former Soviet Union. The decline in non-U.S. production has
significantly increased the price of ammonia imported into the U.S., which is a
net importer of ammonia, and has allowed domestically produced ammonia to rise
significantly in price. In the second half of 1994, urea prices recovered from
depressed levels in 1993 and early 1994 when competition from lower cost imports
forced domestic prices lower. Increased urea purchases overseas, primarily by
India and China, caused global and domestic prices to strengthen. Demand for
ammonia and urea remained strong in 1995 with sales prices consistent with 1994
levels. The Company expects the foregoing factors to continue into 1996 and,
accordingly, expects selling prices and volumes for its Nitrogen Products to
remain strong into 1996. However, changes in the market outside of its control
could adversely affect this outlook. The countries comprising the former Soviet
Union control a large portion of worldwide ammonia production capacity. The
unstable economies of these countries could force an increase from their current
production levels in order to receive foreign currency, causing an increase in
product available for import into the U.S. and resulting in downward pressure on
selling prices. In addition, there can be no assurance that urea purchases by
foreign countries will continue at current levels.
25
<PAGE>
The cost of ethylene, the primary feedstock for PVC, rose during the first half
of 1995 but has recently been falling. The Company believes that its PVC
operations have lower exposure to ethylene price increases than many other
manufacturers because the Company is able to produce a portion of its PVC raw
material, VCM, from acetylene instead of ethylene. Acetylene-based VCM
manufacturing accounts for approximately one-third of the Partnership's total
VCM production. The primary raw material for acetylene, as well as for methanol
and ammonia, is natural gas, thus the costs of these products are affected by
changes in natural gas prices which, in 1995, declined on average 15% from 1994
levels. Chlorine is a feedstock for PVC resins and unit costs have varied
significantly on a historical basis, as demonstrated in 1991 when chlorine had a
negative value in the market due to an extreme oversupply situation. Recently,
chlorine prices have remained relatively unchanged. Raw materials costs account
for a high percentage of the Company's total production costs. The Company
purchases its major raw materials - natural gas, ethylene and chlorine - under
market sensitive supply contracts. Generally, prices under these contracts are
adjusted on a monthly basis and, although the Company generally does not
purchase raw materials at spot prices, its operating results are nevertheless
subject to short-term fluctuations in raw material market prices. These raw
materials are commodities in nature and fluctuate in price due to general
economic conditions, seasonal factors and the supply/demand balance at any point
in time. Natural gas prices vary primarily due to seasonal changes in
residential demand for heating purposes. Ethylene is a derivative of the
petroleum refining industry, with ethylene prices tending to follow supply and
demand factors of ethylene's derivative products. Chlorine and its by-product
caustic soda, a neutralizing agent in numerous manufacturing processes, are both
derivatives of brine. Prices for each of these co-products are driven by supply
and demand for each of the products themselves, as well as the supply and demand
for the co-product such that either product can influence the price of the
other. Unit costs for raw materials can vary significantly within short
periods. For example, during the 1993-1995 period, monthly prices of natural
gas have varied from $1.50 per million BTU to $2.50 per million BTU primarily
due to seasonal variations in demand. Monthly prices of ethylene have varied
from $0.15 per pound to $0.28 per pound and chlorine has varied from $110 per
ton to $175 per ton. These fluctuations limit the ability to accurately
forecast future raw material costs.
On May 2, 1995, the Company, through its subsidiary operating partnership (the
"Operating Partnership"), completed the purchase of OxyChem's Addis, Louisiana
PVC manufacturing facility and related assets ("Addis facility"). The Addis
facility has an annual proven production capacity of 450 million pounds per
year, which increased the Company's stated annual capacity for PVC resin
production by approximately 50%. The cash purchase price for the Addis facility
was $100.4 million (see "Acquisition").
RESULTS OF OPERATIONS
The following table sets forth the dollar amount of revenues and the percentage
of total revenues for each of the principal product groups of the Company (in
thousands):
<TABLE>
<CAPTION>
1995 1994 1993
--------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
PVC Polymers Products $449,657 61% $347,122 53% $261,342 60%
Methanol and Derivatives 187,126 25% 236,032 36% 119,779 28
Nitrogen Products 102,804 14% 74,598 11% 52,176 12
-------- ---- -------- ---- -------- ----
Total Revenues $739,587 100% $657,752 100% $433,297 100%
======== ==== ======== ==== ======== ====
</TABLE>
26
<PAGE>
The following table summarizes indices of relative average selling prices
received per unit of product sold per period for the three principal product
groups of the Company and relative average raw material costs per unit for the
principal raw materials (using 1985 = 100 as the base year for all products sold
or purchased per period). The price indices in the table reflect changes in the
mix and volume of individual products sold as well as changes in selling prices.
<TABLE>
<CAPTION>
Year Ended December 31,
1995 1994 1993
------- ------ ------
<S> <C> <C> <C>
Average price received per
unit sold
PVC Polymers Products 133 124 106
Methanol and Derivatives 134 166 94
Nitrogen Products 149 120 85
Raw material costs per unit purchased
Natural Gas 69 79 88
Ethylene 173 137 115
Chlorine 92 116 83
Production volumes (1)
(in millions of pounds)
PVC Polymers Products 2,312 2,067 1,849
Methanol and Derivatives 2,805 2,660 2,409
Nitrogen Products 1,389 1,221 1,207
</TABLE>
- ----------------
(1) Includes the production of intermediate products.
1995 COMPARED TO 1994
Total Revenues
Total revenues for 1995 increased $81.8 million or 12% to $739.6 million in
1995 from $657.8 million in 1994. This increase was the net result of a $102.5
million increase in revenues from PVC Polymers Products, a $48.9 million
decrease in Methanol and Derivatives revenues and a $28.2 million increase in
Nitrogen Products revenues.
Total revenues for PVC Polymers Products increased 30% as a result of a 21%
increase in sales volumes along with a 7% increase in selling prices. The
increase in volume was mainly attributable to the acquisition of the Addis
Facility during 1995.
Total revenues for Methanol and Derivatives decreased 21% as a result of a 19%
decrease in selling prices along with a 2% decrease in sales volumes. The
decrease in selling price was due to the circumstances described above.
Total revenues for Nitrogen Products increased 38% as a result of a 24%
increase in selling prices and an 11% increase in sales volumes. Generally
strong market conditions led to increased selling prices and volumes for ammonia
and urea during 1995.
Cost of Goods Sold
27
<PAGE>
Total cost of goods sold increased 16% to $516.5 million in 1995 from
$446.2 million in 1994. The increase resulted almost entirely from the
additional sales volumes attributed to the acquisition of the Addis Facility.
Expressed as a percentage of total revenues, cost of goods sold increased to 70%
of total revenues in 1995 from 68% in 1994.
Gross profit for PVC Polymers Products increased 32% as a result of the
significant increase in sales volumes.
Gross profit for Methanol and Derivatives decreased 27% from record
level in 1994. Gross margins for Nitrogen Products almost tripled due to
increased selling prices along with reduced natural gas cost.
Incentive Distribution to General Partner
During 1995, incentive distribution to the General Partner aggregated $29.8
million compared to $20.6 during 1994 reflecting overall higher quarterly
results. Each quarter's distributions during 1995 exceeded $0.3647 per unit, the
amount after which the General Partner receives 20% of the remaining
distribution as an incentive distribution.
Interest Expense
Interest expense during 1995 increased 17% to $19.1 million due to the debt
associated with the acquisition of the Addis Facility.
Other Expense, Including Minority Interest
Other (income) and expense decreased to $1.2 million in 1995 from $7.1 million
in 1994 resulting primarily from the absence of the $4.0 million accrual
incurred in 1994 relating to various environmental matters.
Extraordinary Loss on Early Extinguishment of Debt
The Partnership incurred a loss of $6.9 million, or 19 cents per Unit, in 1995
as a result of a prepayment premium on $150 million in debt retired during the
year. See Acquisition and Financing and Notes to Consolidated Financial
Statements, Note 3.
1994 VS. 1993
Total Revenues
Total revenues for 1994 increased $224.5 million or 52% to $657.8 million from
$433.3 million in 1993. This increase was the result of an $85.8 million
increase in revenues from PVC Polymers Products, a $116.3 million increase in
Methanol and Derivatives revenues and a $22.4 million increase in Nitrogen
Products revenues.
Total revenues for PVC Polymers Products increased 33% as a result of a 17%
increase in selling prices and a 14% increase in sales volumes. These increases
were due to increased demand for PVC resins resulting from strength in the
construction and automotive industries, as well as other industries.
28
<PAGE>
Total revenues for Methanol and Derivatives increased 97% as a result of a 76%
increase in selling prices and a 12% increase in sales volumes. These increases
were due to the worldwide tightness in the methanol market resulting from
limited growth in methanol supply and industry consolidations in recent years
and increased demand for methanol and formaldehyde in downstream applications
such as MTBE and adhesives.
Total revenues for Nitrogen Products increased 43% as a result of a 40%
increase in selling prices and a 2% increase in sales volumes. Ammonia selling
prices increased significantly fueled primarily by strong domestic demand and
the worldwide tightness in the ammonia market. Urea volumes and selling prices
showed modest improvements.
Cost of Goods Sold
Total cost of goods sold increased 12% to $446.2 million in 1994 from $397.8
million in 1993. The increase was a result of the increased volumes discussed
above and an aggregate raw material cost increase of approximately 4% comprised
of significant unit cost increases for chlorine and ethylene offset by reduced
natural gas costs. Expressed as a percentage of total revenues, cost of good
sold decreased to 68% of total revenues in 1994 from 92% in 1993, resulting in
greatly improved gross margins and net income for the Company.
Gross margins for PVC Polymers Products increased 182% as a result of the
improved selling prices and volumes discussed above, partially offset by
substantially higher chlorine and ethylene costs.
Gross margins for Methanol and Derivatives increased 552% as a result of the
increased volumes and significantly higher selling prices discussed above,
combined with reduced natural gas costs.
Gross margins for Nitrogen Products improved from a slightly negative position
in 1993 to a profitable position in 1994 on the strength of the ammonia selling
price increases and reduced natural gas costs discussed above.
Incentive Distribution to General Partner
An incentive distribution to the General Partner of $20.6 million was
generated in 1994 as a result of improved operating performance. The quarterly
distributions generated in 1993 did not result in incentive distribution to the
General Partner.
Other Expense, Including Minority Interest
The net expense for 1994 was $7.1 million compared to $1.6 million in 1993.
This increase was primarily due to a $4.0 million provision established in the
third quarter 1994 for potential expenses related to environmental matters. See
Notes to Consolidated Financial Statements, Note 8. The increase was also
partially due to the increase in the minority interest in consolidated
subsidiary due to the subsidiary's improved operating performance.
Net Income (Loss)
Net income was $146.4 million compared to a net loss of $1.4 million in 1993.
As discussed above, the primary reasons for the improved operating performance
were significant selling price increases in all product lines and
29
<PAGE>
volume improvements in PVC resins and methanol, partially offset by increased
raw material costs.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows from Operations. Cash provided by operations increased to $225.6
million for 1995, as compared to $164.2 million for 1994. Operating cash flows
were positively affected by a decrease of $30.6 million in receivables along
with an increase in payables, partially offset by a decrease in incentive
distribution payable. Cash provided by operations for the year ended December
31, 1994 increased to $164.2 million, as compared to $38.3 million for the prior
year. The increase was primarily attributable to an increase in net income and
increased accruals for the incentive payable and other liabilities, partially
offset by an increase in accounts receivable.
Cash Flows from Investing Activities. The Partnership paid $100.4 million for
the acquisition of a PVC manufacturing facility in 1995. See Acquisition and
Financing.
Capital expenditures for 1995 totaled $27.0 million. This amount included
$13.6 million for the expansion of facilities (such as the methanol expansion
project) and for other discretionary capital improvements. Non-discretionary
capital expenditures totaled $13.4 million for 1995, which amount included a
large number of relatively small projects.
Capital expenditures during 1994 totaled $22.6 million, $6.8 million of which
related to completion of the urea granulation and expansion project and other
discretionary capital projects and $15.8 million of which related to non-
discretionary projects, and environmental and safety related projects. Non-
discretionary capital expenditures vary from year to year with normal equipment
renovation requirements.
Cash Flows from Financing Activities. The Partnership makes quarterly
distributions to Unitholders and the General Partner of 100% of its Available
Cash. Available Cash means generally, with respect to any quarter, the sum of
all cash receipts of the Partnership plus net reductions to reserves established
in prior quarters, less all of its cash distributions and net additions to
reserves in such quarter. These reserves are retained to provide for the proper
conduct of the Partnership's business, to stabilize distributions of cash to
Unitholders and the General Partner and as necessary to comply with the terms of
any agreement or obligation of the Partnership. Cash distributions of $213.1
million were made during 1995 compared to $76.6 million in 1994 and $33.8
million in 1993.
As discussed under Item 1"Business" herein, there are various seasonality
factors affecting results of operations and, therefore, cash distributions. In
addition, the amount of Available Cash constituting Cash from Operations for any
period does not necessarily correlate directly with net income for such period
because various items and transactions affect net income and Available Cash
constituting Cash from Operations differently. For example, depreciation
reduces net income but does not affect Available Cash constituting Cash from
Operations, while changes in working capital items (including receivables,
accounts payable and other items) generally do not affect net income but do
affect such Available Cash. Moreover, as provided for in the Partnership
Agreements, certain reserves may be established which affect Available Cash
constituting Cash from Operations but do not affect
30
<PAGE>
cash balances in financial statements. Such reserves have generally been used
to set cash aside for interest payments, capital expenditures and other accrued
items.
Acquisition and Financing
On May 2, 1995, the Partnership, through the Operating Partnership, completed
the purchase of Occidental Chemical Corporation's Addis, Louisiana PVC
manufacturing facility and related assets. The Addis Facility has an annual
proven production capacity of 450 million pounds per year, which will increase
the Operating Partnership's stated annual capacity for PVC resin production by
approximately 50%. The cash purchase price for the Addis assets was $100.4
million.
On May 1, 1995, the Partnership issued $200 million aggregate principal amount
of senior unsecured notes (the "Senior Notes"). The net proceeds from this
offering were used to prepay $150 million aggregate principal amount of
outstanding notes plus a related prepayment premium of $6.9 million reflected as
an extraordinary loss in 1995, and accrued interest. The remaining proceeds
were used to fund a portion of the purchase price of the Addis Facility.
Liquidity
The Partnership expects to satisfy its cash requirements, including the
requirements of the Addis Facility, through internally generated cash and
borrowings. In connection with the acquisition of the Addis Facility, the
Partnership entered into a Revolving Credit Facility which provides a $100.0
million line of credit for capital expenditures (including the acquisition),
working capital and general partnership purposes. Borrowings under the
Revolving Credit Facility were $40.0 million at December 31, 1995. The amount
available under the facility reduces to $75.0 million on January 1, 1996, $50.0
million on January 1, 1997 and terminates December 31, 1997. The facility may
be extended for one year with the consent of the lenders. The Partnership has
terminated its previous $20.0 million credit facility.
The revolving credit agreement along with the Senior Notes contain a number of
financial and other covenants that management believes are customary in lending
transactions of these types.
Capital Expenditures
The Partnership currently believes that the level of annual base capital
expenditures over the next several years will be in the range of $20 to $25
million per year. Total capital expenditures for 1996 are anticipated to be
approximately $20 to $25 million. Future capital expenditures would vary
substantially if the Partnership is required to undertake corrective action or
incur other environment compliance costs in connection with the proceedings
discussed under Item 3 "Legal Proceedings."
Environmental Expenditures
Annual environmental capital expenditures for 1993-1995 ranged from $1.3 to
$3.6 million. The 1996 budget for environmental capital expenditures is
approximately $2.6 million, and is included in the budget of $20 to $25 million
discussed above.
Annual non-capital environmental expenditures for 1993-1995 ranged from $18.7
to $21.7 million. In connection with potential environmental matters,
31
<PAGE>
an additional provision of $4.0 million was reflected in the operating results
in 1994. The 1996 budget for non-capital environmental expenditures is
approximately $21.8 million. The Partnership's actual level of spending would
vary substantially if it is required to undertake corrective action or incur
other environmental compliance costs in connection with the proceedings
discussed under Item 3 "Legal Proceedings."
<TABLE>
<CAPTION>
Item 8. Financial Statements and Supplementary Data
- ------- -------------------------------------------
Sequential
Index to Financial Statements Page
- ----------------------------- ----------
<S> <C>
Report of Independent Accountants 43
Consolidated Statements of Operations for the years
ended December 31, 1995, 1994 and 1993 44
Consolidated Statements of Cash Flows for the years
ended December 31, 1995, 1994 and 1993 45
Consolidated Balance Sheets as of December 31, 1995
and 1994 46
Consolidated Statements of Changes in Partners'
Capital for the years ended December 31, 1995,
1994 and 1993 47
Notes to Consolidated Financial Statements 48-53
</TABLE>
Selected Quarterly Financial Data (Unaudited)
- ---------------------------------------------
(in thousands except per Unit data, which is net of 1% General Partner
interest)
<TABLE>
<CAPTION>
1995 Quarters
--------------------------------------
First Second Third Fourth
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues $214,806 $187,663 $186,672 $150,446
Gross Profit 106,315 58,184 39,899 18,662
Income before
extraordinary item 83,487 36,754 23,811 6,874
Net Income 83,487 29,842 23,811 6,874
Income per Unit before
extraordinary loss 2.25 0.99 0.64 0.19
Net Income
per Unit 2.25 0.80 0.64 0.19
1994 Quarters
--------------------------------------
First Second Third Fourth
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues $118,981 $149,671 $169,481 $219,619
Gross Profit 12,076 37,934 61,998 99,628
Net Income 3,628 25,264 40,646 76,867
Net Income per Unit 0.10 0.68 1.09 2.07
</TABLE>
32
<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting
- ------- -----------------------------------------------------------
and Financial Disclosure
------------------------
No Form 8-K was issued by the Company for the two most recent years ended
December 31, 1995 reporting a change in or disagreement with accountants.
PART III
Item 10. Directors and Executive Officers of the Registrant
- -------- --------------------------------------------------
The Partnership is a limited partnership (of which BCPM is the General Partner)
and has no directors or officers. The directors, officers and employees of the
General Partner perform management and non-supervisory functions for the
Partnership.
Management Organization - Joseph M. Saggese is Chairman, President and Chief
Executive Officer of BCPM. He is also an Executive Vice President of Borden and
President and Chief Executive Officer of Borden Chemicals, Inc. John L. Russ III
and Wayne P. Leonard, who report directly to Mr. Saggese, are responsible for
Partnership marketing and manufacturing operations, respectively.
Independent Committee - BCPM is required to maintain an Independent Committee
of its Board of Directors, which shall be composed of at least three directors,
each of whom is neither an officer, employee or director of Borden nor an
officer or employee of BCPM. Certain actions require special approval from the
Independent Committee. Such actions include an expansion of the scope of
business of the Partnership, the making of material capital expenditures, the
material curtailment of operations of any plant, the material expansion of
capacity of any plant, and the amendment of or entry into by the Partnership of
any agreement with Borden. The members of the Independent Committee are Edward
H. Jennings, and George W. Koch. Daniel M. Galbreath was a member of the
Independent Committee until he passed away in September 1995. On March 5, 1996,
Dr. E. Linn Draper, Jr. was appointed to this vacancy.
As sole stockholder of BCPM, Borden elects directors of BCPM on an annual
basis. Set forth below is certain information concerning the directors and
officers of BCPM.
<TABLE>
<CAPTION>
Served in
Age on Present
Position and Office Dec. 31, Position
Name with General Partner 1995 Since
- ---- -------------------- -------- ---------
<S> <C> <C> <C>
Joseph M. Saggese Director, Chairman, President
and Chief Executive Officer 64 1990
Edward H. Jennings Director 58 1989
George W. Koch Director 69 1987
Dr. E. Linn
Draper, Jr. Director 53 1996
William H. Carter Director 42 1995
Joan V. Stapleton Director and Vice President-
Strategy 50 1987
*Wayne P. Leonard Executive Vice President -
Operations 54 1987
</TABLE>
33
<PAGE>
<TABLE>
<S> <C> <C> <C>
*John L. Russ III Executive Vice President-Sales and
Marketing 55 1987
*James O. Stevning Vice President, Chief Financial
Officer and Treasurer 36 1996
Lawrence L. Dieker Vice President, Secretary,
and General Counsel 57 1987
*John R. Beaver Controller and Principal
Accounting Officer 34 1996
</TABLE>
*Mr. Leonard, Mr. Russ, Mr. Stevning and Mr. Beaver were all elected to their
current positions effective January 23, 1996. However, Mr. Leonard and Mr. Russ
have served in substantially the same capacity since 1987.
Joseph M. Saggese has been Chairman of the Board of Directors, President and
Chief Executive Officer of BCPM since July 1990. He is also Executive Vice
President of Borden and President and Chief Executive Officer of Borden
Chemical, Inc., the successor to a major portion of the former PIP Division of
Borden and its predecessor division, (collectively with the PIP Division the
"Chemicals Division"). Positions he has held since July 1990. From January 1989
to August 1990 he served as Senior Group Vice President of the Chemicals
Division. He served as a Senior Vice President of the Chemicals Division from
October 1985 to January 1989.
Edward H. Jennings is a director of BCPM. He is also a professor and President
Emeritus of The Ohio State University. He served as president of The Ohio State
University from 1981 to 1990. Mr. Jennings is also a director of Super Foods,
Inc., a wholesale grocer, Lancaster Colony, Inc., a manufacturer and marketer of
food, automotive and glass products, and Hymedia, Inc., a medical products
company.
George W. Koch is a director of BCPM. He is Of Counsel in the law firm of
Kirkpatrick & Lockhart since January 1992. Prior to that he was a partner of
Kirkpatrick & Lockhart since April 1990. From 1966 to April 1990, he was
President and Chief Executive Officer of the Grocery Manufacturers of America,
Inc., a non-profit organization of the leading grocery manufacturers in the
United States. Mr. Koch is also a director of McCormick & Co., a food products
company.
Dr. E. Linn Draper, Jr. is a director of BCPM. He is also Chairman, President
and Chief Executive Officer of American Electric Power Company, Inc. and
American Electric Power Service Corporation, positions he has held since 1992.
Dr. Draper is also President of Ohio Valley Electric Corporation. From 1987 to
1992, he was Chairman, President and Chief Executive Officer of Gulf States
Utility Company. Dr. Draper is currently a director of VECTRA Technologies,
Inc., the Nuclear Energy Institute and the Institute of Nuclear Power Operation.
William H. Carter is a director of BCPM. He is also Executive Vice President
and Chief Financial Officer of Borden, a position he has held since April 1995.
Prior to joining Borden, he was a partner of Price Waterhouse LLP.
Joan V. Stapleton is a director and a Vice President of BCPM. Prior to that,
she was Vice President of the Chemicals Division, a position she had held since
1983. She has served in other capacities with the Borden PIP
34
<PAGE>
Division since 1972, including assistant controller, manager of business
planning/commercial development, and director of planning and development.
Wayne P. Leonard is Executive Vice President of BCPM. From 1984 to 1987, he
was Director of Manufacturing, Basic Chemicals Unit of the Chemicals Division.
Prior thereto, he was manager of the vinyl products sector of the Basic
Chemicals Unit of the Chemicals Division. He has served in the chemical
business thirty years and at all such times he has worked at the Geismar
complex.
John L. Russ III is Executive Vice President of BCPM. From 1986 to 1987, he
was General manager, Thermoplastics Units and Petrochemical Chemicals Division.
He joined Borden in 1982 as director of sales and marketing for the
Thermoplastics Unit of the Chemicals Division. He has served in the PVC resin
business in sales and marketing capacities for over thirty years.
James O. Stevning is Vice President, Chief Financial Officer and Treasurer of
BCPM. From March 1994 until January 1996, he was Controller and Principal
Accounting Officer of BCPM. Prior to that, he had been a Group Controller and an
Assistant Controller of the Chemicals Division.
Lawrence L. Dieker is Vice President, General Counsel and Secretary of BCPM.
He is also a Vice President and General Counsel of Borden Chemical, Inc., a
position he has held since January 1995. He was previously Assistant General
Counsel of Borden, a position he held from 1982 to January 1995.
John R. Beaver joined BCPM in November 1995 and was elected Controller and
Principal Accounting Officer in January 1996. Prior thereto, he was Manager of
Financial Reporting for Sterling Chemicals, Inc. and has served in the chemical
business in various financial and accounting capacities for fifteen years.
Item 11. Executive Compensation
- -------- ----------------------
The Partnership has no directors or officers. The directors and officers of
BCPM receive no direct compensation from the Partnership for services to the
Partnership. The Partnership reimburses BCPM for all direct and indirect costs
incurred in managing the Partnership.
During 1995 the three independent directors of BCPM received a retainer of
$15,000 per year plus a fee of $1,000 for each BCPM Board meeting attended. The
Board functions in part through its Independent and Audit Committees. The three
non-employee members of each of these committees are paid a meeting fee of $700
for each committee meeting attended. The committee chairman is also paid an
additional $100 for each committee meeting attended in that capacity. During
1995, the Board met five times, and the Independent and Audit Committees met
jointly four times.
The Board of Directors of BCPM has approved a long-term incentive plan for
management and employees of BCPM (and employees of Borden who provide support to
or perform services for BCPM). The plan is intended to provide incentives to the
management and employees of BCPM (and such employees of Borden) to enhance the
market value of the Units. Under the plan, awards of "phantom" appreciation
rights in the Holding Company are made to selected BCPM or Borden officers or
employees on the basis of or in relation to services performed, directly or
indirectly, for the benefit of the Company. Subject to certain restrictions,
such grantees would be entitled to exercise all or any portion of the phantom
appreciation rights granted to them. Upon exercise of any such rights, the
grantee would be
35
<PAGE>
entitled to receive from BCPM or Borden, an amount in cash calculated to award
the grantee for any actual appreciation in the market value of the Units in the
Holding Company and actual cash distributions made by the Holding Company in
respect of the Units. The benefits under the plan may be in addition to, and not
in lieu of, the benefits provided to management and employees of BCPM (and such
employees of Borden) under existing plans or employee benefit arrangements. BCPM
(or Borden, on behalf of BCPM) will be reimbursed by the Company for all
payments made or expenses incurred by BCPM (or Borden, on behalf of BCPM) under
the plan. Under the plan, an initial grant of approximately 61,500 phantom
appreciation rights has been made.
Item 12. Security Ownership of Certain Beneficial Owners and
- -------- ---------------------------------------------------
Management
----------
To the knowledge of BCPM, no person is the beneficial owner of more than five
percent of the Partnership's Units. As of February 9, 1996 the beneficial
ownership of Common Units by all directors and officers of BCPM as a group was
approximately 36,000 Units, which represents less than one percent of the total
Units outstanding.
Item 13. Certain Relationships and Related Transactions
- -------- ----------------------------------------------
The Partnership is managed by BCPM pursuant to the Amended and Restated
Agreement of Limited Partnership (the "Agreement") dated December 15, 1988.
Under the Agreement BCPM is entitled to reimbursement of certain costs of
managing the Partnership. These costs include compensation and benefits payable
to officers and employees of BCPM, payroll taxes, general and administrative
costs and legal and professional fees. Note 3 of Notes to Consolidated
Financial Statements of the Partnership contained on page 35 of this Form 10-K
Annual Report contains information regarding relationships and related
transactions.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports
- -------- ----------------------------------------------------
on Form 8-K
-----------
(a) 1. Financial Statements
--------------------
a. The Consolidated Financial Statements, together with the report
thereon of Price Waterhouse LLP dated January 23, 1996 are
contained on pages 44 through 54 of this Form 10-K Annual Report.
2. Financial Statement Schedules
-----------------------------
None required.
3. Exhibits
--------
2.1/(7)/ Asset Transfer Agreement dated as of August 12, 1994 and
amended as of January 10, 1995, and March 16, 1995, between the
Borden Chemicals and Plastics Operating Limited Partnership
(the "Operating
36
<PAGE>
Partnership") and Occidental Chemical Corporation ("OxyChem")
and the forms of VCM Supply Agreement and PVC Tolling Agreement
annexed thereto
2.1.1/(7)/ Third Amendment of Asset Transfer Agreement dated as of May 2,
1995 between the Operating Partnership and OxyChem
3.0/(8)/ Restated Certificate of Incorporation of BCPM
3.2/(2)/ By-Laws of BCPM
3.3/(1)/ Amended and Restated Certificate of Limited Partnership of the
Partnership
3.4/(1)/ Amended and Restated Certificate of Limited Partnership of the
Operating Partnership
3.5/(1)/ Amended and Restated Agreement of Limited Partnership of the
Partnership dated as of December 15, 1988
3.6/(3)/ Amended and Restated Agreement of Limited Partnership of the
Operating Partnership, dated as of November 30, 1987
4.1/(6)/ Form of Depositary Receipt for Common Units
10.1 Indenture dated as of May 1, 1995 of 9 1/2 Notes due 2005
between the Operating Partnership and The Chase Manhattan Bank
(National Association), as Trustee
10.4 Revolving Credit Agreement, dated as of May 2, 1995, between
the Operating Partnership and Credit Suisse, as Agent and as a
lender and Other Lenders
10.5/(3)/ Service Agreement, dated as of November 30, 1987, between
Borden and the Operating Partnership
10.6/(3)/ Intercompany Agreement, dated as of November 30, 1987, among
Borden, BCPM, the Partnership and the Operating Partnership
10.7/(1)/ Borden and BCPM Coverant Agreement, dated as of December 15,
1988, among Borden and the Partnership
10.8/(1)/ Ethylene Dichloride/Vinyl Chloride Monomer Tolling Agreement,
dated as of July 19, 1988, between the Operating Partnership
and Vulcan Chemicals, a division of Vulcan Materials Company
10.9/(3)/ PVC Purchase Agreement, dated as of November 30, 1987, between
Borden and the Operating Partnership
37
<PAGE>
10.10/(3)/ Ammonia Purchase Agreement, dated as of November 30, 1987,
between Borden and the Operating Partnership
10.10.1/(1)/ Amendment Agreement No. 1 to Ammonia Purchase Agreement, dated
as of December 15, 1988, between Borden and the Operating
Partnership
10.11/(3)/ Urea Purchase Agreement, dated as of November 30, 1987,
between Borden and the Operating Partnership
10.11.1/(1)/ Amendment Agreement No. 1 to Urea Purchase Agreement, dated as
of December 15, 1988, between Borden and the Operating
Partnership
10.12/(3)/ Methanol Purchase Agreement, dated as of November 30, 1987,
between Borden and the Operating Partnership
10.12.1/(1)/ Amendment Agreement No. 1 to Methanol Purchase Agreement, dated
as of December 15, 1988, between Borden and the Operating
Partnership
10.13/(3)/ Formaldehyde Processing Agreement, dated as of November 30,
1987, between Borden and the Operating Partnership
10.13.1/(1)/ Amendment Agreement No. 1 to Formaldehyde Processing Agreement,
dated as of December 15, 1988 between Borden and the Operating
Partnership
10.14/(3)/ Urea-Formaldehyde Concentrate Processing Agreement, dated as of
November 30, 1987, between Borden and the Operating Partnership
10.14.1/(1)/ Amendment Agreement No. 1 to Urea-Formaldehyde Concentrate
Processing Agreement, dated as of December 15, 1988, between
Borden and the Operating Partnership
10.15/(3)/ Use of Name and Trademark License Agreement, dated as of
November 30, 1987, among Borden, the Partnership and the
Operating Partnership
10.16/(3)/ Patent and Know-How Agreement, dated November 30, 1987, among
Borden, the Partnership and the Operating Partnership
10.17/(3)/ Environmental Indemnity Agreement, dated as of November 30,
1987, among the Partnership, the Operating Partnership and
Borden
10.18/(3)/ Lease Agreement, dated as of November 30, 1987, between the
Operating Partnership and Borden
10.19/(2)/ Indenture, dated as of June 1, 1962, among Monochem, Inc.,
Borden and Uniroyal Chemical Company, Inc. (as successor to
Uniroyal Inc., which was a successor to United States Rubber
Company)
38
<PAGE>
10.20/(2)/ Amendment to Indenture, dated as of December 30, 1981, among
Monochem, Inc., Borden and Uniroyal Chemical Company, Inc. (as
successor to Uniroyal, Inc.)
10.21/(2)/ Restructuring Agreement, dated as of December 9, 1980, among
Borden, Uniroyal Chemical Company, Inc. (as successor to
Uniroyal, Inc.) and Monochem, Inc.
10.22/(2)/ Amendment to Restructuring Agreement, dated as of December 31,
1981, among Borden, Uniroyal Chemical Company, Inc. (as
successor to Uniroyal, Inc.) and Monochem, Inc.
10.23/(2)/ Restated Basic Agreement, dated as of January 1, 1982, between
Borden and Uniroyal Chemical Company, Inc. (as successor to
Uniroyal, Inc.)
10.24/(2)/ Restated Operating Agreement, dated as of January 1, 1982,
among Borden, Uniroyal Chemical Company, Inc. (as successor to
Uniroyal, Inc.) and Monochem, Inc.
10.25/(2)/ Restated Agreement to Amend Operating Agreement, dated as of
January 1, 1983, among Borden, Uniroyal Chemical Company, Inc.
(as successor to Uniroyal, Inc.) and Monochem, Inc.
10.26/(2)/ Operating Agreement for Oxygen and Acetylene Plants, dated
April 1, 1982, between Borden and BASF Wyandotte Corporation
(subsequently named BASF Corporation) ("BASF")
10.27/(2)/ Amendment to Operating Agreement for Oxygen and Acetylene
Plants, dated August 22, 1984, between Borden and BASF
10.28/(2)/ Second Amendment to Operating Agreement for Oxygen and
Acetylene Plants, dated December 14, 1984, between Borden and
BASF
10.29/(2)/ Third Amendment to Operating Agreement for Oxygen and Acetylene
Plants, dated as of October 2, 1985, between Borden and BASF
10.30/(2)/ Fourth Amendment to Operating Agreement, dated August 25, 1987,
between Borden and BASF
10.31/(2)/ Fifth Amendment to Operating Agreement, dated November 10,
1987, between Borden and BASF
10.32/(1)/ Sixth Amendment to Operating Agreement, dated February 11,
1988, between the Operating Partnership and BASF
10.33/(2)/ Third Purchase Agreement, dated August 25, 1987, between
Borden and BASF
39
<PAGE>
10.34/(2)/ Operating Agreement, dated December 14, 1984 among Borden,
BASF, Liquid Air Corporation ("LAC") and LAI Properties, Inc.
("LAI")
10.35/(2)/ Amendment No. 1 to Operating Agreement, dated October 2, 1985,
among Borden, BASF, LAC and LAI
10.36/(1)/ Amendment No. 2 to the Operating Agreement, dated February 11,
1988, among Borden, the Operating Partnership, BASF, LAC and
LAI
10.37/(2)/ Second Operating Agreement, dated October 2, 1985, among
Borden, BASF, LAC and LAI
10.38/(1)/ Restated Second Operating Agreement, dated February 11, 1988
among Borden, the Operating Partnership, BASF, LAC and LAI
10.39/(1)/ Acetylene Sales Agreement No. 1, dated February 11, 1988,
between the Operating Partnership and BASF
10.40/(1)/ Acetylene Sales Agreement No. 2, dated February 11, 1988,
between the Operating Partnership and BASF
10.41/(3)/ Railroad Car Master Sublease Agreement, dated as of November
30, 1987, between Borden and the Operating Partnership,
relating to ACF Industries, Incorporated Master Service
Contract
10.42/(3)/ Railroad Car Master Sublease Agreement, dated as of November
30, 1987, between Borden and the Operating Partnership,
relating to Pullman Leasing Company Lease of Railroad Equipment
10.43/(3)/ Railroad Car Master Sublease Agreement, dated as of November
30, 1987, between Borden and the Operating Partnership,
relating to Union Tank Car Company Service Agreement
10.44/(3)/ Railroad Car Master Sublease Agreement, dated as of November
30, 1987, between Borden and the Operating Partnership,
relating to General Electric Railroad Service Corporation Car
Leasing Agreement
10.45/(3)/ Railroad Car Master Sublease Agreement, dated as of November
30, 1987, between Borden and the Operating Partnership,
relating to General American Transportation Corporation Tank
Car Service Contract
10.46/(3)/ Railroad Car Sublease Agreement, dated as of November 30, 1987,
between Borden and the Operating Partnership, relating to EHF
Leasing Corporation Railroad Equipment Lease
10.47/(3)/ Railroad Car Sublease Agreement, dated as of November 30, 1987,
between Borden and the Operating
40
<PAGE>
Partnership, relating to Bank of New York Lease of Railroad
Equipment (as amended)
10.48/(2)/ Form of Rail Service Agreement between Borden and the Operating
Partnership
10.49/(4)/ Form of Letter Agreement with Directors
10.50/(3)/ Illiopolis Indemnity Agreement
10.51/(3)/ 1995 Long-Term Incentive Plan
__________________
/(1)/ Filed as an exhibit to the joint Registration Statement on Form S-1 and
Form S-3 of the Partnership, Borden, Inc. and Borden Delaware Holdings,
Inc. (File No. 33-25371) and is incorporated herein by reference in this
Form 10-K Annual Report.
/(2)/ Filed as an exhibit to the Partnership's Registration Statement on Form
S-1 (File No. 33-17057) and is incorporated herein by reference in this
Form 10-K Annual Report.
/(3)/ Filed as an exhibit to the Partnership's Registration Statement on Form
S-1 (File No. 33-18938) and is incorporated herein by reference in this
Form 10-K Annual Report.
/(4)/ Filed as an exhibit to the Registrant's 1989 Form 10-K Annual Report and
is incorporated herein by reference in this Form 10-K Annual Report.
/(5)/ Exhibits 10.8, 10.32, 10.36, 10.37 and 10.38, which were previously filed,
contain information which has been deleted pursuant to an application for
confidential treatment pursuant to Rule 406 of the Securities Act of 1933,
with respect to which an order has been granted by the Commission.
/(6)/ Filed as an exhibit to the Registrant's 1992 Form 10-K Annual Report and
is incorporated herein by reference in this Form 10-K Annual Report.
/(7)/ Filed as an exhibit to Borden Chemicals and Plastics Limited Partnership's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1995.
Confidential treatment has been granted as to certain provisions.
/(8)/ Filed as an exhibit to Borden Chemicals and Plastics Limited Partnership's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1995.
(b) Reports on Form 8-K
-------------------
No reports on Form 8-K were filed by the Registrant during the fourth
quarter 1995.
41
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
BORDEN CHEMICALS AND PLASTICS
LIMITED PARTNERSHIP
By BCP Management, Inc.,
General Partner
By /s/ James O. Stevning
----------------------------
James O. Stevning
Vice President, Chief Financial
Officer and Treasurer
By /s/ John R. Beaver
---------------------------
John R. Beaver
Controller and Principal
Accounting Officer
Date: February 9, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities (with BCP Management, Inc., General Partner)
indicated, on the date set forth above.
Signature Title
--------- -----
/s/ Joseph M. Saggese Director, Chairman, President
- ----------------------------
Joseph M. Saggese and Chief Executive Officer
/s/ Edward H. Jennings Director
- ----------------------------
Edward H. Jennings
/s/ George W. Koch Director
- ----------------------------
George W. Koch
/s/ Joan V. Stapleton Director and Vice President
- ----------------------------
Joan V. Stapleton
/s/ William H. Carter Director
- ---------------------------
William H. Carter
42
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE PARTNERS OF BORDEN CHEMICALS
AND PLASTICS LIMITED PARTNERSHIP
In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations, of changes in partners' capital
and of cash flows present fairly, in all material respects, the financial
position of Borden Chemicals and Plastics Limited Partnership at December 31,
1995 and 1994, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 1995, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Partnership's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Columbus, Ohio
January 23, 1996
43
<PAGE>
BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER UNIT DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
REVENUES
Net trade sales $608,070 $514,499 $349,200
Net affiliated sales 131,517 143,253 84,097
-------- -------- --------
Total revenues 739,587 657,752 433,297
-------- -------- --------
EXPENSES
Cost of goods sold
Trade 424,492 352,700 321,966
Affiliated 92,035 93,516 75,805
Marketing, general & administrative expense 22,127 21,092 18,993
Interest expense 19,066 16,342 16,356
General Partner incentive 29,783 20,616 0
Other expense,
including minority interest 1,158 7,081 1,612
-------- -------- --------
Total expenses 588,661 511,347 434,732
-------- -------- --------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM 150,926 146,405 (1,435)
Extraordinary loss on early extinguish-
ment of debt (6,912) 0 0
-------- -------- --------
NET INCOME (LOSS) 144,014 146,405 (1,435)
Less 1% General Partner interest (1,440) (1,464) 14
-------- -------- --------
NET INCOME (LOSS) APPLICABLE TO LIMITED
PARTNERS' INTEREST $142,574 $144,941 $ (1,421)
======== ======== ========
PER UNIT DATA, NET OF 1% GENERAL PARTNER
INTEREST
Income (loss) per unit before extra-
ordinary item $ 4.07 $3.94 $(0.04)
Extraordinary loss per Unit (0.19) 0 0
-------- -------- --------
Net income (loss) per Unit $ 3.88 $3.94 $(0.04)
======== ======== ========
Average number of Units outstanding
during the year 36,750 36,750 36,750
======== ======== ========
Cash distributions declared per Unit $ 4.66 $ 3.52 $ .78
======== ======== ========
</TABLE>
See notes to consolidated financial statements
44
<PAGE>
BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------
1995 1994 1993
---------- ---------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATIONS
Net income (loss) $ 144,014 $ 146,405 $ (1,435)
Adjustments to reconcile net income
to net cash provided by operating
activities:
Extraordinary loss on early extinguish-
ment of debt 6,912 0 0
Depreciation 49,198 44,305 42,946
Decrease (increase) in receivables 30,641 (54,374) (11,821)
(Increase) decrease in inventories (10,612) 1,126 (5,418)
Increase in payables 14,186 6,298 13,698
(Decrease) increase in incentive
distribution payable (9,955) 11,865 0
Increase in accrued interest 1,417 0 0
Other, net ( 213) 8,583 517
--------- --------- --------
225,588 164,208 38,487
--------- --------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid for acquisition (100,376) 0 0
Capital expenditures ( 27,085) ( 22,578) (15,041)
--------- --------- --------
(127,461) ( 22,578) (15,041)
--------- --------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from issuance of long-
term debt 200,000 0 0
Proceeds from short-term borrowing (net) 40,000 0 0
Payment of debt issuance costs (9,815) 0 0
Repayment of long-term debt, including
prepayment penalty (156,912) 0 0
Cash distributions paid (213,105) (76,558) (33,781)
--------- --------- --------
(139,832) (76,558) (33,781)
--------- --------- --------
(Decrease) increase in cash and equivalents (41,705) 65,072 (10,335)
Cash and equivalents at beginning of year 74,126 9,054 19,389
--------- --------- --------
Cash and equivalents at end of year $ 32,421 $ 74,126 $ 9,054
========= ========= ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
Interest paid during the year $ 17,649 $ 16,342 $ 16,356
========= ========= ========
</TABLE>
See notes to consolidated financial statements
45
<PAGE>
BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1995 1994
------------ ------------
<S> <C> <C>
ASSETS
Cash and equivalents $ 32,421 $ 74,126
Accounts receivable (less allowance for
doubtful accounts of $457 and $627,
respectively)
Trade 75,788 84,330
Affiliated 15,202 37,301
Inventories
Finished and in process goods 33,418 19,591
Raw materials and supplies 9,654 8,540
Other current assets 3,541 2,831
---------- ---------
Total current assets 170,024 226,719
---------- ---------
Investments in and advances to
affiliated companies 4,437 3,772
Other assets 39,415 29,094
---------- ---------
43,852 32,866
---------- ---------
Land 14,106 12,051
Buildings 44,216 37,931
Machinery and equipment 633,484 523,517
---------- ---------
691,806 573,499
Less accumulated depreciation ( 337,175) (290,180)
---------- ---------
Total assets 354,631 283,319
---------- ---------
$ 568,507 $ 542,904
========== =========
LIABILITIES AND
PARTNERS' CAPITAL
Accounts and drafts payable $ 64,892 $ 50,706
Cash distributions payable 21,179 60,999
Short-term borrowing 40,000 0
Current portion of long-term debt 0 30,000
Incentive distribution payable to
General Partner 1,910 11,865
Accrued interest 3,262 1,845
Other accrued liabilities 13,468 14,330
---------- ---------
Total current liabilities 144,711 169,745
Long-term debt 200,000 120,000
Other liabilities 5,677 5,471
Minority interest in consolidated subsidiary 1,655 1,953
---------- ---------
Total liabilities 352,043 297,169
---------- ---------
Commitments and contingencies (See Note 8)
Partners' capital
Limited Partners 215,762 244,443
General Partner 702 1,292
---------- ---------
Total partners' capital 216,464 245,735
---------- ---------
$ 568,507 $ 542,904
========== =========
</TABLE>
See notes to consolidated financial statements
46
<PAGE>
BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
(IN THOUSANDS)
<TABLE>
<CAPTION>
PREFERENCES COMMON GENERAL
UNITHOLDERS UNITHOLDERS PARTNER TOTAL
----------- ----------- ------- -----
<S> <C> <C> <C> <C>
Balances at December 31, 1992 $ 210,923 $ 48,025 $ 1,647 $ 260,595
Combination of Preference and (210,923) 210,923
Common units
Net loss (1,421) (14) (1,435)
Cash distributions declared (28,665) (290) (28,955)
--------- --------- ------- ---------
Balances at December 31, 1993 0 228,862 1,343 230,205
Net income 144,941 1,464 146,405
Cash distributions declared (129,360) (1,515) (130,875)
--------- --------- ------- ---------
Balances at December 31, 1994 0 244,443 1,292 245,735
Net income 142,574 1,440 144,014
Cash distributions declared (171,255) (2,030) (173,285)
--------- --------- ------- ---------
Balances at December 31, 1995 $ 0 $ 215,762 $ 702 $ 216,464
========= ========= ======= =========
</TABLE>
See notes to consolidated financial statements.
47
<PAGE>
BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP
-------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(In thousands except Unit and per Unit data)
1. ORGANIZATION
Borden Chemicals and Plastics Limited Partnership (the "Partnership"), a
Delaware limited partnership, was formed in 1987 when the Partnership, through
its subsidiary operating partnership, acquired the basic chemicals and polyvinyl
chloride ("PVC") resins operations of Borden, Inc. ("Borden"). The operations
are comprised of highly integrated plants in Geismar, Louisiana, which produce
basic petrochemical products, PVC resins and industrial gases and a PVC resins
plant located in Illiopolis, Illinois. In 1995, the Partnership, through its
subsidiary operating partnership completed the purchase of a PVC manufacturing
facility in Addis, Louisiana (the "Addis Facility"). See Acquisition and
Financing Note 3. The Partnership conducts its activities through Borden
Chemicals and Plastics Operating Limited Partnership (the "Operating
Partnership"). The Partnership, as the sole limited partner, owns a 98.9899%
interest and BCP Management, Inc. ("BCPM"), a Delaware corporation and wholly-
owned subsidiary of Borden, owns a 1.0101% interest as the sole general partner
("General Partner") in the Operating Partnership. The General Partner's interest
in the Operating Partnership is reflected in the accompanying consolidated
financial statements as minority interest. BCPM also owns a 1% general partner
interest in the partnership, resulting in an aggregate 2% interest in the
partnerships.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies summarized below are in conformity with
generally accepted accounting principles; however, this is not the basis for
reporting taxable income to Unitholders. The preparation of financial statements
in conformity with generally accepted accounting principles require the use of
management's estimates.
Principles of Consolidation - The consolidated financial statements include
the accounts of the Partnership and the Operating Partnership after elimination
of interpartnership accounts and transactions.
Revenues - Sales and related cost of sales are recognized upon shipment of
products. Net trade and net affiliated sales are net of sales discounts and
product returns and allowances.
Cash Equivalents - The Partnership considers all highly liquid investments
purchased with an original maturity of three months or less to be cash
equivalents.
Inventories - Inventories are stated at the lower of cost or market.
Cost is determined using the average cost and first-in, first-out methods.
Investments in and advances to affiliated companies - The Partnership's
proportionate ownership of a joint venture that provides utilities to the
Geismar complex is accounted for by the equity method. Utilities provided by the
joint venture are allocated to joint venture partners at cost. The cost of the
Partnership's proportionate share of utilities is included in cost of goods
sold.
48
<PAGE>
Other Assets - Included in Other Assets are spare parts totalling $22,182 and
$19,643 at December 31, 1995 and 1994, respectively. Debt issuance costs are
capitalized and are amortized over the term of the associated debt or credit
agreement.
Property and Equipment - The amount of the purchase price originally
allocated by the Partnership at its formation to land, buildings, and machinery
and equipment was based upon their relative fair values. Expenditures made
subsequent to the formation of the Partnership have been capitalized at cost
except that the purchase price for Addis assets (Note 3) have been allocated to
properties based upon their relative fair values.
Depreciation is recorded on the straight-line basis by charges to costs and
expenses at rates based on the estimated useful lives of the proper ties
(average rates for buildings - 4%; machinery and equipment - 8%).
Major renewals and betterments are capitalized. Maintenance, repairs and
minor renewals totaling $34,298 in 1995, $32,144 in 1994, and $29,905 in 1993
were expensed as incurred. When properties are retired or otherwise disposed of,
the related cost and accumulated depreciation are removed from the accounts.
Income Taxes - The Partnership is not a separate taxable entity for Federal
and state and local income tax purposes. Accordingly, any taxable income or
loss, which may vary substantially from income or loss reported under generally
accepted accounting principles, is included in the tax returns of the individual
partners. Under current tax law the Partnership will be treated as a partnership
until December 31, 1997; thereafter, it will be taxed as a corporation.
Effective January 1, 1993 the Partnership adopted statement of Financial
Accounting Standard ("SFAS") No. 109 "Accounting for Income Taxes." The adoption
of this statement did not have a material effect on 1993 results. Because of
available tax planning strategies which management intends to implement to "step
up" the tax basis of partnership assets to the generally higher partners' basis
in their units, no provision for deferred income taxes is required for the
future reversal of temporary differences between the book and tax basis of
partnership assets.
3. ACQUISITION AND FINANCING
On May 2, 1995, the Partnership, through the Operating Partnership, completed
the purchase of Occidental Chemical Corporation's Addis, Louisiana PVC
manufacturing facility and related assets. The cash purchase price for the Addis
assets was $100,400.
On May 1, 1995, the Operating Partnership issued $200,000 aggregate principal
amount of senior unsecured notes (the "Senior Notes"). The proceeds from this
offering, net of $9,815 of debt issuance costs, were used to prepay $150,000
aggregate principal amount of outstanding notes plus a related $6,912 prepayment
premium and accrued interest. The remaining proceeds were used to fund a portion
of the purchase price of the Addis Facility.
A $100,000 revolving credit facility was obtained during the second quarter
of 1995. Borrowing under this facility was $40,000 at December 31, 1995.
49
<PAGE>
The following financial information presents the proforma effect of the
acquisition and financing transactions discussed above on the historical results
of operations for the twelve months ended December 31, 1995 and 1994,
respectively, as if the transactions occurred on January 1, 1994.
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED
-----------------------------------
DECEMBER 31, 1995 DECEMBER 31, 1994
----------------- -----------------
<S> <C> <C>
Total revenues $794,393 $795,075
Income before extraordinary item:
Income $155,168 $149,606
Income per Unit, net of 1% General $ 4.18 $ 4.03
Partner interest
</TABLE>
4. RELATED PARTY TRANSACTIONS
The Partnership is managed by the General Partner. Under certain agreements,
the General Partner and Borden are entitled to reimbursement of costs incurred
relating to the business activities of the Partnership. The Partnership is
engaged in various transactions with Borden and its affiliates in the ordinary
course of business. Such transactions include, among other things, the sharing
of certain general and administrative costs, sales of products to and purchases
of raw materials from Borden or its affiliates, and usage of rail cars owned or
leased by Borden.
The employees of BCPM (together with employees of Borden providing support to
or services for BCPM) operate the Partnership and participate in various Borden
benefit plans including pension, retirement savings, and health and life
insurance. Employee benefit plan expenses are determined by Borden's actuary
based on annual employee census data. The Partnership is charged for general
insurance expense, which includes liability and property damage insurance, based
on calculations made by Borden's Risk Management Department. Under its risk
retention program, Borden maintains deductibles of $2,500, $500 and $500 per
occurrence for property and related damages at the Geismar, Illiopolis and Addis
facilities, respectively, and deductibles ranging from $1,000 to $3,000 per
event for liability insurance. The Partnership has first dollar liability
insurance coverage from Borden. The cost of Borden's corporate information
services and corporate staff department services is allocated to the Partnership
based on usage of resources such as personnel and data processing equipment.
The Partnership has no direct liability for postretirement benefits since the
Partnership does not directly employ any of the persons responsible for managing
and operating the Partnership, but instead reimburses Borden (on its own or
BCPM's behalf) for their services. As a result of Borden's adoption of SFAS No.
106 "Employers' Accounting for Postretirement Benefits Other Than Pensions",
1995 and 1994 charges to the Partnership for such services were actuarially
determined. The Partnership expensed the full amount of such charges but only
reimbursed Borden (on its own or BCPM's behalf) for actual postretirement
benefits paid. The difference between cash payments to Borden (on its own or
BCPM's behalf) and postretirement expense is accrued on the Partnership's books.
50
<PAGE>
Benefit plan and general insurance expenses, and allocation for usage of
resources such as personnel and data processing equipment were $11,628 in 1995,
$9,991 in 1994, $9,506 in 1993. Management believes the allocation methods used
are reasonable. Although no specific analysis has been undertaken, if the
Partnership were to directly provide such services and resources at the same
cost as Borden, management believes the allocations would be indicative of costs
that would be incurred on a stand-alone basis.
The Partnership sells methanol, ammonia, urea and PVC resins to, and
processes formaldehyde and urea-formaldehyde concentrate for, Borden and its
affiliates at prices which approximate market.
The Partnership entered into long-term agreements with Borden which require
Borden to purchase from the Partnership at least 85% of Borden's requirements
for PVC resins, ammonia, urea and methanol and to utilize specified percentages
of the Partnership's capacity to process formaldehyde and urea-formaldehyde
concentrate.
5. DEBT
At December 31, long-term debt consists of the following:
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
9.5% notes due 2005... $200,000 --
10.7% note due 1997... -- $90,000
11.1% note due 1999... -- 60,000
-------- --------
200,000 150,000
Less current portion.. -- 30,000
-------- --------
$200,000 $120,000
======== ========
</TABLE>
On May 1, 1995, the Operating Partnership issued $200,000 aggregate principal
amount of senior unsecured notes. The net proceeds from this offering were used
to prepay $150,000 aggregate principal amount of outstanding notes, plus a
related prepayment premium of $6,912 reflected as an extraordinary loss in 1995,
and accrued interest. The remaining proceeds were used to fund a portion of the
purchase price of the Addis Facility.
The aggregate fair value of the Partnership's outstanding debt was $215,493
at December 31, 1995 and $152,914 at December 31, 1994, which was calculated
based on current yields for debt with similar characteristics.
The Partnership obtained a short-term working capital facility of up to
$100,000 under a revolving credit agreement during 1995. Borrowings under this
facility were $40,000 at December 31, 1995. The total amount available under the
revolving credit agreement reduces to $75,000 on January 1, 1996 and $50,000 on
January 1, 1997. The revolving credit agreement expires on December 31, 1997 at
which time any outstanding balance is due. A commitment fee of .375% per annum
is payable on the unused portion. Borrowings under the revolving credit
agreement bear interest at rates fixed at the time of each borrowing. The
average interest rate of these borrowings at December 31, 1995 was 7.5%. The
Partnership's revolving credit agreement also allows an additional $20,000 of
borrowings outside the agreement, none of which was utilized during 1995. It
provides that no recourse is available against the General Partner.
51
<PAGE>
The revolving credit agreement and the Senior Notes contain a number of
financial and other covenants that management believes are customary in lending
transactions of these types.
6. ALLOCATION OF INCOME AND LOSS
Income and loss of the Partnership is allocated in proportion to the
partners' percentage interests in the Partnership, provided that at least 1% of
the income or loss of the Partnership and Operating Partnership is allocated to
the General Partner. For income tax purposes, certain items are specially
allocated to account for differences between the tax basis and fair market value
of property contributed to the Partnership by Borden and to facilitate
uniformity of Units. In addition, the Partnership Agreement generally provides
for an allocation of gross income to the Unitholders and the General Partner to
reflect disproportionate cash distributions, on a per Unit basis.
7. CASH DISTRIBUTIONS
The Partnership makes quarterly distributions to Unitholders and the General
Partner of 100% of its Available Cash. Available Cash each quarter generally
consists of cash receipts less cash disbursements (excluding cash distributions
to Unitholders and the General Partner) and reserves.
Distributions of Available Cash are generally made 98% to the Unitholders and
2% to the General Partner, subject to the payment of an incentive distribution
to the General Partner after a target level of cash distributions to the
Unitholders is achieved for the quarter. The incentive distribution is 20% of
any remaining Available Cash for the quarter (in addition to the General
Partner's 2% regular distribution). Incentive distributions are accounted for as
an expense of the Partnership.
8. CONTINGENCIES
Environmental and Legal Proceedings
On October 27, 1994, the U.S. Department of Justice ("DOJ"), at the request
of the U.S. Environmental Protection Agency (the "EPA"), filed an action against
the Company and BCPM in the U.S. District Court for the Middle District of
Louisiana. The complaint seeks facility-wide corrective action and civil
penalties for alleged violations of the federal Resource, Conservation and
Recovery Act ("RCRA"), the federal Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), and the Clean Air Act at the Geismar
complex. If the Partnership is unsuccessful in this proceeding, or otherwise
subject to RCRA permit requirements, it may be subject to three types of costs:
(i) corrective action; (ii) penalties; and (iii) costs needed to obtain a RCRA
permit, portions of each which could be subject to the Environmental Indemnity
Agreement ("EIA") discussed below. As to penalties, although the maximum
statutory penalties that would apply in a successful enforcement action by the
United States would be in excess of $150,000, management believes that, assuming
the Partnership is unsuccessful, based on information currently available, and
an analysis of relevant case law and administrative decisions, the more likely
amount of any liability for civil penalties would not exceed several million
dollars.
52
<PAGE>
The Partnership is subject to extensive federal, state and local
environmental laws and regulations which impose limitations on the discharge of
pollutants into the air and water, establish standards for the treatment,
storage, transportation and disposal of solid and hazardous wastes, and impose
obligations to investigate and remediate contamination in certain circumstances.
The Partnership has expended substantial resources, both financial and
managerial, and it anticipates that it will continue to do so in the future.
Failure to comply with the extensive federal, state and local environmental laws
and regulations could result in significant civil or criminal penalties, and
remediation costs.
Under the EIA, Borden has agreed, subject to certain specified limitations,
to indemnify the Partnership in respect of environmental liabilities arising
from facts or circumstances that existed and requirements in effect prior to
November 30, 1987, the date of the initial sale of the Geismar and Illiopolis
plants to the Partnership. The Partnership is responsible for environmental
liabilities arising from facts or circumstances that existed and requirements
that become effective on or after such date. With respect to certain
environmental liabilities that may arise from facts or circumstances that
existed and requirements in effect both prior to and after such date, Borden and
the Partnership will share liabilities on an equitable basis considering all of
the facts and circumstances including, but not limited to, the relative
contribution of each to the matter and the amount of time each has operated the
assets in question (to the extent relevant). No claims can be made under the EIA
after November 30, 2002, and no claim can, with certain exceptions, be made with
respect to the first $500 of liabilities which Borden would otherwise be
responsible for thereunder in any year, but such excluded amounts shall not
exceed $3,500 in the aggregate. Excluded amounts under the EIA have aggregated
approximately $3,000 through December 31, 1995.
In connection with potential environmental matters, a $4,000 provision has
been included in the Partnership's 1994 operating results. Because of various
factors (including the nature of any settlement with appropriate regulatory
authorities or the outcome of any proceeding, actual environmental conditions,
the scope of the application of the EIA and the timing of actions, if any,
required to be taken by the Partnership), the Partnership cannot reasonably
estimate the full range of costs it might incur with respect to the
environmental matters discussed herein. The costs incurred in any quarter or
year could be material to the Partnership's results of operations for such
quarter or year, although, on the basis of the relevant facts and circumstances,
management believes this to be unlikely. However, management believes that such
costs should not have a material adverse effect on the Partnership's financial
position.
The Partnership is subject to legal proceedings and claims which arise in the
ordinary course of business. In the opinion of the management of the
Partnership, the amount of the ultimate liability, taking into account its
insurance coverage, including its risk retention program and Environmental
Indemnity Agreement with Borden would not materially affect the financial
position or results of operations of the Partnership.
53
<PAGE>
________________________________________________________________________________
BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP
BCP FINANCE CORPORATION
9 1/2% Notes Due 2005
_______________________
INDENTURE
Dated as of May 1, 1995
_______________________
THE CHASE MANHATTAN BANK (National Association),
As Trustee
________________________________________________________________________________
<PAGE>
CROSS-REFERENCE TABLE/1/
TIA Indenture
Section Section
------- ---------
310(a)(1) ............................ 7.10
(a)(2) ............................ 7.10
(a)(3) ............................ N.A.
(a)(4) ............................ N.A.
(b) ............................ 7.08; 7.10
(c) ............................ N.A.
311(a) ............................ 7.11
(b) ............................ 7.11
(c) ............................ N.A.
312(a) ............................ 2.05
(b) ............................ 10.03
(c) ............................ 10.03
313(a) ............................ 7.06
(b)(1) ............................ N.A.
(b)(2) ............................ 7.06
(c) ............................ 10.02
(d) ............................ 7.06
314(a) ............................ 4.02; 10.02
(b) ............................ N.A.
(c)(1) ............................ 10.04
(c)(2) ............................ 10.04
(c)(3) ............................ N.A.
(d) ............................ N.A.
(e) ............................ 10.05
(f) ............................ 4.12
315(a) ............................ 7.01
(b) ............................ 7.05; 10.02
(c) ............................ 7.01
(d) ............................ 7.01
(e) ............................ 6.11
316(a)(last
sentence) ............................ 10.06
(a)(1)(A) ............................ 6.05
(a)(1)(B) ............................ 6.04
(a)(2) ............................ N.A.
(b) ............................ 6.07
317(a)(1) ............................ 6.08
(a)(2) ............................ 6.09
(b) ............................ 2.04
318(a) ............................ 10.01
N.A. means Not Applicable.
__________________________
/1/ Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of the Indenture.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
Definition and Incorporation by Reference
SECTION 1.01. Definitions........................................... 1
SECTION 1.02. Other Definitions..................................... 16
SECTION 1.03. Incorporation by Reference of Trust Indenture Act..... 16
SECTION 1.04. Rules of Construction................................. 17
ARTICLE II
The Securities
SECTION 2.01. Form and Dating....................................... 18
SECTION 2.02. Execution and Authentication.......................... 18
SECTION 2.03. Registrar and Paying Agent............................ 18
SECTION 2.04. Paying Agent To Hold Money In Trust................... 19
SECTION 2.05. Securityholder Lists.................................. 19
SECTION 2.06. Transfer and Exchange................................. 20
SECTION 2.07. Replacement Securities................................ 20
SECTION 2.08. Outstanding Securities................................ 20
SECTION 2.09. Temporary Securities; Global Securities............... 21
SECTION 2.10. Cancellation.......................................... 22
SECTION 2.11. Defaulted Interest.................................... 22
ARTICLE III
Redemption
SECTION 3.01. Notices to Trustee.................................... 23
SECTION 3.02. Selection of Securities To Be Redeemed................ 23
SECTION 3.03. Notice of Redemption.................................. 23
SECTION 3.04. Effect of Notice of Redemption........................ 24
SECTION 3.05. Deposit of Redemption Price........................... 24
SECTION 3.06. Securities Redeemed in Part........................... 24
ARTICLE IV
Covenants
SECTION 4.01. Payment of Securities................................ 25
SECTION 4.02. SEC Reports.......................................... 25
SECTION 4.03. Limitation on Restricted Payments.................... 25
SECTION 4.04. Limitation on Debt................................... 28
SECTION 4.05. Limitation on Restrictions on Distributions from
Subsidiaries......................................... 29
-i-
<PAGE>
SECTION 4.06. Limitation on Sales of Assets and Subsidiary
Stock................................................ 29
SECTION 4.07. Limitation on Debt and Preferred Stock of
Subsidiaries......................................... 32
SECTION 4.08. Limitation on Liens Securing Debt.................... 33
SECTION 4.09. Limitation on Sale and Leaseback Transactions........ 34
SECTION 4.10. Limitation on Transactions with Affiliates........... 34
SECTION 4.11. Change of Control.................................... 35
SECTION 4.12. Uncompleted Acquisition Offer........................ 36
SECTION 4.13. Compliance Certificate............................... 38
ARTICLE V
Successors
SECTION 5.01. When the Company May Merge or Transfer Assets........ 38
SECTION 5.02. When Finance Corp. May Merge or Transfer Assets...... 38
SECTION 5.03. Obligations After Merger or Transfer................. 39
ARTICLE VI
Defaults and Remedies
SECTION 6.01. Events of Default.................................... 40
SECTION 6.02. Acceleration......................................... 41
SECTION 6.03. Other Remedies....................................... 42
SECTION 6.04. Waiver of Past Defaults.............................. 42
SECTION 6.05. Control by Majority.................................. 42
SECTION 6.06. Limitation on Suits.................................. 43
SECTION 6.07. Rights of Holders to Receive Payment................. 43
SECTION 6.08. Collection Suit by Trustee........................... 43
SECTION 6.09. Trustee May File Proofs of Claim..................... 43
SECTION 6.10. Priorities........................................... 44
SECTION 6.11. Undertaking for Costs................................ 44
SECTION 6.12. Waiver of Stay or Extension Laws..................... 44
ARTICLE VII
Trustee
SECTION 7.01. Duties of Trustee.................................... 45
SECTION 7.02. Rights of Trustee.................................... 46
SECTION 7.03. Individual Rights of Trustee......................... 47
SECTION 7.04. Trustee's Disclaimer................................. 47
SECTION 7.05. Notice of Defaults................................... 47
SECTION 7.06. Reports by Trustee to Holders........................ 47
SECTION 7.07. Compensation and Indemnity........................... 47
SECTION 7.08. Replacement of Trustee............................... 48
SECTION 7.09. Successor Trustee by Merger.......................... 49
(ii)
<PAGE>
SECTION 7.10. Eligibility; Disqualification........................ 49
SECTION 7.11. Preferential Collection of Claims Against Issuers.... 50
ARTICLE VIII
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities; Defeasance..... 50
SECTION 8.02. Conditions to Defeasance............................. 51
SECTION 8.03. Application of Trust Money........................... 52
SECTION 8.04. Repayment to the Company............................. 52
SECTION 8.05. Indemnity for Government Obligations................. 52
SECTION 8.06. Reinstatement........................................ 52
ARTICLE IX
Amendments
SECTION 9.01. Without Consent of Holders........................... 53
SECTION 9.02. With Consent of Holders.............................. 53
SECTION 9.03. Compliance with Trust Indenture Act.................. 54
SECTION 9.04. Revocation and Effect of Consents and Waivers........ 54
SECTION 9.05. Notation on or Exchange of Securities................ 55
SECTION 9.06. Trustee to Sign Amendments........................... 55
ARTICLE X
Miscellaneous
SECTION 10.01. Trust Indenture Act Controls......................... 55
SECTION 10.02. Notices.............................................. 55
SECTION 10.03. Communication by Holders with Other Holders.......... 56
SECTION 10.04. Certificate and Opinion as to Conditions Precedent... 56
SECTION 10.05. Statement Required in Certificate or Opinion......... 56
SECTION 10.06. When Securities Disregarded.......................... 57
SECTION 10.07. Rules by Trustee, Paying Agent and Registrar......... 57
SECTION 10.08. Legal Holidays....................................... 57
SECTION 10.09. Governing Law........................................ 57
SECTION 10.10. No Recourse Against Others........................... 57
SECTION 10.11. Successors........................................... 58
SECTION 10.12. Multiple Originals................................... 58
SECTION 10.13. Table of Contents; Headings.......................... 58
EXHIBIT A [FORM OF SECURITY]................................... 60
(iii)
<PAGE>
INDENTURE dated as of May 1, 1995, among BORDEN CHEMICALS AND PLASTICS
OPERATING LIMITED PARTNERSHIP, a Delaware limited partnership, BCP FINANCE
CORPORATION, a Delaware corporation, and THE CHASE MANHATTAN BANK (NATIONAL
ASSOCIATION), a national association organized under the laws of the United
States of America.
Each party agrees as follows for the benefit of the other party and
for the equal and ratable benefit of the Holders of the 9 1/2% Notes Due 2005
(the "Securities"):
ARTICLE I
Definition and Incorporation by Reference
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SECTION 1.01. Definitions.
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"Accounts Receivable" means (i) any accounts receivable (whether or
not earned by performance), chattel paper, instruments, documents, general
intangibles, trade acceptances, any other rights to receive installment, rental
or other payments for, or relating to amounts due or to become due on account
of, goods or equipment sold or leased or to be sold or leased or services
rendered or to be rendered or funds advanced or loaned or to be advanced or
loaned and other similar rights to payment of any kind, (ii) any proceeds of any
of the foregoing and (iii) any interest in any property or asset of any kind
(whether of the obligor with respect to such accounts receivable or any other
person securing the payment of any item listed in clause (i) above) .
"Acquisition" means the purchase of the Addis Assets pursuant to the
Asset Transfer Agreement.
"Addis Assets" means a polyvinyl chloride production facility located
in Addis, Louisiana and certain related assets to be purchased pursuant to the
Asset Transfer Agreement.
"Affiliate" of any person means (i) any person that, directly or
indirectly, is in control of, is controlled by or is under common control with
such person or (ii) any person who is a director or officer (A) of such person,
(B) of any Subsidiary of such person or (C) of any person described in clause
(i) above. For purposes of this definition, control of a person means the power,
direct or indirect, to direct or cause the direction of the management and
policies of such person whether by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Asset Disposition" means any sale, lease, transfer or other
disposition (or series of related sales, leases, transfers or dispositions) of
Capital Stock of a Subsidiary (other than directors' qualifying shares),
property or other assets (each
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referred to for the purposes of this definition as a "disposition") by the
Company or any of its Subsidiaries, including any disposition by means of a
merger, consolidation or similar transaction, other than (i) a disposition by
the Company or a Subsidiary to the Company or a Wholly Owned Subsidiary, (ii) a
disposition of property or assets at fair market value in the ordinary course of
business, (iii) a disposition of obsolete assets in the ordinary course of
business, (iv) a disposition that constitutes a Restricted Payment or a sale and
leaseback transaction and (v) any sale, transfer or other disposition by the
Company or any Subsidiary of Accounts Receivable or of any Subsidiary
substantially all the assets of which are Accounts Receivable, which sale,
transfer or other disposition constitutes a "sale" under generally accepted
accounting principles (as in effect at the time thereof).
"Asset Transfer Agreement" means the Asset Transfer Agreement, dated
as of August 12, 1994, as amended, between the Company and Occidental Petroleum
Company.
"Attributable Debt" in respect of a sale and leaseback arrangement
means, as at the time of determination, the present value (discounted at the
interest rate borne by the Securities, compounded annually) of the total
obligations of the lessee for rental payments during the remaining term of the
lease included in such arrangement (including any period for which such lease
has been extended).
"Available Cash" has the meaning given to such term in the Amended and
Restated Agreement of Limited Partnership of Borden Chemical and Plastics
Operating Limited Partnership, dated as of November 30, 1987, as amended to the
date of this Indenture.
"Average Life" means, as of the date of determination, with respect
to any Debt, the quotient obtained by dividing (a) the sum of the products of
(i) the numbers of years from the date of determination to the dates of each
successive scheduled principal payment or redemption or similar payment with
respect to such Debt multiplied by (ii) the amount of such payment, by (b) the
sum of all such payments.
"BCPM" means BCP Management, Inc., a Delaware corporation, and its
successors.
"Board of Directors" means the Board of Directors of the Company (or,
if the Company is a limited partnership or a general partnership, of any of its
general partner or partners, respectively, authorized to act on behalf of such
limited partnership or general partnership, as the case may be, in connection
with this Indenture) or any committee thereof duly authorized to act on behalf
of such Board.
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"Borden" means Borden, Inc., a New Jersey corporation, and its
successors (other than as a result of any transaction described in clause (a)(i)
of the definition of "Change of Control" as if Borden, Inc. were deemed for such
purposes to be the Company).
"Business Day" means each day that is not a Legal Holiday.
"Capital Lease Obligations" of a person means any obligation which is
required to be classified and accounted for as a capital lease on the face of a
balance sheet of such person prepared in accordance with generally accepted
accounting principles; the amount of such obligation shall be the capitalized
amount thereof, determined in accordance with generally accepted accounting
principles; and the stated maturity thereof shall be the date of the last
payment of rent or any other amount due under such lease prior to the first date
upon which such lease may be terminated by the lessee without payment of a
penalty.
"Capital Stock" means any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of or interests
in (however designated) capital stock, including any preferred stock, and with
respect to a partnership, any interest therein (whether general or limited) that
confers on a person the right to receive a share of the profits and losses of,
or distributions of assets of, such partnership; provided that Capital Stock
shall not include any debt security that is convertible into or exchangeable for
Capital Stock.
A "Change of Control" occurs when (a) (i) any person or "group" for
purposes of Section 13(d) of the Exchange Act (a "Group"), other than Permitted
Holders, shall beneficially own, directly or indirectly, more than 50% of the
total voting power of all classes of Voting Stock of BCPM, the Holding Company
or the Company, (ii) (A) the Company shall sell, lease, convey or otherwise
dispose of all or substantially all the Company's assets to any person or
Group or (B) the Company shall consolidate with or merge into another person or
another person shall consolidate with or merge into the Company, in case of
either of the foregoing, in a transaction in which the outstanding Voting Stock
of the Company is reclassified or changed into or exchanged for cash, securities
or other property, other than, in the case of either of clauses (A) or (B), to,
with or into, as applicable, one or more Permitted Holders or a person, more
than 50% of the total voting power of all classes of Voting Stock of which,
after giving effect to such transaction, is beneficially owned, directly or
indirectly, by one or more Permitted Holders or (iii) the Company, the Holding
Company or BCPM shall adopt a plan of liquidation or dissolution (unless all or
substantially all the Company's assets are distributed
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pursuant to such plan to one or more Permitted Holders) and (b) a Rating Decline
occurs within the period of 60 days following the first public announcement of
any of the events described in clause (a) (the "Announcement") (which period
shall be extended if during such 60 days either both Rating Agencies shall have
placed the Company on credit watch (with negative implications) or one of the
Rating Agencies shall have placed the Company on credit watch (with negative
implications) and the other Rating Agency shall have made the determination
described in the definition of Rating Decline, until such time as it can be
determined whether or not there has been a Rating Decline). A "Rating Decline"
shall be deemed to have occurred (i) in the event the Securities are rated below
Investment Grade by each Rating Agency on the day before the Announcement, if
each such rating is reduced by more than one gradation (whether or not within
the same Rating Category) and (ii) in the event the Securities are rated
Investment Grade by either or both of the Rating Agencies on the day before the
Announcement, if the Securities cease to be rated Investment Grade by at least
one Rating Agency. "Rating Agency" means either Standard & Poor's Corporation
and its successors ("S&P"), or Moody's Investors Service Inc. and its successors
("Moody's"), or if S&P and Moody's or both shall not make a rating of the
Securities publicly available, a nationally recognized statistical rating agency
or agencies, as the case may be, selected by the Company which shall be
substituted for S&P or Moody's or both, as the case may be; and "Rating
Category" means each major rating category symbolized by (x) in the case of S&P,
AAA, AA, A, BBB, BB, B, CCC, CC and C and each such Rating Category shall
include pluses or minuses ("gradations") modifying such capital letters; (y) in
the case of Moody's, Aaa, Aa, A, Baa, Ba, B, Caa, Ca, and C and each such Rating
Category shall include added numerals such as 1, 2, or 3 ("gradations")
modifying such letters; and (z) with respect to any other Rating Agency,
equivalent symbols. "Investment Grade" means (i) with respect to S&P, any of the
Rating Categories from and including AAA to and including BBB-and (ii) with
respect to Moody's, any of the Rating Categories from and including Aaa to and
including Baa3.
"Company" means Borden Chemicals and Plastics Operating Limited
Partnership, a Delaware limited partnership, until a successor replaces it
pursuant to the applicable provisions of this Indenture, and thereafter means
the successor.
"Consolidated EBITDA Coverage Ratio" as of any date of determination
means the ratio of (i) the aggregate amount of EBITDA for the period of the most
recent four consecutive fiscal quarters ending at least 5 days prior to the date
of such determination to (ii) Consolidated Interest Expense for such four fiscal
quarters; provided however, that (1) if the Company or any Subsidiary has issued
any Debt since the beginning of such period that remains outstanding as of such
date of determination or if the transaction giving rise to the need to calculate
the
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Consolidated EBITDA Coverage Ratio is an issuance of Debt, or both, EBITDA and
Consolidated Interest Expense for such period shall be calculated after giving
effect on a pro forma basis to such Debt as if such Debt has been issued on the
first day of such period and the discharge of any other Debt repaid,
repurchased, defeased or otherwise discharged with the proceeds of such new Debt
as if such discharge had occurred on the first day of such period, (2) if since
the beginning of such period the Company or any Subsidiary shall have made any
Asset Disposition, the EBITDA for such period shall be reduced by an amount
equal to the EBITDA (if positive) directly attributable to the assets that were
the subject of such Asset Disposition for such period, or increased by an amount
equal to the EBITDA (if negative), directly attributable thereto for such
period, and Consolidated Interest Expense for such period shall be reduced by an
amount equal to the Consolidated Interest Expense directly attributable to any
Debt or Preferred Stock of the Company or any Subsidiary repaid, repurchased,
defeased or otherwise discharged with respect to the Company and its continuing
Subsidiary or from which the Company or such continuing Subsidiary has been
released by reason of the assumption thereof by the transferee of such Asset
Disposition, in connection with such Asset Dispositions for such period (or, if
the Capital Stock of any Subsidiary is sold, the Consolidated Interest Expense
for such period directly attributable to the Debt or Preferred Stock of such
Subsidiary to the extent the Company and its continuing Subsidiaries are no
longer liable for such Debt or Preferred Stock after such sale), (3) if since
the beginning of such period the Company or any Subsidiary (by merger or
otherwise) shall have made an Investment in any Subsidiary (or any person which
becomes a Subsidiary) or an acquisition or assets, including any acquisition of
assets occurring in connection with a transaction causing a calculation to be
made hereunder, which constitutes all or substantially all of an operating unit
of a business, EBITDA and Consolidated Interest Expense for such period shall be
calculated after giving pro forma effect thereto (including the issuance of any
Debt) as if such Investment or acquisition occurred on the first day of such
period and (4) if since the beginning of such period any person (that
subsequently became a Subsidiary or was merged with or into the Company or any
Subsidiary since the beginning of such period) shall have made any Asset
Disposition or any Investment that would have required an adjustment pursuant to
clause (2) or (3) above if made by the Company or a Subsidiary during such
period, EBITDA and Consolidated Interest Expense for such period shall be
calculated after giving pro forma effect thereto as if such Asset Disposition or
Investment occurred on the first day of such period. For purposes of this
definition, whenever pro forma effect is to be given to an acquisition of
assets, the amount of income or earnings relating thereto, and the amount of
Consolidated Interest Expense associated with any Debt or Preferred Stock issued
in connection therewith, shall be determined on a pro forma basis in good faith
by a responsible financial or accounting Officer of the Company. If any Debt
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bears a floating rate of interest and is being given pro forma effect, the
interest of such Debt shall be calculated as if the rate in effect on the date
of determination had been the applicable rate for the entire period (taking into
account any Interest Rate Protection Agreement applicable to such Debt if such
Interest Rate Protection Agreement has a remaining term in excess of 12 months).
"Consolidated Interest Expense" means, for any period, the total
interest expense of the Company and its consolidated Subsidiaries, including (i)
interest expense attributable to Capital Lease Obligations, (ii) amortization of
debt discount and debt issuance cost, (iii) capitalized interest, (iv) non-cash
interest payments, (v) commissions, discounts and other fees and charges owed
with respect to letters of credit and bankers' acceptance financing, (vi) net
costs under Interest Rate Protection Agreements (including amortization of
fees), (vii) Preferred Stock dividends in respect of all Preferred Stock held by
persons other than the Company or a Wholly Owned Subsidiary, (viii) interest
incurred in connection with investments in discontinued operations and (ix)
interest actually paid by the Company or any of its consolidated Subsidiaries
under any guarantee of Debt or other obligation of any other person.
"Consolidated Net Income" means, for any period, the net income of the
Company and its consolidated Subsidiaries; provided, however, that there shall
not be included in such Consolidated Net Income:
(i) any net income of any person if such person is not a Subsidiary,
except that (A) the Company's equity in the net income of any such person
for such period shall be included in such Consolidated Net Income up to the
aggregate amount of cash actually distributed by such person during such
period to the Company or a Subsidiary as a dividend or other distribution
(subject, in the case of a dividend or other distribution to a Subsidiary,
to the limitations contained in clause (iii) below) and (B) the Company's
equity in a net loss of any such person for such period shall be included
in determining such Consolidated Net Income;
(ii) any net income of any person acquired by the Company or a
Subsidiary in a pooling of interests transaction for any period prior to
the date of such acquisition;
(iii) any net income of any Subsidiary that is subject to
restrictions, directly or indirectly, on the payment of dividends or the
making of distributions by such Subsidiary, directly or indirectly, to the
Company, except that (A) the Company's equity in the net income of any such
Subsidiary for such period shall be included in such Consolidated Net
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Income up to the aggregate amount of cash actually distributed by such
Subsidiary during such period to the Company or another Subsidiary as a
dividend or other distribution (subject, in the case of a dividend or other
distribution to another Subsidiary, to the limitation contained in this
clause) and (B) the Company's equity in a net loss of any such Subsidiary
for such period shall be included in determining such Consolidated Net
Income;
(iv) any gain (or loss) realized upon the sale or other disposition
of any property, plant or equipment of the Company or its consolidated
Subsidiaries (including pursuant to any sale-and-leaseback arrangement)
which is not sold or otherwise disposed of in the ordinary course of
business and any gain (or loss) realized upon the sale or other disposition
of any Capital Stock of any person; and
(v) the cumulative effect of a change in accounting principles.
"Consolidated Net Tangible Assets" means the total assets of the
Company and its Subsidiaries appearing on a consolidated balance sheet of the
Company and its Subsidiaries (prepared in accordance with generally accepted
accounting principles) as of any date selected by the Company not more than 90
days prior to the date of determination, after (i) adding thereto all
Attributable Debt of the Company and its Subsidiaries in respect of any sale and
leaseback arrangement not capitalized on such balance sheet, (ii) eliminating
all intercompany transactions and all amounts properly attributable to minority
interests, if any, in the stock and surplus of Subsidiaries and (iii) deducting
therefrom (without duplication of deductions):
(a) all liabilities of the Company and its Subsidiaries other than
Debt;
(b) the net book amount of all assets, after deducting any reserves
applicable thereto, which would be treated as intangible under generally
accepted accounting principles, including such items as goodwill,
trademarks, trade names, service marks, brand names, copyrights, patents
and licenses, and rights with respect to the foregoing, unamortized debt
discount and expense and organization expenses;
(c) any write-up in the book value of any asset on the books of the
Company or any Subsidiary resulting from a revaluation thereof subsequent
to the date of this Indenture (other than the write-up of the book value of
an asset made in accordance with purchase accounting under generally
accepted accounting principles in connection with the purchase of such
asset);
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(d) all deferred charges (other than prepaid expenses); and
(e) all reserves, including, without limitation, reserves for
deferred income taxes, liabilities (fixed or contingent), depreciation,
obsolescence, depletion, insurance and inventory valuation, which appear or
under generally accepted accounting principles are required to appear on
such balance sheet.
"Consolidated Net Worth" of any person means the total of the amounts
shown on the balance sheet of such person and its consolidated Subsidiaries,
determined on a consolidated basis in accordance with generally accepted
accounting principles, as of the end of the most recent fiscal quarter of such
person ending at least 5 days prior to the taking of any action for the purpose
of which the determination is being made, as (i) if such person is a
partnership, the consolidated equity of the partners less (x) any amounts
attributable to Redeemable Stock and (y) any amounts attributable to
Exchangeable Stock and (ii) if such person is not a partnership, (A) the par or
stated value of all outstanding Capital Stock of such person plus (B) paid-in
capital or capital surplus relating to such Capital Stock plus (C) any retained
earnings or earned surplus less (1) any accumulated deficit, (2) any amounts
attributable to Redeemable Stock and (3) any amounts attributable to
Exchangeable Stock.
"Credit Facility" means the credit facility under that certain
Revolving Credit Agreement, dated as of November 2, 1987, by and between the
Company and Wachovia Bank and Trust Company, N.A., including any related notes,
instruments and agreements executed in connection therewith, and which may be
replaced with a facility between the Company and certain lenders, providing for
up to $100.0 million of credit borrowings, including any related notes,
instruments and agreements executed in connection therewith, in each as amended,
modified, renewed, refunded, replaced or refinanced from time to time.
"Debt" of any person means, without duplication,
(i) the principal of and premium, if any, in respect of (A)
indebtedness of such person for money borrowed and (B) indebtedness
evidenced by notes, debentures, bonds or other similar instruments for the
payment of which such person is responsible or liable;
(ii) all Capital Lease Obligations of such person;
(iii) all obligations of such person issued or assumed as the
deferred purchase price of property, all conditional sale obligations of
such person and all obligations of such person under any title retention
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agreement (but excluding trade accounts payable arising in the ordinary
course of business);
(iv) all obligations of such person for the reimbursement of any
obligor on any letter of credit, banker's acceptance or similar credit
transaction (other than obligations with respect to letters of credit
securing obligations (other than obligations described in (i) through (iii)
above) entered into in the ordinary course of business of such person to
the extent such letters of credit are not drawn upon or, if and to the
extent drawn upon, such drawing is reimbursed no later than the third
Business Day following receipt by such person of a demand for reimbursement
following payment on the letter of credit);
(v) the amount of all obligations of such person with respect to the
redemption, repayment or other repurchase of any Redeemable Stock (but
excluding any accrued dividends);
(vi) all obligations of the type referred to in clauses (i) through
(v) of other persons and all dividends of other persons for the payment of
which, in either case, such person is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise, including by means of any
agreement which has the economic effect of a guarantee; and
(vii) all obligations of the type referred to in clauses (i) through
(vi) of other persons secured by any Lien on any property or asset of such
person (whether or not such obligation is assumed by such person), the
amount of such obligation being deemed to be the lesser of the value of
such property or assets or the amount of the obligation so secured.
"Default" means any event that is, or after notice or passage of time
or both would be, and Event of Default.
"Depository" means, (i) with respect to any Global Security offered
for sale solely outside of the United States, a common depository for Morgan
Guaranty Trust Company of New York, Brussels office, operator of the Euro-clear
System, and Centrale de Livraison de Valeurs Mobilieres. S.A., and (ii) with
respect to any Global Security offered for sale in the United States, a clearing
agency registered under the Exchange Act, which shall in either case be
designated by the Company pursuant to Section 2.09.
"Disqualified Capital Stock" means any Capital Stock that is
Redeemable Stock or Exchangeable Stock.
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"EBITDA" for any period means the Consolidated Net Income for such
period, plus the following to the extent deducted in calculating such
Consolidated Net Income: (i) income tax expense, (ii) Consolidated Interest
Expense, (iii) depreciation expense, (iv) amortization expense and (v) all other
noncash items reducing Consolidated Net Income, less all noncash items
increasing Consolidated Net Income.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchangeable Stock" means any Capital Stock that is exchangeable or
convertible into another security (other than Capital Stock of the Company that
is neither Exchangeable Stock nor Redeemable Stock).
"Finance Corp." means BCP Finance Corporation, a Delaware corporation,
and its successors.
"Global Security" means a Security executed by the Company and
authenticated and delivered by the Trustee to the Depositary or pursuant to the
Depositary's instruction, all in accordance with this Indenture including
Section 2.09, and which shall represent, and shall be denominated in an amount
equal to the aggregate principal amount of, all the outstanding Securities or a
portion thereof, in either case having the same terms as other Securities.
"Global Security" shall include any temporary Global Security and any permanent
Global Security.
"Guarantee" means any obligation, contingent or otherwise, of any
person directly or indirectly guaranteeing any Debt or other obligation of any
person and any obligation, direct or indirect, contingent or otherwise, of such
person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt or other obligation of such person (whether arising by
virtue of partnership arrangements, or by agreement to keep-well, to purchase
assets, goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of assuring
in any other manner the obligee of such Debt or other obligation of the payment
thereof (in whole or in part); provided, however, that the term "Guarantee"
shall not include endorsements for collection or deposit in the ordinary course
of business. The term "Guarantee" used as a verb has a corresponding meaning.
"Holder" or "Securityholder" means the person in whose name a Security
is registered on the Registrar's books.
"Holding Company" means Borden Chemicals and Plastics Limited
Partnership, a Delaware limited partnership, and its successors.
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"Independent Committee" means a standing committee of the Board of
Directors composed entirely of Independent Directors; provided that if there is
no such standing committee, then "Independent Committee" means all the
Independent Directors.
"Independent Directors" means members of the Board of Directors who
are neither officers nor employees of the Company or any of its Affiliates (or,
if the Company is a limited or general partnership, of any general partner
thereof or any of its Affiliates).
"Indenture" means this Indenture as amended or supplemented from time
to time.
"Interest Rate Protection Agreement" means any interest rate swap
agreement, interest rate cap agreement or other financial agreement or
arrangement designed to protect the Company or any Subsidiary against
fluctuations in interest rates.
"Investment" in any person means any loan or advance to, any
acquisition of Capital Stock, obligation or other security of, or capital
contribution or other investment in, such person.
"issue" means issue, assume, guarantee, incur or otherwise become
liable for; provided, however, that any Debt or Capital Stock or a person
existing at the time such person becomes a Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be issued by such
Subsidiary at the time it become a Subsidiary.
"Issuers" means the Company and Finance Corp., as joint and several
obligors under the Securities.
"Lien" means any mortgage, pledge, security interest, conditional sale
or other title retention agreement or other similar lien.
"Net Available Cash" from an Asset Disposition means cash payments
received (including any cash payments received by way of deferred payment of
principal pursuant to a note or installment receivable or otherwise, but only as
and when received, and excluding any other consideration received in the form of
assumption by the acquiring person of Debt or other obligations relating to such
properties or assets or received in any other noncash form) therefrom, in each
case net of all legal, title and recording tax expenses, commissions and other
fees and expenses incurred, and all Federal, state, provincial, foreign and
local taxes required to be accrued as a liability under generally accepted
accounting principles, as a consequence of such Asset Disposition, and in each
case net of all payments made on any Debt which is secured by any assets subject
to such Asset Disposition, in accordance with the terms of any lien upon or
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other security agreement of any kind with respect to such assets, or which must
by its terms, or in order to obtain a necessary consent to such Asset
Disposition, or by applicable law be repaid out of the proceeds from such Asset
Disposition, and net of amounts thereof allocable to minority interest holders
in Subsidiaries.
"Net Cash Proceeds", with respect to any issuance or sale of Capital
Stock, means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.
"Officer" means the Chairman of the Board, the President, any Vice
President, the Treasurer, the Principal Accounting Officer or the Secretary of
the Company (or, if the Company is a limited partnership or a general
partnership, of any of its general partners or partners, respectively,
authorized to act on behalf of such limited partnership or general partnership,
as the case may be, in connection with this Indenture) or of Finance Corp., as
the case may be.
"Officers' Certificate" means a certificate signed by two Officers.
"Opinion of Counsel" means a written opinion from legal counsel, which
may be an employee of or counsel to the Company or the Trustee.
"Pari Passu Debt" means any Debt of the Company (other than the
Securities), whether or not secured, that is pari passu in right of payment to
the Securities.
"Permitted Holders" means, as of the date of determination, any and
all of (a) Borden and its Subsidiaries, (b) Kohlberg Kravis Roberts & Co., its
successors and its Affiliates and (c) (i) any officer or other member of
management employed by Borden, BCPM, the Company or any Subsidiary for the
12-month period prior to the date of determination; (ii) any persons described
in clause (i) who have retired (including as the result of disability) after the
initial date of this Indenture from the employment of Borden, BCPM, the Company
or any Subsidiary in the ordinary course of business; (iii) family members or
the relatives of the persons described in clauses (i) and (ii); (iv) any trusts
created for the benefit of the persons described in clauses (i), (ii), (iii) or
(v); (v) in the event of the incompetence or death of any of the persons
described in clauses (i), (ii) and (iii), such person's estate, executor,
administrator, committee or other personal representative, or beneficiaries, in
each case who at any particular date shall beneficially own or have the right to
acquire, directly or
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indirectly, Capital Stock and (vi) any person, the management of which is
controlled by one or more persons described in clause (i) or (ii); provided,
however, that in connection with the transaction that otherwise would constitute
a Change of Control were the persons described in this clause (c) not Permitted
Holders, any Debt incurred as a result thereof shall not be recourse to any of
the assets of the Company or any Subsidiary. The management of a person shall be
deemed to be controlled by the chief executive officer (or equivalent executive)
of such person.
"Permitted Investments" shall mean (i) investments in direct
obligations of the United States of America or any agency or instrumentality
thereof maturing within one year of the date of acquisition thereof, (ii)
investments in certificates of deposit maturing within one year of the date of
acquisition thereof issued by a bank or trust company which is organized under
the laws of the United States or any state thereof having capital, surplus and
undivided profits aggregating in excess of $50.0 million or the debt of which is
rated P-1 (or higher) by Moody's or A-1 (or higher) by S&P and (iii) investments
in commercial paper given the highest rating by two established national credit
rating agencies and maturing not more than nine months from the date of
acquisition thereof.
"Permitted Liens" means (i) Liens that exist on the date of this
Indenture, (ii) Liens on property or assets (or any income or profits therefrom)
existing at the time of acquisition of such property or assets, (iii) Liens on
property or assets (or any income or profits therefrom) of a person existing at
the time such person is merged into or consolidated with or acquired by the
Company or its Subsidiaries, (iv) Liens in favor of any governmental authority
to secure any payment obligation under any statute, (v) Liens of landlords and
Liens of carriers, warehousemen, mechanics and materialmen incurred in the
ordinary course of business, (vi) Liens incurred for the purpose of financing
all or any part of the purchase price or the cost of construction or improvement
of the property or assets subject to such Liens; provided, however, that such
Lien shall not extend to or cover any other property or assets other than such
property or assets or any improvements thereon and shall attach to such
property, assets, or improvements within 180 days of the acquisition or
construction thereof, (vii) Liens incurred to secure (or to obtain letters of
credit that secure) the performance of tenders, statutory obligations, surety or
appeal bonds, bids, leases, performance or return-of-money bonds, purchase,
construction or sale contracts or other obligations of a like nature incurred in
the ordinary course of business, (viii) Liens on Capital Stock of a Subsidiary
and Liens on intercompany notes issued by such Subsidiary to the Company, in
either case to secure Debt incurred by such Subsidiary in connection with the
Company's acquisition of such Subsidiary or the business of such Subsidiary,
(ix) Liens securing any Debt
13
<PAGE>
owed to the Company or any Subsidiary, (x) Liens on any Accounts Receivable or
inventory granted to secure Debt issued pursuant to the Credit Facility (or any
Refinancing Agreement) referred to in clause (b)(1) or pursuant to clause (b)(5)
of Section 4.04, (xi) Liens to secure any extension, renewal, refunding or
refinancing (or successive extensions, renewals, refundings or refinancings), in
whole or in part, of any Debt secured by Liens referred to in the foregoing
clauses (i) through (x) so long as such Liens do not extend to any other
property or assets and the aggregate principal amount of the Debt so secured is
not increased, and (xii) Liens securing Debt of a person, the aggregate
principal amount of which, together with the aggregate principal amount of all
other Debt of such person secured by Liens (excluding Debt secured by Liens
permitted in the foregoing clauses (i) through (xi)) and the aggregate amount of
Attributable Debt deemed to be outstanding in respect of all sale and leaseback
transactions permitted by clause (i) of Section 4.09 (excluding any such sale
and leaseback transactions otherwise permitted by the foregoing clauses (i)
through (xi)), does not exceed 5% of Consolidated Net Tangible Assets.
"person" means any individual, corporation, partnership, association,
joint-stock company, limited liability company, trust, unincorporated
organization, government or any agency or political subdivision thereof or any
other entity.
"Preferred Stock", as applied to the Capital Stock of any person,
means Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such person,
over the Capital Stock of any other class of such person.
"principal" of a Security means the principal of the Security plus the
premium, if any, payable on the Security which is due or overdue or is to become
due at the relevant time.
"Redeemable Stock" means any Capital Stock that by its terms or
otherwise is required to be redeemed prior to the first anniversary of the
Stated Maturity of the Securities or is redeemable at the option of the holder
thereof at any time prior to the first anniversary of the Stated Maturity of the
Securities.
"Refinance" means, in respect of any Debt or Preferred Stock, to
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue Debt or Preferred Stock in exchange or replacement for, such Debt or
Preferred Stock. "Refinanced" and "Refinancing" shall have correlative meanings.
"Refinancing Agreement" means any credit agreement, indenture or other
agreement pursuant to which the Company or any Subsidiary Refinances, in whole
or in part, Debt of the Company
14
<PAGE>
or any Subsidiary issued under clause (b)(1) of Section 4.04; provided, however,
that the principal amount of the Refinancing Debt issued pursuant to such
Refinancing Agreement may not exceed the principal amount of the Debt so
Refinanced.
"SEC" means the Securities and Exchange Commission.
"Securities" means the Securities issued under this Indenture.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" of the Company within the meaning of Rule 1-02 under
Regulation S-X as promulgated by the SEC.
"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which the principal of such
security is due and payable, including pursuant to any mandatory redemption
provision.
"Subordinated Obligation" means any Debt of the Company (whether
outstanding on the date hereof or hereafter incurred) that is subordinate or
junior in right of payment to the Securities.
"Subsidiary" means any corporation, association, partnership or other
business entity of which more than 50% of the total voting power of the
outstanding Capital Stock (or other interests entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, general
partners, managers, managing members, managing partners or trustees thereof or,
if such persons are not elected, to vote on any matter that is submitted to the
vote of all persons holding ownership interests in such entity) is at the time
owned or controlled, directly or indirectly, by (i) the Company, (ii) the
Company and one or more Subsidiaries or (iii) one or more Subsidiaries.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. SS
------
77aaa-77bbbb) as in effect on the date of this Indenture.
"Total Debt" means, as of any date of determination, the total Debt of
the Company and its consolidated Subsidiaries .
"Trustee" means The Chase Manhattan Bank (National Association), until
a successor replaces it pursuant to the applicable provisions of this Indenture,
and thereafter means the successor.
"Trust Officer" means the Chairman of the Board, the President or any
officer or assistant officer of the
15
<PAGE>
Trustee assigned by the Trustee to administer its corporate trust matters.
"Uniform Commercial Code" means the New York Uniform Commercial Code
as in effect from time to time.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable at the issuer's option.
"Voting Stock" of any person means, with respect to a corporation, all
classes of Capital Stock of such corporation then outstanding and normally
entitled to vote in the election of directors or, with respect to a partnership
(whether general or limited), any general partner interest in such partnership.
"Wholly Owned Subsidiary" of any person means a Subsidiary of such
person all the outstanding Capital Stock or other ownership interests or, in the
case of a limited partnership, all the partners' Capital Stock (other than up to
a 2% general partner interest), of which (other than directors' qualifying
shares) shall at the time be owned by such person or by one or more Wholly Owned
Subsidiaries of such person.
SECTION 1.02. Other Definitions.
-----------------
<TABLE>
<CAPTION>
Defined in
Term Section
---- ----------
<S> <C>
"Bankruptcy Law"........................................... 6.01
"covenant defeasance option"............................... 8.01(b)
"Custodian"................................................ 6.01
"Event of Default"......................................... 6.01
"legal defeasance option".................................. 8.01(b)
"Legal Holiday"............................................ 10.08
"Paying Agent"............................................. 2.03
"Registrar"................................................ 2.03
</TABLE>
SECTION 1.03. Incorporation by Reference of Trust Indenture Act.
-------------------------------------------------
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder.
16
<PAGE>
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Issuers and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule have the
meanings assigned to them by such definitions.
SECTION 1.04. Rules of Construction. Unless the context otherwise
---------------------
requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with generally accepted accounting principles, and the
term "generally accepted accounting principles" with respect to any
determination required or permitted hereunder shall mean such accounting
principles as are generally accepted in the United States at the date of
such determination;
(3) "or" is not exclusive;
(4) "including" means including, without limitation;
(5) words in the singular include the plural and words in the plural
include the singular;
(6) unsecured debt shall not be deemed to be subordinate or junior to
secured debt merely by virtue of its nature as unsecured debt;
(7) the principal amount of any noninterest bearing or other discount
security at any date shall be the principal amount thereof that would be
shown on a balance sheet of the issuer dated such date prepared in
accordance of principal on such security shall be deemed to be the issuance
of Debt; and
(8) the principal amount of Redeemable Stock shall be (i) the maximum
liquidation value of such Redeemable Stock or (ii) the maximum mandatory
redemption or mandatory repurchase price with respect to such Redeemable
Stock, whichever is greater.
17
<PAGE>
ARTICLE II
The Securities
--------------
SECTION 2.01. Form and Dating. The Securities and the Trustee's
---------------
certificate of authentication with respect thereto shall be substantially in the
form of Exhibit A hereto, which is hereby incorporated in and expressly made a
part of this Indenture. The Securities may have notations, legends or
endorsements required by law, stock exchange rule, agreements to which the
Issuers are subject, if any, or usage (provided that any such notation legend or
endorsement is in a form acceptable to the Issuers). Each Security shall be
dated the date of its authentication. The terms of the Securities set forth in
Exhibit A are part of the terms of this Indenture.
SECTION 2.02. Execution and Authentication. Two Officers shall sign
----------------------------
the Securities for each of the Issuers by manual or facsimile signature.
If an Officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security, the Security shall be
valid nevertheless.
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security. The
signature shall be conclusive evidence that the Security has been authenticated
under this Indenture.
The Trustee shall authenticate and deliver Securities for original
issue in an aggregate principal amount of $200,000,000, upon a written order of
the Company and Finance Corp. signed by two Officers or by an Officer and an
Assistant Treasurer or an Assistant Secretary of the Company and Finance Corp.
Such order shall specify the amount of the Securities to be authenticated and
the date on which the original issue of Securities is to be authenticated. The
aggregate principal amount of Securities outstanding at any time shall not
exceed such amount as provided in Section 2.07.
The Trustee may appoint an authenticating agent reasonably acceptable
to the Company to authenticate the Securities. Unless limited by the terms of
such appointment, an authenticating agent may authenticate Securities whenever
the Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as any Registrar, Paying Agent or agent for service of notices and
demands.
SECTION 2.03. Registrar and Paying Agent. The Issuers shall maintain
--------------------------
an office or agency where Securities may be
18
<PAGE>
presented for registration of transfer or for exchange (the "Registrar") and an
office or agency where Securities may be presented for payment (the "Paying
Agent"). The Registrar shall keep a registrar of the Securities and of their
transfer and exchange. The Issuers may have one or more co-registrars and one or
more additional paying agents. The term "Paying Agent" includes any additional
paying agent.
The Issuers shall enter into an appropriate agency agreement with any
Registrar, Paying Agent or co-registrar not a party to this Indenture, which
shall incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The Issuers shall notify
the Trustee of the name and address of any such agent. If the Issuers fail to
maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be
entitled to appropriate compensation therefor pursuant to Section 7.07. The
Company or any Subsidiary or Affiliate may act as Paying Agent, Registrar,
co-registrar or transfer agent.
The Issuers initially appoint the Trustee as Registrar and Paying
Agent in connection with the Securities.
SECTION 2.04. Paying Agent To Hold Money in Trust. Prior to each due
-----------------------------------
date of the principal and interest on any Security, the Issuers shall deposit
with the Paying Agent a sum sufficient to pay such principal and interest when
so becoming due. The Issuers shall require each Paying Agent (other than the
Trustee) to agree in writing that the Paying Agent shall hold in trust for the
benefit of Securityholders or the Trustee all money held by the Paying Agent for
the payment of principal of or interest on the Securities and shall notify the
Trustee of any default by the Issuers in making any such payment. If the Company
or a domestically incorporated Wholly Owned Subsidiary acts as Paying Agent, it
shall segregate the money held by it as Paying Agent and hold it as a separate
trust fund. The Issuers at any time may require a Paying Agent to pay all money
held by it to the Trustee and to account for any funds disbursed by the Paying
Agent. Upon complying with this Section, the Paying Agent shall have no further
liability for the money delivered to the Trustee.
SECTION 2.05. Securityholder Lists. The Trustee shall preserve in as
--------------------
current a form as is reasonably practicable the most recent list available to it
of the names and addresses of Securityholders. If the Trustee is not the
Registrar, the Issuers shall furnish to the Trustee, in writing at least five
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of Securityholders.
19
<PAGE>
SECTION 2.06. Transfer and Exchange. The Securities shall be issued
---------------------
in registered form and shall be transferable only upon the surrender of a
Security for registration of transfer. When a Security is presented to the
Registrar or a co-registrar with a request to register a transfer, the Registrar
shall register the transfer as requested if the requirements of Section 8-401(1)
of the Uniform Commercial Code are met. When Securities are presented to the
Registrar or a co-registrar with a request to exchange them for an equal
principal amount of Securities of other denominations, the Registrar shall make
the exchange as requested if the same requirements are met. To permit
registration of transfers and exchanges, the Issuers shall execute and the
Trustee shall authenticate Securities at the Registrar's or co-registrar's
request. The Issuers may require payment of a sum sufficient to pay all taxes,
assessments or other governmental charges. The Issuers shall not be required to
make and the Registrar need not register transfers or exchanges of Securities
selected for redemption (except, in the case of Securities to be redeemed in
part, the portion thereof not to be redeemed) or any Securities for a period of
15 days before a selection of Securities to be redeemed or any Securities 15
days before an interest payment date.
Prior to the due presentation for registration of transfer of any
Security, the Issuers, the Trustee, the Paying Agent, the Registrar or any co-
registrar may deem and treat the person in whose name a Security is registered
as the absolute owner of such Security for the purpose of receiving payment of
principal of and interest on such Security and for all other purposes
whatsoever, whether or not such Security is overdue, and none of the Issuers,
the Trustee, the Paying Agent, the Registrar or any co-registrar shall be
affected by notice to the contrary.
SECTION 2.07. Replacement Securities. If a mutilated Security is
----------------------
surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Issuers shall issue
and the Trustee shall authenticate a replacement Security if the requirements of
Section 8-405 of the Uniform Commercial Code are met and the Holder satisfies
any other reasonable requirements of the Trustee. If required by the Trustee or
the Issuers, such Holder shall furnish an indemnity bond sufficient in the
judgment of the Issuers and the Trustee to protect the Issuers, the Trustee, the
Paying Agent, the Registrar and any co-registrar from any loss which any of them
may suffer if a Security is replaced. The Issuers and the Trustee may charge the
Holder for their expenses in replacing a Security.
Every replacement Security is an additional obligation of the Issuers.
SECTION 2.08. Outstanding Securities. Securities outstanding at any
----------------------
time are all Securities authenticated by the
20
<PAGE>
Trustee except for those cancelled by it, those delivered to it for cancellation
and those described in this Section as not outstanding. A Security does not
cease to be outstanding because the Company or an affiliate of the Company holds
the Security.
If a Security is replaced pursuant to Section 2.07, it ceases to be
outstanding unless the Trustee and the Issuers receive proof satisfactory to
them that the replaced Security is held by a bona fide purchaser.
If the Paying Agent segregates and holds in trust, in accordance with
this Indenture, on a redemption date or maturity date money sufficient to pay
all principal and interest payable on that date with respect to the Securities
to be redeemed or maturing, as the case may be, then on and after that date such
Securities cease to be outstanding and interest on them ceases to accrue.
SECTION 2.09. Temporary Securities; Global Securities. (a) Until
---------------------------------------
definitive Securities are ready for delivery, the Issuers may prepare and the
Trustee shall authenticate temporary Securities. Temporary Securities shall be
substantially in the form of definitive Securities but may have variations that
the Issuers consider appropriate for temporary Securities. Every temporary
Security shall be executed by the Issuers and authenticated by the Trustee, and
registered by the Registrar, upon the same conditions, and with like effect, as
a definitive Security. Without unreasonable delay, the Issuers shall prepare and
the Trustee shall authenticate definitive Securities and deliver them in
exchange for temporary Securities. All references herein to "definitive
Securities" shall be deemed to apply equally to permanent Global Securities.
(b) If the Issuers shall advise the Trustee that the Securities are
to be issued as one or more Global Securities, then the Issuers shall execute
and the Trustee shall, in accordance with Section 2.02, authenticate and deliver
to the Depositary or pursuant to the Depositary's instruction one or more
Global Securities. Each Global Security shall bear a legend substantially to the
following effect: "Except as otherwise provided in Section 2.09 of the
Indenture, this Security may be transferred, in whole but not in part, only to
another nominee of the Depositary or to a successor Depositary or to a nominee
of successor Depositary."
(c) Notwithstanding any other provision of this Section 2.09 or of
Section 2.06, except for exchanges of Global Securities as provided in Section
2.09(e), a Global Security may be transferred, in whole but not in part and in
the manner provided in Section 2.06, only to another nominee of the Depositary,
or to a successor Depositary selected or approved by the Issuers or to a nominee
of such successor Depositary.
21
<PAGE>
(d) If at any time the Depositary notifies the Issuers that it is
unwilling or unable to continue as Depositary or, with respect to a Depositary
contemplated by clause (ii) of the definition thereof, if at any time the
Depositary shall no longer be registered or in good standing under the Exchange
Act or other applicable statute or regulation and, in any such case, a successor
Depositary is not appointed by the Issuers within 90 days after the Issuers
receive such notice or becomes aware of such condition, as the case may be, this
Section 2.09 shall no longer be applicable to the Securities and the Issuers
will execute, and the Trustee will authenticate and deliver, Securities in
definitive form, in authorized denominations, and in an aggregate principal
amount equal to the principal amount of the Global Security in exchange for such
Global Security.
(e) Upon any exchange of a part of a temporary or permanent Global
Security for definitive Securities, the temporary or permanent Global Security,
as the case may be, shall be endorsed by the Trustee or an authenticating agent
for the Trustee to reflect the reduction of its principal amount by an amount
equal to the aggregate principal amount of definitive Securities so exchanged
and endorsed.
SECTION 2.10. Cancellation. The Issuers at any time may deliver
------------
Securities to the Trustee for cancellation. The Registrar and the Paying Agent
shall forward to the Trustee any Securities surrendered to them for registration
of transfer, exchange or payment. The Trustee and no one else shall cancel and
destroy (subject to the record retention requirements of the Exchange Act) all
Securities surrendered for registration of transfer, exchange, payment or
cancellation and deliver a certificate of such destruction to the Company unless
the Company directs the Trustee to deliver cancelled Securities to the Company.
The Issuers may not issue new Securities to replace Securities they have
redeemed, paid or delivered to the Trustee for cancellation.
SECTION 2.11. Defaulted Interest. If the Issuers default in a
------------------
payment of interest on the Securities, the Issuers shall pay defaulted interest
(plus interest on such defaulted interest to the extent lawful) in any lawful
manner. The Issuers may determine to pay the defaulted interest to the persons
who are Securityholders on a subsequent special record date, which date shall be
at least five Business Days prior the payment date. If the Issuers so determine,
the Issuers shall fix or cause to be fixed any such special record date and
payment date, and, at least 15 days before any such special record date, the
Issuers shall mail to each Securityholder a notice that states the special
record date, the payment date and the amount of defaulted interest to be paid.
22
<PAGE>
ARTICLE III
Redemption
----------
Section 3.01. Notices to Trustee. If the Issuers elect to redeem
------------------
Securities pursuant to paragraph 5 of the Securities, they shall notify the
Trustee in writing of the redemption date and the principal amount of Securities
to be redeemed.
The Issuers shall give each notice to the Trustee provided for in this
Section at least 45 days before the redemption date and at least 15 days prior
to the notice mailed to Holders pursuant to Section 3.03, unless the Trustee
consents to a shorter period, provided, however, that if the Issuers have
incurred any obligation to repurchase the Securities pursuant to Section 4.11,
then such notice to the Trustee or any Securityholder shall be given
simultaneously with the notice given to the Securityholders relating to a Change
of Control. Such notice shall be accompanied by an Officers' Certificate from
the Company to the effect that such redemption will comply with the conditions
herein. If fewer than all the Securities are to be redeemed, the record date
relating to such redemption shall be selected by the Issuers given to the
Trustee, which record date shall be not less than 15 days after the date of
notice to the Trustee.
SECTION 3.02. Selection of Securities To Be Redeemed. If fewer than
--------------------------------------
all the Securities are to be redeemed, the Trustee shall select the Securities
to be redeemed pro rata or by lot or by a method that complies with applicable
legal and securities exchange requirements, if any, and that the Trustee
considers fair and appropriate and in accordance with methods generally used at
the time of selection by fiduciaries in similar circumstances. The Trustee shall
make the selection from outstanding Securities not previously called for
redemption. The Trustee may select for redemption portions of the principal of
Securities that have denominations larger than $1,000. Securities and portions
thereof that the Trustee selects shall be in amounts of $1,000 or a whole
multiple of $1,000. Provisions of this Indenture that apply to Securities called
for redemption also apply to portions of Securities called for redemption. The
Trustee shall notify the Issuers promptly of the Securities or portions of
Securities to be redeemed.
Section 3.03. Notice of Redemption. At least 30 days but not more
--------------------
than 60 days before a date for redemption of Securities, the Issuers shall mail
a notice of redemption by first-class mail to each Holder of Securities to be
redeemed.
The notice shall identify the Securities to be redeemed pursuant to
paragraph 5 thereof and shall state:
23
<PAGE>
(1) the redemption date;
(2) the redemption price of and accrued and unpaid interest on such
Securities;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(5) if fewer than all the outstanding Securities are to be redeemed,
the identification and principal amounts of the particular Securities to be
redeemed;
(6) that, unless the Issuers default in making such redemption
payment or the Paying Agent is prohibited from making such payment pursuant
to the terms of this Indenture, interest on Securities (or portion thereof)
called for redemption ceases to accrue on and after the redemption date;
and
(7) that no representation is made as to the correctness or accuracy
of the CUSIP number, if any, listed in such notice or printed on the
Securities.
At the Issuers' request, the Trustee shall give the notice of
redemption in the Issuers' name and at the Issuers' expense. In such event, the
Issuers shall provide the Trustee with the information required by clauses (1)
through (3).
SECTION 3.04. Effect of Notice of Redemption. Once notice of
------------------------------
redemption is mailed, Securities called for redemption become due and payable on
the redemption date and at the redemption price stated in the notice. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price stated in the notice, plus accrued and unpaid interest to the redemption
date. Failure to give notice or any defect in the notice to any Holder shall not
affect the validity of the notice to any other Holder.
SECTION 3.05. Deposit of Redemption Price. Prior to the redemption
---------------------------
date, the Issuers shall deposit with the Paying Agent (or, if the Company or a
domestically incorporated Wholly Owned Subsidiary is the Paying Agent, shall
segregate and hold in trust) money sufficient to pay the redemption price of and
accrued and unpaid interest on all Securities to be redeemed on that date other
than Securities or portions of Securities called for redemption which have been
delivered by the Issuers to the Trustee for cancellation.
SECTION 3.06. Securities Redeemed in Part. Upon surrender of a
---------------------------
Security that is redeemed in part, the Issuers
24
<PAGE>
shall execute and the Trustee shall authenticate for the Holder (at the
Issuers's expense) a new Security equal in principal amount to the unredeemed
portion of the Security surrendered.
ARTICLE IV
Covenants
---------
SECTION 4.01. Payment of Securities. The Issuers shall promptly pay
---------------------
the principal of and interest on the Securities on the dates and in the manner
provided in the Securities and in this Indenture. Principal and interest shall
be considered paid on the date due if on such date the Trustee or the Paying
Agent holds in accordance with this Indenture money sufficient to pay all
principal and interest then due and the Trustee or the Paying Agent, as the case
may be, is not prohibited from paying such money to the Securityholders on that
date pursuant to the terms of this Indenture.
The Issuers shall pay interest on overdue principal at the rate borne
by the Securities plus 1% per annum, and they shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
The obligations of the Issuers under this Section 4.01 shall be joint
and several.
SECTION 4.02. SEC Reports. The Issuers shall file with the Trustee
-----------
and provide Securityholders, within 15 days after they file them with the SEC,
copies of their annual report or reports and of the information, documents and
other reports (or copies of such portions of any of the foregoing as the SEC may
by rules and regulations prescribe) which the Issuers are required to file with
the SEC pursuant to Section 13 or 15(d) of the Exchange Act. In the event the
Company or Finance Corp. is at any time no longer subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, it shall continue to
provide the Trustee with reports containing substantially the same information
as would have been required to be filed with the SEC had it continued to have
been subject to such reporting requirements. In such event, such reports shall
be provided at the times the Company or Finance Corp. would have been required
to provide reports had it continued to have been subject to such reporting
requirements. The Issuers also shall comply with the other provisions of TIA (S)
314(a).
SECTION 4.03. Limitation on Restricted Payments. (a) The Company
----------------------------------
shall not, and shall not permit any of its Subsidiaries, directly or indirectly,
to: (1) declare or pay any dividend or make any distribution on or in respect of
its Capital Stock, including any payment in connection with any merger or
consolidation involving the Company (except dividends or
25
<PAGE>
distributions payable solely in its Capital Stock (other than Disqualified
Capital Stock) or payable to the Company or a Subsidiary), (2) purchase, redeem
or otherwise acquire or retire for value any Capital Stock of the Company or of
any direct or indirect parent of the Company, (3) purchase, repurchase, redeem,
defease or otherwise acquire or retire for value, prior to scheduled maturity,
scheduled repayment or scheduled sinking fund payment, and Subordinated
Obligations (other than the purchase, repurchase or other acquisition of
Subordinated Obligations purchased in anticipation of satisfying a sinking fund
obligation, principal installment or final maturity, in each case due within one
year of the date of acquisition) or (4) make any Investment in any Affiliate of
the Company other than a Subsidiary or a person which will become a Subsidiary
as a result of any such Investment (any such dividend, distribution, purchase,
redemption, repurchase, defeasance, other acquisition, retirement or Investment
being herein referred to as a "Restricted Payment"), unless, at the time of such
Restricted Payment:
(i) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
(ii) the Consolidated EBITDA Coverage Ratio exceeds 3.0 to 1;
(iii) Total Debt does not exceed 60% of Consolidated Net Tangible
Assets on a pro forma basis as of the end of the most recently completed
fiscal quarter ending at least 5 days prior to the date on which such
Restricted Payment is made; and
(iv) such Restricted Payment (the amount of any such payment, if
other than cash, to be determined by the Board of Directors, whose
determination shall be conclusive and evidenced by a resolution in an
Officers' Certificate from the Company delivered to the Trustee), together
with the aggregate of all other Restricted Payments (other than any
Restricted Payments permitted by the provisions of clauses (i), (ii) or
(iii) of Section 4.03 (b)) made by the Company and its Subsidiaries in the
fiscal quarter during which such Restricted Payment is made shall not
exceed an amount equal to Available Cash of the Company for the immediately
preceding fiscal quarter.
(b) The provisions of this Section shall not prohibit:
(i) Any purchase, redemption, repurchase, defeasance, other
acquisition or retirement (a "purchase of redemption") of Capital Stock or
Subordinated Obligations of the Company made by exchange for, or out of the
proceeds of the substantially concurrent sale (other than to a Subsidiary)
of, Capital Stock of the Company (other than Disqualified
26
<PAGE>
Capital Stock); provided, however, that (A) such purchase or redemption shall be
excluded in the calculation of the amount of Restricted Payments and (B) the Net
Cash Proceeds from such sale (to the extent so used) shall be excluded in the
calculation of the amount of Available Cash in clause Section 4.03 (a) (iv);
(ii) Any purchase or redemption of Subordinated Obligations of the
Company made by exchange for, or out of the proceeds of the substantially
concurrent sale (other than to a Subsidiary) of, Debt of the Company; provided,
however, that such Debt shall be subordinated to the Securities to at least the
same extent as the Subordinated Obligations so exchanged, purchased or redeemed,
shall have a Stated Maturity later than the earlier of the Stated Maturity of
the Securities and the Stated Maturity such Subordinated Obligations and shall
have an Average Life greater than the lesser of the Average Life of the
Securities and the Average Life of such Subordinated Obligations; provided
further, however, that (A) such purchase or redemption shall be excluded in the
calculation of the amount of Restricted Payments and (B) the Net Cash Proceeds
from such sale (to the extent so used) shall be excluded in the calculation of
the amount of Available Cash in Section 4.03(a) (iv);
(iii) Any purchase or redemption of Subordinated Obligations from Net
Available Cash to the extent permitted under Section 4.06; provided,
however, that (A) such purchase or redemption shall be excluded in the
calculation of the amount of Restricted Payments and (B) the Net Available Cash
from such sale (to the extent so used) shall be excluded from the definition of
Available Cash in Section 4.03 (a) (iv); or
(iv) Dividends paid within 60 days after the date of declaration
thereof if at such date of declaration such dividend would have complied
with this provision; provided, however, that at the time of payment of such
dividend, no further Default shall have occurred and be continuing (or
would result therefrom); provided further, however, that such dividend
shall be included (when paid, but not when declared) in the calculation of
the amount of Restricted Payments.
(c) Not later than the date of making any Restricted Payment, the Company
shall deliver to the Trustee an Officers' Certificate of the Company stating
that such Restricted Payment is permitted and setting forth the basis upon which
the calculations required by this Section 4.03 were computed, which calculations
may be based upon the Company's latest available financial statements.
27
<PAGE>
SECTION 4.04. Limitation on Debt. (a) The Company shall not, and
------------------
shall not permit any of its Subsidiaries to, directly or indirectly, issue any
Debt unless, at the time of such issuance, the Consolidated EBITDA Coverage
Ratio as of the date such Debt is issued exceeds 2.5 to 1.
(b) Notwithstanding the foregoing, the Company and its Subsidiaries may
issue the following Debt:
(1) (A) Commercial paper of the Company having a maturity of 12
months or less in an aggregate principal amount not to exceed $50.0
million outstanding at any time and (B) Debt issued pursuant to the Credit
Facility (or any Refinancing Agreement);
(2) Debt issued to and held by the Company or a Wholly Owned
Subsidiary; provided, however, that any subsequent issuance or transfer of
any Capital Stock that results in any such Wholly Owned Subsidiary ceasing
to be a Wholly Owned Subsidiary or any transfer of such Debt (other than to
the Company or a Wholly Owned Subsidiary) shall be deemed, in each case, to
constitute the issuance of such Debt by the issuer thereof;
(3) The Securities and Debt issued in exchange for, or the proceeds
of which are used to Refinance, any Debt permitted by this clause (3);
provided, however, that (i) the principal amount of the Debt so issued
shall not exceed the principal amount of the Debt so Refinanced and (ii)
the Debt so issued (A) shall have a Stated Maturity no earlier than the
Stated Maturity of the Debt so Refinanced and (B) shall have an Average
Life no less than the remaining Average Life of the Debt so Refinanced;
(4) Debt (other than Debt described in clause (1), (2) or (3) above)
outstanding on the date on which the Securities were originally issued or
Debt issued in exchange for, or the proceeds of which are used to
Refinance, any Debt permitted by this clause (4) or permitted by clause (a)
above; provided, however, that the principal amount of the Debt so issued
shall not exceed the principal amount of the Debt so Refinanced and the
Debt so issued (A) shall have a Stated Maturity no earlier than the Stated
Maturity of the Debt so Refinanced and (B) shall have an Average Life no
less than the remaining Average Life of the Debt so Refinanced; and
(5) Debt in an aggregate principal amount which, together with all
other Debt of the Company then outstanding (other than Debt permitted by
clauses (1) through (4) above or clause (a) above) does not exceed $20.0
million (less the amount of any Debt and Preferred Stock of Subsidiaries
then
28
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outstanding and incurred pursuant to clause (e) of Section 4.07).
SECTION 4.05. Limitation on Restrictions on Distributions from
------------------------------------------------
Subsidiaries. The Company shall not permit any of its Subsidiaries to create or
- ------------
permit to exist or become effective any consensual encumbrance or restriction on
the ability of any Subsidiary to (1) pay dividends or make any other
distributions on its Capital Stock or pay any Debt or other obligation owed to
the Company, (2) make any loans or advances to the Company or (3) transfer any
of its tangible property or tangible assets to the Company, except:
(a) Any encumbrance or restriction pursuant to an agreement in effect
at or entered into on the date the Securities are issued, including any
encumbrance or restriction existing pursuant to the Credit Facility in
effect on the date the Securities are issued;
(b) Any encumbrance or restriction with respect to a Subsidiary
pursuant to an agreement relating to any Debt issued by such Subsidiary on
or prior to the date on which such Subsidiary was acquired by the Company
(other than Debt issued as consideration in, or to provide all or any
portion of the funds utilized to consummate, the transaction or series of
related transactions pursuant to which such Subsidiary became a Subsidiary
or was acquired by the Company) and outstanding on such date;
(c) Any encumbrance or restriction pursuant to an agreement effecting
a Refinancing of Debt issued pursuant to an agreement referred to in clause
(a) or (b) of this Section 4.05 or contained in any amendment to an
agreement referred to in such clause (a) or (b); provided, however, that
the encumbrances and restrictions contained in any of such refinancing
agreement or amendment are no less favorable to the Securityholders than
encumbrances and restrictions contained in such agreements;
(d) In the case of clause (3) above, any such encumbrance or
restriction consisting of the covenant set forth in Section 4.10 or other,
similar covenants or agreements; and
(e) In the case of clause (3) above, restrictions contained in
security agreements securing Debt of a Subsidiary to the extent such
restrictions restrict the transfer of the property subject to such security
agreements.
SECTION 4.06. Limitation on Sales of Assets and Subsidiary Stock.
--------------------------------------------------
The Company shall not, and shall not permit any of its Subsidiaries to, make any
Asset Disposition unless (i)
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<PAGE>
the Company or such Subsidiary receives consideration at the time of such Asset
Disposition at least equal to the fair market value, as determined in good faith
by the Board of Directors or the board of directors of the relevant Subsidiary
(including as to the value of all non-cash consideration), of the shares and
assets subject to such Asset Disposition and at lease 80% of the consideration
thereof received by the Company or such Subsidiary is in the form of cash or
cash equivalents or consists of assets in which the Company or such Subsidiary,
as the case may be, would have been able to invest pursuant to the election set
forth in clause (B) below, and (ii) an amount equal to 100% of the Net Available
Cash from such Asset Disposition is applied by the Company (or such Subsidiary,
as the case may be) (A) first, to the extent the Company elects (or is required
by the terms of any Pari Passu Debt), to prepay, repay or purchase Pari Passu
Debt or Debt of a Wholly Owned Subsidiary or such Subsidiary elects (or is
required by the terms of any Pari Passu Debt) to prepay, repay or purchase Debt
or Pari Passu Debt (in each case other than Debt owed to the Company or an
Affiliate of the Company) within 60 days from the later of the date of such
Asset Disposition or the receipt of such Net Available Cash; (B) second, to the
extent of the balance of such Net Available Cash after any application in
accordance with clause (A), at the election of the Company or such Subsidiary,
as the case may be, to acquire assets to replace its assets that were the
subject of such Asset Disposition or to acquire assets (or to make improvements
to existing assets) that (as determined by the Board of Directors or the board
of directors of such Subsidiary, as the case may be) will be used in the
business of the Company and its Subsidiaries existing on the date of original
issuance of the Securities or in businesses reasonably related thereto, in each
case by the later of (x) the date that is 180 days from the date of such Asset
Disposition or (y) the date of the receipt of such Net Available Cash (the later
of (x) and (y) being hereinafter called the "New Asset Acquisition Date"); (C)
third, to the extent of any balance of such Net Available Cash after application
and in accordance with clauses (A) and (B), to make an offer (the "Net Available
Cash Offer") pursuant to and subject to the conditions contained in this
Indenture, to the holders of the Securities (and to holders of other Pari Passu
Debt designated by the Company) to purchase Securities (and such other Pari
Passu Debt) at a purchase price of 100% of the principal amount thereof (without
premium) plus accrued and unpaid interest (or in respect of such other Pari
Passu Debt such lesser price, if any, as may be provided for by the terms of
such other Pari Passu Debt) (the aggregate amount of such purchase price being
hereinafter called the "Net Available Cash Payment") and (D) fourth, to the
extent of the balance of such Net Available Cash after application in accordance
with clauses (A), (B) and (C), to any application not prohibited by this
Indenture; provided, however, that in connection with any prepayment, repayment
or purchase of Debt pursuant to clause (A) or (C) above, the Company or such
Subsidiary shall retire such Debt and shall cause the related loan commitment
(if any) to be
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permanently reduced in an amount equal to the principal amount so prepaid,
repaid or purchased. Notwithstanding the foregoing provisions of this paragraph,
the Company and its Subsidiaries shall not be required to apply any Net
Available Cash (other than Net Available Cash from an Asset Disposition
consisting of a sale and leaseback transaction that the Company has elected to
treat as an Asset Disposition pursuant to clause (ii) of Section 4.09) in
accordance with this paragraph except to the extent that the aggregate Net
Available Cash from all Asset Dispositions which are not applied in accordance
with this paragraph exceeds $10.0 million. Pending application of Net Available
Cash pursuant to this covenant, such Net Available Cash shall be invested in
Permitted Investments.
Within 30 days after the New Asset Acquisition Date, the Company shall
commence a Net Available Cash Offer by mailing a notice to the Trustee and each
Holder stating:
(i) that the Net Available Cash Offer is being made pursuant to this
Section and that all Securities validly tendered will be accepted for
payment on a pro rata basis;
(ii) the purchase price and the date of purchase (which shall be a
Business Day no earlier than 30 days nor later than 60 days from the date
notice is mailed) (the "Net Available Cash Payment Date");
(iii) that any Security not tendered will continue to accrue interest
as provided in this Indenture;
(iv) that, unless the Company defaults in the payment therefore, any
Security accepted for payment pursuant to the Net Available Cash Offer
shall cease to accrue interest after the Net Available Cash Payment Date;
(v) that Holders electing to have a Security purchased pursuant to
the Net Available Cash Offer will be required to surrender the Security,
together with the form entitled "Option of Holder to Elect Purchase" on the
reverse side of the Security duly completed, to the Paying Agent at the
address specified in the notice prior to the close of business on the
Business Day immediately preceding the Net Available Cash Payment Date;
(vi) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than the close of business on the third
Business Day immediately preceding the Net Available Cash Payment Date, a
facsimile transmission or letter setting forth the name of such Holder, the
principal amount of Securities delivered for purchase and a statement that
such Holder is withdrawing his election to have such Securities purchased;
and
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<PAGE>
(vii) that Holders whose Securities are being purchased only in part
will be issued new Securities of like tenor equal in principal amount to
the unpurchased portion of the Securities surrendered; provided, however,
that each Security purchased and each new Security issued shall be in an
original principal amount of $1,000 or integral multiples thereof.
On or prior to the date notice is mailed to the Trustee and each
Holder, the Company shall furnish the Trustee with an Officers' Certificate of
the Company stating the amount of the Net Available Cash Payment.
On the Net Available Cash Payment Date, the Company shall:
(i) accept for payment on a pro rata basis Securities or portions
thereof tendered pursuant to the Net Available Cash Offer;
(ii) deposit with the Paying Agent money sufficient to pay the
purchase price of all Securities or portions thereof so accepted; and
(iii) deliver, or cause to be delivered, to the Trustee, Securities or
portions thereof so accepted together with an Officers' Certificate of the
Company specifying the Securities or portions thereof accepted for payment
by the Company.
The Company will publicly announce the results of the Net Available
Cash Offer as soon as practicable after the Net Available Cash Payment Date.
Notwithstanding the foregoing, the Company may modify the procedures
set forth above for a Net Available Cash Offer in any manner not adverse to
holders of the Securities.
The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
covenant. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this covenant, the Company shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under this clause by virtue thereof.
SECTION 4.07. Limitation on Debt and Preferred Stock of Subsidiaries.
------------------------------------------------------
The Company shall not permit any Subsidiary to issue, directly or indirectly,
any Debt or Preferred Stock except:
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<PAGE>
(a) Debt or Preferred Stock issued to and held by the Company or a
Wholly Owned Subsidiary; provided, however, that (i) any subsequent
issuance or transfer of any Capital Stock that results in any such Wholly
Owned Subsidiary ceasing to be a Wholly Owned Subsidiary or (ii) any
subsequent transfer of such Debt or Preferred Stock (other than to the
Company or a Wholly Owned Subsidiary) shall be deemed, in each case, to
constitute the issuance of such Debt or Preferred Stock by the issuer
thereof;
(b) Debt or Preferred Stock of a Subsidiary issued and outstanding on
or prior to the date on which such Subsidiary was acquired by the Company
(other than Debt or Preferred Stock issued as consideration in, or to
provide all or any portion of the funds or credit support utilized to
consummate, the transaction or series of transactions pursuant to which
such Subsidiary became a Subsidiary or was acquired by the Company);
(c) Any other Debt or Preferred Stock (other than any described in
clause (a) or (b)) issued and outstanding on the date the Securities are
issued;
(d) Debt or Preferred Stock issued in exchange for, or the proceeds
of which are used to Refinance, Debt or Preferred Stock referred to in the
foregoing clause (b) or (c); provided, however, the principal amount or
liquidation value of such Debt or Preferred Stock so issued shall not
exceed the principal amount or the liquidation value of the Debt or
Preferred stock so Refinanced and (ii) the Debt or Preferred Stock so
issued (A) shall have a Stated Maturity no earlier than the Stated Maturity
of the Debt or Preferred Stock being exchanged or Refinanced and (B) shall
have an Average Life no less than the remaining Average Life of the Debt or
Preferred Stock being Refinanced; and
(e) Debt and Preferred Stock in an aggregate principal amount which,
together with any other Debt or Preferred stock of Subsidiaries then
outstanding (other than Debt or Preferred Stock permitted by clauses (a)
through (d) of this covenant) does not exceed $20.0 million (less the
amount of any Debt then outstanding and incurred pursuant to Section
4.04(b)(5)).
SECTION 4.08. Limitation on Liens Securing Debt. The Company shall
---------------------------------
not, and shall not permit any Subsidiary to, directly or indirectly, create,
incur, assume or otherwise cause or suffer to exist or become effective any Lien
securing Debt of any kind (other than Permitted Liens) upon any of their
respective property or assets, now owned or hereafter acquired, or any income or
profits therefrom, unless the Company makes or causes to be made effective
provision whereby payment of the principal and interest on the Securities will
be secured by such
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<PAGE>
Lien equally and ratably with (or prior to) such Debt for so long as such Debt
shall be secured; provided, however, that (i) in the event of any sale, transfer
or other disposition by the Company or any Subsidiary of Accounts Receivable or
of any Subsidiary substantially all the assets of which are Accounts Receivable,
which sale, transfer or other disposition constitutes a "sale" under generally
accepted accounting principles (as in effect at the time thereof), neither such
sale, transfer or other disposition nor any recourse provided by the Company or
any Subsidiary in connection therewith shall, in any event, constitute Debt or a
Lien and (ii) neither the satisfaction and discharge of any Debt pursuant to any
indenture or other instrument governing such Debt, nor the defeasance of any
Debt pursuant to any indenture or other instrument governing such Debt, shall be
deemed the creation, incurrence, assumption or existence of any Lien securing
Debt.
SECTION 4.09. Limitation on Sale and Leaseback Transactions. The
---------------------------------------------
Company shall not, and shall not permit any Subsidiary to, enter into any
arrangement with any person providing for the leasing by the Company or any
Subsidiary of any real or tangible personal property (except for leases for a
term of not more than one year (including renewal rights) or between the Company
and a Subsidiary or between Subsidiaries), which property has been or is to be
sold or transferred by the Company or such Subsidiary to such person in
contemplation of such leasing, unless (i) the Company or such Subsidiary would
be entitled to create a Lien on such property securing Debt in an amount equal
to the Attributable Debt with respect to such arrangement without equally and
ratably securing the Securities pursuant to Section 4.08 or (ii) the Company or
such Subsidiary shall have received consideration from such arrangement at least
equal to the fair market value of the property subject thereto (which shall be
determined in good faith by the Board of Directors and evidenced by a resolution
of the Board of Directors) and elects to treat the assets subject to such
arrangement as an Asset Disposition subject to Section 4.06.
SECTION 4.10. Limitation on Transactions with Affiliates. The Company
------------------------------------------
shall not, and shall not permit any Subsidiary to, conduct any business or enter
into any transaction or series of similar transactions (including the purchase,
sale, lease or exchange of any property or the rendering of any service) with
any Affiliate of the Company (other than (i) a Wholly Owned Subsidiary or (ii)
an employee stock ownership plan, unless the terms of such business, transaction
or series of transactions are fair and reasonable to the Company. All such
business, transaction or series of transactions that are approved by the Board
of Directors (including by a majority of the Independent Committee of the Board
of Directors) shall be deemed fair and reasonable to the Company. This Section,
however, will not prohibit any management compensation arrangements consistent
with industry practice, and all such business, transactions or
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<PAGE>
series of transactions that have been completed or with respect to which
agreements have been entered into prior to the date of this Indenture shall be
deemed fair and reasonable to the Company.
SECTION 4.11. Change of Control. (a) Upon a Change of Control, each
-----------------
Holder shall have the right to require that the Issuers repurchase such Holder's
Securities (other than Securities called for redemption pursuant to Article III)
at a purchase price in cash equal to 101% of the principal amount thereof plus
accrued and unpaid interest, if any, to the date of purchase, in accordance with
the terms contemplated in this Section 4.11.
(b) Within 30 days following any Change of Control, the Issuers shall mail
a notice to each Holder (other than each Holder to which the Issuers have
theretofore mailed a notice of redemption pursuant to Section 3.03 in connection
with the redemption of all the Securities held by such Holder) with a copy to
the Trustee stating: (1) that a Change of Control has occurred and that such
Holder has the right to require the Issuers to purchase such Holder's Securities
(other than Floating Rate Securities called for redemption pursuant to Article
III) at a purchase price in cash equal to 101% of the principal amount thereof
plus accrued and unpaid interest, if any, to the date of purchase; (2) the
circumstances and relevant facts regarding such Change of Control; (3) the
repurchase date (which shall be no earlier than 30 days nor later than 60 days
from the date such notice is mailed); and (4) the instructions, determined by
the Issuers consistent with this Indenture, that a Holder must follow in order
to have its Securities purchased.
(c) Holders electing to have a Security purchased will be required to
surrender the Security, with the attached form entitled "Option of Holder to
Elect Purchase" duly completed, to the Issuers at the address specified in the
notice referred to in paragraph (b) above at least 10 Business Days prior to the
repurchase date. Holders will be entitled to withdraw their election if the
Trustee or the Issuers receive, not later than three Business Days prior to the
repurchase date, a telegram, telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of the Security delivered for
purchase by the Holder and a statement that such Holder is withdrawing his
election to have such Security purchased.
(d) On the purchase date, all Securities purchased by the Issuers under
this Section shall be delivered by the Trustee for cancellation, and the Issuers
shall pay the purchase price plus accrued and unpaid interest, if any, to the
Holders entitled thereto.
(e) The Issuers shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and
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<PAGE>
any other securities laws or regulations in connection with the repurchase of
Securities pursuant to this Section. To the extent that the provision of any
securities laws or regulations conflict with the provisions of this Section, the
Issuers shall comply with the applicable securities laws and regulations and
shall not be deemed to have breached their obligations under this Section by
virtue thereof.
SECTION 4.12. Uncompleted Acquisition Offer. If the Company does not
-----------------------------
consummate the Acquisition by June 15, 1995 (the "Uncompleted Acquisition
Date"), the Issuers will be required to make an offer (the "Uncompleted
Acquisition Offer"), pursuant to and subject to the conditions contained in this
Indenture, to the holders of the Securities to purchase up to $35,000,000
principal amount of Securities at a purchase price of 100% of the principal
amount thereof plus accrued and unpaid interest to the date of purchase.
Within 30 days after the Uncompleted Acquisition Date, the Issuers
shall commence an Uncompleted Acquisition Offer by mailing a notice to the
Trustee and each Holder stating:
(i) that the Uncompleted Acquisition Offer is being made
pursuant to this Section and that all Securities validly tendered will be
accepted for payment on a pro rata basis;
(ii) the purchase price and the date of purchase (which
shall be a Business Day no earlier than 30 days nor later than 60 days from
the date notice is mailed) (the "Uncompleted Acquisition Offer Payment
Date");
(iii) that any Security not tendered will continue to accrue
interest as provided in this Indenture;
(iv) that, unless the Issuers default in the payment
therefore, any Security accepted for payment pursuant to the Uncompleted
Acquisition Offer shall cease to accrue interest after the Uncompleted
Acquisition Offer Payment Date;
(v) that Holders electing to have a Security purchased
pursuant to the Offer will be required to surrender the Security, together
with the form entitled "Option of Holder to Elect Purchase" on the reverse
side of the Security duly completed, to the Paying Agent at the address
specified in the notice prior to the close of business on the Business Day
immediately preceding the Uncompleted Acquisition Offer Payment Date;
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<PAGE>
(vi) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than the close of business on the third
Business Day immediately preceding the Uncompleted Acquisition Offer
Payment Date, a facsimile transmission or letter setting forth the name of
such Holder, the principal amount of Securities delivered for purchase and
a statement that such Holder is withdrawing his election to have such
Securities purchased; and
(vii) that Holders whose Securities are being purchased only in part
will be issued new Securities of like tenor equal in principal amount to
the unpurchased portion of the Securities surrendered; provided, however,
that each Security purchased and each new Security issued shall be in an
original principal amount of $1,000 or integral multiples thereof.
On or prior to the date notice is mailed to the Trustee and each Holder,
the Company shall furnish the Trustee with an Officers' Certificate of the
Company stating the amount of the payment.
On the Uncompleted Acquisition Payment Date, the Company shall:
(i) accept for payment on a pro rata basis Securities or portions
thereof tendered pursuant to the Uncompleted Acquisition Offer;
(ii) deposit with the Paying Agent money sufficient to pay the
purchase price of all Securities or portions thereof so accepted; and
(iii) deliver, or cause to be delivered, to the Trustee, Securities
or portions thereof so accepted together with an Officers' Certificate of
the Company specifying the Securities or portions thereof accepted for
payment by the Company.
Notwithstanding the foregoing, the Company may modify the procedures set
forth above for an Uncompleted Acquisition Offer in any manner not adverse to
holders of the Securities.
The Issuers shall comply, to the extent applicable, with the requirements
of Section 14(e) of the Exchange Act and any other securities laws or
regulations in connection with the repurchase of Securities pursuant to this
covenant. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this covenant, the Issuers shall comply
with the applicable securities laws and regulations and
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<PAGE>
shall not be deemed to have breached its obligations under this clause by virtue
thereof.
SECTION 4.13. Compliance Certificate. Each of the Issuers shall
----------------------
deliver to the Trustee within 120 days after the end of each fiscal year an
Officers' Certificate stating that in the course of the performance by the
signers of their duties as Officers of the Company or Finance Corp., as the case
may be, they would normally have knowledge of any Default by the Company or
Finance Corp., as the case may be, and whether or not the signers know of any
Default that occurred during such period. If they do, the certificate shall
describe the Default, its status and what action the Company or Finance Corp.,
as the case may be, is taking or purposes to take with respect thereto.
ARTICLE V
---------
Successors
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SECTION 5.01. When the Company May Merge or Transfer Assets. The
---------------------------------------------
Company shall not consolidate with or merge with or into, or sell, convey,
transfer or lease all or substantially all its assets to, another person unless
(i) the resulting, surviving or transferee person or lessee (if other than the
Company) shall be a person organized and existing under the laws of the United
States or any State thereof or the District of Columbia and such entity shall
assume by supplemental indenture all the obligations of the Company under the
Securities and this Indenture, (ii) immediately after giving effect to such
transaction, no Default shall have happened and be continuing, (iii) immediately
after giving effect to such transaction, the resulting, surviving or transferee
person would be able to issue an additional $1.00 of Debt pursuant to the first
sentence of Section 4.04, (iv) immediately after giving effect to such
transaction, the resulting, surviving or transferee person has a Consolidated
Net Worth which is not less than the Consolidated Net Worth of the Company
immediately prior to such transaction and (v) the Company shall have delivered
to the Trustee an Officers' Certificate of the Company and an Opinion of Counsel
of the Company, each stating that such consolidation, merger, sale, conveyance,
transfer or lease and such supplemental indenture comply with this Indenture.
SECTION 5.02. When Finance Corp. May Merge or Transfer Assets.
-----------------------------------------------
Finance Corp. shall not consolidate with or merge with or into, or sell, convey,
transfer or lease all or substantially all its assets to, another person unless
(i) the resulting, surviving or transferee person or lessee (if other than
Finance Corp.) shall be an entity organized or existing under the laws of the
United States or any state thereof or the District of Columbia and such entity
expressly assumes by supplemental indenture all the obligations of the Company
under the Securities
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<PAGE>
and this Indenture, (ii) immediately after giving effect to such transaction, no
Default shall have happened and be continuing and (iii) Finance Corp. shall have
delivered to the Trustee an Officers' Certificate of Finance Corp. and an
Opinion of Counsel of Finance Corp., each stating that such consolidation,
merger, sale, conveyance, transfer or lease and such supplemental indenture
comply with this Indenture.
SECTION 5.03. Obligations After Merger or Transfer. Upon any such
------------------------------------
consolidation, merger, sale, conveyance, transfer or lease, and following such
an assumption by the resulting, surviving or transferee person or lessee, (i)
such resulting, surviving or transferee person or lessee shall succeed to and be
substituted for the Company or Finance Corp., as the case may be, with the same
effect as if it had been named herein and (ii) the Company or Finance Corp., as
the case may be, shall be released and discharged from all obligations and
covenants under this Indenture; provided, however, that in the event of any such
lease, the Company or Finance Corp., as the case may be, shall not, by operation
of this Section 5.03, be released or discharged from its obligation to pay the
principal of and interest on the Securities at the times, places and rate
prescribed in this Indenture and the Securities. In the case of the Company or
Finance Corp., as the case may be, such resulting, surviving or transferee
person or lessee may cause to be signed, and may issue either in its own name or
in the name of the Company or Finance Corp., as the case may be, prior to such
succession any or all of the Securities issuable hereunder which theretofore
shall not have been signed by the Company or Finance Corp., as the case may be,
and delivered to the Trustee; and, upon the order of such resulting, surviving
or transferee person or lessee instead of the Company or Finance Corp., and
subject to all the terms, conditions and limitations in this Indenture
prescribed, the Trustee shall authenticate and shall deliver any Securities
which previously shall have been signed and delivered by the officers of the
Company or Finance Corp. to the Trustee for authentication, and any Securities
which such resulting, surviving or transferee person or lessee thereafter shall
cause to be signed and delivered to the Trustee for that purpose. All the
Securities so issued shall in all respects have the same legal rank and benefit
under this Indenture as the Securities theretofore or thereafter issued in
accordance with the terms of this Indenture.
In case of any such consolidation, merger, sale, conveyance, transfer
or lease, such changes in phraseology and form (but not in substance) may be
made in the Securities thereafter to be issued as may be appropriate.
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ARTICLE VI
Defaults and Remedies
---------------------
SECTION 6.01. Events of Default. An "Event of Default" occurs if:
-----------------
(1) the Issuers default in any payment of interest on any Security
when the same becomes due and payable, and such default continues for a
period of 30 days;
(2) the Issuers default in the payment of the principal of any
Security when the same becomes due and payable at its Stated Maturity, upon
redemption, upon declaration or otherwise;
(3) the Company or Finance Corp. fails to comply with Section 5.01;
(4) the failure by the Company to comply for 30 days after notice
with any of its obligations under Section 4.02, 4.03, 4.04, 4.05, 4.06,
4.07, 4.08, 4.09, 4.10 or 4.11 (other than a failure to purchase
Securities);
(5) the Issuers fail to comply with any of their respective
agreements in the Securities or this Indenture (other than those referred
to in (1), (2), (3) or (4) above) and such failure continues for 60 days
after the notice specified below;
(6) Debt of the Company, Finance Corp. or any Significant Subsidiary
is not paid within any applicable grace period after final maturity or is
accelerated by the holders thereof because of a default and the total
amount of such Debt unpaid or accelerated exceeds $20,000,000 and such
failure continues for 10 days after notice;
(7) the Company, Finance Corp. or any Significant Subsidiary pursuant
to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief against it in
an involuntary case;
(C) consents to the appointment of a Custodian of it or for any
substantial part of its property; or
(D) makes a general assignment for the benefit of its creditors;
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(8) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company, Finance Corp. or any
Significant Subsidiary in an involuntary case;
(B) appoints a Custodian of the Company, Finance Corp. or any
Significant Subsidiary or for any substantial part of their respective
property; or
(C) order the winding up or liquidation of the Company or any
Significant Subsidiary; or
(9) any judgment or decree for the payment of money in excess of
$20,000,000 (to the extent not covered by insurance) shall be rendered
against either of the Issuers, and there is a period of 60 days following
such judgment during which such judgment or decree is not discharged,
waived or the execution thereof stayed and such judgment or decree is not
satisfied, discharged, waived or the execution stayed within 10 days after
the notice specified below.
The term "Bankruptcy Law" means Title 11, United States Code, or any
------------------
similar Federal or state law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator, custodian or similar official
under any Bankruptcy Law.
A Default under clause (4), (5), (6) or (9) is not an Event of Default
until the Trustee or the Holders of at least 25% in principal amount of the
Securities notify the Issuers of the Default and the Issuers do not cure such
Default within the time specified after receipt of such Notice. Such Notice must
specify the Default, demand that it be remedied and state that such notice is a
"Notice of Default".
The Company shall deliver to the Trustee, within 30 days after the
occurrence thereof, written notice in the form of an Officers' Certificate of
any Default or Event of Default, its status and what action the Issuers are
taking or propose to take with respect thereto.
SECTION 6.02. Acceleration. If an Event of Default (other than an
------------
Event of Default specified in Section 6.01(7) or (8)) occurs and is continuing,
the Trustee by notice to the Issuers, or the Holders of at least 25% in
principal amount of the Securities by notice to the Issuers and the Trustee, may
declare the principal of and the accrued interest on all the Securities to be
due and payable. Upon such a declaration, such principal and interest shall be
due and payable immediately. If an Event of Default specified in Section 6.01(7)
or (8) occurs and is continuing, the principal of and interest on all the
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Securities shall ipso facto become and be immediately due and payable without
---- -----
any declaration or other act on the part of the Trustee or any Securityholders.
The Holders of a majority in principal amount of the Securities by notice to the
Trustee may rescind an acceleration and its consequences if the rescission would
not conflict with any judgment or decree and if all existing Events of Default
have been cured or waived except nonpayment of principal or interest that has
become due solely because of acceleration. No such rescission shall affect any
subsequent Default or impair any right consequent thereto.
SECTION 6.03. Other Remedies. If an Event of Default occurs and its
--------------
continuing, the Trustee may pursue any available remedy to collect the payment
of principal of or interest on the Securities or to enforce the performance of
any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right of remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
SECTION 6.04. Waiver of Past Defaults. The Holders of a majority in
-----------------------
principal amount of the Securities by notice to the Trustee may waive an
existing Default and its consequences (including in connection with a tender
offer or exchange offer for Securities) except (1) a Default in the payment of
the principal of or interest on a Security or (2) a Default in respect of a
provision that under Section 9.02 cannot be amended without the consent of each
Securityholder affected. When a Default is waived, it is deemed cured, but no
such waiver shall extend to any subsequent or other Default or impair any
consequent right.
SECTION 6.05. Control by Majority. The Holders of a majority in
-------------------
principal amount of the Securities may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee (including in connection
with a tender offer or exchange offer for Securities). However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture, or,
subject to Section 7.01, that the Trustee determines is unduly prejudicial to
the rights of other Securityholders or would involve the Trustee in personal
liability, provided, however, that the Trustee may take any other action deemed
proper by the Trustee that is not inconsistent with such direction. Prior to
taking any action hereunder, the Trustee shall be entitled to indemnification
satisfactory to it
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in its sole discretion against all losses and expenses caused by taking or not
taking such action.
SECTION 6.06. Limitation on Suits. A Securityholder may not pursue
-------------------
any remedy with respect to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice stating that an
Event of Default is continuing;
(2) the Holders of at least 25% in principal amount of the Securities
make a written request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee reasonable security
or indemnity against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer of security or indemnity; and
(5) the Holders of a majority of principal amount of the Securities
do not give the Trustee a direction inconsistent with the request during
such 60-day period.
A Securityholder may not use this Indenture to prejudice the rights of
another Securityholder or to obtain a preference or priority over another
Securityholder.
SECTION 6.07. Rights of Holders to Receive Payment. Notwithstanding
------------------------------------
any other provision of this Indenture, the right of any Holder to receive
payment of principal of and interest on the Securities held by such Holder, on
or after the respective due dates expressed in the Securities, or to bring suit
for the enforcement of any such payment on or after such respective dates, shall
not be impaired or affected without the consent of such Holder.
SECTION 6.08. Collection Suit by Trustee. If an Event of Default in
--------------------------
payment of interest or principal specified in Section 6.01(1) or (2) occurs and
is continuing, the Trustee may recover judgment in its own name and as trustee
of an express trust against the Issuers for the whole amount of principal and
interest remaining unpaid (together with interest on such unpaid interest to
the extent lawful) and the amounts provided for in Section 7.07.
SECTION 6.09. Trustee May File Proofs of Claim. The Trustee may file
--------------------------------
such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee and the Securityholders
allowed in any judicial proceedings relative to the Company or Finance Corp., or
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their respective creditors or property, and, unless prohibited by law or
applicable regulations, may vote on behalf of the Holders in any election of a
trustee in bankruptcy or other person performing similar functions, and any
Custodian in any such judicial proceeding is hereby authorized by each Holder to
make payments to the Trustee and, in the event that the Trustee shall consent to
the making of such payments directly to the Holders, to pay to the Trustee any
amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and its counsel, and any other amounts due
the Trustee under Section 7.07.
SECTION 6.10. Priorities. If the Trustee collects any money or
----------
securities pursuant to this Article 6, it shall pay out such money or securities
in the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to Securityholders for amounts due and unpaid on the
Securities for principal and interest, ratably, without preference or priority
of any kind, according to the amounts due and payable on the Securities for
principal and interest, respectively; and
THIRD: to the Company.
The Trustee may fix a record date and payment date for any payment to
Securityholders pursuant to this Section. At least 15 days before such record
date, the Issuers shall mail to each Securityholder and the Trustee a notice
that states the record date, the payment date and amount to be paid.
SECTION 6.11. Undertaking for Costs. In any suit for the enforcement
---------------------
of any right or remedy under this Indenture or in any suit against the Trustee
for any action taken or omitted by it as Trustee, a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees, against any party litigant in the
suit, having due regard to the merits and good faith of the claims or defenses
made by the party litigant. This Section does not apply to a suit by the
Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by Holders of
more than 10% in principal amount of the Securities.
SECTION 6.12. Waiver of Stay or Extension Laws. Neither the Company
--------------------------------
nor Finance Corp. (to the extent they may lawfully do so) shall at any time
insist upon, or plead, or in any manner whatsoever claim or take the benefit or
advantage of, any 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 and Finance Corp.
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(to the extent that they may lawfully do so) hereby expressly waive all benefit
or advantage of any such law, and shall not hinder, delay or impede the
execution of any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law had been enacted.
ARTICLE VII
Trustee
-------
SECTION 7.01. Duties of Trustee. (a) If an Event of Default has
-----------------
occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in
their exercise as a prudent person would exercise or use under the circumstances
in the conduct of such person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture. However, the Trustee shall examine the certificates
and opinions to determine whether or not they conform to the
requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful misconduct,
except that:
(1) this paragraph does not limit the effect of paragraph (b) of
this Section;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05.
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(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Issuers.
(f) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
SECTION 7.02. Rights of Trustee. (a) The Trustee may rely on any
-----------------
document believed by it to be genuine and to have been signed or presented by
the proper person. The Trustee need not investigate any fact or matter stated in
the document.
(b) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on the
Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be responsible
for the misconduct or negligence of any agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights or
powers; provided, however, that the Trustee's conduct does not constitute
wilful misconduct, negligence or bad faith.
(e) The Trustee may consult with counsel, and the advice or opinion
of counsel with respect to legal matters relating to this Indenture and the
Securities shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder in
good faith and in accordance with the advice or opinion of such counsel.
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SECTION 7.03. Individual Rights of Trustee. The Trustee in its
----------------------------
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or its affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar
or co-paying agent may do the same with like rights. However, the Trustee must
comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer. The Trustee shall not be
--------------------
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Issuers'
use of the proceeds from the Securities, and it shall not be responsible for any
statement of the Company or Finance Corp. in the Indenture or in any document
issued in connection with the sale of the Securities or in the Securities other
than the Trustee's certificate of authentication.
SECTION 7.05. Notice of Defaults. If a Default occurs and is
------------------
continuing and if it is known to the Trustee, the Trustee shall mail to each
Securityholder notice of the Default within 90 days after it occurs. Except in
the case of a Default in payment of principal of or interest on any Security
(including payments pursuant to the mandatory redemption provisions of such
Security), the Trustee may withhold the notice if and so long as a committee of
its Trust Officers in good faith determines that withholding the notice is in
the interests of Securityholders.
SECTION 7.06. Reports by Trustee to Holders. On or before July 15,
-----------------------------
1996 and or on before July 15 in every year thereafter, the Trustee shall mail
to each Securityholder a brief report dated as of May 16 that complies with TIA
(S) 313(a). The Trustee also shall comply with TIA (S) 313(b).
A copy of each report at the time of its mailing to Securityholders
shall be filed with the SEC and each stock exchange on which the Securities are
listed. The Company agrees to notify promptly the Trustee whenever the
Securities become listed on any stock exchange and of any delisting thereof.
SECTION 7.07. Compensation and Indemnity. The Issuers shall pay to the
--------------------------
Trustee from time to time reasonable compensation for its services. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Issuers shall reimburse the Trustee upon
request for all reasonable out-of-pocket expenses incurred or made by it,
including costs of collection, in addition to the compensation for its services.
Such expenses shall include the reasonable compensation and expenses
disbursement and advances of the Trustee's agents, counsel, accountants and
experts. The Issuers shall indemnify the Trustee against any and all loss,
liability or expense (including reasonable attorneys' fees and expenses)
incurred by it in connection with the administration of
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this trust and the performance of its duties hereunder. The Trustee shall notify
the Issuers promptly of any claim for which it may seek indemnity. Failure by
the Trustee to so notify the Issuers shall not relieve the Issuers of their
obligations hereunder. The Issuers shall defend such claim and the Trustee shall
cooperate in the defense. The Trustee may have separate counsel and the Issuers
shall pay the reasonable fees and expenses of such counsel. The Issuers need not
reimburse any expense or indemnify against any loss, liability or expense
incurred by the Trustee through the Trustee's own wilful misconduct, negligence
or bad faith.
To secure the Issuers' payment obligations in this Section, the
Issuers and the Holders agree that the Trustee shall have a lien prior to the
Securities on all money or property held or collected by the Trustee, except
that held in trust to pay principal of and interest on particular Securities.
The Issuers' payment obligations pursuant to this Section shall
survive the discharge of this Indenture. When the Trustee incurs fees and
expenses (including reasonable attorneys' fees and expenses) after the
occurrence of a Default specified in Section 6.01(7) or (8), such fees and
expenses are intended to constitute expenses of administration under the
Bankruptcy Law.
SECTION 7.08. Replacement of Trustee. The Trustee may resign at any
----------------------
time by so notifying the Issuers. The Holders of a majority in principal amount
of the Securities may remove the Trustee by so notifying the Trustee and may
appoint a successor Trustee. The Issuers shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged a bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the Trustee or
its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Issuers shall promptly appoint a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuers. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the
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successor Trustee, subject to the lien provided for in Section 7.07.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Issuers or the
Holders of a majority in principal amount of the Securities may petition any
court of competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to this
Section, the Issuers' obligations under Section 7.07 shall continue for the
benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger. If the Trustee
---------------------------
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors by merger, conversion
or consolidation to the Trustee shall succeed to the trusts created by this
Indenture any of the Securities shall have been authenticated but not delivered,
any such successor to the Trustee may adopt the certificate of authentication of
any predecessor trustee, and deliver such Securities so authenticated; and in
case at that time any of the Securities shall not have been authenticated, any
successor to the Trustee may authenticate such Securities either in the name of
any predecessor hereunder or in the name of the successor to the Trustee; and in
all such cases such certificates shall have the full force which it is anywhere
in the Securities or in this Indenture provided that the certificate of the
Trustee shall have.
SECTION 7.10. Eligibility; Disqualification. The Trustee shall at all
-----------------------------
times satisfy the requirements of TIA (S) 310(a). The Trustee shall have a
combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition. The Trustee shall comply with TIA
(S) 310(b), including the optional provision permitted by the second sentence of
TIA (S) 310(b)(9); provided, however, that there shall be excluded from the
operation of TIA (S) 310(b)(1) any indenture or indentures under which other
securities or certificates of interest or participation in other securities of
the Issuers are outstanding if the requirements for such exclusion set forth in
TIA (S) 310(b)(1) are met.
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SECTION 7.11. Preferential Collection of Claims Against Issuers. The
-------------------------------------------------
Trustee shall comply with TIA S 311(a), excluding any creditor relationship
listed in TIA S 311(b). A Trustee who has resigned or been removed shall be
subject to TIA S 311(a) to the extent indicated.
ARTICLE VIII
Discharge of Indenture: Defeasance
----------------------------------
SECTION 8.01. Discharge of Liability on Securities; Defeasance. (a)
------------------------------------------------
When (i) the Issuers deliver to the Trustee all outstanding Securities (other
than Securities replaced pursuant to Section 2.07) for cancellation or (ii) all
outstanding Securities have become due and payable and the Issuers irrevocably
deposit with the Trustee funds sufficient to pay at maturity all outstanding
Securities, including interest thereon (other than Securities replaced pursuant
to Section 2.07), and if in either case the Issuers pay all other sums payable
hereunder by the Issuers, then this Indenture shall, subject to Sections 8.01(c)
and 8.06, cease to be of further effect. The Trustee shall acknowledge
satisfaction and discharge of this Indenture on demand of the Issuers
accompanied by an Officers' Certificate of the Company and an Opinion of Counsel
and at the cost and expense of the Issuers.
(b) Subject to Section 8.01(c) and 8.06, the Issuers at any time may
terminate (i) all their obligations under the Securities and this Indenture
("legal defeasance option") or (ii) their obligations under Sections 4.02, 4.03,
4.04, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11, 5.01 and 5.02 and the operation
of Sections 6.01(3), 6.01(4), 6.01(5), 6.01(6), 6.01(7) (only with respect to
Significant Subsidiaries), 6.01(8) (only with respect to Significant
Subsidiaries) and 6.01(9) ("covenant defeasance option"). The Issuers may
exercise their legal defeasance option notwithstanding their prior exercise of
their covenant defeasance option.
If the Issuers exercise their legal defeasance option, payment of the
Securities may not be accelerated because of an Event of Default. If the Issuers
exercise their covenant defeasance option, payment of the Securities may not be
accelerated because of an Event of Default specified in Section 6.01(3),
6.01(4), 6.01(5), 6.01(6), 6.01(7) (only with respect to Significant
Subsidiaries), 6.01(8) (only with respect to Significant Subsidiaries) or
6.01(9).
Upon satisfaction of the conditions set forth herein and upon request
of the Issuers, the Trustee shall acknowledge in writing the discharge of those
obligations that the Issuers terminate.
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(c) Notwithstanding clauses (a) and (b) above, the Issuers'
obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 7.07, 7.08, 8.04, 8.05 and
8.06 shall survive until the Securities have been paid in full. Thereafter, the
Issuers' obligations in Sections 7.07, 8.04 and 8.05 shall survive.
SECTION 8.02. Conditions to Defeasance. The Issuers may exercise
------------------------
their legal defeasance option or their covenant defeasance option only if:
(1) the Issuers irrevocably deposit in trust with the Trustee money
or U.S. Government Obligations for the payment of principal and interest on
the outstanding Securities to maturity or redemption, as the case may be;
(2) the Issuers deliver to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and without
reinvestment on the deposited U.S. Government Obligations plus any
deposited money without investment will provide cash at such times and in
such amounts (but, in the case of the legal defeasance option only, not
more than such amounts) as will be sufficient to pay principal and interest
when due on all the outstanding Securities to maturity or redemption, as
the case may be;
(3) 123 days pass after the deposit is made and during the 123-day
period no Default (with respect to the Issuers) specified in Section
6.01(7) or (8) occurs which is continuing at the end of the period;
(4) no Default has occurred and is continuing on the date of such
deposit and after giving effect thereto;
(5) the deposit does not constitute a default under any other
agreement binding on either of the Issuers; and
(6) the Company delivers an Opinion of Counsel to the effect that
Securityholders will not recognize income, gain or loss for Federal income
tax purposes as a result of such deposit and defeasance and will be subject
to Federal income tax on the same amount and in the same manner and at the
same times as would have been the case if such deposit and defeasance had
not occurred (and, in the case of legal defeasance only, such Opinion of
Counsel must be based on a ruling of the Internal Revenue Service or a
change in applicable Federal income tax law); and
(7) the Company delivers to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that all conditions precedent to the
defeasance and discharge of the Securities as contemplated by this Article
8 have been complied with.
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Before or after a deposit, the Issuers may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date in
accordance with Article 3.
SECTION 8.03. Application of Trust Money. The Trustee shall hold in
--------------------------
trust money or U.S. Government Obligations deposited with it pursuant to this
Article 8. It shall apply the deposited money and the money from U.S. Government
Obligations through the Paying Agent and in accordance with this Indenture to
the payment of principal of and interest on the Securities.
SECTION 8.04. Repayment to the Company. The Trustee and the Paying
------------------------
Agent shall promptly turn over to the Company upon request any excess money or
securities held by them at any time.
Subject to any applicable abandoned property law, the Trustee and the
Paying Agent shall pay to the Company upon request any money held by them for
the payment of principal or interest that remains unclaimed for two years, and,
thereafter, Securityholders entitled to the money must look to the Issuers for
payment as general creditors.
SECTION 8.05. Indemnity for Government Obligations. The Issuers shall
------------------------------------
pay and shall indemnify the Trustee against any tax, fee or other charge imposed
on or assessed against deposited U.S. Government Obligations or the principal
and interest received on such U.S. Government Obligations.
SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is unable
-------------
to apply any money or U.S. Government Obligations in accordance with this
Article 8 by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Issuers' obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article 8 until such time as the Trustee
or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with this Article 8; provided, however, that, if the
Issuers have made any payment of interest on or principal of any Securities
because of the reinstatement of its obligations, the Issuers shall be subrogated
to the rights of the Holders of such Securities to receive such payment from the
money or U.S. Government Obligations held by the Trustee or Paying Agent.
-52-
<PAGE>
ARTICLE IX
Amendments
----------
SECTION 9.01. Without Consent of Holders. The Company, Finance Corp.
--------------------------
and the Trustee may amend this Indenture or the Securities without notice to or
consent of any Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article V;
(3) to provide for uncertificated Securities in addition to or in
place of certificated Securities; provided, however, that the
uncertificated Securities are issued in registered form for purposes of
Section 163(f) of the Internal Revenue Code of 1986, as amended, or in a
manner such that the uncertificated Securities are described in Section
163(f)(2)(B) of the Internal Revenue Code of 1986, as amended;
(4) to add guarantees with respect to the Securities;
(5) to add to the covenants of the Issuers for the benefit of the
Holders or to surrender any right or power herein conferred upon the
Issuers;
(6) to comply with any requirements of the SEC in connection with
qualifying this Indenture under the TIA; or
(7) to make any change that does not adversely affect the rights of
any Securityholder.
After an amendment under this Section becomes effective, the Issuers
shall mail to Securityholders a notice briefly describing such amendment. The
failure to give such notice to all Securityholders, or any defect therein, shall
not impair or affect the validity of an amendment under this Section.
SECTION 9.02. With Consent of Holders. Subject to the next sentence,
-----------------------
the Company, Finance Corp. and the Trustee may amend this Indenture or the
Securities in any respect without notice to any Securityholder but with the
written consent of the Holders of at least a majority in principal amount of the
Securities (including consents obtained in connection with a tender offer or
exchange offer for Securities). However, without the consent of each
Securityholder affected, no amendment shall:
(1) reduce the amount of Securities whose Holders must consent to an
amendment;
-53-
<PAGE>
(2) reduce the rate of or extend the time for payment of interest on
any Security;
(3) reduce the principal of or extend the fixed maturity of any
Security;
(4) reduce the premium payable upon the redemption of any Security or
change the time at which any Security may or shall be redeemed;
(5) make any Security payable in money other than that stated in the
Security; or
(6) make any change in Section 6.04 or 6.07 or this Section.
It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent approves the substance thereof.
After an amendment under this Section becomes effective, the Issuers
shall mail to Securityholders a notice briefly describing such amendment. The
failure to give such notice to all Securityholders, or any defect therein, shall
not impair or affect the validity of an amendment under this Section.
SECTION 9.03. Compliance with Trust Indenture Act. Every amendment
-----------------------------------
to this Indenture or the Securities shall comply with the TIA as then in effect.
SECTION 9.04. Revocation and Effect of Consents and Waivers. A
---------------------------------------------
consent to an amendment or a waiver by a Holder of a Security shall bind the
Holder and every subsequent Holder of that Security or portion of the Security
that evidences the same debt as the consenting Holder's Security, even if
notation of the consent or waiver is not made on the Security. However, any such
Holder or subsequent Holder may revoke the consent or waiver as to such Holder's
Security or portion of the Security if the Trustee receives the notice of
revocation before the date the amendment or waiver becomes effective. After an
amendment or waiver becomes effective, it shall bind every Securityholder.
The Issuers may, but shall not be obligated to, fix a record date for
the purpose of determining the Securityholders entitled to give their consent or
take any other action described above. If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those persons who were
Securityholders at such record date (or their duly designated proxies), and only
those persons, shall be entitled to give such consent or to revoke any consent
previously given or to take any such action, whether or not such persons
continue to be Holders
-54-
<PAGE>
after such record date. No such consent shall be valid or effective for more
than 120 days after such record date.
SECTION 9.05. Notation on or Exchange of Securities. If an amendment
-------------------------------------
changes the terms of a Security, the Trustee may require the Holder of the
Security to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Security regarding the changed terms and return it to the
Holder. Alternatively, if the Issuers or the Trustee so determine, the Issuers
in exchange for the Security shall issue and the Trustee shall authenticate a
new Security that reflects the changed terms. Failure to make the appropriate
notation or to issue a new Security shall not affect the validity of such
amendment.
SECTION 9.06. Trustee to Sign Amendments. The Trustee shall sign any
--------------------------
amendment authorized pursuant to this Article 9 if the amendment does note
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may but need not sign it. In signing such amendment the
Trustee shall be entitled to receive indemnity reasonably satisfactory to it and
to receive, and shall be fully protected in relying upon, an Officers'
Certificate and an Opinion of Counsel stating that such amendment is authorized
or permitted by this Indenture and that all conditions precedent, if any, have
been satisfied.
ARTICLE X
Miscellaneous
-------------
SECTION 10.01. Trust Indenture Act Controls. If any provision of this
----------------------------
Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control.
SECTION 10.02. Notices. Any notice or communication shall be in
-------
writing and delivered in person or mailed by first-class mail addressed as
follows:
if to the Company or Finance Corp.:
BCP Management, Inc.
180 East Broad Street
Columbus, Ohio 43215
Attention: Secretary
if to the Trustee:
The Chase Manhattan Bank (National Association)
4 Chase MetroTech Center - 3rd Floor
Brooklyn, New York 11245
Attention: Institutional Trust Group
-55-
<PAGE>
The Company, Finance Corp. or the Trustee by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Security holder shall be
mailed to the Securityholder at the Securityholder's address as it appears on
the registration books of the Registrar and shall be sufficiently given if so
mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above it is duly given, whether or not the addressee receives it.
SECTION 10.03. Communication by Holders with Other Holders.
--------------------------------------------
Securityholders may communicate pursuant to TIA S 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, Finance Corp., the Trustee, the Registrar and anyone
else shall have the protection of TIA S 312(c).
SECTION 10.04. Certificate and Opinion as to Conditions Precedent.
---------------------------------------------------
Upon any request or application by the Issuers to the Trustee to take or refrain
from taking any action under this Indenture, the Company shall furnish to the
Trustee:
(1) an Officers' Certificate stating that, in the Opinion of the
signers, all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(2) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
SECTION 10.05. Statement Required in Certificate or Opinion. Each
---------------------------------------------
certificate or opinion with respect to compliance with a covenant or condition
provided for in this Indenture shall include:
(1) a statement that the person making such certificate or opinion
has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to
-56-
<PAGE>
whether or not such covenant or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such person,
such covenant or condition has been complied with.
SECTION 10.06. When Securities Disregarded. In determining whether
----------------------------
the Holders of the required principal amount of Securities have concurred in any
direction, waiver or consent, Securities owned by the Issuers or by any person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Issuers shall be disregarded and deemed not to be
outstanding, except that, for the purpose of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Securities which the Trustee knows are so owned shall be so disregarded. Also,
subject to the foregoing, only Securities outstanding at the time shall be
considered in any such determination.
SECTION 10.07 Rules by Trustee, Paying Agent and Registrar. The
---------------------------------------------
Trustee may make reasonable rules for action by or meeting of Securityholders.
The Registrar and the Paying Agent may make reasonable rules for their
functions.
SECTION 10.08. Legal Holidays. A "Legal Holiday" is a Saturday, a
---------------
Sunday or a day on which banking institutions are not required to be open in the
State of New York. If a payment date is a Legal Holiday, payment shall be made
on the next succeeding day that is not a Legal Holiday, and no interest shall
accrue for the intervening period. If a regular record date is a Legal Holiday,
the record date shall not be affected.
SECTION 10.09. Governing Law. This Indenture and the Securities shall
--------------
be governed by, and construed in accordance with, the laws of the State of New
York but without giving effect to applicable principles of conflicts of law to
the extent that the application of the laws of another jurisdiction would be
required thereby.
SECTION 10.10. No Recourse Against Others. (a) No director, officer,
---------------------------
employee, partner or stockholder, as such, of the Company or of Finance Corp.
(or of such partner or stockholder) shall have any liability for any obligations
of the Company or of Finance Corp., as the case may be, under the Securities or
this Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Securityholder
shall waive and release all such liability. The waiver and release shall be a
part of the consideration for the issue of the Securities.
(b) without limiting the generality of the foregoing, if the Company
is a limited partnership, the obligations of the
-57-
<PAGE>
Company hereunder and under the Securities will be non-recourse to the general
partner (the "General Partner") of the Company (and its affiliates (other than
the Company)), and principal of and interest on the Securities will be payable
only out of the cash flow and assets of the Company. The Trustee hereby agrees,
and each holder of a Security will be deemed to have agreed, that,
notwithstanding any statutory and/or common law liability of a general partner
for the debts and obligations of a partnership, neither the General Partner nor
its assets (nor any of its affiliates (other than the Company) nor their
respective assets) shall be liable for any of the obligations of the Company
hereunder or under the Securities, it being expressly agreed and acknowledged
that all such obligations of the Company shall be payable and satisfied only
from the cash flow and assets of the Company.
SECTION 10.11. Successors. All agreements of the Company and Finance
----------
Corp. in this Indenture and the Securities shall bind their respective
successors. All agreements of the Trustee in this Indenture shall bind its
successors.
SECTION 10.12. Multiple Originals. The parties may sign any number of
------------------
copies of this Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement. One signed copy is enough to prove this
Indenture.
SECTION 10.13. Table of Contents; Headings. The table of contents,
----------------------------
cross-reference sheet and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not intended
to be considered a part hereof and shall not modify or restrict any of the terms
or provisions thereof.
-58-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed as of the date first written above.
BORDEN CHEMICALS AND PLASTICS
OPERATING PARTNERSHIP
by: BCP MANAGEMENT, INC.,
its General Partner,
Attest: by: /S/ JOSEPH M. SAGGESE
---------------------------
Name: Joseph M. Saggese
Title: President
/S/ LAWRENCE L. DIEKER
- ------------------------------
Name: Lawrence L. Dieker
Title: Secretary
BCP FINANCE CORPORATION
Attest: by: /S/ JOSEPH M. SAGGESE
---------------------------
Name: Joseph M. Saggese
Title: President
/S/ LAWRENCE L. DIEKER
- ------------------------------
Name: Lawrence L. Dieker
Title: Secretary
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
as Trustee
Attest: by: /S/ THOMAS J. PROVENZANO
---------------------------
Name: Thomas J. Provenzano
Title: Second Vice President
/S/ SHIEK WILTSHIRE
- ------------------------------
Name: Shiek Wiltshire
Title: Assistant Secretary
-59
<PAGE>
EXHIBIT A
[FORM OF SECURITY]
BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP
BCP FINANCE CORPORATION
No. $
9 1/2% Note Due 2005
BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP, a
Delaware limited partnership, and BCP FINANCE CORPORATION, a Delaware
corporation, as joint and several obligors, promise to pay to , or
registered assigns, the principal sum of Dollars on May 1, 2005.
Interest Payment Dates: May 1 and November 1
Record Dates: April 15 and October 15
Additional provisions of this Security are set forth on the other side
of this Security.
Dated:
BORDEN CHEMICALS AND PLASTICS
OPERATING LIMITED PARTNERSHIP
By: BCP MANAGEMENT, INC.
as General Partner
By:
____________________________
President
____________________________
Secretary
BCP FINANCE CORPORATION
By:
____________________________
President
____________________________
Secretary
-60-
<PAGE>
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
THE CHASE MANHATTAN BANK (National Association),
as Trustee, certifies that this
is one of the Securities referred
to in the Indenture.
By:
______________________________
Authorized Signatory
-61-
<PAGE>
[FORM ON REVERSE SIDE OF SECURITY]
9 1/2% Note Due 2005
1. Interest
--------
BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP, a
Delaware limited partnership (such partnership, and its successors and assigns
under the Indenture hereinafter referred to, being herein called the "Company"),
and BCP FINANCE CORPORATION, a Delaware corporation (such corporation, and its
successors and assigns under the Indenture hereinafter referred to, being herein
called "Finance Corp."; the Company and Finance Corp. are collectively referred
to herein as the "Issuers"), jointly and severally promise to pay interest on
the principal amount of this Security at the rate per annum shown above. The
Issuers will pay interest semiannually on May 1 and November 1 of each year
(beginning November 1, 1995). Interest on Securities will accrue from the most
recent date to which interest has been paid or, if no interest has been paid or
duly provided for, from May 1, 1995. Interest will be computed on the basis of a
360-day year of twelve 30-day months. The Issuers shall pay interest on overdue
principal at the rate borne by the Securities plus 1% per annum, and they shall
pay interest on overdue installments of interest at the same rate to the extent
lawful.
2. Method of Payment
-----------------
The Issuers will pay interest on the Securities (except defaulted
interest) to the persons who are registered holders of Securities at the close
of business on the April 15 or October 15 next preceding the interest payment
date even if Securities are cancelled after the record date and on or before the
interest payment date. Holders must surrender Securities to a Paying Agent to
collect principal payments. The Issuers will pay principal and interest in money
of the United States that at the time of payment is legal tender for payment of
public and private debts. However, the Issuers may pay principal and interest by
check payable in such money and may mail an interest check to a Holder's
registered address.
3. Paying Agent and Registrar
--------------------------
Initially, The Chase Manhattan Bank (National Association), a
corporation organized under the laws of the United States of America
("Trustee"), will act as Paying Agent and Registrar. The Issuers may appoint and
change and Paying Agent, Registrar or co-registrar without notice. The Company
or
-62-
<PAGE>
any of its domestically incorporated Wholly Owned Subsidiaries may act as Paying
Agent, Registrar or co-registrar.
4. Indenture
---------
The Company issued the Securities under an Indenture dated as of May
1, 1995 ("Indenture"), among the Company, Finance Corp. and the Trustee. The
terms of the Securities include those stated in the Indenture, and those made
part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C.
------
SS 77aaa-77bbbb) as in effect on the date of the Indenture (the "Act"). The
Securities are subject to all such terms, and Securityholders are referred to
the Indenture and the Act for a statement of those terms. Capitalized terms used
herein and not defined herein have the meaning ascribed thereto in the
Indenture. The Issuers will furnish to any Securityholder upon written request
and without charge to the Securityholder a copy of the Indenture which has in it
the text of this Security in larger type.
The Securities are general unsecured obligations of the Issuers
limited to $200,000,000 aggregate principal amount (subject to Section 2.07 of
the Indenture). The Indenture imposes certain limitations on (i) the payment of
dividends on, and redemption of, capital stock of the Company and its
subsidiaries and the redemption of certain subordinated obligations of the
Company, (ii) the issuance of additional debt by the Company, (iii) limitations
on restrictions on distributions from subsidiaries of the Company, (iv) sales of
assets and subsidiary stock, (v) the issuance of debt and preferred stock by the
Company's subsidiaries, (vi) sale and leaseback transactions and (vii)
transactions with affiliates. The Indenture also provides that if the Company
does not consummate the acquisition of the Addis Assets by June 15, 1995, the
Issuers will be required to offer to purchase up to $35.0 million in principal
amount of the Securities at 100% of the principal amount thereof plus accrued
and unpaid interest to the date of purchase.
5. Optional Redemption
-------------------
The Securities may not be redeemed prior to May 1, 2000. On and after
that date, the Issuers may redeem all the Securities in whole at any time or in
part from time to time at the following redemption prices (expressed in
percentages of principal amount) plus accrued interest to the redemption date:
-63-
<PAGE>
If redeemed during the 12 month period beginning May 1,
<TABLE>
<CAPTION>
Redemption
Year Price
---- ----------
<S> <C>
2000 ........................................... 104.00%
2001 ........................................... 102.50%
2002 ........................................... 101.25%
2003 and thereafter ............................. 100.00%
</TABLE>
6. Notice of Redemption
--------------------
Notice of redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each Holder of Securities to be redeemed
at his, her or its registered address. Securities in denominations larger than
$1,000 may be redeemed in part but only in whole multiples of $1,000. If money
sufficient to pay the redemption price of accrued and unpaid interest on all
Securities (or portions thereof) to be redeemed on the redemption date is
deposited with the Paying Agent on or before the redemption date and certain
other conditions are satisfied on or after such date interest ceases to accrue
on such Securities (or such portions thereof) called for redemption.
7. Change of Control
-----------------
Upon a Change of Control, each Holder shall have the right (subject to
any right of the Issuers to redeem all or any part of the Securities pursuant to
Article III of the Indenture) to require that the Issuers repurchase such
Holder's Securities at a purchase price in cash equal to 101% of the principal
amount thereof plus accrued and unpaid interest, if any, to the date of
purchase, in accordance with Section 4.11 of the Indenture.
8. Denominations; Transfer; Exchange
---------------------------------
The Securities are in registered form without coupons in denominations
of $1,000 and whole multiples of $1,000. A Holder may transfer or exchange
Securities in accordance with the Indenture. The Registrar may require a Holder,
among other things, to furnish appropriate endorsements or transfer documents
and to pay any taxes and fees required by law or permitted by the Indenture. The
Registrar need not register the transfer of or exchange any Securities selected
for redemption (except, in the case of a Security to be redeemed in part, the
portion of the Security not to be redeemed) or any Securities for a period of 15
days before a selection of Securities to be redeemed or 15 days before an
interest payment date.
-64-
<PAGE>
9. Persons Deemed Owners
---------------------
The registered holder of this Security may be treated as the owner of
it for all purposes.
10. Unclaimed Money
---------------
If the money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back to
the Company at its request unless an abandoned property law designates another
person. After any such payment, Holders entitled to the money must look only to
the Issuers and not to the Trustee for payment.
11. Defeasance
----------
Subject to certain conditions, the Issuers at any time may terminate
some or all of their obligations under the Securities and the Indenture if the
Issuers deposit with the Trustee money or U.S. Government Obligations for the
payment of principal, premium and interest on the Securities to the date fixed
for redemption or maturity, as the case may be.
12. Amendment, Waiver
-----------------
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount outstanding of the Securities
(including consents obtained in connection with a tender offer or exchange offer
for Securities) and (ii) any default or noncompliance with any provision may be
waived with the written consent of the Holders of a majority in principal amount
outstanding of the Securities (including consents obtained in connection with
a tender offer or exchange offer for Securities). Subject to certain exceptions
set forth in the Indenture, without the consent of any Securityholder, the
Company, Finance Corp. and the Trustee may amend the Indenture or the Securities
to cure any ambiguity, omission, defect or inconsistency, or to comply with
Article 5 of the Indenture, or to provide for uncertificated Securities in
addition to or in place of certificated Securities, or to comply with the Act or
to add additional covenants or surrender the Issuers' rights, or to make certain
changes in the subordination provisions, or to make any change that does not
adversely affect the rights of any Securityholder.
13. Defaults and Remedies
---------------------
Under the Indenture, Events of Default include (i) default for 30 days
in payment of interest on the Securities; (ii) default in payment of principal
on the Securities at maturity, upon redemption pursuant to paragraph 5 hereof,
upon declaration or otherwise; (iii) failure by the Issuers to comply
-65-
<PAGE>
with other agreements in the Indenture or the Securities, in certain cases
subject to notice and lapse of time; (iv) failure to pay other debt after final
maturity or after acceleration thereof, if the total amount of such debt exceeds
$20,000,000; (v) certain events of bankruptcy or insolvency; and (vi) certain
judgments or decrees for the payment of money in excess of $20,000,000. If any
Event of Default occurs and is continuing, the Trustee or the Holders of at
least 25% in principal amount of the Securities may declare all the Securities
to be due and payable immediately. Certain events of bankruptcy or insolvency
are Events of Default which will result in the Securities being due and payable
immediately upon the occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the Securities except
as provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Securities unless it receives reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in principal amount of the Securities
may direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Securityholders notice of any continuing Default (except a Default
in payment of principal or interest) if it determines that withholding notice is
in their interest.
14. Trustee Dealings with the Issuers
---------------------------------
Subject to certain limitations imposed by the Act, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its affiliates and may otherwise deal with the Company
or its affiliates with the same rights it would have if it were not Trustee.
15. No Recourse Against Others
--------------------------
A director, officer, employee, partner or stockholder, as such, of the
Company, Finance Corp. or the Trustee shall not have any liability for any
obligations of the Company or Finance Corp., as the case may be, under the
Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Security, each
Securityholder waives and releases all such liability. The waiver and release
are part of the consideration for the issue of the Securities.
Without limiting the generality of the foregoing, if the Company is a
limited partnership, the obligations of the Company hereunder and under the
Indenture will be non-recourse to the general partner (the "General Partner") of
the Company (and its affiliates (other than the Company)), and principal of and
-66-
<PAGE>
interest on this Security will be payable only out of the cash flow and assets
of the Company. The Trustee hereby agrees, and each holder of a Security will be
deemed to have agreed, that, notwithstanding any statutory and/or common law
liability of a general partner for the debts and obligations of a partnership,
neither the General Partner nor its assets (nor any of its affiliates (other
than the Company) nor their respective assets) shall be liable for any of the
obligations of the Company hereunder or under the Indenture, it being expressly
agreed and acknowledged that all such obligations of the Company shall be
payable and satisfied only from the cash flow and assets of the Company.
16. Authentication
--------------
This Security shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
17. Abbreviations
-------------
Customary abbreviations may be used in the name of a Securityholder or
an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
18. CUSIP Numbers
-------------
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Issuers have caused CUSIP numbers to be
printed on the Securities and have directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Securityholders. No representation is
made as to the accuracy of such numbers either as printed on the Securities or
as contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
19. Notices
-------
Any notice or communication shall be in writing and delivered in
person or mailed by first-class addressed as follows:
if to the Company or Finance Corp.:
BCP Management, Inc.
180 East Broad Street
Columbus, Ohio 43215
Attention: Secretary
-67-
<PAGE>
if to the Trustee:
The Chase Manhattan Bank (National Association)
4 Chase MetroTech Center - 3rd Floor
Brooklyn, New York 11245
Attention: Institutional Trust Group
The Company, Finance Corp. or the Trustee by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Securityholder shall be mailed
to the Securityholder at the Securityholder's address as it appears on the
registration books of the Registrar and shall be sufficiently given if so mailed
within the time prescribed.
-68-
<PAGE>
________________________________________________________________________________
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to
transfer this Security on the books of the Company. The agent may substitute
another to act for him.
________________________________________________________________________________
Date: _________________________ Your Signature: ____________________________
________________________________________________________________________________
Sign exactly as your name appears on the other side of this Security.
-69-
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
To elect to have this Security purchased by the Issuers pursuant to
Section 4.06, 4.11 or 4.12 of the Indenture, check the box below:
{__} Section 4.06 {__} Section 4.11 {__} Section 4.12
To elect to have only part of this Security purchased by the Issuers
pursuant to Section 4.06, Section 4.11 or Section 4.12 of the Indenture, state
the amount you elect to have purchased (in integral multiples of $1,000):
$__________________
Date: __________________ Your Signature: ___________________________________
(Sign exactly as your name appears on this Security)
Tax Identification No.: ___________________________
Signature Guarantee.
-70-
<PAGE>
================================================================================
CLOSING DOCUMENTS
================================================================================
CREDIT AGREEMENT
$100,000,000
DATED AS OF
MAY 2, 1995
AMONG
BORDEN CHEMICALS AND PLASTICS
OPERATING LIMITED PARTNERSHIP,
AS THE COMPANY,
THE BANKS DEFINED HEREIN
AND
CREDIT SUISSE,
AS AGENT,
AND
INDIVIDUALLY, AS A BANK
================================================================================
Andrews & Kurth L.L.P.
<PAGE>
BORDEN CHEMICALS AND PLASTICS
OPERATING LIMITED PARTNERSHIP
$100,000,000 LOAN FROM CREDIT SUISSE
AND THE BANKS NAMED IN THE CREDIT AGREEMENT
DATED MAY 2, 1995
INDEX TO CLOSING DOCUMENTS
DOCUMENT TAB
- -------- ---
Credit Agreement dated May 2, 1995 and executed by Borden Chemicals and 1
Plastics Operating Limited Partnership, a limited partnership organized
and existing under the New York Limited Partnership Act (the "Company"),
whose sole general partner is BCP Management Inc., a Delaware
corporation ("BCPM"), the banks and other financial institutions listed
on the signature pages under the caption ("Banks" and Credit Suisse,
("Credit Suisse"), individually as a Bank and as agent for the other
Banks (in such capacity together with any other Person who becomes the
Agent, the "Agent")
Revolving Credit Notes in the amount of each Bank's commitment 2
Officer's Certificate of the Company certifying: 3
. and attaching Certificate of Incorporation, Bylaws and Resolutions
of the General Partner and the Partnership Agreement of the Company
. other items in Section 5.01(d) of the Credit Agreement
---------------
Opinion of Sidley & Austin, counsel to the Company 4
Opinion of General Counsel of the Company 5
Certificates of Good Standing and Existence for the Company and its 6
General Partner
. Delaware
. Louisiana
. Illinois
Wachovia Bank and Trust Company, N.A. Termination Agreement 7
<PAGE>
================================================================================
CREDIT AGREEMENT
$100,000,000
DATED AS OF
MAY 2, 1995
AMONG
BORDEN CHEMICALS AND PLASTICS
OPERATING LIMITED PARTNERSHIP,
AS THE COMPANY,
THE BANKS DEFINED HEREIN
AND
CREDIT SUISSE,
AS AGENT,
AND
INDIVIDUALLY, AS A BANK
================================================================================
<PAGE>
TABLE OF CONTENTS
CREDIT AGREEMENT
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS ................... 1
Section 1.01 Definitions ........................................ 1
Section 1.02 Types of Loans and Borrowings ...................... 21
Section 1.03 Accounting Terms and Determinations ................ 21
Section 1.04 Computation of Time Periods ........................ 21
ARTICLE II LOANS .............................................. 22
Section 2.01(a) Commitment ......................................... 22
Section 2.02(b) Swing Loan Commitment .............................. 22
Section 2.02 Minimum Amount of Each Borrowing ................... 22
Section 2.03 Notice of Borrowing ................................ 23
Section 2.04 Disbursement of Funds .............................. 23
Section 2.05 Notes .............................................. 24
Section 2.06 Conversions and Continuances ....................... 24
Section 2.07 Pro Rata Borrowings ................................ 25
Section 2.08 Interest ........................................... 25
Section 2.09 Interest Periods ................................... 26
Section 2.10 Interest Rate Not Ascertainable .................... 27
Section 2.11 Reserve Requirements; Change in Circumstances ...... 27
Section 2.12 Change in Legality ................................. 29
Section 2.13 Indemnity .......................................... 30
Section 2.14 Special Provisions for Swing Loans ................. 31
ARTICLE III LETTERS OF CREDIT .................................. 32
Section 3.01 Letters of Credit .................................. 32
Section 3.02 Letter of Credit Requests .......................... 33
Section 3.03 Letter of Credit Participants ...................... 34
Section 3.04 Agreement to Repay Letter of Credit Drawings ....... 35
Section 3.05 Increased Costs .................................... 37
Section 3.06 Conflict between Applications and Agreements ....... 37
ARTICLE IV FEES; COMMITMENTS; PAYMENTS ........................ 38
Section 4.01 Fees ............................................... 38
Section 4.02 Voluntary Reduction of Commitment .................. 39
Section 4.03 Mandatory Reduction of Commitment .................. 39
Section 4.04 Voluntary Prepayments .............................. 40
Section 4.05 Mandatory Repayments ............................... 40
Section 4.06 Method and Place of Payment ........................ 41
Section 4.07 Net Payments ....................................... 41
Section 4.08 Tax Forms .......................................... 42
Section 4.09 Maturity Date Extension Option ..................... 42
-i-
<PAGE>
ARTICLE V CONDITIONS PRECEDENT ............................... 43
Section 5.01 Conditions Precedent to the Initial Borrowing of
Loans ............................................ 43
Section 5.02 Conditions Precedent to All Credit Events .......... 44
Section 5.03 Conditions Precedent to Conversions ................ 44
Section 5.04 Delivery of Documents .............................. 45
ARTICLE VI REPRESENTATIONS AND WARRANTIES ..................... 45
Section 6.01 Organization and Qualification ..................... 45
Section 6.02 Authorization and Validity ......................... 45
Section 6.03 Governmental Consents .............................. 46
Section 6.04 Conflicting or Adverse Agreements or Restrictions .. 46
Section 6.05 Title to Assets .................................... 46
Section 6.06 Litigation ......................................... 46
Section 6.07 Financial Statements, Projections and Information
Memorandum ...................................... 46
Section 6.08 Default ............................................ 47
Section 6.09 Investment Company Act ............................. 47
Section 6.10 Public Utility Holding Company Act ................. 47
Section 6.11 ERISA .............................................. 47
Section 6.12 Tax Returns and Payments ........................... 47
Section 6.13 Environmental Matters .............................. 48
Section 6.14 Purpose of Loans ................................... 48
Section 6.15 Franchises and Other Rights ........................ 49
Section 6.16 Subsidiaries ....................................... 49
Section 6.17 Solvency ........................................... 49
Section 6.18 Material Contracts ................................. 49
ARTICLE VII AFFIRMATIVE COVENANTS .............................. 49
Section 7.01 Information Covenants .............................. 49
Section 7.02 Books, Records and Inspections ..................... 51
Section 7.03 Insurance and Maintenance of Properties ............ 51
Section 7.04 Payment of Taxes ................................... 51
Section 7.05 Corporate Existence ................................ 52
Section 7.06 Compliance with Statutes ........................... 52
Section 7.07 ERISA .............................................. 52
ARTICLE VIII NEGATIVE COVENANTS ................................. 53
Section 8.01 Change in Business ................................. 53
Section 8.02 Consolidation, Merger or Sale of Assets ............ 53
Section 8.03 Liens .............................................. 53
Section 8.04 Limitation on Debt ................................. 54
Section 8.05 Investments ........................................ 55
Section 8.06 Restricted Payments ................................ 55
Section 8.07 Change in Accounting; Fiscal Year .................. 57
Section 8.08 Consolidated EBITDA Coverage Ratio ................. 57
-ii-
<PAGE>
Section 8.09 Total Debt to Consolidated Net Tangible Assets
Ratio ............................................ 57
Section 8.10 Transactions with Affiliates ....................... 57
Section 8.11 Limitation on Sales of Assets and Subsidiary Stock . 58
Section 8.12 Limitation on Debt and Preferred Stock of
Subsidiaries ..................................... 59
Section 8.13 Limitation on Sale and Leaseback Transactions ...... 60
ARTICLE IX EVENTS OF DEFAULT AND REMEDIES ..................... 60
Section 9.01 Events of Default and Remedies ..................... 60
Section 9.02 Other Remedies ..................................... 62
Section 9.03 Obligations Non Recourse as to General Partner ..... 63
ARTICLE X THE AGENT .......................................... 63
Section 10.01 Authorization and Action ........................... 63
Section 10.02 Agent's Reliance ................................... 63
Section 10.03 Agent and Affiliates; Credit Suisse (in its capacity
as a Bank) and Affiliates ........................ 64
Section 10.04 Bank Credit Decision ............................... 65
Section 10.05 Agent's Indemnity .................................. 65
Section 10.06 Successor Agent .................................... 66
Section 10.07 Notice of Default .................................. 66
ARTICLE XI MISCELLANEOUS ...................................... 66
Section 11.01 Amendments ......................................... 66
Section 11.02 Notices ............................................ 67
Section 11.03 No Waiver; Remedies ................................ 68
Section 11.04 Costs, Expenses and Taxes .......................... 68
Section 11.05 Indemnity .......................................... 69
Section 11.06 Right of Setoff .................................... 69
Section 11.07 Governing Law ...................................... 69
Section 11.08 Interest ........................................... 70
Section 11.09 Binding Effect ..................................... 71
Section 11.10 Successors and Assigns; Participants ............... 71
Section 11.11 Confidentiality .................................... 74
Section 11.12 Pro Rata Treatment ................................. 74
Section 11.13 Independence of Covenants .......................... 75
Section 11.14 Separability ....................................... 75
Section 11.15 Execution in Counterparts .......................... 75
Section 11.16 Interpretation ..................................... 75
Section 11.17 Submission to Jurisdiction ......................... 76
Section 11.18 Final Agreement of the Parties ..................... 77
Section 11.19 Waiver of Jury Trial ............................... 77
-iii-
<PAGE>
Exhibits:
- --------
Exhibit 1.01-A Administrative Questionnaire
Exhibit 2.03 Form of Notice Borrowing
Exhibit 2.05 Form of Revolving Credit Note
Exhibit 2.14 Swing Loan Participation Certificate
Exhibit 3.02 Form of Letter of Credit Request
Exhibit 5.01(e) Form of Opinion
Exhibit 11.10 Form of Assignment and Acceptance
Schedules:
- ---------
Schedule 6.13 Exceptions to Environmental Matters
Schedule 8.05 Investments
-iv-
<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT dated as of May 2, 1995 (this "Agreement") is
---------
among Borden Chemicals and Plastics Operating Limited Partnership, a Delaware
limited partnership (with its successors and permitted assigns, the "Company"),
-------
whose sole general partner is BCP Management, Inc., a Delaware corporation, the
banks and other financial institutions listed on the signature pages hereof
under the caption "Banks" (together with each other Person who becomes a Bank
-----
pursuant to Section 11.10, collectively, the "Banks") and Credit Suisse,
------------- -----
("Credit Suisse"), individually as a Bank and as agent for the other Banks (in
-------------
such capacity together with any other Person who becomes the Agent pursuant to
Section 10.06, the "Agent").
- ------------- -----
RECITALS
The Company has requested that the Banks make available to the Company
a revolving line of credit in the aggregate principal amount of $100,000,000 for
the purpose of refinancing certain existing debt and for working capital,
capital expenditures and general corporate purposes. The Company and the Banks
have requested that Credit Suisse act as the Agent for the Banks. The Banks and
Credit Suisse are amenable to such requests upon the terms and conditions set
forth herein. Accordingly, the Company, the Agent and the Banks now enter into
this Agreement.
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Definitions. As used in this Agreement, the following
-----------
terms shall have the following meanings:
"Accounts Receivable" means (a) any accounts receivable (whether or
not earned by performance), chattel paper, instruments, documents, general
intangibles, trade acceptances, and other rights to receive installment, rental
or other payments for, or relating to amounts due or to become due on account
of, goods or equipment sold or leased or to be sold or leased or services
rendered or to be rendered or funds advanced or loaned or to be advanced or
loaned and other similar rights to payment of any kind, (b) any proceeds of any
of the foregoing and (c) any interest in any property or asset of any kind
(whether of the obligor with respect to such accounts receivable or any other
Person) securing the payment of any item listed in clause (a) above.
"Administrative Questionnaire" means an Administrative Questionnaire
substantially in the form of Exhibit 1.01A, which each Bank has completed and
-------------
provided to the Agent and the Company.
"Affiliate" of any Person, means (i) any Person that, directly or
indirectly, is in control of, is controlled by or is under common control with
such Person or (ii) any Person who is a director or officer (A) of such Person,
(B) of any Subsidiary of such Person or (C) of any Person described in clause
(i) above. For purposes of this
<PAGE>
definition, control of a Person means the power, direct or indirect, to direct
or cause the direction of the management and policies of such Person whether by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Agent" has the meaning specified in the introduction to this
Agreement.
"Agent's Fee" has the meaning specified in Section 4.01(d).
---------------
"Agent's Letter" means that certain letter dated April 5, 1995 from
Credit Suisse to the Company and acknowledged by the Company setting forth
(among other things) the terms of the Agent's Fee.
"Agreement" has the meaning specified in the introduction to this
Credit Agreement.
"Applicable Lending Office" means, with respect to each Bank, such
Bank's Domestic Lending Office in the case of a Base Rate Loan and such Bank's
Eurodollar Lending Office in the case of a Eurodollar Loan.
"Application" means an application in the form used by the Issuing
Bank from time to time requesting the Issuing Bank to open a Letter of Credit.
"Asset Disposition" means any sale, lease, transfer or other
disposition (or series of related sales, leases, transfers or dispositions) of
Capital Stock of a Subsidiary (other than directors' qualifying shares),
property or other assets (each referred to for the purposes of this definition
as a "disposition") by the Company or any of its Subsidiaries, including any
disposition by means of a merger, consolidation or similar transaction, other
than (a) a disposition by the Company or a Subsidiary to the Company or a Wholly
Owned Subsidiary, (b) a disposition of property or assets at fair market value
in the ordinary course of business, (c) a disposition of obsolete assets in the
ordinary course of business, (d) a disposition that constitutes a Restricted
Payment or a sale and leaseback transaction and (e) any sale, transfer or other
disposition by the Company or any Subsidiary of Accounts Receivable or of any
Subsidiary substantially all the assets of which are Accounts Receivable, which
sale, transfer or other disposition constitutes a "sale" under generally
accepted accounting principles (as in effect at the time thereof).
"Assignment and Acceptance" has the meaning specified in Section
-------
11.10(c).
- --------
"Attributable Debt" in respect of a sale and leaseback arrangement
means, as at the time of determination, the present value (discounted at the
Base Rate, compounded annually) of the total obligations of the lessee for
rental payments during the remaining term of the lease included in such
arrangement (including any period for which such lease had been extended).
"Available Cash" has the meaning given to such term in the Amended and
-2-
<PAGE>
Restated Agreement of Limited Partnership of the Company, dated as of November
30, 1987, as amended to the date of this Agreement.
"Average Life" means, as of the date of determination, with respect to
any Debt, the quotient obtained by dividing (a) the sum of the products of (i)
the numbers of years from the date of determination to the dates of each
successive scheduled principal payment or redemption or similar payment with
respect to such Debt multiplied by (ii) the amount of such payment, by (b) the
sum of all such payments.
"Bank" has the meaning provided in the introduction to this Agreement.
"Bankruptcy Code" has the meaning specified in Section 9.01(e).
---------------
"Base Rate" means, a fluctuating interest rate per annum in effect
from time to time, which rate per annum shall at all times be equal to the
higher of (a) the rate of interest announced publicly by the Agent, from time to
time, as the Agent's base lending rate for commercial loans in dollars; and (b)
1/2 of 1% per annum above the Federal Funds Rate. The base lending rate is not
the lowest rate of interest charged by the Agent in connection with extensions
of credit.
"Base Rate Borrowing" means a Borrowing comprised of Base Rate Loans.
"Base Rate Loan" means any Loan bearing interest at a rate determined
by reference to the Base Rate in accordance with the provisions of Article II.
----------
"BCPM" means BCP Management, Inc., a Delaware corporation, and its
successors.
"Board" means the Board of Governors of the Federal Reserve System of
the United States (or any successor).
"Board of Directors" means the Board of Directors of the Company (or,
if the Company is a limited partnership or a general partnership, the Board of
Directors of any of its general partners or partners, respectively, authorized
to act on behalf of such limited partnership or general partnership, as the case
may be, in connection with this Agreement) or any committee thereof duly
authorized to act on behalf of such Board.
"Borden" means Borden, Inc., a New Jersey corporation, and its
successors (other than as a result of any transaction described in clause (a) of
the definition of "Change of Control", as if Borden, Inc. were deemed for such
purposes to be the Company).
"Borrowing" means a borrowing pursuant to a Notice of Borrowing
comprised of a single Type of Loan from all the Banks (or resulting from a
conversion or conversions on the same date having in the case of Eurodollar Rate
Loans the same Interest Period (except as otherwise provided in this Agreement))
made by all of the Banks concurrently to the Company.
-3-
<PAGE>
"Borrowing Date" means, with respect to each Borrowing, the Business
Day upon which the proceeds of such Borrowing are to be made available to the
Company.
"Business Day" means any day (other than a day which is a Saturday,
Sunday or legal holiday in the State of New York) on which banks are open for
business in New York, New York; provided, however, that, when used in connection
with a Eurodollar Loan, the term "Business Day" shall also exclude any day on
which banks are not open for dealings in dollar deposits in the Eurodollar
interbank market.
"Capital Lease" means, as to any Person, any lease in respect of which
the rental obligations of such Person constitute Capital Lease Obligations.
"Capital Lease Obligations" of a Person means any obligation which is
required to be classified and accounted for as a capital lease on a balance
sheet of such Person prepared in accordance with GAAP; the amount of such
obligation shall be the capitalized amount thereof, determined in accordance
with GAAP; and the stated maturity thereof shall be the date of the last payment
of rent or any other amount due under such lease prior to the first date upon
which such lease may be terminated by the lessee without payment of a penalty.
"Capital Stock" means any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of or interests
in (however designated) capital stock, including any preferred stock, and with
respect to a partnership, any interest therein (whether general or limited) that
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, such partnership; provided that Capital Stock
shall not include any debt security that is convertible into or exchangeable for
Capital Stock.
A "Change of Control" occurs when (a) any Person or "group" for
purposes of Section 13(d) of the Exchange Act (a "Group"), other than Permitted
Holders, shall beneficially own, directly or indirectly, more than 50% of the
total voting power of all classes of Voting Stock of the General Partner,
Holding Company or the Company or (b)(i) the Company shall sell, lease, convey
or otherwise dispose of all or substantially all of the Company's assets to any
Person or Group or (ii) the Company shall consolidate with or merge into another
Person or another Person shall consolidate with or merge into the Company, in
case of either of the foregoing, in a transaction in which the outstanding
Voting Stock of the Company is reclassified or changed into or exchanged for
cash, securities or other property, other than, in the case of either of clauses
(i) or (ii), to, with or into, as applicable, one or more Permitted Holders or a
Person, more than 50% of the total voting power of all classes of Voting Stock
of which, after giving effect to such transaction, is beneficially owned,
directly or indirectly, by one or more Permitted Holders or (iii) the Company,
Holding Company or the General Partner shall adopt a plan of liquidation or
dissolution (unless all or substantially all the Company's assets are
distributed pursuant to such plan to one or more Permitted Holders).
-4-
<PAGE>
"Code" means Internal Revenue Code of 1986, as amended from time to
time, and the regulations promulgated thereunder.
"Commitment" means, with respect to each Bank, the amount set forth
opposite the name of such Bank under the heading "Commitment" on the signature
page for such Bank, or, in the case of any Person who becomes a Bank after the
Execution Date, on the signature page of the Assignment and Acceptance executed
by such Person, in each case, as the same may be reduced from time to time or
terminated pursuant to Section 4.02, Section 4.03 or Article IX and with respect
------------ ------------ ----------
to the Commitment for the Swing Loan Bank shall include the Swing Loan
Commitment.
"Commitment Fee" has the meaning specified in Section 4.01(b).
---------------
"Company" has the meaning specified in the introduction to this
Agreement.
"Consolidated EBITDA Coverage Ratio", as of any date of determination,
means the ratio of (a) the aggregate amount of EBITDA for the period of the four
most recent consecutive fiscal quarters to (b) Consolidated Interest Expense for
such four fiscal quarters; provided, however, that (i) if the Company or any
Subsidiary has issued any Debt since the beginning of such period that remains
outstanding as of such date of determination, EBITDA and Consolidated Interest
Expense for such period shall be calculated after giving effect on a pro forma
basis to such Debt as if such Debt had been issued on the first day of such
period and the discharge of any other Debt repaid, repurchased, defeased or
otherwise discharged with the proceeds of such new Debt as if such discharge had
occurred on the first day of such period, (ii) if, since the beginning of such
period, the Company or any Subsidiary shall have made any Asset Disposition, the
EBITDA for such period shall be reduced by an amount equal to the EBITDA (if
positive) directly attributable to the assets that were the subject of such
Asset Disposition for such period, or increased by an amount equal to the EBITDA
(if negative), directly attributable thereto for such period, and Consolidated
Interest Expense for such period shall be reduced by an amount equal to the
Consolidated Interest Expense directly attributable to any Debt or Preferred
Stock of the Company or any Subsidiary repaid, repurchased, defeased or
otherwise discharged with respect to the Company and its continuing Subsidiary
or from which the Company or such continuing Subsidiary has been released by
reason of the assumption thereof by the transferee of such Asset Disposition, in
connection with such Asset Dispositions for such period (or, if the Capital
Stock of any Subsidiary is sold, the Consolidated Interest Expense for such
period directly attributable to the Debt or Preferred Stock of such Subsidiary
to the extent the Company and its continuing Subsidiaries are no longer liable
for such Debt or Preferred Stock after such sale), (iii) if since the beginning
of such period the Company or any Subsidiary (by merger or otherwise) shall have
made an Investment in any Subsidiary (or any Person which becomes a Subsidiary)
or an acquisition of assets, which constitutes all or substantially all of an
operating unit of a business, EBITDA and Consolidated Interest Expense for such
period shall be calculated after giving pro forma effect thereto (including the
issuance of any Debt) as if such Investment or acquisition occurred on the first
day of such period and (iv) if since the beginning of such period
-5-
<PAGE>
any Person (that subsequently became a Subsidiary or was merged with or into the
Company or any Subsidiary since the beginning of such period) shall have made
any Asset Disposition or any Investment that would have required an adjustment
pursuant to clause (ii) or (iii) above if made by the Company or a Subsidiary
during such period, EBITDA and Consolidated Interest Expense for such period
shall be calculated after giving pro forma effect thereto as if such Asset
Disposition or Investment occurred on the first day of such period. For purposes
of this definition, whenever pro forma effect is to be given to an acquisition
of assets, the amount of income or earnings relating thereto, and the amount of
Consolidated Interest Expense associated with any Debt or Preferred Stock issued
in connection therewith, shall be determined on a pro forma basis in good faith
by a responsible financial or accounting Officer of the Company. If any Debt
bears a floating rate of interest and is being given pro forma effect, the
interest of such Debt shall be calculated as if the rate in effect on the date
of determination had been the applicable rate for the entire period (taking into
account any Interest Rate Protection Agreement applicable to such Debt if such
Interest Rate Protection Agreement has a remaining term in excess of 12 months).
"Consolidated Interest Expense" means, for any period, (a) the total
interest expense of the Company and its consolidated Subsidiaries, including (i)
interest expense attributable to Capital Lease Obligations, (ii) amortization of
debt discount and debt issuance cost, (iii) capitalized interest, (iv) non-cash
interest payments, (v) commissions, discounts and other fees and charges owed
with respect to letters of credit and bankers' acceptance financing, (vi) net
costs under Interest Rate Protection Agreements (including amortization of
fees), (vii) Preferred Stock dividends in respect of all Preferred Stock held by
Persons other than the Company or a Wholly Owned Subsidiary, (viii) interest
incurred in connection with investments in discontinued operations and (ix)
interest actually paid by the Company or any of its consolidated Subsidiaries
under any guarantee of Debt or other obligation of any other Person minus (b)
the total interest income of the Company and its consolidated Subsidiaries.
"Consolidated Net Income" means, for any period, the net income of the
Company and its consolidated Subsidiaries; provided, however, that there shall
not be included in such Consolidated Net Income:
(a) any net income of any Person if such Person is not a Subsidiary,
except that (i) the Company's equity in the net income of any such Person
for such period shall be included in such Consolidated Net Income up to the
aggregate amount of cash actually distributed by such Person during such
period to the Company or a Subsidiary as a dividend or other distribution
(subject, in the case of a dividend or other distribution to a Subsidiary,
to the limitations contained in clause (c) below) and (ii) the Company's
equity in a net loss of any such Person for such period shall be included
in determining such Consolidated Net Income;
(b) any net income of any Person acquired by the Company or a
Subsidiary in a pooling of interests' transaction for any period prior to
the date of such acquisition;
-6-
<PAGE>
(c) any net income of any Subsidiary that is subject to restrictions,
directly or indirectly, on the payment of dividends or the making of
distributions by such Subsidiary, directly or indirectly, to the Company,
except that (i) the Company's equity in the net income of any such
Subsidiary for such period shall be included in such Consolidated Net
Income up to the aggregate amount of cash actually distributed by such
Subsidiary during such period to the Company or another Subsidiary as a
dividend or other distribution (subject in the case of a dividend or other
distribution to another Subsidiary, to the limitation contained in this
clause) and (ii) the Company's equity in a net loss of any such Subsidiary
for such period shall be included in determining such Consolidated Net
Income;
(d) any gain (or loss) realized upon the sale or other disposition of
any property, plant or equipment of the Company or its consolidated
Subsidiaries (including pursuant to any sale-and-leaseback arrangement)
which is not sold or otherwise disposed of in the ordinary course of
business and any gain (or loss) realized upon the sale or other disposition
of any Capital Stock of any Person; and
(e) the cumulative effect of a change in accounting principles.
"Consolidated Net Tangible Assets" means the total assets of the
Company and its Subsidiaries appearing on a consolidated balance sheet of the
Company and its Subsidiaries (prepared in accordance with GAAP) as of the most
recent fiscal quarter, after (a) adding thereto all Attributable Debt of the
Company and its Subsidiaries in respect of any sale and leaseback arrangement
not capitalized on such balance sheet, (b) eliminating all intercompany
transactions and all amounts properly attributable to minority interests, if
any, in the stock and surplus of Subsidiaries and (b) deducting therefrom
(without duplication of deductions):
(i) all liabilities of the Company and its Subsidiaries other than
Debt;
(ii) the net book amount of all assets, after deducting any reserves
applicable thereto, which would be treated as intangible under GAAP,
including such items as goodwill, trademarks, trade names, service marks,
brand names, copyrights, patents and licenses, and rights with respect to
the foregoing, unamortized debt discount and expense and organization
expenses;
(iii) any write-up in the book value of any asset on the books of the
Company or any Subsidiary resulting from a revaluation thereof subsequent
to the date of this Agreement (other than the write-up of the book value of
an asset made in accordance with purchase accounting under GAAP in
connection with the purchase of such asset);
(iv) all deferred charges (other than prepaid expenses); and
-7-
<PAGE>
(v) all reserves, including, without limitation, reserves for
deferred income taxes, liabilities (fixed or contingent), depreciation,
obsolescence, depletion, insurance and inventory valuation, which appear or
under GAAP are required to appear on such balance sheet.
"Consolidated Net Worth" of any Person, means the total of the amounts
shown on the balance sheet of such Person and its consolidated Subsidiaries,
determined on a consolidated basis in accordance with GAAP, as of the end of the
most recent fiscal quarter of such Person, and (a) if such Person is a
partnership, the consolidated equity of the partners less (x) any amounts
attributable to Redeemable Stock and (y) any amounts attributable to
Exchangeable Stock and (b) if such Person is not a partnership, (i) the par or
stated value of all outstanding Capital Stock of such Person plus (ii) paid-in
capital or capital surplus relating to such Capital Stock plus (iii) any
retained earnings or earned surplus less (A) any accumulated deficit, (B) any
amounts attributable to Redeemable Stock and (C) any amounts attributable to
Exchangeable Stock.
"Conversion Date" means that date upon which the Borrower shall be
treated as a corporation for federal income tax purposes pursuant to Section
7704 of the Internal Revenue Code of 1986, as amended and Section 10211(c) of
P.L. 100-203, the Omnibus Budget Reconciliation Bill of 1987, as amended by
Section 2004(f)(2), of P.L. 100-647, the Technical and Miscellaneous Revenue Act
of 1988, as amended or supplemented from time to time.
"Credit Event" means the making of any Loan or the issuance or the
extension of any Letter of Credit.
"Credit Suisse" has the meaning specified in the introduction to this
Agreement.
"CS First Boston" means CS First Boston Corporation in its capacity as
the arranger of this Agreement pursuant to a written agreement dated April 5,
1995 with the Company.
"Debt" of any Person means, without duplication,
(a) the principal of and premium, if any, in respect of (i)
indebtedness of such Person for money borrowed and (ii) indebtedness
evidenced by notes, debentures, bonds or other similar instruments for the
payment of which such Person is responsible or liable;
(b) all Capital Lease Obligations and all Attributable Debt of such
Person;
(c) all obligations of such Person issued or assumed as the deferred
purchase price of property, all conditional sale obligations of such Person
and all obligations of such Person under any title retention agreement (but
excluding trade accounts payable arising in the ordinary course of
business);
-8-
<PAGE>
(d) all obligations of such Person for the reimbursement of any
obligor on any letter of credit, banker's acceptance or similar credit
transaction (other than obligations with respect to letters of credit
securing obligations (other than obligations described in (a) through (c)
above) entered into in the ordinary course of business of such Person to
the extent such letters of credit are not drawn upon or, if and to the
extent drawn upon, such drawing is reimbursed no later than the third
Business Day following receipt by such Person of a demand for reimbursement
following payment on the letter of credit);
(e) the amount of all obligations of such Person with respect to the
redemption, repayment or other repurchase of any Redeemable Stock (but
excluding any accrued dividends);
(f) all obligations of the type referred to in clauses (a) through
(e) of other Persons and all dividends of other Persons for the payment of
which, in either case, such Person is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise, including by means of any
agreement which has the economic effect of a guarantee; and
(g) all obligations of the type referred to in clauses (a) through
(f) of other Persons secured by any Lien on any property or asset of such
Person (whether or not such obligation is assumed by such Person), the
amount of such obligation being deemed to be the lesser of the value of
such property or assets or the amount of the obligation so secured.
"Default" means the occurrence of any event which with the giving of
notice or the passage of time or both would become an Event of Default.
"Default Rate" has the meaning specified in Section 2.08(c).
---------------
"Designated Payment Date" means the last Business Day of each calendar
quarter during the term hereof.
"Disqualified Capital Stock" means any Capital Stock that is
Redeemable Stock or Exchangeable Stock.
"Domestic Lending Office" means, with respect to any Bank, the office
of such Bank specified as its "Domestic Lending Office" on such Bank's signature
-----------------------
page to this Agreement or, as to any Person who becomes a Bank after the date
hereof, on the signature page of the Assignment and Acceptance executed by such
Person, in the Administrative Questionnaire delivered by such Person or such
other office of such Bank as such Bank may hereinafter designate from time to
time its "Domestic Lending Office" by notice to the Company and the Agent.
"Drawing" has the meaning specified in Section 3.04(b).
---------------
"EBITDA" for any period, means the Consolidated Net Income for such
period, plus the following to the extent deducted in calculating such
Consolidated Net Income: (a) income tax expense, (b) Consolidated Interest
Expense, (c) depreciation
-9-
<PAGE>
expense, (d) amortization expense and (e) all other non-cash items reducing
Consolidated Net Income, less all non-cash items increasing Consolidated Net
Income.
"Effective Date" means the date on which all conditions to borrowing
set forth in Article V are first met or waived in accordance with Section 11.01
--------- -------------
hereof.
"Eligible Assignee" means (a) any Bank, (b) a commercial bank or any
similar financial institution having combined capital and surplus in excess of
$500,000,000 and (c) any other bank or similar financial institution approved by
the Agent and the Company, which approval shall not be unreasonably withheld.
"Environmental Laws" means (a) federal, state or local laws pertaining
to conservation or protection of the environment in effect at the time in
question, including the Clean Air Act, the Comprehensive Environmental Response
Compensation and Liability Act, ("CERCLA"), the Federal Water Pollution Control
------
Act, the Occupational Safety and Health Act, the Resource Conservation and
Recovery Act, the Safe Drinking Water Act, the Toxic Substances Control Act, the
Superfund Amendment and Reauthorization Act of 1986, the Hazardous Materials
Transportation Act, and comparable state and local laws, and other environmental
conservation and protection laws, (b) final rules or regulations of any
governmental regulatory agency (or interim or temporary rules or regulations in
respect of which the issuing agency has appropriately indicated their present
applicability pending the finalization process) adopted pursuant to authority
granted pursuant to any law listed in (a) above, and (c) any judicial, arbitral
or administrative order, judgment, permit or approval, pursuant to any law
listed in (a) or rule or regulation listed in (b), to the extent that such
order, judgment, permit or approval is binding upon the Company or its property
or assets.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) which is either a member of the same "controlled group" or under
"common control," within the meaning of Sections 414(b) and 414(c) of the Code
and the regulations thereunder, with the Company.
"Eurocurrency Liabilities" has the meaning specified in Regulation D
of the Board as in effect from time to time.
"Eurodollar Lending Office" means, with respect to each Bank, the
branches or affiliates of such Bank which such Bank has designated as its
"Eurodollar Lending Office" on such Bank's signature page to this Agreement or,
as to any Person who becomes a Bank after the date hereof, on the signature page
of the Assignment and Acceptance executed by such Person, in the Administrative
Questionnaire delivered by such Person or such other office of such Bank as such
Bank may hereafter designate from time to time as its "Eurodollar Lending
Office" by notice to the Company and the Agent.
-10-
<PAGE>
"Eurodollar Rate" means, for any Interest Period for each Eurodollar
Rate Loan comprising part of the same Borrowing, an interest rate per annum
equal to the rate per annum obtained by dividing (a) the average (rounded upward
to the nearest whole multiple of 1/16 of 1% per annum, if such average is not
such a multiple) of the rate per annum at which deposits in U.S. dollars are
offered by the principal office of each of the Reference Banks in London,
England to prime banks in London interbank market at 11:00 a.m. (London Time)
two Business Days before the first day of such Interest Period for a period
equal to such Interest Period by (b) a percentage equal to 100% minus the
Reserve Percentage for such Interest Period. The Eurodollar Rate for any
Interest Period for each Eurodollar Rate Loan comprising part of the same
Borrowing shall be determined by the Agent on the basis of applicable rates
furnished to and received by the Agent from the Reference Banks two Business
Days before the first day of such Interest Period.
"Eurodollar Rate Borrowing" means a Borrowing comprised of a
Eurodollar Rate Loans.
"Eurodollar Rate Loan" means any Loan bearing interest at a rate
determined by reference to the Eurodollar Rate in accordance with the provisions
of Article II.
----------
"Events of Default" has the meaning specified in Section 9.01.
------------
"Exchange Act" means the Securities and Exchange Act of 1934, as
amended.
"Exchangeable Stock" means any Capital Stock that is exchangeable or
convertible into another security (other than Capital Stock of the Company
that is neither Exchangeable Stock nor Redeemable Stock).
"Execution Date" means the earliest date upon which all of the
following shall have occurred: counterparts of this Agreement shall have been
executed by the Company, the Agent and each Bank listed on the signature pages
hereof and the Agent shall have received such counterparts via telecopy or
otherwise.
"Extension Request" has the meaning specified in Section 4.09.
------------
"Federal Funds Rate" means, for any period, a fluctuating interest
rate per annum equal for each day during such period to 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, 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
transaction received by the Agent from three Federal funds brokers of recognized
standing selected by it.
"Fees" means all amounts payable pursuant to Section 4.01.
------------
"Financials" has the meaning specified in Section 6.07.
------------
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<PAGE>
"Financial Statement Delivery Date" means the date on which the
quarterly or annual financial statements of the Company are delivered pursuant
to Section 7.01(a) or Section 7.01(b), as the case may be.
--------------- ---------------
"Form 1001" has the meaning specified in Section 4.08.
------------
"Form 4224" has the meaning specified in Section 4.08.
------------
"GAAP" means generally accepted accounting principles as in effect
from time to time as set forth in the opinions, statements and pronouncements of
the Accounting Principles Board of the American Institute of Certified Public
Accountants, the Financial Accounting Standards Board and such other Persons who
shall be approved by a significant segment of the accounting profession and
concurred in by the independent certified public accountants certifying any
audited financial statements of the Company.
"General Partner" shall mean BCP Management, Inc., a Delaware
corporation, and its successors.
"Hazardous Materials" means (a) hazardous waste as defined in the
Resource Conservation and Recovery Act of 1976, or in any applicable federal,
state or local law or regulation, (b) hazardous substances, as defined in
CERCLA, or in any applicable state or local law or regulation, (c) gasoline, or
any other petroleum product or by-product, (d) toxic substances, as defined in
the Toxic Substances Control Act of 1976, or in any applicable federal, state or
local law or regulation or (e) insecticides, fungicides, or rodenticides, as
defined in the Federal Insecticide, Fungicide, and Rodenticide Act of 1975, or
in any applicable federal, state or local law or regulation, as each such Act,
statute or regulation, may be amended from time to time.
"Highest Lawful Rate" means, as to any Bank, the maximum nonusurious
rate of interest that, under applicable law, may be contracted for, taken,
reserved, charged or received by such Bank on the Loans or under the Loan
Documents at any time or from time to time. If the maximum rate of interest
which, under applicable law, the Banks are permitted to charge the Company on
the Loans shall change after the date hereof, to the extent permitted by
applicable law, the Highest Lawful Rate shall be automatically increased or
decreased, as the case may be, as of the effective time of such change without
notice to the Company or any other Person.
"Holding Company" means Borden Chemicals and Plastics Limited
Partnership, a Delaware limited partnership and its successors.
"Indenture" means that certain Indenture dated as of May 1, 1995 among
the Company, BCP Finance Corporation, a Delaware corporation, and The Chase
Manhattan Bank (National Association), a corporation organized under the laws of
the United States of America providing for, among other things, issuance of the
Securities by the Company and BCP Finance Corporation, and any agreement under
-12-
<PAGE>
which the Company incurs Debt to Refinance any portion of its Debt under the
Indenture, as each of same may be amended or supplemented from time to time.
"Independent Committee" means a standing committee of the Board of
Directors composed entirely of Independent Directors; provided that if there is
no such standing committee, then "Independent Committee" means all the
Independent Directors.
"Information Memorandum" means that certain information memorandum
regarding the Loans dated April 1995 compiled by CS First Boston Corporation
from information (other than the information contained in the Industry Overview
Section thereof) provided by the Company, which Information Memorandum has been
previously distributed to the Banks.
"Interest Period" has the meaning specified in Section 2.09.
------------
"Interest Rate Protection Agreement" means any interest rate swap
agreement, interest rate cap agreement or other financial agreement or
arrangement designed to protect the Company or any Subsidiary against
fluctuations in interest rates.
"Investment" in any Person means, as applied to any Person, any direct
or indirect purchase or other acquisition by such Person of stock or other
securities of any other Person, or any direct or indirect loan, or advance to,
any acquisition of Capital Stock, obligation or other security of, or capital
contribution or other investment in, such Person by such Person to any other
Person, and any other item which would be classified as an "investment" on a
balance sheet of such Person, including any direct or indirect contribution by
such Person of property or assets to a joint venture, partnership or other
business entity in which such Person retains an interest.
"Issuing Bank" means, Credit Suisse and its successors and permitted
assigns.
"Letter of Credit" has the meaning provided in Section 3.01.
------------
"Letter of Credit Fee" has the meaning specified in Section 4.01(c).
---------------
"Letter of Credit Limit" means $30,000,000.
"Letter of Credit Outstandings" means, at any time, the sum of (a) the
aggregate Stated Amount of all outstanding Letters of Credit and (b) the amount
of all Unpaid Drawings in respect of all Letters of Credit.
"Letter of Credit Request" has the meaning specified in Section 3.02.
------------
"Lien" means, when used with respect to any Person, any mortgage,
lien, charge, pledge, security interest or encumbrance of any kind (whether
voluntary or involuntary and whether imposed or created by operation of law or
otherwise) upon,
-13-
<PAGE>
or pledge of, any of its property or assets, whether now owned or hereafter
acquired, or any lease intended as security, any Capital Lease in the nature of
the foregoing, any conditional sale agreement or other title retention
agreement, in each case, for the purpose, or having the effect, of protecting a
creditor against loss or securing the payment or performance of an obligation to
a creditor.
"Loan" and "Loans" shall mean an extension of credit by (i) the Banks
to the Company under Article II in the form of Base Rate Loans and Eurodollar
Rate Loans and (ii) the Swing Loan Bank in the form of a Swing Loan.
"Loan Documents" means this Agreement, the Notes, the Letter of Credit
Requests and the Applications.
"Majority Banks" means, at any time, Banks holding at least 51% of the
Total Commitment or, if the Commitments shall have been terminated, holding
Notes evidencing at least 51% of the aggregate unpaid principal amount of the
Loans.
"Margin" means, with respect to any Loan, the rate of interest per
annum determined as set forth below as a function of the Type of such Loan:
Eurodollar Base
Rate Loan Rate Loan
--------- ---------
1.00% 0%
"Material Adverse Effect" means, relative to any circumstance,
condition, occurrence or series of occurrences of whatever nature (including any
adverse determination in any litigation, arbitration or governmental
investigation or proceeding) affecting the business, condition (financial or
otherwise), operations, performance or properties of the Company and its
Subsidiaries taken as a whole which after taking into account actual insurance
coverage and effective indemnification with respect to such occurrence,
materially impairs the ability of the Company to make payment hereunder or under
the Notes.
"Maturity Date" means with respect to (a) Base Rate Loans and
Eurodollar Loans, December 31, 1997, as same may be extended pursuant to the
Maturity Date Extension Option, or the earlier date of the acceleration of the
maturity of the Obligations pursuant to Section 9.01 and (b) Swing Loans, the
-------------
earlier to occur of (i) the seventh (7th) day after such Swing Loan is made and
(ii) the Maturity Date for Base Rate Loans and Eurodollar Loans as discussed in
(a) above.
"Maturity Date Extension Option" shall have the meaning specified in
Section 4.09.
- ------------
"Maximum Permissible Rate" has the meaning specified in Section 11.08.
-------------
"Moody's" means Moody's Investors Service, Inc., and its successors.
-14-
<PAGE>
"Multiemployer Plan" means any plan which is a "multiemployer plan"
(as such term is defined in Section 4001(a)(3) of ERISA).
"Net Available Cash" from an Asset Disposition or sale of Accounts
Receivable, means cash payments received (including any cash payments received
by way of deferred payment of principal pursuant to a note or installment
receivable or otherwise, but only as and when received, and excluding any other
consideration received in the form of assumption by the acquiring Person of Debt
or other obligations relating to such properties or assets or received in any
other non-cash form) therefrom, in each case net of all legal, title and
recording tax expenses, commissions and other fees and expenses incurred, and
all Federal, state, provincial, foreign and local taxes required to be accrued
as a liability under GAAP, as a consequence of such Asset Disposition or sale of
Accounts Receivable, and in each case net of all payments made on any Debt which
is secured by any assets subject to such Asset Disposition or sale of Accounts
Receivable, in accordance with the terms of any Lien upon or other security
agreement of any kind with respect to such assets, or which must by its terms,
or in order to obtain a necessary consent to such Asset Disposition, or by
applicable law be repaid out of the proceeds from such Asset Disposition or sale
of Accounts Receivable, and net of amounts thereof allocable to minority
interest holders in Subsidiaries.
"Net Cash Proceeds", with respect to any issuance or sale of Capital
Stock, means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.
"Note" and "Notes" have the meanings specified in Section 2.05(a).
---------------
"Notice of Borrowing" has the meaning provided in Section 2.03.
------------
"Notice of Conversion" has the meaning provided in Section 2.06.
------------
"Notice of Default" has the meaning specified in Section 9.01.
------------
"Obligations" means all the obligations of the Company now or
hereafter existing under the Loan Documents, whether for principal, Unpaid
Drawings, interest, Fees, expenses, indemnification or otherwise.
"Officer" or "Responsible Officer" means the Chairman of the Board,
the President, any Vice President, the Treasurer, the Principal Accounting
Officer or the Secretary of the Company (or, if the Company is a limited
partnership or a general partnership, the Chairman of the Board of any of its
general partners or partners, respectively, authorized to act on behalf of such
limited partnership or general partnership, as the case may be, in connection
with this Agreement).
"Operating Rights" has the meaning specified in Section 6.15.
------------
-15-
<PAGE>
"Pari Passu Debt" means any Debt of the Company (other than the
Obligations), whether or not secured, that is pari passu in right of payment to
the Obligations.
"Payment Office" means the office of the Agent located at 12 East 49th
Street, 39th Floor, New York, New York 10017, or such other office as the Agent
may hereafter designate in writing as such to the other parties hereto.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to all or any of its functions under ERISA.
"Percentage Participation" means, for each Bank at any time, that
percentage obtained when dividing the amount of such Bank's Commitment by the
Total Commitment at such time or, if the Commitments shall have been terminated,
that percentage obtained by dividing the outstanding principal amount of such
Bank's Loans by the aggregate outstanding principal amount of the Loans at such
time.
"Permitted Holders" means, as of the date of determination, any and
all of (a) Borden and its Subsidiaries, (b) Kohlberg Kravis Roberts & Co., its
successors and its Affiliates and (c) (i) any officer or other member of
management employed by Borden, BCPM, the Company or any Subsidiary for the
12-month period prior to the date of determination; (ii) any Persons described
in clause (i) who have retired (including as the result of disability) after the
initial date of this Agreement from the employment of Borden, BCPM, the Company
or any Subsidiary in the ordinary course of business; (iii) family members or
relatives of the Persons described in clause (i) and (ii); (iv) any trusts
created for the benefit of the Persons described in clause (i), (ii), (iii) or
(v); (v) in the event of the incompetence or death of any of the Persons
described in clauses (i), (ii) and (iii), such Person's estate, executor,
administrator, committee or other personal representative, or beneficiaries, in
each case who at any particular date shall beneficially own or have the right to
acquire, directly or indirectly, Capital Stock and (vi) any Person, the
management of which is controlled by one or more Persons described in clause (i)
or (ii); provided, however, that in connection with the transaction that
otherwise would constitute a Change of Control were the Persons described in
this clause (c) not Permitted Holders, any debt incurred as a result thereof
shall not be recourse to any of the assets of the Company or any Subsidiary. The
management of a Person shall be deemed to be controlled by the chief executive
officer (or equivalent executive) of such Person.
"Permitted Investments" shall mean (a) investments in direct
obligations of the United States of America or any agency or instrumentality
thereof maturing within one year of the date of acquisition thereof, (b)
investments in dollar denominated certificates of deposit of, eurodollar
certificates of deposit of, banker's acceptances of or time deposits (including,
without limitation, eurodollar time deposits) maturing within one year of the
date of acquisition thereof with (i) any Bank or (ii) any commercial Bank having
capital, surplus and undivided profits aggregating in excess of $500,000,000 or
the debt of which is rated P-1 (or higher) by Moody's or A-1 (or higher) by S&P
or which has a bank rating of B/C (or higher) by Thomson Bank Watch and (c)
investments in commercial paper given the highest
-16-
<PAGE>
rating by two established national credit rating agencies and maturing not more
than nine months from the date of acquisition thereof.
"Permitted Liens" means the following, to the extent that the Debt
secured thereby does not exceed 10% of the Company's Consolidated Net Tangible
Assets: (a) Liens that exist on the date hereof, (b) Liens on property or assets
(or any income or profits therefrom) existing at the time of acquisition of such
property or assets, (c) Liens on property or assets (or any income or profits
therefrom) of a Person existing at the time such Person is merged into or
consolidated with or acquired by the Company or its Subsidiaries, (d) Liens in
favor of any governmental authority to secure any payment obligation under any
statute, (e) Liens of landlords and Liens of carriers, warehousemen, mechanics
and materialmen incurred in the ordinary course of business, (f) Liens incurred
for the purpose of financing all or any part of the purchase price or the cost
of construction or improvement of the property or assets subject to such Liens;
provided, however, that such Lien shall not extend to or cover any other
property or assets other than such property or assets and any improvements
thereon and shall attach to such property, assets, or improvements within 180
days of the acquisition or construction thereof, (g) Liens incurred to secure
(or to obtain letters of credit that secure) the performance of tenders,
statutory obligations, surety or appeal bonds, bids, leases, performance or
return-of-money bonds, purchase, construction or sale contracts or other
obligations of a like nature incurred in the ordinary course of business, (h)
Liens on Capital Stock of a Subsidiary and Liens on intercompany notes issued by
such Subsidiary to the Company, in either case to secure Debt incurred by such
Subsidiary in connection with the Company's acquisition of such Subsidiary or
the business of such Subsidiary, (i) Liens securing any Debt owed to the Company
or any Subsidiary, (j) Liens to secure any extension, renewal, refunding or
refinancing (or successive extensions, renewals, refundings or refinancings), in
whole or in part, of any Debt secured by Liens referred to in the foregoing
clauses (a) through (i) so long as such Liens do not extend to any other
property or assets and the aggregate principal amount of the Debt so secured is
not increased, and (k) Liens securing Debt of a Person, the aggregate principal
amount of which, together with the aggregate principal amount of all other Debt
of such Person secured by Liens (excluding Debt secured by Liens permitted in
the foregoing clauses (a) through (j) and the aggregate amount of Attributable
Debt deemed to be outstanding in respect of all sale and leaseback transactions
permitted by clause (a) of Section 8.13, does not exceed 5% of Consolidated Net
------------
Tangible Assets.
"Person" means an individual, partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, or a foreign or
domestic state or political subdivision thereof or any agency of such state or
subdivision.
"Plan" means any employee pension benefit plan (as defined in Section
3(2) of ERISA), subject to Title IV of ERISA or Section 412 of the Code, other
than a Multiemployer Plan, with respect to which the Company or an ERISA
Affiliate contributes or has an obligation or liability to contribute, including
any such plan that may have been terminated.
-17-
<PAGE>
"Preferred Stock", as applied to the Capital Stock of any Person,
means Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such Person,
over the Capital Stock of any other class of such Person.
"Prospectus" means the prospectus with respect to the Securities dated
April 21, 1995.
"Redeemable Stock" means, at any time, any Capital Stock that by its
terms or otherwise is required to be redeemed prior to the first anniversary of
the then applicable Maturity Date of the Base Rate Loans and the Eurodollar Rate
Loans or is redeemable at the option of the holder thereof at any time prior to
the first anniversary of such then applicable Maturity Date.
"Reference Banks" means Credit Suisse and The Chase Manhattan Bank,
N.A.
"Refinance" means, in respect of any Debt or Preferred Stock, to
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue Debt or Preferred Stock in exchange or replacement for, such Debt or
Preferred Stock. "Refinanced" and "Refinancing" shall have correlative meanings.
"Refinancing Agreement" means any credit agreement, indenture or other
agreement pursuant to which the Company or any Subsidiary Refinances, in whole
or in part, Debt of the Company or any Subsidiary issued under Section 8.04;
------------
provided, however, that the principal amount of the Refinancing Debt issued
pursuant to such Refinancing Agreement may not exceed the principal amount of
the Debt so Refinanced.
"Register" has the meaning specified in Section 11.10(e).
----------------
"Regulation A" means Regulation A of the Board (respecting loans to
depository institutions), as the same is from time to time in effect, and all
official rulings and interpretations thereunder or thereof.
"Regulation D" means Regulation D of the Board (respecting reserve
requirements), as the same is from time to time in effect, and all official
rulings and interpretations thereunder or thereof.
"Regulation U" means Regulation U of the Board (respecting margin
credit extended by banks), as the same is from time to time in effect, and all
official rulings and interpretations thereunder or thereof.
"Regulation X" means Regulation X of the Board (respecting borrowers
who obtain margin credit), as the same is from time to time in effect, and all
official rulings and interpretations thereunder or thereof.
-18-
<PAGE>
"Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping or disposing into
the environment (including the abandonment or discarding of barrels, containers
and other closed receptacles).
"Reportable Event" means an event described in Section 4043(b) of
ERISA with respect to a Plan as to which the 30-day notice requirement has not
been waived by the PBGC.
"Requirements of Environmental Laws" means, as to any Person, the
requirements of any applicable Environmental Law relating to or affecting such
Person or the condition or operation of such Person's business or its
properties, both real and Personal.
"Reserve Percentage" for any Interest Period for all Eurodollar Rate
Loans comprising part of the same Borrowing means the reserve percentage if and
to the extent actually applicable two Business Days before the first day of such
Interest Period under regulations issued from time to time by the Board (or any
successor) for determining the reserve requirement (including, without
limitation, any emergency, supplemental or other marginal reserve requirement)
for each Bank with respect to liabilities or assets consisting of or including
Eurocurrency Liabilities (or with respect to any other category of liabilities
that includes deposits by reference to which the interest rate on Eurodollar
Rate Loans is determined) having a term equal to such Interest Period.
"Restricted Payment" has the meaning set forth in Section 8.06.
------------
"S & P" means Standard & Poor's Corporation, and its successors.
"Securities" means the debt instruments issued pursuant to the
Indenture.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" of the Company within the meaning of Rule 1-02 under
Regulation S-X as promulgated by the Securities and Exchange Commission.
"Stated Amount" means, with respect to each Letter of Credit, at any
time, the maximum amount then available to be drawn thereunder (without regard
to whether any condition to drawing thereon could be met).
"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which the principal of such
security is due and payable, including pursuant to any mandatory redemption
provision.
"Subordinated Obligation" means any Debt of the Company (whether
outstanding on the date hereof or hereafter incurred) that is subordinate or
junior in right of payment of the Notes.
"Subsidiary" means any corporation, association, partnership or other
business entity of which more than 50% of the total voting power of the
outstanding
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<PAGE>
Capital Stock (or other interests entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, general partners,
managers, managing members, managing partners or trustees thereof or, if such
Persons are not elected, to vote on any matter that is submitted to the vote of
all Persons holding ownership interests in such entity) is at the time owned or
controlled, directly or indirectly, by (a) the Company, (b) the Company and one
or more Subsidiaries or (c) one or more Subsidiaries.
"Swing Loan" means an extension of credit by the Swing Loan Bank under
Article II in the form of a Swing Loan.
"Swing Loan Bank" means Credit Suisse, its successors and permitted
assigns.
"Swing Loan Commitment" means the commitment of the Swing Loan Bank to
make loans from time to time pursuant to Section 2.01(b) in an aggregate amount
---------------
not to exceed on any date the amount of $10,000,000 (in minimum increments of
$1,000,000 with additional increments of $500,000), as the same shall be
reduced as a result of a reduction in the Swing Loan Commitment pursuant to
Section 4.02, Section 4.03 and Article IX; provided that the Swing Loan
- ------------ ------------ ----------
Commitment is a part of the combined Total Commitments, rather than a separate,
independent commitment.
"Swing Loan Participation Certificate" means a participation
certificate substantially in the form of Exhibit 2.14.
------------
"Threshold Debt" has the meaning set forth in Section 9.01(d).
---------------
"Total Commitment" means all Commitments of all of the Banks, which on
the Effective Date is $100,000,000 and may be reduced from time to time pursuant
to Section 4.02, Section 4.03 or Article IX and by the election of any Bank not
------------ --------------------------
to participate in the Maturity Date Extension Option.
"Total Debt" means, as of any date of determination, the total Debt of
the Company and its consolidated Subsidiaries.
"Total Unutilized Commitment" means the aggregate Unutilized
Commitment for all of the Banks.
"Type" has the meaning set forth in Section 1.02.
------------
"Unfunded Current Liability" means, with respect to any Plan, the
amount, if any, by which the present value of the accrued benefits under the
Plan as of the close of its most recent Plan year exceeds the fair market value
of the assets allocable thereto, determined in accordance with Section 412 of
the Code and based upon the actuarial assumption in the Plan.
---------
"Unpaid Drawing" has the meaning specified in Section 3.04(a).
---------------
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<PAGE>
"Unutilized Commitment" for any Bank, at any time, means the remainder
of (a) such Bank's Commitment at such time less (b) the sum of (i) the
outstanding Loans (excluding Swing Loans) made by such Bank and (ii) the product
of (A) the Letter of Credit Outstandings at such time multiplied by (B) such
Bank's Percentage Participation.
"Up Front Fee" has the meaning specified in Section 4.01(a).
---------------
"Voting Stock" of any Person, means, with respect to a corporation,
all classes of Capital Stock of such corporation then outstanding and normally
entitled to vote in the election of directors or, with respect to a partnership
(whether general or limited), any general partner interest in such partnership.
"Wachovia Credit Facility" means the credit facility under that
certain Revolving Line of Credit Agreement, dated November 2, 1987, by and
between the Company and Wachovia Bank and Trust Company, N.A., providing up to
$20,000,000 of credit borrowings, including any related notes, instruments and
agreements executed in connection therewith, in each case as amended, modified,
renewed, refunded, replaced or refinanced from time to time.
"Wholly Owned Subsidiary" of any Person, means a Subsidiary of such
Person all the outstanding Capital Stock or other ownership interests or, in the
case of a limited partnership, all the partners' Capital Stock (other than up to
a 2% general partner interests), of which (other than directors' qualifying
shares) shall at the time be owned by such Person or by one or more Wholly Owned
Subsidiaries of such Person.
SECTION 1.02. Types of Loans and Borrowings. Loans and Borrowings
-----------------------------
hereunder are distinguished by "Type". The Type of a Loan refers to the
determination whether such Loan is a Eurodollar Rate Loan or a Base Rate Loan.
The Type of a Borrowing refers to the determination whether such Borrowing is a
Eurodollar Rate Borrowing or a Base Rate Borrowing.
SECTION 1.03. Accounting Terms and Determinations. Unless otherwise
-----------------------------------
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with GAAP,
applied on a basis consistent (except for changes concurred in by the Company's
independent public accountants) with the most recent audited consolidated
financial statements of the Company and its consolidated Subsidiaries delivered
to the Banks; provided that, if the Company notifies the Agent that the Company
wishes to amend any covenant in Article VIII to eliminate the effect of the
change in GAAP on the operation of such covenant (or if the Agent notifies the
Company that the Majority Banks wish to amend Article VIII for such purposes),
then the Company's compliance with such covenant shall be determined on the
basis of GAAP in effect immediately before the relevant changes in GAAP became
effective, until either such notice is withdrawn or such covenant is amended in
a manner satisfactory to the Company and the Majority Banks.
SECTION 1.04. Computation of Time Periods. In this Agreement in the
---------------------------
computation of periods of time from a specified date to a later specified date,
the word
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<PAGE>
"from" means "from and including" and the words "to" and "until" each means "to
but excluding".
ARTICLE II
LOANS
SECTION 2.01(a). Commitment. Subject to and upon the terms and
----------
conditions herein set forth, each Bank severally agrees at any time and from
time to time on and after the Effective Date and prior to the Maturity Date with
respect to Base Rate Loans and Eurodollar Rate Loans, to make and maintain a
Loan or Loans to the Company, which Loans (a) shall, at the option of the
Company, be made and maintained pursuant to one or more Borrowings comprised of
Base Rate Loans or Eurodollar Rate Loans; provided that, except as otherwise
specifically provided herein, all Loans comprising all or a portion of the same
Borrowing shall at all times be of the same Type, (b) shall be repaid and may be
reborrowed in accordance with the provisions hereof and (c) (including Swing
Loans) shall, in the aggregate, not exceed the total principal amount at any
time outstanding that amount which, when added to the product of such Bank's
Percentage Participation of the Letter of Credit Outstandings at such time,
equals the Commitment of such Bank. Notwithstanding the foregoing, the sum of
the aggregate outstanding principal amount of the Loans of all Banks plus (i)
the Letter of Credit Outstandings and (ii) the outstanding principal amount of
the Debt of the Company permitted under Section 8.04(b)(i)(A), shall at no time
---------------------
exceed the Total Commitment.
SECTION 2.01(b). Swing Loan Commitment. Subject to the terms and
---------------------
conditions of this Agreement, the Swing Loan Bank agrees to make one or more
Loans to the Company (each such loan, a "Swing Loan") from time to time on any
----------
Business Day during the period from the Effective Date to the Maturity Date, in
an aggregate amount not to exceed the Swing Loan Commitment; provided,
however, that, after giving effect to any Borrowing of Swing Loans, the
aggregate outstanding amount of all Loans of the Banks plus (i)_the Letter of
Credit Outstanding and (ii) the outstanding principal amount of the Debt of the
--------
Company permitted under Section 8.04(b)(i)(A), shall not at any time exceed the
---------------------
Total Commitment; and provided further, that the aggregate outstanding principal
amount of any Bank's Loans (excluding Swing Loans) when added to the product of
such Bank's Percentage Participation of (i) Swing Loans and (ii) Letter of
Credit Outstandings, shall not at any time exceed such Bank's Commitment. Within
the limits of the Swing Loan Commitment, and subject to the other terms and
conditions hereof, the Company may borrow Swing Loans under this subsection
----------
2.01(b), prepay Swing Loans under Section 4.04 and reborrow Swing Loans under
- ------ ------------
subsection 2.01(b).
- ------------------
SECTION 2.02. Minimum Amount of Each Borrowing. The aggregate
--------------------------------
principal amount of each Borrowing, shall not be less than the lesser of (a)
$5,000,000 and, if greater, shall be an integral multiple of $1,000,000 and (b)
the Total Unutilized Commitment. More than one Borrowing may occur on the same
day but at no time shall there be outstanding more than ten Borrowings of
Eurodollar Rate Loans.
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<PAGE>
SECTION 2.03. Notice of Borrowing. (a) Whenever the Company desires to
-------------------
make a Borrowing hereunder, the Company shall give written notice (a " Notice of
---------
Borrowing") (or telephonic notice promptly confirmed in writing) to the Agent
- ---------
(i) in the case of a Borrowing to be comprised of Base Rate Loans, not later
than 11:00 a.m. (New York time) one Business Day prior to the Borrowing Date
for such Borrowing and (ii) in the case of a Borrowing comprised of Eurodollar
Rate Loans, not later than 11:00 a.m. (New York time) three Business Days prior
to the Borrowing Date for such Borrowing. Each Notice of Borrowing shall be
irrevocable and shall be in the form of Exhibit 2.03 specifying (A) the
------------
aggregate principal amount of the Loans to be made pursuant to such Borrowing,
(B) the Borrowing Date (which shall be a Business Day), (C) whether such Loans
are to be initially maintained as Base Rate Loans or Eurodollar Rate Loans and
(D) if the proposed Borrowing is to be comprised of Eurodollar Rate Loans,
the initial Interest Period to be applicable thereto. The Company may submit one
or more Notices of Borrowing on any Business Day.
(b) The Agent shall promptly give the Banks written notice or
telephonic notice (promptly confirmed in writing) of each proposed Borrowing
under Section 2.03(a) above, of each Bank's proportionate share thereof and of
--------------
the other matters covered by each Notice of Borrowing.
(c) Swing Loans. Each Borrowing of Swing Loans shall be made upon the
------------
irrevocable written notice by the Company delivered to the Agent in the form of
a Notice of Borrowing, which notice must be received by the Agent at or prior to
11:00 a.m. (New York time) on the requested Borrowing Date, specifying: (i) the
amount of the Borrowing, which shall be in an aggregate minimum amount of
$1,000,000 with additional increments of $500,000; and (ii) the Borrowing Date,
which shall be a Business Day. All Swing Loans shall be Base Rate Loans.
SECTION 2.04. Disbursement of Funds. (a) No later than 1:00 p.m. (New
---------------------
York time) on the Borrowing Date each Bank will, except with respect to
borrowing of Swing Loans, make available its pro rata portion of the amount of
such Borrowing in U.S. dollars and in immediately available funds at the Payment
Office. The Agent will credit in immediately available funds the amounts so
received to the general deposit account of the Company with the Agent or such
other single account as directed in writing by the Company. The Swing Loan Bank
will make available to the Company at its account at the Swing Loan Bank or such
other single account as directed in writing by the Company, no later than 2:30
p.m. (New York time) on the requested Borrowing Date, in immediately available
funds, the proceeds of the Swing Loans being made on such date.
(b) Unless the Agent shall have been notified by any Bank prior to the
Borrowing Date that such Bank does not intend to make available to the Agent
such Bank's portion of the Borrowing to be made on such date, the Agent may
assume that such Bank has made such amount available to the Agent on such date
of Borrowing and the Agent may, in reliance upon such assumption, make available
to the Company a corresponding amount. If such corresponding amount is not in
fact made available to the Agent by such Bank and the Agent has made available
same to the Company, the Agent shall be entitled to recover such corresponding
amount on demand from such Bank. If such Bank does not pay such corresponding
amount
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<PAGE>
forthwith upon the Agent's demand therefor, the Agent shall promptly notify the
Company, and the Company shall pay such corresponding amount to the Agent within
two Business Days after demand therefor. The Agent shall also be entitled to
recover interest on such corresponding amount from the date such corresponding
amount was made available by the Agent to the Company to the date such
corresponding amount is recovered by the Agent, (i) from such Bank at a rate per
annum equal to the lesser of (A) the Highest Lawful Rate or (B) the Federal
Funds Rate or (ii) from the Company at a rate per annum equal to the lesser of
(A) the Highest Lawful Rate or (B) the applicable Margin plus the relevant
Eurodollar Rate or Base Rate, as applicable. Nothing herein shall be deemed to
relieve any Bank from its obligation to fulfill its commitments hereunder or to
prejudice any rights which the Company may have against any Bank as a result of
any default by such Bank hereunder.
SECTION 2.05. Notes. (a) The Company's obligation to pay the principal
of, and interest on, all the Loans made by each Bank shall be evidenced by a
promissory note duly executed and delivered by the Company substantially in the
form of Exhibit 2.05 hereto with blanks appropriately completed in conformity
------------
herewith (each a "Note" and collectively, the "Notes"), which Note shall (i) be
---- -----
payable to the order of such Bank and be dated the Effective Date, (ii) be in a
stated principal amount equal to the Commitment of such Bank, (iii) be payable
prior to maturity as provided in Article IV and mature, with respect to the
----------
Loans evidenced thereby, on the Maturity Date, (iv) bear interest as provided in
the appropriate clause of Section 2.08 in respect of the Base Rate Loans and
------------
Eurodollar Rate Loans, as the case may be, evidenced thereby and (v) be entitled
to the benefits of this Agreement, and, to the extent applicable, the other Loan
Documents.
(b) Each Bank will note on its internal records, to the extent
applicable, the date, amount, Type and Interest Period for each Loan made by
such Bank to the Company hereunder, and the amount of each payment in respect
thereof and will, prior to any transfer of any of its Notes, endorse on the
reverse side thereof the outstanding principal amount of Loans evidenced
thereby. Failure to make any such notation shall not affect the Company's
obligation in respect of such Loans.
SECTION 2.06. Conversions and Continuances. The Company shall have the
----------------------------
option to convert on any Business Day all or a portion of the outstanding
principal amount of one Type of its Loans made pursuant to one or more
Borrowings into a Borrowing or Borrowings of the other Type of Loans provided,
that (a) except as otherwise provided in Section 2.11, no partial conversion of
------------
Eurodollar Rate Loans shall reduce the outstanding principal amount of
Eurodollar Rate Loans made pursuant to any single Borrowing to less than
$5,000,000 (b) Base Rate Loans may only be converted into Eurodollar Rate Loans,
and Eurodollar Rate Loans may only be continued as further Eurodollar Rate
Loans, if and only if, in either case no Default or Event of Default is in
existence on the date of the conversion or continuance and (c) no Swing Loans
may be converted to Eurodollar Rate Loans. Each such conversion or continuance
shall be effect by the Company giving the Agent notice (each a "Notice of
---------
Conversion") prior to 10:00 a.m. (New York time) (i) at least three Business
- ----------
Days prior to the date of such conversion or continuance in the case of a
conversion into or continuance as Eurodollar Rate Loans and (ii) on the
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<PAGE>
Business Day of such conversion or continuance in the case of a conversion into
or continuance as Base Rate Loans, specifying each Type of Borrowing (or
portions thereof) to be so converted and, if to be converted into or continuance
as Eurodollar Rate Loans, the Interest Period to be initially applicable
thereto. The Agent shall promptly give the Banks written or telephonic notice
(promptly confirmed in writing) of any such proposed conversion affecting any of
its Loans.
SECTION 2.07. Pro Rata Borrowings. Other than as set forth in Section
------------------- -------
2.14 with respect to Swing Loans, all Borrowings under this Agreement shall be
- ----
incurred from the Banks pro rata on the basis of their respective Percentage
Participations. It is understood that no Bank shall be responsible for any
default by any other Bank in its obligation to make Loans hereunder and that
each Bank shall be obligated to make the Loans provided to be made by it
hereunder, regardless of the failure of any other Bank to fulfill its
commitments hereunder.
SECTION 2.08 Interest. (a) Subject to Section 11.08, the Company
-------- -------------
agrees to pay interest in respect of the unpaid principal amount of each Base
Rate Loan from the date of the respective Borrowing to maturity (whether by
acceleration or otherwise) at a rate per annum which shall at all times be equal
to the lesser of (i) the Highest Lawful Rate and (ii) the applicable Margin plus
the Base Rate in effect from time to time. Interest on Base Rate Loans shall be
computed on the basis of the actual number of days elapsed over a year of 360
days.
(b) Subject to Section 11.08, the Company agrees to pay interest in
-------------
respect of the unpaid principal amount of each Eurodollar Rate Loan from the
date of the respective Borrowing to maturity (whether by acceleration or
otherwise) at a rate per annum (computed on the basis of the actual number of
days elapsed over a year of 360 days) which shall be equal to the lesser of (i)
the Highest Lawful Rate and (ii) the applicable Margin plus the relevant
Eurodollar Rate for such Interest Period.
(c) Subject to Section 11.08, overdue principal and, to the extent
-------------
permitted by law, overdue interest in respect of each Loan and all other overdue
amounts owing hereunder shall bear interest for each day that such amounts are
overdue at a rate per annum equal to the lesser of (i) the Highest Lawful Rate
and (ii) the Base Rate per annum in effect from time to time plus 2% (such
lesser rate of interest being the "Default Rate"); provided, that no Loan shall
------------
bear interest after maturity (whether by acceleration or otherwise) at a rate
per annum less than the lesser of (i) the rate of interest applicable thereto at
maturity and (ii) the Hightest Lawful Rate.
(d) Interest on each Loan shall accrue from and including the date of
such Loan to but excluding the date of any repayment thereof and shall be
payable (i) in respect of Eurodollar Rate Loans (A) on the last day of the
Interest Period applicable thereto and in the case of any Interest Period in
excess of three months, at three months intervals and on the last day of such
Interest Period and (B) on the date of any voluntary prepayment, or mandatory
prepayment or any conversion with respect to such Eurodollar Rate Loan, (ii) in
respect of each Base Rate Loan (A) on each Designated Payment Date and (B) on
the date of any voluntary or mandatory prepayment or any conversion with respect
to such Base Rate Loan and (iii) in respect
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<PAGE>
of each Loan, at maturity (whether by acceleration or otherwise) and, after
maturity, on demand.
(e) The Agent, upon determining the Eurodollar Rate for any Interest
Period, shall notify the Company and the Banks thereof. Each such determination
shall, absent manifest error, be final and conclusive and binding on all parties
hereto. In addition, prior to the due date for the payment of interest on any
Loans set forth in Section 2.08(d) the Agent shall notify the Company by
---------------
telecopy of the amount of interest due by the Company on all outstanding Loans
on the applicable due date.
SECTION 2.09 Interest Periods. (a) At the time the Company gives any
----------------
Notice of Borrowing or Notice of Conversion in respect of the making of, or
conversion or continuance into, a Eurodollar Rate Borrowing, the Company shall
have the right to elect, by giving the Agent on the dates and at the times
specified in Section 2.03 or Section 2.06, as the case may be, notice of the
------------ ------------
interest period (each an "Interest Period") applicable to such Eurodollar Rate
---------------
Borrowing, which Interest Period shall be either a one, two, three or six month
period, or such longer period as the Agent in its reasonable discretion may
determine is available at the relevant time; provided, that:
(i) all Loans comprising a Eurodollar Rate Borrowing shall at
all times have the same Interest Period;
(ii) the initial Interest Period for any Eurodollar Rate
Borrowing shall commence on the date of such Eurodollar Rate Borrowing
(including the date of any conversion thereto pursuant to Section 2.06) and
------------
each Interest Period occurring thereafter in respect of such Eurodollar
Rate Borrowing shall commence on the day on which the next preceding
Interest Period expires;
(iii) if any Interest Period relating to a Borrower of Eurodollar
Rate Loans begins on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period,
such Interest Period shall end on the last Business Day of such calendar
month;
(iv) if any Interest Period would otherwise expire on a day
which is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided, however, that if any Interest Period in
respect of a Borrowing of Eurodollar Rate Loans would otherwise expire on a
day which is not a Business Day, but is a day of the month after which no
further Business Day occurs in such month, such Interest Period shall
expire on the next preceding Business Day;
(v) no Interest Period shall extend beyond the Maturity Date;
and
(vi) at no time shall there be more than ten Interest Periods
in effect under this Agreement.
(b) If upon the expiration of any Interest Period applicable to a
Eurodollar Rate Borrowing, the Company has failed to elect a new Interest
Period to
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<PAGE>
be applicable to such Borrowing as provided above, the Company shall be deemed
to have elected to convert such Borrowing into a Base Rate Borrowing effective
as of the expiration date of such current Interest Period.
SECTION 2.10 Interest Rate Not Ascertainable. In the event that the
-------------------------------
Agent shall have reasonably determined (which determination shall, absent
manifest error, be final, conclusive and binding upon all parties) that on any
date for determining the Eurodollar Rate for any Interest Period, by reason of
any changes arising after the date of this Agreement affecting the Eurodollar
interbank market, adequate and fair means do not exist for ascertaining the
applicable interest rate on the basis provided for in the definition of
Eurodollar Rate, then, and in any such event, the Agent shall forthwith give
notice to the Company and to the Banks of such determination. Until the Agent
notifies the Company that the circumstances giving rise to the suspension
described herein no longer exist, the obligations of the Bank to make Eurodollar
Rate Loans shall be suspended.
SECTION 2.11 Reserve Requirements; Change in Circumstances. (a)
---------------------------------------------
Notwithstanding any other provision herein, but subject to Section 11.08, if
-------------
after the Execution Date the application or effectiveness of any applicable law
or regulation or any change in application or effectiveness of any applicable
law or regulation or any change in applicable law or regulation or in the
interpretation or administration thereof, or compliance by any Bank with any
applicable guideline or request made after the Execution Date from any central
bank or governmental authority (whether or not having the force of law) (i)
shall change the basis of taxation of payments to any Bank of the principal of
or interest on any Eurodollar Rate Loan made by such Bank or any other fees or
amount payable hereunder (other than (x) taxes imposed on the overall net income
of such Bank or its Applicable Lending Office or franchise taxes imposed upon it
by the jurisdiction in which such Bank or its Applicable Lending Office has an
office or by any political subdivision or taxing authority therein (or any tax
which is enacted or adopted by such jurisdiction, political subdivision or
taxing authority as a direct substitute for any such taxes) or (y) any tax,
assessment, or other governmental charge that would not have been imposed but
for the failure of any Bank to comply with any certification, information,
documentation, or other reporting requirement), (ii) shall impose, modify or
deem applicable any reserve, special deposit or similar requirement against
assets of, deposits with or for the account of, or credit extended by, such Bank
or (iii) shall impose on such Bank, or the Eurodollar interbank market any other
condition affecting this Agreement or any Eurodollar Rate Loan made by such
Bank, and the result of any of the foregoing shall be to increase the cost to
such Bank of maintaining its Commitment or of making or maintaining any
Eurodollar Rate Loan or to reduce the amount of any sum received or receivable
by such Bank hereunder (whether of principal, interest or otherwise) in respect
thereof by an amount deemed in good faith by such Bank to be material, then the
Company shall pay to the Agent for the account of such Bank such additional
amount or amounts as will compensate such Bank for such increase or reduction to
such Bank upon demand by such Bank. Nothwithstanding the foregoing, in no event
shall the compensation payable under this paragraph (to the extent, if any,
constituting interest under applicable laws), together with all amounts
constituting interest under applicable laws and payable in connection with this
Agreement, the Notes and the other Loan Documents, exceed the Highest Lawful
Rate.
-27-
<PAGE>
(b) If any Bank shall have determined in good faith that any law,
rule, regulation or guideline regarding capital adequacy, or any change therein,
or any change in the interpretation or administration thereof or compliance by
any Bank (or any lending office of such Bank) with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency has or would have the effect of
reducing the rate of return on the capital of such Bank as a consequence of, or
with reference to, such Bank's obligations hereunder to a level below that which
such Bank could have achieved but for such adoption, change or compliance by an
amount deemed by such Bank to be material, then, from time to time, the Company
shall pay to the Agent for the account of such Bank such additional amount or
amounts as will reasonably compensate such Bank for such reduction by such Bank.
Notwithstanding the foregoing, in no event shall the compensation payable under
this paragraph (to the extent, if any, constituting interest under applicable
laws) together with all amounts constituting interest under applicable laws and
payable in connection with this Agreement, the Notes or the other Loan
Documents, exceed the Highest Lawful Rate.
(c) Each Bank will notify the Company through the Agent of any event
occurring after the date of this Agreement which will entitle such Bank to
compensation pursuant to this Section, as promptly as practicable, and in any
event within 60 days after it becomes aware thereof provided that in the event
such notification is given after 60 days after such Bank becomes aware thereof,
such Bank shall be entitled to recover only those amounts otherwise recoverable
hereunder which accrue after the date of such notice. A certificate of a Bank
setting forth in reasonable detail (i) such amount or amounts as shall be
necessary to compensate such Bank as specified in paragraph (a) or (b) above, as
the case may be and (ii) the calculation of such amount or amounts under clause
(a)(i), shall be delivered to the Company (with a copy to the Agent) and shall
be conclusive absent manifest error. The Company shall pay to the Agent for the
account of such Bank the amount shown as due on any such certificate as will
reasonably compensate such Bank for such matters within 30 days after its
receipt of the same. Upon the request of the Company, each Bank agrees that it
will use reasonable efforts to designate a different Applicable Lending Office
for the Loans due to it affected by the matters described in subsection (a) and
(b) above, if such designation will avoid or reduce the liability of the Company
to such Bank under this Section so long as such designation is not materially
disadvantageous to such Bank as determined by such Bank in its reasonable
discretion.
(d) Except as expressly provided in subsection (c) above, failure on
the part of any Bank to demand compensation for any increased costs or reduction
in amounts received or receivable or reduction in return on capital with respect
to any Interest Period shall not constitute a waiver of such Bank's rights to
demand compensation for any increased costs or reduction in amounts received or
receivable or reduction in return on capital with respect to such Interest
Period or any other Interest Period.
(e) In the event any Bank shall seek compensation pursuant to this
Section or shall fail to fund any of its Loans in accordance with this
Agreement, the
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<PAGE>
Company may give notice to such Bank (with copies to the Agent) that it wishes
to seek one or more Eligible Assignees to assume the Commitment of such Bank and
to purchase its outstanding Loans, other Obligations and Notes. Each Bank
requesting compensation pursuant to this Section agrees to sell its Commitment,
Loans, other Obligations, Notes and interest in this Agreement and the other
Loan Documents pursuant to subsection (c) above to any such Eligible Assignee
for an amount equal to the sum of the outstanding unpaid principal of and
accrued interest on such Loans, such other Obligations and Notes plus all other
fees, amounts and compensation due such Bank hereunder calculated, in each case,
to the date such Commitment, Loans, other Obligations, Notes and interest are
purchased, whereupon such Bank shall have no further Commitment or other
obligation to the Company hereunder or under any Note.
SECTION 2.12. Change in Legality. (a) Notwithstanding anything to
------------------
the contrary herein contained, if any change in any law or regulation or in the
interpretation thereof by any governmental authority charged with the
administration or interpretation thereof shall in the reasonable determination
of a Bank or its legal counsel make it unlawful for any Bank or its Eurodollar
Lending Office to make or maintain any Eurodollar Rate Loan or to give effect to
its obligations as contemplated hereby, then, by prompt written notice to the
Company and to the Agent, such Bank may:
(i) declare that Eurodollar Rate Loans will not thereafter be
made by such Bank hereunder, whereupon the Company shall be prohibited from
requesting Eurodollar Rate Loans from such Bank hereunder unless such
declaration is subsequently withdrawn; and
(ii) require that all outstanding Eurodollar Rate Loans made by
it be converted to Base Rate Loans, in which event (A) all such Eurodollar
Rate Loans shall be automatically converted to Base Rate Loans as of the
effective date of such notice as provided in paragraph (b) below and (B)
all payments and prepayments of principal which would otherwise have been
applied to repay the converted Eurodollar Rate Loans shall instead be
applied to repay the Base Rate Loans resulting from the conversion of such
Eurodollar Rate Loans.
Each Bank agrees that it will use reasonable efforts to designate a different
Applicable Lending Office for the Eurodollar Loans due to it affected by this
Section, if such designation will avoid the illegality described in this Section
so long as such designation will not be materially disadvantageous to such Bank
as determined by such Bank in its reasonable discretion.
(b) For purposes of this Section, a notice to the Company (with a
copy to the Agent) by any Bank pursuant to paragraph (a) above shall be
effective on the date of receipt thereof by the Company.
(c) In the event any Bank shall give a notice to the Company pursuant
to this Section or Section 3.05, the Company may give notice to such Bank (with
copies to the Agent) that it wishes to seek one or more Eligible Assignees to
assume the Commitment of such Bank and to purchase its outstanding Loans,
Obligations
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<PAGE>
and Notes. Each Bank giving a notice to the Company pursuant to this Section
agrees to sell its Commitment, Loans, Obligations, Notes and interest in this
Agreement and the other Loan Documents to any such Eligible Assignee for an
amount equal to the sum of the outstanding unpaid principal of and accrued
interest on such Loans, Obligations and Notes plus all other fees, amounts and
compensation due such Bank hereunder calculated, in each case, to the date such
Commitment, Loans, Obligations, Notes and interest are purchased, whereupon such
Bank shall have no further Commitment or other obligation to the Company
hereunder or under any Note.
SECTION 2.13. INDEMNITY. THE COMPANY SHALL INDEMNIFY EACH BANK
---------
AGAINST ANY LOSS OR REASONABLE EXPENSE WHICH SUCH BANK MAY SUSTAIN OR INCUR AS A
CONSEQUENCE OF (A) ANY FAILURE BY THE COMPANY TO FULFILL ON THE DATE OF ANY
BORROWING HEREUNDER THE APPLICABLE CONDITIONS SET FORTH IN ARTICLE V, (B) IF,
---------
FOR ANY REASON (OTHER THAN THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH
BANK), A BORROWING OF OR A CONVERSION FROM OR INTO EURODOLLAR RATE LOANS DOES
NOT OCCUR ON THE DATE SPECIFIED THEREFOR IN A NOTICE OF BORROWING OR NOTICE OF
CONVERSION, (C) ANY PAYMENT, PREPAYMENT OR CONVERSION OF A EURODOLLAR RATE LOAN
REQUIRED BY ANY PROVISION OF THIS AGREEMENT (OTHER THAN SECTION 2.12) OR
OTHERWISE MADE ON A DATE OTHER THAN THE LAST DAY OF THE APPLICABLE INTEREST
PERIOD, (D) ANY DEFAULT IN THE PAYMENT OR PREPAYMENT OF THE PRINCIPAL AMOUNT
OF ANY LOAN OR ANY PART THEREOF OR INTEREST ACCRUED THEREON, AS AND WHEN DUE AND
PAYABLE (AT THE DUE DATE THEREOF OR INTEREST ACCRUED THEREON, AS AND WHEN DUE
AND PAYABLE (AT THE DUE DATE THEREOF, BY NOTICE OF PREPAYMENT OR OTHERWISE) OR
(E) THE OCCURRENCE OF ANY EVENT OF DEFAULT, INCLUDING, IN THE CASE OF ANY OF THE
EVENTS SET FORTH IN CLAUSES (A) THROUGH (D) OF THIS SECTION, ANY LOSS OR
REASONABLE EXPENSE SUSTAINED OR INCURRED OR TO BE SUSTAINED OR INCURRED IN
LIQUIDATING OR EMPLOYING DEPOSITS FROM THIRD PARTIES ACQUIRED TO EFFECT OR
MAINTAIN SUCH LOAN OR ANY PART THEREOF AS A EURODOLLAR RATE LOAN. FOR PURPOSES
OF THIS SECTION, "LOSS OR REASONABLE EXPENSE" SHALL MEAN AN AMOUNT EQUAL TO THE
EXCESS, IF ANY, AS REASONABLY DETERMINED BY EACH BANK OF (I) ITS ACTUAL COST OF
OBTAINING THE FUNDS FOR THE LOAN BEING PAID, PREPAID OR CONVERTED OR NOT
BORROWED (BASED ON THE THEN APPLICABLE EURODOLLAR RATE) FOR THE PERIOD FROM THE
DATE OF SUCH PAYMENT, PREPAYMENT OR CONVERSION OR FAILURE TO BORROW TO THE LAST
DAY OF THE INTEREST PERIOD FOR SUCH LOAN (OR, IN THE CASE OF A FAILURE TO
BORROW, THE INTEREST PERIOD FOR THE LOAN WHICH WOULD HAVE COMMENCED ON THE DATE
OF SUCH FAILURE TO BORROW) OVER (II) THE AMOUNT OF INTEREST (AS REASONABLY
DETERMINED BY SUCH BANK) THAT WOULD BE REALIZED BY SUCH BANK IN REEMPLOYING THE
FUNDS SO PAID, PREPAID OR CONVERTED OR NOT BORROWED FOR SUCH PERIOD OR INTEREST
PERIOD, AS THE CASE MAY BE. EACH BANK WILL NOTIFY THE COMPANY THROUGH THE AGENT
OF ANY LOSS OR EXPENSE WHICH WILL ENTITLE SUCH BANK TO COMPENSATION PURSUANT TO
THIS SECTION, AS PROMPTLY AS POSSIBLE AND IN ANY EVENT WITHIN 60 DAYS AFTER IT
BECOMES AWARE THEREOF PROVIDED THAT IN THE EVENT SUCH NOTIFICATION IS GIVEN
AFTER 60 DAYS AFTER SUCH BANK BECOMES AWARE THEREOF, SUCH BANK SHALL BE ENTITLED
TO RECOVER ONLY THOSE AMOUNTS OTHERWISE RECOVERABLE HEREUNDER WHICH ACCRUE AFTER
THE DATE OF SUCH NOTICE. A CERTIFICATE OF EACH BANK SETTING FORTH ANY AMOUNT OR
AMOUNTS WHICH SUCH BANK IS ENTITLED TO RECEIVE PURSUANT TO THIS SECTION SHALL BE
DELIVERED TO THE COMPANY (WITH A COPY TO THE AGENT) AND SHALL BE CONCLUSIVE, IF
MADE IN GOOD FAITH, ABSENT MANIFEST ERROR. THE
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<PAGE>
COMPANY SHALL PAY TO THE AGENT FOR THE ACCOUNT OF EACH BANK THE AMOUNT SHOWN AS
DUE ON ANY CERTIFICATE WITHIN 30 DAYS AFTER ITS RECEIPT OF THE SAME.
NOTWITHSTANDING THE FOREGOING, IN NO EVENT SHALL THE COMPENSATION PAYABLE UNDER
THIS SECTION (TO THE EXTENT, IF ANY, CONSTITUTING INTEREST UNDER APPLICABLE
LAWS) TOGETHER WITH ALL AMOUNTS CONSTITUTING INTEREST UNDER APPLICABLE LAWS AND
PAYABLE IN CONNECTION WITH THIS AGREEMENT OR THE NOTES, EXCEED THE HIGHEST
LAWFUL RATE. WITHOUT PREJUDICE TO THE SURVIVAL OF ANY OTHER OBLIGATIONS OF THE
COMPANY HEREUNDER, THE OBLIGATIONS OF THE COMPANY UNDER THIS SECTION SHALL
SURVIVE THE TERMINATION OF THIS AGREEMENT, THE PAYMENT OF THE OBLIGATIONS AND
THE ASSIGNMENT OF ANY OF THE NOTES.
SECTION 2.14. Special Provisions for Swing Loans.
------------------------------------
(a) Banks to Make Revolving Loans.
------------------------------
(i) The Swing Loan Bank, at any time in its discretion, upon
written request to the Banks through the Agent (with a copy to the applicable
Company) on or before 11.00 a.m. (New York time) on the requested Borrowing Date
(which shall be a Business Day), may require each Bank (including the Swing Loan
Bank) to make a Base Rate Loan in an amount equal to such Bank's Percentage
Participation of the outstanding Swing Loans. Promptly upon receipt of any such
request, the Agent shall give notice thereof to the Banks. The Agent shall
apply the proceeds of such Loans to prepay the Swing Loans of the Swing Loan
Bank; provided, however, that the Agent shall be obligated to make the proceeds
of such Loans available only to the extent received by it from the Banks. All
Loans made pursuant to this Section 2.14(a) shall be Base Rate Loans.
---------------
(ii) In the event the Agent advances proceeds from any Loan to
the Swing Loan Bank and one or more of the Banks (other than the Swing Loan
Bank) fail to fund all or any portion of such Loan immediately upon receipt of
notice from the Agent, then the Agent shall promptly notify the Company, and the
Company shall pay such corresponding amount to the Agent within two Business
Days after demand therefor. The Agent shall also be entitled to recover from
either such Bank or the Company interest on such corresponding amount from the
date such corresponding amount was made available by the Agent to the Company to
the date such corresponding amount is recovered by the Agent, (i) from such Bank
at a rate per annum equal to the lesser of (A) the Highest Lawful Rate or (B)
the Federal Funds Rate or (ii) from the Company at a rate per annum equal to the
lesser of (A) the Highest Lawful Rate or (B) the applicable Margin plus the Base
Rate. Nothing herein shall be deemed to relieve any Bank from its obligation to
fulfill its commitments hereunder or to prejudice any rights which the Company
may have against any Bank as a result of any default by such Bank hereunder.
(b) Participations in Swing Loans.
-----------------------------
(i) If, at any time prior to the making of Loans pursuant to
Section 2.14(a)(i) hereof, any Event of Default shall have occurred, each Bank,
- ------------------
on the date such Loan was to have been made or, if no request for Loans had
been made pursuant to Section 2.14(a)(i) hereof, promptly upon request by the
------------------
Swing Loan Bank delivered
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<PAGE>
to the Agent, shall purchase an undivided participation interest in all
outstanding Swing Loans in an amount equal to its Percentage Participation times
the outstanding amount of such Swing Loans. Each Bank (other than the Swing Loan
Bank) will transfer immediately to the Swing Loan Bank, in immediately available
funds, the amount of its participation and, upon receipt thereof, the Swing Loan
Bank will deliver to such other Bank a Swing Loan Participation Certificate,
dated the date of receipt of such funds and in the amount of such Bank's
participation.
(ii) Whenever, at any time after the Swing Loan Bank has
received from any other Bank such other Bank's participating interest in a Swing
Loan, the Swing Loan Bank receives any payment on account thereof, the Swing
Loan Bank will distribute to such other Bank its participating interest in such
amount (appropriately adjusted, in the case of interest payments, to reflect the
period of time during which such Bank's participating interest was outstanding
and funded); provided, however, that in the event that any payment received by
the Swing Loan Bank is required to be returned, such other Bank will return to
the Swing Loan Bank any portion thereof previously distributed to it.
(c) Acknowledged Privity. The Company expressly agrees that, in
--------------------
respect of each Bank's funded participation interest in any Swing Loan, such
Bank shall be deemed to be in privity of contract with the Company and have the
same rights and remedies against the Company under the Loan Documents as if such
funded participation interest in such Swing Loan were a Loan.
(d) Unconditional Obligation. Each Bank's obligation to make the
------------------------
Loans or to purchase participation interests in the Swing Loans as provided in
this Section 2.14 shall be absolute and unconditional and shall not be affected
------------
by any circumstance, including without limitation, (i) any set-off,
counterclaim, recoupment, defense or other right which such Bank may have
against the Swing Loan Bank, the Company or any other Person for any reason
whatsoever, (ii) the existence of any Default or Event of Default at any time
(iii) the occurrence of any event or existence of any condition that might have
a Material Adverse Effect, or (iv) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing.
ARTICLE III
LETTERS OF CREDIT
SECTION 3.01. Letters of Credit. (a) Subject to and upon the terms
-----------------
and conditions herein set forth, the Issuing Bank agrees that it will, at any
time and from time to time on or after the Effective Date and prior to the
Maturity Date with respect to Base Rate Loans and Eurodollar Rate Loans,
following its receipt of a Letter of Credit Request, issue for the account of
the Company and in support of the obligations of the Company, one or more
irrevocable letters of credit (all such letters of credit collectively, the
"Letters of Credit" and individually, a "Letter of Credit"); provided that the
----------------- ----------------
Issuing Bank shall not issue any Letter of Credit if at the time of such
issuance:
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<PAGE>
(i) the Stated Amount of such Letter of Credit shall be
greater than an amount which when added to (x) the Letter of Credit
Outstandings at such time (y) the aggregate principal amount of all Loans
then outstanding and (z) the outstanding principal amount of the Debt of
the Company allowed under Section 8.04(b)(i)(A), would exceed the Total
---------------------
Commitment; or
(ii) the Stated Amount of such Letter of Credit shall be
greater than an amount which when added to the Letter of Credit
Outstandings at such time, would exceed the Letter of Credit Limit; or
(iii) the expiry date or, in the case of any Letter of Credit
containing an expiry date that is extendible at the option of the Issuing
Bank, the initial expiry date of such Letter of Credit is a date that is
later than the earlier to occur of (i) a date which is one year after the
date of issuance or (ii) the Maturity Date with respect to Base Rate Loans
and Eurodollar Rate Loans.
(b) the Issuing Bank shall neither renew nor permit the renewal of
any Letter of Credit if any of the conditions precedent to such renewal set
forth in Section 5.02 are not satisfied or, after giving effect to such renewal,
------------
the expiry date of such Letter of Credit would be a date that is later than the
Maturity Date with respect to Base Rate Loans and Eurodollar Rate Loans.
SECTION 3.02. Letter of Credit Requests. (a) Whenever the Company
-------------------------
desires that a Letter of Credit be issued for its account or that the existing
expiry date shall be extended, it shall give the Issuing Bank (with copies to
be sent to the Agent and each other Bank) (i) in the case of a Letter of Credit
to be issued, at least five Business Days' prior written request therefor and
(ii) in the case of the extension of the existing expiry date of any Letter of
Credit, at least five Business Days' prior written request to the date on which
the Issuing Bank must notify the beneficiary thereof that the Issuing Bank does
not intend to extend such existing expiry date. Each such request shall be
executed by the Company and shall be in the form of Exhibit 3.02 attached hereto
------------
(each a "Letter of Credit Request") and, in the case of the issuance of each
------------------------
Letter of Credit, shall be accompanied by an Application therefor, completed to
the satisfaction of the Issuing Bank, and such other certificates documents and
other papers and information as the Issuing Bank or any Bank (through the Agent)
may reasonably request. Each Letter of Credit shall be denominated in U.S.
dollars, shall expire no later than the date specified in Section 3.01, shall
------------
not be in an amount greater than is permitted under clauses (ii) or (iii) of
Section 3.01(a) and shall be in such form as may be reasonably approved from
- ---------------
time to time by the Issuing Bank and the Company.
(b) The making of each Letter of Credit Request shall be deemed to be
a representation and warranty by the Company that such Letter of Credit may be
issued in accordance with, and will not violate the requirements of this
Agreement. Unless the Issuing Bank has received notice from any Bank before it
issues the respective Letter of Credit or extends the existing expiry date of a
Letter of Credit that one or more of the conditions specified in Article V are
---------
not then satisfied, or that the issuance of such Letter of Credit would violate
this Agreement, then the Issuing Bank may issue the requested Letter of Credit
for the account of the Company in
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<PAGE>
accordance with the Issuing Bank's usual and customary practices. Upon its
issuance of any Letter of Credit or the extension of the existing expiry date of
any Letter of Credit, as the case may be, the Issuing Bank shall promptly notify
the Company, the Agent and each Bank of such issuance or extension.
SECTION 3.03. Letter of Credit Participations. (a) All Letters of
-------------------------------
Credit issued subsequent hereto shall be deemed to have been sold and
transferred by the Issuing Bank to each Bank, and each Bank shall be deemed
irrevocably and unconditionally to have purchased and received from the Issuing
Bank, without recourse or warranty, an undivided interest and participation, to
the extent of such Bank's Percentage Participation in each such Letter of Credit
(including extensions of the expiry date thereof), each substitute letter of
credit, each drawing made thereunder and the obligations of the Company under
this Agreement and the other Loan Documents with respect thereto.
(b) In determining whether to pay under any Letter of Credit, the
Issuing Bank shall have no obligation relative to the Banks other than to
confirm that any documents required to be delivered under such Letter of Credit
appear to have been delivered and that they appear to comply on their face with
the requirements of such Letter of Credit and applicable law.
(c) In the event that the Issuing Bank makes any payment under any
Letter of Credit and the Company shall not have reimbursed such amount in full
to such Issuing Bank pursuant to Section 3.04(a), such Issuing Bank shall
---------------
promptly notify the Agent, which shall promptly notify each Bank of such
failure, and each Bank shall promptly and unconditionally pay to the Agent for
the account of such Issuing Bank the amount of such Bank's Percentage
Participation of such unreimbursed payment in U. S. dollars and in same day
funds. If the Agent so notifies, prior to 10:00 a.m. (New York time) on any
Business Day, any Bank required to fund a payment under a Letter of Credit, such
Bank shall make available to the Agent for the account of such Issuing Bank such
Bank's Percentage Participation of the amount of such payment on such Business
Day in same day funds. If and to the extent such Bank shall not have so made its
Percentage Participation of the amount of such payment available to the Agent
for the account of such Issuing Bank, such Bank agrees to pay to the Agent for
the account of such Issuing Bank, forthwith on demand such amount, together with
interest thereon, for each day from such date until the date such amount is paid
to the Agent for the account of such Issuing Bank at the lesser of (i) the
Federal Funds Rate and (ii) the Highest Lawful Rate. The failure of any Bank to
make available to the Agent for the account of such Issuing Bank, its Percentage
Participation of any payment under any Letter of Credit shall not relieve any
other Bank of its obligation hereunder to make available to the Agent for the
account of such Issuing Bank its Percentage Participation of any payment under
any Letter of Credit on the date required, as specified above, but no Bank shall
be responsible for the failure of any other Bank to make available to the Agent
for the account of such Issuing Bank such other Bank's Percentage Participation
of any such payment.
(d) Whenever an Issuing Bank receives a payment of a reimbursement
obligation as to which the Agent has received for the account of such Issuing
Bank
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<PAGE>
any payments from the Banks pursuant to clause (b) above, such Issuing Bank
shall pay promptly to the Agent and the Agent shall promptly pay to each Bank
which has paid its Percentage Participation thereof, in U.S. dollars and in
same day funds, an amount equal to such Bank's Percentage Participation thereof
together with any interest on such reimbursement obligation allocable to such
Bank's Percentage Participation paid by the Company to such Issuing Bank
pursuant to Section 3.04(a) and received by the Agent.
---------------
(e) The obligations of the Banks to make payments (other than
payments resulting solely from the gross negligence or wilfull misconduct of the
Issuing Bank) to the Agent for the account of the Issuing Bank with respect to
Letters of Credit shall be irrevocable and not subject to any qualification or
exception whatsoever and shall be made in accordance with the terms and
conditions of this Agreement under all circumstances, including any of the
following circumstances:
(i) any lack of validity or enforceability of this Agreement
or any of the other Loan Documents;
(ii) the existence of any claim, setoff, defense or other right
which the Company may have at any time against a beneficiary named in a
Letter of Credit, any transferee of any Letter of Credit, the Agent, any
Issuing Bank, any Bank, or any other Person, whether in connection with
this Agreement, any Letter of Credit, the transactions contemplated herein
or any unrelated transactions (including any underlying transaction between
the Company and the beneficiary named in any such Letter of Credit);
(iii) any draft, certificate or any other document presented
under the Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Loan Documents;
or
(v) the occurrence of any Default or Event of Default.
SECTION 3.04. Agreement to Repay Letter of Credit Drawings. (a) Upon
--------------------------------------------
the receipt by the Issuing Bank of any Drawing from a beneficiary under a Letter
of Credit, the Issuing Bank promptly will provide the Agent, the Banks and the
Company with telecopy notice thereof. The Company hereby agrees to reimburse
such Issuing Bank by making payment to the Agent in immediately available funds
at the Payment office, for any payment made by the Issuing Bank under any Letter
of Credit issued by it (each such amount so paid until reimbursed, an "Unpaid
------
Drawing"). Such reimbursement payment shall be due and payable (x) not later
- -------
than 2:00 p.m. (New York time) on the date the Issuing Bank notifies the Company
of such Drawing, if such notice is received at or before 11:00 a.m. (New York
time) on such date, or (y) not later than 11:00 a.m. (New York time) on the
first Business Day succeeding the date such notice is received, if such notice
is received after 11:00 a.m. (New York time). The Company shall pay interest on
the amount so paid by the Issuing Bank, to the extent not reimbursed on the date
of such payment, from and
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<PAGE>
including the date paid to but excluding the date reimbursement is made as
provided above, at a rate per annum equal to the Default Rate, such interest to
be payable on demand.
(b) The Company's obligations under this Section to reimburse the
Issuing Bank with respect to Unpaid Drawings (including, in each case, interest
thereon) shall be absolute and unconditional under any and all circumstances and
irrespective of any setoff, counterclaim or defense to payment which the Company
may have or have had against any Bank (including such Issuing Bank in its
capacity as the issuer of a Letter of Credit or any Bank as a participant
therein), including any defense based upon the failure of any drawing under a
Letter of Credit (each a "Drawing") to conform to the terms of the Letter of
-------
Credit or any non-application or misapplication by the beneficiary of the
proceeds of such Drawing, unless such matter arises out of the gross negligence
or willful misconduct of the Issuing Bank in paying such Drawing.
(c) The Company also agrees with the Issuing Bank and the Banks that
the Issuing Bank shall not be responsible for, and the Company's reimbursement
obligations under subsection (a) above shall not be affected by, among other
things, the validity or genuineness of documents or of any endorsements thereon,
even though such documents shall in fact prove to be invalid, fraudulent or
forged, or any dispute between the Company and the beneficiary of any Letter of
Credit or any other party to which such Letter of Credit may be transferred or
any claims whatsoever of the Company against any beneficiary of such Letter of
Credit or any such transferee other than the gross negligence or willful
misconduct of the Issuing Bank in paying such Drawing.
(d) THE ISSUING BANK SHALL NOT BE LIABLE FOR ANY ERROR, OMISSION,
INTERRUPTION OR DELAY IN TRANSMISSION, DISPATCH OR DELIVERY OF ANY MESSAGE OR
ADVICE, HOWEVER TRANSMITTED, IN CONNECTION WITH ANY LETTER OF CREDIT, BUT SHALL
BE LIABLE FOR ERRORS OR OMISSIONS CAUSED BY SUCH ISSUING BANK'S GROSS NEGLIGENCE
OR WILLFUL MISCONDUCT. THE COMPANY AGREES TO INDEMNIFY THE ISSUING BANK, ITS
OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS AND HOLD SUCH PARTIES HARMLESS FROM
ANY AND ALL LOSSES, LIABILITIES, CLAIMS OR DAMAGES (INCLUDING REASONABLE
ATTORNEYS FEES) ARISING OUT OF OR RESULTING FROM ANY ACTION TAKEN OR OMITTED BY
SUCH PERSON UNDER OR IN CONNECTION WITH ANY LETTER OF CREDIT OR ANY RELATED
DRAFT OR DOCUMENT WHICH ACTION TAKEN OR OMITTED WAS CAUSED BY SUCH PERSON'S SOLE
OR CONTRIBUTORY NEGLIGENCE. THE COMPANY AGREES THAT ANY ACTION TAKEN OR OMITTED
BY AN ISSUING BANK UNDER OR IN CONNECTION WITH ANY LETTER OF CREDIT OR
THE RELATED DRAFTS OR DOCUMENTS, IF DONE IN ACCORDANCE WITH THE STANDARDS OF
CARE SPECIFIED IN THE UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS (1993
REVISION), INTERNATIONAL CHAMBER OF COMMERCE, PUBLICATION NO. 500 (AND ANY
SUBSEQUENT REVISIONS THEREOF APPROVED BY A CONGRESS OF THE INTERNATIONAL CHAMBER
OF COMMERCE AND ADHERED TO BY THE ISSUING BANKS) AND, TO THE EXTENT NOT
INCONSISTENT THEREWITH, THE UNIFORM COMMERCIAL CODE OF THE STATE OF NEW YORK,
SHALL NOT RESULT IN ANY LIABILITY OF AN ISSUING BANK TO THE COMPANY.
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<PAGE>
SECTION 3.05. Increased Costs. (a) Notwithstanding any other
---------------
provision herein, but subject to Section 11.08, if any Bank shall have
-------------
determined in good faith that any law, rule, regulation or guideline or the
application or effectiveness of any applicable law or regulation or any change
in applicable law or regulation or any change after the Execution Date in the
interpretation or administration thereof, or compliance by any Bank (or any
lending office of such Bank) with any applicable guideline or request from any
central bank or governmental authority (whether or not having the force of law)
either (i) shall impose, modify or make applicable any reserve, deposit, capital
adequacy or similar requirement against letters of credit issued, or
participated in, by any Bank or (ii) shall impose on any Bank any other
conditions affecting this Agreement or any Letter of Credit; and the result of
any of the foregoing is to increase the cost to any Bank of issuing, maintaining
or participating in any Letter of Credit, or reduce the amount received or
receivable by any Bank hereunder with respect to Letters of Credit, by an amount
deemed by such Bank to be material, then, from time to time, the Company shall
pay to the Agent for the account of such Bank such additional amount or amounts
as will reasonably compensate such Bank for such increased cost or reduction by
such Bank. Notwithstanding the foregoing, in no event shall the compensation
payable under this paragraph (to the extent, if any, constituting interest under
applicable laws) together with all amounts constituting interest under
applicable laws and payable in connection with this Agreement, the Notes or the
other Loan Documents, exceed the Highest Lawful Rate.
(b) Each Bank will notify the Company through the Agent of any event
occurring after the date of this Agreement which will entitle such Bank to
compensation pursuant to subsection (a) above, as promptly as practicable, and
in any event within 30 days after it becomes aware thereof provided that in the
event such notification is given after 60 days after such Bank becomes aware
thereof, such Bank shall be entitled to recover only those amounts otherwise
recoverable hereunder which accrue after the date of such notice. A certificate
of a Bank setting forth in reasonable detail such amount or amounts as shall be
necessary to compensate such Bank as specified in subsection (a) above may be
delivered to the Company (with a copy to the Agent) and shall be conclusive
absent manifest error. The Company shall pay to the Agent for the account of
such Bank the amount shown as due on any such certificate within 30 days after
its receipt of the same.
SECTION 3.06. Conflict between Applications and Agreement. To the
-------------------------------------------
extent that any provision of any Application related to any Letter of Credit is
inconsistent with the provisions of this Agreement, the provisions of this
Agreement shall control.
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ARTICLE IV
FEES; COMMITMENTS; PAYMENTS
SECTION 4.01 Fees. (a) The Company agrees to pay to the Agent on the
----
Execution Date for pro rata distribution to the Banks (based upon their
respective Percentage Participations in the amount of the Total Commitment) a
fee equal to 0.25% of the Total Commitment (the "Up Front Fee").
------------
(b) The Company agrees to pay to the Agent for distribution to each
Bank a Commitment fee (the "Commitment Fee") for the period from the Execution
--------------
Date to the date upon which the Total Commitment shall have been terminated,
computed at a rate equal to 0.375% per annum on the daily average Unutilized
Commitment of such Bank. Accrued Commitment Fees shall be calculated to the day
immediately preceding each Designated Payment Date and to the date immediately
preceding such date upon which the Total Commitment is terminated and shall be
due and payable in arrears on each Designated Payment Date commencing June 30,
1995 and on the date upon which the Total Commitment is terminated. The
Commitment Fee (i) shall be paid in immediately available funds and (ii) shall
be calculated on the basis of the actual number of days elapsed over a year of
365 or 366 days, as the case may be.
(c) The Company agrees to pay to the Agent for pro rata distribution
to the Banks (based upon their respective Percentage Participations) a fee in
respect of each Letter of Credit issued for the account of the Company (the
"Letter of Credit Fee"), for the period from the date of issuance of such Letter
--------------------
of Credit to the expiry date of such Letter of Credit, computed at the rate of
1% per annum on the daily average Stated Amount of each Letter of Credit. The
Company agrees to pay to the Issuing Bank, for its own account, a fee in respect
of each Letter of Credit issued for the account of the Company, for the period
from the date of issuance of such Letter of Credit to the expiry date of such
Letter of Credit, computed at the rate of 0.1% per annum on the daily average
Stated Amount of such Letter of Credit. Accrued Letter of Credit Fees and fees
due to the Issuing Bank pursuant to this Section shall be due and payable in
arrears on each Designated Payment Date commencing June 30, 1995, and on the
Maturity Date with respect to Base Rate Loans and Eurodollar Rate Loans or, if
earlier, on the date upon which the Total Commitment is terminated. The Letter
of Credit Fees (i) will be in lieu of all commissions and fees for the Letters
of Credit other than customary administrative, issuance, amendment, payment and
negotiation charges, (ii) shall be paid in immediately available funds and (iii)
shall be calculated on the basis of the actual number of days elapsed over a
year of 365 or 366 days, as the case may be.
(d) The Company agrees to pay to the Agent for its sole account an
Agent's fee (the "Agent's Fee") as previously agreed to in writing by the
-----------
Company and the Agent. The Agent's Fee shall be due and payable on the Execution
Date and on each one year anniversary of the Execution Date during the term
hereof as consideration for the performance of the Agent's duties hereunder.
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<PAGE>
(e) The Company agrees to pay to CS First Boston Corporation for its
sole account an arranger fee (the "Arranger Fee") as previously agreed to in
------------
writing by the Company and CS First Boston Corporation. The Arranger Fee shall
be due and payable on the Execution Date.
(f) In no event shall the Fees payable under this Section (to the
extent, if any, constituting interest under applicable laws) together with all
amounts constituting interest under applicable laws and payable in connection
with this Agreement, the Notes and the other Loan Documents exceed the Highest
Lawful Rate.
SECTION 4.02. Voluntary Reduction of Commitment. Upon at least two
---------------------------------
Business Days' prior telephonic notice confirmed in writing to the Agent (which
notice the Agent shall promptly transmit to each of the Banks), the Company
shall have the right, without premium or penalty, to irrevocably terminate the
Unutilized Commitment in part or in whole; provided, that (a) any such reduction
shall apply proportionately to the Commitment of each of the Banks and (b) any
partial reduction of the Total Commitment shall be in the amount of $10,000,000
or, if greater, an integral multiple of $1,000,000. If and to the extent that
the Company specifies in such notice that it desires to terminate all or any
part of the Swing Loan Commitment, then (i) the Swing Loan Commitment shall be
reduced by the amount so requested, (ii) the reduction shall be applied
proportionately to the Commitment of each Bank and (iii) that portion of the
Swing Loan Bank's Commitment not constituting a part of the Swing Loan
Commitment shall be increased by the aggregate amount of the reductions applied
to reduce proportionately the Commitments of each of the Banks. All reductions
of the Unutilized Commitment made pursuant to this Section 4.02 shall be applied
------------
proportionately to each of the mandatory reductions of the Total Commitment
required under Section 4.03 (a) and Section 4.03(b).
---------------- ---------------
SECTION 4.03. Mandatory Reduction of Commitment. (a) The Total
---------------------------------
Commitment, if not sooner terminated, shall terminate on the Maturity Date with
respect to Base Rate Loans and Eurodollar Rate Loans.
(b) The Total Commitment, if not sooner reduced or terminated, shall
be reduced by the Company to not more than (i) $75,000,000 on January 1, 1996
and (ii) $50,000,000 on January 1, 1997.
(c) The Total Commitment, if not sooner terminated, shall be reduced
by the total amount of all prepayments of the Loans required to be made in
accordance with Section 8.11 as a result of Asset Dispositions and Section 8.03
------------ ------------
as a result of sales of Accounts Receivable. All reductions of the Unutilized
Commitment made pursuant to this Section 4.03 (c) shall be applied
proportionately to each of the mandatory reductions of the Total Commitment
required under Section 4.03 (a) and Section 4.03(b).
---------------- ---------------
(d) The Total Commitment, if not sooner terminated, shall be
terminated or reduced as required by Section 4.05(c).
---------------
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<PAGE>
(e) The reductions in the Total Commitment required by Section 4.03(b)
---------------
and Section 4.03(c) shall with respect to the portion thereof applied to reduce
---------------
the Commitment of Credit Suisse, be applied proportionately to the Swing Loan
Commitment and the balance of the Credit Suisse Commitment.
SECTION 4.04. Voluntary Prepayments. The Company may (x) by giving
---------------------
telephonic notice (promptly confirmed in writing) by Noon (New York time) on
Business Day of such prepayment, in the case of Base Rate Borrowings, and (y)
upon at least three Business Days' notice, in the case of Eurodollar Rate
Borrowings, in each case to the Agent stating the proposed date and aggregate
principal amount of the prepayment, and if such notice is given the Company
shall, prepay the outstanding aggregate principal amount of the Loans
constituting part of the same Borrowing in whole or in part, together with
accrued, unpaid interest to the date of such prepayment on the aggregate
principal amount prepaid, provided that (a) no Eurodollar Rate Loan may be
prepaid prior to the last day of its Interest Period unless, simultaneously
therewith, the Company pays to the Agent for the benefit of the Banks, all sums
due and payable under Section 2.13 hereof; (b) each partial prepayment shall be
------------
in an initial aggregate principal amount of $1,000,000 and, if greater, an
integral multiple of $500,000; and (c) each prepayment pursuant to this Section
shall be applied pro rata among the designated outstanding Loans of each of the
Banks, first, to the payment of accrued and unpaid interest, then, to the
outstanding principal of such Loans in the inverse order of maturity thereof.
SECTION 4.05. Mandatory Repayments. (a) On the Maturity Date the
--------------------
Company shall pay the aggregate principal amount of the Loans outstanding on
such date, together with all accrued, unpaid interest due thereon.
(b) Subject to Section 2.13, the Company shall repay the outstanding
------------
principal amount of the Loans on any day on which the aggregate outstanding
principal amount of the Loans, when added to (i) Letter of Credit Outstandings
and (ii) the outstanding principal amount of the Debt of the Company allowed
under Section 8.04(b)(i)(A) exceeds the Total Commitment, in the amount of such
---------------------
excess. If, after giving effect to the prepayment of all outstanding Loans, the
Letter of Credit Outstandings exceed the difference between (i) Total
Commitment and (ii) the outstanding principal amount of the Debt of the Company
allowed under Section 8.04(b)(i)(A), the Company shall pay an amount of cash
equal to such excess Letter of Credit Outstandings to the Agent, such cash
hereby pledged and to be held as security for all obligations of the Company
hereunder and under the other Loan Documents.
(c) Upon the occurrence of a Change of Control, the Company shall pay
the aggregate principal amount of the Loans outstanding, together with all
accrued, unpaid interest due thereon and the Total Commitment shall terminate
unless such payment and termination is waived by the Majority Banks (i) in a
case where the Company is a voluntary party to the relevant transaction, prior
to the effectiveness of such Change of Control or (ii) in a case where the
Company is not a voluntary party to the relevant transaction, prior to the fifth
day following the occurrence of such Change of Control, in each case pursuant to
Section 11.01. Such payment shall be made (i) immediately upon the occurrence of
- -------------
a Change of Control in a case where the
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<PAGE>
Company is a voluntary party to the relevant transaction and (ii) within five
days after any Change of Control in a case where the Company is not a voluntary
party to the relevant transaction. In the event that the Company requests such a
waiver the Banks will respond to such request (i) in a case where the Company is
a voluntary party to the relevant transaction within ten Business Days or (ii)
in a case where the Company is not a voluntary party to the relevant
transaction, prior to the fifth day following the occurrence of such Change of
Control; provided, that the failure of the Banks to so respond shall constitute
the Majority Bank's rejection of such waiver request.
(d) Each repayment pursuant to this Section shall be applied pro rata
among the designated outstanding Loans of each of the Banks, first, to the
payment of accrued and unpaid interest, then, in the case of all Loans, to the
outstanding principal of such Loans.
SECTION 4.06. Method and Place of Payment. Except as otherwise
---------------------------
specifically provided herein, all payments under this Agreement shall be made to
the Agent for the account of the Bank or Banks entitled thereto not later than
Noon (New York time) on the date when due and shall be made in lawful money of
the United States in immediately available funds at the Payment Office. If the
Agent fails to send to any Bank its portion of any payment timely received by
the Agent by the close of business on the day such payment was received, the
Agent shall pay such Bank interest on its portion of such payment at the lesser
of (i) the Federal Funds Rate and (ii) the Highest Lawful Rate for the period
from the day such payment was timely received by the Agent to the date such
Bank's portion of such payment is sent to such Bank. Whenever any payment to be
made hereunder or under any Note shall be stated to be due on a day which is not
a Business Day, the due date thereof shall be extended to the next succeeding
Business Day and, with respect to payments of principal, interest shall be
payable at the applicable rate during such extension.
SECTION 4.07. Net Payments. Except with respect to withholdings of
------------
United States taxes, as provided in Section 4.08, all payments (whether of
------------
principal, interest, Fees, reimbursements or otherwise) by the Company under
this Agreement shall be made without set-off or counterclaim and shall be made
free and clear of and without deduction for any present or future tax, levy,
impost or any other charge, if any, of any nature whatsoever, other than income
taxes, or franchise or similar taxes, now or hereafter imposed by any taxing
authority. Except with respect to withholdings of United States taxes as
provided in Section 4.08, if the making of such payments by the Company is
------------
prohibited by law unless such a tax, levy, impost or other charge is deducted or
withheld therefrom, the Company shall pay to the Agent, on the date of each such
payment, such additional amounts (without duplication of any amounts required to
be paid by the Company pursuant to Section 2.11 or Section 3.05) as may be
------------ ------------
necessary in order that the net amounts received by the Banks after such
deduction or withholding shall equal the amounts which would have been received
if such deduction or withholding were not required. The Company shall confirm
that all applicable taxes, if any, imposed on this Agreement or transactions
hereunder shall have been properly and legally paid by it to the appropriate
taxing authorities by sending official tax receipts or notarized copies of such
receipts to the Agent within 30 days after payment of any applicable tax.
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<PAGE>
Notwithstanding the foregoing, in no event shall the compensation payable under
this Section 4.07 (to the extent, if any, constituting interest under
------------
applicable laws) together with all amounts constituting interest under
applicable laws and payable in connection with this Agreement, the Notes and the
other Loan Documents exceed the Highest Lawful Rate.
SECTION 4.08. Tax Forms. With respect to each Bank that is organized
---------
under the laws of a jurisdiction outside the United States, on the date of the
initial Borrowing hereunder, and from time to time thereafter if requested by
the Company or the Agent, each such Bank shall provide the Agent and the company
two duly completed copies of the United States Internal Revenue Service Form
1001 (or such other documentation or information as may, under applicable United
States federal income tax statutes or regulations, be required in order to claim
an exemption or reduction from United States income tax withholding by reason of
an applicable treaty with the United States, such documentation or other
information being hereafter referred to as "Form 1001") or 4224 (or such other
---------
documentation or information as may, under applicable United States federal
income tax statutes or regulations, be required in order to claim an exemption
form United States income tax withholding for income that is effectively
connected with the conduct of a trade or business within the United States, such
documentation or other information being hereafter referred to as "Form 4224"),
---------
as the case may be, indicating in each case that such Bank is either entitled to
receive payments under this Agreement and the Notes without deduction or
withholding of any United States federal income taxes or, as the case may be, is
subject to such limited deduction or withholding as it is capable of recovering
in full from a source other than the Company. Each Bank which delivers to the
Company and the Agent a Form 1001 or 4224 pursuant to the next preceding
sentence further undertakes to deliver to the Company and the Agent two further
copies of the said Form 1001 or 4224, or successor applicable form or
certificate, as the case may be, as and when the previous form filed by it
hereunder shall expire or shall become incomplete or inaccurate in any respect,
unless in any of such cases an event has occurred prior to the date on which any
such delivery would otherwise be required which renders such form inapplicable.
SECTION 4.09. Maturity Date Extension Option. In the event the
------------------------------
Company desires to extend the Maturity Date with respect to Base Rate Loans and
Eurodollar Rate Loans for a period of one year form December 31, 1997 until
December 31, 1998 it shall give the Agent written notice to such effect (an
"Extension Request") no earlier than October 31, 1997 and no later than November
-----------------
30, 1997. An Extension Request shall be irrevocable and must be accompanied by
the Company's (a) pro forma balance sheet as of the Conversion Date and (b) the
financial information and certificate described in Section 7.01(a) and Section
--------------- -------
7.01(d) , respectively, applicable to the most recently ended quarterly
- -------
accounting period of the Company. The Agent shall promptly give the Banks
written notice or telephonic notice (promptly confirmed in writing) of the
Company's Extension Request. Each Bank shall have the option, in its sole and
absolute discretion, to extend its Commitment in accordance with the Extension
Request. Any Bank electing to grant the Extension Request shall notify the
Company (with a copy to the Agent and the other Banks) on or before thirty (30)
days after the date of receipt of the Extension Request, which notification
shall constitute an extension of such Bank's Commitment
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<PAGE>
until December 31, 1998. The failure of any Bank to so notify the Company of its
acceptance of the Company's Extension Request shall constitute a rejection of
such Extension Request.
ARTICLE V
CONDITIONS PRECEDENT
SECTION 5.01. Conditions Precedent to the Initial Borrowing of Loans.
------------------------------------------------------
The obligation of each Bank to make its initial Loan or issue a Letter of Credit
for the account of the Company is subject to the following conditions:
The Agent shall received the following, each in form and substance
satisfactory to the Agent:
(a) this Agreement executed by each party hereto;
(b) a Note executed by the Company and payable to the order of each
Bank;
(c) a Notice of Borrowing with respect to the Loans, if any, to be
borrowed on the initial Borrowing Date meeting the requirements of Section 2.03;
------------
(d) a certificate of an Officer and of the secretary or an assistant
secretary of the Company certifying, inter alia, (i) true and complete copies of
the certificate of incorporation of the General Partner, as amended and in
effect, the bylaws of the General Partner, as amended and in effect, the Amended
and Restated Agreement of Limited Partnership of the Company and the resolutions
adopted by the Board of Directors (A) authorizing the executing, delivery and
performance by the Company of this Agreement and the other Loan Documents and
the Borrowings to be made and the Letters of Credit to be issued hereunder, (B)
approving the forms of the Loan Documents which will be delivered at or prior to
the initial Borrowing Documents and any related documents, including, any
agreement contemplated by this Agreement, (ii) the incumbency and specimen
signatures of the Officers of the General Partner executing any documents on
behalf of the Company (iii) (A) that the representations and warranties made by
the Company in any Loan Document and which will be delivered at or prior to the
date of the initial Borrowing Date are true and correct in all material
respects, (B) the absence of any proceedings for the dissolution or liquidation
of the Company and (C) the absence of the occurrence of any Material
Adverse Effect or the occurrence and continuance of any Default or Event of
Default; (iv) that the closing under the Asset Transfer Agreement dated as of
August 12, 1994 between Occidental Chemical Corporation and the Company, as
amended, shall have occurred substantially as described in the Prospectus; (v)
that the closing under the Underwriting Agreement dated April 21, 1995 between
the Company, BCPM, BLP Finance Corporation and CS First Boston Corporation shall
have occurred and the Securities shall have been issued as described in the
Prospectus; and (vi) that the Wachovia Credit Agreement has been terminated;
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<PAGE>
(e) a favorable, signed opinions addressed to the Agent and the
Banks from the general counsel of the General Partner and counsel to the Company
and from Sidley & Austin, counsel to the Company, in substantially the form
attached hereto as Exhibit 5.01(e);
---------------
(f) the payment to the Agent and the Banks, as applicable, of all
fees then due under Section 4.01 hereof and all other reasonable fees and
------------
expenses (including the reasonable fees and disbursements pursuant to Section
-------
11.04) to be paid on or prior to the Effective Date; and
- -----
(g) certificates of appropriate public officials as to the existence
and good standing of the Company and the General Partner issued in the state of
incorporation or formation and each state wherein the Company is or should be
qualified to do business as a foreign entity.
SECTION 5.02. Conditions Precedent to All Credit Events. The
-----------------------------------------
obligation of the Banks to make any Loan or to issue or extend any Letter of
Credit is subject to the further conditions precedent that on the date of such
Credit Event (other than any conversion of existing Loans into Base Rate Loans):
(a) The Effective Date shall have occurred.
(b) The representations and warranties set forth in Article VI,
-----------
excluding those contained in Section 6.07(a), 6.07(c) and 6.07(d), shall be
- -----------------------------------------------------------------
true and correct in all material respects as of, and as if such representations
and warranties were made on, the date of the proposed Loan or Letter of Credit,
as the case may be (unless such representation and warranty expressly relates
to an earlier date), and the Company shall be deemed to have certified to the
Agent and the Banks that such representations and warranties are true and
correct in all material respects by submitting a Notice of Borrowing or a Letter
of Credit Request, as the case may be.
(c) The Company shall have complied with the provisions of Section
-------
2.03 or Section 3.02, as applicable.
- ---- ------------
(d) No Default or Event of Default shall have occurred and be
continuing or would result from such Credit Event.
(e) No Material Adverse Effect shall have occurred since the delivery
of the Financials.
The acceptance of the benefits of each such Credit Event shall constitute a
representation and warranty by the Company, to each of the Banks that all of the
conditions specified in this Section above exist as of that time.
SECTION 5.03. Conditions Precedent to Conversions. The obligation
-----------------------------------
of the Banks to convert any existing Borrowing into a Borrowing consisting of
Eurodollar Rate Loans is subject to the condition precedent that on the date of
such conversion no Default or Event of Default shall have occurred and be
continuing or would result from the making of such conversion. The acceptance of
the benefits of
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<PAGE>
each such conversion shall constitute a representation and warranty by the
Company to each of the Banks that no Default or Event of Default shall have
occurred and be continuing or would result from the making of such conversion.
SECTION 5.04. Delivery of Documents. All of the Notes,
---------------------
certificates, legal opinions and other documents and papers referred to in this
Article V, unless otherwise specified, shall be delivered to the Agent for the
- ---------
account of each of the Banks and, except for the Notes, in sufficient
counterparts for each of the Banks and shall be reasonably satisfactory in form
and substance to the Banks.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
In order to induce the Banks to enter into this Agreement and to make
the Loans provided for herein and issue Letters of Credit, the Company makes, on
or as of the Effective Date and the occurrence of each Credit Event (except to
the extent such representations or warranties relate to an earlier date or are
no longer true and correct in all material respects solely as a result of
transactions permitted by the Loan Documents), the following representations and
warranties to the Agent and the Banks:
SECTION 6.01. Organization and Qualification. Each of the Company
------------------------------
and the General Partner (a) is a corporation or partnership duly organized,
validly existing and in good standing under the laws of the state of its
incorporation or organization, (b) has the corporate or partnership power to own
its property and to carry on its business as now conducted and (c) is duly
qualified as a foreign corporation or foreign partnership to do business and is
in good standing in every jurisdiction in which the failure to be so qualified
would, have a Material Adverse Effect.
SECTION 6.02. Authorization and Validity. The Company has the power
--------------------------
and authority to execute, deliver and perform its obligations hereunder and
under the other Loan Documents, and all such action has been duly authorized by
all necessary corporate proceedings on the part of the General Partner. The
General Partner has the corporate power and authority to execute and deliver as
the General Partner the Loan Documents, and all of such action has been duly
authorized by all necessary corporate proceedings on its part. This Agreement
has been duly and validly executed and delivered by the Company and constitutes
a valid and legally binding agreement enforceable in accordance with its terms
and the Notes and the other Loan Documents, when duly executed and delivered by
the Company, will constitute valid and legally binding obligations of the
Company enforceable in accordance with the respective terms thereof and of this
Agreement, except, in each case, as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other
similar laws relating to or affecting the enforcement of creditors' rights
generally, and by general principles of equity (regardless of whether such
enforceability is a proceeding in equity or at law).
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<PAGE>
SECTION 6.03. Governmental Consents. No authorization, consent,
---------------------
approval, license or exemption of or filing or registration with any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, which has not been obtained is necessary for the valid
execution, delivery or performance by the Company of any Loan Document.
SECTION 6.04. Conflicting or Adverse Agreements or Restrictions.
-------------------------------------------------
Neither the execution nor delivery of the Loan Documents nor compliance with the
terms and provisions hereof or thereof will be contrary to the provisions of, or
constitute a default under (a) the charter, bylaws or partnership agreement of
the Company or any of its Subsidiaries or (b) any applicable law (including
Regulation U) or any applicable regulation, order, writ, injunction or decree of
any court or governmental instrumentality or (c) any material agreement to which
the Company or any of its Subsidiaries is a party or by which it is bound or to
which it is subject.
SECTION 6.05. Title to Assets. Each of the Company and its
---------------
Subsidiaries has good and indefeasible title to all of its material assets,
subject to no Liens, except those permitted hereunder. All of such assets,
have been and are being maintained by the appropriate Person in good working
condition in accordance with industry standards, subject to force majeure and
ordinary wear and tear excepted.
SECTION 6.06. Litigation. Except as described in the Prospectus or
----------
as set forth on schedule 6.13, no proceedings against or affecting the Company
-------------
or any Subsidiary are pending or, to the knowledge of the Company, threatened
before any court or governmental agency or department which involve a reasonable
material risk of having a Material Adverse Effect.
SECTION 6.07. Financial Statements, Projections and Information
-------------------------------------------------
Memorandum. (a) The Company has furnished to each Bank its audited consolidated
- ----------
balance sheet, income statement and statement of cash flow for itself and its
consolidated Subsidiaries as of December 31, 1994 (the "Financials"). The
----------
Financials have been prepared in conformity with GAAP consistently applied
(except as otherwise disclosed in such financial statements) throughout the
periods involved and present fairly, in all material respects, the consolidated
financial condition of the Company and its consolidated Subsidiaries as of
December 31, 1994 and the results of their operations for the period then ended.
(b) No Material Adverse Effect has occurred since the date of the
Financials.
(c) The projections with respect to the Company's income and cash
distributions, balance sheet and statement of cash flows contained in the
Information Memorandum, copies of which have been furnished to each Bank prior
to the date hereof, were prepared in good faith on the basis of the assumptions
stated in the Information Memorandum, which assumptions were believed by the
Company to be reasonable in all material respects at the time made, it being
recognized by the Banks and the Agent that (w) such projections relate to
future events and are not to be viewed as facts or assurances, (x) actual
results during the period or periods covered by any such projections ar subject
to many economic and competitive
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<PAGE>
uncertainties and contingencies that are beyond the control of the Company,
(y) there can be no assurances that such projections and the related financial
model will be realized and (z) actual results may vary materially from the
projected results.
(d) Taken as a whole, as of the date hereof, the representations and
warranties of the Company and the assertions of fact by the Company contained in
this Agreement, the Information Memorandum and the Prospectus and any other
certificate or document provided by the Company to the Banks and the Agent after
the date of the Prospectus do not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made in
such documents not misleading.
SECTION 6.08. Default. (a) Neither the Company nor any Subsidiary is
-------
in default under the provisions of any instrument evidencing any Debt or of any
agreement relating thereto, or in default in any respect under any order, writ,
injunction or decree of any court, or in default in any respect under or in
violation of any order, injunction or decree of any governmental
instrumentality, which defaults or violations would reasonably be expected to
have a Material Adverse Effect.
(b) Other than the Indenture, neither the Company nor any Subsidiary
is a party to any material agreement evidencing any Debt of such Person with an
outstanding principal amount in excess of $2,500,000 on the Execution Date.
SECTION 6.09. Investment Company Act. Neither the Company nor any
----------------------
Subsidiary is, or is directly or indirectly controlled by or acting on behalf of
any Person which is, and "investment company," as such term is defined in the
Investment Company Act of 1940.
SECTION 6.10. Public Utility Holding Company Act. Neither the
----------------------------------
Company nor any Subsidiary is a non-exempt "holding company" or subject to
regulation as such, or, to the knowledge of the Company's officers, an
"affiliate" of a "holding company" or a "subsidiary company" of a "holding
company," within the meaning of the Public Utility Holding Company Act of 1935.
SECTION 6.11. ERISA. No material accumulated funding deficiency (as
-----
defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived, exists or is expected to be incurred with respect to any Plan(s). No
liability to PBGC (other than required premium payments) has been or is expected
by the Company to be incurred with respect to any Plan(s) by the Company or any
ERISA Affiliate which would reasonably be expected to have a Material Adverse
Effect. Neither the Company nor any ERISA Affiliate has incurred any withdrawal
liability under Title IV of ERISA with respect to any Multiemployer Plans which
would reasonably be expected to have a Material Adverse Effect.
SECTION 6.12. Tax Returns and Payments. Each of the Company and its
------------------------
Subsidiaries has filed all federal income tax returns, state tax returns and
other material tax returns, statements and reports (or obtained extensions with
respect thereto) which, are required to be filed and have paid or deposited or
made adequate provision in accordance with GAAP for the payment of all taxes
(including estimated
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<PAGE>
other Loan Document to violate Regulation U, Regulation X, or any other
regulation of the Board.
SECTION 6.15. Franchises and Other Rights. The Company and each of
---------------------------
its Subsidiaries have all franchises, permits, licenses and other authority
(collectively, the "Operating Rights") as are necessary to enable them to carry
----------------
on their respective businesses as now being conducted, except to the extent that
the failure to do so would not reasonably be expected to have a Material Adverse
Effect.
SECTION 6.16. Subsidiaries. BCF Finance Corporation is the only
------------
Subsidiary of the Company as of the Execution Date.
SECTION 6.17. Solvency. As of the Effective Date, the Company
--------
warrants and represents that with respect to itself and each of its
Subsidiaries:
(i) the present fair salable value of its respective assets is not
less than its probable liability on its Debts, and the sum of its Debts is
not greater than all of its property, at a fair valuation;
(ii) it is able to pay its respective Debts as they mature and has
not incurred any debts beyond its ability to pay such Debts as they mature
(taking into account the timing and amounts of cash to be received by it
from any source and the amounts to be payable on or in respect of its
Debts); and
(iii) it has sufficient capital with which to conduct its respective
businesses (whether currently being conducted or proposed to be conducted).
SECTION 6.18. Material Contracts. As of the Execution Date, the
------------------
Purchase Agreements and Processing Agreements between Borden and the Company
referred to in the Prospectus (a) have been duly executed and delivered by, and
constitute the legal, valid and binding obligation of, each party thereto,
enforceable against such party in accordance with its terms, (b) are in full
force and effect and (c) have not been amended or modified in any material
respect.
ARTICLE VII
AFFIRMATIVE COVENANTS
The Company covenants and agrees for itself, that on and after the
date hereof and for so long as this Agreement is in effect and until the
Commitments and each Letter of Credit have terminated, and the Obligations
(other than indemnities not yet due) are paid in full:
SECTION 7.01. Information Covenants. The Company will furnish or
---------------------
cause to be furnished the following information to each Bank and the Agent:
(a) As soon as available, and in any event within 45 days after the
close of each of the first three quarterly accounting periods in each fiscal
year of the
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<PAGE>
Company, the consolidated balance sheet of the Company and its consolidated
Subsidiaries as of the end of such quarterly period and the related consolidated
statements of income and retained earnings for such quarterly period and
statement of cash flows for the elapsed portion of the fiscal year ended with
the last day of such quarterly period, setting forth, in each case, comparative
consolidated figures for the related periods in the prior fiscal year, all of
which shall be certified by the chief financial officer or chief executive
officer of the Company as fairly presenting in all material repects the
financial position of the Company and its consolidated Subsidiaries as of the
end of such period and the results of their operation for the period then ended
in accordance with GAAP, subject to changes resulting from normal year-end audit
adjustments and the inclusion of abbreviated footnotes.
(b) As soon as available, and in any event within 90 days after the
close of each fiscal year of the Company, the consolidated balance sheet of the
Company and its consolidated Subsidiaries as at the end of such fiscal year and
the related consolidated statements of income and retained earinings and
statement of cash flows for such fiscal year, setting forth, in each case,
comparative figures for the preceding fiscal year and certified by Price
Waterhouse LLP or other independent certified public accountants of recognized
national standing.
(c) Promptly after any Responsible Officer of the Company or any of
its Subsidiaries obtains knowledge thereof, notice of
(i) any event or condition which constitutes a Default or an
Event of Default,
(ii) any condition or event which, in the opinion of management
of the Company, would reasonably be expected to have a Material Adverse
Effect, or
(iii) any condition or event with respect to which the Company
has determined to issue a Current Report on Form 8-K
a notice of such event or condition will be delivered to each Bank specifying
the nature and period of existence thereof and specifying the notice given or
action taken by such Person and the nature of any such claimed default, event or
condition and, in the case of an Event of Default or Default, what action has
been taken, is being taken or is proposed to be taken with respect thereto.
(d) At the time of the delivery of the financial statements provided
for in Sections 7.01(a) and (b), a certficate of the chief financial officer,
---------------- ---
treasurer or the controller of the Company to the effect that no Default or
Event of Default exists or, if any Default or Event of Default does exist,
specifying the nature and extent thereof and the action that is being taken or
that is proposed to be taken with respect thereto, which certificate shall set
forth (i) the name of any Subsidiary formed or acquired after the delivery of
the last certificate required hereunder and (ii) the calculations required (if
any, in the case of Section 8.11 and Section 8.12) to establish whether the
------------ ------------
Company was in compliance with the provisions of Section 8.08, Section 8.09,
---------------------------
Section 8.11 and Section 8.12 as at the end of such fiscal period or year, as
- ---------------- ------------
the case may be.
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(e) Upon request by the Agent, such environmental reports, studies
and audits regarding the Company or its Subsidiaries as are in existence.
(f) Promptly upon transmission therof, copies of any filings and
registrations with, and reports to, the SEC other than reports delivered
pursuant to Section 16 of the Securities and Exchange Act of 1934, which will be
delivered only upon request by the Agent.
(g) From time to time and with reasonable promptness, such other
information or documents as the Agent or any Bank through the Agent may
reasonably request, including, without limitation, notice of any Persons which
have become Subsidiaries.
SECTION 7.02. Books, Records and Inspections. The Company will
------------------------------
maintain, and will permit, or cause to be permitted at such Bank's or Banks'
expense, any Person designated by any Bank or the Banks in writing upon one
Business Day's notice and without materially disrupting the operations of the
Company or any of its Subsidiaries to visit and inspect any of the properties of
the Company and its Subsidiaries, to examine the books and financial records of
the Company and its Subsidiaries and make copies thereof or extracts therefrom
and to discuss the affairs, finances and accounts of any such Persons with the
officers, employees and agents of the Company and its Subsidiaries and with
their independent public accountants, all at such reasonable times and as
often as the Agent or such Bank may reasonably request.
SECTION 7.03. Insurance and Maintenance of Properties. (a) Each of
---------------------------------------
the Company and its Subsidiaries will keep adequately insured by financially
sound and reputable insurers all of its property of a character, and in amounts
and against such risks, usually insured by similar Persons engaged in the same
or similar businesses, including, without limitation, insurance against fire,
casualty and any other hazards normally insured against. Each of the Company and
its Subsidiaries will at all times maintain insurance against its liability for
injury to Persons or property, which insurance shall be by financially sound and
reputable insurers and in such amounts and form as are customary for
corporations of established reputation engaged in the same or a similar business
and owning and operating similar properties.
(b) Subject to force majeure an ordinary wear and tear, each of the
Company and its Subsidiaries will cause all of its material properties used or
useful in the conduct of its business to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment
and will cause to be made all necessary repairs, renewals and replacements
thereof, such that all of same will be maintained according to standards as are
customary with entities of similar size to the Company in the same or similar
lines of business.
SECTION 7.04. Payment of Taxes. Each of the Company and its
----------------
Subsidiaries will pay and discharge all taxes, assessments and governmental
charges or levies imposed upon it or upon its income or profits, or upon any
properties
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<PAGE>
belonging to it, prior to the date on which penalties attach therto, except for
such amounts that are being contested in good faith and by appropriate
proceedings and against which the Company or such Subsidiary maintains
appropriate reserves in accordance with GAAP.
SECTION 7.05. Corporate Existence. Subject to Section 8.02, the
------------------- ------------
Company will do all things necessary to preserve and keep in full force and
effect the corporate or partnership existence of the Company, and, except to the
extent the failure to do so would not reasonably be expected to have a Material
Adverse Effect, to preserve the existence of the Company's Subsidiaries, and to
keep in full force and effect the rights and franchises of the Company and its
Subsidiaries; provided that the Company may permit the occurrence of the
Conversion Date.
SECTION 7.06. Compliance with Statutes. Each of the Company and its
------------------------
Subsidiaries will comply with all applicable material statutes, regulations and
orders of, and all applicable restrictions imposed by, all governmental bodies,
domestic or foreign, in respect of the conduct of its business and the ownership
of its property, except to the extent the failure to do so would not reasonably
be expected to have a Material Adverse Effect.
SECTION 7.07. ERISA. As soon as possible and, in any event, within ten
-----
days after any Responsible Officer of the Company or any of its Subsidiaries
knows or has reason to know any of the following items is true and is reasonably
expected to have a Material Adverse Effect, such Person will deliver or cause to
be delivered to each of the Banks a certificate of the Responsible Officer of
the Company setting forth details as to such occurrence and such action, if any,
which such Person or its ERISA Affiliate is required or proposes to take,
together with any notices required or proposed to be given to or filed with or
by such Person or ERISA Affiliate with respect thereto: that a Reportable Event
has occurred or that an application may be or has been made to the Secretary of
the Treasury for a waiver or modification of the minimum funding standard; that
a Multiemployer Plan has been or may be terminated, reorganized, partitioned or
declared insolvent under Title IV of ERISA; that any required contribution to a
Plan or Multiemployer Plan has not been or may not be timely made; that
proceedings may be or have been instituted under Section 4069(a) of ERISA to
impose liability on the Company or an ERISA Affiliate or under Section 4042 of
ERISA to terminate a Plan or appoint a trustee to administer a Plan; that the
Company or any ERISA Affiliate has incurred or may incur any liability
(including any contingent or secondary liability) on account of the termiantion
of or withdrawal from a Plan or a Multiemployer Plan; and that the Company or
any ERISA Affiliate may be required to provide security to a Plan under Section
401(a)(29) of the Code; or any other condition(s) exist(s) or may occur with
respect to one or more Plans and/or Multiemployer Plans.
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ARTICLE VIII
NEGATIVE COVENANTS
The Company covenants and agrees, that on and after the date hereof
and for so long as this Agreement is in effect and until the Commitments and
each Letter of Credit have terminated, and the Obligations (other than
indemnities not yet due) are paid in full:
SECTION 8.01. Change in Business. The Company will not, and will not
------------------
permit any of its Subsidiaries to, engage in any business not related, ancillary
or complimentary to the business conducted by the Company and/or any of its
Affiliates on the Execution Date.
SECTION 8.02. Consolidation, Merger or Sale of Assets. The Company
---------------------------------------
shall not consolidate with or merge with or into, or sell, convey, transfer or
lease all or substantially all its assets to, another Person unless such
transaction does not constitute a Change of Control and (a) the resulting,
surviving or transferee Person or lessee (if other than the Company) shall be a
Person organized and existing under the laws of the United States or any State
thereof or the District of Columbia and such entity shall assume by the
execution of such notes, credit agreement and other documentation as is
satisfactory to the Agent and the Banks all of the Obligations, (b) immediately
after giving effect to such transaction, no Default shall have happened and be
continuing (including, without limitation, any breach of Section 8.09), and on a
------------
pro forma basis giving effect to such transaction there has not been a breach of
Section 8.08,(c) immediately after giving effect to such transaction, the
- ------------
resulting, surviving or transferee Person has a Consolidated Net Worth which is
not less than the Consolidated Net Worth of the Company immediately prior to
such transaction and (d) the Company shall have delivered to the Agent an
Officer's Certificate and an opinion of counsel, each stating that such
consolidation, merger, sale, conveyance, transfer or lease and such additional
loan documentation evidencing same comply with this Agreement.
SECTION 8.03. Liens. The Company shall not, and shall not permit any
-----
Subsidiary to directly or indirectly, create, incur, assume or otherwise cause
or suffer to exist or become effective any Lien securing Debt of any kind (other
than Permitted Liens) upon any of their respective property or assets, now owned
or hereafter acquired, or any income or profits therefrom, unless the Company
makes or causes to be made effective provision whereby payment of the
Obligations will be secured by such Lien in form satisfactory to the Agent and
the Majority Banks equally and ratably for the benefit of the Banks with (or
prior to) such Debt for so long as such Debt shall be secured; provided,
however, (a) subject to Section 8.02(i), in the event of any sale, transfer or
------------
other disposition by the Company or any Subsidiary of Accounts Receivable or of
any Subsidiary substantially all the assets of which are Accounts Receivable,
which sale, transfer or other disposition constitutes a "sale" under GAAP (as in
effect at the time thereof), neither such sale, transfer or other disposition
nor any recourse provided by the Company or any Subsidiary in connection
therewith shall, in any event, constitute Debt or a Lien and (ii) all Net
Available Cash from any such sale shall be applied as a mandatory repayment of
the Loans and the Total
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<PAGE>
Commitment shall be reduced by the amount of such repayment and (b) that neither
the satisfaction and discharge of any Debt pursuant to any indenture or other
instrument governing such Debt, nor the defeasance of any Debt pursuant to any
indenture or other instrument governing such Debt, shall be deemed the creation,
incurrence, assumption or existence of any Lien securing Debt.
SECTION 8.04 Limitation on Debt. (a) The Company shall not, and shall
------------------
not permit any of its Subsidiaries to, directly or indirectly, issue or permit
to exist any Debt.
(b) Notwithstanding the foregoing, the Company and its Subsidiaries
may issue or permit to exist the following Debt provided that after giving
effect to same there shall not be in existence a Default or Event of Default:
(i) (A) commercial paper of the Company having a maturity of 12
months or less in an aggregate principal amount not to exceed $50,000,000
outstanding at any time provided that the amount available at any time
under the Total Commitment shall be decreased on on a dollar-for-dollar
basis by an amount equal to the aggregate outstanding principal amount of
any such commercial paper Debt at such time and (B) Debt issued pursuant to
the Indenture or any Refinancing Agreement;
(ii) Debt issued to and held by the Company or a Wholly Owned
Subsidiary; provided, however, that any subsequent issuance or transfer of
any Capital Stock that results in any such Wholly Owned Subsidiary ceasing
to be a Wholly Owned Subsidiary or any transfer of such Debt (other than
to the Company or a Wholly Owned Subsidiary) shall be deemed, in each case,
to constitute the issuance of such Debt by the issuer thereof;
(iii) The Obligations, and Debt issued in exchange for, or the
proceeds of which are used to Refinance either (x) the Obligations or (y)
any Debt so issued or the proceeds of which are so used,; provided that (i)
the principal amount of the Debt so issued shall not exceed the principal
amount of the Debt so Refinanced and (ii) the Debt so issued (i) shall have
a Stated Maturity no earlier than the Stated Maturity of the Debt so
Refinanced and (ii) shall have an Average Life no less than the remaining
Average Life of the Debt so Refinanced;
(iv) Debt (other than Debt described in clause (i), (ii) or
(iii) above) outstanding on the Effective Date or Debt issued in exchange
for, or the proceeds of which are used to Refinance, any Debt permitted by
this clause (iv); provided that the principal amount of the Debt so
Refinanced and the Debt so issued (A) shall have a Stated Maturity no
earlier than the Stated Maturity of the Debt so Refinanced and (B) shall
have an Average Life no less than the remaining Average Life of the Debt so
Refinanced; and
(v) Debt in an aggregate principal amount which, together with
all
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<PAGE>
other Debt of the Company then outstanding (other than Debt permitted by
clauses (i) through (iv) above) does not exceed $30,000,000.
SECTION 8.05. Investments. The Company will not and will not permit
-----------
any Subsidiary to, directly or indirectly, make or own any Investment in any
Person, except:
(a) The Company and its Subsidiaries may make and own Permitted
Investments;
(b) The Company and its Subsidiaries may continue to own Investments
owned by them on the date hereof as set forth on Schedule 8.05;
-------------
(c) The Company and its Subsidiaries may make and own Investments (i)
arising out of loans and advances in the ordinary course of business; provided,
however, the aggregate outstanding amount of all such loans and advances shall
not exceed $1,000,000 at any time outstanding, (ii) arising out of advances made
in the ordinary course of business to contract or perform services for the
Company or any of its Subsidiaries, (iii) constituting accounts receivable
arising in the ordinary course of business and payable within 60 days, (iv)
arising out of deposits with any bank, (v) acquired by reason of the exercise of
customary creditors' rights upon default or pursuant to the bankruptcy,
insolvency or reorganization of a debtor, or (vi) de minimis Investments each
year in connection with the operations of their businesses;
(d) The Company and its Subsidiaries may endorse negotiable
instruments for collection in the ordinary course of business; and
(e) Subject to the limitations of Section 8.04, and provided that
------------
there is not then in existence a Default or an Event of Default, the Company may
acquire (i) new Subsidiaries or substantially all of the assets of any entity
(A) engaged generally in the same or related industries as the Company and its
Subsidiaries, and (B) not engaged in the same or related industry as the Company
and its Subsidiaries, provided, that the acquisition of assets or Capital Stock
of the entities described in this Clause (B) shall have a total consideration,
not in excess of 10% of the Company's Consolidated Net Tangible Assets and (ii)
an interest in any entity which shall not constitute a Subsidiary (including,
without limitation, the Company) after acquisition of such interest, provided
that, the acquisition of assets of Capital Stock of such entities shall have a
total consideration, not in excess of 5% of the Company's Consolidated Net
Tangible Assets.
SECTION 8.06. Restricted Payments. (a) The Company shall not, and
-------------------
shall not permit any of its Subsidiaries, directly or indirectly, to: (i)
declare or pay any dividend or make any distribution on or in respect of its
Capital Stock, including any payment in connection with any merger or
consolidation involving the Company (except dividends or distributions payable
solely in its Capital Stock (other than Disqualified Capital Stock) or payable
to the Company or a Subsidiary), (ii) purchase, redeem or otherwise acquire or
retire for value any Capital Stock of the Company or of any direct or indirect
parent of the Company, (iii) purchase, repurchase, redeem, defease or otherwise
acquire or retire for value, prior to scheduled maturity,
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<PAGE>
scheduled repayment or scheduled sinking fund payment, any Subordinated
Obligations (other than the purchase, repurchase or other acquisition of
Subordinated Obligations purchased in anticipation of satisfying a sinking fund
obligation, principal installment or final maturity, in each case due within one
year of the date of acquisition) or (iv) make any Investment in any Affiliate of
the Company other than a Subsidiary or a Person which will become a Subsidiary
as a result of any such Investment (any such dividend, distribution, purchase,
redemption, repurchase, defeasance, other acquisition, retirement or Investment
being herein referred to as a "Restricted Payment"), unless, at the time of such
Restricted Payment:
(A) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
(B) the Consolidated EBITDA Coverage Ratio exceeds 3.5 to 1;
(C) Total Debt does not exceed 60% of Consolidated Net Tangible
Assets on a pro forma basis as of the end of the most recently completed
fiscal quarter ending at least 45 days prior to the date on which such
Restricted Payment is made; and
(D) such Restricted Payment (the amount of any such payment, if
other than cash, to be determined by the Board of Directors, whose
determination shall be conclusive and evidenced by a resolution in an
Officer's Certificate from the Company delivered to the Agent), together
with the aggregate of all other Restricted Payments (other than any
Restricted Payments permitted by the provisions of clauses (i),(ii) or
(iii) of Section 8.06(b)) made by the Company its Subsidiaries in the
---------------
fiscal quarter during which such Restricted Payment is made shall not
exceed an amount equal to Available Cash of the Company for the immediately
preceding fiscal quarter.
(b) The provisions of this Section shall not prohibit:
(i) Any purchase, redemption, repurchase, defeasance, other
acquisition or retirement (a "purchase or redemption") of Capital Stock or
Subordinated Obligations of the Company made by exchange for, or out of the
proceeds of the substantially concurrent sale (other than to a Subsidiary)
of, Capital Stock of the Company (other than Disqualified Capital Stock);
provided, however, that (A) such purchase or redemption shall be excluded
in the calculation of the amount of Restricted Payments and (B) the Net
Cash Proceeds from such sale (to the extent so used) shall be excluded in
the calculation of the amount of Available Cash in clause Section
-------
8.06(a)(D);
----------
(ii) Any purchase or redemption of Subordinated Obligations of
the Company made by exchange of, or out of the proceeds of the
substantially concurrent sale (other than to a Subsidiary) of, Debt of the
Company; provided, however, that such Debt shall be subordinated to the
Notes to at least the same extent as the Subordinated Obligations so
exchanged, purchased or redeemed, shall have a Stated Maturity later than
the earlier of the Stated Maturity of the
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<PAGE>
Notes and the Stated Maturity of such Subordinated Obligations and shall
have an Average Life greater than the lesser of the Average Life of the
Loans and the Average Life of such Subordinated Obligations; provided,
further, however, that (A) such purchase or redemption shall be excluded in
the calculation of the amount of Restricted Payments and (B) the Net Cash
Proceeds from such sale (to the extent so used) shall be excluded in the
calculation of the amount of Available Cash in Section 8.06(a)(D);
------------------
(iii) Any purchase or redemption of Subordinated Obligations
from Net Available Cash to the extent permitted under Section 8.11;
provided, however, that (A) such purchase or redemption shall be excluded
in the calculation of the amount of Restricted Payments and (B) the Net
Available Cash from such sale (to the extent so used) shall be excluded
from the definition of Available Cash in Section 8.06(a)(D);or
------------------
(iv) Dividends paid within 60 days after the date of declaration
thereof if at such date of declaration such dividend would have complied
with this provision; provided, however, that at the time of payment of such
dividend, no further Default shall have occurred and be continuing (or
would result therefrom); provided further, however, that such dividend
shall be included (when paid, but not when declared) in the calculation of
the amount of Restricted Payments.
(c) Not later than five Business Days after the declaration of any
Restricted Payment, but no later than three Business Days before making any
Restricted Payment the Company shall deliver to the Agent an Officers'
Certificate of the Company stating that such Restricted Payment is permitted and
setting forth the basis upon which the calculations required by this Section
-------
8.06 were computed, which calculations may be based upon the Company's latest
- ----
available financial statements.
SECTION 8.07. Change in Accounting; Fiscal Year. The Company will
---------------------------------
not and will not permit any Subsidiary to, change its method of accounting
except for immaterial changes in methods, changes permitted by GAAP in which the
Company's auditors concur and changes required by GAAP. The Company shall advise
the Agent in writing promptly upon making any such change to the extent same is
not disclosed in the financial statements required under Section 7.01 hereof.
------------
SECTION 8.08. Consolidated EBITDA Coverage Ratio. The Company will
------------------- --------------
not permit the Consolidated EBITDA Coverage Ratio to be less than 3.5:1.0.
SECTION 8.09. Total Debt to Consolidated Net Tangible Assets Ratio.
----------------------------------------------------
The Company will not permit the ratio of Total Debt to Consolidated Net
Tangible Assets to be greater than 60%.
SECTION 8.10. Transactions with Affiliates. The Company shall not,
----------------------------
and shall not permit any Subsidiary to, conduct any business or enter into any
transaction or series of similar transactions (including the purchase, sale,
lease or exchange of any property or the rendering of any service) with any
Affiliate of the Company other than (a) a Wholly Owned Subsidiary or (b) an
employee stock
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<PAGE>
ownership plan, unless the terms of such business, transaction or series of
transactions are fair and reasonable to the Company. All such business,
transactions or series of transactions that are approved by the Board of
Directors (including by a majority of the Independent Committee of the Board of
Directors) shall be deemed fair and reasonable to the Company. This Section,
however, will not prohibit any management compensation arrangements consistent
with industry practice, and all such business, transactions or series of
transactions that have been completed or with respect to which agreements have
been entered into prior to the date of this Agreement shall be deemed fair and
reasonable to the Company.
SECTION 8.11. Limitation on Sales of Assets and Subsidiary Stock. The
--------------------------------------------------
Company shall not, and shall not permit any of its Subsidiaries to, make any
Asset Disposition unless (a) the Company or such Subsidiary receives
consideration at the time of such Asset Disposition at least equal to the fair
market value, as determined in good faith by the Board of Directors, or the
board of directors of the relevant Subsidiary (including as to the value of all
non-cash consideration), of the shares and assets subject to such Asset
Disposition and at least 80% of the consideration thereof received by the
Company or such Subsidiary is in the form of cash or cash equivalents or
consists of assets in which the Company or such Subsidiary, as the case may be,
would have been able to invest pursuant to the election set forth in clause
(b)(ii) below, and (b) an amount equal to 100% of the Net Available Cash from
such Asset Disposition is applied by the Company (or such Subsidiary, as the
case may be) (i) first, to the extent the Company elects (or is required by the
terms of any Pari Passu Debt), to prepay, repay or purchase Pari Passu Debt or
Debt of a Wholly Owned Subsidiary or such Subsidiary elects (or is required by
the terms of any Pari Passu Debt), to prepay, repay or purchase Pari Passu Debt
or Debt of a Wholly Owned Subsidiary or such Subsidiary elects or is required by
the terms of any Pari Passu Debt) to prepay, repay or purchase Debt or Pari
Passu Debt (in each case other than Debt owed to the Company or an Affiliate of
the Company) within 60 days from the later of the date of such Asset Disposition
or the receipt of such Net Available Cash and in the case of any prepayment
under this clause (b)(i) the Total Commitment shall be reduced and the Pari
Passu Debt shall be prepaid on the same date in an amount equal to that
proportion that each such Debt bears to the total of the outstanding principal
amount of the Pari Passu Debt plus the Total Commitment; (ii) second, to the
extent of the balance of such Net Available Cash after any application in
accordance with clause (i), at the election of the Company or such Subsidiary,
as the case may be, to acquire assets to replace its assets that were the
subject of such Asset Disposition or to acquire assets (or to make improvements
to existing assets) that (as determined by the Board of Directors or the board
of directors of such Subsidiary, as the case may be) will be used in the
business of the Company and its Subsidiaries existing on the date of original
issuance of the Notes or in business reasonably related thereto, in each case by
the later of (x) the date that is 180 days from the date of such Asset
Disposition or (y) the date of the receipt of such Net Available Cash (iii)
third, to the extent of any balance of such Net Available Cash after application
and in accordance with clauses (i) and (ii), to make an offer pursuant to and
subject to the conditions contained in this Agreement and the Indenture, to the
holders of the Securities and the Notes (and to holders of other Pari Passu Debt
designated by the Company) to purchase the Securities and the Notes (and such
other Pari Passu Debt) at a purchase price of 100% of the principal amount
thereof (without premium) plus accrued and unpaid interest (or in respect of
such other Pari Passu Debt such lesser price, if any, as may be provided for by
the terms of such other Pari
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Passu Debt) and in the case of this clause (b)(iii) the Total Commitment shall
be reduced and the Securities (or other Pari Passu Debt) shall be prepaid on the
same day in an amount equal to the proportion that each such Debt bears to the
total of the outstanding principal balance of the Securities (or outstanding
principal balance of the other Pari Passu Debt) plus the Total Commitment, and
(iv) fourth, to the extent of the balance of such Net Available Cash after
application in accordance with clauses (i), (ii) and (iii), to any application
not prohibited by the Agreement; provided, however, that in connection with any
prepayment, repayment or purchase of Debt pursuant to clause (i) or (iii) above,
the Company or such Subsidiary shall retire such Debt and shall cause the
related loan commitment (if any, including, without limitation, the Total
Commitment) to be permanently reduced in an amount equal to the principal amount
so prepaid, repaid or purchased.
Nothwithstanding the foregoing provisions of this paragraph, the
Company and its Subsidiaries shall not be required to apply any Net Available
Cash (other than Net Available Cash from an Asset Disposition consisting of a
sale and leaseback transaction that the Company has elected to treat as an Asset
Disposition pursuant to clause (b) of Section 8.13) in accordance with this
------------
paragraph except to the extent that the aggregate Net Available Cash from all
Asset Dispositions which are not applied in accordance with this paragraph
exceeds $10,000,000. Pending application of Net Available Cash pursuant to this
covenant, such Net Available Cash shall be invested in Permitted Investments.
SECTION 8.12. Limitation on Debt and Preferred Stock of Subsidiaries.
------------------------------------------------------
The Company shall not permit any Subsidiary to issue or permit to exist,
directly or indirectly, any Debt or Preferred Stock except:
(a) Debt or Preferred Stock issued to and held by the Company or a
Wholly Owned Subsidiary; provided, however, that (i) any subsequent issuance or
transfer of any Capital Stock that results in any such Wholly Owned Subsidiary
ceasing to be a Wholly Owned Subsidiary or (ii) any subsequent transfer of such
Debt or Preferred Stock (other than to the Company or a Wholly Owned Subsidiary)
shall be deemed, in each case, to constitute the issuance of such Debt or
Preferred Stock by the issuer thereof;
(b) Debt or Preferred Stock of a Subsidiary issued and outstanding on
or prior to the date on which such Subsidiary was acquired by the Company (other
than Debt or Preferred Stock issued as consideration in, or to provide all or
any portion of the funds or credit support utilized to consummate, the
transaction or series of transactions pursuant to which such Subsidiary became a
Subsidiary or was acquired by the Company);
(c) Any other Debt or Preferred Stock (other than any described in
clause (a) or (b)) issued and outstanding on the Execution Date; and
(d) Debt or Preferred Stock issued in exchange for, or the proceeds
of which are used to Refinance, Debt or Preferred Stock referred to in the
foregoing clause (b) or (c); provided, however, the principal amount or
liquidation value of such Debt or Preferred Stock so issued shall not exceed the
principal amount or the
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liquidation value of the Debt or Preferred Stock so Refinanced and (ii) the Debt
or Preferred Stock so issued (A) shall have a Stated Maturity no earlier than
the Stated Maturity of the Debt or Preferred Stock being exchanged or Refinanced
and (B) shall have an Average Life no less than the remaining Average Life of
the Debt or Preferred Stock being Refinanced.
SECTION 8.13. Limitation on Sale and Leaseback Transactions. The
---------------------------------------------
Company shall not, and shall not permit any Subsidiary to, enter into any
arrangement with any Person providing for the leasing by the Company or any
Subsidiary of any real or tangible personal property (except for leases for a
term of not more than one year (including renewal rights) or between the Company
and a Subsidiary or between Subsidiaries), which property has been or is to be
sold or transferred by the Company or Subsidiary to such Person in contemplation
of such leasing, unless (a) the Company or such Subsidiary would be entitled to
create a Lien on such property securing Debt in an amount equal to the
Attributable Debt with respect to such arrangement without equally and ratably
securing the Notes and the Obligations pursuant to Section 8.03 or (b) the
------------
Company or such Subsidiary shall have received consideration from such
arrangement at least equal to the fair market value of the property subject
thereto (which shall be determined in good faith by the Board of Directors and
evidenced by a resolution of the Board of Directors) and elects to treat the
assets subject to such arrangement as an Asset Disposition subject to Section
-------
8.11.
- ----
ARTICLE IX
EVENTS OF DEFAULT AND REMEDIES
SECTION 9.01. Events of Default and Remedies. If any of the following
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events ("Events of Default") shall occur and be continuing:
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(a) (x) any installment of principal on any Note shall not be paid on
the date on which such payment is due or (y) any interest on any Note or Unpaid
Drawing, any Fee or any other amount due under any Loan Document shall not be
paid on the date on which such payment is due and any such failure referred to
in this clause (y) shall continue for five or more Business Days; or
(b) any representation or warranty made or, for purposes of Article
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VI, deemed made by the Company or in any of the Loan Documents or other
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document, certificate or financial statement delivered in connection with this
Agreement or any other Loan Document shall prove to have been incorrect in any
material respect when made or deemed made or reaffirmed, as the case may be; or
(c) the Company (i) shall fail to perform or observe any duty or
covenant contained in Article VIII of this Agreement, other than those in
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Section 8.07, or (ii) shall fail to perform or observe any duty or covenant
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contained in Article VII or in Section 8.07 or any other material duty or
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covenant contained elsewhere in this Agreement and said failure shall continue
for a period of thirty (30) days after written notice thereof has been given to
the Company by the Agent or by the Agent upon request of any Bank; or
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(d) the Company or any Subsidiary fails to make (whether as primary
obligor or as guarantor or other surety) any principal payment of or interest or
premium, if any, on any Debt (other than the Notes) with an aggregate principal
amount in excess of $20,000,000 outstanding ("Threshold Debt") beyond any period
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of grace provided with respect thereto, or there shall occur any other event
which causes, or permits the holder or holders to cause, such obligations to
become due prior to any stated maturity, provided that any such event shall
constitute an Event of Default hereunder only upon the expiration of any
applicable grace period in the instrument governing such Threshold Debt; or
(e) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i) relief
in respect of the Company or any Significant Subsidiary, or of a substantial
part of the property or assets of the Company or any such Subsidiary, under
Title 11 of the United States Code, as now or hereafter in effect, or any
successor thereto (the "Bankruptcy Code"), or any other federal or state
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bankruptcy, insolvency, receivership or similar law, (ii) the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar official for
the Company or any such Subsidiary or (iii) the winding-up or liquidation of the
Company or any such Subsidiary; and such proceeding or petition shall continue
undismissed for 60 days or an order or decree approving or ordering any of the
foregoing shall be entered; or
(f) the Company or any Significant Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking relief under the Bankruptcy
Code or any other federal or state bankruptcy, insolvency, receivership or
similar law, (ii) consent to the institution of, or fail to contest in a timely
and appropriate manner, any proceeding or the filing of any petition described
in clause (e) above, (iii) apply for or consent to the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar official for
the Company or any such Subsidiary or for a substantial part of the property or
assets of the Company or any Subsidiary, (iv) file an answer admitting the
material allegations of a petition filed against it in any such proceeding, (v)
make a general assignment for the benefit of creditors, (vi) become unable,
admit in writing its inability or fail generally to pay its debts as they become
due or (vii) take any action for the purpose of effecting any of the foregoing;
or
(g) any Plan shall incur an "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived, or a waiver of the minimum funding standard or extension of any
amortization period is sought or granted under Section 412 of the Code with
respect to a Plan; any proceeding shall have occurred or is reasonably likely to
occur by the PBGC under Section 4069(a) of ERISA to impose liability on the
Company or an ERISA Affiliate; any Plan shall have an Unfunded Current
Liability; any required contribution to a Plan or Multiemployer Plan shall not
have been timely made; or the Company or any ERISA Affiliate has incurred or is
reasonably likely to incur a liability to or on account of a Plan or
Multiemployer Plan under Section 515, 4062, 4063, 4064, 4201 or 4204 of ERISA,
and there shall result (individually or collectively) from any such
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event or events a liability which would reasonably be expected to have a
Material Adverse Effect; or
(h) any judgement or decree for the payment of money in excess of
$20,000,000 (to the extent not covered by insurance) shall be rendered against
the Company or any Subsidiary, and there is a period of 60 days following such
judgment during which such judgment or decree is not discharged, waived or the
execution thereof stayed and such judgment or decree is not satisfied,
discharged, waived or the execution stayed within 10 days after the notice
specified below;
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Agent may, and upon the written request of the
Majority Banks shall, by written notice to the Company (a "Notice of Default")
-----------------
take any or all of the following actions, without prejudice to the rights of the
Agent, any Bank or other holder of any of the Obligations to enforce its claims
against the Company (provided that, if an Event of Default specified in Section
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9.01(e) or Section 9.01(f) shall occur, the results which would occur upon the
- ------- ---------------
giving of a Notice of Default as specified in clauses (i), (ii) and (iii) below,
shall occur automatically without the giving of any Notice of Default): (i)
declare the Total Commitment terminated, whereupon the Commitments of the Banks
shall forthwith terminate immediately and any Commitment Fee shall forthwith
become due and payable without any other notice of any kind; (ii) declare the
principal of and any accrued and unpaid interest in respect of all Loans, and
all Obligations owing hereunder, to be, whereupon the same shall become,
forthwith due and payable without presentment, demand, notice of demand or of
dishonor and non-payment, protest, notice of protest, notice of intent to
accelerate,declaration or notice of acceleration or any other notice of any
kind, all of which are hereby waived by the Company; (iii) terminate any Letter
of Credit which may be terminated in accordance with its terms (whether by the
giving of written notice to the beneficiary or otherwise); and (iv) direct the
Company to pay, and the Company agrees that upon receipt of such notice (or upon
the occurrence of an Event of Default specified in Section 9.01(e) or Section
--------------- -------
9.01(f)), it will pay to the Agent, to the extent permitted by law, such
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additional amount of cash as is equal to the aggregate Stated Amount of all
Letters of Credit then outstanding hereby pledged and to be held in an interest
bearing account with the Agent as security for the Obligations.
SECTION 9.02. Other Remedies. Upon the occurrence and during the
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continuance of any Event of Default, the Agent, acting at the request of the
Majority Banks, may proceed to protect and enforce its and the Banks' rights,
either by suit in equity or by action at law or both; or may proceed to enforce
the payment of all amounts owing to the Agent and the Banks under the Loan
Documents and any accrued and unpaid interest thereon in the manner set forth
herein or therein; it being intended that no remedy conferred herein or in any
of the other Loan Documents is to be exclusive of any other remedy, and each and
every remedy contained herein or in any other Loan Document shall be cumulative
and shall be in addition to every other remedy given hereunder and under the
other Loan Documents now or hereafter existing at law or in equity or by statute
or otherwise.
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SECTION 9.03. Obligation Non Recourse as to General Partner.
---------------------------------------------
Notwithstanding anything contained in this Agreement or any of the other Loan
Documents to the contrary, the Agent and the Banks acknowledge and agree that
payment of the Obligations shall not be enforced against the General Partner or
any of its assets except to the extent of its general partnership interest in
the Company, nor shall the General Partner have any liability whatsoever
hereunder other than to the extent of the general partnership interest in the
Company in connection with this Agreement and the transactions contemplated
hereby. The foregoing provision is not intended to release or discharge any of
the Obligations.
Notwithstanding the foregoing provisions to the contrary the General
Partner and its successors and assigns shall be and remain fully liable to the
Agent and the Banks, and this Section 9.03 shall not be construed so as to limit
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remedies for intentional or wilfull misconduct of the General Partner.
ARTICLE X
THE AGENT
SECTION 10.01. Authorization and Action. Each Bank hereby
------------------------
irrevocably appoints and authorizes the Agent to act on its behalf and to
exercise such powers under this Agreement and the other Loan Documents as are
specifically delegated to or required of the Agent by the terms hereof,
together with such powers as are reasonably incidental thereto. The Agent may
perform any of its duties hereunder by or through its agents and employees. The
duties of the Agent shall be mechanical and administrative in nature; the Agent
shall not have by reason of this Agreement or any other Loan Documents a
fiduciary relationship in respect of any Bank; and nothing in this Agreement or
any other Loan Document, expressed or implied, is intended to, or shall be so
construed as to, impose upon the Agent any obligations in respect of this
Agreement or any other Loan Document except as expressly set forth herein or
therein. As to any matters not expressly provided for by this Agreement, the
Notes or the other Loan Documents (including enforcement or collection of the
Notes), the Agent shall not be required to exercise any discretion or take any
action, but shall be required to act or to refrain form acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions
of the Majority Banks, and such instructions shall be binding upon all Banks
and all holders of Notes and the Obligations; provided, however, that the Agent
shall not be required to take any action which exposes the Agent to personal
liability or which is contrary to this Agreement or applicable law.
SECTION 10.02. Agent's Reliance. (a) neither the agent nor any of
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its directors, officers, agents or employees shall be liable for any action
taken or omitted to be taken by it or them under or in connection with this
Agreement, the Notes or any of the other Loan Documents (i) with the consent or
at the request of the Majority Banks or (ii) in the absence of its or their own
gross negligence or willful misconduct (it being the express intention of the
parties hereto that the Agent and its directors, officers, agents and employees
shall have no liability for actions and omissions under this Section resulting
from their sole ordinary or contributory ordinary negligence).
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(b) WITHOUT LIMITATION OF THE GENERALITY OF THE FOREGOING, THE AGENT:
(I) MAY TREAT THE PAYEE OF EACH NOTE AND THE OBLIGATIONS AS THE HOLDER THEREOF
UNTIL THE AGENT RECEIVES WRITTEN NOTICE OF THE ASSIGNMENT OR TRANSFER THEREOF
SIGNED BY SUCH PAYEE AND IN FORM SATISFACTORY TO THE AGENT; (II) MAY CONSULT
WITH LEGAL COUNSEL (INCLUDING COUNSEL FOR THE COMPANY), INDEPENDENT PUBLIC
ACCOUNTANTS AND OTHER EXPERTS SELECTED BY IT AND SHALL NOT BE LIABLE FOR ANY
ACTION TAKEN OR OMITTED TO BE TAKEN IN GOOD FAITH BY IT IN ACCORDANCE WITH THE
ADVICE OF SUCH COUNSEL, ACCOUNTANTS OR EXPERTS; (III) MAKES NO WARRANTY OR
REPRESENTATION TO ANY BANK AND SHALL NOT BE RESPONSIBLE TO ANY BANK FOR ANY
STATEMENTS, WARRANTIES OR REPRESENTATIONS MADE IN OR IN CONNECTION WITH THIS
AGREEMENT, ANY NOTE OR ANY OTHER LOAN DOCUMENT; (IV) EXCEPT AS OTHERWISE
EXPRESSLY PROVIDED HEREIN, SHALL NOT HAVE ANY DUTY TO ASCERTAIN OR TO INQUIRE AS
TO THE PERFORMANCE OR OBSERVANCE OF ANY OF THE TERMS, CONVENANTS OR CONDITIONS
OF THIS AGREEMENT, ANY NOTE OR ANY OTHER LOAN DOCUMENT OR TO INSPECT THE
PROPERTY (INCLUDING THE BOOKS AND RECORDS) OF THE COMPANY; (V) SHALL NOT BE
RESPONSIBLE TO ANY BANK FOR THE DUE EXECUTION, LEGALITY, VALIDITY,
ENFORCEABILITY, COLLECTIBILITY, GENUINENESS, SUFFICIENCY OR VALUE OF THIS
AGREEMENT, ANY NOTE, ANY OTHER LOAN DOCUMENT OR ANY OTHER INSTRUMENT OR DOCUMENT
FURNISHED PURSUANT HERETO OR THERETO; (VI) SHALL NOT BE RESPONSIBLE TO ANY BANK
FOR THE PERFECTION OR PRIORITY OF ANY LIEN SECURING THE OBLIGATIONS; AND (VII)
SHALL INCUR NO LIABILITY UNDER OR IN RESPECT OF THIS AGREEMENT, ANY NOTE OR ANY
OTHER LOAN DOCUMENT BY ACTING UPON ANY NOTICE, CONSENT, CERTIFICATE OR OTHER
INSTRUMENT OR WRITING (WHICH MAY BE BY TELEGRAM, TELECOPIER, CABLE OR TELEX)
REASONABLY BELIEVED BY IT TO BE GENUINE AND SIGNED OR SENT BY THE PROPER PARTY
OR PARTIES.
SECTION 10.03. Agent and Affiliates; Credit Suisse (in its capacity
----------------------------------------------------
as a Bank) and Affiliates. Without limiting the right of any other Bank to
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engage in any business transactions with the Company or any of its Affiliates,
with respect to their Commitments, the Loans made by them and the Notes issued
to them, Credit Suisse and each other Bank who may become the Agent shall have
the same rights and powers under this Agreement and its Notes as any other Bank
and may exercise the same as though it was not the Agent; and the term "Bank" or
"Banks" shall, unless otherwise expressly indicated, include Credit Suisse and
any such other Bank, in their individual capacities. Credit Suisse, each other
Person who becomes the Agent and their respective Affiliates may be engaged in,
or may hereafter engage in, one or more loan, letter of credit, the "Other
-----
Financings") with the Company, any Subsidiary of the Company or any of their
- ----------
respective Affiliates, or may act as trustee on behalf of, or depositary for, or
otherwise engage in other business transactions with the Company, any Subsidiary
of the Company or any of their respective Affiliates (all Other Financings and
other such business transactions being collectively, the "Other Activities")
----------------
with no responsibility to account therefor to the Banks. Without limiting the
rights and remedies of the Banks specifically set forth herein, no other Bank by
virtue of being a Bank hereunder shall have any interest in (a) any Other
Activities, (b) any present or future guaranty by or for the account of the
Company not contemplated or included herein, (c) any present or future offset
exercised by the Agent in respect of any such Other Activities, (d) any present
or future property
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taken as security for any such Other Activities or (e) any property now or
hereafter in the possession or control of the Agent which may be or become
security for the Obligations of the Company, any Subsidiary of the Company or
any of their respective Affiliates hereunder and under the Notes by reason of
the general description of indebtedness secured, or of property contained in
any other agreements, documents or instruments related to such Other Activities;
provided, however, that if any payment in respect of such guaranties or such
property or the proceeds thereof shall be applied to reduction of the
Obligations then each Bank shall be entitled to share in such application
according to its pro rata portion of such Obligations.
SECTION 10.04. Bank Credit Decision. Each Bank acknowledges and
--------------------
agrees that it has, independently and without reliance upon the Agent or any
other Bank and based on the financial statements referred to in Section 6.07 and
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such other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Bank also
acknowledges and agrees that it will, independently and without reliance upon
the Agent or any other Bank and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement and the other Loan Documents.
SECTION 10.05. AGENT'S INDEMNITY. (A) THE AGENT SHALL NOT BE
-----------------
REQUIRED TO TAKE ANY ACTION HEREUNDER OR TO PROSECUTE OR DEFEND ANY SUIT IN
RESPECT OF THIS AGREEMENT, THE NOTES OR ANY OTHER LOAN DOCUMENT UNLESS
INDEMNIFIED TO THE AGENT'S REASONABLE SATISFACTION BY THE BANKS AGAINST LOSS,
COST, LIABILITY AND EXPENSE. IF ANY INDEMNITY FURNISHED TO THE AGENT SHALL
BECOME IMPAIRED, IT MAY CALL FOR ADDITIONAL INDEMNITY AND CEASE TO DO THE ACTS
INDEMNIFIED AGAINST UNTIL SUCH ADDITIONAL INDEMNITY IS GIVEN. IN ADDITION,
THE BANKS AGREE TO INDEMNIFY THE AGENT (TO THE EXTENT NOT REIMBURSED BY THE
COMPANY), RATABLY ACCORDING TO THE RESPECTIVE AGGREGATE PRINCIPAL AMOUNTS OF THE
NOTES THEN HELD BY EACH OF THEM (OR IF NO NOTES ARE AT THE TIME OUTSTANDING,
RATABLY ACCORDING TO THE RESPECTIVE AMOUNTS OF THEIR COMMITMENTS, OR IF NO
COMMITMENTS ARE OUTSTANDING, THE RESPECTIVE AMOUNTS OF THE COMMITMENTS
IMMEDIATELY PRIOR TO THE TIME THE COMMITMENTS CEASED TO BE OUTSTANDING), FROM
AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES,
ACTIONS, JUDGEMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS OF ANY KIND OR
NATURE WHATSOEVER WHICH MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST THE
AGENT IN ANY WAY RELATING TO OR ARISING OUT OF THIS AGREEMENT OR ANY ACTION
TAKEN OR OMITTED BY THE AGENT UNDER THIS AGREEMENT, THE NOTES AND THE OTHER LOAN
DOCUMENTS (INCLUDING ANY ACTION TAKEN OR OMITTED UNDER ARTICLE II, ARTICLE III,
---------- -----------
OR ARTICLE IV OF THIS AGREEMENT). WITHOUT LIMITATION OF THE FOREGOING, EACH
----------
BANK AGREES TO REIMBURSE THE AGENT PROMPTLY UPON DEMAND FOR ITS RATABLE SHARE OF
ANY OUT-OF-POCKET EXPENSES (INCLUDING REASONABLE COUNSEL FEES) INCURRED BY THE
AGENT IN CONNECTION WITH THE PREPARATION, EXECUTION, ADMINISTRATION, OR
ENFORCEMENT OF, OR LEGAL ADVICE IN RESPECT OF RIGHTS OR RESPONSIBILITIES UNDER,
THIS AGREEMENT, THE NOTES AND THE OTHER LOAN DOCUMENTS TO THE EXTENT THAT THE
AGENT IS NOT REIMBURSED FOR SUCH EXPENSES BY THE COMPANY. THE PROVISIONS OF
THIS SECTION SHALL SURVIVE
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the termination of this Agreement, the payment of the Obligations and/or the
assignment of any of the Notes.
(b) Not withstanding the foregoing, no Bank shall be liable under
this Section to the Agent for any portion of such liabilities, obligations,
losses damages, penalties, actions, judgments, suits, costs, expenses or
disbursements due to the Agent resulting from the Agent's gross negligence or
willful misconduct.
SECTION 10.06. Successor Agent. The Agent may resign at any time by
---------------
giving five days prior written notice thereof to the Banks and the Company and
may be removed as Agent under this Agreement, the Notes and the other Loan
Documents at any time with or without cause by the Majority Banks. Upon any
such resignation or removal, the Majority Banks shall have the right to
appoint a successor Agent, subject to the approval of the Company. If no
successor Agent shall have been so appointed by the Majority Banks, and shall
have accepted such appointment, within 30 calendar days after the retiring
Agent's giving of notice of resignation or the Majority Banks' removal of the
retiring Agent, then the retiring Agent may, subject to the approval of the
Company, on behalf of the Banks, appoint a successor Agent, which shall be a
commercial bank organized under the laws of the United States of America or of
any state thereof and having a combined capital and surplus of at least
$500,000,000. Upon the acceptance of any appointment as Agent hereunder and
under the Notes and the other Loan Documents by a successor Agent, such
successor Agent shall thereupon succeed to, and become vested with, all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations under this Agreement,
the Notes and the other Loan Documents. After any retiring Agent's resignation
or removal as Agent hereunder and under the Notes and the other Loan Documents,
the provisions of this Article X shall inure to its benefits as to any actions
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taken or omitted to be taken by it while it was Agent under this Agreement, the
Notes and the other Loan Documents.
SECTION 10.07. Notice of Default. The Agent shall not be deemed to
-----------------
have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Agent shall have received notice from a Bank or the
Company referring to this Agreement, describing such Default or Event of Default
and stating that such notice is a "notice of default." If the Agent receives
such notice, the Agent shall give notice thereof to the Banks; provided,
however, if such notice is received from a Bank, the Agent also shall give
notice thereof to the Company. The Agent shall be entitled to take action or
refrain from taking action with respect to such Default or Event of Default as
provided in Section 10.01 and Section 10.02.
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ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Amendments. No amendment or waiver of any provision
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of this Agreement, any Note or any other Loan Document, nor consent to any
departure by the Company herefrom or therefrom, shall in any event be effective
unless the same shall be in writing and signed by the Company, as to amendments,
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and by the Majority Banks in all cases, and then, in any case, such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no amendment, waiver or consent
shall, unless in writing and signed by 100% of the Banks, do any of the
following: (a) change the definition of "Majority Banks," "Total Commitment" or
"Percentage Participation,", (b) reduce or increase the amount or alter the
terms of the Commitment of any Bank, other than as set forth in Section 4.03(d)
---------------
or subject any Bank to any additional obligations, (c) reduce the principal of,
or rate or amount of interest applicable to, any Loan or the reimbursement
obligations of the Company under the Letters of Credit other than as provided in
this Agreement, or the Up Front Fee, the Commitment Fee or any Letter of Credit
Fees, (d) postpone any date fixed for any payment of principal of, or interest
on, the Notes or the reimbursement obligations of the Company under any Letter
of Credit, (e) change this Section or (f) change the aggregate unpaid principal
amount of the Notes, or the number of Banks, which shall be required for the
Banks or any of them to take any action hereunder; and provided that no
amendment, waiver or consent shall, unless in writing and signed by the Agent in
addition to the Banks required above to take such action, affect the rights or
duties of the Agent under this Agreement, any Note or any other Loan Document.
SECTION 11.02. Notices. The Agent, any Bank or the holder of any of
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the Obligations, giving consent or notice or making any request of the Company
provided for hereunder, shall notify each Bank and the Agent thereof. In the
event that the holder of any Note or any of the Obligations (including any Bank)
shall transfer such Note or Obligations, it shall promptly so advise the Agent
which shall be entitled to assume conclusively that no transfer of any Note or
any of the Obligations has been made by any holder (including any Bank) unless
and until the Agent receives written notice to the contrary. Except with
respect to telephone notifications specifically permitted pursuant to ARTICLE II
----------
and ARTICLE III, all notices, consents, requests, approvals, demands and other
-----------
communications provided for herein shall be in writing (including telecopy
communications) and mailed, telecopied, sent by overnight courier or delivered:
(a) If to the Company or any of its Subsidiaries, to them at:
BCP Management, Inc.
180 East Broad Street
Columbus, Ohio 43215
Attention: Secretary
(b) If to the Agent, to it at:
12 East 49th Street
39th Floor
New York, New York 10017
Attention: Syndications/Agency
(c) If to any Bank, as specified on the signature page for such Bank
hereto or, in the case of any Person who becomes a Bank after the date hereof,
as specified on the Assignment and Acceptance executed by such Person or in the
Administrative Questionnaire delivered by such Person or, in the case of any
party
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hereto, such other address or telecopy number as such party may hereafter
specify for such purpose by notice to the other parties.
All communications shall, when mailed, telecopied or delivered, be effective (x)
72 hours after mailing by certified mail, return receipt requested to any party
at its address specified above, on the signature page hereof or on the signature
page of such Assignment and Acceptance (or other address designated by such
party in a communication to the other parties hereto), (y) when telecopied to
any party to the telecopy number set forth above, on the signature page hereof
or on the signature page of such Assignment and Acceptance (or other telecopy
number designated by such party in a communication to the other parties hereto)
and such telecopy is confirmed, or (z) when delivered personally to any party at
its address specified above, on the signature page hereof or on the signature
page of such Assignment and Acceptance (or other address designated by such
party in a Communication to the other parties hereto); provided, that
communications to the Agent pursuant to Article II, Article III or Article XI
---------- ----------- ----------
shall not be effective until received by the Agent.
SECTION 11.03. No Waiver; Remedies. No failure on the part of any
-------------------
Bank or the Agent to exercise and no delay in exercising, any right hereunder,
under any Note or under any other Loan Document shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right, or any
abandonment or discontinuance of any steps to enforce such right, preclude any
other or further exercise thereof or the exercise of any other right. No notice
to or demand on the Company in any case shall entitle the Company to any other
or further notice or demand in similar or other circumstances. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.
SECTION 11.04. Costs, Expenses and Taxes. The Company agrees to pay
-------------------------
on demand: (a) all reasonable out-of-pocket costs and expenses of the Agent in
connection with the preparation, execution and delivery of this Agreement, the
Notes, the other Loan Documents and the other documents to be delivered
hereunder, including the reasonable fees and out-of-pocket expenses of counsel
for the Agent, including Andrews & Kurth L.L.P., with respect thereto and with
respect to advising the Agent as to its rights and responsibilities under this
Agreement, the Notes and the other Loan Documents, and any modification,
extension, amendment, supplement or waiver of any of the terms of this Agreement
or any other Loan Document, (b) all reasonable out-of-pocket costs and expenses
of the Agent in connection with the syndication of the credit evidenced by this
Agreement and the other Loan Documents, (c) all reasonable costs and expenses of
each of the Agent, the Banks and any other holder of an interest in the Notes,
and the Obligations of the Company hereunder and under the Loan Documents,
including reasonable legal fees (including the allocated cost of in-house
counsel) and expenses, in connection with a default or the enforcement of this
Agreement, the Notes and the other Loan Documents. In addition, the Company
shall pay any and all stamp and similar taxes payable or determined to be
payable in connection with the execution and delivery of this Agreement, the
Notes, the other Loan Documents and the other documents to be delivered
hereunder. Without prejudice to the survival of any other obligations of the
Company hereunder and under the Notes, the obligations of the Company under this
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Section shall survive the termination of this Agreement and the payment of the
Obligations or the assignment of the Notes.
SECTION 11.05. Indemnity. (a) The Company agrees to indemnify the
---------
Agent, the Banks, the Issuing Bank and each Affiliate thereof and their
respective directors, officers, employees and agents from, and hold each of them
harmless against, any and all losses, liabilities, claims or damages (including
reasonable legal fees and expenses) to which any of them may become subject,
insofar as such losses, liabilities, claims or damages arise out of or result
from any investigation, litigation or other proceeding (including any threatened
investigation or proceeding) including, without limitation, any of same
resulting from or arising out of any actual or proposed use by the Company of
the proceeds of any extension of credit by any Bank hereunder or any of the
other Loan Documents, and the Company shall reimburse the Agent, each Bank and
each Affiliate thereof and their respective directors, officers, employees and
agents, upon demand for any expenses (including legal fees) reasonably incurred
in connection with any such investigation or proceeding; but excluding any such
losses, liabilities, claims, damages, fees or expenses incurred by reason of the
gross negligence or willful misconduct of the Person to be indemnified.
(B) Without limiting any provision of this Agreement, it is the
express intention of the parties hereto that each Person to be indemnified
hereunder or thereunder shall be indemnified and held harmless against any and
all losses, liabilities, claims or damages covered by subsection (a) above and
arising out of or resulting from the ordinary sole or contributory negligence of
such Person. Without prejudice to the survival of any other obligations of the
Company hereunder and under the other Loan Documents, the obligations of the
Company under this Section shall survive the termination of this Agreement and
the other Loan Documents and the payment of the Obligations or the assignment of
the Notes.
SECTION 11.06. Right of Setoff. If any Event of Default shall have
---------------
occurred and be continuing, each Bank is hereby authorized at any time and from
time to time, to the fullest extent permitted by law, to set off and apply any
and all deposits (time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Bank, or any branch, subsidiary or
Affiliate of such Bank, to or for the credit or the account of the Company
against any and all the Obligations, irrespective of whether or not such Bank or
the Agent shall have made any demand under this Agreement, such Note or the
Obligations and although the Obligations may be unmatured. Each Bank agrees
promptly to notify the Company after any such setoff and application made by
such Bank, but the failure to give such notice shall not affect the validity of
such setoff and application. The rights of each Bank under this Section are in
addition to other rights and remedies (including other rights of setoff) which
such Bank may have.
SECTION 11.07 Governing Law. This Agreement, all Notes, the other
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Loan Documents and all other documents executed in connection herewith and
therewith, shall be deemed to be contracts and agreements executed by the
Company,
-69-
<PAGE>
the Agent and the Banks under the law of the State of New York and for all
purposes shall be construed in accordance with, and governed by, the law of said
state. Without limitation of the foregoing, nothing in this Agreement, or in the
Notes or in any other Loan Document shall be deemed to constitute a waiver of
any rights which any Bank may have under applicable federal legislation relating
to the amount of interest which such Bank may contract for, take, receive or
charge in respect of any Loans or other Obligations to such Bank hereunder and
under the other Loan Documents, including any right to take, receive, reserve
and charge interest at the rate allowed by the law of the state where such Bank
is located.
SECTION 11.08. Interest. Each provision in this Agreement and each
--------
other Loan Document is expressly limited so that in no event whatsoever shall
the amount paid, or otherwise agreed to be paid, to the Agent or any Bank, or
charged, contracted for, reserved, taken or received by the Agent or any Bank,
for the use, forbearance or detention of the money to be loaned under this
Agreement or any Loan Document or otherwise (including any sums paid as required
by any covenant or obligation contained herein or in any other Loan Document
which is for the use, forbearance or detention of such money), exceed that
amount of money which would cause the effective rate of interest to exceed the
Highest Lawful Rate, and all amounts owed under this Agreement and each other
Loan Document shall be held to be subject to reduction to the effect that such
amounts so paid or agreed to be paid, charged, contracted for, reserved, taken
or received which are for the use, forbearance or detention of money under this
Agreement or such Loan Document shall in no event exceed that amount of money
which would cause the effective rate of interest to exceed the Highest Lawful
Rate. Anything in any Note or any other Loan Document to the contrary
notwithstanding, the Company shall not be required to pay unearned interest on
any Note and under the Loan Documents at a rate in excess of the Highest Lawful
Rate, and if the effective rate of interest which would otherwise be payable
under such Note, such Obligations and such Loan Documents would exceed the
Highest Lawful Rate, or if the holder of such Note shall receive any unearned
interest or shall receive monies that are deemed to constitute interest which
would increase the effective rate of interest payable by the Company under such
Note and the Loan Documents to a rate in excess of the Highest Lawful Rate, then
(a) the amount of interest which would otherwise be payable shall be reduced to
the amount allowed under applicable law and (b) any unearned interest paid or
any interest paid in excess of the Highest Lawful Rate shall in the first
instance be credited on the principal of the Obligations (or if all such
Obligations shall have been paid in full, refunded to the Company). It is
further agreed that, without limitation of the foregoing, all calculations of
the rate of interest contracted for, reserved, taken, charged or received by any
Bank under the Notes and under this Agreement and the other Loan Documents held
by it are made for the purpose of determining whether such rate exceeds the
Highest Lawful Rate applicable to such Bank (such Highest Lawful Rate being such
Bank's "Maximum Permissible Rate"), and shall be made, to the extent permitted
------------------------
by usury laws applicable to such Bank (now or hereafter enacted), by amortizing,
prorating and spreading in equal parts during the period of the full stated term
of the Loans evidenced by said Notes and the other Obligations all interest at
any time contracted for, charged or received by such Bank in connection
therewith. If at any time and from time to time (y) the amount of interest
payable to any Bank on any date shall be computed at such Bank's Maximum
Permissible Rate
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<PAGE>
pursuant to this Section and (z) in respect of any subsequent interest
computation period the amount of interest otherwise payable to such Bank would
be less than the amount of interest payable to such Bank computed at such Bank's
Maximum Permissible Rate, then the amount of interest payable to such Bank in
respect of such subsequent interest computation period shall continue to be
computed at such Bank's Maximum Permissible Rate until the total amount of
interest payable to such Bank shall equal the total amount of interest which
would have been payable to such Bank if the total amount of interest had been
computed without giving effect to this Section.
SECTION 11.09. Binding Effect. This Agreement shall become effective
--------------
when it shall have been executed by the Company and the Agent and when the Agent
shall have been notified by each Bank that such Bank has executed it and
thereafter shall be binding upon and inure to the benefit of the Company, the
Agent and each Bank and their respective successors and permitted assigns.
SECTION 11.10. Successors and Assigns; Participations. (a) All
--------------------------------------
covenants, promises and agreements by or on behalf of the Company, the Agent or
the Banks that are contained in this Agreement shall bind and inure to the
benefit of their respective permitted successors and assigns. Other than as set
forth in Section 8.02, the Company may not assign or transfer any of its rights
------------
or obligations hereunder without the written consent of all the Banks.
(b) Each Bank may, without the consent of the Company, sell
participations to one or more banks in all or a portion of its rights and
obligations under this Agreement and the other Loan Documents (including all or
a portion of its Commitment, the Loans and the Notes and participations in
Letters of Credit held by it); provided, however, that (i) the selling Bank's
obligations under this Agreement shall remain unchanged, (ii) such Bank shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (iii) the participating banks or other entities shall be
entitled to the cost protection provisions contained in Article II, Article III
---------- -----------
and Section 11.04; provided, however, the costs to which a participant shall be
-------------
entitled to obtain pursuant to Articles II and III shall be determined by
----------- ---
reference to such participant's selling Bank and shall be recoverable solely
from such selling Bank (without increasing the Company's obligation to reimburse
such Bank thereunder) and (iv) the Company, the Agent and the other Banks shall
continue to deal solely and directly with the selling Bank in connection with
such Bank's rights and obligations under this Agreement and the other Loan
Documents; provided, however, the selling Bank may grant a participant rights
with respect to amendments, modifications or waivers only with respect to the
amount of principal or the rate of interest payable on, or the dates fixed for
any payment of principal of or fees with respect to interest on, the Loans. No
participant shall be a third party beneficiary of this Agreement and shall not
be entitled to enforce any rights provided to its selling Bank against the
Company under this Agreement.
(c) A Bank may assign to any other Bank or Banks or to any Affiliate
of a Bank and, with the prior written consent of the Agent and the Company
(which consent shall not be unreasonably withheld), a Bank may assign to one or
more other Eligible Assignees all or a portion of (but if a portion of, not less
than $5,000,000 of)
-71-
<PAGE>
its interests, rights, and obligations under this Agreement and the other Loan
Documents (including all or a portion of its Commitment and the same portion of
the Loans at the time owing to it and the Note held by it, including its
participation in the Letters of Credit); provided, however, that (i) each such
assignment shall be in a minimum principal amount of not less than $5,000,000
(unless such assignment shall be to another Bank) and shall be of a constant,
and not a varying, percentage of all the assigning Bank's Commitment, rights and
obligations under this Agreement and (ii) the parties to each such assignment
shall execute and deliver to the Agent, for its acceptance and recording in the
Register (as defined below), an Assignment and Acceptance substantially in the
form of Exhibit 11.10 hereto (an "Assignment and Acceptance"), any Note subject
------------- -------------------------
to such assignment and, in the case of the Eligible Assignee, an Administrative
Questionnaire. Upon such execution, delivery, acceptance and recording, from
and after the effective date specified in each Assignment and Acceptance, which
effective date shall be at least five Business Days after the execution thereof
unless otherwise agreed to by the assigning Bank, the Eligible Assignee
thereunder and the Agent (x) the Eligible Assignee thereunder shall be a party
hereto and to the other Loan Documents and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Bank hereunder
and under the other Loan Documents and (y) the assignor Bank thereunder shall,
to the extent provided in such Assignment and Acceptance, be released from its
obligations under this Agreement and the other Loan Documents (and, in the case
of an Assignment and Acceptance covering all of the remaining portion of an
assigning Bank's rights and obligations under this Agreement and the other Loan
Documents such Bank shall cease to be a party hereto).
(d) By executing and delivering an Assignment and Acceptance, the
Bank assignor thereunder and the Eligible Assignee confirm to and agree with
each other and the other parties hereto as follows: (i) other than the
representation and warranty that it is the legal and beneficial owner of the
interest being assigned thereby free and clear of any adverse claim known to
such Bank assignor, such Bank assignor makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of this
Agreement, the other Loan Documents or any other instrument or document
furnished pursuant hereto or thereto; (ii) such Bank assignor makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Company or the performance of observance of its
respective obligations under this Agreement or any other instrument or document
furnished pursuant hereto or thereto; (iii) such Eligible Assignee confirms that
it has received a copy of this Agreement together with copies of the most recent
financial statements delivered pursuant to Section 6.07 or Section 7.01 and such
------------ ------------
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and Acceptance; (iv)
such Eligible Assignee will, independently and without reliance upon the Agent,
such Bank assignor or any other Bank and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement and the other Loan
Documents; (v) such Eligible Assignee appoints and authorizes the Agent to take
such action on behalf of such Eligible Assignee and to the exercise such powers
under this Agreement
-72-
<PAGE>
and the other Loan Documents as are delegated to the Agent by the terms hereof,
together with such powers as are reasonably incidental thereto; (vi) such
Eligible Assignee agrees that it will perform in accordance with its terms all
of the obligations which by the terms of this Agreement and the other Loan
Documents are required to be performed by it as a Bank and (vii) such Eligible
Assignee confirms that it is an Eligible Assignee confirms that it is an
Eligible Assignee as defined herein.
(e) The Agent shall maintain at its office a copy of each Assignment
and Acceptance delivered to it and a register for the recordation of the names
and addresses of the Banks and the Commitment of, and principal amount of the
Loans and other Obligations owing to, each Bank from time to time (the
"Register"). The entries in the Register shall be conclusive, in the absence of
--------
manifest error, and the Company, the Agent and the Banks may treat each Person
whose name is recorded in the Register as a Bank hereunder for all purposes of
this Agreement and the other Loan Documents. The Register shall be available
for inspection by the Company, any Bank or the Agent at any reasonable time and
from time to time upon reasonable prior notice.
(f) Upon its receipt of an Assignment and Acceptance executed by an
assigning Bank and an Eligible Assignee together with the Note subject to such
assignment, a service fee of $3,500 payable by the assigning Bank to the Agent
and upon giving any required written consent to such assignment, the Agent
shall, if such Assignment and Acceptance has been completed and is substantially
in form of Exhibit 11.10 hereto, (i) accept such Assignment and Acceptance, (ii)
-------------
record the information contained therein in the Register and (iii) give prompt
notice thereof to the Banks and the Company. Within five Business Days after
receipt of such notice, the Company shall execute and deliver to the Agent in
exchange for the surrendered Note, a new Note to the order of such Eligible
Assignee in an amount respectively equal to their portion of the Commitment of
the assigning Bank assumed by it pursuant to such Assignment and Acceptance and,
if the assigning Bank has retained any of its Commitment hereunder, a new Note
to the order of the assigning Bank in an equal amount to the Commitment (which
must be in an amount not less than $5,000,000) retained by it hereunder. Such
new Notes shall be in an aggregate principal amount equal to the aggregate
principal amount of such surrendered Note, shall be dated the effective date of
such Assignment and Acceptance and shall otherwise be in substantially the form
of Exhibit 2.05, as applicable, hereto. Any cancelled Note shall be returned to
------------
the Company.
(g) Notwithstanding any other provision herein, any Bank may, in
connection with any assignment or participation or proposed assignment or
participation pursuant to this Section disclose to the assignee or participant
or proposed assignee or participant, any information relating to the Company
furnished to such Bank by or on behalf of the Company, however to the provisions
of Section 11.11.
-------------
(h) Anything in this Section to the contrary notwithstanding, any
Bank may at any time, without the consent of the Company or the Agent, assign
and pledge all or any portion of its Commitment and the Loans owing to it any
Federal Reserve Bank (and its transferees) as collateral security pursuant to
Regulation A
-73-
<PAGE>
and any Operating Circular issued by such Federal Reserve Bank. No such
assignment shall release the assigning Bank from its obligations hereunder.
(i) All transfers of any interest in any Note hereunder shall be in
compliance with all federal and state securities laws, if applicable.
Notwithstanding the foregoing sentence, however, the parties to this Agreement
do not intend that any transfer under this Section be construed as a "purchase"
or "sale" of a "security" within the meaning of any applicable federal or state
securities laws.
SECTION 11.11. Confidentiality. Each Bank agrees to exercise its
---------------
best efforts to keep any information delivered or made available by the
Company to it (including any information obtained pursuant to Section 7.01)
------------
which is clearly indicated to be confidential information, confidential from
anyone other than Persons employed or retained by such Bank who are or are
expected to become engaged in evaluating, approving, structuring or
administering the Loans or the Letters of Credit; provided that nothing herein
shall prevent any Bank from disclosing such information (a) to any of such
Bank's Affiliates or any other Bank, (b) pursuant to subpoena or upon the order
of any court or administrative agency, (c) upon the request or demand of any
regulatory agency or authority having jurisdiction over such Bank, (d) which has
been publicly disclosed, (e) to the extent reasonably required in connection
with any litigation to which either Agent, any Bank, the Company or their
respective Affiliates may be a party, (f) upon the occurrence and continuation
of an Event of Default, to the extent reasonably required in connection with the
exercise of any remedy hereunder, (g) to such Bank's legal counsel and
independent auditors to the extent such Persons are involved in evaluating,
approving, structuring or administering the Loans, and to the extent of such
activity, and (h) to any actual or proposed participant or assignee of all or
part of its rights hereunder which has agreed in writing to be bound by the
provisions of this Section. Each Bank will promptly notify the Company of any
information that it is required or requested to deliver pursuant to clause (b),
(c) or (e) of this Section, prior to any disclosure, if reasonably practicable,
provided further that the Company may, at its sole expense, move to quash or
remove any subpoena or otherwise contest any demand for such documents arising
in items (b), (c) and/or (e) of this Section.
SECTION 11.12. Pro Rata Treatment. (a) Except as otherwise
------------------
specifically permitted hereunder, each payment or prepayment of principal, if
permitted under this Agreement, and each payment of interest with respect to a
Borrowing shall be made pro rata among the Banks in accordance with the
respective principal amounts of the Loans extended by each Bank with respect to
such Borrowing.
(b) Each Bank agrees that if it shall, through the exercise of a
right of banker's lien, setoff or counterclaim against the Company (pursuant to
Section 11.06 or otherwise), including a secured claim under Section 506 of the
- -------------
Bankruptcy Code or other security or interest arising from, or in lieu of, such
secured claim, received by such Bank under any applicable bankruptcy, insolvency
or other similar law or otherwise, obtain payment (voluntary or involuntary) in
respect of the Notes, Loans, Unpaid Drawings and other Obligations held by it
(other than pursuant to Section 2.11, Section 2.13 and Section 3.05) as a result
------------ ------------ ------------
of which the unpaid principal portion
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<PAGE>
of the Notes and the Obligations held by it shall be proportionately less than
the unpaid principal portion of the Notes and Obligations held by any other
Bank, it shall be deemed to have simultaneously purchased from such other Bank a
participation in the Notes and Obligations held by such other Bank, so that the
aggregate unpaid principal amount of the Notes, Obligations and participations
in Notes held by each Bank shall be in the same proportion to the aggregate
unpaid principal amount of the Notes and Obligations then outstanding as the
principal amount of the Notes and other Obligations held by it prior to such
exercise of banker's lien, setoff or counterclaim was to the principal amount of
all Notes and other Obligations outstanding prior to such exercise of banker's
lien, setoff or counterclaim; provided, however, that if any such purchase or
purchases or adjustments shall be made pursuant to this Section and the payment
giving rise thereto shall thereafter be recovered, such purchase or purchases or
adjustments shall be rescinded to the extent of such recovery and the purchase
price or prices or adjustments restored without interest. The Company expressly
consents to the foregoing arrangements and agrees that any Person holding such a
participation in the Notes and the Obligations deemed to have been so purchased
may exercise any and all rights of banker's lien, setoff or counterclaim with
respect to any and all moneys owing by the Company to such Person as fully as if
such Person had made a Loan directly to the Company in the amount of such
participation.
SECTION 11.13. Independence of Covenants. All covenants contained in
-------------------------
this Agreement and in the other Loan Documents shall be given independent effect
so that if a particular action or condition is not permitted by any of such
covenants, the fact that such action or condition would be permitted by an
exception to, or otherwise be within the limitations of, another covenant, shall
not avoid the occurrence of a Default or an Event of Default if such action is
taken or condition exists.
SECTION 11.14. Separability. Should any clause, sentence, paragraph
------------
or Section of this Agreement be judicially declared to be invalid, unenforceable
or void, such decision will not have the effect of invalidating or voiding the
remainder of this Agreement, and the parties hereto agree that the part or parts
of this Agreement so held to be invalid, unenforceable or void will be deemed to
have been stricken herefrom and the remainder will have the same force and
effectiveness as if such part or parts had never been included herein.
SECTION 11.15. Execution in Counterparts. This Agreement may be
-------------------------
executed in any number of counterparts and by different 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 on and the same
agreement.
SECTION 11.16. Interpretation. (a) In this Agreement, unless a clear
--------------
contrary intention appears:
(i) the singular number includes the plural number and vice
versa;
(ii) reference to any gender includes each other gender;
-75-
<PAGE>
(iii) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision;
(iv) reference to any Person includes such Person's successors
and assigns but, if applicable, only if such successors and assigns are
permitted by this Agreement, and reference to a Person in a particular
capacity excludes such Person in any other capacity or individually,
provided that nothing in this clause (iv) is intended to authorize any
assignment not otherwise permitted by this Agreement;
(v) except as expressly provided to the contrary herein,
reference to any agreement, document or instrument (including this
Agreement) means such agreement, document or instrument as amended,
supplemented or modified and in effect from time to time in accordance with
the terms thereof and, if applicable, the terms hereof, and reference to
any Note or other note includes any note issued pursuant hereto in
extension or renewal thereof and in substitution or replacement therefor;
(vi) unless the context indicates otherwise, reference to any
Article, Section, Schedule or Exhibit means such Article or Section hereof
or such Schedule or Exhibit hereto;
(vii) the words "including" (and with correlative meaning
"include") means including, without limiting the generality of any
description preceding such term; and
(viii) reference to any law, rule or regulation means such as
amended, modified, codified or reenacted, in whole or in part, and in
effect from time to time.
(b) The Article and Section headings herein and the Table of Contents
are for convenience only and shall not affect the construction hereof.
(c) No provision of this Agreement shall be interpreted or construed
against any Person solely because that Person or its legal representative
drafted such provision.
SECTION 11.17. SUBMISSION TO JURISDICTION. (a) ANY LEGAL ACTION OR
--------------------------
PROCEEDING WITH RESPECT TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE
SOUTHERN DISTRICT OF NEW YORK AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT,
THE COMPANY HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE AFORESAID
-------------
COURTS WITH RESPECT TO ANY SUCH ACTION OR PROCEEDING. THE COMPANY FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY
-76-
<PAGE>
OR THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT ITS
ADDRESS PROVIDED IN SECTION 11.02, SUCH SERVICE TO BECOME EFFECTIVE THIRTY DAYS
-------------
AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENT OR ANY
BANK TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY IN ANY OTHER JURISDICTION.
(b) THE COMPANY HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR
PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT BROUGHT IN THE
COURTS REFERRED TO IN CLAUSE (a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND
AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
SECTION 11.18. FINAL AGREEMENT OF THE PARTIES. THIS AGREEMENT
------------------------------
(INCLUDING THE SCHEDULES AND EXHIBITS HERETO), THE NOTES AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES RELATING TO THE
SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT
MATTER OF THIS AGREEMENT.
SECTION 11.19. WAIVER OF JURY TRAIL. EACH OF THE COMPANY, THE AGENT
--------------------
AND THE BANKS HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRAIL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS, THE LOANS OR
THE ACTIONS OF THE AGENT OR ANY BANK IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE OR ENFORCEMENT THEREOF.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized as of the
date first above written.
THE COMPANY:
BORDEN CHEMICALS AND
PLASTICS OPERATING LIMITED
PARTNERSHIP
By BCP Management, Inc.
By: /s/ David A. Kelly
--------------------------------
Name: David A. Kelly
Title: Director, Treasurer and Principal
Financial Officer
AGENT:
CREDIT SUISSE,
as Agent for the Banks
By:_______________________________
Name: Heather Riekenberg
Title: Associate
By:_______________________________
Name: Ira Lubinsky
Title: Associate
ISSUING BANK:
CREDIT SUISSE,
as Issuing Bank
By:_______________________________
Name: J. Hamilton Crawford
Title: Associate
By:_______________________________
Name: Michael Mast
Title: Member of Senior Management
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized as of the
date first above written.
THE COMPANY:
BORDEN CHEMICALS AND
PLASTICS OPERATING LIMITED
PARTNERSHIP
By BCP Management, Inc.
By: ____________________________________
Name:
Title:
AGENT:
CREDIT SUISSE,
as Agent for the Banks
By: /s/Heather Riekenberg
------------------------------------
Name: Heather Riekenberg
Title: Associate
By: /s/Ira Lubinsky
------------------------------------
Name: Ira Lubinsky
Title: Associate
ISSUING BANK:
CREDIT SUISSE,
as Issuing Bank
By: /s/J. Hamilton Crawford
------------------------------------
Name: J. Hamilton Crawford
Title: Associate
By: /s/Michael Mast
------------------------------------
Name: Michael Mast
Title: Member of Senior Management
<PAGE>
Bank
----
CREDIT SUISSE
Commitment:
- ----------
$16,000,000
By: /s/J. Hamilton Crawford
------------------------------------
Name: J. Hamilton Crawford
Title: Associate
Address: 12 E. 49th Street
New York, New York 10017
By: /s/Michael Mast
------------------------------------
Name: Michael Mast
Title: Member of Senior Management
Address: 12 E. 49th Street
New York, New York 10017
Telecopy No.: (212) 238-5439
Domestic Lending Office
-----------------------
Credit Suisse
12 E. 49th Street
New York, New York 10017
Eurodollar Lending Office
-------------------------
Credit Suisse
12 E. 49th Street
New York, New York 10017
<PAGE>
Bank
----
THE CHASE MANHATTAN BANK, N.A.
Commitment:
- ----------
$14,000,000
By: /s/Ruth I. Dreessen
------------------------------------
Name: Ruth I. Dreessen
Title: Vice President
Address: 1 Chase Manhattan Plaza -
4th Floor
New York, New York 10081
Telecopy No.: (212) 552-1246
Domestic Lending Office
-----------------------
The Chase Manhattan Bank, N.A.
1 Chase Manhattan Plaza
New York, New York 10081
Eurodollar Lending Office
-------------------------
The Chase Manhattan Bank, N.A.
1 Chase Manhattan Plaza
New York, New York 10081
<PAGE>
Bank
----
THE HUNTINGTON NATIONAL BANK
Commitment:
- ----------
$14,000,000
By: /s/ Robert H. Friend
----------------------------
Name: Robert H. Friend
Title: Vice President
Address: Huntington National Bank
The Huntington Center - HCO810
Columbus, Ohio 43287
Telecopy No: (614) 480-3066
Domestic Lending Office
-----------------------
Hunting National Bank
The Huntington Center - HC0810
Columbus, Ohio 43287
Eurodollar Lending Office
-------------------------
Huntington National Bank
The Huntington Center - HC0810
Columbus, Ohio 43287
<PAGE>
Bank
----
WACHOVIA BANK OF GEORGIA, N.A.
Commitment:
- ----------
$14,000,000 By: [SIGNATURE ILLEGIBLE]
---------------------
Name: [SIGNATURE ILLEGIBLE]
Title: Sen. Vice President
Corporate Services
Address: 191 Peachtree St. N.E.
Atlanta, Georgia 30303
Telecopy No.: (404) 332-6898
Domestic Lending Office
-----------------------
Wachovia Bank of Georgia, N.A.
191 Peachtree St. N.E.
Atlanta, Georgia 30303
Eurodollar Lending Office
-------------------------
Wachovia Bank of Georgia, N.A.
191 Peachtree St. N.E.
Atlanta, Georgia 30303
<PAGE>
Bank
----
NATIONSBANK, N.A. (CAROLINAS)
Commitment:
- ----------
$14,000,000
By: /s/ Scott Jackson
-------------------------------
Name: Scott Jackson
Title: Vice President
Address: 767 Fifth Avenue, 5th Floor
New York, New York 10153-0083
Telecopy No.: (212) 751-6909
Domestic Lending Office
-----------------------
NationsBank, N.A.
101 North Tryon Street, 15th Floor
Charlotte, North Carolina 28255
Eurodollar Lending Office
-------------------------
NationsBank, N.A.
101 North Tryon Street, 15th Floor
Charlotte, North Carolina 28255
<PAGE>
Bank
----
BANK ONE, COLUMBUS, NA
Commitment:
- ----------
$14,000,000
By: /s/ James B. Waddell
------------------------------
Name: James B. Waddell
Title: Vice President
Address: 100 East Broad Street
Columbus, Ohio 43271-0209
Telecopy No.: (614) 248-5518
Domestic Lending Office
-----------------------
Bank One, Columbus, NA
100 East Broad Street
Columbus, Ohio 43271-0209
Eurodollar Lending Office
-------------------------
Bank One, Columbus, NA
100 East Broad Street
Columbus, Ohio 43271-0209
<PAGE>
Bank
----
CREDITLYONNAIS
Commitment:
- ----------
$14,000,000
Domestic Lending Office
-----------------------
Credit Lyonnais New York Branch
1301 Avenue of the Americas
New York, New York 10019
Telecopy No.: (212) 459-3179
By: /s/ Mark Campellone
------------------------------------
Name: Mark Campellone
Title:
Eurodollar Lending Office
-------------------------
Credit Lyonnais Cayman Island Branch
1301 Avenue of the Americas
New York, New York 10019
By: /s/ Mark Campellone
------------------------------------
Name: Mark Campellone
Title:
<PAGE>
EXHIBIT 1.01A
CREDIT SUISSE
Administrative Details Form For: Borden Chemicals and Plastic LP
<TABLE>
<CAPTION>
====================================================================================
====================================================================================
<S> <C>
Lending Institutions: ______________________________________________________
Address: ______________________________________________________
______________________________________________________
Telephone: ___________________ Telex No:____________________
Telefax: ___________________ Answerback:____________________
CONTACTS - Credit Incomes: ______________________________________________________
Address: ___________________ Telephone:___________________
___________________ Telefax:___________________
CONTACTS - Admin/Operations: ______________________________________________________
Address: ___________________ Telephone:___________________
___________________ Telefax:___________________
Domestic Lending Eurodollar Lending
PAYMENT INSTRUCTIONS: Fees & Interest
Bank Name: ___________________ ___________________
Bank Address: ___________________ ___________________
___________________ ___________________
ABA#/Acct.#: ___________________ ___________________
Name on Acct.: ___________________ ___________________
Further credit to: ___________________ ___________________
Acct. Name/No.: ___________________ ___________________
PAYMENT INSTRUCTIONS: Principal
Bank Name: ___________________ ___________________
Bank Address: ___________________ ___________________
___________________ ___________________
ABA#/Acct.#: ___________________ ___________________
Name on Acct.: ___________________ ___________________
Further credit to: ___________________ ___________________
Acct. Name/No.: ___________________ ___________________
</TABLE>
PLEASE NOTE: CREDIT SUISSE ADMINISTRATIVE DETAILS
For payments of principal, fees, or interest to Credit Suisse, please credit our
account at the Federal Reserve Bank of New York.
ABA# 0260-0917-9, for further credit to Credit Suisse Account No. 904996-02,
Attn: Loans Dept., Reference:
Borden Chemicals and Plastic LP PLEASE MAKE ALL PAYMENTS NO LATER THAN
- ----------------------------------------
11:00 A.M. NY TIME.
Primary Acct Administrator
CREDIT SUISSE NEW YORK Julia Kingsbury
12 E. 49th Street Tel: 212-238-5063
New York, NY 10017 Fax: 212-238-5073
<PAGE>
EXHIBIT 2.03
FORM
OF
NOTICE OF BORROWING
Credit Suisse, as Agent
for the Banks that are parties to the
Credit Agreement referred to below
12 East 49th Street, 44th Floor
New York, New York 10017
Attention:____________ [Date]
Dear Sirs:
Reference is made to the Credit Agreement dated as of _______________,
1995 (the "Credit Agreement"), among Borden Chemicals and Plastics Operating
----------------
Limited Partnership (the "Company"), the banks party thereto and Credit Suisse,
-------
as agent for such banks. Capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to such terms in the Credit Agreement.
The Company, hereby requests a Borrowing under the Credit Agreement
and in that connection sets forth below the information relating to such
Borrowing (the "Proposed Borrowing") as required by Section 2.03 of the Credit
------------------
Agreement:
(a) Aggregate Principal Amount of Proposed Borrowing/1/ $_______________
-
(b) Borrowing Date of Proposed Borrowing/2/ ________________
-
(c) Type of Loans to comprise the Proposed Borrowing/3/ ________________
-
(d) Interest Period and last day thereof/4/ ________________
-
___________
/1/ Except with respect to any Proposed Borrowing of the entire Unutilized
-
Commitment, not less than $5,000,000 and, if greater, in integral multiples
of $1,000,000.
/2/ Must be a Business Day.
-
/3/ Base Rate Loans or Eurodollar Rate Loans.
-
/4/ Applicable only to a proposed Borrowing to be comprised of Eurodollar Rate
-
Loans, which shall have a duration of one, two, three or six months, or
such longer period as the Agent in its reasonable discretion may determine
is available at the relevant time, and which shall end not later than the
Maturity Date; subject, however, to the limitations contained in Section
2.09 of the Credit Agreement.
<PAGE>
By each of the delivery of this Notice of Borrowing and the
acceptance of any or all of the Loans made by the Banks in response to this
Notice of Borrowing, the Company shall be deemed to have represented and
warranted that the conditions to lending specified in Article V of the Credit
Agreement have been satisfied with respect to the Proposed Borrowing.
Very truly yours,
BORDEN CHEMICALS AND PLASTICS
OPERATING LIMITED PARTNERSHIP
By: BCP Management, Inc.
By:_______________________
Name:
Title:
-2-
<PAGE>
EXHIBIT 2.05
FORM
OF
REVOLVING CREDIT NOTE
$________________ Dated: _____________, 1995
FOR VALUE RECEIVED, the undersigned, Borden Chemicals and Plastics
Operating Limited Partnership, a Delaware limited partnership (the "Company")
-------
whose sole general partner is BCP Management Inc., HEREBY PROMISES TO PAY to the
order of (the "Bank") on or before the Maturity Date (as hereinafter defined)
----
the lesser of (i) the amount of the Bank's Commitment and (ii) the aggregate
amount of the Loans made by the Bank to the Company and outstanding on the
Maturity Date. The principal amount of each Loan made by the Bank to the Company
pursuant to the Credit Agreement (as hereinafter defined) shall be due and
payable on the dates and in the amounts as are specified in the Credit
Agreement.
The Company promises to pay interest on the unpaid principal amount of
each Loan from the date of such Loan until such principal amount is paid in
full, at such interest rates, and payable at such dates and times, as are
specified in the Credit Agreement dated as of _____________, 1995 (as the same
may from time to time be amended, modified or supplemented, the "Credit
------
Agreement," the terms defined therein and not otherwise defined herein being
- ---------
used herein as therein defined), among the Company, the Bank and certain other
banks that are parties thereto, Credit Suisse, as Agent for the Bank and such
other banks.
Both principal and interest are payable in same day funds in lawful
money of the United States of America to Credit Suisse, as Agent, at 12 East
49th Street, New York, New York 10017, or at such other place as the Agent shall
designate in writing to the Company. The amount of each Loan made by the Bank to
the Company and the borrowing date, the rate of interest applicable thereto and
all payments made on account of principal and interest hereof, may be recorded
by the Bank and, prior to any transfer hereof, endorsed on the grid attached
hereto which is part of this Promissory Note; provided, however, that the
failure of the Bank to make such notation or any error therein shall not in any
manner affect the obligation of the Company to repay such Loan in accordance
with the terms of this Promissory Note and the Credit Agreement.
This Promissory Note may be held by the Bank for the account of its
Domestic Lending Office or its Eurodollar Lending Office and may be transferred
from one to the other from time to time as the Bank may determine.
This Promissory Note is one of the Notes referred to in, and is
entitled to the benefits of, the Credit Agreement. The Credit Agreement, among
other things,
<PAGE>
(i) provides for the making of the Loans by the Bank to the Company from time to
time, the indebtedness of the Company resulting from each such Loan being
evidenced by this Promissory Note and (ii) contains provisions for acceleration
of the maturity hereof upon the happening of certain stated events, also for
prepayments on account of principal hereof prior to the maturity hereof upon the
terms and conditions therein specified, and to the effect that no provision of
the Credit Agreement or this Promissory Note shall require the payment or permit
the collection of interest in excess of the Highest Lawful Rate.
The Company and any and all endorsers, guarantors and sureties
severally waive grace, demand, presentment for payment, notice of dishonor or
default or intent to accelerate, protest and notice of protest and diligence in
collecting and bringing of suit against any party hereto, and agree to all
renewals, extensions or partial payments hereon and to any release or
substitution of security herefor, in whole or in part, with or without notice,
before or after maturity.
This Promissory Note shall be governed by, and construed and
interpreted in accordance with, the law of the State of New York.
BORDEN CHEMICALS AND PLASTICS
OPERATING LIMITED
PARTNERSHIP
By: BCP Management, Inc.
By:_______________________
Name:_____________________
Title:____________________
-2-
<PAGE>
LOANS AND PAYMENTS OF PRINCIPAL AND INTEREST
<TABLE>
<CAPTION>
_________________________________________________________________________________________________
End of
Borrowing Interest Rate of Amount of Amount of
Date or Amount Period Interest Principal Interest Unpaid
Conversion and Type of Applicable Applicable Paid or Paid or Principal Notation
Date Loan to Loan to Loan Prepaid Prepaid Balance Made By
=================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
_________________________________________________________________________________________________
_________________________________________________________________________________________________
_________________________________________________________________________________________________
_________________________________________________________________________________________________
_________________________________________________________________________________________________
_________________________________________________________________________________________________
_________________________________________________________________________________________________
_________________________________________________________________________________________________
_________________________________________________________________________________________________
_________________________________________________________________________________________________
_________________________________________________________________________________________________
_________________________________________________________________________________________________
_________________________________________________________________________________________________
_________________________________________________________________________________________________
_________________________________________________________________________________________________
_________________________________________________________________________________________________
_________________________________________________________________________________________________
_________________________________________________________________________________________________
_________________________________________________________________________________________________
</TABLE>
-3-
<PAGE>
EXHIBIT 2.14
FORM
OF
SWING LOAN PARTICIPATION CERTIFICATE
______________, 199_
(Name of Bank)
- ----------------
________________
________________
Dear Ladies and Gentlemen:
Pursuant to subsection 2.14(b)(i) of that certain Credit Agreement dated as
of _______, 1995 (as the same may be amended, modified or restated from time to
time, the "Credit Agreement"), among Borden Chemicals and Plastics Operating
Limited Partnership, a Delaware limited partnership, (as defined in the Credit
Agreement), the several financial institutions from time to time party thereto
(the "Banks"), Credit Suisse, letter of credit issuing bank, Credit Suisse, as
Agent (the "Agent") for the Banks therein named, the undersigned hereby
acknowledges receipt from you on the date hereof of ___________________ DOLLARS
($___________) as payment for a participating interest in the following Swing
Loan(s):
Date(s) of Swing Loan(s): _________________, 199_
Principal Amount of Swing Loan(s): $_____________
Capitalized terms used herein without definition have the meaning assigned
to them in the Credit Agreement.
Very truly yours,
CREDIT SUISSE,
as Swing Loan Bank
By:__________________________
Name:
Title:
<PAGE>
EXHIBIT 3.02
FORM
OF
LETTER OF CREDIT REQUEST
______________, 19_
Credit Suisse
12 East 49th Street, 44th Floor
New York, New York 10017
Attention:__________
Gentlemen:
Reference is made to the Credit Agreement dated as of _______________,
1995 (the "Credit Agreement"), among Borden Chemicals and Plastics Operating
----------------
Limited Partnerships (the "Company"), the banks thereto and Credit Suisse, as
-------
agent for such banks. Capitalized terms which are used but not defined herein
shall have the respective meanings assigned to such terms in the Credit
Agreement.
The Company hereby requests the issuance of a Letter of Credit under
the Credit Agreement, and in that connection sets forth below the information
relating to such Letter of Credit ("Proposed Letter of Credit") as required by
-------------------------
Section 3.02 of the Credit Agreement. The Proposed Letter of Credit must be
issued:
(a) on or before _________, 19__/1/
(b) for the benefit of ______________
(c) in the amount of $_______________
(d) having an expiry date of _______, 19__/2/
(e) subject to the conditions set forth in the Application attached
hereto
0R
The Company hereby refers to Letter of Credit Number __________ (the
"Expiring Letter of Credit") which has an existing expiry date of ___________.
-------------------------
The Company hereby requests that [the expiry date of the Expiring Letter of
Credit be extended to _________/2/]
The Company hereby certifies that after giving effect to the [issuance
of the Proposed Letter of Credit] or [the extension of the Expiring Letter of
Credit] (a) the aggregate Letter of Credit Outstanding will not exceed the
Letter of Credit
_______________________________
/1/ Which must be not less than two Business Days after notice is given to the
Issuing Bank.
/2/ Which shall not be later than the earlier of (i) a date which is one year
after the date of issuance or (ii) the Maturity Date.
<PAGE>
Limit and (b) the sum of the aggregate outstanding Loans plus the Letter of
Credit Outstanding will not exceed the Total Commitment. The Company hereby
further certifies that on the date hereof all applicable conditions to the
[issuance of the Proposed Letter of Credit] [extension of the Expiring Letter of
Credit] set forth in Article V of the Credit Agreement have been satisfied and
that the [Proposed Letter of Credit][the Expiring Letter of Credit as extended]
complies with the terms of the Credit Agreement, and upon the [issuance of the
Proposed Letter of Credit] [extension of the Expiring Letter of Credit], the
Company will be deemed to have recertified the foregoing on such issuance date
or extension date, as the case may be.
Sincerely,
BORDEN CHEMICALS AND PLASTICS
OPERATING LIMITED PARTNERSHIP
By: BCP Management, Inc.
By:_______________________
Name:
Title:
<PAGE>
S&A DRAFT
4/28/95
MAY __, 1995
To Credit Suisse, as Agent, and each of the Banks
Under the Credit Agreement referred to below
c/o Credit Suisse, as Agent
12 East 49th Street
39th Floor
New York, New York 10017
Re: Borden Chemicals and Plastics
Operating Limited Partnership
-----------------------------
Ladies and Gentlemen:
I am Vice President, General Counsel and Secretary of BCP Management,
Inc. (the "General Partner") and have acted as counsel to Borden Chemicals and
Plastics Operating Limited Partnership (the "Company"), and to the General
Partner, the Company's sole general partner, in connection with the preparation,
execution and delivery of that certain Credit Agreement dated as of May __, 1995
(the "Credit Agreement") among the Company, the institutions from time to time
party thereto as Banks (collectively, the "Banks"), and Credit Suisse, as agent
for the Banks (in such capacity, the "Agent"). This opinion is being delivered
pursuant to Section 5.01(e) of the Credit Agreement. Terms defined in the Credit
Agreement and not otherwise defined herein are used herein with the meanings as
so defined.
In connection with the opinions expressed herein, I have reviewed the
following documents:
(i) The Credit Agreement executed by each of the parties thereto;
(ii) The Notes; and
(iii) (x) The Certificate of Incorporation and By-Laws of the General
Partner,
<PAGE>
(y) the Certificate of Limited Partnership and Amended and
Restated Agreement of Limited Partnership of the Company, and
(z) certificates of governmental officials as to
(1) the due organization, valid existence and good standing of
each of the Company and the General Partner under the laws of the
State of Delaware,
(2) the due qualification or registration of the Company as a
foreign limited partnership in the State of Illinois and the
State of Louisiana, and
(3) the due qualification as a foreign corporation and good
standing of the General Partner in the State of Illinois and the
State of Louisiana.
The Credit Agreement and the Notes are hereinafter referred to as the
"Loan Documents".
In addition, I have examined originals or copies, certified or
otherwise identified to my satisfaction, of such corporate records, agreements,
documents or instruments and other instruments, as applicable, and of
certificates or comparable documents or instruments of public officials and
other instruments and documents and have made such inquiries of such officers
and representatives and such examination of law as I have deemed relevant and
necessary to form and basis for the opinions hereinafter set forth.
In my examination of the Loan Documents I have assumed the
authenticity of all such documents submitted to us as originals, the conformity
to authentic originals of all such documents submitted to me as copies and the
genuineness of all signatures (other than the signatures of the representatives
of the General Partner). As to all questions of fact material to the opinions
specified herein that have not been independently established, I have relied
upon the representations and warranties of the Company contained in the Credit
Agreement.
In rendering the opinions expressed below, I have assumed, without any
independent investigation or verification of any kind, that each party to the
Loan Documents (other than the Company and the General Partner) has been duly
organized and is validly existing and in good standing under its jurisdiction of
incorporation and has full power and authority to execute and deliver the Loan
Documents and perform the obligations set forth therein, and that the execution,
delivery, and performance of the Loan Documents by such other parties have been
duly authorized by all requisite corporate and other action on the part of such
2
<PAGE>
other parties and such documents have been duly executed and delivered by such
other parties.
Based upon the foregoing assumptions and examination of documents and
upon such investigation as I have deemed necessary, and subject to the
qualifications set forth in subparagraphs (a) through (f) below, I am of the
opinion that:
1. The Company (i) is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of Delaware and (ii)
has the partnership power to own its property and carry on its business as now
conducted. The General Partner (i) is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and (ii)
has the corporate power to own its property and carry on its business as now
conducted.
2. The Company is duly qualified or authorized as a foreign limited
partnership in the State of Illinois and the State of Louisiana.
3. The General Partner is duly qualified as a foreign corporation to
do business and is in good standing in the State of Illinois and the State of
Louisiana.
4. The execution, delivery and performance by the Company of each
Loan Document are within the Company's partnership powers and have been duly
authorized by all necessary corporate action on the part of the General Partner.
The execution and delivery by the General Partner, as general partner of the
Company, of each Loan Document are within the General Partner's corporate powers
and have been duly authorized by all necessary corporate action on the part of
the General Partner.
My opinions are expressly qualified as follows:
(a) My opinions expressed above are limited to the General
Corporation Law of the State of Delaware, the Delaware Revised Uniform
Limited Partnership Act, and the federal law of the United States, and I do
not express any opinion herein concerning any other law.
(b) I express no opinion as to the effect of the compliance or
noncompliance of the Agent, any of the Banks or the Issuing Bank with any
state or federal laws or regulations applicable to any such party because
of such party's legal or regulatory status, the nature of such party's
business or the authority of any party to conduct business in any
jurisdiction.
3
<PAGE>
(c) I express no opinion at to the effect (if any) of the law of any
jurisdiction (except the State of New York) in which any Bank is located
which limits the rate of interest that such Bank may charge or collect.
(d) Insofar as the opinions expressed in paragraphs 2 and 3 related
to matters governed by the law of the State of Illinois or the State of
Louisiana, I have not made an independent examination of such law, but have
relied exclusively upon the certificates referred to clauses (iii)(z)(2)
and (iii)(z)(3) above.
(e) I express no opinion with respect to any federal or state
securities laws.
(f) My opinions speak as of the date hereof and I assume no
obligation to supplement the foregoing opinions if any applicable laws
change after the date hereof or if I become aware of any facts which might
change such opinions after the date hereof.
This opinion is furnished to you by me as counsel to the Company and
the General Partner and is solely for your benefit and may not be quoted by you
without my prior written consent. Sidley & Austin may rely upon this opinion in
rendering their opinion to you of even date herewith, but this opinion may not
be furnished to, relied on or quoted by any other Person without my prior
written consent.
Very truly yours,
Lawrence L. Dieker
4
<PAGE>
S&A DRAFT
4/28/95
May __, 1995
To Credit Suisse, as Agent, and each of the Banks
Under the Credit Agreement referred to below
c/o Credit Suisse, as Agent
12 East 49th Street
39th Floor
New York, New York 10017
Re: Borden Chemicals and Plastics
Operating Limited Partnership
-----------------------------
Ladies and Gentlemen:
We have acted as special New York counsel to Borden Chemicals and
Plastics Operating Limited Partnership (the "Company"), and to BCP Management,
Inc. (the "General Partner"), the Company's sole general partner, in connection
with the preparation, execution and delivery of that certain Credit Agreement
dated as of May __, 1995 (the "Credit Agreement") among the Company, the
institutions from time to time party thereto as Banks (collectively, the
"Banks"), and Credit Suisse, as agent for the Banks (in such capacity, the
"Agent"). This opinion is being delivered pursuant to Section 5.01(e) of the
Credit Agreement. Terms defined in the Credit Agreement and not otherwise
defined herein are used herein with the meanings as so defined.
In connection with the opinions expressed herein, we have reviewed the
following documents:
(i) The Credit Agreement executed by each of the parties thereto;
(ii) The Notes; and
(iii) The opinion of Lawrence L. Dieker, Vice President, General
Counsel and Secretary of the General Partner.
<PAGE>
The Credit Agreement and the Notes are hereinafter referred to as the
"Loan Documents".
In addition, we have examined originals or copies, certified or
otherwise identified to our satisfaction, of such corporate records, agreements,
documents or instruments and other instruments, as applicable, and of
certificates or comparable documents or instruments of public officials and
other instruments and documents and have made such inquiries of such officers
and representatives and such examination of law as we have deemed relevant
and necessary to form the basis for the opinions hereinafter set forth.
In our examination of the Loan Documents we have assumed the
authenticity of all such documents submitted to us as originals, the conformity
to authentic originals of all such documents submitted to us as copies and the
genuineness of all signatures (other than the signatures of the representatives
of the General Partner). As to all questions of fact material to the opinions
specified herein that have not been independently established, we have relied
upon the representations and warranties of the Company contained in the Credit
Agreement.
In rendering the opinions expressed below, we have assumed, without
any independent investigation or verification of any kind, that each party to
the Loan Documents (other than the Company and the General Partner) has been
duly organized and is validly existing and in good standing under its
jurisdiction of incorporation and has full power and authority to execute and
deliver the Loan Documents and perform the obligations set forth therein, and
that the execution, delivery, and performance of the Loan Documents by such
other parties have been duly authorized by all requisite corporate and other
action on the part of such other parties and such documents have been duly
executed and delivered by such other parties.
To the extent that our opinion expressed below involve conclusions as
to the matters set forth in the opinion referred to above of Lawrence L. Dieker,
we have relied upon and assumed without independent investigation the
correctness of such opinion, and our opinion is subject to the assumptions,
qualifications and limitations set forth in such opinion.
Based upon the foregoing assumptions and examination of documents and
upon such investigation as we have deemed necessary, and subject to the
qualifications set forth in subparagraphs (a) through (f) below, we are of the
opinion that each Loan Document has been executed and delivered by the Company
and constitutes the legal, valid, and binding obligation of the
2
<PAGE>
Company, enforceable against the Company in accordance with its terms.
Our opinions are expressly qualified as follows:
(a) Our opinions are subject to the effect of applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance and other laws affecting
the enforcement of creditors' rights generally and to the effect of general
equitable principles (whether considered in a proceeding in equity or at
law). In applying such principles, a court, among other things, might not
allow a creditor to accelerate maturity of a debt upon the occurrence of a
default deemed immaterial or for non-credit reasons or might decline to
order a debtor to perform covenants. Such principles applied by a court
might include a requirement that a creditor act with reasonableness and in
good faith. Furthermore, a court may refuse to enforce a covenant or any
provision providing for indemnification if and to the extent that it deems
such covenant or indemnification provision to be violative of applicable
public policy.
(b) Our opinions expressed above are limited to the law of the State
of New York and the federal law of the United States, and we do not express
any opinion herein concerning any other law.
(c) We express no opinion as to the effect of the compliance or
noncompliance of the Agent, any of the Banks or the Issuing Bank with any
state or federal laws or regulations applicable to any such party because
of such party's legal or regulatory status, the nature of such party's
business or the authority of any party to conduct business in any
jurisdiction.
(d) We express no opinion at to the effect (if any) of the
law of any jurisdiction (except the State of New York) in which any Bank is
located which limits the rate of interest that such Bank may charge or
collect.
(e) We express no opinion with respect to any federal or state
securities laws.
(f) Our opinions speak as of the date hereof and we assume no
obligation to supplement the foregoing opinions if any applicable laws
change after the date hereof or if we become aware of any facts which might
change such opinions after the date hereof.
3
<PAGE>
This opinion is furnished to you by us as counsel to the Company and
the General Partner and is solely for your benefit and may not be quoted by you
without our prior written consent. This opinion may not be furnished to, relied
on or quoted by any other Person without our prior written consent.
Very truly yours,
4
<PAGE>
Schedule 6.13
-------------
1. The Company acquired a facility in Geismar, Louisiana ("Geismar facility")
and a facility in Illiopolis, Illinois (Illiopolis facility") from Borden,
Inc. ("Borden") in 1987 ("1987 Transaction"). In connection with the 1987
Transaction, Borden, the Company and Borden Chemicals and Plastics Limited
Partnership ("Holding Company") entered into an Environmental Indemnity
Agreement. Under the Environmental Indemnity Agreement, subject to certain
conditions, Borden has agreed to indemnify the Company and the Holding
Company in respect of environmental liabilities arising from facts or
circumstances that existed and requirements in effect prior to November 30,
1987 ("Transfer Date"). The Company is responsible for environmental
liabilities arising from facts or circumstances that existed and
requirements in effect on or after the Transfer Date. With respect to
certain environmental liabilities that may arise from facts or
circumstances that existed and requirements in effect bother prior to and
after the Transfer Date, Borden and the Company will share liabilities on
an equitable basis considering all of the facts and circumstances
including, but not limited to, the relative contribution of each to the
matter and the amount of time each has operated the asset in question (to
the extent relevant). No claims can be made under the Environmental
Indemnity Agreement after November 30, 2002, and no claim can, with certain
exceptions, be made with respect to the first $0.5 million of liabilities
which Borden would otherwise be responsible for thereunder in any year, but
such excluded amounts shall not exceed $3.5 million in the aggregate.
Excluded amounts under the Environmental Indemnity Agreement have
aggregated approximately $2.2 million through December 31, 1994.
In 1985 the Louisiana Department of Environmental Quality ("LDEQ") and
Borden entered into a Settlement Agreement that called for the
implementation of a long term groundwater and soil remediation program at
the Geismar facility. Borden and the Company have implemented the
Settlement Agreement, and have worked in cooperation with the LDEQ to
remediate the groundwater and soil contamination. The Company believes that
it already has sufficiently identified the extent of the groundwater plume.
Nevertheless, the Company may drill and test some additional groundwater
wells for the purpose of addressing issues raised by the LDEQ concerning
whether the extent of the groundwater contamination has been identified.
Borden has paid substantially all the costs to date of the Settlement
Agreement. It is unknown how long the remediation program will continue or
whether the LDEQ will require the Company to incur costs to take further
remedial measures in response to data generated by the potential
additional groundwater wells. If the LDEQ requires the Company to take
further remedial measures, the Company anticipates that a portion of such
costs would be covered by the Environmental Indemnity Agreement. The extent
to which any such costs for further remedial measures required by LDEQ will
be covered by the Environmental Indemnity Agreement will depend, in large
part, on whether such remedial measures respond to facts or circumstances
that existed and requirements in effect prior to the Transfer Date.
<PAGE>
2. On October 27, 1994, the Department of Justice ("DOJ"), at the request of
the United States Environmental Protection Agency ("USEPA"), filed and
enforcement proceeding against the Company, the Holding Company and BCP
Management, Inc. ("BCPM") in federal district court in Louisiana ("Geismar
enforcement proceeding"). The complaint seeks civil penalties for alleged
violations of the Resource Conservation and Recovery Act ("RCRA"), the
Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA") and the Clean Air Act at the Geismar facility, as well as
corrective action at that facility.
The federal government's primary allegations for which it seeks penalties
include claims that: (i) the Company's export to South Africa of a
partially depleted mercuric chloride catalyst for recycling violated RCRA;
(ii) the Company should have applied for a RCRA permit for operation of its
valorization of chlorinated residuals ("VCR") unit and related tanks before
August 1991; and (iii) the Company should have applied for a RCRA permit
for the north trench sump at the Geismar facility because such sump
allegedly contains hazardous waste. The government's allegation include
other claims that are related to these and other alleged RCRA violations,
as well as claims of alleged violations of immediate release reporting
requirements under CERCLA and requirements governing particulate matter
emissions under the Clear Air Act.
In May 1994, the Company filed a Complaint for Declaratory Judgment in
federal district court in Louisiana seeking a determination that: (i) the
partially depleted mercuric chloride catalyst was not a hazardous waste
when it was exported for recycling; (ii) the materials entering the VCR
unit and related tanks are not hazardous waste; and (iii) the north trench
sump does not require a RCRA permit.
If the Company is unsuccessful in prosecuting its Declaratory Judgment
Action, or in defending itself against the Geismar enforcement proceeding,
it could be subject to three types of costs: (i) penalties; (ii) corrective
action; and (iii) costs needed to obtain a RCRA permit. Although the
maximum statutory penalties that would apply in a successful enforcement
action by the DOJ would be in excess of $150 million, the Company believes
that, assuming the Company is unsuccessful and based on information
currently available to it and an analysis of relevant case law and
administrative decisions, the more likely amount of any liability for civic
penalties would not exceed several million dollars.
If the company is unsuccessful in either the Declaratory Judgment Action or
the Geismar enforcement proceeding, it may also be subject to corrective
action. The federal government also can require corrective action for a
facility subject to RCRA permit requirements. Corrective action could
require the Company to conduct investigatory and remedial activities at the
Geismar facility concurrently with the groundwater monitoring and remedial
program that the Company is currently conducting under the Settlement
Agreement with LDEQ. The DOJ has advised the Company that it intends to
seek facility-wide corrective action to address potential contamination at
the Geismar complex.
2
<PAGE>
The EPA has indicated that it intends to evaluate the adequacy of the
existing groundwater remediation project performed under the Settlement
Agreement with LDEQ, and to determine the potential for other areas of
contamination on or near the Geismar facility. The cost of any corrective
action could be material, depending on the scope of such corrective action.
If the Company is unsuccessful in either proceeding concerning its
challenge to the applicability of the RCRA permit requirements to the VCR
unit related tanks, or the north trench sump, it will have to incur
additional permitting costs. The Company estimates that its costs to
complete the permitting process for the VCR unit and related tanks would be
approximately $1.0 million. The Company believes that the costs for
amending its pending RCRA permit application to include the north trench
sump would not be material.
If the United States is successful in requiring the Company to perform
corrective action at the Geismar facility, the Company anticipates that at
least a portion of such corrective action costs would be covered by the
Environmental Indemnity Agreement. The extent to which any penalties or
permit costs that the Company may incur as a result of the Geismar
enforcement action will be subject to the Environmental Indemnity Agreement
will depend, in large part, on whether such penalties or costs are
attributable to facts or circumstances that existed and requirements in
effect prior to November 30, 1987.
3. In February 1993, an EPA Administrative Law Judge held that the Illiopolis
facility had violated CERCLA and the Emergency Planning and Community
Right-to-Know Act ("EPCRA") by failing to report certain valve releases,
which occurred between February 1987 and July 1989, that the Company
believes are exempt from CERCLA and EPCRA reporting. The Company's petition
for reconsideration was denied, a penalty hearing will be scheduled, and
further appeals are possible. The proposed penalty in EPA's administrative
complaint initiating this proceeding in 1991 was $1.0 million.
4. During the early 1990s, the Company shipped partially depleted mercuric
chloride catalyst to the facility of Thor Chemicals S.A. (PTY) Limited
("Thor") in Cato Ridge, South Africa for recovery of mercury. In 1993 the
LDEQ determined that the partially depleted catalyst was not a hazardous
waste, although LDEQ reversed this position in 1994. The Company disagrees
with this reversal.
The Company believes that Thor's operations have included the production of
mercuric chloride catalyst and the recovery of mercury from partially
depleted catalyst. Recovery of mercury at Thor's facility was discontinued
in March 1994 when the Department of Health in South Africa refused to
renew a temporary license that had been granted to Thor. At such time,
there were approximately 2,600 drums of partially depleted catalyst at the
facility which had been shipped by the Company to Thor.
3
<PAGE>
In February 1995, Thor and three of its management personnel were tried by
South Africa for the common law crime of culpable homicide and a number of
alleged violations of the Machinery Occupational Safety Act of 1983
("MOSA"), because of the deaths of two Thor employees. The prosecution
alleged that the deaths were the result of mercury poisoning. In exchange
for a plea by Thor that it had violated provisions of MOSA, the prosecution
dropped the homicide charges against Thor and all the charges against
Thor's management personnel. The court has sentenced Thor to a fine of
R13,500.00, which is equivalent to approximately $3,800. The Company is
aware that relatives of two deceased Thor employees, and a Thor employee
allegedly suffering from mercury poisoning, have filed suit in the United
Kingdom against Thor's parent company for negligence.
On March 24, 1995, the President of South Africa appointed a Commission of
Inquiry and published the following terms of reference for the Commission:
(i) to investigate the history and background of the acquisition of mercury
catalyst stockpiled by Thor as well as additional mercury-containing sludge
on the premises and to report on the further utilization or disposal
thereof; (ii) to recommend the best practical environmental option to
address the problem of mercury-containing catalyst and/or waste currently
on Thor's premises; and (iii) to report the results of the Commission's
inquiry to the President of the Republic of South Africa. In addition, the
Minister of Water Affairs and Forestry has instructed his department's
regional office to investigate alleged water pollution at and near the Thor
facility. The Government of South Africa has not made any allegations or
asserted any claims against the Company.
The contract between the Company and Thor provides that title to, risk of
loss, and all other incidents of ownership of the partially depleted
catalyst would pass from the Company to Thor when the catalyst reached
South Africa. The Company does not believe that it is liable for disposing
of the approximately 2,600 drums of partially depleted catalyst remaining
at the Thor facility. Nonetheless, in the event that the Company should be
required to dispose of the approximately 2,600 drums at the facility
shipped by the Company, the Company estimates that such cost would not be
in excess of $4 million.
With regard to the environmental condition of the Thor facility, the
Company has not been notified by the Government of South Africa that the
Company would be liable for any contamination or other conditions at the
facility, although it is impossible to determine what, if any, allegations
any party may make in connection with the Thor facility in the future.
5. In connection with its environmental due diligence investigation of the
facility in Addis, Louisiana that the Company plans to acquire
("Acquisition") from Occidental Chemical Corporation ("Oxychem"), some
contamination has been identified at that facility. Oxychem has agreed to
indemnify the Company for environmental liabilities arising from
4
<PAGE>
the manufacture, generation, treatment, storage, handling, processing,
disposal, discharge, loss, leak, escape or spillage of any product, waste
or substance generated or handled by Oxychem prior to the closing of the
Acquisition, any condition resulting therefrom relating to acts, omissions
or operations of Oxychem prior to such date, and any duty, obligation or
responsibility imposed on Oxychem prior to such date under environmental
laws in effect prior to such date to address such condition. However,
except with regard to claims arising from Oxychem's disposal of waste at
sites other than the Addis Facility, Oxychem has no indemnification
obligation if the claim for indemnification is the result of a change in
applicable law after the closing of the Acquisition. Oxychem's obligation
to indemnify the Company for environmental liabilities is subject to
certain limits.
5
<PAGE>
Schedule 8.05
-------------
<PAGE>
EXHIBIT 11.10
FORM
OF
ASSIGNMENT AND ACCEPTANCE
DATED______,19__
Reference is made to the Credit Agreement dated as of_____________,
1995 (the "Credit Agreement"), among Borden Chemicals and Plastics Operating
----------------
Limited Partnership (the "Company"), the banks party thereto and Credit Suisse,
as agent for such banks. Capitalized terms used herein and not otherwise defined
shall have the meanings assigned to such terms in the Credit Agreement.
____________________ (the "Assignor") and __________________ (the
--------
"Assignee") agree as follows:
--------
1. (a) The Assignor hereby sells and assigns to the Assignee
(without recourse to the Assignor), and the Assignee hereby purchases and
assumes from the Assignor, a __% interest (the "Percentage Interest") in and to
-------------------
all the Assignor's rights and obligations under the Credit Agreement as of the
Assignment Date (as defined below), including, without limitation, (i) the
Percentage Interest in the Commitment of the Assignor on the Assignment Date,
(ii) the Percentage Interest in all reimbursement obligations (net of
participations therein purchased by other Banks pursuant to the Credit
Agreement) in respect of the Letters of Credit either issued by the Assignor or
in which the Assignor has purchased participations pursuant to the Credit
Agreement, (iii) the Percentage Interest in the Loans owing to the Assignor
outstanding on the Assignment Date, (iv) the Percentage Interest in all unpaid
interest with respect to such Loans and all Commitment Fees and Letter of Credit
Fees due to Assignor in its capacity as a bank accrued to the Assignment Date
and (v) the Percentage Interest in the Note held by the Assignor.
(b) In furtherance of the foregoing (i) to the extent the Assignor is
the issuer of the Letters of Credit, the Assignee hereby purchases a
participation, in the proportion of the Percentage Interest, in all
reimbursement obligations (net of participations therein purchased by other
Banks pursuant to the Credit Agreement) in respect of the Letters of Credit upon
the terms and conditions set forth in the Credit Agreement, with the same effect
as if the Assignee had been a Bank, and had purchased such participation, on the
date each Letter of Credit was issued and (ii) to the extent the Assignor is not
the issuer of the Letters of Credit and has purchased participations in
reimbursement obligations in respect of the Letters of Credit issued by the
Issuing Bank, the Assignee hereby purchases a portion of such participations
(net of portions thereof purchased by other Banks pursuant to the Credit
Agreement), in the proportion of the Percentage Interest, upon the terms and
conditions set forth in the Credit Agreement, with the same effect as if the
Assignee had been a Bank, and had directly purchased participations equal to
such portions, on the date Letter of Credit was issued.
2. The Assignor (a) shall deliver to the Agent a schedule in the
form of Schedule 1 hereto with all blanks appropriately completed (b) makes no
<PAGE>
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Credit Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement, any other Loan
Document or any instrument or document furnished pursuant thereto, other than
that it is the legal and beneficial owner of the interest being assigned by it
hereunder and that such interest is free and clear of any adverse claim known to
the Assignor; (c) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Company or the
performance or observance by any Loan Party of any of its obligations under the
Loan Documents or any other instrument or document furnished pursuant thereto;
and (d) attaches the Note issued to Assignor and requests that the Agent
exchange such Note for a new Note executed by the Company and payable to the
Assignee in a principal amount equal to $___________ [and a New Note executed by
the Company and payable to the Assignor in a principal amount equal to
$____________].
3. The Assignee (i) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (ii) confirms that it
has received a copy of the Credit Agreement, together with copies of the most
recent financial statements delivered pursuant to Section 7.01 thereof and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Assignment and Acceptance; (iii)
agrees that it will, independently and without reliance upon the Agent, the
Assignor or any other Bank and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under the Credit Agreement; (iv) confirms that it
is an Eligible Assignee; (v) appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under the Credit
Agreement as are delegated to the Agent by the terms thereof, together with such
powers as are reasonably incidental thereto; (vi) agrees that it will perform in
accordance with their terms all the obligations which by the terms of the Credit
Agreement are required to be performed by it as a Bank; (vii) agrees that it
will comply with Section 11.11 of the Credit Agreement with respect to
information complying with that provision furnished to it by the Company or the
Assignor with respect to any Loan Party; (viii) confirms that it has delivered a
completed Administrative Questionnaire to the Agent[; and (ix) attaches the
forms prescribed by the Internal Revenue Service of the United States certifying
as to the Assignee's exemption from United States withholding taxes with respect
to all payments to be made to the Assignee under the Credit Agreement or such
other documents as are necessary to indicate that all such payments are subject
to such tax at a rate reduced by an applicable tax treaty]./1/
4. The effective date for this Assignment and Acceptance shall be
______________(the "Assignment Date")./2/ Following the execution of this
---------------
Assignment
______________________
1/ If the Assignee is organized under the laws of a jurisdiction outside the
United States.
2/ See Section 11.11(c) of the Credit Agreement. Such date shall be at least
five Business Days after the execution of this Assignment and Acceptance and
delivery thereof to the Agent unless otherwise agreed to by the Assignor,
the Assignee and the Agent.
-2-
<PAGE>
and Acceptance, it will be delivered to the Agent for acceptance and recording
by the Agent pursuant to Section 11.10 of the Credit Agreement.
5. Upon such acceptance and recording, form amd after the Assignment
Date, (i) the Assignee shall be a party to the Credit Agreement and, to the
extent provided in this Assignment and Acceptance, have the rights and
obligations of a Bank thereunder and (ii) the Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement.
6. Notwithstanding anything to the contrary contained in the Credit
Agreement, the Company shall not be required to reimburse the Agent, the
Assignor or the Assignee for any costs and expenses (including attorney's fees)
incurred by such Person in connection with this Assignment and Acceptance.
7. Upon such acceptance and recording, from and after the Assignment
Date, the Agent shall make all payments in respect of the interest assigned
hereby (including payments of principal, interest, fees and other amounts) to
the Assignee. The Assignor and the Assignee shall make all appropriate
adjustments in payments for periods prior to the Assignment Date by the Agent or
with respect to the making of this assignment directly between themselves.
-3-
<PAGE>
8. This Assignment and Acceptance shall be governed by, and
construed in accordance with, the law of the State of New York.
[NAME OF ASSIGNOR],
By:________________________________
Name:
Title:
[NAME OF ASSIGNEE],
By:________________________________
Name:
Title:
Consented and Agreed to as
of the date first above written.
CREDIT SUISSE,
as Agent
By:________________________________
Name:
Title:
/3/
________________________________
3/ Consent of the Company is required if the Assignee is not a Bank or an
Affiliate of a Bank.
-4-
<PAGE>
SCHEDULE 1
TO
ASSIGNMENT AND ACCEPTANCE
(i) Percentage Interest assigned: ____________%
(ii) Assignee's Commitment (without giving effect $____________
to assignments that have not yet become effective):
(iii) Aggregate outstanding principal amount of Loans $____________
assigned (unreduced by any assignments thereof which
have not yet become effective):
(iv) Amount of reimbursement obligations (net of $____________
participations therein purchased by other Banks
pursuant to the Credit Agreement) in respect of the
Letters of Credit issued by the Assignor:/1/
(v) Amount of participations in reimbursement $____________
obligations in respect of the Letters of Credit
issued by a Bank other than Assignor purchased by
the Assignor (net of portions thereof purchased by
other Banks pursuant to the Credit Agreement):/2/
[NAME OF ASSIGNOR], as Assignor
By:________________________________
Name:
Title:
Dated:_____________________________
[NAME OF ASSIGNEE], as Assignee
By:________________________________
Name:
Title:
Lending Office:
Accepted this ____ day
of _______________________, 1995
CREDIT SUISSE, as Agent
By:________________________________
Name:
Title:
________________________
/1/ If the Assignor is Credit Suisse, clause (iv) should be included and clause
(v) omitted.
/2/ If the Assignor is not Credit Suisse, clause (v) should be included and
clause (iv) omitted.
<PAGE>
REVOLVING CREDIT NOTE
$14,000,000 Dated: May 2, 1995
FOR VALUE RECEIVED, the undersigned, Borden Chemicals and Plastics
Operating Limited Partnership, a Delaware limited partnership (the "Company")
-------
whose sole general partner is BCP Management Inc., HEREBY PROMISES TO PAY to the
order of Bank One, Columbus, NA (the "Bank") on or before the Maturity Date (as
----
hereinafter defined) the lesser of (i) the amount of the Bank's Commitment and
(ii) the aggregate amount of the Loans made by the Bank to the Company and
outstanding on the Maturity Date. The principal amount of each Loan made by the
Bank to the Company pursuant to the Credit Agreement (as hereinafter defined)
shall be due and payable on the dates and in the amounts as are specified in the
Credit Agreement.
The Company promises to pay interest on the unpaid principal amount of
each Loan from the date of such Loan until such principal amount is paid in
full, at such interest rates, and payable at such dates and times, as are
specified in the Credit Agreement dated as of May 2, 1995 (as the same may from
time to time be amended, modified or supplemented, the "Credit Agreement," the
----------------
terms defined therein and not otherwise defined herein being used herein as
therein defined), among the Company, the Bank and certain other banks that are
parties thereto, Credit Suisse, as Agent for the Bank and such other banks.
Both principal and interest are payable in same day finds in lawful
money of the United States of America to Credit Suisse, as Agent, at 12 East
49th Street, New York, New York 10017, or at such other place as the Agent
shall designate in writing to the Company. The amount of each Loan made by the
Bank to the Company and the borrowing date, the rate of interest applicable
thereto and all payments made on account of principal and interest hereof, may
be recorded by the Bank and, prior to any transfer hereof, endorsed on the grid
attached hereto which is part of this Promissory Note; provided, however, that
the failure of the Bank to make such notation or any error therein shall not in
any manner affect the obligation of the Company to repay such Loan in accordance
with the terms of this Promissory Note and the Credit Agreement.
This Promissory Note may be held by the Bank for the account of its
Domestic Lending Office or its Eurodollar Lending Office and may be transferred
from one to the other from time to time as the Bank may determine.
This Promissory Note is one of the Notes referred to in, and is
entitled to the benefits of, the Credit Agreement. The Credit Agreement, among
other things, (i) provides for the making of the Loans by the Bank to the
Company from time to time, the indebtedness of the Company resulting from each
such Loan being evidenced by this Promissory Note and (ii) contains provisions
for acceleration of the maturity hereof upon the happening of certain stated
events, also for prepayments on
<PAGE>
account of principal hereof prior to the maturity hereof the terms and
conditions therein specified, and to the effect that no provision of the Credit
Agreement or this Promissory Note shall require the payment or permit the
collection of interest in excess of the Highest Lawful Rate.
The Company and any and all endorsers, guarantors and sureties
severally waive grace, demand, presentment for payment, notice of dishonor or
default or intent to accelerate, protest and notice of protest and diligence in
collecting and bringing of suit against any party hereto, and agree to all
renewals, extensions or partial payments hereon and to any release or
substitution of security herefor, in whole or in part, with or without notice,
before or after maturity.
This Promissory Note shall be governed by, and construed and
interpreted in accordance with, the law of the State of New York.
BORDEN CHEMICALS AND
PLASTICS OPERATING LIMITED
PARTNERSHIP
By: BCP Management, Inc.
By: /s/ David A. Kelly
--------------------------------------
Name: David A. Kelly
------------------------------------
Title: Director Treasurer and Principal
-----------------------------------
Financial Officer
-2-
<PAGE>
LOANS AND PAYMENTS OF PRINCIPAL AND INTEREST
<TABLE>
<CAPTION>
_____________________________________________________________________________________________________________________________
End of
Borrowing Interest Rate of Amount of Amount of
Date or Amount Period Interest Principal Interest Unpaid
Conversion and Type of Applicable Applicable Paid or Paid or Principal Notation
Date Loan to Loan to Loan Prepaid Prepaid Balance Made By
<S> <C> <C> <C> <C> <C> <C> <C>
=============================================================================================================================
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
</TABLE>
-3-
<PAGE>
REVOLVING CREDIT NOTE
$14,000,000 Dated: May 2, 1995
FOR VALUE RECEIVED, the undersigned, Borden Chemicals and Plastics
Operating Limited Partnership, a Delaware limited partnership (the "Company")
-------
whose sole general partner is BCP Management Inc., HEREBY PROMISES TO PAY to the
order of The Huntington National Bank (the "Bank") on or before the Maturity
----
Date (as hereinafter defined) the lesser of (i) the amount of the Bank's
Commitment and (ii) the aggregate amount of the Loans made by the Bank to the
Company and outstanding on the Maturity Date. The principal amount of each Loan
made by the Bank to the Company pursuant to the Credit Agreement (as hereinafter
defined) shall be due and payable on the dates and in the amounts as are
specified in the Credit Agreement.
The Company promises to pay interest on the unpaid principal amount of
each Loan from the date of such Loan until such principal amount is paid in
full, at such interest rates, and payable at such dates and times, as are
specified in the Credit Agreement dated as of May 2, 1995 (as the same may from
time to time be amended, modified or supplemented, the "Credit Agreement," the
----------------
terms defined therein and not otherwise defined herein being used herein as
therein defined), among the Company, the Bank and certain other banks that are
parties thereto, Credit Suisse, as Agent for the Bank and such other banks.
Both principal and interest are payable in same day funds in lawful
money of the United States of America to Credit Suisse, as Agent, at 12 East
49th Street, New York, New York 10017, or at such other place as the Agent
shall designate in writing to the Company. The amount of each Loan made by the
Bank to the Company and the borrowing date, the rate of interest applicable
thereto and all payments made on account of principal and interest hereof, may
be recorded by the Bank and, prior to any transfer hereof, endorsed on the grid
attached hereto which is part of this Promissory Note; provided, however, that
the failure of the Bank to make such notation or any error therein shall not in
any manner affect the obligation of the Company to repay such Loan in accordance
with the terms of this Promissory Note and the Credit Agreement.
This Promissory Note may be held by the Bank for the account of its
Domestic Lending Office or its Eurodollar Lending Office and may be transferred
from one to the other from time to time as the Bank may determine.
This Promissory Note is one of the Notes referred to in, and is
entitled to the benefits of, the Credit Agreement. The Credit Agreement, among
other things, (i) provides for the making of the Loans by the Bank to the
Company from time to time, the indebtedness of the Company resulting from each
such Loan being evidenced by this Promissory Note and (ii) contains provisions
for acceleration of the maturity hereof upon the happening of certain stated
events, also for prepayments on
<PAGE>
account of principal hereof prior to the maturity hereof upon the terms and
conditions therein specified, and to the effect that no provision of the Credit
Agreement or this Promissory Note shall require the payment or permit the
collection of interest in excess of the Highest Lawful Rate.
The Company and any and all endorsers, guarantors and sureties
severally waive grace, demand, presentment for payment, notice of dishonor or
default or intent to accelerate, protest and notice of protest and diligence in
collecting and bringing of suit against any party hereto, and agree to all
renewals, extensions or partial payments hereon and to any release or
substitution of security herefor, in whole or in part, with or without notice,
before or after maturity.
This Promissory Note shall be governed by, and construed and
interpreted in accordance with, the law of the State of New York.
BORDEN CHEMICALS AND
PLASTICS OPERATING LIMITED
PARTNERSHIP
By: BCP Management, Inc.
By: /s/ David A. Kelly
--------------------------------------
Name: David A. Kelly
------------------------------------
Title: Director, Treasurer and Principal
-----------------------------------
Financial Officer
-2-
<PAGE>
LOANS AND PAYMENTS OF PRINCIPAL AND INTEREST
<TABLE>
<CAPTION>
_____________________________________________________________________________________________________________________________
End of
Borrowing Interest Rate of Amount of Amount of
Date or Amount Period Interest Principal Interest Unpaid
Conversion and Type of Applicable Applicable Paid or Paid or Principal Notation
Date Loan to Loan to Loan Prepaid Prepaid Balance Made By
<S> <C> <C> <C> <C> <C> <C> <C>
=============================================================================================================================
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
</TABLE>
-3-
<PAGE>
REVOLVING CREDIT NOTE
$16,000,000 Dated: May 2, 1995
FOR VALUE RECEIVED, the undersigned, Borden Chemicals and Plastics
Operating Limited Partnership, a Delaware limited partnership (the "Company")
-------
whose sole general partner is BCP Management Inc. , HEREBY PROMISES TO PAY to
the order of Credit Suisse, (the "Bank") on or before the Maturity Date (as
----
hereinafter defined) the lesser of (i) the amount of the Bank's Commitment and
(ii) the aggregate amount of the Loans made by the Bank to the Company and
outstanding on the Maturity Date. The principal amount of each Loan made by the
Bank to the Company pursuant to the Credit Agreement (as hereinafter defined)
shall be due and payable on the dates and in the amounts as are specified in the
Credit Agreement.
The Company promises to pay interest on the unpaid principal amount of
each Loan from the date of such Loan until such principal amount is paid in
full, at such interest rates, and payable at such dates and times, as are
specified in the Credit Agreement dated as of May 2, 1995 (as the same may from
time to time be amended, modified or supplemented, the "Credit Agreement," the
-----------------
terms defined therein and not otherwise defined herein being used herein as
therein defined), among the Company, the Bank and certain other banks that are
parties thereto, Credit Suisse, as Agent for the Bank and such other banks.
Both principal and interest are payable in same day funds in lawful
money of the United States of America to Credit Suisse, as Agent, at 12 East
49th Street, New York, New York 10017, or at such other place as the Agent shall
designate in writing to the Company. The amount of each Loan made by the Bank to
the Company and the borrowing date, the rate of interest applicable thereto and
all payments made on account of principal and interest hereof, may be recorded
by the Bank and, prior to any transfer hereof, endorsed on the grid attached
hereto which is part of this Promissory Note; provided, however, that the
failure of the Bank to make such notation or any error therein shall not in any
manner affect the obligation of the Company to repay such Loan in accordance
with the terms of this Promissory Note and the Credit Agreement.
The Promissory Note may be held by the Bank for the account of its
Domestic Lending Office or its Eurodollar Lending Office and may be transferred
from one to the other from time to time as the Bank may determine.
This Promissory Note is one of the Notes referred to in, and is
entitled to the benefits of, the Credit Agreement. The Credit Agreement, among
other things, (i) provides for the making of the Loans by the Bank to the
Company from time to time, the indebtedness of the Company resulting from each
such Loan being evidenced by this Promissory Note and (ii) contains provisions
for acceleration of the maturity hereof upon the happening of certain stated
events, also for prepayments on
<PAGE>
account of principal hereof prior to the maturity hereof upon the terms and
conditions therein specified, and to the effect that no provision of the Credit
Agreement or this Promissory Note shall require the payment or permit the
collection of interest in excess of the Highest Lawful Rate.
The Company and any and all endorsers, guarantors and sureties
severally waive grace, demand, presentment for payment, notice of dishonor or
default or intent to accelerate, protest and notice of protest and diligence in
collecting and bringing of suit against any party hereto, and agree to all
renewals, extensions or partial payments hereon and to any release or
substitution of security herefor, in whole or in part, with or without notice,
before or after maturity.
This Promissory Note shall be governed by, and construed and
interpreted in accordance with, the law of the State of New York.
BORDEN CHEMICALS AND
PLASTICS OPERATING LIMITED
PARTNERSHIP
By: BCP Management, Inc.
By: /s/ David A. Kelly
---------------------------
Name: DAVID A. KELLY
-------------------------
Title: Director, Treasurer and
------------------------
Principal Financial
-------------------
Officer
-------
-2-
<PAGE>
LOANS AND PAYMENTS OF PRINCIPAL AND INTEREST
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
End of
Borrowing Interest Rate of Amount of Amount of
Date or Amount Period Interest Principal Interest Unpaid
Conversion and Type of Applicable Applicable Paid or Paid or Principal Notation
Date Loan to Loan to Loan Prepaid Prepaid Balance Made By
=============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
</TABLE>
-3-
<PAGE>
REVOLVING CREDIT NOTE
$14,000,000 Dated: May 2, 1995
FOR VALUE RECEIVED, the undersigned, Borden Chemicals and Plastics
Operating Limited Partnership, a Delaware limited partnership (the "Company")
-------
whose sole general partner is BCP Management Inc. , HEREBY PROMISES TO PAY to
the order of NationsBank, N.A. (the "Bank") on or before the Maturity Date (as
----
hereinafter defined) the lesser of (i) the amount of the Bank's Commitment and
(ii) the aggregate amount of the Loans made by the Bank to the Company and
outstanding on the Maturity Date. The principal amount of each Loan made by the
Bank to the Company pursuant to the Credit Agreement (as hereinafter defined)
shall be due and payable on the dates and in the amounts as are specified in the
Credit Agreement.
The Company promises to pay interest on the unpaid principal amount of
each Loan from the date of such Loan until such principal amount is paid in
full, at such interest rates, and payable at such dates and times, as are
specified in the Credit Agreement dated as of May 2, 1995 (as the same may from
time to time be amended, modified or supplemented, the "Credit Agreement," the
----------------
terms defined therein and not otherwise defined herein being used herein as
therein defined), among the Company, the Bank and certain other banks that are
parties thereto, Credit Suisse, as Agent for the Bank and such other banks.
Both principal and interest are payable in same day funds in lawful
money of the United States of America to Credit Suisse, as Agent, at 12 East
49th Street, New York, New York 10017, or at such other place as the Agent shall
designate in writing to the Company. The amount of each Loan made by the Bank to
the Company and the borrowing date, the rate of interest applicable thereto and
all payments made on account of principal and interest hereof, may be recorded
by the Bank and, prior to any transfer hereof, endorsed on the grid attached
hereto which is part of this Promissory Note; provided, however, that the
failure of the Bank to make such notation or any error therein shall not in any
manner affect the obligation of the Company to repay such Loan in accordance
with the terms of this Promissory Note and the Credit Agreement.
This Promissory Note may be held by the Bank for the account of its
Domestic Lending Office or its Eurodollar Lending Office and may be transferred
from one to the other from time to time as the Bank may determine.
This Promissory Note is one of the Notes referred to in, and is
entitled to the benefits of, the Credit Agreement. The Credit Agreement, among
other things, (i) provides for the making of the Loans by the Bank to the
Company from time to time, the indebtedness of the Company resulting from each
such Loan being evidenced by this Promissory Note and (ii) contains provisions
for acceleration of the maturity hereof upon the happening of certain stated
events, also for prepayments on
<PAGE>
account of principal hereof prior to the maturity hereof upon the terms and
conditions therein specified, and to the effect that no provision of the Credit
Agreement or this Promissory Note shall require the payment or permit the
collection of interest in excess of the Highest Lawful Rate.
The Company and any and all endorsers, guarantors and sureties
severally waive grace, demand, presentment for payment, notice of dishonor or
default or intent to accelerate, protest and notice of protest and diligence in
collecting and bringing of suit against any party hereto, and agree to all
renewals, extensions or partial payments hereon and to any release or
substitution of security herefor, in whole or in part, with or without notice,
before or after maturity.
This Promissory Note shall be governed by, and construed and
interpreted in accordance with, the law of the State of New York.
BORDEN CHEMICALS AND
PLASTICS OPERATING LIMITED
PARTNERSHIP
By: BCP Management, Inc.
By: /s/ David A. Kelly
---------------------------
Name: DAVID A. KELLY
-------------------------
Title: Director, Treasurer and
------------------------
Principal Financial
-------------------
Officer
-------
-2-
<PAGE>
LOANS AND PAYMENTS OF PRINCIPAL AND INTEREST
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
End of
Borrowing Interest Rate of Amount of Amount of
Date or Amount Period Interest Principal Interest Unpaid
Conversion and Type of Applicable Applicable Paid or Paid or Principal Notation
Date Loan to Loan to Loan Prepaid Prepaid Balance Made By
<S> <C> <C> <C> <C> <C> <C> <C>
=============================================================================================================================
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
</TABLE>
-3-
<PAGE>
REVOLVING CREDIT NOTE
$14,000,000 Dated: May 2, 1995
FOR VALUE RECEIVED, the undersigned, Borden Chemicals and Plastics
Operating Limited Partnership, a Delaware limited partnership (the "Company")
-------
whose sole general partner is BCP Management Inc., HEREBY PROMISES TO PAY to the
order of Credit Lyonnais (the "Bank") on or before the Maturity Date (as
----
hereinafter defined) the lesser of (i) the amount of the Bank's Commitment and
(ii) the aggregate amount of the Loans made by the Bank to the Company and
outstanding on the Maturity Date. The principal amount of each Loan made by the
Bank to the Company pursuant to the Credit Agreement (as hereinafter defined)
shall be due and payable on the dates and in the amounts as are specified in the
Credit Agreement.
The Company promises to pay interest on the unpaid principal amount of
each Loan from the date of such Loan until such principal amount is paid in
full, at such interest rates, and payable at such dates and times, as are
specified in the Credit Agreement dated as of May 2, 1995 (as the same may from
time to time be amended, modified or supplemented, the "Credit Agreement," the
----------------
terms defined therein and not otherwise defined herein being used herein as
therein defined), among the Company, the Bank and certain other banks that are
parties thereto, Credit Suisse, as Agent for the Bank and such other banks.
Both principal and interest are payable in same day funds in lawful
money of the United States of America to Credit Suisse, as Agent, at 12 East
49th Street, New York, New York 10017, or at such other place as the Agent shall
designate in writing to the Company. The amount of each Loan made by the Bank to
the Company and the borrowing date, the rate of interest applicable thereto and
all payments made on account of principal and interest hereof, may be recorded
by the Bank and, prior to any transfer hereof, endorsed on the grid attached
hereto which is part of this Promissory Note; provided, however, that the
failure of the Bank to make such notation or any error therein shall not in any
manner affect the obligation of the Company to repay such Loan in accordance
with the terms of this Promissory Note and the Credit Agreement.
This Promissory Note may be held by the Bank for the account of its
Domestic Lending Office or its Eurodollar Lending Office and may be transferred
from one to the other from time to time as the Bank may determine.
This Promissory Note is one of the Notes referred to in, and is
entitled to the benefits of, the Credit Agreement. The Credit Agreement, among
other things, (i) provides for the making of the Loans by the Bank to the
Company from time to time, the indebtedness of the Company resulting from each
such Loan being evidenced by this Promissory Note and (ii) contains provisions
for acceleration of the maturity hereof upon the happening of certain stated
events, also for prepayments on
<PAGE>
account of principal hereof prior to the maturity hereof upon the terms and
conditions therein specified, and to the effect that no provision of the Credit
Agreement or this Promissory Note shall require the payment or permit the
collection of interest in excess of the Highest Lawful Rate.
The Company and any and all endorsers, guarantors and sureties
severally waive grace, demand, presentment for payment, notice of dishonor or
default or intent to accelerate, protest and notice of protest and diligence in
collecting and bringing of suit against any party hereto, and agree to all
renewals, extensions or partial payments hereon and to any release or
substitution of security herefor, in whole or in part, with or without notice,
before or after maturity.
This Promissory Note shall be governed by, and construed and
interpreted in accordance with, the law of the State of New York.
BORDEN CHEMICALS AND
PLASTICS OPERATING LIMITED
PARTNERSHIP
By: BCP Management, Inc.
By: /s/ David A. Kelly
----------------------------
Name: DAVID A. KELLY
--------------------------
Title: Director, Treasurer and
-------------------------
Principal Financial
-----------------------
Officer
-------
-2-
<PAGE>
LOANS AND PAYMENTS OF PRINCIPAL AND INTEREST
<TABLE>
<CAPTION>
________________________________________________________________________________________________________
End of
Borrowing Interest Rate of Amount of Amount of
Date or Amount Period Interest Principal Interest Unpaid
Conversion and Type of Applicable Applicable Paid or Paid to Principal Notation
Date Loan to Loan to Loan Prepaid Prepaid Balance Made By
========================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
________________________________________________________________________________________________________
________________________________________________________________________________________________________
________________________________________________________________________________________________________
________________________________________________________________________________________________________
________________________________________________________________________________________________________
________________________________________________________________________________________________________
________________________________________________________________________________________________________
________________________________________________________________________________________________________
________________________________________________________________________________________________________
________________________________________________________________________________________________________
________________________________________________________________________________________________________
________________________________________________________________________________________________________
________________________________________________________________________________________________________
________________________________________________________________________________________________________
________________________________________________________________________________________________________
________________________________________________________________________________________________________
________________________________________________________________________________________________________
________________________________________________________________________________________________________
________________________________________________________________________________________________________
________________________________________________________________________________________________________
</TABLE>
-3-
<PAGE>
REVOLVING CREDIT NOTE
$14,000,000 Dated:May 2,1995
FOR VALUE RECEIVED, the undersigned, Borden Chemicals and Plastics
Operating Limited Partnership, a Delaware limited partnership (the "Company")
-------
whose sole general partner is BCP Management Inc. , HEREBY PROMISES TO PAY to
the order of The Chase Manhattan Bank, (the "Bank") on or before the Maturity
----
Date (as hereinafter defined) the lesser of (i) the amount of the Bank's
Commitment and (ii) the aggregate amount of the Loans made by the Bank to the
Company and outstanding on the Maturity Date. The principal amount of each Loan
made by the Bank to the Company pursuant to the Credit Agreement (as hereinafter
defined)shall be due and payable on the dates and in the amounts as are
specified in the Credit Agreement.
The Company promises to pay interest on the unpaid principal amount of
each Loan from the date of such Loan until such principal amount is paid in
full, at such interest rates, and able at such dates and times, as are specified
in the Credit Agreement dated as of May 2, 1995 (as the same may from time to
time be amended, modified or supplemented, the "Credit Agreement," the terms
----------------
defined therein and not otherwise defined herein being used herein as therein
defined), among the Company, the Bank and certain other banks that are parties
thereto, Credit Suisse, as Agent for the Bank and such other banks .
Both principal and interest are payable in same day funds in lawful
money of the United States of America to Credit Suisse, as Agent, at 12 East
49th Street, New York, New York 10017 or at such other place as the Agent shall
designate in writing to the Company. The amount of each Loan made by the Bank to
the Company and the borrowing date, the rate of interest applicable thereto and
all payments made on account of principal and interest hereof, may be recorded
by the Bank and, prior to any transfer hereof, endorsed on the grid attached
hereto which is part of this Promissory Note; provided, however, that the
failure of the Bank to make such notation or any error therein shall not in any
manner affect the obligation of the Company to repay such Loan in accordance
with the terms of this Promissory Note and the Credit Agreement.
This Promissory Note may be held by the Bank for the account of its
Domestic Lending Office or its Eurodollar Lending Office and may be transferred
from one to the other from time to time as the Bank may determine.
This Promissory Note is one of the Notes referred to in, and is
entitled to the benefits of, the Credit Agreement. The Credit Agreement, among
other things, (i) provides for the making of the Loans by the Bank to the
Company from time to time, the indebtedness of the Company resulting from each
such Loan being evidenced by this Promissory Note and (ii) contains provisions
for acceleration of the maturity hereof upon the happening of certain stated
events, also for prepayments on
<PAGE>
account of principal hereof prior to the maturity hereof upon the terms and
conditions therein specified, and to the effect that no provision of the Credit
Agreement or this Promissory Note shall require the payment or permit the
collection of interest in excess of the Highest Lawful Rate.
The Company and any and all endorsers, guarantors and sureties
severally waive grace, demand, presentment for payment, notice of dishonor or
default or intent to accelerate, protest and notice of protest and diligence in
collecting and bringing of suit against any party hereto, and agree to all
renewals, extensions or partial payments hereon and to any release or
substitution of security herefor, in whole or in part, with or without notice,
before or after maturity.
This Promissory Note shall be governed by, and construed and
interpreted in accordance with, the law of the State of New York.
BORDEN CHEMICALS AND
PLASTICS OPERATING LIMITED
PARTNERSHIP
By: BCP Management, Inc.
By: /s/ David A. Kelly
--------------------------
Name: David A. Kelly
------------------------
Title: Director, Treasurer and
-----------------------
Principal Financial Officer
---------------------------
-2-
<PAGE>
LOANS AND PAYMENTS OF PRINCIPAL AND INTEREST
<TABLE>
<CAPTION>
_______________________________________________________________________________________________________
End of
Borrowing Interest Rate of Amount of Amount of
Date or Amount Period Interest Principal Interest Unpaid
Conversion and Type of Applicable Applicable Paid or Paid or Principal Notation
Date Loan to Loan to Loan Prepaid Prepaid Balance Made By
=======================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
_______________________________________________________________________________________________________
_______________________________________________________________________________________________________
_______________________________________________________________________________________________________
_______________________________________________________________________________________________________
_______________________________________________________________________________________________________
_______________________________________________________________________________________________________
_______________________________________________________________________________________________________
_______________________________________________________________________________________________________
_______________________________________________________________________________________________________
_______________________________________________________________________________________________________
_______________________________________________________________________________________________________
_______________________________________________________________________________________________________
_______________________________________________________________________________________________________
_______________________________________________________________________________________________________
_______________________________________________________________________________________________________
_______________________________________________________________________________________________________
_______________________________________________________________________________________________________
_______________________________________________________________________________________________________
_______________________________________________________________________________________________________
</TABLE>
-3-
<PAGE>
REVOLVING CREDIT NOTE
$14,000,000 Dated: May 2, 1995
FOR VALUE RECEIVED, the undersigned, Borden Chemicals and Plastics
Operating Limited Partnership, a Delaware limited partnership (the "Company")
-------
whose sole general partner is BCP Management Inc., HEREBY PROMISES TO PAY to the
order of Wachovia Bank of Georgia, N.A. (the "Bank") on or before the Maturity
----
Date (as hereinafter defined) the lesser of (i) the amount of the Bank's
Commitment and (ii) the aggregate amount of the Loans made by the Bank to the
Company and outstanding on the Maturity Date. The principal amount of each Loan
made by the Bank to the Company pursuant to the Credit Agreement (as hereinafter
defined) shall be due and payable on the dates and in the amounts as are
specified in the Credit Agreement.
The Company promises to pay interest on the unpaid principal amount of
each Loan from the date of such Loan until such principal amount is paid in
full, at such interest rates, and payable at such dates and times, as are
specified in the Credit Agreement dated as of May 2, 1995 (as the same may from
time to time be amended, modified or supplemented, the "Credit Agreement," the
----------------
terms defined therein and not otherwise defined herein being used herein as
therein defined), among the Company, the Bank and certain other banks that are
parties thereto, Credit Suisse, as Agent for the Bank and such other bank.
Both principal and interest are payable in same day funds in lawful
money of the United States of America to Credit Suisse, as Agent, at 12 East
49th Street, New York, New York 10017, or at such other place as the Agent shall
designate in writing to the Company. The amount of each Loan made by the Bank to
the Company and the borrowing date, the rate of interest applicable thereto and
all payments made on account of principal and interest hereof, may be recorded
by the Bank and, prior to any transfer hereof, endorsed on the grid attached
hereto which is part of this Promissory Note; provided, however, that the
failure of the Bank to make such notation or any error therein shall not in any
manner affect the obligation of the Company to repay such Loan in accordance
with the terms of this Promissory Note and the Credit Agreement.
This Promissory Note may be held by the Bank for the account of its
Domestic Lending Office or its Eurodollar Lending Office and may be transferred
from one to the other from time to time as the Bank may determine.
This Promissory Note is one of the Notes referred to in, and is
entitled to the benefits of, the Credit Agreement. The Credit Agreement, among
other things, (i) provides for the making of the Loans by the Bank to the
Company from time to time, the indebtedness of the Company resulting from each
such Loan being evidenced by this Promissory Note and (ii) contains provisions
for acceleration of the maturity hereof upon the happening of certain stated
events, also for prepayments on
<PAGE>
account of principal hereof prior to the maturity hereof upon the terms and
conditions therein specified, and to the effect that no provision of the Credit
Agreement or this Promissory Note shall require the payment or permit the
collection of interest in excess of the Highest Lawful Rate.
The Company and any and all endorsers, guarantors and sureties
severally waive grace, demand, presentment for payment, notice of dishonor or
default or intent to accelerate, protest and notice of protest and diligence in
collecting and bringing of suit against any party hereto, and agree to all
renewals, extensions or partial payments hereon and to any release or
substitution of security herefor, in whole or in part, with or without notice,
before or after maturity.
This Promissory Note shall be governed by, and construed and
interpreted in accordance with, the law of the State of New York.
BORDEN CHEMICALS AND
PLASTICS OPERATING LIMITED
PARTNERSHIP
By: BCP Management, In.
By: /s/ David A. Kelly
-------------------------------
Name: David A. Kelly
-----------------------------
Title: Director, Treasurer and
-----------------------
Principal Financial
-------------------
Officer
-------
-2-
<PAGE>
LOANS AND PAYMENTS OF PRINCIPAL AND INTEREST
<TABLE>
<CAPTION>
_______________________________________________________________________________________________________
End of
Borrowing Interest Rate of Amount of Amount of
Date or Amount Period Interest Principal Interest Unpaid
Conversion and Type of Applicable Applicable Paid or Paid or Principal Notation
Date Loan to Loan to Loan Prepaid Prepaid Balance Made By
=======================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
_______________________________________________________________________________________________________
_______________________________________________________________________________________________________
_______________________________________________________________________________________________________
_______________________________________________________________________________________________________
_______________________________________________________________________________________________________
_______________________________________________________________________________________________________
_______________________________________________________________________________________________________
_______________________________________________________________________________________________________
_______________________________________________________________________________________________________
_______________________________________________________________________________________________________
_______________________________________________________________________________________________________
_______________________________________________________________________________________________________
_______________________________________________________________________________________________________
_______________________________________________________________________________________________________
_______________________________________________________________________________________________________
_______________________________________________________________________________________________________
_______________________________________________________________________________________________________
_______________________________________________________________________________________________________
_______________________________________________________________________________________________________
</TABLE>
-3-
<PAGE>
BORDEN CHEMICALS AND PLASTICS
OPERATING LIMITED PARTNERSHIP
OFFICER'S CERTIFICATE
I, Lawrence L. Dieker, Vice President, General Counsel and Secretary
of BCP Management, Inc., a Delaware corporation and the sole general partner
(the "General Partner") of Borden Chemicals and Plastics Operating Limited
Partnership, a Delaware limited partnership (the "Company"), in connection with
the execution and delivery of the Credit Agreement (the "Credit Agreement", the
terms defined therein being used herein as therein defined) dated as of May 2,
1995 among the Company, the banks and other financial institutions listed on the
signature pages under the caption "Banks" and Credit Suisse, ("Credit Suisse"),
individually as a Bank and as agent for the other Banks (in such capacity
together with any other Person who becomes the Agent, the "Agent"), which Credit
Agreement provides for loans for the benefit of the Company not to exceed
$100,000,000 in aggregate unpaid principal amount DO HEREBY CERTIFY AS FOLLOWS
on behalf of the General Partner:
1. Attached hereto as Exhibit A is true and complete copy of the
certificate of incorporation, as amended and in effect, of the General Partner.
2. Attached hereto as Exhibit B is a true and complete copy of the
bylaws, as amended and in effect, of the General Partner.
3. Attached hereto as Exhibit C is a true and correct copy of the
Amended and Restated Agreement of Limited Partnership of the Company.
4. Attached hereto as Exhibit D is a true and correct copy of
resolutions duly adopted by the Board of Directors of the General Partner. Such
resolutions have not been amended, modified or revoked and are in full force and
effect on the date hereof.
5. The persons named below are duly elected officers of the Company,
now hold the offices set forth opposite their respective names and the signature
opposite the name and title of each of them is his or her true and correct
signature:
<PAGE>
Name Office Signature
---- ------ ---------
David A. Kelly Director, Treasurer /s/ David A. Kelly
- -------------------- ------------------------
and Principal Financial
Officer
Lawrence L. Dieker Vice President, General /s/ Lawrence A Dieker
- -------------------- Counsel and Secretary ------------------------
6. The representations and warranties made by the Company in any loan
Document are true and correct in all material respects and no dissolution or
liquidation proceedings with respect to the Company have been commenced.
7. There exists on the date hereof no Event of Default.
8. The closing under the Asset Transfer Agreement dated as of August
12, 1994 between Occidental Chemical Corporation and the Company, as amended,
has occurred substantially as described in the Prospectus.
9. The closing under the Underwriting Agreement dated April 21, 1995
between the Company, BCPM, BLP Finance Corporation and CS First Boston
Corporation has occurred and the Securities have been issued as described in the
Prospectus.
10. The Wachovia Credit Agreement has been terminated.
IN WITNESS WHEREOF, I have signed this certificate as of the 2nd day
---
of May , 1995.
------
/s/ Lawrence L. Dieker
---------------------
Secretary
-2-
<PAGE>
EXHIBIT A
State of Delaware
PAGE 1
Office of the Secretary of State
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF "BCP MANAGEMENT, INC.", FILED IN THIS OFFICE ON THE SIXTH DAY
OF AUGUST, A.D. 1987, AT 10 O'CLOCK A.M.
[SEAL] /s/ Edward J. Freel
------------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION:
7474495
2134202 8100 DATE:
04-17-95
950083756
<PAGE>
CERTIFICATE OF INCORPORATION
OF
BCP MANAGEMENT, INC.
FIRST: The name of the Corporation is BCP Management, Inc.
SECOND: The address of the Corporation's registered office in the
State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City
of Wilmington, County of New Castle. The name of the Corporation's registered
agent at such address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of Delaware.
FOURTH: The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 10,000 shares of common stock with
a par value of one dollar ($1.00) per share.
FIFTH: The name and mailing address of the incorporator of the
Corporation are as follows:
Name Address
---- -------
Steven Sutherland One First National Plaza
Suite 4200
Chicago, Illinois 60603
SIXTH: The name and mailing address of the person who is to serve as
director until the first annual meeting of stockholders or until his successor
is elected and qualified is as follows:
Name Address
---- -------
Lawrence O. Doza c/o Borden, Inc.
277 Park Avenue
New York, New York 10172
SEVENTH: In furtherance and not in limitation of the powers conferred
by statute, the Board of Directors is expressly authorized to make, alter or
repeal the By-Laws of the Corporation, subject to any specific limitation on
such power provided by any By-Laws adopted by the stockholders.
EIGHTH: Elections of directors need not be by written ballot unless
the By-Laws of the Corporation so provide.
<PAGE>
NINTH: The Corporation is to have perpetual existence.
TENTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon the
stockholders herein are granted subject to this reservation.
ELEVENTH: A. 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 General Corporation Law
of the State of Delaware, or (iv) for any transaction from which the director
derived an improper personal benefit. If the General Corporation Law of the
State of Delaware is amended to authorize corporate action further eliminating
or limiting the personal liability of directors, then the liability of a
director of the Corporation shall be eliminated or limited to the fullest extent
permitted by the General Corporation Law of the State of Delaware, as so
amended. Any repeal or modification of this Section A by the stockholders of the
Corporation shall not adversely affect any right or protection of a director of
the Corporation existing at the time of such repeal or modification.
B. (1) Each person who was or is made a party or is threatened to
be made a party to or is involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (hereinafter a "proceeding"),
by reason of the fact that he or she or a person of whom he or she is the legal
representative is or was a director, officer or employee of the Corporation or
is or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation or of a partnership, joint venture,
trust or other enterprise, including service with respect to employee benefit
plans, whether the basis of such proceeding is alleged action in an official
capacity as a director, officer, employee or agent or in any other capacity
while serving as a director, officer, employee or agent, shall be indemnified
and held harmless by the Corporation to the fullest extent authorized by the
General Corporation Law of the State of Delaware as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Corporation to provide broader indemnification
rights than said law permitted the Corporation to provide prior to such
amendment), against all expense, liability and loss (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and
-2-
<PAGE>
amounts paid or to be paid in settlement) reasonably incurred or suffered by
such person in connection therewith and such indemnification shall continue as
to a person who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of his or her heirs, executors and administrators;
provided, however, that except as provided in paragraph (2) of this Section B
- -------- -------
with respect to proceedings seeking to enforce rights to indemnification, the
Corporation shall indemnify any such person seeking indemnification in
connection with a proceeding (or part thereof) initiated by such person only if
such proceeding (or part thereof) was authorized by the Board of Directors of
the Corporation. The right to indemnification conferred in this Section B shall
be a contract right and shall include the right to be paid by the Corporation
the expenses incurred in defending any such proceeding in advance of its final
disposition; provided, however, that if the General Corporation Law of the State
-------- -------
of Delaware requires, the payment of such expenses incurred by a director or
officer in his or her capacity as a director or officer (and not in any other
capacity in which service was or is rendered by such person while a director or
officer, including, without limitation, service to an employee benefit plan) in
advance of the final disposition of & proceeding, shall be made only upon
delivery to the Corporation of an undertaking by or on behalf of such director
or officer, to repay all amounts so advanced if it shall ultimately be
determined that such director or officer is not entitled to be indemnified under
this Section B or otherwise.
(2) If a claim under paragraph (1) of this Section B is not paid in
full by the Corporation within thirty days after a written claim has been
received by the Corporation, the claimant may at any time thereafter bring suit
against the Corporation to recover the unpaid amount of the claim and, if
successful in whole or in part, the claimant shall be entitled to be paid also
the expense of prosecuting such claim. It shall be a defense to any such action
(other than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition where the required
undertaking, if any is required, has been tendered to the Corporation) that the
claimant has not met the standards of conduct which make it permissible under
the General Corporation Law of the State of Delaware for the Corporation to
indemnify the claimant for the amount claimed, but the burden of proving such
defense shall be on the Corporation. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel or stockholders) to
have made a determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because he or she
has met the applicable standard of conduct set forth in the General Corporation
Law of the State of Delaware, nor an actual determination by the Corporation
(including its Board of
-3-
<PAGE>
Directors, independent legal counsel or stockholders) that the claimant has not
met such applicable standard of conduct, shall be a defense to the action or
create a presumption that the claimant has not met the applicable standard
of conduct.
(3) The right to indemnification and the payment of expenses incurred
in defending a proceeding in advance of its final disposition conferred in this
Section B shall not be exclusive of any other right which any person may have
or hereafter acquire under any statute, provision of the Certificate of
incorporation, By-Law, agreement, vote of stockholders or disinterested
directors or otherwise.
(4) The Corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of the Corporation
or another Corporation, partnership, joint venture, trust or other enterprise
against any expense, liability or loss, whether or not the Corporation would
have the power to indemnify such person against such expense, liability or loss
under the General Corporation Law of the State of Delaware.
(5) The Corporation may, to the extent authorized from time to time
by the Board of Directors, grant rights to indemnification, and rights to be
paid by the Corporation the expenses incurred in defending any proceeding in
advance of its final disposition, to any agent of the Corporation to the fullest
extent of the provisions of this Section B with respect to the indemnification
and advancement of expenses of directors, officers and employees of the
Corporation.
THE UNDERSIGNED, being the incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the General Corporation Law of
the State of Delaware, makes this Certificate, hereby declaring and certifying
that the facts herein stated are true, and accordingly has hereunto set his hand
this 5th day of August, 1987.
---
/s/ Steven Sutherland
-----------------------------
Steven Sutherland
-4-
<PAGE>
BYLAWS
------
OF
--
BCP MANAGEMENT, INC.
--------------------
ARTICLE I
---------
Stockholders' Meetings
----------------------
Section 1. Annual Meeting. The annual meeting of stockholders for
--------------
the election of directors and the transaction of such other business as may
properly come before it shall be held on the first Monday of April of each year,
or such other date, and at such time and place, within or without the State of
Delaware, as shall be determined by resolution of the Board of Directors. If the
day fixed for the annual meeting is a legal holiday, such meeting shall be held
on the next succeeding business day.
Section 2. Special Meeting. Special meetings of stockholders may be
---------------
called by the Board of Directors or the Chairman of the Board of Directors and
shall be called by the Chairman of the Board of Directors or the Secretary at
the request in writing, stating the purpose or purposes thereof, of holders of
at least a majority of the shares of capital stock of the Corporation issued and
outstanding and entitled to vote. Special meetings of stockholders may be held
at such places, within or without the State of Delaware, as may be specified in
the call of any meeting.
Section 3. Notice of Meetings and Adjourned Meetings. Written notice
-----------------------------------------
of every meeting of stockholders stating the place, date, time and purposes
thereof, shall, except when otherwise required by the laws of Delaware, be
mailed at least ten but not more than sixty days prior to the meeting to each
stockholder of record entitled to vote thereat. Any meeting at which a quorum of
stockholders is present, in person or by proxy, may adjourn from time to time
without notice other than announcement at such meeting until its business is
completed. 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 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 4. Quorum. The holders of a majority of the shares of
------
capital stock issued and outstanding and entitled to vote, present in person or
by proxy, shall, except as otherwise provided by law, constitute a quorum for
<PAGE>
the transaction of business at all meetings of stockholders. If at any meeting a
quorum is not present, the chairman of the meeting or the holders of the
majority of the shares of stock present or represented may adjourn the meeting
from time to time until a quorum is present. At the adjourned meeting the
Corporation may transact any business that might have been transacted at the
original meeting. If the adjournment is for more than thirty days, or if 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. The stockholders present or represented at a duly called
or held meeting at which a quorum is present may continue to transact business
until final adjournment notwithstanding the withdrawal of enough stockholders to
leave less than a quorum.
Section 5. Voting. Except as provided in the Certificate of
------
Incorporation of the Corporation, each holder of capital stock entitled to vote
at a stockholders' meeting shall, as to all matters in respect of which such
capital stock has voting rights, be entitled to one vote in person or by written
proxy for each share of capital stock owned of record by him, but no proxy shall
be voted or acted upon after three years from its date unless the proxy provides
for a longer period. No vote upon any matter need be by ballot unless demanded
by the holders of at least ten per cent of the shares represented and entitled
to vote at the meeting. All elections shall be decided by a plurality of the
votes cast and all other questions or matters shall be decided by a majority of
the votes cast, unless otherwise required by the laws of Delaware, the
Certificate of Incorporation or these bylaws.
Section 6. Consent of Stockholders in Lieu of Meeting. Any action
------------------------------------------
required to be taken or which may be taken at any annual or special meeting of
stockholders of the Corporation may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Prompt notice of the taking of the corporate action without a meeting
by less than unanimous written consent shall be given to those stockholders who
have not consented in writing.
-2-
<PAGE>
ARTICLE II
----------
Directors
---------
Section 1. Number, Election and Term of Office of Directors. The
------------------------------------------------
number of directors shall be fixed from time to time resolution of the Board of
Directors. Each director shall hold office until his successor is elected and
qualified or until his earlier resignation or removal. Directors need not be
stockholders.
Section 2. Resignation or Removal. Any director may resign by giving
----------------------
written notice to the Board of Directors or the Chairman of the Board of
Directors, any such resignation shall take effect at the time of receipt of
notice thereof or at any later time specified therein, and, unless expressly
required, acceptance of such resignation shall not be necessary to make it
effective. Except as otherwise required by the Certificate of Incorporation, any
director may be removed, with or without cause, by the affirmative vote or
consent of the holders of a majority of the shares of capital stock issued and
outstanding and entitled to vote.
Section 3. Vacancies. Except as otherwise required by the
---------
Certificate of Incorporation, any vacancy occurring in the Board of Directors
and any directorship to be filled by reason of an increase in the number of
directors may be filled by a majority of the directors then in office, although
less than a quorum, or by the stockholders. A director elected to fill a vacancy
shall hold office until his successor is elected and qualified or until his
earlier resignation or removal. Except as otherwise required by the Certificate
of Incorporation, when one or more directors shall resign from the Board of
Directors, effective at a future date, a majority of the directors then in
office, including those who have so resigned, shall have the 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 provided in this Section for the filling of other vacancies.
Section 4. Place of Meetings. Meetings of the Board of Directors may
-----------------
be held at such places, within or without the State of Delaware, as the Board of
Directors may from time to time determine or as may be specified in the call of
any meetings.
Section 5. Regular Meetings. A regular annual meeting of the Board
----------------
of Directors shall be held without call or notice immediately after and at the
same general place as the annual meeting of stockholders, or at such other time
or place as determined by the stockholders at such meeting, for
-3-
<PAGE>
the purpose of organizing the Board of Directors, electing officers and
transacting any other business that may properly come before the meeting.
Additional regular meetings of the Board of Directors may be held without call
or notice at such place and at such time as shall be fixed by resolution of the
Board of Directors.
Section 6. Special Meetings. Special meetings of the Board of
----------------
Directors may be called by the Chairman of the Board of Directors or at least a
majority of the directors then in office. Notice of special meetings either
shall be mailed by the Secretary to each director at least three days before the
meeting or shall be given personally or telegraphed or telecopied to each
director by the Secretary at least twenty-four hours before this meeting. Such
notice shall set forth the date, time and place of such meeting but need not,
unless otherwise required by law, state the purpose of the meeting.
Section 7. Quorum and Voting. A majority of the entire Board of
-----------------
Directors shall constitute a quorum for the transaction of business at any
meeting of the Board of Directors. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the
Board of Directors unless otherwise provided by the laws of Delaware, the
Certificate of Incorporation or these bylaws. A majority of the directors
present at any meeting at which a quorum is present may adjourn the meeting to
any other date, time or place without further notice other than announcement at
the meeting. If at any meeting a quorum is not present, a majority of the
directors present may adjourn the meeting to any other date, time or place
without notice other than announcement at the meeting until a quorum is present.
Section 8. Compensation. The directors shall be paid their
------------
reasonable expenses, if any, of attendance at each meeting of the Board of
Directors and may be paid a fixed sum for attendance at each meeting of the
Board of Directors or a stated salary as director. No such payment shall
preclude any director from serving the Corporation in any other capacity and
receiving compensation therefor.
Section 9. Telephonic Meetings. Members of the Board of Directors
-------------------
may participate in a meeting of the Board of Directors, by means of conference
telephone or other similar communications equipment by means of which all
persons participating in the meeting can hear each other, and participation in a
meeting pursuant to this Section shall constitute presence in person at such
meeting.
Section 10. Independent Committee. So long as the Corporation is a
---------------------
general partner of Borden Chemicals and
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<PAGE>
Plastics Limited Partnership ("the Partnership"), the Board of Directors shall
from time to time by resolution designate an Independent Committee to consist of
three members of the Board of Directors, each of which shall not be an officer
of the Corporation or of any corporate stockholder of the Corporation which owns
a majority of the capital stock of the Corporation. The Independent Committee
shall examine and resolve any matter required to be submitted to such Committee
by the Agreement of Limited Partnership of the Partnership and any matter
submitted to such Committee by a vote of the majority of the entire Board of
Directors. The Board of Directors shall have the power at any time to change the
membership of such Committee and to fill vacancies in such Committee, subject to
the requirements in the first sentence of this Section 10. The Independent
Committee may make rules for the conduct of its business and may appoint such
committees and assistants as it shall from time to time deem necessary.
ARTICLE III
-----------
Officers
--------
Section 1. Number, Qualification, Election and Term of Office. The
--------------------------------------------------
officers of the Corporation shall be a Chairman of the Board, a President, a
Secretary, a Treasurer, and such other officers, including one or more
Vice-Presidents (who may be designated by different classes) and one or more
Assistant Secretaries and Assistant Treasurers, as the Board of Directors may
from time to time deem advisable. Each officer of the Corporation shall be
elected by the Board of Directors and shall hold office until his successor
shall have been elected and qualified, or until his earlier resignation or
removal.
Section 2. Removal and Vacancies. All officers shall serve at the
---------------------
pleasure of the Board of Directors. Any officer may be removed by the Board of
Directors at any time with or without cause. A vacancy in any office shall be
filled by the Board of Directors.
Section 3. The Chairman of the Board. The Chairman of the Board of
-------------------------
Directors shall be the chief executive officer of the Corporation and shall
preside at all meetings of stockholders and at all meetings of the Board of
Directors. He shall have general and active supervision over the property
business and affairs of the Corporation. The Chairman of the Board may sign,
execute and deliver in the name of the Corporation powers of attorney,
contracts, bonds and other obligations, and shall have such further duties as
are incident to the office of the Chairman of the Board of
-5-
<PAGE>
Directors or prescribed by law or as shall from time to time be designated by
the Board of Directors.
Section 4. The President. The President shall, subject to the
-------------
direction and control of the Chairman of the Board of Directors, be the chief
operating officer of the Corporation and have such duties and powers as shall
from time to time be designated by the Board of Directors or by the Chairman of
the Board of Directors.
Section 5. The Vice-Presidents. In the absence of the President or
-------------------
in the event of his inability or refusal to act, the Vice-President, if any (or,
if there be more than one, the Vice-Presidents in the order designated by the
Chairman of the Board of Directors, subject to revision by the Board of
Directors, and, absent such designation or revision, in the order of their first
election to that office), shall perform the duties and discharge the
responsibilities of the President. They shall have such other duties and powers
as shall from time to time be designated by the Board of Directors or by the
Chairman of the Board of Directors.
Section 6. The Secretary and Assistant Secretaries. The Secretary,
---------------------------------------
or in the event of his absence or inability or refusal to act, the Assistant
Secretary, if any (or, if there be more than one, the Assistant Secretaries in
the order designated by the Chairman of the Board of Directors, subject to
revision by the Board of Directors, and, absence such designation or revision,
in order of their first election to that office), shall be the keeper of the
corporate seal and records (except those kept by the Treasurer), and shall give
notice of, attend and record minutes of meetings of stockholders and directors.
The Secretary or any Assistant Secretary shall have authority to affix the
corporate seal to any instrument requiring it, and when so affixed, the
corporate seal may be attested by the signature of the Secretary or any
Assistant Secretary. The Secretary and any Assistant Secretaries shall have such
other duties as may be prescribed by the Board of Directors or by the Chairman
of the Board of Directors.
Section 7. The Treasurer and Assistant Treasurers. The Treasurer,
--------------------------------------
or, in the event of his absence or inability or refusal to act, the Assistant
Treasurer, if any (or, if there be more than one, the Assistant Treasurers in
the order designated by the Chairman of the Board of Directors, subject to
revision by the Board of Directors, and, absent such designation or revision, in
the order of their first election to that office), shall be responsible for (i)
the custody and safekeeping of all of the funds of the Corporation, (ii) the
receipt and deposit of all moneys paid to the Corporation, (iii) where necessary
or appropriate, the endorsement for
-6-
<PAGE>
collection on behalf of the Corporation of all checks, drafts, notes, and other
obligations payable to the Corporation, (iv) the disbursement of funds of the
Corporation under such rules as the Board of Directors may from time to time
adopt, (v) keeping full and accurate records of all receipts and disbursements,
and (vi) the performance of such further duties as are incident, to the office
of Treasurer or as may from time to time be prescribed by the Board of Directors
or by the Chairman of the Board of Directors.
Section 8. Other Officers. Any other officers elected pursuant to
--------------
Section 1 of this Article III shall have such duties as are prescribed by the
Board of Directors.
ARTICLE IV
----------
Stock Certificates and Transfer Books
-------------------------------------
Section 1. Certificate. Every stockholder shall be entitled to have
-----------
a certificate, in such form as the Board of Directors shall from time to time
approve, signed by or in the name of the Corporation by the Chairman of the
Board of Directors, the President or any Vice-President and by the Treasurer, an
Assistant Treasurer, the Secretary or an Assistant Secretary, certifying the
number of shares owned by him.
Section 2. Facsimile Signatures. Where a certificate is
--------------------
countersigned (a) by a transfer agent other than the Corporation or its
employee, or (b) by a registrar other than the Corporation or its employee, any
other signature on the certificate may be a facsimile. In case any officer,
transfer agent or registrar who has signed or whose facsimile signature has been
placed upon a certificate shall have ceased to be such officer, transfer agent
or registrar before such certificate is issued, it may be issued by the
Corporation with the same effect as if he were such officer, transfer agent or
registrar at the date of issue.
Section 3. Record Ownership. A record of the name and address of the
----------------
holder of each certificate, the number of shares represented thereby, and the
date of issue, thereof, shall be made on the Corporation's books. The
Corporation shall be entitled to treat the holder of record of any share or
shares of stock as the holder in fact thereof, and accordingly, shall not be
bound to recognize any equitable or other claim to or interest in any share on
the part of any other person whether or not it shall have express or other
notice thereof, except as required by the laws of the State of Delaware.
<PAGE>
Section 4. Lost Certificates. Any person claiming a stock
-----------------
certificate in lieu of one Lost, stolen, mutilated or destroyed shall give the
Corporation an affidavit as to his ownership of the certificate and of the facts
as to its loss, theft, mutilation or destruction. He shall also, if required by
the Board of Directors, give the Corporation a bond, in such form and amount
as may be approved by the Board of Directors, sufficient to indemnify the
Corporation against any claim that may be made against it on account of the
alleged loss or theft of the certificate or the issuance of a new certificate.
Section 5. Transfer Agent or Registrar. The Corporation may maintain
---------------------------
one or more transfer offices or agencies, each in charge of a transfer agent
designated by the Board of Directors, where the shares of stock of the
Corporation shall be transferable. The Corporation may also maintain one or more
registry offices, each in charge of a registrar designated by the Board of
Directors, wherein such shares of stock shall be registered.
Section 6. Transfer of Stock. Transfer of shares shall, except as
-----------------
provided in Section 4 of this Article IV, be made on the books of the
Corporation only by direction of the person named in the certificate or his
attorney, lawfully constituted in writing, and only upon the surrender for
cancellation of the certificate therefor, duly endorsed or accompanied by a
written assignment of the shares evidenced thereby.
Section 7. Fixing Date for Determination of Stockholders of Record.
-------------------------------------------------------
(a) In order that the Corporation may determine the stockholders entitled to
notice of or to Vote at any meeting of stockholders or any adjournment thereof,
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 capital 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 than ten days before the date of such
meeting, nor more than sixty days prior to any other action.
(b) If no record date is fixed:
(1) The record date for determining stockholders entitled to notice
of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the
day on which the meeting is held.
-8-
<PAGE>
(2) The record date for determining stockholders entitled to express
consent to corporate action in writing without a meeting, when no prior
action by the Board of Directors is necessary, shall be the day on which
the first written consent is expressed.
(3) The record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
(c) A determination of stockholders of record entitled to notice of
or to vote at a meeting of stockholders shall apply to any adjournment of
the meeting; provided, however, that the Board of Directors may fix a new
-------- -------
record date for the adjourned meeting.
ARTICLE V
---------
General Provisions
------------------
Section 1. Offices. The registered office of the Corporation in
-------
Delaware shall be in the City of Wilmington, County of New Castle. The
Corporation may have such other offices as the Board of Directors may from time
to time determine. The books of the Corporation may be kept outside the State of
Delaware.
Section 2. Seal. The corporation's seal shall have inscribed thereon
----
the name of the Corporation, the year of its organization and the words
"corporate seal - Delaware."
Section 3. Fiscal Year. The fiscal year of the Corporation shall be
-----------
fixed by resolution of the Board of Directors.
Section 4. Inspection of Books. Subject to laws of the State of
-------------------
Delaware, the directors shall determine from time to time whether, and, if
allowed, when and under what conditions and regulations the accounts and books
of the Corporation (except such as may by statute be specifically open to
inspection), or any of them, shall be open to the inspection of the
stockholders, and the stockholders' rights in this respect are and shall be
restricted and limited accordingly.
Section 5. Reliance on Records. Each director and officer shall in
-------------------
the performance of his duties be fully protected in relying in good faith upon
the books of account or reports made to the Corporation by any of its officials,
-9-
<PAGE>
or by an independent certified public accountant, or by an appraiser selected
with reasonable care by the Board of Directors, or in relying in good faith upon
other records of the Corporation.
Section 6. Waiver of Notice. Whenever any notice is required to be
----------------
given, a waiver thereof in writing, signed by the person or persons entitled to
the notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
Section 7. Indemnification. (a) Each person who was or is made a
---------------
party or is threatened to be made a party to or is involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she or a person
of whom he or she is the legal representative is or was a director, officer or
employee of the Corporation or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation or
of a partnership, joint venture, trust or other enterprise, including service
with respect to employee benefit plans, whether the basis of such proceeding is
alleged action in an official capacity as a director, officer, employee or agent
or in any other capacity while serving as a director, officer, employee or
agent, shall be indemnified and held harmless by the Corporation to the fullest
extent authorized by the General Corporation Law of the State of Delaware as the
same exists or may hereafter be amended (but, in the case of any such amendment,
only to the extent that such amendment permits the Corporation to provide
broader indemnification rights than said law permitted the Corporation to
provide prior to such amendment), against all expense, liability and loss
(including attorneys' fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid or to be paid in settlement) reasonably incurred or suffered by
such person in connection therewith and such indemnification shall continue as
to a person who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of his or her heirs, executors and administrators;
provided, however, that except as provided in paragraph (b) of this Section 7
- -----------------
with respect to proceedings seeking to enforce rights to indemnification, the
Corporation shall indemnify any such person seeking indemnification in
connection with a proceeding (or part thereof) initiated by such person only if
such proceeding (or part thereof) was authorized by the Board of Directors of
the Corporation. The right to indemnification conferred in this Section 7 shall
be a contrast right and shall include the right to be paid by the Corporation
the expenses incurred in defending any such proceeding in advance of its final
disposition; provided, however, that if the General Corporation Law of the State
-----------------
of Delaware requires, the payment of such expenses incurred by a director of
offi-
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<PAGE>
cer in his or her capacity as a director or officer (and not in any other
capacity in which service was or is rendered by such person while a director or
officer, including, without limitation, service to an employee benefit plan) in
advance of the final disposition of a proceeding, shall be made only upon
delivery to the Corporation of an undertaking by or on behalf of such director
or officer, to repay all amounts so advanced if it shall ultimately be
determined that such director or officer is not entitled to be indemnified under
this Section 7 or otherwise.
(b) If a claim under paragraph (a) of this Section is not paid in
full by the Corporation within thirty days after a written claim has been
received by the Corporation, the claimant may at any time thereafter bring suit
against the Corporation to recover the unpaid amount of the claim and, if
successful in whole or in part, the claimant shall be entitled to be paid also
the expense of prosecuting such claim. It shall be a defense to any such action
(other than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition where the required
undertaking, if any is required, has been tendered to the Corporation) that the
claimant has not met the standards of conduct which make it permissible under
the General Corporation Law of the State of Delaware for the Corporation to
indemnify the claimant for the amount claimed, but the burden of proving such
defense shall be on the Corporation. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel or stockholders) to
have made a determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because he or she
has met the applicable standard of conduct set forth in the General Corporation
Law of the State of Delaware, nor an actual determination by the Corporation
(including its Board of Directors, independent legal counsel or stockholders)
that the claimant has not met such applicable standard of conduct, shall be a
defense to the action or create a presumption that the claimant has not met the
applicable standard of conduct.
(c) The right to indemnification and the payment of expenses incurred
in defending a proceeding in advance of its final disposition conferred in this
Section 7 shall not be exclusive of any other right which any person may have or
hereafter acquire under any statute, provision of the Certificate of
Incorporation, By-law, agreement, vote of stockholders or disinterested
directors or otherwise.
(d) The Corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of the Corporation
or another corporation, partnership, joint venture, trust or other enterprise
against any expense, liability or loss, whether or not the Corporation
-11-
<PAGE>
would have the power to indemnify such person against such expense, liability or
loss under the General Corporation Law of the State of Delaware.
(e) The Corporation may, to the extent authorized from time to time
by the Board of Directors, grant rights to indemnification, and rights to be
paid by the Corporation the expenses incurred in defending any proceeding in
advance of its final disposition, to any agent of the Corporation to the fullest
extent of the provisions of this Section 7 with respect to the indemnification
and advancement of expenses of directors, officers and employees of the
Corporation.
Section 8. Amendments to Bylaws. These bylaws may be amended, altered
--------------------
or repealed by the stockholders or by the Board of Directors.
-12-
<PAGE>
EXHIBIT C
AMENDED AND RESTATED
AGREEMENT OF
LIMITED PARTNERSHIP OF
BORDEN CHEMICALS AND PLASTICS OPERATING
LIMITED PARTNERSHIP
A DELAWARE LIMITED PARTNERSHIP
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I ORGANIZATIONAL MATTERS.................................... 1
1.1 Formation and Continuation................................ 1
1.2 Name...................................................... 1
1.3 Registered Office; Principal Office....................... 2
1.4 Power of Attorney......................................... 2
1.5 Term...................................................... 4
ARTICLE II DEFINITIONS............................................... 4
ARTICLE III PURPOSE................................................... 11
3.1 Purpose and Business...................................... 11
3.2 Powers.................................................... 12
ARTICLE IV CAPITAL CONTRIBUTIONS..................................... 13
4.1 Initial Contributions..................................... 13
4.2 Return of Initial Contributions........................... 13
4.3 Contributions by General Partner, Organizational Limited
Partner and Investor Partnership........................ 14
4.4 No Preemptive Rights...................................... 14
4.5 Capital Accounts.......................................... 15
4.6 Interest.................................................. 18
4.7 No Withdrawal............................................. 18
4.8 Loans from Partners....................................... 18
ARTICLE V ALLOCATIONS AND DISTRIBUTIONS............................. 18
5.1 Allocations for Tax Purposes.............................. 18
5.2 Allocations for Capital Account Purposes.................. 20
5.3 Requirement of Distributions.............................. 21
ARTICLE VI MANAGEMENT AND OPERATION OF BUSINESS...................... 22
6.1 Management................................................ 22
6.2 Certificate of Limited Partnership........................ 23
6.3 Restrictions on General Partner's Authority............... 24
6.4 Reimbursement of the General Partner...................... 25
6.5 Outside Activities........................................ 26
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
6.6 Loans to and from the General Partner; Contracts with
Affiliates.............................................. 27
6.7 Indemnification........................................... 28
6.8 Liability of Indemnitees.................................. 29
6.9 Resolution of Conflicts of Interest....................... 30
6.10 Other Matters Concerning the General Partner.............. 31
6.11 Title to Partnership Assets............................... 32
6.12 Limitations Regarding Certain Actions..................... 32
6.13 Reliance by Third Parties................................. 32
ARTICLE VII RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNER............. 33
7.1 Limitation of Liability................................... 33
7.2 Management of Business.................................... 33
7.3 Return of Capital......................................... 33
7.4 Rights of the Limited Partner Relating to the Partnership. 33
ARTICLE VIII BOOKS, RECORDS, ACCOUNTING AND REPORTS.................... 34
8.1 Records and Accounting.................................... 34
8.2 Fiscal Year............................................... 35
8.3 Reports................................................... 35
ARTICLE IX TAX MATTERS............................................... 35
9.1 Preparation of Tax Returns................................ 35
9.2 Tax Elections............................................. 35
9.3 Tax Controversies......................................... 36
9.4 Organizational Expenses................................... 36
9.5 Withholding............................................... 36
ARTICLE X TRANSFER OF INTERESTS..................................... 36
10.1 Transfer.................................................. 36
10.2 Transfer of General Partner's Partnership Interest........ 37
10.3 Transfer of Interest of Limited Partner................... 37
ARTICLE XI ADMISSION OF PARTNERS..................................... 37
11.1 Admission of Substituted Limited Partner.................. 37
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
11.2 Admission of Successor General Partner................... 37
11.3 Amendment of Agreement and Certificate of Limited
Partnership............................................ 37
ARTICLE XII WITHDRAWAL OR REMOVAL OF THE GENERAL PARTNER............. 38
12.1 Withdrawal or Removal of General Partner................. 38
12.2 Interest of Departing Partner and Successor.............. 38
12.3 Reimbursement of Departing Partner....................... 38
ARTICLE XIII DISSOLUTION AND LIQUIDATION.............................. 38
13.1 Dissolution.............................................. 38
13.2 Continuation of the Business of the Partnership after
Dissolution............................................ 40
13.3 Liquidation.............................................. 41
13.4 Distributions in Kind.................................... 42
13.5 Cancellation of Certificate of Limited Partnership....... 42
13.6 Reasonable Time for Winding Up........................... 42
13.7 Return of Capital........................................ 43
13.8 No Capital Account Restoration........................... 43
13.9 Waiver of Partition...................................... 43
ARTICLE XIV AMENDMENT OF PARTNERSHIP AGREEMENT....................... 43
14.1 Amendment to Be Adopted Solely by General Partner........ 43
14.2 Amendment Procedures..................................... 44
14.3 Prohibited Amendments.................................... 44
ARTICLE XV GENERAL PROVISIONS....................................... 45
15.1 Addresses and Notices.................................... 45
15.2 Titles and Captions...................................... 45
15.3 Pronouns and Plurals..................................... 45
15.4 Further Action........................................... 45
15.5 Binding Effect........................................... 45
15.6 Integration.............................................. 45
15.7 Creditors................................................ 45
15.8 Waiver................................................... 45
15.9 Counterparts............................................. 46
</TABLE>
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<PAGE>
15.10 Applicable Law........................................... 46
15.11 Invalidity of Provisions................................. 46
-iv-
<PAGE>
AMENDED AND RESTATED
AGREEMENT OF
LIMITED PARTNERSHIP OF BORDEN
CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP dated as of
November 30, 1987 is entered into by and among BCP Management, Inc., a Delaware
corporation as the General Partner, Borden, Inc., a New Jersey corporation as
the Organizational Limited Partner, and Borden Chemicals and Plastics Limited
Partnership, a Delaware limited partnership (the "Limited Partner" or "Investor
Partnership"), together with any other Persons who become Partners, as provided
herein. In consideration of the covenants, conditions and agreements contained
herein, the parties hereto hereby agree as follows:
ARTICLE I
ORGANIZATIONAL MATTERS
1.1 Formation and Continuation. The General Partner and the
--------------------------
Organizational Limited Partner have previously formed the Partnership as a
limited partnership pursuant to the provisions of the Delaware Act and hereby
amend and restate the original Agreement of Limited Partnership in its entirety.
Subject to the provisions of this Agreement, the General Partner and the
Organizational Limited Partner hereby continue the Partnership as a limited
partnership pursuant to the provisions of the Delaware Act. Except as expressly
provided herein to the contrary, the rights and obligations of the Partners and
the administration and termination of the Partnership shall be governed by the
Delaware Act. The Partnership Interest of each Partner shall be personal
property for all purposes.
1.2 Name. The name of the Partnership shall be "Borden Chemicals
----
and Plastics Operating Limited Partnership." The Partnership's business may be
conducted under any other name or names deemed advisable by the General Partner,
including the name of the General Partner or any Affiliate thereof. The words
"Limited Partnership," "L.P.," "Ltd." or similar words or letters shall be
included in the Partnership's name where necessary for the purposes of complying
with the laws of any jurisdiction that so requires. The General Partner in its
sole discretion may change the name of the Partnership at any time and from time
to time and shall notify the Limited Partner of such change. Notwithstanding
<PAGE>
the foregoing, unless otherwise permitted by the Organizational Limited Partner,
in the event that neither BCP Management, Inc. nor a Subsidiary of Borden is the
general partner of the Partnership, the Partnership shall change its name to a
name not including "Borden" and shall cease using the name "Borden" or other
names or symbols associated therewith.
1.3 Registered Office; Principal Office. The address of the
-----------------------------------
registered office of the Partnership in the State of Delaware shall be located
at The Corporation Trust Center, 1209 Orange Street, New Castle County,
Wilmington, Delaware 19801, and the registered agent for service of process
on the Partnership in the State of Delaware at such registered office shall be
The Corporation Trust Company. The principal office of the Partnership shall be
Highway 73, Geismar, Louisiana 70734, or such other place as the General Partner
may from time to time designate by notice to the Limited Partner. The
Partnership may maintain offices at such other place or places within or outside
the State of Delaware as the General Partner deems advisable.
1.4 Power of Attorney. (a) The Limited Partner hereby constitutes
-----------------
and appoints each of the General Partner and the Liquidator severally (and any
successor to either thereof by merger, transfer, assignment, election or
otherwise) and each of their authorized officers and attorneys-in-fact, with
full power of substitution, as its true and lawful agent and attorney-in-fact,
with full power and authority in its name, place and stead, to:
(i) execute, swear to, acknowledge, deliver, file and record in the
appropriate public offices (A) all certificates, documents and other
instruments (including without limitation this Agreement and the
Certificate of Limited Partnership and all amendments or restatements
thereof) that the General Partner or the Liquidator deems reasonable and
appropriate or necessary to form, qualify, or continue the existence or
qualification of, the Partnership as a limited partnership (or a
partnership in which limited partners have limited liability) in the State
of Delaware and in all other jurisdictions in which the Partnership may
conduct business or own property; (B) all instruments that the General
Partner or the Liquidator deems appropriate or necessary to reflect any
amendment, change, modification or restatement of this Agreement in
accordance with its terms; (C) all conveyances and other instruments or
documents that the General Partner or the Liquidator deems appropriate or
necessary to reflect the dissolution and liquidation of the Partnership
pursuant to the
-2-
<PAGE>
terms of this Agreement, including a certificate of cancellation; and (D)
all instruments relating to the admission, withdrawal or substitution of
any Partner pursuant to Articles X, XI or XII or the Capital Contribution
of any Partner;
(ii) sign, execute, swear to and acknowledge all ballots, consents,
approvals, waivers, certificates and other instruments appropriate or
necessary, in the sole discretion of the General Partner or the Liquidator,
to make, evidence, give, confirm or ratify any vote, consent, approval,
agreement or other action which is made or given by the Partners hereunder
or is consistent with the terms of this Agreement or appropriate or
necessary, in the sole discretion of the General Partner or the Liquidator,
to effectuate the terms or intent of this Agreement; provided, that when
--------
the consent or approval of the Limited Partner is required by any other
provision of this Agreement, the General Partner or the Liquidator may
exercise the power of attorney made in this subsection (ii) only after the
necessary consent or approval of the Limited Partner.
Nothing herein contained shall be construed as authorizing the General Partner
to amend this Agreement except in accordance with Article XIV or as may be
otherwise expressly provided for in this Agreement.
(b) The foregoing power of attorney is hereby declared to be
irrevocable and a power coupled with an interest, and it shall survive and not
be affected by the subsequent death, incompetency, disability, incapacity,
dissolution, bankruptcy or termination of the Limited Partner, the transfer of
all or any portion of the Limited Partner's Partnership Interest and shall
extend to the Limited Partner's heirs, successors, assigns and personal
representatives. The Limited Partner hereby agrees to be bound by any
representation made by the General Partner or the Liquidator, acting in good
faith pursuant to such power of attorney; and the Limited Partner hereby waives
any and all defenses which may be available to contest, negate or disaffirm the
action of the General Partner or the Liquidator, taken in good faith under such
power of attorney. The Limited Partner shall execute and deliver to the General
Partner or the Liquidator, within 15 days after receipt of the General Partner's
or the Liquidator's request therefor, such further designation, powers of
attorney and other instruments as the General Partner or the Liquidator deems
necessary to effectuate this Agreement and the purposes of the Partnership.
-3-
<PAGE>
1.5 Term. The Partnership commenced upon the filing of the
----
Certificate of Limited Partnership in accordance with the Delaware Act and shall
continue in existence until the close of Partnership business on December 31,
2082, or until the earlier termination of the Partnership in accordance with the
provisions of Article XIII.
ARTICLE II
DEFINITIONS
The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.
"Acquired Facilities" shall mean the interest in the manufacturing and
-------------------
production facilities located at Geismar, Louisiana and Illiopolis, Illinois
which were transferred to the Partnership by Borden, the General Partner and the
Investor Partnership, as such facilities may be maintained or improved from time
to time, subject to the provisions of Article VI hereof.
"Adjusted Property" means any property the Carrying Value of which has
-----------------
been adjusted pursuant to Section 4.5(d)(i) or (d)(ii).
"Affiliate" means any Person that directly or indirectly controls, is
---------
controlled by, or is under common control with, the Person in question;
provided, that neither the Partnership nor the Investor Partnership shall be
- --------
deemed an Affiliate of Borden or the General Partner. As used in the definition
of "Affiliate" the term "control" means the procession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
a Person, whether through ownership of voting securities, by contract or
otherwise.
"Agreed Value" of any Contributed Property means the fair market value
------------
of such property or other consideration at the time of contribution as
determined by the General Partner using such reasonable method of valuation as
it may adopt; provided, that the Agreed Value of any property deemed contributed
--------
to the Partnership for federal income tax purposes upon termination and
reconstitution thereof pursuant to Section 708 of the Code shall be determined
in accordance with Section 4.5(c) hereof. Subject to Section 4.5(c), the General
Partner shall, in its discretion, use such method as it deems reasonable and
appropriate to allocate the aggregate Agreed Value of Contributed Properties
transferred to the Partnership in a single or integrated transaction among each
-4-
<PAGE>
separate property on a basis proportional to their fair market values.
"Agreement" means this Amended and Restated Agreement of Limited
---------
Partnership, as it may be amended, supplemented or restated from time to time.
"Available Cash," with respect to any quarter within any calendar
--------------
year, means (i) the sum of (a) the cash receipts of the Partnership during such
quarter from all sources and (b) any reduction in reserves established in prior
quarters, less (ii) the sum of (aa) all cash disbursements of the Partnership
during such quarter, including, without limitation, disbursements for operating
expenses, taxes, debt service (including payments of principal, premium and
interest) and capital items (but excluding all cash distributions to Partners),
(bb) any reserves established in such quarter in such amounts as the General
Partner shall deem to be necessary in the reasonable discretion of the General
Partner or appropriate in its reasonable discretion to provide for the proper
conduct of the business of the Partnership (including reserves for future
capital expenditures), and (cc) any other reserves in such amounts as are
necessary in the reasonable discretion of the General Partner because the
distribution of such amounts would be prohibited by applicable law or by any
loan agreement, security agreement, mortgage, debt instrument or other agreement
or obligation to which the Partnership is a party (including, without
limitation, the Note Agreement) or by which it is bound or its assets are
subject. Notwithstanding the foregoing, "Available Cash" shall not include any
cash receipts or reductions in reserves or take into account any disbursements
made or reserves established after commencement of the dissolution and
liquidation of the Partnership.
"Book-Tax Disparities" means the differences between a Partner's
--------------------
Capital Account balance as maintained pursuant to Section 4.5, and such balance
had such Capital Account been maintained strictly in accordance with tax
accounting principles (such disparities reflecting the differences between the
Carrying Value of either Contributed Properties or Adjusted Properties, as
adjusted from time to time, and the adjusted basis thereof for federal income
tax purposes).
"Borden" means Borden, Inc., a New Jersey corporation.
------
"Borden Delaware" means Borden Delaware Holdings, Inc., a Delaware
---------------
Corporation.
"Business Day" means Monday through Friday of each week, except that a
------------
legal holiday recognized as such by the
-5-
<PAGE>
government of the United States or the states of Delaware, Louisiana, Illinois
or New York shall not be regarded as a Business Day.
"calendar quarter" or "quarter" means any calendar quarter or, at the
---------------- -------
election of the General Partner, (i) any period commencing on January 1 and
comprised of not less than 12 nor more than 13 weeks, as determined by the
General Partner (ii) any period commencing on the day next following any period
referred to in clause (i) and comprised of approximately 13 weeks, as determined
by the General Partner (iii) any period commencing on the day next following any
period referred to in clause (ii) and comprised of approximately 13 weeks, as
determined by the General Partner and (iv) any period commencing on the day next
following any period referred to in clause (iii) and ending on the next
following December 31.
"Capital Account" means the capital account maintained for a Partner
---------------
pursuant to Section 4.5.
"Capital Contribution" means any cash, cash equivalents or the Net
--------------------
Agreed Value of Contributed Property which a Partner contributes to the
Partnership pursuant to Section 4.1, 4.2, 4.3 or 12.2(c).
"Carrying Value" means (a) with respect to a Contributed Property, the
--------------
Agreed Value of such property reduced (but not below zero) by all depreciation,
amortization and cost recovery deductions charged to the Partners' Capital
Accounts, and (b) with respect to any other Partnership property, the adjusted
basis of such property for federal income tax purposes, all as of the time of
determination. The Carrying Value of any property shall be adjusted from time to
time in accordance with Sections 4.5(d)(i) and 4.5(d)(ii), and to reflect
changes, additions or other adjustments to the Carrying Value for dispositions
and acquisitions of Partnership properties, as deemed appropriate by the General
Partner.
"Certificate" means a certificate issued by the Partnership evidencing
-----------
ownership of one or more Partnership Interests.
"Certificate of Limited Partnership" means the Certificate of Limited
----------------------------------
Partnership filed with the Secretary of State of the State of Delaware as
referenced in Section 6.2, as such Certificate may be amended and/or restated
from time to time.
"Chemical Products" shall mean (i) methanol, ammonia, formaldehyde,
-----------------
urea, acetylene, acetylene-based vinyl chloride monomer, ethylene-based vinyl
chloride monomer,
-6-
<PAGE>
urea-formaldehyde concentrate, acetic acid, general purpose and specialty
purpose polyvinyl chloride resins and industrial gases produced in connection
with the production of the foregoing, (ii) any other basic chemical products
approved from time to time by Special Approval of the General Partner, and (iii)
any chemical or other by-products of the products set forth in or referred to in
clause (i) or clause (ii) above.
"Code" means the Internal Revenue Code of 1986, as amended and in
----
effect from time to time, as interpreted by the applicable regulations
thereunder. Any reference herein to a specific section or sections of the Code
shall be deemed to include a reference to any corresponding provision of future
law.
"Commencement Date" means November 30, 1987.
-----------------
"Common Unit" has the meaning set forth in the Investor Partnership
-----------
Agreement.
"Contributed Property" means each property or other consideration, in
--------------------
such form as may be permitted by the Delaware Act, but excluding cash and cash
equivalents, contributed to the Partnership (or deemed contributed to the
Partnership on termination and reconstitution thereof pursuant to Section 708 of
the Code). Once the Carrying Value of a Contributed Property is adjusted
pursuant to Section 4.5(d)(i), such property shall no longer constitute a
Contributed Property for purposes of Section 5.1, but shall be deemed an
Adjusted Property for such purposes.
"Contributing Partner" means each Partner contributing (or deemed to
--------------------
have contributed on termination and reconstitution of the Partnership pursuant
to Section 708 of the Code or otherwise) a Contributed Property.
"Conveyance Agreement" means the Conveyance and Transfer Agreement
--------------------
dated as of the Commencement Date among Borden, Borden Delaware, the General
Partner, the Partnership and the Investor Partnership.
"Delaware Act" means the Delaware Revised Uniform Limited Partnership
------------
Act, 6 Del. C. (S) 17-101, et seq., as it may be amended from time to time, and
--- - -------
any successor to such statute.
"Departing Partner" means a former General Partner, as of the
-----------------
effective date of any withdrawal or removal of such former General Partner
pursuant to Section 12.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
------------
and any successor to such statute.
-7-
<PAGE>
"General Partner" means BCP Management, Inc., a Delaware corporation,
---------------
or any of its successors in its capacity as general partner of the Partnership.
"Indemnitiee" means the General Partner, any Departing Partner, any
-----------
Person who is or was an Affiliate of the General Partner or any Departing
Partner, any Person who is or was an officer, director, employee, partner,
agent or trustee of the General Partner or any Departing Partner or any such
Affiliate, or any Person who is or was serving at the request of the General
Partner or any Departing Partner or any such Affiliate as a director, officer,
employee, agent or trustee of another Person.
"Independent Committee" means a comittee of the Board of Directors of
---------------------
the General Partner composed of all directors who are neither officers,
employees, or directors of Borden or any of its Affiliates, other than the
General Partner, nor officers or employees of the General Partner.
"Intercompany Agreement" means the Intercompany Agreement dated as of
----------------------
the Commencement Date among Borden, the Partnership, the Investor Partnership
and the General Partner.
"Investor Partnership" means Borden Chemicals and Plastics Limited
--------------------
Partnership, a Delaware limited partnership.
"Investor Partnership Agreement" means the Amended and Restated
------------------------------
Agreement of Limited Patnership of the Investor Partnership, dated as of the
Commencement Date, as it may be amended, supplemented or restated from time to
time.
"License Agreements" means, collectively, the Use of Name and
------------------
Trademark License Agreement and the Patent and Know-How Agreement, in each case
among Borden, the Partnership and the Investor Partnership and dated as of the
Commencement Date.
"Limited Partner" means any Person who is a limited partner of the
---------------
Partnership other than the Organizational Limited Partner (i.e., the Investor
----
Partnership and each Substituted Limited Partner) and shown as a Limited Partner
on the books and records of the Partnership.
"Liquidator" means the General Partner or the Person (other than the
----------
General Partner) approved pursuant to Section 13.3 who performs the functions
described therein.
"Minimum Gain" has the meaning as set forth in Section 5.2(d).
------------
-8-
<PAGE>
"NASDAQ" means the National Association of Securities Dealers
------
Automated Quotation System.
"Net Agreed Value" means (a) in the case of any Contributed Property,
----------------
the Agreed Value of such property reduced by any liabilities either assumed by
the Partnership upon such contribution or to which such property is subject when
contributed and (b) in the case of any property distributed to a Partner by the
Partnership, the Partnership's Carrying Value of such property at the time such
property is distributed, reduced by any indebtedness either assumed by such
Partner upon such distribution or to which such property is subject at the time
of distribution, in either case, as determined under Section 752 of the Code.
"Note Agreement" means the Note Agreement dated November 20, 1987
--------------
regarding the issuance by the Partnership of the Notes.
"Notes" means the $150,000,000 aggregate principal amount 10.70% and
-----
11.10% Senior Notes of the Partnership.
"Operative Agreements" means, collectively, (a) the Purchase
--------------------
Agreements, (b) the Distribution Support Agreement (as defined in the Investor
Partnership Agreement), (c) the License Agreements, (d) the Intercompany
Agreement, (e) the Environmental Indemnity Agreement dated as of the
Commencement Date among Borden, the Investor Partnership and the Partnership and
(f) the Lease Agreement dated as of the Commencement Date, between Borden and
the Partnership.
"Opinion of Counsel" means a written opinion of counsel (who may be
------------------
regular counsel to the Partnership or the General Partner) acceptable to the
General Partner.
"Organizational Limited Partner" means Borden in its capacity as the
------------------------------
organizational limited partner pursuant to this Agreement.
"Outstanding" means the Partnership Interests of the Limited Partner
-----------
issued by the Partnership and shown on the Partnership's books and records to be
outstanding.
"Partner" means a General Partner or a Limited Partner.
-------
"Partnership" means the limited partnership formed and continued
-----------
pursuant to this Agreement and any successor thereto.
"Partnership Interest" means the interest of a Partner in the
--------------------
Partnership.
-9-
<PAGE>
"Partnership Year" means the fiscal year of the Partnership, which
----------------
shall be the calendar year.
"Percentage Interest" means (a) as to the General Partner, 1.0101%,
-------------------
and (b) as to the Limited Partner, 98.9899%
"Person" means an individual or a corporation, partnership, trust,
------
unincorporated organization, association or other entity.
"Preference Unit" has the meaning set forth in the Investor
---------------
Partnership Agreement.
"Purchase Agreements" means collectively, the PVC Purchase Agreement,
------------------
the Ammonia Purchase Agreement, the Urea Purchase Agreement, the Methanol
Purchase Agreement, the Formaldehyde Processing Agreement and the Urea-
Formaldehyde Processing Agreement, in each case between Borden and the
Partnership and dated as of the Commencement Date.
"Recapture Income" means any gain recognized by the Partnership
------------------
(computed without regard to any adjustment required by Sections 734 or 743 of
the Code) upon the disposition of any property or asset of the Partnership,
which gain is characterized as ordinary income because it represents the
recapture of deductions previously taken with respect to such property or asset.
"Recaptured Credits" means any credits previously taken against
------------------
federal income tax liability which are required under the Code to be recaptured
upon the disposition of any property by the Partnership prior to the end of such
property's useful life used in determining the amount of the credit relating
thereto.
"Registration Statement" means the Registration Statement on Form S-1
----------------------
(Registration No. 33-17057), as it has been or as it may be amended or
supplemented from time to time, filed by the Investor Partnership with the
Securities and Exchange Commission under the Securities Act to register the
offering and sale of the Depositary Preference Units (as defined in the Investor
Partnership Agreement) of the Investor Partnership in the Initial Offering (as
so defined).
"Residual Gain" or "Residual Loss" shall mean any net gain or net
------------- -------------
loss. As the case may be, of the Partnership recognized for federal income tax
purposes resulting from a sale, exchange or other disposition of a Contributed
Property or Adjusted Property, to the extent such net gain or net loss, is not
allocated pursuant to Section 5.1(f) or 5.1(g) to eliminate Book-Tax
Disparities.
-10-
<PAGE>
"Securities Act" means the Securities Act of 1933, as amended, and any
--------------
successor to such statute.
"Service Agreement" means the Service Agreement between Borden and the
-----------------
Partnership and dated as of the Commencement Date.
"Special Approval" means approval by a majority of the members of the
----------------
Board of Directors of the General Partner that includes approval by a majority
of the members of the Independent Committee.
"Subsidiary" means, with respect to any Person, any corporation or
----------
other entity of which a majority of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by such Person.
"Substituted Limited Partner" means a Person who is admitted as a
---------------------------
Limited Partner to the Partnership pursuant to Section 11.1 in place of and with
all the rights of a Limited Partner and who is shown as a Limited Partner on the
books and records of the Partnership.
"Unitholder" means any limited partner in the Investor Partnership or
----------
any assignee of a Unit.
"Unit" has the meaning set forth in the Investor Partnership
----
Agreement.
"Unrealized Gain" attributable to a Partnership property means, as of
---------------
any date, the excess, if any, of the fair market value of such property (as
determined under Section 4.5(d)) as of such date over the Carrying Value of such
property as of such date (prior to any adjustment to be made pursuant to Section
4.5(d) as of such date).
"Unrealized Loss" attributable to a Partnership property means, as of
---------------
any date, the excess, if any , of the Carrying Value of such property as of such
date (prior to any adjustment to be made pursuant to Section 4.5(d) as of such
date) over the fair market value of such property (as determined under Section
4.5(d) as of such date).
ARTICLE III
PURPOSE
3.1 Purpose and Business. The purpose and nature of the business to
--------------------
be conducted by the Partnership shall be (i) to engage in the manufacture and
production of the Chemical Products at the Acquired Facilities and sell or
otherwise distribute such Chemical Products and, in
-11-
<PAGE>
connection therewith, to operate, maintain and improve the Acquired Facilities,
(ii) to conduct any other business that may be lawfully conducted by a limited
partnership organized pursuant to the Delaware Act, and (iii) to do anything
necessary or incidental to the foregoing; provided, that without Special
--------
Approval of the General Partner, the Partnership shall not (a) expand the annual
capacity of the Acquired Facilities for the production of formaldehyde to any
capacity in excess of an aggregate of 385,000,000 pounds per year, (b) expand
the definition of Chemical Products, as permitted by the definition thereof, or
(c) engage in any other business as contemplated by clause (ii) above. The
General Partner has no duty to the Partnership or the Limited Partner to propose
or approve, and in its sole discretion may decline to propose or approve, any of
the matters referred to in clause (a), (b) or (c) of the proviso to the
foregoing sentence.
3.2 Powers. The Partnership shall be empowered to do any and all
------
acts and things necessary, appropriate, proper, advisable, incidental to , or
convenient for the furtherance and accomplishment of the purposes and business
described herein and for the protection and benefit of the Partnership,
including, without limitation, the following:
(a) To borrow money and issue evidences of indebtedness, and to
secure the same by mortgages, deeds of trust, security interests, pledges,
or other liens on all or any part of the assets and properties of the
Partnership;
(b) To secure and maintain insurance against liability or other loss
with respect to the activities and assets of the Partnership (including,
without limitation, insurance against liabilities under Section 6.7);
(c) To employ or retain such Persons as may be necessary or
appropriate for the conduct of the Partnership's business, including
permanent, temporary, or part-time employees and independent attorneys,
accountants, consultants, and contractors;
(d) To acquire, own, hold a leasehold interest in, maintain, use,
lease, sublease, manage, operate, sell, exchange, transfer, or otherwise
deal in assets and property as may be necessary or convenient for the
purposes and business of the Partnership;
(e) To incur expenses and to enter into, guarantee, perform, and
carry out contracts or commitments of any kind, to assume obligations, and
-12-
<PAGE>
to execute, deliver, acknowledge, and file documents in furtherance of the
purposes and business of the Partnership;
(f) To pay, collect, compromise, arbitrate, litigate, or otherwise
adjust, contest, or settle any and all claims or demands of or against the
Partnership;
(g) To invest in interest-bearing and non-interest bearing accounts
and short term investments, including, without limitation, obligations of
federal, state, and local governments and their agencies, mutual funds
(including money market funds), commercial paper, time deposits, letters of
credit, and certificates of deposit of commercial banks, savings banks, or
savings and loan associations; and
(h) To engage in any kind of activity and to enter into and perform
obligations of any kind necessary to or in connection with, or incidental
to, the accomplishment of the purposes and business of the Partnership, so
long as such activities and obligations may be lawfully engaged in or
performed by a limited partnership under the Delaware Act.
ARTICLE IV
CAPITAL CONTRIBUTIONS
4.1 Initial Contributions. In order to form the Partnership under
---------------------
the Delaware Act, the General Partner has made an initial contribution to the
capital of the Partnership of $10 and has accepted a contribution to the capital
of the Partnership in the amount of $990 from the Organizational Limited Partner
for an interest in the Partnership, and the Organizational Limited Partner has
been admitted to the Partnership as a limited partner of the Partnership.
4.2 Return of Initial Contributions. As of the Commencement Date and
-------------------------------
after giving effect to the transactions contemplated by Section 4.3 hereof and
the admission to the Partnership of the Investor Partnership as the Limited
Partner in accordance with this Agreement, the interest in the Partnership of
the Organizational Limited Partner shall be terminated, the $10 contributed by
the General Partner and the $990 contributed by the Organizational Limited
Partner as an initial contribution shall be refunded, and the Organizational
Limited Partner shall withdraw as a limited partner. Ninety-nine percent of any
interest or other profit
-13-
<PAGE>
which may have resulted from the investment or other use of such initial
contribution shall be allocated and distributed to the Organizational Limited
Partner and the balance thereof shall be allocated and distributed to the
General Partner.
4.3 Contributions by General Partner, Organizational Limited Partner
----------------------------------------------------------------
and Investor Partnership. Pursuant to the Conveyance Agreement, on the
- ------------------------
Commencement Date, (i) the General Partner shall contribute, transfer, convey,
assign and deliver or cause to be contributed, transferred, conveyed, assigned
and delivered, to the Partnership the property and other consideration described
in the Conveyance Agreement as being so contributed, transferred, conveyed,
assigned and delivered, as and to the extent provided in the Conveyance
Agreement, in exchange for a Partnership Interest as a general partner in the
Partnership representing a 1.0101% Percentage Interest and the payment and
distribution of 1.0101% of the net proceeds from the issuance and sale of the
Notes; (ii) the Investor Partnership shall contribute, transfer, convey, assign
and deliver, or cause to be contributed, transferred, conveyed, assigned and
delivered, to the Partnership the property and other consideration described in
the Conveyance Agreement as being so contributed, transferred, conveyed,
assigned and delivered, as and to the extent provided in the Conveyance
Agreement, in exchange for a Partnership Interest as a limited partner in the
Partnership representing a .9899% Percentage Interest and the payment and
distribution of .9899% of the net proceeds from the issuance and sale of the
Notes; and (iii) the Organizational Limited Partner shall contribute, sell,
transfer, convey, assign and deliver or cause to be contributed, sold,
transferred, conveyed, assigned and delivered, to the Partnership the property
and other consideration described in the Conveyance Agreement as being so
contributed, as and to the extent provided in the Conveyance Agreement, in
exchange for a Partnership Interest as a limited partner in the Partnership
representing a 98.0000% Percentage Interest and the payment and distribution of
98.0000% of the net proceeds from the issuance and sale of the Notes. As
provided for in the Conveyance Agreement, the Organizational Limited Partner
shall, immediately after the contribution, sale, transfer, conveyance,
assignment and delivery referred to in clause (iii) above, contribute, sell,
transfer, convey, assign and deliver all of the Partnership Interest
(representing a 98.0000% Percentage Interest as a limited partner) received in
exchange therefor to the Investor Partnership in exchange for 28,125,000
Preference Units and 8,625,000 Common Units representing a 99% partnership
interest in the Investor Partnership, and the Investor Partnership shall be
admitted to the Partnership as a Limited Partner. The Limited Partner, with the
consent of the General Partner, may, but shall not be obligated to, make
additional Capital Contributions to the Partnership. Upon
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<PAGE>
any such Capital Contribution by the Limited Partner, the General Partner shall
be obligated to make an additional Capital Contribution to the Partnership such
that the General Partner shall at all times have at least a 1% interest in each
item of Partnership gain, loss, deduction and credit.
4.4 No Preemptive Rights. No Person shall have any preemptive,
--------------------
preferential or other similar right with respect to (a) additional Capital
Contributions; (b) issuance or sale of any class or series of Partnership
Interests, whether unissued, held in treasury or hereafter created; (c) issuance
of any obligations, evidences of indebtedness or other securities of the
Partnership convertible into or exchangeable for, or carrying or accompanied by
any rights to receive, purchase or subscribe to, any unissued Partnership
Interests held in treasury; (d) issuance of any right of subscription to or
right to receive, or any warrant or option for the purchase of, any of the
foregoing securities; or (e) issuance or sale of any other securities that may
be issued or sold by the Partnership.
4.5 Capital Accounts. (a) The Partnership shall maintain for each
----------------
Partner a separate Capital Account in accordance with the rules of Treasury
Regulation Section 1.704-1(b)(2)(iv). Such Capital Account shall be increased by
(i) the amount of all Capital Contributions made by such Partner to the
Partnership pursuant to this Agreement and (ii) all items of Partnership income
and gain (including income and gain exempt from tax) computed in accordance with
Section 4.5(b) and allocated to such Partner pursuant to Article V and decreased
by (x) the amount of cash or Net Agreed Value of all actual and deemed
distributions of cash or property made to such Partner pursuant to this
Agreement and (y) all items of Partnership deduction and loss allocated to such
Partner pursuant to Article V.
(b) For purposes of computing the amount of any item of income, gain,
deduction or loss to be reflected in the Partners' Capital Accounts, the
determination, recognition and classification of any such item shall be the same
as its determination, recognition and classification for federal income tax
purposes (including any method of depreciation, cost recovery or amortization
used for that purpose), provided, that:
--------
(i) Solely for purposes of this Section 4.5, the partnership shall be
treated as owning directly its proportionate share (as determined by the
General Partner) of all property owned by any partnership which the
Partnership controls.
(ii) Except as otherwise provided in Treasury Regulation
Section 1.704-:(b)(2)(iv)(m), the
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<PAGE>
computation of all items of income, gain, loss and deduction shall be made
without regard to any election under Section 754 of the Code which may be
made by the Partnership and, as to those items described in Section
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705(a)(1)(B) or 705(a)(2)(B) of the Code, without regard to the fact that
such items are not includible in gross income or are neither currently
deductible nor capitalized for federal income tax purposes.
(iii) Any income, gain or loss attributable to the taxable
disposition of any Partnership property shall be determined as if the
adjusted basis of such property as of such date of disposition were equal
in amount to the Partnership's Carrying Value with respect to such property
as of such date.
(iv) In accordance with the requirements of Section 704(b) of the
Code, any deductions for depreciation, cost recovery or amortization
attributable to any Contributed Property shall be determined as if the
adjusted basis of such property on the date it was acquired by the
Partnership were equal to the Agreed Value of such property. Upon an
adjustment pursuant to Section 4.5(d)(i) to the Carrying Value of any
Partnership property subject to depreciation, cost recovery or
amortization, any further deductions for such depreciation, cost recovery
or amortization attributable to such property shall be determined (A) as if
the adjusted basis of such property were equal to the Carrying Value of
such property immediately following such adjustment and (B) using a rate of
depreciation, cost recovery or amortization derived under the same method
and useful life (or, if applicable, the remaining useful life) as is
applied for federal income tax purposes; provided, that if the asset has a
--------
zero adjusted basis for federal income tax purposes, depreciation, cost
recovery or amortization deductions shall be determined using any
reasonable method which the General Partner may adopt.
(v) If the Partnership's adjusted basis in a depreciable or cost
recovery property is reduced for federal income tax purposes pursuant to
Section 48(q)(l) or 48(q)(3) of the Code, the amount of such reduction
shall, solely for purposes hereof, be deemed to be an additional
depreciation or cost recovery deduction in the year such property is placed
in service and shall be allocated among the Partners pursuant to
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<PAGE>
Section 5.2. Any restoration of such basis pursuant to Section 48(q)(2) of
the Code shall, to the extent possible, be allocated in the same manner to
the Partners to whom such deemed deduction was allocated.
(c) A transferee of a Partnership Interest shall succeed to that
portion of the Capital Account of the transferor relating to such Partnership
Interest transferred; provided, that if the transfer causes a termination of the
--------
Partnership under Section 708(b)(1)(3) of the Code, the Partnership's properties
shall be deemed to have been distributed in liquidation of the Partnership to
the Partners and recontributed by such Partners in reconstitution of the
Partnership. In such event, the Carrying Values of the Partnership properties
shall be adjusted immediately prior to such deemed distribution pursuant to
Section 4.5(d)(ii) and such Carrying Values shall then constitute the Agreed
Values of such properties. The Capital Accounts of such reconstituted
Partnership shall be maintained in accordance with the principles of this
Section 4.5.
(d)(i) Consistent with the provisions of Treasury Regulation Section
1.704-1(b)(2)(iv)(f), on an issuance of additional Partnership Interests for
cash or Contributed Property, the Capital Accounts of all Partners and the
Carrying Value of each Partnership property immediately prior to such issuance
shall be adjusted upward or downward to reflect any Unrealized Gain or
Unrealized Loss attributable to such Partnership property, as if such Unrealized
Gain or Unrealized Loss had been recognized on an actual sale of each such
property immediately prior to such issuance and had been allocated to the
Partners at such time pursuant to Section 5.2. In determining Unrealized Gain or
Unrealized Loss for purposes of this Section 4.5(d)(i), the aggregate fair
market value of all Partnership properties as of any date shall be deemed to be
equal to the sum of (a) all Partnership liabilities, plus (b) 101.02% of the
product resulting from multiplying (x) the total number of Percentage Interests
of Limited Partners immediately before the issuance of such additional
Partnership Interests by (y) the price at which the additional Partnership
Interests are purchased from the Partnership as of such date, provided, that in
--------
the event any Partnership Interests then Outstanding or such additional
Partnership interests to be issued are of a different class or type from any
other Partnership Interests of Limited Partners such aggregate fair market value
shall be determined by the General Partner in its reasonable discretion. The
General Partner shall allocate such aggregate value among the assets of the
Partnership (in whatever manner it deems reasonable) to arrive at a fair market
value for individual properties.
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<PAGE>
(ii) In accordance with Treasury Regulation Section 1.704-
1(b)(2)(iv)(f), immediately prior to any actual or deemed distribution to a
Partner of any Partnership property (other than cash or cash equivalents), the
Capital Accounts of all Partners and the Carrying Value of each Partnership
property shall, immediately prior to any such distribution be adjusted upward or
downward to reflect any Unrealized Gain or Unrealized Loss attributable to such
Partnership property, as if such Unrealized Gain or Unrealized Loss had been
recognized in a sale of such property immediately prior to such distribution for
an amount equal to its fair market value, and had been allocated to the
Partners, at such time, pursuant to Section 5.2. In determining Unrealized Gain
or Unrealized Loss for purposes of this Section 4.5(d)(ii), the fair market
value of such Partnership property shall be determined by the General Partner
using such method of valuation as it deems reasonable; provided, that in the
--------
case of a liquidation distribution pursuant to Section 13.4, such fair market
value shall be determined in the manner provided in Section 13.4.
4.6 Interest. No interest shall be paid by the Partnership on
--------
Capital Contributions or on balances in Partners' Capital Accounts.
4.7 No Withdrawal. No Partner shall be entitled to withdraw any part
-------------
of its Capital Contribution or its Capital Account or to receive any
distribution from the Partnership, except as provided in Sections 4.2 and 4.3
and Articles V, XII and XIII.
4.8 Loans from Partners. Loans by a Partner to the Partnership shall
-------------------
not be considered Capital Contributions. If either Partner shall advance funds
to the Partnership in excess of the amounts required hereunder to be contributed
by it to the capital of the Partnership, the making of such excess advances
shall not result in any increase in the amount of the Capital Account of such
Partner. The amount of any such excess advances shall be a debt of the
Partnership to such Partner and shall be payable or collectible only out of the
Partnership assets in accordance with the terms and conditions upon which such
advances are made.
ARTICLE V
ALLOCATIONS AND DISTRIBUTIONS
5.1 Allocations for Tax Purposes. (a) Except as otherwise provided
----------------------------
in this Section 5.1, for federal income tax purposes, each item of income, gain,
loss, deduction and
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<PAGE>
credit shall be allocated between the Partners in the same manner as its
correlative item of "book" income, gain, loss, deduction or credit has been
allocated pursuant to Section 5.2.
(b) Any Recapture Income or Recaptured Credits resulting from the
sale or other taxable disposition of any Partnership asset shall be allocated,
to the extent possible, after taking into account other required allocations of
gain pursuant to this Section 5.1 (other than Section 5.1(a)), among the
Partners or their successors in interest in the same proportions that the
deductions or credits directly or indirectly giving rise to such Recapture
Income or Recaptured Credits were allocated.
(c) All items of income, gain, loss, deduction and credit recognized
by the Partnership for federal income tax purposes and allocated to the Partners
in accordance with the provisions hereof and any basis allocation made by the
Partnership shall be determined without regard to any election under Section 754
of the Code made by the Partnership; provided, that such allocations, once made,
--------
shall be adjusted as necessary or appropriate to take into account, those
adjustments permitted or required by Section 734 and 743 of the Code.
(d) Each item of Partnership income, gain, loss, and deduction
attributable to a transferred Partnership Interest shall, for federal income tax
purposes, be determined on an annual basis and prorated on a monthly basis and
shall be allocated to the Partners based on the number of days such Partnership
Interest was owned during the Partnership Year to which such items are
attributable. The General Partner may revise, alter or otherwise modify such
methods of allocation as it determines necessary, to the extent permitted or
required by Section 706 of the Code and the regulations or rulings promulgated
thereunder.
(e) For the proper administration of the Partnership and for the
preservation of uniformity of the Units, the General Partner shall have sole
discretion to (i) adopt such conventions as it deems appropriate in determining
the amount of depreciation, amortization and cost recovery deductions; (ii) make
special allocations for federal income tax purposes of income (including gross
income) or deductions; and (iii) amend the provisions of this Agreement as
appropriate (x) to reflect the proposal or promulgation of Treasury Regulations
under Section 704(c) of the Code, or (y) otherwise to preserve or achieve
uniformity of Units. The General Partner may adopt such conventions, make such
allocations and make such amendments to this Agreement as provided in this
Section 5.1(e) only if such conventions, allocations, or amendments would not
have a material adverse effect on the
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<PAGE>
Partners or the Partnership and if such allocations are consistent with the
principles of Section 704 of the Code.
(f)(i) In the case of any Contributed Property, for federal income
tax purposes, items of income, gain, loss, depreciation and cost recovery
deductions attributable thereto shall be allocated among the Partners in a
manner consistent with the principles of Section 704(c) of the Code to take into
account any variation between the Agreed Value of such property and its adjusted
basis at the time of contribution in attempting to eliminate Book-Tax
Disparities.
(ii) Except as otherwise provided in Section 5.1(h), any item of
Residual Gain or Residual Loss attributable to any Contributed Property shall
be allocated among the Partners in accordance with Section 5.2.
(g)(i) In the case of any Adjusted Property, for federal income tax
purposes, items of income, gain, loss, depreciation and cost recovery deductions
attributable thereto shall (x) first, be allocated among the Partners in a
manner consistent with the principles of Section 704(c) of the Code to take into
account any Unrealized Gain or Unrealized Loss attributable to such property and
the allocations thereof pursuant to Section 4.5(d)(i) in attempting to
elimination Book-Tax Disparities, and (y) second, if such property was
originally Contributed Property, be allocated among the Partners in a manner
consistent with Section 5.1(f)(i).
(2) Except as otherwise provided in Section 5.1(h), items of Residual
Gain or Residual Loss attributable to any Adjusted Property shall be allocated
among the Partners in accordance with Section 5.2.
(h) Subject to Sections 5.1(f)(i) and (g)(i), any item of income,
gain, loss or deduction otherwise allocable to the Limited Partners which
constitutes the tax corollary of an item of "book" income, gain, loss or
deduction that has been allocated to the General Partner pursuant to Section
5.2(b), shall be allocated to the General Partner in the same manner and to the
same extent as provided in this Section 5.2(b).
5.2 Allocations for Capital Account Purposes. (a) For purposes of
----------------------------------------
maintaining the Capital Accounts of the Partners and in determining the rights
of the Partners between themselves, except as otherwise provided in this Section
5.2, each item of income, gain, loss, deduction or credit (computed in
accordance with Section 4.5(b)) shall be allocated to the Partners in accordance
with their respective Percentage Interests.
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<PAGE>
(b) If the allocation of any item of loss or deduction to the Limited
Partner would cause the Capital Account of the Limited Partner to have a deficit
balance in excess of the Limited Partner's share of any then existing Minimum
Gain, such item of loss or deduction to the extent of such excess shall instead
be allocated to the General Partner and the General Partner shall as soon
thereafter as practicable be allocated a like amount of income or gain otherwise
allocable to the Limited Partner.
(c) If any Partner unexpectedly receives any adjustments, allocations
or distributions described in Treasury Regulation Sections 1.704-1(b)
(2)(ii)(d)(4), (5) or (6), items of Partnership income and gain shall, subject
to Section 5.2(d), be specially allocated to such Partner in an amount and
manner sufficient to eliminate any deficit in its Capital Account created by
such adjustments, allocations or distributions as quickly as possible. This
Section 5.2(c) is intended to constitute a "qualified income offset" within the
meaning of Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(3).
(d) If there is a net decrease in Partnership Minimum Gain during a
Partnership Year, all Partners with a deficit Capital Account balance at the end
of such year, computed as described in Treasury Regulation Section
1.704-1(b)(4)(iv)(e), shall be allocated, before any other allocation of
Partnership items for such Partnership Year is made under Section 704(b) of the
Code, items of income and gain for such year (and, if necessary, subsequent
years) in the amount and in the proportions sufficient to eliminate such
deficits as quickly as possible. For purposes of this Section 5.2(d), "Minimum
Gain" shall be determined in accordance with Treasury Regulation Section
1.704-1(b)(4)(iv). This Section 5.2(d) is intended to constitute a "minimum
gain chargeback" within the meaning of Treasury Regulation Section
1.704-1(b)(4)(iv)(e).
(e) Notwithstanding any other provision of this Section 5.2, in the
event that the Internal Revenue Service is successful in asserting an adjustment
to the taxable income of the General Partner and, as a result of any such
adjustment, the Partnership is entitled to a deduction for federal income tax
purposes with respect to any portion of such adjustment, such deduction shall be
allocated to the General Partner.
5.3 Requirement of Distributions. Within 45 days following the end of
----------------------------
each calendar quarter (or following the period from the Commencement Date to
December 31, 1987) an amount equal to 100% of Available Cash with respect to
such quarter (or period) shall be distributed by the Partnership to the Partners
in accordance with their Percentage
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<PAGE>
Interests. The foregoing shall not (i) modify in any respect the provisions of
Section 4.2 regarding the distribution of any interest or other profit on the
initial contributions referred to therein or the provisions of Section 4.3
regarding the payment and distribution of the net proceeds from the issuance and
sale of the Notes, or (ii) require any distribution of cash if and to the extent
such distribution would be prohibited by applicable law or by any loan
agreement, security agreement, mortgage, debt instrument or other agreement or
obligation to which the Partnership is a party (including, without limitation,
the Note Agreement) or by which it is bound or its assets are subject.
ARTICLE VI
MANAGEMENT AND OPERATION OF BUSINESS
6.1 Management. (a) The General Partner shall conduct, direct and
----------
exercise full control over all activities of the Partnership. Except as
otherwise expressly provided in this Agreement, all management powers over the
business and affairs of the Partnership shall be exclusively vested in the
General Partner, and the Limited Partner shall have no right of control or
management power over the business and affairs of the Partnership. In addition
to the powers now or hereafter granted a general partner of a limited
partnership under applicable law or which are granted to the General Partner
under applicable law or which are granted to the General Partner under any other
provision of this Agreement, the General Partner, subject to Section 6.3, shall
have full power and authority to do all things deemed necessary or desirable by
it to conduct the business of the Partnership, to exercise all powers set forth
in Section 3.2 and to effectuate the purposes set forth in Section 3.1,
including, without limitation, (i) the making of any expenditures, the borrowing
of money, the guaranteeing of indebtedness and other liabilities, the issuance
of evidences of indebtedness, and the incurring of any obligations it deems
necessary for the conduct of the activities of the Partnership; (ii) the
acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or
exchange of any assets of the Partnership or the merger or other combination of
the Partnership with or into another entity (all of the foregoing subject to any
prior approval which may be required by Section 6.3); (iii) the use of the
assets of the Partnership (including without limitation, cash on hand) for any
purpose and on any terms it sees fit, including, without limitation, the
financing of the conduct of the operations of the Partnership, the lending of
funds to other Persons and the repayment of obligations of the Partnership; (iv)
the negotiation, execution and performance of contracts, conveyances and other
instruments that it considers useful or necessary to the conduct of Partnership
operations or the
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<PAGE>
implementation of its powers under this Agreement, on such terms and conditions
deemed desirable in its sole discretion including, without limitation, in the
case of any mortgage against property of the Partnership in Louisiana, a
confession of judgment, waiver of appraisal and other usual Louisiana security
clauses; (v) the distribution of Partnership cash; (vi) the selection and
dismissal of employees (including, without limitation, employees having titles
such as "president," "vice-president," "secretary" and "treasurer") and agents,
outside attorneys, accountants, consultants and contractors and the
determination of their compensation and other terms of employment or hiring;
(vii) the maintenance of such insurance for the benefit of the Partnership and
the Partners as it deems necessary or appropriate; (viii) the formation of, or
acquisition of an interest in, and the contribution of property to, any further
limited or general partnerships, joint ventures or other relationships that it
deems desirable; (ix) the control of any matters affecting the rights and
obligations of the Partnership, including the conduct of litigation and the
incurring of legal expense and the settlement of claims and litigation; and (x)
the lending or borrowing of money (including but not limited to the issuance of
the Notes), the assumption or guarantee of or other contracting for indebtedness
and other liabilities, the issuance of evidences of indebtedness and the
securing of same by mortgage, deed of trust or other lien or encumbrance, the
bringing and defending of actions at law or in equity and the indemnification of
any Person against liabilities and contingencies to the extent permitted by law.
(b) Each of the Partners (and each other Person who may acquire a
Partnership Interest) hereby approves the execution, delivery and performance by
--------------------------------------
the parties thereto of the Purchase Agreements, the Intercompany Agreement, the
- ----------------------
Conveyance Agreement, the License Agreements, the Service Agreement, the Note
Agreement and the payment and distribution to the Investor Partnership, General
Partner and the Organizational Limited Partner of the net proceeds of the
issuance and sale of the Notes by the Partnership, as provided herein, and the
-------
other agreements described in the Registration Statement and agrees that the
- --------------------------------------------------------
General Partner is authorized to execute, deliver and perform the
- -----------------------------------------------------------------
above-mentioned agreements and transactions and such other agreements described
- -------------------------------------------------------------------------------
in the Registration Statement on behalf of the Partnership without any further
- ------------------------------------------------------------------------------
act, approval or vote of the Partners (or such other Persons), notwithstanding
- -------------------------------------
any other provision of this Agreement, the Delaware Act or any applicable law,
rule or regulation. None of the execution, delivery or performance by the
General Partner, the Partnership, the Investor Partnership or any Affiliate of
the foregoing of any agreement authorized or permitted under this Agreement
shall constitute a breach by the General Partner of
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<PAGE>
any duty that the General Partner may owe the Partnership or the Limited Partner
under this Agreement or of any duty stated or implied by law or equity.
6.2 Certificate of Limited Partnership. The General Partner has filed
----------------------------------
the Certificate of Limited Partnership with the Secretary of State of the State
of Delaware as required by the Delaware Act and shall use all reasonable efforts
to cause to be filed such other certificates or documents as may be determined
by the General Partner in its sole discretion to be reasonable and necessary or
appropriate for the formation, continuation, qualification and operation of a
limited partnership (or a partnership in which the limited partners have limited
liability) in the State of Delaware or any other state in which the Partnership
may elect to do business or own property. To the extent that the General Partner
in its sole discretion determines such action to be reasonable and necessary or
appropriate, the General Partner shall file amendments to and restatements of
the Certificate of Limited Partnership and do all the things to maintain the
Partnership as a limited partnership (or a partnership in which the limited
partners have limited liability) under the laws of the State of Delaware or any
other state in which the Partnership may elect to do business or own property.
Subject to the terms of Section 7.4(a), the General Partner shall not be
required, before or after filing, to deliver or mail a copy of the Certificate
of Limited Partnership or any amendment thereto to the Limited Partner.
6.3 Restrictions on General Partner's Authority. (a) The General
-------------------------------------------
Partner may not, without the written approval of the specific act by the
Limited Partner or by other written instrument executed and delivered by the
Limited Partner subsequent to the date of this Agreement, do any of the
following:
(i) any act in contravention of this Agreement;
(ii) any act that would make it impossible to carry on the ordinary
business of the Partnership, except as otherwise provided in this
Agreement;
(iii) possess Partnership property, or assign any rights in specific
Partnership property, for other than a Partnership purpose;
(iv) admit a person as a Partner, except as otherwise provided in this
Agreement;
(v) amend this Agreement in any manner, except as otherwise provided in
this Agreement; or
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<PAGE>
(vi) transfer its interest as General Partner of the Partnership, except
as otherwise provided in Section 10.2.
(b) Except as provided in Article XIII, the General Partner may not
sell, exchange or otherwise dispose of all or substantially all of the
Partnership's assets in a single transaction or a series of related transactions
(including by way of merger or other combination with any other Person) without
the approval of the Limited Partner; provided, that this provision shall not
--------
preclude or limit the mortgage, pledge, hypothecation or grant of a security
interest in all or substantially all of the Partnership's assets and shall not
apply to any forced sale of any or all of the Partnership's assets pursuant to
the foreclosure of, or other realization upon, any such encumbrance.
6.4 Reimbursement of the General-Partner. (a) Except as provided in
------------------------------------
this Section 6.4 and elsewhere in this Agreement or the Investor Partnership
Agreement, the General Partner shall not be compensated for its services as
general partner of the Partnership.
(b) The General Partner shall be reimbursed on a monthly basis, or
such other basis as the General Partner may determine in its sole discretion,
for (i) all direct and indirect expenses it incurs or payments it makes on
behalf of the Partnership (including amounts paid to any Person to perform
services to or for the Partnership) and (ii) for the General Partner's and that
portion of its Affiliates' legal, accounting, investor communications,
utilities, telephone, secretarial, travel, entertainment, bookkeeping,
reporting, data processing, office rent and other office expenses (including
overhead charges), salaries, fees and other compensation and benefit expenses of
employees, officers and directors, other administrative or overhead expenses and
all other expenses necessary or appropriate to the conduct of the Partnership's
business and allocable to the Partnership or otherwise incurred by the General
Partner in operating the Partnership's business (including, without limitation,
expenses allocated to the General Partner by its Affiliates). The General
Partner shall determine the fees and expenses that are allocable to the
Partnership in any reasonable manner determined by the General Partner in its
sole discretion. Such reimbursements shall be in addition to any reimbursement
to the General Partner as a result of indemnification pursuant to Section 6.7.
(c) The General Partner in its sole discretion and without the
approval of the Limited Partner may propose and adopt on behalf of the
Partnership employee benefit plans (including, without limitation, plans
involving the issuance of Units), for the benefit of employees of the General
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<PAGE>
Partner, the Partnership or any Affiliate of any of them in respect of services
performed, directly or indirectly, for the benefit of the Partnership; provided,
--------
that no such plan may provide for the issuance of Partnership Interests in the
Partnership.
6.5 Outside Activities. (a) After the Commencement Date, the General
------------------
Partner shall not, for so long as it is the general partner of the Partnership,
enter into or conduct any business nor incur any debts or liabilities except in
connection with or incidental to (i) its performance of the activities required
or authorized by this Agreement or the Investor Partnership Agreement or
described in or contemplated by the Registration Statement and (ii) the
acquisition, ownership or disposition of its partnership interests in the
Partnership and the Investor Partnership.
(b) Except as provided in the Intercompany Agreement, or described in
the Registration Statement or provided in subsection (a) above, no Indemnitee
shall be expressly or implicitly restricted or proscribed pursuant to this
Agreement, the Investor Partnership Agreement or by the partnership relationship
established hereby or thereby from engaging in other activities for profit,
whether in the businesses engaged in by the Partnership or the Investor
Partnership or anticipated to be engaged in by the Partnership or anticipated to
be engaged in by the Partnership, the Investor Partnership or otherwise,
including without limitation, those businesses described in or contemplated by
the Registration Statement. Without limitation of and subject to the foregoing
(but subject to the limitations set forth in the Registration Statement and the
Intercompany Agreement), each Indemnitee shall have the right to engage in the
chemicals or plastics business and any other business of every type and
description and to engage in and possess an interest in other business ventures
of any and every type and description, independently or with others, including
business interests and activities in direct competition with the Partnership or
the Investor Partnership and none of the same shall breach any duty to the
Partnership or any Partner. Neither the Partnership, the Investor Partnership
nor any other Person shall have any rights by virtue of this Agreement, the
Investor Partnership Agreement or the partnership relationship established
hereby or thereby in any business ventures of any Indemnitee, and, except as set
forth in the Registration Statement, such Indemnitees shall have no obligation
to offer any interest in any such business ventures to the Partnership, the
Investor Partnership or any Partner or any such other Person.
(c) Without limitation of subsections (a) and (b), and
notwithstanding anything to the contrary in this Agreement, the competitive
activities of certain Indemnitees and the restrictions on the Partnership's
activities
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<PAGE>
contained in the Intercompany Agreement or described in the Registration
Statement under the caption "Conflicts of Interest and Fiduciary Responsibility"
are hereby approved by the Limited Partner.
6.6 Loans to and from the General Partner; Contracts with
------------------------------------- --------------
Affiliates. (a) The General Partner, the Limited Partner or any Affiliate of
- ----------
either may lend to the Partnership funds needed or desired by the Partnership
for such periods of time as the General Partner may determine; provided, that
--------
the General Partner, the Limited Partner or any such Affiliate may not charge
the Partnership interest at a rate greater than the rate that would be charged
the Partnership (without reference to the General Partner's financial abilities
or guaranties) by unrelated lenders on comparable loans. The Partnership shall
reimburse the General Partner, the Limited Partner or any Affiliate of either,
as the case may be, for any costs (other than any additional interest costs)
incurred by it in connection with the borrowing of funds obtained by the General
Partner, the Limited Partner or such Affiliate and loaned to the Partnership.
The Partnership may not lend funds to the General Partner or any Affiliate of
the General Partner.
(b) The General Partner may itself, or may enter into an agreement
with any of its Affiliates to, render services for the Partnership. Any service
rendered to the Partnership by the General Partner or any such Affiliate shall
be on terms that are fair and reasonable to the Partnership; provided, that the
--------
requirements of this Section 6.6(b) shall be deemed satisfied as to any
transaction approved by Special Approval. The provisions of Section 6.4 shall
apply to the rendering of services described in this Section 6.6(b).
(c) The Partnership may transfer assets to joint ventures, other
partnerships, corporations or other business entities in which it is or thereby
becomes a participant upon such terms and subject to such conditions consistent
with applicable law as the General Partner deems appropriate.
(d) Neither the General Partner nor any Affiliate thereof shall sell,
transfer or convey any property to, or purchase any property from, the
Partnership, directly or indirectly, except pursuant to transactions that are
fair and reasonable to the Partnership; provided, that the requirements of this
--------
Section 6.6(d) shall be deemed to be satisfied as to (i) the transactions
effected pursuant to Section 4.2 and Section 4.3 hereof, the Conveyance
Agreement and any other transactions described in the Registration Statement or
(ii) any transaction approved by Special Approval.
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(e) Without limitation of subsections (a) through (d) above, and
notwithstanding anything to the contrary in this Agreement, the existence of
conflicts of interest described in the Registration Statement under the caption
"Conflicts of Interest and Fiduciary Responsibility" are hereby approved by the
Limited Partner.
6.7 Indemnification. (a) To the fullest extent permitted by law, each
---------------
Indemnitee shall be indemnified and held harmless by the Partnership from and
against any and all losses, claims, damages, liabilities, joint or several,
expenses (including legal fees and expenses), judgments, fines, settlements and
other amounts arising from any and all claims, demands, actions, suits or
proceedings, whether civil, criminal, administrative or investigative, in which
any Indemnitee may be involved, or is threatened to be involved, as a party or
otherwise, by reason of its status as (x) the General Partner, a Departing
Partner or an Affiliate thereof, (y) an officer, director, employee, partner,
agent or trustee of the General Partner, any Departing Partner or an Affiliate
thereof of (z) a Person serving at the request of the Partnership in another
entity in a similar capacity, if the Indemnitee acted in good faith and in a
manner which such Indemnitee acted in good faith and in a manner which such
Indemnitee in good faith believed to be in, or not opposed to, the best
interests of the Partnership, and, with respect to any criminal proceeding, had
no reasonable cause to believe its conduct was unlawful. The termination of any
such action, suit or proceeding by judgment, order, settlement, conviction or
upon a plea of nolo contendere, or its equivalent, shall not, of itself, create
---- ----------
a presumption that the Indemnitee acted in a manner contrary to that specified
above. Any indemnification pursuant to this Section 6.7 shall be made only out
of the assets of the Partnership.
(b) To the fullest extent permitted by law, expenses (including legal
fees and expenses) incurred by an Indemnitee in defending any claim, demand,
action, suit or proceeding shall, from time to time, be advanced by the
Partnership prior to the final disposition of such claim, demand, action, suit
or proceeding upon receipt by the Partnership of an undertaking by or on behalf
of the Indemnitee to repay such amount if it shall be determined that the
Indemnitee is not entitled to be indemnified as authorized in this Section 6.7.
(c) The indemnification provided by this Section 6.7 shall be in
addition to any other rights to which an Indemnitee may be entitled under any
agreement, pursuant to any vote of the Partners, as a matter of law or
otherwise, either as to actions in the Indemnitee's capacity as (i) the General
Partner, a Departing Partner or an Affiliate thereof, (ii) as an officer,
director, employee, partner, agent or trustee of the General Partner, any
Departing Partner or an
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Affiliate thereof or (iii) a Person serving at the request of the Partnership in
a similar capacity with respect to another entity, and shall continue as to an
Indemnitee who has ceased to serve in any such capacity and shall inure to the
benefit of the heirs, successors, assigns and administrators of the Indemnitee.
(d) The Partnership may purchase and maintain insurance, on behalf of
the General Partner and such other Persons as the General Partner shall
determine, against any liability that may be asserted against any liability that
may be asserted against or expense that may be incurred by such Person in
connection with the Partnership's activities, regardless of whether the
Partnership would have the power to indemnify such Person against such liability
under the provisions of this Agreement.
(e) For purposes of this Section 6.7, the Partnership shall be deemed
to have requested an Indemnitee to serve as fiduciary of an employee benefit
plan whenever the performance by it of its duties to the Partnership also
imposes duties on, or otherwise involves services by, it to the plan or
participants or beneficiaries of the plan; excise taxes assessed on an
Indemnitee with respect to an employee benefit plan pursuant to applicable law
shall be deemed "fines" within the meaning of Section 6.7(a); and action taken
or omitted by it with respect to an employee benefit plan in the performance of
its duties for a purpose reasonably believed by it to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be for a purpose
which is in, or not opposed to, the best interests of the Partnership.
(f) In no event may an Indemnitee subject the Limited Partner to
personal liability by reason of the indemnification provisions set forth in this
Agreement.
(g) An Indemnitee shall not be denied indemnification in whole or in
part under this Section 6.7 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement.
(h) The provisions of this Section 6.7 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other persons.
6.8 Liability of Indemnitees. (a) No Indemnitee shall be liable to
------------------------
the Partnership, the Limited Partner or any Persons who have acquired interests
in the Partnership (whether as a Limited Partner or otherwise) or Units, for
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losses sustained or liabilities incurred as a result of any act or omission if
such Indemnitee acted in good faith.
(b) The General Partner may exercise any of the powers granted to it
by this Agreement and perform any of the duties imposed upon it hereunder either
directly or by or through its agents, and the General Partner shall not be
responsible for any misconduct or negligence on the part of any such agent
appointed by the General Partner in good faith.
6.9 Resolution of Conflicts of Interest. (a) Unless otherwise
-----------------------------------
expressly provided in this Agreement or the Investor Partnership Agreement,
whenever a potential conflict of interest exists or arises between the General
Partner or any of its Affiliates, on the one hand, and the Partnership or the
Limited Partner, on the other hand, any resolution or course of action in
respect of such conflict of interest shall be permitted and deemed approved by
the Limited Partner and shall not constitute a breach of this Agreement, of the
Investor Partnership Agreement, or any other agreement contemplated herein or
therein, or of any duty stated or implied by law or equity, if the resolution or
course of action is or, by operation of this Agreement, is deemed to be fair and
reasonable to the Partnership. The General Partner shall be authorized but not
required in connection with its resolution of such conflict of interest to seek
Special Approval of a resolution of such conflict or course of action. Any
conflict of interest and any resolution of such conflict of interest shall be
deemed fair and reasonable to the Partnership upon Special Approval of such
conflict of interest or resolution. The General Partner may also adopt a
resolution or course of action that has not received Special Approval. Any such
resolution or course of action in respect of any conflict of interest shall not
constitute a breach of this Agreement, of the Investor Partnership Agreement, of
any other agreement contemplated herein or therein, or of any duty stated or
implied by law or equity, if such resolution or course of action is fair and
reasonable to the Partnership. The General Partner shall be authorized in
connection with its resolution of any such conflict of interest to consider (i)
the relative interests of any party to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interest; and (ii) such
additional factors as the General Partner deems relevant, reasonable or
appropriate under the circumstances. However, nothing contained in this
Agreement shall require the General Partner to consider the interests of any
Person other than the Partnership.
(b) Whenever this Agreement or any other agreement contemplated
hereby provides that the General Partner or any of its Affiliates is permitted
or required to make a decision
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<PAGE>
(i) in its "discretion" or under a grant of similar authority or latitude, the
General Partner or such Affiliate shall be entitled to consider only such
interests and factors as it desires and shall have no duty or obligation to give
any consideration to any interest of or factors affecting the Limited Partner,
the Partnership, or any Unitholder, or (ii) in its "good faith" or under another
express standard, the General Partner or such Affiliate shall act under such
express standard and shall not be subject to any other or different standards
imposed by this Agreement, any other agreement contemplated hereby or applicable
law. In addition, any actions taken by the General Partner consistent with the
standard of "reasonable discretion" set forth in the definition of Available
Cash will be deemed not to breach any duty of the General Partner to the
Partnership or the Limited Partner. During the Support Period (as defined in the
Investor Partnership Agreement) the General Partner shall have no duty to sell
or otherwise dispose of any asset of the Partnership, other than in the ordinary
course of business. No borrowing by the Partnership or the approval thereof by
the General Partner shall be deemed to constitute a breach of duty of the
General Partner to the Partnership, or the Limited Partner by reason of the fact
that the purpose or effect of such borrowing is directly or indirectly to avoid
(i) subordination of Common Units by reason of the provisions of Section 5.4 or
5.5 of the Investor Partnership Agreement or (ii) the obligation of Borden or
any of its Affiliates to purchase APUs (as defined in the Investor Partnership
Agreement) in accordance with the Distribution Support Agreement (as so
defined), or to permit the redemption of APUs.
(c) Whenever a particular transaction, arrangement or resolution of a
conflict of interest is required hereunder to be "fair and reasonable" to any
Person, the fairness and reasonableness of such transaction, arrangement or
resolution shall be considered on the whole in the context of all similar or
related transactions, and in the context of all transactions, relationships and
arrangements between or among the relevant Persons or their respective
Affiliates.
6.10 Other Matters Concerning the General Partner. (a) The General
--------------------------------------------
Partner may rely and shall be protected in acting or refraining from action upon
any resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, bond, debenture, or other paper or document believed by
it to be genuine and to have been signed or presented by the proper party or
parties.
(b) The General Partner may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers, and other consultants
and advisers selected by it, and any act taken or omitted to be taken in
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<PAGE>
reliance upon the opinion (including an Opinion of Counsel) of such Persons as
to matters which the General Partner believes to be within such Person's
professional or expert competence shall be conclusively presumed to have been
done or omitted in good faith and in accordance with such opinion.
(c) The General Partner shall have the right, in respect of any of
its powers or obligations hereunder, to act through any of its duly authorized
officers and a duly appointed attorney or attorneys-in-fact. Each such attorney
shall, to the extent provided by the General Partner in the power of attorney,
have full power and authority to do and perform all and every act and duty which
is permitted or required to be done by the General Partner hereunder.
6.11 Title to Partnership Assets. Title to Partnership assets,
---------------------------
whether real, personal or mixed and whether tangible or intangible, shall be
deemed to be owned by the Partnership as an entity, and no Partner or assignee,
individually or collectively, shall have any ownership interest in such
Partnership assets or any portion thereof. Title to any or all of the
Partnership assets may be held in the name of the Partnership, the General
Partner or one or more nominees, as the General Partner may determine. The
General Partner hereby declares and warrants that any Partnership assets for
which legal title is held in the name of the General Partner shall be held by
the General Partner for the use and benefit of the Partnership in accordance
with the provisions of this Agreement. All Partnership assets shall be recorded
as the property of the Partnership on its books and records, irrespective of the
name in which legal title to such Partnership assets is held.
6.12 Limitations Regarding Certain Actions. In addition to any other
-------------------------------------
provision of this Agreement requiring Special Approval, the General Partner will
not cause or permit the Partnership to take any of the following actions without
Special Approval: (a) the making of any material capital expenditure
(individually or, with respect to related capital expenditures, as a group), (b)
the material curtailment of the operations of the Partnership, (c) the material
expansion of the capacity of any of the plants constituting part of the Acquired
Facilities, or (d) the amendment of or entry into by the Partnership of any
agreement between the Partnership and Borden (except that the Partnership may,
--------------------
without Special Approval, enter into the agreements specifically referred to in
- -------------------------------------------------------------------------------
Section 6.1(b)).
- -----------
6.13 Reliance by Third Parties. Notwithstanding anything to the
-------------------------
contrary in this Agreement, any Person dealing with the Partnership shall be
entitled to assume that the General Partner has full power and authority to
encumber, sell or otherwise use in any manner any and all assets of the
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Partnership and to enter into any contracts on behalf of the Partnership, and
such Person shall be entitled to deal with the General Partner as if it were the
Partnership's sole party in interest, both legally and beneficially. The Limited
Partner hereby waives any and all defenses or other remedies which may be
available against such Person to contest, negate or disaffirm any action of the
General Partner in connection with any such dealing. In no event shall any
Person dealing with the General Partner or its representatives be obligated to
ascertain that the terms of this Agreement have been complied with or to inquire
into the necessity or expedience of any act or action of the General Partner or
its representatives. Each and every certificate, document or other instrument
executed on behalf of the Partnership, the General Partner or its
representatives shall be conclusive evidence in favor of any and every Person
relying thereon or claiming thereunder that (a) at the time of the execution and
delivery of such certificate, document or instrument this Agreement was in full
force and effect, (b) the Person executing and delivering such certificate,
document or instrument was duly authorized and empowered to do so for and on
behalf of the Partnership and (c) such certificate, document or instrument was
duly executed and delivered in accordance with the terms and provisions of this
Agreement and is binding upon the Partnership.
ARTICLE VII
RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNER
7.1 Limitation of Liability. The Limited Partner and the
-----------------------
Organizational Limited Partner shall have no liability under this Agreement
except as provided in this Agreement or the Delaware Act.
7.2 Management of Business. The Limited Partner (in its capacity as
----------------------
such) shall not take part in the operation, management or control (within the
meaning of the Delaware Act) of the Partnership's business, transact any
business in the Partnership's name or have the power to sign documents for or
otherwise bind the Partnership.
7.3 Return of Capital. The Limited Partner shall not be entitled to
-----------------
the withdrawal or return of its Capital Contribution, except to the extent of
distributions made pursuant to this Agreement or upon termination of the
Partnership as provided herein.
7.4 Rights of the Limited Partner Relating to the Partnership. (a)
---------------------------------------------------------
In addition to other rights provided by this Agreement or by applicable law, and
except as limited by Section 7.4(b), the Limited Partner shall have the right,
for
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<PAGE>
a purpose reasonably related to such Limited Partner's interest as a limited
partner in the Partnership, upon reasonable demand and at such Limited Partner's
own expense:
(i) to obtain true and full information regarding the status of the
business and financial condition of the Partnership;
(ii) promptly after becoming available, to obtain a copy of the
Partnership's federal, state and local income tax returns for each year;
(iii) to have furnished to it, upon notification to the General
Partner, a current list of the name and last known business, residence or
mailing address of each Partner;
(iv) to have furnished to it, upon notification to the General
Partner, a copy of this Agreement and the Certificate of Limited
Partnership and all amendments thereto, together with executed copies of
all powers of attorney pursuant to which this Agreement, the Certificate of
Limited Partnership and all amendments thereto have been executed;
(v) to obtain true and full information regarding the amount of cash
and a description and statement of the Agreed Value of any other property
or services contributed by each Partner and which each Partner has agreed
to contribute in the future and the date on which each become a Partner;
and
(vi) to obtain such other information regarding the affairs of the
Partnership as is just and reasonable.
(b) Notwithstanding any other provision of this Section 7.4, the
General Partner may keep confidential from the Limited Partner for such period
of time as the General Partner deems reasonable, any information that the
General Partner reasonably believes to be in the nature of trade secrets or
other information the disclosure of which the General Partner in good faith
believes is not in the best interests of the Partnership or could damage the
Partnership or its business or which the Partnership is required by law or by
agreements with third parties to keep confidential.
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<PAGE>
ARTICLE VIII
BOOKS, RECORDS, ACCOUNTING AND REPORTS
8.1 Records and Accounting. The General Partner shall keep or cause
----------------------
to be kept at the principal office of the Partnership appropriate books and
records with respect to the Partnership's business including, without
limitation, all books and records necessary to provide to the Limited Partner
any information, lists and copies of documents required to be provided pursuant
to Section 7.4(a). The books of the Partnership shall be maintained on an
accrual basis in accordance with generally accepted accounting principles.
8.2 Fiscal Year. The fiscal year of the Partnership shall be the
-----------
calendar year.
8.3 Reports. (a) As soon as practicable, but in no event later
-------
than 90 days after the close of each Partnership Year, the General Partner shall
cause to be mailed to the Limited Partner as of a date selected by the General
Partner in its sole discretion, an annual report containing financial statements
of the Partnership for such Partnership Year, presented in accordance with
generally accepted accounting principles, including a balance sheet and
statements of operations, Partners' equity and changes in financial position,
such statements to be audited by a firm of independent public accountants
selected by the General Partner.
(b) As soon as practicable, but in no event later than 60 days after
the close of each calendar quarter except the last calendar quarter of each
year, the General Partner shall cause to be mailed to the Limited Partner, as of
a date selected by the General Partner in its sole discretion, a report
containing unaudited financial statements of the Partnership.
ARTICLE IX
TAX MATTERS
9.1 Preparation of Tax Returns. The General Partner shall arrange
--------------------------
for the preparation and timely filing of all returns of Partnership income,
gains, deductions, losses and other items required of the Partnership for
federal and state income tax purposes and shall use all reasonable efforts to
furnish to the Limited Partner, within 75 days of the close of each taxable
year, the tax information reasonably required for federal and state income tax
reporting purposes. The classification, realization and recognition of income,
gain, losses and deductions and other
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<PAGE>
items shall be on the accrual method of accounting for federal income tax
purposes. The taxable year of the Partnership shall be the calendar year.
9.2 Tax Elections. Except as otherwise provided herein, the General
-------------
Partner shall, in its sole discretion, determine whether to make any available
election pursuant to the Code, provided, that the General Partner shall make the
--------
election under Section 754 of the Code in accordance with applicable regulations
thereunder. The General Partner shall have the right to seek to revoke any such
election (including, without limitation, the election under Section 754 of the
Code) upon the General Partner's determination that such revocation is in the
best interests of the Limited Partner.
9.3 Tax Controversies. Subject to the provisions hereof, the General
-----------------
Partner is designated the Tax Matters Partner (as defined in Section 6231 of the
Code), and is authorized and required to represent the Partnership (at the
Partnership's expense) in connection with all examinations of Partnership's
affairs by tax authorities, including resulting administrative and judicial
proceedings, and to expend Partnership funds for professional services and costs
associated therewith. Each Partner agrees to cooperate with the General Partner
and to do or refrain from doing any or all things reasonably required by the
General Partner to conduct such proceedings.
9.4 Organizational Expenses. The Partnership shall elect to deduct
-----------------------
expenses, if any, incurred by it in organizing the Partnership ratably over a
60-month period as provided in Section 709 of the Code.
9.5 Withholding. Notwithstanding any other provision of this
-----------
Agreement, the General Partner is authorized to take any action that it
determines to be necessary or appropriate to cause the Partnership to comply
with any withholding requirements established under the Code or any other
federal, state or local law including, without limitation, pursuant to Section
1441, 1442, 1445 and 1446 of the Code. To the extent that the Partnership is
required to withhold and pay over to any taxing authority any amount resulting
from the allocation or distribution of income to the Limited Partner. The amount
so withheld shall be treated as a distribution of cash in the amount of such
withholding to such Partner.
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<PAGE>
ARTICLE X
TRANSFER OF INTERESTS
10.1 Transfer. (a) The term "transfer," when used in this Article X
--------
with respect to a Partnership Interest, shall be deemed to refer to a
transaction by which a Partner assigns its Partnership Interest to another
Person and includes a sale, assignment, gift, pledge, encumbrance,
hypothecation, mortgage, exchange or any other disposition by law or otherwise.
(b) No Partnership Interest shall be transferred, in whole or in
part, except in accordance with the terms and conditions set forth in this
Article X. Any transfer or purported transfer of a Partnership Interest not made
in accordance with this Article X shall be null and void.
10.2 Transfer of General Partner's Partnership Interest. The General
--------------------------------------------------
Partner may not transfer all or any part of its Partnership Interest as the
General Partner; provided, that if the General Partner transfers its partnership
--------
interest as general partner in the Investor Partnership to any Person (in
accordance with the provisions of the Investor Partnership Agreement), the
General Partner shall also transfer its Partnership Interest as the General
Partner to such Person. The Limited Partner hereby approves of any such
transfer.
10.3 Transfer of Interest of Limited Partner. The Limited Partner may
---------------------------------------
not transfer all or any part of its Partnership Interests except that a
successor of the Limited Partner may become a Substituted Limited Partner as
provided in Article XI.
ARTICLE XI
ADMISSION OF PARTNERS
11.1 Admission of Substituted Limited Partner. Any successor to the
----------------------------------------
Partnership Interest of the Limited Partner shall be admitted to the Partnership
as a Limited Partner upon (a) furnishing to the General Partner (1) acceptance
in form satisfactory to the General Partner of all the terms and conditions of
this Agreement and (ii) such other documents or instruments as may be required
in order to effect its admission as a Limited Partner, and (b) obtaining the
consent of the General Partner, which consent may be withheld or granted in the
sole discretion of the General Partner. The transferee shall be admitted to the
Partnership as a Limited Partner immediately prior to the transfer.
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<PAGE>
11.2 Admission of Successor General Partner. A successor General
--------------------------------------
Partner approved pursuant to Section 12.1 or the transferee of or successor to
the Partnership Interest of the General Partner pursuant to Section 10.2
admitted to the Partnership as the General Partner, effective immediately prior
to the transfer of the Partnership Interest of the General Partner pursuant to
Section 10.2 or the withdrawal or removal of the General Partner pursuant to
Section 12.1 and such successor General Partner shall continue the business of
the Partnership without dissolution.
11.3 Amendment of Agreement and Certificate of Limited Partnership.
-------------------------------------------------------------
To cause the admission to the Partnership of any successor General Partner, the
General Partner shall take all steps necessary and appropriate to prepare as
soon as practical an amendment of this Agreement and, if required by law, shall
prepare and file an amendment to the Certificate of Limited Partnership and may
for this purpose exercise the power of attorney granted pursuant to Section 1.4.
ARTICLE XII
WITHDRAWAL OR REMOVAL OF THE GENERAL PARTNER
12.1 Withdrawal or Removal of General Partner. The General partner
----------------------------------------
shall automatically withdraw from the Partnership or be removed as General
Partner if, and only if, it withdraws from, or is removed as the general
partner of, the Investor Partnership. Such withdrawal or removal shall become
effective at the same time as is its withdrawal or removal as general partner of
the Investor Partnership shall become effective. The Partners agree that the
approval of a successor general partner of the Investor Partnership shall
constitute approval by each Partner of such successor as the successor General
Partner of the Partnership. If no successor General Partner is approved, the
Partnership shall be dissolved pursuant to Section 13.1.
12.2 Interest of Departing Partner and Successor. The Partnership
-------------------------------------------
Interest of a Departing Partner departing as a result of withdrawal or removal
pursuant to Section 13.1 of the Investor Partnership Agreement shall be
purchased by the successor to the Departing Partner. Such purchase shall be a
condition to the admission of the successor to the Partnership as General
Partner. The purchase price for such Partnership Interest shall be paid in cash
and shall be equal to the fair market value of the Departing Partner's
Partnership Interest, determined as of the effective date of its departure in
the manner specified in the Investor Partnership Agreement.
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<PAGE>
12.3 Reimbursement of Departing Partner. The Partnership shall
----------------------------------
reimburse a Departing Partner for all employee related liabilities, including,
without limitation, reasonable severance liabilities incurred in connection with
the termination of employees employed by such Departing Partner for the benefit
of the Partnership.
ARTICLE XIII
DISSOLUTION AND LIQUIDATION
13.1 Dissolution. The Partnership shall not be dissolved by the
-----------
admission of a Substituted Limited Partner or by the admission of a successor
General Partner in accordance with the terms of this Agreement. Upon the removal
or withdrawal of the General Partner, any successor General Partner shall
continue the business of the Partnership. The Partnership shall dissolve, and
its affairs shall be wound up, upon:
(a) the expiration of its term as provided in Section 1.5;
(b) the withdrawal or removal of the General Partner, or any other
event that results in its ceasing to be the General Partner (other than by
reason of a transfer of the General Partner's Partnership Interest in
accordance with Section 10.2 or withdrawal or removal following approval by
the Limited Partner of a successor pursuant to Section 12.1);
(c) an election to dissolve the Partnership by the General Partner
that is approved by the Limited Partner;
(d) the bankruptcy or the dissolution of the General Partner;
(e) the sale of all or substantially all of the assets and properties
of the Partnership; or
(f) the dissolution of the Investor Partnership;
provided, that the Partnership shall not be dissolved upon an event described in
- --------
Section 13.1(b) if, within 90 days after such event, all Partners agree in
writing to continue the business of the Partnership and to the appointment,
effective as of the date of such event, of a successor General Partner or
General Partners.
For purposes of this Section 13.1, bankruptcy of the General Partner
shall be deemed to have occurred when (a) it commences a voluntary proceeding
seeking liquidation,
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<PAGE>
reorganization or other relief under any bankruptcy, insolvency or other similar
law now or hereafter in effect, (v) it is adjudged a bankrupt or insolvent, or
has entered against it a final and nonappealable order for relief under any
bankruptcy, insolvency or similar law now or hereafter in effect, (w) it
executes and delivers a general assignment for the benefit of its creditors, (x)
it files an answer or other pleading admitting or failing to contest the
material allegations of a petition filed against it in any proceeding of the
nature described in clause (u) above, (y) it seeks, consents to or acquiesces in
the appointment of a trustee, receiver or liquidator for it or for all or any
substantial part of its properties, or (z)(1) any proceeding of the nature
described in clause (u) above has not been dismissed within 120 days after the
commencement thereof, (2) the appointment without its consent or acquiescence of
a trustee, receiver or liquidator appointed pursuant to clause (y) above has not
been vacated or stayed within 90 days of such appointment, or (3) such
appointment is not vacated within 90 days after the expiration of any such stay.
13.2 Continuation of the Business of the Partnership after
-----------------------------------------------------
Dissolution. Upon (i) dissolution of the Partnership in accordance with Section
- -----------
13.1(b) and a failure of all Partners to agree to continue the business of the
Partnership and appoint a successor General Partner as provided in Section 13.1
then within an additional 90 days, or (ii) dissolution of the Partnership in
accordance with Section 13.1(d) then within 180 days, the Limited Partner may
elect to reconstitute the Partnership and continue its business on the same
terms and conditions set forth in this Agreement by forming a new limited
partnership on terms identical to those set forth in this Agreement and having
as a general partner a Person approved by the Limited Partner. In addition, upon
dissolution of the Partnership in accordance with Section 13.1(f), if the
Investor Partnership is reconstituted pursuant to Section 14.2 of the Investor
Partnership Agreement, the reconstituted entity may, within 180 days after such
event of dissolution, as the Limited Partner, elect to reconstitute the
Partnership in accordance with the foregoing sentence. Upon any such election by
the Limited Partner, all Partners shall be bound thereby and shall be deemed to
have approved thereof. Unless such an election is made within the applicable
time period set forth above, the Partnership shall conduct only activities
necessary to wind up its affairs. If such an election is so made after
dissolution, then:
(a) the reconstituted Partnership shall continue until the end of the
term set forth in Section 1.5 unless earlier dissolved in accordance with
this Article XIII;
-40-
<PAGE>
(b) if the successor general partner is not the former General
Partner, then the interest of the former General Partner shall be purchased
by the successor general partner in the manner described in Section 12.2
and
(c) all necessary steps shall be taken to cancel this Agreement and
the Certificate of Limited Partnership and to enter into a new partnership
agreement and certificate of limited partnership, and the successor general
partner may for this purpose exercise the powers of attorney granted the
General Partner pursuant to Section 1.4.
13.3 Liquidation. Upon dissolution of the Partnership, unless the
-----------
Partnership is continued under an election to reconstitute and continue the
Partnership pursuant to Section 13.2, the General Partner, or in the event the
General Partner has been dissolved or removed, become bankrupt as defined in
Section 13.1 or withdrawn from the Partnership, a liquidator or liquidating
committee approved by the Limited Partner, shall be the Liquidator. The
Liquidator (if other than the General Partner) shall be entitled to receive such
compensation for its services as may be approved by the Limited Partner. The
Liquidator shall agree not to resign at any time without 15 days' prior written
notice and (if other than the General Partner) may be removed at any time, with
or without cause, by notice of removal approved by the Limited Partner. Upon
dissolution, removal or resignation of the Liquidator, a successor and
substitute Liquidator (who shall have and succeed to all rights, powers and
duties of the original Liquidator) shall within 30 days thereafter be approved
by the Limited Partner. The right to approve a successor or substitute
Liquidator in the manner provided herein shall be deemed to refer also to any
such successor or substitute Liquidator approved in the manner herein provided.
Except as expressly provided in this Article XIII, the Liquidator approved in
the manner provided herein shall have and may exercise, without further
authorization or consent of any of the parties hereto, all of the powers
conferred upon the General Partner under the terms of this Agreement (but
subject to all of the applicable limitations, contractual and otherwise, upon
the exercise of such powers, other than the limitation on sale set forth in
Section 6.3(b)) to the extent necessary or desirable in the good faith judgment
of the Liquidator to carry out the duties and functions of the Liquidator
hereunder for and during such period of time as shall be reasonably required in
the good faith judgment of the Liquidator to complete the winding up and
liquidation of the Partnership as provided for herein. The Liquidator shall
liquidate the assets of the Partnership, and apply and distribute the proceeds
of such liquidation in
-11-
<PAGE>
the following order of priority, unless otherwise required by mandatory
provisions of applicable law:
(a) the payment to creditors of the Partnership, including Partners
who are creditors, in the order of priority provided by law; and the
creation of a reserve of cash or other assets of the Partnership for
contingent liabilities in an amount, if any, determined by the Liquidator
to be appropriate for such purposes;
(b) to the Partners in accordance with the positive balances in their
respective Capital Accounts after taking into account adjustments to such
Capital Accounts pursuant to Section 5.2 until such balances are reduced to
zero; provided, that the General Partner shall contribute to the
--------
Partnership cash in an amount sufficient to restore to zero any negative
balance in its Capital Account by the end of the taxable year of
liquidation or 90 days after the date of liquidation, whichever is later;
and
(c) finally, to the Partners in accordance with their respective
Percentage Interests.
13.4 Distributions in Kind. Notwithstanding the provisions of
--------------------
Section 13.3 which require the liquidation of the assets of the Partnership, but
subject to the order of priorities set forth therein, if upon dissolution of the
Partnership the Liquidator determines that an immediate sale of part or all of
the Partnership's assets would be impractical or would cause undue loss to the
Partners, the Liquidator may, in its absolute discretion, defer for a reasonable
time the liquidation of any assets except those necessary to satisfy liabilities
of the Partnership (including those to Partners) and/or distribute to the
Partners, in lieu of cash, as tenants in common or as owners in indivision and
in accordance with the provisions of Section 13.3, undivided interests in such
Partnership assets as the Liquidator deems not suitable for liquidation. Any
such distributions in kind shall be made only if, in the good faith judgement of
the Liquidator, such distributions in kind are in the best interest of the
Limited Partner, and shall be subject to such conditions relating to the
disposition and management of such properties as the Liquidator deems reasonable
and equitable and to any agreements governing the operation of such properties
at such time. The Liquidator shall determine the fair market value of any
property distributed in kind using such reasonable method of valuation as it may
adopt.
13.5 Cancellation of Certificate of Limited Partnership. Upon the
--------------------------------------------------
completion of the distribution of
-42-
<PAGE>
partnership cash and property as provided in Sections 13.3 and 13.4, the
Partnership shall be terminated, and the Certificate of Limited Partnership and
all qualifications of the Partnership as a foreign limited partnership in
jurisdictions other than the State of Delaware shall be cancelled and such other
actions as may be necessary to terminate the Partnership shall be taken.
13.6 Reasonable Time for Winding Up. A reasonable time shall be
------------------------------
allowed for the orderly winding up of the business and affairs of the
Partnership and the liquidation of its assets pursuant to the Section 13.3 in
order to minimize any losses otherwise attendant upon such winding up and the
provisions of this Agreement shall remain in effect between the Partners during
the period of liquidation.
13.7 Return of Capital. The General Partner shall not be personally
-----------------
liable for the return of the Capital Contributions of the Limited Partner, or
any portion thereof, it being expressly understood that any such return shall be
made solely from the Partnership assets.
13.8 No Capital Account Restoration. Except as provided in Section
------------------------------
13.3(b), no Partner shall have any obligation to restore any negative balance in
its Capital Account upon liquidation of the Partnership.
13.9 Waiver of Partition. Each Partner hereby agrees that there
-------------------
shall not be a partition of the Partnership property distributed in kind for a
period of 15 years following such distribution.
ARTICLE XIV
AMENDMENT OF PARTNERSHIP AGREEMENT
14.1 Amendment to Be Adopted Solely by General Partner. The Limited
-------------------------------------------------
Partner agrees that the General Partner (pursuant to its power of attorney from
the Limited Partner), without the approval of the Limited Partner, may amend any
provision of this Agreement, and execute, swear to, acknowledge, deliver, file
and record whatever documents may be required in connection therewith, to
reflect:
(a) a change in the name of the Partnership or the location of the
principal place of business of the Partnership;
(b) the admission, substitution, withdrawal or removal of Partners in
accordance with this Agreement;
-43-
<PAGE>
(c) a change that in the sole discretion of the General Partner is
reasonable and necessary or appropriate to qualify or continue the
qualification of the Partnership as a limited partnership or a partnership
in which the limited partners have limited liability under the laws of any
state or that is necessary or advisable in the opinion of the General
Partner to ensure that the Partnership will not be taxable as a corporation
or an association taxable as a corporation for federal income tax purposes;
(d) a change (i) that in the sole discretion of the General Partner
does not adversely affect the Limited Partner in any material respect, (ii)
that is necessary or desirable to satisfy any requirements, conditions or
guidelines contained in any opinion, directive, order, ruling or regulation
of any federal or state agency or judicial authority or contained in any
federal or state statute, or that is necessary or desirable to facilitate
the trading of the Depositary Units (as defined in the Investor Partnership
Agreement) or comply with any rule, regulation, guideline or requirement
of any securities exchange on which Depositary Units (as so defined) are or
will be listed for trading, compliance with any of which the General
Partner deems to be in the best interests of the Partnership and the
Limited Partner or (iii) that is required to effect the intent of the
provisions of this Agreement or is otherwise contemplated by this
Agreement;
(e) an amendment that is necessary, in the Opinion of Counsel, to
prevent the Partnership or the General Partner or its directors or officers
from in any manner being subjected to the provisions of the Investment
Company Act of 1940, as amended, the Investment Advisers Act of 1940, as
amended, or "plan asset" regulations adopted under the Employee Retirement
Income Security Act of 1974, as amended, whether or not substantially
similar to plan asset regulations currently applied or proposed by the
United States Department of Labor;
(f) any amendment expressly permitted in this agreement to be made
by the General Partner acting alone;
(g) any amendment to this Agreement that is necessary to conform this
Agreement to any amend-
-44-
<PAGE>
ments made in the Investor Partnership Agreement; or
(h) any other amendments similar to the foregoing.
14.2 Amendment Procedures. Except as provided in Section 14.1, all
--------------------
amendments to this Agreement shall be made in accordance with the following
requirements. Amendments to this Agreement may be proposed by the General
Partner or by the Limited Partner. Subject to Section 14.1, any proposed
amendment shall be effective only upon the approval of the General Partner and
the Limited Partner.
14.3 Prohibited Amendments. Notwithstanding any other provision of
---------------------
this Agreement, no amendment to this Agreement shall be made if such amendment
would have a material adverse effect on the business, financial condition,
results of operations, properties or assets of the Partnership or on the ability
of the Partnership to perform its obligations under this Agreement, the
Operative Agreements or the Notes.
ARTICLE XV
GENERAL PROVISIONS
15.1 Addresses and Notices. Any notice, demand, request or report
---------------------
required or permitted to be given or made to the Partnership, the General
Partner or the Limited Partner under this Agreement shall be in writing and
shall be deemed given if received by it at the principal office of the
Partnership designated pursuant to Section 1.3.
15.2 Titles and Captions. All article or section titles or captions
-------------------
in this Agreement are for convenience only. They shall not be deemed part of
this Agreement and in no way define, limit, extend or describe the scope or
intent of any provisions hereof. Except as specifically provided otherwise,
references to "Articles" and "Sections" are to Articles and Sections of this
Agreement.
15.3 Pronouns and Plurals. Whenever the context may require, any
--------------------
pronoun used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns, pronouns and verbs
shall include the plural and vice versa.
15.4 Further Action. The parties shall execute and deliver all
--------------
documents, provided all information and take or refrain from taking action as
may be necessary or appropriate to achieve the purposes of this Agreement.
-45-
<PAGE>
15.5 Binding Effect. This Agreement shall be binding upon and inure
--------------
to the benefit of the parties hereto and their heirs, executors, administrators,
successors, legal representatives and permitted assigns.
15.6 Integration. This Agreement constitutes the entire agreement
-----------
among the parties hereto pertaining to the subject matter hereof and supersedes
all prior agreement and understandings pertaining thereto.
15.7 Creditors. None of the provisions of this Agreement shall be
---------
for the benefit of, or shall be enforceable by, any creditor of the Partnership.
15.8 Waiver. No failure by any party to insist upon the strict
------
performance of any covenant, duty, agreement or condition of this Agreement or
to exercise any right or remedy consequent upon a breach thereof shall
constitute waiver of any such breach or any other covenant, duty, agreement or
condition.
15.9 Counterparts. This Agreement may be executed in counterparts,
------------
all of which together shall constitute one agreement binding on all the parties
hereto, notwithstanding that all such parties are not signatories to the
original or the same counterpart.
15.10 Applicable Law. This Agreement shall be construed in
--------------
accordance with and governed by the laws of the State of Delaware, without
regard to the principles of conflicts of law.
15.11 Invalidity of Provisions. If any provision of this Agreement
------------------------
is or becomes invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not be affected thereby.
-46-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the dates and at the places set forth below and in the presence of the witnesses
whose signatures appear opposite the signatures of the parties hereto.
Date: November 30, 1987 GENERAL PARTNER
Place: New York, New York BCP MANAGEMENT, INC.
------------------
Witnesses: By: /s/ David A. Kelly
---------------------------
/s/ SIGNATURE ILLEGIBLE Name: David A. Kelly
- --------------------------- Title: Treasurer
/s/ SIGNATURE ILLEGIBLE
- ---------------------------
Date: November 30, 1987 ORGAINZATIONAL LIMITED PARTNER:
Place: New York, New York BORDEN, INC.
------------------
By: /s/ SIGNATURE ILLEGIBLE
Witensses: ---------------------------
Name: Lawrence O. Doza
/s/ Carolyn O'Leary Title: Sr. Vice President &
- ---------------------------
Chief Financial
Officer
/s/ SIGNATURE ILLEGIBLE
- ---------------------------
Date: November 30, 1987 LIMITED PARTNER:
Place: New York, New York BORDEN CHEMICALS AND PLASTICS
------------------
LIMITED PARTNERSHIP,
Witnesses:
/s/ Carolyn O'Leary By: BCP Management, Inc.
- ---------------------------
(General Partner)
/s/ SIGNATURE ILLEGIBLE
- ---------------------------
By: /s/ SIGNATURE ILLEGIBLE
---------------------------
Name: David A. Kelly
Title: Treasurer
-47-
<PAGE>
STATE OF New York
COUNTY OF New York
On this 30th day of November, 1987, before me, the undersigned Notary
Public for the State and County aforesaid, and in the presence of the
undersigned competent witnesses, personally came and appeared David A. Kelly who
declared and acknowledged unto me, that he is the Treasurer of BCP Management,
Inc., a Delaware corporation, that as such duly authorized officer, by and with
the authority of the Board of Directors of said corporation, he signed the
foregoing instrument as the free act and deed of said corporation, for and on
behalf of said corporation and for the objects and purposes therein set forth.
THUS DONE AND PASSED at New York, New York, on the date first above
written in the presence of me, Notary, and the following competent witnesses,
who have signed in the presence of the appearer and me, Notary.
WITNESSES: BCP MANAGEMENT, INC.
/s/ Carolyn O'Leary By: [SIGNATURE ILLEGIBLE]
- ------------------------ ------------------------
[SIGNATURE ILLEGIBLE]
- ------------------------
Margaret M. Keane
-----------------
NOTARY PUBLIC
County of New York, State of New York
My commission expires:
May 12, 1988
<PAGE>
STATE OF New York
COUNTY OF New York
On this 30th day of November, 1987, before me, the undersigned Notary
Public for the State and County aforesaid, and in the presence of the
undersigned and competent witnesses, personally came and appeared Lawrence U.
Doza ,who declared and acknowledged unto me, that he is the Senior VP and Chief
Financial Officer of Borden, Inc., a New Jersey corporation, that as such duly
authorized officer, by and with the authority of the Board of Directors of said
corporation, he signed the foregoing instrument as the free act and deed of said
corporation, for and on behalf of said corporation and for the objects and
purposes therein set forth.
THUS DONE AND PASSES at New York, New York, on the date first above
written in the presence of me, Notary, and the following competent witnesses,
who have signed in the presence of the appearer and me, Notary.
WITNESSES: BORDEN, INC.
/s/ Carolyn O'Leary By: [SIGNATURE ILLEGIBLE]
- ------------------------ ------------------------
[SIGNATURE ILLEGIBLE]
- ------------------------
Margaret M. Keane
-----------------
NOTARY PUBLIC
County of New York, State of New York.
My commission expires:
May 12, 1988
<PAGE>
STATE OF New York
COUNTY OF New York
On this 30th day of November, 1987, before me, the undersigned Notary
Public for the State and County aforesaid, and in the presence of the
undersigned competent witnesses, personally came and appeared David A. Kelly,
who declared and acknowledged unto me, that he is the Treasurer of BCP
Management, Inc., a Delaware corporation and the general partner of Borden
Chemicals and Plastics Limited Partnership, a Delaware limited partnership, that
as such duly authorized officer, by and with the authority of the Board of
Directors of said corporation, he signed the foregoing instrument as the free
act and deed of said corporation as the general partner of said limited
partnership, for and on behalf of said limited partnership and for the objects
and purposes therein set forth.
THUS DONE AND PASSED at New York, New York, on the date first above
written in the presence of me, Notary, and the following competent witnesses,
who have signed in the presence of the appearer and me, Notary.
WITNESSES: BORDEN CHEMICALS AND PLASTICS
LIMITED PARTNERSHIP
By: BCP Management, Inc.
(General Partner)
/s/ Carolyn O'Leary By: [SIGNATURE ILLEGIBLE]
- ------------------------ ------------------------
[SIGNATURE ILLEGIBLE]
- ------------------------
Margaret M. Keane
-----------------
NOTARY PUBLIC
County of New York, State of New York
My commission expires:
May 12, 1988
<PAGE>
Exhibit D
BCP MANAGEMENT, INC.
MINUTES OF SPECIAL MEETING OF BOARD OF DIRECTORS
MARCH 29, 1995
A special meeting of the Board of Directors was held by telephone
conference call on March 29, 1995, beginning at 10:00 a.m., pursuant to notice
duly given.
Mr. Saggese, the Chairman of the Board, called the meeting to order.
The following directors participated:
J. M. Saggese
D. M. Galbreath
E. H. Jennings
D. A. Kelly
G. W. Koch
J. V. Stapleton
R. B. Wiles
Mr. M. M. Mahmood, of Sidley & Austin, also participated at Mr.
Saggese's invitation.
The minutes of the meeting of the Board held on January 24, 1995, were
approved.
Mr. Saggese then advised the Board that he was recommending that the
Operating Partnership should not proceed with the previously approved public
offering of Units, but instead should (i) proceed with the previously approved
public offering of $200 million of Notes for purposes of prepayng the existing
$150 million of Notes and the paying of related
<PAGE>
premiums, financing a portion of the purchase price for the Addis PVC plant
acquisition from Occidental Chemical Corporation, and other purposes, and (ii)
implement a revolving credit facility for up to $100 million to finance the
balance of the purchase price for the Addis PVC plant, and for other purposes.
Mr. Saggese then explained that his recommendation was primarily based
on the current trading price of the Units and prevailing interest rates, which
made the Unit offering less attractive and the Notes offering and credit
facility more attractive and the Notes offering and credit facility more
attractive. He also noted that his recommendation will eliminate the dilution of
earnings that would have resulted from the Unit offering. Thereupon, upon motion
duly made and seconded, and after a full discussion, the following resolution
was unanimously passed:
WHEREAS, this Board of Directors of BCP Management, Inc. (the
"Corporation") had previously approved, for and on behalf of the
Corporation, on its own behalf and, in its capacity as general partner of
Borden Chemicals and Plastics Limited Partnership ("BCP") and Borden
Chemicals and Plastics Operating Limited Partnership ("BCOP"), for and on
behalf of BCP and BCOP: (i) the acquisition ("Acquisition") by BCOP of the
Addis PVC resins facility from Occidental Chemical Corporation; (ii) the
registration and public offering ("Units Offering") by BCP of up to
5,000,000 Units for purposes of financing all or a portion of the purchase
price for the Acquisition and other purposes; and (iii) the registration
and public offering ("Notes Offering") by BCOP of up to $225 million of
Notes for purposes of prepaying the existing $150 million of Notes ("Old
Notes") of BCOP and paying of related premiums, financing a portion of the
purchase price for the Acquisition and other purposes; and
-2-
<PAGE>
WHEREAS, based on the trading price of the Units, prevailing interest
rates and other factors, it is desirable and in the best interests of BCP
and BCOP that in order to (i) finance the purchase price for the
Acquisition and the prepayment of the Old Notes and payment of the related
premiums and expenses and (ii) obtain a larger working line of credit for
BCOP relative to BCOP's existing $20 million working capital facility (the
"Existing Facility"), BCOP should effect the Notes Offering for up to $225
million of Notes and implement a revolving credit facility for up to $100
million;
NOW, THEREFORE, BE IT RESOLVED, that the Notes Offering by BCOP of up
to $225 million of Notes previously authorized and approved by this Board
of Directors be and hereby is further approved, confirmed and ratified by
the Corporation on its own behalf and, in its capacity as general partner
of BCP and BCOP, for and on behalf of BCP and BCOP; and
FURTHER RESOLVED, that, without limiting the scope of any previous
authorization provided by this Board of Directors with respect to the Notes
Offering, the President, the Chief Financial Officer and the Treasurer of
the Corporation, or any of them, be and hereby are authorized to determine
and establish for and on behalf of the Corporation on its own behalf and in
its capacity as general partner of BCP and BCOP, for and on behalf of BCP
and BCOP, (a) the aggregate principal amount of the Notes, which shall not
exceed $225 million, (b) the maturity date or dates of the Notes, (c) the
offering price by the underwriters of the Notes to the public, (d) the
purchase price to be paid to BCOP by the underwriters, (e) the interest to
be borne by the Notes, (f) the terms and provisions of any redemption
provisions, (g) the other terms and restrictive covenants relating to the
Notes and (h) any terms or conditions required or appropriate to be
complied with by BCP, BCOP or the Corporation; and
FURTHER RESOLVED, that the implementation by BCOP of a new revolving
credit facility ("Revolving Credit Facility") of up to $100 million and the
incurrence by BCOP of up to $100,000,000 of additional indebtedness by BCOP
under the Revolving Credit Facility for purposes of financing a portion of
the purchase price of the Acquisition and related expenses and for capital
expenditures, working capital and other partnership purposes, be and hereby
is authorized and approved by
-3-
<PAGE>
the Corporation, in its capacity as general partner of BCOP, for and on
behalf of BCOP, and that the President, the Chief Financial Officer and the
Treasurer of the Corporation, or any of them, be and hereby are authorized
to determine and establish, for and on behalf of the Corporation in its
capacity as general partner of BCOP, for and on behalf of BCOP, the amount
(not to exceed $100 million outstanding principal amount) and terms
(including in respect of maturity date, principal amortization, interest
rates and restrictions on BCOP) of such additional indebtedness to be
incurred by BCOP and to enter into such agreements (including, without
limitation, an agreement for retention of CS First Boston Corporation as
arranger, an agreement for retention of Credit Suisse as administrative
agent and a Revolving Credit Agreement) as they may determine to be
necessary or appropriate in order to implement the foregoing, such
determination to be conclusively evidenced by the establishment in writing
of such amounts and terms and the execution and delivery of such
agreements; and
FURTHER RESOLVED, that, unless subsequently authorized by the Board of
Directors of the Corporation, BCP shall not proceed with the Units Offering
and the President or any Vice President of the Corporation be and hereby is
authorized (but not required), for and on behalf of the Corporation, in
its capacity as general partner of BCP, for and on behalf of BCP, to
apply at any time to the Securities and Exchange Commission for withdrawal
of the registration statement with respect to the Units Offering; and
FURTHER RESOLVED, that in the event that BCOP obtains the Revolving
Credit Facility, the President or any Vice President of the Corporation be
and hereby is authorized (but not required to), for and on behalf of the
Corporation, in its capacity as general partner of BCOP, for and on behalf
of BCOP, to terminate the Existing Facility; and
FURTHER RESOLVED, that the BCOP shall (i) apply the net proceeds from
the Notes Offering to prepayment of the Old Notes and payment of related
premiums and expenses and payment of a portion of the purchase price of the
Acquisition and related expenses and (ii) use cash on hand, borrowings of
up to $75 million under the Revolving Credit Facility or a combination
thereof to pay the remaining portion of the purchase price for the
Acquisition and to pay for transaction costs relating
-4-
<PAGE>
to the Acquisition, the Notes Offering, the Units Offering and the
Revolving Credit Facility and that the President, Vice President or
Treasurer of the Corporation, or any of them, be and hereby are authorized,
for and on behalf of the Corporation in its capacity as general partner of
BCOP, for and on behalf of BCOP, to determine and establish the amount of
cash on hand, borrowings under the Revolving Credit Facility or a
combination thereof to be used for such purposes; and
FURTHER RESOLVED, that in the event that the closing of the Notes
Offering and the Acquisition occurs prior to the implementation by BCOP of
the Revolving Credit Facility, and net proceeds from the Notes Offering
remaining after prepayment of the Old Notes and payment of related premiums
and expenses be applied towards the purchase price of the Acquisition and
any remaining purchase price and transaction costs be financed by means of
cash on hand, borrowings under the Existing Facility or a combination
thereof and the President, Vice President or Treasurer of the Corporation,
or any of them, be and hereby are authorized, for and on behalf of the
Corporation in its capacity as general partner of BCOP, for and on behalf
of BCOP, to (i) determine and establish the amount of cash on hand,
borrowings under the Existing Facility or a combination thereof, used for
such purposes and (ii) borrow such amounts under the Revolving Credit
Facility, when established, that they deem appropriate to replenish all or
any portion of the cash on hand or repay borrowings under the Existing
Facility;
FURTHER RESOLVED, that the officers of the Corporation, for and on
behalf of the Corporation, on its own behalf and, in its capacity as
general partner of BCP or BCOP, on behalf of BCP or BCOP, be and hereby is
authorized to take such additional actions, including, without limitation,
the execution and delivery of such agreements, documents and other
instruments, the obtaining of such consents or waivers, the retention of
such legal counsel, financial advisors, accountants and other specialists
and the incurrence and payment of all such expenses, fees and taxes
(including fees for legal counsel, accountants and financial advisors,
underwriting fees, filing fees, printing and distribution costs), as they
in their discretion shall determine to be advisable, appropriate or
necessary in order to carry out the purposes and intent of the foregoing
resolutions (such determination to be conclusively evidenced by the taking
of such
-5-
<PAGE>
actions) and that all actions by the officers of the Corporation so
taken or heretofore taken in connection with any of the actions
authorized in any of the foregoing resolutions and the transactions
contemplated by the foregoing resolutions, are hereby authorized,
approved and ratified.
There being no further business, Mr. Saggess adjourned the meeting.
Lawrence L. Dieker
Secretary
<PAGE>
[SIDLEY & AUSTIN LETTERHEAD]
May 2, 1995
To Credit Suisse, as Agent, and each of the Banks
Under the Credit Agreement referred to below
c/o Credit Suisse, as Agent
12 East 49th Street
39th Floor
New York, New York 10017
Re: Borden Chemicals and Plastics
Operating Limited Partnership
-----------------------------
Ladies and Gentlemen:
We have acted as special New York Counsel to Borden Chemicals and
Plastics Operating Limited Partnership (the "Company"), and to BCP Management,
Inc. (the "General Partner"), the Company's sole general partner, in connection
with the preparation, execution and delivery of that certain Credit Agreement
dated as of May 2, 1995 (the "Credit Agreement") among the Company, the
institutions from time to time party thereto as Banks (collectively, the
"Banks"), and Credit Suisse, as agent for the Banks (in such capacity, the
"Agent"). This opinion is being delivered pursuant to Section 5.01(e) of the
Credit Agreement. Terms defined in the Credit Agreement and not otherwise
defined herein are used herein with the meanings as so defined.
In connection with the opinion expressed herein, we have reviewed the
following documents:
(i) The Credit Agreement executed by each of the parties thereto;
(ii) The Notes; and
(iii) The opinion of Lawrence L. Dieker, Vice President, General
Counsel and Secretary of the General Partner.
The Credit Agreement and the Notes are hereinafter referred to as the
"Loan Documents".
<PAGE>
In addition, we have examined originals or copies, certified or
otherwise identified to our satisfaction, of such corporate records, agreements,
documents or instruments and other instruments, as applicable, and of
certificates or comparable documents or instruments of public officials and
other instruments and documents and have made such inquiries of such officers
and representatives and such examination of law as we have deemed relevant and
necessary to form the basis for the opinion hereinafter set forth.
In our examination of the Loan Documents we have assumed the
authenticity of all such documents submitted to us as originals, the conformity
to authentic originals of all such documents submitted to us as copies and the
genuineness of all signatures (other than the signatures of the representatives
of the General Partner). As to all questions of fact material to the opinions
specified herein that have not been independently established, we have relied
upon the representations and warranties of the Company contained in the Credit
Agreement.
In rendering the opinion expressed below, we have assumed, without any
independent investigation or verification of any kind, that each party to the
Loan Documents (other than the Company) has been duly organized and is validly
existing and in good standing under its jurisdiction of incorporation and has
full power and authority to execute and deliver the Loan Documents and perform
the obligations set forth therein, and that the execution, delivery, and
performance of the Loan Documents by such other parties have been duly
authorized by all requisite corporate and other action on the part of such other
parties and such documents have been duly executed and delivered by such other
parties.
To the extent that our opinion expressed below involves conclusions as
to the matters set forth in the opinion referred to above of Lawrence L. Dieker,
we have relied upon and assumed without independent investigation the
correctness of such opinion, and our opinion is subject to the assumptions,
qualifications and limitations set forth in such opinion.
Based upon the foregoing assumptions and examination of documents and
upon such investigation as we have deemed necessary, and subject to the
qualifications set forth 'in subparagraphs (a) through (f) below, we are of the
opinion that each Loan Document has been executed and delivered by the Company
and constitutes the legal, valid, and binding obligation of the Company,
enforceable against the Company in accordance with its terms.
2
<PAGE>
Our opinion is expressly qualified as follows:
(a) Our opinion is subject to the effect of applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance and other laws affecting
the enforcement of creditors' rights generally and to the effect of general
equitable principles (whether considered in a proceeding in equity or at
law). In applying such principles, a court, among other things, might not
allow a creditor to accelerate maturity of a debt upon the occurrence of a
default deemed immaterial or for non-credit reasons or might decline to
order a debtor to perform covenants. Such principles applied by a court
might include a requirement that a creditor act with reasonableness and in
good faith. Furthermore, a court may refuse to enforce a covenant or any
provision providing for indemnification if and to the extent that it deems
such covenant or indemnification provision to be violative of applicable
public policy.
(b) Our opinion expressed above is limited to the law of the State of
New York and the federal law of the United States, and we do not express
any opinion herein concerning any other law.
(c) We express no opinion as to the effect of the compliance or
noncompliance of the Agent, any of the Banks or the Issuing Bank with any
state or federal laws or regulations applicable to any such party because
of such party's legal or regulatory status, the nature of such party's
business or the authority of any party to conduct business in any
jurisdiction.
(d) We express no opinion as to the effect (if any) of the law of any
jurisdiction (except the State of New York) in which any Bank is located
which limits the rate of interest that such Bank may charge or collect.
(e) We express no opinion with respect to any federal or state
securities laws.
(f) Our opinion speaks as of the date hereof and we assume no
obligation to supplement the foregoing opinion if any applicable laws
change after the date hereof or if we become aware of any facts which might
change such opinion after the date hereof.
This opinion is furnished to you by us as counsel to the Company and
the General Partner and is solely for your benefit and may not be quoted by you
without our prior written
3
<PAGE>
consent. This opinion may not be furnished to, relied on or quoted by any other
Person without our prior written consent.
Very truly yours,
/s/ Sidley & Austin
4
<PAGE>
[LETTERHEAD OF BORDEN CHEMICAL AND PLASTICS]
May 2, 1995
LAWRENCE L. DIEKER
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
BCP MANAGEMENT, INC.
To Credit Suisse, as Agent, and each of the Banks
Under the Credit Agreement referred to below
c/o Credit Suisse, as Agent
12 East 49th Street
39th Floor
New York, New York 10017
Re: Borden Chemicals and Plastics
Operating Limited Partnership
-----------------------------
Ladies and Gentlemen:
I am Vice President, General Counsel and Secretary of BCP Management,
Inc. (the "General Partner") and have acted as counsel to Borden Chemicals and
Plastics Operating Limited Partnership (the "Company"), and to the General
Partner, the Company's sole general partner, in connection with the preparation,
execution and delivery of that certain Credit Agreement dated as of May 2, 1995
(the "Credit Agreement") among the Company, the institutions from time to time
party thereto as Banks (collectively, the "Banks"), and Credit Suisse, as agent
for the Banks (in such capacity, the "Agent"). This opinion is being delivered
pursuant to Section 5.01(e) of the Credit Agreement. Terms defined in the Credit
Agreement and not otherwise defined herein are used herein with the meanings as
so defined.
In connection with the opinions expressed herein, I have reviewed the
following documents:
(i) The Credit Agreement executed by each of the parties thereto;
(ii) The Notes; and
(iii) (x) The Certificate of Incorporation and By-Laws of the General
Partner,
(y) the Certificate of Limited Partnership and Amended and
Restated Agreement of Limited Partnership of the Company, and
<PAGE>
(z) certificates of governmental officials as to
(1) the due organization, valid existence and good standing of
each of the Company and the General Partner under the laws of the
State of Delaware,
(2) the due qualification or registration of the Company as a
foreign limited partnership in the State of Illinois and the
State of Louisiana, and
(3) the due qualification as a foreign corporation and good
standing of the General Partner in the State of Illinois and the
State of Louisiana.
The Credit Agreement and the Notes are hereinafter referred to as the
"Loan Documents".
In addition, I have examined originals or copies, certified or
otherwise identified to my satisfaction, of such corporate records, agreements,
documents or instruments and other instruments, as applicable, and of
certificates or comparable documents or instruments of public officials and
other instruments and documents and have made such inquiries of such officers
and representatives and such examination of law as I have deemed relevant and
necessary to form the basis for the opinions hereinafter set forth.
In my examination of the Loan Documents I have assumed the
authenticity of all such documents submitted to us as originals, the conformity
to authentic originals of all such documents submitted to me as copies and the
genuineness of all signatures (other than the signatures of the representatives
of the General Partner). As to all questions of fact material to the opinions
specified herein that have not been independently established, I have relied
upon the representations and warranties of the Company contained in the Credit
Agreement.
In rendering the opinions expressed below, I have assumed, without any
independent investigation or verification of any kind, that each party to the
Loan Documents (other than the Company) has been duly organized and is validly
existing and in good standing under its jurisdiction of incorporation and has
full power and authority to execute and deliver the Loan Documents and perform
the obligations set forth therein, and that the execution, delivery, and
performance of the Loan Documents by such other parties have been duly
authorized by all requisite corporate and other action on the part of such other
parties and such documents have been duly executed and delivered by such other
parties.
Based upon the foregoing assumptions and examination of documents and
upon such investigation as I have deemed necessary,
2
<PAGE>
and subject to the qualifications set forth in subparagraphs (a) through (f)
below, I am of the opinion that:
1. The Company (i) is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of Delaware and (ii)
has the partnership power to own its property and carry on its business as now
conducted. The General Partner (i) is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and (ii)
has the corporate power to own its property and carry on its business as now
conducted.
2. The Company is duly qualified or authorized as a foreign limited
partnership in the State of Illinois and the State of Louisiana.
3. The General Partner is duly qualified as a foreign corporation to
do business and is in good standing in the State of Illinois and the State of
Louisiana.
4. The execution, delivery and performance by the Company of each
Loan Document are within the Company's partnership powers and have been duly
authorized by all necessary corporate action on the part of the General Partner.
The execution and delivery by the General Partner, as general partner of the
Company, of each Loan Document are within the General Partner's corporate powers
and have been duly authorized by all necessary corporate action on the part of
the General Partner.
My opinions are expressly qualified as follows:
(a) My opinions expressed above are limited to the General
Corporation Law of the State of Delaware, the Delaware Revised Uniform
Limited Partnership Act, and the federal law of the United States, and I
do not express any opinion herein concerning any other law.
(b) I express no opinion as to the effect of the compliance or
noncompliance of the Agent, any of the Banks or the Issuing Bank with any
state or federal laws or regulations applicable to any such party because
of such party's legal or regulatory status, the nature of such party's
business or the authority of any party to conduct business in any
jurisdiction.
(c) I express no opinion as to the effect (if any) of the law of any
jurisdiction (except the State of New York)
3
<PAGE>
in which any Bank is located which limits the rate of interest that such
Bank may charge or collect.
(d) Insofar as the opinions expressed in paragraphs 2 and 3 related
to matters governed by the law of the State of Illinois or the State of
Louisiana, I have not made an independent examination of such law, but have
relied exclusively upon the certificates referred to clauses (iii)(z)(2)
and (iii)(z)(3) above.
(e) I express no opinion with respect to any federal or state
securities laws.
(f) My opinions speak as of the date hereof and I assume no
obligation to supplement the foregoing opinions if any applicable laws
change after the date hereof or if I become aware of any facts which might
change such opinions after the date hereof.
This opinion is furnished to you by me as counsel to the Company and
the General Partner and is solely for your benefit and may not be quoted by you
without my prior written consent. Sidley & Austin may rely upon this opinion in
rendering their opinion to you of even date herewith, but this opinion may not
be furnished to, relied on or quoted by any other Person without my prior
written consent.
Very truly yours,
/s/Lawrence L. Dieker
Lawrence L. Dieker
4
<PAGE>
STATE OF DELAWARE PAGE 1
OFFICE OF THE SECRETARY OF STATE
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THAT "BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP" IS
DULY FORMED UNDER THE LAWS OF THE STATE OF DELAWARE AND IS IN GOOD STANDING AND
HAS A LEGAL EXISTENCE NOT HAVING BEEN CANCELLED OR REVOKED SO FAR AS THE
RECORDS OF THIS OFFICE SHOW AND IS DULY AUTHORIZED TO TRANSACT BUSINESS.
THE FOLLOWING DOCUMENTS HAVE BEEN FILED:
CERTIFICATE OF LIMITED PARTNERSHIP, FILED THE THIRTY-FIRST DAY OF AUGUST,
A.D. 1987, AT 10 O'CLOCK A.M.
RESTATED CERTIFICATE, FILED THE TWENTY-FIRST DAY OF OCTOBER, A.D. 1987, AT
11:30 O'CLOCK A.M.
CERTIFICATE OF AMENDMENT, REPRESENTED BY "THE CORPORATION TRUST COMPANY"
WITHOUT APPOINTMENT, FILED THE EIGHTH DAY OF AUGUST, A.D. 1988, AT 9 O'CLOCK
A.M.
RESTATED CERTIFICATE, FILED THE FIFTEENTH DAY OF DECEMBER, A.D. 1988, AT
12:45 O'CLOCK P.M.
AND I DO HEREBY FURTHER CERTIFY THAT THE AFORESAID CERTIFICATES ARE THE
ONLY CERTIFICATES ON RECORD OF THE AFORESAID LIMITED PARTNERSHIP.
/s/Edward J. Freel
----------------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION:
2136420 8310 7476253
DATE:
950085709 04-19-95
<PAGE>
STATE OF DELAWARE PAGE 2
OFFICE OF THE SECRETARY OF STATE
--------------------------------
AND I DO HEREBY FURTHER CERTIFY THAT THE ANNUAL TAXES HAVE BEEN PAID TO
DATE.
/s/Edward J. Freel
----------------------------------------
[SEAL APPEARS HERE] Edward J. Freel, Secretary of State
AUTHENTICATION:
2136420 8310 7476253
DATE: 04-19-95
950085709
<PAGE>
STATE OF DELAWARE PAGE 1
OFFICE OF THE SECRETARY OF STATE
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF LIMITED
PARTNERSHIP OF "BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP",
FILED IN THIS OFFICE ON THE THIRTY-FIRST DAY OF AUGUST, A.D. 1987, AT 10
O'CLOCK A.M.
/s/Edward J. Freel
----------------------------------------
[SEAL APPEARS HERE] Edward J. Freel, Secretary of State
AUTHENTICATION:
2136420 8100 7476366
DATE:
950085732 04-19-95
<PAGE>
CERTIFICATE OF LIMITED PARTNERSHIP
OF
BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP
THIS Certificate of Limited Partnership of Borden Chemicals and
Plastics Operating Limited Partnership, (the "Partnership"), dated as of August
28, 1987, has been duly executed and is being filed by the undersigned to form a
limited partnership under the Delaware Revised Uniform Limited Partnership Act
(6 Del.C (S) 17-101, et seq.). The undersigned states:
----- -- ----
1. Name. The name of the limited partnership formed hereby is Borden
----
Chemicals and Plastics Operating Limited Partnership.
2. Registered Office. The address of the registered office of the
-----------------
Partnership in the state of Delaware is c/o The Corporation Trust Company,
Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County,
Delaware 19801.
3. Registered Agent. The name and address of the registered agent
----------------
for service of process on the Partnership in the State of Delaware is The
Corporation Trust Company, Corporation Trust Center, 1209 Orange Street,
Wilmington, Hew Castle County, Delaware 19801.
4. General Partner. The name and the business address of the sole
---------------
general partner of the Partnership is: BCP Management, Inc., 277 Park Avenue,
New York, New York 10172.
IN WITNESS WHEREOF, the undersigned general partner has duly executed
this Certificate of Limited Partnership as of the day and year first aforesaid.
BCP MANAGEMENT, INC.
a Delaware corporation
By: [SIGNATURE ILLEGIBLE]
-------------------------------
Title: TREASURER
-----------------------
<PAGE>
STATE OF DELAWARE PAGE 1
OFFICE OF THE SECRETARY OF STATE
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE RESTATED CERTIFICATE OF
"BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP", FILED IN THIS
OFFICE ON THE TWENTY-FIRST DAY OF OCTOBER, A.D. 1987, AT 11:30 O'CLOCK A.M.
/s/Edward J. Freel
----------------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION:
2136420 8100 7476365
DATE:
950085732 04-19-95
<PAGE>
AMENDED AND RESTATED CERTIFICATE OF LIMITED PARTNERSHIP
OF
BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP
This Amended and Restated Certificate of Limited Partnership of Borden
Chemicals and Plastics Operating Limited Partnership (the "Partnership"), dated
as of October 16, 1987, has been duly executed and is being filed by the
undersigned in accordance with the provisions of 6 Del. C. (S) 17-210, to amend
-------
and restate the original Certificate of Limited Partnership of the Partnership,
which was filed on August 31, 1987, with the Secretary of State of the State of
Delaware, (the "Certificate"), to form a limited partnership under the Delaware
Revised Uniform Limited Partnership Act (6 Del. C. (S) 17-101, et seq.).
------- -- ----
The Certificate is hereby amended and restated in its entirety to read
as follows:
1. Name. The name of the limited partnership formed and continued
----
hereby is Borden Chemicals and Plastics Operating Limited Partnership.
2. Registered Office. The address of the registered office of the
-----------------
Partnership in the State of Delaware is c/o The Corporation Trust Company,
Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County,
Delaware 19801.
3. Registered Agent. The name and address of the registered agent
----------------
for service of process on the Partnership in the State of Delaware is The
Corporation Trust Company, Corporation Trust Center, 1209 Orange Street,
Wilmington, New Castle County, Delaware 19801.
4. General Partner. The name and the business address of the sole
---------------
general partner of the Partnership is: BCP Management, Inc., Highway 73,
Geismar, Louisiana 70734.
<PAGE>
IN WITNESS WHEREOF, the undersigned general partner has duly executed
this Amended and Restated Certificate of Limited Partnership as of the day and
year first aforesaid.
BCP MANAGEMENT, INC.
a Delaware corporation
By: [SIGNATURE ILLEGIBLE]
-------------------------------
Title: VICE PRESIDENT
-----------------------
-2-
<PAGE>
STATE OF DELAWARE
PAGE 1
OFFICE OF THE SECRETARY OF STATE
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT
OF "BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP", FILED IN THIS
OFFICE ON THE EIGHTH DAY OF AUGUST, A.D. 1988, AT 9 O'CLOCK A.M.
/s/Edward J. Freel
[SEAL] ----------------------------------------
Edward J. Freel, Secretary of State
2136420 8100 AUTHENTICATION: 7476364
950085732 DATE: 04-19-95
<PAGE>
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF LIMITED PARTNERSHIP
OF
BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP
It is hereby certified that:
First: The name of the limited partnership, hereinafter called the
"(Partnership") is Borden Chemicals and Plastics Operating Limited
Partnership.
Second: Pursuant to the provisions of Section 17-202; Title 6, Delaware
Code, the Amendment to the Certificate of Limited Partnership effected by
this Certificate of Amendment is: Change the registered agent from The
Corporation Trust Company to The Prentice-Hall Corporation System, Inc.,
and change the registered office of the Partnership in Delaware to 229
South State Street, City of Dover 19901, County of Kent.
The Undersigned, a general partner of the Partnership, executes this
Certificate of Amendment on May 31, 1988.
------
[SIGNATURE ILLEGIBLE]
-----------------------------------
BCP Management, Inc.
General Partner
<PAGE>
STATE OF DELAWARE
PAGE 1
OFFICE OF THE SECRETARY OF STATE
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE RESTATED CERTIFICATE OF
"BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP", FILED IN THIS
OFFICE ON THE FIFTEENTH DAY OF DECEMBER, A.D. 1988, AT 12:45 O'CLOCK P.M.
/s/Edward J. Freel
[SEAL] ----------------------------------------
Edward J. Freel, Secretary of State
2136420 8100 AUTHENTICATION: 7476363
950085732 DATE: 04-19-95
<PAGE>
AMENDED AND RESTATED
CERTIFICATE OF LIMITED PARTNERSHIP
OF
BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP
THIS Amended and Restated Certificate of Limited Partnership of Borden
Chemicals and Plastics Operating Limited Partnership (the "Partnership"), dated
as of August 8, 1988, has been duly executed and is being filed by the
undersigned in accordance with the provisions of 6 Del.C. (S) 17-210, to amend
------
and restate the original Certificate of Limited Partnership of the Partnership,
which was filed on August 31, 1987, with the Secretary of State of the State of
Delaware, as heretofore amended (the "Certificate"), to form a limited
partnership under the Delaware Revised Uniform Limited Partnership Act (6 Del.C.
------
(S) 17-101, et seq.).
-- ---
The Certificate is hereby amended and restated in its entirety to read
as follows:
1. Name. The name of the limited partnership formed and continued
----
hereby is Borden Chemicals and Plastics Operating Limited Partnership.
2. Registered Office. The address of the registered office of the
-----------------
Partnership in the State of Delaware is c/o The Prentice-Hall Corporation
Systems, Inc., 229 South State Street, Dover, Kent County, Delaware 19901.
3. Registered Agent. The name and address of the registered agent
----------------
for service of process on the Partnership in
-1-
<PAGE>
the State of Delaware is The Prentice-Hall Corporation Systems, Inc., 229 South
State Street, Dover, Kent County, Delaware 19901.
4. General Partner. The name and the business address of the sole
---------------
general partner of the Partnership is BCP Management, Inc., a Delaware
corporation, Highway 73, Geismar, Louisiana 70734.
IN WITNESS WHEREOF, the undersigned general partner has duly executed
this Amended and Restated Certificate of Limited Partnership as of the day and
year first aforesaid.
GENERAL PARTNER:
BCP Management, Inc.
By: [SIGNATURE ILLEGIBLE]
--------------------------------
TITLE: Secretary
-----------------------------
-2-
<PAGE>
PAGE 1
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THAT "BCP MANAGEMENT, INC." IS DULY INCORPORATED UNDER THE LAWS OF THE
STATE OF DELAWARE AND IS IN GOOD STANDING AND HAS A LEGAL CORPORATE EXISTENCE
NOT HAVING BEEN CANCELLED OR DISSOLVED SO FAR AS THE RECORDS OF THIS OFFICE
SHOW AND IS DULY AUTHORIZED TO TRANSACT BUSINESS.
THE FOLLOWING DOCUMENTS HAVE BEEN FILED:
CERTIFICATE OF INCORPORATION, FILED THE SIXTH DAY OF AUGUST, A.D. 1987, AT
10 O'CLOCK A.M.
CERTIFICATE OF AMENDMENT, FILED THE SECOND DAY OF NOVEMBER, A.D. 1987, AT
10 O'CLOCK A.M.
CERTIFICATE OF CHANGE OF REGISTERED AGENT, REPRESENTED BY "THE CORPORATION
TRUST COMPANY" WITHOUT APPOINTMENT, FILED THE TWENTY-FIRST DAY OF JUNE, A.D.
1988, AT 9 O'CLOCK A.M.
AND I DO HEREBY FURTHER CERTIFY THAT THE AFORESAID CERTIFICATES ARE THE
ONLY CERTIFICATES ON RECORD OF THE AFORESAID CORPORATION.
AND I DO HEREBY FURTHER CERTIFY THAT THE ANNUAL REPORTS HAVE BEEN FILED TO
DATE.
AND I DO HEREBY FURTHER CERTIFY THAT THE FRANCHISE TAXES
/s/Edward J. Freel
-----------------------------------
[SEAL] Edward J. Freel, Secretary of State
2134202 8310 AUTHENTICATION: 7474810
950084545 DATE: 04-18-95
<PAGE>
STATE OF DELAWARE PAGE 2
OFFICE OF THE SECRETARY OF STATE
--------------------------------
HAVE BEEN PAID TO DATE.
/s/Edward J. Freel
[SEAL] -----------------------------------
Edward J. Freel, Secretary of State
2134202 8310 AUTHENTICATION:
7474810
950084545 DATE:
04-18-95
<PAGE>
STATE OF DELAWARE PAGE 1
OFFICE OF THE SECRETARY OF STATE
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF "BCP MANAGEMENT, INC.", FILED IN THIS OFFICE ON THE SIXTH DAY
OF AUGUST, A.D. 1987, AT 10 O'CLOCK A.M.
/s/Edward J. Freel
[SEAL] -----------------------------------
Edward J. Freel, Secretary of State
2134202 8100 AUTHENTICATION:
7474495
950083756 DATE: 04-17-95
<PAGE>
CERTIFICATE OF INCORPORATION
OF
BCP MANAGEMENT, INC.
FIRST: The name of the Corporation is BCP Management, Inc.
SECOND: The address of the Corporation's registered office in the
State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City
of Wilmington, County of New Castle. The name of the Corporation's registered
agent at such address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of Delaware.
FOURTH: The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 10,000 shares of common stock with
a par value of one dollar ($1.00) per share.
FIFTH: The name and mailing address of the incorporator of the
Corporation are as follows:
<TABLE>
<CAPTION>
Name Address
---- -------
<S> <C>
Steven Sutherland One First National Plaza
Suite 4200
Chicago, Illinois 60603
</TABLE>
SIXTH: The name and mailing address of the person who is to serve as
director until the first annual meeting of stockholders or until his successor
is elected and qualified is as follows:
<TABLE>
<CAPTION>
Name Address
---- -------
<S> <C>
Lawrence O. Doza c/o Borden, Inc.
277 Park Avenue
New York, New York 10172
</TABLE>
SEVENTH: In furtherance and not in limitation of the powers conferred
by statute, the Board of Directors is expressly authorized to make, alter or
repeal the By-Laws of the Corporation, subject to any specific limitation on
such power provided by any By-Laws adopted by the stockholders.
EIGHTH: Elections of directors need not be by written ballot unless
the By-Laws of the Corporation so provide.
<PAGE>
NINTH: The Corporation is to have perpetual existence.
TENTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon the
stockholders herein are granted subject to this reservation.
ELEVENTH: A. 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 General
Corporation Law of the State of Delaware, or (iv) for any transaction from which
the director derived an improper personal benefit. If the General Corporation
Law of the State of Delaware is amended to authorize corporate action further
eliminating or limiting the personal liability of directors, then the
liability of a director of the Corporation shall be eliminated or limited to
the fullest extent permitted by the General Corporation Law of the State of
Delaware, as so amended. Any repeal or modification of this Section A by the
stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification.
B. (1) Each person who was or is made a party or is threatened to be
made a party to or is involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (hereinafter a "proceeding"), by
reason of the fact that he or she or a person of whom he or she is the legal
representative is or was a director, officer or employee of the Corporation or
is or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation or of a partnership, joint venture,
trust or other enterprise, including service with respect to employee benefit
plans, whether the basis of such proceeding is alleged action in an official
capacity as a director, officer, employee or agent or in any other capacity
while serving as a director, officer, employee or agent, shall be indemnified
and held harmless by the Corporation to the fullest extent authorized by the
General Corporation Law of the State of Delaware as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Corporation to provide broader indemnification
rights than said law permitted the Corporation to provide prior to such
amendment), against all expense, liability and loss (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and
-2-
<PAGE>
amounts paid or to be paid in settlement) reasonably incurred or suffered by
such person in connection therewith and such indemnification shall continue as
to a person who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of his or her heirs, executors and administrators;
provided, however, that except as provided in paragraph (2) of this Section B
- -------- -------
with respect to proceedings seeking to enforce rights to indemnification, the
Corporation shall indemnify any such person seeking indemnification in
connection with a proceeding (or part thereof) initiated by such person only if
such proceeding (or part thereof) was authorized by the Board of Directors of
the Corporation. The right to indemnification conferred in this Section B shall
be a contract right and shall include the right to be paid by the Corporation
the expenses incurred in defending any such proceeding in advance of its final
disposition; provided, however, that if the General Corporation Law of the State
-------- -------
of Delaware requires, the payment of such expenses incurred by a director or
officer in his or her capacity as a director or officer (and not in any other
capacity in which service was or is rendered by such person while a director or
officer, including, without limitation, service to an employee benefit plan) in
advance of the final disposition of a proceeding, shall be made only upon
delivery to the Corporation of an undertaking by or on behalf of such director
or officer, to repay all amounts so advanced if it shall ultimately be
determined that such director or officer is not entitled to be indemnified under
this Section B or otherwise.
(2) If a claim under paragraph (1) of this Section B is not paid in
full by the Corporation within thirty days after a written claim has been
received by the Corporation, the claimant may at any time thereafter bring suit
against the Corporation to recover the unpaid amount of the Claim and, if
successful in whole or in part, the claimant shall be entitled to be paid also
the expense of prosecuting such claim. It shall be a defense to any such action
(other than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition where the required
undertaking, if any is required, has been tendered to the Corporation) that the
claimant has not met the standards of conduct which make it permissible under
the General Corporation Law of the State of Delaware for the Corporation to
indemnify the claimant for the amount claimed, but the burden of proving such
defense shall be on the Corporation. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel or stockholders) to
have made a determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because he or she
has met the applicable standard of conduct set forth in the General Corporation
Law of the State of Delaware, nor an actual determination by the Corporation
(including its Board of
-3-
<PAGE>
Directors, independent legal counsel or stockholders) that the claimant has not
met such applicable standard of conduct, shall be a defense to the action or
create a presumption that the claimant has not met the applicable standard of
conduct.
(3) The right to indemnification and the payment of expenses incurred
in defending a proceeding in advance of its final disposition conferred in this
Section B shall not be exclusive of any other right which any person may have or
hereafter acquire under any statute, provision of the Certificate of
Incorporation, By-Law, agreement, vote of stockholders or disinterested
directors or otherwise.
(4) The Corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of the Corporation,
or another corporation, partnership, joint venture, trust or other enterprise
against any expense, liability or loss, whether or not the Corporation would
have the power to indemnify such person against such expense, liability or loss
under the General Corporation Law of the State of Delaware.
(5) The Corporation may, to the extent authorized from time to time
by the Board of Directors, grant rights to indemnification, and rights to be
paid by the Corporation the expenses incurred in defending any proceeding in
advance of its final disposition, to any agent of the Corporation to the fullest
extent of the provisions of this Section B with respect to the indemnification
and advancement of expenses of directors, officers and employees of the
Corporation.
THE UNDERSIGNED, being the incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the General Corporation Law of the
State of Delaware, makes this Certificate, herby declaring and certifying that
the facts herein stated are true, and accordingly has hereunto set his hand this
5th day of August, 1987.
- ---
/s/ Steven Sutherland
-----------------------------
Steven Sutherland
-4-
<PAGE>
State of Delaware
PAGE 1
OFFICE OF THE SECRETARY OF STATE
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF "BCP MANAGEMENT, INC.", FILED IN THIS OFFICE ON THE SECOND DAY OF
NOVEMBER, A.D. 1987, AT 10 0' CLOCK A.M.
[SEAL APPEARS HERE] /s/ Edward J. Freel
----------------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION:
2134202 8100 7474496
DATE:
950083756 04-17-95
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
BCP MANAGEMENT, INC.
BCP Management, Inc., a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware ("the
Corporation"), DOES HEREBY CERTIFY:
FIRST: That the directors of the Corporation, by written consent dated
October 2, 1987, filed with the minutes of the Corporation, adopted a resolution
proposing and declaring advisable the following amendment to the Certificate of
Incorporation of the Corporation and directing that such amendment be submitted
to the sole stockholder of the Corporation for its approval in accordance with
Section 242 of the General Corporation Law of the State of Delaware;
RESOLVED, that the Board of Directors of the Corporation declares it
advisable that the Certificate of Incorporation of the Corporation be
amended by changing Article THIRD thereof so that, as amended, said
Article shall be and read in its entirety as follows:
THIRD: The purposes of the Corporation are to (i) act as the general
partner of Borden Chemicals and Plastics Limited Partnership, a Delaware
Limited Partnership, and Borden Chemicals and Plastics Operating Limited
Partnership, a Delaware limited partnership, and any successors to such
<PAGE>
limited partnerships, (ii) conduct, direct and exercise full control over
all activities of such limited partnerships and successors and (iii) do
anything necessary or incidental to the foregoing.
RESOLVED FURTHER, that such proposed amendment be submitted to the
sole stockholder of the Corporation for its approval.
SECOND: That in lieu of a meeting and vote of the sole stockholder,
the sole stockholder has given its written consent to said amendment in
accordance with the provisions of Section 228 of the General Corporation Law
of the State of Delaware.
THIRD: That the aforesaid amendment was duly adopted in accordance
with the applicable provisions of Sections 242 and 228 of the General
Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, said BCP Management, Inc. has caused this
certificate to be signed by A.S. D'Amato, its Chairman of the Board, President
and Chief Executive Officer,
-2-
<PAGE>
and attested by Lawrence L. Dieker, its Secretary, this 6th day of October,
---
1987.
BCP Management, Inc.
By: /s/ A.S. D'Amato
-------------------------
A. S. D'Amato
Chairman of the Board,
President and Chief
Executive Officer
ATTEST:
By: /s/ Lawrence L. Dieker
-------------------------
Lawrence L. Dieker
Secretary
-3-
<PAGE>
State of Delaware
PAGE 1
OFFICE OF THE SECRETARY OF STATE
________________________________
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF CHANGE OF
REGISTERED AGENT OF "BCP MANAGEMENT, INC.", FILED IN THIS OFFICE ON THE
TWENTY-FIRST DAY OF JUNE, A.D. 1988, AT 9 O'CLOCK A.M.
/s/ Edward J. Freel
[SEAL APPEARS HERE] ----------------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION:
2134202 8100 7474497
DATE:
950083756 04-17-95
<PAGE>
CERTIFICATE OF CHANGE OF LOCATION OF REGISTERED OFFICE
AND OF REGISTERED AGENT
It is hereby certified that:
1. The name of the corporation (hereinafter called the
"corporation") is
- BCP Management, Inc.
2. The registered office of the corporation within the State of
Delaware is hereby changed to 229 South State Street, City of Dover 19901,
County of Kent.
3. The registered agent of the corporation within the State of
Delaware is hereby changed to The Prentice-Hall Corporation System, Inc.,
the business office of which is identical with the registered office of the
corporation as hereby changed.
4. The corporation has authorized the changes hereinbefore set
forth by resolution of its Board of Directors.
Signed on June 1, 1988.
[SIGNATURE ILLEGIBLE]
-------------------------------------
President
Attest:
/s/ [SIGNATURE ILLEGIBLE]
- ------------------------------
Secretary
<PAGE>
UNITED STATES OF AMERICA
STATE OF LOUISIANA
FOX MCKEITHEN
SECRETARY OF STATE
AS SECRETARY OF STATE, OF THE STATE OF LOUISIANA, I DO HEREBY CERTIFY THAT
BORDEN CHEMICALS AND PLASTICS OPERATING
LIMITED PARTNERSHIP
A partnership whose principal place of business is Wilmington, Delaware,
Filed partnership documents and registered to do business in this State on
November 19, 1987.
IN TESTIMONY WHEREOF, I HAVE HEREUNTO SET
MY HAND AND CAUSED THE SEAL OF MY OFFICE
TO BE AFFIXED AT THE CITY OF BATON ROUGE ON,
April 25, 1995 [SEAL APPEARS HERE]
/s/ Fox McKeithen
DWI
SECRETARY OF STATE
<PAGE>
UNITED STATES OF AMERICA
STATE OF LOUISIANA
FOX MCKEITHEN
SECRETARY OF STATE
AS SECRETARY OF STATE, OF THE STATE OF LOUISIANA, I DO HEREBY CERTIFY THAT
BCP MANAGEMENT, INC.
A Delaware corporation domiciled at Wilmington,
Filed charter and qualified to do business in this State on November 19, 1987,
I further certify that the records of this Office indicate the corporation has
paid all fees due the Secretary of State, and so far as the Office of the
Secretary of State is concerned is in good standing and is authorized to do
business in this State.
I further certify that this Certificate is not intended to reflect the financial
condition of this corporation since this information is not available from the
records of this Office.
Qualification Documents: November 19, 1987
R. S. 12:308 June 23, 1988
R. S. 12:308 October 8, 1991
IN TESTIMONY WHEREOF, I HAVE HEREUNTO SET
MY HAND AND CAUSED THE SEAL OF MY OFFICE
TO BE AFFIXED AT THE CITY OF BATON ROUGE ON,
April 25, 1995 [SEAL APPEARS HERE]
/s/ Fox McKeithen
DWI
SECRETARY OF STATE
<PAGE>
File Number S000458
-----------
STATE OF ILLINOIS
OFFICE OF
THE SECRETARY OF STATE
TO ALL TO WHOM THESE PRESENTS SHALL COME, GREETING:
I, George H, Ryan, Secretary of State of the State of Illinois,
do hereby certify that
BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP, A
DELAWARE LIMITED PARTNERSHIP, HAVING COMPLIED WITH THE PROVISIONS
OF THE REVISED UNIFORM LIMITED PARTNERSHIP ACT OF THE ILLINOIS
STATE STATUTES ON 11/09/1987 IS AUTHORIZED AND EXISTS IN ILLINOIS
AS A LIMITED PARTNERSHIP.*****************************************
[SEAL APPEARS HERE] IN TESTIMONY WHEREOF, I hereto set
my hand and cause to be affixed the Great Seal
of the State of Illinois this 25th
---------------------
day of APRIL A.D., 1995.
---------------- ---
/s/ George H. Ryan
---------------------------------------------------
Secretary of State
<PAGE>
File Number 5486-225-3
---------------
STATE OF ILLINOIS
OFFICE OF
THE SECRETARY OF STATE
TO ALL TO WHOM THESE PRESENTS SHALL COME, GREETING:
I, George H. Ryan, Secretary of State of the State of Illinois,
do hereby certify that
BCP MANAGEMENT, INC., INCORPORATED IN
THE STATE OF DELAWARE AND LICENSED TO TRANSACT BUSINESS IN THIS
STATE ON NOVEMBER 9, 1987, APPEARS TO HAVE COMPLIED WITH ALL THE
PROVISIONS OF THE BUSINESS CORPORATION ACT OF THIS STATE RELATING
TO THE FILING OF ANNUAL REPORTS AND PAYMENT OF FRANCHISE TAXES,
AND IS AT THIS TIME A FOREIGN CORPORATION IN GOOD STANDING AND
AUTHORIZED TO TRANSACT BUSINESS IN THE STATE OF ILLINOIS**********
[SEAL APPEARS HERE] IN TESTIMONY WHEREOF, I hereto set
my hand and cause to be affixed the Great Seal of
the State of Illinois this 25TH
-------------------------
day of APRIL A.D., 1995.
----------------- --
/s/ George H. Ryan
---------------------------------------------------
SECRETARY OF STATE
<PAGE>
EXPEDITED
SECRETARY OF STATE
APR 25 1995
EXP. FEES 10.00
-------
COPY.CERT. 5.00
------
<PAGE>
May 1, 1995
-
Wachovia Bank and Trust Company, N.A.
P.O. Box 3099
301 North Main Street
Winston-Salem, North Carolina 27102
Attention: National Noteteller
First Wachovia Corporation
2 Peachtree Street, N.W.
Atlanta, Georgia 30383
Attention: Robert Marcus, MC370
Re: $20,000,000 Revolving Line
of Credit Agreement (the "Old Agreement")
------------------------------------------
Ladies and Gentlemen:
Effective simultaneously with the closing of the $100,000,000 Credit
Agreement dated as of May __, 1995 among Borden Chemicals and Plastics Operating
Limited Partnership (the "Borrower"), the banks and other financial institutions
listed on the signature pages thereof under the caption "Banks", and Credit
Suisse, individually as a Bank and as agent for the other Banks, the Borrower
hereby terminates and Old Agreement.
By your signature set forth below, you acknowledge and agree to such
termination and waive the thirty (30) days' written notice requirement set forth
in the Old Agreement.
This letter may be executed in counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument.
<PAGE>
Very Truly Yours,
BORDEN CHEMICALS AND PLASTICS
OPERATING LIMITED PARTNERSHIP
By: BCP MANAGEMENT, INC., as
General Partner
By:___________________________
Name:
Title:
Acknowledged and Agreed to:
WACHOVIA BANK AND TRUST COMPANY, N.A.
By: /s/ J. Peter Payton
-----------------------------
Name: J. Peter Payton
Title: SUP/GE
<PAGE>
Dec 31, 1995 quick coverage calc
- --------------------------------
568.5 (Assets)
( 9.0) finance cost deferred
(144.7) Liab
+ 40.0 debt
(1,655)
( 5.677)
- ---------
268.000
