<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
-
Commission File No. 1-9699
BORDEN CHEMICALS AND PLASTICS
LIMITED PARTNERSHIP
Delaware 31-1269627
(State of organization) (I.R.S. Employer Identification No.)
Highway 73, Geismar, Louisiana 70734 614-225-4482
(Address of principal executive offices) (Registrant's telephone number)
______
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 _____.
----
______
Number of Common Units outstanding as of the close of business on May 5,
2000: 36,750,000.
================================================================================
1
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BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per Unit data)
<TABLE>
<CAPTION>
Three Months Ended
---------------------------------------
March 31, March 31,
2000 1999
-------- --------
<S> <C> <C>
Revenues
Net trade sales........................................ $158,489 $ 99,824
Net sales to related parties........................... 22,435 15,610
-------- --------
Total revenues................................... 180,924 115,434
-------- --------
Expenses
Cost of goods sold
Trade............................................ 142,013 91,558
Related parties.................................. 22,121 16,331
Marketing, general & administrative expense............ 7,935 6,161
Interest expense....................................... 7,463 6,386
Other expense, including minority
interest and equity in loss of affiliate......... 1,021 689
-------- --------
Total expenses.............................. 180,553 121,125
-------- --------
Net income (loss)...................................... 371 (5,691)
Less 1% General Partner interest.................. (4) 57
-------- --------
Net income (loss) applicable to Limited
Partners' interest................................ $ 367 $ (5,634)
======== ========
Per Unit data-basic, net of 1% General Partner interest
Net income (loss) per Unit............................. $ 0.01 $ (0.15)
======== ========
Average number of Units outstanding during the period 36,750 36,750
======== ========
Cash distributions declared per Unit................... $ 0.00 $ 0.00
======== ========
</TABLE>
See Notes to Consolidated Financial Statements.
2
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BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended
---------------------------------------
March 31, March 31,
2000 1999
-------- --------
<S> <C> <C>
Cash Flows From Operations
Net income (loss)......................................... $ 371 $(5,691)
Adjustments to reconcile net loss income to net cash
provided by operating activities:
Depreciation............................................ 10,110 8,707
Increase (decrease) in cash from
changes in certain assets and liabilities:
Receivables, net..................................... (9,122) 2,482
Inventories.......................................... 2,597 (1,459)
Payables............................................. (9,539) (5,942)
Accrued Interest..................................... 4,527 4,928
Other, net........................................... (1,546) 672
------- -------
(2,602) 3,697
------- -------
Cash Flows Used In Investing Activities
Capital expenditures.................................... (1,046) (3,913)
Plant acquisition....................................... (8,177) 0
------- -------
(9,223) (3,913)
------- -------
Cash Flows Used In Financing Activities
Proceeds from long-term borrowings...................... 20,139 1,800
Repayments of long-term borrowings...................... (5,638) (2,200)
Payment of debt issuance costs.......................... (1,113) 0
------- -------
13,388 ( 400)
------- -------
Increase (decrease) in cash and equivalents............... 1,563 ( 616)
Cash and equivalents at beginning of period............... 5,759 8,703
------- -------
Cash and equivalents at end of period..................... $ 7,322 $ 8,087
======= =======
Supplemental Disclosures of Cash Flow Information
Interest paid during the period........................... $ 2,199 $ 1,101
======= =======
</TABLE>
See Notes to Consolidated Financial Statements
3
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BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
ASSETS March 31, 2000 December 31, 1999
------ --------------- ------------------
<S> <C> <C>
Cash and equivalents......................................................... $ 7,322 $ 5,759
Accounts receivable (less allowance for doubtful accounts
of $501 and $456, respectively)
Trade...................................................................... 83,933 75,794
Related parties............................................................ 15,845 14,862
Inventories
Finished and in process goods.............................................. 35,693 36,041
Raw materials and supplies................................................. 13,243 15,492
Other current assets......................................................... 4,323 4,443
--------- ---------
Total current assets....................................................... 160,359 152,391
--------- ---------
Investments in and advances to affiliated companies.......................... 8,332 8,521
Other assets................................................................. 50,747 50,679
--------- ---------
59,079 59,200
--------- ---------
Plant, property and equipment
Land....................................................................... 16,390 16,308
Buildings.................................................................. 46,019 45,625
Machinery and equipment.................................................... 722,006 704,252
--------- ---------
784,415 766,185
Less accumulated depreciation.............................................. (507,035) (496,925)
--------- ---------
Net plant, property and equipment.......................................... 277,380 269,260
--------- ---------
Total assets............................................................. $ 496,818 $ 480,851
========= =========
LIABILITIES AND PARTNERS' CAPITAL
- ---------------------------------
Accounts and drafts payable.................................................. $ 56,978 $ 66,517
Accrued interest............................................................. 7,936 3,409
Other accrued liabilities.................................................... 17,912 17,084
--------- ---------
Total current liabilities.................................................. 82,826 87,010
Long-term debt............................................................... 277,701 263,200
Deferred tax on gross margin................................................. 6,640 6,640
Other liabilities............................................................ 10,142 4,866
Minority interest in consolidated subsidiary................................. 658 655
--------- ---------
Total liabilities.......................................................... 377,967 362,371
--------- ---------
Partners' capital
Limited Partners........................................................... 119,133 118,766
General Partner............................................................ (282) (286)
--------- ---------
Total partners' capital................................................. 118,851 118,480
--------- ---------
Total liabilities and partners' capital................................. $ 496,818 $ 480,851
========= =========
</TABLE>
See Notes to Consolidated Financial Statements.
4
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BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Limited General
Partners Partner Total
-------- ------- -----
<S> <C> <C> <C>
Balance at December 31, 1998......................... $142,517 $( 46) $ 142,471
Net loss.......................................... ( 5,634) ( 57) ( 5,691)
-------- ------ ---------
Balance at March 31, 1999............................ $136,883 $( 103) $ 136,780
======== ====== =========
Balance at December 31, 1999......................... $118,766 $( 286) $ 118,480
Net income........................................ 367 4 371
-------- ------ ---------
Balance at March 31, 2000............................ $119,133 $( 282) $ 118,851
======== ====== =========
</TABLE>
See Notes to Consolidated Financial Statements.
5
<PAGE>
BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands except Unit and per Unit data)
1. Interim Financial Statements
The accompanying unaudited interim consolidated condensed financial statements
of Borden Chemicals and Plastics Limited Partnership (the "Partnership"), and
its subsidiary operating partnership Borden Chemicals and Plastics Operating
Limited Partnership (the "Operating Partnership") contain all adjustments,
consisting only of normal recurring adjustments, which in the opinion of BCP
Management, Inc. (the "General Partner") are necessary for a fair statement of
the results for the interim periods. Results for the interim periods are not
necessarily indicative of the results for the full year.
Basic income per unit is computed by dividing net income, after subtracting the
General Partner's 1% interest, by the weighted average number of units
outstanding. Currently, there are no potentially dilutive securities;
accordingly, basic income per unit and diluted income per unit are equivalent.
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities", which is
effective in 2000 for the Partnership. The statement requires that all
derivatives be recorded in the balance sheet as either assets or liabilities and
be measured at fair value. The accounting for changes in fair value of a
derivative depends on the intended use of the derivative and the resulting
designation. The Partnership is in the process of assessing the impact that SFAS
No. 133 will have on the consolidated financial statements.
2. Environmental and Legal Proceedings
Under an Environmental Indemnity Agreement (the "EIA") with Borden, Inc.
("Borden"), 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.
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.
The Partnership is subject to legal proceedings and claims which may 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, is unlikely to have a material adverse effect
on the financial position or results of operations of the Partnership.
6
<PAGE>
3. Segment Information
The Partnership's internal reporting is organized on the basis of products.
Each of the following products is considered to be an operating segment of the
business: polyvinyl chloride ("PVC"), vinyl chloride monomer ("VCM"), acetylene,
methanol, formaldehyde, ammonia and urea. These operating segments have been
aggregated into three reportable segments according to the nature and economic
characteristics of the products, production processes and other similarities.
The segments are (i) PVC Polymers Products, which consist of PVC resins and
feedstocks (VCM and acetylene), (ii) Methanol and Derivatives, which consist of
methanol and formaldehyde, and (iii) Nitrogen Products, which consist of ammonia
and urea.
The Partnership evaluates performance of the segments and allocates resources to
them based upon contributing margin, which is gross margin net of distribution
expense.
Financial information for each of the reportable segments for the first quarters
of 2000 and 1999 is provided in the following table.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
PVC Methanol
Polymers and Nitrogen Consolidated
Products Derivatives Products Totals
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
2000
Revenues $141,056 $27,531 $12,337 $180,924
Contributing Margin 21,177 (1,929) (2,458) 16,790
1999
Revenues $ 83,125 $19,817 $12,492 $115,434
Contributing Margin 9,097 57 (1,609) 7,545
</TABLE>
- --------------------------------------------------------------------------------
A reconciliation of the total segment consolidated contributing margin to total
consolidated income for the first quarters ended March 31, 2000 and 1999, is as
follows:
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Total segment contributing margin $16,790 $ 7,545
Marketing, general and
Administrative expense (7,935) (6,161)
Interest expense (7,463) (6,386)
Other misc. (expense) income, net (1,021) (689)
------- -------
Consolidated income (loss) $ 371 $(5,691)
======= =======
</TABLE>
4. Debt
The Operating Partnership entered into a new four-year Credit Agreement (the
"Year 2000 Revolving Credit Facility") with Fleet Capital Corporation ("Fleet"),
effective March 31, 2000, which provides for a revolving credit facility of up
to $100 million subject to borrowing base limitations. The Operating
Partnership's obligations under the facility are secured by its accounts
receivable, inventory and a lien against certain fixed assets. The Year 2000
Revolving Credit Facility replaced the existing facility and all amounts
outstanding under that facility were repaid with borrowings under the Year 2000
Revolving Credit Facility. In addition, the change in control of the General
Partner, the Partnership or the Operating Partnership are all events of default
under the Year 2000 Revolving Credit Facility.
7
<PAGE>
On May 1, 1995, the Operating Partnership issued $200 million aggregate
principal amount of 9.5% Notes due 2005 (the "Notes") pursuant to an Indenture
dated as of May 1, 1995 (the "Indenture"). The Notes are senior unsecured
obligations of the Operating Partnership.
The Notes include restrictions on the Operating Partnership's ability to make
cash distributions, incur additional indebtedness, sell assets, engage in
sale/leasebacks and to take certain other actions. Upon a Change in Control, the
holders of the Notes may require the Operating Partnership to repurchase their
Notes at a price equal to 101% of the aggregate principal amount plus accrued
and unpaid interest to the date of repurchase.
8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
- --------------------------------------------------------------------------------
of Operations
- -------------
Results of Operations
Quarter Ended March 31, 2000 Compared to Quarter Ended March 31, 1999
Revenues
Total revenues during the first quarter of 2000 increased $65.5 million or 57%
to $180.9 million from $115.4 million in the first quarter of 1999. This
increase was the result of a $57.9 million increase in PVC Polymers Products
revenues, a $7.7 million increase in Methanol and Derivatives revenues and a
$0.1 million decrease in Nitrogen Products revenues.
Total revenues for PVC Polymers Products increased $57.9 million as a result of
a 55% increase in selling prices, and a 13% increase in sales volumes. Selling
prices and volume increases are the result of increased demand in the
marketplace.
Total revenues for Methanol and Derivatives increased $7.7 million as a result
of a 17% and 19% increase in selling prices and sales volumes, respectively.
These results are due to an increase in demand coupled with a number of
competitors' plants being idle during the current period.
Total revenues for Nitrogen Products decreased $0.1 million as a result of a 17%
increase in sales prices, which was offset by a 20% decrease in volume.
Increased prices are due to tightened demand in world markets. This was offset
by decreased volume due to an outage in our ammonia plant during the first
quarter of 2000.
Cost of Goods Sold
Total cost of goods sold increased $56.2 million to $164.1 million in the
current period from $107.9 million in the same period last year. The increase
was due to increased sales volumes along with increases in all major raw
materials. Expressed as a percent of revenue, cost of goods sold was 91% in the
current period versus 93% in the prior year.
PVC Polymers Products contributing margin improved upon prior year's
profitability to a profit of $21.2 million from $9.1 million for the same
quarter of 1999. This is a result of both an increase in selling prices, and a
higher yielding product mix.
Contributing margin of Methanol and Derivatives decreased from a profit of $0.1
million in the first quarter of 1999 to a loss of $1.9 million in the first
quarter of 2000. Increased natural gas costs were partially offset by a 17%
increase in selling prices.
Nitrogen Products generated a $2.5 million loss in the first quarter of 2000,
compared to a $1.6 million loss for the same quarter of 1999. Natural gas price
increases and sales volume that decreased 20% were not able to be offset by a
17% selling price increase when compared to the same period last year.
Interest Expense
Interest expense for the first quarter of 2000 increased $1.1 million which is
the result of having drawn $77.7 million under the Revolving Credit Facility in
the first quarter of 2000 compared to $51.4 million for the same period a year
ago.
Net Income
Net income for the first quarter of 2000 was $0.4 million compared to a $5.7
million loss for the first quarter of 1999. As discussed above, the primary
reasons for the $6.1 million increase from prior year was the result of
increased volume and selling prices from PVC products that were partially offset
by declines in Methanol and Nitrogen products.
9
<PAGE>
Liquidity and Capital Resources
Cash Flows from Operations. Cash provided by operations for the first quarter
2000 totaled ($2.6) million, a reduction of $6.3 million primarily due to an
unfavorable change in both accounts receivable and payables offset by a return
to profitability.
Cash Flows from Investing Activities. First quarter capital expenditures
totaled $1.0 million and $3.9 million for 2000 and 1999, respectively. The
Partnership had 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. The Partnership purchased BASF's interest in the acetylene
plant in January 2000 for $15.9 million, $8.2 million of which was paid in the
first quarter 2000 and the remaining balance of which is payable equally over
the succeeding thirty-six months.
Cash Flows from Financing Activities. Net long-term borrowings were $14.5
million in the first quarter of 2000 compared to a repayment of $0.4 million in
the first quarter of 1999. An increase of $6.0 million in net income was offset
by unfavorable increases in capital expenditures and plant acquisitions of $5.3
million, a $1.1 million debt issuance cost payment, an $11.6 million increase in
working capital requirements, and unfavorable variances in other assets and
liabilities of $2.9 million.
Liquidity
Adverse business conditions for the Partnership's methanol and nitrogen product
groups caused the Partnership to incur net losses over three of the past four
quarters. Unless business conditions improve, industry overcapacity affecting
these product groups is likely to partially offset the improvement in the
Partnership's PVC Polymer group. This performance combined with the
Partnership's acquisition of BASF's ownership in the Geismar acetylene plant,
and its capital expenditure needs (which are anticipated to be in the range of
$4.0 to $5.0 million per quarter), along with restrictions in the new Credit
Agreement and the Indenture make it highly unlikely that the Partnership will
declare quarterly cash distributions in 2000.
The Operating Partnership entered into a new four-year Credit Agreement (the
"Year 2000 Revolving Credit Facility") with Fleet Capital Corporation ("Fleet"),
effective March 31, 2000, which provides for a revolving credit facility of up
to $100 million subject to borrowing base limitations. The Operating
Partnership's obligations under the facility are secured by its accounts
receivable, inventory and a lien against certain fixed assets. The Year 2000
Revolving Credit Facility replaced the existing facility and all amounts
outstanding under that facility were repaid with borrowings under the Year 2000
Revolving Credit Facility. As of March 31, 2000, the Operating Partnership had
$77.7 million outstanding under the Year 2000 Revolving Credit Facility.
As of March 31, 2000, the Operating Partnership had $77.7 million outstanding
under the Year 2000 Revolving Credit Facility. Under the Year 2000 Revolving
Credit Facility, the company, at its option, may make either LIBOR based or Base
Rate borrowings. The applicable margin for such borrowings is reset quarterly,
beginning fourth quarter 2000, based on the ratio of EBITDA to cash interest
expense for the previous twelve months. For LIBOR based borrowings the
applicable margin can range from LIBOR plus 1.25% to 2.50%, and for Base Rate
borrowings, the margin can range from Base Rate flat to Base Rate plus 0.5%. In
addition, the Operating Partnership pays a commitment fee between 0.375% and
0.50% on the unused portion of the facility based on the same EBITDA to cash
interest expense ratio. The applicable margin, through the quarter ended
September 30, 2000, is 2.25% for LIBOR loans and 0.25% for Base Rate loans and
the commitment fee is 0.50% for the same period. The Credit Agreement contains
covenants that place significant restrictions on, among other things, the
ability to incur additional indebtedness, make distributions, engage in certain
transactions with affiliates, create liens or other encumbrances, merge or
consolidate with other entities, make acquisitions, make capital expenditures,
and sell or otherwise dispose of assets. In addition, a change in control of
the General Partner, the Partnership or the Operating Partnership are events of
default under the Year 2000 Revolving Credit Facility.
On May 1, 1995, the Operating Partnership issued $200 million aggregate
principal amount of 9.5% Notes due 2005 (the "Notes") pursuant to an Indenture
dated as of May 1, 1995 (the "Indenture"). The Notes are senior unsecured
obligations of the Operating Partnership.
10
<PAGE>
The Notes include restrictions on the Operating Partnership's ability to make
cash distributions, incur additional indebtedness, sell assets, and to take
certain other actions. Upon a change in control, the holders of the Notes may
require the Operating Partnership to repurchase their Notes at a price equal to
101% of the aggregate principal amount plus accrued and unpaid interest to the
date of repurchase.
Strategic Alternatives
In November 1999, the Partnership announced that A.D. Little had been retained
to assist in developing strategic business plans for its various operations. In
January 2000, the Partnership announced its intention to evolve into a focused
PVC company and to explore ways to realize value in the near term for its non-
PVC businesses. A variety of options with industry players, including
alliances, joint ventures, acquisitions of supply contracts, and/or a sale of
all of the non-PVC businesses are being evaluated and pursued. However, the
Partnership has not made any decisions that impact its ability to continue to
operate the non-PVC businesses. No assurance can be given that these efforts
will result in any transaction.
Capital Expenditures
The Partnership currently believes that the level of annual base capital
expenditures over the next two years will be in the range of $15 to $20 million
per year. Total capital expenditures for 2000 are anticipated to be
approximately $26.1 million with a large portion relating to the acquisition of
BASF's 50% share of the acetylene plant at the Geismar complex.
Item 2-A Market Risk
- --------------------
Interest Rate Risk - The Year 2000 Credit Facility provides up to $100 million
under a revolving credit agreement with Fleet Capital Corporation. The credit
facility expires on March 30, 2004, at which time all amounts outstanding must
be repaid. Interest on borrowings under the revolving credit facility are
determined, at the Operating Partnership's option, based on the applicable LIBOR
rate (one, two, three or six month periods) plus a margin. The ABR rate is the
greater of (a) the prime rate as announced or quoted by Fleet Bank or (b)
Federal Funds Effective rate plus .50%. At March 31, 2000, borrowings under the
facility were $77.7 million and bore interest at 9.25%.
The Partnership is exposed to swings in the LIBOR or ABR rates. A change of
1.00% in the applicable rate would change the Partnership's interest cost by
$0.8 million based on the borrowings at March 31, 2000.
Commodity Risk - The Partnership generally does not use derivatives or other
financial instruments such as futures contracts to manage commodity market risk.
However, at certain times of the year the Operating Partnership will enter into
contracts whereby it agrees to purchase a specified quantity of natural gas (the
Operating Partnership's principal raw material) at a fixed price. Such
contracts are generally not in excess of three months forward, and the Operating
Partnership generally limits such forward purchases to 60% of a month's
requirements. In addition, the Partnership has entered into a fifteen year
supply agreement (commencing in 1997) to provide a long-term supply of ethylene,
a raw material, and minimize price volatility. The purchase price for the
product varies with the supplier's raw material and variable costs, which are
market-driven, as well as its fixed costs. The Partnership evaluates all such
contracts on the basis of whether committed costs are expected to be realized in
light of current and expected selling prices when the commodities are consumed
in manufactured products.
Foreign Exchange and Equity Risk - The Partnership is not exposed to significant
foreign exchange or equity market risk.
Forward-Looking Statements
Certain statements in this section are forward-looking. These can be identified
by the use of forward-looking words or phrases such as "believe", "expect",
"may" and "potential", among others and include statements regarding the
business outlook for the Operating Partnership and its ability to fund its cash
needs. The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for such forward-looking statements. While these forward-looking
statements are based on the Partnership's reasonable current expectations, a
variety of risks uncertainties and other
11
<PAGE>
factors, including many which are outside the control of the Partnership, could
cause the Partnership's actual results to differ materially from the anticipated
results or expectations expressed in such forward-looking statements. The risks,
uncertainties and other factors that may affect the operations, performance,
development and results of the Partnership include changes in the demand for and
pricing of its commodity products, changes in industry production capacity,
changes in the supply of and costs of its significant raw materials, and changes
in applicable environmental, health and safety laws and regulations.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
- --------------------------
There have been no material development in the ongoing legal proceedings that
are discussed in the Partnership's 1999 Annual Report on Form 10-K.
The Partnership is subject to legal proceedings and claims that may arise in the
ordinary course of business. In the opinion of the management of the
Partnership, the amount of ultimate liability, taking into account its insurance
coverage, including its risk retention program and Environmental Indemnity
Agreement with Borden, is unlikely to have a material adverse effect on the
financial position or results of operations of the Partnership.
Item 6a. Exhibits
- ------------------
10.2 Revolving Credit Agreement. Dated March 31, 2000, between the
Operating Partnership and Fleet Capital Corporation, as Agent and as
a lender, and other lenders.
12
<PAGE>
SIGNATURE
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.,
its General Partner
By: /s/ James O. Stevning
--------------------------------------
James O. Stevning
Chief Financial Officer and Treasurer
Principal Accounting Officer
May 5, 2000
13
<PAGE>
Exhibit 10.2
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT is made this 31st day of March, 2000, by
and among FLEET CAPITAL CORPORATION ("Fleet"), a Rhode Island corporation with
an office at One South Wacker Drive, Suite 1400, Chicago, Illinois 60606,
individually as a Lender and as Agent ("Agent") for itself and any other
financial institution which is or becomes a party hereto (each such financial
institution, including Fleet, is referred to hereinafter individually as a
"Lender" and collectively as the "Lenders"), the LENDERS and BORDEN CHEMICALS
AND PLASTICS OPERATING LIMITED PARTNERSHIP, a Delaware limited partnership with
its chief executive office and principal place of business at Highways 73 & 30,
Geismar, Louisiana 70734 ("Borrower"). Capitalized terms used in this Agreement
have the meanings assigned to them in Appendix A, General Definitions.
Accounting terms not otherwise specifically defined herein shall be construed in
accordance with GAAP consistently applied.
SECTION 1. CREDIT FACILITY
Subject to the terms and conditions of, and in reliance upon the
representations and warranties made in, this Agreement and the other Loan
Documents, Lenders agree to make a Total Credit Facility of up to $100,000,000
available upon Borrower's request therefor, as follows:
1.1. Loans.
-----
1.1.1. Revolving Credit Loans. Each Lender agrees, severally and not
----------------------
jointly, for so long as no Default or Event of Default exists, to make
Revolving Credit Loans to Borrower from time to time during the period from
the date hereof to but not including the last day of the Term, as requested
by Borrower in the manner set forth in subsection 3.1.1 hereof, up to a
maximum principal amount at any time outstanding equal to the lesser of (i)
such Lender's Revolving Loan Commitment minus the LC Amount and (ii) the
-----
product of such Lender's Revolving Loan Percentage and an amount equal to
the Borrowing Base at such time minus the LC Amount. Agent shall have the
-----
right to establish reserves in such amounts, and with respect to such
matters, as Agent shall reasonably determine necessary or appropriate, and
customary for collateral under other asset-based facilities, arising from
conditions impairing the value of the relevant collateral. Notwithstanding
the foregoing, Agent shall not establish any reserves in respect of any
matters relating to any items of Collateral that have been taken into
account in determining Eligible Inventory or Eligible Accounts, as
applicable. The Revolving Credit Loans may be repaid and reborrowed without
penalty, subject to the provisions of subsection 2.3 (iii).
1.1.2. Use of Proceeds. The Revolving Credit Loans shall be used
---------------
solely for (i) the satisfaction of existing Indebtedness of Borrower, (ii)
for Borrower's general operating capital needs in a manner consistent with
the provisions of this Agreement and all applicable laws, and (iii) for
other purposes permitted under this Agreement.
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<PAGE>
1.1.3. Overadvance Loan. If Borrower requests that Lenders make, or
----------------
permit to remain outstanding, Revolving Credit Loans in an aggregate amount
in excess of the Borrowing Base minus the LC Amount (hereinafter,
-----
"Borrowing Base Availability"), Lenders having sixty-six and two-thirds
percent (66-2/3%) or more of the aggregate Revolving Loan Commitments may
in their discretion elect to cause all Lenders having a Revolving Loan
Commitment to make, or permit to remain outstanding, such excess Revolving
Credit Loans (such Revolving Credit Loans in excess of Borrowing Base
Availability being referred to as "Overadvance Revolving Credit Loans"),
provided, however, that such Lenders may not cause all Lenders having a
-------- -------
Revolving Loan Commitment to make, or permit to remain outstanding, (a)
Revolving Credit Loans in excess of the aggregate of all Revolving Loan
Commitments minus the LC Amount, or (b) Overadvance Revolving Credit Loans
in excess of $5,000,000. If Overadvance Revolving Credit Loans are made, or
permitted to remain outstanding, pursuant to the preceding sentence, then
(a) the Borrowing Base shall be deemed increased by the amount of such
permitted Overadvance Revolving Credit Loans, but only for so long as
Lenders having sixty-six and two-thirds percent (66-2/3%) or more of the
aggregate Revolving Loan Commitment allow such Overadvance Revolving Credit
Loans to be outstanding and (b) all Lenders that have committed to make
Revolving Credit Loans shall be bound to make, or permit to remain
outstanding, such Overadvance Revolving Credit Loans based upon their
Revolving Loan Percentages in accordance with the terms of this Agreement.
If Overadvance Revolving Credit Loans remain outstanding for more than
thirty (30) days during any 180-day period, Revolving Credit Loans must be
repaid immediately in an amount sufficient to eliminate all of such
Overadvance Revolving Credit Loans.
1.1.4. Collateral Protection Loans. Upon the occurrence and during
---------------------------
the continuance of an Event of Default, Agent, in its sole discretion, may
make Revolving Credit Loans, in an aggregate amount not to exceed
$5.000,000, if Agent deems that such Revolving Credit Loans are necessary
to protect all or any portion of the Collateral (hereinafter, "Collateral
Protection Loans"). Each Lender shall be obligated to advance its Revolving
Loan Percentage of each Collateral Protection Loan. If Collateral
Protection Loans are made pursuant to the preceding sentence, then (a) the
Borrowing Base shall be deemed increased by the amount of such permitted
Collateral Protection Loans, but only for so long as Agent allows such
Collateral Protection Loans to be outstanding, and (b) all Lenders that
have committed to make Revolving Credit Loans shall be bound to make, or
permit to remain outstanding, such Collateral Protection Loans based upon
their Revolving Loan Percentages in accordance with the terms of this
Agreement.
1.2. Letters of Credit: LC Guaranties.
--------------------------------
Agent agrees, for so long as no Default or Event of Default exists
and if requested by Borrower, to (i) issue its, or cause to be issued by Bank or
another Affiliate of Agent, on the date requested by Borrower, Letters of Credit
for the account of Borrower or (ii) execute LC Guaranties by which Bank, or
another Affiliate of Lender, on the date requested by
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<PAGE>
Borrower, shall guaranty the payment or performance by Borrower of its
reimbursement obligations with respect to letters of credit, provided that the
--------
LC Amount shall not exceed $20,000,000 at any time. No Letter of Credit or LC
Guaranty may have an expiration date that is more than one year from the date of
issuance thereof, which expiration date may be extended for additional periods
of up to one year, subject to the immediately following sentence. No Letter of
Credit or LC Guaranty may have an expiration date that is after 30 days prior to
the last day of the Term. Notwithstanding anything to the contrary contained
herein, Borrower, Agent and Lenders hereby agree that all LC Obligations arising
from any Letter of Credit or LC Guaranty issued at a time when there was
sufficient Availability for the issuance thereof, and all obligations of
Borrower relating thereto, shall be satisfied by the prompt issuance of one or
more Revolving Credit Loans that are Base Rate Portions, which Borrower hereby
acknowledges are requested and Lenders hereby agree to fund. In the event that
Revolving Credit Loans are not, for any reason, promptly made to satisfy all
then existing LC Obligations, each Lender hereby agrees to pay to Agent, on
demand, an amount equal to such LC Obligations multiplied by such Lender's
---------- --
Revolving Loan Percentage, and until so paid, such amount shall be secured by
the Collateral and shall bear interest and be payable at the same rate and in
the same manner as Base Rate Portions. Immediately upon the issuance of a Letter
of Credit or an LC Guaranty under this Agreement, each Lender shall be deemed to
have irrevocably and unconditionally purchased and received from Agent, without
recourse or warranty, an undivided interest and participation therein equal to
such LC Obligations multiplied by such Lender's Revolving Loan Percentage.
---------- --
SECTION 2. INTEREST, FEES AND CHARGES
2.1. Interest.
--------
2.1.1. Rates of Interest. Interest shall accrue on the principal
-----------------
amount of the Base Rate Portion outstanding at the end of each day at a
fluctuating rate per annum equal to Applicable Margin then in effect plus
----
the Alternate Base Rate. Said rate of interest shall increase or decrease
by an amount equal to any increase or decrease in the Alternate Base Rate,
effective as of the opening of business on the day that any such change in
the Alternate Base Rate occurs. If Borrower properly exercises its LIBOR
Option as provided in Section 2.3, interest shall accrue on the principal
amount of the LIBOR Portions outstanding at the end of each day at a rate
per annum equal to the Applicable Margin then in effect plus the LIBOR Rate
----
applicable to each LIBOR Portion for the corresponding LIBOR Period.
2.1.2. Default Rate of Interest. At the option of Agent or the
------------------------
Majority Lenders, upon and after the occurrence of an Event of Default, and
during the continuation thereof, the principal amount of all Loans shall
bear interest at a rate per annum equal to 2.0% plus the interest rate
----
otherwise applicable thereto (the "Default Rate").
2.1.3. Maximum Interest. In no event whatsoever shall the aggregate
----------------
of all amounts deemed interest hereunder and charged or collected pursuant
to the terms of this Agreement exceed the highest rate permissible under
any law which a court of
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<PAGE>
competent jurisdiction shall, in a final determination, deem applicable
hereto (the "Maximum Rate"). If at any time, the amount of interest paid
hereunder is limited by the Maximum Rate, and the amount at which interest
accrues hereunder is subsequently below the Maximum Rate, the rate at which
interest accrues hereunder shall remain at the Maximum Rate, until such
time as the aggregate interest paid hereunder equals the amount of interest
that would have been paid hereunder had the Maximum Rate not applied. If
any provisions of this Agreement are in contravention of any such law, such
provisions shall be deemed amended to conform thereto.
2.2. Computation of Interest and Fees.
--------------------------------
Interest, Letter of Credit and LC Guaranty fees and unused line fees
hereunder shall be calculated daily and shall be computed on the actual number
of days elapsed over a year of 365/366 days. Notwithstanding the foregoing,
LIBOR Portions shall be calculated daily and shall be computed on the actual
number of days elapsed over a year of 360 days.
2.3. LIBOR Option.
------------
(i) Upon the conditions that: (1) Agent shall have received a
LIBOR Request from Borrower at least 3 Business Days prior to the
first day of the LIBOR Period requested, (2) there shall have occurred
no change in applicable law which would make it unlawful for Lenders
to obtain deposits of U.S. dollars in the London interbank foreign
currency deposits market, (3) as of the date of the LIBOR Request and
the first day of the LIBOR Period, there shall exist no Default or
Event of Default, (4) Agent is able to determine the LIBOR Rate in
respect of the requested LIBOR Period, (5) Agent is able to obtain
deposits of U.S. dollars in the London interbank foreign currency
deposits market in the applicable amounts and for the requested LIBOR
Period, and (6) as of the first date of the LIBOR Period, there are no
more than 4 outstanding LIBOR Portions including the LIBOR Portion
being requested; then interest on the LIBOR Portion requested during
the LIBOR Period requested will be based on the applicable LIBOR Rate.
Agent will provide each Lender with a copy of each LIBOR Request
received by Agent, promptly following the receipt thereof.
(ii) Each LIBOR Request shall be irrevocable and binding on
Borrower. Borrower shall indemnify each Lender for any loss, penalty
or expense incurred by such Lender due to failure on the part of
Borrower to fulfill, on or before the date specified in any LIBOR
Request, the applicable conditions set forth in this Agreement or due
to the prepayment of the applicable LIBOR Portion prior to the last
day of the applicable LIBOR Period, including, without limitation, any
loss (including loss of anticipated profits) or expense incurred by
reason of the liquidation or redeployment of deposits or other funds
acquired by any Lender to fund or maintain the requested LIBOR
Portion.
-4-
<PAGE>
(iii) If any Legal Requirement shall (1) make it unlawful for any
Lender to fund through the purchase of U.S. dollar deposits any LIBOR
Portion or otherwise give effect to its obligations as contemplated
under this Section 2.3, or (2) shall impose on any Lender any costs
based on or measured by the excess above a specified level of the
amount of a category of deposits or other liabilities of any Lender
which includes deposits by reference to which the LIBOR Rate is
determined as provided herein or a category of extensions of credit or
other assets of any Lender which includes any LIBOR Portion or (3)
shall impose on any Lender any restrictions (not already taken into
account under statutory reserves) on the amount of such a category of
liabilities or assets which any Lender may hold, then, in each such
case, each affected Lender may (A) in the case of (1) and (3) above,
by written notice thereof to Borrowers, describing the Legal
Requirement in reasonable detail, terminate such Lender's obligation
to make Loans available to Borrowers under the LIBOR Option if
necessary in connection therewith and (B) in the case of (2) above by
written notice thereof to Borrowers, describing the Legal Requirements
in reasonable detail, require Borrowers to pay such Lender such
additional amount or amounts as will compensate such Lender for such
additional costs which are properly allocable to the applicable LIBOR
Portion. Any LIBOR Portion subject thereto shall immediately bear
interest thereafter at the rate and in the manner provided for the
Base Rate Portion pursuant to subsection 2.1.1. Borrower shall
indemnify each Lender against any loss, penalty or expense (excluding
lost profits) incurred by such Lender due to liquidation or
redeployment of deposits or other funds acquired by such Lender to
fund or maintain any LIBOR Portion that is terminated under this
paragraph.
2.4. Closing Fee; Additional Fees.
----------------------------
Borrower shall pay to Agent fees in accordance with the terms of the
fee letter between Borrower and Agent.
2.5. Letter of Credit and LC Guaranty Fees.
-------------------------------------
Borrower shall pay to Agent, for the ratable benefit of the Lenders, a per
annum fee equal to the Applicable Margin then in effect for LIBOR Portions
multiplied by the LC Amount outstanding from time to time during the term of
- ---------- --
this Agreement, which fees shall be payable monthly in arrears on the first day
of each month hereafter, plus all normal and customary charges associated with
----
the issuance of such Letters of Credit and LC Guaranties, which fees and charges
shall be deemed fully earned and shall be due and payable upon issuance of each
such Letter of Credit or LC Guaranty and shall not be subject to rebate or
proration upon the termination of this Agreement for any reason. In addition to
the foregoing, Borrower shall pay to Agent, for its own account, fronting fees
equal to .125% per annum multiplied by the LC Amount outstanding from time to
---------- --
time during the term of this Agreement, which fronting fees shall be payable
monthly in arrears on the first day of each month hereafter.
-5-
<PAGE>
2.6. Unused Line Fee.
----------------
Borrower shall pay to Agent, for the ratable benefit of the Lenders, a fee
equal to 0.50% per annum (which percentage shall be reduced to .375% per annum
during all periods in which the Applicable Margin for Base Rate Portions equals
0%) of the average daily amount by which the Total Credit Facility exceeds the
sum of the outstanding principal balance of the Revolving Credit Loans plus the
----
LC Amount. The unused line fee shall be payable monthly in arrears on the first
day of each month hereafter.
2.7. Prepayment Fee.
--------------
Borrower shall pay to Agent, for the ratable benefit of the Lenders, a fee
in the event that prior to the second anniversary of the Closing Date, Borrower
elects to repay the Loans in full and terminate all Revolving Loan Commitments.
Such fee shall be payable upon repayment of the Loans and shall be in the amount
of $1,000,000 if the Loans are repaid and the Revolving Loan Commitments are
terminated on or before the first anniversary of the Closing Date and $500,000
if the Loans are repaid and the Revolving Loan Commitments are terminated after
the first anniversary of the Closing Date and on or before the second
anniversary of the Closing Date. Notwithstanding the foregoing, no fee will be
due and owing under this subsection if Borrower repays the Loans with the
proceeds of another secured credit facility following the refusal by Agent and
Lenders to provide credit to Borrower on terms substantially similar to those
governing such other credit facility.
2.8. Capital Adequacy.
----------------
If any Lender shall have determined that the adoption after the date of
this Agreement of any law, rule or regulation regarding capital adequacy, or any
change after the date of this Agreement therein or in the interpretation or
application thereof or compliance by any Lender with any request or directive
after the date of this Agreement regarding capital adequacy (whether or not
having the force of law) from any central bank or governmental authority, does
or shall have the effect of reducing the rate of return on such Lender's capital
as a consequence of its obligations hereunder to a level below that which such
Lender could have achieved but for such adoption, change or compliance (taking
into consideration such Lender's policies with respect to capital adequacy) by
an amount deemed by such Lender, in its sole discretion, to be material, then
from time to time, after submission by such Lender to Borrower of a written
demand therefor, Borrower shall pay to such Lender, within 30 days of such
demand, such additional amount or amounts as will compensate such Lender for
such reduction. A certificate of such Lender claiming entitlement to payment as
set forth above shall be conclusive in the absence of manifest error. Such
certificate shall set forth the nature of the occurrence giving rise to such
payment, the additional amount or amounts to be paid to such Lender, and the
method by which such amounts were determined. In determining such amount, such
Lender may use any reasonable averaging and attribution method.
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<PAGE>
2.9. Audit Fees.
----------
Borrower shall pay to Agent all reasonable out-of-pocket expenses incurred
by Agent in connection with audits of the books and records and Properties of
Borrower and its Subsidiaries and such other matters as Agent shall deem
appropriate in its reasonable credit judgment. Borrower shall pay to Agent a per
diem amount (at Agent's standard rates in effect from time to time) for each
person conducting the audits referred to in the preceding sentence. Such out-of-
pocket expenses and per diem amounts shall be payable on the first day of the
month following the date of issuance by Agent of a request for payment thereof
to Borrower.
2.10. Reimbursement of Expenses.
--------------------------
If, at any time or times regardless of whether or not an Event of Default
then exists, (i) Agent incurs legal or accounting expenses or any other costs or
out-of-pocket expenses in connection with (1) the negotiation and preparation of
this Agreement or any of the other Loan Documents, any amendment of or
modification of this Agreement or any of the other Loan Documents, or any
syndication or attempted syndication of the Obligations (including, without
limitation, printing and distribution of materials to prospective Lenders and
all costs associated with bank meetings, but excluding any closing fees paid to
Lenders in connection therewith) or (2) the administration of this Agreement or
any of the other Loan Documents and the transactions contemplated hereby and
thereby, including, without limitation, actions taken pursuant to subsection
8.1.1; or (ii) Agent or any Lender incurs legal or accounting expenses or any
other costs or out-of-pocket expenses in connection with (1) any litigation,
contest, dispute, suit, proceeding or action (whether instituted by Agent, any
Lender, Borrower or any other Person) relating to the Collateral, this Agreement
or any of the other Loan Documents or Borrower's, any of its Subsidiaries' or
any Guarantor's affairs; (2) any attempt to enforce any rights of Agent or any
Lender against Borrower or any other Person which may be obligated to Agent or
any Lender by virtue of this Agreement or any of the other Loan Documents,
including, without limitation, the Account Debtors; or (3) any attempt to
inspect, verify, protect, preserve, restore, collect, sell, liquidate or
otherwise dispose of or realize upon the Collateral; then all such legal and
accounting expenses, other costs and out of pocket expenses of Agent or any
Lender, as applicable, shall be charged to Borrower; provided, that Borrower
--------
shall not be responsible for such costs and out-of-pocket expenses to the extent
incurred because of the gross negligence or willful misconduct of Agent or any
Lender. Borrower shall also reimburse Agent for expenses incurred by Agent in
its administration of the Collateral to the extent and in the manner provided in
Section 2.11 hereof.
2.11. Bank Charges.
------------
Borrower shall pay to Agent any and all fees, costs or expenses which Agent
pays to a bank or other similar institution arising out of or in connection with
(i) the forwarding to Borrower or any other Person on behalf of Borrower, by
Agent, of proceeds of Loans made to Borrower pursuant to this Agreement and (ii)
the depositing for collection by Agent of any check or item of payment received
or delivered to Agent on account of the Obligations.
-7-
<PAGE>
2.12. Collateral Protection Expenses; Appraisals.
------------------------------------------
All out-of-pocket expenses incurred in protecting, storing, warehousing,
insuring, handling, maintaining and shipping the Collateral, any and all excise,
property, sales, and use taxes imposed by any state, federal, or local authority
on any of the Collateral or in respect of the sale thereof shall be borne and
paid by Borrower. If Borrower fails to promptly pay any portion thereof when
due, Agent may, at its option, but shall not be required to, pay the same and
charge Borrower therefor. Additionally, from time to time during the continuance
of any Event of Default, if Agent determines in its reasonable credit judgment
that obtaining appraisals is necessary or desirable, Agent may, at Borrower's
expense, obtain appraisals from appraisers (who may be personnel of Agent),
stating the then current fair market value of all or any portion of the real
estate or personal property of Borrower or any of its Subsidiaries.
2.13. Payment of Charges.
------------------
All amounts chargeable to Borrower under this Agreement shall be
Obligations secured by all of the Collateral, shall be, unless specifically
otherwise provided, payable on demand and shall bear interest from the date
demand was made or such amount is due, as applicable, until paid in full at the
rate applicable to Base Rate Portions from time to time.
2.14. No Deductions.
-------------
(i) Any and all payments or reimbursements made hereunder shall
be made free and clear of and without deduction for any and all
taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto; excluding, however, the following:
taxes imposed on (or measured by) the income of Agent or any Lender
or franchise taxes imposed by the jurisdiction under the laws of
which Agent or any Lender is organized or doing business or any
political subdivision thereof and taxes imposed on (or measured by)
its income by the jurisdiction of Agent's or such Lender's applicable
lending office or any political subdivision thereof or franchise
taxes (all such taxes, levies, imposts, deductions, charges or
withholdings and all liabilities with respect thereto excluding such
income or franchise taxes, herein "Tax Liabilities"). If Borrower
shall be required by law to deduct any such Tax Liabilities from or
in respect of any sum payable hereunder to Agent or any Lender, then
the sum payable hereunder shall be increased as may be necessary so
that, after all required deductions are made, such Lender receives an
amount equal to the sum it would have received had no such deductions
been made; provided, however, that Borrower shall not be required to
-------- -------
increase any such amounts payable to any Lender with respect to any
Tax Liabilities that are attributable to such Lender's failure to
comply with the requirements of paragraph (ii) of this Section 2.14.
(ii) Each Lender or transferee that is not a citizen or resident
of the United States, a corporation, partnership or other entity
created or organized in or under the laws of the United States (or
any jurisdiction thereof), or any
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<PAGE>
estate or trust that is subject to federal income taxation regardless
of the source of its income (a "Non-U.S. Lender") shall deliver to
the Borrower and the Agent two copies of either U.S. Internal Revenue
Service Form W-8BEN (or successor form) or Form W-8ECI (or successor
form) claiming complete or partial exemption from U.S. federal
withholding tax on all payments from the Borrower under this
Agreement. Such forms shall be delivered by each Non-U.S. Lender on
or before the date it becomes a party to this Agreement. In addition,
each Non-U.S. Lender agrees to provide to the Borrower and the Agent
a new Form W-8BEN or W-8ECI upon the obsolescence or inapplicability
of any previously delivered form and comparable statements in
accordance with applicable United States laws and regulations and
amendments duly executed and completed, and to comply with all
applicable United States laws and regulations with regard to such
withholding tax exemption.
(iii) If any Lender or the Agent receives a refund in respect of
any amounts paid by the Borrower pursuant to this Section 2.14, which
refund in the good faith judgment of such Lender or Agent is
allocable to such payment, it shall promptly notify the Borrower of
such refund and shall, within 30 days after receipt, repay such
refund to the Borrower net of all out-of-pocket expenses of such
Lender or the Agent; provided, however, that the Borrower, upon the
request of such Lender or the Agent, agrees to repay the amount paid
over to the Borrower to such Lender or the Agent in the event such
Lender or the Agent is required to repay such refund.
SECTION 3. LOAN ADMINISTRATION.
3.1. Manner of Borrowing Revolving Credit Loans.
------------------------------------------
Borrowings under the credit facility established pursuant to Section 1
hereof shall be as follows:
3.1.1. Loan Requests. A request for a Revolving Credit Loan shall be
-------------
made, or shall be deemed to be made, in the following manner: (i) Borrower
may give Agent notice of its intention to borrow, in which notice Borrower
shall specify the amount of the proposed borrowing and the proposed
borrowing date, no later than 11:00 a.m. Chicago, Illinois, time on the
proposed borrowing date (or in accordance with Section 2.3 in the case of a
request for a LIBOR Portion), provided, however, that no such request may
--------
be made at a time when there exists a Default or an Event of Default; and
(ii) the becoming due of any amount required to be paid under this
Agreement, whether as interest or for any other Obligation, shall be deemed
irrevocably to be a request for a Revolving Credit Loan on the due date in
the amount required to pay such interest or other Obligation.
3.1.2. Disbursement. Borrower hereby irrevocably authorizes Lender to
------------
disburse the proceeds of each Revolving Credit Loan requested, or deemed to
be
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<PAGE>
requested, pursuant to subsection 3.1.1 as follows: (i) the proceeds of
each Revolving Credit Loan requested under subsection 3.1.1(i) shall be
disbursed by Agent in lawful money of the United State; of America in
immediately available funds, in the case of the initial borrowing, in
accordance with the terms of the written disbursement letter from Borrower,
and in the case of each subsequent borrowing, by wire transfer to such bank
account as may be agreed upon by Borrower and Agent from time to time or
elsewhere if pursuant to a written direction from Borrower; and (ii) the
proceeds of each Revolving Credit Loan deemed requested under subsection
3.1.1(ii) shall be disbursed by Agent by way of direct payment of the
relevant interest or other Obligation.
3.1.3. Payment by Lenders. Agent shall give to each Lender prompt
------------------
written notice by facsimile, telex or cable of the receipt by Agent from
Borrower of any request for a Revolving Credit Loan, but only if Agent is
requiring each Lender to advance its Revolving Loan Percentage thereof
prior to the weekly settlement described below. Each such notice shall
specify the requested date and amount of such Revolving Credit Loan,
whether such Revolving Credit Loan shall be subject to the LIBOR Option,
and the amount of each Lender's advance thereunder (in accordance with its
applicable Revolving Loan Percentage). Each Lender shall, not later than
3:00 p.m. (Chicago time) on such requested date, wire to a bank designated
by Agent the amount of that Lender's Revolving Loan Percentage of the
requested Revolving Credit Loan. The failure of any Lender to make the
Revolving Credit Loans to be made by it shall not release any other Lender
of its obligations hereunder to make its Revolving Credit Loan. Neither
Agent nor any other Lender shall be responsible for the failure of any
other Lender to make the Revolving Credit Loan to be made by such other
Lender. The foregoing notwithstanding, Agent, in its sole discretion, may
from its own funds make a Revolving Credit Loan on behalf of any Lender. In
such event, the Lender on behalf of whom Agent made the Revolving Credit
Loan shall reimburse Agent for the amount of such Revolving Credit Loan
made on its behalf, on a weekly (or more frequent, as determined by Agent
in its sole discretion) basis. The entire amount of interest attributable
to such Revolving Credit Loan for the period from the date on which such
Revolving Credit Loan was made by Agent on such Lender's behalf until Agent
is reimbursed by such Lender, shall be paid to Agent for its own account.
3.1.4. Authorization. Borrower hereby irrevocably authorizes Agent to
-------------
advance to Borrower, and to charge to Borrower's Loan Account hereunder as
a Revolving Credit Loan, a sum sufficient to pay all interest accrued on
the Obligations during the immediately preceding month and to pay all fees,
costs and expenses and other Obligations at any time owed by Borrower to
Agent or any Lender hereunder.
3.1.5. Letter of Credit and LC Guaranty Requests. A request for a
-----------------------------------------
Letter of Credit or LC Guaranty shall be made in the following manner:
Borrower may give Agent and Bank a written notice of its request for the
issuance of a Letter of Credit or LC Guaranty, not later than 11:00 a.m.
Chicago, Illinois, time, one Business Day before the proposed issuance date
thereof, in which notice Borrower shall specify the
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<PAGE>
proposed issuer, issuance date and format and wording for the Letter of
Credit or LC Guaranty being requested (which shall be satisfactory to Agent
and the Person being asked to issue such Letter of Credit or LC Guaranty);
provided, that no such request may be made at a time when there exists a
--------
Default or Event of Default. Such request shall be accompanied by an
executed application and reimbursement agreement in form and substance
satisfactory to Agent and the Person being asked to issue the Letter of
Credit or LC Guaranty, as well as any required resolutions.
3.1.6. Method of Making Requests. As an accommodation to Borrower,
-------------------------
unless a Default or an Event of Default is then in existence, (i) Agent
shall permit telephonic requests for Revolving Credit Loans to Agent, (ii)
Agent and Bank may, in their discretion, permit electronic transmittal of
requests for Letters of Credit and LC Guaranties to them, and (iii) Agent
may, in Agent's discretion, permit electronic transmittal of instructions,
authorizations, agreements or reports to Agent. Unless Borrower
specifically directs Agent or Bank in writing not to accept or act upon
telephonic or electronic communications from Borrower, neither Agent nor
Bank shall have any liability to Borrower for any loss or damage suffered
by Borrower as a result of Agent's or Bank's honoring of any requests,
execution of any instructions, authorizations or agreements or reliance on
any reports communicated to it telephonically or electronically and
purporting to have been sent to Agent or Bank by an authorized officer of
Borrower, and neither Agent nor Bank shall have any duty to verify the
origin of any such communication or the authority of the person sending it.
Each telephonic request for a Revolving Credit Loan, Letter of Credit or LC
Guaranty accepted by Agent and Bank, if applicable, hereunder shall be
promptly followed by a written confirmation of such request from Borrower
to Lender and Bank, if applicable.
3.2. Payments.
--------
Except where evidenced by notes or other instruments issued or made by
Borrower to any Lender and accepted by such Lender specifically containing
payment instructions that are in conflict with this Section 3.2 (in which case
the conflicting provisions of said notes or other instruments shall govern and
control), the Obligations shall be payable as follows:
3.2.1. Principal. Principal payable on account of Revolving Credit
---------
Loans shall be payable by Borrower to Agent for the ratable benefit of
Lenders immediately upon the earliest of (i) the receipt by Agent or
Borrower of any proceeds of any of the Collateral or other funds (except as
otherwise provided herein), to the extent of said proceeds and other funds,
subject to Borrower's rights to reborrow such amounts in compliance with
subsection 1.1.1 hereof; (ii) the occurrence of an Event of Default in
consequence of which Agent or Majority Lenders elect to accelerate the
maturity and payment of the Obligations, or (iii) the earlier of the last
day of the Term or termination of this Agreement pursuant to Section 4
hereof.
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<PAGE>
3.2.2. Interest.
--------
(i) Base Rate Portion. Interest accrued on Base Rate Portions
-----------------
shall be due and payable on the earliest of (1) the first calendar day
of each month (for the immediately preceding month), computed through
the last calendar day of the preceding month, (2) the occurrence of an
Event of Default in consequence of which Agent or Majority Lenders
elect to accelerate the maturity and payment of the Obligations or (3)
the earlier of the last day of the Term or termination of this
Agreement pursuant to Section 4 hereof
(ii) LIBOR Portion. Interest accrued on each LIBOR Portion shall be
-------------
due and payable on each LIBOR Interest Payment Date and on the earlier
of (1) the occurrence of an Event of Default in consequence of which
Agent or Majority Lenders elect to accelerate the maturity and payment
of the Obligations or (2) the earlier of the last day of the Term or
termination of this Agreement pursuant to Section 4 hereof
3.2.3. Costs, Fees and Charges. Costs. fees and charges payable
-----------------------
pursuant to this Agreement or any of the other Loan Documents shall be
payable by Borrower to Agent, as and when provided in Section 2 hereof or
to any other Person designated by Agent in writing.
3.2.4. Other Obligations. The balance of the Obligations requiring
-----------------
the payment of money, if any, shall be payable by Borrower to Agent for
distribution to Lenders, as appropriate, as and when provided in this
Agreement, the Other Agreements or the Security Documents, or on demand,
whichever is later.
3.3. Application of Payments and Collections.
---------------------------------------
All items of payment received by Agent by 1:00 p.m., Chicago. Illinois,
time, on any Business Day shall be deemed received on that Business Day. All
items of payment received after 1:00 p.m., Chicago, Illinois, time, on any
Business Day shall be deemed received on the following Business Day. If as the
result of collections of Accounts as authorized by subsection 6.2.4 hereof or
otherwise (including as a result of receipt of proceeds of business interruption
insurance), a credit balance exists in the Loan Account, such credit balance
shall not accrue interest in favor of Borrower, but shall be disbursed to
Borrower or otherwise at Borrower's direction in the manner set forth in
subsection 3.1.2. upon Borrower's request at any time, so long as no Default or
Event of Default then exists. Agent may at its option, offset such credit
balance against any of the Obligations upon and during the continuance of an
Event of Default.
3.4. All Loans to Constitute One Obligation.
--------------------------------------
The Loans shall constitute one general Obligation of Borrower, and shall be
secured by Lender's Lien upon all of the Collateral.
-12-
<PAGE>
3.5 Loan Account.
------------
Agent shall enter all Loans as debits to a loan account (the "Loan
Account") and shall also record in the Loan Account all payments made by
Borrower on any Obligations and all proceeds of Collateral which are finally
paid to Agent. and may record therein, in accordance with customary accounting
practice, other debits and credits, including interest and all charges and
expenses properly chargeable to Borrower pursuant to this Agreement or any other
Loan Document.
3.6. Statements of Account.
---------------------
Agent will account to Borrower monthly with a statement of Loans, charges
and payments made pursuant to this Agreement during the immediately preceding
month, and such account rendered by Agent shall be deemed final, binding and
conclusive upon Borrower absent demonstrable error unless Agent is notified by
Borrower in writing to the contrary within 30 days of the date each accounting
is received by Borrower. Such notice shall only be deemed an objection to those
items specifically objected to therein.
3.7. Sharing of Payments. Etc.
------------------------
If any Lender shall obtain any payment (whether voluntary, involuntary,
through the exercise of any right of set-off, or otherwise) on account of any
Loan made by it in excess of its ratable share of payments on account of Loans
made by all Lenders, such Lender shall forthwith purchase from each other Lender
such participation in such Loan as shall be necessary to cause such purchasing
Lender to share the excess payment ratably with each other Lender; provided,
--------
that if all or any portion of such excess payment is thereafter recovered from
such purchasing Lender, such purchase from each Lender shall be rescinded and
such Lender shall repay to the purchasing Lenders the purchase price to the
extent of such recovery, together with an amount equal to such Lender's ratable
share (according to the proportion of (i) the amount of such Lender's required
repayment to (ii) the total amount so recovered from the purchasing Lender) of
any interest or other amount paid or payable by the purchasing Lender in respect
of the total amount so recovered. Borrower agrees that any Lender so purchasing
a participation from another Lender pursuant to this Section 3.7 may, to the
fullest extent permitted by law, exercise all its rights of payment (including
the right of set-off) with respect to such participation as fully as if such
Lender were the direct creditor of Borrower in the amount of such participation.
Notwithstanding anything to the contrary contained herein, all purchases and
repayments to be made under this Section 3.7 shall be made through Agent.
SECTION 4. TERM AND TERMINATION
4.1. Term of Agreement.
-----------------
Subject to the right of Lenders to cease making Loans to Borrower during
the continuance of any Default or Event of Default, this Agreement shall be in
effect for a period of 4 years from the date hereof, through and including March
31, 2004 (the "Term"), unless terminated as provided in Section 4.2 hereof.
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<PAGE>
4.2. Termination.
-----------
4.2.1. Termination by Lenders. Agent may, and at the direction of
----------------------
Majority Lenders shall, terminate this Agreement upon written notice to the
Borrower upon or after the occurrence and during the continuance of an
Event of Default.
4.2.2. Termination by Borrower. Upon at least 10 days prior written
-----------------------
notice to Agent and Lenders, Borrower may, at its option, terminate this
Agreement; provided, however, no such termination shall be effective until
--------- -------
Borrower has paid or collateralized to Agent's reasonable satisfaction all
of the Obligations in immediately available funds, all Letters of Credit
and LC Guaranties have expired, terminated or have been cash collateralized
to Agent's reasonable satisfaction and Borrower has complied with
subsection 2.7. Any notice of termination given by Borrower shall be
irrevocable unless all Lenders otherwise agrees in writing, no Lender shall
have any obligation to make any Loans or issue or procure any Letters of
Credit or LC Guaranties on or after the termination date stated in such
notice. Borrower may elect to terminate this Agreement in its entirety
only. No section of this Agreement or type of Loan available hereunder may
be terminated singly.
4.2.3. Effect of Termination. All of the Obligations shall be
---------------------
immediately due and payable upon the termination date stated in any notice
of termination of this Agreement. All undertakings, agreements, covenants,
warranties and representations of Borrower contained in the Loan Documents
shall survive any such termination and Agent shall retain its Liens in the
Collateral and Agent and each Lender shall retain all of its rights and
remedies under the Loan Documents notwithstanding such termination until
all Obligations have been discharged or paid, in full, in immediately
available funds, including, without limitation, all Obligations under
Section 2.3(ii) resulting from such termination. Notwithstanding the
foregoing or the payment in full of the Obligations, Agent shall not be
required to terminate its Liens in the Collateral unless, with respect to
any loss or damage Agent may incur as a result of dishonored checks or
other items of payment received by Agent from Borrower or any Account
Debtor and applied to the Obligations, Agent shall, at its option, (i) have
received a written agreement satisfactory to Agent, executed by Borrower
and by any Person whose loans or other advances to Borrower are used in
whole or in part to satisfy the Obligations, indemnifying Agent and each
Lender from any such loss or damage or (ii) have retained cash Collateral
for such period of time as Agent, in its reasonable discretion, may deem
necessary to protect Agent and each Lender from any such loss or damage.
SECTION 5. SECURITY INTERESTS
5.1. Security Interest in Collateral.
-------------------------------
To secure the prompt payment and performance to Agent and each Lender of
the Obligations, Borrower hereby grants to Agent for the benefit of itself and
each Lender, a security interest in and to, and a continuing Lien upon, all of
the following Property and
-14-
<PAGE>
interests in Property of Borrower, whether now owned or existing or hereafter
created, acquired or arising and wheresoever located:
(i) Accounts;
(ii) Inventory;
(iii) Equipment located at either of Borrower's facilities in
Geismar, Louisiana or Addis, Louisiana;
(iv) Deposit accounts containing proceeds (as defined in the
Code) of any of the foregoing;
(v) Proceeds (as defined in the Code) of any of the foregoing;
and
(vi) All books and records (including, without limitation,
customer lists, credit files, computer programs, print-outs, and other
computer materials and records) of Borrower pertaining to any of (i)
through (v) above.
5.2. Lien Perfection: Further Assurances.
-----------------------------------
Borrower shall execute such UCC-1 financing statements as are required by
the Code and such other instruments, assignments or documents as are necessary
to perfect Agent's Lien upon any of the Collateral and shall take such other
action as may be required to perfect or to continue the perfection of Agent's
Lien upon the Collateral. Unless prohibited by applicable law, Borrower hereby
authorizes Agent to execute and file any such financing statement on Borrower's
behalf if Borrower fails to promptly do so after written demand by Agent. The
parties agree that a carbon, photographic or other reproduction of this
Agreement shall be sufficient as a financing statement and may be filed in any
appropriate office in lieu thereof. At Agent's request, Borrower shall also
promptly execute or cause to be executed and shall deliver to Agent any and all
documents, instruments and agreements deemed necessary by Agent, to give effect
to or carry out the terms or intent of the Loan Documents.
5.3. Lien on Realty.
--------------
The due and punctual payment and performance of the Obligations shall also
be secured by the Lien created by Mortgages upon all real Property of Borrower
described therein. Each Mortgage shall be executed by Borrower in favor of
Agent. Each Mortgage shall be duly recorded, at Borrower's expense, in each
office where such recording is required to constitute a fully perfected Lien on
the real Property covered thereby. Borrower shall deliver to Agent, at
Borrower's expense, mortgagee title insurance policies issued by a title
insurance company satisfactory to Agent, which policies shall be in form and
substance satisfactory to Agent and shall insure a valid first Lien in favor of
Agent, for the benefit of itself and the Lenders, on the Property covered by
each Mortgage, subject only to those exceptions acceptable to Agent and its
counsel. Borrower shall deliver to Agent such other documents, including,
without limitation, as-built survey prints of the real Property, as Agent and
its counsel may request relating to the real Property subject to the Mortgages.
-15-
<PAGE>
5.4. Limitations on Collateral.
-------------------------
Exclusive of Accounts, Inventory and proceeds thereof, all other
Collateral, including all real Property now or hereafter subject to a Mortgage,
shall secure no more than $17,000,000 of Obligations at any time outstanding.
SECTION 6. COLLATERAL ADMINISTRATION
6.1. General.
-------
6.1.1. Location of Collateral. All Collateral, other than Inventory
----------------------
in transit and motor vehicles, will at all times be kept by Borrower and
its Subsidiaries at one or more of business locations set forth in Exhibit
-------
6.1.1 hereto, as updated pursuant to Section 6.3 hereof.
-----
6.1.2. Insurance of Collateral. Borrower shall maintain and pay for
-----------------------
insurance upon all Collateral wherever located and with respect to the
business of Borrower and each of its Subsidiaries, covering casualty,
hazard, public liability and such other risks in such amounts and with such
insurance companies as are reasonably satisfactory to Agent. Borrower shall
deliver certified copies of such policies to Agent as promptly as
practicable, with satisfactory lender's loss payable endorsements, naming
Agent as a loss payee, assignee or additional insured, as appropriate, as
its interest may appear, and showing only such other loss payees, assignees
and additional insureds as are satisfactory to Agent. Each policy of
insurance or endorsement shall contain a clause requiring the insurer to
give not less than 10 days' prior written notice to Agent in the event of
cancellation of the policy for nonpayment of premium and not less than 30
days' prior written notice to Agent in the event of cancellation of the
policy for any other reason whatsoever and a clause specifying that the
interest of Agent shall not be impaired or invalidated by any act or
neglect of Borrower, any of its Subsidiaries or the owner of the Property
or by the occupation of the premises for purposes more hazardous than are
permitted by said policy. Borrower agrees to deliver to Agent, promptly as
rendered, true copies of all reports made in any reporting forms to
insurance companies. All proceeds of business interruption insurance (if
any) of Borrower and its Subsidiaries shall be remitted to Agent for
application to the outstanding balance of the Revolving Credit Loans.
Unless Borrower provides Agent with evidence of the insurance coverage
required by this Agreement, Agent may purchase insurance at Borrower's
expense to protect Agent's interests in the Properties of Borrower and its
Subsidiaries. This insurance may, but need not, protect the interests of
Borrower and its Subsidiaries. The coverage that Agent purchases may not
pay any claim that Borrower or any Subsidiary makes or any claim that is
made against Borrower or any such Subsidiary in connection with said
Property. Borrower may later cancel any insurance purchased by Agent, but
only after providing Agent with evidence that Borrower and its Subsidiaries
have obtained insurance as required by this Agreement. If Agent purchases
insurance,
-16-
<PAGE>
Borrower will be responsible for the costs of that insurance, including
interest and any other charges Agent may impose in connection with the
placement of insurance, until the effective date of the cancellation or
expiration of the insurance. The costs of the insurance may be added to the
Obligations. The costs of the insurance may be more than the cost of
insurance that Borrower and its Subsidiaries may be able to obtain on their
own.
6.1.3. Protection of Collateral. Lender shall not be liable or
------------------------
responsible in any way for the safekeeping of any of the Collateral or for
any loss or damage thereto (except for reasonable care in the custody
thereof while any Collateral is in Agent's or any Lender's actual
possession) or for any diminution in the value thereof, or for any act or
default of any warehouseman, carrier, forwarding agency, or other person
whomsoever, but the same shall be at Borrower's sole risk.
6.2. Administration of Accounts.
--------------------------
6.2.1. Records, Schedules and Assignments of Accounts. Borrower shall
----------------------------------------------
keep accurate and complete records of its Accounts and all payments and
collections thereon and shall submit to Agent on such periodic basis as
Agent shall request a sales and collections report for the preceding
period, in form consistent with the reports currently prepared by Borrower
with respect to such information. At least once each month, but subject to
subsection 8.1.4, from and after the date hereof, Borrower shall deliver to
Agent a detailed aged trial balance of all Accounts existing as of the last
day of the preceding month, and upon Agent's request therefor, copies of
proof of delivery and the original copy of all documents, including,
without limitation, repayment histories and present status reports relating
to the Accounts so scheduled and such other matters and information
relating to the status of then existing Accounts as Agent shall reasonably
request. Accompanying each aged trial balance hereunder shall be a
reconciliation of Accounts to Borrower's general ledger, a detailed
calculation of non-Eligible Accounts and copies of all customer reduction
reports.
6.2.2. Taxes. If an Account includes a charge for any tax payable to
-----
any governmental taxing authority, Agent is authorized, in its sole
discretion, to pay the amount thereof to the proper taxing authority for
the account of Borrower and to charge Borrower therefor, except for taxes
that (i) are being actively contested in good faith and by appropriate
proceedings and with respect to which Borrower maintains reasonable
reserves on its books therefor and (ii) would not reasonably be expected to
result in any Lien other than a Permitted Lien. In no event shall Agent or
any Lender be liable for any taxes to any governmental taxing authority
that may be due by Borrower.
6.2.3. Account Verification. Any of Agent's officers, employees or
--------------------
agents shall have the right, at any time or times hereafter, in the name of
Agent, any designee of Agent or Borrower, to verify the validity, amount or
any other matter relating to any Accounts by mail, telephone, telegraph or
otherwise; provided, that unless a
--------
-17-
<PAGE>
Default or an Event of Default is then in existence, prior to conducting
each set of verifications, Agent shall generally consult with Borrower
about the verification process. Borrower shall cooperate fully with Agent
in an effort to facilitate and promptly conclude any such verification
process.
6.2.4. Maintenance of Dominion Account. At all times after the 60th
-------------------------------
day following the Closing Date, Borrower shall maintain a Dominion Account
or accounts pursuant to lockbox and blocked account arrangements acceptable
to Agent with such banks as may be selected by Borrower and be acceptable
to Agent (it being agreed by Agent that any Lender will be acceptable).
Borrower shall issue to and such banks an irrevocable letter of
instruction directing such banks to deposit all payments or other
remittances received in the lockbox and blocked accounts to the Dominion
Account for application on account of the Obligations. All funds deposited
in any Dominion Account shall immediately become the property of Agent, for
the ratable benefit of Lenders, and Borrower shall obtain the agreement by
such banks in favor of Agent to waive any offset rights against the funds
so deposited. Agent assumes no responsibility for such lockbox and blocked
account arrangements, including, without limitation, any claim of accord
and satisfaction or release with respect to deposits accepted by any bank
thereunder.
6.2.5. Collection of Accounts, Proceeds of Collateral. To expedite
----------------------------------------------
collection, Borrower shall endeavor in the first instance to make
collection of their Accounts for Agent. All remittances received by
Borrower on account of Accounts, together with the proceeds of any other
Collateral, shall be held as Agent's property, for its benefit and the
benefit of Lenders, by Borrower as trustee of an express trust for Agent's
benefit and Borrower shall immediately deposit same in kind in the Dominion
Account. Agent retains the right at all times after the occurrence and
during the continuance of an Event of Default to notify Account Debtors
that Accounts have been assigned to Agent and to collect Accounts directly
in its own name and to charge the collection costs and expenses, including
reasonable attorneys' fees, to Borrower.
6.3. Records and Reports of Inventory.
--------------------------------
Borrower shall keep records of its Inventory which records shall be
complete and accurate in all material respects. Borrower shall furnish to Agent
Inventory reports at such times as Lender may request, but at least once each
month, which reports will be in such format and detail as Agent shall request
and shall include a current list of all Inventory by location (it being
understood that each Borrower-owned facility, each warehouse, each terminal and
each consignee of Inventory is a separate location), and major product type,
substantially in the form of Exhibit 6.3. Such reports will also show, for each
major product type, standard costs, lower of cost or market adjustments and
total extended values. Borrower shall conduct a physical inventory no less
frequently than annually and shall provide to Agent a report based on each such
physical inventory promptly thereafter, together with such supporting
information as Agent shall reasonably request.
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<PAGE>
6.4. Administration of Equipment.
---------------------------
6.4.1. Records of Equipment. Promptly after the reasonable request
--------------------
therefor by Agent, Borrower shall deliver to Agent any and all evidence of
ownership, if any, of any of the Equipment and copies of all of Borrower's
records of its Equipment.
6.4.2. Proceeds of Dispositions. All proceeds of any sale, lease or
------------------------
other disposition of Property pursuant to subsection 8.2.9 shall be
remitted to Agent for application to the Loans, provided, that proceeds of
--------
Equipment or other fixed assets may be used to acquire replacement
Equipment or other fixed assets which are useful in the business of
Borrower or one of its Subsidiaries, provided that the replacement
--------
Equipment or other fixed assets shall be acquired within 180 days after any
disposition of the Equipment or other fixed assets that are to be replaced
and the replacement Equipment or other fixed assets shall be free and clear
of Liens other than Permitted Liens that are Purchase Money Liens.
SECTION 7. REPRESENTATIONS AND WARRANTIES
7.1. General Representations and Warranties.
--------------------------------------
To induce Agent and each Lender to enter into this Agreement and to make
advances hereunder, Borrower warrants, represents and covenants to Agent and
each Lender that:
7.1.1. Organization and Qualification. Borrower is a limited
------------------------------
partnership duly organized, validly existing and in good standing under the
laws of the State of Delaware. Each of Borrower's Subsidiaries is a
corporation, limited partnership or limited liability company duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization. Each of Borrower and
each of its Subsidiaries is duly qualified and is authorized to do business
and is in good standing as a foreign limited liability company, limited
partnership or corporation, as applicable, in each state or jurisdiction
listed on Exhibit 7.1.1 hereto and in all other states or jurisdictions in
-------------
which the failure of Borrower or any of its Subsidiaries to be so qualified
would reasonably be expected to have a Material Adverse Effect.
7.1.2. Power and Authority. Borrower and each of its Subsidiaries is
-------------------
duly authorized and empowered to enter into, execute, deliver and perform
this Agreement and each of the other Loan Documents to which it is a party.
The execution, delivery and performance of this Agreement and each of the
other Loan Documents have been duly authorized by all necessary corporate
or other relevant action and do not and will not (i) require any consent or
approval of the limited partner of Borrower or any of the shareholders,
partners or members, as the case may be, of any Subsidiary of Borrower
other than any consent or approval which has been obtained; (ii) contravene
Borrower's or any of its Subsidiaries' charter, articles or certificate of
incorporation, partnership agreement, certificate of formation, by-laws,
limited liability agreement, operating agreement or other organizational
documents (as the case may be); (iii)
-19-
<PAGE>
violate, or cause Borrower or any of its Subsidiaries to be in default
under, any provision of any material law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award in effect having
applicability to Borrower or any of its Subsidiaries; (iv) result in a
breach of or constitute a default under any material indenture, loan or
credit agreement or any other agreement, lease or instrument to which
Borrower or any of its Subsidiaries is a party or by which it or its
Properties may be bound or affected; or (v) result in, or require, the
creation or imposition of any Lien (other than Permitted Liens) upon or
with respect to any of the Properties now owned or hereafter acquired by
Borrower or any of its Subsidiaries.
7.1.3. Legally Enforceable Agreement. This Agreement is, and each of
-----------------------------
the other Loan Documents when delivered under this Agreement will be, a
legal, valid and binding obligation of each of Borrower and each of its
Subsidiaries party thereto, enforceable against it in accordance with its
respective terms, except as limited by applicable bankruptcy, insolvency or
similar laws affecting creditors' rights generally, and by general
principles of equity.
7.1.4. Capital Structure. Exhibit 7.1.4 hereto states, as of the date
----------------- -------------
hereof, (i) the correct name of each of the Subsidiaries of Borrower, its
jurisdiction of incorporation or organization and the percentage of its
Voting Stock owned by Borrower, (ii) the name of each of Borrower's and
each of its Subsidiaries' corporate or joint venture relationships and the
nature of the relationship, (iii) the number, nature and holder of all
outstanding Securities of Borrower and the holder of Securities of each
Subsidiary of Borrower and (iv) the number of issued and treasury
Securities of Borrower. Borrower has good title to all of the Securities it
purports to own of each of such Subsidiaries, free and clear in each case
of any Lien other than Permitted Liens. All such Securities have been duly
issued and are fully paid and non-assessable. As of the date hereof, there
are no outstanding options to purchase, or any rights or warrants to
subscribe for, or any commitments or agreements to issue or sell any
Securities or obligations convertible into, or any powers of attorney
relating to any Securities, of Borrower or any of its Subsidiaries. Except
as set forth on Exhibit 7.1.4, as of the date hereof, there are no material
-------------
outstanding agreements or instruments binding upon any of Borrower's or any
of its Subsidiaries' partners, members or shareholders, as the case may be,
relating to the ownership of its Securities.
7.1 .5. Names. Neither Borrower nor any of its Subsidiaries has been
-----
known as or has used any legal, fictitious or trade names except those
listed on Exhibit 7.1.5 hereto. Except as set forth on Exhibit 7.1.5,
------------- -------------
neither Borrower nor any of its Subsidiaries has been the surviving entity
of a merger or consolidation or has acquired all or substantially all of
the assets of any Person.
7.1.6. Business Locations: Agent for Process. Each of Borrower's and
-------------------------------------
each of its Subsidiary's chief executive office and other places of
business as of the date hereof are as listed on Exhibit 6.l.l hereto as
-------------
updated from time to time by Borrower. During the preceding one-year
period, neither Borrower nor any of its Subsidiaries
-20-
<PAGE>
has had an office or place of business other than as listed on Exhibit
-------
6.1.1. All tangible Collateral is and will at all times be kept by Borrower
-----
and its Subsidiaries in accordance with subsection 6.1.1. Except as shown
on Exhibit 6.1.1, as of the date hereof, no Inventory is stored with a
-------------
bailee, distributor, warehouseman or similar party, nor is any Inventor
consigned to any Person.
7.1.7. Title to Properties; Priority of Liens. Insofar as is necessary
--------------------------------------
for Borrower or any of its Subsidiaries to operate their respective
business, Borrower and each of its Subsidiaries has good, indefeasible and
marketable title to and fee simple ownership of, or valid and subsisting
leasehold interests in, all of its real Property, and good title to all of
the Collateral and all of its other Property, in each case, free and clear
of all Liens except Permitted Liens. All Accounts, all Inventory and to the
knowledge of Borrower all other Property (exclusive of Property having an
aggregate value of up to $250,000) used or useful in the business of
Borrower is owned by Borrower, rather than BCPM. Each of Borrower and each
of its Subsidiaries has paid or discharged all lawful claims which, if
unpaid, might become a Lien against any of Borrower's or such Subsidiary's
Properties that is not a Permitted Lien. The Liens granted to Agent under
Section 5 hereof are first priority Liens, subject only to Permitted Liens.
7.1.8. Intentionally Omitted.
---------------------
7.1.9. Equipment. The Equipment of Borrower and the equipment of its
---------
Subsidiaries is in good operating condition and repair, and all necessary
replacements of and repairs thereto shall be made so that the operating
efficiency thereof shall be maintained and preserved, reasonable wear and
tear excepted.
7.1.10. Financial Statement Fiscal Year. The Consolidated balance
-------------------------------
sheets of Limited Partner, its Subsidiaries (including the accounts of all
Subsidiaries of Borrower and their respective Subsidiaries for the
respective periods during which a Subsidiary relationship existed) as of
December 31, 1999, and the related statements of income for the periods
ended on such dates, except for the absence of footnote disclosures and
normal year-end adjustments, have been prepared in accordance with GAAP,
and present fairly in all material respects the financial positions of
Limited Partner and such Persons, taken as a whole, at such dates and the
results of Limited Partner's and such Persons' operations, taken as a
whole, for such periods. As of the date hereof, since December 31, 1999,
there has been no material adverse change in the financial position of
Limited Partner and such other Persons, taken as a whole, as reflected in
the Consolidated balance sheet as of such date. As of the date hereof, the
fiscal year of Limited Partner and each of its Subsidiaries ends on
December 31 of each year.
7.1.11. Full Disclosure. The financial statements referred to in
---------------
subsection 7.1.10 hereof do not, nor does this Agreement or any other
written statement of Borrower to Agent or any Lender, taken as a whole,
contain any untrue statement of a material fact or omit to state a material
fact necessary to make the
-21-
<PAGE>
statements contained therein or herein not misleading. There is no fact
which Borrower has failed to disclose to Agent or any Lender in writing
which would reasonably be expected to have a Material Adverse Effect.
7.1.12. Solvent Financial Condition. Each of Borrower and each of its
---------------------------
Subsidiaries, is now and, after giving effect to the initial Loans to be
made and the initial Letters of Credit and LC Guaranties to be issued
hereunder and all related transactions, will be, Solvent.
7.1.13. Surety Obligations. Except as set forth on Exhibit 7.1.13, as
------------------ --------------
of the date hereof, neither Borrower nor any of its Subsidiaries is
obligated as surety or indemnitor under any surety or similar bond or other
contract issued or entered into to assure payment, performance or
completion of performance of any undertaking or obligation of any Person.
7.1.14. Taxes. Borrower's federal tax identification number is
-----
31-126-5500. The federal tax identification number of each Subsidiary of
Borrower is shown on Exhibit 7.1.14 hereto. Borrower and each of its
--------------
Subsidiaries has filed all federal, state and material local tax returns
and other reports relating to taxes it is required by 1aws to file, and has
paid, or made provision for the payment of, all taxes, assessments, fees,
levies and other governmental charges upon it, its income and Properties as
and when such taxes, assessments, fees, levies and charges are due and
payable, unless and to the extent any thereof are being actively contested
in good faith and by appropriate proceedings and Borrower and each of its
Subsidiaries maintains reasonable reserves on its books therefor. The
provision for taxes on the books of Borrower and its Subsidiaries is
adequate for all years not closed by applicable statutes, and for the
current fiscal year.
7.1.15. Brokers. Except as shown on Exhibit 7.1.15 hereto, there are
------- --------------
no claims for brokerage commissions, finder's fees or investment banking
fees in connection with the transactions contemplated by this Agreement.
7.1.16. Patents, Trademarks, Copyrights and Licenses. Borrower and
--------------------------------------------
each of its Subsidiaries owns, possesses or licenses or has the right to
use all material patents, trademarks, service marks, trade names,
copyrights, licenses and other Intellectual Property necessary for the
present and planned future conduct of its business without any known
conflict with the rights of others. All such federally registered patents,
trademarks, service marks, tradenames, copyrights, licenses, and
Intellectual Property are listed on Exhibit 7.1.16 hereto. No claim has
--------------
been asserted to Borrower or any of its Subsidiaries which is currently
pending that their use of their Intellectual Property or the conduct of
their business does or may infringe in any material respect upon the
Intellectual Property rights of any third party. Except as set forth on
Exhibit 7.1.16, each of Borrower's and each of its Subsidiaries' material
--------------
license agreements and similar arrangements relating to its Inventory would
permit the continued use by Borrower or such Subsidiary, or Agent or its
assignee, of such license agreement or such similar arrangement and the
right to sell Inventory subject
-22-
<PAGE>
to such license agreement for a period of no less than 12 months after a
default or breach of such agreement or arrangement. The consummation and
performance of the transactions and actions contemplated by this Agreement
and the other Loan Documents, including without limitation, the exercise by
Agent of any of its rights or remedies under Section 10, will not result in
the termination or impairment of any of Borrower's or any of its
Subsidiaries' ownership or rights relating to its material Intellectual
Property. Except as listed on Exhibit 7.1.16, (a) neither Borrower nor any
--------------
of its Subsidiaries is in breach of, or default under, any term of any
material license or sublicense with respect to any of its Intellectual
Property and (b) to the knowledge of Borrower, no other party to such
material license or sublicense is in breach thereof or default thereunder,
and such license is valid and enforceable.
7.1.17. Governmental Consents. Borrower and each of its Subsidiaries
---------------------
has, and is in good standing with respect to, all material governmental
consents, approvals, licenses, authorizations, permits, certificates,
inspections and franchises necessary to continue to conduct its business as
heretofore or proposed to be conducted by it and to own or lease and
operate its Properties as now owned or leased by it.
7.1.18. Compliance with Laws. Borrower and each of its Subsidiaries
--------------------
has duly complied in all material respects with, and its Properties,
business operations and leaseholds are in compliance in all material
respects with, the provisions of all federal, state and local laws, rules
and regulations applicable to Borrower or such Subsidiary, as applicable,
its Properties or the conduct of its business, and there have been no
citations, notices or orders of noncompliance issued to Borrower or any of
its Subsidiaries under any such material law, rule or regulation. Borrower
and each of its Subsidiaries has established and maintains an adequate
monitoring system to insure that it remains in compliance in all material
respects with all federal, state and local rules, laws and regulations
applicable to it. No lnventory has been produced in violation of the Fair
Labor Standards Act (29 U.S.C. (S)201 et seq.), as amended.
-- ---
7.1.19. Restrictions. Neither Borrower nor any of its Subsidiaries is
------------
a party or subject to any contract or agreement which restricts its right
or ability to incur Indebtedness hereunder, other than as set forth on
Exhibit 7.1.19 hereto, none of which prohibit the execution of or
--------------
compliance with this Agreement or the other Loan Documents by Borrower or
any of its Subsidiaries, as applicable.
7.1.20. Litigation. On the date hereof except as set forth on Exhibit
---------- -------
7.1.20 hereto there are no material actions, suits, proceedings or
------
investigations pending, or to the knowledge of Borrower, threatened,
against or involving Borrower or any of its Subsidiaries, or the business,
operations, Properties, prospects, profits or condition of Borrower or any
of its Subsidiaries. None of the items set forth on Exhibit 7.1.20 hereto
--------------
could reasonably be expected to result in a Material Adverse Effect.
Neither Borrower nor any of its Subsidiaries is in default with respect to
any material order, writ, injunction, judgment, decree or rule of any
court, governmental authority or arbitration board or tribunal.
-23-
<PAGE>
7.1.21. No Defaults. No event has occurred and no condition exists
-----------
which would, upon or after the execution and delivery of this Agreement or
Borrower's performance hereunder, constitute a Default or an Event of
Default.
7.1.22. Leases. Exhibit 7.1.22 hereto is a complete listing of all
------- --------------
capitalized and operating personal property leases of Borrower and its
Subsidiaries (other than those pertaining to rail cars) and all real
property leases of Borrower and its Subsidiaries, in each case requiring
the payment of in excess of $100,000 during any 12-month period. Borrower
and each of its Subsidiaries is in full compliance with all of the terms of
each of its respective material capitalized and operating leases.
7.1.23. Pension Plans. Except as disclosed on Exhibit 7.1.23 hereto,
------------- --------------
neither BCPM, Borrower nor any of its Subsidiaries has any Plan. BCPM,
Borrower and each of its Subsidiaries is in material compliance with the
requirements of ERISA and the regulations promulgated thereunder with
respect to each Plan. No fact or situation that would reasonably be
expected to result in a material adverse change in the financial condition
of BCPM, Borrower and its Subsidiaries exists in connection with any Plan.
Neither BCPM, Borrower nor any of its Subsidiaries has any material
withdrawal liability in connection with a Multiemployer Plan.
7.1.24. Trade Relations. Except as set forth on Exhibit 7.1.24, there
--------------- --------------
exists no actual or, to Borrower's knowledge, threatened termination,
cancellation or limitation of, or any modification or change in, the
business relationship between Borrower or any of its Subsidiaries and any
customer or any group of customers whose purchases individually or in the
aggregate are material to the business of Borrower and its Subsidiaries, or
with any material supplier, and there exists no present condition or state
of facts or circumstances which, in any such case, would prevent Borrower
or any of its Subsidiaries from conducting such business after the
consummation of the transaction contemplated by this Agreement in
substantially the same manner in which it has heretofore been conducted.
7.1.25. Labor Relations. Except as described on Exhibit 7.1.25 hereto,
--------------- --------------
as of the date hereof, neither Borrower nor any of its Subsidiaries is a
party to any collective bargaining agreement. There are no material
grievances, disputes or controversies with any union or any other
organization of Borrower's or any of its Subsidiaries' employees, or
threats of strikes, work stoppages or any asserted pending demands for
collective bargaining by any union or organization.
7.1.26. Environmental Matter. Borrower is entitled to reimbursement
--------------------
from Borden, Inc., pursuant to that certain Environmental Indemnity
Agreement dated as of November 30, 1987 between Borrower and Borden, Inc.,
for any and all fees, costs and expenses associated with testing that may
be required and soil and groundwater clean-up and remediation that may be
required, in each case pursuant to the March 1998 Consent Decree between
the United States Department of Justice and Borrower.
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<PAGE>
7.2 Continuous Nature of Representations and Warranties.
---------------------------------------------------
Each representation and warranty contained in this Agreement and the other
Loan Documents shall be continuous in nature and shall remain accurate, complete
and not misleading at all times during the term of this Agreement, except to the
extent stated to be made as of a specific date and except for changes in the
nature of a Borrower's or a Borrower's Subsidiaries' business or operations that
would render the information in any exhibit attached hereto or to any other Loan
Document either inaccurate, incomplete or misleading, so long as Majority
Lenders have consented to such changes or such changes are expressly permitted
by this Agreement.
7.3. Survival of Representations and Warranties.
------------------------------------------
All representations and warranties of Borrower contained in this Agreement
or any of the other Loan Documents shall survive the execution, delivery and
acceptance thereof by Agent and each Lender and the parties thereto and the
closing of the transactions described therein or related thereto.
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS
8.1. Affirmative Covenants.
---------------------
During the term of this Agreement, and thereafter for so long as there are
any Obligations outstanding, Borrower covenants that, unless otherwise consented
to by Majority Lenders, in writing, it shall:
8.1.1. Visits and Inspections: Lender Meeting. Permit representatives
--------------------------------------
of Agent, from time to time, as often as may be reasonably requested, but
only during normal business hours, to visit and inspect the Properties of
Borrower and each of its Subsidiaries, inspect, audit and make extracts
from its books and records, and discuss with its officers, its employees
and its independent accountants, Borrower's and each of its Subsidiaries'
business, assets, liabilities, financial condition, business prospects and
results of operations. Agent, if no Default or Event of Default then
exists, shall give Borrower reasonable prior notice of any such inspection
or audit (and any audit under Section 2.9 above) and shall reasonably
coordinate the visit of the representatives with Agent. Without limiting
the foregoing, Borrower will participate and will cause its key management
personnel to participate in a meeting with Agent and Lenders once during
each year (except that during the continuation of an Event of Default such
meetings may be held more frequently as requested by Agent or Majority
Lenders), which meeting shall be held at such time and such place as may be
reasonably requested by Agent.
8.1.2. Notices. Promptly notify Agent in writing of the occurrence of
-------
any event or the existence of any fact which renders any representation or
warranty in this Agreement or any of the other Loan Documents inaccurate,
incomplete or misleading in any material respect as of the date made or
remade. In addition, Borrower agrees
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<PAGE>
to provide Agent with (i) 10 Business Days' prior written notice of (1) any
change in the legal name of Borrower or any of its Subsidiaries, (2) the
adoption by Borrower or any of its Subsidiaries of any new fictitious name or
tradename and (3) any change in the chief executive office of Borrower or any of
its Subsidiaries, and (ii) prompt written notice of any change in the
information disclosed in any Exhibit hereto, in each ease after giving effect to
the materiality limits and Material Adverse Effect qualifications contained
therein.
8.1.3. Financial Statements. Keep, and cause each of its Subsidiaries to
--------------------
keep, adequate records and books of account with respect to its business
activities in which proper entries are made in accordance with customary
accounting practices reflecting all its financial transactions; and cause to be
prepared and furnished to Agent and each Lender, the following, all to be
prepared in accordance with GAAP applied on a consistent basis, unless
Borrower's certified public accountants concur in any change therein and such
change is disclosed to Agent and is consistent with GAAP:
(i) not later than 90 days after the close of each fiscal year of
Borrower, unqualified (except for a qualification for a change in
accounting principles with which the accountant concurs) audited financial
statements of Limited Partner and its Subsidiaries as of the end of such
year, on a Consolidated basis, certified by a firm of independent certified
public accountants of recognized standing selected by Borrower but
acceptable to Agent and, within a reasonable time thereafter a copy of any
management letter issued in connection therewith;
(ii) not later than 30 days after the end of each month hereafter,
including the last month of Borrower's fiscal year, unaudited interim
financial statements of Borrower and its Subsidiaries as of the end of such
month and of the portion of the fiscal year then elapsed, on a Consolidated
and consolidating basis, certified by the principal financial officer of
Borrower as prepared in accordance with GAAP and fairly presenting in all
material respects the financial position and results of operations of
Borrower and its Subsidiaries for such month and period subject only to
changes from audit and year-end adjustments and except that such statements
need not contain notes:
(iii) together with each delivery of financial statements pursuant to
clauses (i) and (ii) of this subsection 8.1.3, a management report (1)
setting forth in comparative form the corresponding figures for the
corresponding periods of the previous fiscal year and the corresponding
figures from the most recent Projections for the current fiscal year
delivered pursuant to subsection 8.1.7 and (2) setting forth (but only in
the case of management reports submitted together with financial statements
delivered as of the end of each calendar quarter), in reasonable detail, a
calculation of the "Consolidated Net Tangible Assets" (as defined in the
Indenture referred to in Exhibit 8.2.3). The information above shall be
-----
presented in reasonable detail and shall be certified
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<PAGE>
by the chief financial officer of Borrower to the effect that such
information fairly presents in all material respects the results of
operation and financial condition of Borrower and its Subsidiaries as at
the dates and for the periods indicated;
(iv) promptly after the sending or filing thereof, as the case may
be, copies of any proxy statements or financial statements which Borrower
or Limited Partner has made available to its Securities holders and copies
of any regular, periodic and special reports or registration statements
which Limited Partner, Borrower or any of its Subsidiaries files with the
Securities and Exchange Commission or any governmental authority which may
be substituted therefor, or any national securities exchange;
(v) upon request of Agent, copies of any annual report to be filed
with ERISA in connection with each Plan; and
(vi) such other data and information (financial and otherwise) as
Agent or any Lender, from time to time, may reasonably request, bearing
upon or related to the Collateral or Borrower's or any of its Subsidiaries'
financial condition or results of operations.
Concurrently with the delivery of the financial statements described
in paragraph (i) of this subsection 8.1.3, Borrower shall forward to Agent (and
Agent shall forward to each Lender) a copy of the accountants' letter to
Borrower's management that is prepared in connection with such financial
statements. Concurrently with the delivery of the financial statements described
in paragraph (i) and (ii) (but solely for the last month of each fiscal quarter
of Borrower) of this subsection 8.1.3, or more frequently if reasonably
requested by Agent, Borrower shall cause to be prepared and furnished to Agent
(and Agent shall forward to each Lender) a Compliance Certificate in the form of
Exhibit 8.1.3 hereto executed by the Chief Financial Officer of Borrower.
- -------------
8.1.4. Borrowing Base Certificates. On or before the 20th day of each
---------------------------
month from and after the date hereof (the 25th day of each month until June of
2000), Borrower shall deliver to Agent, in form acceptable to Agent, a borrowing
base certificate relating to Eligible Accounts and Eligible Inventory as of the
last day of the immediately preceding month, with such supporting materials as
Agent shall reasonably request. If Borrower deems it advisable, Borrower shall
execute and deliver to Agent borrowing base certificates more frequently than
monthly. If average Availability, calculated on a daily basis for the preceding
thirty days, is less than $20,000,000, Borrower shall deliver the borrowing base
certificates referred to in this subsection on a weekly basis, prepared as of
the last day of the immediately preceding week. If, at any time, Borrower is
required, pursuant to the provisions of the immediately preceding sentence to
deliver borrowing base certificates on a weekly basis, Borrower shall (unless
otherwise consented to by Agent) continue to deliver borrowing base certificates
on a weekly basis for at least two months, even if
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<PAGE>
at any time during such two-month period, average Availability, calculated
in the manner and for the period set forth in the immediately preceding
sentence equals or exceeds $20,000,000. Each Borrowing Base Certificate
delivered hereunder shall be accompanied by a detailed listing of all non-
Eligible Accounts as of the date on which the Borrowing Base Certificate
has been prepared.
8.1.5. Landlord, Processor and Storage Agreements. To the extent
------------------------------------------
requested by the Agent, provide Agent with copies of all agreements between
Borrower or any of its Subsidiaries and any landlord, processor,
distributor, warehouseman or consignee which owns any premises at which any
Collateral may, from time to time, be kept.
8.1.6. Guarantor Financial Statements. Deliver or cause to be
------------------------------
delivered to Agent financial statements, if any, for each Guarantor (to the
extent not consolidated with the financial statements delivered to Agent
under subsection 8.1.3) in form and substance satisfactory to Agent at such
intervals and covering such time periods as Agent may request.
8.1.7. Projections. No later than 30 days after the end of each
-----------
fiscal year of Borrower, deliver to Agent Projections of Borrower and each
of its Subsidiaries for the forthcoming fiscal year, month by month.
8.1.8. Subsidiaries. Each Subsidiary of Borrower, whether now or
------------
hereafter in existence, shall promptly upon Agent's request, execute and
deliver to Agent a Guaranty Agreement and a security agreement pursuant to
which such Subsidiary guaranties the payment of all Obligations and grants
to Agent a first priority Lien (subject only to Permitted Liens) on all of
its Properties of the types described in subsection 5.1.
8.2. Negative Covenants.
------------------
During the Term, and thereafter for so long as there are any Obligations
outstanding, Borrower covenants that, unless otherwise consented to by Majority
Lenders, in writing, it shall not:
8.2.1. Mergers: Consolidations; Acquisitions. Merge or consolidate,
-------------------------------------
or permit any Subsidiary of Borrower to merge or consolidate, with any
Person; or acquire, or permit any of their respective Subsidiaries to
acquire, all or any substantial part of the Properties constituting a
business unit of any Person, except for:
(i) mergers of any Subsidiary of Borrower into Borrower or
another Subsidiary of Borrower; and
(ii) acquisitions of assets consisting of fixed assets or real
property that constitute Capital Expenditures permitted under
subsection 8.2.8;
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<PAGE>
provided, that during each fiscal year Borrower may make acquisitions for which
- --------
the aggregate total consideration expended or incurred, when added to the
aggregate amounts expended or incurred during such fiscal year pursuant to
subsection 8.2.8, the first proviso of subsection 8.2.11 and the first proviso
of subsection 8.2.12, do not exceed the maximum amount of Capital Expenditures
permitted under subsection 8.2.8 for such fiscal year, provided further.
-------- -------
Borrower may make additional acquisitions for which the aggregate total
consideration expended or incurred, when added to the aggregate amounts expended
or incurred pursuant to the second proviso of subsection 8.2.11 and the second
proviso of subsection 8.2.12, do not exceed $15,000,000 during the term of this
Agreement, but such additional acquisitions may be consummated only if
immediately after giving effect thereto, Availability will exceed $35,000,000,
or, in the alternative. Borrower may make additional acquisitions for which the
------------------
aggregate total consideration expended or incurred, when added to the aggregate
amounts expended or incurred pursuant to the second proviso of subsection 8.2.11
and the second proviso of subsection 8.2.12, do not exceed $30,000,000 during
the term of this Agreement, but such additional acquisitions may be consummated
only if immediately after giving effect thereto. Availability will exceed
$50,000,000 (it being understood by the parties hereto that under no
circumstances may the aggregate amounts expended or incurred pursuant to this
second proviso and the second provisos of subsections 8.2.11 and 8.2.12 exceed
$30,000,000 during the term of this Agreement).
8.2.2. Loans. Make, or permit any Subsidiary of Borrower to make, any
-----
loans or other advances of money to any Person, other than (i) for salary,
travel advances, advances against commissions and other similar advances to
employees and extensions of trade credit in the ordinary course of business,
(ii) deposits with financial institutions permitted under this Agreement, and
(iii) prepaid expenses.
8.2.3. Total Indebtedness for Money Borrowed. Create, incur, assume, or
-------------------------------------
suffer to exist, or permit any Subsidiary of Borrower to create, incur or suffer
to exist, any Indebtedness for Money Borrowed, except:
(i) Obligations owing to Agent or any Lender under this Agreement;
(ii) (A) Debt of Borrower to any Subsidiary of Borrower, and (B) Debt
of the Subsidiaries of Borrower to Borrower which when aggregated may not
exceed $5,000,000 (less the aggregate book value of Property theretofore
transferred by Borrower to its Subsidiaries pursuant to subsection
8.2.9(ii)) at any time;
(iii) Debt existing on the date of this Agreement and listed on
Exhibit 8.2.3.;
--------------
(iv) Permitted Purchase Money Indebtedness, provided that in any
--------
fiscal year Borrower may not incur any such Indebtedness in excess of
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<PAGE>
$12,500,000 plus, in fiscal year 2001 and each fiscal year thereafter, the
unused portion of such amount for the immediately preceding fiscal year;
(v) Guaranties of any Indebtedness permitted hereunder;
(vi) Contingent liabilities arising out of endorsements of checks
and other negotiable instruments for deposit or collection in the ordinary
course of business;
(vii) To the extent not mentioned above, trade payables, accruals and
accounts payable in the ordinary course of business not for Money Borrowed;
(viii) Debt in respect of Hedge Agreements entered into in the
ordinary course of business; and
(ix) Indebtedness not included in paragraphs (i) through (vi) above
which does not exceed at any time, in the aggregate, the sum of
$35,000,000.
8.2.4. Affiliate Transactions. Enter into, or be a party to, or permit any
----------------------
Subsidiary of Borrower to enter into or be a party to, any transaction with any
Affiliate of Borrower or any holder of any Securities of Borrower or any
Subsidiary of Borrower, except in the ordinary course of and pursuant to the
reasonable requirements of Borrower's or such Subsidiary's business and upon
fair and reasonable terms which are fully disclosed to Agent and are no less
favorable to Borrower than would be obtained in a comparable arms-length
transaction with a Person not an Affiliate or Security holder of Borrower.
8.2.5. Limitation on Liens. Create or suffer to exist, or permit any
-------------------
Subsidiary of Borrower to create or suffer to exist, any Lien upon any of its
Property, income or profits, whether now owned or hereafter acquired, except:
(i) Liens at any time granted in favor of Agent for the benefit of
Lenders;
(ii) Liens for taxes, assessments or governmental charges (excluding
any Lien imposed pursuant to any of the provisions of ERISA) not exceeding
$5,000,000 in the aggregate and not yet due, or being contested in the
manner described in subsection 7.1.14 hereto;
(iii) Liens arising in the ordinary course of the business of
Borrower or any of its Subsidiaries by operation of law or regulation, but
only if payment in respect of any such Lien is not at the time required and
such Liens do not, in the aggregate, materially detract from the value of
the Property of Borrower or any of its Subsidiaries or materially impair
the use thereof in the operation of the business of Borrower or any of its
Subsidiaries;
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<PAGE>
(iv) Purchase Money Liens securing Permitted Purchase Money
Indebtedness;
(v) Such other Liens as appear on Exhibit 8.2.5 hereto;
-------------
(vi) Liens incurred or deposits made in the ordinary course of
business in Connection with (1) worker's compensation, social security,
unemployment insurance and other like laws or (2) sales contracts, leases,
statutory obligations, work in progress advances and other similar
obligations not incurred in connection with the borrowing of money or the
payment of the deferred purchase price of property;
(vii) Reservations, covenants, zoning and other land use
regulations, title exceptions, servitudes, rights of way or encumbrances
granted in the ordinary course of business, affecting real Property owned
or leased by Borrower or one of its Subsidiaries; provided that such
--------
exceptions do not in the aggregate materially interfere with the use of
such Property in the ordinary course of Borrower's or such Subsidiary's
business;
(viii) Judgment Liens that do not give rise to an Event of Default
under subsection 10.1.15; and
(ix) Such other Liens as Majority Lenders may hereafter approve in
writing.
8.2.6. Intentionally Omitted.
8.2.7. Distributions. Declare or make, or permit any Subsidiary of
-------------
Borrower to declare or make, any Distributions, except for:
(i) Distributions from any Subsidiary of Borrower to Borrower;
(ii) Distributions paid solely in Securities of Borrower or any of
its Subsidiaries;
(iii) Distributions in amounts necessary to permit Borrower to
repurchase Securities of Limited Partner from employees of Borrower or any
of its Subsidiaries upon the termination of their employment, so long as no
Default or Event of Default exists at the time of or would be caused by the
making of such Distributions and the aggregate cash amount of such
Distributions, measured at the time when made, does not exceed $5,000,000
in any fiscal year of Borrowers;
(iv) So long as no Default or Event of Default exists at the time
of or would be caused by the making of such Distributions, Distributions in
an amount sufficient to permit the partners of Borrower to pay taxes with
respect to the income and gains of Borrower and its Subsidiaries, provided
--------
that the
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<PAGE>
aggregate Distributions made during the term of this Agreement pursuant to
this clause shall not exceed the aggregate taxes accrued to the partners of
Borrower, taking into account all income, gains, expenses and losses of
Borrower and its Subsidiaries; and
(v) Other Distributions, provided that such distributions are made
--------
only if Borrower demonstrates to the satisfaction of Agent that average
daily Availability, during the immediately preceding ninety days exceeded
$50,000,000 and that immediately after such distribution, and on a
projected basis for the next ninety days, Availability will exceed
$50,000,000.
8.2.8. Capital Expenditures. Make Capital Expenditures (including, without
--------------------
limitation, by way of capitalized leases) which, in the aggregate, as to
Borrower and all of its Subsidiaries, exceed $24,000,000 during any fiscal year
of Borrower (increased to $44,000,000 for any fiscal year if Borrower
demonstrates to the satisfaction of Agent that prior to making each and every
Capital Expenditure in any year in which Borrower and its Subsidiaries have
previously made Capital Expenditures in excess of $20,000,000, average daily
Availability, during the immediately preceding sixty days exceeded $20,000,000
and after giving effect to the proposed Capital Expenditure (and all related
costs) and all proposed Capital Expenditures (and related costs) associated with
or related thereto Availability exceeds $20,000,000) (less the amounts
previously paid, incurred or expended during such Fiscal Year pursuant to the
first proviso of subsection 8.2.1, the first proviso of subsection 8.2.11 and
the first proviso of subsection 8.2.12). The Capital Expenditures calculation
for the year 2000 shall exclude up to $18,500,000 of Capital Expenditures made
by Borrower for the acquisition of the remaining joint venture interest in the
acetylene plant from BASF, provided that the cash portion thereof does not
--------
exceed $11,500,000 during the year 2000.
8.2.9. Disposition of Assets. Sell, lease or otherwise dispose of any of,
---------------------
or permit any Subsidiary of Borrower to sell, lease or otherwise dispose of any
of, its Properties, including any disposition of Property as part of a sale and
leaseback transaction, to or in favor of any Person, except sales of Inventory
in the ordinary course of business and except, so long as no Default or Event of
Default has occurred and is continuing:
(i) dispositions of Equipment and other fixed assets (exclusive of
real property) by Borrower comprising either its methanol and/or nitrogen
businesses;
(ii) (A) transfers of Property to Borrower by a Subsidiary of
Borrower, and (B) transfers of Property from Borrower to its Subsidiaries
having an aggregate book value of up to $5,000,000 during the term of this
Agreement (less the then outstanding Debt of Borrower to its Subsidiaries
pursuant to subsection 8.2.3(ii));
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<PAGE>
(iii) dispositions of Property that is substantially worn, damaged,
uneconomic or obsolete;
(iv) dispositions of investments described in paragraphs (iv), (v),
(vi) and (vii) of the definition of the term "Restricted Investments";
(v) dispositions of vacant real property which is not integral to
Borrower's business or the value of Agent's then remaining Collateral
constituting real property; and
(vi) dispositions not included in paragraphs (i) through (v) above
which are consummated during the term of this Agreement and which do not
involve assets having an aggregate book value in excess of $35,000,000,
provided that Borrower may not dispose of its real property located in
--------
Geismar, Louisiana or Addis, Louisiana pursuant to the provisions of this
paragraph (vi).
8.2.10. Securities of Subsidiaries. Permit any of its Subsidiaries to
--------------------------
issue any additional Securities except director's qualifying Securities.
8.2.11. Restricted Investment. Make or have, or permit any Subsidiary of
---------------------
Borrower to make or have, any Restricted Investment; provided, that during each
--------
fiscal year Borrower may make Restricted Investments for which the aggregate
total amount expended on such Restricted Investments, when added to the
aggregate amounts expended or incurred during such fiscal year pursuant to
subsection 8.2.8, the first proviso of subsection 8.2.1 and the first proviso of
subsection 8.2.12, do not exceed the maximum amount of Capital Expenditures
permitted under subsection 8.2.8 for such fiscal year, provided further,
----------------
Borrower may make additional Restricted Investments for which the aggregate
total amount expended on such Restricted Investments, when added to the
aggregate amounts expended or incurred pursuant to the second proviso of
subsection 8.2.1 and the second proviso of subsection 8.2.12, do not exceed
$15,000,000 during the term of this Agreement, but such additional Restricted
Investments may be consummated only if after giving effect thereto, Availability
will exceed $35,000,000, or, in the alternative, Borrower may make additional
------------------
Restricted Investments for which the aggregate total expended on such Restricted
Investments, when added to the aggregate amounts expended or incurred pursuant
to the second proviso of subsection 8.2.1 and the second proviso of subsection
8.2.12, do not exceed $30,000,000 during the term of the Agreement, but such
additional Restricted Investments may be consummated only if immediately after
giving effect thereto, Availability will exceed $50,000,000 (it being understood
by the parties hereto that under no circumstances may the aggregate amounts
expended or incurred pursuant to this second proviso and the second provisos of
subsections 8.2.1 and 8.2.12 exceed $30,000,000 during the term of this
Agreement).
8.2.12. Subsidiaries and Joint Ventures. Create, acquire or otherwise
-------------------------------
suffer to exist any Subsidiary or joint venture arrangement not in existence as
of the date
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<PAGE>
hereof; provided, that during each fiscal year Borrower may create, acquire
--------
or otherwise suffer to exist any Subsidiary or joint venture arrangement
not in existence as of the date hereof for which the aggregate total
consideration expended or incurred, when added to the aggregate amounts
expended or incurred during such fiscal year pursuant to subsection 8.2.8,
the first proviso of subsection 8.2.1 and the first proviso of subsection
8.2.11, do not exceed the maximum amount of Capital Expenditures permitted
under subsection 8.2.8 for such fiscal year, provided further. Borrower may
----------------
create, acquire or otherwise suffer to exist additional Subsidiary or joint
venture arrangements not in existence as of the date hereof for which the
aggregate total consideration expended or incurred, when added to the
aggregate amounts expended or incurred pursuant to the second proviso of
subsection 8.2.1 and the second proviso of subsection 8.2.11, do not exceed
$15,000,000 during the term of this Agreement, but such additional
Subsidiary or joint venture arrangements not in existence as of the date
hereof may be consummated only if after giving effect thereto, Availability
will exceed $35,000,000 or, in the alternative, Borrower may create,
------------------
acquire or otherwise suffer to exist additional Subsidiary or joint
ventures, arrangements not in existence as of the date hereof for which the
aggregate total consideration expended or incurred, when added to the
aggregate amounts expended or incurred pursuant to the second proviso of
subsection 8.2.1 and the second proviso of subsection 8.2.1 1. do not
exceed $30.000,000 during the term of this Agreement, but such additional
Subsidiary or joint venture arrangements not in existence as of the date
hereof may be consummated only if after giving effect thereto, Availability
will exceed $50,000,000 (it being understood by the parties hereto that
under no circumstances may the aggregate amounts expended or incurred
pursuant to this second proviso and the second provisos of subsections
8.2.1. and 8.2.11 exceed $30,000,000 during the term of this Agreement).
8.2.13. Tax Consolidation. File or consent to the filing of any
-----------------
consolidated income tax return with any Person other than Limited Partner.
8.2.14. Organizational Documents. Agree to. or suffer to occur, any
------------------------
amendment, supplement or addition to its or any of its Subsidiaries'
charter, articles or certificate of incorporation, certificate of
formation, limited partnership agreement, bylaws, limited liability
agreement, operating agreement or other organizational documents (as the
case may be), that would reasonably be expected to have a Material Adverse
Effect.
8.2.15. Fiscal Year End. Change, or permit any Subsidiary of Borrower
--------------
to change, its fiscal year end.
8.3. Specific Financial Covenants.
----------------------------
During the Term, and thereafter for so long as there are any Obligations
outstanding, Borrower covenants that, unless otherwise consented to by Lenders
in writing, it shall comply with all of the financial covenants set forth in
Exhibit 8.3 hereto. If GAAP changes from the basis used in preparing the audited
- -----------
financial statements delivered to Agent by Borrower on or
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<PAGE>
before the Closing Date, Borrower will provide Agent with certificates
demonstrating compliance with such financial covenants and will include, at the
election of Borrower or upon the request of Agent, calculations setting forth
the adjustments necessary to demonstrate how Borrower is in compliance with such
financial covenants based upon GAAP as in effect on the Closing Date.
SECTION 9. CONDITIONS PRECEDENT
Notwithstanding any other provision of this Agreement or any of the
other Loan Documents, and without affecting in any manner the rights of Agent or
any Lender under the other sections of this Agreement, no Lender shall be
required to make any Loan, nor shall Agent be required to or issue or procure
any Letter of Credit or LC Guaranty unless and until each of the following
conditions has been and continues to be satisfied:
9.1. Documentation.
-------------
Agent shall have received, in form and substance satisfactory to Agent
and its counsel, a duly executed copy of this Agreement and the other Loan
Documents (including without limitation a "no offset" agreement with Borden,
Inc. and documents sufficient to implement the cash management system described
in subsection 6.2.4), all in form and substance satisfactory to Agent and its
counsel.
9.2. No Default.
----------
No Default or Event of Default shall exist.
9.3. Other Conditions.
----------------
Each of the conditions precedent set forth in the Loan Documents shall
have been satisfied.
9.4. Availability.
------------
Agent shall have determined that immediately after Lenders have made
the initial Loans and after Agent has issued or procured the initial Letters of
Credit and LC Guaranties contemplated hereby, and Borrower has paid (or, if
accrued, treated as paid), all closing costs incurred in connection with the
transactions contemplated hereby, and Borrower reserves an amount sufficient to
pay all trade payables greater than 60 days past due, Availability shall not be
less than $10,000,000.
9.5. No Litigation.
--------------
No action, proceeding, investigation, regulation or legislation shall
have been instituted or proposed before any court, governmental agency or
legislative body to enjoin, restrain or prohibit, or to obtain damages in
respect of, or which is related to or arises out of this Agreement or the
consummation of the transactions contemplated hereby.
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<PAGE>
9.6. Material Adverse Effect.
-----------------------
Since the date of Limited Partner's most recent audited financial
statements, there has not been any material adverse change in its business,
assets, financial condition, income or prospects and no event or condition
exists which would be reasonably likely to result in any Material Adverse
Effect.
SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
10.1. Events of Default.
-----------------
The occurrence of one or more of the following events shall constitute an
"Event of Default":
10.1.1. Payment of Obligations. Borrower shall fail to pay any of the
----------------------
Obligations on the due date thereof (whether due at stated maturity, on
demand, upon acceleration or otherwise).
10.1.2. Misrepresentations. Any representation, warranty or other
------------------
statement made or furnished to Agent or any Lender by or on behalf of
Borrower, any Subsidiary of Borrower or any Guarantor in this Agreement,
any of the other Loan Documents or any instrument, certificate or financial
statement furnished in compliance with or in reference thereto proves to
have been false or misleading in any material respect when made, furnished
or remade pursuant to Section 7.2 hereof.
10.1.3. Breach of Specific Covenants. Borrower shall fail or neglect
-----------------------------
to perform, keep or observe any covenant contained in Sections 6.1.2,
8.1.1, 8.1.4, 8.2 or 8.3 hereof on the date that Borrower is required to
perform, keep or observe such covenant or shall fail or neglect to perform,
keep or observe any covenant contained in Section 5.2, 8.1.2 or 8.1.3
hereof within 5 days following the date on which Borrower is required to
perform, keep or observe such covenant.
10.1.4. Breach of Other Covenants. Borrower shall fail or neglect to
-------------------------
perform, keep or observe any covenant contained in this Agreement (other
than a covenant which is dealt with specifically elsewhere in Section 10.1
hereof) and the breach of such other covenant is not cured to Agent's
satisfaction within 30 days after the sooner to occur of Borrower's receipt
of notice of such breach from Agent or the date on which such failure or
neglect first becomes known to any officer of Borrower.
10.1.5. Default Under Security Documents or Other Agreements. Any
-----------------------------------------------------
event of default shall occur under, or Borrower, any of its Subsidiaries or
any other Guarantor shall default in the performance or observance of any
term, covenant, condition or agreement contained in, any of the Security
Documents or the Other Agreements and such default shall continue beyond
any applicable grace period.
10.1.6. Other Defaults. There shall occur any default or event of
--------------
default on the part of Borrower, any Subsidiary of Borrower or any other
Guarantor under any
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<PAGE>
agreement, document or instrument to which Borrower, such Subsidiary of Borrower
or such Guarantor is a party or by which Borrower, such Subsidiary of Borrower
or such Guarantor or any of its Property is bound, creating or relating to any
Indebtedness (other than the Obligations) with an outstanding principal balance
in excess of $55,000,000 if the payment or maturity of such Indebtedness is
accelerated in consequence of such event of default or demand for payment of
such Indebtedness is made or could be made in accordance with the terms thereof.
10.1.7. Uninsured Losses. Any material loss, theft, damage or destruction
----------------
of any portion of the Collateral having a fair market value of $5,000,000, in
the aggregate, if not fully covered (subject to such deductibles and self-
insurance retentions as Agent shall have permitted) by insurance.
10.1.8. Insolvency and Related Proceedings. Limited Partner, Borrower, any
----------------------------------
Subsidiary of Borrower or any Guarantor shall cease to be Solvent or shall
suffer the appointment of a receiver, trustee, custodian or similar fiduciary,
or shall make an assignment for the benefit of creditors, or any petition for an
order for relief shall be filed by or against Limited Partner, Borrower, any
Subsidiary of Borrower or any Guarantor under the federal bankruptcy laws (if
against Limited Partner, Borrower, any Subsidiary of Borrower or any Guarantor
the continuation of such proceeding for more than 60 days), or Limited Partner,
Borrower, any Subsidiary of Borrower or any Guarantor shall make any offer of
settlement, extension or composition to their respective unsecured creditors
generally.
10.1.9. Business Disruption: Condemnation. There shall occur a cessation
---------------------------------
of a substantial part of the business of Borrower, any Subsidiary of Borrower or
any Guarantor for a period which materially adversely affects Borrower's, such
Subsidiary's or such Guarantor's capacity to continue its business on a
profitable basis; or Borrower, any Subsidiary of Borrower or any Guarantor shall
suffer the loss or revocation of any material license or permit now held or
hereafter acquired by Borrower, any Subsidiary of Borrower or any Guarantor
which is necessary to the continued or lawful operation of its business; or
Borrower, any Subsidiary of Borrower or any Guarantor shall be enjoined,
restrained or in any way prevented by court, governmental or administrative
order from conducting all or any material part of its business affairs; or any
material lease or agreement pursuant to which Borrower, any Subsidiary of
Borrower or any Guarantor leases, uses or occupies any Property shall be
canceled or terminated prior to the expiration of its stated term; or any
material portion of the Collateral shall be taken through condemnation or the
value of such Property shall be impaired through condemnation.
10.1.10. Change of Ownership. (i) Limited Partner ceases to be the sole
-------------------
limited partner of Borrower, (ii) BCP Management, Inc., a Delaware corporation
("BCPM"), ceases to be the sole general partner of either Borrower or Limited
Partner, (iii) Borden, Inc., a New Jersey corporation, ceases to be the sole
shareholder of BCPM, or (iv) a "Change of Control" (as defined in the Indenture
dated as of May
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<PAGE>
1, 1995 with respect to the 9.5% Notes Due 2005 of Borrower and BCP Finance
Corporation, a Delaware corporation) occurs.
10.1.11. ERISA. A Reportable Event shall occur which constitutes grounds
-----
for the termination by the Pension Benefit Guaranty Corporation of any Plan or
for the appointment by the appropriate United States district court of a trustee
for any Plan, or if any Plan shall be terminated or any such trustee shall be
requested or appointed, or if Borrower, any Subsidiary of Borrower or any other
Guarantor is in "default" (as defined in Section 4219(c)(5) of ERISA) with
respect to payments to a Multiemployer Plan resulting from Borrower's, such
Subsidiary's or such Guarantor's complete or partial withdrawal from such Plan
and any such event would reasonably be expected to have a Material Adverse
Effect.
10.1.12. Challenge to Agreement. Borrower, any Subsidiary of Borrower or
----------------------
any other Guarantor, or any Affiliate of any of them, shall challenge or contest
in writing in any action, suit or proceeding the validity or enforceability of
this Agreement or any of the other Loan Documents, the legality or
enforceability of any of the Obligations or the perfection or priority of any
Lien granted to Agent.
10.1.13. Repudiation of or Default Under Guaranty Agreement. Any Guarantor
--------------------------------------------------
shall revoke in writing or attempt to revoke the Guaranty Agreement signed by
such Guarantor, or shall repudiate in writing such Guarantor's liability
thereunder or shall be in default under the terms thereof.
10.1.14. Criminal Forfeiture. Borrower, any Subsidiary of Borrower or any
-------------------
Guarantor shall be criminally indicted or convicted under any law that could
lead to a forfeiture of any material Property of Borrower, any Subsidiary of
Borrower or any Guarantor.
10.1.15. Judgments. Any money judgments, writ of attachment or similar
----------
processes (collectively, "Judgments") are issued or rendered against Borrower,
any Subsidiary of Borrower or any other Guarantor, or any of their respective
Property (i) in the case of money judgments, in an amount of $55,000,000 or more
for any single judgment, attachment or process or $10,000,000 or more for all
such judgments, attachments or processes in the aggregate, in each case in
excess of any applicable insurance with respect to which the insurer has
admitted liability, and (ii) in the case of non-monetary Judgments, such
Judgment or Judgments (in the aggregate) would reasonably be expected to have a
Material Adverse Effect, in each case which Judgment is not stayed, released or
discharged within 60 days.
10.1.16. Limited Partner. Limited Partner conducts any business other than
---------------
business incidental to the ownership of limited partnership interests of
Borrower, or Limited Partner owns any assets other than the limited partnership
interests of Borrower.
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<PAGE>
10.2. Acceleration of the Obligations.
-------------------------------
Upon or at any time after the occurrence and during the continuance of an
Event of Default, Agent or Majority Lenders may declare all or any portion of
the Obligations at once due and payable without presentment, demand protest or
further notice by Agent or any Lender, and Borrower shall forthwith pay to
Agent, the full amount of such Obligations, provided, that upon the occurrence
--------
of an Event of Default specified in subsection 10.1.8 hereof, all of the
Obligations shall become automatically due and payable without declaration,
notice or demand by Agent or any Lender.
10.3. Other Remedies.
--------------
Upon the occurrence and during the continuance of an Event of Default,
Agent shall have and may exercise from time to time the following rights and
remedies:
10.3.1. All of the rights and remedies of a secured party under the
Code or under other applicable law, and all other legal and equitable
rights to which Agent or Lenders may be entitled, all of which rights and
remedies shall be cumulative and shall be in addition to any other rights
or remedies contained in this Agreement or any of the other Loan Documents,
and none of which shall be exclusive.
10.3.2. The right to take immediate possession of the Collateral,
and to (i) require Borrower and each of its Subsidiaries to assemble the
Collateral, at Borrower's expense, and make it available to Agent at a
place designated by Agent which is reasonably convenient to both parties,
and (ii) enter any premises where any of the Collateral shall be located
and to keep and store the Collateral on said premises until sold (and if
said premises be the Property of Borrower or any Subsidiary of Borrower,
Borrower agrees not to charge, or permit any of its Subsidiaries to charge,
Agent for storage thereof).
10.3.3. The right to sell or otherwise dispose of all or any
Collateral in its then condition, or after any further manufacturing or
processing thereof, at public or private sale or sales, with such notice as
may be required by law, in lots or in bulk, for cash or on credit, all as
Agent, in its sole discretion, may deem advisable. Borrower agrees that 10
days' written notice to Borrower or any of its Subsidiaries of any public
or private sale or other disposition of Collateral shall be reasonable
notice thereof, and such sale shall be at such locations as Agent may
designate in said notice. Agent shall have the right to conduct such sales
on Borrower's or any of its Subsidiaries' premises, without charge
therefor, and such sales may be adjourned from time to time in accordance
with applicable law. Agent shall have the right to sell, lease or otherwise
dispose of the Collateral, or any part thereof, for cash, credit or any
combination thereof, and Agent, on behalf of Lenders, may purchase all or
any part of the Collateral at public or, if permitted by law, private sale
and, in lieu of actual payment of such purchase price, may set off the
amount of such price against the Obligations. The proceeds realized from
the sale of any Collateral may be applied, after allowing 2 Business Days
for collection, first to the costs, expenses and
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<PAGE>
attorneys' fees incurred by Agent in collecting the Obligations, in
enforcing the rights of Agent and Lenders under the Loan Documents and in
collecting retaking, completing, protecting, removing, storing,
advertising for sale, selling and delivering any Collateral, second to the
interest and fees due upon any of the Obligations, third to the principal
of the Obligations, fourth to all other Obligations (exclusive of
Obligations arising under Hedge Agreements) and fifth to Obligations
arising under Hedge Agreements. If any deficiency shall arise, Borrower and
each Guarantor shall remain jointly and severally liable to Agent and
Lenders therefor.
10.3.4. Agent is hereby granted a license or other right to use,
without charge, Borrower's and each of its Subsidiary's labels, patents,
copyrights, licenses, rights of use of any name, trade secrets, tradenames,
trademarks and advertising matter, or any Property of a similar nature, as
it pertains to the Collateral, in completing, advertising for sale and
selling any Collateral and Borrower's and each of its Subsidiary's rights
under all licenses and a)) franchise agreements shall inure to Agent's
benefit.
10.3.5. Agent may, at its option, require Borrower to deposit with
Agent funds equal to the LC Amount and, if Borrower fails to promptly make
such deposit, Agent may advance such amount as a Revolving Credit Loan
(whether or not an overadvance is created thereby). Each such Revolving
Credit Loan shall be secured by all of the Collateral and shall bear
interest and be payable at the same rate and in the same manner as Loans.
Any such deposit or advance shall be held by Agent as a reserve to fund
future payments on such LC Guaranties and future drawings against such
Letters of Credit. At such time as all LC Guaranties have been paid or
terminated and all Letters of Credit have been drawn upon or expired, any
amounts remaining in such reserve shall be applied against any outstanding
Obligations, or, if all Obligations have been indefeasibly paid in full,
returned to Borrower.
10.3.6. Without limiting any other provision hereof, if an Event of
Default exists:
(i) It shall be lawful for, and the Borrower does hereby
authorize the Agent, without making a demand or putting the Borrower
in default, the same being hereby expressly waived, to cause all or
any part of the Collateral, at the Agent's sole discretion, to be
seized and sold under executory or other legal process, issued by a
court of competent jurisdiction, with or without appraisement, at
the option of the Agent, as an entirety or in parcels as the Agent
may determine, to the highest bidder, for cash, and the Borrower
hereby waives the notice of demand and delay provided for by Article
2639 of the Louisiana Code of Civil Procedure; and
(ii) The Agent shall have any other rights and remedies
contained in the Louisiana Commercial Laws - Secured Transactions,
Title 10, Section 9-10 et seq. ("Chapter 9") or other applicable
-- ---
laws.
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<PAGE>
In the exercise of any rights and remedies following an Event of
Default, to the extent permitted by law, (1) the sale, lease or other
disposition by the Agent of the Collateral, or any part thereof, may be
sold in any number of lots at public or private sale; (ii) the Agent and/or
any of the Lenders may purchase all or any part of the Collateral at public
or private sale, and in lieu of actual payment of such purchase price may
set-off the amount of such purchase price against the Obligations; (iii)
any sales of the Collateral may be adjourned from time to time with or
without notice; (iv) the Agent may, in its sole and absolute discretion,
cause the Collateral to remain on the Borrower's premises, at the
Borrower's expense, pending sale or other disposition thereof; (v) the
Agent shall have the right to conduct such sales on the Borrower's premises
or elsewhere, at the Borrower's expense, on such occasion or occasions as
the Agent may see fit; (vi) the Borrower shall execute and deliver, or
cause to be executed and delivered, such instruments, documents,
assignments, deeds, waivers, certificates and affidavits and take such
further action as the Agent shall require in connection with such sale; and
(vii) if the Borrower fails to carry out its obligations set out in subpart
(Vi) above, the Borrower hereby constitutes the Agent as its attorney-in-
fact to execute any such instrument, documents, assignment, deed, waiver,
certificate or affidavit on behalf of the Borrower and in its name.
10.3.7. Borrower hereby confesses judgment in favor of the Lenders
and/or the Agent for the full amount of Obligations, in principal and
interest, together with all attorney's fees and costs due hereunder, and
any and all other monies due by the Borrower to the Lenders and/or the
Agent under the terms hereof and under the Agreement.
10.3.8. Pursuant to Louisiana R.S. 9:5136, the Agent is hereby
authorized and empowered to name, at the time of the seizure of any of the
Collateral, a keeper of such property, which said keeper may be the Agent
or its designated agent or nominee, who or which shall be named by the
Agent in its pleadings to enforce its rights and remedies hereunder in a
court of competent jurisdiction. The keeper shall be entitled to reasonable
compensation for its services, and such compensation and any advances for
working capital or otherwise made by the Agent and/or any one or more of
the Lenders to the keeper shall constitute a part of the Obligations
secured hereby.
10.4. Set Off and Sharing of Payments.
-------------------------------
In addition to any rights now or hereafter granted under applicable law and
not by way of limitation of any such rights, during the continuance of any Event
of Default, each Lender is hereby authorized by Borrower at any time or from
time to time, with prior written consent of Agent and with reasonably prompt
subsequent notice to Borrower (any prior or contemporaneous notice to Borrower
being hereby expressly waived) to set off and to appropriate and to apply any
and all (i) balances held by such Lender at any of its offices for the account
of Borrower or any of its Subsidiaries (regardless of whether such balances are
then due to Borrower or its Subsidiaries), and (ii) other property at any time
held or owing by such Lender to or for the credit or for the account of Borrower
or any of its Subsidiaries,
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<PAGE>
against and on account of any of the Obligations. Any Lender exercising a right
to set off shall, to the extent the amount of any such set off exceeds its
Revolving Loan Percentage of the amount set off, purchase for cash (and the
other Lenders shall sell) interests in each such other Lender's pro rata share
of the Obligations as would be necessary to cause such Lender to share such
excess with each other Lender in accordance with their respective Revolving Loan
Percentages. Each Borrower agrees, to the fullest extent permitted by law, that
any Lender may exercise its right to set off with respect to amounts in excess
of its pro rata share of the Obligations and upon doing so shall deliver such
excess to Agent for the benefit of all Lenders in accordance with the Revolving
Loan Percentages.
10.5. Remedies Cumulative: No Waiver.
------------------------------
All covenants, conditions, provisions, warranties, guaranties, indemnities,
and other undertakings of Borrower contained in this Agreement and the other
Loan Documents, or in any document referred to herein or contained in any
agreement supplementary hereto or in any schedule or in any Guaranty Agreement
given to Agent or any Lender or contained in any other agreement between any
Lender and Borrower or between Agent and Borrower heretofore, concurrently, or
hereafter entered into, shall be deemed cumulative to and not in derogation or
substitution of any of the terms, covenants, conditions, or agreements of
Borrower herein contained. The failure or delay of Agent or any Lender to
require strict performance by Borrower of any provision of this Agreement or to
exercise or enforce any rights, Liens, powers, or remedies hereunder or under
any of the aforesaid agreements or other documents or security or Collateral
shall not operate as a waiver of such performance, Liens, rights, powers and
remedies, but all such requirements, Liens, rights, powers, and remedies shall
continue in full force and effect until all Loans and other Obligations owing or
to become owing from Borrower to Agent and each Lender have been fully
satisfied. None of the undertakings, agreements, warranties, covenants and
representations of Borrower contained in this Agreement or any of the other Loan
Documents and no Event of Default by Borrower under this Agreement or any other
Loan Documents shall be deemed to have been suspended or waived by Lenders,
unless such suspension or waiver is by an instrument in writing specifying such
suspension or waiver and is signed by a duly authorized representative of Agent
and directed to Borrower.
SECTION 11. THE AGENT
11.1. Authorization and Action.
------------------------
Each Lender hereby appoints and authorizes Agent to take such action
on its behalf and to exercise such powers under this Agreement and the other
Loan Documents as are delegated to Agent by the terms hereof and thereof,
together with such powers as are reasonably incidental thereto. Each Lender
hereby acknowledges that Agent shall not have by reason of this Agreement
assumed a fiduciary relationship in respect of any Lender. In performing its
functions and duties under this Agreement, Agent shall act solely as agent of
Lenders and shall not assume, or be deemed to have assumed, any obligation
toward, or relationship of agency or trust with or for, Borrower. As to any
matters not expressly provided for by this Agreement and the other Loan
Documents, Agent may, but shall not be
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<PAGE>
required to, exercise any discretion or take any action, but shall be required
to act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Majority Lenders, whenever
such instruction shall be requested by Agent or required hereunder, or a greater
or lesser number of Lenders if so required hereunder, and such instructions
shall be binding upon all Lenders; provided, that Agent shall be fully justified
--------
in failing or refusing to take any action which exposes Agent to any liability
or which is contrary to this Agreement, the other Loan Documents or applicable
law, unless Agent is indemnified to its satisfaction by the other Lenders
against any and all liability and expense which it may incur by reason of taking
or continuing to take any such action. If Agent seeks the consent or approval of
the Majority Lenders (or a greater or lesser number of Lenders as required in
this Agreement), with respect to any action hereunder, Agent shall send notice
thereof to each Lender and shall notify each Lender at any time that the
Majority Lenders (or such greater or lesser number of Lenders) have instructed
Agent to act or refrain from acting pursuant hereto.
11.2. Agent's Reliance, Etc.
---------------------
Neither Agent, any Affiliate of Agent, nor any of their respective
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 or
the other Loan Documents, except for its or their own gross negligence or
willful misconduct. Without limitation of the generality of the foregoing,
Agent: (i) may treat each Lender party hereto as the holder of Obligations until
Agent receives written notice of the assignment or transfer or such lender's
portion of the Obligations signed by such Lender and in form reasonably
satisfactory to Agent; (ii) may consult with legal counsel, 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 warranties or
representations to any Lender and shall not be responsible to any Lender for any
recitals, statements, warranties or representations made in or in connection
with this Agreement or any other Loan Documents; (iv) shall not have any duty
beyond Agent's customary practices in respect of loans in which Agent is the
only lender, to ascertain or to inquire as to the performance or observance of
any of the terms, covenants or conditions of this Agreement or the other Loan
Documents on the part of Borrower, to inspect the property (including the books
and records) of Borrower, to monitor the financial condition of Borrower or to
ascertain the existence or possible existence or continuation of any Default or
Event of Default; (v) shall not be responsible to any Lender for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement or the other Loan Documents or any other instrument or
document furnished pursuant hereto or thereto; (vi) shall not be liable to any
Lender for any action taken, or inaction, by Agent upon the instructions of
Majority Lenders pursuant to Section 11.1 hereof or refraining to take any
action pending such instructions; (vii) shall not be liable for any
apportionment or distributions of payments made by it in good faith pursuant to
Section 3 hereof; (viii) shall incur no liability under or in respect of this
Agreement or the other Loan Documents by acting upon any notice, consent,
certificate, message or other instrument or writing (which may be by telephone,
facsimile, telegram, cable or telex) believed in good faith by it to be
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genuine and signed or sent by the proper party or parties; and (ix) may assume
that no Event of Default has occurred and is continuing, unless Agent has actual
knowledge of the Event of Default, has received notice from Borrower or
Borrower's independent certified public accounts stating the nature of the Event
of Default, or has received notice from a Lender stating the nature of the Event
of Default and that such Lender considers the Event of Default to have occurred
and to be continuing. In the event any apportionment or distribution described
in clause (vii) above is determined to have been made in error, the sole
recourse of any Person to whom payment was due but not made shall be to recover
from the recipients of such payments any payment in excess of the amount to
which they are determined to have been entitled.
11.3. Fleet and Affiliates.
--------------------
With respect to its commitment hereunder to make Loans, Fleet shall
have the same rights and powers under this Agreement and the other Loan
Documents as any other Lender and may exercise the same as though it were not
Agent; and the terms "Lender," "Lenders" or "Majority Lenders" shall, unless
otherwise expressly indicated, include Fleet in its individual capacity as a
Lender. Fleet and its Affiliates may lend money to, and generally engage in any
kind of business with, Borrower, and any Person who may do business with or own
Securities of Borrower all as if Fleet were not Agent and without any duty to
account therefor to any other Lender.
11.4. Lender Credit Decision.
----------------------
Each Lender acknowledges that it has, independently and without
reliance upon Agent or any other Lender and based on the financial statements
referred to herein and such other documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon Agent or any other Lender 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. Agent
shall not have any duty or responsibility, either initially or on an ongoing
basis, to provide any Lender with any credit or other similar information
regarding Borrower.
11.5. Indemnification.
---------------
Lenders agree to indemnify Agent (to the extent not reimbursed by
Borrower), in accordance with their respective Revolving Loan Percentages, from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against
Agent in any way relating to or arising out of this Agreement or any other Loan
Document or any action taken or omitted by Agent under this Agreement; provided
--------
that no Lender shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from Agent's gross negligence or willful misconduct
determined by a final non-appealable order of a court of competent jurisdiction.
Without limitation of the foregoing, each Lender
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agrees to reimburse Agent promptly upon demand for its ratable share, as set
forth above, of any out-of-pocket expenses (including attorneys' fees) incurred
by Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiation, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement and each other Loan Document,
to the extent that Agent is not reimbursed for such expenses by Borrower. The
obligations of Lenders under this Section 11.5 shall survive the payment in full
of all Obligations and the termination of this Agreement. If after payment and
distribution of any amount by Agent to Lenders, any Lender or any other Person,
including Borrower, any creditor of Borrower, a liquidator, administrator or
trustee in bankruptcy, recovers from Agent any amount found to have been
wrongfully paid to Agent or disbursed by Agent to Lenders, then Lenders, in
accordance with their respective Revolving Loan Percentages, shall reimburse
Agent for all such amounts.
11.6. Rights and Remedies to be Exercised by Agent Only.
-------------------------------------------------
Each Lender agrees that, except as set forth in subsection 10.4, no
Lender shall have any right individually (i) to realize upon the security
created by this Agreement or any other Loan Document, (ii) to enforce any
provision of this Agreement or any other Loan Document, or (iii) to make demand
under this Agreement or any other Loan Document.
11.7. Agency Provisions Relating to Collateral.
----------------------------------------
Each Lender authorizes and ratifies Agent's entry into this
Agreement and the Security Documents for the benefit of Lenders. Each Lender
agrees that any action taken by Agent with respect to the Collateral in
accordance with the provisions of this Agreement or the Security Documents, and
the exercise by Agent of the powers set forth herein or therein, together with
such other powers as are reasonably incidental thereto, shall be authorized and
binding upon all Lenders. Agent is hereby authorized on behalf of all Lenders,
without the necessity of any notice to or further consent from any Lender, from
time to time prior to an Event of Default, to take any action with respect to
any Collateral or the Loan Documents which may be necessary to perfect and
maintain perfected Agent's Liens upon the Collateral, for its benefit and the
ratable benefit of Lenders. Lenders hereby irrevocably authorize Agent, at its
option and in its discretion, to release any Lien granted to or held by Agent
upon any Collateral (i) upon termination of the Agreement and payment and
satisfaction of all Obligations; or (ii) constituting property being sold or
disposed of if the sale or disposition is made in compliance with subsection
8.2.9 hereof (such release shall be deemed to be automatic upon such sale or
disposal); or (iii) constituting property in which Borrower owned no interest at
the time the Lien was granted or at any time thereafter; or (iv) in connection
with any foreclosure sale or other disposition of Collateral after the
occurrence and during the continuation of an Event of Default or (v) if
approved, authorized or ratified in writing by Agent at the direction of all
Lenders. Upon request by Agent at any time, Lenders will confirm in writing
Agent's authority to release particular types or items of Collateral pursuant
hereto. Except for its obligation to adhere to Agent's customary practices in
respect of loans in which Agent is the only lender, Agent shall have no
obligation whatsoever to any Lender or to any other Person to assure that the
Collateral exists or is
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<PAGE>
owned by Borrower or is cared for, protected or insured or has been encumbered
or that the Liens granted to Agent herein or pursuant to the Security Documents
have been properly or sufficiently or lawfully created, perfected, protected or
enforced or are entitled to any particular priority, or to exercise at all or in
any particular manner or under any duty of care. disclosure or fidelity, or to
continue exercising; any of its rights, authorities and powers granted or
available to Agent in this Section 11.7 or in any of the Loan Documents, it
being understood and agreed that in respect of the Collateral, or any act,
omission or event related thereto, Agent may act in any manner it may deem
appropriate, in its sole discretion, but consistent with the provisions of this
Agreement, including given Agent's own interest in the Collateral as a Lender
and that Agent shall have no duty or liability whatsoever to any Lender.
11.8. Agent's Right to Purchase Commitments.
-------------------------------------
Agent shall have the right, but shall not be obligated, at any time
upon written notice to any Lender and with the consent of such Lender, which may
be granted or withheld in such Lender's sole discretion, to purchase for Agent's
own account all of such Lender's interests in this Agreement, the other Loan
Documents and the Obligations, for the face amount of the outstanding
Obligations owed to such Lender, including without limitation all accrued and
unpaid interest and fees.
11.9. Right of Sale, Assignment, Participations.
-----------------------------------------
Borrower hereby consents to any Lender's participation, sale,
assignment, transfer or other disposition, at any time or times hereafter, of
this Agreement and any of the other Loan Documents, or of any portion hereof or
thereof, including, without limitation, such Lender's rights, title, interests,
remedies, powers, and duties hereunder or thereunder subject to the terms and
conditions set forth below:
11.9.1. Sales, Assignments. Each Lender hereby agrees that, with
------------------
respect to any sale or assignment (i) no such sale or assignment shall be
for an amount of less than $5,000,000, (ii) each such sale or assignment
shall be made on terms and conditions which are customary in the industry
at the time of the transaction, (iii) Agent and, in the absence of a
Default or Event of Default, Borrower, must consent, such consent not to be
unreasonably withheld, to each such assignment to a party which is not an
original signatory to this Agreement, (iv) the assignee Lender shall pay to
the Agent a processing and recordation fee of $3,500 and any out-of-pocket
attorneys' fees and expenses incurred by the Agent in connection with any
such sale or assignment. After such sale or assignment has been consummated
(x) the assignee Lender thereupon shall become a "Lender" for all purposes
of this Agreement and (y) the assigning Lender shall have no further
liability for funding the portion of Revolving Loan Commitments assumed by
such other Lender.
11.9.2. Participations. Any Lender may grant participations in its
--------------
extensions of credit hereunder to any other Lender or other lending
institution (a "Participant"), provided that (i) no Participant shall
--------
thereby acquire any direct rights
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under this Agreement, (ii) no Participant shall be granted any right to
consent to any amendment, except to the extent any of the same pertain to
(1) reducing the aggregate principal amount of, or interest rate on, or
fees applicable to, any Loan or (2) extending the final stated maturity of
any Loan or the stated maturity of any portion of any payment of principal
of, or interest or fees applicable to, any of the Loans; provided, that the
--------
rights described in this subclause (2) shall not be deemed to include the
right to consent to any amendment with respect to or which has the effect
of requiring any mandatory prepayment of any portion of any Loan or any
amendment or waiver of any Default or Event of Default, (iii) no sale of a
participation in extensions of credit shall in any manner relieve the
originating Lender of its obligations hereunder, (iv) the originating
Lender shall remain solely responsible for the performance of such
obligations, (v) Borrower and the Agent shall continue to deal solely and
directly with the originating Lender in connection with the originating
Lender's rights and obligations under this Agreement and the other Loan
Documents, (vi) in no event shall any financial institution purchasing the
participation grant a participation in its participation interest in the
Loans without the prior written consent of Agent, and, in the absence of a
Default or an Event of Default, Borrower, which consents shall not
unreasonably be withheld and (vii) all amounts payable by Borrower
hereunder shall be determined as if the originating Lender had not sold any
such participation.
11.9.3. Certain Agreements of Borrower. Borrower agrees that (i) it
------------------------------
will use its reasonable efforts to assist and cooperate with each Lender in
any manner reasonably requested by such Lender to effect the sale of
participation in or assignments of any of the Loan Documents or any portion
thereof or interest therein, including, without limitation, assisting in
the preparation of appropriate disclosure documents and making members of
management available at reasonable times to meet with and answer questions
of potential assignees and Participants; and (ii) subject to the provisions
of Section 12.14 hereof, such Lender may disclose credit information
regarding Borrower to any potential Participant or assignee.
11.10. Amendment.
---------
No amendment or waiver of any provision of this Agreement or any
other Loan Document, nor consent to any departure by Borrower therefrom, shall
in any event be effective unless the same shall be in writing and signed by the
Majority Lenders and Borrower, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided, that no amendment, waiver or consent shall be effective, unless
--------
(i) in writing and signed by each Lender, if it would do any of the following:
(1) increase or decrease the aggregate Loan Commitments, or any Lender's
Revolving Loan Commitment, (2) forgive the principal of, or accrued interest on,
any amount payable hereunder other than those payable only to Fleet in its
capacity as Agent, which may be reduced by Fleet unilaterally, (3) increase or
decrease the stated interest rate or any fees payable hereunder, (4) postpone
any date fixed for any payment of principal of, or interest or fees on, any
amounts payable hereunder, other than those payable only to Fleet in its
capacity as Agent, which may be postponed by Fleet unilaterally, (5) reduce the
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percentage of Lenders that shall be required for Lenders or any of them to take
any action hereunder, (6) release or discharge any Person liable for the
performance of any obligations of Borrower hereunder or under any of the Loan
Documents, (7) amend any provision of this Agreement that requires the consent
of all Lenders or consent to or waive any breach thereof, (8) amend this Section
11.10, (9) release any substantial portion of the Collateral, unless otherwise
permitted pursuant to Section 11.7 hereof, (10) increase the percentage figures
constituting the advance rates set forth in the defined term "Borrowing Base",
or (11) change the provisions of Section 8.3 hereof or Exhibit 8.3 hereto; or
-----------
(ii) in writing and signed by Agent in addition to the Lenders required above to
take such action, affect the rights or duties of Agent under this Agreement, or
any Loan Document.
11.11. Resignation of Agent: Appointment of Successor.
----------------------------------------------
The Agent may resign as Agent by giving not less than thirty (30)
days' prior written notice to the Lenders and Borrower. If the Agent shall
resign under this Agreement, then, (i) subject to the consent of the Borrower
(which consent shall not be unreasonably withheld and which consent shall not be
required during any period in which a Default or an Event of Default exists),
the Majority Lenders shall appoint from among the Lenders a successor agent for
the Lenders or (ii) if a successor agent shall not be so appointed and approved
within the thirty (30) day period following the Agent's notice to the Lenders
and the Borrower of its resignation, then the Agent shall appoint a successor
agent who shall serve as Agent until such time as the Majority Lenders appoint a
successor agent. Subject to the Borrower's consent as set forth above. Upon its
appointment, such successor agent shall succeed to the rights, powers and duties
of the Agent and the term "Agent" shall mean such successor effective upon its
appointment, and the former Agent's rights, powers and duties as Agent shall be
terminated without any other or further act or deed on the part of such former
Agent or any of the parties to this Agreement. After the resignation of any
Agent hereunder, the provisions of this Section 11 shall inure to the benefit of
such former Agent and such former Agent shall not by reason of such resignation
be deemed to be released from liability for any actions taken or not taken by it
while it was an Agent under this Agreement.
SECTION 12. MISCELLANEOUS
12.1. Power of Attorney.
-----------------
Borrower hereby irrevocably designates, makes, constitutes and
appoints Agent (and all Persons designated by Agent) as Borrower's true and
lawful attorney (and agent-in-fact), solely with respect to the matters set
forth in this Section 12.1, and Agent, or Agent's agent, may, without notice to
Borrower and in Borrower's or Agent's name, but at the cost and expense of
Borrower:
12.1.1. At such time or times as Agent or said agent, in its sole
discretion, may determine, endorse Borrower's name on any checks, notes,
acceptances, drafts, money orders or any other evidence of payment or
proceeds of the Collateral which come into the possession of Agent or under
Agent's control.
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<PAGE>
12.1.2. At such time or times upon or after the occurrence and during
the continuance of an Event of Default, as Agent or its agent in its sole
discretion may determine: (i) demand payment of the Accounts from the
Account Debtors, enforce payment of the Accounts by legal proceedings or
otherwise, and generally exercise all of Borrower's rights and remedies
with respect to the collection of the Accounts; (ii) settle, adjust,
compromise, discharge or release any of the Accounts or other Collateral or
any legal proceedings brought to collect any of the Accounts or other
Collateral; (iii) sell or assign any of the Accounts and other Collateral
upon such terms, for such amounts and at such time or times as Agent deems
advisable; (iv) take control, in any manner, of any item of payment or
proceeds relating to any Collateral; (v) prepare, file and sign Borrower's
name to a proof of claim in bankruptcy or similar document against any
Account Debtor or to any notice of lien, assignment or satisfaction of lien
or similar document in connection with any of the Collateral; (vi) receive,
open and dispose of all mail addressed to Borrower and notify postal
authorities to change the address for delivery thereof to such address as
Agent may designate; (vii) endorse the name of Borrower upon any of the
items of payment or proceeds relating to any Collateral and deposit the
same to the account of Agent on account of the Obligations; (viii) endorse
the name of Borrower upon any chattel paper, document, instrument, invoice,
freight bill, bill of lading or similar document or agreement relating to
the Accounts, Inventory and any other Collateral; (ix) use Borrower's
stationery and sign the name of Borrower to verifications of the Accounts
and notices thereof to Account Debtors; (x) use the information recorded on
or contained in any data processing equipment and computer hardware and
software relating to the Accounts, Inventory, Equipment and any other
Collateral; (xi) make and adjust claims under policies of insurance; and
(xii) do all other acts and things necessary, in Agent's determination, to
fulfill Borrower's obligations under this Agreement.
The power of attorney granted hereby shall constitute a power coupled with
an interest and shall be irrevocable.
12.2. Indemnity.
---------
Borrower hereby agrees to indemnify Agent and each Lender (and each of
their Affiliates) and hold Agent and each Lender (and each of their Affiliates)
harmless from and against any liability, loss, damage, suit, action or
proceeding ever suffered or incurred by any such Person (including reasonable
attorneys fees and legal expenses) as the result of Borrower's failure to
observe, perform or discharge Borrower's duties hereunder. In addition, Borrower
shall defend Agent and each Lender (and each of their Affiliates) against and
save it harmless from all claims of any Person with respect to the Collateral
(except those resulting from the gross negligence or intentional misconduct of
any such Person). Without limiting the generality of the foregoing, these
indemnities shall extend to any claims asserted against Agent or any Lender (and
each of their Affiliates) by any Person under any Environmental Laws by reason
of Borrower's or any other Person's failure to comply with laws applicable to
solid or hazardous waste materials or other toxic substances. Notwithstanding
any contrary provision in this
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Agreement, the obligation of Borrower under this Section 12.2 shall survive the
payment in full of the Obligations and the termination of this Agreement.
12.3. Sale of lnterest.
----------------
Borrower may not sell, assign or transfer any interest in this Agreement,
any of the other Loan Documents, or any of the Obligations, or any portion
thereof, including, without limitation, Borrower's rights, title, interests,
remedies, powers, and duties hereunder or thereunder.
12.4. Severability.
------------
Wherever possible, each provision of this Agreement shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Agreement shall be prohibited by or invalid under applicable
law, such provision shall be ineffective only to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
12.5. Successors and Assigns.
----------------------
This Agreement, the Other Agreements and the Security Documents shall be
binding upon and inure to the benefit of the successors and assigns of Borrower,
Agent and each Lender permitted under Section 11.9 hereof.
12.6. Cumulative Effect: Conflict of Terms.
------------------------------------
The provisions of the Other Agreements and the Security Documents are hereby
made cumulative with the provisions of this Agreement. Except as otherwise
provided in any of the other Loan Documents by specific reference to the
applicable provision of this Agreement, if any provision contained in this
Agreement is in direct conflict with, or inconsistent with, any provision in any
of the other Loan Documents, the provision contained in this Agreement shall
govern and control.
12.7. 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 and delivered shall be deemed to be an original and all of which
counterparts taken together shall constitute but one and the same instrument.
12.8. Notice.
------
Except as otherwise provided herein, all notices, requests and demands to or
upon a party hereto, to be effective, shall be in writing and shall be sent by
certified or registered mail, return receipt requested, by personal delivery
against receipt, by overnight courier or by facsimile and, unless otherwise
expressly provided herein, shall be deemed to have been validly served, given,
delivered or received immediately when delivered against receipt, one Business
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Day after deposit with an overnight courier or, in the case of facsimile notice,
when sent, addressed as follows:
If to Agent: Fleet Capital Corporation
One South Wacker Drive
Suite 1400
Chicago, Illinois 60606
Attention: Loan Administration Manager
Facsimile No.: (312) 827-4222
With a copy to: Goldberg~ Kohn, Bell, Black,
Rosenbloom & Moritz, Ltd.
55 East Monroe Street
Suite 3700
Chicago, Illinois 60603
Attention: David M. Mason
Facsimile No.: (312) 332-2196
If to Borrower: Borden Chemicals and Plastics Operating
Limited Partnership
Highways 73 & 30
Geismar, Louisiana 70734
Attention: Chief Financial Officer
Facsimile No.: (225) 673-0672
With a copy to: Simpson & Thacher
425 Lexington Avenue
New York, New York 10017
Attention: James Cross
Facsimile No.: (212) 455-2502
or to such other address as each party may designate for itself by notice given
in accordance with this Section 12.8; provided, however, that any notice,
--------
request or demand to or upon a Lender pursuant to subsection 3.1.1 or 4.2.2
hereof shall not be effective until received by such Lender.
12.9. Consent.
-------
Whenever Agent's or Majority Lenders' consent is required to be obtained
under this Agreement, any of the Other Agreements or any of the Security
Documents as a condition to any action, inaction, condition or event, except as
otherwise specifically provided herein, Agent or Majority Lenders, as
applicable, shall be authorized to give or withhold such consent in their sole
and absolute discretion.
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12.10. Credit Inquiries.
----------------
Borrower hereby authorizes and permits Agent and each Lender to respond to
usual and customary credit inquiries from third parties concerning Borrower or
any of its Subsidiaries.
12.11. Time of Essence.
---------------
Time is of the essence of this Agreement, the Other Agreements and the
Security Documents.
12.12. Entire Agreement.
----------------
This Agreement and the other Loan Documents, together with all other
instruments, agreements and certificates executed by the parties in connection
therewith or with reference thereto, embody the entire understanding and
agreement between the parties hereto and thereto with respect to the subject
matter hereof and thereof and supersede all prior agreements, understandings and
inducements, whether express or implied, oral or written.
12.13. Interpretation.
--------------
No provision of this Agreement or any of the other Loan Documents shall be
construed against or interpreted to the disadvantage of any party hereto by any
court or other governmental or judicial authority by reason of such party having
or being deemed to have structured or dictated such provision.
12.14. Confidentialfty.
---------------
Agent and each Lender shall hold all nonpublic information obtained pursuant
to the requirements of this Agreement in accordance with Agent's and such
Lender's customary procedures for handling confidential information of this
nature and in accordance with safe and sound banking practices and in any event
may make disclosure reasonably required by a prospective participant or assignee
in connection with the contemplated participation or assignment or as required
or requested by any governmental authority or representative thereof or pursuant
to legal process and shall require any such participant or assignee to agree to
comply with this Section 12.14.
12.15. GOVERNING LAW; CONSENT TO FORUM.
-------------------------------
THIS AGREEMENT HAS BEEN NEGOTIATED AND DELIVERED IN AND SHALL BE DEEMED TO
HAVE BEEN MADE IN CHICAGO, ILLINOIS. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WiTH THE LAWS OF THE STATE OF ILLINOIS; PROVIDED,
--------
HOWEVER, THAT IF ANY OF THE COLLATERAL SHALL BE LOCATED IN ANY JURISDICTION
OTHER THAN ILLINOIS, THE LAWS OF SUCH JURISDICTION SHALL GOVERN THE METHOD,
MANNER AND PROCEDURE FOR FORECLOSURE OF AGENT'S LIEN UPON SUCH COLLATERAL AND
THE ENFORCEMENT OF AGENT'S OTHER REMEDIES IN RESPECT OF SUCH COLLATERAL TO THE
EXTENT
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THAT THE LAWS OF SUCH JURISDICTION ARE DIFFERENT FROM OR INCONSISTENT WITH THE
LAWS OF ILLINOIS. AS PART OF THE CONSIDERATION FOR NEW VALUE RECEIVED, AND
REGARDLESS OF ANY PRESENT OR FUTURE DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF
BORROWER, AGENT OR ANY LENDER, BORROWER HEREBY CONSENTS AND AGREES THAT THE
CIRCUIT COURT OF COOK COUNTY, ILLINOIS, OR, AT AGENT'S OPTION, THE UNITED STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS, EASTERN DIVISION, SHALL
HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAiMS OR DISPUTES BETWEEN
BORROWER ON THE ONE HAND AND AGENT OR ANY LENDER ON THE OTHER HAND PERTAINING TO
THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT.
BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY
ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND BORROWER HEREBY WAIVES ANY
OBJECTION WHICH BORROWER MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION,
IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE
--------------------
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH
COURT. BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND
OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH
SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
ADDRESSED TO BORROWER AT THE ADDRESS SET FORTH IN THIS AGREEMENT AND THAT
SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF BORROWER'S ACTUAL
RECEIPT THEREOF OR 3 DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE
PREPAID. NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO AFFECT THE
RIGHT OF AGENT OR ANY LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY AGENT OR ANY LENDER OF ANY
JUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS
AGREEMENT TO ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR JURISDICTION.
12.16. WAIVERS BY BORROWER.
-------------------
BORROWER WAIVES (i) THE RIGHT TO TRIAL BY JURY (WHICH AGENT AND EACH LENDER
HEREBY ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAiM OF ANY KIND
ARISING OUT OF OR RELATED TO ANY OF THE LOAN DOCUMENTS, THE OBLIGATIONS OR THE
COLLATERAL; (ii) PRESENTMENT, DEMAND AND PROTEST AND NOTICE OF PRESENTMENT,
PROTEST, DEFAULT, NON PAYMENT, MATURITY, RELEASE, COMPROMISE, SETTLEMENT,
EXTENSION OR RENEWAL OF ANY OR ALL COMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS,
DOCUMENTS, INSTRUMENTS, CHATTEL PAPER AND GUARANTIES AT ANY TIME HELD BY
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AGENT OR ANY LENDER ON WHICH BORROWER MAY IN ANY WAY BE LIABLE AND HEREBY
RATIFIES AND CONFIRMS WHATEVER AGENT OR ANY LENDER MAY DO IN THIS REGARD; (iii)
NOTICE PRIOR TO AGENT'S TAKING POSSESSION OR CONTROL OF THE COLLATERAL OR ANY
BOND OR SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING AGENT TO
EXERCISE ANY OF AGENT'S REMEDIES; (iv) THE BENEFIT OF ALL VALUATION,
APPRAISEMENT AND EXEMPTION LAWS; AND (v) NOTICE OF ACCEPTANCE HEREOF. BORROWER
ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT TO AGENT'S AND
EACH LENDER'S ENTERING INTO THIS AGREEMENT AND ThAT AGENT AND EACH LENDER IS
RELYING UPON THE FOREGOING WAIVERS IN ITS FUTURE DEALINGS WITH BORROWER.
BORROWER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVERS WITH
ITS LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
12.17. Advertisement.
-------------
Borrower hereby authorizes Agent to publish the name of Borrower and the
amount of the credit facility provided hereunder in any "tombstone" or
comparable advertisement which Agent elects to publish.
-54-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed on the day and
year specified at the beginning of this Agreement.
BORDEN CHEMICALS AND PLASTICS
OPERATING LIMITED PARTNERSHIP, a
Delaware limited partnership
By: BCP MANAGEMENT, INC., a Delaware
corporation, its general partner
By /s/ [ILLEGIBLE]^^
---------------------------
Its CFO
--------------------------
<PAGE>
FLEET CAPITAL CORPORATION, a Rhode Island
corporation, as Agent and a Lender
By /s/ [ILLEGIBLE]^^
---------------------
Title Senior Vice President
---------------------
Revolving Loan Commitment: $43,000,000
<PAGE>
CONGRESS FINANCIAL CORPORATION
(CENTRAL)
By /s/ [ILLEGIBLE]^^
-------------------
Title VP
-------------------
Revolving Loan Commitment: $20,000,000
<PAGE>
HELLER FINANCIAL, INC.
By /s/ [ILLEGIBLE]^^
------------------------
Title Vice President
------------------------
Revolving Loan Commitment: S 15,000,000
<PAGE>
PNC BANK NA.
By /s/ [ILLEGIBLE]^^
----------------------
Title Vice President
----------------------
Revolving Loan Commitment: $22,000,000
<PAGE>
APPENDIX A
GENERAL DEFINITIONS
When used in the Loan and Security Agreement dated as of March 31, 2000,
by and among Fleet Capital Corporation, individually and as Agent, the other
financial institutions which are or become parties thereto and Borden Chemicals
and Plastics Operating Limited Partnership, the following terms shall have the
following meanings (terms defined in the singular to have the same meaning when
used in the plural and vice versa):
Account Debtor - any Person who is or may become obligated under or on
--------------
account of an Account.
Accounts - (1) 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).
Affiliate - a Person (other than a Subsidiary): (i) which directly or
---------
indirectly through one or more intermediaries controls, or is controlled by,
or is under common control with, a Person; (ii) which beneficially owns or
holds 10% or more of any class of the Voting Stock of a Person; or (iii) 10%
or more of the Voting Stock (or in the case of a Person which is not a
corporation, 10% or more of the equity interest) of which is beneficially
owned or held by a Person or a Subsidiary of a Person.
Agent - Fleet Capital Corporation in its capacity as agent for the
-----
Lenders under the Agreement and any successor in that capacity appointed
pursuant to subsection 11.11.
Agreement - the Loan and Security Agreement referred to in the first
---------
sentence of this Appendix A, all Exhibits and Schedules thereto and this
Appendix A, as each of the same may be amended from time to time.
Alternate Base Rate - the higher of (i) the rate of interest announced
-------------------
or quoted by Bank from time to time as its prime rate for commercial loans,
whether or not such rate is the lowest rate charged by Bank to its most
preferred borrowers, and if such prime rate for commercial loans is
discontinued by Bank as a standard, a comparable reference rate designated
by Bank in good faith as a substitute therefor shall be the Alternative Base
Rate, and (ii) the Federal Funds Rate plus .50%.
----
<PAGE>
Applicable Margin - from the Closing Date to, but not including, the first
-----------------
Adjustment Date (as hereinafter defined) the percentages set forth below with
respect to the Base Rate Portion and the LIBOR Portions:
Base Rate Portion .25%
LIBOR Portions 2.25%
The percentages set forth above will be adjusted effective on the first day
of the month following delivery by Borrower to Agent of the financial statements
required to be delivered pursuant to subsection 8.1.3(ii) of the Agreement for
each September, December, March and June beginning with the month ending
September 30, 2000 (each such date an "Adjustment Date"), effective
prospectively, by reference to the EBITDA/Interest Ratio for the quarter most
recently ending in accordance with the following:
EBITDA/ LIBOR Base Rate Portions
Interest Ratio Portions -------------------
-------------- ---------
less than l.5x 2.50% .50%
equal to or greater 2.25% .25%
than 1.5x but less
than 2.0x
equal to or greater 2.00% 0%
than 2.0x but less
than 2.5x
equal to or greater 1.75% 0%
than 2.5x but less
than 3.0x
equal to or greater 1.50% 0%
than 3.0x but less
than 4.0x
4.0x or greater 1.25% 0%
provided that, if Borrower fails to deliver the financial statements required to
- --------
be delivered pursuant to subsection 8.1.3(ii) of the Agreement on or before the
due date thereof, the interest rate shall automatically adjust to the highest
interest rate set forth above, effective prospectively from such due date until
the next Adjustment Date.
Availability - the amount of additional money which Borrower is entitled to
------------
borrow from time to time as Revolving Credit Loans, such amount being the
difference derived when the sum of the principal amount of Revolving Credit
Loans
A-2
<PAGE>
then outstanding (including any amounts which Agent or any Lender may have paid
for the account of Borrower pursuant to any of the Loan Documents and which have
not been reimbursed by Borrower), the LC Amount and any reserves is subtracted
from the Borrowing Base. If the amount outstanding is equal to or greater than
the Borrowing Base, Availability is 0. When calculating "Availability" for
purposes of subsection 8.3, the reference to the term "Borrowing Base" shall
mean the amount generated by clause (ii) of the definition of that term, and, in
Agent's discretion, Availability shall be reduced by the amount of all overdue
trade payables.
Bank - Fleet National Bank.
----
Base Rate Portion - that portion of the Revolving Credit Loans that is not
-----------------
subject to a LIBOR Option.
BCPM - as defined in subsection 10.1.10 of the Agreement.
----
Borrowing Base - as at any date of determination thereof, an amount equal to
--------------
the lesser of:
(i) $100,000,000; or
(ii) an amount equal to 85% of the net amount of Eligible Accounts
outstanding at such date, plus 65% of the net amount of Eligible Inventory
----
exclusive of "caustic," "additive" and "solvent" inventories at such date,
plus 50% of the net amount of Eligible Inventory consisting of "caustic,"
----
"additive" and "solvent" inventories at such date, plus the lesser of
----
$17,000,000 and 5% of "Consolidated Net Tangible Assets" (as defined in the
Indenture referred to on Exhibit 8.23) as of the last day of the calendar
------------
quarter most recently ended and for which financial statements have been
delivered under subsection 8.1.3(ii). Notwithstanding the foregoing, the
aggregate amount attributable to Eligible Inventory pursuant to this clause
(ii) will not exceed 60% of the Borrowing Base.
For purposes hereof, the net amount of Eligible Accounts at any time shall
be the face amount of such Eligible Accounts less any and all returns, rebates,
discounts (which may, at Agent's option, be calculated on shortest terms),
credits, allowances or excise taxes of any nature at any time issued, owing,
claimed by Account Debtors, granted, outstanding or payable in connection with
such Accounts at such time. For purposes hereof, the amount of Eligible
Inventory shall be determined on a first-in, first-out, lower of cost or market
basis in accordance with GAAP.
Accounts and Inventory acquired by Borrower pursuant to any merger,
consolidation or acquisition consummated pursuant to subsection 8.2.1 or 8.2.11
Shall not be Eligible Accounts or Eligible Inventory unless consented to by
Agent in writing.
A-3
<PAGE>
Business Day - (i) when used with respect to the LIBOR Option, shall mean a
------------
day on which dealings may be effected in deposits of United States Dollars in
the London interbank foreign currency deposits market and on which Agent is
conducting and other banks may conduct business in London, England, in the State
of Wisconsin or the State of Illinois and (ii) when used with respect to any
other provision of the Agreement, any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the State of Wisconsin or the State
of Illinois or is a day on which banking institutions located in either of such
states are closed.
Capital Expenditures - expenditures made or liabilities incurred for the
--------------------
acquisition of any fixed assets or improvements, replacements, substitutions or
additions thereto which have a useful life of more than one year, to the extent
reflected in the Borrower's financials as additions to plant property and
equipment in accordance with GAAP including the total principal portion of
Capitalized Lease Obligations to the extent first recorded in the period with
respect to which Capital Expenditures is being recorded.
Capitalized Lease Obligation - any Indebtedness represented by obligations
----------------------------
under a lease that is capitalized for financial reporting purposes in accordance
with GAAP.
Cash Interest Expense - with respect to any period of determination, Limited
---------------------
Partner's and its Subsidiaries' Consolidated interest expense paid in cash for
such period (net of interest income), including, without limitation, the
interest portion of Capitalized Lease Obligations, as determined in accordance
with GAAP.
Closing Date - the date on which all of the conditions precedent in Section
------------
9 of the Agreement are satisfied and the initial Loan is made or the initial
Letter of Credit or LC Guaranty is issued under the Agreement.
Code - the Uniform Commercial Code as adopted and in force in the State of
----
Illinois, as from time to time in effect.
Collateral - all of the Property and interests in Property described in
----------
Section 5 of the Agreement, and all other Property and interests in Property, if
any, that now or hereafter secure the payment and performance of any of the
Obligations.
Consolidated - the consolidation in accordance with GAAP of the accounts or
------------
other items as to which such term applies.
Current Assets - at any date means the amount at which all of the current
--------------
assets of a Person would be properly classified as current assets shown on a
balance sheet at such date in accordance with GAAP.
Default - an event or condition the occurrence of which would, with the
-------
lapse of time or the giving of notice, or both, become an Event of Default.
A-4
<PAGE>
Default Rate - as defined in subsection 2.1.2 of the Agreement.
------------
Distribution - in respect of any Person means and includes: (i) the payment
------------
of any dividends or other distributions on Securities (except distributions in
such Securities) and (ii) the redemption or acquisition of Securities of such
Person, as the case may be, unless made contemporaneously from the net proceeds
of the sale of Securities. Distribution shall also include, in the case of
Borrower and its Subsidiaries, the making of any prepayment, redemption or
acquisition of the 9.5% Notes Due 2005 of Borrower and BCP Finance Corporation,
a Delaware corporation, or any obligations relating thereto, which 9.5% Notes
Due 2005 were issued pursuant to the Indenture dated as of May 1, 1995.
Dominion Account - a special bank account or accounts of Agent established
----------------
by Borrower pursuant to subsection 6.2.4 of the Agreement at banks selected by
Borrower, but acceptable to Agent in its reasonable discretion, and over which
Agent shall have sole and exclusive access and control for withdrawal purposes.
EBITDA - with respect to any period, the sum of Limited Partner's and its
------
Subsidiaries' Consolidated net earnings (or loss) before (i) interest expense,
income taxes, depreciation and amortization for said period (but excluding any
extraordinary gains for such period), (ii) non-recurring charges and losses
associated with changes in accounting practices and dispositions of Borrower's
nitrogen or methanol businesses and (iii) additional non-recurring or non-cash
losses or charges and extraordinary losses not to exceed (in the case of all
items set forth in this clause (iii) taken as a whole) $ 10,000.000, all as
determined in accordance with GAAP.
EBITDA/Interest Ratio - EBITDA for the twelve month period most recently
---------------------
ended divided by Cash Interest Expense for such period; provided that when
------- --------
determining the EBITDA/Interest Ratio as of September 30, 2000, the nine month
period then ended shall be substituted for the twelve month period then ended.
Eligible Account - an Account arising in the ordinary course of the business
----------------
of Borrower from the sale of goods or rendition of services which Agent, in its
reasonable credit judgment, deems to be an Eligible Account. Without limiting
the generality of the foregoing, no Account shall be an Eligible Account if:
(1) it arises out of a sale made by Borrower to a Subsidiary of Borrower
or an Affiliate of Borrower (other than Borden, Inc.) or to a Person
controlled by an Affiliate of Borrower (other than Borden, Inc.); or
(ii) it remains unpaid more than 90 days after the original invoice date
(120 days for not more than $1,000,000 of Accounts at any one time) or more
than 60 days after the original due date; or
A-5
<PAGE>
(iii) it is owed by an Account Debtor and the total unpaid Accounts of such
Account Debtor exceed 25% of the net amount of all Eligible Accounts, but only
to the extent of such excess; or
(iv) it is owed by an Account Debtor and more than 25% of the total unpaid
Accounts of such Account Debtor remain unpaid more than 60 days after the
original due date; or
(v) any covenant, representation or warranty contained in the Agreement
with respect to such Account has been breached; or
(vi) the Account Debtor is also a creditor or supplier of Borrower or any
Subsidiary of Borrower, or the Account Debtor has disputed liability with
respect to such Account, or the Account Debtor has made any claim or deduction
with respect to any other Account due from such Account Debtor to Borrower or
any Subsidiary of Borrower, or the Account otherwise is or may become subject to
right of setoff by the Account Debtor, provided, that any such Account shall be
--------
eligible to the extent such amount thereof exceeds such contract, dispute,
claim, deduction, setoff or similar right, provided, that when calculating the
--------
foregoing the then outstanding amount owing by Borrower to BASF with respect to
the purchase by Borrower of the acetylene plant in Geismar, Louisiana will be
treated as a claim of BASF and therefor reduce Eligible Accounts, and provided
--------
that any such Account owing by Borden, Inc. shall be eligible following receipt
by Agent of a "no-offset" letter from Borden, Inc. in a form satisfactory to
Agent; or
(vii) the Account Debtor has commenced a voluntary case under the federal
bankruptcy laws, as now constituted or hereafter amended, or made an assignment
for the benefit of creditors, or a decree or order for relief has been entered
by a court having jurisdiction in the premises in respect of the Account Debtor
in an involuntary case under the federal bankruptcy laws, as now constituted or
hereafter amended, or any other petition or other application for relief under
the federal bankruptcy laws, as now constituted or hereafter amended, has been
filed against the Account Debtor, or if the Account Debtor has failed, suspended
business, ceased to be Solvent, or consented to or suffered a receiver, trustee,
liquidator or custodian to be appointed for it or for all or a significant
portion of its assets or affairs; or
(viii) it arises from a sale to an Account Debtor outside the United States;
or
(ix) (a) it arises from a sale to the Account Debtor on a bill-and-hold or
consignment basis; or (b) any Account that is subject to a reserve established
by Borrower or any of its Subsidiaries for potential returns or refunds, to the
extent of such reserve; or
A-6
<PAGE>
(x) the Account Debtor is the United States of America or any
department, agency or instrumentality thereof, unless Borrower or any such
Subsidiary, as applicable, assigns its right to payment of such Account to
Agent, in a manner satisfactory to Agent, in its reasonable credit judgment, so
as to comply with the Assignment of Claims Act of 1940 (31 U.S.C. (S)203 et
--
seq., as amended); or
- ---
(xi) it is not at all times subject to Agent's duly perfected, first
priority security interest and to no other Lien that is not a Permitted Lien; or
(xii) the goods giving rise to such Account have not been delivered to and
accepted by the Account Debtor or the services giving rise to such Account have
not been performed by Borrower and accepted by the Account Debtor or the Account
otherwise does not represent a final sale; or
(xiii) the Account is evidenced by chattel paper or an instrument of any
kind, or has been reduced to judgment; or
(xiv) the goods or services giving rise to such Account were not produced
or rendered in accordance with the terms and conditions of the applicable
purchase order, contract or other document relating thereto and forming a part
of the agreement between Borrower and the Account Debtor; or
(xv) the Account is not for a liquidated amount maturing on the due date
set forth in the applicable invoice; or
(xvi) there are facts, events or occurrences which in any way impair the
validity or enforceability of the Account or tend to reduce the amount payable
thereunder; or
(xvii) the Account Debtor did not have the capacity to contract at the time
any contract, agreement or document giving rise to the Account was executed or
otherwise agreed upon; or
(xviii) there are proceedings or actions which are threatened or pending
against the Account Debtor thereunder which might result in any material adverse
change in such Account Debtor's financial condition or the collectibility of
such Account; or
(xix) Borrower or a Subsidiary of Borrower has made any agreement with the
Account Debtor for any extension, compromise, settlement or modification of the
Account or any deduction therefrom, except for discounts or allowances which are
made in the ordinary course of business for prompt payment or to meet
competitive industry pricing and which discounts or allowances are reflected in
the calculation of the face value of each invoice related to such Account.
A-7
<PAGE>
Eligible Inventory - Inventory of a Borrower (other than scrap resin, boxes
------------------
and other packaging materials and supplies, tooling, samples and literature) if:
(i) it is raw materials, work in process that is readily marketable in
its current form or finished goods;
(ii) it is in good, new and saleable condition;
(iii) it is not spoiled, slow-moving, obsolete or unmerchantable as
determined by Agent using reasonable criteria;
(iv) it meets all standards imposed by any governmental agency or
authority;
(v) it conforms in all respects to any covenants, warranties and
representations set forth in the Agreement;
(vi) it is at all times subject to Agent's duly perfected, first
priority security interest and no other Lien except a Permitted Lien; and
(vii) it is situated at a location in compliance with the Agreement, or
is in transit between facilities of Borrower or in transit to terminals and
consignees (it being understood that all other Inventory in transit of
Borrower will not be Eligible Inventory), provided that Inventory situated
--------
at a location not owned by Borrower will be Eligible Inventory only if Agent
has received a satisfactory landlord's agreement or bailee letter, as
applicable, with respect to such location, provided that Inventory located
--------
at vendors will not be Eligible under any circumstances and provided that
--------
the maximum amount of Inventory located at terminals and with consignees
which can be Eligible will be $16,000,000 in the aggregate (increased by up
to an additional $9,000,000 in the discretion of Agent).
Environmental Laws - all federal, state and local laws, rules, regulations,
------------------
ordinances, orders and consent decrees relating to pollution or the protection
of the environment.
Equipment - all machinery, apparatus, equipment, fittings, furniture,
---------
fixtures, motor vehicles and other tangible personal Property (other than
Inventory) of every kind and description used in the operations of Borrower or
owned by Borrower or in which Borrower has an interest, whether now owned or
hereafter acquired by Borrower and wherever located, and all parts, accessories
and special tools and all increases and accessions thereto and substitutions and
replacements therefor.
A-8
<PAGE>
ERISA - the Employee Retirement Income Security Act of 1974, as amended, and
-----
all rules and regulations from time to time promulgated thereunder.
Event of Default - as defined in Section 10.1 of the Agreement.
----------------
Federal Funds Rate - shall mean, for any day, the weighted average of the
------------------
per annum rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as published on the
next succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day that is a Business Day, the average of
the quotations for the day of such transactions received by Agent from 3 federal
funds brokers of recognized standing selected by it.
GAAP - generally accepted accounting principles in the United States of
----
America in effect from time to time.
General Intangible1es - all personal property of Borrower (including
---------------------
things in action) other than goods, Accounts, chattel paper, documents,
instruments and money, whether now owned or hereafter created or acquired by
Borrower.
Guarantors - each Person who now or hereafter guarantees payment or
----------
performance of the whole or any part of the Obligations in favor of Agent.
Guaranty Agreements - each guaranty hereafter executed by any Guarantor in
-------------------
favor of Agent.
Hedge Agreements - interest rate swaps, caps or collar agreements, interest
----------------
rate future or option contracts, currency swap agreements, currency future or
option contracts, commodities swap agreements, commodity future or option
contracts and other similar agreement entered into by Borrower to protect
Borrower or any of its Subsidiaries against fluctuations in interest rates,
currency exchange rates and commodity rates.
Indebtedness - as applied to a Person means, without duplication:
------------
(1) all items which in accordance with GAAP would be included in
determining total liabilities as shown on the liability side of a balance
sheet of such Person as at the date as of which Indebtedness is to be
determined, including, without limitation, Capitalized Lease Obligations;
(ii) all obligations of other Persons which such Person has guaranteed,
(iii) all reimbursement obligations in connection with letters of
credit or letter of credit guaranties issued for the account of such Person;
(iv) all obligations under Hedge Agreements; and
A-9
<PAGE>
(v) in the case of Borrower (without duplication), the Obligations.
Intellectual Property - means: (i) United States, international, and foreign
---------------------
patents and patent applications, (ii) trademarks and service marks, whether or
not registered, including all common law rights, and registrations and
applications for registration thereof and other source identifiers (including
Internet domain names), (iii) copyrights, whether or not registered, and
registrations and applications for registration thereof, including copyrights in
computer software and databases and (iv) confidential and proprietary
information, including trade secrets.
Inventory - all of the inventory of Borrower, whether now owned or hereafter
---------
acquired (including inventory purchased on account), including, but not limited
to, all goods intended for sale or lease by Borrower, or for display or
demonstration; all work in process; all raw materials and other materials and
supplies of every nature and description used or which might be used in
connection with the manufacture, printing, packing, shipping, advertising,
selling, leasing or furnishing of such goods or otherwise used or consumed in
the business of Borrower; and all documents evidencing and General Intangibles
relating to any of the foregoing, whether now owned or hereafter acquired by
Borrower; in each case to the extent constituting "inventory" under Section 9-
109(4) of the Uniform Commercial Code as in effect in the State of New York.
Investment Property - all of the investment property of Borrower, whether
-------------------
now owned or hereafter acquired, including, but not limited to, all Securities
(certificated or uncertificated), securities accounts, securities entitlements,
commodity accounts and commodity contracts.
LC Amount - at any time, the aggregate undrawn face amount of all Letters of
---------
Credit and LC Guaranties then outstanding.
LC Guaranty - any guaranty pursuant to which Agent or any Affiliate of Agent
-----------
shall guaranty the payment or performance by Borrower of its reimbursement
obligation under any letter of credit.
LC Obligations - Any Obligations that arise from any draw against any Letter
--------------
of Credit or against any Letter of Credit supported by an LC Guaranty.
Legal Requirement - any requirement imposed upon Agent or any Lender by any
-----------------
law of the United States of America or the United Kingdom or by any regulation,
order, interpretation, ruling or official directive (whether or not having the
force of law) of the Federal Reserve Board, the Bank of England or any other
board, central bank or governmental or administrative agency, institution or
authority of the United States of America, the United Kingdom or any political
subdivision of either thereof.
Letter of Credit - any letter of credit issued by Agent or any Affiliate of
----------------
Agent for the account of Borrower.
A-10
<PAGE>
LIBOR Interest Payment Date - the first day of each calendar month during
---------------------------
the applicable LIBOR Period and the first day of the calendar month immediately
following termination of the LIBOR Period.
LIBOR Option - the option granted pursuant to subsection 2.3 of the
------------
Agreement to have the interest on all or any portion of the principal amount of
the Loans based on a LIBOR Rate.
LIBOR Period - any period of 1 month, 2, months, 3 months or 6 months
------------
commencing on a Business Day, selected as provided in subsection 2.3(i);
provided, that no LIBOR Period shall extend beyond the last day of the Term,
- --------
unless Borrower and Lenders have agreed to an extension of the Term beyond the
expiration of the LIBOR Period in question. If any LIBOR Period so selected
shall end on a date that is not a Business Day, such LIBOR Period shall instead
end on the next preceding or succeeding Business Day as determined by Agent in
accordance with the then current banking practice in London; provided, that
--------
Borrower shall not be required to pay double interest, even though the preceding
LIBOR Period ends and the new LIBOR Period begins on the same day. Each
determination by Agent of the LIBOR Period shall, in the absence of manifest
error, be conclusive.
LIBOR Portion - that portion of the Revolving Credit Loans specified in a
-------------
LIBOR Request (including any portion of Revolving Credit Loans which is being
borrowed by Borrower concurrently with such LIBOR Request) which is not less
than $500,000 and is an integral multiple of $100,000, which does not exceed the
outstanding balance of Revolving Credit Loans not already subject to a LIBOR
Option and, which, as of the date of the LIBOR Request specifying such LIBOR
Portion, has met the conditions for basing interest on the LIBOR Rate in Section
2.3 of the Agreement and the LIBOR Period of which was commenced and not
terminated.
LIBOR Rate - with respect to any LIBOR Portion for the related LIBOR Period,
----------
an interest rate per annum (rounded upwards, if necessary, to the next higher
1/8 of 1%) equal to the product of (i) the Base LIBOR Rate (as hereinafter
defined) multiplied by (ii) Statutory Reserves. For purposes of this definition,
----------
the term "Base LIBOR Rate" shall mean the rate (rounded upwards, if necessary,
to the next higher 1/8 of 1%) at which deposits of U.S. dollars approximately
equal in principal amount to the LIBOR Portion specified in the applicable LIBOR
Request are offered to Agent by prime banks in the London interbank foreign
currency deposits market at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such LIBOR Period, for delivery on the first
day of such LIBOR Period. Each determination by Agent of any LIBOR Rate shall,
in the absence of manifest error, be conclusive.
LIBOR Request - a notice in writing (or by telephone confirmed by telex,
-------------
telecopy or other facsimile transmission on the same day as the telephone
request) from Borrower to Agent requesting that interest on a Revolving Credit
Loan be based
A-ll
<PAGE>
on the LIBOR Rate, specifying: (i) the first day of the LIBOR Period; (ii) the
length of the LIBOR Period consistent with the definition of that term; and
(iii) the dollar amount of the LIBOR Portion, consistent with the definition of
such terms.
Lien - any interest in Property securing an obligation owed to, or a claim
----
by, a Person other than the owner of the Property, whether such interest is
based on common law, statute or contract. The term "Lien" shall also include
rights of seller under conditional sales contracts or title retention
agreements, reservations, exceptions, encroachments, easements, rights-of-way,
covenants, conditions, restrictions, leases and other title exceptions and
encumbrances affecting Property. For the purpose of the Agreement, Borrower
shall be deemed to be the owner of any Property which it has acquired or holds
subject to a conditional sale agreement or other arrangement pursuant to which
title to the Property has been retained by or vested in some other Person for
security purposes.
Limited Partner - Borden Chemicals and Plastics Limited Partnership, a
---------------
Delaware limited partnership.
Loan Account - the loan account established on the books of Agent pursuant
------------
to Section 3.5 of the Agreement.
Loan Documents - the Agreement, the Other Agreements and the Security
--------------
Documents.
Loans - all loans and advances of any kind made by Agent or any Lender
-----
pursuant to the Agreement.
Majority Lenders - as of any date, Lenders holding 51% or more of the
----------------
aggregate Revolving Loan Commitments, provided that if at any time there are
--------
three or fewer Lenders, at least two of such Lenders shall be required to
constitute "Majority Lenders".
Material Adverse Effect - (i) a material adverse effect on the business,
-----------------------
financial condition, operation, performance or properties of Borrower, (ii) a
material adverse effect on the rights and remedies of Agent or Lenders under the
Loan Documents, or (iii) the material impairment of the ability of Borrower to
perform their obligations hereunder or under any Loan Document.
Money Borrowed - means, without duplication, (i) Indebtedness arising from
--------------
the lending of money by any Person to Borrower or any of its Subsidiaries; (ii)
Indebtedness, whether or not in any such case arising from the lending by any
Person of money to Borrower or any of its Subsidiaries, (1) which is represented
by notes payable or drafts accepted that evidence extensions of credit, (2)
which constitutes obligations evidenced by bonds, debentures, notes or similar
instruments, or (3) upon which interest charges are customarily paid (other than
accounts payable) or that was issued or assumed as full or partial payment for
Property; (iii) Indebtedness that
A-12
<PAGE>
constitutes a Capitalized Lease Obligation; (iv) reimbursement obligations with
respect to letters of credit or guaranties of letters of credit and (v)
Indebtedness of Borrower or any of its Subsidiaries under any guaranty of
obligations that would constitute Indebtedness for Money Borrowed under clauses
(i) through (iii) hereof, if owed directly by Borrower or any of its
Subsidiaries. Money Borrowed shall not include trade payables or accrued
expenses.
Mortgages - All mortgages, deeds of trust and comparable documents now or at
---------
any time hereafter securing the whole or any part of the Obligations.
Multiemployer Plan - has the meaning set forth in Section 4001(a)(3) of
------------------
ER1SA.
Obligations - all Loans, all LC Obligations, the LC Amount and all other
-----------
advances, debts, liabilities, obligations, covenants and duties, together with
all interest, fees and other charges thereon, owing, arising, due or payable
from Borrower to Agent, for its own benefit and the benefit of the Lenders, or
from Borrower to Bank, of any kind or nature, present or future, whether or not
evidenced by any note, guaranty or other instrument, in each case arising under
the Agreement or any of the other Loan Documents, whether direct or indirect
(including those acquired by assignment), absolute or contingent, primary or
secondary, due or to become due, now existing or hereafter arising and however
acquired, including without limitation any obligations owing to Agent, any
Lender or Bank under any Hedge Agreement.
Other Agreements - any and all agreements, instruments and documents (other
----------------
than the Agreement and the Security Documents), heretofore, now or hereafter
executed by Borrower, any Subsidiary of Borrower or any other third party and
delivered to Agent in respect of the transactions contemplated by the Agreement.
Permitted Liens - any Lien of a kind specified in subsection 8.2.5 of the
---------------
Agreement.
Permitted Purchase Money Indebtedness - Purchase Money Indebtedness of
-------------------------------------
Borrower incurred after the date hereof which is secured by a Purchase Money
Lien and the principal amount of which, when aggregated with the principal
amount of all other such Indebtedness and Capitalized Lease Obligations of
Borrower and its Subsidiaries at the time outstanding, does not exceed
$50,000,000. For the purposes of this definition, the principal amount of any
Purchase Money Indebtedness consisting of capitalized leases (as opposed to
operating leases) shall be computed as a Capitalized Lease Obligation.
Person - an individual, partnership, corporation, limited liability company,
------
joint stock company, land trust, business trust, or unincorporated organization,
or a government or agency or political subdivision thereof.
A-13
<PAGE>
Plan - an employee benefit plan now or hereafter maintained for employees of
----
Borrower or any of its Subsidiaries that is covered by Title IV of ERISA.
Projections - Borrower's forecasted Consolidated (i) balance sheets, (ii)
-----------
profit and loss statements, (iii) cash flow statements, and (iv) capitalization
statements, all prepared on a consistent basis with the historical financial
statements of Borrower and its Subsidiaries, together with appropriate
supporting details and a statement of underlying assumptions.
Property - any interest in any kind of property or asset, whether real,
--------
personal or mixed, or tangible or intangible.
Purchase Money Indebtedness - means and includes (i) Indebtedness (other
---------------------------
than the Obligations) for the payment of all or any part of the purchase price
of any fixed assets, (ii) any Indebtedness (other than the Obligations) incurred
at the time of or within 10 days prior to or after the acquisition of any fixed
assets for the purpose of financing all or any part of the purchase price
thereof, and (iii) any renewals, extensions or refinancings thereof, but not any
increases in the principal amounts thereof outstanding at the time.
Purchase Money Lien - a Lien upon fixed assets which secures Purchase Money
--------------------
Indebtedness, but only if such Lien shall at all times be confined solely to the
fixed assets the purchase price of which was financed through the incurrence of
the Purchase Money Indebtedness secured by such Lien.
Reportable Event - any of the events set forth in Section 4043(b) of ERISA.
----------------
Restricted Investment - any investment made in cash or by delivery of
----------------------
Property to any Person, whether by acquisition of stock, Indebtedness or other
obligation or Security, or by loan, advance or capital contribution, or
otherwise, or in any Property except the following:
(i) investments by Borrower, to the extent existing on the Closing
Date, in one or more Subsidiaries of Borrower;
(ii) Property to be used in the ordinary course of business;
(iii) Current Assets arising from the sale of goods and services in
the ordinary course of business of Borrower or any of its Subsidiaries;
(iv) investments in direct obligations of the United States of America,
or any agency thereof or obligations guaranteed by the United States of
America, provided that such obligations mature within one year from the date
--------
of acquisition thereof;
A-14
<PAGE>
(v) investments in certificates of deposit maturing within one year
from the date of acquisition and fully insured by the Federal Deposit
Insurance Corporation;
(vi) investments in commercial paper given the highest rating by a
national credit rating agency and maturing not more than 270 days from the
date of creation thereof;
(vii) investments in money market, mutual or similar funds having
assets in excess of $100,000,000 and the investments of which are limited to
investment grade securities;
(viii) investments otherwise expressly permitted pursuant to the
Agreement; and
(ix) other investments made at such time as Borrower has demonstrated
to the satisfaction of Agent that average daily Availability, during the
immediately preceding ninety days, exceeded $50,000,000 and after giving
effect to the making of such investment Availability will exceed
$50,000,000.
Revolving Credit Loan - a Loan made by Lender pursuant to Section 1.1 of the
---------------------
Agreement.
Revolving Loan Commitment - With respect to any Lender, the amount of such
-------------------------
Lender's commitment pursuant to subsection 1.1.1 of the Agreement, as set forth
below such Lender's name on the signature page hereof.
Revolving Loan Percentage - With respect to each Lender, the percentage
--------------------------
equal to the quotient of such Lender's Revolving Loan Commitment divided by the
------- --
aggregate of all Revolving Loan Commitments.
Security(ies) - shall mean, collectively all shares of stock, partnership
------------
interests, membership interests, membership units or other ownership interests.
Security Documents - the Guaranty Agreements, the Mortgages and all other
------------------
instruments and agreements now or at any time hereafter securing the whole or
any part of the Obligations.
Solvent - as to any Person, such Person (i) owns Property whose fair
-------
saleable value is greater than the amount required to pay all of such Person's
Indebtedness (including contingent debts discounted based on the likelihood of
their having to be paid), (ii) is able to pay all of its Indebtedness as such
Indebtedness matures and (iii) has capital sufficient to carry on its business
and transactions and all business and transactions in which it is about to
engage.
A-15
<PAGE>
Statutory Reserves - a fraction (expressed as a decimal) the numerator
------------------
of which is the number one, and the denominator of which is the number one minus
-----
the aggregate of the maximum reserve percentages (including, without limitation,
any marginal, special, emergency or supplemental reserves), expressed as a
decimal, established by the Board of Governors of the Federal Reserve System and
any other banking authority to which Lender is subject for Eurocurrency
Liabilities (as defined in Regulation D of the Board of Governors of the Federal
Reserve System or any successor thereto). Such reserve percentages shall
include, without limitation, those imposed under such Regulation D. LIBOR
Portions shall be deemed to constitute Eurocurrency Liabilities and as such
shall be deemed to be subject to such reserve requirements without benefit of or
credit for proration, exceptions or offsets which may be available from time to
time to any Lender under such Regulation D. Statutory Reserves shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.
Subsidiary - any Person of which another Person owns, directly or
----------
indirectly through one or more intermediaries, more than 50% of the Voting
Stock at the time of determination.
Tax - in relation to any LIBOR Portion and the applicable LIBOR Rate,
---
any tax, levy, impost, duty, deduction, withholding or charges of whatever
nature required by any Legal Requirement (i) to be paid by any Lender
and/or (ii) to be withheld or deducted from any payment otherwise required
hereby to be made by Borrower to any Lender; provided, that the term "Tax"
--------
shall not include any taxes imposed upon the income of any Lender or
franchise taxes.
Term - as defined in Section 4.1 of the Agreement.
----
Total Credit Facility - $100,000,000.
---------------------
Voting Stock - Securities of any class or classes of a corporation,
------------
limited partnership or limited liability company or any other entity the
holders of which are ordinarily, in the absence of contingencies, entitled
to vote with respect to the election of corporate directors (or Persons
performing similar functions).
Other Terms. All other terms contained in the Agreement shall have,
-----------
when the context so indicates, the meanings provided for by the Code to the
extent the same are used or defined therein.
Certain Matters of Construction. The terms "herein", "hereof" and
-------------------------------
"hereunder" and other words of similar import refer to the Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. The section titles, table of contents and
list of exhibits appear as a matter of convenience only and shall not affect the
interpretation of the Agreement. All references to statutes and related
regulations shall include any amendments of same and any successor statutes and
regulations.
A-16
<PAGE>
All references to any of the Loan Documents shall include any and all
modifications thereto and any and all extensions or renewals thereof.
A-17
<PAGE>
LIST OF EXHIBITS AND SCHEDULES
Exhibit 6.1.1 Borrower's Business Locations
Exhibit 6.3 Inventory Report
Exhibit 7.1.1 Jurisdictions in Which Borrower and Its Subsidiaries Are
Authorized to Do Business
Exhibit 7.1.4 Capital Structure of Borrower and each Subsidiary
Exhibit 7.1.5 Names
Exhibit 7.1.13 Surety Obligations
Exhibit 7.1.14 Tax Identification Numbers of Subsidiaries
Exhibit 7.1.15 Brokers' Fees
Exhibit 7.1.16 Patents, Trademarks, Copyrights and Licenses
Exhibit 7.1.19 Contracts Restricting Right to Incur Debts
Exhibit 7.1.20 Litigation
Exhibit 7.1.22 Capitalized and Operating Leases
Exhibit 7.1.23 Pension Plans
Exhibit 7.1.24 Trade Relations
Exhibit 7.1.25 Labor Relations
Exhibit 8.1.3 Compliance Certificate
Exhibit 8.2.3 Existing Indebtedness
Exhibit 8.2.5 Permitted Liens
Exhibit 8.3 Financial Covenants
<PAGE>
EXHIBIT 6.1.1
BUSINESS LOCATIONS
1. Borrower currently has the following business locations, and no others:
Chief Executive Office: Hwy 73, Geismar, LA 70734
Other Locations: 8600 Hwy 1 South, Addis, LA 70710; Hwy 36, Illiopolis, IL
62539
2. Borrower maintains its books and records relating to Accounts and General
Intangibles at: Hwy 73, Geismar, LA 70734
3.. Borrower has had no office, place of business or agent for process located
in any county other than as set forth above, except: see 7. below.
4. Each Subsidiary currently has the following business locations, and no
others:
Chief Executive Office: Hwy 73, Geismar, LA 70734
Other Locations: None
5. Each Subsidiary maintains its books and records relating to Accounts and
General Intangibles at: Hwy 73, Geismar, LA 70734
6. Each Subsidiary has had no office, place of business or agent for process
located in any county other than as set forth above.
Exhibit 6.1.1 - Page 1
<PAGE>
7. The following bailees, warehouseman, similar parties and consignees hold
inventory of Borrower or one of its Subsidiaries:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
Name and Address of Party Nature of Relationship Amount of Inventory Owner of
------------------------- ---------------------- ------------------ --------
Inventory
---------
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
See attached pages. Consignment inventory See attached @ Borrower
and inventory @ 2/29/00.
terminal locations.
- --------------------------------------------------------------------------------------------------
</TABLE>
Exhibit 6.1.1 - Page 2
<PAGE>
Consignment Customers and Value@
Adresses: 2/29/00
AEP Industries $8 10.208
1201 Pine Hill Road
Griffin, GA 30224
Kent Nicholson
AEP Industries $ 425,408
595 Coronation Drive
West Hill, ON Canada
MIE4R9
Cindi Ritter
AEP Industries $ 219,104
12631 156th Street
Edmonton, AB Canada
T5V1EI
Maurice Ryan
Culmac $ 59,211
3720 South Venoy Road
Wayne, MI 48184
Michelle Braidwood
DIAB/Divinycell International $ 21,528
315 Seahawk Drive
DeSoto, TX 75115
Rusty Thompson
Freedom Plastics, Inc. $ 952,248
P.O. Box 1488
215 South Arch Street
Janesville, WI 53547
Mark Schiceim
Exhibit 6.1.1 - Page 3
<PAGE>
ISP Chemicals, Inc. $ 0
Highway 95
Industrial Area
Calvert City, KY 42029
Rita Cannon
Sandusky Limited $105,424
3130 West Monroe Street
Sandusky, OH 44870-1832
Jerry Baum
Domco Tarkett $408,584
Route 94
Vails Gate, NY 12584
Jim Queen
Armstrong World Industries, Inc. $ 61,517
c/o Miller Truck Lines
Highway 99
Stroud, OK 74079
Junior Gilman
Armstrong World Industries, Inc. $ 20,315
c/o A-1 Transfer
3324 North Park Drive
Stillwater, OK 74075
Danny Randolph - mailing address
3111 North Marine St.
Stillwater, OK 74075
E A R Specialty Composites $134,616
Aearo
Corporation
7911 Zionsville Road
Indianapolis, IN 46268
Bill Bogden
Exhibit 6.1.1 - Page 4
<PAGE>
East Tennesse Cartage $21,552
100 Meadowview Lane
Kingsport, TN 37660
Rick Wagner
Lydall, Inc. $16,728
Composite Materials
Division
P.O. Box 599 230 Industrial Park Drive
Covington, TN
38019
Oma Fiedler
Eastman Chemical Co. $40,150
P.O. Box 511 2800 Gap Road Hwy 394
Kingsport, TN 37622 Magnus, AR 72501
Debbie Hileman
Omnova Solutions, Inc. Bulkmatic $ 0
terminal
P.O. Box Omnova Pitcairn Yard, Lease track
Jeanette, PA 15644 #548
Mike Demark Pitcairn, PA 15140
Omnova
Solutions
133 Yorkville Road
East Columbus, MS 39702
Exhibit 6.1.1 -- Page 5
<PAGE>
Terminal
Information:
Acct # Address Phone #
90403 D&S Warehouse 302-731-7440
104 Alan Drive
Harmony Industrial Park
Newark,DE 19711
90409 Delaware Express 410-392-2486
271 Rear Franklin Street
Worcester, MA 01604
90412 Delaware Express 410-392-2486 *There is no
physical address
Edgemoor, DE
90459 Bulkmatic Services 770-441-5060
2325 Weaver Way
Doraville GA 30340
90466 Delaware Express 410-392-2486
500 Kentile Road
South Plainfield, NJ
07080
90473 CSX Bids Terminal 410-392-2486
1205 Centerville Road
Wilmington, DE 19808
At our PDI terminal
in Canada:
We have two transfer stations in Canada and these are their
addresses:
For our Lachine (PDI) station the 905-878-6448
address is:
1111 12th Avenue North
Lachine, Quebec H8S 4K9
For our Streetsville (PDI) station the address same phone #
is:
359 Wheelabrator Way
Milton, ON L9T 3C1
Exhibit 6.1.1 -- Page 6
<PAGE>
EXHIBIT 6.3
INVENTORY REPORT
To be agreed upon by Agent and Borrower.
Exhibit 6.3 - Page 1
<PAGE>
EXHIBIT 7.1.1
JURISDICTIONS IN WHICH BORROWER
AND ITS SUBSIDIARIES
ARE AUTHORIZED TO DO BUSINESS
<TABLE>
<CAPTION>
================================================================================
Company Jurisdiction
================================================================================
<S> <C>
Borrower Delaware
Illinois
Louisiana
Ohio
- -------------------------------------------------------------------------------
BEV Management, LLC Delaware
Louisiana
- -------------------------------------------------------------------------------
BCP Finance Corp. Delaware
- -------------------------------------------------------------------------------
Monochem, Inc. Louisiana
- -------------------------------------------------------------------------------
VEI Limited Partnership Delaware
Louisiana
- -------------------------------------------------------------------------------
</TABLE>
Exhibit 7.1.1 -- Page 1
<PAGE>
EXHIBIT 7.7.4
CAPITAL STRUCTURE
1. The class and the number of authorized and issued Securities of Borrower
and each of its Subsidiaries and the record owner of such Securities are as
follows:
Borrower:
- --------
<TABLE>
<CAPTION>
Class of Number of Securities Record Owners Number of Securities
Securities Issued and Outstanding ------------- Authorized but Unissued
---------- ---------------------- -----------------------
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
general 1.0101% BCP N/A
partnership Management, Inc.
interest
- -----------------------------------------------------------------------------------------------------
limited 98.9899% Borden N/A
partnership Chemicals &
interest Plastics Limited
Partnership
- -----------------------------------------------------------------------------------------------------
<CAPTION>
Subsidiaries:
- ------------
- -----------------------------------------------------------------------------------------------------
Class of Number of Securities Record Owners Number of Securities
Securities Issued and Outstanding ------------- Authorized but Unissued
---------- ---------------------- -----------------------
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BEV Managing Member Borrower N/A
Management,
LLC
- -----------------------------------------------------------------------------------------------------
BCP Finance 1,000 Borrower 0
Corp.
- -----------------------------------------------------------------------------------------------------
Monochem, 500 Class A Uniroyal, Inc. 0
Inc. (500)
--------------------------------------------------------------------------
500 Class B Borrower (500) 0
---------------------------------------------------------------------------
1,500,000 Class C Borrower 998,980
(334,962)
Uniroyal, Inc.
(166,058)
- -----------------------------------------------------------------------------------------------------
</TABLE>
Exhibit 7.1.4 -- Page 1
<PAGE>
<TABLE>
<CAPTION>
Class of Number of Securities Record Owners Number of Securities
Securities Issued and Outstanding ------------- Authorized but Unissued
---------- ---------------------- -----------------------
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
VEI Limited 51% general partnership BEV N/A
Partnership interest Management,
LLC
- -------------------------------------------------------------------------------------------------------------------
49% limited partnership Enjay, Inc. N/A
interest
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
2. The number, nature and holder of all other outstanding Securities of
Borrower and each Subsidiary are as follows:
None.
3. The correct name and jurisdiction of incorporation or organization of each
Subsidiary of Borrower and the percentage of its issued and outstanding
Voting Stock owned by Borrower are as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Jurisdiction of Percentage of Voting
Name Incorporation/Organization Stock Owned by Borrower
---- -------------------------- -----------------------
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
BEV Management, Delaware limited liability 100%
LLC company
- -------------------------------------------------------------------------------------------------------------------
BCP Finance Corp. Delaware corporation 100%
- -------------------------------------------------------------------------------------------------------------------
Monochem, Inc. Louisiana corporation 50%
- -------------------------------------------------------------------------------------------------------------------
VEI Limited Delaware limited partnership 0% (directly),
Partnership 5l% (indirectly)
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
4. The name of each of Borrower's and each Subsidiary's corporate or joint
venture Affiliates and the nature of the affiliation are as follows:
See above.
5. The agreements or instruments binding upon the partners, members or
shareholders of Borrower or any of its Subsidiaries and relating to the
ownership of its Securities, are as follows:
Limited Partnership Agreement of VEI limited Partnership -- March 11,
1997
Exhibit 7.1.4 - Page 2
<PAGE>
Limited liability Company Agreement of BEV Management LLC -- March 11,
1997
By-Laws of BCP Finance Corporation
Articles of Incorporation of Monochem, Inc.
By-Laws of Monochem, Inc.
Amended and Restated Agreement of Limited Partnership of Borden
Chemicals and Plastics Operating Limited Partnership
Exhibit 7.1.4 - Page 3
<PAGE>
EXHIBIT 7.1.5
NAMES
1. Borrower's correct name, as registered with the Secretary of State of the
State of Delaware is:
Borden Chemicals and Plastics Operating Limited Partnership
2. In the conduct of its business, Borrower has used the following names:
BCP
3. Each Subsidiary's correct name, as registered with the Secretary of State
of the State of its incorporation or formation, is:
BCP Finance Corporation; Monochem, Inc.; BEV Management LLC; VEI Limited
Partnership
4. In the conduct of its business, each Subsidiary has used the following
names:
None other than formal name.
5. Borrower has not been the surviving entity of a merger or consolidation nor
has it acquired substantially all the assets of any person.
6. No Subsidiary has been the surviving entity of a merger or consolidation
nor has it acquired substantially all the assets of any person.
Exhibit 7.1.5 - Page 1
<PAGE>
EXHIBIT 7.1.13
SURETY OBLIGATIONS
<TABLE>
<CAPTION>
=============================================================================================================================
Bond Obligee Name Bond Description Effective Expiration Bond Amount Premium Annualized Cost
Number Date Date
=============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
5802235 Bureau of Industrial Alcohol 04/26/1999 04/26/2000 $ 10,000.00 $ 50.00 $ 50.00
Alcohol, Tobacco Bond
& Firearms
- -----------------------------------------------------------------------------------------------------------------------------
5907002 U.S. Customs Customs Bond 02/01/2000 02/01/2001 $ 50,000.00 $ 163.00 $ 163.00
- -----------------------------------------------------------------------------------------------------------------------------
5907003 U.S. Customs Customs Bond 02/01/2000 02/01/2001 $ 50,000.00 $ 163.00 $ 163.00
- -----------------------------------------------------------------------------------------------------------------------------
5926169* Illinois Dept. of Appeal Bond 12/10/1999 12/10/2000 $ 653,184.00 $ 3,266.00 $ 3,266.00
Revenue
- -----------------------------------------------------------------------------------------------------------------------------
BSD State of Louisiana Hazardous Waste 4/30/2000 4/30/2000 $ 540,242.00 $17,707.00 $17,707.00
5296965** Closure
- -----------------------------------------------------------------------------------------------------------------------------
Summary: $1,347,582.00 $2l,174.00 $21,174.00
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
* $653,184 appeal bond contesting 1988 and 1989 Illinois taxes; annualized
cost $3,266.
** $540,242 bond for hazardous waste closure with the State of Louisiana;
annualized cost $17,707.
Exhibit 7.1.13 - Page 1
<PAGE>
EXHIBIT 7.1.14
TAX IDENTIFICATION NUMBERS OF SUBSIDIARIES
Subsidiary Number
- ---------- ------
BCP Finance Corporation 72-1282447
Monochem, Inc. 73-0545612
BEV Management, LLC 62-1678783
VEI Limited Partnership 62-1678781
Exhibit 7.1.14 - Page 1
<PAGE>
EXHIBIT 7.1.15
BROKERS' FEES
None.
Exhibit 7.1.15 - Page 1
<PAGE>
EXHIBIT 7.1.16
PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES
1. PATENTS, TRADEMARKS, COPYRIGHTS AND LiCENSES
1. Borrower's and its Subsidiaries' patents:
- --------------------------------------------------------------------------------
Status in Federal Registration Registration
Patent Owner Patent Office Number Date
------ ----- ------------- ------ ----
- --------------------------------------------------------------------------------
None.
2. Borrower's and its Subsidiaries' trademarks:
- --------------------------------------------------------------------------------
Status in Federal Registration Registration
Trademark Owner Patent Office Number Date
--------- ----- ------------- ------ ----
- --------------------------------------------------------------------------------
BCP Borrower Registered 2,327,996 3/14/2000
- --------------------------------------------------------------------------------
3. Borrower's and its Subsidiaries' copyrights:
- --------------------------------------------------------------------------------
Status in Federal Registration Registration
Copyrights Owner Copyright Office Number Date
---------- ----- ---------------- ------ ----
- --------------------------------------------------------------------------------
None.
4. Borrower's and its Subsidiaries' licenses (other than routine business
licenses, authorizing them to transact business in local jurisdictions):
- --------------------------------------------------------------------------------
Licensor* Nature of Name of License
-------- --------- ---------------
License
-------
- --------------------------------------------------------------------------------
Montedison Technology Acetylene Low Pressure Drop Scrubbers
- --------------------------------------------------------------------------------
Stamicarbon Technology Urea Evaporator
- --------------------------------------------------------------------------------
Hydro Agri Technology Urea Granulator
- --------------------------------------------------------------------------------
Stauffer Technology VCM-E Process
- --------------------------------------------------------------------------------
D.B. Western Technology Formaldehyde II Process
- --------------------------------------------------------------------------------
D.B. Western Technology Formaldehyde III Process
- --------------------------------------------------------------------------------
Union Carbide Technology Ammonia PSA Unit
- --------------------------------------------------------------------------------
Haldor Topsoe & Davy Technology Ammonia Process
- --------------------------------------------------------------------------------
B.F. Goodrich Technology PVC Clean Wall Technology
- --------------------------------------------------------------------------------
B.F. Goodrich Technology PVC Slurry Stripper Technology
- --------------------------------------------------------------------------------
Exhibit 7.1.16 - Page 1
<PAGE>
- -------------------------------------------------------------------------------
Licensor* Nature of Name of License
-------- --------- ---------------
License
-------
- -------------------------------------------------------------------------------
Rhone-Poulenc & Jacobs Techno1ogy VCR Process
- -------------------------------------------------------------------------------
ICI & Davy Techno1ogy Methanol Low Pressure Process
- -------------------------------------------------------------------------------
Union Carbide Technology Ammonia MEA Process
- -------------------------------------------------------------------------------
Union Carbide Technology Methanol MEA Process
- -------------------------------------------------------------------------------
UTI Technology Stripper
- -------------------------------------------------------------------------------
UTI Technology Urea Low Energy Process
- -------------------------------------------------------------------------------
BASF & Chemico Technology Acetylene Process
- -------------------------------------------------------------------------------
Borden, Inc. Patent and Patent and Know-How Agreement of
Technology November 30, 1987
- -------------------------------------------------------------------------------
* No royalties paid.
5. Infringement Activities: None.
6. Unregistered material trademarks, service marks and copyrights: None.
7. Material license agreements that do not permit assignment or limit the use
of license after default:
Use of Name of Trademark License, dated November 30, 1987. Trademark:
Borden. Design No. 921,370.
Exhibit 7.1.16 - Page 2
<PAGE>
EXHIBIT 7.1.19
CONTRACTS RESTRICTING RIGHT TO INCUR DEBT
Contracts that restrict the right of Borrower or any of its Subsidiaries to
incur Indebtedness:
$200,000,000 of Senior Unsecured 9.5% Notes due 2005 and
$90,000,000 Revolving Credit Agreement Expiring December 31, 2000 (This
agreement will be terminated concurrently with the execution and delivery of the
Loan and Security Agreement).
Exhibit 7.1.19 - Page 1
<PAGE>
EXHIBIT 7.1.20
LITIGATION
1. Actions, suits, proceedings and investigations pending against Borrower or
any Subsidiary:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Title of Action Nature of Action* Complaining Parties Jurisdiction or
--------------- ---------------- ------------------- ---------------
Tribunal
--------
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Advance Environmental AERC alleges that Borrower is See Title of Action See Title of Action
Recycling Company, LLC v. responsible for all capital and repairs
Borden Chemicals and Plastics costs associated with the recycling of
Operating Limited Partnership; florescent bulbs. Plaintiff has
In the Superior Court of New asserted claims for breach of contract,
Jersey Law Division, Morris breach of implied and express
County warranties, breach of the implied
covenant of good faith and fair dealing,
and fraud. AERC seeks damages in
excess of $1.7 million.
- ------------------------------------------------------------------------------------------------------------------------------
Hampton, Letha, wife of, and Anhydrous ammonia release on February See Title of Action See Title of Action
Alexander, Donald R., et al 14, 1995. Plaintiffs allege injury
v. Illinois Central Railroad arising from (1) exposure to anhydrous
Co., et al, consolidated with ammonia fumes (2) evacuation from their
McGhee, Trula, et al v. homes (3) denial of access to their
Illinois Central Railroad homes and/or business due to road
Co., et al, 2l/st Judicial highway blockade. The total amount paid
District Court for the Parish is $86,008.14. Claim liability is
of Tangipahoa, LA, No. 9501824, estimated at between $20.000.00 to
Division B $50.000.00.
- ------------------------------------------------------------------------------------------------------------------------------
Anderson et al. v. Borrower, Vinyl Chloride Monomer (VCM) release on Fifteen named See Title of Action
No. 29282(B) consolidated 12/24/97. Plaintiffs allege personal plaintiffs in two
with Milligan, et al. v. injuries and property damage for punitive class
Borrower, In the 18/th/ themselves and unspecified number actions.
District Court, Parish of West of other "similarly situated" but unnamed
Baton Rouge, State of individuals. The total amount paid is
Louisiana; No. 29286(B) $1,699,874.50 (settlement proceeds expected
to be completed within 6 months). Settled
for $1.300.000.O0.
- ------------------------------------------------------------------------------------------------------------------------------
Edward George, et al. v. Eight (8) owners of thirty (30) acres See Title of Action See Title of Action
Borden Chemicals and Plastics of land adjacent to the Geismar, LA
Operating Limited Partnership brought these suits alleging personal
and BCP Management Inc; In the injury and diminished property value
23/rd/ Judicial District Court, due to Borrower's release of hazardous
Ascension Parish, State of materials into the air and groundwater.
Louisiana No. 57,534 Settled for $634,000 in March 2000
consolidated with No. 59,820. (still in process).
Dave Miller, et al v. Borden
Chemicals and Plastics
Operating Limited Partnership
and BCP Management, Inc.; In
the 23/rd/ Judicial District
Court, Ascension Parish, State
of Louisiana; No. 62 129.
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
Exhibit 7.1.20 - Page 1
<PAGE>
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
A1vin Ellis, Jr. v. Borden Class action suit arising out of a See Title of Action See Title of Action
Chemicals and Plastics, In 7/7/97 Vinyl Chloride Monomer
the 23/rd/ Judicial District anhydrous ammonia release from
Court, Parish of Ascension, Borrower's Geismar, LA facility.
State of Louisiana; No. 62, 819, Plaintiffs allege numerous ill-defined
Division "D"; Ruby Mae Scott physical injuries, medical expenses,
and Ida Mae Davis v. Borden and property damage. Claim liability is
Chemicals and Plastics, estimated at between $100,000.00 and
In the 23/rd/ Judical District $275,000.OO.
Court, Parish of Ascension,
State of Louisiana; No. 62, 820:
Division "A" (Scott II).
- -----------------------------------------------------------------------------------------------------------------------
Ross and Christie Johnson v. Personal injury case arising from See Title of Action See Title of Action
Borrower; In the 23/rd/ Judicial 8/22/96 chemical release from Borrower's
District Court, Parish of Geismar, LA facility. Total amount paid
Ascension, State of is $1,155,986.83. Claim liability is
Louisiana; No. 60, 739. estimated at between $50,000.00 and
$100,000.00.
- -----------------------------------------------------------------------------------------------------------------------
Michael A. Bourgeois, Lonnie Personal injury case arising from the See Title of Action See Title of Action
R. Falcon, Lloyd J. Delatte, 12/13/98 release of 843 pounds of
Jr., Henry J. Landry. Jr., hydrogen chloride from Borrower's
Bruce M. Blanchard, Dwight F. Geismar, LA facility. Total amount paid
Wright and Bryan Walker v. is $16,000.00. Claim liability is
Borden Chemicals and Plastics estimated at between $12,000.00 and
Operating Limited $25,000.00.
Partnership; In the 23/rd/
Judicial District Court,
Parish of Ascension, State of
Louisiana; No. 83748,
Division "E"
- -----------------------------------------------------------------------------------------------------------------------
David Edward Hodges and Dawn Plaintiff was electrocuted on 6/11/98 See Title of Action See Title of Action
Hodges v. Borden Chemical and at Addis, LA facility. Total amount
Plastics Operating Limited paid is $24,372.51. Claim liability is
Partnership, et al; In the estimated at between $150,000.00 and
18/th/ Judicial District Court, $300,000.00.
Parish of West Baton Rouge,
State of Louisiana; No. 30205
- -----------------------------------------------------------------------------------------------------------------------
Illiopolis Air Notice of On 2/2/99, BC1 received a NOV pursuant State of Illinois See Title of Action
Violation (NOV) to Section 31 (a)(1) of the Illinois
Environmental Protection Act. The State
of Illinois alleges that Borrower's
Iliopolis, IL facility threatened or
allowed uncontrolled discharge of vinyl
chloride on 3/28/99 and 5/18/99.
Liability cannot be estimated at this
time.
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
Exhibit 7.1.20 - Page 2
<PAGE>
<TABLE>
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
Joe Roberts, et al v. Borden, On 8/12/88, a rail Tankcar, (loaded See Title of Action See Title of Action
Inc. et al, Civil District w/anhydrous ammonia at Borrower's
Court, Parish of Orleans, Geismar, LA facility) had a very small
State of Louisiana, No. leak at top dome gasket. Several
89-16618; Civil District Court, plaintiff's filed class action suit;
Parish on Orleans, State of however, only a few individuals remain
Louisiana; No. 89-17973 as the majority of the claims lacked
merit (due to the tiny amount of
exposure). The case has seen long
periods of dormancy. Total amount paid
is $117,086.08. Claim liability is
estimated at between $50,000.00 and
$100,000.00.
----------------------------------------------------------------------------------------------------------------------
Kenneth Jackson, et al v. BASF Plaintiffs allege, in a class action See Title of Action See Title of Action
Corporation, et al, 23/rd/ petition, that from 1975 to the present
Judicial District Court, the acetylene plant, at Geismar, LA,
Parish of Ascension, State has been releasing benzene and other
of Louisiana, No. 00066223D hazardous substances in Geismar and
the surrounding communities, causing
personal injuries and property damage.
Claim liability is estimated at between
$50,000.O0 and $1,000,000.00 depending
on contributions from other parties).
- -----------------------------------------------------------------------------------------------------------------------
Coleman, Frank, et al v. Owens Plaintiffs allege injuries due to
Corning Fiberglass Corporation, exposures to asbestos while working at
et al. 18 the Judicial Borrower's Geismar, LA facility. These
District Court, Parish cases are being managed by Borden, Inc.
of Iberville, State of as Borden, Inc. is responsible for
Louisiana, No. 50, 953 "B" exposures occuring before 11/30/87.
Total amount paid is $12,213.65. Claim
liability is estimated at between
$10,000.00 and $25,000.00.
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
* The Borrower thinks it is in a favorable position to make settlements mostly
at the low end of claim liability. The Borrower further thinks that it's
insurers will pay their share of any claim should the Borrower's liability
exceed its self-insured retention. All settlement estimates currently are within
the Borrower's self-insured retention.
2. The only threatened actions, suits, proceedings or investigations of which
Borrower or any Subsidiary is aware are as follows:
None.
Exhibit 7.1.20 - Page 3
<PAGE>
EXHIBIT 7.1.22
CAPITALIZED AND OPERATING LEASES
No capitalized and/or operating leases exist which require payments totaling
$100,000 in any 12 month period.
Exhibit 7.1.22(a) - Page 1
<PAGE>
EXHIBIT 7.1.23
PENSION PLANS
Borrower and its Subsidiaries have the following Plans:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Party Type of Plan
- -------------------------------------------------------------------------------
<S> <C>
BCP Management, Inc. Borden, Inc. Employees' Retirement
Income Plan
Borden, Inc. Executive Supplement
Pension Plan (a non-qualified plan)
- -------------------------------------------------------------------------------
Borrower None.
- -------------------------------------------------------------------------------
Subsidiaries None.
- -------------------------------------------------------------------------------
</TABLE>
Exhibit 7.1.23 - Page 1
<PAGE>
EXHIBIT 7.1.24
TRADE RELATIONS
None.
Exhibit 7.1.24 - Page 1
<PAGE>
EXHIBIT 7.1.25
COLLECTIVE BARGAINING AGREEMENTS; LABOR CONTROVERSIES
1. Borrower and its Subsidiaries are parties to the following collective
bargaining agreements:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
Type of Agreement Parties Term of Agreement
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Labor Agreement Local Union No. 7188; 5/1/98 thru 5/1/03
United Paperworkers
International Union; Borden
Inc.--Illiopolis plant
- --------------------------------------------------------------------------------------------
</TABLE>
2. Material grievances, disputes of controversies with employees of Borrower
or any of its Subsidiaries are as follows:
- -------------------------------------------------------------------------------
Parties Involved Nature of Grievance, Dispute or Controversy
- -------------------------------------------------------------------------------
None
- -------------------------------------------------------------------------------
3. Threatened strikes, work stoppages and asserted pending demands for
collective bargaining with respect to Borrower or any of its Subsidiaries
are as follows:
- -------------------------------------------------------------------------------
Parties Involved Nature of Matter
- -------------------------------------------------------------------------------
None
- --------------------------------------------------------------------------------
Exhibit 7.1.25 - Page 1
<PAGE>
EXHIBIT 8.1.3
COMPLIANCE CERTIFICATE
[Letterhead of Borden Chemicals and
Plastics Operating Limited Partnership]
Fleet Capital Corporation, as Agent
20800 Swenson Drive
Suite 350
Waukesha, Wisconsin 53186
The undersigned, the chief financial officer of Borden Chemicals and
Plastics Operating Limited Partnership, a Delaware limited partnership
("Borrower"), gives this certificate to Fleet Capital Corporation, in its
capacity as Agent ("Agent") in accordance with the requirements of subsection
8.1.3 of that certain Loan and Security Agreement dated March 2000 among
Borrower, Agent and the Lenders party thereto ("Loan Agreement"). Capitalized
terms used in this Certificate, unless otherwise defined herein, shall have the
meanings ascribed to them in the Loan Agreement.
1. Based upon my review of the balance sheets and statements of
income of Limited Partner and its Subsidiaries for the quarterly period ending
______________, _______, copies of which are attached hereto, I hereby certify
that:
(i) Average Availability for the period referred to in subsection
8.1.4 is $_________;
(ii) Availability has exceeded [$l0,000,000] [$7,000,000] at all
times during the period, except on __________;
(iii) Capital Expenditures during the period and for the fiscal year
to date total $_________ and $___________, respectively.
2. No Default exists on the date hereof, other than: __________
____________________________________________ [if none, so state]; and
Exhibit 8.1.3 - Page 1
<PAGE>
3. No Event of Default exists on the date hereof, other than________
________________________________________________ [if none, so state].
Very truly yours,
_____________________________
Chief Financial Officer
Exhibit 8.1.3 - Page 2
<PAGE>
EXH1BIT 8.2.3
EXISTING INDEBTEDNESS
$200,000,000 of Senior Unsecured 9.5% Notes due 2005; and
$90,000,000 Revolving Credit Agreement Expiring December 31, 2000 (This
agreement will be terminated concurrently with the execution and delivery of the
Loan and Security Agreement).
Exhibit 8.2.3 - Page 1
<PAGE>
EXHIBiT 8.2.5
PERMITTED LIENS
Liens existing under $90,000,000 Revolving Credit Agreement Expiring December
31, 2000 (This agreement will be terminated concurrently with the execution and
delivery of the Loan and Security Agreement).
Exhibit 8.2.5 - Page 1
<PAGE>
EXHIBIT 8.3
FINANCIAL COVENANTS
Commencing March 31, 2000 Borrower shall maintain Availability of not less
than (i) $10,000,000 at all times when the EBITDA/Interest Ratio (calculated as
of the last day of the month most recently ended) is less than or equal to 2.0
and (ii) $7,000,000 at all times when the EBITDA/Interest Ratio (calculated as
of the last day of the month most recently ended) is greater than 2.0.
Exhibit 8.3 - Page 1
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 7,322
<SECURITIES> 0
<RECEIVABLES> 99,778
<ALLOWANCES> 0
<INVENTORY> 48,936
<CURRENT-ASSETS> 160,359
<PP&E> 784,415
<DEPRECIATION> 507,035
<TOTAL-ASSETS> 496,818
<CURRENT-LIABILITIES> 82,826
<BONDS> 200,000
0
0
<COMMON> 0
<OTHER-SE> 213,992
<TOTAL-LIABILITY-AND-EQUITY> 496,818
<SALES> 180,924
<TOTAL-REVENUES> 180,924
<CGS> 164,134
<TOTAL-COSTS> 164,134
<OTHER-EXPENSES> 8,956
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,463
<INCOME-PRETAX> 371
<INCOME-TAX> 0
<INCOME-CONTINUING> 371
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 371
<EPS-BASIC> .01
<EPS-DILUTED> .01
</TABLE>
