-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BOq8EApiSKeWeeL2az5ZKkOp40UBQdEAfBBDEVWXs1TlYlVyhGX8A8X8+3HnhbwN KAjfNFJGnTULs6F3AgHjwA== 0000950136-97-001586.txt : 19971113 0000950136-97-001586.hdr.sgml : 19971113 ACCESSION NUMBER: 0000950136-97-001586 CONFORMED SUBMISSION TYPE: S-1 PUBLIC DOCUMENT COUNT: 29 FILED AS OF DATE: 19971112 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HUNTSMAN PACKAGING CORP CENTRAL INDEX KEY: 0001049442 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: S-1 SEC ACT: SEC FILE NUMBER: 333-40067 FILM NUMBER: 97715120 BUSINESS ADDRESS: STREET 1: 500 HUNTSMAN WAY CITY: SALT LAKE CITY STATE: UT ZIP: 84108 S-1 1 REGISTRATION STATEMENT AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 12, 1997 REGISTRATION NO. 333- =============================================================================== SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------- FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 HUNTSMAN PACKAGING CORPORATION (Exact Name of Registrant as specified in its charter) UTAH (State or other jurisdiction of incorporation or organization) 2671 (Primary Standard Industrial Classification Code Number) 87-0496065 (I.R.S. Employer Identification Number) 500 HUNTSMAN WAY SALT LAKE CITY, UTAH 84108 (801) 532-5200 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices) HUNTSMAN DEERFIELD FILMS CORPORATION (Exact Name of Registrant as specified in its charter) MASSACHUSETTS (State or other jurisdiction of incorporation or organization) 2671 (Primary Standard Industrial Classification Code Number) 04-2162223 (I.R.S. Employer Identification Number) 500 HUNTSMAN WAY SALT LAKE CITY, UTAH 84108 (801) 532-5200 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices) ---------- HUNTSMAN UNITED FILMS CORPORATION (Exact Name of Registrant as specified in its charter) GEORGIA (State or other jurisdiction of incorporation or organization) 2671 (Primary Standard Industrial Classification Code Number) 58-1783013 (I.R.S. Employer Identification Number) 500 HUNTSMAN WAY SALT LAKE CITY, UTAH 84108 (801) 532-5200 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices) ---------- (Cover continued on next page) (continued from preceding page) HUNTSMAN PREPARATORY, INC. (Exact Name of Registrant as specified in its charter) UTAH (State or other jurisdiction of incorporation or organization) 2671 (Primary Standard Industrial Classification Code Number) 87-0563872 (I.R.S. Employer Identification Number) 500 HUNTSMAN WAY SALT LAKE CITY, UTAH 84108 (801) 532-5200 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices) ---------- HUNTSMAN CONTAINER CORPORATION INTERNATIONAL (Exact Name of Registrant as specified in its charter) UTAH (State or other jurisdiction of incorporation or organization) 2671 (Primary Standard Industrial Classification Code Number) 87-0473075 (I.R.S. Employer Identification Number) 500 HUNTSMAN WAY SALT LAKE CITY, UTAH 84108 (801) 532-5200 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices) ---------- HUNTSMAN PACKAGING GEORGIA, INC. (Exact Name of Registrant as specified in its charter) GEORGIA (State or other jurisdiction of incorporation or organization) 2671 (Primary Standard Industrial Classification Code Number) 87-0558537 (I.R.S. Employer Identification Number) 500 HUNTSMAN WAY SALT LAKE CITY, UTAH 84108 (801) 532-5200 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices) ---------- HUNTSMAN FILM PRODUCTS OF MEXICO, INC. (Exact Name of Registrant as specified in its charter) UTAH (State or other jurisdiction of incorporation or organization) 2671 (Primary Standard Industrial Classification Code Number) 87-0500805 (I.R.S. Employer Identification Number) 500 HUNTSMAN WAY SALT LAKE CITY, UTAH 84108 (801) 532-5200 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices) ---------- (cover continued on next page) (continued from preceding page) HUNTSMAN BULK PACKAGING CORPORATION (Exact Name of Registrant as specified in its charter) UTAH (State or other jurisdiction of incorporation or organization) 2671 (Primary Standard Industrial Classification Code Number) 87-0529726 (I.R.S. Employer Identification Number) 500 HUNTSMAN WAY SALT LAKE CITY, UTAH 84108 (801) 532-5200 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices) ---------- RONALD G. MOFFITT SENIOR VICE PRESIDENT AND GENERAL COUNSEL, SECRETARY HUNTSMAN PACKAGING CORPORATION 500 HUNTSMAN WAY SALT LAKE CITY, UTAH 84108 (801) 532-5200 (Name, address, including zip code, and telephone number, including area code, of agent for service) COPY TO: PHYLLIS G. KORFF, ESQ. SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP 919 THIRD AVENUE NEW YORK, NEW YORK 10022 (212) 735-3000 APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed basis or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. | | If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. | | If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. | | If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. | | If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. | | ---------- CALCULATION OF REGISTRATION FEE ===============================================================================
PROPOSED PROPOSED MAXIMUM AMOUNT MAXIMUM AGGREGATE AMOUNT OF TITLE OF EACH CLASS OF TO BE OFFERING PRICE OFFERING PRICE REGISTRATION SECURITIES TO BE REGISTERED REGISTERED PER NOTE (1) FEE - --------------------------- -------------- -------------- ---------------- -------------- 9 1/8% Senior Subordinated Notes due 2007 ............ $125,000,000 100% $125,000,000 $37,879 - --------------------------- -------------- -------------- ---------------- -------------- Guarantees ................. $125,000,000 (2) (2) None - --------------------------- -------------- -------------- ---------------- --------------
=============================================================================== (1) Estimated in accordance with Rule 457(c) of the Securities Act, solely for the purpose of calculating the registration fee. (2) No separate consideration will be received for the Guarantees. ---------- THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. SUBJECT TO COMPLETION, DATED NOVEMBER 12, 1997 PROSPECTUS HUNTSMAN LOGO OFFER FOR ALL OUTSTANDING 9 1/8% SENIOR SUBORDINATED NOTES DUE 2007 IN EXCHANGE FOR 9 1/8% SENIOR SUBORDINATED NOTES DUE 2007 WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OF HUNTSMAN PACKAGING CORPORATION THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON , 1997, UNLESS EXTENDED ---------- Huntsman Packaging Corporation, a Utah corporation ("Huntsman Packaging" or the "Company"), hereby offers, upon the terms and subject to the conditions set forth in this Prospectus (as the same may be amended or supplemented from time to time, the "Prospectus") and the accompanying Letter of Transmittal (which together constitute the "Exchange Offer"), to exchange an aggregate principal amount of up to $125,000,000 of its 9 1/8% Senior Subordinated Notes due 2007 (the "New Notes"), which have been registered under the Securities Act of 1933, as amended (the "Securities Act"), for a like principal amount of its issued and outstanding 9 1/8% Senior Subordinated Notes due 2007 (the "Old Notes" and, together with the New Notes, the "Notes") from the holders (the "Holders") thereof. The terms of the New Notes are identical in all material respects to the terms of the Old Notes, except for certain transfer restrictions and registration rights relating to the Old Notes. The Old Notes are, and the New Notes will be, redeemable, in whole or in part, at the option of Huntsman Packaging, on or after October 1, 2002, at the redemption price set forth herein plus accrued interest to the date of redemption. In addition, at any time on or prior to October 1, 2000, Huntsman Packaging may, at its option, redeem up to 35% of the aggregate principal amount of the Notes originally issued with the net cash proceeds of one or more Equity Offerings (as defined), at a redemption price equal to 109 1/8% of the principal amount thereof plus accrued interest to the date of redemption; provided, however, that after giving effect to any such redemption, at least 65% of the aggregate principal amount of the Notes originally issued remain outstanding. Upon a Change of Control (as defined), each Holder of the Notes will have the right to require Huntsman Packaging to repurchase such Holder's Notes at a price equal to 101% of the principal amount thereof plus accrued interest to the date of repurchase. In addition, Huntsman Packaging will be obligated to offer to repurchase the Notes at 100% of the principal amount thereof plus accrued interest to the date of repurchase in the event of certain Asset Sales (as defined). See "Description of the Notes." The Old Notes are, and the New Notes will be, unsecured senior subordinated obligations of Huntsman Packaging and will be subordinated in right of payment to all existing and future Senior Debt (as defined) of Huntsman Packaging, will be pari passu in right of payment to all senior subordinated Indebtedness (as defined) of Huntsman Packaging and will be senior in right of payment to all existing and future subordinated obligations of Huntsman Packaging. The Old Notes are unconditionally guaranteed (the "Old Guarantees"), and the New Notes will be unconditionally guaranteed (the "New Guarantees" and, together with the Old Guarantees, the "Guarantees") on a senior subordinated basis by certain of Huntsman Packaging's subsidiaries (each, a "Guarantor" and collectively, the "Guarantors"). The Guarantees will be unsecured senior subordinated obligations of the Guarantors and will be subordinated in right of payment to all existing and future Guarantor Senior Debt (as defined). The Notes will be effectively subordinated to all obligations of any subsidiary of Huntsman Packaging that is not a Guarantor. As of June 30, 1997, on a pro forma basis after giving effect to the offering of the Old Notes (the "Offering"), and the purchase of the CT Film division of Huntsman Polymers Corporation (formerly known as Rexene Corporation) ("Huntsman Polymers") by Huntsman Packaging (the "CT Film Purchase"), Huntsman Packaging would have had approximately $150.3 million of Senior Debt outstanding and approximately $275.3 million of total Indebtedness outstanding (in each case, excluding unused commitments and outstanding letters of credit totalling $74.7 million under the Credit Facilities (as defined)), and Restricted Subsidiaries that are not Guarantors would have had no Indebtedness outstanding (excluding intercompany loans and guarantees of Huntsman Packaging Indebtedness). See "Risk Factors --Substantial Leverage and Ability to Service Indebtedness" and "Description of the Notes -- Ranking." For each Old Note accepted for exchange, the Holder of such Old Note will receive a New Note having a principal amount equal to that of the surrendered Old Note. Interest on each New Note will accrue (A) from the later of (i) the last interest payment date on which interest was paid on the Old Note surrendered in exchange therefor, or (ii) if the Old Note is surrendered for exchange on a date in a period which includes the record date for an interest payment date to occur on or after the date of such exchange and as to which interest will be paid, the date of such interest payment date or (B) if no interest has been paid on the Old Notes, from September 30, 1997. Accordingly, registered Holders of New Notes on the relevant record date for the first interest payment date following the consummation of the Exchange Offer will receive interest accruing from the most recent date to which interest has been paid or, if no interest has been paid, from September 30, 1997. Old Notes accepted for exchange will cease to accrue interest from and after the date of consummation of the Exchange Offer. Holders of Old Notes whose Old Notes are accepted for exchange will not receive any payment in respect of accrued interest on such Old Notes. (Continued on following page) ---------- SEE "RISK FACTORS," BEGINNING ON PAGE 13 OF THIS PROSPECTUS FOR A DISCUSSION OF CERTAIN RISKS TO BE CONSIDERED BY HOLDERS WHO TENDER THEIR OLD NOTES IN CONNECTION WITH THIS EXCHANGE OFFER. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ---------- The date of this Prospectus is , 1997 (Continued from previous page) The New Notes are being offered hereunder in order to satisfy certain obligations of Huntsman Packaging contained in the Registration Rights Agreement, dated as of September 19, 1997 (the "Registration Rights Agreement"), among Huntsman Packaging and the other signatories thereto. Under existing interpretations by the staff of the Securities and Exchange Commission (the "Commission") contained in several no-action letters issued to third parties, Huntsman Packaging believes that the New Notes issued pursuant to the Exchange Offer in exchange for the Old Notes may be freely transferable by holders thereof (other than any such holder which is an "affiliate" of Huntsman Packaging within the meaning of Rule 405 under the Securities Act) without further registration under the Securities Act; provided, however, that each Holder that wishes to exchange its Old Notes for New Notes will be required to represent (i) that any New Notes to be received by it will be acquired in the ordinary course of its business, (ii) that at the time of the commencement of the Exchange Offer it has no arrangement or understanding with any person to participate in the distribution (within the meaning of the Securities Act) of the New Notes in violation of the Securities Act, (iii) that it is not an "affiliate" (as defined in Rule 405 promulgated under the Securities Act) of Huntsman Packaging, (iv) if such Holder is not a broker-dealer, that it is not engaged in, and does not intend to engage in, the distribution of New Notes and (v) if such Holder is a broker-dealer (a "Participating Broker-Dealer") that will receive New Notes for its own account in exchange for Old Notes that were acquired as a result of market-making or other trading activities, that it will deliver a prospectus in connection with any resale of such New Notes. However, Huntsman Packaging does not intend to request the Commission to consider, and the Commission has not considered, the Exchange Offer in the context of a no-action letter and there can be no assurance that the staff of the Commission would make a similar determination with respect to the Exchange Offer as in such other circumstances. Huntsman Packaging will agree to make available, during the period required by the Securities Act, a prospectus meeting the requirements of the Securities Act for use by Participating Broker-Dealers and other persons, if any, with similar prospectus delivery requirements for use in connection with any resale of New Notes. If any Holder is an affiliate of Huntsman Packaging or is engaged in or intends to engage in or has any arrangement with any person to participate in the distribution of the New Notes to be acquired pursuant to the Exchange Offer, such Holder (i) could not rely on the applicable interpretations of the staff of the Commission and (ii) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction, including the delivery of a prospectus which contains the information with respect to any selling holder required by the Securities Act. Each broker-dealer that receives New Notes for its own account pursuant to the Exchange Offer must represent to Huntsman Packaging that it will deliver a prospectus in connection with any resale of such New Notes. The Letter of Transmittal states that by so representing and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of New Notes received in exchange for Old Notes where such Old Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities. Huntsman Packaging has agreed that, starting on the Expiration Date (as defined herein) and ending on the close of business on the 90th day following the Expiration Date, it will make this Prospectus available to any broker-dealer for use in connection with any such resale. See "Plan of Distribution." Huntsman Packaging will not receive any proceeds from this Exchange Offer. Huntsman Packaging has agreed to bear the expenses of this Exchange Offer. Tenders of Old Notes pursuant to the Exchange Offer may be withdrawn at any time prior to the Expiration Date. In the event Huntsman Packaging terminates the Exchange Offer and does not accept for exchange any Old Notes, Huntsman Packaging will promptly return the Old Notes to the Holders thereof. See "The Exchange Offer." Prior to the Exchange Offer there has been no established trading market for the Old Notes or the New Notes. Although BT Alex. Brown Incorporated and Chase Securities Inc. (the "Initial Purchasers") have advised Huntsman Packaging that they currently intend to make a market in the New Notes, they are not obligated to do so and may discontinue such market-making at any time without notice. Accordingly, no assurance can be given as to the future development of an active market for the New Notes, or the ability of the Holders of New Notes to sell their New Notes or the price that such Holders may obtain for their New Notes upon any sale. Huntsman Packaging does not intend to apply for listing of the New Notes on any securities exchange or for quotation through any automated quotation system. To the extent that a market for the New Notes does develop, the New Notes could trade at a discount from their principal amount. See "Risk Factors -- Lack of Established Market for the Notes." CAUTIONARY STATEMENTS FOR PURPOSES OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 Certain statements in this Prospectus under the captions "Prospectus Summary," "Risk Factors," "Unaudited Pro Forma Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business" and elsewhere constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this Prospectus, the words "anticipate," "believe," "estimate," "expect" and similar expressions are generally intended to identify forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of Huntsman Packaging, or industry results, to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Such risks, uncertainties and other important factors include, among others: general economic and business conditions; industry trends; competition; raw material costs and availability; the loss of any significant customer; changes in business strategy or development plans; availability, terms and deployment of capital; availability of qualified personnel; changes in, or the failure or inability to comply with, government regulation, including, without limitation, environmental regulations; and other factors referenced in this Prospectus. See "Risk Factors." These forward-looking statements speak only as of the date of this Prospectus. Huntsman Packaging expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in Huntsman Packaging's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. MARKET AND INDUSTRY DATA MARKET DATA USED THROUGHOUT THIS PROSPECTUS WERE OBTAINED FROM INTERNAL COMPANY SURVEYS AND INDUSTRY SURVEYS AND PUBLICATIONS. THE SOURCES FOR THIS DATA INCLUDE, WITHOUT LIMITATION, MASTIO & COMPANY AND THE FLEXIBLE PACKAGING ASSOCIATION. INDUSTRY SURVEYS AND PUBLICATIONS GENERALLY STATE THAT THE INFORMATION CONTAINED THEREIN HAS BEEN OBTAINED FROM SOURCES BELIEVED TO BE RELIABLE, BUT THERE CAN BE NO ASSURANCE AS TO THE ACCURACY AND COMPLETENESS OF SUCH INFORMATION. THE COMPANY HAS NOT INDEPENDENTLY VERIFIED SUCH MARKET DATA. SIMILARLY, INTERNAL COMPANY SURVEYS, WHILE BELIEVED BY THE COMPANY TO BE RELIABLE, HAVE NOT BEEN VERIFIED BY ANY INDEPENDENT SOURCES. i PROSPECTUS SUMMARY The following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information and financial data, including the financial statements and notes thereto, appearing elsewhere in this Prospectus. Unless otherwise stated in this Prospectus, references to (a) "Huntsman Packaging" or the "Company" shall mean Huntsman Packaging Corporation and its consolidated subsidiaries, (b) "Huntsman Corporation" shall mean Huntsman Corporation and its consolidated subsidiaries and (c) the "CT Film Purchase" shall mean the purchase of the assets of the CT Film division ("CT Film") of Huntsman Polymers Corporation (formerly known as Rexene Corporation) ("Huntsman Polymers") by Huntsman Packaging. Unless otherwise stated in this Prospectus, all market share and growth data are presented for North America and are based on 1995 and 1996 revenues. "G-Bond" and "Winwrap" are trademarks of the Company. All other trademarks, service marks or trade names referred to in this Prospectus are the property of their respective owners. THE COMPANY GENERAL Huntsman Packaging Corporation is one of the largest manufacturers of film and flexible packaging products in North America. The Company offers one of the most diverse product lines in the industry and has attained a leading market position in each of its major product lines. Management attributes its market leadership primarily to its advanced film extrusion equipment and technology, broad and innovative product lines, well-established customer relationships and low-cost production capabilities. The Company's product lines are comprised of the following: (i) converter films that are sold for additional fabrication and resale by other flexible packaging manufacturers for use in a wide range of consumer and industrial markets; (ii) barrier films that contain and protect food and other products; (iii) printed products that include printed rollstock, bags and sheets used to package products in the food and medical industries; (iv) stretch films that are used for industrial unitizing and containerization; (v) PVC films that are used by supermarkets, institutions and homes to wrap meat, cheese and produce; and (vi) foam products that include meat trays, egg cartons and fast food containers. Converter Films. Converter films are polyethylene films that are sold to converters and laminators for final processing into consumer products such as bags, pouches and printed products. With the consummation of the CT Film Purchase, the Company currently holds North America's number one market position in the converter film segment with a 23% market share. Barrier Films. Barrier films are polyethylene films that are sold to food processors and other end users. These films provide specific types of barrier protection against moisture, oxygen, light and gases and are puncture resistant. The Company is the second largest producer of cookie, cracker and cereal box liners in North America, with a 19% market share. The CT Film Purchase allowed the Company to gain entry or increase access to other growing barrier film markets, including medical, personal care and agricultural films. Printed Products. Printed products are manufactured and sold to fresh and frozen food processors, bakeries, textile manufacturers and other dry goods processors. The Company is North America's leading supplier of film used in the frozen food segment, with a 31% market share. The Company is also the second largest producer in the bakery market, with a 20% market share, supplying approximately one-fifth of the five billion bread bags manufactured in North America each year. Management anticipates growth opportunities in the packaged salad and fresh produce market, which is expected to grow approximately 9% annually over the next several years. Stretch Films. Stretch films are used primarily to bundle products and wrap pallets. Currently, approximately one-half of all loads shipped in North America are unitized with stretch film. Management expects additional growth in stretch films as they continue to replace less economical and less environmentally-acceptable packaging alternatives, such as steel strapping. The Company is North America's fourth largest producer of stretch films, with an 11% market share. 1 PVC Films. PVC films are used by supermarkets, institutions and homes to wrap meat, cheese and produce. Management believes the Company has North America's number two market position in PVC films. Management estimates that the Company also has the number one and three market shares in Australia and Western Europe with 60% and 16%, respectively. The Company expects PVC film export sales to increase in the growing Central and South American markets. Foam Products. The Company's polystyrene foam products include meat trays, egg cartons and fast food containers, which it manufactures in the U.K. and France. Management estimates that the Company is the largest producer of egg cartons in France, with a 26% market share, and the third largest producer of polystyrene foam food packaging in Western Europe, with an 11% market share. The Company expects growth in foam products sales by penetrating emerging markets in Eastern Europe and the Middle East. The Company currently has over 2,000 customers, including General Mills, Kraft/General Foods, Campbell Soup, Albertson's, Safeway, American Stores, Tyson Foods, Interstate Bakeries (Wonder Bread), Becton-Dickinson, Kimberly-Clark, 3M and Johnson & Johnson. With the addition of CT Film, the Company has a manufacturing capacity of nearly 800 million pounds of polyethylene and PVC films. For the year ended December 31, 1996, the Company, on a pro forma basis after giving effect to the CT Film Purchase, would have had net sales of $567.6 million, EBITDA (as defined) of $35.5 million and Adjusted EBITDA (as defined) of $65.6 million. HUNTSMAN PACKAGING Huntsman Packaging was founded in 1992 for the purpose of acquiring Goodyear Tire & Rubber Company's Film Products Division. Since its formation, Huntsman Packaging has pursued its growth strategy by improving operating efficiency and by completing nine strategic acquisitions that have complemented Huntsman Packaging's existing product lines and provided it with new products and access to new markets. For example, the October 1996 acquisition (the "Deerfield Acquisition") of Deerfield Plastics Company, Inc. ("Deerfield") established Huntsman Packaging as a leading converter film producer and nearly doubled its share in the stretch film market. The July 1996 acquisition (the "United Films Acquisition") of United Films Corporation ("United Films") established Huntsman Packaging as a premier producer of cookie, cracker and cereal box liners. Huntsman Packaging has a successful track record of improving capacity utilization, reducing overhead costs and increasing profits of its acquired businesses. The Company's recent acquisitions have provided it with additional state-of-the-art equipment, which has allowed it to reduce capital expenditures and consolidate its manufacturing operations by closing older, less efficient operations. Management believes that additional cost savings can be achieved as it continues to integrate acquired companies. Until recently, Huntsman Packaging was a wholly-owned subsidiary of Huntsman Corporation. Contemporaneous with the Offering, Huntsman Packaging was separated from Huntsman Corporation (the "Split-Off"). As a result of the Split-Off, Jon M. Huntsman now owns approximately 65% of the total equity of Huntsman Packaging. Richard P. Durham and the Christena Karen H. Durham Trust collectively own approximately 35% of the total equity of Huntsman Packaging. Mr. Durham is Mr. Huntsman's son-in-law and the President and Chief Executive Officer of Huntsman Packaging. Christena Durham is the daughter of Mr. Huntsman, the beneficiary of the Christena Karen H. Durham Trust and the wife of Mr. Durham. Jon M. Huntsman, Richard P. Durham and Christena H. Durham are currently the directors of the Company. CT FILM PURCHASE On August 27, 1997, an indirect subsidiary of Huntsman Corporation was merged into Rexene Corporation (the "Rexene Acquisition"). The surviving corporation was renamed Huntsman Polymers Corporation. On September 30, 1997, Huntsman Packaging acquired CT Film from Huntsman Polymers Corporation for $70 million in cash. Management believes that the CT Film Purchase strengthens the Company's position as a market leader in the film and flexible packaging industry by enhancing its existing product lines and providing 2 new growth opportunities. The CT Film Purchase provides the Company with new customers, including Becton-Dickinson, Kimberly-Clark and Johnson & Johnson, and provides access to the growing medical, personal care and agricultural film markets. In addition, CT Film increases the Company's share of the North American converter film market from 11% to a leading 23% share. With the CT Film Purchase, management expects to generate significant cost savings, primarily from three sources: (i) approximately $4.0 million in annual savings from raw material cost reductions; (ii) approximately $6.6 million in annual savings from the elimination of duplicative management and operating personnel; and (iii) approximately $5.7 million in annual savings through the consolidation of less efficient facilities and the related elimination of personnel and fixed costs. With the former CT Film assets operating at approximately 67% of capacity prior to the acquisition of CT Film, management believes that CT Film's available capacity can be used to: (i) relocate manufacturing to facilities closer to customers, thereby reducing transportation costs and increasing logistical flexibility in product delivery; (ii) reduce production lead times; and (iii) reduce capital expenditures. COMPETITIVE STRENGTHS Superior Manufacturing Capability. With the acquisition of CT Film, management believes the Company possesses a broader range of manufacturing equipment and more state-of-the-art manufacturing equipment than any of its competitors. The resulting combination of manufacturing flexibility and efficiency enhances the Company's ability to bring new technologies to the marketplace and meet the ever-increasing performance needs of its customers in a cost-effective manner. Strong Market Positions. The Company has a leading market position in each of its major product lines. With the CT Film Purchase, the Company is North America's largest supplier of converter and frozen food films and its second largest supplier of PVC films, cookie, cracker and cereal box liners and bakery bags. The Company also maintains significant market shares in PVC film in Western Europe and Australia and polystyrene foam food packaging products in Western Europe. The Company attributes its market leadership primarily to its broad and innovative product lines, well-established customer relationships, low-cost manufacturing capabilities and technological innovation. Proven Management Team. The Company has assembled an outstanding management team at both the corporate and operating levels, with extensive experience in the flexible packaging industry. Senior management has an average of over 20 years of experience in the film and flexible packaging industry. Since the Company's formation in 1992, management has successfully integrated nine acquisitions, enhanced productivity, diversified its product lines, strengthened its customer relationships and increased EBITDA. Well-Established Customer Relationships. The Company has close working relationships with both its end-use customers and its distributors. The Company is a major supplier to some of the most significant end users of film products in the world, including Albertson's, American Stores, Campbell Soup, General Mills, Interstate Bakeries (Wonder Bread), Keebler, Kraft/General Foods, Pillsbury, Safeway, Tyson Foods and most of the flexible packaging converters that supply such end users. In addition, the Company manufactures and supplies film to some of the largest non-food film consumers in North America, including Baxter, Becton-Dickinson, Kimberly-Clark, 3M, Johnson & Johnson, Goodyear, Wal-Mart and Owens Corning. During the past five years, the Company also has assembled a distribution network that includes the four leading national film distributors: Unisource, Bunzl, Zellerbach and ResourceNet. Management believes that the combination of its end-use customers and leading national distributors gives the Company a strategic advantage in the marketplace. Low-Cost Production. The Company believes that its manufacturing costs are among the lowest in the industry due to: (i) economies of scale provided by its high volume production; (ii) high plant 3 utilization attained through the continual consolidation of less efficient operations; (iii) favorable resin and other raw material prices based on its significant purchasing requirements; (iv) state-of-the-art manufacturing equipment that minimizes resin requirements and waste; and (v) capital investment that has resulted in improved operating efficiency. STRATEGY Since its formation, the Company has focused on strategic acquisitions, technology development and production improvements to take advantage of current and projected market trends. Management believes that the following trends will drive future growth in the film and flexible packaging industry: (i) traditional forms of rigid packaging (paperboard, glass, metals and rigid plastic) will be replaced by sophisticated, less expensive, higher performing, flexible packaging alternatives; (ii) new metallocene-based resin technologies will encourage growth in flexible packaging and require state-of-the-art extrusion equipment to deliver these technologies in a cost-effective manner; and (iii) customers and distributors will continue to prefer large, integrated suppliers, such as the Company, to smaller suppliers. Management believes that the Company's combination of core technological competencies, modern, flexible manufacturing capabilities and innovative management and marketing practices will position the Company as the premier film extrusion company in North America. To that end, the Company will continue to pursue the following strategies: Develop New Products and New Markets. To capitalize on the Company's core technological and manufacturing competencies, the Company will continue to focus on customer needs through its specialized product development teams consisting of sales, marketing, technical and manufacturing professionals. In cooperation with major customers, the Company is developing films for stand-up plastic pouches that are replacing traditional rigid packaging for a broad range of consumer products, including juices, pet food, laundry detergent and snack foods. The Company recently developed a high-integrity shrink film for Campbell Soup that replaces traditional corrugated box and tray applications used in bundling canned goods. The Company also achieves product innovation by identifying and purchasing or licensing value-added technologies. A recent example is the Company's acquisition of the patent rights to the G-Bond manufacturing process. This cost-effective method of film production has allowed Huntsman Packaging to gain market share in the rapidly growing packaged salad market, most notably with Dole Foods. Continue Cost Reductions and Productivity Enhancements. The Company continues to seek opportunities to reduce its operating costs and enhance productivity. Recently, following the acquisitions of United Films and Deerfield, the Company closed older, less efficient production facilities in Dallas, Texas and Bowling Green, Kentucky, thereby reducing manufacturing costs. Through the CT Film Purchase, the Company intends to achieve significant cost savings through reduction in raw material prices, and overhead expenditures and further plant rationalizations. With the addition of CT Film, the Company's plants will be able to service customers from lower-cost manufacturing facilities that are located closer to the customers, reducing both delivery times and transportation costs. Enhance and Leverage Customer Relationships. The Company has developed long-standing relationships with many of its customers. These customers value product innovation and reliable supply, and consequently exercise great care in establishing and maintaining their supplier relationships. The Company believes that its reputation for innovation and reliability is recognized in the marketplace. In addition, management believes that the trend of supplier consolidation will continue. The Company focuses on meeting the increasingly complex packaging needs of its customers with its wide array of film and flexible packaging products. As the Company has grown through acquisitions, it has successfully sold existing products to newly-acquired customers and has sold newly-acquired products to existing customers. Management believes this leveraging has provided and will continue to provide growth opportunities. 4 THE EXCHANGE OFFER The Exchange Offer ............ Huntsman Packaging is offering to exchange up to $125,000,000 aggregate principal amount of its 9 1/8% Senior Subordinated Notes due 2007 (the "New Notes") for a like principal amount of its 9 1/8% Senior Subordinated Notes due 2007 (the "Old Notes" and, collectively with the New Notes, the "Notes") that are properly tendered and accepted. The terms of the New Notes and the Old Notes are identical in all material respects, except for certain transfer restrictions and registration rights relating to the Old Notes described below under "--Summary Description of the New Notes." Tenders; Expiration Date; Withdrawal ................... The Exchange Offer will expire at 5:00 p.m., New York City time, on , 1997, or such later date and time to which it is extended (the "Expiration Date"). The tender of Old Notes pursuant to the Exchange Offer may be withdrawn at any time prior to the Expiration Date. Any Old Note not accepted for exchange for any reason will be returned without expense to the tendering Holder thereof as promptly as practicable after the expiration or termination of the Exchange Offer. See "The Exchange Offer -- Terms of the Exchange Offer; Period for Tendering Old Notes," and "--Withdrawal of Tenders." Procedure for Tendering Old Notes ........................ Certain brokers, dealers, commercial banks, trust companies and other nominees who hold Old Notes through the Depository Trust Company (the "Book-Entry Transfer Facility") must effect tenders by book-entry through the Book-Entry Transfer Facility's automated tender offer program ("ATOP"). Tendering Holders of Old Notes wishing to accept the Exchange Offer must complete, sign and date the Letter of Transmittal, or a facsimile thereof, in accordance with the instructions contained therein, and mail or otherwise deliver such Letter of Transmittal, or such facsimile together with either certificates for such Old Notes or, if tendering through ATOP, a Book-Entry Confirmation (as defined herein) of such Old Notes into the Book-Entry Transfer Facility, if such procedure is available, and any other required documentation to the exchange agent (the "Exchange Agent") at the address set forth herein. Tendering Holders of Old Notes that use ATOP will, by so doing, represent that they are bound by the terms of the Letter of Transmittal. See "The Exchange Offer -- Book-Entry Transfer." By executing the Letter of Transmittal, each Holder will represent to Huntsman Packaging, among other things, that (i) the New Notes acquired pursuant to the Exchange Offer by the Holder and any other person are being obtained in the ordinary course of business of the person receiving such New Notes, (ii) neither the Holder nor such other person is participating in, intends to participate in or has an arrangement or understanding with any person to participate in the distribution of such New Notes and (iii) neither the Holder nor such other person is 5 an "affiliate," as defined under Rule 405 of the Securities Act, of Huntsman Packaging. Each broker-dealer that receives New Notes for its own account in exchange for Old Notes, where such Old Notes were acquired by such broker or dealer as a result of market-making activities or other trading activities, must represent that it will deliver a prospectus in connection with any resale of such New Notes. The Letter of Transmittal states that by so representing and by delivering a prospectus, a broker or dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. See "The Exchange Offer -- Procedures for Tendering Old Notes" and "Plan of Distribution." Special Procedures for Beneficial Owners ............ Any beneficial owner whose Old Notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and who wishes to tender should contact such registered Holder promptly and instruct such registered Holder to tender on such beneficial owner's behalf. If such beneficial owner wishes to tender on such owner's behalf, such owner must, prior to completing and executing the Letter of Transmittal and delivering its Old Notes, either make appropriate arrangements to register ownership of the Old Notes in such owner's name or obtain a properly completed bond power from the registered Holder. The transfer of registered ownership may take considerable time. See "The Exchange Offer -- Procedures for Tendering Old Notes." Guaranteed Delivery Procedures ................... Holders of Old Notes who wish to tender their Old Notes and whose Old Notes are not immediately available or who cannot deliver their Old Notes or any other documents required by the Letter of Transmittal to the Exchange Agent must tender their Old Notes according to the guaranteed delivery procedures set forth in "The Exchange Offer -- Guaranteed Delivery Procedures." Federal Income Tax Consequences ................. The exchange pursuant to the Exchange Offer should not result in any income, gain or loss to the Holders or Huntsman Packaging for federal income tax purposes. See "Certain United States Federal Income Tax Considerations." Use of Proceeds ............... Huntsman Packaging will not receive any proceeds from this Exchange Offer. See "Use of Proceeds." Exchange Agent ................ is serving as the exchange agent (the "Exchange Agent") in connection with the Exchange Offer. 6 CONSEQUENCES OF EXCHANGING OR FAILURE TO EXCHANGE OLD NOTES Holders of Old Notes who do not exchange their Old Notes for New Notes pursuant to the Exchange Offer will continue to be subject to the provisions in the Indenture regarding transfer and exchange of the Old Notes and the restrictions on transfer of such Old Notes as set forth in the legend thereon as a consequence of the issuance of the Old Notes pursuant to exemptions from, or in transactions not subject to, the registration requirements of the Securities Act and applicable state securities laws. In general, the Old Notes may not be offered or sold, unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. Huntsman Packaging does not currently anticipate that it will register Old Notes under the Securities Act. See "Description of the Notes -- Registration Rights." Under existing interpretations by the staff of the Commission contained in several no-action letters issued to third parties, Huntsman Packaging believes that the New Notes issued pursuant to the Exchange Offer in exchange for the Old Notes may be freely transferable by holders thereof (other than any such holder which is an "affiliate" of Huntsman Packaging within the meaning of Rule 405 under the Securities Act) without further registration under the Securities Act; provided, however, that each Holder that wishes to exchange its Old Notes for New Notes will be required to represent (i) that any New Notes to be received by it will be acquired in the ordinary course of its business, (ii) that at the time of the commencement of the Exchange Offer it has no arrangement or understanding with any person to participate in the distribution (within the meaning of the Securities Act) of the New Notes in violation of the Securities Act, (iii) that it is not an "affiliate" (as defined in Rule 405 promulgated under the Securities Act) of Huntsman Packaging, (iv) if such Holder is not a broker-dealer, that it is not engaged in, and does not intend to engage in, the distribution of New Notes and (v) if such Holder is a broker-dealer (a "Participating Broker-Dealer") that will receive New Notes for its own account in exchange for Old Notes that were acquired as a result of market-making or other trading activities, that it will deliver a prospectus in connection with any resale of such New Notes. However, Huntsman Packaging does not intend to request the Commission to consider, and the Commission has not considered, the Exchange Offer in the context of a no-action letter and there can be no assurance that the staff of the Commission would make a similar determination with respect to the Exchange Offer as in such other circumstances. Huntsman Packaging will agree to make available, during the period required by the Securities Act, a prospectus meeting the requirements of the Securities Act for use by Participating Broker-Dealers and other persons, if any, with similar prospectus delivery requirements for use in connection with any resale of New Notes. If any Holder is an affiliate of Huntsman Packaging or is engaged in or intends to engage in or has any arrangement with any person to participate in the distribution of the New Notes to be acquired pursuant to the Exchange Offer, such Holder (i) could not rely on the applicable interpretations of the staff of the Commission and (ii) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction, including the delivery of a prospectus which contains the information with respect to any selling holder required by the Securities Act. Each broker-dealer that receives New Notes for its own account pursuant to the Exchange Offer must represent to Huntsman Packaging that it will deliver a prospectus in connection with any resale of such New Notes. The Letter of Transmittal states that by so representing and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of New Notes received in exchange for Old Notes where such Old Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities. Huntsman Packaging has agreed that, starting on the Expiration Date and ending on the close of business on the 90th day following the Expiration Date, it will make this Prospectus available to any broker-dealer for use in connection with any such resale. See "Plan of Distribution." However, to comply with the securities laws of certain jurisdictions, if applicable, the New Notes may not be offered or sold unless they have been registered or qualified for sale in such jurisdictions or an exemption from registration or qualification is available and is complied with. Huntsman Packaging does not currently intend to register or qualify the sale of the New Notes in any such jurisdictions. See "The Exchange Offer -- Consequences of Exchanging or Failing to Exchange Old Notes." 7 SUMMARY DESCRIPTION OF THE NEW NOTES The terms of the New Notes and the Old Notes are identical in all material respects, except for certain transfer restrictions and registration rights relating to the Old Notes. Interest on each New Note will accrue (A) from the later of (i) the last interest payment date on which interest was paid on the Old Note surrendered in exchange therefor, or (ii) if the Old Note is surrendered for exchange on a date in a period which includes the record date for an interest payment date to occur on or after the date of such exchange and as to which interest will be paid, the date of such interest payment date or (B) if no interest has been paid on the Old Notes, from September 30, 1997. Accordingly, registered Holders of New Notes on the relevant record date for the first interest payment date following the consummation of the Exchange Offer will receive interest accruing from the most recent date to which interest has been paid or, if no interest has been paid, from September 30, 1997. Old Notes accepted for exchange will cease to accrue interest from and after the date of consummation of the Exchange Offer. Holders of Old Notes whose Old Notes are accepted for exchange will not receive any payment in respect of interest on such Old Notes otherwise payable on any interest payment date the record date for which occurs on or after consummation of the Exchange Offer. In the event of a registration default under the Registration Rights Agreement, Huntsman Packaging will pay additional interest ("Additional Interest") to each Holder of Transfer Restricted Securities (as defined herein). See "Description of the Notes -- Additional Interest." Securities Offered ............ $125,000,000 aggregate principal amount of 9 1/8% Senior Subordinated Notes due 2007. Issuer ........................ Huntsman Packaging Corporation, a Utah corporation. Maturity Date ................. October 1, 2007. Interest Payment Dates ........ Interest on the New Notes will be payable semi-annually in arrears on each April 1 and October 1, commencing April 1, 1998. Ranking ....................... The New Notes will be unsecured senior subordinated obligations of Huntsman Packaging and, as such, will be subordinated in right of payment to all existing and future Senior Debt (as defined) of Huntsman Packaging and will be effectively subordinated to all obligations of any subsidiary of Huntsman Packaging that is not a Guarantor. The New Notes will rank pari passu in right of payment to all senior subordinated Indebtedness of Huntsman Packaging and will be senior in right of payment to all existing and future subordinated obligations of Huntsman Packaging. As of June 30, 1997, on a pro forma basis, after giving effect to the Offering and the CT Film Purchase, Huntsman Packaging would have had approximately $150.3 million of Senior Debt outstanding and approximately $275.3 million of total Indebtedness outstanding (in each case, excluding unused commitments and outstanding letters of credit totalling $74.7 million under the Credit Facilities), and Restricted Subsidiaries that are not Guarantors would have had no Indebtedness outstanding (excluding intercompany loans and guarantees of Huntsman Packaging Indebtedness). Guarantees .................... The New Notes will be unconditionally guaranteed on a senior subordinated basis by each subsidiary of Huntsman Packaging 8 that guarantees the Credit Facilities. The New Guarantees will be unsecured senior subordinated obligations of the Guarantors, and will be subordinated in right of payment to all existing and future Guarantor Senior Debt (as defined) and will rank pari passu to any senior subordinated Indebtedness of the Guarantors and senior in right of payment to all subordinated obligations of the Guarantors. Optional Redemption ........... The New Notes will be redeemable, in whole or in part, at the option of Huntsman Packaging, on or after October 1, 2002. In addition, at any time on or prior to October 1, 2000, Huntsman Packaging may, at its option, redeem up to 35% of the aggregate principal amount of the New Notes originally issued with the net cash proceeds of one or more Equity Offerings (as defined), at a redemption price equal to 109 1/8% of the principal amount thereof plus accrued interest to the date of redemption; provided, however, that, after giving effect to any such redemption, at least 65% of the aggregate principal amount of the New Notes originally issued remain outstanding. Change of Control ............. Upon a Change of Control (as defined), each Holder will have the right to require Huntsman Packaging to repurchase such Holder's Notes at a price equal to 101% of the principal amount thereof plus accrued interest to the date of repurchase. Certain Covenants ............. The Indenture contains certain covenants that limit the ability of Huntsman Packaging to, among other things, incur additional indebtedness, pay dividends or make certain other restricted payments, consummate certain asset sales, enter into certain transactions with affiliates, incur liens, impose restrictions on the ability of a subsidiary to pay dividends or make certain payments to Huntsman Packaging and its subsidiaries, merge or consolidate with any other person or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all the assets of Huntsman Packaging. In addition, under certain circumstances, Huntsman Packaging will be required to offer to purchase the Notes, in whole or in part, at a purchase price equal to 100% of the principal amount thereof plus accrued interest to the date of repurchase with the proceeds of certain Asset Sales (as defined). For additional information regarding the Notes, see "Description of the Notes." EXCHANGE OFFER AND REGISTRATION RIGHTS Holders of New Notes other than as set forth below are not entitled to any registration rights with respect to the New Notes. Pursuant to the Registration Rights Agreement, Huntsman Packaging agreed, for the benefit of the Holders of Old Notes, to use its best efforts to file an Exchange Offer Registration Statement (as defined). The Registration Statement of which this Prospectus is a part constitutes the Exchange Offer Registration Statement. Under certain circumstances, certain Holders of Notes (including Holders who may not participate in the Exchange Offer or who may not freely resell New Notes received in the Exchange Offer) may require Huntsman Packaging to use its best efforts to file, and cause to become effective, a shelf registration statement under the Securities Act, which would cover resales of Notes by such Holders. See "Description of the Notes -- Registration Rights." 9 USE OF PROCEEDS Huntsman Packaging will not receive any proceeds from this Exchange Offer. The net proceeds to Huntsman Packaging from the Offering, after deducting discounts and expenses, were approximately $121 million. Huntsman Packaging used the net proceeds of the Offering, together with borrowings under the Credit Facilities, to finance repayment of all outstanding long-term indebtedness to Huntsman Corporation (a portion of which was incurred to finance the Deerfield Acquisition, the United Films Acquisition and capital expenditures), fund the CT Film Purchase and provide funds for ongoing working capital and general corporate purposes. See "Use of Proceeds" and "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Liquidity and Capital Resources." RISK FACTORS Holders of Old Notes should consider carefully the information set forth under the caption "Risk Factors" and all other information contained in this Prospectus before making a decision to tender their Old Notes in connection with this Exchange Offer. Huntsman Packaging's executive offices are located at 500 Huntsman Way, Salt Lake City, Utah 84108. Huntsman Packaging's telephone number is (801) 532-5200. 10 SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA The summary financial data set forth below present the historical financial data of Huntsman Packaging. The summary financial data as of December 31, 1994, 1995 and 1996 and for the years then ended have been derived from the audited financial statements of Huntsman Packaging. The summary financial data as of December 31, 1992 and 1993 and for the years then ended have been derived from the unaudited financial statements of Huntsman Packaging. The summary financial data as of June 30, 1996 and 1997 and for the six months then ended have been derived from Huntsman Packaging's unaudited financial statements included elsewhere in this Prospectus. Interim results, in the opinion of management of Huntsman Packaging, include all adjustments (consisting solely of normal recurring adjustments) necessary to present fairly the financial information for such periods; however, such results are not necessarily indicative of the results that may be expected for any other interim period or for a full year. The summary pro forma financial data of Huntsman Packaging set forth below give effect to: (i) the Offering; (ii) the Split-Off; (iii) the CT Film Purchase; (iv) the execution of the Credit Facilities (items (i)-(iv) are collectively referred to as the "1997 Pro Forma Transactions"); (v) the Deerfield Acquisition; (vi) the United Films Acquisition; and (vii) the contribution of certain European foam operations ("European Foam") by Huntsman Corporation to Huntsman Packaging (items (v)-(vii) are collectively referred to as the "1996 Pro Forma Transactions," and the 1997 Pro Forma Transactions and the 1996 Pro Forma Transactions are collectively referred to as the "Pro Forma Transactions"). The unaudited pro forma condensed statement of operations and other financial data for the year ended December 31, 1996 and the six months ended June 30, 1997 give effect to the Pro Forma Transactions as if they had occurred on January 1, 1996. The unaudited pro forma condensed balance sheet data as of June 30, 1997 give effect to the 1997 Pro Forma Transactions as if they had occurred on such date. The summary pro forma financial data do not purport to be indicative of the financial position or results of operations of future periods or indicative of results that would have occurred had the transactions referred to above been consummated on the dates indicated. The summary pro forma financial data should be read in conjunction with "Unaudited Pro Forma Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations," Huntsman Packaging's audited and unaudited historical financial statements and the notes thereto and CT Film's audited and unaudited historical financial statements and the notes thereto included elsewhere in this Prospectus. 11
HUNTSMAN PACKAGING HISTORICAL HUNTSMAN PACKAGING PRO FORMA ------------------------------------------------------------------ ------------------------------- SIX MONTHS YEAR ENDED SIX MONTHS YEAR ENDED DECEMBER 31, ENDED JUNE 30, DECEMBER 31, ENDED JUNE 30, ----------------------------------------------- ------------------ -------------- -------------- 1992 1993 1994 1995 1996 1996 1997 1996 1997 -------- -------- -------- -------- --------- -------- -------- -------------- -------------- (DOLLARS IN MILLIONS) (DOLLARS IN MILLIONS) STATEMENT OF OPERATIONS: Net sales ..................... $ 69.4 $200.2 $255.7 $280.0 $308.1 $127.9 $218.7 $567.6 $298.1 Costs of goods sold ........... 56.0 166.0 210.4 235.1 263.3 106.8 192.5 492.0 264.6 -------- -------- -------- -------- --------- -------- -------- -------------- -------------- Gross profit ................. 13.4 34.2 45.3 44.9 44.8 21.1 26.2 75.6 33.5 Total operating expenses ..... 9.8 28.0 33.5 31.8 39.4 14.7 16.6 57.5 22.8 -------- -------- -------- -------- --------- -------- -------- -------------- -------------- Income from operations ...... 3.6 6.2 11.8 13.1 5.4 6.4 9.6 18.1 10.7 Interest expense--net ......... (1.6) (6.5) (7.5) (8.8) (11.6) (4.8) (7.1) (23.4) (11.7) Other income (expense) ........ (0.1) 0.5 -- (2.5) (3.4) 0.8 0.9 (3.5) 0.9 -------- -------- -------- -------- --------- -------- -------- -------------- -------------- Income (loss) before income taxes and extraordinary item . 1.9 0.2 4.3 1.8 (9.6) 2.4 3.4 (8.8) (0.1) Provision for (benefit from) income taxes ................. 1.5 0.3 1.9 0.9 (4.9) 0.8 1.4 (3.2) -- -------- -------- -------- -------- --------- -------- -------- -------------- -------------- Income (loss) before extraordinary item ........... 0.4 (0.1) 2.4 0.9 (4.7) 1.6 2.0 $ (5.6) $ (0.1) ============== ============== Extraordinary item............. -- -- -- -- (1.3) (1.3) -- -------- -------- -------- -------- --------- -------- -------- Net income (loss)............. $ 0.4 $ (0.1) $ 2.4 $ 0.9 $ (6.0) $ 0.3 $ 2.0 ======== ======== ======== ======== ========= ======== ======== OTHER FINANCIAL DATA: Depreciation and amortization $ 3.8 $ 8.9 $ 8.5 $ 10.6 $ 12.2 $ 5.3 $ 7.7 $ 20.9 $ 10.7 EBITDA (1) .................... 7.3 15.6 20.3 21.2 14.2 12.5 18.2 35.5 22.3 Adjusted EBITDA (2)............ 7.3 15.6 20.3 21.2 29.2(3) 12.5 18.2 65.6(3)(4) 29.9(4) Cash flows from operating activities.................... (1.8) 15.8 (1.9) 9.7 11.8 6.2 3.6 Cash flows from investing activities.................... (45.5) (41.3) (8.1) (17.6) (85.4) (3.4) (8.0) Cash flows from financing activities.................... 69.6 7.0 9.9 6.7 79.9 (0.6) 12.2 Net cash interest expense ..... 1.4 6.0 7.0 8.3 11.6 4.8 7.1 23.4 11.7 Capital expenditures .......... 1.3 5.6 8.3 16.5 9.2 3.4 8.0 26.4 12.7 Ratio of Adjusted EBITDA to net cash interest expense ... 5.2x 2.6x 2.9x 2.6x 2.5x 2.6x 2.6x 2.8x 2.6x Ratio of earnings to fixed charges (5) .................. 1.9x 1.0x 1.5x 1.2x 0.2x 1.5x 1.5x 0.7x 1.0x BALANCE SHEET DATA (AT PERIOD END): Working capital................ $ 40.6 $ 34.1 $ 46.8 $ 53.0 $ 74.6 $ 56.8 $ 85.5 $122.9 Total assets .................. 158.8 181.3 196.1 204.6 329.2 205.6 338.4 432.7 Long-term debt ................ 68.7 78.1 88.7 103.0 186.7 102.3 198.3 275.3 Total liabilities ............. 100.2 123.6 136.1 142.5 262.1 143.4 271.8 366.0 Stockholders' equity........... 58.6 57.7 60.0 62.1 67.0 62.2 66.7 66.7
- ------------ (1) EBITDA is defined as earnings from operations before interest expense, taxes and depreciation and amortization. Huntsman Packaging understands that certain investors believe EBITDA reflects a company's ability to satisfy principal and interest obligations with respect to its indebtedness and to utilize cash for other purposes. EBITDA does not represent and should not be considered as an alternative to net income or cash flows from operations as determined by generally accepted accounting principles ("GAAP"). (2) Adjusted EBITDA is EBITDA as modified to reflect certain adjustments which management believes are relevant in evaluating the future operating performance of the Company. These adjustments, which eliminate the impact of certain nonrecurring charges and reflect the estimated impact of management's business and operating strategy, are based on estimates and assumptions made and believed to be reasonable by the Company, but are inherently uncertain and are subject to change. Adjusted EBITDA should not be viewed as indicative of actual or future results and is not computed in accordance with GAAP or with regulations of the Commission. (3) Adjusted for $12.1 million aggregate charges resulting from the closing of certain facilities in the year ended December 31, 1996 and estimated savings of $2.9 million of overhead to reflect the closing of such facilities as if they had been closed on January 1, 1996. (4) Adjusted for the following: (i) Management's estimated recurring net cost savings due to the combination of Huntsman Packaging and CT Film. Management believes these savings will be fully realized by the end of 1998. Net savings are expected to result from the following:
SIX MONTHS YEAR ENDED ENDED DECEMBER 31, 1996 JUNE 30, 1997 ----------------- --------------- Plant headcount reductions ................ $ 1.1 $0.6 Administrative headcount reductions ....... 5.5 2.7 Savings from United States plant closure .. 4.1 2.1 Savings from United Kingdom plant closure . 1.6 0.8 ----------------- --------------- Total estimated recurring net cost savings. $12.3 $6.2 ================= ===============
(ii) Cost savings from the elimination of $2.8 million during the year ended December 31, 1996 and $1.4 million during the six months ended June 30, 1997 of corporate allocations from Rexene Corporation recorded by CT Film which will not recur. (5) For purposes of this computation, earnings are defined as income before income taxes plus fixed charges. Fixed charges consist of interest (including amortization of deferred financing costs) and that portion of rental expense that is representative of interest (deemed to be one-third of operating lease rental expense). For the year ended December 31, 1996, earnings were insufficient to cover fixed charges by $9.6 million due primarily to a $10.9 million restructuring charge. 12 RISK FACTORS Holders of Old Notes should consider carefully the following risk factors as well as the other information contained in this Prospectus before making a decision to tender their Old Notes in this Exchange Offer, although the risk factors set forth below (other than "--Consequences of Exchanging or Failing to Exchange Old Notes") are generally applicable to the Old Notes as well as the New Notes. CONSEQUENCES OF EXCHANGING OR FAILING TO EXCHANGE OLD NOTES Holders of Old Notes who do not exchange their Old Notes for New Notes pursuant to the Exchange Offer will continue to be subject to the restrictions on transfer of such Old Notes as set forth in the legend thereon as a consequence of the issuance of the Old Notes pursuant to exemptions from, or in transactions not subject to, the registration requirements of the Securities Act and applicable state securities laws. In general, the Old Notes may not be offered or sold, unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. Huntsman Packaging does not currently anticipate that it will register Old Notes under the Securities Act. See "Description of the Notes -- Registration Rights." Under existing interpretations by the staff of the Commission contained in several no-action letters issued to third parties, Huntsman Packaging believes that the New Notes issued pursuant to the Exchange Offer in exchange for the Old Notes may be freely transferable by holders thereof (other than any such holder which is an "affiliate" of Huntsman Packaging within the meaning of Rule 405 under the Securities Act) without further registration under the Securities Act; provided, however, that each Holder that wishes to exchange its Old Notes for New Notes will be required to represent (i) that any New Notes to be received by it will be acquired in the ordinary course of its business, (ii) that at the time of the commencement of the Exchange Offer it has no arrangement or understanding with any person to participate in the distribution (within the meaning of the Securities Act) of the New Notes in violation of the Securities Act, (iii) that it is not an "affiliate" (as defined in Rule 405 promulgated under the Securities Act) of Huntsman Packaging, (iv) if such Holder is not a broker-dealer, that it is not engaged in, and does not intend to engage in, the distribution of New Notes and (v) if such Holder is a broker-dealer (a "Participating Broker-Dealer") that will receive New Notes for its own account in exchange for Old Notes that were acquired as a result of market-making or other trading activities, that it will deliver a prospectus in connection with any resale of such New Notes. However, Huntsman Packaging does not intend to request the Commission to consider, and the Commission has not considered, the Exchange Offer in the context of a no-action letter and there can be no assurance that the staff of the Commission would make a similar determination with respect to the Exchange Offer as in such other circumstances. Huntsman Packaging will agree to make available, during the period required by the Securities Act, a prospectus meeting the requirements of the Securities Act for use by Participating Broker-Dealers and other persons, if any, with similar prospectus delivery requirements for use in connection with any resale of New Notes. If any Holder is an affiliate of Huntsman Packaging or is engaged in or intends to engage in or has any arrangement with any person to participate in the distribution of the New Notes to be acquired pursuant to the Exchange Offer, such Holder (i) could not rely on the applicable interpretations of the staff of the Commission and (ii) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction, including the delivery of a prospectus which contains the information with respect to any selling holder required by the Securities Act. Each broker-dealer that receives New Notes for its own account pursuant to the Exchange Offer must represent to Huntsman Packaging that it will deliver a prospectus in connection with any resale of such New Notes. The Letter of Transmittal states that by so representing and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of New Notes received in exchange for Old Notes where such Old Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities. Huntsman Packaging has agreed that, starting on the Expiration Date (as defined herein) and ending on the close of business on the 90th day following the Expiration Date, it will make this Prospectus available to any broker-dealer for use in connection with any such resale. See "Plan of Distribution." However, to comply with the securities laws of certain jurisdictions, if applicable, the New Notes may not be offered or sold unless they have been 13 registered or qualified for sale in such jurisdictions or an exemption from registration or qualification is available and is complied with. Huntsman Packaging does not currently intend to register or qualify the sale of the New Notes in any such jurisdiction. See "The Exchange Offer -- Consequences of Exchanging or Failing to Exchange Old Notes." SUBSTANTIAL LEVERAGE AND ABILITY TO SERVICE INDEBTEDNESS As of June 30, 1997, Huntsman Packaging had outstanding long-term debt of approximately $198.3 million. In connection with the Offering and the CT Film Purchase, Huntsman Packaging incurred a significant amount of additional indebtedness, and as a result, has significant debt service requirements. As of June 30, 1997, on a pro forma basis after giving effect to the 1997 Pro Forma Transactions as if they had occurred on such date, Huntsman Packaging would have had total outstanding long-term debt of approximately $275.3 million, or approximately 80% of its total capitalization, and stockholders' equity of $66.7 million. For the year ended December 31, 1996, on a pro forma basis after giving effect to the Pro Forma Transactions, the ratio of EBITDA to net cash interest expense would have been 1.5x. See "Capitalization," "Unaudited Pro Forma Financial Data" and "Selected Historical Financial Data." Huntsman Packaging's high degree of leverage could have important consequences to Holders, including, but not limited to, the following: (i) Huntsman Packaging's ability to obtain additional financing in the future for working capital, capital expenditures, product development, debt service requirements, acquisitions, general corporate or other purposes may be materially limited or impaired; (ii) a substantial portion of Huntsman Packaging's cash flow from operations must be dedicated to the payment of principal and interest on its indebtedness, thereby reducing the funds available to Huntsman Packaging for other purposes, including its operations and future business opportunities; (iii) certain of Huntsman Packaging's borrowings, including borrowings under the Credit Facilities, are at variable rates of interest, exposing Huntsman Packaging to the risk of increased interest rates; (iv) the indebtedness outstanding under the Credit Facilities is secured by a lien on substantially all the assets of Huntsman Packaging and its domestic subsidiaries and will mature prior to the maturity of the Notes; (v) Huntsman Packaging's flexibility to adjust to changing market conditions and ability to withstand competitive pressures could be limited by its leveraged position and the covenants contained in its debt instruments, thus putting Huntsman Packaging at a competitive disadvantage; and (vi) Huntsman Packaging may be vulnerable in a downturn in general economic conditions or in its business or be unable to carry out capital spending that is important to its growth and productivity improvement programs. Huntsman Packaging is required to make scheduled principal payments under the Credit Facilities commencing in 2001. Huntsman Packaging's ability to make scheduled payments or to refinance its obligations with respect to its indebtedness, including the Notes, will depend on its financial and operating performance, which is subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond its control, including interest rates, unscheduled plant shutdowns, increased operating costs, raw material and product prices, regulatory developments and the ability of the Company to repatriate cash generated outside of the United States without incurring a substantial tax liability. See "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Liquidity." There can be no assurance that Huntsman Packaging will maintain a level of cash flow from operations sufficient to permit it to pay the principal, premium, if any, and interest on its indebtedness, including the Notes. If Huntsman Packaging's cash flow and capital resources are insufficient to fund its debt service obligations, Huntsman Packaging may be forced to reduce or delay capital expenditures, sell assets, seek additional capital or restructure or refinance its indebtedness, including the Notes. There can be no assurance that any such alternative measures would be successful or would permit Huntsman Packaging to meet its scheduled debt service obligations. In the absence of such operating results and resources, Huntsman Packaging could face substantial liquidity problems and might be required to dispose of material assets or operations to meet its debt service and other obligations. The agreement governing the Credit Facilities (the "Credit Agreement") and the Indenture (as defined) will restrict Huntsman 14 Packaging's ability to sell assets and use the proceeds therefrom. See "Description of the Notes." There can be no assurance as to the ability of Huntsman Packaging to consummate such sales or to obtain the proceeds which Huntsman Packaging could realize therefrom or that such proceeds would be adequate to meet the obligations then due. In the event that Huntsman Packaging is unable to generate sufficient cash flow and Huntsman Packaging is otherwise unable to obtain funds necessary to meet required payments of principal, premium, if any, and interest on its indebtedness, or if Huntsman Packaging otherwise fails to comply with the various covenants in the instruments governing such indebtedness (including covenants in the Indenture and the Credit Agreement), Huntsman Packaging could be in default under the terms of the agreements governing such indebtedness, including the Credit Agreement and the Indenture. In the event of such default, the holders of such indebtedness could elect to declare all the funds borrowed thereunder to be due and payable together with accrued and unpaid interest, the lenders under the Credit Facilities could elect to terminate their commitments thereunder and Huntsman Packaging could be forced into bankruptcy or liquidation. Any default under the agreements governing the indebtedness of Huntsman Packaging could have a significant adverse effect on Huntsman Packaging's ability to pay principal, premium, if any, and interest on the Notes and on the market value of the Notes. See "Use of Proceeds" and "Description of the Notes." SUBORDINATION OF THE NOTES; UNSECURED STATUS OF THE NOTES The payment of principal, premium, if any, and interest on, and any other amounts owing in respect of, the Notes is subordinated in right of payment to the prior payment in full of all existing and future Senior Debt (as defined in the Indenture) of Huntsman Packaging, including all amounts owing under the Credit Facilities. As of June 30, 1997 on a pro forma basis after giving effect to the Offering and the CT Film Purchase, the aggregate principal amount of such Senior Debt of Huntsman Packaging would have been $150.3 million (excluding unused commitments and outstanding letters of credit totalling $74.7 million under the Credit Facilities). Therefore, in the event of a bankruptcy, liquidation, dissolution, reorganization or similar proceeding with respect to Huntsman Packaging, the assets of Huntsman Packaging will be available to pay obligations on the Notes only after all Senior Debt of Huntsman Packaging has been paid in full, and there can be no assurance that there will be sufficient assets remaining to pay amounts due on all or any of the Notes. The Guarantees will be unsecured senior subordinated obligations of the Guarantors and will be subordinated in right of payment to all existing and future Guarantor Senior Debt (as defined in the Indenture), including all amounts owing under the Credit Facilities. In addition, the Notes are effectively subordinated to all obligations of any subsidiary of Huntsman Packaging that is not a Guarantor, including trade payables of such subsidiaries, whether or not such liabilities constitute Guarantor Senior Debt. The Indenture permits Huntsman Packaging to incur certain secured indebtedness, including indebtedness under the Credit Facilities, which is secured by a lien on substantially all the assets of Huntsman Packaging and its domestic subsidiaries. The Notes are unsecured and therefore do not have the benefit of such collateral. Accordingly, if an event of default occurs under the Credit Agreement, the lenders under the Credit Facilities will have a prior right to the assets of Huntsman Packaging, and may foreclose upon such collateral. In either such event, such assets would first be used to repay in full amounts outstanding under the Credit Facilities, resulting in all or a portion of Huntsman Packaging's assets being unavailable to satisfy the claims of the Holders and other unsecured indebtedness. RESTRICTIONS UNDER CREDIT FACILITIES Huntsman Packaging will be subject to certain restrictive covenants under the Credit Agreement, including financial and operating covenants. Failure to comply with any such covenants would permit the lenders under the Credit Agreement to cease making any further loans and to accelerate the maturity of the indebtedness under the Credit Facilities and institute foreclosure proceedings as to Huntsman Packaging's assets and could result in the acceleration of other indebtedness of Huntsman Packaging, including the Notes. Such actions would adversely affect Huntsman Packaging's ability to pay the principal, premium, if any, or interest on the Notes. 15 EXPOSURE TO FLUCTUATIONS IN RESIN PRICES AND DEPENDENCE ON RESIN SUPPLIES Huntsman Packaging uses large quantities of resin in manufacturing its products. For the year ended December 31, 1996, resin costs comprised approximately 78% of raw materials costs and approximately 44% of net sales. While Huntsman Packaging historically has been able to pass through increases in the cost of resin to its customers, significant increases in the price of resin could adversely affect Huntsman Packaging's operating margins. There can be no assurance that a significant increase in resin prices, would not have an adverse effect on Huntsman Packaging's business, results of operations and debt service capabilities. In addition, Huntsman Packaging has relied on certain key suppliers of resin for most of its resin supply, some of which resin has characteristics proprietary to the supplier. Although Huntsman Packaging believes that its key suppliers will continue to supply Huntsman Packaging with adequate amounts of resin on a timely basis and that alternatives are available for resin with proprietary characteristics, the loss of a key source of supply, the inability to obtain resin with desired proprietary characteristics or a delay in shipments could have an adverse effect on Huntsman Packaging's business. Huntsman Packaging also obtains resin on favorable terms under certain contracts with suppliers. Should any of Huntsman Packaging's resin suppliers fail to deliver resin or should any such contract be canceled, Huntsman Packaging would be forced to purchase resin in the open market and no assurances can be given that it would be able to make such purchases at prices that would allow it to remain competitive. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business -- Raw Materials." COMPETITION The markets in which Huntsman Packaging operates are highly competitive on the basis of price, service, quality and innovation in product structures. In addition to many smaller competitors, Huntsman Packaging faces strong competition from various large flexible packaging companies, including Bemis, American National Can, Printpack, Cryovac (a division of W.R. Grace), Tenneco, AEP and Exxon. Some of Huntsman Packaging competitors are substantially larger, more diversified and have greater financial, personnel and marketing resources than Huntsman Packaging and therefore may have certain competitive advantages vis-|f2-vis Huntsman Packaging. Although Huntsman Packaging has broad product lines and is continually developing its product structures and graphics, from time to time customers may determine to use alternative product structures and graphics not offered by Huntsman Packaging, with a corresponding reduction in existing and potential revenues from these customers. See "Business." CUSTOMER RELATIONSHIPS Huntsman Packaging is dependent upon a limited number of large customers with substantial purchasing power for a majority of its sales, many of which are reducing their number of suppliers. The top ten customers accounted for approximately 20.5% of Huntsman Packaging's total sales in 1996. The loss of one or more major customers, or a material reduction in the sales to such customers would have a material adverse effect on Huntsman Packaging's results of operations and on its ability to services its Indebtedness. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business." RISKS RELATING TO THE INTEGRATION OF THE CT FILM PURCHASE With the consummation of the CT Film Purchase, the sales efforts of Huntsman Packaging and CT Film, the consolidation of less efficient facilities and the elimination of duplicative management and operating personnel must be completed successfully in order to capture the benefit of the expected efficiencies and cost reductions. This process will require substantial attention from Huntsman Packaging's management team. The diversion of management attention, as well as any other difficulties that may be encountered in the transition and integration process, could have a material adverse effect on Huntsman Packaging's financial condition, results of operations or cash flows. There can be no assurance that Huntsman Packaging will be able to integrate the operations of Huntsman Packaging and CT Film successfully. In addition, CT Film's sales volume and operating results for 1996 were adversely affected by 16 technological changes in the disposable diaper market, resulting in a significant reduction in sales volume to CT Film's largest customer. Although the Company is currently developing various strategies to increase the sales and profits of CT Film, there can be no assurance as to its ability to achieve such results. FRAUDULENT TRANSFER CONSIDERATIONS If, under relevant federal and state fraudulent transfer and conveyance statutes, in a bankruptcy, reorganization or liquidation case or similar proceeding or a lawsuit by or on behalf of unpaid creditors of Huntsman Packaging or a Guarantor, a court were to find that, at the time the Notes were issued by Huntsman Packaging, (a) Huntsman Packaging issued the Notes with the intent of hindering, delaying or defrauding current or future creditors or (b)(i) Huntsman Packaging or such Guarantor received less than reasonably equivalent value or fair consideration for issuing the Notes or a Guarantee, respectively, and (ii) after applying the proceeds, Huntsman Packaging or such Guarantor (A) was insolvent or was rendered insolvent by reason of such transactions, (B) was engaged, or about to engage, in a business or transaction for which its assets constituted unreasonably small capital to carry on its business, or (C) intended to incur, or believed or reasonably should have believed that it would incur, debts beyond its ability to pay as such debts matured or became due (as all of the foregoing terms are defined in or interpreted under the relevant fraudulent transfer or conveyance statutes), such court could avoid the obligations under the Notes or such Guarantee or further subordinate the Notes or such Guarantee to presently existing and future indebtedness of Huntsman Packaging or such Guarantor or take other action detrimental to the Holders, including, under certain circumstances, invalidating the Notes or such Guarantee. In that event, there can be no assurance that any repayment on the Notes would ever be received by Holders. The avoidance of such Notes could result in an event of default with respect to other debt of Huntsman Packaging and its subsidiaries, which could result in acceleration of such debt. The measure of insolvency for purposes of the foregoing considerations will vary depending upon the law of the jurisdiction that is be applied. Generally, however, a company would be considered insolvent if, at the time it incurred indebtedness, either (i) it is unable to pay its debts as they become due in the usual course of its business, (ii) the sum of its debts, including contingent liabilities, was greater than all its assets at a fair valuation or (iii) the present fair saleable value of its assets is less than the amount required to pay the probable liability on its total existing debts and liabilities (including contingent liabilities), as they become absolute and matured. There can be no assurance as to what standards a court would use to determine whether Huntsman Packaging or a Guarantor was solvent at the relevant time, or whether, whatever standard was used, the Notes or the Guarantees would be avoided on another of the grounds set forth above. The Holders of the Notes will have the benefit of the Guarantees of the Guarantors. However, the Guarantees will be limited to the maximum amount which the Guarantors are permitted to guarantee under applicable law. As a result, a Guarantor's liability under its Guarantee could be reduced to zero, depending upon the amount of other obligations of the Guarantors. Notwithstanding such provision, such Guarantee may be subject to review by a court under relevant federal and state fraudulent conveyance and transfer statutes and, if a court makes certain findings, it could take certain actions detrimental to the Holders of the Notes. The Guarantees may also be released under certain circumstances. See "Description of the Notes -- Guarantees." LACK OF ESTABLISHED MARKET FOR THE NOTES The New Notes are being offered to the Holders of the Old Notes. The Old Notes were issued on September 30, 1997 to a small number of institutional investors and are eligible for trading in the Private Offerings, Resales and Trading through Automated Linkages (PORTAL) Market, the National Association of Securities Dealers' screen-based, automated market for trading of securities eligible for resale under Rule 144A of the Securities Act. The New Notes will constitute a new issue of securities for which there is no established trading market, and there can be no assurance that an active trading market for the New Notes will develop in the PORTAL Market or elsewhere. Although the Initial Purchasers have advised the Company that they currently intend to make a market in the New Notes, they are not obligated to do so and may discontinue such market-making at any time without notice. Accordingly, no 17 assurance can be given as to (i) the likelihood that an active market for the New Notes will develop, (ii) the liquidity of any such market, (iii) the ability of the Holders to sell their New Notes or (iv) the prices that Holders may obtain for their New Notes upon any sale. In addition, such market-making activity will be subject to the limits imposed by the Securities Act and Securities Exchange Act of 1934, as amended (the "Exchange Act"), and may be limited during the Exchange Offer. See "Description of the Notes" and "The Exchange Offer." The Company does not intend to apply for listing of the New Notes or Old Notes on any securities exchange or for quotation through the National Association of Securities Dealers Automated Quotation System. Historically, the market for non-investment grade debt has been subject to disruptions that have caused substantial volatility in the prices of securities similar to the Notes. There can be no assurance that the market for the Notes will not be subject to similar disruptions. Any such disruptions may have an adverse effect on the Holders. EXCHANGE OFFER PROCEDURES Subject to the conditions set forth under "The Exchange Offer -- Conditions to the Exchange Offer," issuance of the New Notes in exchange for Old Notes pursuant to the Exchange Offer will be made only after a timely receipt by Huntsman Packaging of (i) a book-entry confirmation (as defined below) evidencing the tender of such Old Notes through ATOP or (ii) certificates representing such Old Notes, a properly completed and duly executed Letter of Transmittal, with any required signature guarantees, and all other required documents. See "The Exchange Offer -- Acceptance of Old Notes for Exchange; Delivery of New Notes" and "--Procedures for Tendering Old Notes." Therefore, Holders of the Old Notes desiring to tender such Old Notes in exchange for New Notes should allow sufficient time to ensure timely delivery. Huntsman Packaging is under no duty to give notification of defects or irregularities with respect to the tenders of Old Notes for exchange. 18 USE OF PROCEEDS Huntsman Packaging will not receive any proceeds from the issuance of the New Notes offered pursuant to the Exchange Offer. In consideration for issuing the New Notes as contemplated in this Prospectus, Huntsman Packaging will receive in exchange Old Notes in like principal amount, the terms of which are identical in all material respects to the New Notes except for certain transfer restrictions and registration rights. The Old Notes surrendered in exchange for New Notes will be retired and cancelled and cannot be reissued. Accordingly, issuance of the New Notes will not result in any increase in the indebtedness of Huntsman Packaging. The net proceeds to Huntsman Packaging from the Offering, after deducting discounts and expenses, were approximately $121 million. Huntsman Packaging used the net proceeds of the Offering, together with borrowings under the Credit Facilities, to finance the repayment of all outstanding long-term indebtedness owed to Huntsman Corporation (a portion of which was incurred to finance the Deerfield Acquisition, the United Films Acquisition and capital expenditures), fund the CT Film Purchase and provide funds for ongoing working capital and general corporate purposes. The indebtedness repaid bore interest at a variable rate of interest equal to LIBOR plus 2.00% and was payable on demand. 19 THE EXCHANGE OFFER TERMS OF THE EXCHANGE OFFER; PERIOD FOR TENDERING OLD NOTES The Old Notes were sold by Huntsman Packaging on September 30, 1997 (the "Closing Date") to BT Alex. Brown Incorporated and Chase Securities Inc., the Initial Purchasers, pursuant to a Purchase Agreement, dated September 19, 1997, entered into by and among Huntsman Packaging, the Initial Purchasers and the Guarantors named therein (the "Purchase Agreement"). Upon the terms and subject to the conditions set forth in this Prospectus and in the accompanying Letter of Transmittal (which together constitute the Exchange Offer), Huntsman Packaging will accept for exchange Old Notes which are properly tendered on or prior to the Expiration Date and not withdrawn as permitted below. As used herein, the term "Expiration Date" means 5:00 p.m., New York City time on , 1997; provided, however, that if Huntsman Packaging, in its sole discretion, has extended the period of time for which the Exchange Offer is open, the term "Expiration Date" means the latest time and date to which the Exchange Offer is extended. As of the date of this Prospectus, $125,000,000 aggregate principal amount of the Old Notes is outstanding. This Prospectus, together with the Letter of Transmittal, is first being sent on or about , 1997, to all Holders of Old Notes known to Huntsman Packaging. Huntsman Packaging's obligation to accept Old Notes for exchange pursuant to the Exchange Offer is subject to certain conditions as set forth under "--Conditions to the Exchange Offer" below. Huntsman Packaging expressly reserves the right, at any time or from time to time, to extend the period of time during which the Exchange Offer is open, and thereby delay acceptance for exchange of any Old Notes, by giving oral or written notice of such extension to the Holders thereof as described below. During any such extension, all Old Notes previously tendered will remain subject to the Exchange Offer and may be accepted for exchange by Huntsman Packaging. Any Old Notes not accepted for exchange for any reason will be returned without expense to the tendering Holder thereof as promptly as practicable after the expiration or termination of the Exchange Offer. Old Notes tendered in the Exchange Offer must be in denominations of principal amount of $1,000 or any integral multiple thereof. Huntsman Packaging expressly reserves the right to amend or terminate the Exchange Offer, and not to accept for exchange any Old Notes not theretofore accepted for exchange, upon the occurrence of any of the conditions of the Exchange Offer specified below under "--Conditions to the Exchange Offer." Huntsman Packaging will give oral or written notice of any extension, amendment, non-acceptance or termination to the Holders of the Old Notes as promptly as practicable, such notice in the case of any extension to be issued by means of a press release or other public announcement no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. PROCEDURES FOR TENDERING OLD NOTES The tender to Huntsman Packaging of Old Notes by a Holder thereof as set forth below and the acceptance thereof by Huntsman Packaging will constitute a binding agreement between the tendering Holder and Huntsman Packaging upon the terms and subject to the conditions set forth in this Prospectus and in the accompanying Letter of Transmittal. Except as set forth below, a Holder who wishes to tender Old Notes for exchange pursuant to the Exchange Offer must transmit a properly completed and duly executed Letter of Transmittal, including all other documents required by such Letter of Transmittal, to (the "Exchange Agent") at one of the addresses set forth below under "--Exchange Agent" for receipt on or prior to the Expiration Date. In addition, either (i) certificates for such Old Notes must be received by the Exchange Agent along with the Letter of Transmittal or (ii) if using ATOP, a timely confirmation of a book-entry transfer (a "Book-Entry Confirmation") of such Old Notes, if such procedure is available, into the Exchange Agent's account at The Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to the procedure for book-entry transfer described below, must be received by the Exchange Agent prior to the Expiration Date or (iii) the Holder must comply with the guaranteed delivery procedures described below. 20 THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE HOLDERS. IF SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY. NO LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO HUNTSMAN PACKAGING. Any beneficial owner whose Old Notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and who wishes to tender should contact the registered Holder promptly and instruct such registered Holder to tender on such beneficial owner's behalf. If such beneficial owner wishes to tender on such owner's own behalf, such owner must, prior to completing and executing the Letter of Transmittal and delivering such owner's Old Notes, either make appropriate arrangements to register ownership of the Old Notes in such owner's name or obtain a properly completed bond power from the registered Holder. The transfer of registered ownership may take considerable time. Signatures on a Letter of Transmittal or a notice of withdrawal described below (see "--Withdrawal of Tenders"), as the case may be, must be guaranteed as described below (see "--Guaranteed Delivery Procedures") unless the Old Notes tendered pursuant thereto are tendered (i) by a registered Holder who has not completed the box entitled "Special Issuance Instructions" or "Special Delivery Instructions" on the Letter of Transmittal or (ii) for the account of an Eligible Institution (as defined below). In the event that signatures of a Letter of Transmittal or a notice of withdrawal, as the case may be, are required to be guaranteed, such guarantee must be made by a firm which is a member of a registered national securities exchange or a member of the National Association of Securities Dealers, Inc. or by a commercial bank or trust company having an office or correspondent in the United States (collectively, "Eligible Institutions"). If Old Notes are registered in the name of a person other than a signer of the Letter of Transmittal, the Old Notes surrendered for exchange must be endorsed by, or be accompanied by a written instrument or instruments of transfer or exchange, in satisfactory form as determined by Huntsman Packaging, duly executed by the registered Holder with the signature thereon guaranteed by an Eligible Institution. All questions as to the validity, form, eligibility (including time of receipt) and acceptance of tendered Old Notes will be determined by Huntsman Packaging in its sole discretion, which determination will be final and binding. Huntsman Packaging reserves the absolute right to reject any and all tenders of any particular Old Notes not properly tendered or to not accept any particular Old Note if acceptance would, in the judgment of Huntsman Packaging or its counsel, be unlawful. Huntsman Packaging also reserves the absolute right to waive any defects, irregularities or conditions of the Exchange Offer as to any particular Old Notes either before or after the Expiration Date (including the right to waive the ineligibility of any Holder who seeks to tender Old Notes in the Exchange Offer). The interpretation of the terms and conditions of the Exchange Offer as to any particular Old Note either before or after the Expiration Date (including the Letter of Transmittal and the instructions thereto) by Huntsman Packaging will be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Old Notes for exchange must be cured within such reasonable period of time as Huntsman Packaging may determine. Neither Huntsman Packaging, the Exchange Agent or any other person will be under any duty to give notification of any defect or irregularity with respect to any tender of Old Notes for exchange, nor will any of them incur any liability for failure to give such notification. If the Letter of Transmittal is signed by a person or persons other than the registered Holder or Holders of Old Notes, such Old Notes must be endorsed or accompanied by appropriate powers of attorney, in either case signed exactly as the name or names of the registered Holder or Holders that appear on the Old Notes. If the Letter of Transmittal or any Old Note or powers of attorney are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and, unless waived by Huntsman Packaging, proper evidence satisfactory to Huntsman Packaging of their authority to so act must be submitted with the Letter of Transmittal. 21 By tendering, each Holder will be required to represent (i) that any New Notes to be received by it will be acquired in the ordinary course of its business, (ii) that at the time of the commencement of the Exchange Offer it has no arrangement or understanding with any person to participate in the distribution (within the meaning of the Securities Act) of the New Notes in violation of the Securities Act, (iii) that it is not an "affiliate" (as defined in Rule 405 promulgated under the Securities Act) of Huntsman Packaging, (iv) if such Holder is not a broker-dealer, that it is not engaged in, and does not intend to engage in, the distribution of New Notes and (v) if such Holder is a Participating Broker-Dealer that will receive New Notes for its own account in exchange for Old Notes that were acquired as a result of market-making or other trading activities, that it will deliver a prospectus in connection with any resale of such New Notes. Huntsman Packaging will agree to make available, during the period required by the Securities Act, a prospectus meeting the requirements of the Securities Act for use by Participating Broker-Dealers and other persons, if any, with similar prospectus delivery requirements for use in connection with any resale of New Notes. If any Holder is an affiliate of Huntsman Packaging, is engaged in or intends to engage in or has any arrangement with any person to participate in the distribution of the New Notes to be acquired pursuant to the Exchange Offer, such Holder (i) could not rely on the applicable interpretations of the staff of the Commission and (ii) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction, including the delivery of a prospectus which contains the information with respect to any selling holder required by the Securities Act. Each broker-dealer that receives New Notes for its own account in exchange for Old Notes, where such Old Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must represent to Huntsman Packaging that it will deliver a prospectus in connection with any resale of such New Notes. See "Plan of Distribution." The Letter of Transmittal states that by so representing and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES Upon satisfaction or waiver of all of the conditions to the Exchange Offer, Huntsman Packaging will accept, promptly after the Expiration Date, all Old Notes properly tendered and will issue the New Notes promptly after acceptance of the Old Notes. See "--Conditions to the Exchange Offer" below. For purposes of the Exchange Offer, Huntsman Packaging will be deemed to have accepted properly tendered Old Notes for exchange, when, as and if Huntsman Packaging has given oral or written notice thereof to the Exchange Agent. For each Old Note accepted for exchange, the Holder of such Old Note will receive a New Note having a principal amount equal to that of the surrendered Old Note. Accordingly, registered Holders of New Notes on the relevant record date for the first interest payment date following the consummation of the Exchange Offer will receive interest accruing from the most recent date to which interest has been paid or, if no interest has been paid, from September 30, 1997. Old Notes accepted for exchange will cease to accrue interest from and after the date of consummation of the Exchange Offer. Holders of Old Notes whose Old Notes are accepted for exchange will not receive any payment in respect of accrued interest on such Old Notes otherwise payable on any interest payment date the record date for which occurs on or after consummation of the Exchange Offer. In the event of a registration default under the Registration Rights Agreement, Huntsman Packaging will pay Additional Interest to each Holder of Transfer Restricted Securities (as defined herein). See "Description of the Notes -- Additional Interest." In all cases, issuance of New Notes for Old Notes that are accepted for exchange pursuant to the Exchange Offer will be made only after timely receipt by the Exchange Agent of certificates for such Old Notes or, if using ATOP, a timely Book-Entry Confirmation of such Old Notes into the Exchange Agent's account at the Book-Entry Facility, a properly completed and duly executed Letter of Transmittal and all other required documents or, in the case of a Book-Entry confirmation, an Agent's Message in lieu thereof. If any tendered Old Notes are not accepted for any reason set forth in the terms and conditions of the Exchange Offer or if Old Notes are submitted for a greater principal amount than the Holder desires to exchange, such unaccepted or non-exchanged Old Notes will be returned without expense to the tendering Holder thereof (or, in the case of Old Notes tendered by book-entry transfer into the 22 Exchange Agent's account at the Book-Entry Transfer Facility pursuant to the book-entry procedures described below, such non-exchanged Old Notes will be credited to an account maintained with such Book-Entry Transfer Facility) as promptly as practicable after the expiration or termination of the Exchange Offer. BOOK-ENTRY TRANSFER The Exchange Agent will make a request to establish an account with respect to the Old Notes at the Book-Entry Transfer Facility for purposes of the Exchange Offer within two business days after the date of this Prospectus, and any tendering financial institution that is a participant in the Book-Entry Transfer Facility's systems must make book-entry delivery of Old Notes by causing the Book-Entry Transfer Facility to transfer such Old Notes into the Exchange Agent's account at the Book-Entry Transfer Facility in accordance with the Book-Entry Transfer Facility's ATOP procedures for transfer. Such holder of Old Notes using ATOP should transmit its acceptance to the Book-Entry Transfer Facility on or prior to the Expiration Date (or comply with the guaranteed delivery procedures set forth below). The Book-Entry Transfer Facility will verify such acceptance, execute a book-entry transfer of the tendered Old Notes into the Exchange Agent's account at the Book-Entry Transfer Facility and then send to the Exchange Agent confirmation of such book-entry transfer, including an Agent's Message confirming that the Book-Entry Transfer Facility has received an express acknowledgment from such holder that such holder has received and agrees to be bound by this Letter of Transmittal and that Huntsman Packaging may enforce this Letter of Transmittal against such Holder (a "Book-Entry Confirmation"). GUARANTEED DELIVERY PROCEDURES If a registered Holder of the Old Notes desires to tender such Old Notes and the Old Notes are not immediately available, or time will not permit such Holder's Old Notes or other required documents to reach the Exchange Agent before the Expiration Date, or the procedure for book-entry transfer cannot be completed on a timely basis, a tender may be effected if (i) the tender is made through an Eligible Institution, (ii) prior to the Expiration Date, the Exchange Agent receives from such Eligible Institution a properly completed and duly executed Letter of Transmittal (or a facsimile thereof) and Notice of Guaranteed Delivery, substantially in the form provided by Huntsman Packaging (by telegram, telex, facsimile transmission, mail or hand delivery), setting forth the name and address of the Holder of Old Notes and the principal amount of Old Notes tendered, stating that the tender is being made thereby and guaranteeing that, within three New York Stock Exchange, Inc. ("NYSE") trading days after the date of execution of the Notice of Guaranteed Delivery, the certificates for all physically tendered Old Notes, in proper form for transfer, or a Book-Entry Confirmation, as the case may be, and any other documents required by the Letter of Transmittal will be deposited by the Eligible Institution with the Exchange Agent, and (iii) the certificates for all physically tendered Old Notes, in proper form for transfer, or a Book-Entry Confirmation, as the case may be, and all other documents required by the Letter of Transmittal, are received by the Exchange Agent within three NYSE trading days after the date of execution of the Notice of Guaranteed Delivery. WITHDRAWAL OF TENDERS Tenders of Old Notes may be withdrawn at any time prior to the Expiration Date. For a withdrawal to be effective, a written notice of withdrawal must be received by the Exchange Agent at one of its addresses set forth below under "--Exchange Agent" prior to the Expiration Date. Any such notice of withdrawal must (i) specify the name of the person having deposited the Old Notes to be withdrawn (the "Depositor"), (ii) identify the Old Notes to be withdrawn (including the principal amount of such Old Notes) and (iii) (where certificates for Old Notes have been transmitted) specify the name in which such Old Notes are registered, if different from that of the withdrawing Holder. If certificates for Old Notes have been delivered or otherwise identified to the Exchange Agent, then, prior to the release of such certificates the withdrawing Holder must also submit the serial numbers of the particular certificates to be withdrawn and a signed notice of withdrawal with signatures guaranteed by an Eligible Institution unless such Holder is an Eligible Institution. If Old Notes have been tendered 23 pursuant to the procedure for book-entry transfer described above, any notice of withdrawal must specify the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Old Notes and otherwise comply with the procedures of such facility. All questions as to the validity, form and eligibility (including time of receipt) of such notices will be determined by Huntsman Packaging, whose determination shall be final and binding on all parties. Any Old Note so withdrawn will be deemed not to have been validly tendered for exchange for purposes of the Exchange Offer. Any Old Note which has been tendered for exchange but which is not exchanged for any reason will be returned to the Holder thereof without cost to such Holder (or, in the case of Old Notes tendered by book-entry transfer procedures described above, such Old Notes will be credited to an account maintained with such Book-Entry Transfer Facility for the Old Notes) as soon as practicable after withdrawal, rejection of tender or termination of the Exchange Offer. Properly withdrawn Old Notes may be retendered by following one of the procedures described under "--Procedures for Tendering Old Notes" above at any time on or prior to the Expiration Date. CONDITIONS TO THE EXCHANGE OFFER Notwithstanding any other provision of the Exchange Offer, Huntsman Packaging will not be required to accept for exchange, or issue New Notes in exchange for, any Old Notes and may terminate or amend the Exchange Offer if at any time before the acceptance of such Old Notes for exchange or the exchange of the New Notes for such Old Notes, any of the following events occur: (a) there shall be threatened, instituted or pending any action or proceeding before, or any injunction, order or decree shall have been issued by, any court or governmental agency or other governmental regulatory or administrative agency or commission, (i) seeking to restrain or prohibit the making or consummation of the Exchange Offer or any other transaction contemplated by the Exchange Offer, or assessing or seeking any damages as a result thereof, or (ii) resulting in a material delay in the ability of Huntsman Packaging to accept for exchange or exchange some or all of the Old Notes pursuant to the Exchange Offer, or any statute, rule, regulation, order or injunction shall be sought, proposed, introduced, enacted, promulgated or deemed applicable to the Exchange Offer or any of the transactions contemplated by the Exchange Offer by any government or governmental authority, domestic or foreign, or any action shall have been taken, proposed or threatened, by any government or governmental authority, agency or court, domestic or foreign, that in the reasonable judgment of Huntsman Packaging might directly or indirectly result in any of the consequences referred to in clauses (i) or (ii) above or, in the reasonable judgment of Huntsman Packaging, might result in the Holders of New Notes having obligations with respect to resales and transfers of New Notes which are greater than those described in the interpretation of the Commission referred to on the cover page of this Prospectus, or would otherwise make it inadvisable to proceed with the Exchange Offer; or (b) there shall have occurred (i) any general suspension of or general limitation on prices for, or trading in, securities on any national securities exchange or in the over-the-counter market, (ii) any limitation by any governmental agency or authority which may adversely affect the ability of Huntsman Packaging to complete the transactions contemplated by the Exchange Offer, (iii) a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States or any limitation by any governmental agency or authority which adversely affects the extension of credit or (iv) a commencement of a war, armed hostilities or other similar international calamity directly or indirectly involving the United States, or, in the case of any of the foregoing existing at the time of the commencement of the Exchange Offer, a material acceleration or worsening thereof; or (c) any change (or any development involving a prospective change) shall have occurred or be threatened in the business, properties, assets, liabilities, financial condition, operations, results of operations or prospects of Huntsman Packaging and its subsidiaries taken as a whole that, in the reasonable judgment of Huntsman Packaging, is or may be adverse to Huntsman Packaging, or Huntsman Packaging shall have become aware of facts that, in the reasonable judgment of Huntsman Packaging, have or may have adverse significance with respect to the value of the Old Notes or the New Notes; 24 which, in the reasonable judgment of Huntsman Packaging in any case, and regardless of the circumstances (including any action by Huntsman Packaging) giving rise to any such condition, makes it inadvisable to proceed with the Exchange Offer and/or with such acceptance for exchange or with such exchange. The foregoing conditions are for the sole benefit of Huntsman Packaging and may be asserted by Huntsman Packaging regardless of the circumstances giving rise to any such condition or may be waived by Huntsman Packaging in whole or in part at any time and from time to time in its sole discretion. The failure by Huntsman Packaging at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right and each such right shall be deemed an ongoing right which may be asserted at any time and from time to time. In addition, Huntsman Packaging will not accept for exchange any Old Note tendered, and no New Notes will be issued in exchange for any such Old Note, if at such time any stop order shall be threatened or in effect with respect to the Registration Statement of which this Prospectus constitutes a part or the qualification of the Indenture under the Trust Indenture Act of 1939. EXCHANGE AGENT has been appointed as the Exchange Agent of the Exchange Offer. All executed Letters of Transmittal should be directed to the Exchange Agent at one of the addresses set forth below. Questions and requests for assistance, requests for additional copies of this Prospectus or of the Letter of Transmittal and requests for Notice of Guaranteed Delivery should be directed to the Exchange Agent addressed as follows: By Registered or Certified Mail: By Hand Delivery: By Overnight Delivery: By Facsimile: Confirm by Telephone: DELIVERY OF THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY OF SUCH LETTER OF TRANSMITTAL. FEES AND EXPENSES Huntsman Packaging will not make any payment to brokers, dealers or others soliciting acceptances of the Exchange Offer. The estimated cash expenses to be incurred in connection with the Exchange Offer will be paid by Huntsman Packaging and are estimated in the aggregate to be $ . TRANSFER TAXES Holders who tender their Old Notes for exchange will not be obligated to pay any transfer tax in connection therewith, except that Holders who instruct Huntsman Packaging to register New Notes in the name of, or request that Old Notes not tendered or not accepted in the Exchange Offer be returned to, a person other than the registered tendering Holder will be responsible for the payment of any applicable transfer tax thereon. CONSEQUENCES OF EXCHANGING OR FAILING TO EXCHANGE OLD NOTES Holders of Old Notes who do not exchange their Old Notes for New Notes pursuant to the Exchange Offer will continue to be subject to the provisions in the Indenture regarding transfer and exchange of the 25 Old Notes and the restrictions on transfer of such Old Notes as set forth in the legend thereon as a consequence of the issuance of the Old Notes pursuant to exemptions from, or in transactions not subject to, the registration requirements of the Securities Act and applicable state securities laws. In general, the Old Notes may not be offered or sold, unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. Huntsman Packaging does not currently anticipate that it will register Old Notes under the Securities Act. See "Description of the Notes -- Registration Rights." Under existing interpretations by the staff of the Commission contained in several no-action letters issued to third parties, Huntsman Packaging believes the New Notes issued pursuant to the Exchange Offer in exchange for the Old Notes may be freely transferable by holders thereof (other than any such holder which is an "affiliate" of Huntsman Packaging within the meaning of Rule 405 under the Securities Act) without further registration under the Securities Act; provided, however, that each Holder that wishes to exchange its Old Notes for New Notes will be required to represent (i) that any New Notes to be received by it will be acquired in the ordinary course of its business, (ii) that at the time of the commencement of the Exchange Offer it has no arrangement or understanding with any person to participate in the distribution (within the meaning of the Securities Act) of the New Notes in violation of the Securities Act, (iii) that it is not an "affiliate" (as defined in Rule 405 promulgated under the Securities Act) of Huntsman Packaging, (iv) if such Holder is not a broker-dealer, that it is not engaged in, and does not intend to engage in, the distribution of New Notes and (v) if such Holder is a Participating Broker-Dealer that will receive New Notes for its own account in exchange for Old Notes that were acquired as a result of market-making or other trading activities, that it will deliver a prospectus in connection with any resale of such New Notes. However, Huntsman Packaging does not intend to request the Commission to consider, and the Commission has not considered, the Exchange Offer in the context of a no-action letter and there can be no assurance that the staff of the Commission would make a similar determination with respect to the Exchange Offer as in such other circumstances. Huntsman Packaging will agree to make available, during the period required by the Securities Act, a prospectus meeting the requirements of the Securities Act for use by Participating Broker-Dealers and other persons, if any, with similar prospectus delivery requirements for use in connection with any resale of New Notes. If any Holder is an affiliate of Huntsman Packaging or is engaged in or intends to engage in or has any arrangement with any person to participate in the distribution of the New Notes to be acquired pursuant to the Exchange Offer, such Holder (i) could not rely on the applicable interpretations of the staff of the Commission and (ii) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction, including the delivery of a prospectus which contains the information with respect to any selling holder required by the Securities Act. Each broker-dealer that receives New Notes for its own account pursuant to the Exchange Offer must represent to Huntsman Packaging that it will deliver a prospectus in connection with any resale of such New Notes. The Letter of Transmittal states that by so representing and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of New Notes received in exchange for Old Notes where such Old Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities. Huntsman Packaging has agreed that, starting on the Expiration Date (as defined herein) and ending on the close of business on the 90th day following the Expiration Date, it will make this Prospectus available to any broker-dealer for use in connection with any such resale. See "Plan of Distribution." However, to comply with the securities laws of certain jurisdictions, if applicable, the New Notes may not be offered or sold unless they have been registered or qualified for sale in such jurisdictions or an exemption from registration or qualification is available and is complied with. Huntsman Packaging does not currently intend to register or qualify the sale of the New Notes in any such jurisdiction. 26 CAPITALIZATION The following table sets forth the capitalization of Huntsman Packaging as of June 30, 1997 and on a pro forma basis after giving effect to the 1997 Pro Forma Transactions. The information set forth below is unaudited and should be read in conjunction with the "Unaudited Pro Forma Financial Data" and Huntsman Packaging's audited and unaudited historical financial statements and the notes thereto included elsewhere in this Prospectus.
AS OF JUNE 30, 1997 -------------------------- HISTORICAL PRO FORMA(1) ------------ ------------ (IN MILLIONS) Total cash ................................... $ 16.1 $ 17.0 (2) ============ ============ Long-term debt: Indebtedness to Huntsman Corporation ........ $198.3 -- Revolving credit facility(3) ................. -- $ 75.3 Term loan .................................... -- 75.0 9 1/8% Senior Subordinated Notes ............. -- 125.0 ------------ ------------ Total long-term debt.......................... 198.3 275.3 ------------ ------------ Stockholders' equity: Common stock and additional paid in capital 73.4 73.4 Retained earnings (deficit) ................. (3.4) (3.4) Translation adjustment ...................... (3.3) (3.3) ------------ ------------ Total stockholders' equity ................... 66.7 66.7 ------------ ------------ Total stockholders' equity and long-term debt......................................... $265.0 $342.0 ============ ============
- ------------ (1) Includes an estimated $7.0 million in fees and expenses in connection with the Offering and the 1997 Pro Forma Transactions. (2) $15.5 million of this amount will be held by the Company's European and Australian subsidiaries. See "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Liquidity." (3) Represents drawn portion of $150.0 million revolving credit facility. 27 UNAUDITED PRO FORMA FINANCIAL DATA The pro forma financial data of Huntsman Packaging set forth below give estimated effects of the Pro Forma Transactions. The unaudited pro forma condensed statement of operations and other financial data for the year ended December 31, 1996 and the six months ended June 30, 1997 give effect to the Pro Forma Transactions as if they had occurred on January 1, 1996. The unaudited pro forma condensed balance sheet data as of June 30, 1997 give effect to the 1997 Pro Forma Transactions as if they had occurred on such date. The pro forma financial data do not purport to be indicative of the combined financial position or results of operations of future periods or indicative of results that would have occurred had the transactions referred to above been consummated on the dates indicated. The pro forma financial data should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations," Huntsman Packaging's audited and unaudited historical financial statements and the notes thereto and CT Film's audited and unaudited historical financial statements and the notes thereto included elsewhere in this Prospectus. UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS AND OTHER FINANCIAL DATA FOR THE YEAR ENDED DECEMBER 31, 1996
ADJUSTMENTS ADJUSTMENTS HUNTSMAN FOR 1996 CT FOR 1997 HUNTSMAN PACKAGING PRO FORMA FILM PRO FORMA PACKAGING HISTORICAL TRANSACTIONS(1) HISTORICAL TRANSACTIONS PRO FORMA ------------ --------------- ------------ -------------- ----------- (DOLLARS IN MILLIONS) STATEMENT OF OPERATIONS: Net sales ................................. $308.1 $107.0 $152.5 -- $567.6 Costs of goods sold ....................... 263.3 92.7 141.5 $(5.5)(2) 492.0 ------------ --------------- ------------ -------------- ----------- Gross profit ............................. 44.8 14.3 11.0 5.5 75.6 Total operating expenses .................. 39.4 4.3 13.8 -- 57.5 ------------ --------------- ------------ -------------- ----------- Income (loss) from operations ............ 5.4 10.0 (2.8) 5.5 18.1 Interest expense--net ..................... (11.6) (5.1) (1.2) (5.5)(3) (23.4) Other income (expense) .................... (3.4) (0.1) -- -- (3.5) ------------ --------------- ------------ -------------- ----------- Income (loss) before income taxes and extraordinary item ....................... (9.6) 4.8 (4.0) -- (8.8) Provision for (benefit from) income taxes (4.9) 2.4(4) (0.7) -- (3.2) ------------ --------------- ------------ -------------- ----------- Income (loss) before extraordinary item .. $ (4.7) $ 2.4 $ (3.3) $ -- $ (5.6) ============ =============== ============ ============== =========== OTHER FINANCIAL DATA: Depreciation and amortization.............. $ 12.2 $ 3.7 $ 6.5 $(1.5)(2) $ 20.9 EBITDA(5) ................................. 14.2 13.6 3.7 4.0 (2) 35.5 Adjusted EBITDA (6)........................ 29.2 (7) 13.6 6.5 (8) 16.3 (9) 65.6 Net cash interest expense.................. 11.6 5.1 1.2 5.5 23.4 Capital expenditures ...................... 9.2 9.3 7.9 -- 26.4 Ratio of Adjusted EBITDA to net cash interest expense ......................... 2.5x 2.8x Ratio of earnings to fixed charges (10) .. 0.2x 0.7x
(footnotes on following page) 28 UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS AND OTHER FINANCIAL DATA FOR THE SIX MONTHS ENDED JUNE 30, 1997
ADJUSTMENTS HUNTSMAN CT FOR 1997 HUNTSMAN PACKAGING FILM PRO FORMA PACKAGING HISTORICAL HISTORICAL TRANSACTIONS PRO FORMA ------------ ------------ -------------- ----------- (DOLLARS IN MILLIONS) STATEMENT OF OPERATIONS: Net sales .................................... $218.7 $79.4 -- $298.1 Costs of goods sold .......................... 192.5 74.8 $ (2.7) (2) 264.6 ------------ ------------ -------------- ----------- Gross profit ................................ 26.2 4.6 2.7 33.5 Total operating expenses ..................... 16.6 6.2 -- 22.8 ------------ ------------ -------------- ----------- Income (loss) from operations ............... 9.6 (1.6) 2.7 10.7 Interest expense--net ........................ (7.1) (0.6) (4.0)(3) (11.7) Other income (expense) ....................... 0.9 -- -- 0.9 ------------ ------------ -------------- ----------- Income (loss) before income taxes ............ 3.4 (2.2) (1.3) (0.1) Provision for (benefit from) income taxes ... 1.4 (0.3) (1.1)(4) -- ------------ ------------ -------------- ----------- Net income (loss)............................. $ 2.0 $(1.9) $ (0.9) $ (0.1) ============ ============ ============== =========== OTHER FINANCIAL DATA: Depreciation and amortization ................ $ 7.7 $ 3.7 $ (0.7)(2) $ 10.7 EBITDA(5) .................................... 18.2 2.1 2.0 22.3 Adjusted EBITDA (6)........................... 18.2 3.5(8) 8.2 (9) 29.9 Net cash interest expense..................... 7.1 0.6 4.0 11.7 Capital expenditures ......................... 8.0 4.7 12.7 Ratio of Adjusted EBITDA to net cash interest expense ..................................... 2.6x 2.6x Ratio of earnings to fixed charges (10) ...... 1.5x 1.0x
- ------------ (1) To reflect the Deerfield, United Films and European Foam Acquisitions that occurred during 1996 as if they had occurred on January 1, 1996. (2) Represents the following as a result of the CT Film Purchase:
SIX MONTHS YEAR ENDED ENDED DECEMBER 31, 1996 JUNE 30, 1997 ----------------- --------------- Reduction in depreciation as a result of recording plant and equipment in accordance with the purchase method of accounting .......................... $(1.5) $(0.7) Net reduction in raw materials costs under the Company's existing contractual arrangements compared to CT Film's historical raw materials costs ...................................................................... (4.0) (2.0) ----------------- --------------- $(5.5) $(2.7) ================= ===============
(3) Represents additional interest expense at a rate of 9 1/8% on the Senior Subordinated Notes as a result of the combination of Huntsman Packaging and CT Film. (4) Represents the tax effect of all pro forma adjustments. (5) EBITDA is defined as earnings from operations before interest expense, taxes and depreciation and amortization. Huntsman Packaging understands that certain investors believe EBITDA reflects a company's ability to satisfy principal and interest obligations with respect to its indebtedness and to utilize cash for other purposes. EBITDA does not represent and should not be considered as an alternative to net income or cash flows from operations as determined by GAAP. (6) Adjusted EBITDA is EBITDA as modified to reflect certain adjustments which management believes are relevant in evaluating the future operating performance of the Company. These adjustments, which eliminate the impact of certain nonrecurring charges and reflect the estimated impact of management's business and operating strategy, are based on estimates and assumptions made and believed to be reasonable by the Company, but are inherently uncertain and are subject to change. Adjusted EBITDA should not be viewed as indicative of actual or future results and is not computed in accordance with GAAP or with regulations of the Commission. (7) Adjusted for $12.1 million aggregate charges resulting from the closing of certain facilities in the year ended December 31, 1996 and estimated savings of $2.9 million of overhead to reflect the closing of such facilities as if they had been closed on January 1, 1996. (8) Adjusted for estimated cost savings from the elimination of $2.8 million during the year ended December 31, 1996 and $1.4 million during the six months ended June 30, 1997 of corporate allocations from Rexene Corporation recorded by CT Film which will not recur. (9) Adjusted for management's estimated recurring net cost savings due to the combination of Huntsman Packaging and CT Film. Management believes these savings will be fully realized by the end of 1998. Net savings are expected to result from the following:
SIX MONTHS YEAR ENDED ENDED DECEMBER 31, 1996 JUNE 30, 1997 ----------------- --------------- Plant headcount reductions................. $ 1.1 $0.6 Administrative headcount reductions ....... 5.5 2.7 Savings from United States plant closure .. 4.1 2.1 Savings from United Kingdom plant closure . 1.6 0.8 ----------------- --------------- Total estimated recurring net cost savings................................. $12.3 $6.2 ================= ===============
(10) For purposes of this computation, earnings are defined as income before income taxes plus fixed charges. Fixed charges consist of interest (including amortization of deferred financing costs) and that portion of rental expense that is representative of interest (deemed to be one-third of operating lease rental expense). For the year ended December 31, 1996, earnings were insufficient to cover fixed charges by $9.6 million due primarily to a $10.9 million restructuring charge. 29 UNAUDITED PRO FORMA CONDENSED BALANCE SHEET AS OF JUNE 30, 1997
ADJUSTMENTS HUNTSMAN CT FOR 1997 HUNTSMAN PACKAGING FILM PRO FORMA PACKAGING HISTORICAL HISTORICAL TRANSACTIONS PRO FORMA ------------ ------------ -------------- ----------- (IN MILLIONS) ASSETS Current assets: Cash and cash equivalents $ 16.1 $ 0.9 -- $ 17.0(1) Receivables................ 59.8 20.5 -- 80.3 Inventories................ 53.2 29.7 -- 82.9 Prepaids and other ........ 5.2 0.2 -- 5.4 ------------ ------------ -------------- ----------- Total current assets .... 134.3 51.3 -- 185.6 Plant and equipment--net .. 143.4 83.4 $ (49.1)(2) 177.7 Intangible assets.......... 54.0 -- -- 54.0 Other assets............... 6.8 1.6 7.0 (3) 15.4 ------------ ------------ -------------- ----------- TOTAL...................... $338.5 $136.3 $ (42.1) $432.7 ============ ============ ============== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable........... $ 24.3 $ 11.2 -- $ 35.5 Accrued liabilities........ 24.5 2.7 -- 27.2 ------------ ------------ -------------- ----------- Total current liabilities............. 48.8 13.9 -- 62.7 Long-term debt............. 198.3 -- $ 77.0 (4) 275.3 Deferred income taxes ..... 13.5 -- -- 13.5 Other liabilities.......... 11.2 3.3 -- 14.5 Stockholders' equity....... 66.7 119.1 (119.1)(5) 66.7 ------------ ------------ -------------- ----------- TOTAL ..................... $338.5 $136.3 $ (42.1) $432.7 ============ ============ ============== ===========
- ------------ (1) $15.5 million of this amount will be held by the Company's European and Australian subsidiaries. See "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity." (2) Represents the allocation of the purchase price of CT Film in accordance with the purchase method of accounting. (3) Represents the capitalization of loan origination costs incurred in connection with the CT Film Purchase and the refinancing of debt. (4) Represents the following:
Repay indebtedness to Huntsman Corporation .................... $(198.3) Indebtedness under the term loan and revolving credit facility 150.3 Issuance of the Senior Subordinated Notes ..................... 125.0 ---------- Net .......................................................... $ 77.0 ==========
(5) Represents the elimination of historical divisional equity of CT Film in accordance with the purchase method of accounting. 30 SELECTED HISTORICAL FINANCIAL DATA The selected financial data set forth below present the historical financial data of Huntsman Packaging. The selected financial data as of December 31, 1994, 1995 and 1996 and for the years then ended have been derived from the audited financial statements of Huntsman Packaging. The selected financial data as of December 31, 1992 and 1993 and for the years then ended have been derived from the unaudited financial statements of Huntsman Packaging. The selected financial data as of June 30, 1996 and 1997 and for the six months then ended have been derived from Huntsman Packaging's unaudited financial statements included elsewhere in this Prospectus. Interim results, in the opinion of management of Huntsman Packaging, include all adjustments (consisting solely of normal recurring adjustments) necessary to present fairly the financial information for such periods; however, such results are not necessarily indicative of the results that may be expected for any other interim period or for a full year. The selected financial data should be read in conjunction with "Unaudited Pro Forma Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Huntsman Packaging's audited and unaudited historical financial statements, and the notes thereto, included elsewhere in this Prospectus.
SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, --------------------------------------------- ------------------ 1992 1993 1994 1995 1996 1996 1997 -------- -------- -------- -------- -------- -------- -------- (DOLLARS IN MILLIONS) STATEMENT OF OPERATIONS: Net sales ............................. $ 69.4 $200.2 $255.7 $280.0 $308.1 $127.9 $218.7 Costs of goods sold ................... 56.0 166.0 210.4 235.1 263.3 106.8 192.5 -------- -------- -------- -------- -------- -------- -------- Gross profit ......................... 13.4 34.2 45.3 44.9 44.8 21.1 26.2 Total operating expenses .............. 9.8 28.0 33.5 31.8 39.4 14.7 16.6 -------- -------- -------- -------- -------- -------- -------- Income from operations ............... 3.6 6.2 11.8 13.1 5.4 6.4 9.6 Interest expense--net ................. (1.6) (6.5) (7.5) (8.8) (11.6) (4.8) (7.1) Other expense ......................... (0.1) 0.5 -- (2.5) (3.4) 0.8 0.9 -------- -------- -------- -------- -------- -------- -------- Income (loss) before income tax ...... 1.9 0.2 4.3 1.8 (9.6) 2.4 3.4 Provision for income taxes ............ 1.5 0.3 1.9 0.9 (4.9) 0.8 1.4 -------- -------- -------- -------- -------- -------- -------- Income (loss) before extraordinary item ................................. 0.4 (0.1) 2.4 0.9 (4.7) 1.6 2.0 Extraordinary item .................... -- -- -- -- (1.3) (1.3) -- -------- -------- -------- -------- -------- -------- -------- Net income (loss) ..................... $ 0.4 $ (0.1) $ 2.4 $ 0.9 $ (6.0) $ 0.3 $ 2.0 ======== ======== ======== ======== ======== ======== ======== OTHER FINANCIAL DATA: Depreciation and amortization.......... $ 3.8 $ 8.9 $ 8.5 $ 10.6 $ 12.2 $ 5.3 $ 7.7 EBITDA(1) ............................. 7.3 15.6 20.3 21.2 14.2 12.5 18.2 Cash flows from operating activities . (1.8) 15.8 (1.9) 9.7 11.8 6.2 3.6 Cash flows from investing activities . (45.5) (41.3) (8.1) (17.6) (85.4) (3.4) (8.0) Cash flows from financing activities . 69.6 7.0 9.9 6.7 79.9 (0.6) 12.2 Capital expenditures .................. 1.3 5.6 8.3 16.5 9.2 3.4 8.0 Ratio of earnings to fixed charges (2). 1.9x 1.0x 1.5x 1.2x 0.2x 1.5x 1.5x BALANCE SHEET DATA (AT PERIOD END): Working capital........................ $ 40.6 $ 34.1 $ 46.8 $ 53.0 $ 74.6 $ 56.8 $ 85.5 Total assets .......................... 158.8 181.3 196.1 204.6 329.2 205.6 338.4 Long-term debt ........................ 68.7 78.1 88.7 103.0 186.7 102.3 198.3 Total liabilities ..................... 100.2 123.6 136.1 142.5 262.1 143.4 271.8 Stockholders' equity................... 58.6 57.7 60.0 62.1 67.0 62.2 66.7
- ------------ (1) EBITDA is defined as earnings from operations before interest expense, taxes and depreciation and amortization. Huntsman Packaging understands that certain investors believe EBITDA reflects a company's ability to satisfy principal and interest obligations with respect to its indebtedness and to utilize cash for other purposes. EBITDA does not represent and should not be considered as an alternative to net income or cash flows from operations as determined by generally accepted accounting principles. (2) For purposes of this computation, earnings are defined as income before income taxes plus fixed charges. Fixed charges consist of interest (including amortization of deferred financing costs) and that portion of rental expense that is representative of interest (deemed to be one-third of operating lease rental expense). For the year ended December 31, 1996, earnings were insufficient to cover fixed charges by $9.6 million due primarily to a $10.9 million restructuring charge. 31 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL The following discussion and analysis of Huntsman Packaging's results of operations, financial condition and liquidity should be read in conjunction with "Unaudited Pro Forma Financial Data" and Huntsman Packaging's audited and unaudited financial statements included elsewhere herein. The following discussion also contains certain forward-looking statements that involve risks and uncertainties, and Huntsman Packaging's results could differ materially from those discussed herein. See "Cautionary Statements for Purposes of the Private Securities Litigation Reform Act of 1995." Huntsman Packaging derives its revenue, earnings and cash flow from the sale of film and flexible packaging products to customers located throughout the world. Huntsman Packaging manufactures these products at its facilities located in North America, Europe and Australia. Huntsman Packaging's sales have grown primarily as a result of the growth in the market for film and flexible packaging products, acquisitions over the past several years and production increases at acquired facilities. Since 1992, Huntsman Packaging has completed nine acquisitions, including acquisitions in 1996 of Deerfield, United Films and European Foam. During the past several years, Huntsman Packaging's net sales have increased significantly from year to year, primarily as a result of the aforementioned acquisitions. RESULTS OF OPERATIONS The following table indicates net sales and expenses, and such amounts as a percentage of net sales, for the years ended December 31, 1994, 1995 and 1996 and the six months ended June 30, 1996 and 1997.
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30, ----------------------------------------------------- ----------------------------------- 1994 1995 1996 1996 1997 ----------------- ----------------- ----------------- ----------------- ----------------- % OF % OF % OF % OF % OF $ SALES $ SALES $ SALES $ SALES $ SALES -------- ------- -------- ------- -------- ------- -------- ------- -------- ------- (DOLLARS IN MILLIONS) Net sales .......... $255.7 100% $280.0 100% $308.1 100% $127.9 100% $218.7 100% Cost of goods sold 210.4 82% 235.1 84% 263.3 85% 106.8 83% 192.5 88% -------- ------- -------- ------- -------- ------- -------- ------- -------- ------- Gross profit ....... 45.3 18% 44.9 16% 44.8 15% 21.1 17% 26.2 12% Total operating expenses........... 33.5 13% 31.8 11% 39.4 13% 14.7 12% 16.6 8% -------- ------- -------- ------- -------- ------- -------- ------- -------- ------- Operating income .. $ 11.8 5% $ 13.1 5% $ 5.4 2% $ 6.4 5% $ 9.6 4% ======== ======= ======== ======= ======== ======= ======== ======= ======== =======
SIX MONTHS ENDED JUNE 30, 1997 COMPARED WITH THE SIX MONTHS ENDED JUNE 30, 1996 Net Sales Net sales increased by $90.8 million, or 71.0%, in the first six months of 1997 to $218.7 million from $127.9 million in the six months ended June 30, 1996. The increase was primarily due to the acquisitions of Deerfield, United Films and European Foam in the second half of 1996. These acquisitions increased sales by $88.0 million in the six months ended June 30, 1997. The remaining increase was due primarily to increased sales volume in the Company's stretch film and printed products segments. Gross Profit Gross profit increased by $5.1 million, or 24.2%, in the first six months of 1997 to $26.2 million from $21.1 million in the six months ended June 30, 1996. The acquisitions of Deerfield, United Films and European Foam in the second half of 1996 increased gross profit by $8.9 million in 1997. This increase was offset primarily by a general decrease in the margins in the Company's polyethylene film businesses. In the stretch film segment, gross profit decreased by approximately $3.0 million in 1997, as excess supply and significant changes in the ownership of suppliers led to substantially reduced margins. 32 Total Operating Expenses Total operating expenses (including research and development expenses) increased by $1.9 million, or 12.9%, in the first six months of 1997 to $16.6 million from $14.7 million in the first six months of 1996. The acquisitions of Deerfield, United Films and European Foam in the second half of 1996 increased total operating expenses by approximately $3.1 million in the first six months of 1997. The increase from acquisitions was offset primarily by lower European administration costs in 1997, particularly in the Company's German operation. The German operation successfully reduced administration costs by $0.1 million in the first six months of 1997 as compared to the first six months of 1996. Operating Income Operating income increased by $3.2 million, or 50.0%, in the first six months of 1997 to $9.6 million from $6.4 million in the first six months of 1996, due to the factors discussed above. YEAR ENDED DECEMBER 31, 1996 COMPARED WITH THE YEAR ENDED DECEMBER 31, 1995 Net Sales Net sales increased by $28.1 million, or 10.0%, in 1996 to $308.1 million from $280.0 million in 1995, primarily due to the acquisitions of Deerfield, United Films and European Foam in 1996. These acquisitions increased sales by $42 million in 1996. This increase was offset by decreases in average sales prices in North America as a result of decreases in the average market price of polyethylene and PVC resins from 1995 to 1996. The Company's sales prices generally follow the movement in resin prices, as resins are the primary component of the Company's raw material costs. Polyethylene resin prices dropped significantly towards the end of 1995 and increased steadily during 1996. Notwithstanding the upward trend in polyethylene resin prices during 1996, such prices were approximately 10% lower on average in 1996 as compared to 1995. Gross Profit Gross profit decreased by $0.1 million, or 0.3%, in 1996 to $44.8 million from $44.9 million in 1995. This decrease was due to lower margins primarily as a result of the industry's inability to promptly pass through to customers increases in the costs of resins and other raw materials in 1996. This decline in margins was most significant in Huntsman Packaging's polyethylene stretch films, where margins decreased by $0.08 per pound from 1995 to 1996. These decreases were offset by increased margins in the Company's European and Australian operations as well as an increase of $4.5 million due to the acquisitions of Deerfield, United Films and European Foam. Total Operating Expenses Total operating expenses (including research and development expenses) increased by $7.6 million, or 23.6%, in 1996 to $39.4 million from $31.8 million in 1995 primarily due to a non-recurring restructuring charge of $10.9 million. This charge resulted from the closure of the Bowling Green, Kentucky and Dallas, Texas manufacturing facilities. The increase due to the non-recurring charge was offset partially by reduced administration cost resulting from management restructuring programs initiated in 1995. Operating Income Operating income decreased by $7.7 million, or 58.6%, in 1996 to $5.4 million from $13.1 million in 1995, due primarily to the factors discussed above. YEAR ENDED DECEMBER 31, 1995 COMPARED WITH THE YEAR ENDED DECEMBER 31, 1994 Net Sales Net sales increased by $24.3 million, or 9.5%, to $280.0 million in 1995 from $255.7 million in 1994. This increase was in large part due to increased sales prices for polyethylene films generally. As previously 33 discussed, the Company's sales prices tend to follow resin prices, and polyethylene resin prices increased approximately 50% from the second quarter 1994 to the second quarter 1995 and then declined approximately 30% by year end 1995. These sales price increases were offset partially by lower volumes in the Company's polyethylene film markets, particularly the printed products segment which experienced a 14% decline in volume. Gross Profit Gross profit decreased by $0.4 million in 1995, or 0.8%, to $44.9 million from $45.3 million in 1994. The slight decrease in gross profit was substantially due to a 2.6% decline in sales volume from 1994 to 1995 as gross profit per pound remained constant at $0.18. The lack of change in gross profit per pound was due to the Company's ability to pass through to customers increases in resin prices throughout the year. Total Operating Expenses Total operating expenses decreased by $1.7 million, or 4.8%, to $31.8 million from $33.5 million in 1994. This decrease resulted primarily from a reduction in administrative expenses under a restructuring plan put in place in July 1995. The savings resulting from this plan were offset by a restructuring charge of $1.4 million recorded in 1995. Operating Income Operating income increased $1.3 million, or 10.7%, to $13.1 million in 1995 from $11.8 million in 1994 due to the factors discussed above. LIQUIDITY AND CAPITAL RESOURCES Huntsman Packaging has historically financed its operations through cash provided by operations and by borrowings from Huntsman Corporation or under Huntsman Corporation's credit facilities. Huntsman Packaging's primary uses of cash have been the payment of operating expenses, funding capital expenditures and payment for acquisitions. Net Cash Provided by (Used in) Operating Activities Net cash provided by operating activities was $3.7 million for the six months ended June 30, 1996, a decrease of $2.6 million, or 42.3%, from $6.3 million for the same period in 1996. The decrease resulted primarily from increases in inventories and decreases in accrued and other liabilities. These decreases were offset by increased net income in 1997 of $1.7 million. Net cash provided by operating activities was $11.8 million for the year ended December 31, 1996, an increase of $2.2 million, or 22.2%, from $9.7 million the previous year. $7.4 million of this net cash increase was due primarily to decreases in inventories, net of the Deerfield Acquisition and the United Films Acquisition, which were offset by lower operating income as compared to 1995. Cash flows from operations were $9.7 million in 1995, an increase of $11.6 million. The increase in net cash from 1994 to 1995 was due to increased operating income of $1.3 million and decreases in inventories. Net Cash Used in Investing Activities Net cash used in investing activities for the six months ended June 30, 1997 was $8.0 million, an increase of $4.6 million, or 137.1%, from $3.4 million for the same period in 1996. The increase was entirely due to increases in capital expenditures. The increases in capital expenditures were primarily due to a new 8-color press in the Company's Rochester printing facility and upgrades in the Company's newly acquired Deerfield and United Film facilities. Net cash used in investing activities, for the year ended December 31, 1996 was $85.4 million, an increase of $67.8 million, or 385.2% compared to the year ended December 31, 1995. The increase was primarily attributable to the cash consideration paid in connection with the acquisitions of Deerfield and United Films in 1996. Net cash used in investing activities for the year ended December 31, 1995 was $17.6 million, an increase of $9.5 million, or 118.7% compared to the 34 year ended December 31, 1994. This reflected an $8.2 million increase in capital expenditures over the prior year. These expenditures included the $7.5 million purchase of the Rochester manufacturing building and the $4.3 million purchase of Performance Films Corporation. Net Cash Provided by (Used in) Financing Activities Net cash provided by financing activities for the six months ended June 30, 1997 was $12.2 million, an increase of $12.8 million from net cash used in financing activities of $0.6 million for the same period 1996. This increase was due to additional long-term debt incurred primarily as a result of increased capital expenditures in 1997. Net cash provided by financing activities for the year ended December 31, 1996 was $79.9 million, an increase of $73.1 million compared to the year ended December 31, 1995. This increase was primarily attributable to additional long-term debt incurred in connection with the purchase of the Deerfield and United Films acquisitions made during 1996. Net cash provided by financing activities for the year ended December 31, 1995 was $6.7 million, a decrease of $3.1 million compared to the year ended December 31, 1994. This decrease was primarily due to a $3.0 million dividend paid to Huntsman Corporation. In January 1996, Huntsman Packaging repaid $105.2 million of outstanding long-term notes payable and revolver loans and entered into a financing facility with Huntsman Corporation. Capital Expenditures Capital expenditures were $8.0 million for the six months ended June 30, 1997 and $3.4 million for the same period in 1996. Capital expenditures were $9.2 million, $16.5 million and $8.3 million in the years ended 1996, 1995 and 1994, respectively. With the consummation of the CT Film Purchase, management estimates maintenance capital expenditures of $12 million per year will be required in the near future. Liquidity As of June 30, 1997, Huntsman Packaging had $85.5 million of working capital. As of June 30, 1997, on a pro forma basis after giving effect to the Offering and the CT Film Purchase, Huntsman Packaging would have had approximately $74.7 million available under the Credit Facilities, $5.5 million which would have been issued as letters of credit. The new debt bears interest at LIBOR plus 2.00% which may adjust downward, based on Huntsman Packaging's leverage ratio (as defined in the Credit Agreement) to a minimum of LIBOR plus 1.00%. See "Description of the Credit Facilities." As of June 30, 1997, on a pro forma basis after giving effect to the CT Film Purchase, the Company had $15.5 million in cash and cash equivalents held by the Company's European and Australian subsidiaries. The effective tax rate of repatriating this money to the United States is approximately 40%. In addition, management estimates that dividends and other distributions to the Company of future earnings of the Company's European and Australian subsidiaries will be taxed at an effective rate of approximately 63%, thereby limiting the ability of the Company to access cash and cash equivalents generated by its European and Australian operations for use in its United States operations, including to pay principal, premium, if any, and interest on the Notes. In the six months ended June 30, 1997 and the years ended December 31, 1996 and December 31, 1995, the Company's European and Australian operations generated net income of $2.7 million, $3.3 million and $0.1 million, respectively, and EBITDA of $5.8 million, $4.6 million and $1.4 million, respectively. Huntsman Packaging expects that cash flows from operations and available borrowings under the Credit Facilities will provide sufficient working capital to operate its business, to make expected capital expenditures and to meet foreseeable liquidity requirements. Environmental Matters The operation of any plastic packaging materials manufacturing plant and the distribution of such products, and the related production of by-products and wastes, entails risk of adverse environmental effects. Huntsman Packaging and its operations are subject to certain federal, state, local and foreign laws, regulations, rules and ordinances relating to pollution, the protection of the environment and the generation, storage, handling, transportation, treatment, disposal and remediation of hazardous sub- 35 stances and waste materials ("Environmental Laws"). In the ordinary course of business, Huntsman Packaging is subject to periodic environmental inspections and monitoring by governmental enforcement authorities. As a result of actual or alleged violations arising under or in connection with any Environmental Laws, the Company could incur substantial costs, including fines and civil or criminal sanctions. In addition, Huntsman Packaging's production facilities require environmental permits that are subject to revocation, modification and renewal ("Environmental Permits"). Violations of Environmental Permits can also result in substantial fines and civil or criminal sanctions. Huntsman Packaging believes that it is in material compliance with applicable Environmental Laws and Environmental Permits. The ultimate costs under Environmental Laws and the timing of such costs, however, are difficult to predict and potentially significant expenditures could be required in order to comply with Environmental Laws that may be adopted or imposed in the future. Huntsman Packaging's costs and operating expenses relating to environmental matters totaled approximately $200,000 in each of 1995 and 1996, and are expected to remain at approximately this level in 1997. This amount is expected to be sufficient to cover, among other things, Huntsman Packaging's routine measures to prevent, contain and clean up spills of materials that occur in the ordinary course of business. Huntsman Packaging's estimated capital expenditures for environmental matters are expected to be approximately $517,000 in 1997, approximately $725,000 in 1998, and approximately $175,000 in 1999. Capital expenditures and, to a lesser extent, costs and operating expenses relating to environmental matters will be subject to evolving regulatory requirements and will depend on the timing of the promulgation of specific standards which impose requirements on Huntsman Packaging's operations. 36 BUSINESS GENERAL Huntsman Packaging is one of the largest manufacturers of film and flexible packaging products in North America. The Company offers one of the most diverse product lines in the industry and has attained a leading market position in each of its major product lines. Management attributes its market leadership primarily to its advanced film extrusion equipment and technology, broad and innovative product lines, well-established customer relationships and low-cost production capabilities. The Company's product lines are comprised of the following: (i) converter films that are sold for additional fabrication and resale by other flexible packaging manufacturers for use in a wide range of consumer and industrial markets; (ii) barrier films that contain and protect food and other products; (iii) printed products that include printed rollstock, bags and sheets used to package products in the food and medical industries; (iv) stretch films that are used for industrial unitizing and containerization; (v) PVC films that are used by supermarkets, institutions and homes to wrap meat, cheese and produce; and (vi) foam products that include meat trays, egg cartons and fast food containers. Converter Films. Converter films are polyethylene films that are sold to converters and laminators for final processing into consumer products such as bags, pouches and printed products. With the consummation of the CT Film Purchase, the Company currently holds North America's number one market position in the converter film segment with a 23% market share. Barrier Films. Barrier films are polyethylene films that are sold to food processors and other end users. These films provide specific types of barrier protection against moisture, oxygen, light and gases, and are puncture resistant. The Company is the second largest producer of cookie, cracker and cereal box liners in North America, with a 19% market share. The CT Film Purchase allowed the Company to gain entry or increase access to other barrier film markets, including medical, personal care and agricultural films. Printed Products. Printed products are manufactured and sold to fresh and frozen food processors, bakeries, textile manufacturers and other dry goods processors. The Company is North America's leading supplier of film used in the frozen food segment, with a 31% market share. The Company is also the second largest producer in the bakery market, with a 20% market share, supplying approximately one-fifth of the five billion bread bags manufactured in North America each year. Management anticipates growth opportunities in the packaged salad and fresh produce market, which is expected to grow approximately 9% annually over the next several years. Stretch Films. Stretch films are used primarily to bundle products and wrap pallets. Currently, approximately one-half of all loads shipped in North America are unitized with stretch film. Management expects additional growth in stretch films as they continue to replace less economical and less environmentally-acceptable packaging alternatives, such as steel strapping. The Company is North America's fourth largest producer of stretch films, with an 11% market share. PVC Films. PVC films are used by supermarkets, institutions and homes to wrap meat, cheese and produce. Management believes the Company has North America's number two market position in PVC films. Management estimates that the Company also has the number one and three market shares in Australia and Western Europe with 60% and 16%, respectively. The Company expects PVC film export sales to increase in the growing Central and South American markets. Foam Products. The Company's polystyrene foam products include meat trays, egg cartons and fast food containers, which it manufactures in the U.K. and France. Management estimates that the Company is the largest producer of egg cartons in France, with a 26% market share and the third largest producer of polystyrene foam food packaging in Western Europe, with an 11% market share. The Company expects growth in foam products sales by penetrating emerging markets in Eastern Europe and the Middle East. The Company currently has over 2,000 customers, including General Mills, Kraft/General Foods, Campbell Soup, Albertson's, Safeway, American Stores, Tyson Foods, Interstate Bakeries (Wonder Bread), Becton-Dickinson, Kimberly-Clark, 3M and Johnson & Johnson. With the addition of CT Film, 37 the Company has a manufacturing capacity of nearly 800 million pounds of polyethylene and PVC films. For the year ended December 31, 1996, the Company, on a pro forma basis after giving effect to the CT Film Purchase, would have had net sales of $567.6 million, EBITDA of $35.5 million and Adjusted EBITDA of $65.6 million. HUNTSMAN PACKAGING Huntsman Packaging was founded in 1992 for the purpose of acquiring Goodyear Tire & Rubber Company's Film Products Division. Since its formation, Huntsman Packaging has pursued its growth strategy by improving operating efficiency and by completing nine strategic acquisitions that have complemented Huntsman Packaging's existing product lines and provided it with new products and access to new markets. For example, the Deerfield Acquisition established Huntsman Packaging as a leading converter film producer and nearly doubled its share in the stretch film market. The United Films Acquisition established Huntsman Packaging as a premier producer of cookie, cracker and cereal box liners. Huntsman Packaging has a successful track record of improving capacity utilization, reducing overhead costs and increasing profits of its acquired businesses. The Company's recent acquisitions have provided it with additional state-of-the-art equipment, which has allowed it to reduce capital expenditures and consolidate its manufacturing operations by closing older, less efficient operations. Management believes that additional cost savings can be achieved as it continues to integrate acquired companies. Until recently, Huntsman Packaging was a wholly-owned subsidiary of Huntsman Corporation. Contemporaneous with the Offering, Huntsman Packaging was separated from Huntsman Corporation in the Split-Off. Jon M. Huntsman now owns approximately 65% of the total equity of Huntsman Packaging. Richard P. Durham and the Christena Karen H. Durham Trust collectively own approximately 35% of the total equity of Huntsman Packaging. Mr. Durham is Mr. Huntsman's son-in-law and the President and Chief Executive Officer of Huntsman Packaging. Christena Durham is the daughter of Mr. Huntsman, the beneficiary of the Christena Karen H. Durham Trust and the wife of Mr. Durham. Jon M. Huntsman, Richard P. Durham and Christena H. Durham are currently the directors of the Company. CT FILM PURCHASE On August 27, 1997, an indirect subsidiary of Huntsman Corporation was merged into Rexene Corporation. The surviving corporation was renamed Huntsman Polymers Corporation. On September 30, 1997, Huntsman Packaging acquired CT Film from Huntsman Polymers Corporation for $70 million in cash. Management believes that the CT Film Purchase strengthens the Company's position as a market leader in the film and flexible packaging industry by enhancing its existing product lines and providing new growth opportunities. The CT Film Purchase provides the Company with new customers, including Becton-Dickinson, Kimberly-Clark and Johnson & Johnson, and provides access to the growing medical, personal care and agricultural film markets. In addition, CT Film increases the Company's share of the North American converter film market from 11% to a leading 23% share. With the CT Film Purchase, management expects to generate significant cost savings, primarily from three sources: (i) approximately $4.0 million in annual savings from raw material cost reductions; (ii) approximately $6.6 million in annual savings from the elimination of duplicative management and operating personnel; and (iii) approximately $5.7 million in annual savings through the consolidation of less efficient facilities and the related elimination of personnel and fixed costs. With the former CT Film assets operating at approximately 67% of capacity prior to the acquisition of CT Film, management believes that CT Film's available capacity can be used to: (i) relocate manufacturing to facilities closer to customers, thereby reducing transportation costs and increasing logistical flexibility in product delivery; (ii) reduce production lead times; and (iii) reduce capital expenditures. 38 COMPETITIVE STRENGTHS Superior Manufacturing Capability. With the acquisition of CT Film, management believes the Company possesses a broader range of manufacturing equipment and more state-of-the-art manufacturing equipment than any of its competitors. The resulting combination of manufacturing flexibility and efficiency enhances the Company's ability to bring new technologies to the marketplace and meet the ever-increasing performance needs of its customers in a cost-effective manner. Strong Market Positions. The Company has a leading market position in each of its major product lines. With the CT Film Purchase, the Company is North America's largest supplier of converter and frozen food films and its second largest supplier of PVC films, cookie, cracker and cereal box liners and bakery bags. The Company also maintains significant market shares in PVC film in Western Europe and Australia and polystyrene foam food packaging products in Western Europe. The Company attributes its market leadership primarily to its broad and innovative product lines, well-established customer relationships, low-cost manufacturing capabilities and technological innovation. Proven Management Team. The Company has assembled an outstanding management team at both the corporate and operating levels, with extensive experience in the flexible packaging industry. Senior management has an average of over 20 years of experience in the film and flexible packaging industry. Since the Company's formation in 1992, management has successfully integrated nine acquisitions, enhanced productivity, diversified its product lines, strengthened its customer relationships and increased EBITDA. Well-Established Customer Relationships. The Company has close working relationships with both its end-use customers and its distributors. The Company is a major supplier to some of the most significant end users of film products in the world, including Albertson's, American Stores, Campbell Soup, General Mills, Interstate Bakeries (Wonder Bread), Keebler, Kraft/General Foods, Pillsbury, Safeway, Tyson Foods and most of the flexible packaging converters that supply such end users. In addition, the Company manufactures and supplies film to some of the largest non-food film consumers in North America, including Baxter, Becton-Dickinson, Kimberly-Clark, 3M, Johnson & Johnson, Goodyear, Wal-Mart and Owens Corning. During the past five years, the Company also has assembled a distribution network that includes the four leading national film distributors: Unisource, Bunzl, Zellerbach and ResourceNet. Management believes that the combination of its end-use customers and leading national distributors gives the Company a strategic advantage in the marketplace. Low-Cost Production. The Company believes that its manufacturing costs are among the lowest in the industry due to: (i) economies of scale provided by its high volume production; (ii) high plant utilization attained through the continual consolidation of less efficient operations; (iii) favorable resin and other raw material prices based on its significant purchasing requirements; (iv) the state-of-the-art manufacturing equipment that minimizes resin requirements and waste; and (v) capital investment that has resulted in improved operating efficiency. STRATEGY Since its formation, the Company has focused on strategic acquisitions, technology development and production improvements to take advantage of current and projected market trends. Management believes that the following trends will drive future growth in the film and flexible packaging industry: (i) traditional forms of rigid packaging (paperboard, glass, metals and rigid plastic) will be replaced by sophisticated, less expensive, higher performing, flexible packaging alternatives; (ii) new metallocene-based resin technologies will encourage growth in flexible packaging and require state-of-the-art extrusion equipment to deliver these technologies in a cost-efficient manner; and (iii) customers and distributors will continue to prefer large, integrated suppliers, such as the Company, to smaller suppliers. Management believes that the Company's combination of core technological competencies, modern, flexible manufacturing capabilities and innovative management and marketing practices will position the Company as the premier film extrusion company in North America. To that end, the Company will continue to pursue the following strategies: 39 Develop New Products and New Markets. To capitalize on the Company's core technological and manufacturing competencies, the Company will continue to focus on customer needs through its specialized product development teams consisting of sales, marketing, technical and manufacturing professionals. In cooperation with major customers, the Company is developing films for stand-up plastic pouches that are replacing traditional rigid packaging for a broad range of consumer products, including juices, pet food, laundry detergent and snack foods. The Company recently developed a high-integrity shrink film for Campbell Soup that replaces traditional corrugated box and tray applications used in bundling canned goods. The Company also achieves product innovation by identifying and purchasing or licensing value-added technologies. A recent example is the Company's acquisition of the patent rights to the G-Bond manufacturing process. This cost-effective method of film production has allowed Huntsman Packaging to gain market share in the rapidly growing packaged salad market, most notably with Dole Foods. Continue Cost Reductions and Productivity Enhancements. The Company continues to seek opportunities to reduce its operating costs and enhance productivity. Recently, following the acquisitions of United Films and Deerfield, the Company closed older, less efficient production facilities in Dallas, Texas and Bowling Green, Kentucky, thereby reducing manufacturing costs. Through the CT Film Purchase, the Company intends to achieve significant cost savings through reduction in raw material prices and overhead expenditures and further plant rationalizations. With the addition of CT Film, the Company's plants will be able to service customers from lower-cost manufacturing facilities that are located closer to the customers, reducing both delivery times and transportation costs. Enhance and Leverage Customer Relationships. The Company has developed long-standing relationships with many of its customers. These customers value product innovation and reliable supply, and consequently exercise great care in establishing and maintaining their supplier relationships. The Company believes that its reputation for innovation and reliability is recognized in the marketplace. In addition, management believes that the trend of supplier consolidation will continue. The Company focuses on meeting the increasingly complex packaging needs of its customers with its wide array of film and flexible packaging products. As the Company has grown through acquisitions, it has successfully sold existing products to newly-acquired customers and has sold newly-acquired products to existing customers. Management believes this leveraging has provided and will continue to provide growth opportunities. INDUSTRY OVERVIEW Flexible packaging and film products are thin, pliable bags, pouches, labels and films for food and non-food consumer and industrial goods that are generally produced from single or multi-layer laminates of various combinations of plastics, paper, film and foil. Flexible packaging containers not only protect their contents, they are also cost-effective, space-saving, lightweight, tamper-evident, convenient and often recyclable. Flexible packaging represents the fastest growing sector in the $94 billion North American packaging industry. Currently, flexible plastic packaging is the second largest segment in the packaging industry, at 16%, and is expected to become the largest in the next several years. There are 650 flexible packaging companies in the United States with over 950 plants, predominately concentrated in the Midwest. These companies have approximately $16 billion in industry sales and approximately 84,000 employees. The flexible packaging industry has experienced record levels of consolidation in the past two years. There were 34 business combinations in 1995 and 1996, totalling $2.1 billion in revenues. In addition to the high level of merger and acquisition activity, companies in the industry are participating in more joint ventures, partnerships, expansions and technology sharing agreements. Large consumers of flexible packaging materials are driving market consolidation by using fewer suppliers in order to increase buying efficiencies and reduce administrative costs. The food processing industry represents approximately 50% of the market for flexible packaging. The remaining markets include medical and pharmaceutical applications, household goods, garden supplies, pet food, cosmetics, retail merchandise, agricultural, industrial and institutional applications. End users of flexible packaging have increasingly sought better performing and less expensive packaging alternatives 40 to meet changing demographics and customer needs. For example, in consumer markets, convenience and health consciousness are driving demand for low-fat foods such as ready-to-eat fresh salads and produce, which require sophisticated packaging solutions to maintain freshness, increase shelf life and provide resealability. There is a general industry trend to replace rigid containers (paperboard, glass, metals and rigid plastic) with lower cost and lighter weight flexible packaging. In consumer markets, stand-up pouches are used to replace boxes, jars or cans. In industrial markets, stretch and shrink films are being used to unitize cans, boxes and loads for transport and are replacing traditional forms of packaging such as steel strapping, corrugated paper boxes and taping. As end users continue to replace rigid packaging with flexible packaging, consumers are demanding thinner, stronger and clearer packaging products. In response, resin manufacturers have introduced new resin technologies, such as metallocene resins, which enhance different physical properties of the film. As demand for improved product offerings continues, management anticipates that product lines and manufacturing equipment will change rapidly. PRODUCTS, MARKETS AND CUSTOMERS Huntsman Packaging is one of the largest manufacturers of film and flexible packaging products in North America. The Company offers one of the most diverse product lines in the industry and has attained a leading market position in each of its major product lines. Management attributes its market leadership primarily to its advanced film extrusion equipment and technology, broad and innovative product lines, well-established customer relationships and low-cost production capabilities. The Company's product lines are comprised of the following: (i) converter films that are sold for additional fabrication and resale by other flexible packaging manufacturers for use in a wide range of consumer and industrial markets; (ii) barrier films that contain and protect food and other products; (iii) printed products that include printed rollstock, bags and sheets used to package products in the food and medical industries; (iv) stretch films that are used for industrial unitizing and containerization; (v) PVC films that are used by supermarkets, institutions and homes to wrap meat, cheese and produce; and (vi) foam products that include meat trays, egg cartons and fast food containers. Converter Films Converter films are single-and multi-layer extruded polyethylene films that are sold to converters and laminators for final processing into consumer products such as bags, pouches and printed products. Converter films may also be laminated to another film or to paper or foil to give each layer a specific performance characteristic, such as moisture or oxygen barriers or light protection. Converter films are sold either for their sealability characteristics or their barrier characteristics and must meet stringent performance specifications including gauge control, layer thickness, sealability and web width accuracy. Prior to the CT Film Purchase, the Company was the second largest supplier of converter films in the estimated 710 million pound North American market. With the consummation of the CT Film Purchase, the Company has the number one market position, increasing its market share from approximately 11% to approximately 23%. Management believes the technological advantages of the Company's converter films are recognized and respected in the marketplace. Adherence to strict performance specifications allows the Company to price many of these products at a premium. Single-layer films are a blend of resins that provide desired sealant characteristics for specific packaging applications. Three-and five-layer coextrusions produce films with distinct layers joined together to form what appears to be a single-layer film. Each layer and each resin in each layer provides a specific characteristic -a barrier, an adhesive, a seal or a gloss. The Company's technological capabilities in five-layer film offer an efficient and cost-effective method of sealing in or sealing out moisture, oxygen or odors. The Company continues to enhance its market share in converter films by introducing new product offerings to meet new industry trends and customer needs. Recently, for example, the Company worked closely with one of its converter customers to develop a three-layer film that will replace paper products 41 in pet food packaging applications. In addition, the Company has recently developed a thermal imaging polyethylene film for billboard advertising in cooperation with a national media company. Major converter film customers include All-Pak, Clear Lam Packaging, Lawson Mardon, Plastic Packaging and Sonoco Flexible Packaging. Virtually all laminators in North America buy at least a portion of their film from Huntsman Packaging. These laminated structures are sold to such end users as Federal Express, Heinz, Kraft/General Foods, M&M Mars, Nabisco and Procter & Gamble. Barrier Films Barrier films are polyethylene films that are sold to food processors and other end users. These films provide specific types of barrier protection against moisture, oxygen, light or gases, and are puncture resistant. Barrier films produced by the Company are sold in the following product segments: (i) cookie, cracker and cereal box liners; (ii) medical packaging and personal care films; (iii) shrink film; and (iv) agricultural film. Cookie, Cracker and Cereal Box Liner Film Market The Company sells coextruded barrier films that are manufactured into sealed pouches as box liners for packaging cookies, crackers, cereals and other dry goods. The Company is a leading supplier in this market, with a 19% market share. This market of approximately 180 million pounds is expected to grow approximately 8% annually over the next several years. The Company's advanced, state-of-the-art coextrusion technology has allowed it to gain market share and introduce new products in this segment, such as the successful introduction of a cake mix box liner for General Mills. The Company is a supplier to many market leaders, including General Mills, Kellogg, Nabisco, Keebler and Pillsbury. Medical and Personal Care Film Market With the consummation of the CT Film Purchase, the Company increased its presence in the medical film market and entered the personal care market. There is an estimated 205 million pound medical film market, including medical supply packaging and surgical drapes and gowns. This market is expected to grow approximately 8% annually through the year 2000. The Company now also produces films for use in infant care, adult incontinence and feminine hygiene products for a portion of the estimated 280 million pound personal care market. This market is expected to grow approximately 5% annually through the year 2000. The Company's customers include Becton-Dickinson, Kimberly-Clark, Drypers and Johnson & Johnson. Shrink Film Market Polyethylene shrink films, so-called because of their ability to shrink or contract around a product when heated, are used in many applications, including unitizing consumer products and protecting industrial items during storage and shipment. The Company participates primarily in the industrial segment of the shrink film market. The industrial shrink film market is approximately 344 million pounds and is expected to grow approximately 5% annually through the year 2000. The Company has recently developed a technologically-advanced shrink film that enables end users to downgauge from their current products and offers greater strength and puncture resistance than ordinary shrink film. The introduction of this film has been highly successful, and it is currently used by such nationally-recognized industry leaders as General Mills, Campbell Soup, Del Monte and Perrier. Agricultural Film Market The agricultural film market segment is generally divided into five categories: mulch film, greenhouse film, fumigation/sterilization film, water and soil conservation film and crop storage film. With the consummation of the CT Film Purchase, the Company now produces mulch films and greenhouse films. The North American market for mulch and greenhouse films is approximately 230 million pounds and is expected to grow approximately 4% annually. The Company's agricultural film customers include Asgrow, Gargiulo Farms, Griffin Suppliers and Mecca Farms. The Company believes that it is well-positioned to capitalize on the trends in the agricultural film segment, which include downgauging and the use of metallocene resins. 42 Printed Products The Company's printed products are manufactured and sold in two formats: roll stock and bags. Printed roll stock is sold to fresh and frozen food processors, who use their own packaging equipment to fabricate pouches and bags for their products. Printed bags are sold to fresh and frozen food processors, bakeries, textile manufacturers and other dry goods processors. The Company has profitable niches in the markets for dry goods, ready-to-eat salad and fresh-cut produce, textile, tortilla, medical and specialty packaging. The Company is the number one supplier of film used in the frozen food segment, with a 31% market share. The North American frozen food packaging market is approximately 42 million pounds and is expected to grow approximately 5% annually through the year 2000. The Company is also the second largest producer in the 210 million pound bakery market, with a 20% share, supplying approximately one-fifth of the five billion bread bags manufactured in North America each year. The Company is also the number one supplier of non-household zipper bags in North America. The Company recently developed a new heat-sealed, puncture-resistant printed film for one of the largest food processors in the country. In addition, the Company was named the sole provider of bread bags for IGA/Fleming and the preferred provider of zipper bags for Mission Foods, the largest producer of tortillas in the world. Along with the Company's superior printing and pre-press reclosable technology, the Company's license to the patented G-Bond process further differentiates the Company from its competitors. G-Bond is a lamination simulation that can be achieved with a printing press. Traditional laminations are a two-step process, first printing an image onto film and then laminating the printed film onto a second film. G-Bond accomplishes both steps in one process, eliminating the need for laminating equipment. A modification to the G-Bond process, known as the Dial-a-Barrier process, which is owned by the Company and is the subject of a pending patent application, has become an industry leader in the growing packaged salad and pre-cut produce market. The Company is currently working with Dole Foods, Fresh Express and Mann Packing in this growing market. The Company continues to invest in modern processing equipment, including 8-color presses, specialty reclosability equipment, and state-of-the-art pre-press equipment to reduce changeover time and enhance printing flexibility. This technology recently allowed the Company to print a 17-color product for Hanes using screening techniques on an 8-color press. Huntsman Packaging's printed product customers include Dole Foods, Interstate Bakeries (Wonder Bread), Mission Foods, Ore-Ida, Pepperidge Farms and Pillsbury (Green Giant). Stretch Films Stretch films, used primarily to bundle products and wrap pallets, are made of a blend or coextrusion of linear low density polyethylene, low density polyethylene, metallocene and other specialty resins. Currently, approximately one-half of all loads shipped in North America are unitized with stretch film. Management expects additional growth as stretch films continue to replace less economical and less environmentally-acceptable packaging alternatives, such as steel strapping. Consumption of stretch film in North America exceeds one billion pounds per year and has grown at a rate of approximately 7% annually over the last few years. The Company expects that this market will maintain a growth rate of approximately 7%, and will reach approximately 1.3 billion pounds by 2000. The Company is the fourth largest producer of stretch films in North America, with an 11% market share. Most of the Company's competitors view stretch film as a commodity product and compete primarily on the basis of price. The Company views stretch film as a value-added product. By using state-of-the-art extrusion equipment and continually refining its product offering mix, the Company seeks to be the supplier of choice in this market. Ongoing product development includes the Company's license to the patented Winwrap product, a new lightweight stretch wrap that is half the weight of traditional handwrap. Despite its reduced weight, Winwrap brand stretch wrap offers superior elasticity and holding force, and is also more durable than traditional handwrap. The Company is engaged in a program to sub-license this technology to third parties. 43 Market trends include downgauging of film and the use of more sophisticated resins. Management believes that recent capital improvements in production equipment, strong relationships with all major resin suppliers and ongoing investment in product development have positioned the Company to take advantage of these trends. The stretch film market has also recently been the focus of significant industry consolidation. Tenneco recently purchased Mobil's packaging and stretch film division, AEP purchased Borden's stretch film division, and in October 1996, Huntsman Packaging purchased Deerfield. Management believes that the stretch film market will continue to consolidate, with larger manufacturers, such as the Company, gaining a competitive advantage in servicing large, sophisticated customers. Huntsman Packaging sells stretch film primarily to distributors for resale to end users. In North America, there are more than 3,700 distributors selling stretch film products to more than 200,000 end users. The Company is the only major stretch film producer that distributes its films through all of the major national distributors. The Company's largest customers in this market include Unisource, Zellerbach, NPS, Pacific Packaging and Resinas Poli. PVC Films PVC films are used by supermarkets, institutions and homes to wrap meat, cheese and produce. Based upon benchmarking studies, the Company believes it is the low-cost PVC film producer in the world. Management believes the Company has North America's number two market position in PVC films. Management estimates that the Company also has the number one and three market shares in Australia and Western Europe, with 60% and 16%, respectively. The Company's PVC export sales increased by over 20% in 1996, and the Company expects PVC film export sales to further increase in the growing Central and South American markets. In North America, PVC film is sold to distributors, supermarket chains and converters. Approximately 58% of the Company's PVC film is sold through distributors, 26% is sold directly to supermarket chains, and 16% is sold to converters. Major customers include Albertson's, Bunzl, Kroger, Publix Super Markets and Safeway. In Europe, the Company's major PVC film customers include Disposable Supplies, Errecia, Northern Packaging, Omnipac and Vitembal. In Australia, the Company's customers include Chep Australia, Dalton Packaging, Grocery Holdings, Onwards Industrial and Woolworth. Foam Products The Company's polystyrene foam products include primarily meat trays, egg cartons and fast food containers, which it produces in the U.K. and France. Management estimates that the Company is the largest producer of egg cartons in France, with a 26% market share, and the third largest producer of all polystyrene foam food packaging products in Western Europe, with an 11% market share. The Company expects growth in PVC film sales by penetrating emerging markets in Eastern Europe and the Middle East. Approximately 45% of the Company's sales in the foam market are through distributors to supermarkets, fast food chains and food processors. The remainder of the Company's sales are directly to end users. The Company's largest customers in this market include ACS Catering, Autobar, GB Quick, Marshall Food and Sovereign Foods. COMPETITION The film and flexible packaging industry includes several hundred companies. Small and medium-sized manufacturers, who compete primarily in regional markets, predominate, with relatively few large, national manufacturers. Statistics of the Flexible Packaging Association and available trade and industry information indicate that the ten largest flexible packaging companies accounted for 40% of the total industry sales in 1995. Other sales leaders in this industry include Bemis, American National Can, Printpack, Cryovac (a division of W.R. Grace), Tenneco, AEP and Exxon. See "Risk Factors -- Competition." 44 SALES AND MARKETING The Company believes it has one of the most experienced and effective sales, marketing and technical support teams in the industry. Nine sales professionals, located in eight cities, serve national accounts, and approximately 70 additional professionals are responsible for selling the Company's six product lines. All of the Company's sales, marketing and technical support personnel receive extensive training before assuming account responsibilities. The Company believes it is critical that its sales, marketing and technical support teams have in-depth knowledge of the Company's products, and in some instances engineering and other technical experience, in order to meet customers' product needs and provide meaningful information to the Company for new product development. Technical support personnel assist the sales force with technical expertise and assure compliance with customer specifications. The Company's major national accounts are serviced by national account salespeople who are qualified to sell the entire range of the Company's products. In addition, since each of the Company's product lines have different characteristics and properties, and generally are sold and distributed in different ways, the Company has sales, marketing and technical support personnel dedicated specifically to each product. The Company's products are sold directly to end users, to distributors and through brokers. RESEARCH AND DEVELOPMENT Huntsman Packaging spent $2.2 million, $2.0 million and $2.1 million on research and development for its product lines in 1994, 1995, and 1996, respectively. CT Film spent $2.5 million, $3.7 million and $2.7 million on research and development in 1994, 1995, and 1996, respectively. On a pro forma basis, Huntsman Packaging and CT Film spent 1.1% of net sales in 1996 for research and development. Huntsman Packaging conducts its research and development at facilities in Akron, Ohio and Chippewa Falls, Wisconsin. Both facilities have extensive physical property and analytical test equipment and both blown and cast extrusion pilot line equipment. INTELLECTUAL PROPERTY RIGHTS Proprietary protection of Huntsman Packaging's processes, apparatuses, and other technology and inventions is important to its business. Huntsman Packaging owns approximately 25 unexpired U.S. patents. Approximately seven patent applications, of which one is a provisional application, are currently pending at the United States Patent and Trademark Office, and approximately 17 foreign patents have either been issued or are pending. While a presumption of validity exists with respect to issued U.S. patents, Huntsman Packaging cannot assure that any of its patents will not be challenged, invalidated, circumvented or rendered unenforceable. Furthermore, Huntsman Packaging cannot assure the issuance of any pending patent application, or that if patents are issued, such patents will provide meaningful protection against competitors or against competitive technologies. Huntsman Packaging also relies on unpatented proprietary know-how, continuing technological innovation and other trade secrets to develop and maintain its competitive position. Huntsman Packaging has entered into a number of confidentiality agreements to protect its trade secrets and proprietary know-how upon making necessary disclosures to third parties. There can be no assurance, however, that such agreements will not be breached, that they will provide meaningful protection for Huntsman Packaging's trade secrets or proprietary know-how, or that adequate remedies will be available in the event of an unauthorized use or disclosure of such trade secrets and know-how. In addition, there can be no assurance that others will not obtain knowledge of such trade secrets through independent development or other access by legal means. In addition to its own patents, proprietary trade secrets and know-how, Huntsman Packaging is a party to certain licensing arrangements and other agreements authorizing Huntsman Packaging to use certain trade secrets, know-how and related technology and/or operate within the scope of certain patents owned by other entities. Huntsman Packaging also has licensed or sub-licensed certain intellectual property rights to third parties. 45 Huntsman Packaging has associated brand names with a number of its products, and owns approximately 35 U.S. trademark registrations, one application for registration currently pending at the United States Patent and Trademark Office, and approximately 170 foreign counterparts, including both registrations and applications for registration. However, there can be no assurance that Huntsman Packaging's trademark registrations will provide meaningful protection against the use of similar trademarks by competitors, or that the value of Huntsman Packaging's trademarks will not be diluted. RAW MATERIALS Polyethylene resin, PVC resin and polystyrene resin constitute the primary raw materials used to manufacture all of the Company's products, with polyethylene resin being the single largest raw material purchased by the Company. In 1996, these three resins comprised approximately 78% of total raw material costs and approximately 44% of the Company's net sales. The prices of raw materials are a function of, among other things, manufacturing capacity, demand, and the price of crude oil and natural gas feedstocks. See "Risk Factors -- Exposure to Fluctuations in Resin Prices and Dependence on Resin Supplies." The Company's major suppliers of polyethylene resin are Dow Chemical, Exxon, Chevron and Huntsman Polymers, its major suppliers of PVC resin are Geon and BASF, and its major supplier of polystyrene resin is Huntsman Chemical Corporation. MANUFACTURING Huntsman Packaging manufactures its film products using both the blown and cast extrusion processes. In each process, thermoplastic resin pellets are combined with other resins, plasticizers, or modifiers in a controlled high temperature and pressurized process to create films with specific performance characteristics. These two basic film manufacturing processes produce uniquely different performance characteristics. Cast films are generally clearer, softer, and more uniform in thickness. Blown films offer enhanced physical properties, such as increased tear and puncture strength and barrier protection. In the cast film process, the molten resin mixture is extruded through a horizontal die onto a polished chill roll, where the film is quickly cooled. As the film comes off the end of the chill roll, it is wound onto rolls. Blown film is produced by extruding the molten resin mixture through a circular die and chilled air ring to form a bubble as large as 55 feet high and 25 feet in diameter. The bubble is then collapsed, cut and wound onto rolls. 46 PROPERTIES The principal executive offices of Huntsman Packaging are located at 500 Huntsman Way, Salt Lake City, Utah 84108, and are occupied pursuant to a lease with Huntsman Corporation. The following is a list of the Company's owned or leased properties where manufacturing and research and development are located. In addition, the Company leases sales offices and warehouse space in 30 locations spread over 14 states and 4 foreign countries. Unless otherwise indicated, the property is owned.
LOCATION FACILITY SQ. FOOTAGE - ----------------------------- ----------------------------------------- ------------------------- Birmingham, Alabama Manufacturing 120,000 sq. ft. Bloomington, Indiana Manufacturing* 21,500 sq. ft. Calhoun, Georgia Manufacturing 39,000 sq. ft. Carrollton, Ohio Manufacturing** 63,000 sq. ft. owned 12,000 sq. ft. leased Danville, Kentucky Manufacturing 180,000 sq. ft. Deerfield, Massachusetts Manufacturing 140,000 sq. ft. Guegon, France Manufacturing and warehouse 45,000 sq. ft. Lewisburg, Tennessee Manufacturing 42,000 sq. ft. Merced, California Manufacturing 37,500 sq. ft. Odon, Indiana Manufacturing* 20,000 sq. ft. Philippsburg, Germany Manufacturing 38,000 sq. ft. Melbourne, Australia Manufacturing* 40,000 sq. ft. Rochester, New York Manufacturing 327,000 sq. ft. Seattle, Washington Manufacturing 110,000 sq. ft. Skelmersdale, U.K. Manufacturing and warehouse* 291,000 sq. ft. Toronto, Canada Manufacturing 106,000 sq. ft. Uniontown, Ohio Research and development* Chippewa Falls, Wisconsin Manufacturing; Research and development+ 40,400 sq. ft. Clearfield, Utah Manufacturing* 41,000 sq. ft. Dalton, Georgia Manufacturing 52,000 sq. ft. Harrington, Delaware Manufacturing 42,200 sq. ft. Scunthorpe, U.K. Manufacturing 32,000 sq. ft.
- ------------ * Leased ** Partially owned and partially leased EMPLOYEES As of October 1, 1997, Huntsman Packaging employed approximately 2,261 persons. Approximately 21% of Huntsman Packaging's employees work outside the United States. Huntsman Packaging has approximately 540 employees located in the United States and 310 employees internationally who are subject to collective bargaining agreements which expire from October 1997 to June 2000. Management believes its relationships with employees are good. There have been no strikes or work stoppages. ENVIRONMENTAL MATTERS Huntsman Packaging is subject to certain environmental laws, including those described below. Huntsman Packaging's operating budgets include costs and expenses associated with complying with such laws, including the acquisition, maintenance and repair of pollution control equipment. Additional costs and expenses may also be incurred to meet new requirements under Environmental Laws, as well as in connection with the investigation and remediation of threatened or actual pollution. In many instances, the ultimate costs under Environmental Laws and the time period during which such costs are likely to be incurred are difficult to predict. 47 Under certain Environmental Laws, the Company may be jointly and severally liable for the cost of remediation of environmental contamination on-site and at certain off-site locations at which the Company disposed of or arranged for the disposal or treatment of hazardous substances. Under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended ("CERCLA"), and similar state statutes, an owner or operator of real property may be liable for the costs of removal or remediation of certain hazardous substances on or under the property, regardless of whether the owner or operator owned or operated the real property at the time of the release of the hazardous substances and regardless of whether the release or disposal was in compliance with law at the time it occurred. To date, Huntsman Packaging is not aware that any claims under CERCLA or similar state statutes are pending against it. Under the Resource Conservation and Recovery Act of 1976, as amended ("RCRA"), and similar state statutes, companies that hold permits to treat or store hazardous waste can be required to remediate contamination from solid waste management units at the facility, regardless of when the contamination occurred. The Company's plants generate only small, incidental volumes of hazardous waste or larger volumes stored less than 90 days, and such quantities do not require RCRA permits to be held at the individual facilities. Such waste, when generated, is disposed of at fully-permitted, off-site facilities or is recycled in fully-permitted recovery facilities. At the Deerfield, Massachusetts plant, an underground storage tank ("UST") used to store fuel oil was closed in place prior to acquiring the facility in October 1996. Two tanks below the size regulated by the Commonwealth of Massachusetts remain in service; one active 1,000 gallon fuel oil tank and a 500 gallon tank, which serves as a spill containment vessel for the process. The spill containment tank has never contained any material. No indication of soil or groundwater contamination from these vessels has been detected. There are currently four 4,000 gallon USTs for n-propyl alcohol at the Rochester, New York plant. These tanks are double-walled steel with an epoxy coating, and they are monitored on a regular basis. Proper notifications relative to the installation of the tanks have been provided to state and local authorities. Fourteen additional USTs have been removed from the site between 1987 and 1992. For those tanks from which leakage was discovered, appropriate remedial measures were taken to address soil and groundwater contamination. At the Dalton, Georgia facility, two underground tanks that were installed by a previous owner were discovered when a release to the soil was detected. The release was reported to the State of Georgia Department of Natural Resources in October 1990 by CT Film. Investigation revealed limited levels of soil and groundwater contamination. A risk-based remediation plan, which requires no further action, has been proposed to the State. However, Rexene Corporation accrued $100,000 in its June 30, 1997 balance sheet to remediate should the State decide such remediation is necessary. At this time, Huntsman Packaging does not believe that this project constitutes a material issue. Huntsman Packaging's operations are also subject to regulation under the Clean Air Act and the Clean Water Act, as well as under similar state statutes. Under such statutes, Huntsman Packaging may also incur costs for capital improvements and other requirements, including requirements under the Clean Air Act that are scheduled to take effect in the future. The facilities at Rochester, New York and Seattle, Washington have the potential to emit air pollutants in quantities that require them to obtain a Title V permit under the Clean Air Act Amendments of 1990 and the implementing state regulations. Both facilities have timely filed Title V applications under their respective state programs and receipt of permits is expected. Some capital costs for additional air pollution controls or monitors may be required at both sites, however, such expenditures are not expected to be materially adverse to the business. Several facilities may be required to obtain stormwater permits under the Clean Water Act and implementing regulations. Expenditures are not expected to exceed $20,000 to obtain and comply with all such permits. Additional costs could be incurred if additional regulations are promulgated under the Clean Air and Clean Water Acts and similar state statutes or under other Environmental Laws. An analysis is currently being performed at the Harrington, Delaware and Chippewa Falls, Wisconsin facilities acquired in the CT acquisition to determine if potential emissions from ozone pollution control equipment will require permits under Title V of the Clean Air Act Amendments of 1990. Preliminary 48 estimates indicate that such permits will probably not be required. However, a portion of contingent environmental reserves have been accrued against the possibility that some additional capital investment will be needed. Capital costs are expected to be less than $50,000. Additional costs could be incurred if additional regulations are promulgated under the federal Clean Air and Clean Water Acts and similar state statutes or under other Environmental Laws. Huntsman Packaging's costs and operating expenses relating to environmental matters totaled approximately $200,000 in each of 1995 and 1996, and are expected to remain at approximately this level in 1997. This amount is expected to be sufficient to cover, among other things, Huntsman Packaging's routine measures to prevent, contain and clean up spills of materials that occur in the ordinary course of business. Huntsman Packaging's estimated capital expenditures for environmental matters are expected to be approximately $517,000 in 1997, approximately $725,000 in 1998, and approximately $175,000 in 1999. Capital expenditures and, to a lesser extent, costs and operating expenses relating to environmental matters will be subject to evolving regulatory requirements and will depend on the timing of the promulgation of specific standards which impose requirements on Huntsman Packaging's operations. Rexene Corporation's operating expenses for environmental remediation, compliance and waste disposal for the CT Film division were approximately $345,000 in 1996 and $127,000 in 1995. It is anticipated that approximately $252,000 will be spent for environmental remediation, compliance and waste disposal for CT Film in 1997. In 1996, Rexene Corporation spent approximately $124,000 on environmental capital expenditures for CT Film. Rexene Corporation did not incur any environmental capital expenditures for CT Film in 1995. For the foreseeable future, Huntsman Packaging expects to incur approximately $50,000 per year in capital spending to address the requirements of Environmental Laws for CT Film. LITIGATION Huntsman Packaging is involved in litigation from time to time in the ordinary course of its business. In management's opinion, none of such litigation is material to Huntsman Packaging's financial condition or results of operations. 49 MANAGEMENT DIRECTORS AND EXECUTIVE OFFICERS Below are the names, ages, positions and offices held, and a brief account of the educational and business experience of each current director and executive officer of Huntsman Packaging. BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
NAME AGE POSITION - ------------------------- -------- --------------------------------------------------- Jon M. Huntsman*......... 60 Director and Chairman of the Board of Directors Karen H. Huntsman* ...... 59 Vice Chairman** Richard P. Durham*....... 33 Director, President and Chief Executive Officer Christena H. Durham* .... 33 Director Jack E. Knott............ 42 Executive Vice President and Chief Operating Officer N. Brian Stevenson....... 52 Senior Vice President and General Manager, Packaging Division Douglas W. Bengtson...... 49 Senior Vice President and General Manager, Performance Films Division Ronald G. Moffitt........ 44 Senior Vice President and General Counsel, Secretary Stanley B. Bikulege...... 33 Vice President Stretch Films, Packaging Division Dale A. Brockman......... 46 Vice President Manufacturing, Packaging Division Paul D. Gage............. 40 Vice President Manufacturing, Performance Films Division Thornton L. Hill......... 59 Vice President Sales and Marketing PVC Films, Packaging Division Gary J. Penna............ 49 Vice President Sales and Marketing Converter Films, Performance Films Division Patrick H. Price......... 51 Vice President Administration Kyle E. Rossler.......... 46 Vice President Sales and Marketing Barrier, Specialty, Personal Care and Medical Films, Performance Films Division Edwin W. Stranberg....... 47 Vice President Technology, Performance Films Division Daren G. Cottle.......... 34 Controller, Treasurer, and Assistant Secretary
- ------------ * Such persons are related as follows: Jon M. Huntsman is the father of Christena H. Durham and the father-in-law of Richard P. Durham. Karen H. Huntsman is the wife of Jon M. Huntsman, the mother of Christena H. Durham and the mother-in-law of Richard P. Durham. ** The Vice Chairman is an advisory position to the Board of Directors but does not vote on matters brought to the Board. 50 JON M. HUNTSMAN is a Director and the Chairman of the Board of Directors of Huntsman Packaging and has served as Chairman of the Board, Chief Executive Officer and a Director of Huntsman Corporation, its predecessors and other Huntsman companies for over 25 years. He is also the Chairman and founder of the Huntsman Cancer Foundation. In addition, Mr. Huntsman serves on numerous charitable, civic and industry boards. In 1994, Mr. Huntsman received the prestigious Kavaler Award as the chemical industry's outstanding Chief Executive Officer. Mr. Huntsman formerly served as Special Assistant to the President of the United States and as Vice Chairman of the U.S. Chamber of Commerce. KAREN H. HUNTSMAN is the Vice Chairman and a Director of other Huntsman companies. By appointment of the Governor of the State of Utah, Mrs. Huntsman also serves as a member of the Utah State Board of Regents. Mrs. Huntsman also serves on the board of directors of various corporate and non-profit entities, including First Security Corporation and Intermountain Health Care Inc. RICHARD P. DURHAM became President and Chief Executive Officer of Huntsman Packaging in March 1997. Mr. Durham is a Director of Huntsman Packaging and also is a Director of Huntsman Corporation. Mr. Durham has been with the Huntsman organization in various positions since 1985. Most recently, Mr. Durham served as Co-President and Chief Financial Officer of Huntsman Corporation, where in addition to being responsible for accounting, treasury, finance, tax, legal, human resources, public affairs, purchasing, research and development, and information systems, he also was responsible for Huntsman Packaging. Mr. Durham attended Columbia College and graduated from the Wharton School of Business at the University of Pennsylvania. CHRISTENA H. DURHAM is a Director of Huntsman Packaging and also serves on the Board of Directors of various non-profit organizations including the YWCA of Salt Lake City. Mrs. Durham also serves as a trustee of the Huntsman Excellence in Education Foundation. JACK E. KNOTT became Executive Vice President and Chief Operating Officer of Huntsman Packaging on September 1, 1997. Prior to joining the Company, Mr. Knott was Executive Vice President of Rexene Corporation and President of Rexene Products Company. Mr. Knott served in a variety of management positions in Rexene Corporation from 1985 to 1997, including President of CT Film, from 1989 until 1992. Prior to joining Rexene Corporation, Mr. Knott worked for American National Can. Mr. Knott received a B.S. degree in Chemical Engineering and an M.B.A. degree from the University of Wisconsin and holds nine patents. N. BRIAN STEVENSON became Senior Vice President and General Manager, Packaging Division on September 1, 1997. Mr. Stevenson joined Huntsman Packaging in April 1992 as Executive Vice President and Chief Operating Officer. He has 27 years of operating and management experience in the flexible packaging industry. Mr. Stevenson held numerous management positions at James River and Crown Zellerbach, most recently General Manager of James River's Flexible Packaging Division. In 1990, he left James River to become President of Packaging Industries. Mr. Stevenson holds a B.S. degree in Accounting and an M.B.A. degree from the University of Utah. DOUGLAS W. BENGTSON joined Huntsman Packaging on September 15, 1997 as Senior Vice President and General Manager, Performance Films Division. Mr. Bengtson has 24 years of experience in sales, marketing and senior management. Most recently, Mr. Bengtson was Vice President, Sales and Marketing for Food Packaging at American National Can. His former positions include Vice President, Sales and Marketing at CT Film and Vice President, Sales and Marketing, Rexene Products Division. Mr. Bengtson holds a B.S. degree in Business/Marketing from Colorado State University. RONALD G. MOFFITT joined Huntsman Packaging in 1997, after serving as Vice President and General Counsel of Huntsman Chemical Corporation. Prior to joining Huntsman in 1994, Mr. Moffitt was a partner and director in the Salt Lake City law firm of Van Cott, Bagley, Cornwall & McCarthy, with which he had been associated since 1981. Mr. Moffitt holds a B.A. degree in Accounting, Master of Professional Accountancy, and a J.D. degree from the University of Utah. STANLEY B. BIKULEGE joined Huntsman Packaging in 1992 and was appointed Vice President Stretch Films, Packaging Division in 1997. Mr. Bikulege's prior positions with the Company include Managing Director-Europe, Managing Director PVC Films-Europe and Plant Manager. Prior to joining Huntsman, Mr. Bikulege held numerous positions in Goodyear's Wingfoot Films. Mr. Bikulege received a B.S. degree in chemical Engineering from Youngstown State University and an M.B.A. degree from Georgia State University. 51 DALE A. BROCKMAN joined Huntsman Packaging in February 1993 as the plant manager of the newly-acquired Huntsman Design Products plant in Rochester, New York and was appointed Vice President Manufacturing, Packaging Division on September 1, 1997. He has 24 years of experience in the flexible packaging industry. He has held numerous engineering and management positions at Crown Zellerbach and James River, including General Manager/Bakery Business Unit Manager. Mr. Brockman holds a B.S. degree in Mechanical Technology from Indiana State University. PAUL D. GAGE became Vice President Manufacturing, Performance Films Division on September 1, 1997. Prior to joining the Company, Mr. Gage was Vice President of Technical, Quality and Manufacturing of CT Film. Mr. Gage served in a variety of management positions with CT Film from 1988 to 1997. Mr. Gage received a B.S. degree in Chemical Engineering and Microbiology from Montana State University. THORNTON L. HILL joined the Company as Vice President Sales and Marketing PVC Films, Packaging Division in July 1992. Prior to that time, Mr. Hill was General Sales Manager of Goodyear's Film Products Division and had worked for Goodyear for 29 years in various sales and marketing positions, including Executive Vice President and Chief Operating Officer of Goodyear's Wingfoot Films. He holds a B.A. degree in Education from Morehead State University and has attended executive management programs at Kent State University and Northwestern University. GARY J. PENNA became Vice President Sales and Marketing Converter Films, Performance Films Division on September 1, 1997. Mr. Penna joined Huntsman Packaging in 1996 as a result of the Deerfield Acquisition. Mr. Penna had been with Deerfield since 1994, as Vice President of Sales for Converter Films. Prior to joining Deerfield, Mr. Penna served a variety of management positions at Exxon Corporation. Mr. Penna has a degree in Chemical Engineering from Princeton University and an M.B.A. degree from The Amos Tuck School at Dartmouth College. PATRICK H. PRICE joined the Company in April 1992 as Vice President Administration. Prior to joining the Company, he was employed for fifteen years with Huntsman Chemical Corporation in the human resource department, holding positions as Director of Personnel and Director of Benefits. He holds a B.S. degree in Business Administration from California State University-Northridge. KYLE E. ROSSLER joined Huntsman Packaging in June 1993, and became Vice President Sales and Marketing Barrier, Specialty, Personal Care and Medical Films, Performance Films Division on October 1, 1997. Prior to joining Huntsman Packaging, Mr. Rossler held various managerial positions in sales, marketing and administrative departments with Jefferson Smurfit, Crown Zellerbach and James River. Mr. Rossler has over 23 years of experience in the flexible packaging industry. He holds a B.S. degree in Industrial Engineering degree from the University of Michigan. EDWIN W. STRANBERG joined Huntsman Packaging in February 1993 as Vice President of Operations and became Vice President Technology, Performance Films Division on September 1, 1997. He has 25 years of experience in the flexible packaging industry. He held various manufacturing, technical and sales management positions with Crown Zellerbach and James River prior to joining Huntsman Packaging. Prior to James River, he was Vice President and General Manager of Sealright Co. Inc., a coextruded blown film manufacturer. Mr. Stranberg holds a B.S. degree in Industrial Engineering from New Mexico State University. DAREN G. COTTLE joined the Huntsman organization in 1989 and has held various positions at Huntsman Chemical Corporation, including Plant Controller. Mr. Cottle joined Huntsman Packaging in July 1992 as the Assistant Controller, was named Controller in March 1997, and became Treasurer and Assistant Secretary on October 1, 1997. Prior to joining Huntsman, Mr. Cottle was employed by the international accounting firm of Deloitte & Touche. Mr. Cottle is a Certified Public Accountant and received a B.A. and a masters degree in Professional Accountancy from Weber State University. 52 EXECUTIVE COMPENSATION SUMMARY OF COMPENSATION The following Summary Compensation Table sets forth information concerning compensation earned in the fiscal year ended December 31, 1996, by the Company's Chief Executive Officer and its remaining four most highly compensated executive officers (the "Named Executive Officers") as of the end of the last fiscal year. SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM COMPENSATION ALL OTHER ------------------------------------ ------------------------------------- COMPENSATION AWARDS PAYOUTS ($) -------------------------- ---------- ------------ NUMBER OF SECURITIES OTHER RESTRICTED UNDERLYING ANNUAL STOCK OPTION/ LTIP SALARY BONUS COMPENSATION AWARD(S) SARS PAYOUTS NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)(2) ($) (#) ($) - --------------------------- ------ --------- --------- -------------- ------------ ------------ ---------- Jon M. Huntsman Chief Executive Officer(1) 1996 93,080 493,120 -- 0 0 0 68,122(3) N. Brian Stevenson President, Chief Operating Officer.................... 1996 204,583 100,000 -- 0 0 0 3,750(4) Dale A. Brockman Vice President--Operations. 1996 158,743 35,000 -- 0 0 0 1,552(5) Thornton L. Hills Vice President--Sales...... 1996 165,000 40,000 -- 0 0 0 4,071(5) Kyle E. Rossler Vice President--Marketing, New Business Development .. 1996 154,242 40,000 -- 0 0 0 4,071(5)
- ------------ (1) Jon M. Huntsman's compensation, other than his director's fee (which are described in "Compensation of Directors," and listed in the "All Other Compensation" column), was paid entirely by Huntsman Corporation, Huntsman Packaging's parent company in 1996. Compensation figures for Jon M. Huntsman represent a prorated percentage (based on the 1996 corporate overhead allocation formula) of Huntsman Corporation compensation attributable to services rendered to Huntsman Packaging. (2) Perquisites and other personnel benefits, securities or property are less than either $50,000 or 10% of the total annual salary and bonus reported for the named executive officer. (3) Consists of $25,000 directors' fees from Huntsman Packaging, which are also described in "Compensation of Directors;" $30,822 supplemental executive pension plan accrual; $11,340 employer's 401(k) contribution; and $960 employer's Money Purchase Plan contribution. (4) Consists of $3,000 employer's 401(k) contribution and $750 employer's Money Purchase Plan contribution. (5) Employer's 401(k) contribution. 53 The following table shows the estimated annual benefits payable upon the Corporation's tax-qualified defined benefit pension plan (the "Pension Plan") and supplemental pension plan ("SERP") in specified final average earnings and years-of-service classifications. PENSION PLAN TABLE
YEARS OF BENEFIT SERVICE AT RETIREMENT ---------------------------------------------------------------------- FINAL AVERAGE EARNINGS 10 15 20 25 30 35 40 - ---------------------- -------- -------- -------- --------- --------- --------- --------- 150,000 ............... 24,000 35,000 48,000 60,000 72,000 84,000 96,000 175,000 ............... 28,000 42,000 58,000 70,000 84,000 98,000 112,000 200,000 ............... 32,000 48,000 64,000 80,000 98,000 112,000 128,000 225,000 ............... 36,000 54,000 72,000 90,000 108,000 126,000 144,000 250,000 ............... 40,000 60,000 80,000 100,000 120,000 140,000 180,000 275,000 ............... 44,000 66,000 88,000 110,000 132,000 154,000 176,000 300,000 ............... 48,000 72,000 96,000 120,000 144,000 168,000 192,000
The current Pension Plan benefit is based on the following formula: 1.6% of final average compensation multiplied by years of credited service, minus 1.5% of estimated Social Security benefits multiplied by years of credited service (with a maximum of 50% of Social Security benefits). Final Average compensation is based on the highest average of three consecutive years of compensation. Messrs. Jon M. Huntsman and N. Brian Stevenson are not participants in the Pension Plan. For the other named executive officers, covered compensation consists of base salary and is reflected in the "Salary" column of the Summary Compensation Table. Federal regulations require that for the 1996 plan year, no more than $150,000 in compensation be considered for the calculation of retirement benefits under the Pension Plan, and the maximum amount paid from a qualified defined benefit plan cannot exceed $120,000 as of January 1, 1996. Benefits are calculated on a straight life annuity basis. The benefit amounts under the Pension Plan are offset for Social Security as described above. The SERP is a nonqualified supplemental pension plan for designated executive officers, that provides benefits based on certain compensation amounts not included in the calculation of benefits payable under the Pension Plan. Messrs. Jon M. Huntsman and N. Brian Stevenson are not participants in the SERP. The compensation amounts taken into account for the other named executive officers under the SERP include bonuses (as reflected in the "Bonus" column of the Summary Compensation Table) and base salary in excess of the qualified plan limitations. The SERP benefit is calculated as the difference between (a) and (b) where (a) is the benefit determined using the Pension Plan formula with unlimited base salary plus bonus, and (b) is the benefit determined using base salary as limited by federal regulations. The number of completed years of credited service as of December 31, 1996 under the Pension Plan and SERP for the named executive officers participating in the plans were three years for each of Messrs. Brockman, Hill and Rossler. COMPENSATION OF DIRECTORS Each director receives an annual fee of $25,000. Karen H. Huntsman, who is the Vice Chairman, also receives an annual advisor's fee of $25,000. 54 OWNERSHIP OF CAPITAL STOCK Jon M. Huntsman, 500 Huntsman Way, Salt Lake City, Utah 84108, owns approximately 65% of the total equity of Huntsman Packaging. Richard P. Durham and the Christena Karen H. Durham Trust, 500 Huntsman Way, Salt Lake City, Utah 84108, collectively own approximately 35% of the total equity of Huntsman Packaging. No other director, executive officer or person beneficially owns any equity of Huntsman Packaging. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Huntsman Packaging is party to a lease agreement with Huntsman Headquarters Corporation, an indirect wholly-owned subsidiary of Huntsman Corporation, pursuant to which Huntsman Packaging leases its headquarters and office space. Huntsman Packaging is obligated to pay rent calculated as a pro-rata portion (based on its percentage occupancy) of the mortgage loan on the headquarters facility. The term of the lease expires on December 31, 2005, with an option to extend until December 31, 2015. In connection with the Offering, Huntsman Packaging repaid all outstanding intercompany long-term indebtedness owed to Huntsman Corporation. See "Use of Proceeds." As of June 30, 1997, this indebtedness amounted to $198.3 million. Jon M. Huntsman and his family own approximately 99.6% of the outstanding capital stock of Huntsman Corporation. Huntsman Packaging is a licensee under a license agreement with Huntsman Group Intellectual Property Holdings Corporation to use the "Huntsman" tradename. Huntsman Corporation owns all of the outstanding common stock of Huntsman Group Intellectual Property Holdings Corporation. Huntsman Packaging is a party to agreements with certain affiliates of Huntsman Corporation including, but not limited to, Huntsman Chemical Corporation for the purchase of polystyrene and Huntsman Polymers for the purchase of various resins. All such agreements provide for the purchase of materials or services at prevailing market prices. Huntsman Packaging obtains some of its insurance coverage under policies of Huntsman Corporation. Huntsman Packaging is party to an agreement with Huntsman Corporation that provides for reimbursement of insurance premiums paid by Huntsman Corporation on behalf of Huntsman Packaging. The reimbursement payments are based on premium allocations which are determined in cooperation with Huntsman Corporation's independent insurance broker. It is anticipated that Huntsman Packaging will continue to carry a portion of its insurance coverage under Huntsman Corporation's policies. In connection with the Split-Off, Huntsman Packaging entered into a services agreement with Huntsman Corporation covering the provision of certain tax, finance, treasury and other administrative services. These services are provided to Huntsman Packaging at prices that would be payable to an unaffiliated third party. 55 DESCRIPTION OF THE CREDIT FACILITIES CREDIT AGREEMENT Huntsman Packaging has entered into a credit agreement (the "Credit Agreement") dated as of September 30, 1997 with the Lenders party thereto, The Chase Manhattan Bank ("Chase"), as Administrative Agent, and Chase Securities Inc. ("CSI"), as arranger, pursuant to which Chase has agreed to underwrite the credit facilities described below and CSI has agreed to act as arranger for such credit facilities. The following summary of certain provisions of the Credit Agreement does not purport to be complete and is subject to, and is qualified in its entirety by reference to the Credit Agreement. The Credit Agreement provides for an eight-year $75 million term loan (the "Term Loan") and a seven-year $150 million revolving credit facility (the "Revolving Credit Facility"), $20 million of which may be used for the issuance of letters of credit and $5 million of which will be available as a swingline facility. The Term Loan will amortize quarterly commencing approximately four years after the closing. The Term Loan will amortize as follows: AMORTIZATION (IN MILLIONS)
ANNUAL AMORTIZATION YEAR AMOUNT -------------- 1997........................ $ -- 1998........................ -- 1999........................ -- 2000........................ -- 2001........................ 1.875 2002........................ 17.500 2003........................ 17.500 2004........................ 19.375 2005........................ 18.750
The Term Loan and the loans under the Revolving Credit Facility (the "Revolving Loans", and, together with the Term Loan, the "Loans") bear interest, at Huntsman Packaging's option, at adjusted LIBOR plus a margin commencing at 2.00% per annum or Chase's adjusted base rate plus a margin commencing at 0.75% per annum. Huntsman Packaging pays a quarterly commitment fee on the unused amount of the Revolving Credit Facility at a rate commencing at 0.50% per annum. Such margins and the commitment fee rate are subject to reduction if Huntsman Packaging's ratio of maximum total debt to consolidated EBITDA improves. The Term Loan will be subject to mandatory prepayment with 50% of Excess Cash Flow (as defined in the Credit Agreement) and the net proceeds of certain asset sales and debt and equity issuances. The obligations of Huntsman Packaging under the Credit Agreement will be guaranteed by all of Huntsman Packaging's domestic subsidiaries and will be secured by a first priority perfected lien or pledge on substantially all assets of Huntsman Packaging and its domestic subsidiaries, including (i) all cash, deposits, accounts receivable, inventory, and related intangible assets, (ii) all personal property, plant and equipment, (iii) all material real property, (iv) all general intangibles relating to the accounts receivable and the inventory, including, without limitation, all technology rights, contract rights related thereto and patents, trademarks, or tradenames necessary to operate the business and dispose of receivables and/or inventory; and (v) all equity and debt securities, stock rights and intercompany notes (limited to a pledge of 65% of the capital stock of foreign subsidiaries). The Credit Agreement will contain covenants customary for transactions of this type, including, without limitation, restrictions on indebtedness, liens, sale/leaseback transactions, asset sales, capital 56 expenditures, acquisitions, investments, transactions with affiliates, dividends and other restricted payments, prepayment and redemptions of debt and changes in business. The Credit Agreement will also contain financial covenants including ratio of maximum total debt/EBITDA, minimum interest coverage ratio and minimum net worth. Events of Default under the Credit Facilities will include, without limitation and subject to certain cure periods and exceptions: (i) the failure by the Company to pay interest, principal or fees when due; (ii) the failure by the Company to comply with any term, covenant, condition or agreement provided for by the Credit Facilities, or the fact that any representation or warranty made by the Company pursuant to the Credit Facilities was false in any material respect when made; (iii) the existence of defaults with respect to, or acceleration of, other material indebtedness of the Company; (iv) a "Change in Control" (as defined in the Credit Facilities) of the Company; (v) the occurrence of certain material adverse events with respect to ERISA plans or environmental occurrences; and (vi) the imposition of certain judgment defaults on the Company and the commencement of a voluntary or involuntary bankruptcy or similar proceedings with respect to the Company. 57 DESCRIPTION OF THE NOTES The Old Notes were issued, and the New Notes will be issued under an indenture (the "Indenture"), dated as of September 30, 1997 by and among the Company, the Guarantors and The Bank of New York, as Trustee (the "Trustee"), a copy of which is filed as an exhibit to the Registration Statement of which this Prospectus constitutes a part. The following summary of certain provisions of the Indenture does not purport to be complete and is subject to, and is qualified in its entirety by reference to, the Trust Indenture Act of 1939, as amended (the "TIA"), and to all of the provisions of the Indenture, including the definitions of certain terms therein and those terms made a part of the Indenture by reference to the TIA as in effect on the date of the Indenture. The definitions of certain capitalized terms used in the following summary are set forth below under "--Certain Definitions." For purposes of this section and the section entitled "The Exchange Offer" only, references to the "Company" include only Huntsman Packaging Corporation and not its Subsidiaries. The Old Notes are, and the New Notes will be, unsecured senior subordinated obligations of the Company, ranking subordinate in right of payment to all existing and future Senior Debt of the Company, pari passu in right of payment with all senior subordinated Indebtedness of the Company, and senior in right of payment to all existing, and future subordinated obligations of the Company. The Old Notes were issued, and the New Notes will be issued in fully registered form only, without coupons, in denominations of $1,000 and integral multiples thereof. Initially, the Trustee will act as Paying Agent and Registrar for the Notes. The Notes may be presented for registration of transfer and exchange at the offices of the Registrar, which initially will be the Trustee's corporate trust office. The Company may change any Paying Agent and Registrar without notice to Holders. The Company will pay principal (and premium, if any) on the Notes through the facilities of the Depository Trust Company in New York, New York. At the Company's option, interest may be paid at the Trustee's principal corporate trust office or by check mailed to the registered address of Holders. Any Notes that remain outstanding after the completion of the Exchange Offer, together with the Exchange Notes issued in connection with the Exchange Offer, will be treated as a single class of securities under the Indenture. PRINCIPAL, MATURITY AND INTEREST The Notes are limited in aggregate principal amount to $125 million and will mature on October 1, 2007. Interest on the Notes will accrue at the rate of 9 1/8% per annum and will be payable semi-annually in cash on each April 1 and October 1 (each an "Interest Payment Date") commencing on April 1, 1998, for the period commencing on and including the immediately preceding Interest Payment Date and ending on and including the day next preceding the Interest Payment Date (an "Interest Period"), with the exception that the first Interest Period commenced on and included September 30, 1997 and shall end on and include April 1, 1998. Interest is payable to the persons who are registered Holders at the close of business on March 15, and September 15 immediately preceding the applicable Interest Payment Date. The Notes will not be entitled to the benefit of any mandatory sinking fund. REDEMPTION Optional Redemption. The Notes will be redeemable, at the Company's option, in whole at any time or in part from time to time, on and after October 1, 2002, upon not less than 30 nor more than 60 days' notice, at the following redemption prices (expressed as percentages of the principal amount thereof) if redeemed during the twelve-month period commencing on October 1 of the year set forth below, plus, in each case, accrued and unpaid interest thereon, if any, to the date of redemption:
YEAR PERCENTAGE - ------------------- ------------ 2002................................... 104.563% 2003................................... 103.042% 2004................................... 101.521% 2005 and thereafter.................... 100.000%
58 Optional Redemption upon Equity Offerings. At any time, or from time to time, on or prior to October 1, 2000, the Company may, at its option, use the net cash proceeds of one or more Equity Offerings (as defined below) to redeem up to 35% of the aggregate principal amount of the Notes originally issued at a redemption price equal to 109 1/8% of the principal amount thereof plus accrued and unpaid interest thereon, if any, to the date of redemption; provided that at least 65% of the principal amount of the Notes originally issued remains outstanding immediately after any such redemption. In order to effect the foregoing redemption with the proceeds of any Equity Offering, the Company shall make such redemption not more than 120 days after the consummation of any such Equity Offering. As used in the preceding paragraph, "Equity Offering" means any sale of Qualified Capital Stock of the Company or any capital contribution to the equity of the Company. SELECTION AND NOTICE OF REDEMPTION In the event that less than all of the Notes are to be redeemed at any time, selection of such Notes for redemption will be made by the Trustee in compliance with the requirements of the principal national securities exchange, if any, on which such Notes are listed or, if such Notes are not then listed on a national securities exchange, on a pro rata basis, by lot or by such method as the Trustee shall deem fair and appropriate; provided, however, that no Notes of a principal amount of $1,000 or less shall be redeemed in part; provided, further, that if a partial redemption is made with the proceeds of an Equity Offering, selection of the Notes or portions thereof for redemption shall be made by the Trustee only on a pro rata basis or on as nearly a pro rata basis as is practicable (subject to DTC procedures), unless such method is otherwise prohibited. Notice of redemption shall be mailed by first-class mail at least 30 but not more than 60 days before the redemption date to each Holder to be redeemed at its registered address. If any Note is to be redeemed in part only, the notice of redemption that relates to such Note shall state the portion of the principal amount thereof to be redeemed. A new Note in a principal amount equal to the unredeemed portion thereof will be issued in the name of the Holder thereof upon cancellation of the original Note. On and after the redemption date, interest will cease to accrue on Notes or portions thereof called for redemption as long as the Company has deposited with the Paying Agent funds in satisfaction of the applicable redemption price pursuant to the Indenture. RANKING The payment of all Obligations on the Notes is subordinated in right of payment to the prior payment in full in cash or Cash Equivalents of all Obligations on Senior Debt including, without limitation, the Company's Obligations under the Credit Agreement. Upon any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to creditors upon any liquidation, dissolution, winding up, reorganization, assignment for the benefit of creditors or marshaling of assets of the Company or in a bankruptcy, reorganization, insolvency, receivership or other similar proceeding relating to the Company or its property, whether voluntary or involuntary, all Obligations due or to become due upon all Senior Debt shall first be paid in full in cash or Cash Equivalents, or such payment duly provided for to the satisfaction of the holders of Senior Debt, before any payment or distribution of any kind or character is made on account of any Obligations on the Notes, or for the acquisition of any of the Notes for cash or property or otherwise. If any default occurs and is continuing in the payment when due, whether at maturity, upon any redemption, by declaration or otherwise, of any principal of, interest on, unpaid drawings for letters of credit issued in respect of, or regularly accruing fees with respect to, any Senior Debt, no payment or distribution of any kind or character shall be made by or on behalf of the Company or any other Person on its or their behalf with respect to any Obligations on the Notes or to acquire any of the Notes for cash or property or otherwise. In addition, if any other event of default occurs and is continuing with respect to any Designated Senior Debt, as such event of default is defined in the instrument creating or evidencing such Designated Senior Debt, permitting the holders of such Designated Senior Debt then outstanding (or an agent or trustee on their behalf) to accelerate the maturity thereof and if the Representative for such issue of Designated Senior Debt gives written notice of the event of default to the Trustee invoking the provisions described in this paragraph (a "Default Notice"), then, unless and until all events of default have been 59 cured or waived or have ceased to exist or the Trustee receives notice from the Representative for the respective issue of Designated Senior Debt terminating the Blockage Period (as defined below), during the 180 days after the delivery of such Default Notice (the "Blockage Period"), neither the Company nor any other Person on its behalf shall (x) make any payment or distribution of any kind or character with respect to any Obligations on the Notes or (y) acquire any of the Notes for cash or property or otherwise. Notwithstanding anything herein to the contrary, in no event will a Blockage Period extend beyond 180 days after the delivery of the Default Notice and only one such Blockage Period may be commenced within any 360 consecutive days. No event of default which existed or was continuing on the date of the commencement of any Blockage Period with respect to the Designated Senior Debt shall be, or be made, the basis for commencement of a second Blockage Period by the Representative of such Designated Senior Debt whether or not within a period of 360 consecutive days, unless such event of default shall have been cured or waived for a period of not less than 90 consecutive days (it being acknowledged that any subsequent action, or any breach of any financial covenants for a period commencing after the date of commencement of such Blockage Period that, in either case, would give rise to an event of default pursuant to any provisions under which an event of default previously existed or was continuing shall constitute a new event of default for this purpose). By reason of such subordination, in the event of the insolvency of the Company, creditors of the Company who are not holders of Senior Debt, including the Holders, may recover less, ratably, than holders of Senior Debt. As of June 30, 1997, on a pro forma basis after giving effect to the Offering and the CT Film Purchase, Huntsman Packaging would have had approximately $150.3 million of Senior Debt outstanding (excluding unused commitments and outstanding letters of credit totalling $74.7 million under the Credit Facilities) and Restricted Subsidiaries that are not Guarantors would have had no Indebtedness outstanding (excluding intercompany loans and guarantees of Huntsman Packaging's Indebtedness). See "Risk Factors -- Substantial Leverage and Ability to Service Indebtedness." GUARANTEES Each Guarantor unconditionally guarantees, on a senior subordinated basis, jointly and severally, to each Holder and the Trustee, the full and prompt performance of the Company's obligations under the Indenture and the Notes, including the payment of principal of and interest on the Notes. The Old Guarantees are, and the New Guarantees will be, subordinated to Guarantor Senior Debt on the same basis as the Notes are subordinated to Senior Debt. The obligations of each Guarantor are limited to the maximum amount which, after giving effect to all other contingent and fixed liabilities of such Guarantor and after giving effect to any collections from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under its Guarantee or pursuant to its contribution obligations under the Indenture, will result in the obligations of such Guarantor under the Guarantee not constituting a fraudulent conveyance or fraudulent transfer under federal or state law. Each Guarantor that makes a payment or distribution under a Guarantee shall be entitled to a contribution from each other Guarantor in an amount pro rata, based on the net assets of each Guarantor, determined in accordance with GAAP. Each Guarantor may consolidate with or merge into or sell its assets to (i) the Company, another Guarantor that is a Restricted Subsidiary of the Company or a Restricted Subsidiary that is or in connection therewith becomes a Guarantor without limitation, or (ii) other Persons upon the terms and conditions set forth in the Indenture. See "--Certain Covenants -- Merger, Consolidation and Sale of Assets." In the event all the Capital Stock or assets of a Guarantor or parent company of a Guarantor are sold and the sale complies with the provisions set forth in "--Certain Covenants -- Limitation on Asset Sales," the Guarantor's Guarantee will be released. CHANGE OF CONTROL The Indenture provides that upon the occurrence of a Change of Control, each Holder will have the right to require that the Company purchase all or a portion of such Holder's Notes pursuant to the offer 60 described below (the "Change of Control Offer"), at a purchase price equal to 101% of the principal amount thereof plus accrued interest to the date of purchase. The Indenture provides that, prior to the mailing of the notice referred to below, but in any event within 30 days following any Change of Control, the Company covenants to (i) repay in full and terminate all commitments under Indebtedness under the Credit Agreement and all other Senior Debt the terms of which require repayment upon a Change of Control or offer to repay in full and terminate all commitments under all Indebtedness under the Credit Agreement and all other such Senior Debt and to repay the Indebtedness owed to each lender which has accepted such offer or (ii) obtain the requisite consents under the Credit Agreement and all other Senior Debt to permit the repurchase of the Notes as provided below. The Company shall first comply with the covenant in the immediately preceding sentence before it shall be required to repurchase Notes pursuant to the provisions described below. The Company's failure to comply with the covenant described in the immediately preceding sentence shall constitute an Event of Default described in clause (iii) and not in clause (ii) under "Events of Default" below. Within 30 days following the date upon which the Change of Control occurred, the Company must send, by first class mail, a notice to each Holder, with a copy to the Trustee, which notice shall govern the terms of the Change of Control Offer. Such notice shall state, among other things, the purchase date, which must be no earlier than 30 days nor later than 60 days from the date such notice is mailed, other than as may be required by law (the "Change of Control Payment Date"). Holders electing to have a Note purchased pursuant to a Change of Control Offer will be required to surrender the Note, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Note completed, to the Paying Agent at the address specified in the notice prior to the close of business on the third business day prior to the Change of Control Payment Date. If a Change of Control Offer is made, there can be no assurance that the Company will have available funds sufficient to pay the Change of Control purchase price for all the Notes that might be delivered by Holders seeking to accept the Change of Control Offer. In the event the Company is required to purchase outstanding Notes pursuant to a Change of Control Offer, the Company expects that it would seek third party financing to the extent it does not have available funds to meet its purchase obligations. However, there can be no assurance that the Company would be able to obtain such financing. Neither the Board of Directors of the Company nor the Trustee may waive the covenant relating to a Holder's right to redemption upon a Change of Control. Restrictions in the Indenture described herein on the ability of the Company and its Restricted Subsidiaries to incur additional Indebtedness, to grant liens on its property, to make Restricted Payments and to make Asset Sales may also make more difficult or discourage a takeover of the Company, whether favored or opposed by the management of the Company. Consummation of any such transaction in certain circumstances may require redemption or repurchase of the Notes, and there can be no assurance that the Company or the acquiring party will have sufficient financial resources to effect such redemption or repurchase. Such restrictions and the restrictions on transactions with Affiliates may, in certain circumstances, make more difficult or discourage any leveraged buyout of the Company or any of its Subsidiaries by the management of the Company. While such restrictions cover a wide variety of arrangements which have traditionally been used to effect highly leveraged transactions, the Indenture may not afford the Holders protection in all circumstances from the adverse aspects of a highly leveraged transaction, reorganization, restructuring, merger or similar transaction. The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such rule, laws and regulations are applicable in connection with the repurchase of Notes pursuant to a Change of Control Offer. To the extent that the provisions of any securities laws or regulations conflict with the "Change of Control" provisions of the Indenture, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under the "Change of Control" provisions of the Indenture by virtue thereof. 61 CERTAIN COVENANTS The Indenture contains, among others, the following covenants: Limitation on Incurrence of Additional Indebtedness. The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume, guarantee, acquire, become liable, contingently or otherwise, with respect to, or otherwise become responsible for payment of (collectively, "incur") any Indebtedness (other than Permitted Indebtedness); provided, however, that if no Default or Event of Default shall have occurred and be continuing at the time of or as a consequence of the incurrence of any such Indebtedness, the Company and its Restricted Subsidiaries which are Guarantors may incur Indebtedness (including, without limitation, Acquired Indebtedness) and Restricted Subsidiaries of the Company which are not Guarantors may incur Acquired Indebtedness in each case if on the date of the incurrence of such Indebtedness, after giving effect to the incurrence thereof, the Consolidated Fixed Charge Coverage Ratio of the Company is greater than 2.0 to 1.0 if such proposed incurrence is on or prior to the third anniversary of the Issue Date and 2.25 to 1.0 if such proposed incurrence is thereafter. Limitation on Restricted Payments. The Company will not, and will not cause or permit any of its Restricted Subsidiaries to, directly or indirectly, (a) declare or pay any dividend or make any distribution (other than dividends or distributions payable in Qualified Capital Stock of the Company) on or in respect of shares of Capital Stock of the Company or any Restricted Subsidiary of the Company to holders of such Capital Stock (other than dividends or distributions payable to the Company or any Restricted Subsidiary of the Company), (b) purchase, redeem or otherwise acquire or retire for value any Capital Stock of the Company or any Restricted Subsidiary of the Company or any warrants, rights or options to purchase or acquire shares of any class of such Capital Stock (other than any such Capital Stock, warrants, rights or options owned by the Company or any Restricted Subsidiary of the Company), (c) make any principal payment on, purchase, defease, redeem, prepay, decrease or otherwise acquire or retire for value, prior to any scheduled final maturity, scheduled repayment or scheduled sinking fund payment, any Indebtedness of the Company or any Restricted Subsidiary of the Company that is subordinate or junior in right of payment to the Notes or the Guarantees, or (d) make any Investment (other than Permitted Investments) (each of the foregoing actions set forth in clauses (a), (b) (c) and (d) being referred to as a "Restricted Payment"), if at the time of such Restricted Payment or immediately after giving effect thereto, (i) a Default or an Event of Default shall have occurred and be continuing or (ii) the Company is not able to incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) in compliance with the "Limitation on Incurrence of Additional Indebtedness" covenant or (iii) the aggregate amount of Restricted Payments (including such proposed Restricted Payment) made subsequent to the Issue Date (the amount expended for such purposes, if other than in cash, being the fair market value of such property as determined reasonably and in good faith by the Board of Directors of the Company) shall exceed the sum of: (w) $10 million plus (x) 50% of the cumulative Consolidated Net Income (or if cumulative Consolidated Net Income shall be a loss, minus 100% of such loss) of the Company earned subsequent to the Issue Date and on or prior to the date the Restricted Payment occurs (the "Reference Date") (treating such period as a single accounting period); plus (y) 100% of the aggregate net cash proceeds received by the Company from any Person (other than a Subsidiary of the Company) from the issuance and sale subsequent to the Issue Date and on or prior to the Reference Date of Qualified Capital Stock of the Company; plus (z) without duplication of any amounts included in clause (iii)(y) above, 100% of the aggregate net cash proceeds of any equity contribution received by the Company from a holder of the Company's Capital Stock (excluding, in the case of clauses (iii) (y) and (z), any net cash proceeds from the issuance or sale of Specified Venture Capital Stock). Notwithstanding the foregoing, the provisions set forth in the immediately preceding paragraph do not prohibit: (1) the payment of any dividend within 60 days after the date of declaration of such dividend if the dividend would have been permitted on the date of declaration; (2) the acquisition of any shares of Capital Stock of the Company, either (i) solely in exchange for shares of Qualified Capital Stock of the Company or (ii) if no Default or Event of Default shall have occurred and be continuing, through the application of net proceeds of a substantially concurrent sale for cash (other than to a Subsidiary of the Company) of shares of Qualified Capital Stock of the Company; (3) if no Default or Event of Default shall 62 have occurred and be continuing, the acquisition of any Indebtedness of the Company that is subordinate or junior in right of payment to the Notes either (i) solely in exchange for shares of Qualified Capital Stock of the Company, or (ii) through the application of net proceeds of a substantially concurrent sale or incurrence for cash (other than to a Subsidiary of the Company) of (A) shares of Qualified Capital Stock of the Company or (B) Refinancing Indebtedness; (4) so long as no Default or Event of Default shall have occurred and be continuing, repurchases by the Company of Common Stock of the Company from employees of the Company or any of its Subsidiaries or their authorized representatives upon the death, disability or termination of employment of such employees, in an aggregate amount not to exceed $2 million in any calendar year; (5) the redemption or repurchase of any Common Stock of the Company held by a Wholly Owned Restricted Subsidiary of the Company which obtained such Common Stock directly from the Company; or (6) the payment of consideration by an unaffiliated third party to shareholders of the Company. In determining the aggregate amount of Restricted Payments made subsequent to the Issue Date in accordance with clause (iii) of the immediately preceding paragraph, cash amounts expended pursuant to clauses (1), (2), (3)(ii)(A) and (4) shall be included in such calculation. Not later than the date of making any Restricted Payment, the Company shall deliver to the Trustee an officers' certificate stating that such Restricted Payment complies with the Indenture and setting forth in reasonable detail the basis upon which the required calculations were computed, which calculations may be based upon the Company's quarterly financial statements last provided to the Trustee pursuant to "--Reports to Holders." Limitation on Asset Sales. The Company will not, and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless (i) the Company or the applicable Restricted Subsidiary, as the case may be, receives consideration at the time of such Asset Sale at least equal to the fair market value of the assets sold or otherwise disposed of (as determined in good faith by the Company's Board of Directors), (ii) at least 75% of the consideration received by the Company or the Restricted Subsidiary, as the case may be, from such Asset Sale shall be in the form of cash or Cash Equivalents (provided that the amount of any liabilities (as shown on the Company's or such Restricted Subsidiary's most recent balance sheet) of the Company or any such Restricted Subsidiary (other than liabilities that are by their terms subordinated to the Notes) that are assumed by the transferee of any such assets shall be deemed to be cash for purposes of this provision) and is received at the time of such disposition; and (iii) upon the consummation of an Asset Sale, the Company shall apply, or cause such Restricted Subsidiary to apply, the Net Cash Proceeds relating to such Asset Sale within 365 days (or in the case of Foreign Subsidiary Asset Sales, 545 days) of receipt thereof either (A) to prepay any Senior Debt, Guarantor Senior Debt or Indebtedness of a Restricted Subsidiary that is not a Guarantor and, in the case of any such Indebtedness under any revolving credit facility, effect a permanent reduction in the availability under such revolving credit facility, (B) to make an investment in or expenditures for properties and assets (including Capital Stock of any entity) that replace the properties and assets that were the subject of such Asset Sale or in properties and assets (including Capital Stock of any entity) that will be used in the business of the Company and its Subsidiaries as existing on the Issue Date or in businesses reasonably related thereto ("Replacement Assets"), or (C) a combination of prepayment and investment permitted by the foregoing clauses (iii)(A) and (iii)(B). On the 366th day (or in the case of Foreign Subsidiary Asset Sales, the 546th day) after an Asset Sale or such earlier date, if any, as the Board of Directors of the Company or of such Restricted Subsidiary determines not to apply the Net Cash Proceeds relating to such Asset Sale as set forth in clauses (iii)(A), (iii)(B) and (iii)(C) of the next preceding sentence (each, a "Net Proceeds Offer Trigger Date"), such aggregate amount of Net Cash Proceeds which have not been applied on or before such Net Proceeds Offer Trigger Date as permitted in clauses (iii)(A), (iii)(B) and (iii)(C) of the next preceding sentence (each a "Net Proceeds Offer Amount") shall be applied by the Company or such Restricted Subsidiary to make an offer to purchase (the "Net Proceeds Offer") on a date (the "Net Proceeds Offer Payment Date") not less than 30 nor more than 45 days following the applicable Net Proceeds Offer Trigger Date, from all Holders on a pro rata basis, that amount of Notes equal to the Net Proceeds Offer Amount at a price equal to 100% of the principal amount of the Notes to be purchased, plus accrued and unpaid interest thereon, if any, to the date of purchase; provided, however, that if at any time any non-cash consideration received by the Company or any Restricted Subsidiary of the Company, as the case may be, in connection with any Asset Sale is converted into or sold or otherwise disposed of 63 for cash (other than interest received with respect to any such non-cash consideration), then such conversion or disposition shall be deemed to constitute an Asset Sale hereunder and the Net Cash Proceeds thereof shall be applied in accordance with this covenant. The Company shall not be required to make a Net Proceeds Offer until there is an aggregate unutilized Net Proceeds Offer Amount equal to or in excess of $10 million resulting from one or more Asset Sales, at which time, the unutilized Net Proceeds Offer Amount, shall be applied as required pursuant to this paragraph, provided, however, that the first $10 million of such Net Proceeds Offer Amount need not be applied as required pursuant to this paragraph. In the event of the transfer of substantially all (but not all) of the property and assets of the Company and its Restricted Subsidiaries as an entirety to a Person in a transaction permitted under "--Merger, Consolidation and Sale of Assets," and as a result thereof the Company is no longer an obligor on the Notes, the successor corporation shall be deemed to have sold the properties and assets of the Company and its Restricted Subsidiaries not so transferred for purposes of this covenant, and shall comply with the provisions of this covenant with respect to such deemed sale as if it were an Asset Sale. In addition, the fair market value of such properties and assets of the Company or its Restricted Subsidiaries deemed to be sold shall be deemed to be Net Cash Proceeds for purposes of this covenant. Notwithstanding the two immediately preceding paragraphs, the Company and its Restricted Subsidiaries will be permitted to consummate an Asset Sale without complying with such paragraphs to the extent (i) at least 80% of the consideration for such Asset Sale constitutes Replacement Assets and (ii) such Asset Sale is for fair market value; provided that any consideration not constituting Replacement Assets received by the Company or any of its Restricted Subsidiaries in connection with any Asset Sale permitted to be consummated under this paragraph shall constitute Net Cash Proceeds subject to the provisions of the two preceding paragraphs. Each Net Proceeds Offer will be mailed to the record Holders as shown on the register of Holders within 30 days following the Net Proceeds Offer Trigger Date, with a copy to the Trustee, and shall comply with the procedures set forth in the Indenture. Upon receiving notice of the Net Proceeds Offer, Holders may elect to tender their Notes in whole or in part in integral multiples of $1,000 in exchange for cash. To the extent Holders properly tender Notes in an amount exceeding the Net Proceeds Offer Amount, Notes of tendering Holders will be purchased on a pro rata basis (based on amounts tendered). A Net Proceeds Offer shall remain open for a period of 20 business days or such longer period as may be required by law. The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such rule, laws and regulations are applicable in connection with the repurchase of Notes pursuant to a Net Proceeds Offer. To the extent that the provisions of any securities laws or regulations conflict with the "Asset Sale" provisions of the Indenture, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under the "Asset Sale" provisions of the Indenture by virtue thereof. Limitation on Dividend and Other Payment Restrictions Affecting Subsidiaries. The Company will not, and will not cause or permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or permit to exist or become effective any encumbrance or restriction on the ability of any Restricted Subsidiary of the Company to (a) pay dividends or make any other distributions on or in respect of its Capital Stock; (b) make loans or advances or to pay any Indebtedness or other obligation owed to the Company or any other Restricted Subsidiary of the Company; or (c) transfer any of its property or assets to the Company or any other Restricted Subsidiary of the Company, except for such encumbrances or restrictions existing under or by reason of: (1) applicable law; (2) the Indenture; (3) customary non-assignment provisions of any contract or any lease governing a leasehold interest of any Restricted Subsidiary of the Company; (4) any instrument governing Acquired Indebtedness, which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person or the properties or assets of the Person so acquired; (5) agreements existing on the Issue Date to the extent and in the manner such agreements are in effect on the Issue Date; (6) restrictions 64 imposed by any agreement to sell assets or Capital Stock permitted under the Indenture to any Person pending the closing of such sale; (7) any agreement or instrument governing Capital Stock of any Person that is acquired as in effect at the time of such acquisition which was not entered into in connection with, or in anticipation or contemplation of, such acquisition; (8) Indebtedness or other contractual requirements of a Securitization Entity in connection with a Qualified Securitization Transaction; provided that such restrictions apply only to such Securitization Entity; (9) Liens incurred in accordance with the covenant described under "--Limitation on Liens"; (10) any restrictions under an agreement governing Indebtedness of a Foreign Subsidiary permitted under "--Limitation on Incurrence of Additional Indebtedness"; (11) the Credit Agreement; or (12) an agreement governing Indebtedness incurred to Refinance the Indebtedness issued, assumed or incurred pursuant to an agreement referred to in clause (2), (4), (5), (8), (9), (10) or (11) above; provided, however, that the provisions relating to such encumbrance or restriction contained in any such Indebtedness are no less favorable to the Company in any material respect as determined by the Board of Directors of the Company in their reasonable and good faith judgment than the provisions relating to such encumbrance or restriction contained in agreements referred to in such clause (2), (4), (5), (8), (9), (10) or (11). Limitation on Preferred Stock of Restricted Subsidiaries. The Company will not permit any of its Restricted Subsidiaries to issue any Preferred Stock (other than to the Company or to a Wholly Owned Restricted Subsidiary of the Company) or permit any Person (other than the Company or a Wholly Owned Restricted Subsidiary of the Company) to own any Preferred Stock of any Restricted Subsidiary of the Company. Limitation on Liens. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, create, incur or otherwise cause or suffer to exist or become effective any Liens of any kind upon any property or assets of the Company or any Restricted Subsidiary, now owned or hereafter acquired, which secures Indebtedness pari passu with or subordinated to the Notes or the Guarantees unless (i) if such Lien secures Indebtedness which is pari passu with the Notes or the Guarantees, then the Notes or the Guarantees, as the case may be, are secured on an equal and ratable basis with the obligations so secured until such time as such obligation is no longer secured by a Lien or (ii) if such Lien secures Indebtedness which is subordinated to the Notes or the Guarantees, any such Lien shall be subordinated to a Lien granted to the Holders of the Notes in the same collateral as that securing such Lien to the same extent as such subordinated Indebtedness is subordinated to the Notes or the Guarantees, as the case may be. Prohibition on Incurrence of Senior Subordinated Debt. The Company will not, and will not cause or permit any Guarantor to, incur or suffer to exist Indebtedness that is senior in right of payment to the Notes or the Guarantees, as the case may be, and subordinate in right of payment to any other Indebtedness of the Company or such Guarantor, as the case may be. Merger, Consolidation and Sale of Assets. The Company will not, in a single transaction or series of related transactions, consolidate or merge with or into any Person, or sell, assign, transfer, lease, convey or otherwise dispose of (or cause or permit any Restricted Subsidiary of the Company to sell, assign, transfer, lease, convey or otherwise dispose of) all or substantially all of the Company's assets (determined on a consolidated basis for the Company and the Company's Restricted Subsidiaries) whether as an entirety or substantially as an entirety to any Person unless: (i) either (1) the Company shall be the surviving or continuing entity or (2) the Person (if other than the Company) formed by such consolidation or into which the Company is merged or the Person which acquires by sale, assignment, transfer, lease, conveyance or other disposition the properties and assets of the Company and of the Company's Restricted Subsidiaries substantially as an entirety (the "Surviving Entity") (x) shall be an entity organized and validly existing under the laws of the United States or any State thereof or the District of Columbia and (y) shall expressly assume, by supplemental indenture (in form and substance satisfactory to the Trustee), executed and delivered to the Trustee, the due and punctual payment of the principal of, and premium, if any, and interest on all of the Notes and the performance of every covenant of the Notes, the Indenture and the Registration Rights Agreement on the part of the Company to be performed or observed; (ii) immediately after giving effect to such transaction and the assumption contemplated by clause (i)(2)(y) above (including giving effect to any Indebtedness and Acquired Indebtedness incurred or anticipated to be incurred in connection with or in respect of such transaction), the Company or such 65 Surviving Entity, as the case may be, (1) shall have a Consolidated Net Worth equal to or greater than the Consolidated Net Worth of the Company immediately prior to such transaction and (2) shall be able to incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) pursuant to the "--Limitation on Incurrence of Additional Indebtedness" covenant; (iii) immediately before and immediately after giving effect to such transaction and the assumption contemplated by clause (i)(2)(y) above (including, without limitation, giving effect to any Indebtedness and Acquired Indebtedness incurred or anticipated to be incurred and any Lien granted in connection with or in respect of the transaction), no Default or Event of Default shall have occurred or be continuing; and (iv) the Company or the Surviving Entity shall have delivered to the Trustee an officers' certificate and an opinion of counsel, each stating that such consolidation, merger, sale, assignment, transfer, lease, conveyance or other disposition and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture comply with the applicable provisions of the Indenture and that all conditions precedent in the Indenture relating to such transaction have been satisfied. For purposes of the foregoing, the transfer (by lease, assignment, sale or otherwise, in a single transaction or series of transactions) of all or substantially all of the properties or assets of one or more Restricted Subsidiaries of the Company the Capital Stock of which constitutes all or substantially all of the properties and assets of the Company, shall be deemed to be the transfer of all or substantially all of the properties and assets of the Company unless such transfer is to the Company or one or more Wholly-Owned Restricted Subsidiaries. The Indenture provides that upon any consolidation, combination or merger or any transfer of all or substantially all of the assets of the Company in accordance with the foregoing, in which the Company is not the continuing corporation, the successor Person formed by such consolidation or into which the Company is merged or to which such conveyance, lease or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under the Indenture and the Notes with the same effect as if such surviving entity had been named as such. Each Guarantor (other than any Guarantor whose Guarantee is to be released in accordance with the terms of the Guarantee and the Indenture in connection with any transaction complying with the provisions of "--Limitation on Asset Sales") will not, and the Company will not cause or permit any Guarantor to, consolidate with or merge with or into any Person other than the Company or any other Guarantor unless: (i) the entity formed by or surviving any such consolidation or merger (if other than the Guarantor) or to which such sale, lease, conveyance or other disposition shall have been made is an entity organized and existing under the laws of the United States or any State thereof or the District of Columbia; (ii) such entity assumes by supplemental indenture all of the obligations of the Guarantor on the Guarantee; (iii) immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing; and (iv) immediately after giving effect to such transaction and the use of any net proceeds therefrom on a pro forma basis, the Company could satisfy the provisions of clause (ii) of the first paragraph of this covenant. Any merger or consolidation of a Guarantor with and into the Company (with the Company being the surviving entity) or another Guarantor need not comply with the first paragraph of this covenant. Any merger of the Company with and into a Guarantor need not comply with clause (ii)(2) of the first paragraph of this covenant. Limitations on Transactions with Affiliates. (a) The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, enter into or permit to exist any transaction or series of related transactions (including, without limitation, the purchase, sale, lease or exchange of any property or the rendering of any service) with, or for the benefit of, any of its Affiliates (each an "Affiliate Transaction"), other than (x) Affiliate Transactions permitted under paragraph (b) below and (y) Affiliate Transactions on terms that are no less favorable than those that might reasonably have been obtained in a comparable transaction at such time on an arm's-length basis from a Person that is not an Affiliate of the Company or such Restricted Subsidiary. All Affiliate Transactions (and each series of related Affiliate Transactions which are similar or part of a common plan) that involve an aggregate fair market value of more than $2 million shall be approved by the Board of Directors of the Company or such Restricted Subsidiary, as the case may be, such approval to be evidenced by a Board Resolution stating that such Board of Directors has determined that such transaction complies with the foregoing provisions. If the 66 Company or any Restricted Subsidiary of the Company enters into an Affiliate Transaction (or a series of related Affiliate Transactions related to a common plan) that involves an aggregate fair market value of more than $5 million, the Company or such Restricted Subsidiary, as the case may be, shall, prior to the consummation thereof, obtain a favorable opinion as to the fairness of such transaction or series of related transactions to the Company or the relevant Restricted Subsidiary, as the case may be, from a financial point of view, from an Independent Financial Advisor and file the same with the Trustee. (b) The restrictions set forth in clause (a) shall not apply to (i) reasonable fees and compensation paid to and indemnity provided on behalf of, officers, directors, employees or consultants of the Company or any Restricted Subsidiary of the Company as determined in good faith by the Company's Board of Directors or senior management; (ii) transactions exclusively between or among the Company and any of its Restricted Subsidiaries or exclusively between or among such Restricted Subsidiaries, provided such transactions are not otherwise prohibited by the Indenture; (iii) any agreement as in effect as of the Issue Date or any amendment thereto or any transaction contemplated thereby (including pursuant to any amendment thereto) in any replacement agreement thereto so long as any such amendment or replacement agreement is not more disadvantageous to the Holders in any material respect than the original agreement as in effect on the Issue Date; (iv) Restricted Payments permitted by the Indenture; (v) transactions with distributors or other purchasers of sales of goods or services, in each case in the ordinary course of business and otherwise in compliance with the terms of the Indenture and which are fair to the Company or the Restricted Subsidiaries as applicable, in the reasonable determination of the Board of Directors of the Company or the senior management thereof, or are on terms at least as favorable as might reasonably have been obtained at such time from an unaffiliated party; and (vi) the CT Film Purchase. Limitation of Guarantees by Restricted Subsidiaries. The Company will not permit any of its Restricted Subsidiaries, directly or indirectly, by way of the pledge of any intercompany note or otherwise, to assume, guarantee or in any other manner become liable with respect to any Indebtedness of the Company or any other Restricted Subsidiary (other than (A) Indebtedness under Currency Agreements in reliance on clause (v) of the definition of Permitted Indebtedness, (B) Interest Swap Obligations or Commodity Agreements incurred in reliance on clause (iv) of the definition of Permitted Indebtedness or (C) any guarantee by a Foreign Subsidiary of Indebtedness of another Foreign Subsidiary permitted under "--Limitation of Incurrence of Additional Indebtedness"), unless, in any such case (a) such Restricted Subsidiary that is not a Guarantor executes and delivers a supplemental indenture to the Indenture, providing a Guarantee and (b) (x) if any such assumption, guarantee or other liability of such Restricted Subsidiary is provided in respect of Senior Debt, the guarantee or other instrument provided by such Restricted Subsidiary in respect of such Senior Debt may be superior to the Guarantee pursuant to subordination provisions no less favorable in any material respect to the Holders than those contained in the Indenture and (y) if such assumption, guarantee or other liability of such Restricted Subsidiary is provided in respect of Indebtedness that is expressly subordinated to the Notes, the guarantee or other instrument provided by such Restricted Subsidiary in respect of such subordinated Indebtedness shall be subordinated to the Guarantee pursuant to subordination provisions no less favorable in any material respect to the Holders than those contained in the Indenture. Notwithstanding the foregoing, any such Guarantee by a Restricted Subsidiary of the Notes shall provide by its terms that it shall be automatically and unconditionally released and discharged, without any further action required on the part of the Trustee or any Holder, upon: (i) the unconditional release of such Restricted Subsidiary from its liability in respect of the Indebtedness in connection with which such Guarantee was executed and delivered pursuant to the preceding paragraph; or (ii) any sale or other disposition (by merger or otherwise) to any Person which is not a Restricted Subsidiary of the Company of all of the Company's Capital Stock in, or all or substantially all of the assets of, such Restricted Subsidiary or the parent of such Restricted Subsidiary; provided that (a) such sale or disposition of such Capital Stock or assets is otherwise in compliance with the terms of the Indenture and (b) such assumption, guarantee or other liability of such Restricted Subsidiary has been released by the holders of the other Indebtedness so guaranteed or (iii) such Guarantor becoming an Unrestricted Subsidiary in accordance with the Indenture. 67 Conduct of Business. The Company and its Restricted Subsidiaries (other than a Securitization Entity) will not engage in any businesses which are not the same, similar or related to the businesses in which the Company and its Restricted Subsidiaries are engaged on the Issue Date, except to the extent that after engaging in any new business, the Company and its Restricted Subsidiaries, taken as a whole, remain substantially engaged in similar lines of business as are conducted by them on the Issue Date. Reports to Holders. The Indenture provides that the Company will deliver to the Trustee within 15 days after the filing of the same with the Commission, copies of the quarterly and annual reports and of the information, documents and other reports, if any, which the Company is required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act. The Indenture further provides that, 180 days after the Issue Date, notwithstanding that the Company may not be subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company will file with the Commission, to the extent permitted, and provide the Trustee and Holders with such annual reports and such information, documents and other reports specified in Sections 13 and 15(d) of the Exchange Act which it would have been required to file had it been subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act. The Company will also comply with the other provisions of TIA Section 314(a). EVENTS OF DEFAULT The following events are defined in the Indenture as "Events of Default": (i) the failure to pay interest on any Notes when the same becomes due and payable and the default continues for a period of 30 days (whether or not such payment shall be prohibited by the subordination provisions of the Indenture); (ii) the failure to pay the principal on any Notes, when such principal becomes due and payable, at maturity, upon acceleration, upon redemption or otherwise (including the failure to make a payment to purchase Notes tendered pursuant to a Change of Control Offer or a Net Proceeds Offer) (whether or not such payment shall be prohibited by the subordination provisions of the Indenture); (iii) a default in the observance or performance of any other covenant or agreement contained in the Indenture which default continues for a period of 45 days after the Company receives written notice specifying the default (and demanding that such default be remedied) from the Trustee or the Holders of at least 25% of the outstanding principal amount of the Notes (except in the case of a default with respect to the "Merger, Consolidation and Sale of Assets" covenant, which will constitute an Event of Default with such notice requirement but without such passage of time requirement); (iv) the failure to pay at final maturity (giving effect to any applicable grace periods and any extensions thereof) the principal amount of any Indebtedness of the Company or any Restricted Subsidiary of the Company, or the acceleration of the final stated maturity of any such Indebtedness, if, in either case, the aggregate principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness in default for failure to pay principal at final maturity or which has been accelerated, aggregates $10 million or more at any time and such Indebtedness has not been discharged in full or such acceleration has not been rescinded or annulled within 30 days of such final maturity or acceleration; (v) one or more judgments in an aggregate amount in excess of $10 million (which are not covered by third party insurance as to which the insurer has not disclaimed coverage) shall have been rendered against the Company or any of its Restricted Subsidiaries and such judgments remain undischarged, unpaid or unstayed for a period of 60 days after such judgment or judgments become final and non-appealable; (vi) certain events of bankruptcy affecting the Company or any of its Restricted Subsidiaries which is also a Material Subsidiary; or (vii) any Guarantee of a Material Subsidiary ceases to be in full force and effect or any Guarantee of a Material Subsidiary is declared to be null and void and unenforceable or any Guarantee of a Material Subsidiary is found to be invalid or any of the Guarantors that is a Material Subsidiary denies its liability under its Guarantee (other than by reason of release of a Guarantor in accordance with the terms of the Indenture). 68 If an Event of Default (other than an Event of Default specified in clause (vi) above with respect to the Company) shall occur and be continuing, the Trustee or the Holders of at least 25% in principal amount of outstanding Notes may declare the principal of and accrued interest on all the Notes to be due and payable by notice in writing to the Company and the Trustee specifying the respective Event of Default and that it is a "notice of acceleration" (the "Acceleration Notice"), and the same (i) shall become immediately due and payable or (ii) if there are any amounts outstanding under the Designated Senior Debt, shall become immediately due and payable upon the first to occur of an acceleration under the Designated Senior Debt or 5 business days after receipt by the Company and the Representative under the Designated Senior Debt of such Acceleration Notice. If an Event of Default specified in clause (vi) above with respect to the Company occurs and is continuing, then all unpaid principal of, and premium, if any, and accrued and unpaid interest on all of the outstanding Notes shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder. The Indenture provides that, at any time after a declaration of acceleration with respect to the Notes as described in the preceding paragraph, the Holders of a majority in principal amount of the Notes may rescind and cancel such declaration and its consequences (i) if the rescission would not conflict with any judgment or decree, (ii) if all existing Events of Default have been cured or waived except nonpayment of principal or interest that has become due solely because of the acceleration, (iii) to the extent the payment of such interest is lawful, interest on overdue installments of interest and overdue principal, which has become due otherwise than by such declaration of acceleration, has been paid, (iv) if the Company has paid the Trustee its reasonable compensation and reimbursed the Trustee for its expenses, disbursements and advances and (v) in the event of the cure or waiver of an Event of Default of the type described in clause (vi) of the description above of Events of Default, the Trustee shall have received an officers' certificate and an opinion of counsel that such Event of Default has been cured or waived. No such rescission shall affect any subsequent Default or impair any right consequent thereto. The Holders of a majority in principal amount of the Notes may waive any existing Default or Event of Default under the Indenture, and its consequences, except a default in the payment of the principal of or interest on any Notes. Holders of the Notes may not enforce the Indenture or the Notes except as provided in the Indenture and under the TIA. Subject to the provisions of the Indenture relating to the duties of the Trustee, the Trustee is under no obligation to exercise any of its rights or powers under the Indenture at the request, order or direction of any of the Holders, unless such Holders have offered to the Trustee reasonable indemnity. Subject to all provisions of the Indenture and applicable law, the Holders of a majority in aggregate principal amount of the then outstanding Notes have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee. The Trustee may withhold from Holders of the Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal, premium or interest) if it determines that withholding notice is in their interest. Under the Indenture, the Company is required to provide an officers' certificate to the Trustee promptly upon any such officer obtaining knowledge of any Default or Event of Default (provided that such officers shall provide such certification at least annually whether or not they know of any Default or Event of Default) that has occurred and, if applicable, describe such Default or Event of Default and the status thereof. LEGAL DEFEASANCE AND COVENANT DEFEASANCE The Company may, at its option and at any time, elect to have its obligations and the obligations of the Guarantors discharged with respect to the outstanding Notes ("Legal Defeasance"). Such Legal Defeasance means that the Company shall be deemed to have paid and discharged the entire indebtedness represented by the outstanding Notes, except for (i) the rights of Holders to receive, solely from the trust fund described below, payments in respect of the principal of, premium, if any, and interest on the Notes when such payments are due, (ii) the Company's obligations with respect to the Notes concerning issuing temporary Notes, registration of Notes, mutilated, destroyed, lost or stolen Notes and 69 the maintenance of an office or agency for payments, (iii) the rights, powers, trust, duties and immunities of the Trustee and the Company's obligations in connection therewith and (iv) the Legal Defeasance provisions of the Indenture. In addition, the Company may, at its option and at any time, elect to have the obligations of the Company released with respect to certain covenants that are described in the Indenture ("Covenant Defeasance") and thereafter any omission to comply with such obligations shall not constitute a Default or Event of Default with respect to the Notes. In the event Covenant Defeasance occurs, certain events (not including non-payment, bankruptcy, receivership, reorganization and insolvency events) described under "Events of Default" will no longer constitute an Event of Default with respect to the Notes. In order to exercise either Legal Defeasance or Covenant Defeasance, (i) the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders cash in U.S. dollars, non-callable U.S. government obligations, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, and interest on the Notes on the stated date for payment thereof or on the applicable redemption date, as the case may be; (ii) in the case of Legal Defeasance, the Company shall have delivered to the Trustee an opinion of counsel in the United States reasonably acceptable to the Trustee confirming that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (B) since the date of the Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion of counsel shall confirm that, the Holders will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; provided, however, such opinion of counsel shall not be required if all the Notes will become due and payable on the maturity date within one year or are to be called for redemption within one year under arrangements satisfactory to the Trustee; (iii) in the case of Covenant Defeasance, the Company shall have delivered to the Trustee an opinion of counsel in the United States reasonably acceptable to the Trustee confirming that the Holders will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; (iv) no Default or Event of Default shall have occurred and be continuing on the date of such deposit or insofar as Events of Default from bankruptcy or insolvency events are concerned, at any time in the period ending on the 91st day after the date of deposit; (v) such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under the Indenture or any other material agreement or instrument to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound; (vi) the Company shall have delivered to the Trustee an officers' certificate stating that the deposit was not made by the Company with the intent of preferring the Holders over any other creditors of the Company or with the intent of defeating, hindering, delaying or defrauding any other creditors of the Company or others; (vii) the Company shall have delivered to the Trustee an officers' certificate and an opinion of counsel, each stating that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance have been complied with; (viii) the Company shall have delivered to the Trustee an opinion of counsel to the effect that (A) either (i) the Company has assigned all its ownership interest in the trust funds to the Trustee or (ii) the Trustee has a valid perfected security interest in the trust funds and (B) assuming no intervening bankruptcy of the Company between the date of the deposit and the 124th day following the perfection of a security interest in the deposit and that no Holder is an insider of the Company, after the 124th day following the perfection of a security interest in the deposit, the trust funds will not be subject to avoidance as a preference under Section 547 of the Federal Bankruptcy Code. SATISFACTION AND DISCHARGE The Indenture will be discharged and will cease to be of further effect (except as to surviving rights or registration of transfer or exchange of the Notes, as expressly provided for in the Indenture) as to all outstanding Notes when (i) either (a) all the Notes theretofore authenticated and delivered (except lost, stolen or destroyed Notes which have been replaced or paid and Notes for whose payment money has 70 theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust) have been delivered to the Trustee for cancellation or (b) all Notes not theretofore delivered to the Trustee for cancellation have become due and payable and the Company has irrevocably deposited or caused to be deposited with the Trustee funds in an amount sufficient to pay and discharge the entire Indebtedness on the Notes not theretofore delivered to the Trustee for cancellation, for principal of, premium, if any, and interest on the Notes to the date of deposit together with irrevocable instructions from the Company directing the Trustee to apply such funds to the payment thereof at maturity or redemption, as the case may be; (ii) the Company has paid all other sums payable under the Indenture by the Company; and (iii) the Company has delivered to the Trustee an officers' certificate and an opinion of counsel stating that all conditions precedent under the Indenture relating to the satisfaction and discharge of the Indenture have been complied with. MODIFICATION OF THE INDENTURE From time to time, the Company, the Guarantors and the Trustee, without the consent of the Holders, may amend the Indenture for certain specified purposes, including curing ambiguities, defects or inconsistencies, so long as such change does not, in the opinion of the Trustee, adversely affect the rights of any of the Holders in any material respect. In formulating its opinion on such matters, the Trustee will be entitled to rely on such evidence as it deems appropriate, including, without limitation, solely on an opinion of counsel. Other modifications and amendments of the Indenture may be made with the consent of the Holders of a majority in principal amount of the then outstanding Notes issued under the Indenture, except that, without the consent of each Holder affected thereby, no amendment may: (i) reduce the amount of Notes whose Holders must consent to an amendment; (ii) reduce the rate of or change or have the effect of changing the time for payment of interest, including defaulted interest, on any Notes; (iii) reduce the principal of or change or have the effect of changing the fixed maturity of any Notes, or change the date on which any Notes may be subject to redemption or repurchase, or reduce the redemption or repurchase price therefore; (iv) make any Notes payable in money other than that stated in the Notes; (v) make any change in provisions of the Indenture protecting the right of each Holder to receive payment of principal of and interest on such Note on or after the due date thereof or to bring suit to enforce such payment, or permitting Holders of a majority in principal amount of Notes to waive Defaults or Events of Default; (vi) amend, change or modify in any material respect the obligation of the Company to make and consummate a Change of Control Offer in the event of a Change of Control or make and consummate a Net Proceeds Offer with respect to any Asset Sale that has been consummated or modify in any material respect any of the provisions or definitions with respect thereto; (vii) modify or change any provision of the Indenture or the related definitions affecting the subordination or ranking of the Notes or any Guarantee in a manner which adversely affects the Holders; or (viii) release any Guarantor from any of its obligations under its Guarantee or the Indenture otherwise than in accordance with the terms of the Indenture. GOVERNING LAW The Indenture provides that it, the Notes and the Guarantees will be governed by, and construed in accordance with, the laws of the State of New York but without giving effect to applicable principles of conflicts of law to the extent that the application of the law of another jurisdiction would be required thereby. THE TRUSTEE The Indenture provides that, except during the continuance of an Event of Default, the Trustee will perform only such duties as are specifically set forth in the Indenture. During the existence of an Event of Default, the Trustee will exercise such rights and powers vested in it by the Indenture, and use the same degree of care and skill in its exercise as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. The Indenture and the provisions of the TIA contain certain limitations on the rights of the Trustee, should it become a creditor of the Company, to obtain payments of claims in certain cases or to realize 71 on certain property received in respect of any such claim as security or otherwise. Subject to the TIA, the Trustee will be permitted to engage in other transactions; provided that if the Trustee acquires any conflicting interest as described in the TIA, it must eliminate such conflict or resign. CERTAIN DEFINITIONS Set forth below is a summary of certain of the defined terms used in the Indenture. Reference is made to the Indenture for the full definition of all such terms, as well as any other terms used herein for which no definition is provided. "Acquired Indebtedness" means Indebtedness of a Person or any of its Subsidiaries existing at the time such Person becomes a Restricted Subsidiary of the Company or at the time it merges or consolidates with the Company or any of its Restricted Subsidiaries or assumed in connection with the acquisition of assets from such Person and in each case not incurred by such Person in connection with, or in anticipation or contemplation of, such Person becoming a Restricted Subsidiary of the Company or such acquisition, merger or consolidation. "Affiliate" means, with respect to any specified Person, any other Person who directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such specified Person. The term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative of the foregoing. "Asset Acquisition" means (a) an Investment by the Company or any Restricted Subsidiary of the Company in any other Person pursuant to which such Person shall become a Restricted Subsidiary of the Company or of any Restricted Subsidiary of the Company, or shall be merged with or into the Company or of any Restricted Subsidiary of the Company, or (b) the acquisition by the Company or any Restricted Subsidiary of the Company of the assets of any Person (other than a Restricted Subsidiary of the Company), which constitute all or substantially all of the assets of such Person or comprise any division or line of business of such Person or any other properties or assets of such Person other than in the ordinary course of business. "Asset Sale" means any direct or indirect sale, issuance, conveyance, transfer, lease (other than operating leases entered into in the ordinary course of business), assignment or other transfer for value by the Company or any of its Restricted Subsidiaries (including any Sale and Leaseback Transaction) to any Person other than the Company or a Restricted Subsidiary of the Company of (a) any Capital Stock of any Restricted Subsidiary of the Company; or (b) any other property or assets of the Company or any Restricted Subsidiary of the Company other than in the ordinary course of business; provided, however, that Asset Sales shall not include (i) a transaction or series of related transactions for which the Company or its Restricted Subsidiaries receive aggregate consideration of less than $5 million, (ii) sales of accounts receivable and related assets (including contract rights) of the type specified in the definition of "Qualified Securitization Transaction" to a Securitization Entity for the fair market value thereof, (iii) sales or grants of licenses to use the Company's or any Restricted Subsidiary's patents, trade secrets, know-how and technology to the extent that such license does not prohibit the licensor from using the patent, trade secret, know-how or technology licensed in North America or require the licensor to pay any fees for any such use, (iv) the sale, lease, conveyance, disposition or other transfer (A) of all or substantially all of the assets of the Company or a Restricted Subsidiary of the Company as permitted under "Merger, Consolidation and Sale of Assets", (B) of any Capital Stock or other ownership interest in or assets or property of an Unrestricted Subsidiary or a Person which is not a Subsidiary, (C) pursuant to any foreclosure of assets or other remedy provided by applicable law to a creditor of the Company or any Subsidiary of the Company with a Lien on such assets, which Lien is permitted under the Indenture; provided that such foreclosure or other remedy is conducted in a commercially reasonable manner or in accordance with any bankruptcy law, (D) involving only Cash Equivalents or inventory in the ordinary course of business or obsolete equipment in the ordinary course of business consistent with past practices 72 of the Company or (E) including only the lease or sublease of any real or personal property in the ordinary course of business; (v) the consummation of any transaction in accordance with the terms of "--Limitation on Restricted Payments", and (vi) Permitted Investments. "Board of Directors" means, as to any Person, the board of directors of such Person or any duly authorized committee thereof. "Board Resolution" means, with respect to any Person, a copy of a resolution certified by the Secretary or an Assistant Secretary of such Person to have been duly adopted by the Board of Directors of such Person and to be in full force and effect on the date of such certification, and delivered to the Trustee. "Capital Stock" means (i) with respect to any Person that is a corporation, any and all shares, interests, participations or other equivalents (however designated and whether or not voting) of corporate stock, including each class of Common Stock and Preferred Stock of such Person and (ii) with respect to any Person that is not a corporation, any and all partnership or other equity interests of such Person. "Capitalized Lease Obligation" means, as to any Person, the obligations of such Person under a lease that are required to be classified and accounted for as capital lease obligations under GAAP and, for purposes of this definition, the amount of such obligations at any date shall be the capitalized amount of such obligations at such date, determined in accordance with GAAP. "Cash Equivalents" means (i) a marketable obligation, maturing within two years after issuance thereof, issued or guaranteed by the United States of America or an instrumentality or agency thereof, (ii) a certificate of deposit or banker's acceptance, maturing within one year after issuance thereof, issued by any lender under the Credit Agreement, or a national or state bank or trust company or a European, Canadian or Japanese bank in each case having capital, surplus and undivided profits of at least $100,000,000 and whose long-term unsecured debt has a rating of "A" or better by Standard & Poor's Ratings Group, a division of McGraw Hill Companies ("S&P") or A2 or better by Moody's Investors Service, Inc. ("Moody's") or the equivalent rating by any other nationally recognized rating agency (provided that the aggregate face amount of all Investments in certificates of deposit or bankers' acceptances issued by the principal offices of or branches of such European or Japanese banks located outside the United States shall not at any time exceed 33 1/3% of all Investments described in this definition), (iii) open market commercial paper, maturing within 270 days after issuance thereof, which has a rating of A1 or better by S&P or P1 or better by Moody's, or the equivalent rating by any other nationally recognized rating agency, (iv) repurchase agreements and reverse repurchase agreements with a term not in excess of one year with any financial institution which has been elected a primary government securities dealer by the Federal Reserve Board or whose securities are rated AA-or better by S&P or Aa3 or better by Moody's or the equivalent rating by any other nationally recognized rating agency relating to marketable direct obligations issued or unconditionally guaranteed by the United States of America or any agency or instrumentality thereof and backed by the full faith and credit of the United States of America, (v) "Money Market" preferred stock maturing within six months after issuance thereof or municipal bonds issued by a corporation organized under the laws of any state of the United States, which has a rating of "A" or better by S&P or Moody's or the equivalent rating by any other nationally recognized rating agency and (vi) tax exempt floating rate option tender bonds backed by letters of credit issued by a national or state bank whose long-term unsecured debt has a rating of AA or better by S&P or Aa2 or better by Moody's or the equivalent rating by any other nationally recognized rating agency. "Change of Control" means (i) prior to the initial public equity offering of the Company, the failure by Jon M. Huntsman, his spouse, direct descendants or their spouses, an entity controlled by any of the foregoing and/or by a trust of the type described hereafter, and/or a trust for the benefit of any of the foregoing (the "Huntsman Group"), collectively to own and control at least a sufficient amount of the outstanding voting capital stock of the Company to elect at least a majority of the Board of Directors of the Company or (ii) after the initial public equity offering of the Company, the occurrence of the following: (x) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than one or more members of the Huntsman Group, is or becomes the "beneficial 73 owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person shall be deemed to have "beneficial ownership" of all securities that such Person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of 35% or more of the then outstanding voting capital stock of the Company other than in a transaction having the approval of the board of directors of the Company at least a majority of which members are Continuing Directors; or (y) Continuing Directors shall cease to constitute at least a majority of the directors constituting the board of directors of the Company. "Commodity Agreements" means any commodity futures contract, commodity option or other similar agreement or arrangement entered into by the Company or any of its Subsidiaries designed to protect the Company or any of its Subsidiaries against fluctuation in the price of commodities actually at that time used in the ordinary course of business of the Company or its Subsidiaries. "Common Stock" of any Person means any and all shares, interests or other participations in, and other equivalents (however designated and whether voting or non-voting) of such Person's common stock, whether outstanding on the Issue Date or issued after the Issue Date, and includes, without limitation, all series and classes of such common stock. "Consolidated EBITDA" means, with respect to any Person, for any period, the sum (without duplication) of (i) Consolidated Net Income and (ii) to the extent Consolidated Net Income has been reduced thereby, (A) all income taxes of such Person and its Restricted Subsidiaries paid or accrued in accordance with GAAP for such period (other than income taxes attributable to extraordinary, unusual or nonrecurring gains or losses or taxes attributable to sales or dispositions outside the ordinary course of business), (B) Consolidated Interest Expense and (C) Consolidated Non-cash Charges less any non-cash items increasing Consolidated Net Income for such period, all as determined on a consolidated basis for such Person and its Restricted Subsidiaries in accordance with GAAP. "Consolidated Fixed Charge Coverage Ratio" means, with respect to any Person, the ratio of Consolidated EBITDA of such Person during the four full fiscal quarters for which financial statements have been or should have been delivered to the Trustee under "--Reports to Holders" (the "Four Quarter Period") ending on or prior to the date of the transaction giving rise to the need to calculate the Consolidated Fixed Charge Coverage Ratio (the "Transaction Date") to Consolidated Fixed Charges of such Person for the Four Quarter Period. In addition to and without limitation of the foregoing, for purposes of this definition, "Consolidated EBITDA" and "Consolidated Fixed Charges" shall be calculated after giving effect on a pro forma basis for the period of such calculation to (i) the incurrence or repayment of any Indebtedness of such Person or any of its Restricted Subsidiaries (and the application of the proceeds thereof) giving rise to the need to make such calculation and any incurrence or repayment of other Indebtedness (and the application of the proceeds thereof), other than the incurrence or repayment of Indebtedness in the ordinary course of business for working capital purposes pursuant to working capital facilities, occurring during the Four Quarter Period or at any time subsequent to the last day of the Four Quarter Period and prior to the Transaction Date, as if such incurrence or repayment, as the case may be (and the application of the proceeds thereof), occurred on the first day of the Four Quarter Period and (ii) any Asset Sales or Asset Acquisitions (including, without limitation, any Asset Acquisition giving rise to the need to make such calculation as a result of such Person or one of its Restricted Subsidiaries (including any Person who becomes a Restricted Subsidiary as a result of the Asset Acquisition) incurring, assuming or otherwise being liable for Acquired Indebtedness and also including any Consolidated EBITDA (including any pro forma expense and cost reduction calculated on a basis consistent with Regulation S-X under the Securities Act as in effect on the Issue Date) (provided that such Consolidated EBITDA shall be included only to the extent includable pursuant to the definition of "Consolidated Net Income") attributable to the assets which are the subject of the Asset Acquisition or Asset Sale during the Four Quarter Period occurring during the Four Quarter Period or at any time subsequent to the last day of the Four Quarter Period and on or prior to the Transaction Date, as if such Asset Sale or Asset Acquisition (including the incurrence, assumption or liability for any such Acquired Indebtedness) occurred on the first day of the Four Quarter Period. If such Person or any of its Restricted Subsidiaries directly or indirectly guarantees Indebtedness of a Person other than the Company or a Restricted Subsidiary, the preceding sentence shall give effect to the incurrence of such guaranteed 74 Indebtedness as if such Person or any Restricted Subsidiary of such Person had directly incurred or otherwise assumed such guaranteed Indebtedness. Furthermore, in calculating "Consolidated Fixed Charges" for purposes of determining the denominator (but not the numerator) of this "Consolidated Fixed Charge Coverage Ratio," (1) interest on outstanding Indebtedness determined on a fluctuating basis as of the Transaction Date and which will continue to be so determined thereafter shall be deemed to have accrued at a fixed rate per annum equal to the rate of interest on such Indebtedness in effect on the Transaction Date; (2) if interest on any Indebtedness actually incurred on the Transaction Date may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate, or other rates, then the interest rate in effect on the Transaction Date will be deemed to have been in effect during the Four Quarter Period; and (3) notwithstanding clause (1) above, interest on Indebtedness determined on a fluctuating basis, to the extent such interest is covered by agreements relating to Interest Swap Obligations, shall be deemed to accrue at the rate per annum resulting after giving effect to the operation of such agreements. "Consolidated Fixed Charges" means, with respect to any Person for any period, the sum, without duplication, of (i) Consolidated Interest Expense, plus (ii) the product of (x) the amount of all dividend payments on any series of Preferred Stock of such Person and its Restricted Subsidiaries (other than dividends paid in Qualified Capital Stock and other than dividends paid to such Person or to a Restricted Subsidiary of such Person) paid, accrued or scheduled to be paid or accrued during such period times (y) a fraction, the numerator of which is one and the denominator of which is one minus the then current effective consolidated federal, state and local tax rate of such Person, expressed as a decimal. "Consolidated Interest Expense" means, with respect to any Person for any period, the sum of, without duplication: (i) the aggregate of the interest expense of such Person and its Restricted Subsidiaries for such period determined on a consolidated basis in accordance with GAAP, including without limitation, (a) any amortization of debt discount and amortization or write-off of deferred financing costs, (b) the net costs under Interest Swap Obligations, (c) all capitalized interest and (d) the interest portion of any deferred payment obligation; and (ii) the interest component of Capitalized Lease Obligations paid, accrued and/or scheduled to be paid or accrued by such Person and its Restricted Subsidiaries during such period as determined on a consolidated basis in accordance with GAAP. "Consolidated Net Income" means, with respect to any Person, for any period, the aggregate net income (or loss) of such Person and its Restricted Subsidiaries for such period on a consolidated basis, determined in accordance with GAAP; provided that there shall be excluded therefrom (a) after-tax gains from Asset Sales or abandonments or reserves relating thereto, (b) after-tax items classified as extraordinary or nonrecurring gains, (c) the net income of any Person acquired in a "pooling of interests" transaction accrued prior to the date it becomes a Restricted Subsidiary of the referent Person or is merged or consolidated with the referent Person or any Restricted Subsidiary of the referent Person, (d) the net income (but not loss) of any Restricted Subsidiary of the referent Person to the extent that the declaration of dividends or similar distributions by that Restricted Subsidiary of that income is restricted by a contract, operation of law or otherwise; (e) the net income of any Person, other than a Restricted Subsidiary of the referent Person, except to the extent of cash dividends or distributions paid to the referent Person or to a Wholly Owned Restricted Subsidiary of the referent Person by such Person, (f) any restoration to income of any contingency reserve, except to the extent that provision for such reserve was made out of Consolidated Net Income accrued at any time following the Issue Date, (g) income or loss attributable to discontinued operations (including without limitation, operations disposed of during such period whether or not such operations were classified as discontinued), (h) in the case of a successor to the referent Person by consolidation or merger or as a transferee of the referent Person's assets, any earnings of the successor corporation prior to such consolidation, merger or transfer of assets and (i) all gains or losses from the cumulative effect of any change in accounting principles. "Consolidated Net Worth" of any Person means the consolidated stockholders' equity of such Person, determined on a consolidated basis in accordance with GAAP, less (without duplication) amounts attributable to Disqualified Capital Stock of such Person. "Consolidated Non-cash Charges" means, with respect to any Person, for any period, the aggregate depreciation, amortization and other non-cash expenses of such Person and its Restricted Subsidiaries 75 reducing Consolidated Net Income of such Person and its Restricted Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP (excluding any such charges constituting an extraordinary item or loss or any such charge which requires an accrual of or a reserve for cash charges for any future period). "Continuing Directors" means, as of any date, the collective reference to (i) all members of the board of directors of the Company who have held office continuously since a date no later than twelve months prior to the Company's initial public equity offering, and (ii) all members of the board of directors of the Company who assumed office after such date and whose appointment or nomination for election by the Company's shareholders was approved by a vote of at least 50% of the Continuing Directors in office immediately prior to such appointment or nomination. "Credit Agreement" means the Credit Agreement, dated as of September 30, 1997 among the Company, the lenders party thereto in their capacities as lenders thereunder and The Chase Manhattan Bank, as agent, together with the related documents thereto (including, without limitation, any guarantee agreements and security documents), in each case as such Credit Agreement and related documents may be amended (including any amendment and restatement thereof), supplemented or otherwise modified from time to time, including any agreement extending the maturity of, refinancing, replacing (whether or not contemporaneously) or otherwise restructuring (including increasing the amount of available borrowings thereunder (to the extent that such increase in borrowings is permitted by the "Limitation on Incurrence of Additional Indebtedness" covenant above) or adding Restricted Subsidiaries of the Company as additional borrowers or guarantors thereunder) all or any portion of the Indebtedness under such agreement or any successor or replacement agreement and whether by the same or any other agent, lender or group of lenders. "CT Film" means the CT Film Division of Huntsman Polymers Corporation. "CT Film Purchase" means the acquisition of substantially all of the assets of CT Film for an aggregate consideration of not in excess of $70 million pursuant to that certain Asset Purchase Agreement dated August 27, 1997 between the Company and Huntsman Polymers Corporation as in effect on the date hereof. "Currency Agreement" means any foreign exchange contract, currency swap agreement or other similar agreement or arrangement designed to protect the Company or any Restricted Subsidiary of the Company against fluctuations in currency values. "Default" means an event or condition the occurrence of which is, or with the lapse of time or the giving of notice or both would be, an Event of Default. "Designated Senior Debt" means (i) Indebtedness under or in respect of the Credit Agreement and (ii) any other Indebtedness constituting Senior Debt which, at the time of determination, has an aggregate principal amount of at least $25 million and is specifically designated in the instrument evidencing such Senior Debt as "Designated Senior Debt" by the Company. "Disqualified Capital Stock" means that portion of any Capital Stock which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the sole option of the holder thereof on or prior to the final maturity date of the Notes. "Domestic Overdraft Facility" means an overdraft line of credit in a maximum principal amount of $5 million at any time outstanding. "Exchange Act" means the Securities Exchange Act of 1934, as amended, or any successor statute or statutes thereto. "fair market value" means, with respect to any asset or property, the price which could be negotiated in an arm's-length. free market transaction, for cash, between a willing seller and a willing and able buyer, neither of whom is under undue pressure or compulsion to complete the transaction. Fair market value shall be determined by the Board of Directors of the Company acting reasonably and in good faith and shall be evidenced by a Board Resolution of the Board of Directors of the Company delivered to the Trustee. 76 "Foreign Subsidiary" means any Restricted Subsidiary of the Company organized and conducting its principal operations outside the United States. "Foreign Subsidiary Asset Sale" means any direct or indirect sale, issuance, conveyance, transfer, lease, assignment or other transfer for value by the Company or any of its Restricted Subsidiaries (including any Sale and Leaseback Transaction) to any Person other than the Company or a Restricted Subsidiary of the Company of the Capital Stock of any Foreign Subsidiary or any of the property or assets of any Foreign Subsidiary. "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession of the United States, which are in effect as of the Issue Date. "Guarantees" means the guarantees of the Notes of the Company by the Guarantors. "Guarantor" means (i) each of the guarantors under the Credit Agreement and (ii) each of the Company's Restricted Subsidiaries that in the future executes a supplemental indenture in which such Restricted Subsidiary agrees to be bound by the terms of the Indenture as a Guarantor; provided that any Person constituting a Guarantor as described above shall cease to constitute a Guarantor when its respective Guarantee is released in accordance with the terms of the Indenture. "Guarantor Senior Debt" means with respect to any Guarantor, (i) the principal of, premium, if any, and interest (including any interest accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law) on any Indebtedness of a Guarantor, whether outstanding on the Issue Date or thereafter created, incurred or assumed, unless, in the case of any particular Indebtedness, the instrument creating or evidencing the same or pursuant to which the same is outstanding expressly provides that such Indebtedness shall not be senior in right of payment to the Guarantee of such Guarantor. Without limiting the generality of the foregoing, "Guarantor Senior Debt" shall also include the principal of, premium, if any, interest (including any interest accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law) on, and all other amounts owing in respect of, (w) all monetary obligations of every nature of a Guarantor in respect of the Credit Agreement, including, without limitation, obligations to pay principal and interest, reimbursement obligations under letters of credit, fees, expenses and indemnities, (x) all monetary obligations of every nature of a Guarantor evidence by a promissory note and which is, directly or indirectly, pledged as security for the obligations of the Company under the Credit Agreement, (y) all Interest Swap Obligations and (z) all obligations under Currency Agreements, in each case whether outstanding on the Issue Date or thereafter incurred. Notwithstanding the foregoing, "Guarantor Senior Debt" shall not include (i) any Indebtedness of such Guarantor to a Subsidiary of such Guarantor or any Affiliate of such Guarantor or any such Affiliate's Subsidiaries other than as described in clause (x), (ii) Indebtedness to, or guaranteed on behalf of, any shareholder, director, officer or employee of such Guarantor or any Restricted Subsidiary of such Guarantor (including, without limitation, amounts owed for compensation), (iii) Indebtedness to trade creditors and other amounts owed to suppliers in connection with obtaining goods, materials or services, (iv) Indebtedness represented by Disqualified Capital Stock, (v) any liability for federal, state, local or other taxes owed or owing by such Guarantor, (vi) Indebtedness to the extent incurred in violation of the Indenture provisions set forth under "Limitation on Incurrence of Additional Indebtedness," (vii) Indebtedness which, when incurred and without respect to any election under Section 1111(b) of Title 11, United States Code, is without recourse to such Guarantor and (viii) any Indebtedness which is, by its express terms, subordinated in right of payment to any other Indebtedness of such Guarantor. "Indebtedness" means with respect to any Person, without duplication, (i) all Obligations of such Person for borrowed money, (ii) all Obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (iii) all Capitalized Lease Obligations of such Person, (iv) all Obligations of such Person issued or assumed as the deferred purchase price of property, all conditional sale obligations 77 and all Obligations under any title retention agreement (but excluding trade accounts payable and other accrued liabilities arising in the ordinary course of business that are not overdue by 90 days or more or are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted), (v) all Obligations for the reimbursement of any obligor on any letter of credit, banker's acceptance or similar credit transaction, (vi) guarantees and other contingent obligations in respect of Indebtedness referred to in clauses (i) through (v) above and clause (viii) below, (vii) all Obligations of any other Person of the type referred to in clauses (i) through (vi) which are secured by any lien on any property or asset of such Person, the amount of such Obligation being deemed to be the lesser of the fair market value of such property or asset or the amount of the Obligation so secured, (viii) all Obligations under Currency Agreements, Commodity Agreements and Interest Swap Agreements of such Person and (ix) all Disqualified Capital Stock issued by such Person with the amount of Indebtedness represented by such Disqualified Capital Stock being equal to the greater of its voluntary or involuntary liquidation preference and its maximum fixed repurchase price, but excluding accrued dividends, if any. For purposes hereof, the "maximum fixed repurchase price" of any Disqualified Capital Stock which does not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Capital Stock as if such Disqualified Capital Stock were purchased on any date on which Indebtedness shall be required to be determined pursuant to the Indenture, and if such price is based upon, or measured by, the fair market value of such Disqualified Capital Stock, such fair market value shall be determined reasonably and in good faith by the Board of Directors of the issuer of such Disqualified Capital Stock; provided, however that notwithstanding the foregoing, "Indebtedness" shall not include unsecured indebtedness of the Company and/or its Restricted Subsidiaries incurred to finance insurance premiums in a principal amount not in excess of the insurance premiums to be paid by the Company and/or its Restricted Subsidiaries for a three year period beginning on the date of any incurrence of such indebtedness. "Independent Financial Advisor" means a firm (i) which does not, and whose directors, officers and employees or Affiliates do not, have a direct or indirect financial interest in the Company and (ii) which, in the judgment of the Board of Directors of the Company, is otherwise independent and qualified to perform the task for which it is to be engaged. "Interest Swap Obligations" means the obligations of any Person pursuant to any arrangement with any other Person, whereby, directly or indirectly, such Person is entitled to receive from time to time periodic payments calculated by applying either a floating or a fixed rate of interest on a stated notional amount in exchange for periodic payments made by such other Person calculated by applying a fixed or a floating rate of interest on the same notional amount and shall include, without limitation, interest rate swaps, caps, floors, collars and similar agreements. "Investment" means, with respect to any Person, any direct or indirect loan or other extension of credit (including, without limitation, a guarantee) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition by such Person of any Capital Stock, bonds, notes, debentures or other securities or evidences of Indebtedness issued by, any Person. "Investment" shall exclude extensions of trade credit by the Company and its Restricted Subsidiaries on commercially reasonable terms in accordance with normal trade practices of the Company or such Restricted Subsidiary, as the case may be. For the purposes of the "Limitation on Restricted Payments" covenant, (i) "Investment" shall include and be valued at the fair market value of the net assets of any Restricted Subsidiary at the time that such Restricted Subsidiary is designated an Unrestricted Subsidiary and shall exclude the fair market value of the net assets of any Unrestricted Subsidiary at the time that such Unrestricted Subsidiary is designated a Restricted Subsidiary and (ii) the amount of any Investment shall be the original cost of such Investment plus the cost of all additional Investments by the Company or any of its Restricted Subsidiaries, without any adjustments for increases or decreases in value, or write-ups, write-downs or write-offs with respect to such Investment, reduced by the payment of dividends or distributions in connection with such Investment or any other amounts received in respect of such Investment; provided that no such payment of dividends or distributions or receipt of any such other amounts shall reduce the amount of any Investment if such payment of dividends or distributions or receipt of any such amounts would be included in Consolidated Net Income. If the Company or any Restricted Subsidiary of the Company sells 78 or otherwise disposes of any Common Stock of any direct or indirect Restricted Subsidiary of the Company such that, after giving effect to any such sale or disposition, the Company no longer owns, directly or indirectly, greater than 50% of the outstanding Common Stock of such Restricted Subsidiary, the Company shall be deemed to have made an Investment on the date of any such sale or disposition equal to the fair market value of the Common Stock of such Restricted Subsidiary not sold or disposed of. "Issue Date" means the date of original issuance of the Notes. "Lien" means any lien, mortgage, deed of trust, pledge, security interest, charge or encumbrance of any kind (including any conditional sale or other title retention agreement, any lease in the nature thereof and any agreement to give any security interest). "Material Subsidiary" means, at any date of determination, any Subsidiary of the Company that, together with its Subsidiaries, (i) for the most recent fiscal year of the Company accounted for more than 10% of the consolidated revenues of the Company or (ii) as of the end of such fiscal year, was the owner of 10% of the consolidated assets of the Company, all as set forth on the most recently available consolidated financial statement of the Company and its consolidated Subsidiaries for such fiscal year prepared in conformity with GAAP. "Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds in the form of cash or Cash Equivalents including payments in respect of deferred payment obligations when received in the form of cash or Cash Equivalents (other than the portion of any such deferred payment constituting interest) received by the Company or any of its Restricted Subsidiaries from such Asset Sale net of (a) all out-of-pocket expenses and fees relating to such Asset Sale (including, without limitation, legal, accounting and investment banking fees and sales commissions), (b) taxes paid or payable after taking into account any reduction in consolidated tax liability due to available tax credits or deductions and any tax sharing arrangements, including any taxes to be paid by the Company or any of its Subsidiaries upon the repatriation of such cash proceeds to the United States upon consummation of a Foreign Subsidiary Asset Sale, (c) repayment of Indebtedness that is required to be repaid in connection with such Asset Sale, (d) the decrease in proceeds from Qualified Securitization Transactions which results from such Asset Sale and (e) appropriate amounts to be provided by the Company or any Restricted Subsidiary, as the case may be, as a reserve, in accordance with GAAP, against any liabilities associated with such Asset Sale and retained by the Company or any Restricted Subsidiary, as the case may be, after such Asset Sale, including, without limitation, pension and other post-employment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such Asset Sale. "Obligations" means all obligations for principal, premium, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness. "Permitted Indebtedness" means, without duplication, each of the following: (i) Indebtedness under the Notes, the Indenture and the Guarantees; (ii) Indebtedness incurred pursuant to the Credit Agreement in an aggregate principal amount not exceeding $225 million at any one time outstanding, less (i) the amount of any principal payments made by the Company under the Credit Agreement with the Net Cash Proceeds of any Asset Sale (which are accompanied by a corresponding permanent commitment reduction to the extent that the amount paid could otherwise be reborrowed under the Credit Agreement) pursuant to clause (iii)(A) of the first sentence of "--Limitation on Asset Sales" and (ii) if the CT Film Purchase is not consummated on or before December 31, 1997, a permanent reduction of the facilities under the Credit Agreement in an aggregate principal amount equal to $70 million; (iii) other Indebtedness of the Company and its Restricted Subsidiaries outstanding on the Issue Date reduced by the amount of any scheduled amortization payments or mandatory prepayments when actually paid or permanent reductions thereon; 79 (iv) Commodity Agreements and Interest Swap Obligations of the Company covering Indebtedness of the Company or any of its Restricted Subsidiaries (or Indebtedness which the Company or any Restricted Subsidiary intends to incur) and Interest Swap Obligations of any Restricted Subsidiary of the Company covering Indebtedness of such Restricted Subsidiary (or Indebtedness which such Restricted Subsidiary intends to incur); provided, however, that such Interest Swap Obligations are entered into to protect the Company and its Restricted Subsidiaries from fluctuations in interest rates on Indebtedness permitted under the Indenture to the extent the notional principal amount of such Interest Swap Obligation, when incurred, does not exceed the principal amount of the Indebtedness to which such Interest Swap Obligation relates; (v) Indebtedness under Currency Agreements; provided that in the case of Currency Agreements which relate to Indebtedness, such Currency Agreements do not increase the Indebtedness of the Company and its Restricted Subsidiaries outstanding other than as a result of fluctuations in foreign currency exchange rates or by reason of fees, indemnities and compensation payable thereunder; (vi) Indebtedness of a Restricted Subsidiary of the Company to the Company or to a Wholly-Owned Restricted Subsidiary of the Company for so long as such Indebtedness is held by the Company or a Wholly-Owned Restricted Subsidiary of the Company, in each case subject to no Lien held by a Person other than the Company or a Restricted Subsidiary of the Company; provided that if as of any date any Person other than the Company or a Wholly-Owned Restricted Subsidiary of the Company owns or holds any such Indebtedness or holds a Lien in respect of such Indebtedness such date shall be deemed the incurrence of Indebtedness not constituting Permitted Indebtedness by the issuer of such Indebtedness; (vii) Indebtedness of the Company to a Restricted Subsidiary of the Company for so long as such Indebtedness is held by a Restricted Subsidiary of the Company, in each case subject to no Lien; provided that (a) any Indebtedness of the Company to any Restricted Subsidiary of the Company is unsecured and subordinated, pursuant to a written agreement, to the Company's obligations under the Indenture and the Notes and (b) if as of any date any Person other than a Restricted Subsidiary of the Company owns or holds any such Indebtedness or any Person holds a Lien in respect of such Indebtedness (other than pledges securing the Credit Agreement) such date shall be deemed the incurrence of Indebtedness not constituting Permitted Indebtedness by the Company; (viii) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within two business days of incurrence; (ix) Indebtedness of the Company or any of its Restricted Subsidiaries represented by letters of credit for the account of the Company or such Restricted Subsidiary, as the case may be, in order to provide security for workers' compensation claims, payment obligations in connection with self-insurance or similar requirements in the ordinary course of business; (x) Refinancing Indebtedness; (xi) Indebtedness arising from agreements of the Company or a Subsidiary providing for indemnification, adjustment of purchase price or similar obligations, in each case, incurred in connection with the disposition of any business, assets or Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Subsidiary for the purpose of financing such acquisition; provided that the maximum aggregate liability in respect of all such Indebtedness shall at no time exceed the gross proceeds actually received by the Company and the Subsidiary in connection with such disposition; (xii) Obligations in respect of performance bonds and completion, guarantee, surety and similar bonds provided by the Company or any Restricted Subsidiary in the ordinary course of business; (xiii) Guarantees by the Company or a Subsidiary of Indebtedness incurred by the Company or a Subsidiary so long as the incurrence of such Indebtedness by the Company or any such Subsidiary is otherwise permitted by the terms of the Indenture; 80 (xiv) Indebtedness of the Company or any Restricted Subsidiary incurred in the ordinary course of business not to exceed $10 million at any time outstanding (A) representing Capitalized Lease Obligations or (B) constituting purchase money Indebtedness incurred to finance property or assets of the Company or any Restricted Subsidiary of the Company acquired in the ordinary course of business; provided, however, that such purchase money Indebtedness shall not exceed the cost of such property or assets and shall not be secured by any property or assets of the Company or any Restricted Subsidiary of the Company other than the property and assets so acquired; (xv) Indebtedness of Foreign Subsidiaries that are Restricted Subsidiaries to the extent that the aggregate outstanding amount of Indebtedness incurred by such Foreign Subsidiaries under this clause (xv) does not exceed at any one time an amount equal to the sum of (A) 80% of the consolidated book value of the accounts receivable of all Foreign Subsidiaries and (B) 60% of the consolidated book value of the inventory of all Foreign Subsidiaries. (xvi) the incurrence by a Securitization Entity of Indebtedness in a Qualified Securitization Transaction that is not recourse to the Company or any Subsidiary of the Company (except for Standard Securitization Undertakings); (xvii) additional Indebtedness of the Company and its Restricted Subsidiaries in an aggregate principal amount not to exceed $15 million at any one time outstanding; and (xviii) Indebtedness under any Domestic Overdraft Facility. "Permitted Investments" means (i) Investments by the Company or any Restricted Subsidiary of the Company in any Person that is or will become immediately after such Investment a Wholly Owned Restricted Subsidiary of the Company or that will merge or consolidate into the Company or a Wholly Owned Restricted Subsidiary of the Company, (ii) Investments in the Company by any Restricted Subsidiary of the Company; provided that any Indebtedness evidencing such Investment is unsecured and subordinated (other than pursuant to intercompany notes pledged under the Credit Agreement), pursuant to a written agreement, to the Company's Obligations under the Notes and the Indenture; (iii) Investments in cash and Cash Equivalents; (iv) loans and advances to employees and officers of the Company and its Restricted Subsidiaries in the ordinary course of business for travel, relocation and related expenses for bona fide business purposes not in excess of $3 million at any one time outstanding; (v) Commodity Agreements, Currency Agreements and Interest Swap Obligations entered into in the ordinary course of the Company's or its Restricted Subsidiaries' businesses and otherwise in compliance with the Indenture; (vi) Investments in Unrestricted Subsidiaries or joint ventures not to exceed $20 million, plus (A) the aggregate net after-tax amount returned to the Company or any Restricted Subsidiary in cash on or with respect to any Investments made in Unrestricted Subsidiaries and joint ventures whether through interest payments, principal payments, dividends or other distributions or payments (including such dividends, distributions or payments made concurrently with such Investment), (B) the net after-tax cash proceeds received by the Company or any Restricted Subsidiary from the disposition of all or any portion of such Investments (other than to the Company or a Subsidiary of the Company), (C) upon redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary, the fair market value of such Subsidiary and (D) the net cash proceeds received by the Company from the issuance of Specified Venture Capital Stock; (vii) Investments in securities received pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any debtors of the Company or its Restricted Subsidiaries; (viii) Investments made by the Company or its Restricted Subsidiaries as a result of consideration received in connection with an Asset Sale made in compliance with the "Limitation on Asset Sales" covenant; (ix) Investments existing on the Issue Date; (x) any Investment by the Company or a Wholly Owned Subsidiary of the Company in a Securitization Entity or any Investment by a Securitization Entity in any other Person in connection with a Qualified Securitization Transaction; provided that any Investment in a Securitization Entity is in the form of a Purchase Money Note or an equity interest; (xi) Investments constituting guarantees by the Company or a Subsidiary of Indebtedness incurred by the Company or a Subsidiary so long as the incurrence of such Indebtedness by the Company or any such Subsidiary is otherwise permitted by the terms of the Indenture; and (xii) additional Investments in an aggregate amount not to exceed $2 million. 81 "Person" means an individual, partnership, corporation, unincorporated organization, trust or joint venture, or a governmental agency or political subdivision thereof. "Preferred Stock" of any Person means any Capital Stock of such Person that has preferential rights to any other Capital Stock of such Person with respect to dividends or redemptions or upon liquidation. "Qualified Capital Stock" means any Capital Stock that is not Disqualified Capital Stock. "Qualified Securitization Transaction" means any transaction or series of transactions that may be entered into by the Company or any of its Subsidiaries pursuant to which the Company or any of its Subsidiaries may sell, convey or otherwise transfer pursuant to customary terms to (a) a Securitization Entity (in the case of a transfer by the Company or any of its Subsidiaries) and (b) any other Person (in the case of transfer by a Securitization Entity), or may grant a security interest in any accounts receivable (whether now existing or arising or acquired in the future) of the Company or any of its Subsidiaries, and any assets related thereto including, without limitation, all collateral securing such accounts receivable, all contracts and contract rights and all guarantees or other obligations in respect of such accounts receivable, proceeds of such accounts receivable and other assets (including contract rights) which are customarily transferred or in respect of which security interests are customarily granted in connection with asset securitization transactions involving accounts receivable. "Refinance" means, in respect of any security or Indebtedness, to refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue a security or Indebtedness in exchange or replacement for, such security or Indebtedness in whole or in part. "Refinanced" and "Refinancing" shall have correlative meanings. "Refinancing Indebtedness" means any Refinancing by the Company or any Restricted Subsidiary of the Company of Indebtedness incurred in accordance with the "Limitation on Incurrence of Additional Indebtedness" covenant (other than pursuant to clause (ii), (iv), (v), (vi), (vii), (viii), (ix), (xi), (xii), (xiii), (xiv), (xv), or (xvi) of the definition of Permitted Indebtedness), in each case that does not (1) result in an increase in the aggregate principal amount of Indebtedness of such Person as of the date of such proposed Refinancing (plus the amount of any premium required to be paid under the terms of the instrument governing such Indebtedness and plus the amount of reasonable expenses incurred by the Company in connection with such Refinancing) or (2) create Indebtedness with (A) a Weighted Average Life to Maturity that is less than the Weighted Average Life to Maturity of the Indebtedness being Refinanced or (B) a final maturity earlier than the final maturity of the Indebtedness being Refinanced; provided that (x) if such Indebtedness being Refinanced is Indebtedness of the Company, then such Refinancing Indebtedness shall be Indebtedness solely of the Company, (y) if such Indebtedness being Refinanced is subordinate or junior to the Notes, then such Refinancing Indebtedness shall be subordinate to the Notes at least to the same extent and in the same manner as the Indebtedness being Refinanced and (z) if such Indebtedness being refinanced is subordinated or junior to the Guarantee of such Guarantor, then such Refinancing Indebtedness shall be subordinate to the Guarantee of such Guarantor at least to the same extent and in the same manner as the Indebtedness being Refinanced. "Representative" means the indenture trustee or other trustee, agent or representative in respect of any Designated Senior Debt; provided that if, and for so long as, any Designated Senior Debt lacks such a representative, then the Representative for such Designated Senior Debt shall at all times constitute the holders of a majority in outstanding principal amount of such Designated Senior Debt in respect of any Designated Senior Debt. "Restricted Subsidiary" of any Person means any Subsidiary of such Person which at the time of determination is not an Unrestricted Subsidiary. "Sale and Leaseback Transaction" means any direct or indirect arrangement with any Person or to which any such Person is a party, providing for the leasing to the Company or a Restricted Subsidiary of any property, whether owned by the Company or any Restricted Subsidiary at the Issue Date or later acquired, which has been or is to be sold or transferred by the Company or such Restricted Subsidiary to such Person or to any other Person from whom funds have been or are to be advanced by such Person on the security of such property. 82 "Securitization Entity" means a Wholly Owned Subsidiary of the Company (or another Person in which the Company or any Subsidiary of the Company makes an Investment and to which the Company or any Subsidiary of the Company transfers accounts receivable or equipment and related assets) which engages in no activities other than in connection with the financing of accounts receivable or equipment and which is designated by the Board of Directors of the Company (as provided below) as a Securitization Entity (a) no portion of the Indebtedness or any other Obligations (contingent or otherwise) of which (i) is guaranteed by the Company or any Subsidiary of the Company (excluding guarantees of Obligations (other than the principal of, and interest on, Indebtedness) pursuant to Standard Securitization Undertakings), (ii) is recourse to or obligates the Company or any Subsidiary of the Company in any way other than pursuant to Standard Securitization Undertakings or (iii) subjects any property or asset of the Company or any Subsidiary of the Company, directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to Standard Securitization Undertakings, (b) with which neither the Company nor any Subsidiary of the Company has any material contract, agreement, arrangement or understanding other than on terms no less favorable to the Company or such Subsidiary than those that might be obtained at the time from Persons that are not Affiliates of the Company, other than fees payable in the ordinary course of business in connection with servicing receivables of such entity and (c) to which neither the Company nor any Subsidiary of the Company has any obligation to maintain or preserve such entity's financial condition or cause such entity to achieve certain levels of operating results. Any such designation by the Board of Directors of the Company shall be evidenced to the Trustee, by filing with the Trustee a certified copy of the resolution of the Board of Directors of the Company giving effect to such designation and an officers' certificate certifying that such designation complied with the foregoing conditions. "Senior Debt" means the principal of, premium, if any, and interest (including any interest accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law) on any Indebtedness of the Company, whether outstanding on the Issue Date or thereafter created, incurred or assumed, unless, in the case of any particular Indebtedness, the instrument creating or evidencing the same or pursuant to which the same is outstanding expressly provides that such Indebtedness shall not be senior in right of payment to the Notes. Without limiting the generality of the foregoing, "Senior Debt" shall also include the principal of, premium, if any, interest (including any interest accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law) on, and all other amounts owing in respect of, (x) all monetary obligations of every nature of the Company under the Credit Agreement, including, without limitation, obligations to pay principal and interest, reimbursement obligations under letters of credit, fees, expenses and indemnities, (y) all Interest Swap Obligations and (z) all Obligations under Currency Agreements and Commodity Agreements in each case whether outstanding on the Issue Date or thereafter incurred. Notwithstanding the foregoing, "Senior Debt" shall not include (i) any Indebtedness of the Company to a Restricted Subsidiary of the Company or any Affiliate of the Company or any of such Affiliate's Subsidiaries, (ii) Indebtedness to, or guaranteed on behalf of, any shareholder, director, officer or employee of the Company or any Subsidiary of the Company (including, without limitation, amounts owed for compensation), (iii) Indebtedness to trade creditors and other amounts owed to suppliers in connection with obtaining goods, materials or services, (iv) Indebtedness represented by Disqualified Capital Stock, (v) any liability for federal, state, local or other taxes owed or owing by the Company, (vi) Indebtedness to the extent incurred in violation of the Indenture provisions set forth under "Limitation on Incurrence of Additional Indebtedness," (vii) Indebtedness which, when incurred and without respect to any election under Section 1111(b) of Title 11, United States Code, is without recourse to the Company and (viii) any Indebtedness which is, by its express terms, subordinated in right of payment to any other Indebtedness of the Company. "Specified Venture Capital Stock" means Qualified Capital Stock of the Company issued to a Person (or Affiliates of such Person) who is not an Affiliate of the Company and the proceeds from the issuance of which are applied within 180 days after the issuance thereof to an Investment in an Unrestricted Subsidiary or joint venture. 83 "Standard Securitization Undertakings" means representations, warranties, covenants and indemnities entered into by the Company or any Subsidiary of the Company which are reasonably customary in an accounts receivable securitization transaction. "Subsidiary" with respect to any Person, means (i) any corporation of which the outstanding Capital Stock having at least a majority of the votes entitled to be cast in the election of directors under ordinary circumstances shall at the time be owned, directly or indirectly, by such Person or (ii) any other Person of which at least a majority of the voting interest under ordinary circumstances is at the time, directly or indirectly, owned by such Person. "Unrestricted Subsidiary" of any Person means (i) any Subsidiary of such Person that at the time of determination shall be or continue to be designated an Unrestricted Subsidiary in the manner provided below and (ii) any Subsidiary of an Unrestricted Subsidiary. The Board of Directors may designate any Subsidiary (including any newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary owns any Capital Stock of or owns or holds any Lien on any property of, the Company or any other Subsidiary of the Company that is not a Subsidiary of the Subsidiary to be so designated; provided that (x) the Company certifies to the Trustee that such designation complies with the "Limitation on Restricted Payments" covenant and (y) each Subsidiary to be so designated and each of its Subsidiaries has not at the time of designation, and does not thereafter, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable with respect to any Indebtedness pursuant to which the lender has recourse to any of the assets of the Company or any of its Restricted Subsidiaries. The Board of Directors may designate any Unrestricted Subsidiary to be a Restricted Subsidiary only if (x) immediately after giving effect to such designation, the Company is able to incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) in compliance with the "Limitation on Incurrence of Additional Indebtedness" covenant and (y) immediately before and immediately after giving effect to such designation, no Default or Event of Default shall have occurred and be continuing. Any such designation by the Board of Directors shall be evidenced to the Trustee by promptly filing with the Trustee a copy of the Board Resolution giving effect to such designation and an officers' certificate certifying that such designation complied with the foregoing provisions. "Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, the number of years obtained by dividing (a) the then outstanding aggregate principal amount of such Indebtedness into (b) the sum of the total of the products obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity or other required payment of principal, including payment at final maturity, in respect thereof, by (ii) the number of years (calculated to the nearest one-twelfth) which will elapse between such date and the making of such payment. "Wholly Owned Restricted Subsidiary" of any Person means any Restricted Subsidiary of such Person that is a Wholly Owned Subsidiary of such Person. "Wholly Owned Subsidiary" of any Person means any Subsidiary of such Person of which all the outstanding voting securities (other than in the case of a foreign Subsidiary, directors' qualifying shares or an immaterial amount of shares required to be owned by other Persons pursuant to applicable law) are owned by such Person or any Wholly Owned Subsidiary of such Person. 84 REGISTRATION RIGHTS Holders of New Notes are not entitled to any registration rights with respect to the New Notes. Pursuant to the Registration Rights Agreement, Holders of Old Notes are entitled to certain registration rights. Pursuant to the Registration Rights Agreement, the Company has agreed that it will, at its cost, for the benefit of the Holders, (i) use its best efforts with respect to the Exchange Offer to cause the Exchange Offer Registration Statement to become effective under the Securities Act within 150 days after the original issuance of the Old Notes (the "Issue Date") and (ii) upon the Exchange Offer Registration Statement becoming effective, to offer the New Notes in exchange for surrender of the Old Notes. The Registration Statement of which this Prospectus is a part constitutes the Exchange Offer Registration Statement. The Company will keep the Exchange Offer open for not less than 30 days (or longer if required by applicable law) after the date notice of the Exchange Offer is mailed to the Holders. For each of the Old Notes surrendered to the Company pursuant to the Exchange Offer, the Holder who surrendered such Old Notes will receive a New Note having a principal amount equal to that of the surrendered Old Notes. Interest on each New Note will accrue (A) from the later of (i) the last interest payment date on which interest was paid on the Old Note surrendered in exchange therefor, or (ii) if the Old Note is surrendered for exchange on a date in a period which includes the record date for an interest payment date to occur on or after the date of such exchange and as to which interest will be paid, the date of such interest payment date or (B) if no interest has been paid on the Old Notes, from the Issue Date. Under existing interpretations of the Commission contained in several no-action letters to third parties, the New Notes will be freely transferable by holders thereof (other than affiliates of the Company) after the Exchange Offer without further registration under the Securities Act; provided, however, that each Holder that wishes to exchange its Old Notes for New Notes will be required to represent (i) that any New Notes to be received by it will be acquired in the ordinary course of its business, (ii) that at the time of the commencement of the Exchange Offer it has no arrangement or understanding with any person to participate in the distribution (within the meaning of the Securities Act) of the New Notes in violation of the Securities Act, (iii) that it is not an "affiliate" (as defined in Rule 405 promulgated under the Securities Act) of the Company, (iv) if such Holder is not a broker-dealer, that it is not engaged in, and does not intend to engage in, the distribution of Exchange Notes and (v) if such Holder is a Participating Broker-Dealer that will receive Exchange Notes for its own account in exchange for Old Notes that were acquired as a result of market-making or other trading activities, that it will deliver a prospectus in connection with any resale of such Exchange Notes. The Company has agreed to make available, during the period required by the Securities Act, a prospectus meeting the requirements of the Securities Act for use by Participating Broker-Dealers and other persons, if any, with similar prospectus delivery requirements for use in connection with any resale of New Notes. If, (i) because of any change in law or in currently prevailing interpretations of the staff of the Commission, the Company is not permitted to effect an Exchange Offer, (ii) the Exchange Offer is not consummated within 195 days of the Issue Date, (iii) in certain circumstances, certain holders of unregistered New Notes so request, or (iv) in the case of any Holder that participates in the Exchange Offer, such Holder does not receive New Notes on the date of the exchange that may be sold without restriction under state and federal securities laws (other than due solely to the status of such Holder as an affiliate of the Company within the meaning of the Securities Act), then in each case, the Company will (x) promptly deliver to the Holders and the Trustee written notice thereof and (y) at their sole expense, (a) as promptly as practicable, file a shelf registration statement covering resales of the Old Notes (the "Shelf Registration Statement"), (b) use their best efforts to cause the Shelf Registration Statement to be declared effective under the Securities Act and (c) use their best efforts to keep effective the Shelf Registration Statement until the earlier of two years after the Issue Date or such time as all of the applicable Notes have been sold thereunder. The Company will, in the event that a Shelf Registration Statement is filed, provide to each Holder copies of the prospectus that is a part of the Shelf Registration Statement, notify each such Holder when the Shelf Registration Statement for the Notes has become effective and take certain other actions as are required to permit unrestricted resales of the Notes. A Holder that sells Old Notes pursuant to the Shelf Registration Statement will be required to be named as a selling security holder in the related prospectus and to deliver a prospectus to purchasers, will be subject 85 to certain of the civil liability provisions under the Securities Act in connection with such sales and will be bound by the provisions of the Registration Rights Agreement that are applicable to such a Holder (including certain indemnification rights and obligations). ADDITIONAL INTEREST If the Company fails to comply with the provisions above under "--Registration Rights" or if the Exchange Offer Registration Statement or the Shelf Registration Statement fails to become effective, then, as liquidated damages, additional interest (the "Additional Interest") shall become payable in respect of the Notes as follows: (i) if (A) neither the Exchange Offer Registration Statement nor Shelf Registration Statement is filed with the Commission on or prior to the Filing Date or (B) notwithstanding that the Company has consummated or will consummate an Exchange Offer, the Company is required to file a Shelf Registration Statement and such Shelf Registration Statement is not filed on or prior to the date required by the Registration Rights Agreement, then commencing on the day after either such required filing date, Additional Interest shall accrue on the principal amount of the Notes at a rate of 0.50% per annum for the first 90 days immediately following each such filing date, such Additional Interest rate increasing by an additional 0.50% per annum at the beginning of each subsequent 90-day period; or (ii) if (A) neither the Exchange Offer Registration Statement nor a Shelf Registration Statement is declared effective by the Commission on or prior to the date required by the Registration Rights Agreement or (B) notwithstanding that the Company has consummated or will consummate an Exchange Offer, the Company is required to file a Shelf Registration Statement and such Shelf Registration Statement is not declared effective by the Commission on or prior to the 90th day following the date such Shelf Registration Statement was filed, then, commencing on the day after the required effectiveness date, Additional Interest shall accrue on the principal amount of the Notes at a rate of 0.50% per annum for the first 90 days immediately following such date, such Additional Interest rate increasing by an additional 0.50% per annum at the beginning of each subsequent 90-day period; or (iii) if (A) the Company has not exchanged New Notes for all Notes validly tendered in accordance with the terms of the Exchange Offer on or prior to the 45th day after the date on which the Exchange Offer Registration Statement was declared effective or (B) if applicable, the Shelf Registration Statement has been declared effective and such Shelf Registration Statement ceases to be effective at any time prior to the second anniversary of the Issue Date (other than after such time as all Notes have been disposed of thereunder), then Additional Interest shall accrue on the principal amount of the Notes at a rate of 0.50% per annum for the first 90 days commencing on (x) the 46th day after such effective date, in the case of (A) above, or (y) the day such Shelf Registration Statement ceases to be effective in the case of (B) above, such Additional Interest rate increasing by an additional 0.50% per annum at the beginning of each subsequent 90-day period; provided, however, that the Additional Interest rate on the Notes may not exceed in the aggregate 1.0% per annum; provided, further, however, that (1) upon the filing of the Exchange Offer Registration Statement or a Shelf Registration Statement (in the case of clause (i) above), (2) upon the effectiveness of the Exchange Offer Registration Statement or a Shelf Registration Statement (in the case of clause (ii) above), or (3) upon the exchange of New Notes for all Notes tendered (in the case of clause (iii) (A) above), or upon the effectiveness of the Shelf Registration Statement which had ceased to remain effective (in the case of clause (iii) (B) above), Additional Interest on the Notes as a result of such clause (or the relevant subclause thereof), as the case may be, shall cease to accrue. Any amounts of Additional Interest due pursuant to clause (i), (ii) or (iii) above will be payable in cash on April 1 and October 1 of each year to the Holders of record on the preceding March 15 or September 15, respectively. The summary herein of certain provisions of the Registration Rights Agreement does not purport to be complete and is subject to, and is qualified in its entirety by, all the provisions of the Registration Rights Agreement, a copy of which is filed as an exhibit to the Registration Statement of which this Prospectus is a part. 86 CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS The following is a summary of certain United States federal income tax consequences associated with the exchange of Old Notes for New Notes and the ownership and disposition of the New Notes by Holders who acquire New Notes pursuant to the Exchange Offer. The summary is based upon current laws, regulations, rulings and judicial decisions, all of which are subject to change, possibly retroactively. The discussion below does not address all aspects of United States federal income taxation that may be relevant to particular Holders in the context of their specific investment circumstances or certain types of Holders subject to special treatment under such laws (for example, financial institutions, banks, tax-exempt organizations, insurance companies and, except to the extent described below, Non-U.S. Holders (as defined below)). In addition, the discussion does not address any aspect of state, local or foreign taxation and assumes that a Holder of the New Notes will hold them as "capital assets" (generally, property held for investment) within the meaning of Section 1221 of the Internal Revenue Code of 1986, as amended (the "Code"). For purposes of this discussion, a "U.S. Holder" is (i) an individual citizen or resident of the United States, (ii) a corporation, partnership or other entity created or organized in or under the laws of the United States or of any political subdivision thereof, (iii) an estate that is subject to United States federal income taxation without regard to the source of its income, or (iv) a trust whose administration is subject to the primary supervision of a United States court and which has one or more United States fiduciaries who have the authority to control all substantial decisions of the trust. For purposes of this discussion, a "Non-U.S. Holder" is any Holder who is not a U.S. Holder. PROSPECTIVE HOLDERS OF THE NEW NOTES ARE URGED TO CONSULT THEIR TAX ADVISORS CONCERNING THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF ACQUIRING, OWNING AND DISPOSING OF THE NEW NOTES AS WELL AS THE APPLICATION OF STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX LAWS. EXCHANGE OFFER The exchange of Old Notes for New Notes pursuant to the Exchange Offer should not be treated as an exchange or other taxable event for United States federal income tax purposes because under Treasury regulations, the New Notes should not be considered to differ materially in kind or extent from the Old Notes. Rather, the New Notes received by a Holder should be treated as a continuation of the Old Notes in the hands of such Holder. As a result, there should be no United States federal income tax consequences to Holders who exchange Old Notes for New Notes pursuant to the Exchange Offer and any such Holder should have the same tax basis and holding period in the New Notes as it had in the Old Notes immediately before the exchange. U.S. HOLDERS Interest payable on the New Notes will be includible in the income of a U.S. Holder in accordance with such Holder's regular method of accounting. If a New Note is redeemed, sold or otherwise disposed of, a U.S. Holder generally will recognize gain or loss equal to the difference between the amount realized upon such disposition (to the extent such amount does not represent accrued but unpaid interest) and such Holder's adjusted tax basis in the New Note. Subject to the market discount rules discussed below, such gain or loss will be capital gain or loss. Under recently-enacted legislation, net capital gain (i.e., generally, capital gain in excess of capital loss) recognized by an individual Holder upon the disposition of New Notes that have been held for more than 18 months will generally be subject to tax at a rate not to exceed 20%. Net capital gain recognized by a Holder upon the disposition of New Notes that have been held for more than 12 months but for not more than 18 months will continue to be subject to tax at a rate not to exceed 28% and net capital gain recognized from the disposition of New Notes that have been held for 12 months or less will continue to be subject to tax at ordinary income tax rates. In addition, capital gain recognized by a corporate Holder will continue to be subject to tax at the ordinary income tax rates applicable to corporations. Under the market discount rules of the Code, a Holder (other than a Holder who made the election described below) who purchased an Old Note with "market discount" (generally defined as the amount 87 by which the stated redemption price at maturity exceeds the Holder's purchase price) will be required to treat any gain recognized on the redemption, sale or other disposition of the New Note received in the exchange as ordinary income to the extent of the market discount that accrued during the holding period of such New Note (which would include the holding period of the Old Note). A Holder who has elected under applicable Code provisions to include market discount in income annually as such discount accrues will not, however, be required to treat any gain recognized as ordinary income under these rules. Holders should consult their tax advisors as to the portion of any gain that would be taxable as ordinary income under these provisions. NON-U.S. HOLDERS Under present United States federal income and estate tax law, assuming certain certification requirements are satisfied (which include identification of the beneficial owner of the instrument), and subject to the discussion of backup withholding below: (a) payments of interest on the New Notes to any Non-U.S. Holder generally will not be subject to United States federal income or withholding tax, provided that (1) the Holder does not actually or constructively own 10% or more of the total combined voting power of all classes of stock of Huntsman Packaging entitled to vote, (2) the Holder is not a controlled foreign corporation that is related to Huntsman Packaging through stock ownership, and (3) such interest payments are not effectively connected with the conduct of a United States trade or business of the Holder; (b) a Holder who is a Non-U.S. Holder generally will not be subject to the United States federal income tax on gain realized on the sale, exchange, or other disposition of a New Note, unless (1) such Holder is an individual who is present in the United States for 183 days or more during the taxable year and certain other requirements are met, or (2) the gain is effectively connected with the conduct of a United States trade or business of the Holder; and (c) if interest on the New Notes is exempt from withholding of United States federal income tax under the rules described above, the New Notes will not be included in the estate of a deceased Non-U.S. Holder for United States federal estate tax purposes. The certification referred to above may be made on an Internal Revenue Service ("IRS") Form W-8 or substantially similar substitute form. BACKUP WITHHOLDING AND INFORMATION REPORTING A Holder of the New Notes may be subject to information reporting and to backup withholding at a rate of 31 percent of certain amounts paid to the Holder unless such Holder (a) is a corporation or comes within certain other exempt categories and, when required, provides proof of such exemption or (b) provides a correct taxpayer identification number, certifies as to no loss of exemption from backup withholding and otherwise complies with applicable requirements of the backup withholding rules. Under current regulations, information reporting and backup withholding do not apply to interest payments made at an address outside the United States to a Holder of the New Notes that is not a U.S. Holder if the beneficial owner of the New Notes (a) provides a statement in which such owner certifies, under penalties of perjury, that such owner is not a United States person and provides such owner's name and address or (b) otherwise establishes an exemption; provided that Huntsman Packaging or its paying agent, as the case may be, does not have actual knowledge that the Holder is a U.S. Holder. Under current regulations, payment of the proceeds from the sale of the New Notes to or through a foreign office of a "broker" (as defined in applicable Treasury regulations) will not be subject to information reporting or backup withholding, except that if the broker is a United States person, a controlled foreign corporation for United States federal income tax purposes or a foreign person 50 percent or more of whose gross income from all sources for the three-year period ending with the close of its taxable year preceding the payment was effectively connected with a United States trade or business, information reporting (but not backup withholding) may apply to such payments unless the broker has in its records documentary evidence that the Holder of the New Note is not a United States person and 88 certain conditions are met or the Holder of the New Note otherwise establishes an exemption. Payment of the proceeds from a sale of the New Notes to or through the United States office of a broker is subject to information reporting and backup withholding unless the Holder certifies as to its non-U.S. status under penalties of perjury or otherwise establishes an exemption. Any amounts withheld under the backup withholding rules are not an additional tax and may be credited against the U.S. Holder's United States federal income tax liability, provided that the required information is furnished to the IRS. Recently, the Treasury Department promulgated final regulations regarding the withholding and information reporting rules discussed above. In general, the final regulations do not significantly alter the substantive withholding and information reporting requirements described above but unify current certification procedures and forms and clarify reliance standards. The final regulations will generally be effective for payments made after December 31, 1998, subject to certain transition rules. 89 BOOK-ENTRY; DELIVERY AND FORM Except as described in the next paragraph, the Old Notes initially were, and the New Notes will be, represented by Global Notes. The Global Notes are or will be deposited on the Issue Date with, or on behalf of DTC and registered in the name of a nominee of DTC. The Global Notes. Huntsman Packaging expects that pursuant to procedures established by DTC (i) upon the issuance of the Global Notes, DTC or its custodian will credit, on its internal system, the principal amount of Notes of the individual beneficial interests represented by such Global Notes to the respective accounts of persons who have accounts with such depositary and (ii) ownership of beneficial interests in the Global Notes will be shown on, and the transfer of such ownership will be effected only through, records maintained by DTC or its nominee (with respect to interests of participants) and the records of participants (with respect to interests of persons other than participants). Such accounts initially will be designated by or on behalf of the Initial Purchasers and ownership of beneficial interests in the Global Notes will be limited to persons who have accounts with DTC ("participants") or persons who hold interests through participants. QIBs and institutional Accredited Investors who are not QIBs may hold their interests in the Global Notes directly through DTC if they are participants in such system, or indirectly through organizations which are participants in such system. So long as DTC, or its nominee, is the registered owner or Holder of the Notes, DTC or such nominee, as the case may be, will be considered the sole owner or Holder of the Notes represented by such Global Notes for all purposes under the Indenture. No beneficial owner of an interest in the Global Notes will be able to transfer that interest except in accordance with DTC's procedures, in addition to those provided for under the Indenture with respect to the Notes. Payments of the principal of, premium, if any, interest (including Additional Interest) on, the Global Notes will be made to DTC or its nominee, as the case may be, as the registered owner thereof. None of Huntsman Packaging, the Trustee or any Paying Agent will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in the Global Notes or for maintaining, supervising or reviewing any records relating to such beneficial ownership interest. Huntsman Packaging expects that DTC or its nominee, upon receipt of any payment of principal, premium, if any, interest (including Additional Interest) on the Global Notes, will credit participants' accounts with payments in amounts proportionate to their respective beneficial interests in the principal amount of the Global Notes as shown on the records of DTC or its nominee. Huntsman Packaging also expects that payments by participants to owners of beneficial interests in the Global Notes held through such participants will be governed by standing instructions and customary practice, as is now the case with securities held for the accounts of customers registered in the names of nominees for such customers. Such payments will be the responsibility of such participants. Transfers between participants in DTC will be effected in the ordinary way through DTC's same-day funds system in accordance with DTC rules and will be settled in same day funds. If a Holder requires physical delivery of a Certificated Security for any reason, including to sell Notes to persons in states which require physical delivery of the Notes, or to pledge such securities, such Holder must transfer its interest in a Global Note, in accordance with the normal procedures of DTC and with the procedures set forth in the Indenture. DTC has advised Huntsman Packaging that it will take any action permitted to be taken by a Holder of Notes (including the presentation of Notes for exchange as described below) only at the direction of one or more participants to whose account the DTC interests in the Global Notes are credited and only in respect of such portion of the aggregate principal amount of Notes as to which such participant or participants has or have given such direction. However, if there is an Event of Default under the Indenture, DTC will exchange the Global Notes for Certificated Securities, which it will distribute to its participants. DTC has advised Huntsman Packaging as follows: DTC is a limited purpose trust company organized under the laws of the State of New York, a member of the Federal Reserve System, a "clearing 90 corporation" within the meaning of the Uniform Commercial Code and a "Clearing Agency" registered pursuant to the provisions of Section 17A of the Exchange Act. DTC was created to hold securities for its participants and facilitate the clearance and settlement of securities transactions between participants through electronic book-entry changes in accounts of its participants, thereby eliminating the need for physical movement of certificates. Participants include securities brokers and dealers, banks, trust companies and clearing corporations and certain other organizations. Indirect access to the DTC system is available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a participant, either directly or indirectly ("indirect participants"). Although DTC has agreed to the foregoing procedures in order to facilitate transfers of interests in the Global Note among participants of DTC, it is under no obligation to perform such procedures, and such procedures may be discontinued at any time. Neither Huntsman Packaging nor the Trustee will have any responsibility for the performance by DTC or its participants or indirect participants of their respective obligations under the rules and procedures governing their operations. Certificated Securities. If DTC is at any time unwilling or unable to continue as a depositary for the Global Note and a successor depositary is not appointed by Huntsman Packaging within 90 days, Certificated Securities will be issued in exchange for the Global Notes. PLAN OF DISTRIBUTION Each broker-dealer that receives New Notes for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such New Notes. This Prospectus as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with the resales of New Notes received in exchange for Old Notes where such Old Notes were acquired as a result of market-making activities or other trading activities. Huntsman Packaging has agreed that, starting on the Expiration Date and ending on the close of business on the 90th day following the Expiration Date, it will make this Prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale. In addition, until , 1997 (90 days from the date of this Prospectus), all dealers effecting transactions in the New Notes may be required to deliver a prospectus. Huntsman Packaging will not receive any proceeds from any sale of New Notes by broker-dealers or any other persons. New Notes received by broker-dealers for their own account pursuant to the Exchange Offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the New Notes or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer and/or purchasers of any such New Notes. Any broker-dealer that resells New Notes that were received by it for its own account pursuant to the Exchange Offer and any broker or dealer that participates in a distribution of such New Notes may be deemed to be an "underwriter" within the meaning of the Securities Act and any profit on any such resale of New Notes and any commissions or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The Letter of Transmittal states that by representing that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. For a period of 90 days after the Expiration Date, Huntsman Packaging will promptly send additional copies of this Prospectus and any amendment or supplement to this Prospectus to any broker-dealer that requests such documents in the Letter of Transmittal. Huntsman Packaging has agreed to pay all expenses incident to Huntsman Packaging's performance of, or compliance with, the Registration Rights Agreement and will indemnify the Holders (including any broker-dealers) and certain parties related to the Holders against certain liabilities, including liabilities under the Securities Act. LEGAL MATTERS Certain legal matters as to the validity of the New Notes offered hereby will be passed upon for Huntsman Packaging by Skadden, Arps, Slate, Meagher & Flom LLP, New York, New York. 91 EXPERTS The consolidated financial statements of Huntsman Packaging Corporation and Subsidiaries as of December 31, 1995 and 1996 and for each of the three years in the period ended December 31, 1996 and the combined financial statements of CT Film and Rexene Corporation Limited as of and for the year ended December 31, 1996 included in this Prospectus and the related financial statement schedule included elsewhere in the Registration Statement have been audited by Deloitte & Touche LLP, independent auditors, as stated in their reports appearing herein and elsewhere in the Registration Statement, and are included in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing. AVAILABLE INFORMATION Huntsman Packaging has filed with the Commission a Registration Statement on Form S-1 (the "Registration Statement") under the Securities Act with respect to the New Notes offered hereby. As permitted by the rules and regulations of the Commission, this Prospectus omits certain information, exhibits and undertakings contained in the Registration Statement. For further information with respect to Huntsman Packaging and the New Notes offered hereby, reference is made to the Registration Statement, including the exhibits thereto and the financial statements, notes and schedules filed as a part thereof. Any statement contained in this Prospectus as to the contents of any contract or document filed as an exhibit to the Registration Statement are not necessarily complete, and each such statement is qualified in all respects by such reference. Huntsman Packaging is not currently subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). However, upon the effectiveness of the Registration Statement, Huntsman Packaging will become subject to such requirements. The Registration Statement (and the exhibits and schedules thereto), as well as the periodic reports and other information filed by Huntsman Packaging with the Commission, may be inspected and copied at the Public Reference Section of the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the regional offices of the Commission located at 7 World Trade Center, 15th Floor, Suite 1300, New York, New York 10048 and Suite 1400, Northwestern Atrium Center, 500 West Madison Street, Chicago, Illinois 60661-2511. Copies of such materials may be obtained from the Public Reference Section of the Commission, Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and its public reference facilities in New York, New York and Chicago, Illinois at the prescribed rates. Such information may also be obtained electronically by accessing the Commission's web site on the Internet (http://www.sec.gov). In the event that at any time in the future after the effectiveness of the Registration Statement Huntsman Packaging is not required to be subject to the reporting requirements of the Exchange Act, Huntsman Packaging will be required under the Indenture, dated as of September 30, 1997 (the "Indenture"), by and among Huntsman Packaging, the Guarantors and The Bank of New York, as Trustee (the "Trustee"), pursuant to which the Old Notes have been, and the New Notes will be, issued, to continue to file with the Commission and to provide the Holders with such information, documents and other reports specified in Sections 13 and 15(d) of the Exchange Act which it would have been required to file had it been subject to such reporting requirements, for so long as any Notes are outstanding. 92 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PAGE -------- HUNTSMAN PACKAGING CORPORATION AND SUBSIDIARIES: As of December 31, 1995 and 1996 and for the years ended December 31, 1994, 1995 and 1996: Independent Auditors' Report............................................................ F-2 Consolidated Balance Sheets............................................................. F-3 Consolidated Statements of Operations .................................................. F-5 Consolidated Statements of Stockholder's Equity......................................... F-6 Consolidated Statements of Cash Flows .................................................. F-7 Notes to Consolidated Financial Statements ............................................. F-9 As of June 30, 1997 and for the six months ended June 30, 1996 and 1997 (Unaudited): Consolidated Balance Sheet ............................................................. F-22 Consolidated Statements of Operations .................................................. F-24 Consolidated Statement of Stockholder's Equity ......................................... F-25 Consolidated Statements of Cash Flows .................................................. F-26 Notes to Consolidated Financial Statements ............................................. F-27 CT FILM, A DIVISION OF HUNTSMAN POLYMERS CORPORATION, AND REXENE CORPORATION LIMITED, A WHOLLY-OWNED SUBSIDIARY OF HUNTSMAN POLYMERS CORPORATION: As of December 31, 1996 and for the year then ended: Independent Auditors' Report ........................................................... F-28 Combined Balance Sheet ................................................................. F-29 Combined Statement of Operations ....................................................... F-30 Combined Statement of Cash Flows........................................................ F-31 Notes to Combined Financial Statements ................................................. F-32 As of June 30, 1997 and for the six months then ended (Unaudited): Combined Balance Sheet.................................................................. F-39 Combined Statement of Operations........................................................ F-40 Notes to Combined Financial Statements ................................................. F-41
F-1 INDEPENDENT AUDITORS' REPORT To the Board of Directors and Stockholder of Huntsman Packaging Corporation and Subsidiaries: We have audited the accompanying consolidated balance sheets of Huntsman Packaging Corporation (a wholly-owned subsidiary of Huntsman Corporation) and subsidiaries as of December 31, 1995 and 1996, and the consolidated statements of operations, stockholder's equity, and cash flows for each of the three years in the period ended December 31, 1996. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Huntsman Packaging Corporation and subsidiaries at December 31, 1995 and 1996, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1996 in conformity with generally accepted accounting principles. DELOITTE & TOUCHE LLP Salt Lake City, Utah June 19, 1997 (November 11, 1997 as to Note 12) F-2 HUNTSMAN PACKAGING CORPORATION AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF HUNTSMAN CORPORATION) CONSOLIDATED BALANCE SHEETS DECEMBER 31, 1995 AND 1996 (IN THOUSANDS)
1995 1996 ---------- ---------- ASSETS CURRENT ASSETS: Cash and cash equivalents...................................... $ 3,757 $ 10,647 Receivables: Trade accounts (less allowance for doubtful accounts: $2,070 and $2,818, respectively).................................... 32,573 54,691 Other ........................................................ 5,665 3,227 Inventories (Notes 2 and 9).................................... 30,568 53,441 Prepaid expenses and other .................................... 1,695 3,901 Deferred income taxes (Note 7) ................................ 1,082 1,088 Income taxes receivable from affiliates ....................... 793 ---------- ---------- Total current assets......................................... 76,133 126,995 ---------- ---------- PLANT AND EQUIPMENT (Notes 3 and 6): Land and improvements ......................................... 5,222 6,339 Buildings and improvements..................................... 20,465 35,126 Machinery and equipment........................................ 82,045 141,763 Furniture, fixtures, and automobiles .......................... 1,117 1,248 Leasehold improvements ........................................ 312 423 Construction in progress ...................................... 3,752 6,600 ---------- ---------- Total........................................................ 112,913 191,499 Less accumulated depreciation and amortization................. (20,697) (50,056) ---------- ---------- Plant and equipment--net..................................... 92,216 141,443 ---------- ---------- INTANGIBLE ASSETS--Net (Notes 3, 4, and 11)..................... 32,502 54,843 OTHER ASSETS (Note 8) .......................................... 3,737 5,876 ---------- ---------- TOTAL (Note 5).................................................. $204,588 $329,157 ========== ==========
(Continued) F-3 HUNTSMAN PACKAGING CORPORATION AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF HUNTSMAN CORPORATION) CONSOLIDATED BALANCE SHEETS DECEMBER 31, 1995 AND 1996 (IN THOUSANDS, EXCEPT FOR SHARE AMOUNTS)
1995 1996 ---------- --------- LIABILITIES AND STOCKHOLDER'S EQUITY CURRENT LIABILITIES: Trade accounts payable..................................... $ 9,872 $ 25,779 Accrued liabilities (Note 3)............................... 10,968 19,499 Long-term debt--current portion (Notes 5, 6, and 9) ...... 506 Due to affiliates (Note 9) ................................ 2,318 5,966 Income taxes payable to affiliates ........................ 598 ---------- --------- Total current liabilities................................. 23,158 52,348 LONG-TERM DEBT (Notes 5, 6, and 9).......................... 102,967 186,691 OTHER LIABILITIES (Note 8) ................................. 5,930 9,024 DEFERRED INCOME TAXES (Note 7).............................. 10,439 14,082 ---------- --------- Total liabilities......................................... 142,494 262,145 ---------- --------- COMMITMENTS AND CONTINGENCIES (Notes 6, 8, 10, and 11) STOCKHOLDER'S EQUITY: Common stock--Class A voting $1.00 par value; 50,000 shares authorized; 1,000 shares issued and outstanding .. 1 1 Additional paid-in capital................................. 62,975 73,433 Retained earnings (deficit)................................ 653 (5,405) Translation adjustment..................................... (1,535) (1,017) ---------- --------- Total stockholder's equity................................ 62,094 67,012 ---------- --------- TOTAL....................................................... $204,588 $329,157 ========== =========
(Concluded) See notes to consolidated financial statements. F-4 HUNTSMAN PACKAGING CORPORATION AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF HUNTSMAN CORPORATION) CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1994, 1995, AND 1996 (IN THOUSANDS)
1994 1995 1996 ---------- ---------- ---------- SALES--Net................................................. $255,674 $279,991 $308,092 COST OF SALES (Note 9)..................................... 210,384 235,049 263,300 ---------- ---------- ---------- GROSS PROFIT............................................... 45,290 44,942 44,792 ---------- ---------- ---------- OPERATING EXPENSES (Note 9): Administration and other.................................. 16,404 15,661 10,993 Sales and marketing....................................... 14,770 14,183 15,352 Research and development ................................. 2,290 2,002 2,157 Restructuring charge (Note 3)............................. 10,873 ---------- ---------- ---------- Total operating expenses................................. 33,464 31,846 39,375 ---------- ---------- ---------- OPERATING INCOME........................................... 11,826 13,096 5,417 INTEREST EXPENSE--Net...................................... (7,534) (8,810) (11,578) OTHER EXPENSE--Net (Note 9)................................ (9) (2,473) (3,486) ---------- ---------- ---------- INCOME (LOSS) BEFORE INCOME TAXES AND EXTRAORDINARY ITEM ................................... 4,283 1,813 (9,647) ---------- ---------- ---------- INCOME TAX EXPENSE (BENEFIT)(Note 7): Current .................................................. 1,550 (728) 1,530 Deferred.................................................. 358 1,605 (6,490) ---------- ---------- ---------- Total income taxes....................................... 1,908 877 (4,960) ---------- ---------- ---------- INCOME (LOSS) BEFORE EXTRAORDINARY ITEM.................... 2,375 936 (4,687) EXTRAORDINARY ITEM--Loss on early extinguishment of debt (less applicable current income tax benefit of $780)(Notes 5 and 7)....................... (1,338) ---------- ---------- ---------- NET INCOME (LOSS).......................................... $ 2,375 $ 936 $ (6,025) ========== ========== ==========
See notes to consolidated financial statements. F-5 HUNTSMAN PACKAGING CORPORATION AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF HUNTSMAN CORPORATION) CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY FOR THE YEARS ENDED DECEMBER 31, 1994, 1995, AND 1996 (IN THOUSANDS)
COMMON STOCK ADDITIONAL RETAINED ---------------------- PAID-IN EARNINGS TRANSLATION SHARES AMOUNT CAPITAL (DEFICIT) ADJUSTMENT T0TAL ----------- --------- ----------- --------- ----------- ---------- BALANCE, JANUARY 1, 1994.......... 1 $1 $59,735 $ 328 $(2,341) $57,723 Net income....................... 2,375 2,375 Aggregate adjustment resulting from the translation of foreign currency statements............. (142) (142) -------- -------- ------------ ---------- --------- --------- BALANCE, DECEMBER 31, 1994........ 1 1 59,735 2,703 (2,483) 59,956 Dividends paid on common stock .. (3,000) (3,000) Net income ...................... 936 936 Aggregate adjustment resulting from the translation of foreign currency statements ............ 948 948 Other--including gain on sale of land to affiliate (Note 9) ..... 3,240 14 3,254 -------- -------- ----------- ---------- ----------- --------- BALANCE, DECEMBER 31, 1995........ 1 1 62,975 653 (1,535) 62,094 Capital contribution (Note 11) .. 10,458 10,458 Net loss......................... (6,025) (6,025) Aggregate adjustment resulting from the translation of foreign currency statements ............ 518 518 Other ........................... (33) (33) -------- ------- ------------ ---------- ------------ --------- BALANCE, DECEMBER 31, 1996........ 1 $1 $73,433 $(5,405) $(1,017) $67,012 ======== ======== ============ ========== =========== =========
See notes to consolidated financial statements. F-6 HUNTSMAN PACKAGING CORPORATION AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF HUNTSMAN CORPORATION) CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1994, 1995, AND 1996 (IN THOUSANDS)
1994 1995 1996 ---------- ---------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss)......................................... $ 2,375 $ 936 $ (6,025) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization............................ 8,471 10,569 12,157 Gain on sale of equipment ............................... (168) Deferred income taxes ................................... 358 1,605 (6,490) Provision for losses on accounts receivable ............. 133 499 183 Write-off of goodwill (Note 3) .......................... 3,283 Provision for write-down of plant and equipment (Note 3) 5,300 Changes in operating assets and liabilities--net of assets acquired: Trade accounts receivable .............................. (8,472) 1,658 1,492 Other receivables ...................................... 534 2,968 5,328 Inventories............................................. (10,689) 4,828 (8,291) Prepaid expenses and other ............................. (330) 452 (1,819) Other assets............................................ 333 (1,647) 5,082 Trade accounts payable.................................. 5,443 (7,368) (633) Income taxes receivable................................. 2,648 (1,322) 200 Accrued liabilities and due to affiliates............... (6,421) (3,275) (835) Other liabilities ...................................... 3,872 (227) 2,901 ---------- ---------- ----------- Net cash provided by (used in) operating activities .. (1,913) 9,676 11,833 ---------- ---------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Payment for purchase of United Films Corporation (Note 11)...................................................... (12,276) Payment for purchase of Deerfield Plastics, net of cash acquired (Note 11)....................................... (63,889) Payment for purchase of Performance Films, net of cash acquired (Note 11)....................................... (4,279) Sale of land to affiliate (Note 9) ....................... 3,239 Proceeds from sales of equipment ......................... 227 Capital expenditures for plant and equipment.............. (8,277) (16,544) (9,239) ---------- ---------- ----------- Net cash used in investing activities.................. (8,050) (17,584) (85,404) ---------- ---------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Cash portion of capital contribution by Huntsman Corporation (Note 11) ................................... 2,305 Principal payments on long-term debt...................... (5,211) (14,903) (122,719) Net change in revolving debt ............................. 15,063 Proceeds from long-term debt.............................. 24,650 200,348 Payment of cash dividend.................................. (3,000) ---------- ---------- ----------- Net cash provided by financing activities.............. 9,852 6,747 79,934 ---------- ---------- -----------
(Continued) F-7 HUNTSMAN PACKAGING CORPORATION AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF HUNTSMAN CORPORATION) CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1994, 1995, AND 1996 (IN THOUSANDS)
1994 1995 1996 -------- -------- --------- EFFECT OF EXCHANGE RATE CHANGES ON CASH................................... $ (201) $ 943 $ 527 -------- -------- --------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ...................... (312) (218) 6,890 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR .................................. 4,287 3,975 3,757 -------- -------- --------- CASH AND CASH EQUIVALENTS, END OF YEAR $3,975 $3,757 $10,647 ======== ======== ========= SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the year for: Interest ............................. $9,011 $8,651 $ 447 ======== ======== ========= Income taxes ......................... $ 714 $1,614 $ 127 ======== ======== =========
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES (Note 11): On June 1, 1995, the Company purchased all of the assets of Performance Films Corporation for approximately $4,280. In conjunction with the acquisition, liabilities assumed were as follows:
Fair value of assets acquired $ 5,172 Cash paid ..................... (4,279) --------- Liabilities assumed ........... $ 893 =========
On October 21, 1996, the Company purchased all of the outstanding capital stock of Deerfield Plastics, Inc. (Deerfield) for approximately $68,207. In conjunction with the acquisition, liabilities assumed were as follows:
Fair value of assets acquired (including goodwill of $18,400) $ 90,265 Cash paid..................................................... (68,207) ---------- Liabilities assumed (including deferred acquisition payments) $ 22,058 ==========
On August 1, 1996, the Company purchased all of the outstanding capital stock of United Films Corporation (United) for approximately $12,276. In conjunction with the acquisition, liabilities assumed were as follows:
Fair value of assets acquired (including goodwill of $12,076) $ 21,950 Cash paid .................................................... (12,276) ---------- Liabilities assumed .......................................... $ 9,674 ==========
On August 31, 1996, the Company received all of the outstanding capital stock of Huntsman Container Corporation International (HCCI) in the form of a capital contribution from Huntsman Corporation, the Company's parent. In conjunction with the capital contribution, liabilities assumed were as follows:
Recorded value of assets received (including cash of $2,305) $ 27,090 Capital contribution ........................................ (10,459) ---------- Liabilities assumed ......................................... $ 16,631 ==========
(Concluded) See notes to consolidated financial statements. F-8 HUNTSMAN PACKAGING CORPORATION AND SUBSIDIARIES (A Wholly-Owned Subsidiary of Huntsman Corporation) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1994, 1995, AND 1996 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Huntsman Packaging Corporation and subsidiaries (collectively, the Company) is a wholly-owned subsidiary of Huntsman Corporation (HC). Prior to 1996, it was wholly-owned by other affiliated entities. The Company produces plastic films for food wrapping, plastic films for industrial uses such as pallet wrapping, shrink wrapping, and medical packaging, printed plastic films and bags, and specialty films in North America, Europe, Mexico, and Australia. The following is a summary of the Company's significant accounting policies. PRINCIPLES OF CONSOLIDATION -- The consolidated financial statements include the accounts of Huntsman Packaging Corporation and its wholly-owned subsidiaries, Huntsman Design Products Corporation and its wholly-owned subsidiaries; Huntsman Film Products Corporation (HFP) and its wholly-owned subsidiaries; Huntsman Deerfield Films Corporation; and Huntsman United Films Corporation (see Note 11). All significant intercompany balances and transactions have been eliminated in consolidation. USE OF ESTIMATES IN PREPARING FINANCIAL STATEMENTS -- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. CARRYING VALUE OF LONG-TERM ASSETS -- The Company evaluates the carrying value of long-term assets based upon current and anticipated undiscounted cash flows, and recognizes an impairment when such estimated cash flows will be less than the carrying value of the asset. Measurement of the amount of impairment, if any, is based upon the difference between carrying value and fair value. INVENTORIES -- Inventories consist principally of finished film products and the raw materials necessary to produce them. Finished goods inventories are carried at the lower of cost (on a first-in first-out basis) or market. PLANT AND EQUIPMENT -- Plant and equipment is stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets as follows:
Land improvements ........................ 5 years Buildings and improvements ............... 20 years Machinery and equipment .................. 7-15 years Furniture, fixtures, and automobiles .... 3-7 years Leasehold improvements ................... Shorter of the term of lease or economic life
INTANGIBLE ASSETS -- Intangible assets are stated at cost and amortized using the straight-line method over the estimated useful lives of the assets as follows:
Cost in excess of fair value of net assets acquired .... 40 years Other intangible assets ................................. 2-15 years
OTHER ASSETS -- Other assets consist primarily of deposits, spare parts, and the cash surrender values of life insurance policies. CASH AND CASH EQUIVALENTS -- For the purposes of the consolidated statements of cash flows, the Company considers cash in checking accounts and in short-term highly liquid investments with an original maturity of three months or less to be cash and cash equivalents. F-9 HUNTSMAN PACKAGING CORPORATION AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF HUNTSMAN CORPORATION) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 1994, 1995, AND 1996 FINANCIAL INSTRUMENTS -- The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents approximate fair value because of the immediate or short-term maturity of these financial instruments. The carrying amount of long-term debt approximates fair value because of the floating interest rates associated with such debt. INCOME TAXES -- The Company uses the asset and liability method of accounting for income taxes. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial and tax reporting purposes. During 1996, the Company's operations were included in consolidated U.S. income tax returns of HC. Prior to 1996, the Company was included in the consolidated returns of other affiliated entities. The intercompany tax allocation policy provides for each subsidiary to calculate their own provision on a "separate return basis" and the parent allocates the benefit through intercompany accounts for any tax losses utilized by the parent and its subsidiaries in the consolidated tax returns. ENVIRONMENTAL EXPENDITURES -- Environmental related restoration and remediation costs are recorded as liabilities when site restoration and environmental remediation and clean-up obligations are either known or considered probable, and the related costs can be reasonably estimated. Other environmental expenditures, that are principally maintenance or preventative in nature, are recorded when expended and expensed or capitalized as appropriate. FOREIGN CURRENCY TRANSLATION -- The accounts of the Company's foreign subsidiaries are translated into U.S. dollars in the accompanying consolidated financial statements. Assets and liabilities are translated at rates prevailing at the balance sheet date. Revenues, expenses, gains, and losses are translated at a weighted average rate for the period. Transactions are translated at the rate prevailing as of the transaction date. Cumulative translation adjustments are recorded as an adjustment to stockholder's equity in a separate translation adjustment account. The following financial information relating to foreign operations in the United Kingdom, Canada, Germany, Australia, France, and Mexico has been included in the consolidated financial statements (in thousands):
1994 1995 1996 --------- --------- --------- Assets........ -- $32,118 $56,352 Liabilities .. -- 8,318 28,590 Sales......... $57,199 59,513 71,314 Net income.... 775 1,758 4,991
2. INVENTORIES Inventories consist of the following at December 31, 1995 and 1996 (in thousands):
1995 1996 --------- --------- Finished goods .. $21,104 $34,843 Raw materials ... 6,162 14,586 Work-in-process.. 3,302 4,012 -------- --------- Total............ $30,568 $53,441 ======== =========
3. RESTRUCTURING CHARGE In December 1996, the Company completed a review of its operations and developed its plan to terminate operations at its Dallas, Texas and Bowling Green, Kentucky facilities. The plan is expected to F-10 HUNTSMAN PACKAGING CORPORATION AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF HUNTSMAN CORPORATION) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 1994, 1995, AND 1996 generate efficiencies through utilization of available capacity at other facilities. As a result, included in 1996 operating expenses is a $3.3 million provision for the write-off of impaired goodwill and a $5.3 million provision for the write-down of impaired plant and equipment associated with the two operations. Also, included in operating expenses is an accrual for reduction in work force costs of $1.1 million associated with the elimination of approximately 81 full-time equivalent employees from all levels of operations and an accrual of $1.2 million of other costs related to the closure of the facilities. 4. INTANGIBLE ASSETS The cost of intangible assets and accumulated amortization at December 31, 1995 and 1996 is as follows (in thousands):
1995 1996 ---------- ---------- Cost in excess of fair value of net assets acquired........................................... $ 26,534 $ 52,200 Trademarks.......................................... 4,676 4,676 Non-compete agreements.............................. 6,238 7,283 Other............................................... 7,229 4,455 ---------- ---------- Total............................................... 44,677 68,614 Less accumulated amortization....................... (12,175) (13,771) ---------- ---------- Total............................................... $ 32,502 $ 54,843 ========== ==========
5. LONG-TERM DEBT On January 29, 1996, HC consolidated its financing facilities, which included the refinancing of most of the Company's long-term debt. The HC refinancing replaced certain existing long-term debt, including three separate stand-alone facilities at the Company and at its affiliates, Huntsman Petrochemical Corporation and Huntsman Chemical Corporation (HCC). The HC refinancing consists of a seven year $1.725 billion senior secured credit facility (the Facilities) with a group of banks. The Facilities include a $775 million term loan, an $800 million domestic revolving credit facility, and a $150 million multi-currency revolving credit facility. During October 1996, HC increased the Facilities by an additional $250 million to fund operations and acquisitions. Inasmuch as the 1996 Facilities was completed prior to finalization of the Company's 1995 consolidated financial statements, the Company has shown the December 31, 1995 long-term debt that was refinanced in accordance with the terms of the 1996 Facilities. The 1996 Facilities are intended to be used to provide funds for HC and its subsidiaries. The Company has made notes to HC to evidence borrowings it has made and will make in the future, including the debt refinanced by the Facilities. Under the terms of these notes, the interest rate charged to the Company by HC equals the rate charged HC under the Facilities, as described below, plus 1.5%. In addition, the banks have upstream guarantees from the significant domestic subsidiaries (including the Company) which are collateralized by the majority of the subsidiaries' assets. Both the notes and the guarantees are collateralized by substantially all of the assets of the significant domestic subsidiaries. HC has also pledged substantially all of its assets to collateralize the Facilities. Borrowings under the Facilities bear interest based on a matrix containing HC's ratio of debt to "EBITDA", as defined, which provides for either a base rate or Eurodollar rate which ranges from LIBOR plus .5% to LIBOR plus 2.5%. Accordingly, HC's borrowings bear interest at approximately LIBOR plus 1.59% and .88% as of December 31, 1996 and 1995, respectively. The Facilities contain various covenants and restrictions which require HC to maintain minimum net worth levels at various dates and to maintain minimum interest coverage and maximum debt to capitalization ratios. Also, the F-11 HUNTSMAN PACKAGING CORPORATION AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF HUNTSMAN CORPORATION) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 1994, 1995, AND 1996 Facilities include restrictive covenants customary to financings of this type, including limitations on the incurrence of liens, debt, and the sale of assets. At December 31, 1996, management believes HC was in compliance with these covenants. In connection with the Facilities, management of HC has represented that it will not demand payment on these borrowings during 1997. Accordingly, such amount has been classified as long-term. In connection with the refinancing of most of the Company's long-term debt with HC as discussed above, the Company wrote-off approximately $2.118 million of previously deferred loan costs, which have been recorded, net of the applicable income tax benefit of approximately $780,000, as an extraordinary item in the accompanying 1996 consolidated statement of operations. Long-term debt as of December 31, 1995 and 1996 consists of the following (in thousands):
1995 1996 ----------- ----------- Borrowings under the Facilities--amounts payable to HC: U.S. dollar borrowing at LIBOR plus 2.38% and 3.09% (7.85% and 8.78% as of December 31, 1995 and 1996, respectively) ............................................ $102,967 $186,085 Obligations under capital leases (Note 6) ................. 1,107 Other ..................................................... 5 ----------- ----------- Total ..................................................... 102,967 187,197 Less current portion ...................................... (506) ----------- ----------- Long-term portion.......................................... $102,967 $186,691 =========== ===========
The scheduled maturities of long-term debt by year as of December 31, 1996 are as follows (in thousands):
Year ending December 31: 1997.................... $ 506 1998.................... 186,373 1999.................... 18 2000.................... 19 2001.................... 21 Thereafter.............. 260 --------- Total.................... $187,197 =========
6. LEASES CAPITAL LEASES -- The Company is obligated under various capital leases for land, a building, and machinery and equipment that expire at various dates through 2007. At December 31, 1996, the gross amounts of plant and equipment and related accumulated amortization recorded under capital leases were as follows (in thousands):
Building....................... $ 300 Machinery...................... 2,182 ------- Total cost..................... 2,482 Less accumulated amortization.. (77) ------- Net............................ $2,405 =======
F-12 HUNTSMAN PACKAGING CORPORATION AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF HUNTSMAN CORPORATION) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 1994, 1995, AND 1996 OPERATING LEASES -- The Company also has several noncancelable operating leases, primarily for vehicles, equipment, and office space, that expire through 2006, as well as another lease for warehouse space on a month-to-month basis. The total expense recorded under all operating lease agreements in the accompanying consolidated statements of operations is approximately $2,134,000, $2,038,000, and $2,291,000 for the years ended December 31, 1994, 1995, and 1996, respectively. Future minimum lease payments under operating leases and the present value of future minimum capital lease payments as of December 31, 1996 are as follows (in thousands):
CAPITAL OPERATING LEASES LEASES --------- ----------- Years ending December 31: 1997....................................................... $ 597 $2,222 1998....................................................... 330 1,563 1999....................................................... 47 1,300 2000....................................................... 45 1,134 2001....................................................... 45 991 Thereafter................................................. 331 1,065 --------- ----------- Total minimum lease payments................................ 1,395 $8,275 =========== Amounts representing interest at rates ranging from 6% to 14.5%...................................................... (288) --------- Present value of net minimum capital lease payments (Note 5)......................................................... $1,107 =========
7. INCOME TAXES The following is a summary of domestic and foreign provisions for current and deferred income taxes and a reconciliation of the U.S. statutory income tax rate to the effective income tax rate. The provision (benefit) for income taxes for the years ended December 31, 1994, 1995, and 1996 is as follows (in thousands):
1994 1995 1996 -------- -------- --------- Current: Federal.................................................... $ 302 $ (753) State...................................................... 34 (86) Foreign.................................................... 1,214 111 $ 1,530 -------- -------- --------- Total current.............................................. 1,550 (728) 1,530 -------- -------- --------- Deferred: Federal.................................................... 664 592 (5,876) State...................................................... 76 68 (671) Foreign.................................................... (382) 945 57 -------- -------- --------- Total deferred............................................. 358 1,605 (6,490) -------- -------- --------- Total income tax expense (benefit)(excluding current income tax benefit of $780 for extraordinary item)................ $1,908 $ 877 $(4,960) ======== ======== =========
F-13 HUNTSMAN PACKAGING CORPORATION AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF HUNTSMAN CORPORATION) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 1994, 1995, AND 1996 The effective income tax rate reconciliations for the years ended December 31, 1994, 1995, and 1996 are as follows (in thousands):
1994 1995 1996 -------- -------- ----------- Income (loss) before income taxes and extraordinary item .... $4,283 $1,813 $ (9,647) Extraordinary item--loss on early extinguishment of debt .... (2,118) -------- -------- ----------- Total........................................................ $4,283 $1,813 $(11,765) ======== ======== =========== Expected tax (benefit) at U.S. statutory rate of 35% ........ $1,499 $ 635 $ (4,125) Increase (decrease) resulting from: Nondeductible cost in excess of fair value of net assets acquired................................................... 1,186 State taxes................................................. 110 (18) (663) Foreign rate difference and other (net)..................... 299 260 (2,138) -------- -------- ----------- Total income tax expense (benefit)(including $780 benefit in 1996 related to extraordinary item)......................... $1,908 $ 877 $ (5,740) ======== ======== =========== Effective income tax rate.................................... 44.55% 48.45% 48.78% ======== ======== ===========
Components of net deferred income tax assets and liabilities as of December 31, 1995 and 1996 are as follows (in thousands):
LONG- DECEMBER 31, 1995 CURRENT TERM - ------------------------------------------------- --------- ---------- Deferred income tax assets: Allowance for doubtful trade accounts receivable. $ 475 Amortization of intangibles...................... $ 763 Inventory........................................ 264 AMT credit carryforward.......................... 1,231 Other............................................ 566 515 --------- ---------- Total............................................ 1,305 2,509 --------- ---------- Deferred income tax liabilities: Tax depreciation in excess of book depreciation . (11,462) Other............................................ (223) (1,486) --------- ---------- Total............................................ (223) (12,948) --------- ---------- Net deferred tax liability........................ $1,082 $(10,439) ========= ==========
LONG- DECEMBER 31, 1996 CURRENT TERM - ---------------------------------------------------- --------- ---------- Deferred income tax assets: Allowance for doubtful trade accounts receivable ... $ 559 Net operating loss carryforward..................... $ 3,591 Amortization of intangibles......................... 1,071 Restructuring charges not deducted for tax (Note 3). 3,392 Inventory........................................... 828 AMT credit carryforward.............................. 540 Other............................................... 74 272 --------- ---------- Total............................................... 1,461 8,866 --------- ---------- Deferred income tax liabilities: Tax depreciation in excess of book depreciation .... (21,898) Other............................................... (373) (1,050) --------- ---------- Total............................................... (373) (22,948) --------- ---------- Net deferred income tax (liability).................. $1,088 $(14,082) ========= ==========
F-14 HUNTSMAN PACKAGING CORPORATION AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF HUNTSMAN CORPORATION) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 1994, 1995, AND 1996 8. EMPLOYEE BENEFIT PLANS DEFINED CONTRIBUTION PLAN -- The Company sponsors a salary deferral plan covering substantially all of its non-union domestic employees. Plan participants may elect to make voluntary contributions to this plan up to a specified amount of their compensation. The Company contributes 1% of the participants' compensation and also matches employee contributions up to 2% of the participants' compensation. The Company accrued approximately $855,000, $1,158,000, and $873,000 as its contribution to this plan for the years ended December 31, 1994, 1995, and 1996, respectively. DEFINED BENEFIT PLANS -- The Company sponsors four noncontributory defined benefit pension plans (the Plans) covering domestic employees with 1,000 or more hours of service. The Company also sponsors a defined benefit plan in Germany (the Germany plan). The Company funds the actuarially computed retirement cost. Contributions are intended to not only provide for benefits attributed to service to date but also for those expected to be earned in the future. The consolidated accrued net pension expense for the years ended December 31, 1994, 1995, and 1996 includes the following components (in thousands):
UNITED STATES PLANS (CONSISTING OF THE CORPORATE, DEERFIELD, AND TWO UNION PLANS): 1994 1995 1996 - ------------------------------------------------ -------- -------- -------- Service cost--benefits earned during the period . $2,107 $1,703 $1,717 Interest cost on projected benefit obligation ... 301 430 520 Actual return on assets.......................... 36 (860) (683) Other............................................ (190) 465 107 -------- -------- -------- Total accrued pension expense.................... $2,254 $1,738 $1,661 ======== ======== ======== GERMANY PLAN: Service cost--benefits earned during the period . $ 79 $ 82 $ 77 Interest cost on projected benefit obligation ... 65 75 22 Other............................................ (57) -------- -------- -------- Total accrued pension expense.................... $ 144 $ 100 $ 99 ======== ======== ========
F-15 HUNTSMAN PACKAGING CORPORATION AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF HUNTSMAN CORPORATION) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 1994, 1995, AND 1996 The following table sets forth the funded status of the United States plans and the Germany plan as of December 31, 1995 and 1996 and the amounts recognized in the consolidated balance sheets at those dates (in thousands):
UNITED STATES PLANS (CONSISTING OF THE CORPORATE, DEERFIELD, AND TWO UNION PLANS): 1995 1996 - ------------------------------------------------------------------ --------- --------- Actuarially computed present value of accumulated benefit obligations: Vested........................................................... $ 1,192 $ 2,607 Nonvested........................................................ 892 2,049 --------- --------- Total............................................................. $ 2,084 $ 4,656 ========= ========= Actuarially computed present value of projected benefit obligations for service rendered to date.......................... $ 4,180 $ 6,854 Less plan assets at fair value, principally comprised of equity and bond funds.................................................... (3,412) (7,356) --------- --------- Projected benefit obligation in excess of (less than) plan assets . 768 (502) Unrecognized net gain.............................................. (346) 2,247 Unrecognized prior service cost.................................... (51) (70) --------- --------- Accrued long-term pension liability included in other liabilities . $ 371 $ 1,675 ========= =========
For the above calculations, increases in future compensation of rates ranging from 4.25% through 5.5% were used for the non-union plans. There was no increase in future compensation used for the two union plans. For the calculations, discount rates ranging from 7.75% through 8.5% and expected rates of return on plan assets ranging from 8.5% through 9.0% were used for all plans.
GERMANY 1995 1996 - ------------------------------------------------------------------ -------- -------- Actuarially computed present value of accumulated benefit obligations: Vested........................................................... $ 534 $ 695 Nonvested........................................................ 224 284 -------- -------- Total.............................................................. $ 758 $ 979 ======== ======== Actuarially computed present value of projected benefit obligations for service rendered to date.......................... $1,221 $1,249 Less plan assets................................................... None None -------- -------- Projected benefit obligation in excess of plan assets ............. 1,221 1,249 Unrecognized net gain.............................................. 107 110 -------- -------- Accrued long-term pension liability included in other liabilities . $1,328 $1,359 ======== ========
Increases in future compensation ranging from 2.5% through 3.5% and discount rates ranging from 6.5% through 7.0% were used in determining the actuarially computed present value of the projected benefit obligation of the Germany plan. The cash surrender value of life insurance policies for Germany plan participants included in other assets is approximately $493,000 and $506,000 as of December 31, 1995 and 1996, respectively. F-16 HUNTSMAN PACKAGING CORPORATION AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF HUNTSMAN CORPORATION) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 1994, 1995, AND 1996 FOREIGN PLANS OTHER THAN GERMANY -- Employees in other foreign countries are covered by various post employment arrangements consistent with local practices and regulations. Such obligations are not significant and are included in the consolidated financial statements in other liabilities. 9. RELATED PARTY TRANSACTIONS The accompanying consolidated financial statements include the following balances and transactions with affiliated companies (in thousands):
BALANCES AT DECEMBER 31, 1995 AND 1996: 1994 1995 1996 ------ -------- --------- Due to (from) affiliates: Huntsman Corporation........................................ $ 3 $ 3,607 Huntsman Chemical Corporation............................... 930 2,359 Huntsman Petrochemical Corporation.......................... 1,385 Huntsman Capital Corporation................................ Other affiliates............................................ Long-term debt: Huntsman Corporation........................................ 186,085 Huntsman Chemical Corporation (prior to the refinancing described in Note 5)....................................... 50,000 TRANSACTIONS FOR THE YEARS ENDED DECEMBER 31, 1994, 1995, AND 1996: With Huntsman Petrochemical Corporation--inventory purchases................................................... None $ 1,680 $ 2,280 With Airstar corporation--rent expense under operating lease....................................................... None None 353
ROYALTY TRANSACTION WITH HUNTSMAN GROUP INTELLECTUAL PROPERTIES HOLDING CO. (HUNTSMAN INTELLECTUAL) -- During 1996, the Company and other affiliates entered into a royalty agreement (the Royalty Agreement) with Huntsman Intellectual whereby the Company pays Huntsman Intellectual a royalty for the use of certain trademarks, etc. Huntsman Intellectual is owned by the Company and certain of its affiliates. During 1996, the Company accrued royalties of approximately $1,708,000 to Huntsman Intellectual. Huntsman Intellectual recorded a patronage dividend to the Company of $1,092,000 during 1996. The royalty expense is included in administration and other expense. The dividend is included in other income. ADMINISTRATIVE EXPENSES -- HC allocated administrative expenses to the Company of approximately $1,980,000 and $2,126,000 for the years ended December 31, 1995 and 1996, respectively. There was no allocation for 1994. The allocation is for the estimated portion of the total costs incurred by HC resulting from services provided to the Company and is included in administration and other expense in the consolidated statements of operations. SALE OF LAND TO HUNTSMAN CHEMICAL CORPORATION (HCC) -- During 1995, the Company sold a parcel of land in Woodbury, New Jersey to HCC at a price which exceeded the net book value of the property by approximately $3,239,000. As HCC is an affiliated company, the difference between the selling price and the net book value of the property was recorded as additional paid-in capital. F-17 HUNTSMAN PACKAGING CORPORATION AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF HUNTSMAN CORPORATION) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 1994, 1995, AND 1996 10. COMMITMENTS AND CONTINGENCIES INDEMNITY AGREEMENT -- The Company's operations are subject to extensive environmental laws and regulations concerning emissions to the air, discharges to surface and subsurface waters, and the generation, handling, storage, transportation, treatment, and disposal of waste materials, as adopted by various governmental authorities in the jurisdictions in which the Company operates. The Company makes every reasonable effort to remain in full compliance with existing governmental regulations. In conjunction with a sale of a plant site in 1992, the Company has agreed to indemnify environmental losses of up to $5 million which may have been created at the plant site between January 1, 1988 and May 18, 1992. This indemnity expires on May 8, 2002 and reduces ten percent each year beginning May 12, 1997. The Company believes that the ultimate liability, if any, resulting from this indemnification will not be material to the Company's consolidated financial statements. ROYALTY AGREEMENTS -- The Company has entered into royalty agreements (the Agreements) for the right to use certain patents in the production of certain plastic film. The Company paid a fee of $450,000 to the patent holder for the first 2,250,000 pounds of film produced in North America. The Agreements require the Company to pay the patent holder a fee of $.10 for each pound produced in excess of 2,250,000 pounds but less than 37,500,000 pounds and $.05 per pound for each pound produced in excess of 37,500,000 pounds in North America. The Agreements require the Company to pay certain fees to obtain the rights to sell the product outside of North America. The Company completed the second year under the Agreements in 1996 and is currently obligated to pay $.075 per pound of product sold outside of North America. The Company has the option to maintain these rights in subsequent years for certain agreed-upon fees. The Agreements terminate upon the expiration of the related patents in 2009. LITIGATION -- The Company is party to litigation and claims arising in the ordinary course of business. Management believes, after consulting with legal counsel, that the liabilities, if any, arising from such litigation and claims will have no material adverse effect on the Company's consolidated financial statements. 11. ACQUISITIONS DEERFIELD PLASTICS COMPANY, INC. -- Effective October 21, 1996, the Company acquired all of the issued and outstanding common stock of Deerfield Plastics Company, Inc. for cash of approximately $68,207,000, a $1,900,000 payment to be made in 1997 based on Deerfield's working capital at the acquisition date, and a deferred payment payable over the next three years totaling $5,250,000. The acquisition has been accounted for using the purchase method of accounting; as such, results of operations have been included in the accompanying consolidated financial statements from the date of acquisition. In conjunction with the acquisition, the Company recorded goodwill of approximately $18,400,000, which is being amortized on a straight-line basis over 40 years. HUNTSMAN CONTAINER CORPORATION INTERNATIONAL (HCCI) -- On August 31, 1996, HC contributed all of the outstanding capital stock of HCCI to the Company in the form of a capital contribution. The contribution was recorded as additional paid-in capital and the results of operations have been included in the consolidated financial statements from the date of the contribution. The assets acquired and liabilities assumed of $27,090,000 (including cash of $2,305,000) and $16,631,000, respectively, were recorded by the Company at HCCI's historical carrying values. UNITED FILMS CORPORATION -- On July 31, 1996, the Company acquired all of the issued and outstanding common stock of United Films Corporation for cash of approximately $12,276,000. The acquisition has been accounted for using the purchase method of accounting; as such, results of operations F-18 HUNTSMAN PACKAGING CORPORATION AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF HUNTSMAN CORPORATION) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 1994, 1995, AND 1996 have been included in the accompanying consolidated financial statements from the date of acquisition. In conjunction with the acquisition, the Company recorded goodwill of approximately $12,076,000, which is being amortized on a straight-line basis over 40 years. PERFORMANCE FILMS CORPORATION -- On June 1, 1995, the Company acquired all of the assets of Performance Films Corporation for approximately $4,279,000 in cash. The acquisition has been accounted for using the purchase method of accounting; as such, results of operations have been included in the accompanying consolidated financial statements from the date of acquisition. In conjunction with this acquisition, the Company recorded goodwill of approximately $250,000, which is being amortized on a straight-line basis over 40 years. 12. CONSOLIDATING CONDENSED FINANCIAL STATEMENTS The following are consolidating condensed financial statements which depict, in separate columns, Huntsman Packaging Corporation carrying its investment in subsidiaries under the equity method, on a combined basis the guarantors of Huntsman Packaging Corporation, and on a combined basis the non-guarantors of Huntsman Packaging Corporation, with additional columns reflecting eliminating adjustments and the consolidated total, for the year ended December 31, 1996: CONSOLIDATING CONDENSED BALANCE SHEET (IN THOUSANDS, EXCEPT FOR SHARE AMOUNTS)
HUNTSMAN PACKAGING CONSOLIDATED CORPORATION COMBINED COMBINED HUNTSMAN PACKAGING PARENT ONLY GUARANTORS NON-GUARANTORS ELIMINATIONS CORPORATION ------------------ -------------- -------------- -------------- ------------------ ASSETS CURRENT ASSETS: Cash and cash equivalents . $ (1,294) $11,941 $ 10,647 Receivables ................ 38,881 19,037 57,918 Inventories ................ 44,230 9,211 53,441 Prepaid expenses and other . 2,894 1,007 3,901 Deferred income taxes ...... 1,088 1,088 -------------- -------------- -------------- ------------------ Total current assets ...... 85,799 41,196 126,995 PLANT AND EQUIPMENT--Net ... 120,219 21,224 141,443 INTANGIBLE ASSETS--Net ..... 53,033 1,810 54,843 INVESTMENT IN SUBSIDIARIES . $67,012 $(67,012) OTHER ASSETS ............... 4,496 1,380 5,876 TOTAL ...................... $67,012 $263,547 $65,610 $(67,012) $329,157 LIABILITIES AND STOCKHOLDER'S EQUITY CURRENT LIABILITIES: Trade accounts payable ..... $ 19,536 $ 6,243 $ 25,779 Accrued liabilities ........ 10,358 9,739 20,097 Long-term debt--current portion ................... 506 506 ------------------ -------------- -------------- -------------- ------------------ Due to affiliates .......... 2,524 3,442 5,966 ------------------ -------------- -------------- -------------- ------------------ Total current liabilities . 32,924 19,424 52,348 LONG TERM DEBT ............. 177,766 8,925 186,691 OTHER LIABILITIES .......... 7,526 1,498 9,024 DEFERRED INCOME TAXES ...... 12,163 1,919 14,082 ------------------ -------------- -------------- -------------- ------------------ Total liabilities ......... 230,379 31,766 262,145 ------------------ -------------- -------------- -------------- ------------------ COMMITMENTS AND CONTINGENCIES STOCKHOLDER'S EQUITY Common stock ............... $ 1 167 19,021 (19,188) 1 Additional paid-in capital . 73,433 10,255 (10,255) 73,433 Retained earnings (deficit) ................. (5,405) 33,254 4,474 (37,728) (5,405) Translation adjustment ..... (1,017) (253) 94 159 (1,017) ------------------ -------------- -------------- -------------- ------------------ Total stockholder's equity .................... 67,012 33,168 33,844 (67,012) 67,012 ------------------ -------------- -------------- -------------- ------------------ TOTAL ...................... $67,012 $263,547 $65,610 $(67,012) $329,157
F-19 HUNTSMAN PACKAGING CORPORATION AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF HUNTSMAN CORPORATION) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 1994, 1995, AND 1996 CONSOLIDATING CONDENSED INCOME STATEMENT (IN THOUSANDS, EXCEPT FOR SHARE AMOUNTS)
HUNTSMAN PACKAGING CONSOLIDATED CORPORATION COMBINED COMBINED HUNTSMAN PACKAGING PARENT ONLY GUARANTORS NON-GUARANTORS ELIMINATIONS CORPORATION -------------- -------------- -------------- -------------- ------------------ SALES--Net ........... $244,965 $73,744 $(10,617) $308,092 COST OF SALES......... 214,425 59,492 (10,617) 263,300 -------------- -------------- -------------- -------------- ------------------ GROSS PROFIT.......... 30,540 14,252 0 44,792 -------------- -------------- -------------- -------------- ------------------ TOTAL OPERATING EXPENSES............. 32,401 6,974 39,375 -------------- -------------- -------------- -------------- ------------------ OPERATING INCOME (LOSS)............... (1,861) 7,278 0 5,417 INTEREST EXPENSE--Net. (10,964) (614) (11,578) EQUITY EARNINGS IN SUBSIDIARIES......... $(6,025) 6,025 0 OTHER INCOME (EXPENSE)--Net....... (3,719) 233 (3,486) -------------- -------------- ---------------- NET INCOME (LOSS) BEFORE INCOME TAXES AND EXTRAORDINARY ITEM................. (6,025) (16,544) 6,897 6,025 (9,647) INCOME TAX EXPENSE (BENEFIT)............ (6,547) 1,587 (4,960) -------------- -------------- ------------------ NET INCOME (LOSS) BEFORE EXTRAORDINARY ITEM................. (6,025) (9,997) 5,310 6,025 (4,687) EXTRAORDINARY ITEM.... (1,338) (1,338) -------------- -------------- -------------- -------------- ------------------ NET INCOME (LOSS)..... $(6,025) $(11,335) $ 5,310 $ 6,025 $ (6,025) ============== ============== ============== ============== ==================
F-20 HUNTSMAN PACKAGING CORPORATION AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF HUNTSMAN CORPORATION) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 1994, 1995, AND 1996 CONSOLIDATING STATEMENT OF CASH FLOWS (IN THOUSANDS, EXCEPT FOR SHARE AMOUNTS)
COMBINED HUNTSMAN PACKAGING CONSOLIDATED CORPORATION AND COMBINED HUNTSMAN PACKAGING GUARANTORS NON-GUARANTORS ELIMINATIONS CORPORATION ------------------ -------------- -------------- ------------------ CASH FLOWS FROM OPERATING ACTIVITIES. $ 1,370 $10,463 $ 11,833 CASH FLOWS FROM INVESTING ACTIVITIES: Payments for purchase of United Films Corporation.................. (12,276) (12,276) Payment for purchase of Deerfield Plastics, net of cash acquired..... (63,889) (63,889) Capital acquisitions for property, plants and equipment............... (7,358) (1,881) (9,239) ------------------ -------------- -------------- ------------------ Net cash used in investing activities........................ (83,523) (1,881) (85,404) ------------------ -------------- -------------- ------------------ CASH FLOWS FROM FINANCING ACTIVITIES: Cash portion of capital contribution by Huntsman Corporation............ 2,305 2,305 Principal payment on long-term debt. (119,553) (3,166) (122,719) Proceeds from long-term debt........ 200,348 200,348 ------------------ -------------- -------------- ------------------ Net cash provided by (used in) financing activities............... 80,795 (861) 79,934 ------------------ -------------- -------------- ------------------ EFFECT OF EXCHANGE RATE CHANGES ON CASH................................ 565 (38) 527 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS.................... (793) 7,683 6,890 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD................. (3,888) 7,645 3,757 ------------------ -------------- -------------- ------------------ CASH AND CASH EQUIVALENTS AT END OF PERIOD.............................. $ (4,681) $15,328 $ 10,647 ================== ============== ============== ==================
* * * * * F-21 HUNTSMAN PACKAGING CORPORATION AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF HUNTSMAN CORPORATION) CONSOLIDATED BALANCE SHEET (UNAUDITED) JUNE 30, 1997 (IN THOUSANDS)
ASSETS CURRENT ASSETS: Cash and cash equivalents .................................. $ 16,062 Receivables: Trade accounts (less allowance for doubtful accounts: $2,690)................................................... 56,596 Other ..................................................... 3,199 Inventories ................................................ 53,235 Prepaid expenses and other ................................. 3,796 Deferred income taxes ...................................... 1,419 ---------- Total current assets .................................... 134,307 PLANT AND EQUIPMENT Land and improvements ...................................... 6,521 Buildings and improvements ................................. 35,702 Machinery and equipment .................................... 148,338 Furniture, fixtures and automobiles ........................ 2,070 Leasehold improvements ..................................... 375 Construction in progress ................................... 4,950 ---------- Total ................................................... 197,956 Less: accumulated depreciation and amortization ........... (54,568) ---------- Plant and equipment--net ................................ 143,388 INTANGIBLE ASSETS--Net ...................................... 53,957 OTHER ASSETS ................................................ 6,793 ---------- TOTAL ....................................................... $338,445 ==========
F-22 HUNTSMAN PACKAGING CORPORATION AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF HUNTSMAN CORPORATION) CONSOLIDATED BALANCE SHEET (UNAUDITED) JUNE 30, 1997 (IN THOUSANDS)
LIABILITIES AND STOCKHOLDER'S EQUITY CURRENT LIABILITIES: Trade accounts payable ...................................................... $ 24,284 Accrued liabilities ......................................................... 18,681 Long-term debt--current portion ............................................. 413 Due to affiliates ........................................................... 4,987 Income taxes payable to affiliates .......................................... 393 --------- Total current liabilities .................................................. 48,758 LONG TERM DEBT--INTERCOMPANY ................................................. 198,320 OTHER LIABILITIES ............................................................ 11,182 DEFERRED INCOME TAXES ........................................................ 13,531 --------- Total liabilities .......................................................... 271,791 --------- COMMITMENTS AND CONTINGENCIES STOCKHOLDER'S EQUITY: Common stock--Class A voting $1.00 par value; 50,000 shares authorized; 1,000 shares issued and outstanding ........................................ 1 Additional paid-in capital .................................................. 73,433 Retained earnings (deficit) ................................................. (3,418) Translation adjustment ...................................................... (3,362) --------- Total stockholder's equity ................................................. 66,654 --------- TOTAL ........................................................................ $338,445 =========
F-23 HUNTSMAN PACKAGING CORPORATION AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF HUNTSMAN CORPORATION) CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997 (IN THOUSANDS)
1996 1997 ---------- ---------- SALES--Net .................................................... $127,919 $218,745 COST OF SALES ................................................. 106,792 192,545 ---------- ---------- GROSS PROFIT .................................................. 21,127 26,200 ---------- ---------- OPERATING EXPENSES: Administration and other ..................................... 7,585 8,925 Sales and marketing .......................................... 6,104 6,679 Research and development ..................................... 1,029 1,006 ---------- ---------- Total operating expenses .................................. 14,718 16,610 ---------- ---------- OPERATING INCOME .............................................. 6,409 9,590 INTEREST EXPENSE--Net ......................................... (4,763) (7,062) OTHER EXPENSE--Net ............................................ 755 873 ---------- ---------- INCOME BEFORE INCOME TAXES AND EXTRAORDINARY ITEM.............. 2,401 3,401 ---------- ---------- INCOME TAX EXPENSE (BENEFIT): Current ...................................................... 669 1,695 Deferred ..................................................... 115 (281) ---------- ---------- Total income taxes ........................................ 784 1,414 ---------- ---------- INCOME BEFORE EXTRAORDINARY ITEM .............................. 1,617 1,987 EXTRAORDINARY ITEM--Loss on early extinguishment of debt (less applicable current income tax benefit of $780) ............... (1,338) ---------- ---------- NET INCOME .................................................... $ 279 $ 1,987 ========== ==========
F-24 HUNTSMAN PACKAGING CORPORATION AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF HUNTSMAN CORPORATION) CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY (UNAUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 1997 (IN THOUSANDS)
COMMON STOCK ADDITIONAL ------------------ PAID-IN RETAINED TRANSLATION SHARES AMOUNT CAPITAL EARNINGS ADJUSTMENT TOTAL -------- -------- ----------- -------- ---------- ------ BALANCE, JANUARY 1, 1997............ 1 $1 $73,433 $(5,405) $(1,017) $67,012 Net income.......................... 1,987 1,987 Aggregate adjustment resulting from the translation of foreign currency statements................ (2,345) (2,345) -------- -------- ------------ ---------- ------------- --------- BALANCE, JUNE 30, 1997.............. 1 $1 $73,433 $(3,418) $(3,362) $66,654 ======== ======== ============ ========== ============= =========
F-25 HUNTSMAN PACKAGING CORPORATION AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF HUNTSMAN CORPORATION) CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997 (IN THOUSANDS)
1996 1997 ---------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income.......................................................... $ 279 $ 1,987 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization...................................... 5,303 7,748 Deferred income taxes.............................................. (778) (281) Provision for losses on accounts receivable........................ (108) 132 Changes in operating assets and liabilities--net of assets acquired: Trade accounts receivable......................................... 463 (1,749) Other receivables................................................. (296) 111 Inventories....................................................... (2,861) 157 Prepaid expenses and other........................................ 1,655 (879) Trade accounts payable............................................ 2,170 1,195 Income taxes receivable/payable................................... (74) (233) Accrued and other liabilities..................................... 469 (4,597) ---------- --------- Net cash provided by operating activities......................... 6,222 3,591 ---------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures for property, plant, and equipment ............ (3,372) (7,996) ---------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments on long-term debt................................ (74,450) Net change in revolving debt........................................ (28,517) Proceeds from long-term debt........................................ 102,358 12,235 ---------- --------- Net cash provided by (used in) financing activities............... (609) 12,235 ---------- --------- EFFECT OF EXCHANGE RATE CHANGES ON CASH.............................. (81) (2,418) ---------- --------- NET INCREASE IN CASH AND CASH EQUIVALENTS............................ 2,160 5,412 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD..................... 3,757 10,650 ---------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD........................... $ 5,917 $16,062 ========== ========= SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for: Interest........................................................... $ 1,313 $ 0 Income taxes....................................................... $ 680 $ 488
F-26 HUNTSMAN PACKAGING CORPORATION AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF HUNTSMAN CORPORATION) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 1997 1. UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS The financial information included herein is unaudited; however, the information reflects all adjustments (consisting of normal recurring adjustments) that are, in the opinion of management, necessary to the fair presentation of the consolidated financial position, results of operations, and cash flows for the interim periods. The consolidated financial statements should be read in conjunction with the Notes to Consolidated Financial Statements for the years ended December 31, 1994, 1995, and 1996. The results of operations for the six months ended June 30, 1997, are not necessarily indicative of the results to be expected for the full year. 2. INVENTORIES Inventories at June 30, 1997 consisted of the following:
Finished goods . $35,165 Work-in-process . $ 4,252 Raw materials .. $13,818 --------- Total ........... $53,235 =========
3. ACCOUNTING STANDARDS In June 1997, the FASB issued SFAS No. 131, "Disclosure About Segments of an Enterprise and Related Information." SFAS No. 131 established standards for the way that public business enterprises report information about operating segments in annual financial statements and requires that those enterprises report selected information about operating segments in interim financial reports issued to shareholders. It also establishes standards for related disclosure about products and services, geographic areas, and major customers. SFAS No. 131 is effective for financial statements for periods beginning after December 15, 1997. The Company does not expect the impact of SFAS No. 131 to be material in relation to its financial statements. In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income." SFAS No. 130 establishes standards for reporting and display of comprehensive income and its components (revenues, expenses, gains, and losses) in a full set of general purpose financial statements. SFAS No. 130 requires that an enterprise (a) classify items of other comprehensive income by their nature in a financial statement and (b) display the accumulated balance of other comprehensive income separately from retained earnings and additional paid-in-capital in the equity section of a statement of financial position. SFAS No. 130 is effective for fiscal years beginning after December 15, 1997. The Company does not expect the impact of SFAS No. 130 to be material in relation to its financial statements. F-27 INDEPENDENT AUDITORS' REPORT To the Board of Directors of Huntsman Polymers Corporation: We have audited the accompanying combined balance sheet of CT Film (a division of Huntsman Polymers Corporation, formerly Rexene Corporation) and Rexene Corporation Limited (a wholly-owned subsidiary of Huntsman Polymers Corporation, formerly Rexene Corporation) (collectively, the Company) as of December 31, 1996, and the related combined statements of operations and of cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, such financial statements present fairly, in all material respects, the combined financial position of CT Film and Rexene Corporation Limited as of December 31, 1996, and the combined results of their operations and their cash flows for the year then ended in conformity with generally accepted accounting principles. DELOITTE & TOUCHE LLP Salt Lake City, Utah September 19, 1997 F-28 CT FILM (A DIVISION OF HUNTSMAN POLYMERS CORPORATION, FORMERLY REXENE CORPORATION) AND REXENE CORPORATION LIMITED (A WHOLLY-OWNED SUBSIDIARY OF HUNTSMAN POLYMERS CORPORATION, FORMERLY REXENE CORPORATION) COMBINED BALANCE SHEET DECEMBER 31, 1996 (IN THOUSANDS)
ASSETS CURRENT ASSETS: Cash and cash equivalents............................................................. $ 252 Accounts receivable (less allowance for doubtful accounts and sales returns of $1,266)............................................................................... 20,703 Inventory (less allowance for obsolete inventory of $581)............................. 28,732 Prepaid expenses...................................................................... 262 ---------- Total current assets................................................................. 49,949 PLANT AND EQUIPMENT -NET............................................................... 86,366 NOTE RECEIVABLE ....................................................................... 1,550 ---------- TOTAL................................................................................ $137,865 ========== LIABILITIES AND HUNTSMAN POLYMERS CORPORATION'S INVESTMENT IN THE COMPANY CURRENT LIABILITIES: Accounts payable...................................................................... $ 9,532 Accrued expenses...................................................................... 5,237 ---------- Total current liabilities............................................................ 14,769 ACCUMULATED POSTRETIREMENT BENEFIT OBLIGATION.......................................... 2,910 LONG-TERM PENSION LIABILITY............................................................ 149 ---------- Total liabilities.................................................................... 17,828 ---------- COMMITMENTS AND CONTINGENCIES (Note 10) HUNTSMAN POLYMERS CORPORATION'S INVESTMENT IN THE COMPANY.............................. 120,037 ---------- TOTAL.................................................................................. $137,865 ==========
See notes to combined financial statements. F-29 CT FILM (A DIVISION OF HUNTSMAN POLYMERS CORPORATION, FORMERLY REXENE CORPORATION) AND REXENE CORPORATION LIMITED (A WHOLLY-OWNED SUBSIDIARY OF HUNTSMAN POLYMERS CORPORATION, FORMERLY REXENE CORPORATION) COMBINED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1996 (IN THOUSANDS)
SALES -Net of returns and allowances .. $152,464 COST OF SALES .......................... 141,485 ---------- GROSS PROFIT............................ 10,979 ---------- OPERATING EXPENSES: Marketing, general, and administrative. 8,276 Research and development............... 2,685 Allocated corporate expenses........... 2,779 ---------- Total operating expenses.............. 13,740 ---------- OPERATING LOSS.......................... (2,761) INTEREST EXPENSE -Net................... (1,245) ---------- LOSS BEFORE INCOME TAX BENEFIT.......... (4,006) INCOME TAX BENEFIT -Deferred............ 689 NET LOSS................................ $ (3,317) ==========
See notes to combined financial statements. F-30 CT FILM (A DIVISION OF HUNTSMAN POLYMERS CORPORATION, FORMERLY REXENE CORPORATION) AND REXENE CORPORATION LIMITED (A WHOLLY-OWNED SUBSIDIARY OF HUNTSMAN POLYMERS CORPORATION, FORMERLY REXENE CORPORATION) COMBINED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 1996 (IN THOUSANDS)
OPERATING ACTIVITIES: Net loss ...................................................................... $(3,317) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization.................................................. 6,516 Loss on sale of equipment...................................................... 10 Deferred income tax benefit.................................................... (689) Changes in operating assets and liabilities: Accounts receivable........................................................... 2,928 Inventory..................................................................... (9,334) Prepaid expenses.............................................................. (57) Accounts payable.............................................................. 3,496 Accrued expenses.............................................................. (379) Accumulated postretirement benefit obligation................................. 154 Long-term pension liability................................................... 100 ---------- Net cash provided by operating activities.................................... (572) ---------- INVESTING ACTIVITIES: Proceeds from sale of equipment................................................ 8 Capital expenditures for plant and equipment................................... (7,878) ---------- Net cash used in investing activities........................................ (7,870) ---------- FINANCING ACTIVITIES - Net capital contribution from Huntsman Polymers Corporation.................... 8,207 ---------- EFFECT OF EXCHANGE RATE CHANGES ON CASH......................................... 20 ---------- NET DECREASE IN CASH AND CASH EQUIVALENTS....................................... (215) CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR.................................... 467 ---------- CASH AND CASH EQUIVALENTS, END OF YEAR.......................................... $ 252 ==========
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES: On December 29, 1996, Rexene Corporation Limited issued an additional 2,500 common shares to Huntsman Polymers Corporation in exchange for a $4,281 reduction to the related party debt owing to Huntsman Polymers Corporation. During the year ended December 31, 1996, Rexene Corporation Limited incurred approximately $1,245,000 of interest which was added to the balance owing to Huntsman Polymers Corporation. Due to the operating losses of the Company, the Company did not make any income tax payments during the year ended December 31, 1996. See notes to combined financial statements. F-31 CT FILM (A DIVISION OF HUNTSMAN POLYMERS CORPORATION, FORMERLY REXENE CORPORATION) AND REXENE CORPORATION LIMITED (A WHOLLY-OWNED SUBSIDIARY OF HUNTSMAN POLYMERS CORPORATION, FORMERLY REXENE CORPORATION) NOTES TO COMBINED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 1996 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION -- The accompanying combined financial statements present on a historical cost basis (see below) the assets, liabilities, revenues, and expenses related to CT Film (a division of Huntsman Polymers Corporation, formerly Rexene Corporation) and Rexene Corporation Limited (a wholly-owned subsidiary of Huntsman Polymers Corporation, formerly Rexene Corporation) (collectively, the Company) which includes the operations that will be included in the proposed sale by Huntsman Polymers Corporation to Huntsman Packaging Corporation (Packaging) pursuant to a pending Asset Purchase Agreement (the Agreement) (see Note 2). Packaging is a wholly-owned subsidiary of Huntsman Corporation (Huntsman). On August 27, 1997, a subsidiary of Huntsman merged with Rexene Corporation (Rexene), with Rexene being the surviving entity. Immediately after the merger, Rexene changed its name to Huntsman Polymers Corporation). Accordingly, the historical cost basis used to present the accompanying combined financial statements is the basis of Rexene. DESCRIPTION OF THE BUSINESS -- The Company produces plastic films for the converter, personal care/medical and agricultural films markets in North America and the United Kingdom. The following is a summary of the Company's significant accounting policies. PRINCIPLES OF COMBINATION -- The combined financial statements include the accounts of CT Film and Rexene Corporation Limited. All significant intercompany balances and transactions have been eliminated in the combined financial statements. USE OF ESTIMATES IN PREPARING FINANCIAL STATEMENTS -- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. CARRYING VALUE OF LONG-TERM ASSETS -- The Company evaluates the carrying value of long-term assets based upon current and anticipated undiscounted cash flows, and recognizes an impairment when such estimated cash flows are less than the carrying value of the asset. Measurement of the amount of impairment, if any, is based upon the difference between carrying value and fair value. INVENTORY -- Inventory consists principally of finished film products and the raw materials necessary to produce them. Inventory is carried at the lower of cost (on a first-in first-out basis) or market. PLANT AND EQUIPMENT -- Plant and equipment is stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets as follows:
Land improvements .............. 20 years Buildings and improvements .... 20 years Tools, molds, and dies ......... 3-15 years Machinery and equipment ........ 3-15 years Shorter of the term of Leasehold improvements ......... lease or economic life
CASH AND CASH EQUIVALENTS -- For the purposes of the combined statement of cash flows, the Company considers cash in checking accounts and in short-term highly liquid investments with original maturities of three months or less to be cash and cash equivalents. F-32 CT FILM (A DIVISION OF HUNTSMAN POLYMERS CORPORATION, FORMERLY REXENE CORPORATION) AND REXENE CORPORATION LIMITED (A WHOLLY-OWNED SUBSIDIARY OF HUNTSMAN POLYMERS CORPORATION, FORMERLY REXENE CORPORATION) FINANCIAL INSTRUMENTS -- The carrying amounts reported in the combined balance sheet for cash and cash equivalents approximate fair value because of CORPORATION) the immediate or short-term maturity of these financial instruments. The carrying amount of the note receivable approximates fair value because the interest rate of the note approximates comparable notes. INCOME TAXES -- The Company uses the asset and liability method of accounting for income taxes. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial and tax reporting purposes. During 1996, CT Film's operations were included in the consolidated U.S. income tax return of Rexene and Rexene Corporation Limited filed a separate tax return in the United Kingdom. For purposes of preparing the combined financial statements, CT Film's income tax provision is determined on a "separate return basis". ENVIRONMENTAL EXPENDITURES -- Environmental related restoration and remediation costs are recorded as liabilities when site restoration and environmental remediation and clean-up obligations are either known or considered probable, and the related costs can be reasonably estimated. Other environmental expenditures, that are principally maintenance or preventative in nature, are recorded when expended and expensed or capitalized as appropriate. FOREIGN CURRENCY TRANSLATION -- The accounts of Rexene Corporation Limited are translated into U.S. dollars in the accompanying combined financial statements. Assets and liabilities are translated at rates prevailing at the balance sheet date. Revenues, expenses, gains, and losses are translated at a weighted average rate for the period. Cumulative translation adjustments are recorded as an adjustment to equity and are presented as a component of Huntsman Polymers Corporation's investment in the Company (see Note 6). The following financial information relating to foreign operations in the United Kingdom has been included in the combined financial statements (in thousands):
Assets........ $23,717 Liabilities .. 2,455 Sales......... 7,686 Net Loss...... (3,807)
Transaction gains and losses on amounts payable in currencies other than the Company's functional currencies are recognized in the statement of operations. During the year ended December 31, 1996, Rexene Corporation Limited recognized a transaction gain of $1,576,000. 2. SALE TO HUNTSMAN PACKAGING CORPORATION Pursuant to the terms of the Agreement, Packaging has agreed to acquire the packaging business of Huntsman Polymers Corporation, including specified assets and liabilities of the Company, for a purchase price of $70 million in cash. The consummation of the purchase is subject to customary closing conditions. F-33 CT FILM (A DIVISION OF HUNTSMAN POLYMERS CORPORATION, FORMERLY REXENE CORPORATION) AND REXENE CORPORATION LIMITED (A WHOLLY-OWNED SUBSIDIARY OF HUNTSMAN POLYMERS CORPORATION, FORMERLY REXENE CORPORATION) 3. INVENTORY Inventory consists of the following as of December 31, 1996 (in thousands):
Finished goods........................ $ 9,826 Raw materials......................... 19,060 Work-in-process....................... 427 -------- Total................................ 29,313 Less allowance for obsolete inventory............................ (581) -------- Inventory -net........................ $28,732 ========
4. PLANT AND EQUIPMENT Plant and equipment consists of the following as of December 31, 1996 (in thousands):
Land and improvements............. $ 1,330 Buildings and inprovements........ 12,648 Tools, molds, and dies............ 3,838 Machinery and equipment........... 88,198 Construction in progress.......... 1,929 ---------- Total............................ 107,943 Less accumulated depreciation and amortization..................... (21,577) ---------- Plant and equipment -net ......... $ 86,366 ==========
5. NOTE RECEIVABLE The Company sold certain equipment in 1995 and received a note in the amount of $1,550,000. The note bears interest at 10% and is due on March 31, 2003. The terms of the note require interest only payments through December 1997 with quarterly payments of principal and interest ranging from approximately $72,000 to $110,000. 6. HUNTSMAN POLYMERS CORPORATION'S INVESTMENT IN THE COMPANY Huntsman Polymers Corporation's investment in the Company consists of the following as of December 31, 1996 (in thousands):
Deferred income tax liability -net ..................................... $ 13,950 Rexene Corporation Limited note payable to Huntsman Polymers Corporation............................................................ 16,629 Inventory in transit from Huntsman Polymers Corporation ................ (1,855) Accumulated deficit of Rexene Corporation Limited....................... (2,931) Common stock equity of Rexene Corporation Limited....................... 7,701 Cumulative translation adjustment....................................... (138) Net intercompany payable to Huntsman Polymers Corporation .............. 86,681 --------- Total.................................................................. $120,037 =========
F-34 CT FILM (A DIVISION OF HUNTSMAN POLYMERS CORPORATION, FORMERLY REXENE CORPORATION) AND REXENE CORPORATION LIMITED (A WHOLLY-OWNED SUBSIDIARY OF HUNTSMAN POLYMERS CORPORATION, FORMERLY REXENE CORPORATION) 7. INCOME TAXES The following is a summary of domestic and foreign provisions for deferred income taxes and a reconciliation of the U.S. statutory income tax rate to the effective income tax rate. The deferred income tax benefit for the year ended December 31, 1996 is as follows (in thousands):
Deferred: Federal.......................... $(189) State............................ (28) Foreign.......................... (472) -------- Total deferred income tax benefit.......................... $(689) ========
The effective income tax rate reconciliation for the year ended December 31, 1996 is as follows (in thousands):
Loss before income tax benefit..................... $(4,006) ---------- Expected tax benefit at U.S. statutory rate of 35%............................................... $(1,402) Increase (decrease) resulting from: Deferred tax asset valuation allowance............ 1,012 State taxes....................................... (18) Foreign rate difference and other (net) .......... (281) ---------- Total deferred income tax benefit.................. $ (689) ========== Effective income tax rate.......................... 17% ==========
Components of net deferred income tax assets and liabilities, included in Huntsman Polymers Corporation's investment in the Company, as of December 31, 1996, are as follows (in thousands):
CURRENT LONG-TERM --------- ----------- Deferred income tax assets: Allowance for doubtful accounts receivable....................... $ 739 Allowance for obsolete inventory................................. 152 Net operating loss carryforwards................................. $ 2,906 Inventory capitalization......................................... 163 Other............................................................ 2,647 1,526 --------- ----------- Total............................................................ 3,701 4,432 --------- ----------- Deferred income tax liability-tax depreciation in excess of book depreciation..................................................... (21,071) ----------- Deferred tax asset valuation allowance............................ (1,012) ----------- Net deferred income tax asset (liability) -included with Huntsman Polymers Corporation's investment in the Company................. $3,701 $(17,651) ========= ===========
NET OPERATING LOSS CARRYFORWARDS -- The Company has available approximately $8,150,000 and $567,000 of net operating losses available to offset future income taxes in the United Kingdom and United States, respectively. Such operating losses begin to expire in 2010. Due to the uncertainties regarding realization, the Company has established a valuation allowance against part of the net operating loss carryforwards. F-35 CT FILM (A DIVISION OF HUNTSMAN POLYMERS CORPORATION, FORMERLY REXENE CORPORATION) AND REXENE CORPORATION LIMITED (A WHOLLY-OWNED SUBSIDIARY OF HUNTSMAN POLYMERS CORPORATION, FORMERLY REXENE CORPORATION) 8. EMPLOYEE BENEFIT PLANS DEFINED CONTRIBUTION PLANS -- CT Film employees participate in the Huntsman Polymers Corporation Employee Savings Plan which covers substantially all CT Film employees and Rexene Corporation Limited employees participate in a separate defined contribution plan. Plan participants may elect to make voluntary contributions to this plan up to a specified amount of their compensation. The Company matches a minimum of 25% of the participants' aggregate contributions up to 6% of the participant's base compensation. The Company's contribution to these plans for the year ended December 31, 1996 was insignificant. DEFINED BENEFIT PLAN -- CT Film employees participate in the Huntsman Polymers Corporation non-contributory defined benefit pension plan which covers substantially all full-time domestic employees. CT Film funds the actuarially determined retirement cost. Contributions are intended to not only provide for benefits attributed to service to date but also for those expected to be earned in the future. The combined accrued net pension expense for the year ended December 31, 1996 includes the following components (in thousands):
Service cost-benefits earned during the year . $ 327 Interest cost on projected benefit obligation................................... 241 Actual return on plan assets.................. (221) Other......................................... (24) ------- Total accrued pension expense................ $ 323 =======
The following table sets forth the funded status of the plan as of December 31, 1996 and the amount recognized in the combined balance sheet as of that date (in thousands):
Present value of accumulated benefit obligation: Vested............................................................................. $ 2,636 Nonvested.......................................................................... 401 --------- Total............................................................................... $ 3,037 ========= Present value of projected benefit obligation for service rendered to date ......... $ 3,893 Less plan assets at fair value, principally comprised of equity securities and bonds.............................................................................. (3,152) --------- Projected benefit obligation in excess of plan assets............................... 741 Unrecognized net loss............................................................... (495) Unrecognized prior service cost..................................................... (97) --------- Accrued long-term pension liability................................................. $ 149 =========
Assumptions used in the actuarial valuation include an increase in future compensation of 4.5%, a discount rate of 7.75%, and an expected rate of return on plan assets of 9% were used. POSTRETIREMENT BENEFITS -- CT Film provides certain health care and medical benefits for substantially all of its retired employees. CT Film reimburses retirees for those benefits but does not provide any additional funding for the postretirement benefits. F-36 CT FILM (A DIVISION OF HUNTSMAN POLYMERS CORPORATION, FORMERLY REXENE CORPORATION) AND REXENE CORPORATION LIMITED (A WHOLLY-OWNED SUBSIDIARY OF HUNTSMAN POLYMERS CORPORATION, FORMERLY REXENE CORPORATION) The combined accrued net postretirement benefit expense for the year ended December 31, 1996 includes the following components (in thousands): CORPORATION)
Service cost -benefits earned during the year................. $ 112 Interest cost on accumulated postretirement benefit obligation................................................... 137 Other......................................................... (130) ------- Total......................................................... $ 119 =======
The following table sets forth the funded status of the plan as of December 31, 1996 and the amount recognized in the combined balance sheet as of that date (in thousands):
Present value of accumulated postretirement benefit obligation: Retirees........................................... $ 531 Fully eligible plan participants................... 469 Othe active plan participants...................... 1,195 ------- Accumulated postretirement benefit obligation ...... 2,195 Unrecognized net gain............................... 735 Unrecognized prior service cost..................... (20) ------- Accumulated postretirement benefit obligation ...... $2,910 =======
CT Film has not funded any part of the accumulated postretirement benefit obligation. The assumed health care cost trend rate used to measure the expected cost of benefits covered by the plan for 1997 is 9%; the rate is assumed to decrease each successive year until it reaches 5.5% in 2003, after which it remains constant. A one percent increase in the assumed health care cost trend rate for each year would not significantly increase the accumulated postretirement benefit obligation as of December 31, 1996. The assumed discount rate used in determining the accumulated postretirement benefit obligation was 7.75% as of December 31, 1996. 9. RELATED PARTY TRANSACTIONS The accompanying combined financial statements include the following transactions with Huntsman Polymers Corporation for the year ended December 31, 1996 (in thousands):
Inventory purchases.......... $29,655 Allocated operating expenses.................... 2,779 Interest expense............. 1,245
ADMINISTRATIVE EXPENSES -- As noted above, Huntsman Polymers Corporation allocated administrative expenses to the Company of approximately $2,779,000 for the year ended December 31, 1996. The allocation is for the estimated portion of the total costs incurred by Huntsman Polymers Corporation resulting from services provided to the Company and is included in the combined statement of operations. 10. COMMITMENTS AND CONTINGENCIES ENVIRONMENTAL -- The Company's operations are subject to extensive environmental laws and regulations concerning emissions to the air, discharges to surface and subsurface waters, and the generation, handling, storage, transportation, treatment, and disposal of waste materials, as adopted by F-37 CT FILM (A DIVISION OF HUNTSMAN POLYMERS CORPORATION, FORMERLY REXENE CORPORATION) AND REXENE CORPORATION LIMITED (A WHOLLY-OWNED SUBSIDIARY OF HUNTSMAN POLYMERS CORPORATION, FORMERLY REXENE CORPORATION) various governmental authorities in the jurisdictions in which the Company operates. The Company makes every reasonable effort to remain in full compliance with existing governmental regulations. LITIGATION -- The Company is party to litigation and claims arising in the ordinary course of business. Management believes, after consulting with legal counsel, that the liabilities, if any, arising from such litigation and claims will have no material adverse effect on the Company's combined financial statements. OPERATING LEASES -- The Company has several noncancelable operating leases, primarily for vehicles, equipment, warehouse, and office space, that expire through 2011. The total expense recorded under all operating lease agreements in the accompanying combined statement of operations is approximately $750,000 for the year ended December 31, 1996. Future minimum operating lease payments as of December 31, 1996 are as follows (in thousands):
Years ending December 31: 1997................................ $ 735 1998................................ 681 1999................................ 498 2000................................ 433 2001................................ 432 Thereafter........................... 3,482 ------- Total future minimum operating lease payments............................ $6,261 =======
* * * * * * F-38 CT FILM (A DIVISION OF HUNTSMAN POLYMERS CORPORATION, FORMERLY REXENE CORPORATION) AND REXENE CORPORATION LIMITED (A WHOLLY-OWNED SUBSIDIARY OF HUNTSMAN POLYMERS CORPORATION, FORMERLY REXENE CORPORATION) COMBINED BALANCE SHEET AS OF JUNE 30, 1997 (IN THOUSANDS) (UNAUDITED)
ASSETS Cash............................................. $ 858 Accounts receivable ............................. 20,495 Inventory ....................................... 29,759 Prepaid expenses................................. 218 ---------- Total current assets ........................... 51,330 Property, plant & equipment ..................... 83,385 Note receivable.................................. 1,550 ---------- TOTAL .......................................... $136,265 ---------- LIABILITIES AND HUNTSMAN POLYMERS CORPORATION'S INVESTMENT IN THE COMPANY Accounts payable ................................ $ 11,186 Accrued liabilities ............................. 2,667 ---------- TOTAL CURRENT LIABILITIES ...................... 13,853 ---------- Accumulated postretirement benefit obligation ... 2,970 Long-term pension liability ..................... 359 ---------- TOTAL LIABILITIES .............................. 17,182 ---------- HUNTSMAN POLYMERS CORPORATION'S INVESTMENT IN THE COMPANY..................................... 119,083 ---------- TOTAL........................................... $136,265 ==========
F-39 CT FILM (A DIVISION OF HUNTSMAN POLYMERS CORPORATION, FORMERLY REXENE CORPORATION) AND REXENE CORPORATION LIMITED (A WHOLLY-OWNED SUBSIDIARY OF HUNTSMAN POLYMERS CORPORATION, FORMERLY REXENE CORPORATION) COMBINED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1997 (IN THOUSANDS) (UNAUDITED)
Net Sales ................ $79,353 Cost of Sales ............ 74,800 ---------- Gross Profit ............. 4,553 Total operating expenses 6,174 ---------- Operating loss ........... (1,621) Interest expense ......... 605 ---------- Loss before Income Taxes $(2,226) Income Tax Benefit ....... 348 ---------- Net Loss ................. $(1,878) ==========
F-40 CT FILM (A DIVISION OF HUNTSMAN POLYMERS CORPORATION, FORMERLY REXENE CORPORATION) AND REXENE CORPORATION LIMITED (A WHOLLY-OWNED SUBSIDIARY OF HUNTSMAN POLYMERS CORPORATION, FORMERLY REXENE CORPORATION) NOTES TO COMBINED FINANCIAL STATEMENTS (UNAUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 1997 1. UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS The financial information included herein is unaudited; however, the information reflects all adjustments (consisting of normal recurring adjustments) that are, in the opinion of management, necessary to the fair presentation of the consolidated financial position, results of operations, and cash flows for the interim periods. The consolidated financial statements should be read in conjunction with the Notes to Consolidated Financial Statements for the years ended December 31, 1994, 1995, and 1996. The results of operations for the six months ended June 30, 1997, are not necessarily indicative of the results to be expected for the full year. 2. INVENTORIES Inventories at June 30, 1997 consisted of the following:
Finished goods . $11,118 Work-in-process . $ 180 Raw materials .. $18,461 --------- Total ........... $29,759 =========
3. ACCOUNTING STANDARDS In June 1997, the FASB issued SFAS No. 131, "Disclosure About Segments of an Enterprise and Related Information." SFAS No. 131 established standards for the way that public business enterprises report information about operating segments in annual financial statements and requires that those enterprises report selected information about operating segments in interim financial reports issued to shareholders. It also establishes standards for related disclosure about products and services, geographic areas, and major customers. SFAS No. 131 is effective for financial statements for periods beginning after December 15, 1997. The Company does not expect the impact of SFAS No. 131 to be material in relation to its financial statements. In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income." SFAS No. 130 establishes standards for reporting and display of comprehensive income and its components (revenues, expenses, gains, and losses) in a full set of general purpose financial statements. SFAS No. 130 requires that an enterprise (a) classify items of other comprehensive income by their nature in a financial statement and (b) display the accumulated balance of other comprehensive income separately from retained earnings and additional paid-in-capital in the equity section of a statement of financial position. SFAS No. 130 is effective for fiscal years beginning after December 15, 1997. The Company does not expect the impact of SFAS No. 130 to be material in relation to its financial statements. F-41 NO DEALER, SALESPERSON, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER CONTAINED HEREIN OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY HUNTSMAN PACKAGING. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF ANY OFFER TO BUY ANY SECURITY OTHER THAN THOSE TO WHICH IT RELATES, NOR DOES IT CONSTITUTE AN OFFER TO SELL, OR THE SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF HUNTSMAN PACKAGING SINCE THE DATE HEREOF NOR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF. TABLE OF CONTENTS
PAGE Prospectus Summary.......................... 1 Risk Factors................................ 13 Use of Proceeds............................. 19 The Exchange Offer ......................... 20 Capitalization.............................. 27 Unaudited Pro Forma Financial Data.......... 28 Selected Historical Financial Data.......... 31 Management's Discussion and Analysis of Financial Condition and Results of Operations................................. 32 Business.................................... 37 Management.................................. 50 Ownership of Capital Stock ................. 54 Certain Relationships and Related Transactions............................... 55 Description of the Credit Facilities ....... 56 Description of the Notes ................... 58 Certain United States Federal Income Tax Considerations ........................ 87 Book-Entry; Delivery and Form............... 90 Plan of Distribution ....................... 91 Legal Matters............................... 91 Experts .................................... 92 Available Information....................... 92 Index to Consolidated Financial Statements . F-1
UNTIL , ALL DEALERS OFFERING TRANSACTIONS IN THE NEW NOTES, WHETHER OR NOT PARTICIPATING IN THE EXCHANGE OFFER, MAY BE REQUIRED TO DELIVER A PROSPECTUS. PROSPECTUS [HUNTSMAN LOGO] $125,000,000 HUNTSMAN PACKAGING CORPORATION 9 1/8% SENIOR SUBORDINATED NOTES DUE 2007 , 1997 PART II INFORMATION NOT REQUIRED IN THE PROSPECTUS ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The following is an estimate of all expenses in connection with the issuance and distribution of the securities being registered hereby:
SEC Registration Fee............... $37,879 Accountants' fees and expenses .... * Attorney's fees and expenses ...... * Printing expenses.................. * Miscellaneous...................... * ----------- Total.............................. $ * ===========
- ------------ * To be filed by amendment. ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS. As authorized by Sections 16-10a-901 through 16-10a-909 of the Utah Revised Business Corporation Act, the Company's Bylaws provide that the Company may voluntarily indemnify any individual made a party to a proceeding because the individual is or was a director, officer, employee, fiduciary or agent of the Company, or to a greater extent, if not inconsistent with public policy, if provided for by general or specific action of the Board of Directors, against liability incurred in the proceeding (limited to expenses reasonably incurred by him in connection with such proceeding, which may be advanced by the Company), if the Company, in accordance with the procedures set forth in the Utah Revised Business Corporation Act, has authorized the indemnification and a determination has been made that the individual acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, he had no reasonable cause to believe his conduct was unlawful. The Company's Bylaws further provide that in connection with a proceeding by or in the right of the Company, or in connection with any other proceeding charging that the individual derived an improper benefit, whether or not involving action in the individual's capacity, no indemnification shall be made if the individual was adjudged liable to the Company. ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES. On September 19, 1997, Huntsman Packaging sold $125,000,000 aggregate principal amount of its 9 1/8% Senior Subordinated Notes due 2007 (the "Old Notes") to BT Alex. Brown Incorporated and Chase Securities Inc. (the "Initial Purchasers") for $125,000,000 less the aggregate discount to Initial Purchasers of $2,850,000. Such transaction was exempt from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"), in reliance on Section 4(2) of the Securities Act on the basis that such transactions did not involve a public offering. The Old Notes were guaranteed by subsidiaries of Huntsman Packaging, which are the undersigned Registrants. In accordance with the agreement pursuant to which the Initial Purchasers purchased the Old Notes, such Initial Purchasers agreed to offer and sell the Old Notes only within the United States to "qualified institutional buyers" (as defined in Rule 144A under the Securities Act) and a limited number of institutional "accredited investors" (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) and pursuant to offers and sales that occur outside the United States, in compliance with Regulation S under the Securities Act. Prior to September 30, 1997, Huntsman Packaging was a wholly-owned subsidiary of Huntsman Corporation. On September 29, 1997, Huntsman Packaging reclassified its issued shares of Huntsman Packaging capital stock as 995,001 shares of Class A Common Stock and 4,999 shares of Class B Common II-1 Stock. Pursuant to an Exchange Agreement, dated as of September 26, 1997, by and among Huntsman Corporation, Jon M. Huntsman and Richard P. Durham and Elizabeth A. Whitsett, as Successor Trustees (the "Trustees") of the Christena Karen H. Durham Trust (the "Trust"), Huntsman Corporation distributed all of Huntsman Packaging's issued 995,001 shares of Class A Common Stock and 4,999 shares of Class B Common Stock to Huntsman and the Trustees, for the benefit of the Trust, in exchange for (i) 1,041,896 shares of Huntsman Corporation Common Stock owned by Jon M. Huntsman and (ii) all 561,021 shares of Huntsman Corporation Common Stock owned by the Trustees, for the benefit of the Trust. On September 30, 1997 Huntsman Packaging was split-off from Huntsman Corporation, subsequent to which Huntsman Packaging became directly owned by Huntsman and members of his family. Except for the transactions described above, there have not been any recent sales of unregistered securities by the Registrant. ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. (A) EXHIBITS:
EXHIBIT NUMBER EXHIBIT - ----------- ----------------------------------------------------------------------------------------------- 3.1 Articles of Restatement of the Articles of Incorporation of Huntsman Packaging. 3.11 Articles of Organization of Huntsman Deerfield Films Corporation. 3.12 Articles of Incorporation of Huntsman United Films Corporation. 3.13 Articles of Incorporation of Huntsman Preparatory, Inc. 3.14 Articles of Incorporation of Huntsman Container Corporation International. 3.15 Articles of Incorporation of Huntsman Packaging Georgia, Inc. 3.16 Articles of Incorporation of Huntsman Film Products of Mexico, Inc. 3.17 Articles of Incorporation of Huntsman Bulk Packaging Corporation. 3.2 Amended and Restated By-Laws of Huntsman Packaging. 3.21 By-Laws of Huntsman Deerfield Films Corporation. 3.22 Amended and Restated By-Laws of Huntsman United Films Corporation. 3.23 By-Laws of Huntsman Preparatory, Inc. 3.24 By-Laws of Huntsman Container Corporation International. 3.25 By-Laws of Huntsman Packaging Georgia, Inc. 3.26 By-Laws of Huntsman Film Products of Mexico, Inc. 3.27 By-Laws of Huntsman Bulk Packaging Corporation. 4.1 Indenture, dated as of September 30, 1997, between Huntsman Packaging, the Guarantors and The Bank of New York. 4.2 Form of Exchange Notes (included as Exhibit A-2 in Exhibit 4.1). 4.3 Registration Rights Agreement, dated as of September 19, 1997, by and among Huntsman Packaging, BT Alex. Brown Incorporated and Chase Securities Inc. 5.1 Opinion and consent of Skadden, Arps, Slate, Meagher & Flom LLP as to legality of the Exchange Notes to be issued by Huntsman Packaging.* II-2 EXHIBIT NUMBER EXHIBIT - ----------- ----------------------------------------------------------------------------------------------- 10.1 Exchange Agreement, dated as of September 26, 1997 by and among Huntsman Corporation and Jon M. Huntsman, Richard P. Durham and Elizabeth Whitsett, as Trustees of the Christena Karen H. Durham Trust. 10.2 First Amended Asset Purchase Agreement, dated as of September 26, 1997, between Huntsman Packaging and Huntsman Polymers Corporation. 10.3 Credit Agreement, dated September 30, 1997, among Huntsman Packaging, the various lenders party thereto (the "Lenders") and The Chase Manhattan Bank, as Administrative Agent for the Lenders. 10.4 Guarantee Agreement, dated September 30, 1997, among the subsidiaries of, Huntsman Packaging and The Chase Manhattan Bank, as Administrative Agent for the Lenders. 10.5 Security Agreement, dated as of September 30, 1997, among Huntsman Packaging, each subsidiary of Huntsman Packaging party thereto and The Chase Manhattan Bank, as Collateral Agent for the Secured Parties (as defined therein). 10.6 Pledge Agreement, dated September 30, 1997, among Huntsman Packaging, each subsidiary of Huntsman Packaging party thereto and The Chase Manhattan Bank, as Collateral Agent for the Secured Parties. 10.7 Indemnity, Subrogation and Contribution Agreement, dated September 30, 1997, among Huntsman Packaging, each subsidiary of Huntsman Packaging party thereto and The Chase Manhattan Bank, as Collateral Agent for the Secured Parties. 12.1 Computation of ratio of earnings to fixed charges.* 21.1 Subsidiaries of Huntsman Packaging. 23.1 Consent of Deloitte & Touche LLP. 23.2 Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in Exhibit 5.1).* 24.1 Power of Attorney of certain officers and directors of Huntsman Packaging (contained in, and incorporated herein by reference to, Page II-5 of this Registration Statement). 24.2 Power of Attorney of certain officers and directors of Huntsman Deerfield Films Corporation (contained in, and incorporated herein by reference to, Page II-6 of this Registration Statement). 24.3 Power of Attorney of certain officers and directors of Huntsman United Films Corporation (contained in, and incorporated herein by reference to, Page II-7 of this Registration Statement). 24.4 Power of Attorney of certain officers and directors of Huntsman Preparatory, Inc. (contained in, and incorporated herein by reference to, Page II-8 of this Registration Statement). 24.5 Power of Attorney of certain officers and directors of Huntsman Container Corporation International (contained in, and incorporated herein by reference to, Page II-9 of this Registration Statement). 24.6 Power of Attorney of certain officers and directors of Huntsman Packaging Georgia, Inc. (contained in, and incorporated herein by reference to, Page II-10 of this Registration Statement). 24.7 Power of Attorney of certain officers and directors of Huntsman Film Products of Mexico, Inc. (contained in, and incorporated herein by reference to, Page II-11 of this Registration Statement). II-3 EXHIBIT NUMBER EXHIBIT - ----------- ----------------------------------------------------------------------------------------------- 24.8 Power of Attorney of certain officers and directors of Huntsman Bulk Packaging Corporation (contained in, and incorporated herein by reference to, Page II-12 of this Registration Statement). 25.1 Form T-1 Statement of Eligibility of The Bank of New York to act as trustee under the Indenture. 27.1 Financial Data Schedule.* 99.1 Form of Letter of Transmittal.* 99.2 Form of Notice of Guaranteed Delivery.* 99.3 Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and other Nominees.* 99.4 Form of Letter of Clients.* 99.5 Form of Exchange Agent Agreement.* (B) FINANCIAL STATEMENT SCHEDULES: Schedule II--Valuation and Qualifying Accounts for the years ended December 31, 1996, 1995 and 1994.
- ------------ *To be filed by amendment. ITEM 17. UNDERTAKINGS. (a) The undersigned registrant hereby undertakes that: (1) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. (2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (b) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrants pursuant to the foregoing provisions, or otherwise, the Registrants have been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrants of expenses incurred or paid by a director, officer or controlling person of the Registrants in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrants will, unless in the opinion of its counsel the matter has been settled by the controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. II-4 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, Huntsman Packaging Corporation has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Salt Lake City, in the State of Utah, on the 12th day of November, 1997. HUNTSMAN PACKAGING CORPORATION By: /s/ Richard P. Durham ------------------------------ Richard P. Durham President and Chief Excecutive Officer POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of Richard P. Durham and Ronald G. Moffitt his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement (or any other registration statement for the same offering that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on the dates indicated:
SIGNATURE TITLE DATE - --------------------------- ------------------------------------------------- --------------------- /s/ Jon M. Huntsman Director and Chairman of the Board of November 12, 1997 - ---------------------------- Directors Jon M. Huntsman /s/ Richard P. Durham Director, President and Chief Executive November 12, 1997 - ---------------------------- Officer Richard P. Durham /s/ Christena H. Durham Director November 12, 1997 - ---------------------------- Christena H. Durham /s/Daren G. Cottle Controller, Assistant Secretary and Treasurer November 12, 1997 - ---------------------------- Daren G. Cottle
II-5 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, Huntsman Deerfield Films Corporation has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Salt Lake City, in the State of Utah, on the 12th day of November, 1997. HUNTSMAN DEERFIELD FILMS CORPORATION By: /s/ Richard P. Durham ------------------------------ Richard P. Durham President and Chief Executive Officer POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of Richard P. Durham and Ronald G. Moffitt his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement (or any other registration statement for the same offering that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on the dates indicated:
SIGNATURE TITLE DATE - --------------------------- -------------------------------------- --------------------- /s/Richard P. Durham Director, President and November 12, 1997 - ---------------------------- Chief Executive Officer Richard P. Durham /s/Jack E. Knott Director, Executive Vice President November 12, 1997 - --------------------------- and Chief Operating Officer Jack E. Knott /s/Douglas W. Bengtson Director, Senior Vice President November 12, 1997 - --------------------------- and General Manager Douglas W. Bengtson /s/Daren G. Cottle Controller, Treasurer and November 12, 1997 - ---------------------------- Assistant Clerk Daren G. Cottle
II-6 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, Huntsman United Films Corporation has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Salt Lake City, in the State of Utah, on the 12th day of November, 1997. HUNTSMAN UNITED FILMS CORPORATION By: /s/ Richard P. Durham ------------------------------ Richard P. Durham President and Chief Executive Officer POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of Richard P. Durham and Ronald G. Moffitt his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement (or any other registration statement for the same offering that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on the dates indicated:
SIGNATURE TITLE DATE - --------------------------- ------------------------------------------- --------------------- /s/Richard P. Durham Director, President and Chief Executive November 12, 1997 - ---------------------------- Officer Richard P. Durham /s/Jack E. Knott Director, Executive Vice President November 12, 1997 - --------------------------- and Chief Operating Officer Jack E. Knott /s/Douglas W. Bengtson Director, Senior Vice President November 12, 1997 - --------------------------- and General Manager Douglas G. Bengtson /s/Daren G. Cottle Controller, Assistant Secretary and November 12, 1997 - ---------------------------- Treasurer Daren G. Cottle
II-7 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, Huntsman Preparatory, Inc. has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Salt Lake City, in the State of Utah, on the 12th day of November, 1997. HUNTSMAN PREPARATORY, INC. By: /s/ Richard P. Durham ------------------------------ Richard P. Durham President POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of Richard P. Durham and Ronald G. Moffitt his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement (or any other registration statement for the same offering that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on the dates indicated:
SIGNATURE TITLE DATE - ------------------------- ------------------------------------------ --------------------- /s/Richard P. Durham Director and President November 12, 1997 - -------------------------- Richard P. Durham /s/Ronald G. Moffitt Director, Vice President and Secretary November 12, 1997 - -------------------------- Ronald G. Moffitt /s/Daren G. Cottle Director, Assistant Secretary and November 12, 1997 - -------------------------- Treasurer Daren G. Cottle
II-8 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, Huntsman Container Corporation International has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Salt Lake City, in the State of Utah, on the 12th day of November, 1997. HUNTSMAN CONTAINER CORPORATION INTERNATIONAL By: /s/ Richard P. Durham ------------------------------ Richard P. Durham President and Chief Executive Officer POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of Richard P. Durham and Ronald G. Moffitt his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement (or any other registration statement for the same offering that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on the dates indicated:
SIGNATURE TITLE DATE - -------------------------- ------------------------------------------ --------------------- /s/ Richard P. Durham Director, President and November 12, 1997 - --------------------------- Chief Executive Officer Richard P. Durham /s/ Jack E. Knott Director, Executive Vice President and November 12, 1997 - --------------------------- Chief Operating Officer Jack E. Knott /s/ N. Brian Stevenson Director, Senior Vice President and November 12, 1997 - --------------------------- General Manager N. Brian Stevenson /s/ Daren G. Cottle Controller, Assistant Secretary and November 12, 1997 - --------------------------- Treasurer Daren G. Cottle
II-9 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, Huntsman Packaging Georgia, Inc. has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Salt Lake City, in the State of Utah, on the 12th day of November, 1997. HUNTSMAN PACKAGING GEORGIA, INC. By: /s/ Richard P. Durham ------------------------------ Richard P. Durham President POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of Richard P. Durham and Ronald G. Moffitt his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement (or any other registration statement for the same offering that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on the dates indicated:
SIGNATURE TITLE DATE - ------------------------- --------------------------------------------- --------------------- /s/ Richard P. Durham Director and President November 12, 1997 - -------------------------- Richard P. Durham /s/ Ronald G. Moffitt Director, Vice President and Secretary November 12, 1997 - -------------------------- Ronald G. Moffitt /s/ Daren G. Cottle Director, Controller, Assistant Secretary and November 12, 1997 - -------------------------- Treasurer Daren G. Cottle
II-10 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, Huntsman Film Products of Mexico, Inc. has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Salt Lake City, in the State of Utah, on the 12th day of November, 1997. HUNTSMAN FILM PRODUCTS OF MEXICO, INC. By: /s/ Richard P. Durham ------------------------------ Richard P. Durham President and Chief Executive Officer POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of Richard P. Durham and Ronald G. Moffitt his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement (or any other registration statement for the same offering that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on the dates indicated:
SIGNATURE TITLE DATE - -------------------------- ------------------------------------------- --------------------- /s/ Richard P. Durham Director, President and Chief Executive November 12, 1997 - --------------------------- Officer Richard P. Durham /s/ Jack E. Knott Director, Executive Vice President November 12, 1997 - -------------------------- and Chief Operating Officer Jack E. Knott /s/ N. Brian Stevenson Director, Senior Vice President November 12, 1997 - -------------------------- and General Manager N. Brian Stevenson /s/ Daren G. Cottle Controller, Assistant Secretary November 12, 1997 - -------------------------- and Treasurer Daren G. Cottle
II-11 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, Huntsman Bulk Packaging Corporation has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Salt Lake City, in the State of Utah, on the 12th day of November, 1997. HUNTSMAN BULK PACKAGING CORPORATION By: /s/ Richard P. Durham ------------------------------ Richard P. Durham President and Chief Executive Officer POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of Richard P. Durham and Ronald G. Moffitt his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement (or any other registration statement for the same offering that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on the dates indicated:
SIGNATURE TITLE DATE - -------------------------- ------------------------------------------- --------------------- /s/ Richard P. Durham Director, President and Chief Executive November 12, 1997 - --------------------------- Officer Richard P. Durham /s/ N. Brian Stevenson Director, Senior Vice President November 12, 1997 - -------------------------- and General Manager N. Brian Stevenson /s/ Ronald G. Moffitt Director, Senior Vice President November 12, 1997 - -------------------------- and General Counsel Ronald G. Moffitt /s/ Daren G. Cottle Controller, Assistant Secretary November 12, 1997 - -------------------------- and Treasurer Daren G. Cottle
II-12 SCHEDULE II HUNTSMAN PACKAGING CORPORATION AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF HUNTSMAN CORPORATION) VALUATION AND QUALIFYING ACCOUNTS FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 (IN THOUSANDS) - -----------------------------------------------------------------------------
ADDITIONS BALANCE AT CHARGED TO BEGINNING COSTS AND BALANCE AT DESCRIPTION OF YEAR EXPENSES DEDUCTIONS END OF YEAR - -------------------------------- ------------ ------------ ------------ ------------- ACCUMULATED AMORTIZATION OF INTANGIBLE ASSETS: 1996............................ $12,175 $1,613 $ (17)(2) $13,771 ============ ============ ============ ============= 1995............................ $ 9,439 $2,736 $12,175 ============ ============ ============ ============= 1994............................ $ 5,646 $3,793 $ 9,439 ============ ============ ============ ============= ALLOWANCE FOR DOUBTFUL ACCOUNTS: 1996............................ $ 2,070 $ 960 $(212)(1) $ 2,818 ============ ============ ============ ============= 1995............................ $ 1,553 $1,161 $(644)(1) $ 2,070 ============ ============ ============ ============= 1994............................ $ 444 $1,235 $(126)(1) $ 1,553 ============ ============ ============ =============
- ------------ (1) Deductions represent accounts written off against the allowance. (2) Deduction relates to write-off of goodwill. S-1 EXHIBIT INDEX
EXHIBIT SEQUENTIAL NUMBER EXHIBIT PAGE NO. - ----------- ------- ---------- 3.1 Articles of Restatement of the Articles of Incorporation of Huntsman Packaging. 3.11 Articles of Organization of Huntsman Deerfield Films Corporation. 3.12 Articles of Incorporation of Huntsman United Films Corporation. 3.13 Articles of Incorporation of Huntsman Preparatory, Inc. 3.14 Articles of Incorporation of Huntsman Container Corporation International. 3.15 Articles of Incorporation of Huntsman Packaging Georgia, Inc. 3.16 Articles of Incorporation of Huntsman Film Products of Mexico, Inc. 3.17 Articles of Incorporation of Huntsman Bulk Packaging Corporation. 3.2 Amended and Restated By-Laws of Huntsman Packaging. 3.21 By-Laws of Huntsman Deerfield Films Corporation. 3.22 Amended and Restated By-Laws of Huntsman United Films Corporation. 3.23 By-Laws of Huntsman Preparatory, Inc. 3.24 By-Laws of Huntsman Container Corporation International. 3.25 By-Laws of Huntsman Packaging Georgia, Inc. 3.26 By-Laws of Huntsman Film Products of Mexico, Inc. 3.27 By-Laws of Huntsman Bulk Packaging Corporation. 4.1 Indenture, dated as of September 30, 1997, between Huntsman Packaging, the Guarantors and The Bank of New York. 4.2 Form of Exchange Notes (included as Exhibit A-2 in Exhibit 4.1). 4.3 Registration Rights Agreement, dated as of September 19, 1997, by and among Huntsman Packaging, BT Alex. Brown Incorporated and Chase Securities Inc. 5.1 Opinion and consent of Skadden, Arps, Slate, Meagher & Flom LLP as to legality of the Exchange Notes to be issued by Huntsman Packaging.* 10.1 Exchange Agreement, dated as of September 26, 1997 by and among Huntsman Corporation and Jon M. Huntsman, Richard P. Durham and Elizabeth Whitsett, as Trustees of the Christena Karen H. Durham Trust. 10.2 First Amended Asset Purchase Agreement, dated as of September 26, 1997, between Huntsman Packaging and Huntsman Polymers Corporation. 10.3 Credit Agreement, dated September 30, 1997, among Huntsman Packaging, the various lenders party thereto (the "Lenders") and The Chase Manhattan Bank, as Administrative Agent for the Lenders. 10.4 Guarantee Agreement, dated September 30, 1997, among the subsidiaries of, Huntsman Packaging and The Chase Manhattan Bank, as Administrative Agent for the Lenders. EXHIBIT SEQUENTIAL NUMBER EXHIBIT PAGE NO. - ----------- ------- ---------- 10.5 Security Agreement, dated as of September 30, 1997, among Huntsman Packaging, each subsidiary of Huntsman Packaging party thereto and The Chase Manhattan Bank, as Collateral Agent for the Secured Parties (as defined therein). 10.6 Pledge Agreement, dated September 30, 1997, among Huntsman Packaging, each subsidiary of Huntsman Packaging party thereto and The Chase Manhattan Bank, as Collateral Agent for the Secured Parties. 10.7 Indemnity, Subrogation and Contribution Agreement, dated September 30, 1997, among Huntsman Packaging, each subsidiary of Huntsman Packaging party thereto and The Chase Manhattan Bank, as Collateral Agent for the Secured Parties. 12.1 Computation of ratio of earnings to fixed charges.* 21.1 Subsidiaries of Huntsman Packaging. 23.1 Consent of Deloitte & Touche LLP. 23.2 Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in Exhibit 5.1).* 24.1 Power of Attorney of certain officers and directors of Huntsman Packaging (contained in, and incorporated herein by reference to, Page II-5 of this Registration Statement). 24.2 Power of Attorney of certain officers and directors of Huntsman Deerfield Films Corporation (contained in, and incorporated herein by reference to, Page II-6 of this Registration Statement). 24.3 Power of Attorney of certain officers and directors of Huntsman United Films Corporation (contained in, and incorporated herein by reference to, Page II-7 of this Registration Statement). 24.4 Power of Attorney of certain officers and directors of Huntsman Preparatory, Inc. (contained in, and incorporated herein by reference to, Page II-8 of this Registration Statement). 24.5 Power of Attorney of certain officers and directors of Huntsman Container Corporation International (contained in, and incorporated herein by reference to, Page II-9 of this Registration Statement). 24.6 Power of Attorney of certain officers and directors of Huntsman Packaging Georgia, Inc. (contained in, and incorporated herein by reference to, Page II-10 of this Registration Statement). 24.7 Power of Attorney of certain officers and directors of Huntsman Film Products of Mexico, Inc. (contained in, and incorporated herein by reference to, Page II-11 of this Registration Statement). 24.8 Power of Attorney of certain officers and directors of Huntsman Bulk Packaging Corporation (contained in, and incorporated herein by reference to, Page II-12 of this Registration Statement). 25.1 Form T-1 Statement of Eligibility of The Bank of New York to act as trustee under the Indenture. 27.1 Financial Data Schedule.* 99.1 Form of Letter of Transmittal.* 99.2 Form of Notice of Guaranteed Delivery.* EXHIBIT SEQUENTIAL NUMBER EXHIBIT PAGE NO. - ----------- ------- ---------- 99.3 Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and other Nominees.* 99.4 Form of Letter of Clients.* 99.5 Form of Exchange Agent Agreement.*
- ------------ * To be filed by amendment. EX-3.1 2 ARTICLES OF INCORPORATION OF HUNTSMAN ARTICLES OF RESTATEMENT OF THE ARTICLES OF INCORPORATION OF HUNTSMAN PACKAGING CORPORATION EFFECTIVE SEPTEMBER 29, 1997 AT 4:32 P.M. In accordance with Section 16-10a-1007 of the Utah Revised Business Corporation Act (the "URBCA"), Huntsman Packaging Corporation, a Utah corporation (the "Corporation"), hereby declares and certifies as follows: 1. The name of the Corporation is Huntsman Packaging Corporation. 2. The text of the Amended and Restated Articles of Incorporation of the Corporation (the "Amended and Restated Articles") is attached hereto as Exhibit A and is incorporated herein by this reference. 3. The amendments contained in the Amended and Restated Articles provide for a reclassification, exchange and cancellation of issued shares of the Corporation. The reclassification shall be as set forth in the Amended and Restated Articles and the reclassification, exchange and cancellation shall be implemented as follows: (a) The 1,000 issued shares of Common Stock of the Corporation (the "Old Common Stock") shall be reclassified as 995,001 shares of the Class A Common Stock of the Corporation and 4,999 shares of the Class B Stock Common Stock of the Corporation. (b) The Old Common Stock shall be deemed to be and shall be canceled. 4. The Amended and Restated Articles were approved as of September 26, 1997 in accordance with the requirements of the URBCA. 5. The Amended and Restated Articles were approved by the shareholders of the Corporation. The designation, number of outstanding shares, number of votes entitled to be cast by each voting group entitled to vote separately, number of votes of each voting group indisputably represented, and the total number of votes cast for and against the Amended and Restated Articles by each voting group were as follows:
Votes Votes Outstanding Entitled Indisputably Designation Shares to be Cast Represented For Against - ------------------ --------------------- ---------------------- ---------------------- ------------- ----------------- Common 1000 1000 1000 1000 0 Stock - ------------------ --------------------- ---------------------- ---------------------- ------------- -----------------
The number of votes cast for the Amended and Restated Articles was sufficient for approval. 6. Pursuant to Section 16-10a-1007(5), these Articles of Restatement shall be effective on September 29, 1997 at 4:32 p.m. local time. IN WITNESS WHEREOF, these Articles of Restatement have been executed by the Corporation as of the date first written above. Huntsman Packaging Corporation, a Utah corporation By ____________________________ Richard P. Durham President and Chief Executive Officer Attest: - -------------------------- Ronald G. Moffitt Secretary 2 MAILING ADDRESS If, upon completion of filing of the above Articles of Restatement, the Utah Department of Commerce, Division of Corporations and Commercial Code elects to send a copy of the Articles of Restatement to Huntsman Packaging Corporation by mail, the address to which the copy should be mailed is: Huntsman Packaging Corporation 500 Huntsman Way Salt Lake City, Utah 84108 3 EXHIBIT A AMENDED AND RESTATED ARTICLES OF INCORPORATION OF HUNTSMAN PACKAGING CORPORATION Pursuant to and in accordance with Section 16-10a-1007 of the Utah Revised Business Corporation Act (the "URBCA"), the following are the Amended and Restated Articles of Incorporation of Huntsman Packaging Corporation, a Utah corporation (the " Corporation "): ARTICLE I NAME The name of the Corporation is Huntsman Packaging Corporation. ARTICLE II PURPOSES AND POWERS The Corporation is organized to engage in any and all lawful acts, activities, and/or pursuits for which corporations may presently or hereafter be organized under the URBCA. The Corporation shall have all powers allowed by law, including without limitation those powers described in Section 302 of the URBCA. The purposes stated herein shall be construed as powers as well as purposes and the enumeration of a specific purpose or power shall not be construed to limit or restrict the meaning of general terms or the general powers; nor shall the expression of one thing be deemed to exclude another not expressed, although it be of like nature. ARTICLE III AUTHORIZED SHARES The Corporation is authorized to issue two classes of shares. The total number of shares the Corporation is authorized to issue is One Million Two Hundred Ten Thousand (1,210,000) shares. The preferences, limitations and relative rights of the two classes of shares of the Corporation are as follows: 1. Class A Common Stock 1.1 Number, Designation and Par Value. The Corporation is authorized to issue One Million Two Hundred Thousand (1,200,000) shares desig nated as "Class A Common Stock," each having no par value (the "Class A Stock"). 1.2 Voting. The Class A Stock shall have the following rights with respect to voting: (a) Except as otherwise expressly provided in this Article III, (i) each outstanding share of Class A Stock shall be entitled to one (1) vote on each matter to be voted upon by the shareholders of the Corporation, and (ii) shares of the Class A Stock shall be voted together with shares of the Class B Stock (as defined below) in a single voting group. (b) In any election of the directors of the Corporation, the holders of the outstanding shares of Class A Stock (the "Class A Shareholders"), as a separate voting group, shall be entitled to elect one (1) director (the "Class A Director") of the three (3) directors comprising the Board of Directors of the Corporation (the "Board"). In addition, if the Class A Director vacates his 2 or her directorship, only the Class A Shareholders shall be entitled to vote to fill the vacancy. (c) The Class A Shareholders may act by written consent (either together with or without the Class B Shareholders, as appropriate) in accordance with the URBCA. 1.3 Net Assets. Upon the dissolution of the Corporation, the Class A Shareholders shall be entitled to receive, together with the Class B Share holders (as defined below), on a pro rata basis, the net assets of the Corporation. 1.4 Payment. All shares of the Class A Stock shall be fully paid and nonassessable. 2. Class B Common Stock 2.1 Number, Designation and Par Value. The Corporation is authorized to issue Ten Thousand ( 10,000) shares designated as "Class B Common Stock," each having no par value (the "Class B Stock"). 2.2 Voting. The Class B Stock shall have the following rights with respect to voting: (a) Except as otherwise expressly provided in this Article III, (i) each outstanding share of Class B Stock shall be entitled to one (1) vote on each matter to be voted upon by the shareholders of the Corporation, and (ii) shares of the Class B Stock shall be voted together with shares of the Class A Stock in a single voting group. (b) In any election of the directors of the Corporation, the holders of the outstanding shares of Class B Stock (the "Class B Shareholders"), as a separate voting, group, shall be entitled to elect two (2) directors (each a "Class B Director") of the three (3) directors comprising the Board. In addition, 3 if a Class B Director vacates his or her directorship, (i) if the vacancy is to be filled by the directors and a Class B Director remains on the Board, only the remaining Class B Director shall be entitled to vote to elect a new Class B Director to fill the vacancy, and (ii) if the vacancy is to be filled by the shareholders, only the Class B Shareholders shall be entitled to vote to fill the vacancy. (c) The Class B Shareholders may act by written consent (either together with or without the Class A Shareholders, as appropriate) in accordance with the URBCA 2.3 Net Assets. Upon the dissolution of the Corporation, the Class B Shareholders shall be entitled to receive, together with the Class A Shareholders, on a pro rata basis, the net assets of the Corporation. 2.4 Payment. All shares of the Class B Stock shall be fully paid and nonassessable. ARTICLE IV OFFICER AND DIRECTOR LIABILITY 1. Except as otherwise required by Utah law, the Corporation shall indemnify and advance expenses to its directors, officers, employees, fiducia ries or agents and to any person who is or was serving at the Corporation's request as a director, officer, partner, trustee, employee, fiduciary or agent of another domestic or foreign corporation or other person or of an employee benefit plan (and their respective estates or personal representatives) to the fullest extent as from time to time permitted by Utah law. 2. The personal liability of the directors and officers of the Corporation to the Corporation or its shareholders, or to any third person, shall 4 be eliminated or limited to the fullest extent as from time to time permitted by Utah law. 3. Any repeal or modification of this Article IV by the shareholders of the Corporation shall not adversely affect any right or protection of any person existing at the time of such repeal or modification. 5 EX-3.11 3 ARTICLES OF ORGANIZATION PAGES 1-5 THE COMMONWEALTH OF MASSACHUSETTS DEPARTMENT OF CORPORATIONS AND TAXATION WILLIAM A. SCHAN, COMMISSIONER 235 STATE HOUSE, BOSTON ARTICLES OF ORGANIZATION We, Elliott R. Barker, Elliott R. Barker, Jr., and Kenneth T. Barker being all the directors of DEERFIELD PLASTICS CO., INC. elected at its first meeting, in compliance with the requirements of General Laws, Chapter 156, Section 10, hereby certify that the following is a true copy of the agreement of association to form said corporation, with the names of the subscribers thereto: We, whose names are hereto subscribed, do, by this agreement, associate ourselves with the intention of forming a corporation under the provisions of General Laws, Chapter 156. The name by which the corporation shall be known is DEERFIELD PLASTICS CO., INC. The location of the principal office of the corporation in Massachusetts is to be the town of Deerfield. [The business address of the corporation is to be 271 Main Street, South Deerfield, Massachusetts - ------------------------------------------------------------------------------- Street and number (if office building, give room number), city or town. If such business address is not yet determined, give the name and business address of the treasurer or other officer to receive mail. - ------------------------------------------------------------------------------- Name and title of officer to receive mail and his complete business address. The purposes for which the corporation is formed and the nature of the business to be transacted by it are as follows: To manufacture and process plastics and related substances; to manufacture, re-build, repair, buy, sell, exchange or otherwise deal in all types of plastics products and related substances; and as incidental thereto, to acquire and own or rent or lease, and sell or otherwise dispose of any real or personal property, and any rights, privileges or licenses that may be necessary or convenient to the corporation in connection with the conduct of its business. The total capital stock to be authorized is as follows:
- ---------------------------------------------------------------------------------------------------------------------------- CLASS OF STOCK WITHOUT PAR VALUE WITH PAR VALUE ---------------------------------------------------------------------------------------- NUMBER OF SHARES NUMBER OF SHARES PAR AMOUNT VALUE - ------------------------------------------------------------------------------------------------------------------------------ Preferred none none none $ none - ------------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------- Common none 9900 $10. $99,000. - ------------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------
Restrictions, if any, imposed upon the transfer of shares: [PRINTED OR PHOTOSTATIC RESTRICTIONS MUST NOT BE ATTACHED IN THIS SPACE.] A description of the different classes of stock, if thee are to be two or more classes, and a statement of the terms on which they are to be created and of the method of voting thereon: Other lawful provisions, if any, for the conduct and regulation of the business of the corporation, for its voluntary dissolutions, or for limiting, defining, or regulating the posers of the corporation, or of its directors or stockholders, or of any class of stockholders: 2 [IF SEVEN DAYS' NOTICE IS GIVEN, COMPLETE THE FOLLOWING PARAGRAPH.] The first meeting shall be called by of [IF NOTICE IS WAIVED, FILL IN THE FOLLOWING PARAGRAPH.] We hereby waive all requirements of the General Laws of Massachusetts for notice of the first meeting of the incorporators for the purpose of organization, and appoint the 25th day of November , 1953, at 3:30 o'clock P.M., at the office of Stoddard, Ball & Bartlett, 359 Main Street, Greenfield, Massachusetts, as the time and place for holding such first meeting. The names and residences of the incorporators and the amount of stock subscribed for by each are as follows:
NAME DOMICIL AMOUNT OF STOCK FIRST NAME MUST BE WRITTEN IN FULL Actual place of residence must be given SUBSCRIBED FOR Initials and abbreviations are not PREFERRED COMMON sufficient. Elliott R. Barker 20 Lombard Road, Arlington 74, Mass. none none Elliott R. Barker, Jr. 315 Main Street, (South) Deerfield, Mass. none none Kenneth T. Barker 32 Commerce Street, Clinton, Connecticut none none IN WITNESS WHEREOF we hereto sign our names, this 25th day of November, 1953. (Type or plainly print the name of each incorporator as signed to the Agreement of Association.) Elliott R. Barker Elliott R. Barker, Jr. Kenneth T. Barker 3 And we further certify that: The first meeting of the subscribers to said agreement was held on the 25th day of November, 1953. The amount of capital stock now to be issued is as follows:
- ------------------------------------------------------------------------------------------------------------------ CLASS OF STOCK NUMBER OF SHARES --------------------------------------------------------------------- WITHOUT PAR VALUE WITH PAR VALUE - ------------------------------------------------------------------------------------------------------------------ Preferred none none - ------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------ Common none none - ------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------ - ----------------------------------------------------------------------------------------------------------------------------------- PREFERRED COMMON - ----------------------------------------------------------------------------------------------------------------------------------- TO BE PAID FOR: - ----------------------------------------------------------------------------------------------------------------------------------- IN CASH: - ----------------------------------------------------------------------------------------------------------------------------------- In full - ----------------------------------------------------------------------------------------------------------------------------------- By installments to be paid before commencing business - ----------------------------------------------------------------------------------------------------------------------------------- Amount of installment - ----------------------------------------------------------------------------------------------------------------------------------- IN PROPERTY: - ----------------------------------------------------------------------------------------------------------------------------------- REAL PROPERTY - ----------------------------------------------------------------------------------------------------------------------------------- Location - ----------------------------------------------------------------------------------------------------------------------------------- Area - ----------------------------------------------------------------------------------------------------------------------------------- PERSONAL PROPERTY: - ----------------------------------------------------------------------------------------------------------------------------------- Accounts receivable - ----------------------------------------------------------------------------------------------------------------------------------- Notes receivable - ----------------------------------------------------------------------------------------------------------------------------------- Merchandise - ----------------------------------------------------------------------------------------------------------------------------------- Supplies - ----------------------------------------------------------------------------------------------------------------------------------- Securities - ----------------------------------------------------------------------------------------------------------------------------------- Machinery - ----------------------------------------------------------------------------------------------------------------------------------- Motor vehicles and trailers - ----------------------------------------------------------------------------------------------------------------------------------- Equipment and tools - ----------------------------------------------------------------------------------------------------------------------------------- Furniture and fixtures - ----------------------------------------------------------------------------------------------------------------------------------- Patent rights - ----------------------------------------------------------------------------------------------------------------------------------- Trade-marks - ----------------------------------------------------------------------------------------------------------------------------------- Copyrights - ----------------------------------------------------------------------------------------------------------------------------------- Goodwill - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- 1IN SERVICES - ----------------------------------------------------------------------------------------------------------------------------------- 1IN EXPENSES - ----------------------------------------------------------------------------------------------------------------------------------- NAME DOMICIL POST OFFICE ADDRESS Actual place of residence must be given. HOME OR BUSINESS 4 President Elliott R. Barker 20 Lombard Road, Same Arlington 74, Mass. Treasurer Kenneth T. Barker 32 Commerce Street, Same Clinton, Connecticut Clerk Elliott R. Barker, Jr. 315 Main Street, Same (South) Deerfield, Mass. Directors Elliott R. Barker 20 Lombard Road, Same Arlington 74, Mass. Kenneth T. Barker 32 Commerce Street, Same Clinton, Connecticut Elliott R. Barker, Jr. 315 Main Street, Same (South) Deerfield, Mass.
IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we hereto sign our names, this 25th day of November, 1953. 5 THE COMMONWEALTH OF MASSACHUSETTS WRITE NOTHING BELOW Deerfield Plastics Co., Inc. ---------------------------------------------------------------- ---------------------------------------------------------------- Fee $50.00 paid ---------------------------------------------------------------- ARTICLES OF ORGANIZATION GENERAL LAWS, CHAPTER 156, SECTION 10 Filed in the office of the Secretary of the Commonwealth and Certificate of Incorporation issued as of November 27, 1953 ================================================================ I hereby certify that, upon an examination of the within-written articles of organization, the agreement of association, and the record of the first meeting of the incorporators, including the by-laws, duly submitted to me, it appears that the provisions of the General Laws relative to the organization of corporations have been complied with, and I hereby approve said articles this 27th day of November, 1953. Commissioner of Corporations and Taxation CHARTER TO BE SENT TO - ---------------------------------------------------------------- - ---------------------------------------------------------------- - ---------------------------------------------------------------- FILING FEE: 1/20 OF 1% OF THE TOTAL AMOUNT OF THE AUTHORIZED CAPITAL STOCK WITH PAR VALUE, AND ONE CENT A SHARE FOR ALL AUTHORIZED SHARES WITHOUT PAR VALUE, BUT NOT LESS THAN $50. GENERAL LAWS, CHAPTER 156, SECTION 53. 6 THE COMMONWEALTH OF MASSACHUSETTS DEPARTMENT OF CORPORATIONS AND TAXATION WILLIAM A. SCHAN, COMMISSIONER 230 STATE HOUSE, BOSTON 33 ISSUE OF CAPITAL STOCK This certificate must be submitted to the Commissioner of Corporation and Taxation within thirty days after the date of the vote of the directors, in accordance with General Laws Chapter 156, Section 16. The filing fee to accompany this Certificate is $15.00. Make check payable to THE COMMONWEALTH OF MASSACHUSETTS. We, Elliott R. Barker, President, Kenneth T. Barker, Treasurer, and Elliott R. Barker, Jr., Elliott R. Barker, Kenneth T. Barker being all of the Directors of DEERFIELD PLASTICS CO., INC. located at 271 Main Street, South Deerfield, Massachusetts in compliance with the provisions of Generals Laws, Chapter 156, Section 16, do hereby certify that at a meeting of the directors of the corporation held on January 28, 1954, it was voted to issue thirty-one thousand dollars of its authorized capital stock, this amount being in addition to amounts previously issued and the certificates therefore filed in the office of the Secretary of the Commonwealth; and that
The total amount of capital stock authorized is none shares preferred 9000 shares common none shares without par value The amount of capital stock already issued for none shares preferred cash payable by instalments is none shares common none shares without par value The amount paid there is $ none paid on preferred stock $ $ none paid on common stock $ none paid on shares without par value The amount of fully paid stock already issued for cash is none shares preferred none shares common none shares without par value for property is none shares preferred none shares common none shares without par value for services and expenses is none shares preferred none shares common none shares without par value
We further certify that the amount of additional capital stock to be issued1 for cash, property, services, or expenses is: WITH PAR VALUE none shares preferred $31,000.00 3100 shares common Amount of Additional Issue WITHOUT PAR VALUE none shares preferred none shares common
=================================================================================================================================== TO BE PAID FOR: PREFERRED COMMON ---------------------------------------------- IN CASH: In full 2600 By installments 500 Amount of first installment $1050 IN PROPERTY: REAL ESTATE Location Area PERSONAL PROPERTY: Accounts receivable Notes receivable Merchandise Supplies Securities Machinery Motor vehicles and trailers Equipment and tools Furniture and fixtures Patent rights Trade-marks Copyrights Goodwill Stock Dividend (Show Balance Sheet on Page 3) 2IN SERVICES 2IN EXPENSES - -----------------------------------------------------------------------------------------------------------------------------------
1 No stock shall be at any time issued unless the cash, so far as due, or the property, services or expenses for which it was authorized to be issued, has been actually received or incurred by, or conveyed or rendered to, the corporation, oris in its possession as surplus, nor shall any note or evidence of indebtedness, secured or unsecured, of any person to whom stock is issued, be deemed to be payment thereof, and the president, treasurer and directors shall be jointly and severally liable to any stockholder of the corporation for actual damages caused to him by such issue. 2 SERVICES AND EXPENSES: Services must have been rendered and expenses incurred before stock is issued therefor. State clearly the nature of such services or expenses and the amount of stock to be issued therefor. 2 IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto signed our names, this first day of February in the year 1954. 3 THE COMMONWEALTH OF MASSACHUSETTS WRITE NOTHING BELOW Deerfield Plastics Co., Inc. Fee $15.00 pd. ISSUE OF CAPITAL STOCK GENERAL LAWS, CHAPTER 156, SECTION 16 Filed in the office of the Secretary of the Commonwealth February 17, 1954. ================================================================ I hereby approve the within certificate, this 17th day of February, 1954. Commissioner of Corporations and Taxation. 4 THE COMMONWEALTH OF MASSACHUSETTS DEPARTMENT OF CORPORATIONS AND TAXATION WILLIAM A. SCHAN, COMMISSIONER 230 STATE HOUSE, BOSTON 33 INCREASE OF CAPITAL Within thirty days after the date of the vote of the stockholders, this certificate must be submitted to the Commissioner of Corporations and Taxation. See General Laws, Chapter 156, Section 43. The FEE of 1/20 of 1% of the amount by which the capital stock with par value is increased, and one cent for each additional share without par value, but not in any case fees than $25., must accompany this certificate. Make check payable to THE COMMONWEALTH OF MASSACHUSETTS. We, Elliott R. Barker, President, Kenneth T. Barker, Treasurer, and Elliott R. Barker, Jr. and Kenneth T. Barker, being a majority of the Directors of Deerfield Plastics Co., Inc. located at 271 Main Street, South Deerfield, Massachusetts in compliance with the provision of General Laws, Chapter 156, hereby certify that at a meeting of the stockholders of the corporation, duly called for the purpose, held April 30, 1954, by the affirmative vote of thirty-one hundred shares of the common stock of the corporation, being at least a majority of each class of stock outstanding and entitled to vote, the following amendment authorizing an increase in the capital stock of the corporation was duly adopted, namely: To increase the capital of the corporation by the authorization of 500 shares of prior cumulative preferred stock with a par value of $100 per share, with cumulative dividends at the rate of 6% per annum payable quarterly on February 15, May 15, August 15, and November 15 of each year. Said stock shall be callable at $105 per share, the method of call to be by lot in such amounts and at such time or times as the common stockholders may designate. In default of twelve consecutive quarterly dividend payments each share of the prior cumulative preferred stock may be converted by the holder thereof into five shares of common stock. In the event of liquidation, dissolution or winding up (either voluntary or involuntary) of the corporation the holder of the prior cumulative stock shall be entitled to be paid the sum of $100 for each share then held and outstanding plus all cumulative and unpaid dividends thereon prior to any payment on the common shares and after such payments shall be entitled to no further distribution.
The total amount of capital stock authorized is none shares preferred with par value 9000 shares common none shares preferred without par value none sharers common The amount of capital stock already issued for none shares preferred with par value cash payable by instalments is 395 shares common none shares preferred without par value none shares common The amount paid on such instalment stock is $ none on preferred with par value $3950.00 $ 3950.00 on common $ none on preferred without par value $ none on common The amount of fully paid stock already issued none shares preferred with par value for cash is 2600 shares common none shares preferred without par value none shares common for property is none shares preferred with par value 105 shares common none shares preferred without par value none shares common for services and expenses is none shares preferred with par value none shares common none shares preferred without par value none shares common for services and expenses is 500 shares preferred prior cumulative preferred with par value none shares common none shares without par value none 2 The amount of such additional stock1 now to be issued is described or stated as follows: - ----------------------------------------------------------------------------------------------------------------------------------- TO BE PAID FOR: PREFERRED COMMON ---------------------------------------------- IN CASH: In full 40 By installments Amount of first installment IN PROPERTY: REAL ESTATE Location Area PERSONAL PROPERTY: Accounts receivable Notes receivable Merchandise Supplies Securities Machinery Motor vehicles and trailers Equipment and tools Furniture and fixtures Patent rights Trade-marks Copyrights Goodwill Stock Dividend (Show Balance Sheet on Page 3) 2IN SERVICES 2IN EXPENSES - -----------------------------------------------------------------------------------------------------------------------------------
1 No stock shall be at any time issued unless the cash, so far as due, or the property, services or expenses for which it was authorized to be issued, has been actually received or incurred by, or conveyed or rendered to, the corporation, oris in its possession as surplus, nor shall any note or evidence of indebtedness, secured or unsecured, of any person to whom stock is issued, be deemed to be payment thereof, and the president, treasurer and directors shall be jointly and severally liable to any stockholder of the corporation for actual damages caused to him by such issue. 2 SERVICES AND EXPENSES: Services must have been rendered and expenses incurred before stock is issued therefor. State clearly the nature of such services or expenses and the amount of stock to be issued therefor. 3 IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we hereto sign our names, this 27th day of May, 1954. 4 THE COMMONWEALTH OF MASSACHUSETTS WRITE NOTHING BELOW Deerfield Plastics Co., Inc. ---------------------------------------------------------------- ---------------------------------------------------------------- Fee $25.00 pd. ---------------------------------------------------------------- ARTICLES OF AMENDMENT GENERAL LAWS, CHAPTER 156, SECTION 44 INCREASE OF CAPITAL Establishment of Prior Cumulative Preferred Stock at a Par Value of $100 per Share Filed in the office of the Secretary of the Commonwealth June 11, 1954 ================================================================ I hereby approve the within certificate, this 11th day of June, 1954. Commissioner of Corporations and Taxation THE COMMONWEALTH OF MASSACHUSETTS DEPARTMENT OF CORPORATIONS AND TAXATION WILLIAM A. SCHAN, COMMISSIONER 230 STATE HOUSE, BOSTON 33 ISSUE OF CAPITAL STOCK This certificate must be submitted to the Commissioner of Corporation and Taxation within thirty days after the date of the vote of the directors, in accordance with General Laws Chapter 156, Section 16. The filing fee to accompany this Certificate is $15.00. Make check payable to THE COMMONWEALTH OF MASSACHUSETTS. We, Elliott R. Barker, President, Kenneth T. Barker, Treasurer, and Elliott R. Barker, Jr. - Vice President being a majority of the Directors of DEERFIELD PLASTICS CO., INC. located at 271 Main Street, South Deerfield, Mass. in compliance with the provisions of Generals Laws, Chapter 156, Section 16, do hereby certify that at a meeting of the directors of the corporation held on November 15th, 1954, it was voted to issue $28760 dollars and no shares without par value of its authorized capital stock, this amount being in addition to amounts previously issued and the certificates therefore filed in the office of the Secretary of the Commonwealth; and that
The total amount of capital stock authorized is 500 shares prior cumulative preferred 9000 shares common none shares without par value The amount of capital stock already issued for none shares preferred cash payable by instalments is 395 shares common none shares without par value The amount paid thereon is $ none paid on preferred stock $3950 $ 3950 paid on common stock $ none paid on shares without par value The amount of fully paid stock already issued for cash is 40 shares preferred 2600 shares common none shares without par value for property is none shares preferred 105 shares common none shares without par value for services and expenses is none shares preferred none shares common none shares without par value
2 We further certify that the amount of additional capital stock to be issued1 for cash, property, services, or expenses is:
WITH PAR VALUE 210 shares prior cumulative preferred $28760 776 shares common Amount of Additional Issue WITHOUT PAR VALUE none shares preferred none shares common =================================================================================================================================== TO BE PAID FOR: PREFERRED COMMON ---------------------------------------------- IN CASH: In full 10 By installments Amount of first installment IN PROPERTY: REAL ESTATE 200 Location South Deerfield - County of Franklin Area Land & Buildings at 271 Main Street PERSONAL PROPERTY: Accounts receivable Notes receivable Merchandise Supplies Securities Machinery 776 Motor vehicles and trailers Equipment and tools Furniture and fixtures Patent rights Trade-marks Copyrights Goodwill Stock Dividend (Show Balance Sheet on Page 3) 2IN SERVICES 2IN EXPENSES - -----------------------------------------------------------------------------------------------------------------------------------
1 No stock shall be at any time issued unless the cash, so far as due, or the property, services or expenses for which it was authorized to be issued, has been actually received or incurred by, or conveyed or rendered to, the corporation, oris in its possession as surplus, nor shall any note or evidence of indebtedness, secured or unsecured, of any person to whom stock is issued, be deemed to be payment thereof, and the president, treasurer and directors shall be jointly and severally liable to any stockholder of the corporation for actual damages caused to him by such issue. 2 SERVICES AND EXPENSES: Services must have been rendered and expenses incurred before stock is issued therefor. State clearly the nature of such services or expenses and the amount of stock to be issued therefor. 3 IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto signed our names, this 15th day of November in the year 1954. 4 THE COMMONWEALTH OF MASSACHUSETTS WRITE NOTHING BELOW Deerfield Plastics Co., Inc. Fee $15.00 pd. ISSUE OF CAPITAL STOCK GENERAL LAWS, CHAPTER 156, SECTION 16 Filed in the office of the Secretary of the Commonwealth November 18, 1954 ================================================================ I hereby approve the within certificate, this 18th day of November, 1954. Commissioner of Corporations and Taxation. 5 THE COMMONWEALTH OF MASSACHUSETTS DEPARTMENT OF CORPORATIONS AND TAXATION WILLIAM A. SCHAN, COMMISSIONER 230 STATE HOUSE, BOSTON 33 ISSUE OF CAPITAL STOCK This certificate must be submitted to the Commissioner of Corporation and Taxation within thirty days after the date of the vote of the directors, in accordance with General Laws Chapter 156, Section 16. The filing fee to accompany this Certificate is $15.00. Make check payable to THE COMMONWEALTH OF MASSACHUSETTS. We, Elliott R. Barker, President, Kenneth T. Barker, Treasurer, and Elliott R. Barker, Jr. - Vice President being a majority of the Directors of DEERFIELD PLASTICS CO., INC. located at 271 Main Street - South Deerfield, Mass. in compliance with the provisions of Generals Laws, Chapter 156, Section 16, do hereby certify that at a meeting of the directors of the corporation held on April 29, 1955, it was voted to issue $7910.00 ($6700. pref. and $1210. com.) dollars and no shares without par value of its authorized capital stock, this amount being in addition to amounts previously issued and the certificates therefore filed in the office of the Secretary of the Commonwealth; and that
The total amount of capital stock authorized is 500 shares prior cumulative preferred 9900 shares common none shares without par value The amount of capital stock already issued for none shares preferred cash payable by instalments is none shares common none shares without par value The amount paid thereon is $ paid on preferred stock $ $ paid on common stock $ paid on shares without par value The amount of fully paid stock already issued for cash is 50 shares preferred 3876 shares common none shares without par value for property is 200 shares preferred none shares common none shares without par value for services and expenses is none shares preferred none shares common none shares without par value We further certify that the amount of additional capital stock to be issued1 for cash, property, services, or expenses is: WITH PAR VALUE 67 shares prior cumulative preferred $7910 Amount of Additional Issue 121 shares common WITHOUT PAR VALUE none shares preferred none shares common
=================================================================================================================================== TO BE PAID FOR: PREFERRED COMMON ---------------------------------------------- IN CASH: In full 55 121 By installments Amount of first installment IN PROPERTY: REAL ESTATE Location Area PERSONAL PROPERTY: Accounts receivable Notes receivable Merchandise Supplies Securities Machinery Motor vehicles and trailers Equipment and tools Furniture and fixtures Patent rights Trade-marks Copyrights Goodwill Stock Dividend (Show Balance Sheet on Page 3) 2IN SERVICES (Salary 12 mos. @ $100/mo. ending 4/30/55) 12 2IN EXPENSES - -----------------------------------------------------------------------------------------------------------------------------------
1 No stock shall be at any time issued unless the cash, so far as due, or the property, services or expenses for which it was authorized to be issued, has been actually received or incurred by, or conveyed or rendered to, the corporation, oris in its possession as surplus, nor shall any note or evidence of indebtedness, secured or unsecured, of any person to whom stock is issued, be deemed to be payment thereof, and the president, treasurer and directors shall be jointly and severally liable to any stockholder of the corporation for actual damages caused to him by such issue. 2 SERVICES AND EXPENSES: Services must have been rendered and expenses incurred before stock is issued therefor. State clearly the nature of such services or expenses and the amount of stock to be issued therefor. 2 IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto signed our names, this 10th day of May in the year 1955. 3 THE COMMONWEALTH OF MASSACHUSETTS WRITE NOTHING BELOW Deerfield Plastics Co., Inc. Fee $15.00 paid ISSUE OF CAPITAL STOCK GENERAL LAWS, CHAPTER 156, SECTION 16 Filed in the office of the Secretary of the Commonwealth May 12, 1955 ================================================================ I hereby approve the within certificate, this 12th day of May, 1955. Commissioner of Corporations and Taxation. 4 THE COMMONWEALTH OF MASSACHUSETTS DEPARTMENT OF CORPORATIONS AND TAXATION WILLIAM A. SCHAN, COMMISSIONER 230 STATE HOUSE, BOSTON 33 ISSUE OF CAPITAL STOCK This certificate must be submitted to the Commissioner of Corporation and Taxation within thirty days after the date of the vote of the directors, in accordance with General Laws Chapter 156, Section 16. The filing fee to accompany this Certificate is $15.00. Make check payable to THE COMMONWEALTH OF MASSACHUSETTS. We, Elliott R. Barker, President, Elliot R. Barker, Treasurer, and Kenneth T. Barker, Vice President and Elliott R. Barker, Jr., Clerk being a majority of the Directors of DEERFIELD PLASTICS CO., INC. located at 271 Main Street - South Deerfield, Mass. in compliance with the provisions of Generals Laws, Chapter 156, Section 16, do hereby certify that at a meeting of the directors of the corporation held on June 20, 1955, it was voted to issue $2,000.00 (20 Preferred) dollars and no shares without par value of its authorized capital stock, this amount being in addition to amounts previously issued and the certificates therefore filed in the office of the Secretary of the Commonwealth; and that
The total amount of capital stock authorized is 500 shares prior cumulative preferred 9900 shares common none shares without par value The amount of capital stock already issued for none shares preferred cash payable by instalments is none shares common none shares without par value The amount paid thereon is $ paid on preferred stock $ $ paid on common stock $ paid on shares without par value The amount of fully paid stock already issued for cash is 105 shares preferred 3997 shares common none shares without par value for property is 200 shares preferred none shares common none shares without par value for services and expenses is 12 shares preferred none shares common none shares without par value We further certify that the amount of additional capital stock to be issued1 for cash, property, services, or expenses is: WITH PAR VALUE 20 shares preferred $2,000.00 Amount of Additional Issue none shares common WITHOUT PAR VALUE none shares preferred none shares common
=================================================================================================================================== TO BE PAID FOR: PREFERRED COMMON ---------------------------------------------- IN CASH: In full 20 By installments Amount of first installment IN PROPERTY: REAL ESTATE Location Area PERSONAL PROPERTY: Accounts receivable Notes receivable Merchandise Supplies Securities Machinery Motor vehicles and trailers Equipment and tools Furniture and fixtures Patent rights Trade-marks Copyrights Goodwill Stock Dividend (Show Balance Sheet on Page 3) 2IN SERVICES 2IN EXPENSES - -----------------------------------------------------------------------------------------------------------------------------------
1 No stock shall be at any time issued unless the cash, so far as due, or the property, services or expenses for which it was authorized to be issued, has been actually received or incurred by, or conveyed or rendered to, the corporation, oris in its possession as surplus, nor shall any note or evidence of indebtedness, secured or unsecured, of any person to whom stock is issued, be deemed to be payment thereof, and the president, treasurer and directors shall be jointly and severally liable to any stockholder of the corporation for actual damages caused to him by such issue. 2 SERVICES AND EXPENSES: Services must have been rendered and expenses incurred before stock is issued therefor. State clearly the nature of such services or expenses and the amount of stock to be issued therefor. 2 IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto signed our names, this 11th day of July in the year 1955. 3 THE COMMONWEALTH OF MASSACHUSETTS WRITE NOTHING BELOW Deerfield Plastics Co., Inc. ISSUE OF CAPITAL STOCK GENERAL LAWS, CHAPTER 156, SECTION 16 Filed in the office of the Secretary of the Commonwealth July 14, 1955 ================================================================ I hereby approve the within certificate, this 14th day of July, 1955. Commissioner of Corporations and Taxation. 4 THE COMMONWEALTH OF MASSACHUSETTS DEPARTMENT OF CORPORATIONS AND TAXATION WILLIAM A. SCHAN, COMMISSIONER 230 STATE HOUSE, BOSTON 33 ISSUE OF CAPITAL STOCK This certificate must be submitted to the Commissioner of Corporation and Taxation within thirty days after the date of the vote of the directors, in accordance with General Laws Chapter 156, Section 16. The filing fee to accompany this Certificate is $15.00. Make check payable to THE COMMONWEALTH OF MASSACHUSETTS. We, Kenneth T. Barker, President, Elliot R. Barker, Jr. - Ass't. Treasurer, and Marlon A. Pierson being a majority of the Directors of DEERFIELD PLASTICS CO., INC. located at South Deerfield, Mass. in compliance with the provisions of Generals Laws, Chapter 156, Section 16, do hereby certify that at a meeting of the directors of the corporation held on September 16, 1955, it was voted to issue $360.00 (Common Stock) dollars and no shares without par value of its authorized capital stock, this amount being in addition to amounts previously issued and the certificates therefore filed in the office of the Secretary of the Commonwealth; and that
The total amount of capital stock authorized is 500 shares cumulative preferred 9900 shares common none shares without par value The amount of capital stock already issued for none shares preferred cash payable by instalments is none shares common none shares without par value The amount paid thereon is $ paid on preferred stock $ $ paid on common stock $ paid on shares without par value The amount of fully paid stock already issued for cash is 125 shares preferred 3997 shares common none shares without par value for property is 200 shares preferred none shares common none shares without par value for services and expenses is 12 shares preferred none shares common none shares without par value We further certify that the amount of additional capital stock to be issued1 for cash, property, services, or expenses is: WITH PAR VALUE shares preferred $360.00 Amount of Additional Issue 36 shares common WITHOUT PAR VALUE shares preferred shares common
=================================================================================================================================== TO BE PAID FOR: PREFERRED COMMON ---------------------------------------------- IN CASH: In full By installments Amount of first installment IN PROPERTY: REAL ESTATE Location Area PERSONAL PROPERTY: Accounts receivable Notes receivable Merchandise Supplies Securities Machinery Motor vehicles and trailers Equipment and tools Furniture and fixtures Patent rights Trade-marks Copyrights Goodwill Stock Dividend (Show Balance Sheet on Page 3) 2IN SERVICES (Productivity Bonus) 36 shares 2IN EXPENSES - -----------------------------------------------------------------------------------------------------------------------------------
1 No stock shall be at any time issued unless the cash, so far as due, or the property, services or expenses for which it was authorized to be issued, has been actually received or incurred by, or conveyed or rendered to, the corporation, oris in its possession as surplus, nor shall any note or evidence of indebtedness, secured or unsecured, of any person to whom stock is issued, be deemed to be payment thereof, and the president, treasurer and directors shall be jointly and severally liable to any stockholder of the corporation for actual damages caused to him by such issue. 2 SERVICES AND EXPENSES: Services must have been rendered and expenses incurred before stock is issued therefor. State clearly the nature of such services or expenses and the amount of stock to be issued therefor. 2 IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto signed our names, this 30th day of September in the year 1955. 3 THE COMMONWEALTH OF MASSACHUSETTS WRITE NOTHING BELOW Deerfield Plastics Co., Inc. ISSUE OF CAPITAL STOCK GENERAL LAWS, CHAPTER 156, SECTION 16 Filed in the office of the Secretary of the Commonwealth October 4, 1955 ================================================================ I hereby approve the within certificate, this 4th day of October, 1955. Commissioner of Corporations and Taxation. 4 THE COMMONWEALTH OF MASSACHUSETTS DEPARTMENT OF CORPORATIONS AND TAXATION WILLIAM A. SCHAN, COMMISSIONER 230 STATE HOUSE, BOSTON 33 INCREASE OF CAPITAL Within thirty days after the date of the vote of the stockholders, this certificate must be submitted to the Commissioner of Corporations and Taxation. See General Laws, Chapter 156, Section 43. The FEE of 1/20 of 1% of the amount by which the capital stock with par value is increased, and one cent for each additional share without par value, but not in any case fees than $25., must accompany this certificate. Make check payable to THE COMMONWEALTH OF MASSACHUSETTS. We, Kenneth T. Barker, President, Elliott R. Barker, Jr., Treasurer, and Elliott R. Barker, Jr., Kenneth T. Barker and George H. Nord being a majority of the Directors of Deerfield Plastics Co., Inc. located at 271 Main Street, South Deerfield, Massachusetts, in compliance with the provision of General Laws, Chapter 156, hereby certify that at a meeting of the stockholders of the corporation, duly called for the purpose, held April 24, 1956, by the affirmative vote of 4007 shares of the common stock of the corporation, being at least a majority of each class of stock outstanding and entitled to vote, the following amendment authorizing an increase in the capital stock of the corporation was duly adopted, namely: To increase the capital of the corporation by the authorization of 500 additional shares of prior cumulative preferred stock with a par value of $100 per share, with cumulative dividends at the rate of 6% per annum payable quarterly on February 15, May 15, August 15, and November 15 of each year. Said stock shall be callable at $105 per share, the method of call to be by lot in such amounts and at such time or times as the common stockholders may designate. In default of twelve consecutive quarterly dividend payments each share of the prior cumulative preferred stock may be converted by the holder thereof into five shares of common stock. In the event of liquidation, dissolution or winding up (either voluntary or involuntary) of the corporation the holder of the prior cumulative stock shall be entitled to be paid the sum of $100 for each share then held and outstanding plus all cumulative and unpaid dividends thereon prior to any payment on the common shares and after such payments shall be entitled to no further distribution.
The total amount of capital stock authorized is 500 shares prior cumu- preferred lative preferred with par value 9900 shares common none shares preferred without par value none sharers common The amount of capital stock already issued for none shares preferred with par value cash payable by instalments is 395 shares common none shares preferred without par value none shares common The amount paid on such instalment stock is $ none on preferred with par value $3950.00 $ 3950.00 on common $ none on preferred without par value $ none on common The amount of fully paid stock already issued 137 shares prior cumu- with par value for cash is lative preferred 2700 shares common none shares preferred without par value none shares common for property is 200 shares preferred with par value 83 shares common none shares preferred without par value none shares common for services and expenses is none shares preferred with par value 131 shares common none shares preferred without par value none shares common for services and expenses is 500 shares prior cumu- with par value lative preferred none shares common none shares without par value none 2
The amount of such additional stock1 now to be issued is described or stated as follows:
- ----------------------------------------------------------------------------------------------------------------------------------- TO BE PAID FOR: PREFERRED COMMON ---------------------------------------------- IN CASH: In full By installments Amount of first installment IN PROPERTY: REAL ESTATE Location Area PERSONAL PROPERTY: Accounts receivable Notes receivable Merchandise Supplies Securities Machinery Motor vehicles and trailers Equipment and tools Furniture and fixtures Patent rights Trade-marks Copyrights Goodwill Stock Dividend (Show Balance Sheet on Page 3) 2IN SERVICES 2IN EXPENSES - -----------------------------------------------------------------------------------------------------------------------------------
1 No stock shall be at any time issued unless the cash, so far as due, or the property, services or expenses for which it was authorized to be issued, has been actually received or incurred by, or conveyed or rendered to, the corporation, oris in its possession as surplus, nor shall any note or evidence of indebtedness, secured or unsecured, of any person to whom stock is issued, be deemed to be payment thereof, and the president, treasurer and directors shall be jointly and severally liable to any stockholder of the corporation for actual damages caused to him by such issue. 2 SERVICES AND EXPENSES: Services must have been rendered and expenses incurred before stock is issued therefor. State clearly the nature of such services or expenses and the amount of stock to be issued therefor. 3 IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we hereto sign our names, this 26th day of April, 1956. - ---------------------------- Kenneth T. Barker - ---------------------------- Elliott R. Barker, Jr. - ---------------------------- George H. Nord 4 THE COMMONWEALTH OF MASSACHUSETTS WRITE NOTHING BELOW Deerfield Plastics Co., Inc. ---------------------------------------------------------------- ---------------------------------------------------------------- Fee $25.00 pd. ---------------------------------------------------------------- ARTICLES OF AMENDMENT GENERAL LAWS, CHAPTER 156, SECTION 44 INCREASE OF CAPITAL Filed in the office of the Secretary of the Commonwealth April 30, 1956 ================================================================ I hereby approve the within certificate, this 30th day of April, 1956. Commissioner of Corporations and Taxation 5 THE COMMONWEALTH OF MASSACHUSETTS DEPARTMENT OF CORPORATIONS AND TAXATION WILLIAM A. SCHAN, COMMISSIONER 230 STATE HOUSE, BOSTON 33 ISSUE OF CAPITAL STOCK This certificate must be submitted to the Commissioner of Corporation and Taxation within thirty days after the date of the vote of the directors, in accordance with General Laws Chapter 156, Section 16. The filing fee to accompany this Certificate is $15.00. Make check payable to THE COMMONWEALTH OF MASSACHUSETTS. We, Kenneth T. Barker, President, Elliott R. Barker, Jr., Treasurer, and Stanley F. Jorczak being a majority of the Directors of DEERFIELD PLASTICS CO., INC. located at 271 Main Street - South Deerfield, Mass. in compliance with the provisions of Generals Laws, Chapter 156, Section 16, do hereby certify that at a meeting of the directors of the corporation held on April 11, 1956, it was voted to issue $740.00 (Common Stock) dollars and no shares without par value of its authorized capital stock, this amount being in addition to amounts previously issued and the certificates therefore filed in the office of the Secretary of the Commonwealth; and that
The total amount of capital stock authorized is 500 shares preferred 9900 shares common none shares without par value The amount of capital stock already issued for none shares preferred cash payable by instalments is none shares common none shares without par value The amount paid there is $ none paid on preferred stock $3950.00 $ 3950.00 paid on common stock $ none paid on shares without par value The amount of fully paid stock already issued for cash is 137 shares preferred 2700 shares common none shares without par value for property is 200 shares preferred 881 shares common none shares without par value for services and expenses is none shares preferred 57 shares common none shares without par value We further certify that the amount of additional capital stock to be issued1 for cash, property, services, or expenses is: WITH PAR VALUE shares preferred $740 Amount of Additional Issue 74 shares common WITHOUT PAR VALUE shares preferred shares common
=================================================================================================================================== TO BE PAID FOR: PREFERRED COMMON ---------------------------------------------- IN CASH: In full By installments Amount of first installment IN PROPERTY: REAL ESTATE Location Area PERSONAL PROPERTY: Accounts receivable Notes receivable Merchandise Supplies Securities Machinery Motor vehicles and trailers Equipment and tools Furniture and fixtures Patent rights Trade-marks Copyrights Goodwill Stock Dividend (Show Balance Sheet on Page 3) 2IN SERVICES $740.00 2IN EXPENSES - -----------------------------------------------------------------------------------------------------------------------------------
1 No stock shall be at any time issued unless the cash, so far as due, or the property, services or expenses for which it was authorized to be issued, has been actually received or incurred by, or conveyed or rendered to, the corporation, oris in its possession as surplus, nor shall any note or evidence of indebtedness, secured or unsecured, of any person to whom stock is issued, be deemed to be payment thereof, and the president, treasurer and directors shall be jointly and severally liable to any stockholder of the corporation for actual damages caused to him by such issue. 2 SERVICES AND EXPENSES: Services must have been rendered and expenses incurred before stock is issued therefor. State clearly the nature of such services or expenses and the amount of stock to be issued therefor. 2 IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto signed our names, this 21st day of May in the year 1956. - ------------------------------ Kenneth T. Barker - ------------------------------ Elliott R. Barker - ------------------------------ George H. Nord 3 THE COMMONWEALTH OF MASSACHUSETTS WRITE NOTHING BELOW Deerfield Plastics Co., Inc. Val Fee $2.00 Paid INCREASE OF CAPITAL GENERAL LAWS, CHAPTER 156, SECTION 16 Filed in the office of the Secretary of the Commonwealth June 28, 1956 ================================================================ I hereby approve the within certificate, this 28th day of June, 1956. Commissioner of Corporations and Taxation. 4 THE COMMONWEALTH OF MASSACHUSETTS DEPARTMENT OF CORPORATIONS AND TAXATION 235 STATE HOUSE, BOSTON 33 ISSUE OF CAPITAL STOCK This certificate must be submitted to the Commissioner of Corporations and Taxation within thirty days after the date of the vote of the directors, in accordance with General Laws, Chapter 156, Section 16. The filing fee to accompany this Certificate is $15.00. Make check payable to THE COMMONWEALTH OF MASSACHUSETTS. ---------------- We, Kenneth T. Barker, President, Elliott R. Barker, Jr., Treasurer, and Stanley F. Jorczak being a majority of the Directors of DEERFIELD PLASTICS CO., INC. located at 271 Main Street, South Deerfield, Massachusetts , in compliance with the provisions of General Laws, Chapter 156, Section 16, do hereby certify that at a meeting of the directors of the corporation held on July 18, 1956 , it was voted to issue 10 shares (preferred) and 18 shares (common) dollars, shares with par value of its authorized capital stock, this amount being in addition to amounts previously issued and the certificates therefor filed in the office of the Secretary of the Commonwealth; and that
1,000 shares preferred The total amount of capital stock authorized is: 9,900 shares common none shares without par value none shares preferred The amount of capital stock already issued for 395 shares common cash payable by installments is none shares without par value $ none paid on preferred stock The amount paid thereon is $ 3,950.00 paid on common stock $ 3,950.00 $ none paid on shares without par value The amount of fully paid stock already issued 240 shares preferred for cash is ................................ 2,700 shares common none shares without par value 200 shares preferred for property is ............................ 881 shares common none shares without par value none shares preferred for services and expenses is .............. 131 shares common none shares without par value We further certify that the amount of additional capital stock to be issued1 for cash, property, services, or expenses is: WITH PAR VALUE 10 shares preferred Amount of Additional Issue 18 shares common WITHOUT PAR VALUE none shares preferred none shares common
========================================================================================================================== TO BE PAID FOR:............................................................. PREFERRED COMMON --------------------------------------------- IN CASH:.................................................................. In full................................................................. 10 shares By installments......................................................... Amount of first instalment.............................................. IN PROPERTY:.............................................................. REAL ESTATE............................................................. Location.............................................................. Area.................................................................. PERSONAL PROPERTY:...................................................... Accounts receivable................................................... Notes receivable...................................................... Merchandise........................................................... Supplies.............................................................. 18 shares Securities............................................................ Machinery............................................................. Motor vehicles and trailers........................................... Equipment and tools................................................... Furniture and fixtures Patent rights......................................................... Trade-marks........................................................... Copyrights............................................................ Goodwill.............................................................. Stock Dividend (Show Balance Sheet on Page 3)......................... 2IN SERVICES. . . . . . . . . .(Productivity Bonus)....................... 2IN EXPENSES..............................................................
1 No stock shall be at any time issued unless the cash, so far as due, or the property, services or expenses for which it was authorized to be issued, has been actually received or incurred by, or conveyed or rendered to, the corporation, or is in its possession as surplus; nor shall any note or evidence of indebtedness, secured or unsecured, of any person to who stock is issued, be deemed to be payment therefor; and the president, treasurer and directors shall be jointly and severally liable to any stockholder of the corporation for actual damages caused to him by such issue. 2 SERVICES AND EXPENSES: Services must have been rendered and expenses incurred before stock is issued therefor. State clearly the nature of such services or expenses and the amount of stock to be issued therefor. 2 IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto signed our names, this 10th day of August in the year 1956, /s/ - --------------------------------------- Kenneth T. Barker /s/ - --------------------------------------- Elliott R. Barker, Jr. /s/ - --------------------------------------- Stanley F. Jorczak 3 THE COMMONWEALTH OF MASSACHUSETTS WRITE NOTHING BELOW Deerfield Plastics Co., Inc. ISSUE OF CAPITAL STOCK General Laws, Chapter 156, Section 16 Filed in the office of the Secretary of the Commonwealth Aug. 13, 1956 - ------------------------------------------------------------------------------- I hereby approve the within certificate, this 13th day of August, 1956 ------------------------------------------------ Commissioner of Corporations and Taxation [Seals] THE COMMONWEALTH OF MASSACHUSETTS DEPARTMENT OF CORPORATIONS AND TAXATION 235 STATE HOUSE, BOSTON 33 ISSUE OF CAPITAL STOCK This certificate must be submitted to the Commissioner of Corporations and Taxation within thirty days after the date of the vote of the directors, in accordance with General Laws, Chapter 156, Section 16. The filing fee to accompany this Certificate is $15.00. Make check payable to THE COMMONWEALTH OF MASSACHUSETTS. ------------------ We, Kenneth T. Barker, President, Elliott R. Barker, Jr., Treasurer, and Stanley F. Jorczak being a majority of the Directors of Deerfield Plastics Co., Inc. located at South Deerfield in the Town of Deerfield, in compliance with the provisions of General Laws, Chapter 156, Section 16, do hereby certify that at a meeting of the directors of the corporation held on (a) August 15, 1956, (b) October 17, 1956, and (c) February 2, 1957, it was voted to issue (a) $1,000 (100 shares); (b) $2,200 (22 shares prior cum pfd); (c) $500.00 (5 shares prior cum pfd) dollars, and no shares with par value of its authorized capital stock, this amount being in addition to amounts previously issued and the certificates therefor filed in the office of the Secretary of the Commonwealth; and that
prior cumulative 1,000 shares/preferred The total amount of capital stock authorized is: 9,900 shares common none shares without par value none shares preferred The amount of capital stock already issued for 395 shares common cash payable by installments is none shares without par value $ none paid on preferred stock The amount paid thereon is $ 3,950 paid on common stock $ 3,950.00 $ none paid on shares without par value The amount of fully paid stock already issued prior cumulative 250 shares/preferred for cash is ................................ 2,700 shares common none shares without par value .................................. prior cumulative 240 shares/preferred for property is ............................ 881 shares common none shares without par value none shares preferred for services and expenses is .............. 149 shares common none shares without par value We further certify that the amount of additional capital stock to be issued1 for cash, property, services, or expenses is: prior cumulative WITH PAR VALUE 27 shares/preferred 2,700.00 $ 1,000.00 Amount of Additional Issue 100 shares common WITHOUT PAR VALUE none shares preferred none shares common prior cumulative
TO BE PAID FOR: PREFERRED COMMON IN CASH: In full...................................................... 27 By installments.............................................. Amount of first instalment................................... IN PROPERTY: REAL ESTATE.................................................. Location.................................................. Area...................................................... PERSONAL PROPERTY: Accounts receivable....................................... Notes receivable.......................................... Merchandise............................................... Supplies.................................................. Securities................................................ Machinery................................................. Motor vehicles and trailers............................... Equipment and tools....................................... Furniture and fixtures.................................... Patent rights............................................. Trade-marks............................................... Copyrights................................................ Goodwill.................................................. Stock Dividend (Show Balance Sheet on Page 3)............. 2IN SERVICES. . . . . . . . . .................................. 100 2IN EXPENSES....................................................
1 No stock shall be at any time issued unless the cash, so far as due, or the property, services or expenses for which it was authorized to be issued, has been actually received or incurred by, or conveyed or rendered to, the corporation, or is in its possession as surplus; nor shall any note or evidence of indebtedness, secured or unsecured, of any person to who stock is issued, be deemed to be payment therefor; and the president, treasurer and directors shall be jointly and severally liable to any stockholder of the corporation for actual damages caused to him by such issue. 2 SERVICES AND EXPENSES: Services must have been rendered and expenses incurred before stock is issued therefor. State clearly the nature of such services or expenses and the amount of stock to be issued therefor. Production bonus of 100 shares common voted to George Nord, plant 2 IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto signed our names, this 13th day of March in the year 1957, /s/ - --------------------------------------- Kenneth T. Barker /s/ - --------------------------------------- Elliott R. Barker, Jr. /s/ - --------------------------------------- Stanley F. Jorczak 3 THE COMMONWEALTH OF MASSACHUSETTS WRITE NOTHING BELOW Deerfield Plastics Co., Inc. ISSUE OF CAPITAL STOCK General Laws, Chapter 156, Section 16 Filed in the office of the Secretary of the Commonwealth April 9, 1957 ----------------------- I hereby approve the within certificate, this 9th day of April, 1957 ---------------------------------------------- Commissioner of Corporations and Taxation [Seals] THE COMMONWEALTH OF MASSACHUSETTS DEPARTMENT OF CORPORATIONS AND TAXATION JOSEPH P. HEALEY, COMMISSIONER 236 STATE HOUSE, BOSTON 33 ISSUE OF CAPITAL STOCK This certificate must be submitted to the Commissioner of Corporations and Taxation within thirty days after the date of the vote of the directors, in accordance with General Laws, Chapter 156, Section 16. The filing fee to accompany this Certificate is $10.00. Make check payable to THE COMMONWEALTH OF MASSACHUSETTS. We, Kenneth T. Barker, President, Elliott R. Barker, Jr., Treasurer, Kenneth T. Barker, Elliott R. Barker, Jr., Stanley F. Jorczak and Leo N. Roy being a majority of the Directors of Deerfield Plastics Co., Inc. located at South Deerfield in the Town of Deerfield, in compliance with the provisions of General Laws, Chapter 156, Section 16, do hereby certify that at a meeting of the directors of the corporation held on July 1, 1957 , it was voted to issue - - - - Eleven Thousand - - - dollars, and no shares without par value of its authorized capital stock, this amount being in addition to amounts previously issued and the certificates therefor filed in the office of the Secretary of the Commonwealth; and that
prior cumulative The total amount of capital stock authorized is: 1,000 shares/preferred 9,900 shares common none shares without par value The amount of capital stock already issued for cash payable by installments is none shares preferred 395 shares common none shares without par value The amount paid thereon is $3,950.00 $ none paid on preferred stock $ 3,950 paid on common stock $ none paid on shares without par value The amount of fully paid stock already issued prior cumulative 277 shares/preferred for cash is................................. 2,700 shares common none shares without par value prior cumulative 200 shares/preferred for property is............................. 881 shares common none shares without par value none shares preferred for services and expenses is ............... 249 shares common none shares without par value We further certify that the amount of additional capital stock to be issued1 for cash, property, services, or expenses is: prior cumulative WITH PAR VALUE 110 shares preferred $11,00.00 Amount of Additional Issue none shares common WITHOUT PAR VALUE none shares preferred none shares common
TO BE PAID FOR: PREFERRED COMMON IN CASH: In full...................................................... 110 By installments.............................................. Amount of first instalment................................... IN PROPERTY: REAL ESTATE.................................................. Location.................................................. Area...................................................... PERSONAL PROPERTY: Accounts receivable....................................... Notes receivable.......................................... Merchandise............................................... Supplies.................................................. Securities................................................ Machinery................................................. Motor vehicles and trailers............................... Equipment and tools....................................... Furniture and fixtures.................................... Patent rights............................................. Trade-marks............................................... Copyrights................................................ Goodwill.................................................. Stock Dividend (Show Balance Sheet on Page 3)............. 2IN SERVICES. . . . . . . . . .(Productivity Bonus)............. 100 shares 2IN EXPENSES....................................................
1 No stock shall be at any time issued unless the cash, so far as due, or the property, services or expenses for which it was authorized to be issued, has been actually received or incurred by, or conveyed or rendered to, the corporation, or is in its possession as surplus; nor shall any note or evidence of indebtedness, secured or unsecured, of any person to who stock is issued, be deemed to be payment therefor; and the president, treasurer and directors shall be jointly and severally liable to any stockholder of the corporation for actual damages caused to him by such issue. 2 SERVICES AND EXPENSES: Services must have been rendered and expenses incurred before stock is issued therefor. State clearly the nature of such services or expenses and the amount of stock to be issued therefor. 2 IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto signed our names, this 26th day of July in the year 1957. /s/ - --------------------------------------- Kenneth T. Barker /s/ - --------------------------------------- Stanley F. Jorczak /s/ - --------------------------------------- Elliott R. Barker, Jr. /s/ - --------------------------------------- Leo N. Roy 3 THE COMMONWEALTH OF MASSACHUSETTS WRITE NOTHING BELOW Deerfield Plastics Co., Inc. ISSUE OF CAPITAL STOCK General Laws, Chapter 156, Section 16 Filed in the office of the Secretary of the Commonwealth August 1, 1957 --------------------------- I hereby approve the within certificate, this 1st day of August, 1957 ------------------------------------------ Joseph P. Healey Commissioner of Corporations and Taxation [Seals] THE COMMONWEALTH OF MASSACHUSETTS DEPARTMENT OF CORPORATIONS AND TAXATION JOSEPH P. HEALEY, COMMISSIONER 236 STATE HOUSE, BOSTON 33 ISSUE OF CAPITAL STOCK This certificate must be submitted to the Commissioner of Corporations and Taxation within thirty days after the date of the vote of the directors, in accordance with General Laws, Chapter 156, Section 16. The filing fee to accompany this Certificate is $15.00. Make check payable to THE COMMONWEALTH OF MASSACHUSETTS. We, Kenneth T. Barker, President, Elliott R. Barker, Jr., Treasurer Kenneth T. Barker, Elliott R. Barker, Jr., Stanley F. Jorczak and Charles N. Stoddard, Jr. being a majority of the Directors of DEERFIELD PLASTICS CO., INC. located at South Deerfield in the Town of Deerfield , in compliance with the provisions of General Laws, Chapter 156, Section 16, do hereby certify that at a meeting of the directors of the corporation held on October 18, 1957 , it was voted to issue - - - - Ten Thousand Five Hundred- - - - dollars, and no shares without par value of its authorized capital stock, this amount being in addition to amounts previously issued and the certificates therefor filed in the office of the Secretary of the Commonwealth; and that
prior cumulative The total amount of capital stock authorized is: 1,000 shares/preferred 9,900 shares common none shares without par value The amount of capital stock already issued for cash payable by installments is none shares preferred 395 shares common none shares without par value The amount paid thereon is $3,950.00 $ none paid on preferred stock $ 3,950 paid on common stock $ none paid on shares without par value The amount of fully paid stock already issued prior cumulative 387 shares/preferred for cash is ................................ 2,700 shares common none shares without par value prior cumulative 200 shares/preferred for property is ............................ 881 shares common none shares without par value none shares preferred for services and expenses is .............. 249 shares common none shares without par value We further certify that the amount of additional capital stock to be issued1 for cash, property, services, or expenses is: prior cumulative WITH PAR VALUE 105 shares preferred $10,500 Amount of Additional Issue none shares common WITHOUT PAR VALUE none shares preferred none shares common Prior Cumulative
TO BE PAID FOR: PREFERRED COMMON IN CASH: In full...................................................... 105 By installments.............................................. Amount of first instalment................................... IN PROPERTY: REAL ESTATE.................................................. Location.................................................. Area...................................................... PERSONAL PROPERTY: Accounts receivable....................................... Notes receivable.......................................... Merchandise............................................... Supplies.................................................. Securities................................................ Machinery................................................. Motor vehicles and trailers............................... Equipment and tools....................................... Furniture and fixtures Patent rights............................................. Trade-marks............................................... Copyrights................................................ Goodwill.................................................. Stock Dividend (Show Balance Sheet on Page 3)............. 2IN SERVICES. . . . . . . . . .(Productivity Bonus)............. 100 shares 2IN EXPENSES....................................................
1 No stock shall be at any time issued unless the cash, so far as due, or the property, services or expenses for which it was authorized to be issued, has been actually received or incurred by, or conveyed or rendered to, the corporation, or is in its possession as surplus; nor shall any note or evidence of indebtedness, secured or unsecured, of any person to who stock is issued, be deemed to be payment therefor; and the president, treasurer and directors shall be jointly and severally liable to any stockholder of the corporation for actual damages caused to him by such issue. 2 SERVICES AND EXPENSES: Services must have been rendered and expenses incurred before stock is issued therefor. State clearly the nature of such services or expenses and the amount of stock to be issued therefor. 2 IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto signed our names, this 16th day of July in the year 1958. /s/ - --------------------------------------- Charles N. Stoddard, Jr. /s/ - --------------------------------------- Stanley F. Jorczak /s/ - --------------------------------------- Elliott R. Barker, Jr. /s/ - --------------------------------------- Kenneth T. Barker 3 THE COMMONWEALTH OF MASSACHUSETTS WRITE NOTHING BELOW Deerfield Plastics Co., Inc. ISSUE OF CAPITAL STOCK General Laws, Chapter 156, Section 16 Filed in the office of the Secretary of the Commonwealth August 11, 1958 - ------------------------------------------------------------------------------- I hereby approve the within certificate, this 11th day of August, 1958 ----------------------------------------- Joseph P. Healey Commissioner of Corporations and Taxation [Seals] R.C.-1 THE COMMONWEALTH OF MASSACHUSETTS DEPARTMENT OF CORPORATIONS AND TAXATION 240 STATE HOUSE, BOSTON MASS. REDUCTION OF CAPITAL The fee for filing to accompany this certificate is $15.00. Checks should be made payable to The Commonwealth of Massachusetts. This certificate must be submitted to the Commissioner of Corporations and Taxation within thirty days after the date of the meeting at which the amendment was adopted. Section 45, Chapter 156, General Laws. ------------------ We, Kenneth T. Barker, President, Elliott R. Barker, Jr., Treasurer and Kenneth T. Barker, Elliott R. Barker, Jr., Stanley F. Jorczak and Charles N. Stoddard, Jr. being a majority of the directors of Deerfield Plastics Co., Inc. located at South Deerfield in the Town of Deerfield, in compliance with the provisions of Chapter 156 of the General Laws, do hereby certify that at a meeting of the stockholders of the corporation, duly called for the purpose, held Jan. 31, 1958 , and by the affirmative vote of - - - - 3,238 - - - - shares of the common stock of the corporation, being at least a majority of all the stock outstanding and entitled to vote, the following amendment authorizing a reduction in the capital stock of the corporation was duly adopted, namely: [Here insert an exact copy of the vote or votes authorizing the reduction.] To reduce the authorized capital of the corporation by 1,000 shares of prior cumulative preferred stock with a par value of $100.00 per share with cumulative dividends so that the authorized capital of the corporation shall consist solely of 9,900 shares of common stock with a par value of $10.00 per share.
prior cumulative The total amount of capital stock already authorized is . . . 1,000 shares/preferred with par value 9,900 shares common with par value none shares preferred without par value none shares common without par value prior cumulative The total amount of capital stock already issued is . . . . . . 692 shares preferred with par value ------------- 4,225 shares common with par value --------------- none shares preferred without par value none shares common without par value The amount of the reduction of the capital stock is . . . . . $100,000 preferred with par value $ none common with par value none shares preferred without par value none shares common without par value The amount of issued stock after reduction is . . . . . . . . . $none preferred with par value $42,250 common with par value none shares preferred without par value none shares common without par value
The manner in which said reduction will be effected is as follows: 680 shares of prior cumulative preferred stock out of the 692 shares issued are to be exchanged pro rata $68,000 worth of 6% debentures due 1978. As to the 12 shares of prior cumulative preferred held in Treasury the total outstanding capital stock will be reduced by $1,200 and the sum of $1,200 will be carried to surplus. 2 IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto signed our names, this thirty-first day of January in the year 1959. /s/ - --------------------------------------- Charles N. Stoddard, Jr. /s/ - --------------------------------------- Kenneth T. Barker /s/ - --------------------------------------- Elliott R. Barker, Jr. /s/ - --------------------------------------- Stanley F. Jorczak 3 THE COMMONWEALTH OF MASSACHUSETTS WRITE NOTHING BELOW Deerfield Plastics Co., Inc. ARTICLES OF AMENDMENT REDUCTION OF CAPITAL GENERAL LAWS, CHAPTER 156, SECTION 45 Filed in the office of the Secretary of the Commonwealth March 12, 1959 - ------------------------------------------------------------------------------- I hereby approve the within certificate, this 12th day of March, 1959 ----------------------------------------- Robert T. Capeless Commissioner of Corporations and Taxation [Seals] 4 THE COMMONWEALTH OF MASSACHUSETTS KEVIN H. WHITE SECRETARY OF THE COMMONWEALTH STATE HOUSE, BOSTON, MASS. ARTICLES OF AMENDMENT General Laws, Chapter 156B, Section 72 This certificate must be submitted to the Secretary of the Commonwealth within sixty days after the date of the vote of stockholders adopting the amendment. The fee for filing this certificate is prescribed by General Laws, Chapter 156B, Section 114. Make check payable to The Commonwealth of Massachusetts. ===================== We, Charles P. Barker, President, and Burton Winer, Clerk of DEERFIELD PLASTICS CO., INC. - ------------------------------------------------------------------------------- (Name of Corporation) located at South Main Street, South Deerfield, Massachusetts , do hereby certify that the following amendment to the articles of organization of the corporation was duly adopted at a meeting held on June 18th, 1970, by vote of 2,913 shares of common, Series A out of 2,913 shares outstanding,
_____________ shares of ________________ out of ____________ shares outstanding, and (Class of Stock) _____________ shares of ________________ out of ____________ shares outstanding, (Class of Stock)
being at least a majority of each class outstanding and entitled to vote thereon.1 1 For amendments adopted pursuant to Chapter 156B, Section 70. 2 For amendments adopted pursuant to Chapter 156B, Section 71. Note: Amendments for which the space provided above is not sufficient should be set out on continuation sheets to be numbered 2A, 2B, etc. Continuation sheets shall be on 8 1/2" wide 11" high paper and must have a left-hand margin 1 inch wide for binding. Only one side should be used. ==================== FOR INCREASE IN CAPITAL FILL IN THE FOLLOWING
The total amount of capital stock already authorized is. . . . . 9,900 shares common, Series A, with --------------- par value of $10 per share 9,900 shares common, Series B, with par value of $10 per share shares preferred without par value shares common without par value The amount of additional capital stock authorized is . . . . . . shares preferred with par value of --------------- $10 per share 5,000 shares common, Series A, with par value of $10 per share shares preferred without par value shares common without par value
VOTED: That the number of authorized shares of common stock, Series A, be increased from 9,900 shares, with par value of $10 per share, to 14,900 shares, with par value of $10 per share, and the President and Clerk are hereby authorized to file appropriate Articles of Amendment with the Secretary of the Commonwealth to give effect to this vote. 2 The foregoing amendment will become effective when these articles of amendment are filed in accordance with Chapter 156B, Section 6 of the General Laws unless these articles specify, in accordance with the vote adopting the amendment, a later effective date not more than thirty days after such filing, in which event the amendment will become effective on such later date. IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto signed our names this seventh day of July, in the year 1970. /s/ , President/ - ----------------------------------------------------- Charles P. Barker /s/ , Clerk/ - ----------------------------------------------------- Burton Winer 3 THE COMMONWEALTH OF MASSACHUSETTS ARTICLES OF AMENDMENT (General Laws, Chapter 156B, Section 72) I hereby approve the within articles of amendment and, the filing fee in the amount of $25.00 having been paid, said articles are deemed to have been filed with me this 20th day of July, 1970. /s/ -------------------------------------------- Kevin H. White Secretary of the Commonwealth State House, Boston, Mass. TO BE FILLED IN BY CORPORATION PHOTO COPY OF AMENDMENT TO BE SENT TO: LEVY, WINER & HODOS, ATTORNEYS 318 Main Street Greenfield, Massachusetts 01301 Copied mailed: [Seals] 4 THE COMMONWEALTH OF MASSACHUSETTS KEVIN H. WHITE SECRETARY OF THE COMMONWEALTH STATE HOUSE, BOSTON, MASSACHUSETTS ARTICLES OF AMENDMENT General Laws, Chapter 156B, Section 72 This certificate must be submitted to the Secretary of the Commonwealth within sixty days after the date of the vote of stockholders adopting the amendment. The fee for filing this certificate is prescribed by General Laws, Chapter 156B, Section 114. Make check payable to The Commonwealth of Massachusetts. ================ We, Charles P. Barker, President, and Burton Winer, Clerk of Deerfield Plastics Co., Inc. (Name of Corporation) located at South Main Street, South Deerfield, Massachusetts , do hereby certify that the following amendment to the articles of organization of the corporation was duly adopted at a meeting held on August 31, 1972, by vote of 10,954 shares of common, Series A out of 10,954 shares outstanding, ---------------- (Class of Stock) __________ shares of _____________ out of ________ shares outstanding, and (Class of Stock) __________ shares of _____________ out of _________ shares outstanding (Class of Stock) being at least a majority of each class outstanding and entitled to vote thereon.1 - ---------------------- 1 For amendments adopted pursuant to Chapter 156B, Section 70. 2 For amendments adopted pursuant to Chapter 156B, Section 71. Note: Amendments for which the space provided above is not sufficient should be set out on continuation sheets to be numbered 2A, 2B, etc. Continuation sheets shall be 8 1/2" wide and 11" high paper and must have a left-hand margin 1" wide for binding. Only one side should be used. =================== FOR INCREASE IN CAPITAL, FILL IN THE FOLLOWING:
The total amount of capital stock already authorized is. . . . . 14,900 shares common, Series A, with --------------- par value $10 per share 9,900 shares common, Series B, with par value $10 per share shares preferred without par value shares common without par value The amount of additional capital stock authorized is . . . . . . shares preferred with par value --------------- $10 per share 10,000 shares common, Series B, with par value of $10 per share shares preferred without par value shares common without par value
VOTED: That the number of authorized shares of common stock, Series B, be increased from 9,900 shares, with par value of $10 per share, to 19,900 shares, with par value of $10 per share, and the President and Clerk are hereby authorized to file appropriate Articles of Amendment with the Secretary of the Commonwealth to give effect to this vote. 2 The foregoing amendment will become effective when these articles of amendment are filed in accordance with Chapter 156B, Section 6 of the General Laws unless these articles specify, in accordance with the vote adopting the amendment, a later effective date not more than thirty days after such filing, in which event the amendment will become effective on such later date. IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto signed our names, this 19th day of September, in the year 1972. /s/ , President - ----------------------------------------------------- Charles P. Barker /s/ , Clerk - ----------------------------------------------------- Burton Winer 3 THE COMMONWEALTH OF MASSACHUSETTS ARTICLES OF AMENDMENT (General Laws, Chapter 156B, Section 72) I hereby approve the within articles of amendment and, the filing fee inthe amount of $50.00 having been paid, said articles are deemed to have been filed with me this 10th day of October, 1972. /s/ ----------------------------------------- Kevin H. White Secretary of the Commonwealth State House, Boston, Mass. TO BE FILLED IN BY CORPORATION PHOTO COPY OF AMENDMENT TO BE SENT To: LEVY, WINER & HODOS 277 Main Street Greenfield, Massachusetts 01301 Copy mailed: October 13, 1972 [Seals] 4 THE COMMONWEALTH OF MASSACHUSETTS PAUL GUZZI SECRETARY OF THE COMMONWEALTH STATE HOUSE, BOSTON, MASSACHUSETTS ARTICLES OF AMENDMENT General Laws, Chapter 156B, Section 72 This certificate must be submitted to the Secretary of the Commonwealth within sixty days after the date of the vote of stockholders adopting the amendment. The fee for filing this certificate is prescribed by General Laws, Chapter 156B, Section 114. Make check payable to THE COMMONWEALTH OF MASSACHUSETTS. ================ We, Charles P. Barker, President, and Burton Winer, Clerk of DEERFIELD PLASTICS CO., INC. - ------------------------------------------------------------------------------- (Name of Corporation) located at South Main Street, South Deerfield, Massachusetts , do hereby certify that the following amendment to the articles of organization of the corporation was duly adopted at a meeting held on June 19, 1975 , by vote of 11,349 shares of Class A stock out of 11,349 shares outstanding, being at least a majority of each class outstanding and entitled to vote thereon.1 I WHEREAS, Deerfield Plastics Co., Inc. now owns four thousand forty-one (4,041) shares of its Class A common stock, which it holds as treasury stock; and five thousand seven hundred and seventy-nine (5,779) shares of its Class B common stock, which it holds as treasury stock; WHEREAS, it is deemed desirable and in the best interests of the corporation to retire two thousand eight hundred and one (2,801) shares of its Class A common stock held in the treasury and four thousand five hundred and nineteen (4,519) shares of its Class B common stock held in the treasury; RESOLVED, that the corporation hereby retires two thousand eight hundred and one (2,801) shares of Class A common stock and four thousand five hundred and nineteen (4,519) shares of its Class B common stock now owned by it and held as treasury stock; FURTHER RESOLVED, that the officers of the corporation be and they are hereby authorized to take all steps required to be taken by law as a result of the retirement hereby effected after the approval of the stockholders. - ------------------------ 1 For amendments adopted pursuant to Chapter 156B, Section 70. Note: Amendments for which the space provided above is not sufficient should be set out on continuation sheets to be numbered 2A, 2B, etc. Continuation sheets shall be 8 1/2" wide and 11" high paper and must have a left-hand margin 1" wide for binding. Only one side should be used. II WHEREAS, the Articles of Organization of Deerfield Plastics Co., Inc., as amended, authorize the issuance of twelve thousand ninety-nine (12,099) shares of Class A common stock, of which eleven thousand three hundred and forty-nine (11,349) shares are now issued and outstanding; and WHEREAS, it is deemed to be in the best interests of the corporation and the stockholders to split the outstanding shares of Class A common stock into fifty-six thousand seven hundred and forty-five (56,745) shares of the same class; RESOLVED, that subject to the approval of the stockholders, the Articles of Organization of the corporation be amended by increasing the total number of shares of common stock, Class A, that the corporation is authorized to issue from twelve thousand ninety-nine (12,099) shares to two hundred thousand (200,000) shares and by decreasing the par value of such stock from ten dollars ($10.00) per share to two dollars ($2.00) per share, with a concomitant increase in the authorized number of shares from twelve thousand ninety-nine (12,099) shares to two hundred thousand (200,000) shares; FURTHER RESOLVED, that on the effective date of the amendment each share of common stock, Class A, of the par value of ten dollars ($10.00) per share outstanding before the amendment shall be divided and changed into five (5) fully paid and non-assessable shares of common stock, Class A, of the par value of two dollars ($2.00) per share; and that after the effective date of the amendment, each holder of record of one or more certificates representing shares of the old Class A common stock shall be entitled to receive one or more certificates representing the proportionate number of shares of the new Class A common stock upon the surrender of his old certificate or certificates for cancellation. FURTHER RESOLVED, that a proposed amendment reflecting the proposed change be submitted to the Secretary of State in the manner and form required by the laws of the Commonwealth of Massachusetts. III WHEREAS, the Articles of Organization of Deerfield Plastics Co., Inc., as amended, authorize the issuance of fifteen thousand three hundred and eighty-one (15,381) shares of Class B common stock, of which four thousand three hundred and forty-three (4,343) shares are now issued and outstanding; and WHEREAS, it is deemed to be in the best interests of the corporation and the stockholders to split the outstanding shares of Class B common stock into twenty-one thousand seven hundred fifteen (21,715) shares of the same class; RESOLVED, that subject to the approval of the stockholders, the Articles of Organization of the corporation be amended by increasing the total number of shares of common stock, Class B, that the corporation is authorized to issue from fifteen thousand three hundred and eighty-one (15,381) shares to one hundred and thirty thousand (130,000) shares, and by decreasing the par value of such stock from ten dollars ($10.00) per share to two dollars ($2.00) per share, with a concomitant increase in the authorized number of shares from fifteen thousand three hundred and eight-one (15,381) shares to one hundred and thirty thousand (130,000) shares; FURTHER RESOLVED, that on the effective date of the amendment each share of common stock, Class B, of the par value of ten dollars ($10.00) per share outstanding before the amendment shall be divided and changed into five (5) fully paid non-assessable shares of common stock, Class B, of the par value of two dollars ($2.00) per share; and that after the effective date of the amendment, each holder of record of one or more certificates representing shares of the old Class B common stock shall be entitled to receive one or more certificates representing the proportionate number of shares of the new Class B common stock upon the surrender of his old certificate or certificates for cancellation. 2 FURTHER RESOLVED, that a proposed amendment reflecting the proposed change be submitted to the Secretary of State in the manner and form required by the laws of the Commonwealth of Massachusetts. The foregoing amendment will become effective when these articles of amendment are filed in accordance with Chapter 156B, Section 6 of the General Laws unless these articles specify, in accordance with the vote adopting the amendment, a later effective date not more than thirty days after such filing, in which event the amendment will become effective on such later date. IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto signed our names, this 19th day of June, in the year 1975. /s/ , President - ----------------------------------------------------- Charles P. Barker /s/ , Clerk - ----------------------------------------------------- Burton Winer 3 THE COMMONWEALTH OF MASSACHUSETTS ARTICLES OF AMENDMENT General Laws, Chapter 156B, Section 72 I hereby approve the within articles of amendment and, the filing fee in the amount of $50.00 having been paid, said articles are deemed to have been filed with me this 10th day of July, 1975. /s/ ------------------------------------------------ Paul Guzzi Secretary of the Commonwealth State House, Boston, Massachusetts TO BE FILLED IN BY CORPORATION PHOTO COPY OF AMENDMENT TO BE SENT To: LEVY, WINER & HODOS, P.C. P.O. Box 840 Greenfield, Massachusetts 01301 Copy mailed: [Seals] 4 Federal Identification No. 04-2162223 THE COMMONWEALTH OF MASSACHUSETTS MICHAEL JOSEPH CONNOLLY SECRETARY OF THE COMMONWEALTH ONE ASHBURTON PLACE, BOSTON, MASSACHUSETTS ARTICLES OF AMENDMENT General Laws, Chapter 156B, Section 72 This certificate must be submitted to the Secretary of the Commonwealth within sixty days after the date of the vote of stockholders adopting the amendment. The fee for filing this certificate is prescribed by General Laws, Chapter 156B, Section 114. Make check payable to THE COMMONWEALTH OF MASSACHUSETTS. =================== We, Charles P. Barker, President, and Burton Winer, Clerk of DEERFIELD PLASTICS CO., INC. - ------------------------------------------------------------------------------- (Name of Corporation) located at South Main Street, South Deerfield, Massachusetts 01373 , do hereby certify that the following amendment to the articles of organization of the corporation was duly adopted at a meeting held on March 9, 1981 , by vote of 50,860 shares of common Class A Stock out of 50,860 shares outstanding, being at least two thirds of each class outstanding and entitled to vote thereon and of each class or series of stock whose rights are adversely affected thereby.1 - ------------------------ 1 For amendments adopted pursuant to Chapter 156B, Section 70. Note: Amendments for which the space provided above is not sufficient should be set out on continuation sheets to be numbered 2A, 2B, etc. Continuation sheets shall be 8 1/2" wide and 11" high paper and must have a left-hand margin 1" wide for binding. Only one side should be used. Federal Identification No. 04-2162223 THE COMMONWEALTH OF MASSACHUSETTS SECRETARY OF THE COMMONWEALTH ONE ASHBURTON PLACE, BOSTON, MASSACHUSETTS 02108 CERTIFICATE OF CORRECTION General Laws, Chapter 156B, Section 6A Certificate of Correction of various Articles of Amendment ------------------------------------------------ (Title of document to be corrected) of DEERFIELD PLASTICS CO., INC. (Name of Corporation) It is hereby certified that: 1. The name of the corporation (hereinafter called the "corporation," is DEERFIELD PLASTICS CO., INC. 2. The various Articles of Amendment of the corporation, which was filed with the Secretary of the Commonwealth on August 14, 1967, July 20, 1970, October 10, 1972, July 10, 1975 and March 26, 1981 are hereby corrected. 3. The inaccuracy or defect to be corrected in said document is as follows: all references in said documents to "Series A," "Series B" or "Series C" should be changed to refer to "Class A," "Class B" or "Class C." 4. The portion of the document in corrected form is as follows: In particular, this corporation is currently authorized to issue: 200,000 shares of common Class A stock at $2 par 130,000 shares of common Class B stock at $2 par 50,000 shares of common Class C stock at $2 par IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto signed our names, this 1st day of June, in the year 1981. /s/ , President - ------------------ Charles P. Barker /s/ , Clerk - ------------------ Burton Winer FOR INCREASE IN CAPITAL, FILL IN THE FOLLOWING: The total amount of capital stock already authorized is. . . . . 200,000 shares common, Series A, with --------------- par value 130,000 shares common, Series B, with --------------- par value shares preferred without par value --------------- shares common without par value --------------- The amount of additional capital stock authorized is . . . . . . shares preferred with par value ---------------$10 per share 50,000 shares common, Series C, with ---------------par value shares preferred without par value --------------- shares common without par value ---------------
VOTED: That an Amendment to the Articles of Organization of this corporation be and hereby is authorized effecting the following: (a) This corporation is authorized to issue a class of shares to be designated "Class C common stock," with the total number of such shares to be 50,000, and the aggregate par value of all shares to be 50,000, and the aggregate par value of all shares being $100,000. (b) Class C common stock shall have no right to receive dividends, irregardless of the financial situation of the corporation, nor to participate in the earnings and profits of the corporation other than the equitable interest represented by the shares owned, irregardless of the financial condition of the corporation and even though dividends may be declared on other classes of outstanding stock. (c) Class C common shares shall have no voting power. (d) Each shareholder of Class C common stock shall be subject to the following restrictions: (1) If any stockholder desires to sell his Class C common stock in Corporation and he receives a bona fide written offer from a third person to buy his Class C stock, before he shall sell same, he shall give to Corporation and the other stockholders written notice of such offer, including the name and address of the offeror and the price and terms of the offer. (2) Corporation shall have thirty (30) days in which to give notice that it wishes to buy the Class C stock. If such notice of desire to buy is given, Corporation shall buy all of such Class C stock for the price and under the terms and conditions as provided in Paragraph (7). (3) If such notice of desire to buy is not given by Corporation, then the other stockholders shall have an additional thirty (30) days in which to give written notice that they wish to buy the Class C 2 stock. If such notice of desire to buy is given, the buying stockholders shall buy all of such Class C stock. for the price and under the terms and conditions as provided in Paragraph (7). (4) If such notice of desire to buy is given by Corporation or the other stockholders, the selling stockholder shall not sell to anyone except the ones giving notice. The purchase and sale of said Class C stock shall be completed within sixty (60) days after such notice is given to the selling stockholder. (5) If such notice of desire to buy is not given by either Corporation or the other stockholders, then the selling stockholder may sell to the person from whom he has received the offer only at the price and upon the terms contained in such offer, and only if the sale is concluded within ninety (90) days after the giving of the notice of such offer. If such sale is not concluded within said 90-day period, he shall not conclude the sale and shall not sell to any person until he has first given notice and complied with the procedure herein provided. (6) If more than one stockholder gives notice of desire to buy under Paragraph (3) above, each stockholder shall purchase that percentage of the Class C stock of the selling stockholder that the total Class C stock owned by him at the time of giving notice of desire to buy bears to the total stock owned by all stockholders giving notice of desire to buy. Under the terms hereof, no stockholder shall sell less than all his stock of all classes which he may from time to time hold. (7) At the election of the purchasing stockholder or Corporation, the purchase price for stock Class C shall be either the price of the bona fide offer to purchase of which notice was given or the price established under Paragraph (8); and such price shall be reduced by any amounts owned to Corporation by selling stockholder, thus cancelling such indebtedness. The payment of the purchase price for such Class C stock shall be in accordance with Paragraph (9). Any amounts due the selling stockholder by Corporation for other reasons shall be paid in full at the closing, irrespective of the due date. (8) Unless both parties mutually agree with respect to stock value, then such party shall name one arbitrator, and those two shall determine the value as of the end of the month preceding the date of sale. If the two arbitrators cannot agree upon the value of the stock, they shall appoint a third arbitrator; and the decision of the majority shall be binding upon all parties. (9) Unless the parties mutually agree to different terms, the purchase price shall be paid by a promissory note payable in equal monthly installments of principal and interest over a period of five (5) years beginning on date of sale bearing interest at the prime rate of the First National Bank of Boston, on date of sale. (10) No stockholder shall, without the consent of the holders of at least two-thirds (2/3rds) of the outstanding Class C stock, pledge his Class C stock with another for any reason or purpose. (11) Any person or organization who shall acquire shares of any Stockholder by bankruptcy, supplementary process, creditor's bill or other legal or equitable proceeding against the owner of such shares shall, at any time upon written request of the Board of Directors of Corporation, offer all shares so acquired for sale to Corporation or to a nominee named by the Board of Directors. If a price cannot be agreed upon, it shall be fixed at book value by arbitration as provided in paragraph (8) and pursuant to payment terms set forth in paragraph (9). (12) No shares of Class C stock shall be sold or transferred on the books of the Corporation until these provisions have been complied with; but the Board of Directors may, in any particular instance, waive the requirement. (End) 3 The foregoing amendment will become effective when these articles of amendment are filed in accordance with Chapter 156B, Section 6 of the General Laws unless these articles specify, in accordance with the vote adopting the amendment, a later effective date not more than thirty days after such filing, in which event the amendment will become effective on such later date. IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto signed our names, this 9th day of March, in the year 1981. , President - -------------------------------------- /s/ , Clerk - -------------------------------------- Burton Winer 4 THE COMMONWEALTH OF MASSACHUSETTS ARTICLES OF AMENDMENT General Laws, Chapter 156B, Section 72 I hereby approve the within articles of amendment and, the filing fee in the amount of $100.00 having been paid, said articles are deemed to have been filed with me this 31st day of March, 1981. /s/ ----------------------------------------------- Michael Joseph Connolly Secretary of the Commonwealth State House, Boston, Massachusetts TO BE FILLED IN BY CORPORATION PHOTO COPY OF AMENDMENT TO BE SENT To: LEVY, WINER, HODOS & Berson, P.C. P.O. Box 840 Greenfield, Massachusetts 01302 Telephone: (413) 774-3741 Copy mailed: [Seals] 5 THE COMMONWEALTH OF MASSACHUSSETTS ARTICLES OF AMENDMENT (General Laws, Chapter 156B, Section 72) I hereby approve the within articles of amendment and the filing fee in the amount of $75.00 having been paid, said articles are deemed to have been filed with me this 1st day of September, 1987 MICHAEL JOSEPH CONNOLLY Secretary of State TO BE FILLED IN BY CORPORATION PHOTO COPY OF AMENDMENT TO BE SENT TO: Susan A. Sini, Legal Assistant LEVY, WINER, HODOS, BENSON, BLANNER & BISHOP, P.C. 277 Main Street - P.O. Box 1538 - Greenfield, MA 01302 Telephone 413-774-3741 Copy Mailed TO CHANGE the number of shares and the par value, if any, of each class of stock within the corporation fill in the following: N/A The total presently authorized is:
============================================================================================================================= NO PAR VALUE WITH PAR VALUE PAR KIND OF STOCK NUMBER OF SHARES NUMBER OF SHARE VALUE - ----------------------------------------------------------------------------------------------------------------------------- COMMON - ----------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- PREFERRED - ----------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- =============================================================================================================================
CHANGE the total to:
============================================================================================================================= NO PAR VALUE WITH PAR VALUE PAR KIND OF STOCK NUMBER OF SHARES NUMBER OF SHARE VALUE - ----------------------------------------------------------------------------------------------------------------------------- COMMON - ----------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- PREFERRED - ----------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- =============================================================================================================================
2 That this corporation's Articles of Organization be amended by adding the following: No director shall be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, notwithstanding any provision of law imposing such liability; provided, however, that this provision shall not eliminate the liability of a director, to the extent that such liability is provided by applicable law, (i) for any breach of the director's duty of loyalty to the corporation or its stockholders; (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; (iii) under section 61 or 62 (or successor provisions) of Chapter 156B of the Massachussetts General Laws; or (iv) for any transaction from which the director derived an improper personal benefit. This provision shall not eliminate the liability of a director for any act or omission occurring prior to the date upon which this provision becomes effective. No amendment to or repeal of this provision shall apply to or have any effect on the liability or alleged liability of any director for or with respect to any acts or omissions of such director occurring prior to such amendment or repeal. 3 The foregoing amendment will become effective when these articles of amendment are filed in accordance with Chapter 156B, Section 6 of the General Laws unless these articles specify, in accordance with the vote adopting the amendment, a later effective date not more than thirty days after such filing, in which event the amendment will become effective on such later date. IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto signed our names, this 19th day of August, in the year 1987. /s/ , President - -------------------------------- Charles P. Barker /s/ , Clerk - -------------------------------- Burton Winer 4 Federal Identification No. 04-216-2223 THE COMMONWEALTH OF MASSACHUSETTS OFFICE OF THE MASSACHUSETTS SECRETARY OF STATE MICHAEL JOSEPH CONNOLLY, SECRETARY SECRETARY OF THE COMMONWEALTH ONE ASHBURTON PLACE, BOSTON, MASSACHUSETTS 02108 ARTICLES OF AMENDMENT General Laws, Chapter 156B, Section 72 This certificate must be submitted to the Secretary of the Commonwealth within sixty days after the date of the vote of stockholders adopting the amendment. The fee for filing this certificate is prescribed by General Laws, Chapter 156B, Section 114. Make check payable to THE COMMONWEALTH OF MASSACHUSETTS. ================ We, Charles P. Barker, President, and Burton Winer, Clerk of DEERFIELD PLASTICS CO., INC. - ------------------------------------------------------------------------------- (Name of Corporation) located at South Main Street, South Deerfield, Massachusetts 01373 , do hereby certify that the following amendment to the articles of organization of the corporation was duly adopted at a meeting held on August , 1987 , by vote of 31,197 shares of common Class A Stock out of 31,197 shares outstanding, being at least two thirds of each class outstanding and entitled to vote thereon and of each class or series of stock whose rights are adversely affected thereby.1 - ----------------------------- 1 For amendments adopted pursuant to Chapter 156B, Section 70. Note: If the space provided under any Amendment or item on this form is insufficient, additions shall be set forth on separate 8 1/2 x 11 sheets of papers leaving a left hand margin of a least 1 inch for binding. Additions to more than one Amendment may be continued on a single sheet so long as each Amendment requiring each such addition is clearly indicated. 5 Federal Identification No. 57-056-1873 THE COMMONWEALTH OF MASSACHUSETTS WILLIAM FRANCIS GALVIN SECRETARY OF THE COMMONWEALTH ONE ASHBURTON PLACE, BOSTON, MASSACHUSETTS 02108-1512 STATE HOUSE, BOSTON, MASSACHUSETTS ARTICLES OF MERGER (GENERAL LAWS, CHAPTER 156B, SECTION 79) A merger of DEERFIELD PLASTICS CO., INC., a Massachussetts corporation, and HUNTSMAN PREPARATORY, INC., an Ohio Corporation, the constituent corporations, into DEERFIELD PLASTICS CO., INC., one of the constituent corporations organized under the laws of Massachussetts The undersigned officers of each of the constituent corporations certify under the penalties of perjury as follows: 1. An agreement of merger has been duly adopted in compliance with the requirements of General Laws, Chapter 156B, Section 79, and will be kept as provided by Subsection (c) thereof. The *surviving corporation will furnish a copy of said agreement to any of its stockholders, or to any person who was a stockholder of any constituent corporation, upon written request and without charge. 2. The effective date of the *merger determined pursuant to an agreement of *merger shall be the date approved and filed by the Secretary of the Commonwealth. If a later effective date is desired, specify such date which shall not be more than thirty days after the date of filing: October 21, 1996 3. (For a merger) *The following amendments to the Articles of Organization of the surviving corporation have been effected pursuant to the agreement of merger: (For a consolidation) (a) The purpose of the resulting corporation is the engage in the following business activities: - ------------------------------------ * Delete the inapplicable words. Note: If the space provided under any article or item on this form is insufficient, additions shall be set forth on separate 8 1/2 x 11 sheets of paper with a left margin of at least 1 inch. Additions to more than one article may be made on a simple sheet as long as each article requiring each addition is clearly indicated. (For a consolidation) (b) State the number of shares and the par value of any of each class of stock which the resulting corporation is authorized to issue:
================================================================================================================================= WITHOUT PAR VALUE WITH PAR VALUE - --------------------------------------------------------------------------------------------------------------------------------- TYPE NUMBER OF SHARES TYPE NUMBER OF SHARES PAR VALUE - --------------------------------------------------------------------------------------------------------------------------------- Common: Common: - --------------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------------- Preferred: Preferred: - --------------------------------------------------------------------------------------------------------------------------------- =================================================================================================================================
**(c) If more than one class of stock is authorized, state a distinguishing designation for each class and provide a description of the preferences, voting powers, qualifications, and special or relative rights or privileges of each class and of each series then established. (d) The restrictions, if any, on the transfer of stock contained in the agreement of consolidation are: **(e) Other lawful provisions, if any, for the conduct and regulation of the business and affairs of the corporation, for its voluntary dissolution, or for limiting, defining, or regulating the powers of the corporation, or of its directors or stockholders, or of any class of stockholders: Item 4 below may be deleted if the surviving corporation is organized under the laws of a state other than Massachussetts. 4. The information contained in item 4 is not a permanent part of the Articles of Organization of the *surviving corporation. (a) The street address (post office boxes are not acceptable) of the surviving corporation in Massachussetts is: 10 Greenfield Road South Deerfield, Massachussetts 01373 ** if there are no provisions state "None". 2 Exhibit A POST OFFICE NAME RESIDENTIAL ADDRESS ADDRESS President: N. Brian Stevenson 2782 East Shady Brook Lane Same Sandy, Utah 84121 Treasurer: Albert T. Van Leeuwen 2288 East 10140 South Same Sandy, Utah 84121 Clerk: Robert B. Lence 1416 Ambassador Way East Same Salt Lake City, Utah 84108 Directors: Jon M. Huntsman 3049 Sherwood Circle Same Salt Lake City, Utah 84108 Peter R. Huntsman 1399 Devonshire Drive Same Salt Lake City, Utah 84108 Richard P. Durham 4824 Mount Spring Court Same Salt Lake City, Utah 84117 N. Brian Stevenson 2782 East Shady Brook Lane Same Sandy, Utah 84121 3 (b) The name, residential address and post office address of each director and officer of the *surviving corporation: NAME RESIDENTIAL ADDRESS POST OFFICE ADDRESS President: Treasurer: SEE EXHIBIT A ATTACHED Clerk: Director: (c) The fiscal year end (i.e. tax year) of the *surviving corporation shall end on the last day of the month of: December. (d) The name and business address of the resident agent, if any, of the *surviving corporation is: CT Corporation System, 2 Oliver Street, Boston, Massachussetts 02109 ITEM 5 BELOW MAY BE DELETED IF THE RESULTING/SURVIVING CORPORATION IS ORGANIZED UNDER THE LAWS OF MASSACHUSSETTS. FOR MASSACHUSSETTS CORPORATIONS The undersigned *President and *Clerk of DEERFIELD PLASTICS CO., INC. a corporation organized under the laws of Massachussetts, further state under the penalties of perjury that the agreement of *merger has been duly executed on behalf of such corporation and duly approved in the manner required by General Laws, Chapter 156B, Section 78. , *President - ------------------------------------------------------------------- , *Clerk - ------------------------------------------------------------------- FOR CORPORATIONS ORGANIZED IN A STATE OTHER THAN MASSACHUSSETTS The undersigned, + PRESIDENT and ++ Assistant Clerk of HUNTSMAN PREPARATORY, INC., a corporation organized under the laws of OHIO, further state under the penalties of perjury that the agreement of *merger has been duly adopted by such corporation in the manner required by the laws of OHIO . * Delete the inapplicable words. + Specify the officer having powers and duties + /s/ corresponding to those of the president or ---------------------- vice president of a Massachussetts corporation organized under General Laws, Chapter 156B. ++ Specify the officer having powers and duties ++ /s/ corresponding to the clerk or assistant clerk of ---------------------- such a Massachussetts corporation. 4 THE COMMONWEALTH OF MASSACHUSETTS ARTICLES OF MERGER General Laws, Chapter 156B, Section 72 I hereby approve the within articles of merger and, the filing fee in the amount of $250.00 having been paid, said articles are deemed to have been filed with me this 21st day of October, 1996. /s/ --------------------------------------- William Francis Galvin Secretary of the Commonwealth State House, Boston, Massachusetts TO BE FILLED IN BY CORPORATION PHOTO COPY OF DOCUMENT TO BE SENT TO: DWIGHT W. QUAYLE, ESQ. Ropes & Gray One International Place Boston, Massachusetts 02110-2624 Telephone: (617) 951-7406 5 Federal Identification No. 04-2162223 THE COMMONWEALTH OF MASSACHUSETTS WILLIAM FRANCIS GALVIN SECRETARY OF THE COMMONWEALTH 02108-1512 ONE ASHBURTON PLACE, BOSTON, MASSACHUSETTS ARTICLES OF AMENDMENT General Laws, Chapter 156B, Section 72 This certificate must be submitted to the Secretary of the Commonwealth within sixty days after the date of the vote of stockholders adopting the amendment. The fee for filing this certificate is prescribed by General Laws, Chapter 156B, Section 114. Make check payable to THE COMMONWEALTH OF MASSACHUSETTS. ================ We, N. Brian Stevenson, President, and Robert B. Lence, Clerk of DEERFIELD PLASTICS CO., INC. - ------------------------------------------------------------------------------- (Exact name of Corporation) located at 10 Greenfield Road, South Deerfield, Massachusetts 01373 , -------------------------------------------------------------------- certify that the Articles of Amendment affecting articles numbered: third paragraph on page 1 relating to name - ------------------------------------------------------------------------------- of the Articles of Organization of the corporation were duly adopted at a meeting held on October 21, 1996, by vote of 100 shares of common Class A out of 100 shares outstanding, 1 being at least a majority of each type, class or series outstanding and entitled to vote thereon. Note: If the space provided under any article or item on this form is insufficient, additions shall be set forth on one side only of separate 8 1/2 x 11 sheets of paper with a left margin of at least 1 inch. Additions to more than one article may be made on a single sheet so long as each article requiring each addition is clearly indicated. TO CHANGE the number of shares and the par value, if any, of each class of stock within the corporation fill in the following: N/A The total presently authorized is:
============================================================================================================================= NO PAR VALUE WITH PAR VALUE PAR KIND OF STOCK NUMBER OF SHARES NUMBER OF SHARE VALUE - ----------------------------------------------------------------------------------------------------------------------------- COMMON - ----------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- PREFERRED - ----------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- =============================================================================================================================
CHANGE the total to:
============================================================================================================================= NO PAR VALUE WITH PAR VALUE PAR KIND OF STOCK NUMBER OF SHARES NUMBER OF SHARE VALUE - ----------------------------------------------------------------------------------------------------------------------------- COMMON - ----------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- PREFERRED - ----------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- =============================================================================================================================
2 The name by which the corporation shall be known is HUNTSMAN DEERFIELD FILMS CORPORATION. The foregoing amendment(s) will become effective when these Articles of Amendment are filed in accordance with Chapter 156B, Section 6 of the General Laws unless these articles specify, in accordance with the vote adopting the amendment, a later effective date not more than thirty days after such filing, in which event the amendment will become effective on such later date. Later effective date: ----------------------------------------- SIGNED UNDER THE PENALTIES OF PERJURY, this 21st day of October, 1996. /s/ , President - ------------------------------------------- Charles P. Barker /s/ , Clerk - ------------------------------------------- Burton Winer 3 THE COMMONWEALTH OF MASSACHUSSETTS ARTICLES OF AMENDMENT (General Laws, Chapter 156B, Section 72) I hereby approve the within articles of amendment and the filing fee in the amount of $100 having been paid, said articles are deemed to have been filed with me this 21st day of October, 1996. WILLIAM FRANCIS GALVIN Secretary of the Commonwealth TO BE FILLED IN BY CORPORATION PHOTO COPY OF DOCUMENT TO BE SENT TO: Sam Scruggs, Esq. Huntsman Deerfield Films Corporation 500 Huntsman Way Salt Lake City, Utah 84108 Telephone....................................... 4 EX-3.12 4 ARTICLES OF INCORPORATION OF UNITED FILMS CORPORATION ARTICLES OF INCORPORATION OF UNITED FILMS CORPORATION I. The name of the corporation is UNITED FILMS CORPORATION. II. The general nature of the business of businesses to be engaged in by the corporation shall be the manufacture and sales of coextruded films and personal property. In addition to lease, sell, buy, own and otherwise deal in property, personal, real or mixed, tangible or intangible, either for its own account or as an asset for others, and to do everything incidental to or desirable in connection with the conduct of such business, as well as to enter into any other form of business for any lawful purpose or purposes now or hereafter granted corporations under the laws of Georgia. III. The authorized capital stock of the corporation shall be Five Hundred Thousand Dollars ($500,000.00) and shall consist of Five Hundred Thousand (500,000) shares of no par value common stock. IV. The amount of capital with which the corporation will begin business is not less than Five Hundred Dollars ($500.00). V. The corporation is to have perpetual existence. VI. The corporation is organized pursuant to the provisions of the Georgia Business Corporation Code. VII. The address of the initial registered office of the corporation shall be 280 Parian Run, Duluth, Georgia 30136, located in Quinnett County, and the initial registered agent of the Corporation shall be Thomas Marshall Huff. VIII. The number of directors constituting the first Board of Directors shall be one and the name and street address of each member of the first Board of Directors is: DIRECTORS STREET ADDRESS --------- -------------- Thomas Marshall Huff 280 Parian Run Duluth, Georgia 30136 John Carlin 280 Parian Run Duluth, Georgia 30136 IX. The name and street address of the incorporator of the corporation is as follows: 2 INCORPORATOR STREET ADDRESS ------------ -------------- John P. Hines 1800 Peachtree Street, N.W. 600 Peachtree Palisades West Atlanta, Georgia 30309 IN WITNESS WHEREOF, the undersigned has executed these Articles of Incorporation on the ____ day of ___________, 199_. -------------------------------- JOHN P. HINES 3 CONSENT TO APPOINTMENT AS REGISTERED AGENT I, Thomas Marshall Huff, do hereby consent to serve as registered agent for UNITED FILMS CORPORATION. This _____ day of _________, 199__. ---------------------------------- THOMAS MARSHALL HUFF 280 Parian Run Duluth, Georgia 30136 4 CERTIFICATE DATE: 03/17/88 DOCKET NUMBER : 88076439 EXAMINER : SANDRA JEAN SNOW TELEPHONE : 404-656-1772 REQUESTED BY: JOHN P. HINES 1800 Peachtree Street, NW STE 600 ATLANTA, GA 30309 CORPORATE NAME CERTIFICATE THE RECORDS OF THE SECRETARY OF STATE HAVE BEEN REVIEWED AND THE FOLLOWING NAME IS NOT IDENTICAL TO, AND APPEARS TO BE DISTINGUISHABLY _____?, THE NAME OF ANY OTHER EXISTING CORPORATION OR PROFESSIONAL ASSOCIATION ON FILE PURSUANT TO THE APPLICABLE PROVISIONS OF THE GEORGIA LAWS RELATING TO CORPORATIONS AND PROFESSIONAL ASSOCIATIONS (TITLE 14 OF THE OFFICIAL CODE OF GEORGIA ANNOTATED). --------------------------------------------------------- "UNITED FILMS CORPORATION" --------------------------------------------------------- THIS CERTIFICATE SHALL BE VALID FOR A PERIOD OF TWO CALENDAR MONTHS FOR PROFIT AND NONPROFIT CORPORATIONS AND PROFESSIONAL ASSOCIATIONS (__, __, __, FN, & PA) AND SIX CALENDAR MONTHS FOR BANKS ( ) FROM THE DATE OF THIS CERTIFICATE. PLEASE SUBMIT THE ORIGINAL CERTIFICATE (WHITE COPY) WITH THE ARTICLES OF INCORPORATION. THE SECRETARY OF STATE MAY EXTEND THE CERTIFICATE FOR ONE PERIOD IF THE APPLICANT SUBMITS A $20.00 FEE AND A WRITTEN REQUEST EXPLAINING WHY THE EXTENSION IS REQUESTED. MAX CLELAND SECRETARY OF STATE H. WAYNE HOWELL DEPUTY SECRETARY OF STATE 5 BUSINESS SERVICES AND REGULATION ARTICLES OF INCORPORATION DATA ENTRY FORM FOR GEORGIA CORPORATIONS MAX CLELAND H. WAYNE HOWELL Secretary of State Deputy Secretary of State =============================================================================== I. Filing Date:__________ Code:______ Docket No.:______________ Assigned Exam:____________________ Amt: $______ By:_________ Charter Number:___________________ Completed:_______________ =============================================================================== DO NOT WRITE ABOVE THIS LINE - SOS USE ONLY NOTICE TO APPLICANT: PRINT PLAINLY OR TYPE THE REMAINDER OF THIS FORM. =============================================================================== II. Corporate Name: - ------------------------------------------------------------------------------- Mailing Address: - ------------------------------------------------------------------------------- City: County: State: Zip Code: - ------------------------------------------------------------------------------- III. Fees Submitted By: - ------------------------------------------------------------------------------- Secretary of State: $ Check No.: - ------------------------------------------------------------------------------- Clerk of Court: $ Check No.: County: - ------------------------------------------------------------------------------- Publisher: $ Check No.: Name: - ------------------------------------------------------------------------------- IV. Incorporator: - ------------------------------------------------------------------------------- Address: - ------------------------------------------------------------------------------- City: State: Zip Code: - ------------------------------------------------------------------------------- V. Registered Agent/Office: - ------------------------------------------------------------------------------- 6 - ------------------------------------------------------------------------------- Address: - ------------------------------------------------------------------------------- City: State: Zip Code: - ------------------------------------------------------------------------------- VI. ARTICLES OF INCORPORATION FILING CHECK Applicant Examiner OFF LIST - ------------------------------------------------------------------------------- 1. Original and two conformed copies of Articles of Incorporation - ------------------------------------------------------------------------------- 2. Corporate name certificate enclosed and verified - ------------------------------------------------------------------------------- 3. Publisher's and Clerk's checks en- closed and verified - ------------------------------------------------------------------------------- 4. Consent form enclosed and verified - ------------------------------------------------------------------------------- 5. Corporate duration and statutory authority stated - ------------------------------------------------------------------------------- 6. Number shares, par value, minimum capital stated - ------------------------------------------------------------------------------- 7. Number of directors and their names and addresses - ------------------------------------------------------------------------------- VII. Applicant/Attorney: Telephone: - ------------------------------------------------------------------------------- Address: - ------------------------------------------------------------------------------- City: State: Zip Code: =============================================================================== NOTICE: ATTACHED ARTICLES OF INCORPORATION, SECRETARY OF STATE FILING FEE, NAME CERTIFICATE, CONSENT TO SERVE AS REGISTERED AGENT, PUBLISHER'S LETTER AND FEE AND CLERK'S FEE AND FILE WITH THE SECRETARY OF STATE AT 2 MARTIN LUTHER KING JR. DR., SUITE 315, WEST TOWER, ATLANTA, GEORGIA 30334. FOR INFORMATION CALL 404-656-2817. THIS FORM DOES NOT REPLACE THE ARTICLES OF INCORPORATION. I UNDERSTAND THAT THE INFORMATION ON THIS FORM WILL BE USED IN THE SECRETARY OF STATE CORPORATE DATA BASE. SIGNED:________________________ DATE:_____________________ 7 DOCKET NUMBER : 961990670 CONTROL NUMBER : 8806135 EFFECTIVE DATE : 07/15/1996 REFERENCE : 0064 PRINT DATE : 07/17/1996 FORM NUMBER : 112 Alston & BIRD/JAN R. EZELL ONE ATLANTIC CENTER 1201 WEST PEACHTREE STREET ATLANTA, GA 30309-3424 CERTIFICATE OF CORRECTION I, the Secretary of State and the Corporation Commissioner of the State of Georgia, do hereby certify under the seal of my office that UNITED FILMS CORPORATION A DOMESTIC PROFIT CORPORATION has filed articles of correction in the office of the Secretary of State and has paid the required fees as provided by Title 14 of the Official Code of Georgia Annotated. Attached hereto is a true and correct copy of said articles of correction. WITNESS my hand and official seal in the City of Atlanta and the State of Georgia on the date set forth above. LEWIS A. MASSEY SECRETARY OF STATE 8 ARTICLES OF CORRECTION OF UNITED FILMS CORPORATION In accordance with Section 14-2-124 of the Georgia Business Corporation Code, these Articles of Correction are being filed to correct, as of March 23, 1988, the Articles of Incorporation of United Films Corporation that were filed with the Secretary of State on March 22, 1988. ONE The name of the corporation is United Films Corporation. TWO As a result of scrivener's errors, the number of directors constituting the first Board of Directors set forth in Article VIII of the Articles of Incorporation is incorrect. The number of directors is hereby corrected to be two to conform to the number of directors actually listed. THREE As a result of scrivener's errors, a dollar amount in connection with the authorized capital stock is stated in Article III. Such Article is corrected to read: The authorized shares of the corporation shall consist of Five Hundred Thousand (500,000) shares of no par value common stock. This correction is made because the concept of a stated minimum value of capital stock only applied to a common stock with a par value and did not apply to a no par value common stock. IN WITNESS WHEREOF, the undersigned duly authorized officer of United Films Corporation has caused these Articles of Correction to be duly executed this ___ day of July, 1996. UNITED FILMS CORPORATION By: -------------------------------- Name: --------------------------- Title: -------------------------- 9 DOCKET NUMBER : 962200448 CONTROL NUMBER : 8806135 EFFECTIVE DATE : 08/06/1996 REFERENCE : 0045 PRINT DATE : 08/07/1996 FORM NUMBER : 0611 ALSTON & BIRD JAN R. EZELL 1201 WEST PEACHTREE STREET ATLANTA, GA 30309-3424 CERTIFICATE OF NAME CHANGE AMENDMENT I, the Secretary of State and the Corporation Commissioner of the State of Georgia, do hereby certify under the seal of my office that UNITED FILMS CORPORATION A DOMESTIC PROFIT CORPORATION has filed articles of amendment in the office of the Secretary of State changing its name to HUNTSMAN UNITED FILMS CORPORATION and has paid the required fees as provided by Title 14 of the Official Code of Georgia Annotated. Attached hereto is a true and correct copy of said articles of amendment. WITNESS my hand and official seal in the City of Atlanta and the State of Georgia on the date set forth above. Lewis A. Massey Secretary of State 10 ARTICLES OF AMENDMENT OF UNITED FILMS CORPORATION ONE The name of the corporation is United Films Corporation. TWO Article I of the Articles of Incorporation is hereby deleted in its entirety, and the following new Article I is hereby substituted in its place: I. The name of the corporation is Huntsman United Films Corporation. THREE The foregoing amendment was duly adopted by the Board of Directors of the corporation effective as of July __, 1996. Pursuant to the provisions of Section 14-2-1002 of the Georgia Business Corporation Code, shareholder approval of the amendment was not required. IN WITNESS WHEREOF, the undersigned has caused these Articles of Amendment to be duly executed this ___ day of July, 1996. UNITED FILMS CORPORATION, a Georgia corporation ---------------------------------- N. Brian Stevenson President, Chief Operating Officer 11 CERTIFICATE OF REQUEST FOR PUBLICATION PURSUANT TO SECTION 14-2-1006.1(a) OF THE GEORGIA BUSINESS CORPORATION CODE Pursuant to the provisions of Section 14-2-1006.1(a) of the Georgia Business Corporation Code, the undersigned, an officer of United Films Corporation, hereby certifies that the request for publication of a notice of intent to file Articles of Amendment to change the name of the corporation to Huntsman United Films corporation and payment therefor, have been made as required by Section 14-2-1006.1(b). The undersigned officer has caused this certificate to be duly executed this ___ day of July 1996. UNITED FILMS CORPORATION a Georgia corporation ------------------------------ N. Brian Stevenson President, Chief Operating Officer 12 EX-3.13 5 ARTICLES OF INCORPORATION OF HUNTSMAN PREPARATORY, INC. ARTICLES OF INCORPORATION OF HUNTSMAN PREPARATORY, INC. The undersigned, acting as incorporator of a corporation under the Utah Revised Business Corporation Act (the "URBCA"), adopts the following Articles of Incorporation for such corporation: ARTICLE I NAME The name of the corporation is Huntsman Preparatory, Inc. (the "Corporation"). ARTICLE II PURPOSES AND POWERS The Corporation is organized to engage in any and all lawful acts, activities, and/or pursuits for which corporations may presently or hereafter be organized under the URBCA. The Corporation shall have all powers allowed by law, including without limitation those powers described in Section 302 of the URBCA. The purposes stated herein shall be construed as powers as well as purposes and the enumeration of a specific purpose or power shall not be construed to limit or restrict the meaning of general terms or the general powers; nor shall the expression of one thing be deemed to exclude another not expressed, although it be of like nature. ARTICLE III AUTHORIZED SHARES The aggregate number of shares which the Corporation shall have authority to issue is Fifty Thousand (50,000) shares of common stock. All voting rights of the Corporation shall be exercised by the holders of the common stock and the holders of the common stock of the Corporation shall be entitled to receive the net assets of the Corporation upon dissolution. All shares of the common stock shall be fully paid and nonassessable. ARTICLE IV REGISTERED OFFICE AND AGENT The address of the initial registered office of the Corporation is 500 Huntsman Way, Salt Lake City, Utah 84108, and the name of its initial registered agent at such address is Robert B. Lence. ARTICLE V OFFICER AND DIRECTOR LIABILITY 1. The Corporation shall indemnify and advance expenses to its directors, officers, employees, fiduciaries or agents and to any person who is or was serving at the Corporation's request as a director, officer, partner, trustee, employee, fiduciary or agent of another domestic or foreign corporation or other person or of an employee benefit plan (and their respective estates or personal representatives) to the fullest extent as from time to time permitted by Utah law. 2. The personal liability of the directors and officers of the Corporation to the Corporation or its shareholders, or to any third person, shall be eliminated or limited to the fullest extent as from time to time permitted by Utah law. 3. Any repeal or modification of this Article V by the shareholders of the Corporation shall not adversely affect any right or protection of any person existing at the time of such repeal or modification. ARTICLE VI INCORPORATOR The name and address of the incorporator is as follows: =============================================================================== Name Address - ------------------------------------------------------------------------------- Robert B. Lence 500 Huntsman Way Salt Lake City, Utah 84108 =============================================================================== 2 IN WITNESS WHEREOF, the undersigned, being the incorporator of the Corporation, hereby executes these Articles of Incorporation and certifies to the truth of the facts herein stated, this ____ day of September, 1996. ----------------------------------- Robert B. Lence, Incorporator ACKNOWLEDGEMENT OF REGISTERED AGENT The undersigned, Robert B. Lence, hereby acknowledges that he has been named as registered agent of Huntsman Preparatory, Inc., a Utah corporation to be formed pursuant to the Articles of Incorporation to which this Acknowledgment is attached, and the undersigned hereby agrees to act as registered agent of said corporation. ----------------------------------- Robert B. Lence, Registered Agent MAILING ADDRESS If, upon completion of filing of the above Articles of Incorporation, the Division elects to send a copy of the Articles of Incorporation to the Corporation by mail, the address to which the copy should be mailed is: Huntsman Preparatory, Inc. 500 Huntsman Way Salt Lake City, Utah 84108 Attention: Robert B. Lence 3 EX-3.14 6 ARTICLES OF INCORPORATION OF HUNTSMAN CONTAINER CORPORATION INTERNATIONAL ARTICLES OF INCORPORATION OF HUNTSMAN CONTAINER CORPORATION INTERNATIONAL We, the undersigned natural persons over the age of eighteen (18) years, acting as incorporators of a corporation under the Utah Business Corporation Act, adopt the following Articles of Incorporation for such corporation: ARTICLE I NAME The name of the corporation is: Huntsman Container Corporation International. ARTICLE II DURATION The corporation shall exist perpetually or until dissolved according to law. ARTICLE III PURPOSES AND POWERS Section 3.01. Purposes. The purposes for which the corporation is organized are: (a) To engage in and carry on in all of its branches the business of developing, manufacturing, distilling, producing, treating, preparing, analyzing, compounding, refining, marketing, selling, distributing, importing, exporting, exploiting, mining, using, and otherwise dealing in and with industrial and other chemicals, chemical materials, compounds, preparations, substances, and products, including, without limitation, polystyrene, expandable and expanded polystyrene, styrene monomer, propane, propylene, polypropylene, petroleum derivatives, and chemicals and products of every kind, and also derivatives, materials, products, substances, and combinations produced or manufactured therefrom, including, without limitation, polystyrene containers and foam packaging products and any other solids, liquids, or gases of any kind; and to investigate, form, operate, manage, invest in, affiliate with, or otherwise participate in limited liability companies, partnerships, joint ventures, and other business enterprises which have been or will be engaged in or carrying on such business. (b) To purchase, acquire, own, hold, lease, operate, mortgage, encumber, sell, and dispose of any and all kinds and character of real, personal, and mixed property (the foregoing particular enumeration in no sense being used by way of exclusion or limitation) and while the owner thereof, to exercise all the rights, powers, and privileges of ownership, including, in the case of stocks and shares, the right to vote thereon. (c) To enter into, make, and perform contracts of every kind and description, to borrow and lend money, with or without security, and to endorse or otherwise guarantee the obligations of others. (d) To act as principal, agent, or broker for others and receive compensation for all services which it may render in the performance of the duties of an agency character. (e) To purchase, hold, sell, and transfer the Shares of its own capital stock. (f) To engage in the general business of investing, on behalf of itself and others, any part of its capital and such additional funds as it may obtain, or any interest thereon, either as tenant in common or otherwise, and to sell or otherwise dispose of the same, or any part thereof, or any interest therein. 2 (g) To conduct researches, investigations, and examinations of businesses and enterprises of every kind and description. (h) To engage in any and all other lawful purposes, activities, and pursuits presently or hereafter allowed by law, whether similar or dissimilar to the foregoing. Section 3.02. Powers. The corporation shall have all powers allowed by law, including without limitation those powers described in Sections 16-10-4 and 16-10-5 of the Utah Code Annotated (1953), as amended and supplemented. The purposes stated herein shall be construed as powers as well as purposes, and the matters expressed in any clause shall not be limited by reference to or inference from the terms of any other, but shall be regarded as independent purposes and powers; and the enumeration of specific purposes and powers shall not be construed to limit or restrict the meaning of general terms of the general powers; nor shall the expression of one thing be deemed to exclude another not expressed, although it be of like nature. ARTICLE IV CAPITALIZATION The aggregate number of shares which the corporation shall have authority to issue is fifty thousand (50,000) shares of common stock having a par value of One Dollar ($1.00) per share. All voting rights of the corporation shall be exercised by the holders of the common stock, with each share of common stock being entitled to one (1) vote. All shares of common stock shall have equal rights in the event of dissolution or final liquidation. All shares of the common stock shall be fully paid and nonassessable. ARTICLE V PAID-IN-CAPITAL The corporation will not commence business until consideration of the value of at least One Thousand Dollars ($1,000.00) has been received for the issuance of shares of the common stock. 3 ARTICLE VI BYLAWS Provisions for the regulation of the internal affairs of the corporation shall be set forth in the Bylaws. ARTICLE VII PREEMPTIVE RIGHTS No holder of the shares of the capital stock of any class of the corporation shall have any preemptive or preferential rights of subscription to any shares of any class of stock of the corporation, whether now or hereafter authorized, or to any obligations convertible into stock of the corporation, issued or sold. The term "convertible obligations," as used herein, shall include any notes, bonds, or other evidences of indebtedness to which are attached or with which are issued warrants or other rights to purchase stock of the corporation. ARTICLE VIII REGISTERED OFFICE AND AGENT The address of the initial registered office of the corporation is 2000 Eagle Gate Tower, 60 East South Temple, Salt Lake City, Utah 84111, and the name of its initial registered agent at such address is Brent D Ward. ARTICLE IX DIRECTORS The number of Directors which shall constitute the Board of Directors of the corporation shall be prescribed by the Bylaws, but shall not be less than three (3), unless the number of shareholders is less than three (3), in which case the number of Directors may be the same as the number of shareholders. The number of Directors constituting the initial Board of Directors of the corporation shall be three (3), and the names and addresses of the persons who are to serve as Directors until the first meeting of the shareholders or until their successors are elected and shall qualify are as follows: 4 - ----------------------------------------------------------------------------- NAME ADDRESS - ----------------------------------------------------------------------------- Jon M. Huntsman 2000 Eagle Gate Tower 60 East South Temple Salt Lake City, Utah 84111 Ronald A. Rasband 2000 Eagle Gate Tower 60 East South Temple Salt Lake City, Utah 84111 Michael C. Eades 2000 Eagle Gate Tower 60 East South Temple Salt Lake City, Utah 84111 - ----------------------------------------------------------------------------- ARTICLE X LIMITATION OF DIRECTOR LIABILITY No Director of the corporation shall have any personal liability to the corporation or its shareholders for monetary damages for breach of fiduciary duty; provided, however, that to the extent required by applicable Utah law, this provision shall not be deemed to eliminate or limit the liability of a Director: (a) For any breach of the Director's duty of loyalty to the corporation or its shareholders; (b) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; (c) for actions under Section 16- 10-44 of the Utah Code Annotated (1953), as amended or supplemented; or (d) for any transaction from which the Director derived an improper personal benefit. ARTICLE XI INCORPORATORS The names and addresses of the incorporators are as follows: 5 - ----------------------------------------------------------------------- NAME ADDRESS - ----------------------------------------------------------------------- Ronald A. Rasband 2000 Eagle Gate Tower 60 East South Temple Salt Lake City, Utah 84111 Brent D. Ward 2000 Eagle Gate Tower 60 East South Temple Salt Lake City, Utah 84111 Michael C. Eades 2000 Eagle Gate Tower 60 East South Temple Salt Lake City, Utah 84111 - ----------------------------------------------------------------------- Ronald A. Rasband, Brent D. Ward and Michael C. Eades hereby acknowledge and affirm, under penalties of perjury, to the below named notary public that (i) they appeared before such notary public, (ii) they executed these Articles of Incorporation before such notary public, and (iii) the statements contained in these Articles of Incorporation are true and correct in all respects. DATED this 16th day of October, 1989. ------------------------- Ronald A. Rasband ------------------------- Brent D. Ward ------------------------- Michael C. Eades 6 STATE OF UTAH ) : ss. COUNTY OF SALT LAKE ) The foregoing Articles of Incorporation were subscribed, sworn to, and acknowledged before me this 16th day of October, 1989, by Ronald A. Rasband, Brent D. Ward and Michael C. Eades. ----------------------------- NOTARY PUBLIC Residing at: ----------------- My Commission Expires: - --------------------- REGISTERED AGENT ACKNOWLEDGMENT The undersigned, Brent D. Ward, hereby acknowledges that he has been named as registered agent of Huntsman Container Corporation International, a Utah corporation to be formed pursuant to Articles of Incorporation to which this Registered Agent Acknowledgement is attached, and hereby agrees to act as registered agent of said corporation. ----------------------------- Brent D. Ward 7 STATE OF UTAH ) : ss. COUNTY OF SALT LAKE ) The foregoing Registered Agent Acknowledgment was acknowledged before me this 16th day of October 1989, by Brent D. Ward. ----------------------------- NOTARY PUBLIC Residing at: ---------------- My Commission Expires: - ---------------------- 8 CONSENT The undersigned, Huntsman Corporation, a Utah corporation, hereby consents to the use of the name "Huntsman Container Corporation International" by a Utah corporation to be formed under such name, with the incorporators thereof being Ronald A. Rasband, Brent D. Ward and Michael C. Eades. DATED this 13th day of October, 1989. HUNTSMAN CORPORATION, a Utah corporation By: --------------------------- Its: --------------------------- ARTICLES OF MERGER OF HUNTSMAN PACKAGING INTERNATIONAL CORPORATION INTO HUNTSMAN CONTAINER CORPORATION INTERNATIONAL Effective December 31, 1996 In accordance with Sections 16-10a-1104 and 16-10a-1105 of the Utah Revised Business Corporation Act (the "URBCA"), Huntsman Container Corporation International, a Utah corporation ("HCCI"), hereby declares and certifies as follows: ARTICLE ONE Plan of Merger The Plan of Merger, dated December 20, 1996 (the "Plan of Merger"), with respect to the merger of Huntsman Packaging International Corporation, a Utah corporation ("HPIC"), into HCCI is attached hereto as Exhibit A and is incorporated herein by this reference. ARTICLE TWO Shareholder Approval Pursuant to Section 16-10a-1104(3) of the URBCA, the shareholder of HPIC was required to approve the Plan of Merger (the shareholder of HCCI was not required to approve the Plan of Merger). No shareholders were entitled to vote separately in voting groups. The designation, number of outstanding shares, number of votes entitled to be cast, and the total number of votes cast for and against the Plan of Merger were as follows: =========================================================================== Corporation and Outstanding Votes entitled For Against Designation Shares to be cast - --------------------------------------------------------------------------- HPIC 1,000 1,000 1,000 0 Common Stock =========================================================================== The number of votes cast for the Plan of Merger was sufficient for approval. ARTICLE THREE Share Ownership The merger of HPIC with and into HCCI (the "Merger") is being effected pursuant to Section 16-10a- 1104 of the URBCA. Immediately prior to the Merger, HPIC (the parent corporation) owned all of the outstanding shares of each class of stock of HCCI (the subsidiary corporation). ARTICLE FOUR Effective Date The effective date of the Merger is December 31, 1996, and the effective date complies with Section 16-10a-1104(5) of the URBCA. IN WITNESS WHEREOF, HCCI hereby certifies to the truth of the facts stated herein and executes and delivers these Articles of Merger this 20th day of December, 1996. Huntsman Container Corporation International, a Utah corporation ------------------------------------ Richard P. Durham President ATTEST: - ------------------- Robert B. Lence Secretary 2 MAILING ADDRESS If, upon completion of filing of the above Articles of Merger, the Division elects to send a copy of the Articles of Merger to HCCI by mail, the address to which the copy should be mailed is: Huntsman Container Corporation International 500 Huntsman Way Salt Lake City, Utah 84108 Attention: Robert B. Lence 3 Exhibit A PLAN OF MERGER (MERGER OF HUNTSMAN PACKAGING INTERNATIONAL CORPORATION INTO HUNTSMAN CONTAINER CORPORATION INTERNATIONAL) DECEMBER 20, 1996 The Board of Directors of Huntsman Packaging International Corporation ("HPIC") has determined that HPIC should merge into its wholly-owned subsidiary, Huntsman Container Corporation International, a Utah corporation ("HCCI"), (the "Merger") in accordance with the applicable provisions of the Utah Revised Business Corporation Act (the "URBCA") and the Internal Revenue Code (the "Code"). I. Merger 1.1 Names and States of Incorporation. The name and state of incorporation of each of the constituent corporations is as follows: (a) Huntsman Container Corporation International, a Utah corporation, and (b) Huntsman Packaging International Corporation, a Utah corporation. 1.2 Effective Time. In accordance with the URBCA, the Merger shall be effective on December 31, 1996 s specified in the Articles of Merger (the "Effective Time"). 1.3 Merger. At the Effective Time, the following shall occur: (a) HPIC shall be merged with and into HCCI, and the separate existence of HPIC shall cease. (b) HCCI shall be the surviving corporation and shall continue its corporate existence in accordance with the laws of the State of Utah and under the name "Huntsman Container Corporation International." (c) The Merger shall have the effects set forth in Section 16-10a-1106 of the URBCA. (d) All of the assets and liabilities of HPIC (collectively, the "Assets and Liabilities") shall become assets and liabilities of HCCI. 1.4 Articles of Incorporation. The Articles of Incorporation of HCCI shall continue to be the Articles of Incorporation of HCCI after the Effective Time, until amended or repealed in accordance with the URBCA. 1.5 Bylaws. The Bylaws of HCCI shall continue to be the Bylaws of HCCI after the Effective Time, until amended or repealed in a manner provided by such Bylaws and the URBCA. 1.6 Directors. The directors of HCCI immediately prior to the Effective Time shall continue to serve as the directors of HCCI for the term specified in the Bylaws of HCCI. 1.7 Officers. The officers of HCCI immediately prior to the Effective Time shall continue to be officers of HCCI until otherwise provided in accordance with the Bylaws of HCCI. II. Shares of the Constituent Corporations 2.1 HPIC Stock. As of the date of this plan, (a) HPIC has an authorized capital structure consisting of Fifty Thousand (50,000) shares of Common Stock ("HPIC Common Stock"), and (b) One Thousand (1,000) shares of HPIC Common Stock are issued and outstanding (all of the issued and outstanding shares of HPIC Common Stock are owned by Huntsman Film Products Corporation ("Film Products")). 2.2 HCCI Stock. As of the date of this plan, (a) HCCI has an authorized capital structure of Fifty Thousand (50,000) shares of Common Stock ("HCCI Common Stock"), and (b) One Thousand (1,000) shares of HCCI Common Stock are issued and outstanding (all of the issued and outstanding shares of HCCI Common Stock are owned by HPIC). 2 2.3 Conversion of Outstanding Shares. As of the Effective Time, by virtue of the Merger and without any further action, the following shall occur: (a) Each issued and outstanding share of HCCI Common Stock shall be canceled (such that the One Thousand (1,000) issued and outstanding shares of HCCI Common Stock owned HPIC shall be canceled). (b) Each issued and outstanding share of HPIC Common Stock shall be converted into one (1) share of HCCI Common Stock (such that the One Thousand (1,000) issued and outstanding shares of HPIC Common Stock owned by Film Products shall be converted into One Thousand (1,000) shares of HCCI Common Stock which shall be owned by Film Products). 2.4 Certificates. As of the Effective Time, each certificate nominally representing shares of HPIC Common Stock, for all purposes, shall be deemed to evidence the number of shares of HCCI Common Stock determined in accordance with Section 2.3 above. 2.5 Exchange of Certificates. On or after the Effective Time, all certificates nominally representing shares of HPIC Common Stock shall be surrendered to HCCI for cancellation, and, as soon as reasonably practicable after such cancellation, HCCI shall issue certificates for shares of HCCI Common Stock in accordance with Section 2.3 above. 2.6 Options, Warrants or Other Rights. At the Effective Time, any options, warrants or other rights to purchase shares of HPIC, without any further action, shall be terminated. 2.7 Accounting Records. As of the Effective Time, the Assets and Liabilities shall be recorded in the accounting records of HCCI at the amounts at which they shall be carried at that time in the accounting records of HPIC, subject to such changes, adjustments or eliminations as may be made in accordance with generally accepted accounting principles. 3 2.8 Issuance of Shares. Between the date of this plan and the Effective Time, HPIC shall not issue or cause to be issued any additional shares of stock. 2.9 Tax Matters. HPIC and HCCI intend that the transactions contemplated by this plan shall constitute a tax-free reorganization pursuant to Section 368(a)(1)(A) of the Code. Therefore, all of the terms and provisions of this plan shall be interpreted so that such terms and provisions are in accordance with Section 368(a)(1)(A) of the Code. 4 EX-3.15 7 ARTICLES OF INCORPORATION OF HUNTSMAN PACKAGING GEORGIA, INC. ARTICLES OF INCORPORATION OF HUNTSMAN PACKAGING GEORGIA, INC. I The name of the Corporation is: Huntsman Packaging Georgia, Inc. II The Corporation shall have authority to issue not more than one thousand (1,000) shares of stock, to be designated as Common Stock, with a par value of $.01 per share. The Common Stock shall have all voting rights under the Georgia Business Corporation Code, and shall be entitled to receive the net assets of the Corporation upon dissolution. III The Corporation's initial registered office shall be in Fulton County. The street address of the Corporation's initial registered office and the name of its registered agent at that office are: CT Corporation System 1201 Peachtree Street Atlanta, Georgia 30361 IV The name and address of the Incorporator are: Robert B. Lence 500 Huntsman Way Salt Lake City, Utah 84108 V The mailing address of the initial principal office of the Corporation is: 500 Huntsman Way Salt Lake City, Utah 84108 VI A director of the Corporation shall not be liable to the Corporation or its shareholders for monetary damages for breach of duty of care or other duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the Georgia Business Corporation Code as currently in effect or as the same may be hereafter amended. No amendment, modification or repeal of this Article shall adversely affect any right or protection of a director that exists at the time of such amendment, modification, or repeal. VII Each person who is or was or had agreed to become a director or officer of the Corporation, or each such person who is or was serving or who had agreed to serve at the request of the Board of Directors or an officer of the Corporation as an employee or agent of the Corporation or as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise (including the heirs, executors, administrators or estate of such person), shall be indemnified by the Corporation to the fullest extent permitted by the Georgia Business Corporation Code or any other applicable laws as presently or hereafter in effect. No amendment, modification or repeal of this Article shall adversely affect any right or protection of a director, officer, employee or agent that exists at the time of such amendment, modification or repeal. VIII Any issued and outstanding shares of stock of the Corporation which are repurchased by the Corporation shall become treasury shares which shall be held in treasury by the Corporation until resold or retired and cancelled in the discretion of the Board of Directors. Any treasury shares which are retired and cancelled shall constitute authorized but unissued shares. 2 IX Any action required or permitted to be taken at a shareholders meeting may be taken without a meeting if the action is taken by one or more written consents by persons who would be entitled to vote at a meeting shares having voting power to cast not less than the minimum number (or numbers in the case of voting groups) of votes that would be necessary to authorize or take the action at a meeting at which all shareholders entitled to vote were present and voted. 3 IN WITNESS WHEREOF, the Incorporator executes these Articles of Incorporation as of the ____ day of May, 1996. ----------------------------------- Robert B. Lence 4 EX-3.16 8 ARTICLES OF INCORPORATION OF HUNTSMAN FILM PRODUCTS OF MEXICO, INC. ARTICLES OF INCORPORATION OF HUNTSMAN FILM PRODUCTS OF MEXICO, INC. We, the undersigned natural persons over the age of twenty-one years, acting as incorporators of a corporation under the Utah Business Corporation Act, adopt the following Articles of Incorporation for such corporation: ARTICLE I NAME The name of the corporation is Huntsman Film Products of Mexico, Inc. ARTICLE II DURATION The corporation shall exist perpetually or until dissolved according to law. ARTICLE III PURPOSES AND POWERS Section 3.01. Purposes. The purposes for which the corporation is organized are: (a) To engage in and carry on in all of its branches the business of purchasing, developing, researching, manufacturing, compounding, refining, marketing, selling, distributing, brokering, trading, importing, exporting, using, and otherwise dealing in and with, and to purchase, acquire, hold, manufacture, compound, refine, distill, print, fabricate, treat, prepare, analyze, synthesize, produce, and in every way deal in and with chemical materials, petrochemical materials, plastics, films, compounds, preparations, substances, packaging, and products of every kind, includ- ing without limitation propane, ethane, propylene, ethylene, polypropylene, polyethylene, polyvinylchloride, polybutadiene, petroleum derivates, resins, films, inks, solvents, and products of every kind, and also derivatives, products, materials, resins, films, inks, solvents, substances, and combinations produced or manufactured therefrom, including solids, liquids, gases, and films of all kinds; and to produce, fabricate, print, and utilize and deal in and with chemicals, petrochemicals, and combinations and products of all kinds. (b) To purchase, acquire, own, hold, lease, operate, mortgage, encumber, sell, and dispose of any and all kinds and character of real, personal, and mixed property (the foregoing particular enumeration in no sense being used by way of exclusion or limitation) and while the owner thereof, to exercise all the rights, powers, and privileges of ownership, including, in the case of stocks and shares, the right to vote thereon. (c) To enter into, make, and perform contracts of every kind and description, to borrow and lend money with or without security, and to endorse or otherwise guarantee the obligations of others. (d) To act as principal, agent, or broker for others and receive compensation for all services which it may render in the performance of the duties of an agency character. (e) To purchase, hold, sell, and transfer the shares of its own capital stock. (f) To engage in the general business of investing, on behalf of itself and others, any part of its capital and such additional funds as it may obtain, or any interest thereon, either as tenant in common or otherwise, and to sell or otherwise dispose of the same, or any part thereof, or any interest therein. 2 (g) To conduct researches, investigations, and examinations of businesses and enterprises of every kind and description. (h) To engage in any and all other lawful purposes, activities, and pursuits presently or hereafter allowed by law, whether similar or dissimilar to the foregoing. Section 3.02. Powers. The corporation shall have all powers allowed by law, including without limitation those powers described in Sections 16-10-4 and 16- 10-5 of the Utah Code Annotated (1953), as amended and supplemented. The purposes stated herein shall be construed as powers as well as purposes, and the matters expressed in any clause shall not be limited by reference to or inference from the terms of any other, but shall be regarded as independent purposes and powers; and the enumeration of specific purposes and powers shall not be construed to limit or restrict the meaning of general terms of the general powers; nor shall the expression of one thing be deemed to exclude another not expressed, although it be of like nature. ARTICLE IV CAPITALIZATION The aggregate number of shares which the corporation shall have authority to issue is fifty thousand (50,000) shares of common stock having a par value of One Dollar ($1.00) per share. All voting rights of the corporation shall be exercised by the holders of the common stock, with each share of common stock being entitled to one (1) vote. All shares of common stock shall have equal rights in the event of dissolution or final liquidation. ARTICLE V PAID-IN-CAPITAL The corporation shall not commence business until consideration of the value of at least One Thousand Dollars ($1,000.00) has been received for the issuance of shares of the corporation. 3 ARTICLE VI BYLAWS Provisions for the regulation of the internal affairs of the corporation shall be set forth in the Bylaws of the corporation. ARTICLE VII PREEMPTIVE RIGHTS No holder of the shares of the capital stock of any class of the corporation shall have any pre-emptive or preferential rights of subscription to any shares of any class of stock of the corporation, whether now or hereafter authorized, or to any obligations convertible into stock of the corporation, issued or sold. The term convertible obligations as used herein shall include any notes, bonds, or other evidences of indebtedness to which are attached or with which are issued warrants or other rights to purchase stock of the corporation. ARTICLE VIII REGISTERED OFFICE AND AGENT The address of the initial registered office of the corporation is 1975 Eagle Gate Tower, 60 East South Temple, Salt Lake City, Utah 84111, and the name of its initial registered agent at such address is Brent M. Stevenson. ARTICLE IX DIRECTORS The number of Directors which shall constitute the Board of Directors of the corporation may vary from three (3) to nine (9) Directors as prescribed by the Bylaws of the corporation. The number of Directors constituting the initial Board of Directors of the corporation shall be four (4), and the names and addresses of 4 the persons who are to serve as Directors until the first meeting of the shareholders or until their successors are elected and shall qualify are as follows: - ------------------------------------------------------------------------------- NAME ADDRESS - ------------------------------------------------------------------------------- Jon M. Huntsman 2000 Eagle Gate Tower 60 East South Temple Salt Lake City, Utah 84111 Richard P. Durham 1975 Eagle Gate Tower 60 East South Temple Salt Lake City, Utah 84111 Brent M. Stevenson 1975 Eagle Gate Tower 60 East South Temple Salt Lake City, Utah 84111 Terry R. Parker 1975 Eagle Gate Tower 60 East South Temple Salt Lake City, Utah 84111 - ------------------------------------------------------------------------------- ARTICLE X LIMITATION OF DIRECTOR LIABILITY No Director of the corporation shall have any personal liability to the corporation or its shareholders for monetary damages for any breach of fiduciary duty; provided, however, that to the extent required by applicable Utah law, this provision shall not be deemed to eliminate or limit the liability of a Director: (a) For any breach of the Director's duty of loyalty to the corporation or its shareholders; (b) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; (c) for actions under Section 16-10-44 of the Utah Code Annotated (1953), as amended or supplemented; or (d) for any transaction from which the Director derived an improper personal benefit. 5 ARTICLE XI INCORPORATORS The names and addresses of the incorporators are as follows: - ------------------------------------------------------------------------------- NAME ADDRESS - ------------------------------------------------------------------------------- Brent M. Stevenson 1975 Eagle Gate Tower 60 East South Temple Salt Lake City, Utah 84111 Terry R. Parker 1975 Eagle Gate Tower 60 East South Temple Salt Lake City, Utah 84111 Richard P. Durham 1975 Eagle Gate Tower 60 East South Temple Salt Lake City, Utah 84111 - ------------------------------------------------------------------------------- VERIFICATION Brent M. Stevenson, Terry R. Parker, and Richard P. Durham hereby acknowledge and affirm, under oath, and under penalties of perjury, to the below named Notary Public that: (i) They appeared before such Notary Public; (ii) they executed these Articles of Incorporation of Huntsman Film Products of Mexico, Inc. before such Notary Public; and (iii) these Articles of Incorporation of Huntsman Film Products of Mexico, Inc. are truthful and correct in all respects. DATED this 11th day of August, 1992. -------------------------------- Brent M. Stevenson -------------------------------- Terry R. Parker -------------------------------- Richard P. Durham 6 STATE OF UTAH ) : ss. COUNTY OF SALT LAKE ) The foregoing Articles of Incorporation of Huntsman Film Products of Mexico, Inc. were subscribed, sworn to, and acknowledged before me this 11th day of August, 1992, by Brent M. Stevenson, Terry R. Parker, and Richard P. Durham, who affirmed to me, under oath and penalties of perjury, that the contents of the foregoing Articles of Incorporation of Huntsman Film Products of Mexico, Inc. are true and correct in all respects. ------------------------------- NOTARY PUBLIC Residing at Salt Lake City, Utah My Commission Expires: - ---------------------- ACKNOWLEDGEMENT OF REGISTERED AGENT STATE OF UTAH ) : ss. COUNTY OF SALT LAKE ) The undersigned, Brent M. Stevenson, hereby acknowledges that he has been named as registered agent of Huntsman Film Products of Mexico, Inc., a Utah corporation to be formed pursuant to Articles of Incorporation of Huntsman Film Products of Mexico, Inc. to which this Acknowledgement of Registered Agent is attached, and hereby agrees to act as registered agent of said corporation. -------------------------------- Brent M. Stevenson 7 STATE OF UTAH ) : ss. COUNTY OF SALT LAKE ) The foregoing Acknowledgement of Registered Agent was acknowledged before me this 11th day of August, 1992 by Brent M. Stevenson -------------------------------- NOTARY PUBLIC Residing at Salt Lake City, Utah My Commission Expires: - ---------------------- 8 EX-3.17 9 ARTICLES OF INCORPORATION OF HUNTSMAN BULK PACKAGING CORPORATION ARTICLES OF INCORPORATION OF HUNTSMAN BULK PACKAGING CORPORATION The undersigned, acting as incorporator of a corporation under the Utah Revised Business Corporation Act (the "Act"), adopts the following Articles of Incorporation for such corporation: ARTICLE I NAME The name of this corporation (the "Corporation") is Huntsman Bulk Packaging Corporation ARTICLE II PURPOSES AND POWERS The Corporation is organized to engage in any and all lawful acts, activities, and/or pursuits for which corporations may presently or hereafter be organized under the Act. The Corporation shall have all powers allowed by law, including without limitation those powers described in Section 302 of the Act. The purposes stated herein shall be construed as powers as well as purposes and the enumeration of a specific purpose or power shall not be construed to limit or restrict the meaning of general terms or the general powers; nor shall the expression of one thing be deemed to exclude another not expressed, although it be of like nature. ARTICLE III AUTHORIZED SHARES The aggregate number of shares which the Corporation shall have authority to issue is One Million (1,000,000) shares of common stock. All voting rights of the Corporation shall be exercised by the holders of the common stock and the holders of the common stock of the Corporation shall be entitled to receive the net assets of the Corporation upon dissolution. All shares of the common stock shall be fully paid and nonassessable. ARTICLE IV REGISTERED OFFICE AND AGENT The address of the initial registered office of the Corporation is 2000 Eagle Gate Tower, Salt Lake City, Utah 84111-1098, and the name of its initial registered agent at such address is Elizabeth A. Whitsett. ARTICLE V LIMITATION ON LIABILITY Within the meaning of and in accordance with Section 841 of the Act: 1. No director of the Corporation shall be personally liable to the Corporation or its shareholders for monetary damages for any action taken or any failure to take any action as a director, except as provided in this Article V. 2. The limitation of liability contemplated in this Article V shall not extend to (a) the amount of a financial benefit received by a director to which he is not entitled, (b) an intentional infliction of harm on the Corporation or its shareholders, (c) a violation of Section 842 of the Act, or (d) an intentional violation of criminal law. 2 3. Any repeal or modification of this Article V by the shareholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification. 4. Without limitation, this Article V shall be applied and interpreted, and shall be deemed to incorporate, any provision of the Act, as the same exists or may hereafter be amended, as well as any applicable interpretation of Utah law, so that personal liability of directors and officers of the Corporation to the Corporation or its shareholders, or to any third person, shall be eliminated or limited to the fullest extent as from time to time permitted by Utah law. ARTICLE VI INCORPORATOR The name and address of the incorporator is as follows: - ------------------------------------------------------------------------------- NAME ADDRESS - ------------------------------------------------------------------------------- Elizabeth A. Whitsett 2000 Eagle Gate Tower Salt Lake City, Utah 84111-1098 IN WITNESS WHEREOF, the undersigned, being the incorporator of the Corporation, hereby executes these Articles of Incorporation and certifies to the truth of the facts herein stated, this ____ day of ___________, 1994. ------------------------------------- Elizabeth A. Whitsett, Incorporator 3 ACKNOWLEDGEMENT OF REGISTERED AGENT The undersigned, Elizabeth A. Whitsett, hereby acknowledges that she has been named as registered agent of Huntsman Bulk Packaging Corporation, a Utah corporation to be formed pursuant to the Articles of Incorporation to which this Acknowledgment is attached, and the undersigned hereby agrees to act as registered agent of said corporation. --------------------------------------- Elizabeth A. Whitsett, Registered Agent MAILING ADDRESS If, upon completion of filing of the above Articles of Incorporation, the Division elects to send a copy of the Articles of Incorporation to the Corporation by mail, the address to which the copy should be mailed is: Huntsman Bulk Packaging Corporation 2000 Eagle Gate Tower Salt Lake City, Utah 84111-1098 Attention: Elizabeth A. Whitsett 4 EX-3.2 10 AMENDED AND RESTATED BYLAWS OF HUNTSMAN PACKAGING CORPORATION AMENDED AND RESTATED BYLAWS OF HUNTSMAN PACKAGING CORPORATION A UTAH CORPORATION 1997 TABLE OF CONTENTS ARTICLE 1. OFFICES Section 1.1. Business Offices 1 Section 1.2. Registered Office 1 ARTICLE 2. SHAREHOLDERS Section 2.1. Annual Shareholder Meeting 1 Section 2.2. Special Shareholder Meetings 1 Section 2.3. Place of Shareholder Meetings 2 Section 2.4. Notice of Shareholder Meeting 2 Section 2.5. Fixing of Record Date 4 Section 2.6. Shareholder List 5 Section 2.7. Shareholder Quorum and Voting Requirements 5 Section 2.8. Proxies 6 Section 2.9. Voting of Shares 6 Section 2.10. Corporation's Acceptance of Votes 7 Section 2.11. Informal Action by Shareholders 9 Section 2.12. Waiver of Notice 10 Section 2.13. Voting for Directors 10 Section 2.14. Rights of Shareholders to Inspect Corporate Records 11 Section 2.15. Furnishing Financial Statements to a Shareholder 13 Section 2.16. Information Respecting Shares 13 ARTICLE 3. BOARD OF DIRECTORS Section 3.1. General Powers. 13 2 Section 3.2. Number, Tenure and Qualifications of Directors 13 Section 3.3. Regular Meetings of the Board of Directors 14 Section 3.4. Special Meetings of the Board of Directors 14 Section 3.5. Notice and Waiver of Notice of Special Director Meetings 14 Section 3.6. Quorum of Directors 15 Section 3.7. Manner of Acting 15 Section 3.8. Director Action By Written Consent 16 Section 3.9. Resignation of Directors 16 Section 3.10. Removal of Directors 16 Section 3.11. Board of Director Vacancies 17 Section 3.12. Director Compensation 18 Section 3.13. Director Committees 18 Section 3.14. Director's Rights to Inspect Corporate Records 18 ARTICLE 4. EXECUTIVE COMMITTEE AND OTHER COMMITTEES Section 4.1. Creation of Committees 20 Section 4.2. Approval of Committees and Members 20 Section 4.3. Required Procedures 20 Section 4.4. Authority 20 Section 4.5. Authority of Executive Committee 20 Section 4.6. Compensation 21 ARTICLE 5. OFFICERS 3 Section 5.1. Officers 21 Section 5.2. Appointment and Term of Office 21 Section 5.3. Resignation of Officers 22 Section 5.4. Removal of Officers 22 Section 5.5. The Chairman of the Board 22 Section 5.6. The Vice Chairman 22 Section 5.7. Chief Executive Officer 22 Section 5.8. President 23 Section 5.9. Vice Presidents 23 Section 5.10. Secretary 24 Section 5.11. Treasurer 25 Section 5.12. Assistant Secretaries and Assistant Treasurers. 25 Section 5.13. General Manager 25 Section 5.14. Salaries 26 Section 5.15. Surety Bonds 26 ARTICLE 6. LIMITATION OF LIABILITY AND INDEMNIFICATION Section 6.1. Limitation of Liability of Directors 27 Section 6.2. Indemnification of Directors 27 Section 6.3. Advance Payment of Expenses 28 Section 6.4. Indemnification of Officers, Employees, Fiduciaries, and Agents 29 Section 6.5. Insurance 29 4 ARTICLE 7. EXECUTION OF INSTRUMENTS, BORROWING OF MONEY Section 7.1. Execution of Instruments 29 Section 7.2. Loans 30 Section 7.3. Deposits 30 Section 7.4. Checks, Drafts, etc. 30 Section 7.5. Bonds and Debentures 30 Section 7.6. Sale, Transfer, etc. of Securities 31 Section 7.7. Proxies 31 ARTICLE 8. CERTIFICATES FOR SHARES AND Section 8.1. Certificates for Shares 31 Section 8.2. Shares Without Certificates 32 Section 8.3. Registration of Transfer of Shares 33 Section 8.4. Transfer Agents and Registrars 33 Section 8.5. Restrictions on Transfer of Shares Permitted 33 Section 8.6. Acquisition of Shares 34 Section 8.7. Lost or Destroyed Certificates 35 ARTICLE 9. DISTRIBUTIONS Section 9.1. Distributions 35 ARTICLE 10. CORPORATE SEAL Section 10.1. Corporate Seal 35 ARTICLE 11. FISCAL YEAR Section 11.1. Fiscal Year 35 ARTICLE 12. AMENDMENTS Section 12.1. Amendments 36 5 AMENDED AND RESTATED BYLAWS OF HUNTSMAN PACKAGING CORPORATION ARTICLE 1. OFFICES Section 1.1. Business Offices. The principal office of Huntsman Packaging Corporation (the "Corporation") shall be located at any place either within or outside the State of Utah, as designated in the Corporation's Articles of Incorporation or the Corporation's most recent annual report on file with the Utah Department of Commerce, Division of Corporations and Commercial Code (the "Division") providing such information. The Corporation may have such other offices, either within or outside the State of Utah as the Board of Directors may designate or as the business of the Corporation may require from time to time. The Corporation shall maintain at its principal office a copy of those records specified in Section 2.14 of Article II of these Bylaws. (16-10a-102(24))* Section 1.2. Registered Office. The registered office of the Corporation required by the Utah Revised Business Corporation Act shall be located within the State of Utah. The address of the registered office may be changed from time to time. (16-10a-501 and 16-10a-502) ARTICLE 2. SHAREHOLDERS Section 2.1. Annual Shareholder Meeting. An annual meeting of the shareholders shall be held each year on the date, at the time, and at the place, fixed by the Board of Directors. The annual meeting shall be held for the purpose of electing directors and for the transaction of such other business as may come before the meeting. (16-10a-701) Section 2.2. Special Shareholder Meetings. Special meetings of the shareholders may be called, for any purposes described in the notice of the meeting, by the President, or by the Board of Directors and shall be called 6 by the President at the request of the holder(s) of not less than one-tenth of all outstanding votes of the Corporation entitled to be cast on any issue at the meeting. (16-10a-702) Section 2.3. Place of Shareholder Meetings. The Board of Directors may designate any place, either within or outside the State of Utah, as the place for any annual meeting of the shareholders. The President, the Board of Directors or the shareholder(s) authorized by these Bylaws to request a meeting, as the case may be, may designate any place, either within or outside the State of Utah, as the place for any special meeting of the shareholders called by such person or group. If no designation is made regarding the place of the meeting, the meeting shall be held at the principal office of the Corporation. (16-10a-701(2) and 16-10a-702(3)) Section 2.4. Notice of Shareholder Meeting. (a) Required Notice. Written notice stating the place, day, and hour of any annual or special shareholder meeting shall be delivered not less than ten (10) nor more than sixty (60) days before the date of the meeting, either personally or by mail, by or at the direction of the person or group calling the meeting, to each shareholder of record entitled to vote at such meeting, and to any other shareholder entitled by the Utah Revised Business Corporation Act or the Corporation's Articles of Incorporation to receive notice of the meeting. Notice shall be deemed to be effective when mailed. (b) Notice Not Required. Notice shall not be required to be given to any shareholder to whom: (1) A notice of two consecutive annual meetings, and all notices of meetings or of the taking of action by written consent without a meeting during the period between the two consecutive annual meetings, have been mailed, addressed to the shareholder at the share- holder's address as shown on the records of the Corporation, and have been returned undeliverable; or (2) at least two payments, if sent by first class mail, of dividends or interest on 7 securities during a twelve month period, have been mailed, addressed to the shareholder at the shareholder's address as shown on the records of the Corporation, and have been returned undeliverable. If a shareholder to whom notice is not required to be given delivers to the Corporation a written notice setting forth the shareholder's current address, or if another address for the shareholder is otherwise made known to the Corporation, the requirement that notice be given to the shareholder is reinstated. (16-10a-103 and 16-10a-705) (c) Adjourned Meeting. If any shareholder meeting is adjourned to a different date, time, or place, notice need not be given of the new date, time, or place, if the new date, time, or place is announced at the meeting before adjournment. However, if the adjournment is for more than thirty (30) days, or if after the adjournment a new record date for the adjourned meeting is or must be fixed (see Section 2.5 of these Bylaws), then notice must be given pursuant to the requirements of paragraph (a) of this Section 2.4 to shareholders of record who are entitled to vote at the meeting. (16-10a-705(4)) (d) Contents of Notice. Notice of any special meeting of the shareholders shall include a description of the purpose or purposes for which the meeting is called. Except as provided in this paragraph (d) of Section 2.4, in the Articles of Incorporation, or in the Utah Revised Business Corporation Act, notice of an annual meeting of the shareholders need not include a description of the purpose or purposes for which the meeting is called. (16-10a-705(2), (3)) (e) Waiver of Notice of Meeting. Any shareholder may waive notice of a meeting by a writing signed by the shareholder which is delivered to the Corporation (either before or after the date and time stated in the notice as the date or time when any action will occur or has occurred) for inclusion in the minutes or filing with the Corporation's records. (16-10a-706) (f) Effect of Attendance at Meeting. A shareholder's attendance at a meeting: 8 (1) Waives objection to lack of notice or defective notice of the meeting, unless the shareholder at the beginning of the meeting objects to holding the meeting or transacting business at the meeting; and (2) waives objection to consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice, unless the shareholder objects to considering the matter when it is presented. (16-10a-706) Section 2.5. Fixing of Record Date. For the purpose of determining the shareholders of any voting group entitled to notice of or to vote at any meeting of the shareholders, or the shareholders entitled to take action without a meeting or to demand a special meeting, or the shareholders entitled to receive payment of any distribution or dividend, or in order to make a determination of the shareholders for any other proper purpose, the Board of Directors may fix in advance a date as the record date. Such record date shall not be more than seventy (70) days prior to the date on which the particular action, requiring such determination of the shareholders, is to be taken. If no record date is so fixed by the Board of Directors, the record date shall be at the close of business on the following dates: (a) Annual and Special Meetings. With respect to an annual meeting of the shareholders or any special meeting of the shareholders called by the President, the Board of Directors or the shareholder(s) authorized by these Bylaws to request a meeting, the day before the first notice is delivered to shareholders. (16-10a-707(2)) (b) Meeting Demanded by Shareholders. With respect to a special shareholder meeting demanded by the shareholders pursuant to the Utah Revised Business Corporation Act, the earliest date of any of the demands pursuant to which the meeting is called, or sixty (60) days prior to the date the first of the written demands is received by the Corporation, whichever is later. (16-10a-702(1)(b), (2)) (c) Action Without a Meeting. With respect to actions taken in writing without a meeting (pursuant to 9 Section 2.11 of these Bylaws), the date the first shareholder delivers to the Corporation a signed written consent upon which the action is taken. (16-10a-704(6)) (d) Distributions. With respect to a distribution to the shareholders (other than one involving a repurchase or reacquisition of shares), the date the Board of Directors authorizes the distribution. (16-10a-640(2)) (e) Share Dividend. With respect to the payment of a share dividend, the date the Board of Directors authorizes the share dividend. (16-10a-623(3)) When a determination of the shareholders entitled to vote at any meeting of the shareholders has been made as provided in this Section 2.5, such determination shall apply to any adjournment thereof unless the Board of Directors fixes a new record date, which it must do if the meeting is adjourned to a date more than one hundred twenty (120) days after the date fixed for the original meeting. (16-10a-707) Section 2.6. Shareholder List. The Secretary shall make a complete record of the shareholders entitled to vote at each meeting of shareholders, arranged in alphabetical order within each class or series, with the address of and the number of shares held by each. If voting groups exist (see Section 2.7 of these Bylaws), the list must be arranged by voting group, and within each voting group by class or series of shares. The shareholder list must be available for inspection by any shareholder, beginning on the earlier of ten (10) days before the meeting for which the list was prepared or two (2) business days after notice of the meeting is given and continuing through the meeting and any adjournments. The list shall be available at the Corporation's principal office or at a place identified in the notice of the meeting in the city where the meeting is to be held. A shareholder, his agent, or attorney is entitled on written demand to inspect and, subject to the requirements of Section 2.14 of these Bylaws, to inspect and copy the list during regular business hours and during the period it is available for inspection. The Corporation shall maintain the shareholder list in written form or in another form capable of conversion into written form within a reasonable time. (16-10a-720) 10 Section 2.7. Shareholder Quorum and Voting Requirements. (a) Quorum. Unless the Articles of Incorporation, a Bylaw adopted by the shareholders pursuant to the Utah Revised Business Corporation Act, or the Utah Revised Business Corporation Act provides otherwise, a majority of the votes entitled to be cast on the matter by the voting group constitutes a quorum of that voting group for action on that matter. (16-10a-725(1)) (b) Approval of Actions. If a quorum exists, action on a matter (other than the election of directors) by a voting group is approved if the votes cast within the voting group favoring the action exceed the votes cast opposing the action, unless the Articles of Incorporation, a Bylaw adopted by the shareholders pursuant to the Utah Revised Business Corporation Act, or the Utah Revised Business Corporation Act requires a greater number of affirmative votes. (16-10a-725(3)) (c) Single Voting Group. If the Articles of Incorporation or the Utah Revised Business Corporation Act provides for voting by a single voting group on a matter, action on that matter is taken when approved by that voting group. (16-10-726(1)) (d) Voting Groups. Shares entitled to vote as a separate voting group may take action on a matter at a meeting only if a quorum of those shares exists with respect to that matter. (16-10a-725(1)) If the Articles of Incorporation or the Utah Revised Business Corporation Act provides for voting by two or more voting groups on a matter, action on that matter is taken only when approved by each of those voting groups counted separately. One voting group may vote on a matter even though another voting group entitled to vote on the matter has not voted. (16-10a-726(2)) (e) Effect of Representation. Once a share is represented for any purpose at a meeting, including the purpose of determining that a quorum exists, it is deemed present for quorum purposes for the remainder of the meeting and for any adjournment of that meeting, unless a 11 new record date is or must be set for that adjourned meeting. (16-10a-725(2)) Section 2.8. Proxies. At all meetings of the shareholders, a shareholder may vote in person or by a proxy executed in any lawful manner. Such proxy shall be filed with the Corporation before or at the time of the meeting. No proxy shall be valid after eleven months from the date of its execution unless otherwise provided in the proxy. (16-10a-722) Section 2.9. Voting of Shares. (a) Votes per Share. Unless otherwise provided in the Articles of Incorporation, each outstanding share entitled to vote shall be entitled to one vote, and each fractional share shall be entitled to a corresponding fractional vote, upon each matter submitted to a vote at a meeting of shareholders. (16-10a-721(1)) (b) Restriction on Shares Held by Controlled Corporation. Except as provided by specific court order, no shares of the Corporation held by another corporation, if a majority of the shares entitled to vote for the election of directors of such other corporation are held by the Corporation, shall be voted at any meeting of the Corporation or counted in determining the total number of outstanding shares at any given time for purposes of any meeting. However, the power of the Corporation to vote any shares, including its own shares, held by it in a fiduciary capacity is not hereby limited. (16-10a-721(2), (3)) (c) Redeemable Shares. Redeemable shares are not entitled to be voted after notice of redemption is mailed to the holders thereof and a sum sufficient to redeem the shares has been deposited with a bank, trust company, or other financial institution under an irrevocable obligation to pay the holders the redemption price on surrender of the shares. (16-10a-721(4)) Section 2.10. Corporation's Acceptance of Votes. (a) Corresponding Name. If the name signed on a vote, consent, waiver, proxy appointment, or proxy appointment revocation corresponds to the name of a shareholder, the Corporation, if acting in good faith, is 12 entitled to accept the vote, consent, waiver, proxy appointment, or proxy appointment revocation and give it effect as the act of the shareholder. (16-10a-724(1)) (b) Name does not Correspond. If the name signed on a vote, consent, waiver, proxy appointment, or proxy appointment revocation does not correspond to the name of a shareholder, the Corporation, if acting in good faith, is nevertheless entitled to accept the vote, consent, waiver, proxy appointment, or proxy appointment revocation and give it effect as the act of the shareholder if: (1) The shareholder is an entity as defined in the Utah Revised Business Corporation Act and the name signed purports to be that of an officer or agent of the entity; (2) the name signed purports to be that of an administrator, executor, guardian, or conservator representing the shareholder and, if the Corporation requests, evidence of fiduciary status acceptable to the Corporation has been presented with respect to the vote, consent, waiver, proxy appointment, or proxy appointment revocation; (3) the name signed purports to be that of a receiver or trustee in bankruptcy of the shareholder and, if the Corporation requests, evidence of this status acceptable to the Corporation has been presented with respect to the vote, consent, waiver, proxy appointment, or proxy appointment revocation; (4) the name signed purports to be that of a pledgee, beneficial owner, or attorney-in-fact of the shareholder and, if the Corporation requests, evidence acceptable to the Corporation of the signatory's authority to sign for the shareholder has been presented with respect to the vote, consent, waiver, proxy appointment, or proxy appointment revocation; (5) two or more persons are the shareholder as cotenants or fiduciaries and the name signed purports to be the name of at least one 13 of the cotenants or fiduciaries and the person signing appears to be acting on behalf of all the cotenants or fiduciaries; or (6) the acceptance of the vote, consent, waiver, proxy appointment, or proxy appointment revocation is otherwise proper under rules established by the Corporation that are not inconsistent with the provisions of this Section 2.10. (16-10a-724(2)) (c) Shares owned by Two or More Persons. If shares of the Corporation are registered in the names of two or more persons, or if two or more persons have the same fiduciary relationship respecting the same shares, unless the Secretary is given written notice to the contrary and furnished with a copy of the instrument creating the relationship, their acts with respect to voting shall have the following effect: (1) If only one votes, the act binds all; (2) if more than one vote, the act of the majority so voting binds all; (3) if more than one vote, but the vote is evenly split on any particular matter, each faction may vote the securities in question proportionately; and (4) if the instrument so filed or the registration of the shares shows that any tenancy is held in unequal interests, a majority or even split for the purpose of this Section 2.10 shall be a majority or even split in interest. (16-10a-724(3)) (d) Rejection. The Corporation is entitled to reject a vote, consent, waiver, proxy appointment, or proxy appointment revocation if the Secretary or other officer or agent authorized to tabulate votes, acting in good faith, has reasonable basis for doubt about the validity of the signature on it or about the signatory's authority to sign for the shareholder. (16-10a-724(4)) (e) No Liability. The Corporation and its officer or agent who accepts or rejects a vote, consent, 14 waiver, proxy appointment, or proxy appointment revocation in good faith and in accordance with the standards of this Section 2.10 are not liable in damages to the shareholder for the consequences of the acceptance or rejection. (16-10a-724(5)) (f) Validity. Corporate action based on the acceptance or rejection of a vote, consent, waiver, proxy appointment, or proxy appointment revocation under this Section 2.10 is valid unless a court of competent jurisdiction determines otherwise. (16-10a-724(6)) Section 2.11. Informal Action by Shareholders. (a) Written Consent. Unless otherwise provided in the Articles of Incorporation, any action which may be taken at any annual or special meeting of shareholders may be taken without a meeting and without prior notice if one or more consents in writing, setting forth the action so taken, are signed by the holders of outstanding shares having not less than the minimum number of votes necessary to authorize or take the action at a meeting at which all shares entitled to vote thereon were present and voted. (16-10a-704(1)) (b) Notice Requirements. Unless written consents of all shareholders entitled to vote have been obtained, the Corporation shall give notice of any shareholder approval without a meeting at least ten (10) days before the consummation of the action authorized by the approval to: (1) Those shareholders entitled to vote who have not consented in writing; and (2) those shareholders not entitled to vote and to whom the Utah Revised Business Corporation Act requires notice be given. Such notice shall contain or be accompanied by the same material that would have been required if a formal meeting had been called to consider the action. (16-10a-704(2)) (c) Revocation. Any shareholder giving a written consent, or the shareholders' proxyholder, or a transferee of the shares or a personal representative of 15 the shareholder or their respective proxyholder, may revoke the consent by a signed writing describing the action and stating that the shareholder's prior consent is revoked, if the writing is received by the Corporation prior to the effectiveness of the action. (16-10a-704(3)) (d) Effective Date. Action taken pursuant to this Section 2.11 is not effective unless all written consents on which the Corporation relies for the taking of action are received by the Corporation within a sixty (60) day period and are not revoked. Action thus taken is effective as of the date the last written consent necessary to effect the action is received by the Corporation, unless all the written consents necessary to effect the action specify a later date as the effective date of action. If the Corporation has received written consents signed by all shareholders entitled to vote with respect to the action, the effective date of the action may be any date that is specified in all the written consents as the effective date of the action. The writing may be received by the Corporation by electronically transmitted facsimile or other form of communication providing the Corporation with a complete copy thereof, including a copy of the signature. (16-10a-704(4)) (e) Election of Directors. Notwithstanding paragraph (a) of this Section 2.11, directors may not be elected by written consent except by unanimous written consent of all shares entitled to vote for the election of directors. (16-10a-704(5)) (f) Effect of Action Without a Meeting. Action taken under this Section 2.11 has the same effect as action taken at a meeting of shareholders and may be so described in any document. (16-10a-704(7)) Section 2.12. Waiver of Notice. A shareholder may waive any notice required by the Utah Revised Business Corporation Act, the Corporation's Articles of Incorporation or these Bylaws. Such a waiver may be made before or after the date and time stated in the notice as the date or time when any action will occur or has occurred. Such a waiver must be in a writing signed by the shareholder and must be delivered to the Corporation for inclusion in the minutes of the relevant meeting of the shareholders or in the Corporation's records. (16-10a-706(1)) 16 Section 2.13. Voting for Directors. At each election of directors, unless otherwise provided in the Articles of Incorporation or the Utah Revised Business Corporation Act, every shareholder entitled to vote at the election has the right to vote, in person or by proxy, all of the votes to which the shareholder's shares are entitled for as many persons as there are directors to be elected and for whose election the shareholder has the right to vote. Unless otherwise provided in the Articles of Incorporation or the Utah Revised Business Corporation Act, directors are elected by a plurality of the votes cast by the shares entitled to be voted in the election, at a meeting at which a quorum is present. (16-10a-728(1),(2)) Section 2.14. Rights of Shareholders to Inspect Corporate Records. (a) Minutes and Accounting Records. The Corporation shall keep, as permanent records, minutes of all meetings of its shareholders and Board of Directors, a record of all actions taken by its shareholders or Board of Directors without a meeting, a record of all actions taken on behalf of the Corporation by a committee of the Board of Directors in place of the Board of Directors, and a record of all waivers of notices of meetings of its shareholders, meetings of the Board of Directors, or any meetings of committees of the Board of Directors. The Corporation shall maintain appropriate accounting records. (16-10a-1601(1), (2)) (b) Absolute Inspection Rights. If a shareholder gives the Corporation written notice of the shareholder's demand at least five (5) business days before the date on which the shareholder wishes to inspect and copy, a shareholder (or the shareholder's agent or attorney) has the right to inspect and copy, during regular business hours, any of the following records, all of which the Corporation is required to keep at its principal office: (1) The Corporation's Articles of Incorporation currently in effect; (2) the Corporation's Bylaws currently in effect; (3) the minutes of all shareholders' meetings, and records of all action taken by 17 shareholders without a meeting, for the past three years; (4) all written communications within the past three years to shareholders as a group or to the holders of any class or series of shares as a group; (5) a list of the names and business addresses of the Corporation's current officers and directors; (6) the Corporation's most recent annual report delivered to the Division; and (7) all financial statements prepared for periods ending during the last three years that a shareholder could request pursuant to Section 16-10a-1605 of the Utah Revised Business Corporation Act. (16-10a-1601(5) and 16-10a-1602(1)) (c) Conditional Inspection Rights. If a shareholder gives the Corporation a written demand made in good faith and for a proper purpose at least five business days before the date on which the shareholder wishes to inspect and copy, the shareholder describes with reasonable particularity the shareholder's purpose and the records the shareholder desires to inspect, and the records are directly connected with the shareholder's purpose, the shareholder (or the shareholder's agent or attorney) is entitled to inspect and copy, during regular business hours at a reasonable location specified by the Corporation, any of the following records of the Corporation: (1) Excerpts from: (i) Minutes of any meeting of the Board of Directors, records of any action of a committee of the Board of Directors while acting on behalf of the Corporation in place of the Board of Directors; (ii) minutes of any meeting of the shareholders; (iii)records of action taken by the shareholders without a meeting; and 18 (iv) waivers of notices of any meeting of the shareholders, of any meeting of the Board of Directors, or of any meeting of a committee of the Board of Directors; (2) accounting records of the Corporation; and (3) the record of the Corporation's shareholders referred to in Section 16-10a-1601(3) of the Utah Revised Business Corporation Act. (16-10a-1602(2)) (d) Copy Costs. The right to copy records includes, if reasonable, the right to receive copies made by photographic, xerographic, or other means. The Corporation may impose a reasonable charge, payable in advance, covering the costs of labor and material, for copies of any documents provided to a shareholder. The charge may not exceed the estimated cost of production or reproduction of the records. (16-10a-1603) (e) Shareholder Includes Beneficial Owner. For purposes of this Section 2.14, the term "shareholder" shall include a beneficial owner whose shares are held in a voting trust and any other beneficial owner who establishes beneficial ownership. (16-10a-1602(4)(b)) Section 2.15. Furnishing Financial Statements to a Shareholder. Upon the written request of any shareholder, the Corporation shall mail to the shareholder its most recent annual or quarterly financial statements showing in reasonable detail its assets and liabilities and the results of its operations. (16-10a-1605) Section 2.16. Information Respecting Shares. Upon the written request of any shareholder, the Corporation, at its own expense, shall mail to the shareholder information respecting the designations, preferences, limitations, and relative rights applicable to each class of shares, the variations determined for each series, and the authority of the Board of Directors to determine variations for any existing or future class or series. The Corporation may comply by mailing the shareholder a copy of its Articles of Incorporation containing such information. (16-10a-1606) 19 ARTICLE 3. BOARD OF DIRECTORS Section 3.1. General Powers. All corporate powers shall be exercised by or under the authority of, and the business and affairs of the Corporation shall be managed under the direction of, the Board of Directors, subject to any limitation set forth in the Articles of Incorporation or in any agreement authorized by Section 16-10a-732 of the Utah Revised Business Corporation Act. (16-10a-801) Section 3.2. Number, Tenure and Qualifications of Directors. (a) Number. The number of directors of the Corporation shall be three (3). (16-10a-803(1), (2)) (b) Tenure. Each director shall hold office until the next annual meeting of shareholders or until removed. However, if a director's term expires, the director shall continue to serve until the director's successor shall have been elected and qualified, or until there is a decrease in the number of directors. (16-10a-805) (c) Qualifications. Directors need not be residents of the State of Utah or shareholders of the Corporation unless the Articles of Incorporation so prescribe. (16-10a-802) Section 3.3. Regular Meetings of the Board of Directors. A regular meeting of the Board of Directors shall be held without other notice than provided by this Section 3.3 immediately after, and at the same place as, the annual meeting of shareholders. The Board of Directors may provide, by resolution, the time and place for the holding of additional regular meetings without other notice than such resolution. Section 3.4. Special Meetings of the Board of Directors. Special meetings of the Board of Directors may be called by or at the request of the President, a Vice President or any two (2) directors, who may fix any place, either within or outside the State of Utah, as the place for holding the meeting. 20 Section 3.5. Notice and Waiver of Notice of Special Director Meetings. (a) Notice. Unless the Articles of Incorporation provide for a longer or shorter period, special meetings of the Board of Directors must be preceded by at least two (2) days notice of the date, time, and place of the meeting. (16-10a-822(2)) Notice may be communicated in person, by telephone, by any form of electronic communication, or by mail or private carrier. (16-10a-103(2)) At the written request of any director, notice of any special meeting of the Board of Directors shall be given to such director by facsimile or telex, as the case may be, at the number designated in writing by such director from time to time. (b) Effective Date. Notice of any meeting of the Board of Directors shall be deemed to be effective at the earliest of the following: (1) when received; (2) five (5) days after it is mailed; or (3) the date shown on the return receipt if sent by registered or certified mail, return receipt requested, and the receipt is signed by or on behalf of the director. (16-10a-103(5)). (c) Waiver of Notice. A director may waive notice of any meeting. Except as provided in this Section 3.5, the waiver must be in writing and signed by the director entitled to the notice. The waiver shall be delivered to the Corporation for filing with the corporate records, but delivery and filing are not conditions to its effectiveness. (16-10a-823(1)) (d) Effect of Attendance. The attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except when a director attends a meeting for the express purpose of objecting to the transaction of any business and at the beginning of the meeting, or promptly upon arrival, the director objects to holding the meeting or transacting business at the meeting because of lack of notice or defective notice, and does not thereafter vote for or assent to action taken at the meeting. (16- 10a-823(2)) Section 3.6. Quorum of Directors. A majority of the number of directors prescribed by resolution (or if no number is prescribed, the number in office immediately before the meeting begins) shall constitute a quorum for 21 the transaction of business at any meeting of the Board of Directors, unless the Articles of Incorporation require a greater number. (16-10a-824(1)(b)) Section 3.7. Manner of Acting. (a) Action by Majority. If a quorum is present when a vote is taken, the affirmative vote of a majority of directors present is the act of the Board of Directors, unless the Corporation's Articles of Incorporation or the Utah Revised Business Corporation Act requires the vote of a greater number of directors. (16-10a-824(3)) (b) Telephonic Meetings. Unless the Articles of Incorporation provide otherwise, any or all directors may participate in a regular or special meeting by, or conduct the meeting through the use of, any means of communication by which all directors participating may simultaneously hear each other during the meeting. A director participating in a meeting by this means is deemed to be present in person at the meeting. (16-10a-820(2)) (c) Effect of Presence at Meeting. A director who is present at a meeting of the Board of Directors when corporate action is taken is considered to have assented to the action taken, unless: (1) The director objects at the beginning of the meeting, or promptly upon arrival, to holding it or transacting business at the meeting; (2) the director contemporaneously requests his dissent or abstention as to any specific action to be entered into the minutes of the meeting; or (3) the director causes written notice of a dissent or abstention as to any specific action to be received by the presiding officer of the meeting before its adjournment or by the Corporation promptly after adjournment of the meeting. (16-10a-824(4)) (d) Right of Dissent or Abstention. The right of dissent or abstention as to a specific action is not 22 available to a director who votes in favor of the action taken. (16-10a-824(5)) Section 3.8. Director Action By Written Consent. Unless the Articles of Incorporation or the Utah Revised Business Corporation Act provide otherwise, any action required or permitted to be taken by the Board of Directors at a meeting may be taken without a meeting if all the directors consent to the action in writing. Action is taken by written consent at the time the last director signs a writing describing the action taken, unless, prior to that time, any director has revoked a consent by a writing signed by the director and received by the Secretary. Action taken by written consent is effective when the last director signs the consent, unless the Board of Directors establishes a different effective date. Action taken by written consent has the same effect as action taken at a meeting of directors and may be described as such in any document. (16-10a-821) Section 3.9. Resignation of Directors. A director may resign at any time by giving a written notice of resignation to the Corporation. A resignation of a director is effective when the notice is received by the Corporation unless the notice specifies a later effective date. A director who resigns may deliver a statement of his resignation pursuant to Section 16-10a-1608 of the Utah Revised Business Corporation Act to the Division for filing. (16-10a-807) Section 3.10. Removal of Directors. The shareholders may remove one or more directors at a meeting called for that purpose if notice has been given that a purpose of the meeting is such removal. The removal may be with or without cause, unless the Articles of Incorporation provide that directors may only be removed with cause. If a director is elected by a voting group of shareholders, only the shareholders of that voting group may participate in the vote to remove the director. If cumulative voting is in effect, a director may not be removed if the number of votes sufficient to elect the director under cumulative voting is voted against the director's removal. If cumulative voting is not in effect, a director may be removed only if the number of votes cast to remove the director exceeds the number of votes cast against removal of the director. (16-10a-808) 23 Section 3.11. Board of Director Vacancies. (a) Vacancies. Unless the Articles of Incorporation provide otherwise, if a vacancy occurs on the Board of Directors, including a vacancy resulting from an increase in the number of directors: (1) The shareholders may fill the vacancy; (2) the Board of Directors may fill the vacancy; or (3) if the directors remaining in office constitute fewer than a quorum of the board, they may fill the vacancy by the affirmative vote of a majority of all the directors remaining in office. (16-10a-810(1)) (b) Rights of Voting Groups. Unless the Articles of Incorporation provide otherwise, if the vacant office was held by a director elected by a voting group of shareholders: (1) If one or more directors were elected by the same voting group, only they are entitled to vote to fill the vacancy if it is filled by the directors; and (2) only the holders of shares of that voting group are entitled to vote to fill the vacancy if it is filled by the shareholders. (16-10a-810(2)) (c) Election of Director Prior to Vacancy. A vacancy that will occur at a specific later date, because of a resignation effective at a later date, may be filled before the vacancy occurs, but the new director may not take office until the vacancy occurs. (16-10a-810(3)) (d) Effect of Expiration of Term. If a director's term expires, the director shall continue to serve until the director's successor is elected and qualified or until there is a decrease in the number of directors. The term of a director elected to fill a vacancy expires at the next shareholders' meeting at which directors are elected. (16-10a-805(5)) 24 Section 3.12. Director Compensation. Unless otherwise provided in the Articles of Incorporation, by resolution of the Board of Directors, each director may be paid his expenses, if any, of attendance at each meeting of the Board of Directors, and may be paid a stated salary as a director or a fixed sum for attendance at each meeting of the Board of Directors or both. No such payment shall preclude any director from serving the Corporation in any capacity and receiving compensation therefor. Section 3.13. Director Committees. Committees of the Board of Directors may be established in accordance with Article 4 of these Bylaws. Section 3.14. Director's Rights to Inspect Corporate Records. (a) Absolute Inspection Rights. If a director gives the Corporation written notice of the director's demand at least five (5) business days before the date on which the director wishes to inspect and copy, the director (or the director's agent or attorney) has the right to inspect and copy, during regular business hours, any of the following records, all of which the Corporation is required to keep at its principal office: (1) The Corporation's Articles of Incorporation currently in effect; (2) the Corporation's Bylaws currently in effect; (3) the minutes of all shareholders' meetings, and records of all action taken by shareholders without a meeting, for the past three years; (4) all written communications within the past three years to shareholders as a group or to the holders of any class or series of shares as a group; (5) a list of the names and business addresses of the Corporation's current officers and directors; 25 (6) the Corporation's most recent annual report delivered to the Division; and (7) all financial statements prepared for periods ending during the last three years that a shareholder could request. (16-10a-1601(5) and 16-10a-1602(1)) (b) Conditional Inspection Rights. In addition, if a director gives the Corporation a written demand made in good faith and for a proper purpose at least five business days before the date on which the director wishes to inspect and copy, the director describes with reasonable particularity the director's purpose and the records the director desires to inspect, and the records are directly connected with the director's purpose, the director (or the director's agent or attorney) is entitled to inspect and copy, during regular business hours at a reasonable location specified by the Corporation, any of the following records of the Corporation: (1) Excerpts from: (i) Minutes of any meeting of the Board of Directors, records of any action of a committee of the Board of Directors while acting on behalf of the Corporation in place of the Board of Directors; (ii) minutes of any meeting of the shareholders; (iii) records of action taken by the shareholders without a meeting; and (iv) waivers of notices of any meeting of the shareholders, of any meeting of the Board of Directors, or of any meeting of a committee of the Board of Directors; (2) accounting records of the Corporation; and (3) the record of the Corporation's shareholders referred to in Section 16-10a-1601(3) of the Utah Revised Business Corporation Act. (16-10a-1602(2)) 26 (d) Copy Costs. The right to copy records includes, if reasonable, the right to receive copies made by photographic, xerographic, or other means. The Corporation may impose a reasonable charge, payable in advance, covering the costs of labor and material, for copies of any documents provided to the director. The charge may not exceed the estimated cost of production or reproduction of the records. (16-10a-1603) ARTICLE 4. EXECUTIVE COMMITTEE AND OTHER COMMIT TEES Section 4.1. Creation of Committees. Unless the Articles of Incorporation provide otherwise, the Board of Directors may create an Executive Committee and such other committees as it may deem appropriate and appoint members of the Board of Directors to serve on such commit tees. Each committee must have two (2) or more members, one of whom shall be the Chairman of the Board, if there be such an officer, and one of whom shall be the President of the Corporation. (16-10a-825(1)) Section 4.2. Approval of Committees and Members. The creation of a committee and appointment of members to it must be approved by the greater of: (1) A majority of all the directors in office when the action is taken; or (2) the number of directors required by the Articles of Incorporation to take such action, or, if not specified in the Articles of Incorporation, the number required by Section 3.7 of these Bylaws to take action. (16-10a-825(2)) Section 4.3. Required Procedures. Sections 3.4 through 3.10 of these Bylaws, which govern procedures applicable to the Board of Directors, also apply to committees and their members. (16-10a-825(3)) Section 4.4. Authority. Unless limited by the Articles of Incorporation or the Utah Revised Business Corporation Act, each committee may exercise those aspects of the authority of the Board of Directors which the Board 27 of Directors confers upon such committee in the resolution creating the committee. (16-10a-825(4)) Section 4.5. Authority of Executive Committee. The Executive Committee shall have, and may exercise all powers of the Board of Directors with respect to the management of the business and affairs of the Corporation during the intervals between the meetings of the Board of Directors. Provided, however, the Executive Committee shall not have the power to fill vacancies on the Board of Directors or to amend these Bylaws. Section 4.6. Compensation. Unless otherwise provided in the Articles of Incorporation, the Board of Directors may provide for the payment of a fixed sum and/or expenses of attendance to any member of a committee for attendance at each meeting of such committee. Provided, however, no such payments shall be made to committee members who are salaried employees of the Corporation. ARTICLE 5. OFFICERS AND ADVISORS Section 5.1. Officers and Advisors. The officers of the Corporation shall be a President, one or more Vice Presidents, a Secretary and a Treasurer, each of whom shall be appointed by the Board of Directors. The Board of Directors may appoint a Chief Executive Officer and such other officers and assistant officers as may be deemed necessary. If specifically authorized by the Board of Directors, an officer may appoint one or more officers or assistant officers. The same individual may simultaneously hold more than one office in the Corporation. (16-10a-830) The Board of Directors may also appoint, but shall not be required to appoint, a Chairman of the Board and one or more Vice Chairmen. The Chairman of the Board and any Vice Chairman shall not be officers of the Corporation, but, if not otherwise a director, shall be advisors to the Board of Directors and to the Corporation. The Board of Directors may appoint such other advisors as may be deemed necessary. Section 5.2. Appointment and Term. Each of the officers and advisors of the Corporation shall be appointed by the Board of Directors for a term determined by the Board of Directors. If no term is specified, each officer or advisor shall hold office until the officer or advisor resigns, dies, is removed in the manner provided in Section 28 5.4 of these Bylaws, or until the first meeting of the directors held after the next annual meeting of the shareholders. If the appointment of officers or advisors shall not be made at such meeting, such appointment shall be made as soon thereafter as is convenient. If a vacancy shall occur in any office or advisory position, or if a new office or advisory position shall be created, the Board of Directors may appoint officer(s) or advisor(s) to fill such vacancy, office or position, and such appointment shall be for the term determined by the Board of Directors. Each officer and advisor shall hold office until his or her successor shall have been duly appointed. (16-10a-830) The designation of a specified term does not grant to the officer or advisor any contract rights, and the Board of Directors may remove the officer or advisor at any time prior to the end of such term. (16-10a-833) Section 5.3. Resignation. Any officer or advisor may resign at any time by giving written notice of resignation to the Corporation. (16-10a-832(1)) Section 5.4. Removal. Any officer, advisor or agent of the Corporation may be removed by the Board of Directors at any time, with or without cause. Such removal shall be without prejudice to the contract rights, if any, of the person so removed. Appointment of an officer, advisor or agent shall not of itself create contract rights. (16-10a-832) Section 5.5. The Chairman of the Board. The Chairman of the Board, if there be such a position, shall be a director and shall have the following powers and duties: (a) To be a senior advisor to the Corporation and, in addition to the duties specified in this Section 5.5, to perform such duties as may be assigned to him by the Board of Directors; (b) to preside at all meetings of the shareholders of the Corporation; (c) to preside at all meetings of the Board of Directors; 29 (d) to be a member of the Executive Committee, if any. (16-10a-831) Section 5.6. The Vice Chairman. The Board of Directors may from time to time designate and appoint one or more Vice Chairmen. Each Vice Chairman shall have the right to attend meetings of the Board of Directors, but a Vice Chairman need not be a director (and if a Vice Chairman is not a director, the Vice Chairman shall not vote on any matter voted upon by the directors). Each Vice Chairman shall have such powers and perform such duties as may from time to time be assigned to him or her by the Board of Directors or by the Chairman of the Board. Section 5.7. Chief Executive Officer. The Chief Executive Officer, if there be such an officer, shall be the principal executive officer of the Corporation and, subject to the control of the Board of Directors, in general, shall supervise and control all of the business and affairs of the Corporation. If no Chairman of the Board has been appointed, or in his absence, the Chief Executive Officer, when present, shall preside at all meetings of the shareholders and of the Board of Directors. The Chief Executive Officer may sign, with the Secretary, any Assistant Secretary or any other proper officer of the Corporation authorized by the Board of Directors, certificates for shares of the Corporation, the issuance of which shall have been authorized by a resolution of the Board of Directors, and deeds, mortgages, bonds, contracts, or other instruments, except in cases where the signing and execution thereof shall be expressly delegated by the Board of Directors or by these Bylaws to some other officer or agent of the Corporation, or shall be required by law to be otherwise signed or executed; and in general shall perform all duties incident to the office of Chief Executive Officer and such other duties as may be prescribed by the Board of Directors from time to time. (16-10a-831) Section 5.8. President. The President shall be an executive officer of the Corporation, and, if there be no Chief Executive Officer, shall be the principal executive officer of the Corporation and, subject to the control of the Board of Directors, in general, shall supervise and control all of the business and affairs of the Corporation. In the absence of the Chief Executive Officer or in the event of his death, inability, or refusal to act, the President shall perform the duties of the Chief Executive 30 Officer, and when so acting, shall have all the powers of and be subject to all the restrictions upon the Chief Executive Officer. In the absence of the Chairman of the Board and the Chief Executive Officer, the President, when present, shall preside at all meetings of the shareholders and of the Board of Directors. The President may sign, with the Secretary, any Assistant Secretary or any other proper officer of the Corporation authorized by the Board of Directors, certificates for shares of the Corporation, the issuance of which shall have been authorized by a resolution of the Board of Directors, and deeds, mortgages, bonds, contracts, or other instruments, except in cases where the signing and execution thereof shall be expressly delegated by the Board of Directors or by these Bylaws to some other officer or agent of the Corporation, or shall be required by law to be otherwise signed or executed; and in general shall perform all duties incident to the office of President and such other duties as may be prescribed by the Chief Executive Officer or the Board of Directors from time to time. (16-10a-831) Section 5.9. Vice Presidents. In the absence of the President or in the event of his death, inability, or refusal to act, the Vice President (or in the event there be more than one Vice President, the Vice Presidents in the order designated at the time of their election, or in the absence of any designation, then in the order of their appointment) shall perform the duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President. If there is no Vice President, then the Treasurer shall perform such duties of the President. Any Vice President may sign, with the Secretary, any Assistant Secretary or any other proper officer of the Corporation authorized by the Board of Directors, certificates for shares of the Corporation the issuance of which have been authorized by resolution of the Board of Directors; and shall perform such other duties as from time to time may be assigned to him or her by the Chief Executive Officer, the President or by the Board of Directors. (16-10a-831) Section 5.10. Secretary. The Secretary shall have the following powers and duties: (a) to keep the minutes of the proceedings of the shareholders and of the Board of Directors and the other 31 records and information of the Corporation required to be kept, in one or more books provided for that purpose; (b) to see that all notices are duly given in accordance with the provisions of these Bylaws or as required by law; (c) to be custodian of the corporate records and of any seal of the Corporation; (d) when requested or required, to authenticate any records of the Corporation; (e) to keep a register of the post office address of each shareholder which shall be furnished to the Secretary by such shareholder; (f) to sign with the Chief Executive Officer, the President, or a Vice President, certificates for shares of the Corporation, the issuance of which shall have been authorized by resolution of the Board of Directors; (g) to have general charge of the stock transfer books of the Corporation; and (h) in general, to perform all duties incident to the office of Secretary and such other duties as from time to time may be assigned to him or her by the Chief Executive Officer, the President or by the Board of Directors. (16-10a-830 and 16-10a-831) Section 5.11. Treasurer. The Treasurer shall have the following powers and duties: (a) to have charge and custody of and be responsible for all funds and securities of the Corporation; (b) to receive and give receipts for moneys due and payable to the Corporation from any source whatsoever, and deposit all such moneys in the name of the Corporation in such banks, trust companies, or other depositaries as shall be selected by the Board of Directors; (c) in general, to perform all of the duties incident to the office of Treasurer and such other duties as from time to time may be assigned to him or her by the 32 Chief Executive Officer, the President or by the Board of Directors; and (d) if required by the Board of Directors, to give a bond for the faithful discharge of his or her duties in such sum and with such surety or sureties as the Board of Directors shall determine. (16-10a-831) Section 5.12. Assistant Secretaries and Assistant Treasurers. The Assistant Secretaries, when authorized by the Board of Directors, may sign, with the President or a Vice President, certificates for shares of the Corporation, the issuance of which shall have been authorized by a resolution of the Board of Directors. The Assistant Treasurers, if required by the Board of Directors, shall give bonds for the faithful discharge of their duties in such sums and with such sureties as the Board of Directors shall determine. The Assistant Secretaries and Assistant Treasurers, in general, shall perform such duties as shall be assigned to them by the Secretary or the Treasurer, respectively, or by the Chief Executive Officer, the President or the Board of Directors. (16-10a-831) Section 5.13. General Manager. The Chief Executive Officer, the President or the Board of Directors (or the Executive Committee, if any) may appoint a General Manager who may, or may not, be one of the officers or directors of the Corporation. The General Manager shall have the following powers and duties: (a) If so designated by the Board of Directors, the General Manager may be an executive officer of the Corporation. (b) If so directed by the Chief Executive Officer, the President, or the Board of Directors (or the Executive Committee, if any), the General Manager may have management of the business of the Corporation and its dealings and, if so directed, may have general charge of the business affairs and property of the Corporation, general supervision over its employees and agents; provided, however, the General Manager shall be at all times subject to the control of the Chief Executive Officer, the President or the Board of Directors (or the Executive Committee, if any). 33 (c) If so directed by the Chief Executive Officer, the President, or the Board of Directors (or the Executive Committee, if any), the General Manager may employ all employees of the Corporation, or delegate such employment to subordinate officers or division chiefs, and shall have authority to discharge any person so employed. (d) The General Manager shall make a report to the Chief Executive Officer, the President and the Board of Directors quarterly, or more often if required to do so, setting forth the result of the operations under his charge, together with suggestions looking to the improvement and betterment of the condition of the Corporation, and to perform such other duties as the Board of Directors shall require. Section 5.14. Salaries. The salaries of the officers, advisors and agents shall be fixed from time to time by the Board of Directors; provided, however, that the Board of Directors may delegate to any person or group of persons the power to fix the salaries or other compensation of any subordinate officers, advisors or agents. No officer shall be prevented from receiving any such salary or compensation by reason of the fact that he is also a director of the Corporation. Section 5.15. Surety Bonds. In the event the Board of Directors shall so require, any officer, advisor or agent of the Corporation shall execute to the Corporation a bond in such sums and with such surety or sureties as the Board of Directors may direct, conditioned upon the faithful performance of his duties to the Corporation, including responsibility for negligence and for the accounting for all property, monies, or securities of the Corporation which may come into his hands. ARTICLE 6. LIMITATION OF LIABILITY AND INDEMNIFICATION Section 6.1. Limitation of Liability of Directors. Directors shall not be liable to the Corporation or its shareholders for monetary damages for any action taken or any failure to take any action, as a director, except liability for: 34 (a) the amount of a financial benefit received by a director to which he is not entitled; (b) an intentional infliction of harm on the Corporation or its shareholders; (c) a violation of Section 16-10a-842 of the Utah Revised Business Corporation Act; (d) an intentional violation of criminal law. (16-10a-841(1)) Section 6.2. Indemnification of Directors. Unless otherwise provided in the Articles of Incorporation, the Corporation shall indemnify any individual made a party to a proceeding because the individual is or was a director of the Corporation against liability incurred in the proceeding. Provided, however, the Corporation shall only indemnify an individual if it has authorized the indemnification in accordance with Section 16-10a-906(4) of the Utah Revised Business Corporation Act and a determination has been made in accordance with the procedures set forth in Section 16-10a-906(2) of the Utah Revised Business Corporation Act that indemnification is in accordance with the following requirements: (a) Standard of Conduct. The Corporation shall determine that: (1) The individual's conduct was in good faith; (2) the individual reasonably believed that his or her conduct was in, or not opposed to, the Corporation's best interests; and (3) in the case of any criminal proceeding, the individual had no reasonable cause to believe that his or her conduct was unlawful. (16-10a-902(1)) (b) No Indemnification in Certain Circumstances. The Corporation shall not indemnify an individual under this Section 6.2: (1) In connection with a proceeding by or in the right of the Corporation in which the 35 individual was adjudged liable to the Corporation; or (2) in connection with any other proceeding charging that the individual derived an improper personal benefit, whether or not involving action in the individual's official capacity, in which proceeding he or she was adjudged liable on the basis that he or she derived an improper personal benefit. (16-10a-902(4)) (c) Indemnification in Derivative Actions Limited. Indemnification permitted under this Section 6.2 in connection with a proceeding by or in the right of the Corporation is limited to reasonable expenses incurred in connection with the proceeding. (16-10a-902(5)) Section 6.3. Advance Payment of Expenses. Unless otherwise provided in the Articles of Incorporation, the Corporation may pay for or reimburse in advance of final disposition of any proceeding the reasonable expenses incurred by an individual who is a party to a proceeding because he or she is or was a director of the Corporation if (i) in accordance with the procedures and standards set forth in Section 16-10a-906(4) of the Utah Revised Business Corporation Act, an authorization of payment is made, and (ii) in accordance with the procedures of Section 16-10a-906(2) of the Utah Revised Business Corporation Act, a determination is made that the following has occurred: (a) Written Affirmation. The individual has furnished to the Corporation a written affirmation of the individual's good faith belief that the individual has met the standard of conduct described in Section 6.2 of these Bylaws. (b) Written Undertaking. The individual has furnished to the Corporation a written undertaking, executed personally or on the individual's behalf, to repay the advance if it is ultimately determined that the individual did not meet the standard of conduct (which undertaking must be an unlimited general obligation of the individual but need not be secured and may be accepted without reference to financial ability to make repayment). 36 (c) Factual Determination. A determination has been made that the facts then known to those making the determination would not preclude indemnification under Section 6.2 of these Bylaws or Part 9 of the Utah Revised Business Corporation Act. (16-10a-904) Section 6.4. Indemnification of Officers, Employees, Fiduciaries, and Agents. Unless otherwise provided in the Articles of Incorporation, the Corporation shall indemnify and advance expenses to any individual made a party to a proceeding because the individual is or was an officer, employee, fiduciary, or agent of the Corporation to the same extent as to an individual made a party to a proceeding because the individual is or was a director of the Corporation, or to a greater extent, if not inconsistent with public policy, if provided for by general or specific action of the Board of Directors. (16-10a-907) Section 6.5. Insurance. The Corporation may purchase and maintain liability insurance on behalf of a person who is or was a director, officer, employee, fiduciary, or agent of the Corporation, or who, while serving as a director, officer, employee, fiduciary, or agent of the Corporation, is or was serving at the request of the Corporation as a director, officer, partner, trustee, employee, fiduciary, or agent of another foreign or domestic corporation or other person, or of an employee benefit plan, against liability asserted against or incurred by him or her in that capacity or arising from his or her status as a director, officer, employee, fiduciary, or agent, whether or not the Corporation would have power to indemnify him or her against the same liability under Sections 16-10a-902, 16-10a-903, or 16-10a-907 of the Utah Revised Business Corporation Act. Insurance may be procured from any insurance company designated by the Board of Directors, whether the insurance company is formed under the laws of the State of Utah or any other jurisdiction of the United States or elsewhere, including any insurance company in which the Corporation has an equity or any other interest through stock ownership or otherwise. (16-10a-908) ARTICLE 7. EXECUTION OF INSTRUMENTS, BORROWING OF MONEY AND DEPOSIT OF CORPORATE FUNDS 37 Section 7.1. Execution of Instruments. Subject to any limitation contained in the Utah Revised Business Corporation Act, the Articles of Incorporation or these Bylaws, and subject to any limitations that may be imposed by the Board of Directors, the Chief Executive Officer, President, any Vice President or the Secretary, in the name and on behalf of the Corporation, may execute and deliver any contract or other instrument. Subject to any limitation contained in the Utah Revised Business Corporation Act, the Articles of Incorporation or these Bylaws, the Board of Directors may authorize in writing any other officer or agent to execute and deliver any contract or other instrument in the name and on behalf of the Corporation; any such authorization may be general or confined to specific instances. Section 7.2. Loans. No loan or advance shall be contracted on behalf of the Corporation, no negotiable paper or other evidence of its obligation under any loan or advance shall be issued in its name, and no property of the Corporation shall be mortgaged, pledged, hypothecated, transferred, or conveyed as security for the payment of any loan, advance, indebtedness, or liability of the Corporation, unless and except as authorized by the Board of Directors. Any such authorization may be general or confined to specific instances. Section 7.3. Deposits. All monies of the Corporation not otherwise employed shall be deposited from time to time to its credit in such banks or trust companies or with such bankers or other depositories as the Board of Directors may select, or as from time to time may be selected by any officer or agent authorized to do so by the Board of Directors. Section 7.4. Checks, Drafts, etc. All notes, drafts, acceptances, checks, endorsements, and, subject to the provisions of these Bylaws, evidences of indebtedness of the Corporation shall be signed by such officer or officers or such agent or agents of the Corporation and in such manner as the Board of Directors from time to time may determine. Endorsements for deposit to the credit of the Corporation in any of its duly authorized depositories shall be in such manner as the Board of Directors from time to time may determine. 38 Section 7.5. Bonds and Debentures. Every bond or debenture issued by the Corporation shall be evidenced by an appropriate instrument which shall be signed by the Chief Executive Officer, President or a Vice President and by the Secretary. Where such bond or debenture is authenticated with the manual signature of an authorized officer of the Corporation or other trustee designated by the indenture of trust or other agreement under which such security is issued, the signature of any of the Corporation's officers named thereon may be a facsimile. In case any officer who signed, or whose facsimile signature has been used on any such bond or debenture, shall cease to be an officer of the Corporation for any reason before the same has been delivered by the Corporation, such bond or debenture may nevertheless be adopted by the Corporation and issued and delivered as though the person who signed it or whose facsimile signature has been used thereon had not ceased to be such officer. Section 7.6. Sale, Transfer, etc. of Securities. Sales, transfers, endorsements, and assignments of shares of stocks, bonds, and other securities owned by or standing in the name of the Corporation and the execution and delivery on behalf of the Corporation of any and all instruments in writing incident to any such sale, transfer, endorsement, or assignment, shall be effected by the Chief Executive Officer, President, any Vice President, or by any officer or agent, thereunto authorized by the Board of Directors. Section 7.7. Proxies. Proxies to vote with respect to shares of stock of other corporations used by or standing in the name of the Corporation shall be executed and delivered on behalf of the Corporation by the Chief Executive Officer, President, any Vice President, or by any officer or agent thereunto authorized by the Board of Directors. ARTICLE 8. CERTIFICATES FOR SHARES AND THEIR TRANSFER Section 8.1. Certificates for Shares. (a) Content. Certificates representing shares of the Corporation, at a minimum, shall state on their face the name of the Corporation and that the Corporation is 39 organized under the laws of the State of Utah; the name of the person to whom issued; and the number and class of shares and the designation of the series, if any, the certificate represents; and be in such form as is deter mined by the Board of Directors. Such certificates shall be signed by the President or a Vice President and by the Secretary or an Assistant Secretary and may be sealed with the corporate seal or a facsimile thereof. The signatures of the officers may be facsimiles if the certificate is countersigned by a transfer agent, or registered by a registrar, other than the Corporation itself or an employee of the Corporation. In case any officer who has signed or whose facsimile signature has been placed upon a certificate ceases to be an officer before the certificate is issued, the certificate may be issued by the corporation with the same effect as if the person were an officer at the date of its issue. Each certificate for shares shall be consecutively numbered or otherwise identified. The certificates may contain any other information the Corporation considers necessary or appropriate. (16-10a-625) (b) Legend as to Class or Series. If the Corporation is authorized to issue different classes of shares or different series within a class, the designations, preferences, limitations, and relative rights applicable to each class, the variations in preferences, limitations, and relative rights determined for each series, and the authority of the Board of Directors to determine variations for any existing or future class or series must be summarized on the front or back of each certificate. Alternatively, each certificate may state conspicuously on its front or back that the Corporation will furnish the shareholder this information on request in writing and without charge. (16-10a-625) (c) Shareholder List. The name and address of the person to whom the shares represented are issued, with the number of shares and date of issue, shall be entered on the stock transfer books of the Corporation. (d) Transferring Shares. All certificates surrendered to the Corporation for transfer shall be canceled and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and canceled, except that in case of a lost, destroyed, or mutilated certificate a new one may be 40 issued therefor upon such terms and indemnity to the Corporation as the Board of Directors may prescribe. Section 8.2. Shares Without Certificates. (a) Issuing Shares Without Certificates. Unless the Articles of Incorporation provide otherwise, the Board of Directors may authorize the issuance of some or all of the shares of any or all classes or series without certificates. The authorization does not affect shares already represented by certificates until they are surrendered to the Corporation. (b) Information Statement Required. Within a reasonable time after the issuance or transfer of shares without certificates, the Corporation shall send the shareholder a written statement containing, at a minimum, the name of the Corporation and that it is organized under the laws of the State of Utah; the name of the person to whom issued; and the number and class of shares and the designation of the series, if any, of the issued shares. If the Corporation is authorized to issue different classes of shares or different series within a class, the written statement shall describe the designations, preferences, limitations, and relative rights applicable to each class, the variations in preferences, limitations, and relative rights determined for each series, and the authority of the Board of Directors to determine variations for any existing or future class or series. (16-10a-626) Section 8.3. Registration of Transfer of Shares. Registration of the transfer of shares of the Corporation shall be made only on the stock transfer books of the Corporation. In order to register a transfer, the record owner shall surrender the shares to the Corporation for cancellation, properly endorsed by the appropriate person or persons with reasonable assurances that the endorsements are genuine and effective. Unless the Corporation has established a procedure by which a beneficial owner of shares held by a nominee is to be recognized by the Corporation as the owner, the person in whose name shares stand on the books of the Corporation shall be deemed by the Corporation to be the owner thereof for all purposes. Section 8.4. Transfer Agents and Registrars. The Board of Directors may appoint one or more transfer 41 agents and one or more registrars with respect to the certificates representing shares of stock of the Corporation and may require all such certificates to bear the signature of either or both. The Board of Directors may from time to time define the respective duties of such transfer agents and registrars. Section 8.5. Restrictions on Transfer of Shares Permitted. The Board of Directors or the shareholders may impose restrictions on the transfer or registration of transfer of shares (including any security convertible into, or carrying a right to subscribe for or acquire shares). A restriction does not affect shares issued before the restriction was adopted unless the holders of the shares are parties to the restriction agreement or voted in favor of the restriction or otherwise consented to the restriction. (a) A restriction on the transfer or registration of transfer of shares may be authorized: (1) To maintain the Corporation's status when it is dependent on the number or identity of its shareholders; (2) to preserve entitlements, benefits, or exemptions under federal, state, or local laws; and (3) for any other reasonable purpose. (b) A restriction on the transfer or registration of transfer of shares may: (1) Obligate the shareholder first to offer the Corporation or other persons, separately, consecutively, or simultaneously, an opportunity to acquire the restricted shares; (2) obligate the Corporation or other persons, separately, consecutively, or simultaneously, to acquire the restricted shares; (3) require, as a condition to a transfer or registration, that any one or more persons, including the Corporation or any of its shareholders, approve the transfer or registration, 42 if the requirement is not manifestly unreasonable; or (4) prohibit the transfer or the registration of a transfer of the restricted shares to designated persons or classes of persons, if the prohibition is not manifestly unreasonable. A restriction on the transfer or registration of transfer of shares is valid and enforceable against the holder or a transferee of the holder if the restriction is authorized by this Section 8.5 and its existence is noted conspicuously on the front or back of the certificate, or if the restriction is contained in the information statement required by Section 8.2 of these Bylaws with regard to shares issued without certificates. Unless so noted, a restriction is not enforceable against a person without knowledge of the restriction. (16-10a-627) Section 8.6. Acquisition of Shares. The Corporation may acquire its own shares, and, unless otherwise provided in the Articles of Incorporation, the shares so acquired constitute authorized but unissued shares. If the Articles of Incorporation prohibit the reissuance of acquired shares, the number of authorized shares shall be reduced by the number of shares acquired, effective upon amendment of the Articles of Incorporation, which amendment shall be adopted by the shareholders or the Board of Directors without shareholder action. Appropriate Articles of Amendment must be delivered to the Division and must set forth: (a) The name of the Corporation; (b) the reduction in the number of authorized shares, itemized by class and series; (c) the total number of authorized shares, itemized by class and series, remaining after reduction of the shares; and (d) a statement that the amendment was adopted by the Board of Directors without shareholder action and that shareholder action was not required if such be the case. (16-10a-631) 43 Section 8.7. Lost or Destroyed Certificates. If the holder of a certificate for shares of the Corporation claims that a certificate has been lost, destroyed, or wrongfully taken, the Corporation shall issue a new certificate to such holder, if such holder: (a) so requests before the Corporation has notice that the certificate has been acquired by a bonafide purchaser; (b) files with the Corporation a sufficient indemnity bond; and (c) satisfies any other reasonable requirements imposed by the Corporation. (70A-8-405-). ARTICLE 9. DISTRIBUTIONS Section 9.1. Distributions. The Board of Directors may authorize, and the Corporation may make, distributions (including dividends on its outstanding shares) in the manner and upon the terms and conditions provided by law and in the Articles of Incorporation. (16- 10a-640) ARTICLE 10. CORPORATE SEAL Section 10.1. Corporate Seal. The Board of Directors may provide a corporate seal which may be circular in form and have inscribed thereon any designation including the name of the Corporation, Utah as the state of incorporation, and the words "Corporate Seal." ARTICLE 11. FISCAL YEAR Section 11.1. Fiscal Year. The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors. ARTICLE 12. AMENDMENTS Section 12.1. Amendments. The Corporation's Board of Directors may amend these Bylaws, except to the extent that the Articles of Incorporation, these Bylaws, or the Utah Revised Business Corporation Act reserve this 44 power exclusively to the shareholders in whole or in part. However, the Board of Directors may not adopt, amend, or repeal a Bylaw that fixes a shareholder quorum or voting requirement that is greater than required by the Utah Revised Business Corporation Act. If authorized by the Articles of Incorporation, the shareholders may adopt, amend, or repeal a Bylaw that fixes a greater quorum or voting requirement for shareholders, or voting groups of shareholders, than is required by the Utah Revised Business Corporation Act. Any such action shall comply with the provisions of the Utah Revised Business Corporation Act. The Corporation's shareholders may amend or repeal the Corporation's Bylaws even though the Bylaws may also be amended or repealed by the Corporation's Board of Directors. (16-10a-1020 to 16-10a-1022) ADOPTED as of the 1st day of October, 1997. 45 EX-3.21 11 BYLAWS OF DEERFIELD PLASTICS CO., INC. BY-LAWS OF DEERFIELD PLASTICS CO., INC. ARTICLE I Articles of Organization The name and purposes of the corporation shall be as set forth in the Articles of Organization. These ByLaws, the powers of the corporation and its directors and stockholders, and all matters concerning the conduct and regulation of the business of the corporation shall be subject to such provisions in regard thereto, if any, as are set forth in the Articles of Organization. All references in these By-Laws to the Articles of Organization of the corporation as from time to time amended or restated. ARTICLE II Fiscal Year Except as from time to time otherwise determined by the directors, the fiscal year of the corporation shall in each year end on the last Saturday in April. ARTICLE III Meetings of Stockholders Section 1 - Annual Meetings The annual meeting of stockholders shall be held on the third Wednesday of June in each year (or if that be a legal holiday in the place where the meeting is to be held, on the next succeeding full business day) at 11:00 a.m., unless a different hour is fixed by the Board of Directors or the President and stated in the notice of the meeting. The purposes for which the annual meeting is to be held, in addition to those prescribed by law, by the Articles of Organization or these By-Laws, may be specified by the Board of Directors of the President. If no annual meeting has been held on the date fixed above, a special meeting in lieu thereof may be held; and such special meeting shall have, for the purposes of these ByLaws or otherwise, all the force and effect of an annual meeting. Section 2 - Special Meetings A special meeting of the stockholders may be called at any time by the President or by a majority of the Directors acting by vote or by written instruments(s) signed by them. A special meeting of the stockholders shall be called by the Clerk, or in case of the death, absence, incapacity or refusal of the Clerk, by any other officer upon written application of one or more stockholders who hold at least ten percent (10%) of the stock entitled to vote at the meeting. Such call shall state the time, place and purposes of the meeting. Section 3 - Place of Meetings All meetings of the stockholders shall be held at the principal office of the corporation in Massachusetts unless a different place within Massachusetts, or, if permitted by the Articles of Organization, elsewhere within the United States, is designated by the President or by a majority of the Directors acting by vote or by written instrument(s) signed by them and stated in the notice of the meeting. Any adjourned session of any meeting of the stockholders shall be held at such place within Massachusetts, or, if permitted by the Articles of Organization, elsewhere within the United States as designated in the vote of adjournment. Section 4 - Notice of Meetings A written notice of the place, date and hour of all meetings of stockholders stating the purposes of the meeting shall be given at least seven (7) days before the meeting to each stockholder entitled to vote thereat, and to each stockholder who is otherwise entitled by law or by the Articles of Organization to such notice, by leaving such notice with him or at his residence or usual place of business, or by mailing it, postage prepaid, addressed to such stockholder at his address as it appears in the records of the corporation. Such notice shall be given by the Clerk, or in case of the death, absence, incapacity or refusal of the Clerk, by any other officer or by a person designated either by the Clerk, by 2 the person(s) calling the meeting or by the board of Directors. Whenever notice of a meeting is required to be given a stockholder under any provision of law, of the Articles of Organization or of these By-Laws, a written waiver thereof, executed before or after the meeting by such stockholder or his authorized attorney and filed with the records of the meeting, shall be deemed equivalent to such notice. Section 5 - Quorum At any meeting of the stockholders, a quorum shall consist of a majority of all shares of stock then issued and outstanding and entitled to vote at the meeting, except that if two or more classes or series of stock are entitled to vote on any matter as separate classes or series, then a quorum for that matter shall consist of a majority of all shares of stock of that class or series then issued and outstanding, except when a different quorum is required by law, by the Articles of Organization or by these By-Laws. Stock owned directly or indirectly by the corporation, if any, shall not be deemed outstanding for this purpose. Any meeting may be adjourned from time to time by a majority of the votes properly cast upon the question whether or not a quorum is present, and the meeting may be held as adjourned without further notice. Section 6 - Action by Vote When a quorum is present at any meeting, a plurality of the votes properly cast for election to any office shall elect to such office, and a majority of the votes properly cast upon any question, other than an election to an office shall decide the question, except when a larger vote is required by law, by the Articles of Organization or by these By-Laws. No ballot shall be required for any election unless at the meeting and entitled to vote in the election. Section 7 - Voting Stockholders entitled to vote shall have one vote for each share of stock entitled to vote held by them of record according to the records of the corporation and a proportionate vote for a fractional share, unless otherwise provided by the Articles of Organization. The 3 corporation shall not, directly or indirectly, vote any share of its own stock. Section 8 - Action by Consent Any action required or permitted to be taken at any meeting of the stockholders may be taken without a meeting if all the stockholders entitled to vote on the matter consent to the action in writing and the written consents are filed with the records of the meetings of stockholders. Such consents shall be treated for all purposes as a vote of the stockholders at a meeting. Section 8 - Action by Consent Any action required or permitted to be taken at any meeting of the stockholders may be taken without a meeting if all stockholders entitled to vote on the matter consent to the action in writing and the written consents are filed with the records of the meetings of stockholders. Such consents shall be treated for all purposes as a vote of the stockholders at a meeting. Section 9 - Proxies Stockholders entitled to vote may vote either in person or by proxy in writing dated not more than six (6) months before the meeting named therein, which proxies shall be filed with the Clerk or other person responsible to record the proceedings of the meeting before being voted. Unless otherwise specifically limited by their terms, such proxies shall entitle the holders thereof to vote at any adjournment of such meeting, but shall not be valid after the final adjournment of such meeting. A proxy with respect to stock held in the name of two or more persons shall be valid if executed by any one of them, unless at or prior to exercise of the proxy the corporation receives a specific written notice to the contrary from any one of them. A proxy purporting to be executed by or on behalf of a stockholder shall be deemed valid unless challenged at or prior to its exercise, and the burden of proving invalidity shall rest on the challenge. 4 Section 10 - Voting by Representatives The rights of persons in whose names shares stand on the stock records of the corporation to vote or execute consents is subject to the provisions of this Section of the By-Laws. 10.1 Voting by Pledgee, Trustee, Fiduciary. Shares standing in the name of any person as pledgee, trustee, or other fiduciary may be voted and all rights incident thereto may be exercised only by the pledgee, trustee, or other fiduciary, in person or by proxy, and without proof of authority. However, when a trust company has caused shares to be registered in the name of one or more nominees of the trust company, such shares may be voted and all rights incident thereto may be exercised by such nominee or nominees without proof of authority. 10.2 Voting by Guardian of incompetent. Shares standing in the name of a person adjudged incompetent may be voted and all rights incident thereto may be exercised only by his guardian, in person or by proxy. 10.3 Voting by Executor or Administrator. Shares standing in the name of a deceased person may be voted and all rights incident thereto may be exercised only by his executor or administrator, in person or by proxy. 10.4 Voting by Guardian of Minor. Shares standing in the name of a minor may be voted and all rights incident thereto may be exercised by his guardian, in person or by proxy, or in the absence of such representation by his guardian, by the minor, in person or by proxy, whether or not the Corporation has notice, actual or constructive, of the nonage or the appointment of a guardian, and whether or not a guardian has been in fact appointed. 10.5 Voting of Shares in Name of Corporation. Shares standing in the name of a corporation, domestic or foreign, may be voted or represented and all rights incident thereto may be exercised on behalf 5 of the corporation by the persons described in any of the following subdivisions: (a) Any officer of the corporation authorized so to do by the By-Laws of the Corporation. (b) Any person authorized so to do by resolution of the Board of Directors or of the Executive Committee of the Corporation. (c) Any person authorized so to do by proxy or power or attorney duly executed by the President or Vice President and Secretary or Assistant Secretary. However, such shares may be voted or represented by the persons described in any subdivision only in the absence of vote or representation by the persons described in a preceding subdivision. 10.6 Voting Shares in Names of Two or More Persons. Shares standing in the names of two or more persons shall be voted or represented in accordance with the vote or consent of the majority of the persons in whose names the shares stand. If only one such person is present in person or by proxy, he may vote all the shares, and all the shares standing in the names of such persons are represented for the purpose of determining a quorum. This By-Law applies to the voting of shares by two or more administrators, executors, trustees, or other fiduciaries, unless the instrument or order of court appointing them otherwise directs. ARTICLE IV Directors Section 1 - Powers The business of the corporation shall be managed by a Board of Directors who shall have and may exercise all the powers of the corporation, except as otherwise re- 6 served to the stockholders by law, by the Articles of Organization or by these By-Laws. Section 2 - Enumeration, Election and Term of Office The Board of Directors shall consist of not less than three Directors, except that whenever there shall be only two stockholders, the number of Directors shall be not less than two, and whenever there shall be only one stockholder, the number of Directors shall be not less than one. The number of Directors shall be as determined from time to time by the stockholders and may be enlarged by vote of a majority of the Directors then in office. The Directors shall be chosen at the annual meeting of the stockholders by such stockholders as have the right to vote thereon, and each shall hold office until the next annual election of Directors and until his successor is chosen and qualified or until he sooner dies, resigns, is removed or becomes disqualified. No Director need be a stockholder. Section 3 - Regular Meetings Regular meetings of the Board of Directors may be held at such times and places within or without the Commonwealth of Massachusetts as the Board of Directors may fix from time to time, and, when so fixed, no notice thereof need be given, provided that any Director who is absent when such times and places are fixed shall be given notice of such as provided in Section 5 of this Article IV, and provided further that any resolution relating to the holding of regular meetings shall remain in force only until the next annual meeting of stockholders. The first meeting of the Board of Directors following the annual meeting of the stockholders may be held without notice immediately after and at the same place as the annual meeting of the stockholders or the special meeting held in lieu thereof. If in any year a meeting of the Board of Directors is not held at such time and place, any action to be taken may be taken at any later meeting of the Board of Directors with the same force and effect as if held or transacted at such meeting. Section 4 - Special Meetings Special meetings of the Directors may be called by the President, by the Treasurer, by the Secretary or 7 Clerk, or by any two Directors, and shall be held at the place designated in the call thereof. Section 5 - Notices Notices of any special meeting of the Directors shall be given by the Clerk or Secretary to each Director by mailing such notice to him, postage prepaid, addressed to him at his address as registered on the books of the corporation, or if not so registered, at his last known home or business address, at least forty-eight (48) hours before the meeting, or by delivering such notice in person or by sending it by prepaid telegram addressed to him at such address at least twenty-four (24) hours before the meeting. If the Clerk or Secretary refuses or neglects, for more than twenty-four (24) hours after receipt of a call, to give notice of such special meeting, or if the offices of Clerk and Secretary are vacant or the Clerk and/or Secretary are absent from the Commonwealth of Massachusetts or are incapacitated, such notice may be given by the officer or one of the Directors calling the meeting. Notice need not be given to any Director if a written waiver of notice, executed by him before or after the meeting, is filed with the records of the meeting, or to any Director who attends the meeting without protesting the lack of notice prior to the meeting or at its commencement. A notice or waiver of notice of a Directors' meeting need not specify the purposes of the meeting. Section 6 - Quorum At any meeting of the Directors, a quorum for any election or for the consideration of any question shall consist of a majority of the Directors then in office. Whether or not a quorum is present, any meeting may be adjourned from time to time by a majority of the votes properly cast upon the question, and the meeting may be held as adjourned without further notice. Section 7 - Action by Vote When a quorum is present at any meeting, the votes of a majority of the Directors present shall be requisite and sufficient for election to any office and shall decide any question brought before such meeting, except 8 in any case where a different vote is required by law, by the Articles of Organization or by these By-Laws. Section 8 - Action by Consent Any action required or permitted to be taken at any meeting of the Directors may be taken without a meeting if all the Directors consent to the action in writing and the written consents are filed with the records of the meetings of the Directors. Such consents shall be treated for all purposes as a vote of the Directors at a meeting. Section 9 - Meeting by Telecommunications Members of the Board of Directors, or any committee elected thereby, may participate in a meeting of such Board or committee by means of a conference telephone or similar communications equipment by means of which all persons participating in a meeting can hear each other at the same time, and participation by such means shall constitute presence in person at the meeting. Section 10 - Committees The Board of Directors, by vote of a majority of the Directors then in office, may elect from its number, committees as set forth below, or other committees, and may delegate thereto some or all of its powers, except those which by law, by the Articles of Organization or by these By-Laws, may not be delegated. All members of such committees shall hold such offices at the pleasure of the Board of Directors. The Board of Directors may abolish any such committee at any time. Any committee to which the Board of Directors delegates any of its powers or duties shall keep records of its meetings and upon request shall report its action to the Board of Directors. The Board of Directors shall have power to rescind any action of any committee, but no such rescission shall have retroactive effect. 10.1 Executive Committee. The Board of Directors may appoint from its members, an Executive Committee of not less than two or more than seven members, one of whom shall be the President, and shall designate one of such members as Chairman. The Board may also desig- 9 nate one or more of its members as alternate to serve as a member or members of the Executive Committee in the absence of a regular member or members. The Board of Directors reserves to itself alone the power to declare dividends, issue stock, recommend to stockholders any action requiring their approval, change the membership of any committee at any time, fill vacancies therein, and discharge any committee either with or without cause at any time. Subject to the foregoing limitations, the Executive Committee shall possess and exercise all other powers of the Board of Directors during the intervals between meetings. 10.2 Finance Committee. The Board of Directors may appoint a Finance Committee of three or more directors, at least a majority of whom shall be neither officers nor otherwise employed by the Corporation. The Board shall designate one director as Chairman of the Committee, and may designate one or more directors as alternate members or the Committee, who may replace any absent or disqualified member at any meeting of the Committee. The Committee shall have the power to fix from time to time the compensation of all principal officers of the Corporation (other than the Chairman of the Board and the President, whose compensation shall be fixed from time to time by the Board), and shall otherwise exercise such powers as may be specifically delegated to it by the Board and act upon such matters as may be referred to it from time to time for study and recommendation by the Board or the President. 10.3 Other Committees. The Board of Directors may also appoint from among its own members, such other committees as the Board may determine, which shall in each case consist of not less than two directors, and which shall have such powers and duties as shall from time to time be prescribed by the Board. The President shall be a member ex officio of each committee appointed by the Board of Directors. 10 10.4 Rules of Procedure. A majority of the members of any committee may fix its rules of procedure. All action by any committee shall be reported to the Board of Directors at a meeting succeeding such action and shall be subject to revision, alteration, and approval by the Board of Directors; provided that no rights or acts of third parties shall be affected by any such revision or alteration. 10.5 Advisory Board. The Board of Directors of corporation may appoint individuals who may, but need not be, directors, officers, or employees of corporation to serve as members of an Advisory Board of Directors of one or more operating divisions of the corporation and may fix fees or compensation for attendance at meetings of any such Advisory Boards. The members of any such Advisory Board may adopt and from time to time may amend, rules and regulations for the conduct of their meetings and shall keep minutes which shall be submitted to the Board of Directors of corporation. the term of office of any member of the Advisory Board of Directors shall be at the pleasure of the Board of Directors of corporation and shall expire the day of the annual meeting of the stockholders of corporation. The function of any such Advisory Board of Directors shall be to advise with respect to the affairs of the operating divisions of corporation to which it is appointed. Section 11 - Titles The Board of Directors of corporation may from time to time confer on the employees of the corporation assigned to any operating division of corporation, or discontinue, the title of President, Vice President, and any other titles deemed appropriate. The designation of any such official title for employees assigned to operating divisions of corporation shall not be permitted to conflict in any way with any executive or administrative authority established from time to time by corporation. Any employee so designated as an officer of an operating division shall have authority, responsibilities and duties with respect to his operating division correspond- 11 ing to those normally vested in the comparable officer of corporation by these By-Laws, subject to such limitations as may be imposed by the Board of Directors of corporation. ARTICLE V Officers and Agents Section 1 - Enumeration; Qualification The officers of corporation shall be a President, Treasurer, Secretary/Clerk and such other officers, if any, as the Directors from time to time may, in their discretion, elect or appoint. The corporation may also have such agents, if any, as the Directors from time to time may, in their discretion, appoint. Any officer may be, but none need be, a Director or stockholder. The Clerk shall be a resident of Massachusetts unless the corporation has a resident agent appointed for the purpose of service of process. Any two or more offices may be held by the same person. Any officer may be required by the Directors to give bond for the faithful performance of his duties to the corporation in such amount and with such sureties as the Directors may determine. The premiums for such bonds may be paid by the corporation. Section 2 - Powers Subject to law, to the Articles of Organization and to the other provisions of these By-Laws, each officer shall have, in addition to the duties and powers herein set forth, such duties and powers as are commonly incident to his office and such duties and powers as the Directors may from time to time designate. Section 3 - Election The President, Treasurer and Secretary/Clerk shall be elected annually by the Directors at their first meeting following the annual meeting of the stockholders. Other officers, if any, may be elected or appointed by the Board of Directors at said meeting or at any other time. 12 Section 4 - Tenure Except as otherwise provided by law, by the Articles of Organization or by these By-Laws, the President, Treasurer and Secretary/Clerk shall hold office until the first meeting of the Directors following the next annual meeting of the stockholders and until their respective successors are chosen and qualified; and each other officer shall hold office until the first meeting of the Directors following the next annual meeting of the stockholders and until their respective successors are chosen and qualified, unless a different period shall have been specified by the terms of his election or appointment, or in each case, until he sooner dies, resigns, is removed or becomes disqualified. Each agent or officer shall retain his authority at the pleasure of the Directors. The Directors may terminate or modify the authority of any agent, officer or employee. Section 5 - Chairman of the Board The Chairman of the Board, if there shall be such an officer, shall, if present, preside at all meetings of the Board Directors and exercise and perform such other powers and duties as may be from time to time assigned to him by the Board of Directors or prescribed by the ByLaws. Section 6 - President Subject to such supervisory powers, if any, as may be given by the Board of Directors to the Chairman of the Board, if there by such an officer, the President shall be the chief executive officer of corporation and shall, subject to the control of the Board of Directors, have general supervision, direction and control of the business and officers of corporation, and shall have the general powers and duties of management usually vested in the office of President of a corporation, and shall have such other powers and duties as may be prescribed by the Board of Directors or the By-Laws. Within this authority and in the course of his duties he shall: 6.1 Conduct Meetings. Preside at all meetings of the shareholders and in the absence of the Chairman of the Board, or if there be none, at all meetings of the Board of Direc- 13 tors, and shall be ex officio a member of all the standing committees, including the executive committee, if any. 6.2. Sign Share Certificates. Sign all certificates of stock of the corporation, in conjunction with the Treasurer, unless other- wise ordered by the Board of Directors. 6.3 Execute Instruments. When authorized by the Board of Directors, execute, in the name of the corporation, deeds, conveyances, notices, leases, checks, drafts, bills of exchange, warrants, promissory notes, bonds, debentures, contracts, and other papers and instruments in writing, and unless the Board of Directors shall order otherwise by resolution, make such contracts as the ordinary conduct of the corporation's business may require. 6.4 Hire and Fire Employees. Appoint and remove, employ and discharge, and prescribe the duties and fix the compensation of all agents, employees, and clerks of the Corporation other than the duly appointed officers, subject to the approval of the Board of Directors, and control, subject to the direction of the Board of Directors, all of the officers, agents, and employees of the corporation. 6.5 Meetings of the Corporation. Unless otherwise directed by the Board of Directors, attend in person or by substitute appointed by him or the Vice President and the Secretary or the Assistant Secretary, and act and vote on behalf of the corporation at all meetings of the shareholders of any corporation in which this corporation holds stock. Section 7 - Vice President In the absence or disability of the President, the Vice Presidents, in order of their rank as fixed by the Board of Directors, or, if not ranked, the Vice President designated by the Board of Directors, shall perform all the duties of the President, and when so acting shall have all the powers of, and be subject to all the re- 14 strictions upon, the President. The Vice Presidents shall have such other powers and perform such other duties as from time to time may be prescribed for them respectively by the Board of Directors or the By-Laws. Section 8 - Secretary The Secretary shall: 8.1 Certify By-Laws. Certify and keep at the principal office of the corporation, the original or a copy of its By-Laws as amended or otherwise altered to date. 8.2 Minutes of Meetings. Keep at the principal office of the Corporation or such other place as the Board of Directors may order, a book of minutes of all meetings of its directors and shareholders, executive committee, and other committees, with the time and place of holding, whether regular or special, and, if special how authorized, the notice thereof given, the names of those present at directors' meetings, the number of shares or members present or represented at shareholders' meetings, and the proceedings thereof. 8.3 Notices. See that all notices are duly given in accordance with the provisions of these By-Laws, or as required by law. In case of the absence or disability of the Secretary, or his refusal or neglect to act, notice may be given and served by an Assistant Secretary or by the President or Vice President or by the Board of Directors. 8.4 Custodian of Records and Seal. Be custodian of the records and of the seal of the Corporation and see that it is engraved, lithographed, printed, stamped, impressed upon or affixed to all certificates for shares prior to their issuance and to all documents, the execution of which on behalf of the Corporation under its seal is duly authorized in accordance with the provisions of these By-Laws. 15 8.5 Share Register. Keep at the principal office of the Corporation a share register showing the names of the shareholders and their addresses; the number and date of certificates issued for the same; and the number and date of cancellation of each certificate surrendered for cancellation. 8.6 Reports and Statements. See that the books, reports, statements, certificates, and all other documents and records required by law are properly kept and filed. 8.7 Exhibit Records. Exhibit at all reasonable times to any directors, or shareholders, upon application, the By-Laws, the share register, and minutes of proceedings of the shareholders and directors of the Corporation. 8.8 Other Duties. In general, perform all duties incident to the office of Secretary, and such other duties as from time to time may be assigned to him by the Board of Directors. 8.9 Absence of Secretary. In case of the absence or disability of the Secretary or his refusal or neglect to act, the Assistant Secretary, or if there be none, the Treasurer, acting as Assistant Secretary, may perform all of the functions of the Secretary. In the absence or inability to act, or refusal or neglect to act of both the Secretary, the Assistant Secretary, and Treasurer, any person thereunto authorized by the President or Vice President or by the Board of Directors may perform the functions of the Secretary. Section 9 - Assistant Secretary At the request of the Secretary, or in his absence or disability, the Assistant Secretary, designated by him, shall perform all the duties of the Secretary, and when so acting, he shall have all the powers of, and be subject to all the restrictions upon, the Secretary. The Assistant Secretary shall perform such other duties as 16 from time to time may be assigned to him by the Board of Directors, or the Secretary. Section 10 - Treasurer The Treasurer shall: 10.1 Funds - Custody and Deposit. Have charge and custody of, and be responsible for, all funds and securities of the Corporation, and deposit all such funds in the name of the Corporation in such banks, trust companies or other depositaries as shall be selected by the Board of Directors. 10.2 Funds - Receipt. Receive, and give receipt for, monies due and payable to the Corporation from any source whatsoever. 10.3 Funds - Disbursement Disburse or cause to be disbursed, the funds of the Corporation as may be directed by the Board of Directors, taking proper vouchers for such disbursement. 10.4 Maintain Accounts. Keep and maintain adequate and correct accounts of the Corporation's properties and business transactions, including account of its assets, liabilities, receipts, disbursements, gains, losses, capital, surplus, and shares. Any surplus, including earned surplus, paid-in surplus, and surplus arising from a reduction of stated capital, shall be classified according to source and shown in a separate account. 10.5 Exhibit Records. Exhibit at all reasonable times the books of account and records to any shareholder or director, upon application, during business hours at the office of the Corporation where such books and records are kept. 10.6 Reports to President and Directors. Render to the President and directors, whenever they request it, an account of all his transac- 17 tions as Treasurer and of the financial condition of the Corporation. 10.7 Financial Reports to Shareholders. Prepared, or cause to be prepared, and certify the financial statements to be included in the annual report to shareholders and statements of the affairs of the Corporation when requested by shareholders holding at least 10% of the number of outstanding shares of the Corporation. 10.8 Bond. Give to the Corporation a bond, if required by the Board of Directors or by the President, in a sum, and with one or more sureties, or a surety Company satisfactory to the Board, for the faithful performance of the duties of his office and for the restoration to the Corporation, in case of his death, resignation, retirement, or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the Corporation. 10.9 Other Duties. In general, perform all the duties incident to the office of Treasurer and such other duties as from time to time may be assigned to him by the Board of Directors. 10.10 Absence of Treasurer. In case of the absence or disability of the Treasurer of his refusal or neglect to act, the Assistant Treasurer, may perform all of the functions of the Treasurer. In the absence or inability to act, or refusal or neglect to act, of both the Treasurer and the Secretary, any person thereunto authorized by the President or Vice President or by the Board of Directors may perform the functions of the Treasurer. Section 11 - Assistant Treasurer The Assistant Treasurer, if required so to do by the Board of Directors, shall respectively give bonds for the faithful discharge of his duties, in such sums, and with 18 such sureties as the Board of Directors shall require. At the request of the Treasurer, or in his absence or disability, the Assistant Treasurer designated by him shall perform all the duties of the Treasurer, and when so acting, he shall have all the powers of, and be subject to all the restrictions, upon the Treasurer. He shall perform such other duties as from time to time may be assigned to him by the Board of Directors or the Treasurer. Section 12 - Counsel. The General Counsel shall advise and represent the Company generally in all legal matters and proceedings and shall act as counsel to the Board of Directors and the Executive Committee. The General Counsel may sign and execute pleadings, powers of attorney pertaining to legal matters, and any other contracts and documents in the regular course of his duties. ARTICLE VI Resignations, Removals and Vacancies Section 1 - Resignations Any Director or officer may resign at any time by delivering his resignation in writing to the President, to the Clerk or to a meeting of the Directors. Such resignation shall take effect at such time as is specified therein or upon delivery thereof if no time is specified. Section 2 - Removals Directors, including directors elected by the directors to fill vacancies in the Board, may be removed with or without assignment or cause by vote of the holders of the majority of the shares entitled to vote in the election of Directors, provided that the Directors elected by a particular class of stockholders may be removed only by the vote of the holders of a majority of the shares of that particular class of stock entitled to vote for the election of such Directors. The Directors may, by vote of a majority of the Directors then in office, remove (1) any Director for 19 cause, or (2) any officer from office with or without assignment of cause. If cause is assigned for removal of any Director or officer, such Director or officer may be removed only after a reasonable notice and opportunity to be heard before the body proposing to remove him. Except as the Directors may otherwise determine, no Director or officer who resigns or is removed shall have any right to any compensation as such Director or officer for any period following his resignation or removal or any right to damages on account of such removal whether his compensation be by the month, by the year or otherwise; provided, however, that the foregoing provision shall not prevent such Director or officer from obtaining damages for breach of any contract of employment legally binding upon the corporation. Section 3 - Vacancies Any vacancy in the Board of Directors, including a vacancy resulting from an enlargement of the Board, may be filled by vote of a majority of the Directors then in office, or, in the absence of such election by the Directors, by the stockholders at a meeting called for the purpose; provided, however, that any vacancy resulting from action by the stockholders may be filled by the stockholders at the same meeting at which such action was taken by them. If the office of any officer becomes vacant, the Directors may elect or appoint a successor by vote of a majority of the Directors present at the meeting at which such election or appointment is made. Each such successor shall hold office for the unexpired term of his predecessor and until his successor shall be elected or appointed and qualified, or until he sooner does, resigns, is removed or becomes disqualified. ARTICLE VII Indemnification of Directors and Others 1. The Corporation shall, to the extent legally permissible, indemnify any person serving or who has served as a Director or officer of the Corporation, or at 20 its request as a Director, Trustee, Officer, Employee or other Agent of any organization in which the Corporation owns shares or of which it is a creditor, against all liabilities and expenses, including amounts paid in satisfaction of judgments, in compromise, as fines or penalties, and for counsel fees, reasonably incurred by him in connection with the defense or disposition of any action, suit or other proceeding, whether civil or criminal, in which he may be involved or with which he may be threatened while serving or thereafter, by reason of his being or having been such a Director, Officer, Trustee, Employee or Agent, except with respect to any matter for which he shall have been adjudicated in any proceeding not to have acted in good faith in the reasonable belief that his action was in the best interests of the Corporation; provided, however, that as to any matter disposed of by a compromise payment by such Director, Officer, Trustee, Employee or Agent, pursuant to a consent decree or otherwise, no indemnification either for said payment or for any other expenses shall be provided unless: (a) such compromise shall be approved as in the best interests of the Corporation, after notice that it involves such indemnification: (i) by a disinterested majority of the Directors then in office; or (ii) by the holders of a majority of the outstanding stock at the time entitled to vote for Directors, voting as a single class, exclusive of any stock owned by any interested Director or officer; or (b)in the absence of action by disinterested directors or stockholders, there has been obtained at the request of a majority of the Directors then in office an opinion in writing of independent legal counsel to the effect that such Director or officer appears to have acted in good faith in the reasonable belief that his action was in the best interests of the Corporation. Expenses, including counsel fees, reasonably incurred by any such Director, Officer, Trustee, Employee or Agent in connection with the defense or disposition of 21 any such action, suit or other proceeding may be paid from time to time by the Corporation in advance of the final disposition thereof upon receipt of an undertaking by such individual to repay the amounts so paid to the Corporation if it is ultimately determined that indemnification for such expenses is not authorized under this section. The right of indemnification hereby provided shall not be exclusive of or affect any other rights to which any such Director, Officer, Trustee, Employee or Agent may be entitled. Nothing contained in this Article shall affect any rights to indemnification to which corporate personnel other than such Directors, Officers, Trustees, Employees or Agents may be entitled by contract or otherwise under law. As used in this article, the terms "Director," "Officer," "Trustee, "Employee" and Agent include their respective heirs, executors and administrators, and an "interested" Director, Officer, Trustee, Employee or Agent is one against whom in such capacity the proceedings in question or other proceedings on the same or similar grounds is then pending. 2. Pursuant to the authority granted by virtue of Chapter 156B, Section 67 of the Massachusetts General Laws, the corporation shall indemnify against financial loss, each and every director, officer and employee who might be construed as a fiduciary under the provisions of the Employee Retirement Income Security Act of 1974 for any breach of his fiduciary responsibility and defined in said act. Such indemnification shall encompass all legal costs and all economic outlays which such party shall be required to pay by virtue of such breach. Notwithstanding and in further pursuance of Chapter 156B, Section 67, no indemnification shall be provided for any person with respect to any proceeding not to have acted in good faith in the reasonable belief that his action was in the best interests of the corporation. ARTICLE VIII Stock Section 1 - Stock Authorized The total number of shares and the par value, if any, of each class of stock which the corporation is authorized to issue, and if more than one class is authorized, a description of each class with the preferences, 22 voting powers, qualifications and special and relative rights and privileges as to each class and any series thereof shall be as stated in the Articles of Organization or amendments thereto. Section 2 - Issue of Authorized Unissued Capital Stock Any unissued capital stock from time to time authorized under the Articles of Organization, or amendments thereof, may be issued by vote of the Directors. No such stock shall be issued unless the cash, so far as due, or the property, services or expenses for which it was authorized to be issued, has been actually received or incurred by, or conveyed or rendered to, the Corporation, or is in its possession as surplus. Section 3 - Certificates of Stock Each stockholder shall be entitled to a certificate in form selected by the Board of Directors stating the number, the class and the designation of the series, if any, of the shares held by him. Such certificate shall be signed by the President or a Vice President and the Treasurer or an Assistant Treasurer. Such signatures may be facsimiles if the certificate is signed by a transfer agent or a registrar of other than a Director, Officer or Employee of the Corporation. Section 4 - Transfers Subject to the restrictions, if any, imposed by the Articles of Organization, these By-Laws or any agreement to which the Corporation is a party, shares of stock shall be transferred on the books of the Corporation only by the surrender to the Corporation or its transfer agent of the certificate representing such shares properly endorsed or accompanied by a written assignment of such shares or by a written power of attorney to sell, assign or transfer such shares, properly executed, with necessary transfer stamps affixed, and with such proof that the endorsement, assignment or power of attorney is genuine and effective as the Corporation or its transfer agent may reasonably require. Except as may otherwise be required by law, the Corporation shall be entitled to treat the record holder of stock as shown on its books as the owner of such stock for all purposes, including the payment of dividends and the right to vote with respect 23 thereto, regardless of any transfer, pledge or other disposition of such stock, until the shares have been transferred on the books of the Corporation in accordance with the requirements of these By-Laws. It shall be the duty of each stockholder to notify the Corporation of his post office address. Section 5 - Restrictions on Transfer The transfer of stock is restricted in accordance with such provisions contained in the Articles of Organization, any amendments thereto, or any agreement to which the Corporation is a party. Section 6 - Lost, Mutilated or Destroyed Certificates Except as otherwise provided by law, the Board of Directors may determine the conditions upon which a new certificate of stock may be issued in place of any certificate alleged to have been lost, mutilated or destroyed. It may, in its discretion, require the owner of a lost, mutilated or destroyed certificate, or his legal representative, to give a bond sufficient, in its option, with or without surety, to indemnify the Corporation against any loss or claim which may arise by reason of the issue of a certificate in place of such lost, mutilated or destroyed stock certificate. Section 7 - Transfer Agent and Registrar The Board of Directors may appoint a transfer agent or a registrar or both for its capital stock or any class or series thereof and require all certificates for such stock to bear the signature or facsimile thereof of any such transfer agent or registrar. Section 8 - Setting Record Date and Closing Transfer Records The Board of Directors may fix in advance a time not more than sixty (60) days before (a) the date of any meeting of the stockholders, (b) the date for the payment of any dividend or the making of any distribution to stockholders, or (c) the last day on which the consent or dissent of stockholders may be effectively expressed for any purpose, as the record date for determining the stockholders having the right to notice and vote at such 24 meeting, the right to receive such dividend or distribution, or the right to give such consent or dissent. If a record date is set, only stockholders of record on the date set shall have such right, notwithstanding any transfer of stock on the records of the Corporation after the record date. Without fixing such record date, the Board of Directors may close the transfer records of the Corporation for all or any part of such 60-day period. ARTICLE IX Miscellaneous Provisions Section 1 - Corporate Seal The seal of the Corporation shall be a circular die with the name of the Corporation, the word "Massachusetts" and the year of its incorporation cut or engraved thereon, or shall be in such other form as the Board of Directors may from time to time determine. Section 2 - Corporate Records The original or attested copies of the Articles of Organization, the By-Laws, the records of all meetings of the incorporators and stockholders, and the stock and transfer records which shall contain the names of all stockholders, their record addresses and the amount of stock held by each, shall be kept in Massachusetts at the principal office of the Corporation or at an office of its transfer agent, its Clerk or its Resident Agent. Said copies and records need not all be kept in the same office. They shall be available at all reasonable times to the inspection of any stockholder for any proper purpose but not to secure a list of stockholders for the purpose of selling said list or copies thereof or of using the same for a purpose other than in the interest of the applicant, as a stockholder, relative to the affairs of the Corporation. Section 3 - Evidence of Authority A certificate by the Clerk or Secretary or an Assistant or Temporary Clerk or Secretary as to any matter relative to the Articles of Organization, By-Laws, records of the proceedings of the incorporators, stockholders, Board of Directors or any committee of the Board of 25 Directors, stock and transfer records or any action taken by any person or person as an officer or agent of the Corporation, shall be conclusive evidence of the matters so certified to all persons relying in good faith thereon. ARTICLE X Amendments These By-Laws may be amended or repealed in whole or in part by the affirmative vote of the holders of a majority of the shares of each class of the capital stock at the time outstanding and entitled to vote at any annual or special meeting of stockholders, provided that notice of substance of the proposed amendment is stated in the notice of such meeting. If authorized by the Articles of Organization, the Directors may make, amend or repeal these By-Laws, in whole or in part, except with respect to any provision thereof which by law, the Articles of Organization or these By-Laws requires action by the stockholders. Not later than the time of giving notice of the meeting of stockholders next following the making, amending or repealing by the Directors of any Bylaw, notice thereof stating the substance of such change shall be given to all stockholders entitled to vote on amending these By-Laws. No change in the date fixed in these By-Laws for the annual meeting of stockholders may be made within sixty (60) days before such; and in case of any change in such date, notice thereof shall be given to each stockholder in person or by letter mailed to his last known post office address at least twenty (20) days before the new date fixed for such meeting. Any By-Law adopted, amended or repealed by the Directors may be repealed, amended or reinstated by the stockholders entitled to vote on amending these By-Laws. 26 EX-3.22 12 UNITED FILMS CORPORATION AMENDED & RESTATED BYLAWS UNITED FILMS CORPORATION AMENDED AND RESTATED BYLAWS Adopted as of July 31, 1996 UNITED FILMS CORPORATION AMENDED AND RESTATED BYLAWS TABLE OF CONTENTS Page ---- ARTICLE ONE - OFFICES AND AGENT Section 1.1 Registered Office and Agent.............................. 1 Section 1.2 Other Offices............................................ 1 ARTICLE TWO - SHAREHOLDERS' MEETINGS Section 2.1 Place of Meetings........................................ 1 Section 2.2 Annual Meetings.......................................... 1 Section 2.3 Special Meetings......................................... 1 Section 2.4 Notice of Meetings....................................... 2 SECTION 2.5 Voting Group............................................. 2 Section 2.6 Quorum................................................... 2 Section 2.7 Vote Required for Action................................. 2 Section 2.8 Voting of Shares......................................... 3 Section 2.9 Proxies.................................................. 3 Section 2.10 Presiding Officer........................................ 4 Section 2.11 Adjournments............................................. 4 Section 2.12 Action of Shareholders Without a Meeting................. 4 ARTICLE THREE - THE BOARD OF DIRECTORS Section 3.1 General Powers........................................... 5 Section 3.2 Number, Election and Term of Office...................... 5 Section 3.3 Removal.................................................. 5 Section 3.4 Vacancies................................................ 6 Section 3.5 Compensation............................................. 6 ARTICLE FOUR - MEETINGS OF THE BOARD OF DIRECTORS Section 4.1 Regular Meetings......................................... 6 Section 4.2 Special Meetings......................................... 6 Section 4.3 Place of Meetings........................................ 6 Section 4.4 Notice of Meetings....................................... 7 Section 4.5 Quorum................................................... 7 Section 4.6 Vote Required for Action................................. 7 Section 4.7 Participation by Conference Telephone.................... 8 Section 4.8 Action by Directors Without a Meeting.................... 8 TABLE OF CONTENTS (continued) Page ---- Section 4.9 Adjournments............................................. 8 Section 4.10 Committees of the Board of Directors..................... 8 ARTICLE FIVE - MANNER OF NOTICE AND WAIVER AS TO SHAREHOLDERS AND DIRECTORS Section 5.1 Procedure................................................ 9 Section 5.2 Waiver................................................... 10 ARTICLE SIX - OFFICERS Section 6.1 Number................................................... 11 Section 6.2 Election and Term........................................ 11 Section 6.3 Compensation............................................. 11 Section 6.4 President................................................ 11 Section 6.5 Vice Presidents.......................................... 11 Section 6.6 Secretary................................................ 12 Section 6.7 Treasurer................................................ 12 Section 6.8 Bonds.................................................... 12 ARTICLE SEVEN - DISTRIBUTIONS AND SHARE DIVIDENDS Section 7.1 Authorization or Declaration............................. 12 Section 7.2 Record Date With Regard to Distributions and Share Dividends........................................ 13 ARTICLE EIGHT - SHARES Section 8.1 Authorization and Issuance of Shares..................... 13 Section 8.2 Share Certificates....................................... 13 Section 8.3 Rights of Corporation With Respect to Registered Owners.. 13 Section 8.4 Transfers of Shares...................................... 14 Section 8.5 Duty of Corporation to Register Transfer................. 14 Section 8.6 Lost, Stolen or Destroyed Certificates................... 14 Section 8.7 Fixing of Record Date With Regard to Shareholder Action.. 15 ARTICLE NINE - INDEMNIFICATION Section 9.1 Definitions.............................................. 15 Section 9.2 Basic Indemnification Arrangement........................ 17 Section 9.3 Advances for Expenses.................................... 18 ii TABLE OF CONTENTS (continued) Page ---- Section 9.4 Court-Ordered Indemnification and Advances for Expenses.. 19 Section 9.5 Determination and Authorization of Indemnification....... 20 Section 9.6 Indemnification of Employees and Agents.................. 21 Section 9.7 Shareholder Approved Indemnification..................... 22 Section 9.8 Insurance................................................ 23 Section 9.9 Witness Fees............................................. 23 Section 9.10 Report to Shareholders................................... 23 Section 9.11 Amendments; Severability................................. 23 ARTICLE TEN - MISCELLANEOUS Section 10.1 Inspection of Books and Records.......................... 24 Section 10.2 Fiscal Year.............................................. 24 Section 10.3 Corporate Seal........................................... 24 Section 10.4 Annual Financial Statements.............................. 24 Section 10.5 Conflict With Articles of Incorporation.................. 24 ARTICLE ELEVEN - AMENDMENTS Section 11.1 Power to Amend Bylaws.................................... 25 iii ARTICLE ONE OFFICES AND AGENT Section 1.1 Registered Office and Agent. The corporation shall maintain a registered office in the State of Georgia and shall have a registered agent whose business office is identical to the registered office. Section 1.2 Other Offices. In addition to its registered office, the corporation may have offices at any other place or places, within or without the State of Georgia, as the Board of Directors may from time to time select or as the business of the corporation may require or make desirable. ARTICLE TWO SHAREHOLDERS' MEETINGS Section 2.1 Place of Meetings. Meetings of shareholders may be held at any place within or without the State of Georgia, as set forth in the notice thereof or, in the event of a meeting held pursuant to waiver of notice, as set forth in the waiver, or, if no place is so specified, at the principal office of the corporation. Section 2.2 Annual Meetings. The annual meeting of shareholders shall be held on a day to be determined by the Board of Directors for the purpose of electing directors and transacting any and all business that may properly come before the meeting. If an annual meeting of shareholders is not held as provided in this Section 2.2, any business, including the election of directors, that might properly have been acted upon at such annual meeting may be acted upon at a special meeting in lieu of the annual meeting held pursuant to these bylaws or held pursuant to a court order. Section 2.3 Special Meetings. Special meetings of shareholders or a special meeting in lieu of the annual meeting of shareholders may be called at any time by the Board of Directors or the President. Special meetings of shareholders or a special meeting in lieu of the annual meeting of shareholders shall be called by the corporation upon the written request of the holders of twenty-five percent (25%) of all the votes entitled to be cast on the issue or issues proposed to be considered at the proposed special meeting. Section 2.4 Notice of Meetings. Unless waived as contemplated in Section 5.2, a notice of each meeting of shareholders stating the date, time and place of the meeting shall be given not less than ten (10) days nor more than sixty (60) days before the date thereof, by or at the direction of the President, the Secretary or the officer or persons calling the meeting, to each shareholder entitled to vote at that meeting. In the case of an annual meeting, the notice need not state the purpose or purposes of the meeting unless the articles of incorporation or the Georgia Business Corporation Code (the "Code") requires otherwise. In the case of a special meeting, including a special meeting in lieu of an annual meeting, the notice of meeting shall state the purpose or purposes for which the meeting is called. SECTION 2.5 Voting Group. Voting group means all shares of one or more classes or series that are entitled to vote and be counted together collectively on a matter at a meeting of shareholders. All shares entitled to vote generally on the matter are for that purpose a single voting group. Section 2.6 Quorum. With respect to shares entitled to vote as a separate voting group on a matter at a meeting of shareholders, the presence, in person or by proxy, of a majority of the votes entitled to be cast on the matter by the voting group shall constitute a quorum of that voting group for action on that matter unless the articles of incorporation or the Code provides otherwise. Once a share is represented for any purpose at a meeting, other than solely to object to holding the meeting or to transacting business at the meeting, it is deemed present for quorum purposes for the remainder of the meeting and for any adjournment of the meeting unless a new record date is or must be set for the adjourned meeting pursuant to Section 8.7 of these bylaws. Section 2.7 Vote Required for Action. If a quorum exists, action on a matter (other than the election of directors) by a voting group is approved if the votes cast within the voting group favoring the action exceed the votes cast opposing the action, unless the articles of incorporation, provisions of these bylaws 2 validly adopted by the shareholders or the Code requires a greater number of affirmative votes. If the articles of incorporation or the Code provides for voting by two or more voting groups on a matter, action on that matter is taken only when voted upon by each of those voting groups counted separately. Action may be taken by one voting group on a matter even though no action is taken by another voting group entitled to vote on the matter. With regard to the election of directors, unless otherwise provided in the articles of incorporation, if a quorum exists, action on the election of directors is taken by a plurality of the votes cast by the shares entitled to vote in the election. Section 2.8 Voting of Shares. Unless the articles of incorporation or the Code provides otherwise, each outstanding share having voting rights shall be entitled to one vote on each matter submitted to a vote at a meeting of shareholders. Voting on all matters shall be by voice vote or by show of hands unless any qualified voter, prior to the voting on any matter, demands vote by ballot, in which case each ballot shall state the name of the shareholder voting and the number of shares voted by him, and if the ballot be cast by proxy, it shall also state the name of the proxy. Section 2.9 Proxies. A shareholder entitled to vote pursuant to Section 2.8 may vote in person or by proxy pursuant to an appointment of proxy executed in writing by the shareholder or by his attorney-in-fact. An appointment of proxy shall be valid for only one meeting to be specified therein, and any adjournments of such meeting, but shall not be valid for more than eleven months unless expressly provided therein. Appointments of proxy shall be dated and filed with the records of the meeting to which they relate. If the validity of any appointment of proxy is questioned, it must be submitted to the secretary of the meeting of shareholders for examination or to a proxy officer or committee appointed by the person presiding at the meeting. The secretary of the meeting or, if appointed, the proxy officer or committee, as the case may be, shall determine the validity or invalidity of any appointment of proxy submitted, and reference by the secretary in the minutes of the meeting to the regularity of an appointment of proxy shall be received as prima facie evidence of the facts stated for 3 the purpose of establishing the presence of a quorum at the meeting and for all other purposes. Section 2.10 Presiding Officer. The President shall serve as the chairman of every meeting of shareholders unless another person is elected by the shareholders to serve as chairman at the meeting. The chairman shall appoint any persons he deems required to assist with the meeting. Section 2.11 Adjournments. Whether or not a quorum is present to organize a meeting, any meeting of shareholders (including an adjourned meeting) may be adjourned by the holders of a majority of the voting shares represented at the meeting to reconvene at a specific time and place, but no later than 120 days after the date fixed for the original meeting unless the requirements of the Code concerning the selection of a new record date have been met. At any reconvened meeting within that time period, any business may be transacted that could have been transacted at the meeting that was adjourned. If notice of the adjourned meeting was properly given, it shall not be necessary to give any notice of the reconvened meeting or of the business to be transacted, if the date, time and place of the reconvened meeting are announced at the meeting that was adjourned and before adjournment; provided, however, that if a new record date is or must be fixed, notice of the reconvened meeting must be given to persons who are shareholders as of the new record date. Section 2.12 Action of Shareholders Without a Meeting. Action required or permitted to be taken at a meeting of shareholders may be taken without a meeting if the action is taken by all shareholders entitled to vote on the action or, if so provided in the articles of incorporation, by persons who would be entitled to vote at a meeting shares having voting power to cast not less than the minimum number (or numbers, in the case of voting by groups) of votes that would be necessary to authorize or take the action at a meeting at which all shareholders entitled to vote were present and voted. The action must be evidenced by one or more written consents describing the action taken, signed by shareholders entitled to take action without a meeting, and delivered to the corporation for inclusion in the minutes or filing with the corporate records. The corporation 4 shall give written notice of actions taken as required by the Code. ARTICLE THREE THE BOARD OF DIRECTORS Section 3.1 General Powers. All corporate powers shall be exercised by or under the authority of, and the business and affairs of the corporation shall be managed under the direction of, the Board of Directors. In addition to the powers and authority expressly conferred upon it by these bylaws, the Board of Directors may exercise all powers of the corporation and do all lawful acts and things that are not by law, by any legal agreement among shareholders, by the articles of incorporation or by these bylaws directed or required to be exercised or done by the shareholders. Section 3.2 Number, Election and Term of Office. The number of directors of the corporation shall initially be the number specified in the corporation's articles of incorporation, and thereafter such number can be changed from time to time by resolution of the Board of Directors. Except as provided in Section 3.4, the directors shall be elected by the vote of shareholders as set forth in Section 2.7 at each annual meeting of shareholders or special meeting in lieu of the annual meeting. Except in case of death, written resignation, retirement, disqualification or removal, each director shall serve until the next succeeding annual meeting and thereafter until his successor is elected and qualifies or until the number of directors is decreased. Section 3.3 Removal. One or more directors may be removed from office with or without cause by the shareholders by a majority of the votes entitled to be cast. If the director was elected by a voting group, only the shareholders of that voting group may participate in the vote to remove him. Removal action may be taken at any meeting of shareholders with respect to which the notice stated that the purpose, or one of the purposes, of the meeting is removal of the director, and a removed director's successor may be elected at the same meeting. 5 Section 3.4 Vacancies. A vacancy occurring in the Board of Directors, other than by reason of an increase in the number of directors, shall be filled for the unexpired term by the first to take action of (a) the shareholders or (b) the Board of Directors, and if the directors remaining in office constitute fewer than a quorum of the Board of Directors, they may fill the vacancy by the affirmative vote of a majority of all the directors remaining in office. If the vacant office was held by a director elected by a voting group, only the holders of shares of that voting group or the remaining directors elected by that voting group are entitled to vote to fill the vacancy. A vacancy occurring in the Board of Directors by reason of an increase in the number of directors shall be filled in like manner as any other vacancy but if filled by action of the Board of Directors, shall only be for a term of office continuing until the next election of directors by the shareholders and until the election and qualification of a successor. Section 3.5 Compensation. Unless the articles of incorporation provide otherwise, the Board of Directors may determine from time to time the compensation, if any, directors may receive for their services as directors. A director may also serve the corporation in a capacity other than that of director and receive compensation, as determined by the Board of Directors, for services rendered in such other capacity. ARTICLE FOUR MEETINGS OF THE BOARD OF DIRECTORS Section 4.1 Regular Meetings. Regular meetings of the Board of Directors shall be held immediately after the annual meeting of shareholders or a special meeting in lieu of the annual meeting. In addition, the Board of Directors may schedule other meetings to occur at regular intervals throughout the year. Section 4.2 Special Meetings. Special meetings of the Board of Directors may be called by or at the request of the President or by any two directors in office at that time. Section 4.3 Place of Meetings. Directors may hold their meetings at any place within or without the 6 State of Georgia as the Board of Directors may from time to time establish for regular meetings or as set forth in the notice of special meetings or, in the event of a meeting held pursuant to waiver of notice, as set forth in the waiver. Section 4.4 Notice of Meetings. No notice shall be required for any regularly scheduled meeting of the directors. Unless waived as contemplated in Section 5.2, each director shall be given at least one day's notice (as set forth in Section 5.1) of each special meeting stating the date, time and place of the meeting. Section 4.5 Quorum. Unless a greater number is required by the articles of incorporation, these bylaws or the Code, or unless otherwise specifically provided in the Code, a quorum of the Board of Directors consists of a majority of the total number of directors that has been prescribed by resolution of the shareholders or of the Board of Directors pursuant to Section 3.2. Section 4.6 Vote Required for Action. (a) If a quorum is present when a vote is taken, the affirmative vote of a majority of directors present is the act of the Board of Directors unless the Code, the articles of incorporation or these bylaws require the vote of a greater number of directors. (b) A director who is present at a meeting of the Board of Directors or a committee of the Board of Directors when corporate action is taken is deemed to have assented to the action taken unless: (i) he objects at the beginning of the meeting (or promptly upon his arrival) to holding it or transacting business at the meeting; (ii) his dissent or abstention from the action taken is entered in the minutes of the meeting; or (iii) he delivers written notice of his dissent or abstention to the presiding officer of the meeting before its adjournment or to the corporation immediately after adjournment of the meeting. 7 The right of dissent or abstention is not available to a director who votes in favor of the action taken. Section 4.7 Participation by Conference Telephone. Any or all directors may participate in a meeting of the Board of Directors or of a committee of the Board of Directors through the use of any means of communication by which all directors participating may simultaneously hear each other during the meeting. Section 4.8 Action by Directors Without a Meeting. Unless the articles of incorporation or these bylaws provide otherwise, any action required or permitted to be taken at any meeting of the Board of Directors, or any action that may be taken at a meeting of a committee of the Board of Directors, may be taken without a meeting if the action is taken by all the members of the Board of Directors (or of the committee, as the case may be). The action must be evidenced by one or more written consents describing the action taken, signed by each director (or each director serving on the committee, as the case may be), and delivered to the corporation for inclusion in the minutes or filing with the corporate records. Section 4.9 Adjournments. Whether or not a quorum is present to organize a meeting, any meeting of directors (including an adjourned meeting) may be adjourned by a majority of the directors present to reconvene at a specific time and place. At any reconvened meeting, any business may be transacted that could have been transacted at the meeting that was adjourned. If notice of the adjourned meeting was properly given, it shall not be necessary to give any notice of the reconvened meeting or of the business to be transacted, if the date, time and place of the reconvened meeting are announced at the meeting that was adjourned. Section 4.10 Committees of the Board of Directors. The Board of Directors by resolution may designate from among its members one or more committees, each consisting of one or more directors all of whom serve at the pleasure of the Board of Directors. Except as limited by the Code, each committee shall have the authority set forth in the resolution establishing the committee. The provisions of this Article Four as to the Board of 8 Directors and its deliberations shall be applicable to any committee of the Board of Directors. ARTICLE FIVE MANNER OF NOTICE AND WAIVER AS TO SHAREHOLDERS AND DIRECTORS Section 5.1 Procedure. Whenever these bylaws require notice to be given to any shareholder or director, the notice shall be given in accordance with this Section 5.1. Notice under these bylaws shall be in writing unless oral notice is reasonable under the circumstances. Any notice to directors may be written or oral. Notice may be communicated in person; by telephone, facsimile, telegraph, teletype or other form of wire or wireless communication; or by mail or private carrier. If these forms of personal notice are impracticable, notice may be communicated by a newspaper of general circulation in the area where published, or by radio, television or other form of public broadcast communication. Written notice to the shareholders, if in a comprehensible form, is effective when mailed, if mailed with first-class postage prepaid and correctly addressed to the shareholder's address shown in the corporation's current record of shareholders. Except as otherwise provided in this Section 5.1, written notice, if in a comprehensible form, is effective at the earliest of the following: (a) when received or when delivered, properly addressed, to the addressee's last known principal place of business or residence; (b) five days after its deposit in the mail, as evidenced by the postmark, if mailed with first-class postage prepaid and correctly addressed; or (c) on the date shown on the return receipt, if sent by registered or certified mail, return receipt requested, and the receipt is signed by or on behalf of the addressee. Oral notice is effective when communicated if communicated in a comprehensible manner. 9 In calculating time periods for notice, when a period of time measured in days, weeks, months, years or other measurement of time is prescribed for the exercise of any privilege or the discharge of any duty, the first day shall not be counted but the last day shall be counted. Section 5.2 Waiver. (a) A shareholder may waive any notice before or after the date and time stated in the notice. Except as provided in subsection 5.2(b), the waiver must be in writing, be signed by the shareholder entitled to the notice, and be delivered to the corporation for inclusion in the minutes or filing with the corporate records. (b) A shareholder's attendance at a meeting (i) waives objection to lack of notice or defective notice of the meeting, unless the shareholder at the beginning of the meeting objects to holding the meeting or transacting business at the meeting; and (ii) waives objection to consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice, unless the shareholder objects to considering the matter when it is presented. (c) Unless required by the Code, neither the business transacted nor the purpose of the meeting need be specified in the waiver. (d) A director may waive any notice before or after the date and time stated in the notice. Except as provided in subsection 5.2(e), the waiver must be in writing, signed by the director entitled to the notice, and delivered to the corporation for inclusion in the minutes or filing with the corporate records. (e) A director's attendance at or participation in a meeting waives any required notice to him of the meeting unless the director at the beginning of the meeting (or promptly upon his arrival) objects to holding the meeting or transacting business at the meeting and does not thereafter vote for or assent to action taken at the meeting. 10 ARTICLE SIX OFFICERS Section 6.1 Number. The officers of the corporation shall consist of a President, a Secretary and a Treasurer and any other officers as may be appointed by the Board of Directors or appointed by a duly appointed officer pursuant to this Article Six. The Board of Directors shall from time to time create and establish the duties of the other officers. Any two or more offices may be held by the same person. Section 6.2 Election and Term. All officers shall be appointed by the Board of Directors or by a duly appointed officer pursuant to this Article Six and shall serve at the pleasure of the Board of Directors or the appointing officers, as the case may be. All officers, however appointed, may be removed with or without cause by the Board of Directors and any officer appointed by another officer may also be removed by the appointing officer with or without cause. Section 6.3 Compensation. The compensation of all officers of the corporation appointed by the Board of Directors shall be fixed by the Board of Directors. Section 6.4 President. The President shall be the chief executive officer of the corporation and shall have general supervision of the business of the corporation. The President shall see that all orders and resolutions of the Board of Directors are carried into effect. The President shall perform such other duties as may from time to time be delegated by the Board of Directors. Section 6.5 Vice Presidents. In the absence or disability of the President, or at the direction of the President, the Vice President, if any, shall perform the duties and exercise the powers of the President. If the corporation has more than one Vice President, the one designated by the Board of Directors shall act in lieu of the President. Vice Presidents shall perform whatever duties and have whatever powers the Board of Directors may from time to time assign. 11 Section 6.6 Secretary. The Secretary shall be responsible for preparing minutes of the acts and proceedings of all meetings of the shareholders and of the Board of Directors and any committees thereof. The Secretary shall have authority to give all notices required by the Code or other applicable law or these bylaws. The Secretary shall be responsible for the custody of the corporate books, records, contracts and other documents. The Secretary may affix the corporate seal to any lawfully executed documents and shall sign any instruments as may require his or her signature. The Secretary shall authenticate records of the corporation. The Secretary shall perform whatever additional duties and have whatever additional powers the Board of Directors may from time to time assign. In the absence or disability of the Secretary or at the direction of the President, any assistant secretary may perform the duties and exercise the powers of the Secretary. Section 6.7 Treasurer. The Treasurer shall be responsible for the custody of all funds and securities belonging to the corporation and for the receipt, deposit or disbursement of funds and securities under the direction of the Board of Directors. The Treasurer shall cause to be maintained full and true accounts of all receipts and disbursements and shall make reports of the same to the Board of Directors and the President upon request. The Treasurer shall perform all duties as may be assigned to him from time to time by the Board of Directors. Section 6.8 Bonds. The Board of Directors may by resolution require any or all of the officers, agents or employees of the corporation to give bonds to the corporation, with sufficient surety or sureties, conditioned on the faithful performance of the duties of their respective offices or positions, and to comply with any other conditions as from time to time may be required by the Board of Directors. ARTICLE SEVEN DISTRIBUTIONS AND SHARE DIVIDENDS Section 7.1 Authorization or Declaration. Unless the articles of incorporation provide otherwise, the Board of Directors from time to time in its discre- 12 tion may authorize or declare distributions or share dividends in accordance with the Code. Section 7.2 Record Date With Regard to Distributions and Share Dividends. For the purpose of determining shareholders entitled to a distribution (other than one involving a purchase, redemption or other reacquisition of the corporation's shares) or a share dividend, the Board of Directors may fix a date as the record date. If no record date is fixed by the Board of Directors, the record date shall be determined in accordance with the provisions of the Code. ARTICLE EIGHT SHARES Section 8.1 Authorization and Issuance of Shares. In accordance with the Code, the Board of Directors may authorize shares of any class or series provided for in the articles of incorporation to be issued for any consideration valid under the provisions of the Code. To the extent provided in the articles of incorporation, the Board of Directors shall determine the preferences, limitations and relative rights of the shares. Section 8.2 Share Certificates. The interest of each shareholder in the corporation shall be evidenced by a certificate or certificates representing shares of the corporation which shall be in such form as the Board of Directors from time to time may adopt. Share certificates shall be numbered consecutively, shall be in registered form, shall indicate the date of issuance, the name of the corporation and that it is organized under the laws of the State of Georgia, the name of the shareholder, and the number and class of shares and the designation of the series, if any, represented by the certificate. Each certificate shall be signed by any one of the President, a Vice President, the Secretary or the Treasurer. The corporate seal need not be affixed. Section 8.3 Rights of Corporation With Respect to Registered Owners. Prior to due presentation for transfer of registration of its shares, the corporation may treat the registered owner of the shares as the person exclusively entitled to vote the shares, to receive any share dividend or distribution with respect to 13 the shares, and for all other purposes; and the corporation shall not be bound to recognize any equitable or other claim to or interest in the shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by law. Section 8.4 Transfers of Shares. Transfers of shares shall be made upon the transfer books of the corporation, kept at the office of the transfer agent designated to transfer the shares, only upon direction of the person named in the certificate, or by an attorney lawfully constituted in writing; and before a new certificate is issued, the old certificate shall be surrendered for cancellation or, in the case of a certificate alleged to have been lost, stolen or destroyed, the requirements of Section 8.6 of these bylaws shall have been met. Section 8.5 Duty of Corporation to Register Transfer. Notwithstanding any of the provisions of Section 8.4 of these bylaws, the corporation is under a duty to register the transfer of its shares only if: (a) the certificate is endorsed by the appropriate person or persons; (b) reasonable assurance is given that the endorsement or affidavit is genuine and effective; (c) the corporation either has no duty to inquire into adverse claims or has discharged that duty; (d) the requirements of any applicable law relating to the collection of taxes have been met; and (e) the transfer in fact is rightful or is to a bona fide purchaser. Section 8.6 Lost, Stolen or Destroyed Certificates. Any person claiming a share certificate to be lost, stolen or destroyed shall make an affidavit or affirmation of the fact in the manner required by the Board of Directors and, if the Board of Directors requires, shall give the corporation a bond of indemnity in form and amount, and with one or more sureties satisfactory to the Board of Directors, as the Board of Directors may require, whereupon an appropriate new certificate may 14 be issued in lieu of the one alleged to have been lost, stolen or destroyed. Section 8.7 Fixing of Record Date With Regard to Shareholder Action. For the purpose of determining shareholders entitled to notice of a shareholders' meeting, to demand a special meeting, to vote or to take any other action, the Board of Directors may fix a future date as the record date, which date shall be not more than seventy (70) days prior to the date on which the particular action requiring a determination of shareholders is to be taken. A determination of shareholders entitled to notice of or to vote at a shareholders' meeting is effective for any adjournment of the meeting unless the Board of Directors fixes a new record date, which it must do if the meeting is adjourned to a date more than 120 days after the date fixed for the original meeting. If no record date is fixed by the Board of Directors, the record date shall be determined in accordance with the provisions of the Code. ARTICLE NINE INDEMNIFICATION Section 9.1 Definitions. As used in this Article, the term: (a) "Corporation" includes any domestic or foreign predecessor entity of the corporation in a merger or other transaction in which the predecessors existence ceased upon consummation of the transaction. (b) "Director" or "officer" means an individual who is or was a director or board-elected officer, respectively, of the corporation or who, while a director or officer of the corporation, is or was serving at the corporation's request as a director, officer, partner, trustee, employee, or agent of another domestic or foreign corporation, partnership, joint venture, trust, employee benefit plan or other entity. A director or officer is considered to be serving an employee benefit plan at the corporation's request if his or her duties to the corporation also impose duties on, or otherwise involve services by, the director or officer to the plan or to participants in or beneficiaries of the plan. "Director" or "officer" includes, unless the context 15 otherwise requires, the estate or personal representative of a director or officer. (c) "Disinterested director" or "disinterested officer" means a director or officer, respectively, who at the time of a vote referred to in subsection 9.3(c) or a vote or selection referred to in subsection 9.5(b), 9.5(c) or 9.7(a) is not: (i) A party to the proceeding; or (ii) An individual who is a party to a proceeding having a familial, financial, professional or employment relationship with the person whose indemnification or advance for expenses is the subject of the decision being made with respect to the proceeding, which relationship would, in the circumstances, reasonably be expected to exert an influence on the director's or officer's judgment when voting on the decision being made. (d) "Expenses" includes counsel fees. (e) "Liability" means the obligation to pay a judgment, settlement, penalty, fine (including an excise tax assessed with respect to an employee benefit plan) or reasonable expenses incurred with respect to a proceeding. (f) "Official capacity" means: (i) when used with respect to a director, the office of director in the corporation, and (ii) when used with respect to an officer, the office in the corporation held by the officer. Official capacity does not include service for any other domestic or foreign corporation or any partnership, joint venture, trust, employee benefit plan or other entity. (g) "Party" includes an individual who was, is, or is threatened to be made a named defendant or respondent in a proceeding. 16 (h) "Proceeding" means any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, arbitrative or investigative and whether formal or informal. Section 9.2 Basic Indemnification Arrangement. (a) Except as provided in subsection 9.2(d) below, the corporation shall indemnify an individual who is a party to a proceeding because he or she is or was a director or officer against liability incurred in the proceeding if: (i) such individual conducted himself or herself in good faith; and (ii) such individual reasonably believed: (A) in the case of conduct in his or her official capacity, that such conduct was in the best interests of the corporation; (B) in all other cases, that such conduct was at least not opposed to the best interests of the corporation; and (C) in the case of any criminal proceeding, that the individual had no reasonable cause to believe such conduct was unlawful. (b) A director's or officer's conduct with respect to an employee benefit plan for a purpose he or she believed in good faith to be in the interests of the participants in and beneficiaries of the plan is conduct that satisfies the requirement of subsection 9.2(a)(ii)(B) above. (c) The termination of a proceeding by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent is not, of itself, determinative that the director or officer did not meet the standard of conduct described in subsection 9.2(a). (d) The corporation may not indemnify a director or officer under this Article: 17 (i) in connection with a proceeding by or in the right of the corporation, except for reasonable expenses incurred in connection with the proceeding if it is determined that the director or officer has met the relevant standard of conduct under subsection 9.2(a); or (ii) in connection with any proceeding with respect to conduct for which he or she was adjudged liable on the basis that personal benefit was improperly received by him or her, whether or not involving action in his or her official capacity. Section 9.3 Advances for Expenses. (a) The corporation may, before final disposition of a proceeding, advance funds to pay for or reimburse the reasonable expenses incurred by a director or officer who is a party to a proceeding because he or she is a director or officer if he or she delivers to the corporation: (i) a written affirmation of his or her good faith belief that he or she has met the relevant standard of conduct described in subsection 9.2(a) above or that the proceeding involves conduct for which such person's liability has been eliminated under the corporation's articles of incorporation; and (ii) his or her written undertaking to repay any funds advanced if it is ultimately determined that the director or officer is not entitled to indemnification under this Article or the Code. (b) The undertaking required by subsection 9.3(a)(ii) above must be an unlimited general obligation of the director or officer but need not be secured and may be accepted without reference to the financial ability of the director or officer to make repayment. (c) Authorizations under this Section 9.3 shall be made: 18 (i) by the Board of Directors: (A) when there are two or more disinterested directors, by a majority vote of all the disinterested directors (a majority of whom shall for such purpose constitute a quorum) or by a majority of the members of a committee of two or more disinterested directors appointed by such a vote; or (B) when there are fewer than two disinterested directors, by the vote necessary for action by the Board of Directors in accordance with subsection (c) of Section 14-2-824 of the Code, in which authorization directors who do not qualify as disinterested directors may participate; or (i) by the shareholders, but shares owned or voted under the control of a director or officer who at the time does not qualify as a disinterested director or disinterested officer with respect to the proceeding may not be voted on the authorization. Section 9.4 Court-Ordered Indemnification and Advances for Expenses. (a) A director or officer who is a party to a proceeding because he or she is a director or officer may apply for indemnification or advance for expenses to the court conducting the proceeding or to another court of competent jurisdiction. Pursuant to Section 14-2-854 of the Code, after receipt of an application and after giving any notice it considers necessary, the court shall: (i) order indemnification or advance for expenses if it determines that the director or officer is entitled to indemnification; or (ii) order indemnification or advance for expenses if it determines, in view of all the relevant circumstances, that it is fair and reasonable to indemnify the director or officer, or to advance 19 expenses to the director or officer, even if the director or officer has not met the relevant standard of conduct, failed to comply with the requirements for advance of expenses, or was adjudged liable in a proceeding referred to in subsection 9.2(d) above, but if the director or officer was adjudged so liable, the indemnification shall be limited to reasonable expenses incurred in connection with the proceeding. (b) If the court determines that the director or officer is entitled to indemnification or advance for expenses, it may also order the corporation to pay the director's or officer's reasonable expenses to obtain court-ordered indemnification or advance for expenses. Section 9.5 Determination and Authorization of Indemnification. (a) The corporation acknowledges that indemnification of a director or officer under Section 9.2 has been pre-authorized by the corporation as permitted by Section 14-2-859(a) of the Code. Nevertheless, the corporation shall not indemnify a director or officer under Section 9.2 unless a determination has been made for the specific proceeding that indemnification of the director or officer is permissible in the circumstances because he or she has met the relevant standard of conduct set forth in subsection 9.2(a); provided, however that regardless of the result or absence of any such determination, the corporation shall indemnify a director or officer who was wholly successful, on the merits or otherwise, in the defense of any proceeding to which he or she was a party because he or she was a director or officer of the corporation against reasonable expenses incurred by the director or officer in connection with the proceeding. (b) The determination referred to in subsection 9.5(a) above shall be made: (i) if there are two or more disinterested directors, by the Board of Directors of the corporation by a majority vote of all disinterested directors (a majority of whom shall for such purpose constitute a quorum) or by a majority of the members 20 of a committee of two or more disinterested directors appointed by such a vote; (ii) by special legal counsel: (A) selected in the manner prescribed in paragraph (i) of this subsection 9.5(b); or (B) if there are fewer than two disinterested directors, selected by the Board of Directors (in which selection directors who do not qualify as disinterested directors may participate); or (iii) By the shareholders, but shares owned by or voted under the control of a director or officer who at the time does not qualify as a disinterested director or disinterested officer may not be voted on the determination. (c) As acknowledged above, the corporation has pre-authorized the indemnification of directors and officers hereunder, subject to a determination for a specific proceeding that the director or officer met the relevant standard of conduct under subsection 9.2(a). Consequently, no further decision need or shall be made on a case-by-case basis as to the authorization of the corporation's indemnification of directors or officers hereunder. Nevertheless, evaluation as to reasonableness of expenses of a director or officer for a specific proceeding shall be made in the same manner as the determination that indemnification is permissible, as described in subsection 9.5(b) above, except that if there are fewer than two disinterested directors or if the determination is made by special legal counsel, evaluation as to reasonableness of expenses shall be made by those entitled under subsection 9.5(b)(ii)(B) to select special legal counsel. Section 9.6 Indemnification of Employees and Agents. The corporation may indemnify and advance expenses under this Article to an employee or agent of the corporation who is not a director or officer to the extent, consistent with public policy, that such indemnification and advances may be provided to a director or officer. 21 Section 9.7 Shareholder Approved Indemnification. (a) If authorized by the articles of incorporation or a bylaw, contract or resolution approved or ratified by shareholders of the corporation by a majority of the votes entitled to be cast, the corporation may indemnify or obligate itself to indemnify a director or officer made a party to a proceeding, including a proceeding brought by or in the right of the corporation, without regard to the limitations in other sections of this Article, but shares owned or voted under the control of a director or officer who at the time of such authorization does not qualify as a disinterested director or disinterested officer with respect to any existing or threatened proceeding that would be covered by the authorization may not be voted on the authorization. (b) The corporation shall not indemnify a director or officer under this Section 9.7 for any liability incurred in a proceeding in which the director or officer is adjudged liable to the corporation or is subjected to injunctive relief in favor of the corporation: (i) for any appropriation, in violation of his or her duties, of any business opportunity of the corporation; (ii) for acts or omissions which involve intentional misconduct or a knowing violation of law; (iii) for the types of liability set forth in Section 14-2-832 of the Code; or (iv) for any transaction from which he or she received an improper personal benefit. (c) Where approved or authorized in the manner described in subsection 9.7(a) above, the corporation may advance or reimburse expenses incurred in advance of final disposition of the proceeding only if: (i) The director or officer furnishes the corporation a written affirmation of his or her good faith belief that his or her conduct does not con- 22 stitute behavior of the kind described in subsection 9.7(b) above; and (ii) The director or officer furnishes the corporation a written undertaking, executed personally or on his or her behalf, to repay any advances if it is ultimately determined that he or she is not entitled to indemnification under this Article. Section 9.8 Insurance. The corporation may purchase and maintain insurance on behalf of an individual who is a director, officer, employee or agent of the corporation or who, while a director, officer, employee or agent of the corporation, serves at the corporation's request as a director, officer, partner, trustee, employee or agent of another domestic or foreign corporation, partnership, joint venture, trust, employee benefit plan or other entity against liability asserted against or incurred by him or her in that capacity or arising from his or her status as a director, officer, employee or agent, whether or not the corporation would have power to indemnify or advance expenses to him or her against the same liability under this Article or the Code. Section 9.9 Witness Fees. Nothing in this Article shall limit the corporation's power to pay or reimburse expenses incurred by a director or officer in connection with his or her appearance as a witness in a proceeding at a time when he or she is not a party. Section 9.10 Report to Shareholders. To the extent and in the manner required by the Code from time to time, if the corporation indemnifies or advances expenses to a director or officer in connection with a proceeding by or in the right of the corporation, the corporation shall report the indemnification or advance to the shareholders. Section 9.11 Amendments; Severability. No amendment, modification or rescission of this Article Nine, or any provision hereof, the effect of which would diminish the rights to indemnification or advancement of expenses as set forth herein shall be effective as to any person with respect to any action taken or omitted by such person prior to such amendment, modification or rescission. In the event that any of the provisions of 23 this Article (including any provision within a single section, subsection, division or sentence) is held by a court of competent jurisdiction to be invalid, void or otherwise unenforceable, the remaining provisions of this Article shall remain enforceable to the fullest extent permitted by law. ARTICLE TEN MISCELLANEOUS Section 10.1 Inspection of Books and Records. The Board of Directors shall have the power to determine which accounts, books and records of the corporation shall be opened to the inspection of the shareholders, except those as may by law specifically be made open to inspection, and shall have the power to fix reasonable rules and regulations not in conflict with the applicable law for the inspection of accounts, books and records which by law or by determination of the Board of Directors shall be open to inspection. Without the prior approval of the Board of Directors in their discretion, the right of inspection set forth in Section 14-2-1602(c) of the Code shall not be available to any shareholder owning two percent (2%) or less of the shares outstanding. Section 10.2 Fiscal Year. The Board of Directors is authorized to fix the fiscal year of the corporation and to change the same from time to time as it deems appropriate. Section 10.3 Corporate Seal. If the Board of Directors determines that there should be a corporate seal for the corporation, it shall be in the form as the Board of Directors may from time to time determine. Section 10.4 Annual Financial Statements. In accordance with the Code, the corporation shall prepare and provide to the shareholders such financial statements as may be required by the Code. Section 10.5 Conflict With Articles of Incorporation. In the event that any provision of these bylaws conflicts with any provision of the articles of incorporation, the articles of incorporation shall govern. 24 ARTICLE ELEVEN AMENDMENTS Section 11.1 Power to Amend Bylaws. The Board of Directors shall have the power to alter, amend or repeal these bylaws or adopt new bylaws, but any bylaws adopted by the Board of Directors may be altered, amended or repealed, and new bylaws adopted, by the shareholders. The shareholders may prescribe, by expressing in the action they take in adopting or amending any bylaw or bylaws, that the bylaw or bylaws so adopted or amended shall not be altered, amended or repealed by the Board of Directors. 25 EX-3.23 13 BYLAWS OF HUNTSMAN PREPARATORY, INC. B Y L A W S OF HUNTSMAN PREPARATORY, INC. -------------------------- A UTAH CORPORATION 1996 TABLE OF CONTENTS ARTICLE 1. OFFICES.........................................................1 Section 1.1 Business Offices..............................1 Section 1.2 Registered Office.............................1 ARTICLE 2. SHAREHOLDERS....................................................1 Section 2.1 Annual Shareholder Meeting....................1 Section 2.2 Special Shareholder Meetings..................1 Section 2.3 Place of Shareholder Meetings.................1 Section 2.4 Notice of Shareholder Meeting.................2 Section 2.5 Fixing of Record Date.........................3 Section 2.6 Shareholder List..............................4 Section 2.7 Shareholder Quorum and Voting Requirements....4 Section 2.8 Proxies.......................................5 Section 2.9 Voting of Shares..............................5 Section 2.10 Corporation's Acceptance of Votes.............6 Section 2.11 Informal Action by Shareholders...............8 Section 2.12 Waiver of Notice..............................9 Section 2.13 Voting for Directors..........................9 Section 2.14 Rights of Shareholders to Inspect Corporate Records.......................................9 Section 2.15 Furnishing Financial Statements to a Shareholder..................................11 Section 2.16 Information Respecting Shares................12 ARTICLE 3. BOARD OF DIRECTORS.............................................12 Section 3.1 General Powers...............................12 Section 3.2 Number, Tenure and Qualifications of Directors....................................12 Section 3.3 Regular Meetings of the Board of Directors...12 Section 3.4 Special Meetings of the Board of Directors...12 Section 3.5 Notice and Waiver of Notice of Special Director Meetings............................13 Section 3.6 Quorum of Directors..........................13 Section 3.7 Manner of Acting.............................13 Section 3.8 Director Action By Written Consent...........14 Section 3.9 Resignation of Directors.....................14 Section 3.10 Removal of Directors.........................15 Section 3.11 Board of Director Vacancies..................15 Section 3.12 Director Compensation........................16 Section 3.13 Director Committees..........................16 Section 3.14 Director's Rights to Inspect Corporate Records......................................16 i ARTICLE 4. EXECUTIVE COMMITTEE AND OTHER COMMITTEES.......................18 Section 4.1 Creation of Committees.......................18 Section 4.2 Approval of Committees and Members...........18 Section 4.3 Required Procedures..........................18 Section 4.4 Authority....................................18 Section 4.5 Authority of Executive Committee.............18 Section 4.6 Compensation.................................18 ARTICLE 5. OFFICERS.......................................................19 Section 5.1 Officers.....................................19 Section 5.2 Appointment and Term of Office...............19 Section 5.3 Resignation of Officers......................19 Section 5.4 Removal of Officers..........................19 Section 5.5 The Chairman of the Board....................19 Section 5.6 The Vice Chairman............................20 Section 5.7 Chief Executive Officer......................20 Section 5.8 President....................................20 Section 5.9 Vice Presidents..............................21 Section 5.10 Secretary....................................21 Section 5.11 Treasurer....................................22 Section 5.12 Assistant Secretaries and Assistant Treasurers...................................22 Section 5.13 General Manager..............................22 Section 5.14 Salaries.....................................23 Section 5.15 Surety Bonds.................................23 ARTICLE 6. LIMITATION OF LIABILITY AND INDEMNIFICATION....................23 Section 6.1 Limitation of Liability of Directors.........23 Section 6.2 Indemnification of Directors.................24 Section 6.3 Advance Payment of Expenses..................25 Section 6.4 Indemnification of Officers, Employees, Fiduciaries, and Agents......................25 Section 6.5 Insurance....................................25 ARTICLE 7. EXECUTION OF INSTRUMENTS, BORROWING OF MONEY AND DEPOSIT OF CORPORATE FUNDS.................................26 Section 7.1 Execution of Instruments.....................26 Section 7.2 Loans........................................26 Section 7.3 Deposits.....................................26 Section 7.4 Checks, Drafts, etc..........................26 Section 7.5 Bonds and Debentures.........................27 Section 7.6 Sale, Transfer, etc. of Securities...........27 Section 7.7 Proxies......................................27 ii ARTICLE 8. CERTIFICATES FOR SHARES AND THEIR TRANSFER.....................27 Section 8.1 Certificates for Shares......................27 Section 8.2 Shares Without Certificates..................28 Section 8.3 Registration of Transfer of Shares...........29 Section 8.4 Transfer Agents and Registrars...............29 Section 8.5 Restrictions on Transfer of Shares Permitted....................................29 Section 8.6 Acquisition of Shares........................30 Section 8.7 Lost or Destroyed Certificates...............31 ARTICLE 9. DISTRIBUTIONS..................................................31 Section 9.1 Distributions................................31 ARTICLE 10. CORPORATE SEAL.................................................31 Section 10.1 Corporate Seal...............................31 ARTICLE 11. FISCAL YEAR....................................................31 Section 11.1 Fiscal Year..................................31 ARTICLE 12. AMENDMENTS.....................................................31 Section 12.1 Amendments...................................31 iii BYLAWS OF HUNTSMAN PREPARATORY, INC. ARTICLE 1. OFFICES Section 1.1 Business Offices. The principal office of Huntsman Preparatory, Inc. (the "Corporation") shall be located at any place either within or outside the State of Utah, as designated in the Corporation's Articles of Incorporation or the Corporation's most recent annual report on file with the Utah Department of Commerce, Division of Corporations and Commercial Code (the "Division") providing such information. The Corporation may have such other offices, either within or outside the State of Utah as the Board of Directors may designate or as the business of the Corporation may require from time to time. The Corporation shall maintain at its principal office a copy of those records specified in Section 2.14 of Article II of these Bylaws. (16-10a-102(24))* Section 1.2 Registered Office. The registered office of the Corporation required by the Utah Revised Business Corporation Act shall be located within the State of Utah. The address of the registered office may be changed from time to time. (16-10a-501 and 16-10a-502) ARTICLE 2. SHAREHOLDERS Section 2.1 Annual Shareholder Meeting. An annual meeting of the shareholders shall be held each year on the date, at the time, and at the place, fixed by the Board of Directors. The annual meeting shall be held for the purpose of electing directors and for the transaction of such other business as may come before the meeting. (16-10a-701) Section 2.2 Special Shareholder Meetings. Special meetings of the shareholders may be called, for any purposes described in the notice of the meeting, by the President, or by the Board of Directors and shall be called by the President at the request of the holder(s) of not less than one-tenth of all outstanding votes of the Corporation entitled to be cast on any issue at the meeting. (16-10a-702) Section 2.3 Place of Shareholder Meetings. The Board of Directors may designate any place, either within or outside the State of Utah, as the place for any - -------------- * Citations in parentheses are to Utah Code Annotated. These citations are for reference only and shall not constitute a part of these bylaws. annual meeting of the shareholders. The President, the Board of Directors or the shareholder(s) authorized by these Bylaws to request a meeting, as the case may be, may designate any place, either within or outside the State of Utah, as the place for any special meeting of the shareholders called by such person or group. If no designation is made regarding the place of the meeting, the meeting shall be held at the principal office of the Corporation. (16-10a-701(2) and 16-10a-702(3)) Section 2.4 Notice of Shareholder Meeting. (a) Required Notice. Written notice stating the place, day, and hour of any annual or special shareholder meeting shall be delivered not less than ten (10) nor more than sixty (60) days before the date of the meeting, either personally or by mail, by or at the direction of the person or group calling the meeting, to each shareholder of record entitled to vote at such meeting, and to any other shareholder entitled by the Utah Revised Business Corporation Act or the Corporation's Articles of Incorporation to receive notice of the meeting. Notice shall be deemed to be effective when mailed. (b) Notice Not Required. Notice shall not be required to be given to any shareholder to whom: (1) A notice of two consecutive annual meetings, and all notices of meetings or of the taking of action by written consent without a meeting during the period between the two consecutive annual meetings, have been mailed, addressed to the shareholder at the shareholder's address as shown on the records of the Corporation, and have been returned undeliverable; or (2) at least two payments, if sent by first class mail, of dividends or interest on securities during a twelve month period, have been mailed, addressed to the shareholder at the shareholder's address as shown on the records of the Corporation, and have been returned undeliverable. If a shareholder to whom notice is not required to be given delivers to the Corporation a written notice setting forth the shareholder's current address, or if another address for the shareholder is otherwise made known to the Corporation, the requirement that notice be given to the shareholder is reinstated. (16-10a-103 and 16-10a-705) (c) Adjourned Meeting. If any shareholder meeting is adjourned to a different date, time, or place, notice need not be given of the new date, time, or place, if the new date, time, or place is announced at the meeting before adjournment. However, if the adjournment is for more than thirty (30) days, or if after the adjournment a new record date for the adjourned meeting is or must be fixed (see Section 2.5 of these Bylaws), then notice 2 must be given pursuant to the requirements of paragraph (a) of this Section 2.4 to shareholders of record who are entitled to vote at the meeting. (16-10a-705(4)) (d) Contents of Notice. Notice of any special meeting of the shareholders shall include a description of the purpose or purposes for which the meeting is called. Except as provided in this paragraph (d) of Section 2.4, in the Articles of Incorporation, or in the Utah Revised Business Corporation Act, notice of an annual meeting of the shareholders need not include a description of the purpose or purposes for which the meeting is called. (16-10a-705(2), (3)) (e) Waiver of Notice of Meeting. Any shareholder may waive notice of a meeting by a writing signed by the shareholder which is delivered to the Corporation (either before or after the date and time stated in the notice as the date or time when any action will occur or has occurred) for inclusion in the minutes or filing with the Corporation's records. (16-10a-706) (f) Effect of Attendance at Meeting. A shareholder's attendance at a meeting: (1) Waives objection to lack of notice or defective notice of the meeting, unless the shareholder at the beginning of the meeting objects to holding the meeting or transacting business at the meeting; and (2) waives objection to consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice, unless the shareholder objects to considering the matter when it is presented. (16-10a-706) Section 2.5 Fixing of Record Date. For the purpose of determining the shareholders of any voting group entitled to notice of or to vote at any meeting of the shareholders, or the shareholders entitled to take action without a meeting or to demand a special meeting, or the shareholders entitled to receive payment of any distribution or dividend, or in order to make a determination of the shareholders for any other proper purpose, the Board of Directors may fix in advance a date as the record date. Such record date shall not be more than seventy (70) days prior to the date on which the particular action, requiring such determination of the shareholders, is to be taken. If no record date is so fixed by the Board of Directors, the record date shall be at the close of business on the following dates: (a) Annual and Special Meetings. With respect to an annual meeting of the shareholders or any special meeting of the shareholders called by the President, the Board of Directors or the shareholder(s) authorized by these Bylaws to request a meeting, the day before the first notice is delivered to shareholders. (16-10a-707(2)) 3 (b) Meeting Demanded by Shareholders. With respect to a special shareholder meeting demanded by the shareholders pursuant to the Utah Revised Business Corporation Act, the earliest date of any of the demands pursuant to which the meeting is called, or sixty (60) days prior to the date the first of the written demands is received by the Corporation, whichever is later. (16-10a-702(1)(b), (2)) (c) Action Without a Meeting. With respect to actions taken in writing without a meeting (pursuant to Section 2.11 of these Bylaws), the date the first shareholder delivers to the Corporation a signed written consent upon which the action is taken. (16-10a-704(6)) (d) Distributions. With respect to a distribution to the shareholders (other than one involving a repurchase or reacquisition of shares), the date the Board of Directors authorizes the distribution. (16-10a-640(2)) (e) Share Dividend. With respect to the payment of a share dividend, the date the Board of Directors authorizes the share dividend. (16-10a-623(3)) When a determination of the shareholders entitled to vote at any meeting of the shareholders has been made as provided in this Section 2.5, such determination shall apply to any adjournment thereof unless the Board of Directors fixes a new record date, which it must do if the meeting is adjourned to a date more than one hundred twenty (120) days after the date fixed for the original meeting. (16-10a-707) Section 2.6 Shareholder List. The Secretary shall make a complete record of the shareholders entitled to vote at each meeting of shareholders, arranged in alphabetical order within each class or series, with the address of and the number of shares held by each. If voting groups exist (see Section 2.7 of these Bylaws), the list must be arranged by voting group, and within each voting group by class or series of shares. The shareholder list must be available for inspection by any shareholder, beginning on the earlier of ten (10) days before the meeting for which the list was prepared or two (2) business days after notice of the meeting is given and continuing through the meeting and any adjournments. The list shall be available at the Corporation's principal office or at a place identified in the notice of the meeting in the city where the meeting is to be held. A shareholder, his agent, or attorney is entitled on written demand to inspect and, subject to the requirements of Section 2.14 of these Bylaws, to inspect and copy the list during regular business hours and during the period it is available for inspection. The Corporation shall maintain the shareholder list in written form or in another form capable of conversion into written form within a reasonable time. (16-10a-720) Section 2.7 Shareholder Quorum and Voting Requirements. 4 (a) Quorum. Unless the Articles of Incorporation, a Bylaw adopted by the shareholders pursuant to the Utah Revised Business Corporation Act, or the Utah Revised Business Corporation Act provides otherwise, a majority of the votes entitled to be cast on the matter by the voting group constitutes a quorum of that voting group for action on that matter. (16-10a-725(1)) (b) Approval of Actions. If a quorum exists, action on a matter (other than the election of directors) by a voting group is approved if the votes cast within the voting group favoring the action exceed the votes cast opposing the action, unless the Articles of Incorporation, a Bylaw adopted by the shareholders pursuant to the Utah Revised Business Corporation Act, or the Utah Revised Business Corporation Act requires a greater number of affirmative votes. (16-10a-725(3)) (c) Single Voting Group. If the Articles of Incorporation or the Utah Revised Business Corporation Act provides for voting by a single voting group on a matter, action on that matter is taken when approved by that voting group. (16-10-726(1)) (d) Voting Groups. Shares entitled to vote as a separate voting group may take action on a matter at a meeting only if a quorum of those shares exists with respect to that matter. (16-10a-725(1)) If the Articles of Incorporation or the Utah Revised Business Corporation Act provides for voting by two or more voting groups on a matter, action on that matter is taken only when approved by each of those voting groups counted separately. One voting group may vote on a matter even though another voting group entitled to vote on the matter has not voted. (16-10a-726(2)) (e) Effect of Representation. Once a share is represented for any purpose at a meeting, including the purpose of determining that a quorum exists, it is deemed present for quorum purposes for the remainder of the meeting and for any adjournment of that meeting, unless a new record date is or must be set for that adjourned meeting. (16-10a-725(2)) Section 2.8 Proxies. At all meetings of the shareholders, a shareholder may vote in person or by a proxy executed in any lawful manner. Such proxy shall be filed with the Corporation before or at the time of the meeting. No proxy shall be valid after eleven months from the date of its execution unless otherwise provided in the proxy. (16-10a-722) Section 2.9 Voting of Shares. (a) Votes per Share. Unless otherwise provided in the Articles of Incorporation, each outstanding share entitled to vote shall be entitled to one vote, and each fractional share shall be entitled to a corresponding fractional vote, upon each matter submitted to a vote at a meeting of shareholders. (16-10a-721(1)) 5 (b) Restriction on Shares Held by Controlled Corporation. Except as provided by specific court order, no shares of the Corporation held by another corporation, if a majority of the shares entitled to vote for the election of directors of such other corporation are held by the Corporation, shall be voted at any meeting of the Corporation or counted in determining the total number of outstanding shares at any given time for purposes of any meeting. However, the power of the Corporation to vote any shares, including its own shares, held by it in a fiduciary capacity is not hereby limited. (16-10a-721(2), (3)) (c) Redeemable Shares. Redeemable shares are not entitled to be voted after notice of redemption is mailed to the holders thereof and a sum sufficient to redeem the shares has been deposited with a bank, trust company, or other financial institution under an irrevocable obligation to pay the holders the redemption price on surrender of the shares. (16-10a-721(4)) Section 2.10 Corporation's Acceptance of Votes. (a) Corresponding Name. If the name signed on a vote, consent, waiver, proxy appointment, or proxy appointment revocation corresponds to the name of a shareholder, the Corporation, if acting in good faith, is entitled to accept the vote, consent, waiver, proxy appointment, or proxy appointment revocation and give it effect as the act of the shareholder. (16-10a-724(1)) (b) Name does not Correspond. If the name signed on a vote, consent, waiver, proxy appointment, or proxy appointment revocation does not correspond to the name of a shareholder, the Corporation, if acting in good faith, is nevertheless entitled to accept the vote, consent, waiver, proxy appointment, or proxy appointment revocation and give it effect as the act of the shareholder if: (1) The shareholder is an entity as defined in the Utah Revised Business Corporation Act and the name signed purports to be that of an officer or agent of the entity; (2) the name signed purports to be that of an administrator, executor, guardian, or conservator representing the shareholder and, if the Corporation requests, evidence of fiduciary status acceptable to the Corporation has been presented with respect to the vote, consent, waiver, proxy appointment, or proxy appointment revocation; (3) the name signed purports to be that of a receiver or trustee in bankruptcy of the shareholder and, if the Corporation requests, evidence of this status acceptable to the Corporation has been presented with respect 6 to the vote, consent, waiver, proxy appointment, or proxy appointment revocation; (4) the name signed purports to be that of a pledgee, beneficial owner, or attorney-in-fact of the shareholder and, if the Corporation requests, evidence acceptable to the Corporation of the signatory's authority to sign for the shareholder has been presented with respect to the vote, consent, waiver, proxy appointment, or proxy appointment revocation; (5) two or more persons are the shareholder as cotenants or fiduciaries and the name signed purports to be the name of at least one of the cotenants or fiduciaries and the person signing appears to be acting on behalf of all the cotenants or fiduciaries; or (6) the acceptance of the vote, consent, waiver, proxy appointment, or proxy appointment revocation is otherwise proper under rules established by the Corporation that are not inconsistent with the provisions of this Section 2.10. (16-10a-724(2)) (c) Shares owned by Two or More Persons. If shares of the Corporation are registered in the names of two or more persons, or if two or more persons have the same fiduciary relationship respecting the same shares, unless the Secretary is given written notice to the contrary and furnished with a copy of the instrument creating the relationship, their acts with respect to voting shall have the following effect: (1) If only one votes, the act binds all; (2) if more than one vote, the act of the majority so voting binds all; (3) if more than one vote, but the vote is evenly split on any particular matter, each faction may vote the securities in question proportionately; and (4) if the instrument so filed or the registration of the shares shows that any tenancy is held in unequal interests, a majority or even split for the purpose of this Section 2.10 shall be a majority or even split in interest. (16-10a-724(3)) (d) Rejection. The Corporation is entitled to reject a vote, consent, waiver, proxy appointment, or proxy appointment revocation if the Secretary or other officer or agent authorized to tabulate votes, acting in good faith, has reasonable basis for doubt 7 about the validity of the signature on it or about the signatory's authority to sign for the shareholder. (16-10a-724(4)) (e) No Liability. The Corporation and its officer or agent who accepts or rejects a vote, consent, waiver, proxy appointment, or proxy appointment revocation in good faith and in accordance with the standards of this Section 2.10 are not liable in damages to the shareholder for the consequences of the acceptance or rejection. (16-10a-724(5)) (f) Validity. Corporate action based on the acceptance or rejection of a vote, consent, waiver, proxy appointment, or proxy appointment revocation under this Section 2.10 is valid unless a court of competent jurisdiction determines otherwise. (16-10a-724(6)) Section 2.11 Informal Action by Shareholders. (a) Written Consent. Unless otherwise provided in the Articles of Incorporation, any action which may be taken at any annual or special meeting of shareholders may be taken without a meeting and without prior notice if one or more consents in writing, setting forth the action so taken, are signed by the holders of outstanding shares having not less than the minimum number of votes necessary to authorize or take the action at a meeting at which all shares entitled to vote thereon were present and voted. (16-10a-704(1)) (b) Notice Requirements. Unless written consents of all shareholders entitled to vote have been obtained, the Corporation shall give notice of any shareholder approval without a meeting at least ten (10) days before the consummation of the action authorized by the approval to: (1) Those shareholders entitled to vote who have not consented in writing; and (2) those shareholders not entitled to vote and to whom the Utah Revised Business Corporation Act requires notice be given. Such notice shall contain or be accompanied by the same material that would have been required if a formal meeting had been called to consider the action. (16-10a-704(2)) (c) Revocation. Any shareholder giving a written consent, or the shareholders' proxyholder, or a transferee of the shares or a personal representative of the shareholder or their respective proxyholder, may revoke the consent by a signed writing describing the action and stating that the shareholder's prior consent is revoked, if the 8 writing is received by the Corporation prior to the effectiveness of the action. (16-10a-704(3)) (d) Effective Date. Action taken pursuant to this Section 2.11 is not effective unless all written consents on which the Corporation relies for the taking of action are received by the Corporation within a sixty (60) day period and are not revoked. Action thus taken is effective as of the date the last written consent necessary to effect the action is received by the Corporation, unless all the written consents necessary to effect the action specify a later date as the effective date of action. If the Corporation has received written consents signed by all shareholders entitled to vote with respect to the action, the effective date of the action may be any date that is specified in all the written consents as the effective date of the action. The writing may be received by the Corporation by electronically transmitted facsimile or other form of communication providing the Corporation with a complete copy thereof, including a copy of the signature. (16-10a-704(4)) (e) Election of Directors. Notwithstanding paragraph (a) of this Section 2.11, directors may not be elected by written consent except by unanimous written consent of all shares entitled to vote for the election of directors. (16-10a-704(5)) (f) Effect of Action Without a Meeting. Action taken under this Section 2.11 has the same effect as action taken at a meeting of shareholders and may be so described in any document. (16-10a-704(7)) Section 2.12 Waiver of Notice. A shareholder may waive any notice required by the Utah Revised Business Corporation Act, the Corporation's Articles of Incorporation or these Bylaws. Such a waiver may be made before or after the date and time stated in the notice as the date or time when any action will occur or has occurred. Such a waiver must be in a writing signed by the shareholder and must be delivered to the Corporation for inclusion in the minutes of the relevant meeting of the shareholders or in the Corporation's records. (16-10a-706(1)) Section 2.13 Voting for Directors. At each election of directors, unless otherwise provided in the Articles of Incorporation or the Utah Revised Business Corporation Act, every shareholder entitled to vote at the election has the right to vote, in person or by proxy, all of the votes to which the shareholder's shares are entitled for as many persons as there are directors to be elected and for whose election the shareholder has the right to vote. Unless otherwise provided in the Articles of Incorporation or the Utah Revised Business Corporation Act, directors are elected by a plurality of the votes cast by the shares entitled to be voted in the election, at a meeting at which a quorum is present. (16-10a-728(1), (2)) Section 2.14 Rights of Shareholders to Inspect Corporate Records. 9 (a) Minutes and Accounting Records. The Corporation shall keep, as permanent records, minutes of all meetings of its shareholders and Board of Directors, a record of all actions taken by its shareholders or Board of Directors without a meeting, a record of all actions taken on behalf of the Corporation by a committee of the Board of Directors in place of the Board of Directors, and a record of all waivers of notices of meetings of its shareholders, meetings of the Board of Directors, or any meetings of committees of the Board of Directors. The Corporation shall maintain appropriate accounting records. (16-10a-1601(1), (2)) (b) Absolute Inspection Rights. If a shareholder gives the Corporation written notice of the shareholder's demand at least five (5) business days before the date on which the shareholder wishes to inspect and copy, a shareholder (or the shareholder's agent or attorney) has the right to inspect and copy, during regular business hours, any of the following records, all of which the Corporation is required to keep at its principal office: (1) The Corporation's Articles of Incorporation currently in effect; (2) the Corporation's Bylaws currently in effect; (3) the minutes of all shareholders' meetings, and records of all action taken by shareholders without a meeting, for the past three years; (4) all written communications within the past three years to shareholders as a group or to the holders of any class or series of shares as a group; (5) a list of the names and business addresses of the Corporation's current officers and directors; (6) the Corporation's most recent annual report delivered to the Division; and (7) all financial statements prepared for periods ending during the last three years that a shareholder could request pursuant to Section 16-10a-1605 of the Utah Revised Business Corporation Act. (16-10a-1601(5) and 16-10a-1602(1)) (c) Conditional Inspection Rights. If a shareholder gives the Corporation a written demand made in good faith and for a proper purpose at least five business days before the date on which the shareholder wishes to inspect and copy, the shareholder describes with reasonable particularity the shareholder's purpose and the records the shareholder desires to inspect, and the records are directly connected with the 10 shareholder's purpose, the shareholder (or the shareholder's agent or attorney) is entitled to inspect and copy, during regular business hours at a reasonable location specified by the Corporation, any of the following records of the Corporation: (1) Excerpts from: (i) Minutes of any meeting of the Board of Directors, records of any action of a committee of the Board of Directors while acting on behalf of the Corporation in place of the Board of Directors; (ii) minutes of any meeting of the shareholders; (iii) records of action taken by the shareholders without a meeting; and (iv) waivers of notices of any meeting of the shareholders, of any meeting of the Board of Directors, or of any meeting of a committee of the Board of Directors; (2) accounting records of the Corporation; and (3) the record of the Corporation's shareholders referred to in Section 16-10a-1601(3) of the Utah Revised Business Corporation Act. (16-10a-1602(2)) (d) Copy Costs. The right to copy records includes, if reasonable, the right to receive copies made by photographic, xerographic, or other means. The Corporation may impose a reasonable charge, payable in advance, covering the costs of labor and material, for copies of any documents provided to a shareholder. The charge may not exceed the estimated cost of production or reproduction of the records. (16-10a-1603) (e) Shareholder Includes Beneficial Owner. For purposes of this Section 2.14, the term "shareholder" shall include a beneficial owner whose shares are held in a voting trust and any other beneficial owner who establishes beneficial ownership. (16-10a-1602(4)(b)) Section 2.15 Furnishing Financial Statements to a Shareholder. Upon the written request of any shareholder, the Corporation shall mail to the shareholder its most recent annual or quarterly financial statements showing in reasonable detail its assets and liabilities and the results of its operations. (16-10a-1605) 11 Section 2.16 Information Respecting Shares. Upon the written request of any shareholder, the Corporation, at its own expense, shall mail to the shareholder information respecting the designations, preferences, limitations, and relative rights applicable to each class of shares, the variations determined for each series, and the authority of the Board of Directors to determine variations for any existing or future class or series. The Corporation may comply by mailing the shareholder a copy of its Articles of Incorporation containing such information. (16-10a-1606) ARTICLE 3. BOARD OF DIRECTORS Section 3.1 General Powers. All corporate powers shall be exercised by or under the authority of, and the business and affairs of the Corporation shall be managed under the direction of, the Board of Directors, subject to any limitation set forth in the Articles of Incorporation or in any agreement authorized by Section 16-10a-732 of the Utah Revised Business Corporation Act. (16-10a-801) Section 3.2 Number, Tenure and Qualifications of Directors. (a) Number. The number of directors of the Corporation shall be not less than three (3) (unless the number of shareholders entitled to vote for the directors of the Corporation is less than three (3), then the number of directors may be equal to or greater than the number of such shareholders) nor more than nine (9). The number of directors may be fixed or changed within the range specified in this Section 3.2 by the shareholders or the Board of Directors, but no decrease may shorten the term of any incumbent director. (16-10a-803(1), (2)) (b) Tenure. Each director shall hold office until the next annual meeting of shareholders or until removed. However, if a director's term expires, the director shall continue to serve until the director's successor shall have been elected and qualified, or until there is a decrease in the number of directors. (16-10a-805) (c) Qualifications. Directors need not be residents of the State of Utah or shareholders of the Corporation unless the Articles of Incorporation so prescribe. (16-10a-802) Section 3.3 Regular Meetings of the Board of Directors. A regular meeting of the Board of Directors shall be held without other notice than provided by this Section 3.3 immediately after, and at the same place as, the annual meeting of shareholders. The Board of Directors may provide, by resolution, the time and place for the holding of additional regular meetings without other notice than such resolution. Section 3.4 Special Meetings of the Board of Directors. Special meetings of the Board of Directors may be called by or at the request of the President, a 12 Vice President or any two (2) directors, who may fix any place, either within or outside the State of Utah, as the place for holding the meeting. Section 3.5 Notice and Waiver of Notice of Special Director Meetings. (a) Notice. Unless the Articles of Incorporation provide for a longer or shorter period, special meetings of the Board of Directors must be preceded by at least two (2) days notice of the date, time, and place of the meeting. (16-10a-822(2)) Notice may be communicated in person, by telephone, by any form of electronic communication, or by mail or private carrier. (16-10a-103(2)) At the written request of any director, notice of any special meeting of the Board of Directors shall be given to such director by facsimile or telex, as the case may be, at the number designated in writing by such director from time to time. (b) Effective Date. Notice of any meeting of the Board of Directors shall be deemed to be effective at the earliest of the following: (1) when received; (2) five (5) days after it is mailed; or (3) the date shown on the return receipt if sent by registered or certified mail, return receipt requested, and the receipt is signed by or on behalf of the director. (16-10a-103(5)). (c) Waiver of Notice. A director may waive notice of any meeting. Except as provided in this Section 3.5, the waiver must be in writing and signed by the director entitled to the notice. The waiver shall be delivered to the Corporation for filing with the corporate records, but delivery and filing are not conditions to its effectiveness. (16-10a-823(1)) (d) Effect of Attendance. The attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except when a director attends a meeting for the express purpose of objecting to the transaction of any business and at the beginning of the meeting, or promptly upon arrival, the director objects to holding the meeting or transacting business at the meeting because of lack of notice or defective notice, and does not thereafter vote for or assent to action taken at the meeting. (16-10a-823(2)) Section 3.6 Quorum of Directors. A majority of the number of directors prescribed by resolution (or if no number is prescribed, the number in office immediately before the meeting begins) shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, unless the Articles of Incorporation require a greater number. (16-10a-824(1)(b)) Section 3.7 Manner of Acting. (a) Action by Majority. If a quorum is present when a vote is taken, the affirmative vote of a majority of directors present is the act of the Board of Directors, unless 13 the Corporation's Articles of Incorporation or the Utah Revised Business Corporation Act requires the vote of a greater number of directors. (16-10a-824(3)) (b) Telephonic Meetings. Unless the Articles of Incorporation provide otherwise, any or all directors may participate in a regular or special meeting by, or conduct the meeting through the use of, any means of communication by which all directors participating may simultaneously hear each other during the meeting. A director participating in a meeting by this means is deemed to be present in person at the meeting. (16-10a-820(2)) (c) Effect of Presence at Meeting. A director who is present at a meeting of the Board of Directors when corporate action is taken is considered to have assented to the action taken, unless: (1) The director objects at the beginning of the meeting, or promptly upon arrival, to holding it or transacting business at the meeting; (2) the director contemporaneously requests his dissent or abstention as to any specific action to be entered into the minutes of the meeting; or (3) the director causes written notice of a dissent or abstention as to any specific action to be received by the presiding officer of the meeting before its adjournment or by the Corporation promptly after adjournment of the meeting. (16-10a-824(4)) (d) Right of Dissent or Abstention. The right of dissent or abstention as to a specific action is not available to a director who votes in favor of the action taken. (16-10a-824(5)) Section 3.8 Director Action By Written Consent. Unless the Articles of Incorporation or the Utah Revised Business Corporation Act provide otherwise, any action required or permitted to be taken by the Board of Directors at a meeting may be taken without a meeting if all the directors consent to the action in writing. Action is taken by written consent at the time the last director signs a writing describing the action taken, unless, prior to that time, any director has revoked a consent by a writing signed by the director and received by the Secretary. Action taken by written consent is effective when the last director signs the consent, unless the Board of Directors establishes a different effective date. Action taken by written consent has the same effect as action taken at a meeting of directors and may be described as such in any document. (16-10a-821) Section 3.9 Resignation of Directors. A director may resign at any time by giving a written notice of resignation to the Corporation. A resignation of a director is 14 effective when the notice is received by the Corporation unless the notice specifies a later effective date. A director who resigns may deliver a statement of his resignation pursuant to Section 16-10a-1608 of the Utah Revised Business Corporation Act to the Division for filing. (16-10a-807) Section 3.10 Removal of Directors. The shareholders may remove one or more directors at a meeting called for that purpose if notice has been given that a purpose of the meeting is such removal. The removal may be with or without cause, unless the Articles of Incorporation provide that directors may only be removed with cause. If a director is elected by a voting group of shareholders, only the shareholders of that voting group may participate in the vote to remove the director. If cumulative voting is in effect, a director may not be removed if the number of votes sufficient to elect the director under cumulative voting is voted against the director's removal. If cumulative voting is not in effect, a director may be removed only if the number of votes cast to remove the director exceeds the number of votes cast against removal of the director. (16-10a-808) Section 3.11 Board of Director Vacancies. (a) Vacancies. Unless the Articles of Incorporation provide otherwise, if a vacancy occurs on the Board of Directors, including a vacancy resulting from an increase in the number of directors: (1) The shareholders may fill the vacancy; (2) the Board of Directors may fill the vacancy; or (3) if the directors remaining in office constitute fewer than a quorum of the board, they may fill the vacancy by the affirmative vote of a majority of all the directors remaining in office. (16-10a-810(1)) (b) Rights of Voting Groups. Unless the Articles of Incorporation provide otherwise, if the vacant office was held by a director elected by a voting group of shareholders: (1) If one or more directors were elected by the same voting group, only they are entitled to vote to fill the vacancy if it is filled by the directors; and (2) only the holders of shares of that voting group are entitled to vote to fill the vacancy if it is filled by the shareholders. (16-10a-810(2)) (c) Election of Director Prior to Vacancy. A vacancy that will occur at a specific later date, because of a resignation effective at a later date, may be filled before 15 the vacancy occurs, but the new director may not take office until the vacancy occurs. (16-10a-810(3)) (d) Effect of Expiration of Term. If a director's term expires, the director shall continue to serve until the director's successor is elected and qualified or until there is a decrease in the number of directors. The term of a director elected to fill a vacancy expires at the next shareholders' meeting at which directors are elected. (16-10a-805(5)) Section 3.12 Director Compensation. Unless otherwise provided in the Articles of Incorporation, by resolution of the Board of Directors, each director may be paid his expenses, if any, of attendance at each meeting of the Board of Directors, and may be paid a stated salary as a director or a fixed sum for attendance at each meeting of the Board of Directors or both. No such payment shall preclude any director from serving the Corporation in any capacity and receiving compensation therefor. Section 3.13 Director Committees. Committees of the Board of Directors may be established in accordance with Article 4 of these Bylaws. Section 3.14 Director's Rights to Inspect Corporate Records. (a) Absolute Inspection Rights. If a director gives the Corporation written notice of the director's demand at least five (5) business days before the date on which the director wishes to inspect and copy, the director (or the director's agent or attorney) has the right to inspect and copy, during regular business hours, any of the following records, all of which the Corporation is required to keep at its principal office: (1) The Corporation's Articles of Incorporation currently in effect; (2) the Corporation's Bylaws currently in effect; (3) the minutes of all shareholders' meetings, and records of all action taken by shareholders without a meeting, for the past three years; (4) all written communications within the past three years to shareholders as a group or to the holders of any class or series of shares as a group; (5) a list of the names and business addresses of the Corporation's current officers and directors; 16 (6) the Corporation's most recent annual report delivered to the Division; and (7) all financial statements prepared for periods ending during the last three years that a shareholder could request. (16-10a-1601(5) and 16-10a-1602(1)) (b) Conditional Inspection Rights. In addition, if a director gives the Corporation a written demand made in good faith and for a proper purpose at least five business days before the date on which the director wishes to inspect and copy, the director describes with reasonable particularity the director's purpose and the records the director desires to inspect, and the records are directly connected with the director's purpose, the director (or the director's agent or attorney) is entitled to inspect and copy, during regular business hours at a reasonable location specified by the Corporation, any of the following records of the Corporation: (1) Excerpts from: (i) Minutes of any meeting of the Board of Directors, records of any action of a committee of the Board of Directors while acting on behalf of the Corporation in place of the Board of Directors; (ii) minutes of any meeting of the shareholders; (iii) records of action taken by the shareholders without a meeting; and (iv) waivers of notices of any meeting of the shareholders, of any meeting of the Board of Directors, or of any meeting of a committee of the Board of Directors; (2) accounting records of the Corporation; and (3) the record of the Corporation's shareholders referred to in Section 16-10a-1601(3) of the Utah Revised Business Corporation Act. (16-10a-1602(2)) (c) Copy Costs. The right to copy records includes, if reasonable, the right to receive copies made by photographic, xerographic, or other means. The Corporation may impose a reasonable charge, payable in advance, covering the costs of labor and material, for copies of any documents provided to the director. The charge may not exceed the estimated cost of production or reproduction of the records. (16-10a-1603) 17 ARTICLE 4. EXECUTIVE COMMITTEE AND OTHER COMMITTEES Section 4.1 Creation of Committees. Unless the Articles of Incorporation provide otherwise, the Board of Directors may create an Executive Committee and such other committees as it may deem appropriate and appoint members of the Board of Directors to serve on such committees. Each committee must have two (2) or more members, one of whom shall be the Chairman of the Board, if there be such an officer, and one of whom shall be the President of the Corporation. (16-10a-825(1)) Section 4.2 Approval of Committees and Members. The creation of a committee and appointment of members to it must be approved by the greater of: (1) A majority of all the directors in office when the action is taken; or (2) the number of directors required by the Articles of Incorporation to take such action, or, if not specified in the Articles of Incorporation, the number required by Section 3.7 of these Bylaws to take action. (16-10a-825(2)) Section 4.3 Required Procedures. Sections 3.4 through 3.10 of these Bylaws, which govern procedures applicable to the Board of Directors, also apply to committees and their members. (16-10a-825(3)) Section 4.4 Authority. Unless limited by the Articles of Incorporation or the Utah Revised Business Corporation Act, each committee may exercise those aspects of the authority of the Board of Directors which the Board of Directors confers upon such committee in the resolution creating the committee. (16-10a-825(4)) Section 4.5 Authority of Executive Committee. The Executive Committee shall have, and may exercise all powers of the Board of Directors with respect to the management of the business and affairs of the Corporation during the intervals between the meetings of the Board of Directors. Provided, however, the Executive Committee shall not have the power to fill vacancies on the Board of Directors or to amend these Bylaws. Section 4.6 Compensation. Unless otherwise provided in the Articles of Incorporation, the Board of Directors may provide for the payment of a fixed sum and/or expenses of attendance to any member of a committee for attendance at each meeting of such committee. Provided, however, no such payments shall be made to committee members who are salaried employees of the Corporation. 18 ARTICLE 5. OFFICERS Section 5.1 Officers. The officers of the Corporation shall be a President, one or more Vice Presidents, a Secretary, and a Treasurer, each of whom shall be appointed by the Board of Directors. The Board of Directors may appoint, but shall not be required to appoint, a Chairman of the Board, one or more Vice Chairman and a Chief Executive Officer. Such other officers and assistant officers as may be deemed necessary, including any Vice Presidents, may be appointed by the Board of Directors. If specifically authorized by the Board of Directors, an officer may appoint one or more officers or assistant officers. The same individual may simultaneously hold more than one office in the Corporation. (16-10a-830) Section 5.2 Appointment and Term of Office. The officers of the Corporation shall be appointed by the Board of Directors for such term as is determined by the Board of Directors. If no term is specified, each officer shall hold office until the officer resigns, dies, is removed in the manner provided in Section 5.4 of these Bylaws, or until the first meeting of the directors held after the next annual meeting of the shareholders. If the appointment of officers shall not be made at such meeting, such appointment shall be made as soon thereafter as is convenient. If a vacancy shall occur in any office, or if a new office shall be created, the Board of Directors may appoint an officer or officers to fill such a vacancy or new office, and such appointment shall be for the term determined by the Board of Directors. Each officer shall hold office until his successor shall have been duly appointed. (16-10a-830) The designation of a specified term does not grant to the officer any contract rights, and the Board of Directors may remove the officer at any time prior to the end of such term. (16-10a-833) Section 5.3 Resignation of Officers. Any officer may resign at any time by giving written notice of resignation to the Corporation. (16-10a-832(1)) Section 5.4 Removal of Officers. Any officer or agent may be removed by the Board of Directors at any time, with or without cause. Such removal shall be without prejudice to the contract rights, if any, of the person so removed. Appointment of an officer or agent shall not of itself create contract rights. (16-10a-832) Section 5.5 The Chairman of the Board. The Chairman of the Board, if there be such an officer, shall have the following powers and duties: (a) To be the senior officer of the Corporation and, in addition to the duties specified in this Section 5.5, to perform such duties as may be assigned to him by the Board of Directors; 19 (b) to preside at all meetings of the shareholders of the Corporation; (c) to preside at all meetings of the Board of Directors; (d) to be a member of the Executive Committee, if any. (16-10a-831) Section 5.6 The Vice Chairman. The Board of Directors may from time to time, designate and appoint one or more Vice Chairmen. Each Vice Chairman shall have such powers and perform such duties as may from time to time be assigned to him by the Board of Directors or by the Chairman of the Board. At the request or in the absence or disability of the Chairman of the Board, the Vice Chairman, if there be such an officer, may perform all the duties of the Chairman of the Board and when so acting, shall have all the powers of, and be subject to all the restrictions upon, the Chairman of the Board. Section 5.7 Chief Executive Officer. The Chief Executive Officer, if there be such an officer, shall be the principal executive officer of the Corporation and, subject to the control of the Board of Directors, in general, shall supervise and control all of the business and affairs of the Corporation. If neither a Chairman of the Board nor a Vice Chairman has been appointed, or in their absence, the Chief Executive Officer, when present, shall preside at all meetings of the shareholders and of the Board of Directors. The Chief Executive Officer may sign, with the Secretary or any other proper officer of the Corporation authorized by the Board of Directors, certificates for shares of the Corporation, the issuance of which shall have been authorized by a resolution of the Board of Directors, and deeds, mortgages, bonds, contracts, or other instruments, except in cases where the signing and execution thereof shall be expressly delegated by the Board of Directors or by these Bylaws to some other officer or agent of the Corporation, or shall be required by law to be otherwise signed or executed; and in general shall perform all duties incident to the office of Chief Executive Officer and such other duties as may be prescribed by the Board of Directors from time to time. (16-10a-831) Section 5.8 President. The President shall be an executive officer of the Corporation, and, if there be no Chief Executive Officer, shall be the principal executive officer of the Corporation and, subject to the control of the Board of Directors, in general, shall supervise and control all of the business and affairs of the Corporation. In the absence of the Chief Executive Officer or in the event of his death, inability, or refusal to act, the President shall perform the duties of the Chief Executive Officer, and when so acting, shall have all the powers of and be subject to all the restrictions upon the Chief Executive Officer. In the absence of the Chairman of the Board, the Vice Chairman and the Chief Executive Officer, the President, when present, shall preside at all meetings of the shareholders and of the Board of Directors. The President may sign, with the Secretary or any other proper officer of the Corporation authorized by the Board of Directors, certificates for shares of the Corporation, the issuance of which shall have been authorized by a resolution of the Board of Directors, and deeds, mortgages, bonds, contracts, or other instruments, except in cases 20 where the signing and execution thereof shall be expressly delegated by the Board of Directors or by these Bylaws to some other officer or agent of the Corporation, or shall be required by law to be otherwise signed or executed; and in general shall perform all duties incident to the office of President and such other duties as may be prescribed by the Chief Executive Officer or the Board of Directors from time to time. (16-10a-831) Section 5.9 Vice Presidents. In the absence of the President or in the event of his death, inability, or refusal to act, the Vice President (or in the event there be more than one Vice President, the Vice Presidents in the order designated at the time of their election, or in the absence of any designation, then in the order of their appointment) shall perform the duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President. If there is no Vice President, then the Treasurer shall perform such duties of the President. Any Vice President may sign, with the Secretary or an Assistant Secretary, certificates for shares of the Corporation the issuance of which have been authorized by resolution of the Board of Directors; and shall perform such other duties as from time to time may be assigned to him or her by the Chief Executive Officer, the President or by the Board of Directors. (16-10a-831) Section 5.10 Secretary. The Secretary shall have the following powers and duties: (a) to keep the minutes of the proceedings of the shareholders and of the Board of Directors and the other records and information of the Corporation required to be kept, in one or more books provided for that purpose; (b) to see that all notices are duly given in accordance with the provisions of these Bylaws or as required by law; (c) to be custodian of the corporate records and of any seal of the Corporation; (d) when requested or required, to authenticate any records of the Corporation; (e) to keep a register of the post office address of each shareholder which shall be furnished to the Secretary by such shareholder; (f) to sign with the Chief Executive Officer, the President, or a Vice President, certificates for shares of the Corporation, the issuance of which shall have been authorized by resolution of the Board of Directors; (g) to have general charge of the stock transfer books of the Corporation; and 21 (h) in general, to perform all duties incident to the office of Secretary and such other duties as from time to time may be assigned to him or her by the Chief Executive Officer, the President or by the Board of Directors. (16-10a-830 and 16-10a-831) Section 5.11 Treasurer. The Treasurer shall have the following powers and duties: (a) to have charge and custody of and be responsible for all funds and securities of the Corporation; (b) to receive and give receipts for moneys due and payable to the Corporation from any source whatsoever, and deposit all such moneys in the name of the Corporation in such banks, trust companies, or other depositaries as shall be selected by the Board of Directors; (c) in general, to perform all of the duties incident to the office of Treasurer and such other duties as from time to time may be assigned to him or her by the Chief Executive Officer, the President or by the Board of Directors; and (d) if required by the Board of Directors, to give a bond for the faithful discharge of his or her duties in such sum and with such surety or sureties as the Board of Directors shall determine. (16-10a-831) Section 5.12 Assistant Secretaries and Assistant Treasurers. The Assistant Secretaries, when authorized by the Board of Directors, may sign, with the President or a Vice President, certificates for shares of the Corporation, the issuance of which shall have been authorized by a resolution of the Board of Directors. The Assistant Treasurers, if required by the Board of Directors, shall give bonds for the faithful discharge of their duties in such sums and with such sureties as the Board of Directors shall determine. The Assistant Secretaries and Assistant Treasurers, in general, shall perform such duties as shall be assigned to them by the Secretary or the Treasurer, respectively, or by the Chief Executive Officer, the President or the Board of Directors. (16-10a-831) Section 5.13 General Manager. The Chief Executive Officer, the President or the Board of Directors (or the Executive Committee, if any) may appoint a General Manager who may, or may not, be one of the officers or Directors of the Corporation. The General Manager shall have the following powers and duties: (a) If so designated by the Board of Directors, the General Manager may be an executive officer of the Corporation. 22 (b) If so directed by the Chief Executive Officer, the President, or the Board of Directors (or the Executive Committee, if any), the General Manager may have management of the business of the Corporation and its dealings and, if so directed, may have general charge of the business affairs and property of the Corporation, general supervision over its employees and agents; provided, however, the General Manager shall be at all times subject to the control of the Chief Executive Officer, the President or the Board of Directors (or the Executive Committee, if any). (c) If so directed by the Chief Executive Officer, the President, or the Board of Directors (or the Executive Committee, if any), the General Manager may employ all employees of the Corporation, or delegate such employment to subordinate officers or division chiefs, and shall have authority to discharge any person so employed. (d) The General Manager shall make a report to the Chief Executive Officer, the President and the Board of Directors quarterly, or more often if required to do so, setting forth the result of the operations under his charge, together with suggestions looking to the improvement and betterment of the condition of the Corporation, and to perform such other duties as the Board of Directors shall require. Section 5.14 Salaries. The salaries of the officers shall be fixed from time to time by the Board of Directors; provided, however, that the Board of Directors may delegate to any person or group of persons the power to fix the salaries or other compensation of any subordinate officers or agents appointed in accordance with the provisions of Section 5.2 hereof. No officer shall be prevented from receiving any such salary or compensation by reason of the fact that he is also a Director of the Corporation. Section 5.15 Surety Bonds. In the event the Board of Directors shall so require, any officer or agent of the Corporation shall execute to the Corporation a bond in such sums and with such surety or sureties as the Board of Directors may direct, conditioned upon the faithful performance of his duties to the Corporation, including responsibility for negligence and for the accounting for all property, monies, or securities of the Corporation which may come into his hands. ARTICLE 6. LIMITATION OF LIABILITY AND INDEMNIFICATION Section 6.1 Limitation of Liability of Directors. Directors shall not be liable to the Corporation or its shareholders for monetary damages for any action taken or any failure to take any action, as a director, except liability for: (a) the amount of a financial benefit received by a director to which he is not entitled; 23 (b) an intentional infliction of harm on the Corporation or its shareholders; (c) a violation of Section 16-10a-842 of the Utah Revised Business Corporation Act; (d) an intentional violation of criminal law. (16-10a-841(1)) Section 6.2 Indemnification of Directors. Unless otherwise provided in the Articles of Incorporation, the Corporation shall indemnify any individual made a party to a proceeding because the individual is or was a director of the Corporation against liability incurred in the proceeding. Provided, however, the Corporation shall only indemnify an individual if it has authorized the indemnification in accordance with Section 16-10a-906(4) of the Utah Revised Business Corporation Act and a determination has been made in accordance with the procedures set forth in Section 16-10a-906(2) of the Utah Revised Business Corporation Act that indemnification is in accordance with the following requirements: (a) Standard of Conduct. The Corporation shall determine that: (1) The individual's conduct was in good faith; (2) the individual reasonably believed that his or her conduct was in, or not opposed to, the Corporation's best interests; and (3) in the case of any criminal proceeding, the individual had no reasonable cause to believe that his or her conduct was unlawful. (16-10a-902(1)) (b) No Indemnification in Certain Circumstances. The Corporation shall not indemnify an individual under this Section 6.2: (1) In connection with a proceeding by or in the right of the Corporation in which the individual was adjudged liable to the Corporation; or (2) in connection with any other proceeding charging that the individual derived an improper personal benefit, whether or not involving action in the individual's official capacity, in which proceeding he or she was adjudged liable on the basis that he or she derived an improper personal benefit. (16-10a-902(4)) 24 (c) Indemnification in Derivative Actions Limited. Indemnification permitted under this Section 6.2 in connection with a proceeding by or in the right of the Corporation is limited to reasonable expenses incurred in connection with the proceeding. (16-10a-902(5)) Section 6.3 Advance Payment of Expenses. Unless otherwise provided in the Articles of Incorporation, the Corporation may pay for or reimburse in advance of final disposition of any proceeding the reasonable expenses incurred by an individual who is a party to a proceeding because he or she is or was a director of the Corporation if (i) in accordance with the procedures and standards set forth in Section 16-10a-906(4) of the Utah Revised Business Corporation Act, an authorization of payment is made, and (ii) in accordance with the procedures of Section 16-10a-906(2) of the Utah Revised Business Corporation Act, a determination is made that the following has occurred: (a) Written Affirmation. The individual has furnished to the Corporation a written affirmation of the individual's good faith belief that the individual has met the standard of conduct described in Section 6.2 of these Bylaws. (b) Written Undertaking. The individual has furnished to the Corporation a written undertaking, executed personally or on the individual's behalf, to repay the advance if it is ultimately determined that the individual did not meet the standard of conduct (which undertaking must be an unlimited general obligation of the individual but need not be secured and may be accepted without reference to financial ability to make repayment). (c) Factual Determination. A determination has been made that the facts then known to those making the determination would not preclude indemnification under Section 6.2 of these Bylaws or Part 9 of the Utah Revised Business Corporation Act. (16-10a-904) Section 6.4 Indemnification of Officers, Employees, Fiduciaries, and Agents. Unless otherwise provided in the Articles of Incorporation, the Corporation shall indemnify and advance expenses to any individual made a party to a proceeding because the individual is or was an officer, employee, fiduciary, or agent of the Corporation to the same extent as to an individual made a party to a proceeding because the individual is or was a director of the Corporation, or to a greater extent, if not inconsistent with public policy, if provided for by general or specific action of the Board of Directors. (16-10a-907) Section 6.5 Insurance. The Corporation may purchase and maintain liability insurance on behalf of a person who is or was a director, officer, employee, fiduciary, or agent of the Corporation, or who, while serving as a director, officer, employee, fiduciary, or agent of the Corporation, is or was serving at the request of the Corporation as a director, officer, partner, trustee, employee, fiduciary, or agent of another foreign or 25 domestic corporation or other person, or of an employee benefit plan, against liability asserted against or incurred by him or her in that capacity or arising from his or her status as a director, officer, employee, fiduciary, or agent, whether or not the Corporation would have power to indemnify him or her against the same liability under Sections 16-10a-902, 16-10a-903, or 16-10a-907 of the Utah Revised Business Corporation Act. Insurance may be procured from any insurance company designated by the Board of Directors, whether the insurance company is formed under the laws of the State of Utah or any other jurisdiction of the United States or elsewhere, including any insurance company in which the Corporation has an equity or any other interest through stock ownership or otherwise. (16-10a-908) ARTICLE 7. EXECUTION OF INSTRUMENTS, BORROWING OF MONEY AND DEPOSIT OF CORPORATE FUNDS Section 7.1 Execution of Instruments. Subject to any limitation contained in the Utah Revised Business Corporation Act, the Articles of Incorporation or these Bylaws, and subject to any limitations that may be imposed by the Board of Directors, the Chief Executive Officer, President, any Vice President or the Secretary, in the name and on behalf of the Corporation, may execute and deliver any contract or other instrument. Subject to any limitation contained in the Utah Revised Business Corporation Act, the Articles of Incorporation or these Bylaws, the Board of Directors may authorize in writing any other officer or agent to execute and deliver any contract or other instrument in the name and on behalf of the Corporation; any such authorization may be general or confined to specific instances. Section 7.2 Loans. No loan or advance shall be contracted on behalf of the Corporation, no negotiable paper or other evidence of its obligation under any loan or advance shall be issued in its name, and no property of the Corporation shall be mortgaged, pledged, hypothecated, transferred, or conveyed as security for the payment of any loan, advance, indebtedness, or liability of the Corporation, unless and except as authorized by the Board of Directors. Any such authorization may be general or confined to specific instances. Section 7.3 Deposits. All monies of the Corporation not otherwise employed shall be deposited from time to time to its credit in such banks or trust companies or with such bankers or other depositories as the Board of Directors may select, or as from time to time may be selected by any officer or agent authorized to do so by the Board of Directors. Section 7.4 Checks, Drafts, etc. All notes, drafts, acceptances, checks, endorsements, and, subject to the provisions of these Bylaws, evidences of indebtedness of the Corporation shall be signed by such officer or officers or such agent or agents of the Corporation and in such manner as the Board of Directors from time to time may determine. Endorsements for deposit to the credit of the Corporation in any of its duly authorized 26 depositories shall be in such manner as the Board of Directors from time to time may determine. Section 7.5 Bonds and Debentures. Every bond or debenture issued by the Corporation shall be evidenced by an appropriate instrument which shall be signed by the Chief Executive Officer, President or a Vice President and by the Secretary. Where such bond or debenture is authenticated with the manual signature of an authorized officer of the Corporation or other trustee designated by the indenture of trust or other agreement under which such security is issued, the signature of any of the Corporation's officers named thereon may be a facsimile. In case any officer who signed, or whose facsimile signature has been used on any such bond or debenture, shall cease to be an officer of the Corporation for any reason before the same has been delivered by the Corporation, such bond or debenture may nevertheless be adopted by the Corporation and issued and delivered as though the person who signed it or whose facsimile signature has been used thereon had not ceased to be such officer. Section 7.6 Sale, Transfer, etc. of Securities. Sales, transfers, endorsements, and assignments of shares of stocks, bonds, and other securities owned by or standing in the name of the Corporation and the execution and delivery on behalf of the Corporation of any and all instruments in writing incident to any such sale, transfer, endorsement, or assignment, shall be effected by the Chief Executive Officer, President, any Vice President, or by any officer or agent, thereunto authorized by the Board of Directors. Section 7.7 Proxies. Proxies to vote with respect to shares of stock of other corporations used by or standing in the name of the Corporation shall be executed and delivered on behalf of the Corporation by the Chief Executive Officer, President, any Vice President, or by any officer or agent thereunto authorized by the Board of Directors. ARTICLE 8. CERTIFICATES FOR SHARES AND THEIR TRANSFER Section 8.1 Certificates for Shares. (a) Content. Certificates representing shares of the Corporation, at a minimum, shall state on their face the name of the Corporation and that the Corporation is organized under the laws of the State of Utah; the name of the person to whom issued; and the number and class of shares and the designation of the series, if any, the certificate represents; and be in such form as is determined by the Board of Directors. Such certificates shall be signed by the President or a Vice President and by the Secretary or an Assistant Secretary and may be sealed with the corporate seal or a facsimile thereof. The signatures of the officers may be facsimiles if the certificate is countersigned by a transfer agent, or registered by a registrar, other than the Corporation itself or an employee of the Corporation. In case any officer who has signed or whose facsimile signature has been placed upon a 27 certificate ceases to be an officer before the certificate is issued, the certificate may be issued by the corporation with the same effect as if the person were an officer at the date of its issue. Each certificate for shares shall be consecutively numbered or otherwise identified. The certificates may contain any other information the Corporation considers necessary or appropriate. (16-10a-625) (b) Legend as to Class or Series. If the Corporation is authorized to issue different classes of shares or different series within a class, the designations, preferences, limitations, and relative rights applicable to each class, the variations in preferences, limitations, and relative rights determined for each series, and the authority of the Board of Directors to determine variations for any existing or future class or series must be summarized on the front or back of each certificate. Alternatively, each certificate may state conspicuously on its front or back that the Corporation will furnish the shareholder this information on request in writing and without charge. (16-10a-625) (c) Shareholder List. The name and address of the person to whom the shares represented are issued, with the number of shares and date of issue, shall be entered on the stock transfer books of the Corporation. (d) Transferring Shares. All certificates surrendered to the Corporation for transfer shall be canceled and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and canceled, except that in case of a lost, destroyed, or mutilated certificate a new one may be issued therefor upon such terms and indemnity to the Corporation as the Board of Directors may prescribe. Section 8.2 Shares Without Certificates. (a) Issuing Shares Without Certificates. Unless the Articles of Incorporation provide otherwise, the Board of Directors may authorize the issuance of some or all of the shares of any or all classes or series without certificates. The authorization does not affect shares already represented by certificates until they are surrendered to the Corporation. (b) Information Statement Required. Within a reasonable time after the issuance or transfer of shares without certificates, the Corporation shall send the shareholder a written statement containing, at a minimum, the name of the Corporation and that it is organized under the laws of the State of Utah; the name of the person to whom issued; and the number and class of shares and the designation of the series, if any, of the issued shares. If the Corporation is authorized to issue different classes of shares or different series within a class, the written statement shall describe the designations, preferences, limitations, and relative rights applicable to each class, the variations in preferences, limitations, and relative rights determined for each series, and the authority of the Board of Directors to determine variations for any existing or future class or series. (16-10a-626) 28 Section 8.3 Registration of Transfer of Shares. Registration of the transfer of shares of the Corporation shall be made only on the stock transfer books of the Corporation. In order to register a transfer, the record owner shall surrender the shares to the Corporation for cancellation, properly endorsed by the appropriate person or persons with reasonable assurances that the endorsements are genuine and effective. Unless the Corporation has established a procedure by which a beneficial owner of shares held by a nominee is to be recognized by the Corporation as the owner, the person in whose name shares stand on the books of the Corporation shall be deemed by the Corporation to be the owner thereof for all purposes. Section 8.4 Transfer Agents and Registrars. The Board of Directors may appoint one or more transfer agents and one or more registrars with respect to the certificates representing shares of stock of the Corporation and may require all such certificates to bear the signature of either or both. The Board of Directors may from time to time define the respective duties of such transfer agents and registrars. Section 8.5 Restrictions on Transfer of Shares Permitted. The Board of Directors or the shareholders may impose restrictions on the transfer or registration of transfer of shares (including any security convertible into, or carrying a right to subscribe for or acquire shares). A restriction does not affect shares issued before the restriction was adopted unless the holders of the shares are parties to the restriction agreement or voted in favor of the restriction or otherwise consented to the restriction. (a) A restriction on the transfer or registration of transfer of shares may be authorized: (1) To maintain the Corporation's status when it is dependent on the number or identity of its shareholders; (2) to preserve entitlements, benefits, or exemptions under federal, state, or local laws; and (3) for any other reasonable purpose. (b) A restriction on the transfer or registration of transfer of shares may: (1) Obligate the shareholder first to offer the Corporation or other persons, separately, consecutively, or simultaneously, an opportunity to acquire the restricted shares; 29 (2) obligate the Corporation or other persons, separately, consecutively, or simultaneously, to acquire the restricted shares; (3) require, as a condition to a transfer or registration, that any one or more persons, including the Corporation or any of its shareholders, approve the transfer or registration, if the requirement is not manifestly unreasonable; or (4) prohibit the transfer or the registration of a transfer of the restricted shares to designated persons or classes of persons, if the prohibition is not manifestly unreasonable. A restriction on the transfer or registration of transfer of shares is valid and enforceable against the holder or a transferee of the holder if the restriction is authorized by this Section 8.5 and its existence is noted conspicuously on the front or back of the certificate, or if the restriction is contained in the information statement required by Section 8.2 of these Bylaws with regard to shares issued without certificates. Unless so noted, a restriction is not enforceable against a person without knowledge of the restriction. (16-10a-627) Section 8.6 Acquisition of Shares. The Corporation may acquire its own shares, and, unless otherwise provided in the Articles of Incorporation, the shares so acquired constitute authorized but unissued shares. If the Articles of Incorporation prohibit the reissuance of acquired shares, the number of authorized shares shall be reduced by the number of shares acquired, effective upon amendment of the Articles of Incorporation, which amendment shall be adopted by the shareholders or the Board of Directors without shareholder action. Appropriate Articles of Amendment must be delivered to the Division and must set forth: (a) The name of the Corporation; (b) the reduction in the number of authorized shares, itemized by class and series; (c) the total number of authorized shares, itemized by class and series, remaining after reduction of the shares; and (d) a statement that the amendment was adopted by the Board of Directors without shareholder action and that shareholder action was not required if such be the case. (16-10a-631) 30 Section 8.7 Lost or Destroyed Certificates. If the holder of a certificate for shares of the Corporation claims that a certificate has been lost, destroyed, or wrongfully taken, the Corporation shall issue a new certificate to such holder, if such holder: (a) so requests before the Corporation has notice that the certificate has been acquired by a bona fide purchaser; (b) files with the Corporation a sufficient indemnity bond; and (c) satisfies any other reasonable requirements imposed by the Corporation. (70A-8-405). ARTICLE 9. DISTRIBUTIONS Section 9.1 Distributions. The Board of Directors may authorize, and the Corporation may make, distributions (including dividends on its outstanding shares) in the manner and upon the terms and conditions provided by law and in the Articles of Incorporation. (16-10a-640) ARTICLE 10. CORPORATE SEAL Section 10.1 Corporate Seal. The Board of Directors may provide a corporate seal which may be circular in form and have inscribed thereon any designation including the name of the Corporation, Utah as the state of incorporation, and the words "Corporate Seal." ARTICLE 11. FISCAL YEAR Section 11.1 Fiscal Year. The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors. ARTICLE 12. AMENDMENTS Section 12.1 Amendments. The Corporation's Board of Directors may amend these Bylaws, except to the extent that the Articles of Incorporation, these Bylaws, or the Utah Revised Business Corporation Act reserve this power exclusively to the shareholders in whole or in part. However, the Board of Directors may not adopt, amend, or repeal a Bylaw that fixes a shareholder quorum or voting requirement that is greater than required by the Utah Revised Business Corporation Act. If authorized by the Articles of Incorporation, the shareholders may adopt, amend, or repeal a Bylaw that fixes a greater quorum or voting requirement for shareholders, or voting groups of shareholders, than is required by the Utah Revised 31 Business Corporation Act. Any such action shall comply with the provisions of the Utah Revised Business Corporation Act. The Corporation's shareholders may amend or repeal the Corporation's Bylaws even though the Bylaws may also be amended or repealed by the Corporation's Board of Directors. (16-10a-1020 to 16-10a-1022) ADOPTED as of the ____ day of September, 1996. 32 EX-3.24 14 BYLAWS OF HUNTSMAN CONTAINER CORPORATION INTERNATIONAL BYLAWS OF HUNTSMAN CONTAINER CORPORATION INTERNATIONAL A Utah Corporation 1989 TABLE OF CONTENTS Page ARTICLE I OFFICES Section 1.01. Offices.................................................. 1 Section 1.02. Address.................................................. 1 ARTICLE II SHAREHOLDERS Section 2.01. Annual Meetings.......................................... 1 Section 2.02. Special Meetings......................................... 1 Section 2.03. Place of Meetings........................................ 2 Section 2.04. Notice of Meetings....................................... 2 Section 2.05. Closing of Transfer Books................................ 2 Section 2.06. Voting Lists............................................. 3 Section 2.07. Quorum................................................... 3 Section 2.08. Proxies.................................................. 3 Section 2.09. Voting of Shares by Corporation.......................... 4 Section 2.10. Informal Action by Shareholders.......................... 4 ARTICLE III BOARD OF DIRECTORS Section 3.01. General Powers........................................... 4 Section 3.02. Number, Tenure, and Qualifications....................... 4 Section 3.03. Regular Meetings......................................... 4 Section 3.04. Special Meetings......................................... 4 Section 3.05. Notice................................................... 5 Section 3.06. Quorum................................................... 5 Section 3.07. Manner of Acting......................................... 5 Section 3.08. Vacancies and Newly Created Directorships........................................ 5 Section 3.09. Compensation............................................. 5 Section 3.10. Presumption of Assent.................................... 6 Section 3.11. Resignations............................................. 6 Section 3.12. Removal.................................................. 6 Section 3.13. Telephonic Meetings...................................... 6 Section 3.14. Informal Action by Directors............................. 6 i Page ARTICLE IV OFFICERS Section 4.01. Number................................................... 7 Section 4.02. Election, Term of Office, and Qualifications....................................... 7 Section 4.03. Subordinate Officers, Etc................................ 7 Section 4.04. Resignations............................................. 7 Section 4.05. Removal.................................................. 7 Section 4.06. Vacancies and Newly Created Offices.............................................. 8 Section 4.07. The Chairman of the Board................................ 8 Section 4.08. The President............................................ 8 Section 4.09. The Vice-Presidents...................................... 9 Section 4.10. The Secretary............................................ 9 Section 4.11. The Treasurer............................................ 10 Section 4.12. General Manager.......................................... 11 Section 4.13. Salaries................................................. 12 Section 4.14. Surety Bonds............................................. 12 ARTICLE V EXECUTION OF INSTRUMENTS, BORROWING OF MONEY, AND DEPOSIT OF CORPORATE FUNDS Section 5.01. Execution of Instruments................................. 12 Section 5.02. Loans.................................................... 12 Section 5.03. Deposits................................................. 13 Section 5.04. Checks, Drafts, Etc...................................... 13 Section 5.05. Bonds and Debentures..................................... 13 Section 5.06. Sale, Transfer, Etc., of Securities........................................... 14 Section 5.07. Proxies.................................................. 14 ARTICLE VI CAPITAL STOCK Section 6.01. Stock Certificates....................................... 14 Section 6.02. Transfer of Stock........................................ 15 Section 6.03. Regulations.............................................. 15 Section 6.04. Maintenance of Stock Book at Principal Place of Business.......................... 15 Section 6.05. Transfer Agents and Registrars........................... 15 Section 6.06. Lost or Destroyed Certificates........................... 16 Section 6.07. Closing of Transfer Books and Fixing of Record Date................................ 16 ii Page ARTICLE VII EXECUTIVE COMMITTEE AND OTHER COMMITTEES Section 7.01. How Constituted.......................................... 17 Section 7.02. Powers................................................... 17 Section 7.03. Proceedings.............................................. 17 Section 7.04. Quorum and Manner of Acting.............................. 17 Section 7.05. Resignations............................................. 18 Section 7.06. Removal.................................................. 18 Section 7.07. Vacancies................................................ 18 Section 7.08. Compensation............................................. 18 Section 7.09. Telephonic Meetings...................................... 18 Section 7.10. Informal Action by Committees............................ 18 ARTICLE VIII INDEMNIFICATION Section 8.01. Indemnification Third Party Actions.............................................. 19 Section 8.02. Indemnification for Corporate Actions.............................................. 19 Section 8.03. Determination............................................ 20 Section 8.04. General Indemnification.................................. 20 Section 8.05. Advances................................................. 20 Section 8.06. Scope of Indemnification................................. 21 Section 8.07. Insurance................................................ 21 ARTICLE IX FISCAL OR TAXABLE YEAR 21 ARTICLE X DIVIDENDS 21 ARTICLE XI SEAL 21 ARTICLE XII AMENDMENTS 22 iii BYLAWS OF HUNTSMAN CONTAINER CORPORATION INTERNATIONAL ARTICLE I OFFICES Section 1.01. Offices. The corporation may maintain such offices, within or without the State of Utah, as the Board of Directors may, from time to time designate. Section 1.02. Address. The address of the principal office of the corporation may be changed by the Board of Directors. ARTICLE II SHAREHOLDERS Section 2.01. Annual Meetings. The annual meeting of the shareholders shall be held on the third Saturday in April of each year, at the hour of 10:00 o'clock a.m., beginning with the year following the filing of the Articles of Incorporation, for the purpose of electing Directors and transacting such other business as may come before the meeting. If the day fixed for the annual meeting shall fall on a legal holiday, the meeting shall be held on the next following business day. If the election of Directors shall not be held on the day designated herein for the annual meeting of the shareholders, or at any adjournment thereof, the Board of Directors shall cause the election to be held at a special meeting of the shareholders to be convened as soon thereafter as may be convenient. Section 2.02. Special Meetings. Special meetings of the shareholders may be called at any time by the Board of Directors, or by the President, or in their absence or disability, by any Vice-President, and shall be immediately called by the President, or in his absence or disability, by a Vice-President, or by the Secretary, upon the written request of the holders of not less than one-tenth of all the shares entitled to vote at the meeting, such written request to state the purpose or purposes of the meeting and to be delivered to the President, such Vice-President, or the Secretary. In case of failure to call such meeting within twenty (20) days after such request, such shareholder or 1 shareholders may call the same. (16-10-26).1 Section 2.03. Place of Meetings. The Board of Directors may designate any place, either within or without the State of Utah, as the place of meeting for any annual meeting or for any special meeting called by the Board of Directors. A waiver of notice signed by all shareholders entitled to vote at a meeting may designate any place, either within or without the State of Utah, as the place for the holding of such meeting. If no designation is made, or if a special meeting be otherwise called, the place of meeting shall be at the principal office of the corporation. Section 2.04. Notice of Meetings. The Secretary or an Assistant Secretary shall cause notice of the time, place, and purpose or purposes of all meetings of the shareholders (whether annual or special), to be given at least ten (10) (but not more than fifty (50)) days prior to the meeting, to each shareholder of record. Section 2.05. Closing of Transfer Books. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or shareholders entitled to receive payment of any dividend or in order to make a determination of shareholders for any other proper purpose, the Board of Directors of the corporation may provide that the stock transfer books shall be closed for a period not to exceed, in any case, fifty (50) days. If the stock transfer books are closed for the purpose of determining shareholders entitled to notice of or to vote at such meeting, such books shall be closed for at least ten (10) days immediately preceding such meeting. In lieu of closing the stock transfer books, the Board of Directors may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than fifty (50) days and, in case of a meeting of shareholders, not less than ten (10) days prior to the date on which the particular action requiring such determination of shareholders is to be taken. If the stock transfer books are not closed and no record date is fixed for the determination of shareholders entitled to notice of or to vote at a meeting of the shareholders, or shareholders entitled to receive payment of a dividend, the date on which notice of the meeting is mailed or the date on which the resolution of the Board of Directors declaring - -------------------------- 1 Citations in parentheses are to the Utah Code Annotated. These citations are for reference only and shall not constitute a part of these Bylaws. 2 such dividend is adopted, as the case may be, shall be the record date for such determination of shareholders. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this section, such determination shall apply to any adjournment thereof. (16-10-28). Section 2.06. Voting Lists. The officer or agent having charge of the stock transfer books for shares of the corporation shall make a complete list of the shareholders entitled to vote at such meeting or any adjournment thereof, with the address of and number of shares held by each. The list shall be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any shareholder for any purpose germane to the meeting during the whole time of the meeting. The original stock transfer book shall be prima facie evidence as to the shareholders who are entitled to examine such list or transfer books or to vote at any meeting of shareholders. (16-10-29). Section 2.07. Quorum. A majority of the outstanding shares of the corporation entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of shareholders. If less than a majority of the outstanding shares are represented at a meeting, a majority of the shares so represented may adjourn the meeting from time to time without further notice. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. Section 2.08. Proxies. At each meeting of the shareholders, each shareholder entitled to vote shall be entitled to vote in person or by proxy, provided, however, that the right to vote by proxy shall exist only in case the instrument authorizing such proxy to act shall have been executed in writing by the shareholder himself or by his attorney thereunto duly authorized in writing. Such instrument authorizing a proxy to act shall be delivered at the beginning of such meeting to the Secretary of the corporation or to such other officer or person who may, in the absence of the Secretary, be acting as secretary of the meeting. In the event that any such instrument shall designate two or more persons to act as proxies, a majority of such persons present at the meeting, or, if only one be present, that one shall (unless the instrument shall otherwise provide) have all of the powers conferred by the instrument upon all persons so designated. Persons holding stock in a fiduciary capacity shall be entitled to vote the shares so held, either in person or by proxy, except that no trustee or pledgee shall be entitled to vote shares which are held by or pledged to him without a transfer of such 3 shares into his name. (16-10-31). Section 2.09. Voting of Shares by Corporation. In addition to regulations and restrictions imposed by law upon the voting of shares, shares of its own stock belonging to the corporation or held by it in a fiduciary capacity shall not be voted directly or indirectly at any meeting and shall not be counted in determining the total number of outstanding shares at any given time. (16-10-31). Section 2.10. Informal Action by Shareholders. Any action required to be taken at a meeting of the shareholders, or any other action which may be taken at a meeting of the shareholders, may be taken without a meeting, if a consent in writing, setting forth the action so taken, shall be signed by all of the shareholders entitled to vote with respect to the subject matter thereof. (16-10-138). ARTICLE III BOARD OF DIRECTORS Section 3.01. General Powers. The property, affairs, and business of the corporation shall be managed by its Board of Directors. The Board of Directors may exercise all powers of the corporation, whether derived from law or the Articles of Incorporation, except such powers as are by statute, by the Articles of Incorporation, or by these Bylaws vested solely in the shareholders of the corporation. Section 3.02. Number, Tenure, and Qualifications. The number of Directors of the corporation shall be three (3). Each Director shall hold office until the next annual meeting of the shareholders and until his successor shall have been elected and shall qualify. Directors need not be shareholders of the corporation or residents of the State of Utah. Section 3.03. Regular Meetings. A regular meeting of the Board of Directors shall be held without other notice than by this Bylaw immediately after, and at the same place as, the annual meeting of shareholders. The Board of Directors may provide by resolution the time and place, either within or without the State of Utah, for the holding of additional regular meetings without other notice than such resolution. Section 3.04. Special Meetings. Special meetings of the Board of Directors may be called by or at the request of the President, any Vice-President, or any two Directors. The person or persons authorized to call special meetings of 4 the Board of Directors may fix any place, either within or without the State of Utah, as the place for holding any special meeting of the Board of Directors called by them. Section 3.05. Notice. Notice of any special meeting shall be given at least three (3) days prior thereto by written notice delivered to each Director personally, or by mail, or by telegram. If mailed, such notice shall be deemed to be delivered when deposited in the mail addressed to the Director at his business address, with first class postage thereon prepaid. If notice be given by telegram, such notice shall be deemed to be delivered when the telegram is delivered to the telegraph company. Any Director may waive notice of any meeting, and attendance of a Director at a meeting shall constitute waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. (16-10-40). Section 3.06. Quorum. A majority of the number of Directors shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, but if less than a majority of the number of Directors are present at a meeting, a majority of those Directors present may adjourn the meeting from time to time without further notice. Section 3.07. Manner of Acting. The act of the majority of the Directors present at a meeting at which a quorum is present shall be the act of the Board of Directors, and individual Directors shall have no power as such. Section 3.08. Vacancies and Newly Created Directorships. If any vacancies shall occur in the Board of Directors by reason of death, resignation, or otherwise, or if the authorized number of Directors shall be increased, the Directors then in office shall continue to act and such vacancies or newly created Directorships shall be filled by a vote of the Directors then in office, though less than a quorum, in any way approved by such Directors at the meeting. (16-10-36). Section 3.09. Compensation. By resolution of the Board of Directors, the Directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors, and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary as Director. No such payment shall preclude any Director from serving the corporation in any other capacity and receiving compensation therefor. 5 Section 3.10. Presumption of Assent. A Director of the corporation who is present at a meeting of the Board of Directors at which action on any corporate matter is taken shall be presumed to have assented to the action taken, unless his dissent shall be entered in the minutes of the meeting, or unless he shall file his written dissent to such action with the person acting as the Secretary of the meeting before the adjournment thereof, or unless he shall forward such dissent by registered or certified mail to the Secretary of the corporation within two (2) days after the adjournment of the meeting. Such right to dissent shall not apply to a Director who voted in favor of such action. (16- 10-40). Section 3.11. Resignations. A Director may resign at any time by delivering a written resignation to either the President, any Vice-President, or the Secretary. The resignation shall become effective on its acceptance by the Board of Directors, provided that if the Board has not acted thereon within ten (10) days from the date presented, the resignation shall be deemed accepted. Section 3.12. Removal. At a meeting of the shareholders expressly called for such purpose, one or more of the Directors may be removed, with or without cause, by a vote of the holders of a majority of the shares then entitled to vote at an election of Directors. Any Directorship to be filled by reason of the removal of one or more Directors by the shareholders may be filled by election by the shareholders at the meeting at which the Director or Directors are removed. (16-10-37). Section 3.13. Telephonic Meetings. Meetings of the Board of Directors may be conducted by means of conference telephone or similar communications equipment by which all persons participating in the meeting can hear each other, and participation in such a meeting shall constitute presence in person at the meeting. (16-10-40). Section 3.14. Informal Action by Directors. Any action required to be taken at a meeting of the Directors of the corporation or any other action which may be taken at a meeting of the Directors may be taken without a meeting, if a consent in writing, setting forth the action so taken, shall be signed by all of the Directors. Such consent shall have the same legal effect as a unanimous vote of all of the Directors. (16-10-40). 6 ARTICLE IV OFFICERS Section 4.01. Number. The officers of the corporation shall be a President, one or more Vice-Presidents (as shall be determined from time to time by resolution of the Board of Directors), a Secretary, a Treasurer, and such other officers as may be appointed by the Board of Directors. The Board of Directors may elect, but shall not be required to elect, a Chairman of the Board. (16-10-45). Section 4.02. Election, Term of Office, and Qualifications. The officers shall be chosen by the Board of Directors annually at its annual meeting. In the event of failure to choose officers at an annual meeting of the Board of Directors, officers may be chosen at any regular or special meeting of the Board of Directors. Each such officer (whether chosen at an annual meeting of the Board of Directors to fill a vacancy or otherwise) shall hold his office until the next ensuing annual meeting of the Board of Directors and until his successor shall have been chosen and qualified, or until his death, or until his resignation in the manner provided in these Bylaws. Any one person may hold any two or more of such offices, except that the President shall not also be the Secretary. No person holding two or more offices shall act in or execute any instrument in the capacity of more than one office. Officers need not be shareholders or Directors of the corporation. (16-10-45). Section 4.03. Subordinate Officers, Etc. The Board of Directors may from time to time appoint such other officers or agents as it may deem advisable, each of whom shall have such title, hold office for such period, have such authority, and perform such duties as the Board of Directors may from time to time determine. The Board of Directors may from time to time delegate to any officer or agent the power to appoint any such subordinate officers or agents and to prescribe their respective titles, terms of office, authorities, and duties. Subordinate officers need not be shareholders or Directors of the corporation. Section 4.04. Resignations. Any officer may resign at any time by delivering a written resignation to the Board of Directors, the President, or the Secretary. Unless otherwise specified therein, such resignation shall take effect upon delivery. Section 4.05. Removal. Any officer may be removed from office at any special meeting of the Board of 7 Directors called for that purpose or at a regular meeting, whenever in the judgment of the Board of Directors the best interests of the corporation will be served thereby. Any officer or agent appointed in accordance with the provisions of Section 4.03 hereof may also be removed, either for or without cause, by any officer upon whom such power of removal shall have been conferred by the Board of Directors. (16-10-46). Section 4.06. Vacancies and Newly Created Offices. If any vacancy shall occur in any office by reason of death, resignation, removal, disqualification, or any other cause, or if a new office shall be created, then such vacancies or newly created offices may be filled by the Board of Directors at any regular or special meeting. Section 4.07. The Chairman of the Board. The Chairman of the Board, if there be such an officer, shall have the following powers and duties: (a) The Chairman shall be the senior officer of the corporation and shall perform such duties, in addition to those specified below in this Section 4.07, as may be assigned to him by the Board of Directors. (b) The Chairman shall preside at all meetings of the shareholders. (c) The Chairman shall preside at all meetings of the Board of Directors. (d) The Chairman shall be a member of the Executive Committee, if any. Section 4.08. The President. The President shall have the following powers and duties: (a) If no General Manager has been appointed, the President shall be the chief executive officer of the corporation and, subject to the directions of the Board of Directors, shall have general charge of the business, affairs, and property of the corporation and general supervision over its officers, employees, and agents. (b) If no Chairman of the Board has been chosen, or if such officer is absent or disabled, the President shall preside at meetings of the shareholders and of the Board of Directors. 8 (c) The President shall be a member of the Executive Committee, if any. (d) The President shall be empowered, in conjunction with the Secretary or Treasurer, to sign certificates representing stock of the corporation, the issuance of which shall have been authorized by the Board of Directors. (e) The President shall have all powers and shall perform all duties normally incident to the office of a President of a corporation and shall exercise such other powers and perform such other duties as may from time to time be assigned to him by the Board of Directors. Section 4.09. The Vice-Presidents. The Board of Directors shall, from time to time, designate and elect one or more Vice-Presidents, one of whom may be designated to serve as Executive Vice-President. Each Vice-President shall have such powers and perform such duties as may from time to time be assigned to him by the Board of Directors or by the President. At the request or in the absence or disability of the President, the Executive Vice-President or (in the absence or disability of the Executive Vice-President) the Vice-President designated by the Board of Directors or (in the absence of such designation by the Board of Directors) by the President, as Senior Vice-President, may perform all the duties of the President, and when so acting, shall have all the powers of, and be subject to all the restrictions upon, the President. Section 4.10. The Secretary. The Secretary shall have the following powers and duties: (a) The Secretary shall keep or cause to be kept a record of all of the proceedings of the meetings of the shareholders and of the Board of Directors in books provided for that purpose. (b) The Secretary shall cause all notices to be duly given in accordance with the provisions of these Bylaws and as required by Statute. (c) The Secretary shall be the custodian of the records and of the seal of the corporation, and shall cause such seal (or a facsimile thereof) to be affixed to all certificates representing stock of the corporation prior to the issuance thereof and to all instruments, the execution of which on behalf of the corporation under its seal shall have been duly authorized in accordance with 9 these Bylaws, and when so affixed he may attest the same. (d) The Secretary shall see that the books, reports, statements, certificates, and other documents and records required by statute are properly kept and filed. (e) The Secretary shall have charge of the stock books of the corporation and cause the stock and transfer books to be kept in such manner as to show at any time the amount of the stock of the corporation of each class issued and outstanding, the manner in which and the time when such stock was paid for, the names alphabetically arranged and the addresses of the holders of record thereof, the number of shares held by each holder, and the time when each became such holder of record; and he shall exhibit at all reasonable times to any Director, upon application, the original or duplicate stock register. He shall cause the stock book referred to in Section 6.04 hereof to be kept and exhibited at the principal office of the corporation in the manner and for the purpose provided in such Section. (f) The Secretary shall be empowered, in conjunction with the President or a Vice-President, to sign certificates representing stock of the corporation, the issuance of which shall have been authorized by the Board of Directors. Section 4.11. The Treasurer. The Treasurer shall have the following powers and duties: (a) The Treasurer shall have charge and supervision over and be responsible for the monies, securities, receipts, and disbursements of the corporation. (b) The Treasurer shall cause the monies and other valuable effects of the corporation to be deposited in the name and to the credit of the corporation in such banks or trust companies or with such bankers or other depositories as shall be selected in accordance with Section 5.03 hereof. (c) The Treasurer shall cause the monies of the corporation to be disbursed by checks or drafts (signed as provided in Section 5.04 hereof) drawn upon the authorized depositories of the 10 corporation, and cause to be taken and preserved proper vouchers for all monies disbursed. (d) The Treasurer shall render to the Board of Directors or the President, whenever requested, a statement of the financial condition of the corporation and of all of his transactions as Treasurer, and render a full financial report at the annual meeting of the shareholders, if called upon to do so. (e) The Treasurer shall cause to be kept correct books of account of all the business and transactions of the corporation and exhibit such books to any Director upon request during business hours. (f) The Treasurer shall be empowered from time to time to require from all officers or agents of the corporation reports or statements giving such information as he may desire with respect to any and all financial transactions of the corporation. Section 4.12. General Manager. The Board of Directors may employ and appoint a General Manager who may, or may not, be one of the officers or Directors of the corporation. The General Manager shall have the following powers and duties: (a) The General Manager shall be the chief executive officer of the corporation and, subject to the directions of the Board of Directors, shall have general charge of the business affairs and property of the corporation and general supervision over its officers, employees, and agents. (b) The General Manager shall have the exclusive management of the business of the corporation and of all of its dealings, but at all times subject to the control of the Board of Directors. (c) Subject to the approval of the Board of Directors (or the Executive Committee, if any), the General Manager shall employ all employees of the corporation, or delegate such employment to subordinate officers or division chiefs, and shall have authority to discharge any person so employed. 11 (d) The General Manager shall make a report to the President and Directors quarterly, or more often if required to do so, setting forth the result of the operations under his charge, together with suggestions looking to the improvement and betterment of the condition of the corporation, and to perform such other duties as the Board of Directors shall require. Section 4.13. Salaries. The salaries or other compensation of the officers of the corporation shall be fixed from time to time by the Board of Directors; provided, however, that the Board of Directors may delegate to any person or group of persons the power to fix the salaries or other compensation of any subordinate officers or agents appointed in accordance with the provisions of Section 4.03 hereof. No officer shall be prevented from receiving any such salary or compensation by reason of the fact that he is also a Director of the corporation. Section 4.14. Surety Bonds. In the event the Board of Directors shall so require, any officer or agent of the corporation shall execute to the corporation a bond in such sums and with such surety or sureties as the Board of Directors may direct, conditioned upon the faithful performance of his duties to the corporation, including responsibility for negligence and for the accounting for all property, monies, or securities of the corporation which may come into his hands. ARTICLE V EXECUTION OF INSTRUMENTS, BORROWING OF MONEY, AND DEPOSIT OF CORPORATE FUNDS Section 5.01. Execution of Instruments. Subject to any limitation contained in the Articles of Incorporation or in these Bylaws, the President or any Vice-President and the Secretary or the Treasurer may, in the name and on behalf of the corporation, execute and deliver any contract or other instrument authorized in writing by the Board of Directors. The Board of Directors may, subject to any limitation contained in the Articles of Incorporation or in these Bylaws, authorize in writing any officer or agent to execute and deliver any contract or other instrument in the name and on behalf of the corporation; and any such authorization may be general or confined to specific instances. Section 5.02. Loans. No loan or advance shall be contracted on behalf of the corporation, no negotiable paper 12 or other evidence of its obligation under any loan or advance shall be issued in its name, and no property of the corporation shall be mortgaged, pledged, hypothecated, transferred, or conveyed as security for the payment of any loan, advance, indebtedness, or liability of the corporation, unless and except as authorized by the Board of Directors. Any such authorization may be general or confined to specific instances. Section 5.03. Deposits. All monies of the corporation not otherwise employed shall be deposited from time to time to its credit in such banks or trust companies or with such bankers or other depositories as the Board of Directors may select, or as from time to time may be selected by any officer or agent authorized to do so by the Board of Directors. Section 5.04. Checks, Drafts, Etc. All notes, drafts, acceptances, checks, endorsements, and (subject to the provisions of these Bylaws) evidences of indebtedness of the corporation shall be signed by such officer or officers or such agent or agents of the corporation and in such manner as the Board of Directors may from time to time determine. Endorsements for deposit to the credit of the corporation in any of its duly authorized depositories shall be in such manner as the Board of Directors may from time to time determine. Section 5.05. Bonds and Debentures. Every bond or debenture issued by the corporation shall be evidenced by an appropriate instrument which shall be signed by the President or any Vice-President and by the Treasurer or the Secretary, and sealed with the seal of the corporation, or otherwise as authorized from time to time by the Board of Directors. The seal may be a facsimile, engraved or printed. Where such bond or debenture is authenticated with the manual signature of an authorized officer of the corporation or other trustee designated by the indenture of trust or other agreement under which such security is issued, the signature of any of the corporation's officers named thereon may be a facsimile. In case any officer who signed, or whose facsimile signature has been used on any such bond or debenture, shall cease to be an officer of the corporation for any reason before the same has been delivered by the corporation, such bond or debenture may nevertheless be adopted by the corporation and issued and delivered as though the person who signed it or whose facsimile signature has been used thereon had not ceased to be such officer. 13 Section 5.06. Sale, Transfer, Etc., of Securities. Sales, transfers, endorsements, and assignments of shares of stocks, bonds, and other securities owned by or standing in the name of the corporation and the execution and delivery on behalf of the corporation of any and all instruments in writing incident to any such sale, transfer, endorsement, or assignment, shall be effected by the President or any Vice-President and by the Treasurer or the Secretary, or by any officer or agent thereunto specifically authorized by the Board of Directors. Section 5.07. Proxies. Proxies to vote with respect to shares of stock of other corporations owned by or standing in the name of the corporation shall be executed and delivered on behalf of the corporation by the President or any Vice-President and by the Secretary or the Treasurer of the corporation, or by any officer or agent thereunto specifically authorized by the Board of Directors. ARTICLE VI CAPITAL STOCK Section 6.01. Stock Certificates. Every holder of stock in the corporation shall be entitled to have a certificate, signed by the President or any Vice-President and by the Secretary or an Assistant Secretary and sealed with the seal (which may be a facsimile, engraved or printed) of the corporation, certifying the number and kind, class, or series of shares owned by him in the corporation; provided, however, that where such a certificate is (a) signed by a transfer agent or an assistant transfer agent, or (b) registered by a registrar, the signature of any such President, Vice President, Secretary, or an Assistant Secretary may be a facsimile. In case any officer who shall have signed, or whose facsimile signature or signatures shall have been used on any such certificate, shall cease to be such officer of the corporation, for any reason, before the delivery of such certificate by the corporation, such certificate may nevertheless be adopted by the corporation and be issued and delivered as though the person who signed it or whose facsimile signature or signatures shall have been used thereon, had not ceased to be such officer. Certificates representing shares of stock of the corporation shall be in such form as provided by the statutes of the State of Utah. There shall be entered upon the stock books of the corporation at the time of issuance of each share, the number of the certificate issued, the name and address of the person owning the shares represented thereby, the number and kind, class, or series of such shares, and the date of issuance thereof. Every certificate exchanged or 14 returned to the corporation shall be marked "Cancelled" with the date of cancellation. (16-10-21). Section 6.02. Transfer of Stock. Transfers of shares of the stock of the corporation shall be made on the books of the corporation by the holder of record thereof, or by his attorney thereunto duly authorized by a power of attorney duly executed in writing and filed with the Secretary of the corporation or any of its transfer agents, and upon surrender of the certificate or certificates, properly endorsed or accompanied by proper instruments of transfer, representing such shares. The corporation and transfer agents and registrars, if any, shall be entitled to treat the holder of record of any share or shares of stock as the absolute owner thereof for all purposes, and accordingly shall not be bound to recognize any legal, equitable, or other claim to or interest in such share or shares on the part of any other person whether or not it or they shall have express or other notice thereof. (70A-8-403). Section 6.03. Regulations. Subject to the provisions of this Article VI and of the Articles of Incorporation, the Board of Directors may make such rules and regulations as they may deem expedient concerning the issuance, transfer, redemption, and registration of certificates for shares of the stock of the corporation. Section 6.04. Maintenance of Stock Book at Principal Place of Business. A stock book (or books where more than one kind, class, or series of stock is outstanding) shall be kept at the principal place of business of the corporation, containing the names alphabetically arranged of original shareholders of the corporation, their addresses, their interest, the amount paid on their shares of stock, and all transfers thereof, and the number and class of the shares held by each. Such stock books shall at all reasonable hours be subject to inspection by persons entitled by law to inspect the same. (16-10-47). Section 6.05. Transfer Agents and Registrars. The Board of Directors may appoint one or more transfer agents and one or more registrars with respect to the certificates representing shares of stock of the corporation, and may require all such certificates to bear the signature of either or both. The Board of Directors may from time to time define the respective duties of such transfer agents and registrars. No certificate of stock shall be valid until countersigned by a transfer agent, if at the date appearing thereon the corporation had a transfer agent for such stock, and until registered by a registrar, 15 if at such date the corporation had a registrar for such stock. Section 6.06. Lost or Destroyed Certificates. The corporation may issue a new certificate for stock of the corporation in place of any certificate theretofore issued by it, alleged to have been lost or destroyed, and the Board of Directors may, in their discretion, require the owner of the lost or destroyed certificate or his legal representatives, to give the corporation a bond in such form and amount as the Board of Directors may direct, and with such surety or sureties as may be satisfactory to the Board, to indemnify the corporation and its transfer agents and registrars, if any, against any claims that may be made against it or any such transfer agent or registrar on account of the issuance of such new certificate. A new certificate may be issued without requiring any bond when, in the judgment of the Board of Directors, it is proper to do so. Section 6.07. Closing of Transfer Books and Fixing of Record Date. (a) The Board of Directors shall have power to close the stock books of the corporation for a period of not to exceed fifty (50) days preceding the date of any meeting of shareholders, or the date for payment of any dividend, or the date for the allotment of rights, or the date capital stock shall go into effect, or a date in connection with obtaining the consent of shareholders for any purpose. (b) In lieu of closing the stock transfer books as aforesaid, the Board of Directors may fix in advance a date, not exceeding fifty (50) days preceding the date of any meeting of shareholders, or the date for the payment of any dividend, or the date for the allotment of rights, or the date when any change or conversion or exchange of capital stock shall go into effect, or a date in connection with obtaining any such consent, as a record date for the determination of the shareholders entitled to a notice of, and to vote at, any such meeting and any adjournment thereof, or entitled to receive payment of any such dividend, or to any such allotment of rights, or to exercise the rights in respect of any such change, conversion, or exchange of capital stock, or to give such consent. (c) If the stock transfer books shall be closed or a record date set for the purpose of determining shareholders entitled to notice of or to vote at a meeting of shareholders, such books shall be closed for or such record date shall be at least ten (10) days immediately preceding such meeting. (16-10-28). 16 ARTICLE VII EXECUTIVE COMMITTEE AND OTHER COMMITTEES Section 7.01. How Constituted. The Board of Directors may designate an Executive Committee and such other committees as the Board may deem appropriate, each of which committees shall consist of two or more Directors. Thereafter, members of the Executive Committee and of any such other committee shall be designated annually at the annual meeting of the Board of Directors; provided, however, that at any time the Board of Directors may abolish or reconstitute the Executive Committee or any of such other committees. Each member of the Executive Committee and of such other committees shall hold office until his successor shall have been designated or until his resignation or removal in the manner provided in these Bylaws. (16-10-39). Section 7.02. Powers. During the intervals between meetings of the Board of Directors, the Executive Committee shall have and may exercise all powers of the Board of Directors in the management of the business and affairs of the corporation, except for the power to fill vacancies in the Board of Directors or to amend these Bylaws and except for such powers as by law may not be delegated by the Board of Directors to an Executive Committee. Section 7.03. Proceedings. The Executive Committee, and each such other committee as may be designated hereunder by the Board of Directors, may fix its own presiding and recording officer or officers, and may meet at such place or places, at such time or times, and upon such notice (or without notice) as it shall determine from time to time. It will keep a record of its proceedings and shall report such proceedings to the Board of Directors at the meeting of the Board of Directors next following. Section 7.04. Quorum and Manner of Acting. At all meetings of the Executive Committee, and of each such other committee as may be designated hereunder by the Board of Directors, the presence of members constituting a majority of the total authorized membership of the committee shall be necessary and sufficient to constitute a quorum for the transaction of business, and the act of a majority of the members present at any meeting at which a quorum is present shall be the act of such committee. The members of the Executive Committee and of each such other committee shall act only as a member of such committee and the individual members thereof shall have no powers as such. Section 7.05. Resignations. Any member of the 17 Executive Committee or any other committee designated by the Board of Directors hereunder may resign at any time by delivering a written resignation to either the President, the Secretary, or to the presiding officer of the committee of which he is a member (if a presiding officer shall have been appointed and shall be in office). Unless otherwise specified therein, such resignation shall take effect upon delivery. Section 7.06. Removal. The Board of Directors may at any time remove any member of the Executive Committee or of any other committee designated by it hereunder either, for or without cause. Section 7.07. Vacancies. If any vacancy shall occur in the Executive Committee or in any other committee designated by the Board of Directors hereunder by reason of disqualification, death, resignation, removal, or otherwise, the remaining members shall, until the filling of such vacancy, constitute the then total authorized membership of the committee and, provided that two or more members are remaining, continue to act. Any such vacancy may be filled at any meeting of the Board of Directors. Section 7.08. Compensation. The Board of Directors may allow a fixed sum and expenses of attendance to any member of the Executive Committee or of any other committee designated by the Board of Directors hereunder who is not an active salaried employee of the corporation for attendance at each meeting of such committee. Section 7.09. Telephonic Meetings. Members of the Executive Committee or of any other committee designated by the Board of Directors hereunder may participate in a meeting of such committee by means of conference telephone or similar communications equipment by which all persons participating in the meeting can hear each other, and participation in such meeting shall constitute presence in person at the meeting. (16-10-40). Section 7.10. Informal Action by Committees. Any action which may be taken at a meeting of the Executive Committee or any other committee designated by the Board of Directors may be taken without a meeting, if a consent in writing, setting forth the action so taken, shall be signed by all of the members of such committee. Such consent shall have the same legal effect as a unanimous vote of all of the members of such committee. (16-10-40). 18 ARTICLE VIII INDEMNIFICATION Section 8.01. Indemnification Third Party Actions. The corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative (other than an action, suit, or proceeding by or in the right of the corporation) by reason of the fact that he is or was a Director, officer, employee, or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise, against expenses (including attorney's fees), judgments, fines, and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit, or proceeding, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit, or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. Section 8.02. Indemnification for Corporate Actions. The corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action, suit, or proceeding by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a Director, officer, employee, or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise against expenses (including attorney's fees) actually and reasonably incurred by him in connection with the defense or settlement of such action, suit, or proceeding, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue, or matter as to which such person shall have been adjudged to be liable to the corporation, unless and only to the extent that the court in which such action or suit was 19 brought shall determine upon application that, despite the adjudication of liability and in view of all circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses as such court shall deem proper. Section 8.03. Determination. To the extent that a Director, officer, employee, or agent of the corporation has been successful on the merits or otherwise in defense of any action, suit, or proceeding referred to in Sections 8.01 and 8.02 hereof, or in defense of any claim, issue, or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith. Any other indemnification under Sections 8.01 or 8.02 hereof shall be made by the corporation upon a determination that indemnification of the Director, officer, employee, or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in Section 8.01 or 8.02 hereof. Such determination shall be made either (i) by the Board of Directors by a majority vote of a quorum consisting of Directors who were not parties to such action, suit, or proceeding, or (ii) by independent legal counsel in a written opinion, or (iii) by the shareholders by a majority vote of a quorum of shareholders at any meeting duly called for such purpose. Section 8.04. General Indemnification. The indemnification provided by this Article shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any provision in the corporation's Articles of Incorporation, Bylaws, agreement, vote of shareholders or disinterested Directors, or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a Director, officer, employee, or agent and shall inure to the benefit of the heirs and legal representatives of such a person. Section 8.05. Advances. Expenses incurred in defending a civil or criminal action, suit, or proceeding as contemplated in this Article shall be paid by the corporation in advance of the final disposition of such action, suit, or proceeding upon a majority vote of a quorum of the Board of Directors and upon receipt of an undertaking by or on behalf of the Director, officer, employee, or agent to repay such amount or amounts unless it ultimately be determined that he is entitled to be indemnified by the corporation as authorized by this Article. Section 8.06. Scope of Indemnification. The indemnification authorized by this Article shall apply to 20 all present and future Directors, officers, employees, and agents of the corporation and shall continue as to such persons who cease to be Directors, officers, employees, or agents of the corporation and shall inure to the benefit of the heirs, executors, and administrators of all such persons and shall be in addition to all other rights to which such persons may be entitled as a matter of law. Section 8.07. Insurance. The corporation may purchase and maintain insurance on behalf of any person who is or was a Director, officer, employee, or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise against any liability asserted against him and incurred by him in any such capacity or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liability under the laws of the State of Utah, as the same may hereafter be amended or modified. (16-10-4). ARTICLE IX FISCAL OR TAXABLE YEAR The fiscal or taxable year of the corporation shall be fixed from time to time by resolution of the Board of Directors. ARTICLE X DIVIDENDS The Board of Directors may from time to time declare, and the corporation may pay, dividends on its outstanding shares in the manner and upon the terms and conditions provided by law. ARTICLE XI SEAL The Board of Directors shall provide a corporate seal which shall be circular in form and shall have enscribed thereon the name of the corporation, the state of incorporation, and the words "Corporate Seal." 21 ARTICLE XII AMENDMENTS These Bylaws and all other Bylaws adopted from time to time by the corporation may be altered, amended, or repealed and new Bylaws may be adopted by the Board of Directors, subject to applicable laws and subject to the following: (a) No bylaw shall be adopted by the Board of Directors which shall require more than a majority of the voting shares for a quorum at a meeting of shareholders, or more than a majority of the votes cast to constitute action by the shareholders, except where higher percentages are required by law or by the Articles of Incorporation. (b) If any bylaw regulating an impending election of Directors is adopted or amended or repealed by the Board of Directors, there shall be set forth in the notice of the next meeting of the stockholders for the election of Directors, the bylaws so adopted or amended or repealed, together with a concise statement of the changes made. (16- 10-25). ADOPTED this 17th day of October, 1989. ------------------------------- Jon M. Huntsman ------------------------------- Ronald A. Rasband ------------------------------- Michael C. Eades 22 EX-3.25 15 BYLAWS OF HUNTSMAN PACKAGING GEORGIA, INC. BYLAWS OF HUNTSMAN PACKAGING GEORGIA, INC. ARTICLE 1. MEETINGS OF SHAREHOLDERS 1.1 Place and Time of Meetings. Meetings of the Shareholders shall be held at the principal office of the Corporation, or at such other place either within or without the State of Georgia, as the Board of Directors or the Shareholders may from time to time select, at such time as may be fixed by the Board of Directors or the Shareholders. 1.2 Annual Meeting. An annual meeting of the Shareholders shall be held at such date, time and place, within or without the State of Georgia, as the Board of Directors shall designate and state in the notice of the meeting. 1.3 Special Meetings. Special meetings of the Shareholders may be called at any time by the Board of Directors, or by the Chairman of the Board or the President, or by the holder or holders of not less than twenty-five percent (25%) of all the votes entitled to be cast on any issue proposed to be considered at the proposed special meeting. Such Shareholders must sign, date, and deliver to the Corporation's Secretary one or more written demands for the meeting describing the purpose or purposes for which it is held. Special Shareholders' meetings shall be held at a place designated by the Board of Directors, within or without the State of Georgia. 1.4 Record Date. The Board of Directors shall fix in advance a date as the record date for a determination of Shareholders entitled to notice of and to vote at any meeting of Shareholders or any adjournment thereof, or entitled to receive payment of any dividend, or in order to make a determination of Shareholders for any other proper purpose, such date to be not more than seventy (70) days prior to the date on which the particular action requiring such determination of Shareholders is to be taken. 1.5 Notice of Meeting. Written notice stating the place, day, and hour of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting, by or at the direction of the Chairman of the Board or the President or the other person or persons calling the meeting, to each Shareholder of record entitled to vote at such meeting. Written notice shall be given personally, by mail, by telegram, by private courier or by facsimile transmission. If mailed, notice shall be deemed to be delivered when deposited in the United States mail with first-class postage thereon prepaid, addressed to the Shareholder at his address as it appears on the stock transfer books of the Corporation. 1.6 Waiver of Notice. Notice of a meeting need not be given to any Shareholder who signs a waiver of notice, in person or by proxy, either before or after the date and 2 time stated in the notice. Waiver must be in writing and delivered to the Corporation for inclusion in the minutes or for filing with the corporate records. Attendance of a Shareholder at a meeting, either in person or by proxy, shall of itself constitute waiver of notice and waiver of any and all objections to: (a) the place of the meeting, (b) the time of the meeting, (c) the manner in which the meeting has been called or convened, or (d) objections to consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice, except when a Shareholder attends a meeting solely for the purpose of stating, at the beginning of the meeting, any such objection or objections to the transaction of business or to considering the matter when it is presented. Neither the business transacted nor the purpose of the meeting need be specified in the waiver, except that any waiver by a Shareholder of the notice of a meeting of Shareholders with respect to an amendment of the Articles of Incorporation, a plan of merger or share exchange, a sale of assets, or any other action which would entitle the Shareholder to dissent and obtain payment for his shares shall not be effective unless: (a) prior to execution of the waiver, the Shareholder is furnished with the same material required to be sent to the Shareholder in a notice of the meeting including notice of any applicable dissenters' rights; or (b) the waiver expressly waives the right to receive the materials required to be furnished. 1.7 Quorum. A majority of the shares entitled to vote, represented in person or by proxy, shall constitute a quorum at any meeting of Shareholders. If a quorum exists, 3 action on a matter (other than the election of Directors) by a voting group is approved if the votes cast within the voting group favoring the action exceed the votes cast opposing the action. Once a share is represented for any purpose at a meeting other than solely to object to holding the meeting or transacting business at the meeting, it is deemed present for quorum purposes for the remainder of the meeting and for any adjournment of that meeting unless a new record date is or must be set for the adjourned meeting. An amendment to the Articles of Incorporation or Bylaws that changes or deletes a greater quorum or voting requirement must meet the same quorum requirement and be adopted by the same vote and voting groups required to take action under the quorum and voting requirement prescribed in the provision being amended. 1.8 Adjournment. Any meeting of the Shareholders may be adjourned by the holders of a majority of the voting shares represented at a meeting, whether or not a quorum is present. Notice of an adjourned meeting or of the business to be transacted at such meeting shall not be necessary, provided the date, time, and place to which the meeting is adjourned are announced at the meeting at which the adjournment is taken and provided that the new date is not more than one hundred twenty (120) days after the date of the original meeting. If the new meeting date is more than one hundred twenty (120) days after the date fixed for the original meeting, there shall be a new determination of Shareholders entitled to notice or to vote and new notice must be given. At an adjourned meeting at which a quorum is present or represented, any 4 business may be transacted that could have been transacted at the meeting originally called unless a record date is or must be set forth for that adjourned meeting. 1.9 Voting Rights. Except as otherwise provided by law or in the Articles of Incorporation, each outstanding share shall be entitled to one vote on each matter voted on at a Shareholders' meeting. When a quorum is present at any meeting, the vote of the holders of a majority of the stock which has voting power present in person or represented by proxy shall decide any question properly brought before such meeting, unless the question is one upon which by express provision of law, the Articles of Incorporation or these Bylaws, a different vote is required, in which case such express provision shall govern and control the decision of such question. 1.10 Proxies. A Shareholder may vote his shares in person or by proxy. A Shareholder may appoint a proxy to vote or otherwise act for him by signing an appointment form, either personally or by his attorney-in-fact. A proxy is effective when received by the officer authorized to tabulate votes and is valid for eleven months from the date of its execution unless a longer period is expressly provided in the appointment form. An appointment of proxy is revocable by a Shareholder unless the appointment form conspicuously states that it is irrevocable and the appointment is coupled with an interest. 1.11 Action by Consent of Shareholders. Any action required or permitted to be taken at a meeting of the Shareholders may be taken without a meeting if the action 5 is taken by persons who would be entitled to vote at a meeting shares having voting power to cast not less than the minimum number (or numbers, in the case of voting by groups) of votes that would be necessary to authorize or take action at a meeting at which all Shareholders entitled to vote were present and voted. Action with respect to the election of Directors as to which Shareholders would be entitled to cumulative voting may be taken without a meeting only by written consent of all the Shareholders entitled to vote on the action. If action is taken by less than all of the Shareholders entitled to vote on the action, all voting Shareholders on the record date who did not participate in taking the action shall be given written notice of the action, together with the materials required for valid written consent. The action must be evidenced by one or more written consents describing the action taken, signed by the Shareholders entitled to take action without a meeting and delivered to the Corporation for inclusion in the minutes or filing with the corporate records. All consenting Shareholders shall be furnished with the same required material that would have been sent to the Shareholders in a notice of a meeting at which the proposed action would have been submitted to the Shareholders for action, including notice of any applicable dissenters' rights unless the written consent contains an express waiver of the right to receive materials otherwise required to be furnished. A consent signed by a Shareholder has the effect of a vote taken at a meeting and may be described as such in any document. If notice of an action by Shareholders is required to be given to nonvoting Shareholders and the action is 6 taken by voting Shareholders without a meeting, the Corporation shall give its nonvoting Shareholders written notice of the action not more than ten (10) days after the taking of action without a meeting. Such notice shall contain or be accompanied by the same material that would have been required to be sent to nonvoting Shareholders in a notice of a meeting at which the proposed action would have been submitted to the Shareholders for action. ARTICLE 2. DIRECTORS 2.1 Number, Qualification and Term of Office. The business and affairs of the Corporation shall be managed by a Board of Directors which shall consist of not less than one member. The exact number of Directors may be established or changed from time to time, by resolution of the Board of Directors or the Shareholders. The terms of the preceding sentence may be amended to deprive the Shareholders of the authority granted thereby only by vote of or consent of the Shareholders. The Directors shall be natural persons of the age of eighteen (18) years or older, but need not be residents of the State of Georgia or hold shares of stock in the Corporation. The terms of the initial Directors of the Corporation expire at the first Shareholders' meeting at which Directors are elected. Directors shall be elected by plurality vote of the Shareholders at the annual meeting. Each Director shall hold office for the term to which he is elected or appointed 7 and until his successor has been elected or appointed, and has qualified, or until his earlier resignation, removal from office, death or incapacity to serve. 2.2 Vacancies. A vacancy occurring on the Board of Directors shall be filled by the Shareholders or by the Board of Directors. If the Directors remaining in office constitute fewer than a quorum of the Board of Directors, they may fill the vacancy by the affirmative vote of a majority of all the Directors remaining in office. If the vacant office was held by a Director elected by a voting group of Shareholders, only the holders of shares of that voting group or the remaining Directors elected by that voting group are entitled to vote to fill the vacancy. A Director elected to fill a vacancy shall serve for the unexpired term of his predecessor in office. A vacancy that will occur at a specific later date (including but not limited to a resignation that specifies a later date) may be filled before the vacancy occurs, but the new Director may not take office until the vacancy occurs. 2.3 Removal of Directors. Any or all of the Directors of the Corporation may be removed at any time, with or without cause, by the holders of a majority in voting power of the issued and outstanding voting stock of the Corporation. If a Director is elected by a voting group of Shareholders, only the Shareholders of that voting group may participate in the vote to remove him. A Director may be removed by the Shareholders only at a meeting called for the purpose of removing him and the meeting 8 notice must state that the purpose, or one of the purposes, of the meeting is removal of the Director. 2.4 Compensation. The Board of Directors may fix the compensation of Directors. ARTICLE 3. MEETINGS OF THE BOARD 3.1 Place and Time of Meetings. Regular or special meetings of the Board of Directors may be held at such time and place within or without the State of Georgia as the Board of Directors may from time to time designate. 3.2 Annual Meeting. The Board of Directors shall meet each year immediately following the annual meeting of the Shareholders, or at such other time or place as the Board of Directors shall designate. Written notice of annual meetings of the Board of Directors shall be given personally, by mail, by telegram, by private courier or by facsimile transmission. 3.3 Special Meetings. Special meetings of the Board of Directors may be called at any time by the Chairman of the Board or the President on one day's written notice to each Director by whom such notice is not waived. Notice shall be given personally, by mail, by telegram, by private courier, or by facsimile transmission, and need not describe the business to be transacted at, nor the purpose of, the special meeting. 9 Special meetings shall be called by the President or the Secretary in like manner and on like notice upon the written request of twenty-five percent (25%) of the Board of Directors. 3.4 Waiver of Notice. A Director may waive any notice either before or after the date and time stated in the notice. Such a waiver must be in writing, signed by the Director entitled to the notice, and delivered to the Corporation for inclusion in the minutes or filing with the corporate records. Attendance of a Director at a meeting shall constitute a waiver of notice of that meeting unless the Director at the beginning of the meeting (or promptly upon arrival) objects to holding the meeting or transacting business at the meeting and does not thereafter vote for or assent to action taken at the meeting. 3.5 Quorum. A quorum of the Board of Directors consists of a majority of the number of Directors then in office. If a quorum is present, the acts of a majority of the Directors in attendance shall be the acts of the Board of Directors. A Director who is present at a meeting of the Board of Directors when corporate action is taken is deemed to have assented to the action taken unless: (a) that Director objects at the beginning of the meeting (or promptly upon arrival) to holding the meeting or to transacting business at the meeting; (b) the dissent or abstention of that Director from the action taken is entered into the minutes of the meeting; or (c) that Director delivers written notice of dissent or abstention to the presiding officer of the meeting before its adjournment or 10 to the Corporation immediately after adjournment of the meeting. The right of dissent is not available to a Director who votes in favor of an action taken. 3.6 Adjournment. A meeting of the Board of Directors may be adjourned by a majority of the Directors present, whether or not a quorum exists. Notice of the time and the place of the adjourned meeting and of the business to be transacted thereat, other than by announcement at the meeting at which the adjournment is taken, shall not be necessary. At an adjourned meeting at which a quorum is present, any business may be transacted which could have been transacted at the meeting originally called. 3.7 Action Without Meeting. Any action required or permitted to be taken at a meeting of the Board of Directors may be taken without a meeting if the action is taken by all members of the Board of Directors. The action must be evidenced by one or more written consents, describing the action taken, signed by each Director and delivered to the Corporation for inclusion in the minutes or filing with the corporate records. Such consent shall have the effect of a meeting vote and may be described as such in any document. 3.8 Participation in Meetings Other Than in Person. Members of the Board of Directors may participate in a meeting of the Board by any means of communication by which all persons participating in the meeting can hear each other. Participation in a meeting in such manner shall constitute presence in person at such meeting. 11 ARTICLE 4. COMMITTEES 4.1 Formation and Powers. The Board of Directors may create one or more committees and appoint members of the Board of Directors to serve on them. To the extent specified by the Board of Directors, each committee may exercise all of the powers of the Board of Directors in the management of the business affairs of the Corporation. However, a committee shall not have the power to: (i) approve or propose to Shareholders action that the Georgia Business Corporation Code requires to be approved by Shareholders; (ii) fill vacancies on the Board of Directors or on any of its committees; (iii) amend the Articles of Incorporation pursuant to the Georgia Business Corporation Code, Section 14-2-1002 as it may hereafter be amended; (iv) adopt, amend or repeal bylaws; or (v) approve a plan of merger not requiring Shareholder approval. 4.2 Removal. The Board of Directors shall have power at any time to remove any member of any committee, with or without cause, and to fill vacancies on and to dissolve any such committee. ARTICLE 5. OFFICERS 5.1 Generally. The officers of the Corporation shall consist of a Secretary and, if deemed by the Board of Directors of the Corporation to be necessary or appropriate 12 to conduct the business of the Corporation, a Chairman of the Board, a President, a Treasurer, and one or more Vice Presidents. Two or more offices may be held by the same person. The officers shall be elected by the Directors or, when specifically provided herein, may be appointed by the President or the Chairman of the Board, and each officer shall hold office for the term to which he is elected or appointed and until his successor has been elected or appointed, and has qualified, or until his earlier resignation, removal from office, death or incapacity to serve. 5.2 Chairman of the Board. If elected by the Board of Directors, the Chairman of the Board shall be the chief executive officer of the Corporation. The Chairman of the Board shall preside at all meetings of the Board of Directors and of the Shareholders and shall be an ex-officio member of all standing committees and shall preside at meetings of such committees unless the Board of Directors, in constituting such committees, shall designate or elect some other person to be the chairman thereof. The Chairman of the Board shall also have such other duties as the Board of Directors shall designate. 5.3 President. Unless otherwise specified by the Board of Directors, the President shall be the chief operating officer of the Corporation and shall have the responsibility for the general supervision of the business affairs of the Corporation. In the absence of a Chairman of the Board, he shall serve as chief executive officer of the Corporation. He shall, if also a Director and in the absence of a Chairman of the Board, 13 preside at all meetings of Shareholders and Directors and discharge the duties of a presiding officer, shall present at each annual meeting of the Shareholders a report of the business of the Corporation for the preceding fiscal year, and shall perform whatever other duties the Board of Directors may from time to time prescribe. 5.4 Secretary. The Secretary shall have the responsibility for preparing minutes of all meetings of the Shareholders and Directors, and for authenticating records of the Corporation, and shall have charge of the minute books, stock books and seal of the Corporation, and shall perform such other duties and have such other powers as may from time to time be delegated to him by the President or the Board of Directors. 5.5 Treasurer. If elected or appointed, the Treasurer shall be charged with the management of the financial affairs of the Corporation, shall have the power to recommend action concerning the Corporation's affairs to the President, and shall perform whatever other duties the Board of Directors may from time to time prescribe. 5.6 Vice President. In the absence or disability of the President, the Vice Presidents, if any, elected by the Board of Directors, shall perform the duties and exercise the powers of the President. The Vice Presidents shall perform such other duties and have such other powers as the President, the Chairman of the Board or the Board of Directors may from time to time prescribe. The Board of Directors may designate one or more Vice Presidents or may otherwise specify the order of seniority 14 of the Vice Presidents. The duties and powers of the President shall disburse to the Vice Presidents in such specified order of seniority. 5.7 Assistant Secretary. Assistants to the Secretary may be appointed, and shall have such duties as shall be delegated to them, by the Chairman of the Board, the President, the Secretary or the Board of Directors. 5.8 Vacancies. Vacancies which occur in any of the executive offices by death, resignation, or otherwise, may be filled by the Board of Directors. An officer so selected shall hold office for the remainder of the term of the officer vacating such office and until his successor has been elected or appointed and has qualified, or until his earlier resignation, removal from office, death or incapacity to serve. 5.9 Salaries. The Board of Directors shall fix the salaries of the officers of the Corporation. The salaries of other agents and employees of the Corporation may be fixed by the Board of Directors or by an officer to whom that function has been delegated by the Board. 5.10 Delegation of Duties. Whenever an officer is absent or whenever for any reason the Board of Directors may deem it desirable, the Board may delegate the powers and duties of an officer to any other officer or officers or to any Director or Directors. 5.11 Removal of Officers and Agents. An officer or agent of the Corporation may be removed by a majority vote of the Board of Directors whenever in its judgment 15 the best interests of the Corporation will be served by the removal. The removal shall be without prejudice to the contract rights, if any, of the person so removed. ARTICLE 6. CAPITAL STOCK 6.1 Certificates. The interest of each Shareholder may be evidenced by a certificate or certificates representing shares of stock of the Corporation, which shall be in such form as the Board of Directors may from time to time adopt, and shall be numbered and shall be entered in the books of the Corporation as they are issued. Each share certificate shall state, on its face, the name of the Corporation and that it is organized under the laws of Georgia, the name of the person to whom it is issued, and the number and class of shares and the designation of the series, if any, the certificate represents. Also, each certificate shall be signed, either manually or in facsimile, by the Chairman of the Board, President, Secretary or Assistant Secretary, or any two of such officers; and may bear the seal of the Corporation, or a facsimile thereof. If the certificate is signed in facsimile, it must be countersigned by a transfer agent or registered by a registrar other than the Corporation itself or an employee of the Corporation. The transfer agent or registrar may sign either manually or by facsimile. 6.2 Certificateless Shares. The Board of Directors of the Corporation may authorize the issue of some or all of the shares of any or all of its classes or series of 16 stock without certificates. Within a reasonable time after the issue or transfer of the shares without certificates, the Corporation shall send the shareholder a written statement specifying the name of the Corporation and that it is organized under the laws of Georgia, the name of the person to whom the shares are issued or transferred, the number and class of shares and the designation of the series, if any, which the certificate represents, and any applicable restriction on the transfer of such shares. 6.3 Transfers. Transfers of stock shall be made on the books of the Corporation only by the person named in the certificate, or by an attorney lawfully constituted in writing, and upon surrender of the certificate therefor, or in the case of a certificate alleged to have been lost, stolen or destroyed, upon compliance with the provisions of Section 6.4 of these Bylaws. 6.4 Lost Certificates. Any person claiming a certificate of stock to be lost, stolen or destroyed shall make an affidavit or affirmation of the fact in such manner as the Board of Directors may require and shall, if the Directors so require, give the Corporation a bond of indemnity in form and amount and with one or more sureties satisfactory to the Board of Directors, whereupon an appropriate new certificate may be issued in lieu of the one alleged to have been lost, stolen or destroyed. 17 ARTICLE 7. MISCELLANEOUS 7.1 Inspection of Books. The Board of Directors shall have power to determine which accounts and books of the Corporation, if any, shall be open to the inspection of Shareholders, except such as may by law be specifically open to inspection, and shall have power to fix reasonable rules and regulations not in conflict with the applicable law for the inspection of accounts and books that by law or by determination of the Board of Directors shall be open to inspection. A Shareholder who desires to inspect the records of the Corporation must give the Corporation written notice of the demand at least five (5) business days prior to the requested date of inspection. A Shareholder may inspect the records of the Corporation only if: (i) his demand is made in good faith and for a proper purpose that is reasonably relevant to his legitimate interest as a Shareholder; (ii) he describes with reasonable particularity his purpose and the records he desires to inspect; (iii) the records are directly connected with his purpose; and (iv) the records are to be used only for the stated purpose. In addition, any Shareholder owning two percent (2%) or less of the shares outstanding shall be liable for any expenses of any kind incurred by any party consequent to such inspection, including legal expenses incurred by the Corporation. 7.2 Seal. The corporate seal shall be in such form as the Board of Directors may from time to time determine. In the event that it is inconvenient at any time to use the 18 corporate seal of the Corporation, the words "Seal" or "Corporate Seal" enclosed in parentheses or scroll shall be deemed the corporate seal of the Corporation. ARTICLE 8. AMENDMENT 8.1 The Bylaws of the Corporation may be altered, amended, or repealed, and new Bylaws may be adopted, by the Board of Directors at any regular or special meeting of the Board of Directors, unless the Shareholders, in amending or repealing a particular Bylaw, expressly provide that the Board of Directors may not amend or repeal that Bylaw. If such action is to be taken at a meeting of the Shareholders, notice of the general nature of the proposed change in the Bylaws shall have been given in the notice of the meeting. The Shareholders may also amend or repeal the Corporation's Bylaws, or adopt new Bylaws, by a majority vote of those shares voting, even though the Bylaws may also be amended or repealed by the Board of Directors. ARTICLE 9. INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS; INSURANCE 9.1 Indemnification. The "Corporation" shall indemnify any person who was or is a "party" to a "proceeding" because he is or was a "Director" against liability incurred in the proceeding if he acted in a manner he believed in good faith to be in or 19 not opposed to the best interests of the Corporation, and, in the case of any criminal proceeding, he had no reasonable cause to believe his conduct was unlawful. For the purposes of this Article 9 only, the terms "Corporation", "party", "proceeding" and "Director" shall have the definition set out in the Georgia Business Corporation Code ss. 14-2-850. The termination of a proceeding by judgment, order, settlement, conviction, or a plea of nolo contendere or its equivalent, is not, of itself, determinative that the Director did not meet the standard of conduct set forth in the Georgia Business Corporation Code. However, no indemnification shall be made to any Director in connection with a proceeding by or in the right of the Corporation in which the Director was adjudged liable to the Corporation or in connection with any other proceeding in which he was adjudged liable on the basis that personal benefit was improperly received by him. Indemnification in connection with a proceeding by or in the right of the Corporation is limited to reasonable expenses incurred in connection with the proceeding. 9.2 Determination of Indemnification. Unless ordered by a court, the Corporation shall not indemnify a Director under Section 9.1 unless authorized in the specific case upon a determination that indemnification of the Director is permissible in the circumstances because he has met the applicable standard of conduct set forth in Section 9.1. The determination shall be made: 20 (i) By the Board of Directors by a majority vote of a quorum consisting of Directors who were not parties to the proceeding; or (ii) If such a quorum is not obtainable, by majority vote of a committee duly designated by the Board of Directors (in which designation Directors who are parties may participate), consisting solely of two or more Directors not at the time parties to the proceedings; (iii) By special legal counsel: (A) Selected by the Board of Directors or its committee in the manner described in paragraph (i) or (ii)of this subsection. (B) If a quorum of the Board of Directors cannot be obtained under paragraph (i) of this subsection and a committee cannot be designated under paragraph (ii) of this subsection, selected by majority vote of the full Board of Directors (in which selection Directors who are parties may participate); or (iv) By the Shareholders, but shares owned by or voted under the control of Directors who are at the time parties to the proceeding may not be voted on the determination. Authorization of indemnification or an obligation to indemnify and an evaluation as to reasonableness of expenses shall be made in the same manner as the determination that indemnification is permissible, except that if the determination is made by special legal 21 counsel, authorization of indemnification and evaluation as to reasonableness of expenses shall be made by those entitled under paragraph (iii) of subsection (b) to select counsel. 9.3 Successful Defense. To the extent that a Director of the Corporation has been successful, on the merits or otherwise, in defense of any action, suit or proceeding referred to in Section 9.1 or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith. 9.4 Advance Payment. A corporation may pay for or reimburse the reasonable expenses incurred by a Director who is a party to a proceeding in advance of the final disposition of the proceeding if: the Director furnishes the Corporation a written affirmation of his good faith belief that he has met the standard of conduct set forth in Section 9.1, and the Director furnishes the Corporation a written undertaking, executed personally or on his behalf, to repay any advances if it is ultimately determined that he is not entitled to indemnification by the Corporation as authorized in this Article. 9.5 Shareholder Approved Indemnification. A resolution approved by a majority of the votes entitled to be cast shall permit the Corporation to indemnify or obligate itself to indemnify a Director made a party to a proceeding, including a proceeding brought by or in the right of the Corporation, without regard to the limitations set forth in this Article 9. However, the Corporation shall not indemnify a 22 Director under this Section for any liability incurred in a proceeding in which the Director is adjudged liable to the Corporation or is subjected to injunctive relief in favor of the Corporation: (a) for any appropriation, in violation of his duties, of any business opportunity of the Corporation; (b) for acts or omissions which involve intentional misconduct or a knowing violation of law; (c) for the types of liability set forth in the Georgia Business Corporation Code ss. 14-2-832 or any successor provision thereto; or (d) for any transaction from which he received an improper personal benefit. 9.6 Insurance. The Corporation shall have the power to purchase and maintain insurance on behalf of any person who is or was a Director, officer, employee or agent of the Corporation or who is or was serving at the request of the Corporation as a Director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against any liability asserted against him and incurred by him in that capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of this Article. 9.7 Survival of Indemnification Following Death or Termination. The indemnification and advancement of expenses provided by or granted pursuant to this Article shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a Director, officer, employee, or agent and shall inure to the benefit of the heirs, executors, and administrators of such person. 23 EX-3.26 16 BYLAWS OF HUNTSMAN FILM PRODUCTS OF MEXICO, INC. BYLAWS OF HUNTSMAN FILM PRODUCTS OF MEXICO, INC. -------------------------------------- A Utah Corporation 1992 TABLE OF CONTENTS ARTICLE I OFFICES................................. 1 Section 1.01. Offices....................................................... 1 Section 1.02. Address....................................................... 1 ARTICLE II SHAREHOLDERS.............................. 1 Section 2.01. Annual Meetings............................................... 1 Section 2.02. Special Meetings.............................................. 1 Section 2.03. Place of Meetings............................................. 2 Section 2.04. Notice of Meetings............................................ 2 Section 2.05. Closing of Transfer Books..................................... 2 Section 2.06. Voting Lists.................................................. 3 Section 2.07. Quorum........................................................ 3 Section 2.08. Proxies....................................................... 4 Section 2.09. Voting of Shares by Corporation............................... 4 Section 2.10. Informal Action by Shareholders............................... 4 ARTICLE III BOARD OF DIRECTORS........................... 5 Section 3.01. General Powers................................................ 5 Section 3.02. Number, Tenure, and Qualifications............................ 5 Section 3.03. Regular Meetings.............................................. 5 Section 3.04. Special Meetings.............................................. 5 Section 3.05. Notice........................................................ 5 Section 3.06. Quorum........................................................ 6 Section 3.07. Manner of Acting.............................................. 6 Section 3.08. Vacancies and Newly Created Directorships..................... 6 Section 3.09. Compensation.................................................. 6 Section 3.10. Presumption of Assent......................................... 6 Section 3.11. Resignations.................................................. 7 Section 3.12. Removal....................................................... 7 Section 3.13. Telephonic Meetings........................................... 7 Section 3.14. Informal Action by Directors.................................. 7 i ARTICLE IV OFFICERS................................ 8 Section 4.01. Number........................................................ 8 Section 4.02. Election, Term of Office, and Qualifications.................. 8 Section 4.03. Subordinate Officers, Etc..................................... 8 Section 4.04. Resignations.................................................. 8 Section 4.05. Removal....................................................... 9 Section 4.06. Vacancies and Newly Created Offices........................... 9 Section 4.07. The Chairman of the Board..................................... 9 Section 4.08. The Vice-Chairman............................................. 9 Section 4.09. The President................................................. 10 Section 4.10. The Vice-Presidents........................................... 10 Section 4.11. The Secretary................................................. 11 Section 4.12. The Treasurer................................................. 12 Section 4.13. General Manager............................................... 13 Section 4.14. Salaries...................................................... 14 Section 4.15. Surety Bonds.................................................. 14 ARTICLE V EXECUTION OF INSTRUMENTS, BORROWING OF MONEY, AND DEPOSIT OF CORPORATE FUNDS..................... 15 Section 5.01. Execution of Instruments...................................... 15 Section 5.02. Loans......................................................... 15 Section 5.03. Deposits...................................................... 15 Section 5.04. Checks, Drafts, Etc........................................... 15 Section 5.05. Bonds and Debentures.......................................... 16 Section 5.06. Sale, Transfer, Etc., of Securities........................... 16 Section 5.07. Proxies....................................................... 16 ARTICLE VI CAPITAL STOCK.............................. 17 Section 6.01. Stock Certificates............................................ 17 Section 6.02. Transfer of Stock............................................. 17 Section 6.03. Regulations................................................... 18 Section 6.04. Maintenance of Stock Book at Principal Place of Business...... 18 Section 6.05. Transfer Agents and Registrars................................ 18 Section 6.06. Lost or Destroyed Certificates................................ 18 Section 6.07. Closing of Transfer Books and Fixing of Record Date........... 19 ii ARTICLE VII EXECUTIVE COMMITTEE AND OTHER COMMITTEES................ 20 Section 7.01. How Constituted............................................... 20 Section 7.02. Powers........................................................ 20 Section 7.03. Proceedings................................................... 20 Section 7.04. Quorum and Manner of Acting................................... 20 Section 7.05. Resignations.................................................. 21 Section 7.06. Removal....................................................... 21 Section 7.07. Vacancies..................................................... 21 Section 7.08. Compensation.................................................. 21 Section 7.09. Telephonic Meetings........................................... 21 Section 7.10. Informal Action by Committees................................. 22 ARTICLE VIII INDEMNIFICATION............................. 22 Section 8.01. Indemnification Third Party Actions........................... 22 Section 8.02. Indemnification for Corporate Actions......................... 23 Section 8.03. Determination................................................. 23 Section 8.04. General Indemnification....................................... 24 Section 8.05. Advances...................................................... 24 Section 8.06. Scope of Indemnification...................................... 24 Section 8.07. Insurance..................................................... 24 ARTICLE IX FISCAL OR TAXABLE YEAR......................... 25 ARTICLE X DIVIDENDS................................ 25 ARTICLE XI SEAL.................................. 25 ARTICLE XII AMENDMENTS............................... 25 iii BYLAWS OF HUNTSMAN FILM PRODUCTS OF MEXICO, INC. ARTICLE I OFFICES Section 1.01. Offices. The corporation may maintain such offices, within or without the State of Utah, as the Board of Directors may from time to time designate. Section 1.02. Address. The address of the principal office of the corporation may be changed by the Board of Directors. ARTICLE II SHAREHOLDERS Section 2.01. Annual Meetings. The annual meeting of the shareholders shall be held on the second Saturday in April of each year, at the hour of 10:00 o'clock a.m., beginning with the year following the filing of the Articles of Incorporation, for the purpose of electing Directors and transacting such other business as may come before the meeting. If the day fixed for the annual meeting shall fall on a legal holiday, the meeting shall be held on the next following business day. If the election of Directors shall not be held on the day designated herein for the annual meeting of the shareholders, or at any adjournment thereof, the Board of Directors shall cause the election to be held at a special meeting of the shareholders to be convened as soon thereafter as may be convenient. Section 2.02. Special Meetings. Special meetings of the shareholders may be called at any time by the Board of Directors, or by the President, or in their absence or disability, by any Vice-President, and shall be immediately called by the President, or in his absence or disability, by a Vice-President, or by the Secretary, upon the written request of the holders of not less than one-tenth of all the shares entitled to vote at the meeting, such written request to state the purpose or purposes of the meeting and to be delivered to the President, such Vice-President, or the Secretary. In case of failure to call such meeting within twenty (20) days after such request, such shareholder or shareholders may call the same. (16-10-26)1 Section 2.03. Place of Meetings. The Board of Directors may designate any place, either within or without the State of Utah, as the place of meeting for any annual meeting or for any special meeting called by the Board of Directors. A waiver of notice signed by all shareholders entitled to vote at a meeting may designate any place, either within or without the State of Utah, as the place for the holding of such meeting. If no designation is made, or if a special meeting be otherwise called, the place of meeting shall be at the principal office of the corporation. Section 2.04. Notice of Meetings. The Secretary or an Assistant Secretary shall cause notice of the time, place, and purpose or purposes of all meetings of the shareholders (whether annual or special), to be given at least ten (10) (but not more than fifty (50)) days prior to the meeting, to each shareholder of record. Section 2.05. Closing of Transfer Books. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or shareholders entitled to receive payment of any dividend or in order to make a determination of shareholders for any other proper purpose, the Board of Directors of the corporation may provide that the stock transfer books shall be closed for a period not to exceed, in any case, fifty (50) days. If the stock transfer books are closed for the purpose of determining shareholders entitled to notice of or to vote at such meeting, such books shall be closed for at least ten (10) days immediately preceding such meeting. - -------------- 1 Citations in parentheses are to Utah Code Annotated. These citations are for reference only and shall not constitute a part of these bylaws. 2 In lieu of closing the stock transfer books, the Board of Directors may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than fifty (50) days and, in case of a meeting of shareholders, not less than ten (10) days prior, to the date on which the particular action requiring such determination of shareholders is to be taken. If the stock transfer books are not closed and no record date is fixed for the determination of shareholders entitled to notice of or to vote at a meeting of the shareholders, or shareholders entitled to receive payment of a dividend, the date on which notice of the meeting is mailed or the date on which the resolution of the Board of Directors declaring such dividend is adopted, as the case may be, shall be the record date for such determination of shareholders. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this section, such determination shall apply to any adjournment thereof. (16-10-28). Section 2.06. Voting Lists. The officer or agent having charge of the stock transfer books for shares of the corporation shall make a complete list of the shareholders entitled to vote at such meeting or any adjournment thereof, with the address of and number of shares held by each. The list shall be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any shareholder for any purpose germane to the meeting during the whole time of the meeting. The original stock transfer book shall be prima facie evidence as to the shareholders who are entitled to examine such list or transfer books or to vote at any meeting of shareholders. (16-10-29). Section 2.07. Quorum. A majority of the outstanding shares of the corporation entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of shareholders. If less than a majority of the outstanding shares are represented at a meeting, a majority of the shares so represented may adjourn the meeting from time to time without further notice. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. 3 Section 2.08. Proxies. At each meeting of the shareholders, each shareholder entitled to vote shall be entitled to vote in person or by proxy, provided, however, that the right to vote by proxy shall exist only in case the instrument authorizing such proxy to act shall have been executed in writing by the shareholder himself or by his attorney thereunto duly authorized in writing. Such instrument authorizing a proxy to act shall be delivered at the beginning of such meeting to the Secretary of the corporation or to such other officer or person who may, in the absence of the Secretary, be acting as secretary of the meeting. In the event that any such instrument shall designate two or more persons to act as proxies, a majority of such persons present at the meeting, or, if only one be present, that one shall (unless the instrument shall otherwise provide) have all of the powers conferred by the instrument upon all persons so designated. Persons holding stock in a fiduciary capacity shall be entitled to vote the shares so held, and the persons whose stock is pledged shall be entitled to vote, unless in the transfer by the pledgor on the books of the corporation he shall have expressly empowered the pledgee to vote thereon, in which case the pledgee, or his proxy, may represent such stock and vote thereon. (16-10-31). Section 2.09. Voting of Shares by Corporation. In addition to regulations and restrictions imposed by law upon the voting of shares, shares of its own stock belonging to the corporation or held by it in a fiduciary capacity shall not be voted directly or indirectly at any meeting and shall not be counted in determining the total number of outstanding shares at any given time. (16-10-31). Section 2.10. Informal Action by Shareholders. Any action required to be taken at a meeting of the shareholders, or any other action which may be taken at a meeting of the shareholders, may be taken without a meeting, if a consent in writing, setting forth the action so taken, shall be signed by all of the shareholders entitled to vote with respect to the subject matter thereof. (16-10-138). 4 ARTICLE III BOARD OF DIRECTORS Section 3.01. General Powers. The property, affairs, and business of the corporation shall be managed by its Board of Directors. The Board of Directors may exercise all powers of the corporation, whether derived from law or the Articles of Incorporation, except such powers as are by statute, by the Articles of Incorporation, or by these Bylaws vested solely in the shareholders of the corporation. Section 3.02. Number, Tenure, and Qualifications. The number of Directors of the corporation shall be four (4). Each Director shall hold office until the next annual meeting of the shareholders and until his successor shall have been elected and shall qualify. Directors need not be shareholders of the corporation or residents of the State of Utah. Section 3.03. Regular Meetings. A regular meeting of the Board of Directors shall be held without other notice than by this Bylaw immediately after, and at the same place as, the annual meeting of shareholders. The Board of Directors may provide by resolution the time and place, either within or without the State of Utah, for the holding of additional regular meetings without other notice than such resolution. Section 3.04. Special Meetings. Special meetings of the Board of Directors may be called by or at the request of the Chairman, any Vice-Chairman, the President, any Vice-President, or any two Directors. The person or persons authorized to call special meetings of the Board of Directors may fix any place, either within or without the State of Utah, as the place for holding any special meeting of the Board of Directors called by them. Section 3.05. Notice. Notice of any special meeting shall be given at least three (3) days prior thereto by written notice delivered to each Director personally, or by mail, or by telegram. If mailed, such notice shall be deemed to be delivered when deposited in the mail addressed to the Director at his business address with first class postage thereon prepaid. If notice 5 be given by telegram, such notice shall be deemed to be delivered when the telegram is delivered to the telegraph company. Any Director may waive notice of any meeting, and attendance of a Director at a meeting shall constitute waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened (16-10-40). Section 3.06. Quorum. A majority of the number of Directors shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, but if less than a majority of the number of Directors are present at a meeting, a majority of those Directors present may adjourn the meeting from time to time without further notice. Section 3.07. Manner of Acting. The act of the majority of the Directors present at a meeting at which a quorum is present shall be the act of the Board of Directors, and individual Directors shall have no power as such. Section 3.08. Vacancies and Newly Created Directorships. If any vacancies shall occur in the Board of Directors by reason of death, resignation, or otherwise, or if the authorized number of Directors may be increased, the Directors then in office shall continue to act and such vacancies or newly created Directorships may be filled by a vote of the Directors then in office, though less than a quorum, in any way approved by such Directors at the meeting. (16-10-36). Section 3.09. Compensation. By resolution of the Board of Directors, the Directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors, and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary as Director. No such payment shall preclude any Director from serving the corporation in any other capacity and receiving compensation therefor. Section 3.10. Presumption of Assent. A Director of the corporation who is present at a meeting of the Board of Directors at which action on any corporate matter is taken shall be presumed to have assented to the action taken, unless his dissent shall be entered in the 6 minutes of the meeting, or unless he shall file his written dissent to such action with the person acting as the secretary of the meeting before the adjournment thereof, or unless he shall forward such dissent by registered or certified mail to the Secretary of the corporation within two (2) days after the adjournment of the meeting. Such right to dissent shall not apply to a Director who voted in favor of such action. ( 16-10-40) . Section 3.11. Resignations. A Director may resign at any time by delivering a written resignation to either the Chairman, any Vice-Chairman, the President, any Vice-President, or the Secretary. The resignation shall become effective on its acceptance by the Board of Directors, provided that if the Board has not acted thereon within ten (10) days from the date presented, the resignation shall be deemed accepted. Section 3.12. Removal. At a meeting of the shareholders expressly called for such purpose, one or more of the Directors may be removed, with or without cause, by a vote of the holders of a majority of the shares then entitled to vote at an election of Directors. Any Directorship to be filled by reason of the removal of one or more Directors by the shareholders may be filled by election by the shareholders at the meeting at which the Director or Directors are removed. (16-10-37). Section 3.13. Telephonic Meetings. Meetings of the Board of Directors may be conducted by means of conference telephone or similar communications equipment by which all persons participating in the meeting can hear each other, and participation in such a meeting shall constitute presence in person at the meeting. (16-10-40). Section 3.14. Informal Action by Directors. Any action required to be taken at a meeting of the Directors of the corporation or any other action which may be taken at a meeting of the Directors may be taken without a meeting, if a consent in writing, setting forth the action so taken, shall be signed by all of the Directors. Such consent shall have the same legal effect as a unanimous vote of all of the Directors. (16-10-40). 7 ARTICLE IV OFFICERS Section 4.01. Number. The officers of the corporation shall be a President, one or more Vice-Presidents (as shall be determined from time to time by resolution of the Board of Directors), a Secretary, a Treasurer, and such other officers as may be appointed by the Board of Directors. The Board of Directors may elect, but shall not be required to elect, a Chairman of the Board. (16-10-45). Section 4.02. Election, Term of Office, and Qualifications. The officers shall be chosen by the Board of Directors annually at its annual meeting. In the event of failure to choose officers at an annual meeting of the Board of Directors, officers may be chosen at any regular or special meeting of the Board of Directors. Each such officer (whether chosen at an annual meeting of the Board of Directors to fill a vacancy or otherwise) shall hold his office until the next ensuing annual meeting of the Board of Directors and until his successor shall have been chosen and qualified, or until his death, or until his resignation in the manner provided in these Bylaws. Any one person may hold any two or more of such offices, except that the President shall not also be the Secretary. No person holding two or more offices shall act in or execute any instrument in the capacity of more than one office. Officers need not be shareholders or Directors of the corporation. (16-10-45). Section 4.03. Subordinate Officers, Etc. The Board of Directors may from time to time appoint such other officers or agents as it may deem advisable, each of whom shall have such title, hold office for such period, have such authority, and perform such duties as the Board of Directors may from time to time determine. The Board of Directors may from time to time delegate to any officer or agent the power to appoint any such subordinate officers or agents and to prescribe their respective titles, terms of office, authorities, and duties. Subordinate officers need not be shareholders or Directors of the corporation. Section 4.04. Resignations. Any officer may resign at any time by delivering a written resignation to 8 the Board of Directors, the Chairman, any Vice-Chairman, the President, or the Secretary. Unless otherwise specified therein, such resignation shall take effect upon delivery. Section 4.05. Removal. Any officer may be removed from office at any special meeting of the Board of Directors called for that purpose or at a regular meeting, whenever in the judgment of the Board of Directors the best interests of the corporation will be served thereby. Any officer or agent appointed in accordance with the provisions of Section 4.03 hereof may also be removed, either for or without cause, by any officer upon whom such power of removal shall have been conferred by the Board of Directors. (16-10-46). Section 4.06. Vacancies and Newly Created Offices. If any vacancy shall occur in any office by reason of death, resignation, removal, disqualification, or any other cause, or if a new office shall be created, then such vacancies or newly created offices may be filled by the Board of Directors at any regular or special meeting. Section 4.07. The Chairman of the Board. The Chairman of the Board, if there be such an officer, shall have the following powers and duties: (a) The Chairman shall be the senior officer of the corporation and shall perform such duties, in addition to those specified below in this Section 4.07, as may be assigned to him by the Board of Directors. (b) The Chairman shall preside at all meetings of the shareholders. (c) The Chairman shall preside at all meetings of the Board of Directors. (d) The Chairman shall be a member of the Executive Committee, if any. Section 4.08. The Vice-Chairman. The Board of Directors may from time to time, designate and elect one or more Vice-Chairmen. Each Vice-Chairman shall have such powers and perform such duties as may from time to time 9 be assigned to him by the Board of Directors or by the Chairman. At the request or in the absence or disability of the Chairman, the Vice-Chairman, if there be such an officer, may perform all the duties of the Chairman and when so acting, shall have all the powers of, and be subject to all the restrictions upon, the Chairman. Section 4.09. The President. The President shall have the following powers and duties: (a) If no Chairman has been appointed or unless otherwise designated by the Board of Directors, the President shall be the chief executive officer of the corporation and, subject to the directions of the Board of Directors, shall have general charge of the business, affairs, and property of the corporation and general supervision over its officers, employees, and agents. (b) If no Chairman and no Vice-Chairman of the Board have been chosen, or if both such officers are absent or disabled, the President shall preside at meetings of the shareholders and of the Board of Directors. (c) The President shall be a member of the Executive Committee, if any. (d) The President shall be empowered, in conjunction with the Secretary or Treasurer, to sign certificates representing stock of the corporation, the issuance of which shall have been authorized by the Board of Directors. (e) The President shall have all powers and shall perform all duties normally incident to the office of a President of a corporation and shall exercise such other powers and perform such other duties as may from time to time be assigned to him by the Board of Directors. Section 4.10. The Vice-Presidents. The Board of Directors shall, from time to time, designate and elect one or more Vice-Presidents, one of whom may be designated to serve as Executive Vice-President. Each Vice-President shall have such powers and perform such 10 duties as may from time to time be assigned to him by the Board of Directors or by the President. At the request or in the absence or disabilitY Of the President, the Executive Vice-President or (in the absence or disability of the Executive Vice-President) the Vice-President designated by the Board of Directors or (in the absence of such designation by the Board of Directors) by the President, as Senior Vice-President, may perform all the duties of the President, and when so acting, shall have all the powers of, and be subject to all the restrictions upon, the President. Section 4.11. The Secretary. The Secretary shall have the following powers and duties: (a) The Secretary shall keep or cause to be kept a record of all of the proceedings of the meetings of the shareholders and of the Board of Directors in books provided for that purpose. (b) The Secretary shall cause all notices to be duly given in accordance with the provisions of these Bylaws and as required by statute. (c) The Secretary shall be the custodian of the records and of the seal of the corporation, and shall cause such seal (or a facsimile thereof) to be affixed to all certificates representing stock of the corporation prior to the issuance thereof and to all instruments, the execution of which on behalf of the corporation under its seal shall have been duly authorized in accordance with these Bylaws, and when so affixed he may attest the same. (d) The Secretary shall see that the books, reports, statements, certificates, and other documents and records required by statute are properly kept and filed. (e) The Secretary shall have charge of the stock books of the corporation and cause the stock and transfer books to be kept in such manner as to show at any time the amount of the stock of the corporation of each class issued 11 and outstanding, the manner in which and the time when such stock was paid for, the names alphabetically arranged and the addresses of the holders of record thereof, the number of shares held by each holder, and the time when each became such holder of record; and he shall exhibit at all reasonable times to any Director, upon application, the original or duplicate stock register. He shall cause the stock book referred to in Section 6.04 hereof to be kept and exhibited at the principal office of the corporation in the manner and for the purpose provided in such Section. (f) The Secretary shall be empowered, in conjunction with the President or a Vice-President, to sign certificates representing stock of the corporation, the issuance of which shall have been authorized by the Board of Directors. (g) The Secretary shall perform in general all duties incident to the office of Secretary and such other duties as are given to him by these Bylaws or as may from time to time be assigned to him by the Board of Directors or by the President. Section 4.12. The Treasurer. The Treasurer shall have the following powers and duties: (a) The Treasurer shall have charge and supervision over and be responsible for the monies, securities, receipts, and disbursements of the corporation. (b) The Treasurer shall cause the monies and other valuable effects of the corporation to be deposited in the name and to the credit of the corporation in such banks or trust companies or with such bankers or other depositories as shall be selected in accordance with Section 5.03 hereof. (c) The Treasurer shall cause the monies of the corporation to be disbursed by checks or drafts (signed as provided in Section 5.04 hereof) drawn upon the authorized depositories 12 of the corporation, and cause to be taken and preserved proper vouchers for all monies disbursed. (d) The Treasurer shall render to the Board of Directors or the President, whenever requested, a statement of the financial condition of the corporation and of all of his transactions as Treasurer, and render a full financial report at the annual meeting of the shareholders, if called upon to do so. (e) The Treasurer shall cause to be kept correct books of account of all the business and transactions of the corporation and exhibit such books to any Director upon request during business hours. (f) The Treasurer shall be empowered from time to time to require from all officers or agents of the corporation reports or statements giving such information as he may desire with respect to any and all financial transactions of the corporation. (g) The Treasurer shall be empowered, in conjunction with the President or any Vice-President, to sign certificates representing stock of the corporation, the issuance of which shall have been authorized by the Board of Directors. Section 4.13. General Manager. The Board of Directors may employ and appoint a General Manager who may, or may not, be one of the officers or Directors of the corporation. The General Manager shall have the following powers and duties: (a) If so designated by the Board of Directors, the General Manager may be the chief executive officer of the corporation and, if so designated by the Board of Directors and subject to the directions of the Board of Directors, shall have general charge of the business affairs and property of the corporation and general supervision over its officers, employees, and agents. 13 (b) If so directed by the Board of Directors, the General Manager may have the exclusive management of the business of the corporation and of all of its dealings, but at all times subject to the control of the Board of Directors. (c) If so directed by the Board of Directors (or the Executive Committee, if any), the General Manager may employ all employees of the corporation, or delegate such employment to subordinate officers or division chiefs, and shall have authority to discharge any person so employed. (d) The General Manager shall make a report to the President and Directors quarterly, or more often if required to do so, setting forth the result of the operations under his charge, together with suggestions looking to the improvement and betterment of the condition of the corporation, and to perform such other duties as the Board of Directors shall require. Section 4.14. Salaries. The salaries or other compensation of the officers of the corporation shall be fixed from time to time by the Board of Directors; provided, however, that the Board of Directors may delegate to any person or group of persons the power to fix the salaries or other compensation of any subordinate officers or agents appointed in accordance with the provisions of Section 4.03 hereof. No officer shall be prevented from receiving any such salary or compensation by reason of the fact that he is also a Director of the corporation. Section 4.15. Surety Bonds. In the event the Board of Directors shall so require, any officer or agent of the corporation shall execute to the corporation a bond in such sums and with such surety or sureties as the Board of Directors may direct, conditioned upon the faithful performance of his duties to the corporation, including responsibility for negligence and for the accounting for all property, monies, or securities of the corporation which may come into his hands. 14 ARTICLE V EXECUTION OF INSTRUMENTS, BORROWING OF MONEY, AND DEPOSIT OF CORPORATE FUNDS Section 5.01. Execution of Instruments. Subject to any limitation contained in the Articles of Incorporation or in these Bylaws, the Chairman or any Vice-Chairman or the President or any Vice-President and the Secretary or the Treasurer may, in the name and on behalf of the corporation, execute and deliver any contract or other instrument authorized in writing by the Board of Directors. The Board of Directors may, subject to any limitation contained in the Articles of Incorporation or in these Bylaws, authorize in writing any officer or agent to execute and deliver any contract or other instrument in the name and on behalf of the corporation; and any such authorization may be general or confined to specific instances. Section 5.02. Loans. No loan or advance shall be contracted on behalf of the corporation, no negotiable paper or other evidence of its obligation under any loan or advance shall be issued in its name, and no property of the corporation shall be mortgaged, pledged, hypothecated, transferred, or conveyed as security for the payment of any loan, advance, indebtedness, or liability of the corporation, unless and except as authorized by the Board of Directors. Any such authorization may be general or confined to specific instances. Section 5.03. Deposits. All monies of the corporation not otherwise employed shall be deposited from time to time to its credit in such banks or trust companies or with such bankers or other depositories as the Board of Directors may select, or as from time to time may be selected by any officer or agent authorized to do so by the Board of Directors. Section 5.04. Checks, Drafts, Etc. All notes, drafts, acceptances, checks, endorsements, and (subject to the provisions of these Bylaws) evidences of indebtedness of the corporation shall be signed by such officer or officers or such agent or agents of the corporation and in such manner as the Board of Directors may from time to time determine. Endorsements for deposit to the credit of the corporation in any of its duly authorized 15 depositories shall be in such manner as the Board of Directors may from time to time determine. Section 5.05. Bonds and Debentures. Every bond or debenture issued by the corporation shall be evidenced by an appropriate instrument which shall be signed by the President or any Vice-President and by the Treasurer or the Secretary, and sealed with the seal of the corporation, or otherwise as authorized from time to time by the Board of Directors. The seal may be a facsimile, engraved or printed. Where such bond or debenture is authenticated with the manual signature of an authorized officer of the corporation or other trustee designated by the indenture of trust or other agreement under which such security is issued, the signature of any of the corporation's officers named thereon may be a facsimile. In case any officer who signed, or whose facsimile signature has been used on any such bond or debenture, shall cease to be an officer of the corporation for any reason before the same has been delivered by the corporation, such bond or debenture may nevertheless be adopted by the corporation and issued and delivered as though the person who signed it or whose facsimile signature has been used thereon had not ceased to be such officer. Section 5.06. Sale, Transfer, Etc., of Securities. Sales, transfers, endorsements, and assignments of shares of stocks, bonds, and other securities owned by or standing in the name of the corporation and the execution and delivery on behalf of the corporation of any and all instruments in writing incident to any such sale, transfer, endorsement, or assignment, shall be effected by the Chairman, any Vice-Chairman, the President, or any Vice-President and by the Treasurer or the Secretary, or by any officer or agent thereunto specifically authorized by the Board of Directors. Section 5.07. Proxies. Proxies to vote with respect to shares of stock of other corporations owned by or standing in the name of the corporation shall be executed and delivered on behalf of the corporation by the Chairman, any Vice-Chairman, the President, or any Vice-President and by the Secretary or the Treasurer of the corporation, or by any officer or agent thereunto specifically authorized by the Board of Directors. 16 ARTICLE VI CAPITAL STOCK Section 6.01. Stock Certificates. Every holder of stock in the corporation shall be entitled to have a certificate, signed by the President or any Vice-President and by the Secretary or the Treasurer and sealed with the seal (which may be a facsimile, engraved or printed) of the corporation, certifying the number and kind, class, or series of shares owned by him in the corporation; provided, however, that where such a certificate is (a) signed by a transfer agent or an assistant transfer agent, or (b) registered by a registrar, the signature of any such President, Vice-President, Secretary, or Treasurer may be a facsimile. In case any officer who shall have signed, or whose facsimile signature or signatures shall have been used on any such certificate, shall cease to be such officer of the corporation, for any reason, before the delivery of such certificate by the corporation, such certificate may nevertheless be adopted by the corporation and be issued and delivered as though the person who signed it or whose facsimile signature or signatures shall have been used thereon, had not ceased to be such officer. Certificates representing shares of stock of the corporation shall be in such form as provided by the statutes of the State of Utah. There shall be entered upon the stock books of the corporation at the time of issuance of each share, the number of the certificate issued, the name and address of the person owning the shares represented thereby, the number and kind, class, or series of such shares, and the date of issuance thereof. Every certificate exchanged or returned to the corporation shall be marked "Cancelled" with the date of cancellation. (16-10-21). Section 6.02. Transfer of Stock. Transfers of shares of the stock of the corporation shall be made on the books of the corporation by the holder of record thereof, or by his attorney thereunto duly authorized by a power of attorney duly executed in writing and filed with the Secretary of the corporation or any of its transfer agents, and upon surrender of the certificate or certificates, properly endorsed or accompanied by proper instruments of transfer, representing such shares. The corporation and transfer agents and registrars, if any, shall be entitled to treat the holder of record of any 17 share or shares of stock as the absolute owner thereof for all purposes, and accordingly shall not be bound to recognize any legal, equitable, or other claim to or interest in such share or shares on the part of any other person whether or not it or they shall have express or other notice thereof. (70A-8-403). Section 6.03. Regulations. Subject to the provisions of this Article VI and of the Articles of Incorporation, the Board of Directors may make such rules and regulations as they may deem expedient concerning the issuance, transfer, redemption, and registration of certificates for shares of the stock of the corporation. Section 6.04. Maintenance of Stock Book at Principal Place of Business. A stock book (or books where more than one kind, class, or series of stock is outstanding) shall be kept at the principal place of business of the corporation, containing the names alphabetically arranged of original shareholders of the corporation, their addresses, their interest, the amount paid on their shares of stock, and all transfers thereof, and the number and class of the shares held by each. Such stock books shall at all reasonable hours be subject to inspection by persons entitled by law to inspect the same. (16-10-47). Section 6.05. Transfer Agents and Registrars. The Board of Directors may appoint one or more transfer agents and one or more registrars with respect to the certificates representing shares of stock of the corporation, and may require all such certificates to bear the signature of either or both. The Board of Directors may from time to time define the respective duties of such transfer agents and registrars. No certificate of stock shall be valid until countersigned by a transfer agent, if at the date appearing thereon the corporation had a transfer agent for such stock, and until registered by a registrar, if at such date the corporation had a registrar for such stock. Section 6.06. Lost or Destroyed Certificates. The corporation may issue a new certificate for stock of the corporation in place of any certificate theretofore issued by it, alleged to have been lost or destroyed, and the Board of Directors may, in their discretion, require the owner of the lost or destroyed certificate or his 18 legal representatives, to give the corporation a bond in such form and amount as the Board of Directors may direct, and with such surety or sureties as may be satisfactory to the Board, to indemnify the corporation and its transfer agents and registrars, if any, against any claims that may be made against it or any such transfer agent or registrar on account of the issuance of such new certificate. A new certificate may be issued without requiring any bond when, in the judgment of the Board of Directors, it is proper to do so. Section 6.07. Closing of Transfer Books and Fixing of Record Date. (a) The Board of Directors shall have power to close the stock books of the corporation for a period of not to exceed fifty (50) days preceding the date of any meeting of shareholders, or the date for payment of any dividend, or the date for the allotment of rights, or the date capital stock shall go into effect, or a date in connection with obtaining the consent of shareholders for any purpose. (b) In lieu of closing the stock transfer books as aforesaid, the Board of Directors may fix in advance a date, not exceeding fifty (50) days preceding the date of any meeting of shareholders, or the date for the payment of any dividend, or the date for the allotment of rights, or the date when any change or conversion or exchange of capital stock shall go into effect, or a date in connection with obtaining any such consent, as a record date for the determination of the shareholders entitled to a notice of, and to vote at, any such meeting and any adjournment thereof, or entitled to receive payment of any such dividend, or to any such allotment of rights, or to exercise the rights in respect of any such change, conversion, or exchange of capital stock, or to give such consent. (c) If the stock transfer books shall be closed or a record date set for the purpose of determining shareholders entitled to notice of or to vote at a meeting of shareholders, such books shall be closed for or such record date shall be at least ten (10) days immediately preceding such meeting. (16-l0-28). 19 ARTICLE VII EXECUTIVE COMMITTEE AND OTHER COMMITTEES Section 7.01. How Constituted. The Board of Directors may designate an Executive Committee and such other committees as the Board may deem appropriate, each of which committees shall consist of two or more Directors, one of whom shall be the Chairman of the Board, if there be such an officer, and one of whom shall be the President. Thereafter, members of the Executive Committee and of any such other committee shall be designated annually at the annual meeting of the Board of Directors; provided, however, that at any time the Board of Directors may abolish or reconstitute the Executive Committee or any of such other committees. Each member of the Executive Committee and of such other committees shall hold office until his successor shall have been designated or until his resignation or removal in the manner provided in these Bylaws. (16-10-39). Section 7.02. Powers. During the intervals between meetings of the Board of Directors, the Executive Committee shall have and may exercise all powers of the Board of Directors in the management of the business and affairs of the corporation, except for the power to fill vacancies in the Board of Directors or to amend these Bylaws and except for such powers as by law may not be delegated by the Board of Directors to an Executive Committee. Section 7.03. Proceedings. The Executive Committee, and each such other committee as may be designated hereunder by the Board of Directors, may fix its own presiding and recording officer or officers, and may meet at such place or places, at such time or times, and upon such notice (or without notice) as it shall determine from time to time. It will keep a record of its proceedings and shall report such proceedings to the Board of Directors at the meeting of the Board of Directors next following. Section 7.04. Quorum and Manner of Acting. At all meetings of the Executive Committee, and of each such other committee as may be designated hereunder by the Board of Directors, the presence of members constituting a majority of the total authorized membership of the 20 committee shall be necessary and sufficient to constitute a quorum for the transaction of business, and the act of a majority of the members present at any meeting at which a quorum is present shall be the act of such committee. The members of the Executive Committee and of each such other committee shall act only as a member of such committee and the individual members thereof shall have no powers as such. Section 7.05. Resignations. Any member of the Executive Committee or any other committee designated by the Board of Directors hereunder may resign at any time by delivering a written resignation to either the President, the Secretary, or to the presiding officer of the committee of which he is a member (if a presiding officer shall have been appointed and shall be in office). Unless otherwise specified therein, such resignation shall take effect upon delivery. Section 7.06. Removal. The Board of Directors may at any time remove any member of the Executive Committee or of any other committee designated by it hereunder either, for or without cause. Section 7.07. Vacancies. If any vacancy shall occur in the Executive Committee or in any other committee designated by the Board of Directors hereunder by reason of disqualification, death, resignation, removal, or otherwise, the remaining members shall, until the filling of such vacancy, constitute the then total authorized membership of the committee and, provided that two or more members are remaining, continue to act. Any such vacancy may be filled at any meeting of the Board of Directors. Section 7.08. Compensation. The Board of Directors may allow a fixed sum and expenses of attendance to any member of the Executive Committee or of any other committee designated by the Board of Directors hereunder who is not an active salaried employee of the corporation for attendance at each meeting of such committee. Section 7.09. Telephonic Meetings. Members of the Executive Committee or of any other committee designated by the Board of Directors hereunder may participate in a meeting of such committee by means of conference 21 telephone or similar communications equipment by which all persons participating in the meeting can hear each other, and participation in such meeting shall constitute presence in person at the meeting. (16-10-40). Section 7.10. Informal Action by Committees. Any action which may be taken at a meeting of the Executive Committee or any other committee designated by the Board of Directors may be taken without a meeting, if a consent in writing, setting forth the action so taken, shall be signed by all of the members of such committee. Such consent shall have the same legal effect as a unanimous vote of all of the members of such committee. (16-10-40). ARTICLE VIII INDEMNIFICATION Section 8.01. Indemnification Third Party Actions. The corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative (other than an action, suit, or proceeding by or in the right of the corporation) by reason of the fact that he is or was a Director, officer, employee, or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise, against expenses (including attorney's fees), judgments, fines, and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit, or proceeding, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit, or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and with respect to any criminal action or proceeding, had 22 reasonable cause to believe that his conduct was unlawful. Section 8.02. Indemnification for Corporate Actions. The corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action, suit, or proceeding by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a Director, officer, employee, or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise against expenses (including attorney's fees) actually and reasonably incurred by him in connection with the defense or settlement of such action, suit, or proceeding, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue, or matter as to which such person shall have been adjudged to be liable to the corporation, unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability and in view of all circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses as such court shall deem proper. Section 8.03. Determination. To the extent that a Director, officer, employee, or agent of the corporation has been successful on the merits or otherwise in defense of any action, suit, or proceeding referred to in Sections 8.01 and 8.02 hereof, or in defense of any claim, issue, or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith. Any other indemnification under Sections 8.01 or 8.02 hereof shall be made by the corporation upon a determination that indemnification of the Director, officer, employee, or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in Section 8.01 or 8.02 hereof. Such determination shall be made either (i) by the Board of Directors by a majority vote of a quorum consisting of Directors who were not parties to such action, suit, or proceeding, or (ii) by independent legal counsel in a written opin- 23 ion, or (iii) by the shareholders by a majority vote of a quorum of shareholders at any meeting duly called for such purpose. Section 8.04. General Indemnification. The indemnification provided by this Article shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any provision in the corporation's Articles of Incorporation, Bylaws, agreement, vote of shareholders or disinterested Directors, or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a Director, officer, employee, or agent and shall inure to the benefit of the heirs and legal representatives of such a person. Section 8.05. Advances. Expenses incurred in defending a civil or criminal action, suit, or proceeding as contemplated in this Article shall be paid by the corporation in advance of the final disposition of such action, suit, or proceeding upon a majority vote of a quorum of the Board of Directors and upon receipt of an undertaking by or on behalf of the Director, officer, employee, or agent to repay such amount or amounts unless it ultimately be determined that he is entitled to be indemnified by the corporation as authorized by this Article. Section 8.06. Scope of Indemnification. The indemnification authorized by this Article shall apply to all present and future Directors, officers, employees, and agents of the corporation and shall continue as to such persons who cease to be Directors, officers, employees, or agents of the corporation and shall inure to the benefit of the heirs, executors, and administrators of all such persons and shall be in addition to all other rights to which such persons may be entitled as a matter of law. Section 8.07. Insurance. The corporation may purchase and maintain insurance on behalf of any person who is or was a Director, officer, employee, or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise against any liability asserted 24 against him and incurred by him in any such capacity or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liability under the laws of the State of Utah, as the same may hereafter be amended or modified. (16-10-4). ARTICLE IX FISCAL OR TAXABLE YEAR The fiscal or taxable year of the corporation shall be fixed from time to time by resolution of the Board of Directors. ARTICLE X DIVIDENDS The Board of Directors may from time to time declare, and the corporation may pay, dividends on its outstanding shares in the manner and upon the terms and conditions provided by law. ARTICLE XI SEAL The Board of Directors shall provide a corporate seal which shall be circular in form and shall have enscribed thereon the name of the corporation, the state of incorporation, and the words "Corporate Seal." ARTICLE XII AMENDMENTS These Bylaws and all other Bylaws adopted from time to time by the corporation may be altered, amended, or repealed and new Bylaws may be adopted by the Board of Directors, subject to applicable laws and subject to the following: 25 (a) No bylaw adopted or amended by the shareholders shall be altered or repealed by the Board of Directors; (b) No bylaw shall be adopted by the Board of Directors which shall require more than a majority of the voting shares for a quorum at a meeting of shareholders, or more than a majority of the votes cast to constitute action by the shareholders, except where higher percentages are required by law; provided, however, that (i) If any bylaw regulating an impending election of Directors is adopted or amended or repealed by the Board of Directors, there shall be set forth in the notice of the next meeting of the stockholders for the election of Directors, the bylaws so adopted or amended or repealed, together with a concise statement of the changes made; and (ii) no amendment, alteration, or repeal of this Article XII shall be made except by the stockholders. (16-10-25). 26 EX-3.27 17 BYLAWS OF HUNTSMAN BULK PACKAGING CORPORATION B Y L A W S OF HUNTSMAN BULK PACKAGING CORPORATION ----------------------------------- A UTAH CORPORATION 1994 TABLE OF CONTENTS ARTICLE 1. OFFICES Section 1.1. Business Offices................................1 Section 1.2. Registered Office...............................1 ARTICLE 2. SHAREHOLDERS Section 2.1. Annual Shareholder Meeting......................1 Section 2.2. Special Shareholder Meetings....................1 Section 2.3. Place of Shareholder Meetings...................2 Section 2.4. Notice of Shareholder Meeting...................2 Section 2.5. Fixing of Record Date...........................4 Section 2.6. Shareholder List................................5 Section 2.7. Shareholder Quorum and Voting Requirements......5 Section 2.8. Proxies.........................................6 Section 2.9. Voting of Shares................................6 Section 2.10. Corporation's Acceptance of Votes...............7 Section 2.11. Informal Action by Shareholders.................9 Section 2.12. Waiver of Notice...............................10 Section 2.13. Voting for Directors...........................11 Section 2.14. Rights of Shareholders to Inspect Corporate Records........................................11 Section 2.15. Furnishing Financial Statements to a Shareholder....................................13 Section 2.16. Information Respecting Shares..................13 ARTICLE 3. BOARD OF DIRECTORS Section 3.1. General Powers.................................14 Section 3.2. Number, Tenure and Qualifications of Directors......................................14 Section 3.3. Regular Meetings of the Board of Directors.....14 Section 3.4. Special Meetings of the Board of Directors.....14 Section 3.5. Notice and Waiver of Notice of Special Director Meetings..............................15 Section 3.6. Quorum of Directors............................15 Section 3.7. Manner of Acting...............................16 Section 3.8. Director Action By Written Consent.............16 Section 3.9. Resignation of Directors.......................17 Section 3.10. Removal of Directors...........................17 Section 3.11. Board of Director Vacancies....................17 i Section 3.12. Director Compensation..........................18 Section 3.13. Director Committees............................18 Section 3.14. Director's Rights to Inspect Corporate Records........................................19 ARTICLE 4. EXECUTIVE COMMITTEE AND OTHER COMMITTEES Section 4.1. Creation of Committees.........................20 Section 4.2. Approval of Committees and Members.............21 Section 4.3. Required Procedures............................21 Section 4.4. Authority......................................21 Section 4.5. Authority of Executive Committee...............21 Section 4.6. Compensation...................................21 ARTICLE 5. OFFICERS Section 5.1. Officers.......................................21 Section 5.2. Appointment and Term of Office.................22 Section 5.3. Resignation of Officers........................22 Section 5.4. Removal of Officers............................22 Section 5.5. The Chairman of the Board......................22 Section 5.6. The Vice Chairman..............................23 Section 5.7. Chief Executive Officer........................23 Section 5.8. President......................................24 Section 5.9. Vice Presidents................................24 Section 5.10. Secretary......................................25 Section 5.11. Treasurer......................................25 Section 5.12. Assistant Secretaries and Assistant Treasurers.....................................26 Section 5.13. General Manager................................26 Section 5.14. Salaries.......................................27 Section 5.15. Surety Bonds...................................27 ARTICLE 6. LIMITATION OF LIABILITY AND INDEMNIFICATION Section 6.1. Limitation of Liability of Directors...........27 Section 6.2. Indemnification of Directors...................28 Section 6.3. Advance Payment of Expenses....................29 Section 6.4. Indemnification of Officers, Employees, Fiduciaries, and Agents........................29 Section 6.5. Insurance......................................30 ii ARTICLE 7. EXECUTION OF INSTRUMENTS, BORROWING OF MONEY AND DEPOSIT OF CORPORATE FUNDS Section 7.1. Execution of Instruments.......................30 Section 7.2. Loans..........................................30 Section 7.3. Deposits.......................................31 Section 7.4. Checks, Drafts, etc............................31 Section 7.5. Bonds and Debentures...........................31 Section 7.6. Sale, Transfer, etc. of Securities.............31 Section 7.7. Proxies........................................32 ARTICLE 8. CERTIFICATES FOR SHARES AND THEIR TRANSFER Section 8.1. Certificates for Shares........................32 Section 8.2. Shares Without Certificates....................33 Section 8.3. Registration of Transfer of Shares.............33 Section 8.4. Transfer Agents and Registrars.................34 Section 8.5. Restrictions on Transfer of Shares Permitted...34 Section 8.6. Acquisition of Shares..........................35 Section 8.7. Lost or Destroyed Certificates.................36 ARTICLE 9. DISTRIBUTIONS Section 9.1. Distributions..................................36 ARTICLE 10. CORPORATE SEAL Section 10.1. Corporate Seal.................................36 ARTICLE 11. FISCAL YEAR Section 11.1. Fiscal Year....................................36 ARTICLE 12. AMENDMENTS Section 12.1. Amendments.....................................36 iii BYLAWS OF HUNTSMAN BULK PACKAGING CORPORATION ARTICLE 1. OFFICES Section 1.1. Business Offices. The principal office of Huntsman Bulk Packaging Corporation (the "Corporation") shall be located at any place either within or outside the State of Utah, as designated in the Corporation's Articles of Incorporation or the Corporation's most recent annual report on file with the Utah Department of Commerce, Division of Corporations and Commercial Code (the "Division") providing such information. The Corporation may have such other offices, either within or outside the State of Utah as the Board of Directors may designate or as the business of the Corporation may require from time to time. The Corporation shall maintain at its principal office a copy of those records specified in Section 2.14 of Article II of these Bylaws. (16-10a-102(24))* Section 1.2. Registered Office. The registered office of the Corporation required by the Utah Revised Business Corporation Act shall be located within the State of Utah. The address of the registered office may be changed from time to time. (16-10a-501 and 16-10a-502) ARTICLE 2. SHAREHOLDERS Section 2.1. Annual Shareholder Meeting. An annual meeting of the shareholders shall be held each year on the date, at the time, and at the place, fixed by the Board of Directors. The annual meeting shall be held for the purpose of electing directors and for the transaction of such other business as may come before the meeting. (16-10a-701) Section 2.2. Special Shareholder Meetings. Special meetings of the shareholders may be called, for any purposes described in the notice of the meeting, by the President, or by the Board of Directors and shall be called by the President at - -------------- * Citations in parentheses are to Utah Code Annotated. These citations are for reference only and shall not constitute a part of these bylaws. the request of the holder(s) of not less than one-tenth of all outstanding votes of the Corporation entitled to be cast on any issue at the meeting. (16-10a-702) Section 2.3. Place of Shareholder Meetings. The Board of Directors may designate any place, either within or outside the State of Utah, as the place for any annual meeting of the shareholders. The President, the Board of Directors or the shareholder(s) authorized by these Bylaws to request a meeting, as the case may be, may designate any place, either within or outside the State of Utah, as the place for any special meeting of the shareholders called by such person or group. If no designation is made regarding the place of the meeting, the meeting shall be held at the principal office of the Corporation. (16-10a-701(2) and 16-10a-702(3)) Section 2.4. Notice of Shareholder Meeting. (a) Required Notice. Written notice stating the place, day, and hour of any annual or special shareholder meeting shall be delivered not less than ten (10) nor more than sixty (60) days before the date of the meeting, either personally or by mail, by or at the direction of the person or group calling the meeting, to each shareholder of record entitled to vote at such meeting, and to any other shareholder entitled by the Utah Revised Business Corporation Act or the Corporation's Articles of Incorporation to receive notice of the meeting. Notice shall be deemed to be effective when mailed. (b) Notice Not Required. Notice shall not be required to be given to any shareholder to whom: (1) A notice of two consecutive annual meetings, and all notices of meetings or of the taking of action by written consent without a meeting during the period between the two consecutive annual meetings, have been mailed, addressed to the shareholder at the shareholder's address as shown on the records of the Corporation, and have been returned undeliverable; or (2) at least two payments, if sent by first class mail, of dividends or interest on securities during a twelve month period, have been mailed, addressed to the shareholder at the shareholder's address as shown on the records of the Corporation, and have been returned undeliverable. 2 If a shareholder to whom notice is not required to be given delivers to the Corporation a written notice setting forth the shareholder's current address, or if another address for the shareholder is otherwise made known to the Corporation, the requirement that notice be given to the shareholder is reinstated. (16-10a-103 and 16-10a-705) (c) Adjourned Meeting. If any shareholder meeting is adjourned to a different date, time, or place, notice need not be given of the new date, time, or place, if the new date, time, or place is announced at the meeting before adjournment. However, if the adjournment is for more than thirty (30) days, or if after the adjournment a new record date for the adjourned meeting is or must be fixed (see Section 2.5 of these Bylaws), then notice must be given pursuant to the requirements of paragraph (a) of this Section 2.4 to shareholders of record who are entitled to vote at the meeting. (16-10a-705(4)) (d) Contents of Notice. Notice of any special meeting of the shareholders shall include a description of the purpose or purposes for which the meeting is called. Except as provided in this paragraph (d) of Section 2.4, in the Articles of Incorporation, or in the Utah Revised Business Corporation Act, notice of an annual meeting of the shareholders need not include a description of the purpose or purposes for which the meeting is called. (16-10a-705(2), (3)) (e) Waiver of Notice of Meeting. Any shareholder may waive notice of a meeting by a writing signed by the shareholder which is delivered to the Corporation (either before or after the date and time stated in the notice as the date or time when any action will occur or has occurred) for inclusion in the minutes or filing with the Corporation's records. (16-10a-706) (f) Effect of Attendance at Meeting. A shareholder's attendance at a meeting: (1) Waives objection to lack of notice or defective notice of the meeting, unless the shareholder at the beginning of the meeting objects to holding the meeting or transacting business at the meeting; and (2) waives objection to consideration of a particular matter at the meeting that is not within the purpose or purposes described in 3 the meeting notice, unless the shareholder objects to considering the matter when it is presented. (16-10a-706) Section 2.5. Fixing of Record Date. For the purpose of determining the shareholders of any voting group entitled to notice of or to vote at any meeting of the shareholders, or the shareholders entitled to take action without a meeting or to demand a special meeting, or the shareholders entitled to receive payment of any distribution or dividend, or in order to make a determination of the shareholders for any other proper purpose, the Board of Directors may fix in advance a date as the record date. Such record date shall not be more than seventy (70) days prior to the date on which the particular action, requiring such determination of the shareholders, is to be taken. If no record date is so fixed by the Board of Directors, the record date shall be at the close of business on the following dates: (a) Annual and Special Meetings. With respect to an annual meeting of the shareholders or any special meeting of the shareholders called by the President, the Board of Directors or the shareholder(s) authorized by these Bylaws to request a meeting, the day before the first notice is delivered to shareholders. (16-10a-707(2)) (b) Meeting Demanded by Shareholders. With respect to a special shareholder meeting demanded by the shareholders pursuant to the Utah Revised Business Corporation Act, the earliest date of any of the demands pursuant to which the meeting is called, or sixty (60) days prior to the date the first of the written demands is received by the Corporation, whichever is later. (16-10a-702(1)(b), (2)) (c) Action Without a Meeting. With respect to actions taken in writing without a meeting (pursuant to Section 2.11 of these Bylaws), the date the first shareholder delivers to the Corporation a signed written consent upon which the action is taken. (16-10a-704(6)) (d) Distributions. With respect to a distribution to the shareholders (other than one involving a repurchase or reacquisition of shares), the date the Board of Directors authorizes the distribution. (16-10a-640(2)) (e) Share Dividend. With respect to the payment of a share dividend, the date the Board of Directors authorizes the share dividend. (16-10a-623(3)) 4 When a determination of the shareholders entitled to vote at any meeting of the shareholders has been made as provided in this Section 2.5, such determination shall apply to any adjournment thereof unless the Board of Directors fixes a new record date, which it must do if the meeting is adjourned to a date more than one hundred twenty (120) days after the date fixed for the original meeting. (16-10a-707) Section 2.6. Shareholder List. The Secretary shall make a complete record of the shareholders entitled to vote at each meeting of shareholders, arranged in alphabetical order within each class or series, with the address of and the number of shares held by each. If voting groups exist (see Section 2.7 of these Bylaws), the list must be arranged by voting group, and within each voting group by class or series of shares. The shareholder list must be available for inspection by any shareholder, beginning on the earlier of ten (10) days before the meeting for which the list was prepared or two (2) business days after notice of the meeting is given and continuing through the meeting and any adjournments. The list shall be available at the Corporation's principal office or at a place identified in the notice of the meeting in the city where the meeting is to be held. A shareholder, his agent, or attorney is entitled on written demand to inspect and, subject to the requirements of Section 2.14 of these Bylaws, to inspect and copy the list during regular business hours and during the period it is available for inspection. The Corporation shall maintain the shareholder list in written form or in another form capable of conversion into written form within a reasonable time. (16-10a-720) Section 2.7. Shareholder Quorum and Voting Requirements. (a) Quorum. Unless the Articles of Incorporation, a Bylaw adopted by the shareholders pursuant to the Utah Revised Business Corporation Act, or the Utah Revised Business Corporation Act provides otherwise, a majority of the votes entitled to be cast on the matter by the voting group constitutes a quorum of that voting group for action on that matter. (16-10a-725(1)) (b) Approval of Actions. If a quorum exists, action on a matter (other than the election of directors) by a voting group is approved if the votes cast within the voting group favoring the action exceed the votes cast opposing the action, unless the Articles of Incorporation, a Bylaw adopted by the shareholders pursuant to the Utah Revised Business Corporation Act, or the Utah Revised Business Corporation Act requires a greater number of affirmative votes. (16-10a-725(3)) 5 (c) Single Voting Group. If the Articles of Incorporation or the Utah Revised Business Corporation Act provides for voting by a single voting group on a matter, action on that matter is taken when approved by that voting group. (16-10-726(1)) (d) Voting Groups. Shares entitled to vote as a separate voting group may take action on a matter at a meeting only if a quorum of those shares exists with respect to that matter. (16-10a-725(1)) If the Articles of Incorporation or the Utah Revised Business Corporation Act provides for voting by two or more voting groups on a matter, action on that matter is taken only when approved by each of those voting groups counted separately. One voting group may vote on a matter even though another voting group entitled to vote on the matter has not voted. (16-10a-726(2)) (e) Effect of Representation. Once a share is represented for any purpose at a meeting, including the purpose of determining that a quorum exists, it is deemed present for quorum purposes for the remainder of the meeting and for any adjournment of that meeting, unless a new record date is or must be set for that adjourned meeting. (16-10a-725(2)) Section 2.8. Proxies. At all meetings of the shareholders, a shareholder may vote in person or by a proxy executed in any lawful manner. Such proxy shall be filed with the Corporation before or at the time of the meeting. No proxy shall be valid after eleven months from the date of its execution unless otherwise provided in the proxy. (16-10a-722) Section 2.9. Voting of Shares. (a) Votes per Share. Unless otherwise provided in the Articles of Incorporation, each outstanding share entitled to vote shall be entitled to one vote, and each fractional share shall be entitled to a corresponding fractional vote, upon each matter submitted to a vote at a meeting of shareholders. (16-10a-721(1)) (b) Restriction on Shares Held by Controlled Corporation. Except as provided by specific court order, no shares of the Corporation held by another corporation, if a majority of the shares entitled to vote for the election of directors of such other corporation are held by the Corporation, shall be voted at any meeting of the Corporation or counted in determining the total number of outstanding shares at any given time for purposes of any meeting. However, the power of the Corporation 6 to vote any shares, including its own shares, held by it in a fiduciary capacity is not hereby limited. (16-10a-721(2), (3)) (c) Redeemable Shares. Redeemable shares are not entitled to be voted after notice of redemption is mailed to the holders thereof and a sum sufficient to redeem the shares has been deposited with a bank, trust company, or other financial institution under an irrevocable obligation to pay the holders the redemption price on surrender of the shares. (16-10a-721(4)) Section 2.10. Corporation's Acceptance of Votes. (a) Corresponding Name. If the name signed on a vote, consent, waiver, proxy appointment, or proxy appointment revocation corresponds to the name of a shareholder, the Corporation, if acting in good faith, is entitled to accept the vote, consent, waiver, proxy appointment, or proxy appointment revocation and give it effect as the act of the shareholder. (16-10a-724(1)) (b) Name does not Correspond. If the name signed on a vote, consent, waiver, proxy appointment, or proxy appointment revocation does not correspond to the name of a shareholder, the Corporation, if acting in good faith, is nevertheless entitled to accept the vote, consent, waiver, proxy appointment, or proxy appointment revocation and give it effect as the act of the shareholder if: (1) The shareholder is an entity as defined in the Utah Revised Business Corporation Act and the name signed purports to be that of an officer or agent of the entity; (2) the name signed purports to be that of an administrator, executor, guardian, or conservator representing the shareholder and, if the Corporation requests, evidence of fiduciary status acceptable to the Corporation has been presented with respect to the vote, consent, waiver, proxy appointment, or proxy appointment revocation; (3) the name signed purports to be that of a receiver or trustee in bankruptcy of the shareholder and, if the Corporation requests, evidence of this status acceptable to the Corporation has been presented with respect to the vote, consent, waiver, proxy appointment, or proxy appointment revocation; 7 (4) the name signed purports to be that of a pledgee, beneficial owner, or attorney-in-fact of the shareholder and, if the Corporation requests, evidence acceptable to the Corporation of the signatory's authority to sign for the shareholder has been presented with respect to the vote, consent, waiver, proxy appointment, or proxy appointment revocation; (5) two or more persons are the shareholder as cotenants or fiduciaries and the name signed purports to be the name of at least one of the cotenants or fiduciaries and the person signing appears to be acting on behalf of all the cotenants or fiduciaries; or (6) the acceptance of the vote, consent, waiver, proxy appointment, or proxy appointment revocation is otherwise proper under rules established by the Corporation that are not inconsistent with the provisions of this Section 2.10. (16-10a-724(2)) (c) Shares owned by Two or More Persons. If shares of the Corporation are registered in the names of two or more persons, or if two or more persons have the same fiduciary relationship respecting the same shares, unless the Secretary is given written notice to the contrary and furnished with a copy of the instrument creating the relationship, their acts with respect to voting shall have the following effect: (1) If only one votes, the act binds all; (2) if more than one vote, the act of the majority so voting binds all; (3) if more than one vote, but the vote is evenly split on any particular matter, each faction may vote the securities in question proportionately; and (4) if the instrument so filed or the registration of the shares shows that any tenancy is held in unequal interests, a majority or even split for the purpose of this Section 2.10 shall be a majority or even split in interest. (16-10a-724(3)) 8 (d) Rejection. The Corporation is entitled to reject a vote, consent, waiver, proxy appointment, or proxy appointment revocation if the Secretary or other officer or agent authorized to tabulate votes, acting in good faith, has reasonable basis for doubt about the validity of the signature on it or about the signatory's authority to sign for the shareholder. (16-10a-724(4)) (e) No Liability. The Corporation and its officer or agent who accepts or rejects a vote, consent, waiver, proxy appointment, or proxy appointment revocation in good faith and in accordance with the standards of this Section 2.10 are not liable in damages to the shareholder for the consequences of the acceptance or rejection. (16-10a-724(5)) (f) Validity. Corporate action based on the acceptance or rejection of a vote, consent, waiver, proxy appointment, or proxy appointment revocation under this Section 2.10 is valid unless a court of competent jurisdiction determines otherwise. (16-10a-724(6)) Section 2.11. Informal Action by Shareholders. (a) Written Consent. Unless otherwise provided in the Articles of Incorporation, any action which may be taken at any annual or special meeting of shareholders may be taken without a meeting and without prior notice if one or more consents in writing, setting forth the action so taken, are signed by the holders of outstanding shares having not less than the minimum number of votes necessary to authorize or take the action at a meeting at which all shares entitled to vote thereon were present and voted. (16-10a-704(1)) (b) Notice Requirements. Unless written consents of all shareholders entitled to vote have been obtained, the Corporation shall give notice of any shareholder approval without a meeting at least ten (10) days before the consummation of the action authorized by the approval to: (1) Those shareholders entitled to vote who have not consented in writing; and (2) those shareholders not entitled to vote and to whom the Utah Revised Business Corporation Act requires notice be given. 9 Such notice shall contain or be accompanied by the same material that would have been required if a formal meeting had been called to consider the action. (16-10a-704(2)) (c) Revocation. Any shareholder giving a written consent, or the shareholders' proxyholder, or a transferee of the shares or a personal representative of the shareholder or their respective proxyholder, may revoke the consent by a signed writing describing the action and stating that the shareholder's prior consent is revoked, if the writing is received by the Corporation prior to the effectiveness of the action. (16-10a-704(3)) (d) Effective Date. Action taken pursuant to this Section 2.11 is not effective unless all written consents on which the Corporation relies for the taking of action are received by the Corporation within a sixty (60) day period and are not revoked. Action thus taken is effective as of the date the last written consent necessary to effect the action is received by the Corporation, unless all the written consents necessary to effect the action specify a later date as the effective date of action. If the Corporation has received written consents signed by all shareholders entitled to vote with respect to the action, the effective date of the action may be any date that is specified in all the written consents as the effective date of the action. The writing may be received by the Corporation by electronically transmitted facsimile or other form of communication providing the Corporation with a complete copy thereof, including a copy of the signature. (16-10a-704(4)) (e) Election of Directors. Notwithstanding paragraph (a) of this Section 2.11, directors may not be elected by written consent except by unanimous written consent of all shares entitled to vote for the election of directors. (16-10a-704(5)) (f) Effect of Action Without a Meeting. Action taken under this Section 2.11 has the same effect as action taken at a meeting of shareholders and may be so described in any document. (16-10a-704(7)) Section 2.12. Waiver of Notice. A shareholder may waive any notice required by the Utah Revised Business Corporation Act, the Corporation's Articles of Incorporation or these Bylaws. Such a waiver may be made before or after the date and time stated in the notice as the date or time when any action will occur or has occurred. Such a waiver must be in a writing signed by the shareholder 10 and must be delivered to the Corporation for inclusion in the minutes of the relevant meeting of the shareholders or in the Corporation's records. (16-10a-706(1)) Section 2.13. Voting for Directors. At each election of directors, unless otherwise provided in the Articles of Incorporation or the Utah Revised Business Corporation Act, every shareholder entitled to vote at the election has the right to vote, in person or by proxy, all of the votes to which the shareholder's shares are entitled for as many persons as there are directors to be elected and for whose election the shareholder has the right to vote. Unless otherwise provided in the Articles of Incorporation or the Utah Revised Business Corporation Act, directors are elected by a plurality of the votes cast by the shares entitled to be voted in the election, at a meeting at which a quorum is present. (16-10a-728(1), (2)) Section 2.14. Rights of Shareholders to Inspect Corporate Records. (a) Minutes and Accounting Records. The Corporation shall keep, as permanent records, minutes of all meetings of its shareholders and Board of Directors, a record of all actions taken by its shareholders or Board of Directors without a meeting, a record of all actions taken on behalf of the Corporation by a committee of the Board of Directors in place of the Board of Directors, and a record of all waivers of notices of meetings of its shareholders, meetings of the Board of Directors, or any meetings of committees of the Board of Directors. The Corporation shall maintain appropriate accounting records. (16-10a-1601(1), (2)) (b) Absolute Inspection Rights. If a shareholder gives the Corporation written notice of the shareholder's demand at least five (5) business days before the date on which the shareholder wishes to inspect and copy, a shareholder (or the shareholder's agent or attorney) has the right to inspect and copy, during regular business hours, any of the following records, all of which the Corporation is required to keep at its principal office: (1) The Corporation's Articles of Incorporation currently in effect; (2) the Corporation's Bylaws currently in effect; (3) the minutes of all shareholders' meetings, and records of all action taken by shareholders without a meeting, for the past three years; 11 (4) all written communications within the past three years to shareholders as a group or to the holders of any class or series of shares as a group; (5) a list of the names and business addresses of the Corporation's current officers and directors; (6) the Corporation's most recent annual report delivered to the Division; and (7) all financial statements prepared for periods ending during the last three years that a shareholder could request pursuant to Section 16-10a-1605 of the Utah Revised Business Corporation Act. (16-10a-1601(5) and 16-10a-1602(1)) (c) Conditional Inspection Rights. If a shareholder gives the Corporation a written demand made in good faith and for a proper purpose at least five business days before the date on which the shareholder wishes to inspect and copy, the shareholder describes with reasonable particularity the shareholder's purpose and the records the shareholder desires to inspect, and the records are directly connected with the shareholder's purpose, the shareholder (or the shareholder's agent or attorney) is entitled to inspect and copy, during regular business hours at a reasonable location specified by the Corporation, any of the following records of the Corporation: (1) Excerpts from: (i) Minutes of any meeting of the Board of Directors, records of any action of a committee of the Board of Directors while acting on behalf of the Corporation in place of the Board of Directors; (ii) minutes of any meeting of the shareholders; (iii) records of action taken by the shareholders without a meeting; and 12 (iv) waivers of notices of any meeting of the shareholders, of any meeting of the Board of Directors, or of any meeting of a committee of the Board of Directors; (2) accounting records of the Corporation; and (3) the record of the Corporation's shareholders referred to in Section 16-10a-1601(3) of the Utah Revised Business Corporation Act. (16-10a-1602(2)) (d) Copy Costs. The right to copy records includes, if reasonable, the right to receive copies made by photographic, xerographic, or other means. The Corporation may impose a reasonable charge, payable in advance, covering the costs of labor and material, for copies of any documents provided to a shareholder. The charge may not exceed the estimated cost of production or reproduction of the records. (16-10a-1603) (e) Shareholder Includes Beneficial Owner. For purposes of this Section 2.14, the term "shareholder" shall include a beneficial owner whose shares are held in a voting trust and any other beneficial owner who establishes beneficial ownership. (16-10a-1602(4)(b)) Section 2.15. Furnishing Financial Statements to a Shareholder. Upon the written request of any shareholder, the Corporation shall mail to the shareholder its most recent annual or quarterly financial statements showing in reasonable detail its assets and liabilities and the results of its operations. (16-10a-1605) Section 2.16. Information Respecting Shares. Upon the written request of any shareholder, the Corporation, at its own expense, shall mail to the shareholder information respecting the designations, preferences, limitations, and relative rights applicable to each class of shares, the variations determined for each series, and the authority of the Board of Directors to determine variations for any existing or future class or series. The Corporation may comply by mailing the shareholder a copy of its Articles of Incorporation containing such information. (16-10a-1606) 13 ARTICLE 3. BOARD OF DIRECTORS Section 3.1. General Powers. All corporate powers shall be exercised by or under the authority of, and the business and affairs of the Corporation shall be managed under the direction of, the Board of Directors, subject to any limitation set forth in the Articles of Incorporation or in any agreement authorized by Section 16-10a-732 of the Utah Revised Business Corporation Act. (16-10a-801) Section 3.2. Number, Tenure and Qualifications of Directors. (a) Number. The number of directors of the Corporation shall be not less than three (3) (unless the number of shareholders entitled to vote for the directors of the Corporation is less than three (3), then the number of directors may be equal to or greater than the number of such shareholders) nor more than fourteen (14). The number of directors may be fixed or changed within the range specified in this Section 3.2 by the shareholders or the Board of Directors, but no decrease may shorten the term of any incumbent director. (16-10a-803(1), (2)) (b) Tenure. Each director shall hold office until the next annual meeting of shareholders or until removed. However, if a director's term expires, the director shall continue to serve until the director's successor shall have been elected and qualified, or until there is a decrease in the number of directors. (16-10a-805) (c) Qualifications. Directors need not be residents of the State of Utah or shareholders of the Corporation unless the Articles of Incorporation so prescribe. (16-10a-802) Section 3.3. Regular Meetings of the Board of Directors. A regular meeting of the Board of Directors shall be held without other notice than provided by this Section 3.3 immediately after, and at the same place as, the annual meeting of shareholders. The Board of Directors may provide, by resolution, the time and place for the holding of additional regular meetings without other notice than such resolution. Section 3.4. Special Meetings of the Board of Directors. Special meetings of the Board of Directors may be called by or at the request of the President, a Vice President or any two (2) directors, who may fix any place, either within or outside the State of Utah, as the place for holding the meeting. 14 Section 3.5. Notice and Waiver of Notice of Special Director Meetings. (a) Notice. Unless the Articles of Incorporation provide for a longer or shorter period, special meetings of the Board of Directors must be preceded by at least two (2) days notice of the date, time, and place of the meeting. (16-10a-822(2)) Notice may be communicated in person, by telephone, by any form of electronic communication, or by mail or private carrier. (16-10a-103(2)) At the written request of any director, notice of any special meeting of the Board of Directors shall be given to such director by facsimile or telex, as the case may be, at the number designated in writing by such director from time to time. (b) Effective Date. Notice of any meeting of the Board of Directors shall be deemed to be effective at the earliest of the following: (1) when received; (2) five (5) days after it is mailed; or (3) the date shown on the return receipt if sent by registered or certified mail, return receipt requested, and the receipt is signed by or on behalf of the director. (16-10a-103(5)). (c) Waiver of Notice. A director may waive notice of any meeting. Except as provided in this Section 3.5, the waiver must be in writing and signed by the director entitled to the notice. The waiver shall be delivered to the Corporation for filing with the corporate records, but delivery and filing are not conditions to its effectiveness. (16-10a-823(1)) (d) Effect of Attendance. The attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except when a director attends a meeting for the express purpose of objecting to the transaction of any business and at the beginning of the meeting, or promptly upon arrival, the director objects to holding the meeting or transacting business at the meeting because of lack of notice or defective notice, and does not thereafter vote for or assent to action taken at the meeting. (16-10a-823(2)) Section 3.6. Quorum of Directors. A majority of the number of directors prescribed by resolution (or if no number is prescribed, the number in office immediately before the meeting begins) shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, unless the Articles of Incorporation require a greater number. (16-10a-824(1)(b)) 15 Section 3.7. Manner of Acting. (a) Action by Majority. If a quorum is present when a vote is taken, the affirmative vote of a majority of directors present is the act of the Board of Directors, unless the Corporation's Articles of Incorporation or the Utah Revised Business Corporation Act requires the vote of a greater number of directors. (16-10a-824(3)) (b) Telephonic Meetings. Unless the Articles of Incorporation provide otherwise, any or all directors may participate in a regular or special meeting by, or conduct the meeting through the use of, any means of communication by which all directors participating may simultaneously hear each other during the meeting. A director participating in a meeting by this means is deemed to be present in person at the meeting. (16-10a-820(2)) (c) Effect of Presence at Meeting. A director who is present at a meeting of the Board of Directors when corporate action is taken is considered to have assented to the action taken, unless: (1) The director objects at the beginning of the meeting, or promptly upon arrival, to holding it or transacting business at the meeting; (2) the director contemporaneously requests his dissent or abstention as to any specific action to be entered into the minutes of the meeting; or (3) the director causes written notice of a dissent or abstention as to any specific action to be received by the presiding officer of the meeting before its adjournment or by the Corporation promptly after adjournment of the meeting. (16-10a-824(4)) (d) Right of Dissent or Abstention. The right of dissent or abstention as to a specific action is not available to a director who votes in favor of the action taken. (16-10a-824(5)) Section 3.8. Director Action By Written Consent. Unless the Articles of Incorporation or the Utah Revised Business Corporation Act provide otherwise, any action required or permitted to be taken by the Board of Directors at a 16 meeting may be taken without a meeting if all the directors consent to the action in writing. Action is taken by written consent at the time the last director signs a writing describing the action taken, unless, prior to that time, any director has revoked a consent by a writing signed by the director and received by the Secretary. Action taken by written consent is effective when the last director signs the consent, unless the Board of Directors establishes a different effective date. Action taken by written consent has the same effect as action taken at a meeting of directors and may be described as such in any document. (16-10a-821) Section 3.9. Resignation of Directors. A director may resign at any time by giving a written notice of resignation to the Corporation. A resignation of a director is effective when the notice is received by the Corporation unless the notice specifies a later effective date. A director who resigns may deliver a statement of his resignation pursuant to Section 16-10a-1608 of the Utah Revised Business Corporation Act to the Division for filing. (16-10a-807) Section 3.10. Removal of Directors. The shareholders may remove one or more directors at a meeting called for that purpose if notice has been given that a purpose of the meeting is such removal. The removal may be with or without cause, unless the Articles of Incorporation provide that directors may only be removed with cause. If a director is elected by a voting group of shareholders, only the shareholders of that voting group may participate in the vote to remove the director. If cumulative voting is in effect, a director may not be removed if the number of votes sufficient to elect the director under cumulative voting is voted against the director's removal. If cumulative voting is not in effect, a director may be removed only if the number of votes cast to remove the director exceeds the number of votes cast against removal of the director. (16-10a-808) Section 3.11. Board of Director Vacancies. (a) Vacancies. Unless the Articles of Incorporation provide otherwise, if a vacancy occurs on the Board of Directors, including a vacancy resulting from an increase in the number of directors: (1) The shareholders may fill the vacancy; (2) the Board of Directors may fill the vacancy; or 17 (3) if the directors remaining in office constitute fewer than a quorum of the board, they may fill the vacancy by the affirmative vote of a majority of all the directors remaining in office. (16-10a-810(1)) (b) Rights of Voting Groups. Unless the Articles of Incorporation provide otherwise, if the vacant office was held by a director elected by a voting group of shareholders: (1) If one or more directors were elected by the same voting group, only they are entitled to vote to fill the vacancy if it is filled by the directors; and (2) only the holders of shares of that voting group are entitled to vote to fill the vacancy if it is filled by the shareholders. (16-10a-810(2)) (c) Election of Director Prior to Vacancy. A vacancy that will occur at a specific later date, because of a resignation effective at a later date, may be filled before the vacancy occurs, but the new director may not take office until the vacancy occurs. (16-10a-810(3)) (d) Effect of Expiration of Term. If a director's term expires, the director shall continue to serve until the director's successor is elected and qualified or until there is a decrease in the number of directors. The term of a director elected to fill a vacancy expires at the next shareholders' meeting at which directors are elected. (16-10a-805(5)) Section 3.12. Director Compensation. Unless otherwise provided in the Articles of Incorporation, by resolution of the Board of Directors, each director may be paid his expenses, if any, of attendance at each meeting of the Board of Directors, and may be paid a stated salary as a director or a fixed sum for attendance at each meeting of the Board of Directors or both. No such payment shall preclude any director from serving the Corporation in any capacity and receiving compensation therefor. Section 3.13. Director Committees. Committees of the Board of Directors may be established in accordance with Article 4 of these Bylaws. 18 Section 3.14. Director's Rights to Inspect Corporate Records. (a) Absolute Inspection Rights. If a director gives the Corporation written notice of the director's demand at least five (5) business days before the date on which the director wishes to inspect and copy, the director (or the director's agent or attorney) has the right to inspect and copy, during regular business hours, any of the following records, all of which the Corporation is required to keep at its principal office: (1) The Corporation's Articles of Incorporation currently in effect; (2) the Corporation's Bylaws currently in effect; (3) the minutes of all shareholders' meetings, and records of all action taken by shareholders without a meeting, for the past three years; (4) all written communications within the past three years to shareholders as a group or to the holders of any class or series of shares as a group; (5) a list of the names and business addresses of the Corporation's current officers and directors; (6) the Corporation's most recent annual report delivered to the Division; and (7) all financial statements prepared for periods ending during the last three years that a shareholder could request. (16-10a-1601(5) and 16-10a-1602(1)) (b) Conditional Inspection Rights. In addition, if a director gives the Corporation a written demand made in good faith and for a proper purpose at least five business days before the date on which the director wishes to inspect and copy, the director describes with reasonable particularity the director's purpose and the records the director desires to inspect, and the records are directly connected with the director's purpose, the director (or the director's agent or attorney) is entitled to inspect and copy, during regular business hours at a reasonable location specified by the Corporation, any of the following records of the Corporation: 19 (1) Excerpts from: (i) Minutes of any meeting of the Board of Directors, records of any action of a committee of the Board of Directors while acting on behalf of the Corporation in place of the Board of Directors; (ii) minutes of any meeting of the shareholders; (iii) records of action taken by the shareholders without a meeting; and (iv) waivers of notices of any meeting of the shareholders, of any meeting of the Board of Directors, or of any meeting of a committee of the Board of Directors; (2) accounting records of the Corporation; and (3) the record of the Corporation's shareholders referred to in Section 16-10a-1601(3) of the Utah Revised Business Corporation Act. (16-10a-1602(2)) (c) Copy Costs. The right to copy records includes, if reasonable, the right to receive copies made by photographic, xerographic, or other means. The Corporation may impose a reasonable charge, payable in advance, covering the costs of labor and material, for copies of any documents provided to the director. The charge may not exceed the estimated cost of production or reproduction of the records. (16-10a-1603) ARTICLE 4. EXECUTIVE COMMITTEE AND OTHER COMMITTEES Section 4.1. Creation of Committees. Unless the Articles of Incorporation provide otherwise, the Board of Directors may create an Executive Committee and such other committees as it may deem appropriate and appoint members of the Board of Directors to serve on such committees. Each committee must have two (2) or more members, one of whom shall be the Chairman of the Board, if there be such an officer, and one of whom shall be the President of the Corporation. (16-10a-825(1)) 20 Section 4.2. Approval of Committees and Members. The creation of a committee and appointment of members to it must be approved by the greater of: (1) A majority of all the directors in office when the action is taken; or (2) the number of directors required by the Articles of Incorporation to take such action, or, if not specified in the Articles of Incorporation, the number required by Section 3.7 of these Bylaws to take action. (16-10a-825(2)) Section 4.3. Required Procedures. Sections 3.4 through 3.10 of these Bylaws, which govern procedures applicable to the Board of Directors, also apply to committees and their members. (16-10a-825(3)) Section 4.4. Authority. Unless limited by the Articles of Incorporation or the Utah Revised Business Corporation Act, each committee may exercise those aspects of the authority of the Board of Directors which the Board of Directors confers upon such committee in the resolution creating the committee. (16-10a-825(4)) Section 4.5. Authority of Executive Committee. The Executive Committee shall have, and may exercise all powers of the Board of Directors with respect to the management of the business and affairs of the Corporation during the intervals between the meetings of the Board of Directors. Provided, however, the Executive Committee shall not have the power to fill vacancies on the Board of Directors or to amend these Bylaws. Section 4.6. Compensation. Unless otherwise provided in the Articles of Incorporation, the Board of Directors may provide for the payment of a fixed sum and/or expenses of attendance to any member of a committee for attendance at each meeting of such committee. Provided, however, no such payments shall be made to committee members who are salaried employees of the Corporation. ARTICLE 5. OFFICERS Section 5.1. Officers. The officers of the Corporation shall be a President, one or more Vice Presidents, a Secretary, and a Treasurer, each of whom 21 shall be appointed by the Board of Directors. The Board of Directors may appoint, but shall not be required to appoint, a Chairman of the Board, one or more Vice Chairman and a Chief Executive Officer. Such other officers and assistant officers as may be deemed necessary, including any Vice Presidents, may be appointed by the Board of Directors. If specifically authorized by the Board of Directors, an officer may appoint one or more officers or assistant officers. The same individual may simultaneously hold more than one office in the Corporation. (16-10a-830) Section 5.2. Appointment and Term of Office. The officers of the Corporation shall be appointed by the Board of Directors for such term as is determined by the Board of Directors. If no term is specified, each officer shall hold office until the officer resigns, dies, is removed in the manner provided in Section 5.4 of these Bylaws, or until the first meeting of the directors held after the next annual meeting of the shareholders. If the appointment of officers shall not be made at such meeting, such appointment shall be made as soon thereafter as is convenient. If a vacancy shall occur in any office, or if a new office shall be created, the Board of Directors may appoint an officer or officers to fill such a vacancy or new office, and such appointment shall be for the term determined by the Board of Directors. Each officer shall hold office until his successor shall have been duly appointed. (16-10a-830) The designation of a specified term does not grant to the officer any contract rights, and the Board of Directors may remove the officer at any time prior to the end of such term. (16-10a-833) Section 5.3. Resignation of Officers. Any officer may resign at any time by giving written notice of resignation to the Corporation. (16-10a-832(1)) Section 5.4. Removal of Officers. Any officer or agent may be removed by the Board of Directors at any time, with or without cause. Such removal shall be without prejudice to the contract rights, if any, of the person so removed. Appointment of an officer or agent shall not of itself create contract rights. (16-10a-832) Section 5.5. The Chairman of the Board. The Chairman of the Board, if there be such an officer, shall have the following powers and duties: 22 (a) To be the senior officer of the Corporation and, in addition to the duties specified in this Section 5.5, to perform such duties as may be assigned to him by the Board of Directors; (b) to preside at all meetings of the shareholders of the Corporation; (c) to preside at all meetings of the Board of Directors; (d) to be a member of the Executive Committee, if any. (16-10a-831) Section 5.6. The Vice Chairman. The Board of Directors may from time to time, designate and appoint one or more Vice Chairmen. Each Vice Chairman shall have such powers and perform such duties as may from time to time be assigned to him by the Board of Directors or by the Chairman of the Board. At the request or in the absence or disability of the Chairman of the Board, the Vice Chairman, if there be such an officer, may perform all the duties of the Chairman of the Board and when so acting, shall have all the powers of, and be subject to all the restrictions upon, the Chairman of the Board. Section 5.7. Chief Executive Officer. The Chief Executive Officer, if there be such an officer, shall be the principal executive officer of the Corporation and, subject to the control of the Board of Directors, in general, shall supervise and control all of the business and affairs of the Corporation. If neither a Chairman of the Board nor a Vice Chairman has been appointed, or in their absence, the Chief Executive Officer, when present, shall preside at all meetings of the shareholders and of the Board of Directors. The Chief Executive Officer may sign, with the Secretary or any other proper officer of the Corporation authorized by the Board of Directors, certificates for shares of the Corporation, the issuance of which shall have been authorized by a resolution of the Board of Directors, and deeds, mortgages, bonds, contracts, or other instruments, except in cases where the signing and execution thereof shall be expressly delegated by the Board of Directors or by these Bylaws to some other officer or agent of the Corporation, or shall be required by law to be otherwise signed or executed; and in general shall perform all duties incident to the office of Chief Executive Officer and such other duties as may be prescribed by the Board of Directors from time to time. (16-10a-831) 23 Section 5.8. President. The President shall be an executive officer of the Corporation, and, if there be no Chief Executive Officer, shall be the principal executive officer of the Corporation and, subject to the control of the Board of Directors, in general, shall supervise and control all of the business and affairs of the Corporation. In the absence of the Chief Executive Officer or in the event of his death, inability, or refusal to act, the President shall perform the duties of the Chief Executive Officer, and when so acting, shall have all the powers of and be subject to all the restrictions upon the Chief Executive Officer. In the absence of the Chairman of the Board, the Vice Chairman and the Chief Executive Officer, the President, when present, shall preside at all meetings of the shareholders and of the Board of Directors. The President may sign, with the Secretary or any other proper officer of the Corporation authorized by the Board of Directors, certificates for shares of the Corporation, the issuance of which shall have been authorized by a resolution of the Board of Directors, and deeds, mortgages, bonds, contracts, or other instruments, except in cases where the signing and execution thereof shall be expressly delegated by the Board of Directors or by these Bylaws to some other officer or agent of the Corporation, or shall be required by law to be otherwise signed or executed; and in general shall perform all duties incident to the office of President and such other duties as may be prescribed by the Chief Executive Officer or the Board of Directors from time to time. (16-10a-831) Section 5.9. Vice Presidents. In the absence of the President or in the event of his death, inability, or refusal to act, the Vice President (or in the event there be more than one Vice President, the Vice Presidents in the order designated at the time of their election, or in the absence of any designation, then in the order of their appointment) shall perform the duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President. If there is no Vice President, then the Treasurer shall perform such duties of the President. Any Vice President may sign, with the Secretary or an Assistant Secretary, certificates for shares of the Corporation the issuance of which have been authorized by resolution of the Board of Directors; and shall perform such other duties as from time to time may be assigned to him or her by the Chief Executive Officer, the President or by the Board of Directors. (16-10a-831) 24 Section 5.10. Secretary. The Secretary shall have the following powers and duties: (a) to keep the minutes of the proceedings of the shareholders and of the Board of Directors and the other records and information of the Corporation required to be kept, in one or more books provided for that purpose; (b) to see that all notices are duly given in accordance with the provisions of these Bylaws or as required by law; (c) to be custodian of the corporate records and of any seal of the Corporation; (d) when requested or required, to authenticate any records of the Corporation; (e) to keep a register of the post office address of each shareholder which shall be furnished to the Secretary by such shareholder; (f) to sign with the Chief Executive Officer, the President, or a Vice President, certificates for shares of the Corporation, the issuance of which shall have been authorized by resolution of the Board of Directors; (g) to have general charge of the stock transfer books of the Corporation; and (h) in general, to perform all duties incident to the office of Secretary and such other duties as from time to time may be assigned to him or her by the Chief Executive Officer, the President or by the Board of Directors. (16-10a-830 and 16-10a-831) Section 5.11. Treasurer. The Treasurer shall have the following powers and duties: (a) to have charge and custody of and be responsible for all funds and securities of the Corporation; (b) to receive and give receipts for moneys due and payable to the Corporation from any source whatsoever, and deposit all such moneys in the name of 25 the Corporation in such banks, trust companies, or other depositaries as shall be selected by the Board of Directors; (c) in general, to perform all of the duties incident to the office of Treasurer and such other duties as from time to time may be assigned to him or her by the Chief Executive Officer, the President or by the Board of Directors; and (d) if required by the Board of Directors, to give a bond for the faithful discharge of his or her duties in such sum and with such surety or sureties as the Board of Directors shall determine. (16-10a-831) Section 5.12. Assistant Secretaries and Assistant Treasurers. The Assistant Secretaries, when authorized by the Board of Directors, may sign, with the President or a Vice President, certificates for shares of the Corporation, the issuance of which shall have been authorized by a resolution of the Board of Directors. The Assistant Treasurers, if required by the Board of Directors, shall give bonds for the faithful discharge of their duties in such sums and with such sureties as the Board of Directors shall determine. The Assistant Secretaries and Assistant Treasurers, in general, shall perform such duties as shall be assigned to them by the Secretary or the Treasurer, respectively, or by the Chief Executive Officer, the President or the Board of Directors. (16-10a-831) Section 5.13. General Manager. The Chief Executive Officer, the President or the Board of Directors (or the Executive Committee, if any) may appoint a General Manager who may, or may not, be one of the officers or Directors of the Corporation. The General Manager shall have the following powers and duties: (a) If so designated by the Board of Directors, the General Manager may be an executive officer of the Corporation. (b) If so directed by the Chief Executive Officer, the President, or the Board of Directors (or the Executive Committee, if any), the General Manager may have management of the business of the Corporation and its dealings and, if so directed, may have general charge of the business affairs and property of the Corporation, general supervision over its employees and agents; provided, however, the General Manager shall be at all times subject to the control of the Chief Executive Officer, the President or the Board of Directors (or the Executive Committee, if any). 26 (c) If so directed by the Chief Executive Officer, the President, or the Board of Directors (or the Executive Committee, if any), the General Manager may employ all employees of the Corporation, or delegate such employment to subordinate officers or division chiefs, and shall have authority to discharge any person so employed. (d) The General Manager shall make a report to the Chief Executive Officer, the President and the Board of Directors quarterly, or more often if required to do so, setting forth the result of the operations under his charge, together with suggestions looking to the improvement and betterment of the condition of the Corporation, and to perform such other duties as the Board of Directors shall require. Section 5.14. Salaries. The salaries of the officers shall be fixed from time to time by the Board of Directors; provided, however, that the Board of Directors may delegate to any person or group of persons the power to fix the salaries or other compensation of any subordinate officers or agents appointed in accordance with the provisions of Section 5.2 hereof. No officer shall be prevented from receiving any such salary or compensation by reason of the fact that he is also a Director of the Corporation. Section 5.15. Surety Bonds. In the event the Board of Directors shall so require, any officer or agent of the Corporation shall execute to the Corporation a bond in such sums and with such surety or sureties as the Board of Directors may direct, conditioned upon the faithful performance of his duties to the Corporation, including responsibility for negligence and for the accounting for all property, monies, or securities of the Corporation which may come into his hands. ARTICLE 6. LIMITATION OF LIABILITY AND INDEMNIFICATION Section 6.1. Limitation of Liability of Directors. Directors shall not be liable to the Corporation or its shareholders for monetary damages for any action taken or any failure to take any action, as a director, except liability for: (a) the amount of a financial benefit received by a director to which he is not entitled; (b) an intentional infliction of harm on the Corporation or its shareholders; 27 (c) a violation of Section 16-10a-842 of the Utah Revised Business Corporation Act; (d) an intentional violation of criminal law. (16-10a-841(1)) Section 6.2. Indemnification of Directors. Unless otherwise provided in the Articles of Incorporation, the Corporation shall indemnify any individual made a party to a proceeding because the individual is or was a director of the Corporation against liability incurred in the proceeding. Provided, however, the Corporation shall only indemnify an individual if it has authorized the indemnification in accordance with Section 16-10a-906(4) of the Utah Revised Business Corporation Act and a determination has been made in accordance with the procedures set forth in Section 16-10a-906(2) of the Utah Revised Business Corporation Act that indemnification is in accordance with the following requirements: (a) Standard of Conduct. The Corporation shall determine that: (1) The individual's conduct was in good faith; (2) the individual reasonably believed that his or her conduct was in, or not opposed to, the Corporation's best interests; and (3) in the case of any criminal proceeding, the individual had no reasonable cause to believe that his or her conduct was unlawful. (16-10a-902(1)) (b) No Indemnification in Certain Circumstances. The Corporation shall not indemnify an individual under this Section 6.2: (1) In connection with a proceeding by or in the right of the Corporation in which the individual was adjudged liable to the Corporation; or (2) in connection with any other proceeding charging that the individual derived an improper personal benefit, whether or not involving action in the individual's official capacity, in which 28 proceeding he or she was adjudged liable on the basis that he or she derived an improper personal benefit. (16-10a-902(4)) (c) Indemnification in Derivative Actions Limited. Indemnification permitted under this Section 6.2 in connection with a proceeding by or in the right of the Corporation is limited to reasonable expenses incurred in connection with the proceeding. (16-10a-902(5)) Section 6.3. Advance Payment of Expenses. Unless otherwise provided in the Articles of Incorporation, the Corporation may pay for or reimburse in advance of final disposition of any proceeding the reasonable expenses incurred by an individual who is a party to a proceeding because he or she is or was a director of the Corporation if (i) in accordance with the procedures and standards set forth in Section 16-10a-906(4) of the Utah Revised Business Corporation Act, an authorization of payment is made, and (ii) in accordance with the procedures of Section 16-10a-906(2) of the Utah Revised Business Corporation Act, a determination is made that the following has occurred: (a) Written Affirmation. The individual has furnished to the Corporation a written affirmation of the individual's good faith belief that the individual has met the standard of conduct described in Section 6.2 of these Bylaws. (b) Written Undertaking. The individual has furnished to the Corporation a written undertaking, executed personally or on the individual's behalf, to repay the advance if it is ultimately determined that the individual did not meet the standard of conduct (which undertaking must be an unlimited general obligation of the individual but need not be secured and may be accepted without reference to financial ability to make repayment). (c) Factual Determination. A determination has been made that the facts then known to those making the determination would not preclude indemnification under Section 6.2 of these Bylaws or Part 9 of the Utah Revised Business Corporation Act. (16-10a-904) Section 6.4. Indemnification of Officers, Employees, Fiduciaries, and Agents. Unless otherwise provided in the Articles of Incorporation, the Corporation shall indemnify and advance expenses to any individual made a party to a proceeding because the individual is or was an officer, employee, fiduciary, or agent of the Corporation to the same extent as to an individual made a party to a 29 proceeding because the individual is or was a director of the Corporation, or to a greater extent, if not inconsistent with public policy, if provided for by general or specific action of the Board of Directors. (16-10a-907) Section 6.5. Insurance. The Corporation may purchase and maintain liability insurance on behalf of a person who is or was a director, officer, employee, fiduciary, or agent of the Corporation, or who, while serving as a director, officer, employee, fiduciary, or agent of the Corporation, is or was serving at the request of the Corporation as a director, officer, partner, trustee, employee, fiduciary, or agent of another foreign or domestic corporation or other person, or of an employee benefit plan, against liability asserted against or incurred by him or her in that capacity or arising from his or her status as a director, officer, employee, fiduciary, or agent, whether or not the Corporation would have power to indemnify him or her against the same liability under Sections 16-10a-902, 16-10a-903, or 16-10a-907 of the Utah Revised Business Corporation Act. Insurance may be procured from any insurance company designated by the Board of Directors, whether the insurance company is formed under the laws of the State of Utah or any other jurisdiction of the United States or elsewhere, including any insurance company in which the Corporation has an equity or any other interest through stock ownership or otherwise. (16-10a-908) ARTICLE 7. EXECUTION OF INSTRUMENTS, BORROWING OF MONEY AND DEPOSIT OF CORPORATE FUNDS Section 7.1. Execution of Instruments. Subject to any limitation contained in the Utah Revised Business Corporation Act, the Articles of Incorporation or these Bylaws, and subject to any limitations that may be imposed by the Board of Directors, the Chief Executive Officer, President, any Vice President or the Secretary, in the name and on behalf of the Corporation, may execute and deliver any contract or other instrument. Subject to any limitation contained in the Utah Revised Business Corporation Act, the Articles of Incorporation or these Bylaws, the Board of Directors may authorize in writing any other officer or agent to execute and deliver any contract or other instrument in the name and on behalf of the Corporation; any such authorization may be general or confined to specific instances. Section 7.2. Loans. No loan or advance shall be contracted on behalf of the Corporation, no negotiable paper or other evidence of its obligation under any loan or advance shall be issued in its name, and no property of the Corporation shall be mortgaged, pledged, hypothecated, transferred, or conveyed as 30 security for the payment of any loan, advance, indebtedness, or liability of the Corporation, unless and except as authorized by the Board of Directors. Any such authorization may be general or confined to specific instances. Section 7.3. Deposits. All monies of the Corporation not otherwise employed shall be deposited from time to time to its credit in such banks or trust companies or with such bankers or other depositories as the Board of Directors may select, or as from time to time may be selected by any officer or agent authorized to do so by the Board of Directors. Section 7.4. Checks, Drafts, etc. All notes, drafts, acceptances, checks, endorsements, and, subject to the provisions of these Bylaws, evidences of indebtedness of the Corporation shall be signed by such officer or officers or such agent or agents of the Corporation and in such manner as the Board of Directors from time to time may determine. Endorsements for deposit to the credit of the Corporation in any of its duly authorized depositories shall be in such manner as the Board of Directors from time to time may determine. Section 7.5. Bonds and Debentures. Every bond or debenture issued by the Corporation shall be evidenced by an appropriate instrument which shall be signed by the Chief Executive Officer, President or a Vice President and by the Secretary. Where such bond or debenture is authenticated with the manual signature of an authorized officer of the Corporation or other trustee designated by the indenture of trust or other agreement under which such security is issued, the signature of any of the Corporation's officers named thereon may be a facsimile. In case any officer who signed, or whose facsimile signature has been used on any such bond or debenture, shall cease to be an officer of the Corporation for any reason before the same has been delivered by the Corporation, such bond or debenture may nevertheless be adopted by the Corporation and issued and delivered as though the person who signed it or whose facsimile signature has been used thereon had not ceased to be such officer. Section 7.6. Sale, Transfer, etc. of Securities. Sales, transfers, endorsements, and assignments of shares of stocks, bonds, and other securities owned by or standing in the name of the Corporation and the execution and delivery on behalf of the Corporation of any and all instruments in writing incident to any such sale, transfer, endorsement, or assignment, shall be effected by the Chief Executive Officer, President, any Vice President, or by any officer or agent, thereunto authorized by the Board of Directors. 31 Section 7.7. Proxies. Proxies to vote with respect to shares of stock of other corporations used by or standing in the name of the Corporation shall be executed and delivered on behalf of the Corporation by the Chief Executive Officer, President, any Vice President, or by any officer or agent thereunto authorized by the Board of Directors. ARTICLE 8. CERTIFICATES FOR SHARES AND THEIR TRANSFER Section 8.1. Certificates for Shares. (a) Content. Certificates representing shares of the Corporation, at a minimum, shall state on their face the name of the Corporation and that the Corporation is organized under the laws of the State of Utah; the name of the person to whom issued; and the number and class of shares and the designation of the series, if any, the certificate represents; and be in such form as is determined by the Board of Directors. Such certificates shall be signed by the President or a Vice President and by the Secretary or an Assistant Secretary and may be sealed with the corporate seal or a facsimile thereof. The signatures of the officers may be facsimiles if the certificate is countersigned by a transfer agent, or registered by a registrar, other than the Corporation itself or an employee of the Corporation. In case any officer who has signed or whose facsimile signature has been placed upon a certificate ceases to be an officer before the certificate is issued, the certificate may be issued by the corporation with the same effect as if the person were an officer at the date of its issue. Each certificate for shares shall be consecutively numbered or otherwise identified. The certificates may contain any other information the Corporation considers necessary or appropriate. (16-10a-625) (b) Legend as to Class or Series. If the Corporation is authorized to issue different classes of shares or different series within a class, the designations, preferences, limitations, and relative rights applicable to each class, the variations in preferences, limitations, and relative rights determined for each series, and the authority of the Board of Directors to determine variations for any existing or future class or series must be summarized on the front or back of each certificate. Alternatively, each certificate may state conspicuously on its front or back that the Corporation will furnish the shareholder this information on request in writing and without charge. (16-10a-625) 32 (c) Shareholder List. The name and address of the person to whom the shares represented are issued, with the number of shares and date of issue, shall be entered on the stock transfer books of the Corporation. (d) Transferring Shares. All certificates surrendered to the Corporation for transfer shall be canceled and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and canceled, except that in case of a lost, destroyed, or mutilated certificate a new one may be issued therefor upon such terms and indemnity to the Corporation as the Board of Directors may prescribe. Section 8.2. Shares Without Certificates. (a) Issuing Shares Without Certificates. Unless the Articles of Incorporation provide otherwise, the Board of Directors may authorize the issuance of some or all of the shares of any or all classes or series without certificates. The authorization does not affect shares already represented by certificates until they are surrendered to the Corporation. (b) Information Statement Required. Within a reasonable time after the issuance or transfer of shares without certificates, the Corporation shall send the shareholder a written statement containing, at a minimum, the name of the Corporation and that it is organized under the laws of the State of Utah; the name of the person to whom issued; and the number and class of shares and the designation of the series, if any, of the issued shares. If the Corporation is authorized to issue different classes of shares or different series within a class, the written statement shall describe the designations, preferences, limitations, and relative rights applicable to each class, the variations in preferences, limitations, and relative rights determined for each series, and the authority of the Board of Directors to determine variations for any existing or future class or series. (16-10a-626) Section 8.3. Registration of Transfer of Shares. Registration of the transfer of shares of the Corporation shall be made only on the stock transfer books of the Corporation. In order to register a transfer, the record owner shall surrender the shares to the Corporation for cancellation, properly endorsed by the appropriate person or persons with reasonable assurances that the endorsements are genuine and effective. Unless the Corporation has established a procedure by which a beneficial owner of shares held by a nominee is to be recognized by the Corporation as the 33 owner, the person in whose name shares stand on the books of the Corporation shall be deemed by the Corporation to be the owner thereof for all purposes. Section 8.4. Transfer Agents and Registrars. The Board of Directors may appoint one or more transfer agents and one or more registrars with respect to the certificates representing shares of stock of the Corporation and may require all such certificates to bear the signature of either or both. The Board of Directors may from time to time define the respective duties of such transfer agents and registrars. Section 8.5. Restrictions on Transfer of Shares Permitted. The Board of Directors or the shareholders may impose restrictions on the transfer or registration of transfer of shares (including any security convertible into, or carrying a right to subscribe for or acquire shares). A restriction does not affect shares issued before the restriction was adopted unless the holders of the shares are parties to the restriction agreement or voted in favor of the restriction or otherwise consented to the restriction. (a) A restriction on the transfer or registration of transfer of shares may be authorized: (1) To maintain the Corporation's status when it is dependent on the number or identity of its shareholders; (2) to preserve entitlements, benefits, or exemptions under federal, state, or local laws; and (3) for any other reasonable purpose. (b) A restriction on the transfer or registration of transfer of shares may: (1) Obligate the shareholder first to offer the Corporation or other persons, separately, consecutively, or simultaneously, an opportunity to acquire the restricted shares; (2) obligate the Corporation or other persons, separately, consecutively, or simultaneously, to acquire the restricted shares; 34 (3) require, as a condition to a transfer or registration, that any one or more persons, including the Corporation or any of its shareholders, approve the transfer or registration, if the requirement is not manifestly unreasonable; or (4) prohibit the transfer or the registration of a transfer of the restricted shares to designated persons or classes of persons, if the prohibition is not manifestly unreasonable. A restriction on the transfer or registration of transfer of shares is valid and enforceable against the holder or a transferee of the holder if the restriction is authorized by this Section 8.5 and its existence is noted conspicuously on the front or back of the certificate, or if the restriction is contained in the information statement required by Section 8.2 of these Bylaws with regard to shares issued without certificates. Unless so noted, a restriction is not enforceable against a person without knowledge of the restriction. (16-10a-627) Section 8.6. Acquisition of Shares. The Corporation may acquire its own shares, and, unless otherwise provided in the Articles of Incorporation, the shares so acquired constitute authorized but unissued shares. If the Articles of Incorporation prohibit the reissuance of acquired shares, the number of authorized shares shall be reduced by the number of shares acquired, effective upon amendment of the Articles of Incorporation, which amendment shall be adopted by the shareholders or the Board of Directors without shareholder action. Appropriate Articles of Amendment must be delivered to the Division and must set forth: (a) The name of the Corporation; (b) the reduction in the number of authorized shares, itemized by class and series; (c) the total number of authorized shares, itemized by class and series, remaining after reduction of the shares; and (d) a statement that the amendment was adopted by the Board of Directors without shareholder action and that shareholder action was not required if such be the case. (16-10a-631) 35 Section 8.7. Lost or Destroyed Certificates. If the holder of a certificate for shares of the Corporation claims that a certificate has been lost, destroyed, or wrongfully taken, the Corporation shall issue a new certificate to such holder, if such holder: (a) so requests before the Corporation has notice that the certificate has been acquired by a bona fide purchaser; (b) files with the Corporation a sufficient indemnity bond; and (c) satisfies any other reasonable requirements imposed by the Corporation. (70A-8-405). ARTICLE 9. DISTRIBUTIONS Section 9.1. Distributions. The Board of Directors may authorize, and the Corporation may make, distributions (including dividends on its outstanding shares) in the manner and upon the terms and conditions provided by law and in the Articles of Incorporation. (16-10a-640) ARTICLE 10. CORPORATE SEAL Section 10.1. Corporate Seal. The Board of Directors may provide a corporate seal which may be circular in form and have inscribed thereon any designation including the name of the Corporation, Utah as the state of incorporation, and the words "Corporate Seal." ARTICLE 11. FISCAL YEAR Section 11.1. Fiscal Year. The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors. ARTICLE 12. AMENDMENTS Section 12.1. Amendments. The Corporation's Board of Directors may amend these Bylaws, except to the extent that the Articles of Incorporation, these Bylaws, or the Utah Revised Business Corporation Act reserve this power exclusively to the shareholders in whole or in part. However, the Board of Directors may not adopt, amend, or repeal a Bylaw that fixes a shareholder quorum or voting 36 requirement that is greater than required by the Utah Revised Business Corporation Act. If authorized by the Articles of Incorporation, the shareholders may adopt, amend, or repeal a Bylaw that fixes a greater quorum or voting requirement for shareholders, or voting groups of shareholders, than is required by the Utah Revised Business Corporation Act. Any such action shall comply with the provisions of the Utah Revised Business Corporation Act. The Corporation's shareholders may amend or repeal the Corporation's Bylaws even though the Bylaws may also be amended or repealed by the Corporation's Board of Directors. (16-10a-1020 to 16-10a-1022) ADOPTED as of the ____ day of ___________, 1994. 37 EX-4.1 18 INDENTURE ============================================================================== INDENTURE Dated as of September 30, 1997 Among HUNTSMAN PACKAGING CORPORATION, as Issuer, each of the Guarantors named herein and THE BANK OF NEW YORK, as Trustee --------------------- $125,000,000 9 1/8% Senior Subordinated Notes due 2007 ============================================================================== TABLE OF CONTENTS -----------------
Page ---- ARTICLE ONE DEFINITIONS AND INCORPORATION BY REFERENCE.............................................1 SECTION 1.01 Definitions..................................................1 SECTION 1.02 Incorporation by Reference of TIA...........................28 SECTION 1.03 Rules of Construction.......................................28 ARTICLE TWO THE NOTES.............................................................................29 SECTION 2.01 Form and Dating.............................................29 SECTION 2.02 Execution and Authentication; Aggregate Principal Amount. ...............................29 SECTION 2.03 Registrar and Paying Agent..................................31 SECTION 2.04 Paying Agent To Hold Assets in Trust........................31 SECTION 2.05 Holder Lists................................................32 SECTION 2.06 Transfer and Exchange.......................................32 SECTION 2.07 Replacement Notes...........................................33 SECTION 2.08 Outstanding Notes...........................................33 SECTION 2.09 Treasury Notes..............................................34 SECTION 2.10 Temporary Notes.............................................34 SECTION 2.11 Cancellation................................................34 SECTION 2.12 Defaulted Interest..........................................35 SECTION 2.13 CUSIP Numbers...............................................35 SECTION 2.14 Deposit of Moneys...........................................36 SECTION 2.15 Book-Entry Provisions for Global Notes......................36 SECTION 2.16 Special Transfer Provisions.................................37 ARTICLE THREE REDEMPTION............................................................................40 SECTION 3.01 Notices to Trustee..........................................40 SECTION 3.02 Selection of Notes To Be Redeemed...........................41 SECTION 3.03 Notice of Redemption........................................41 SECTION 3.04 Effect of Notice of Redemption..............................42 SECTION 3.05 Deposit of Redemption Price.................................42 SECTION 3.06 Notes Redeemed in Part......................................43 ARTICLE FOUR COVENANTS.............................................................................43 SECTION 4.01 Payment of Notes............................................43 SECTION 4.02 Maintenance of Office or Agency.............................43 SECTION 4.03 Limitation on Restricted Payments...........................43 SECTION 4.04 Corporate Existence.........................................45 SECTION 4.05 Payment of Taxes and Other Claims...........................46 i SECTION 4.06 Maintenance of Properties and Insurance.....................46 SECTION 4.07 Compliance Certificate; Notice of Default.....................................................46 SECTION 4.08 Compliance with Laws........................................47 SECTION 4.09 Reports to Holders..........................................48 SECTION 4.10 Waiver of Stay, Extension or Usury Laws.....................48 SECTION 4.11 Limitations on Transactions with Affiliates..................................................48 SECTION 4.12 Limitation on Incurrence of Additional Indebtedness.....................................50 SECTION 4.13 Limitation on Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries................................................50 SECTION 4.14 Change of Control...........................................51 SECTION 4.15 Limitation on Asset Sales...................................53 SECTION 4.16 Prohibition on Incurrence of Senior Subordinated Debt...........................................57 SECTION 4.17 Limitation on Preferred Stock of Restricted Subsidiaries................................................57 SECTION 4.18 Limitation on Liens.........................................57 SECTION 4.19 Limitation of Guarantees by Restricted Subsidiaries.....................................58 SECTION 4.20 Conduct of Business.........................................59 ARTICLE FIVE SUCCESSOR CORPORATION.................................................................59 SECTION 5.01 Merger, Consolidation and Sale of Assets......................................................59 SECTION 5.02 Successor Corporation Substituted...........................61 ARTICLE SIX DEFAULT AND REMEDIES..................................................................61 SECTION 6.01 Events of Default...........................................61 SECTION 6.02 Acceleration................................................63 SECTION 6.03 Other Remedies..............................................64 SECTION 6.04 Waiver of Past Defaults.....................................64 SECTION 6.05 Control by Majority.........................................64 SECTION 6.06 Limitation on Suits.........................................65 SECTION 6.07 Rights of Holders To Receive Payment........................65 SECTION 6.08 Collection Suit by Trustee..................................65 SECTION 6.09 Trustee May File Proofs of Claim............................66 SECTION 6.10 Priorities..................................................66 SECTION 6.11 Undertaking for Costs.......................................67 ARTICLE SEVEN TRUSTEE...............................................................................67 SECTION 7.01 Duties of Trustee...........................................67 ii SECTION 7.02 Rights of Trustee...........................................68 SECTION 7.03 Individual Rights of Trustee................................70 SECTION 7.04 Trustee's Disclaimer........................................70 SECTION 7.05 Notice of Default...........................................70 SECTION 7.06 Reports by Trustee to Holders...............................71 SECTION 7.07 Compensation and Indemnity..................................71 SECTION 7.08 Replacement of Trustee......................................72 SECTION 7.09 Successor Trustee by Merger, Etc............................73 SECTION 7.10 Eligibility; Disqualification...............................73 SECTION 7.11 Preferential Collection of Claims Against the Company.................................................74 SECTION 7.12 Trustee's Application for Instructions from the Company............................................74 ARTICLE EIGHT DISCHARGE OF INDENTURE; DEFEASANCE....................................................74 SECTION 8.01 Termination of the Company's Obligations....................74 SECTION 8.02 Acknowledgment of Discharge by Trustee......................77 SECTION 8.03 Application of Trust Money..................................77 SECTION 8.04 Repayment to the Company....................................77 SECTION 8.05 Reinstatement...............................................78 SECTION 8.06 Deposited Money and U.S. Government Obligations to Be Held in Trust; Miscellaneous Provisions....................................78 ARTICLE NINE AMENDMENTS, SUPPLEMENTS AND WAIVERS...................................................78 SECTION 9.01 Without Consent of Holders..................................78 SECTION 9.02 With Consent of Holders.....................................79 SECTION 9.03 Compliance with TIA.........................................80 SECTION 9.04 Revocation and Effect of Consents...........................80 SECTION 9.05 Notation on or Exchange of Notes............................81 SECTION 9.06 Trustee to Sign Amendments, Etc.............................81 ARTICLE TEN SUBORDINATION OF NOTES................................................................82 SECTION 10.01 Notes Subordinated to Senior Debt...........................82 SECTION 10.02 Suspension of Payment When Senior Debt Is in Default...............................................82 SECTION 10.03 Notes Subordinated to Prior Payment of All Senior Debt on Dissolution, Liquidation or Reorganization of Company.....................................................84 SECTION 10.04 Holders To Be Subrogated to Rights of Holders of Senior Debt...................................86 SECTION 10.05 Obligations of the Company Unconditional....................87 SECTION 10.06 Trustee Entitled To Assume Payments iii Not Prohibited in Absence of Notice.........................88 SECTION 10.07 Application by Trustee of Assets Deposited with It...........................................88 SECTION 10.08 No Waiver of Subordination Provisions.......................89 SECTION 10.09 Holders Authorize Trustee To Effectuate Subordination of Notes...........................89 SECTION 10.10 Rights of Trustee To Hold Senior Debt.......................90 SECTION 10.11 No Suspension of Remedies...................................90 SECTION 10.12 No Fiduciary Duty of Trustee to Holder of Senior Debt..............................................90 ARTICLE ELEVEN GUARANTEE OF NOTES....................................................................91 SECTION 11.01 Unconditional Guarantee.....................................91 SECTION 11.02 Limitations on Guarantees...................................92 SECTION 11.0 Execution and Delivery of Guarantee.........................92 SECTION 11.04 Release of a Guarantor......................................93 SECTION 11.05 Waiver of Subrogation.......................................94 SECTION 11.06 Immediate Payment...........................................95 SECTION 11.07 No Set-Off..................................................95 SECTION 11.08 Obligations Absolute........................................95 SECTION 11.09 Obligations Continuing......................................95 SECTION 11.10 Obligations Not Reduced.....................................95 SECTION 11.11 Obligations Reinstated......................................96 SECTION 11.12 Obligations Not Affected....................................96 SECTION 11.13 Waiver......................................................97 SECTION 11.14 No Obligation To Take Action Against the Company............................................98 SECTION 11.15 Dealing with the Company and Others.........................98 SECTION 11.16 Default and Enforcement.....................................98 SECTION 11.17 Amendment, Etc..............................................98 SECTION 11.18 Acknowledgment..............................................99 SECTION 11.19 Costs and Expenses..........................................99 SECTION 11.20 No Merger or Waiver; Cumulative Remedies....................................................99 SECTION 11.21 Survival of Obligations.....................................99 SECTION 11.22 Guarantee in Addition to Other Obligations.................................................99 SECTION 11.23 Severability...............................................100 SECTION 11.24 Successors and Assigns.....................................100 ARTICLE TWELVE SUBORDINATION OF GUARANTEE...........................................................100 SECTION 12.01 Guarantee Obligations Subordinated to Guarantor Senior Debt......................................100 SECTION 12.02 Suspension of Guarantee Obligations When Guarantor Senior Debt Is In Default.................................................100 iv SECTION 12.03 Guarantee Obligations Subordinated to Prior Payment of All Guarantor Senior Debt on Dissolution, Liquidation or Reorganization of Such Subsidiary Guarantor.......................................102 SECTION 12.04 Holders of Guarantee Obligations To Be Subrogated to Rights of Holders of Guarantor Senior Debt......................................104 SECTION 12.06 Trustee Entitled To Assume Payments Not Prohibited in Absence of Notice............................106 SECTION 12.07 Application by Trustee of Assets Deposited with It..........................................106 SECTION 12.08 No Waiver of Subordination Provisions......................107 SECTION 12.09 Holders Authorize Trustee To Effectuate Subordination of Guarantee Obligations.....................107 SECTION 12.10 Right of Trustee To Hold Guarantor Senior Indebtedness........................................108 SECTION 12.11 No Suspension of Remedies..................................108 SECTION 12.12 No Fiduciary Duty of Trustee to Holders of Guarantor Senior Debt...........................108 ARTICLE THIRTEEN MISCELLANEOUS........................................................................109 SECTION 13.01 TIA Controls...............................................109 SECTION 13.02 Notices....................................................109 SECTION 13.03 Communications by Holders with Other Holders....................................................110 SECTION 13.04 Certificate and Opinion as to Conditions Precedent.......................................110 SECTION 13.05 Statements Required in Certificate or Opinion....................................................110 SECTION 13.06 Rules by Trustee, Paying Agent, Registrar..................................................111 SECTION 13.07 Legal Holidays.............................................111 SECTION 13.08 Governing Law..............................................111 SECTION 13.09 No Adverse Interpretation of Other Agreements.................................................111 SECTION 13.10 No Recourse Against Others.................................112 SECTION 13.11 Successors.................................................112 SECTION 13.12 Duplicate Originals........................................112 SECTION 13.13 Severability...............................................112 SECTION 13.14 Independence of Covenants..................................112 v SIGNATURES.............................................................................1
Exhibit A-1 - Form of Initial Note Exhibit A-2 - Form of Exchange Note Exhibit B - Form of Legend for Global Notes Exhibit C - Form of Certificate To Be Delivered in Connection with Transfers to Non-QIB Accredited Investors Exhibit D - Form of Certificate To Be Delivered in Connection with Transfers Pursuant to Regulation S Exhibit E - Form of Guarantee Note: This Table of Contents shall not, for any purpose, be deemed to be part of this Indenture. vi INDENTURE, dated as of September 30, 1997, among HUNTSMAN PACKAGING CORPORATION, a Utah corporation (the "Company"), each of the Guarantors named herein, as guarantors, and The Bank of New York as trustee (the "Trustee"). The Company has duly authorized the creation of an issue of 9 1/8% Series A Senior Subordinated Notes due 2007 (the "Initial Notes") and an issue of 9 1/8% Series B Senior Subordinated Notes due 2007 (the "Exchange Notes", and together with the Initial Notes, the "Notes"). All things necessary to make the Notes, when duly issued and executed by the Company and authenticated and delivered hereunder, the valid and binding obligations of the Company and to make this Indenture a valid and binding agreement of the Company, have been done. Each party hereto agrees as follows for the benefit of the other parties and for the equal and ratable benefit of the Holders of the Company's Notes: ARTICLE ONE DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.01 Definitions. "Acceleration Notice" has the meaning provided in Section 6.02. "Acquired Indebtedness" means Indebtedness of a Person or any of its Subsidiaries existing at the time such Person becomes a Restricted Subsidiary of the Company or at the time it merges or consolidates with the Company or any of its Restricted Subsidiaries or assumed in connection with the acquisition of assets from such Person and in each case not incurred by such Person in connection with, or in anticipation or contemplation of, such Person becoming a Restricted Subsidiary of the Company or such acquisition, merger or consolidation. "Affiliate" means, with respect to any specified Person, any other Person who directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such specified Person. The term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative of the foregoing. -1- "Affiliate Transaction" has the meaning provided in Section 4.11. "Agent" means any Registrar, Paying Agent or Co- registrar. "Asset Acquisition" means (a) an Investment by the Company or any Restricted Subsidiary of the Company in any other Person pursuant to which such Person shall become a Restricted Subsidiary of the Company or of any Restricted Subsidiary of the Company, or shall be merged with or into the Company or of any Restricted Subsidiary of the Company, or (b) the acquisition by the Company or any Restricted Subsidiary of the Company of the assets of any Person (other than a Restricted Subsidiary of the Company) which constitute all or substantially all of the assets of such Person or comprises any division or line of business of such Person or any other properties or assets of such Person other than in the ordinary course of business. "Asset Sale" means any direct or indirect sale, issuance, conveyance, transfer, lease (other than operating leases entered into in the ordinary course of business), assignment or other transfer for value by the Company or any of its Restricted Subsidiaries (including any Sale and Leaseback Transaction) to any Person other than the Company or a Restricted Subsidiary of the Company of (a) any Capital Stock of any Restricted Subsidiary of the Company or (b) any other property or assets of the Company or any Restricted Subsidiary of the Company other than in the ordinary course of business; provided, however, that Asset Sales shall not include (i) a transaction or series of related transactions for which the Company or its Restricted Subsidiaries receive aggregate consideration of less than $5 million, (ii) sales of accounts receivable and related assets (including contract rights) of the type specified in the definition of "Qualified Securitization Transaction" to a Securitization Entity for the fair market value thereof, (iii) sales or grants of licenses to use the Company's or any Restricted Subsidiary's patents, trade secrets, know-how and technology to the extent that such license does not prohibit the licensor from using the patent, trade secret, know-how or technology licensed in North America or require the licensor to pay any fees for any such use, (iv) the sale, lease, conveyance, disposition or other transfer (A) of all or substantially all of the assets of the Company or a Restricted Subsidiary of the Company as permitted under Section 5.01, (B) of any Capital Stock or other ownership interest in or assets or property of an Unrestricted Subsidiary or a Person which is not a Subsidiary, (C) pursuant to any foreclosure of assets or other remedy provided by applicable law to a creditor of the Company or any Subsidiary of the Company with a Lien on such assets, which Lien is permitted under the Indenture; provided that such foreclosure or other remedy is -2- conducted in a commercially reasonable manner or in accordance with any bankruptcy law, (D) involving only Cash Equivalents or inventory in the ordinary course of business or obsolete equipment in the ordinary course of business consistent with past practices of the Company or (E) including only the lease or sublease of any real or personal property in the ordinary course of business, (v) the consummation of any transaction in accordance with the terms of Section 4.03 and (vi) Permitted Investments. "Bankruptcy Law" means Title 11, United States Code or any similar federal, state or foreign law for the relief of debtors. "Board of Directors" means, as to any Person, the board of directors of such Person or any duly authorized committee thereof. "Board Resolution" means, with respect to any Person, a copy of a resolution certified by the Secretary or an Assistant Secretary of such Person to have been duly adopted by the Board of Directors of such Person and to be in full force and effect on the date of such certification, and delivered to the Trustee. "Business Day" means a day that is not a Legal Holiday. "Capital Stock" means (i) with respect to any Person that is a corporation, any and all shares, interests, participations or other equivalents (however designated and whether or not voting) of corporate stock, including each class of Common Stock and Preferred Stock of such Person and (ii) with respect to any Person that is not a corporation, any and all partnership or other equity interests of such Person. "Capitalized Lease Obligation" means, as to any Person, the obligations of such Person under a lease that are required to be classified and accounted for as capital lease obligations under GAAP and, for purposes of this definition, the amount of such obligations at any date shall be the capitalized amount of such obligations at such date, determined in accordance with GAAP. "Cash Equivalents" means (i) a marketable obligation, maturing within two years after issuance thereof, issued or guaranteed by the United States of America or an instrumentality or agency thereof, (ii) a certificate of deposit or banker's acceptance, maturing within one year after issuance thereof, issued by any lender under the Credit Agreement, or a national or state bank or trust company or a European, Canadian or Japanese bank, in each case having capital, surplus and undivided profits of at least $100,000,000 and whose long-term unsecured debt has a rating of "A" or better by S&P or A2 or better by Moody's or the equivalent -3- rating by any other nationally recognized rating agency (provided that the aggregate face amount of all Investments in certificates of deposit or bankers' acceptances issued by the principal offices of or branches of such European or Japanese banks located outside the United States shall not at any time exceed 33 1/3% of all Investments described in this definition), (iii) open market commercial paper, maturing within 270 days after issuance thereof, which has a rating of A1 or better by S&P or P1 or better by Moody's, or the equivalent rating by any other nationally recognized rating agency, (iv) repurchase agreements and reverse repurchase agreements with a term not in excess of one year with any financial institution which has been elected a primary government securities dealer by the Federal Reserve Board or whose securities are rated AA- or better by S&P or Aa3 or better by Moody's or the equivalent rating by any other nationally recognized rating agency relating to marketable direct obligations issued or unconditionality guaranteed by the United States of America or any agency or instrumentality thereof and backed by the full faith and credit of the United States of America, (v) "Money Market" preferred stock maturing within six months after issuance thereof or municipal bonds issued by a corporation organized under the laws of any state of the United States, which has a rating of "A" or better by S&P or Moody's or the equivalent rating by any other nationally recognized rating agency and (vi) tax exempt floating rate option tender bonds backed by letters of credit issued by a national or state bank whose long-term unsecured debt has a rating of AA or better by S&P or Aa2 or better by Moody's or the equivalent rating by any other nationally recognized rating agency. "Change of Control" means (i) prior to the initial public equity offering of the Company, the failure by Jon M. Huntsman, his spouse, direct descendants or their spouses, an entity controlled by any of the foregoing and/or by a trust of the type described hereafter, and/or a trust for the benefit of any of the foregoing (the "Huntsman Group"), collectively to own and control at least a sufficient amount of the outstanding voting capital stock of the Company to elect at least a majority of the Board of Directors of the Company or (ii) after the initial public equity offering of the Company, the occurrence of the following: (x) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than one or more members of the Huntsman Group, is or becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person shall be deemed to have "beneficial ownership" of all securities that such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of 35% or more of the then outstanding voting capital stock of the Company other than in a transaction having the approval of the board of directors of the Company at least a majority of which members are Continuing Directors; or (y) -4- Continuing Directors shall cease to constitute at least a majority of the board of directors of the Company. "Change of Control Date" has the meaning provided in Section 4.14. "Change of Control Offer" has the meaning provided in Section 4.14. "Change of Control Payment Date" has the meaning provided in Section 4.14. "Commission" or "SEC" means the Securities and Exchange Commission. "Commodity Agreements" means any commodity futures contract, commodity option or other similar agreement or arrangement entered into by the Company or any of its Subsidiaries designed to protect the Company or any of its Subsidiaries against fluctuations in the price of commodities actually at that time used in the ordinary course of business of the Company or its Subsidiaries. "Common Stock" of any Person means any and all shares, interests or other participations in, and other equivalents (however designated and whether voting or non-voting) of such Person's common stock, whether outstanding on the Issue Date or issued after the Issue Date, and includes, without limitation, all series and classes of such common stock. "Company" means the party named as such in this Indenture until a successor replaces it pursuant to this Indenture and thereafter means such successor and also includes for the purposes of any provision contained herein and required by the TIA any other obligor on the Notes. "Consolidated EBITDA" means, with respect to any Person, for any period, the sum (without duplication) of (i) Consolidated Net Income and (ii) to the extent Consolidated Net Income has been reduced thereby, (A) all income taxes of such Person and its Restricted Subsidiaries paid or accrued in accordance with GAAP for such period (other than income taxes attributable to extraordinary, unusual or nonrecurring gains or losses or taxes attributable to sales or dispositions outside the ordinary course of business), (B) Consolidated Interest Expense and (C) Consolidated Non-cash Charges less any non-cash items increasing Consolidated Net Income for such period, all as determined on a consolidated basis for such Person and its Restricted Subsidiaries in accordance with GAAP. -5- "Consolidated Fixed Charge Coverage Ratio" means, with respect to any Person, the ratio of Consolidated EBITDA of such Person during the four full fiscal quarters for which financial statements have been or should have been delivered to the Trustee under Section 4.09 (the "Four Quarter Period") ending on or prior to the date of the transaction giving rise to the need to calculate the Consolidated Fixed Charge Coverage Ratio (the "Transaction Date") to Consolidated Fixed Charges of such Person for the Four Quarter Period. In addition to and without limitation of the foregoing, for purposes of this definition, "Consolidated EBITDA" and "Consolidated Fixed Charges" shall be calculated after giving effect on a pro forma basis for the period of such calculation to (i) the incurrence or repayment of any Indebtedness of such Person or any of its Restricted Subsidiaries (and the application of the proceeds thereof) giving rise to the need to make such calculation and any incurrence or repayment of other Indebtedness (and the application of the proceeds thereof), other than the incurrence or repayment of Indebtedness in the ordinary course of business for working capital purposes pursuant to working capital facilities, occurring during the Four Quarter Period or at any time subsequent to the last day of the Four Quarter Period and prior to the Transaction Date, as if such incurrence or repayment, as the case may be (and the application of the proceeds thereof), occurred on the first day of the Four Quarter Period and (ii) any Asset Sales or Asset Acquisitions (including, without limitation, any Asset Acquisition giving rise to the need to make such calculation as a result of such Person or one of its Restricted Subsidiaries (including any Person who becomes a Restricted Subsidiary as a result of the Asset Acquisition) incurring, assuming or otherwise being liable for Acquired Indebtedness and also including any Consolidated EBITDA (including any pro forma expense and cost reduction calculated on a basis consistent with Regulation S-X under the Securities Act as in effect on the Issue Date) (provided that such Consolidated EBITDA shall be included only to the extent includible pursuant to the definition of "Consolidated Net Income") attributable to the assets which are the subject of the Asset Acquisition or Asset Sale during the Four Quarter Period) occurring during the Four Quarter Period or at any time subsequent to the last day of the Four Quarter Period and on or prior to the Transaction Date, as if such Asset Sale or Asset Acquisition (including the incurrence, assumption or liability for any such Acquired Indebtedness) occurred on the first day of the Four Quarter Period. If such Person or any of its Restricted Subsidiaries directly or indirectly guarantees Indebtedness of a Person other than the Company or a Restricted Subsidiary, the preceding sentence shall give effect to the incurrence of such guaranteed Indebtedness as if such Person or any Restricted Subsidiary of such Person had directly incurred or otherwise assumed such guaranteed Indebtedness. Furthermore, in calculating "Consolidated Fixed Charges" for purposes of determining the -6- denominator (but not the numerator) of this "Consolidated Fixed Charge Coverage Ratio," (1) interest on outstanding Indebtedness determined on a fluctuating basis as of the Transaction Date and which will continue to be so determined thereafter shall be deemed to have accrued at a fixed rate per annum equal to the rate of interest on such Indebtedness in effect on the Transaction Date; (2) if interest on any Indebtedness actually incurred on the Transaction Date may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate, or other rates, then the interest rate in effect on the Transaction Date will be deemed to have been in effect during the Four Quarter Period; and (3) notwithstanding clause (1) above, interest on Indebtedness determined on a fluctuating basis, to the extent such interest is covered by agreements relating to Interest Swap Obligations, shall be deemed to accrue at the rate per annum resulting after giving effect to the operation of such agreements. "Consolidated Fixed Charges" means, with respect to any Person for any period, the sum, without duplication, of (i) Consolidated Interest Expense, plus (ii) the product of (x) the amount of all dividend payments on any series of Preferred Stock of such Person and its Restricted Subsidiaries (other than dividends paid in Qualified Capital Stock and other than dividends paid to such Person or to a Restricted Subsidiary of such Person) paid, accrued or scheduled to be paid or accrued during such period times (y) a fraction, the numerator of which is one and the denominator of which is one minus the then current effective consolidated federal, state and local tax rate of such Person, expressed as a decimal. "Consolidated Interest Expense" means, with respect to any Person for any period, the sum of, without duplication: (i) the aggregate of the interest expense of such Person and its Restricted Subsidiaries for such period determined on a consolidated basis in accordance with GAAP, including without limitation, (a) any amortization of debt discount and amortization or write-off of deferred financing costs, (b) the net costs under Interest Swap Obligations, (c) all capitalized interest and (d) the interest portion of any deferred payment obligation; and (ii) the interest component of Capitalized Lease Obligations paid, accrued and/or scheduled to be paid or accrued by such Person and its Restricted Subsidiaries during such period as determined on a consolidated basis in accordance with GAAP. "Consolidated Net Income" means, with respect to any Person, for any period, the aggregate net income (or loss) of such Person and its Restricted Subsidiaries for such period on a consolidated basis, determined in accordance with GAAP; provided that there shall be excluded therefrom (a) after-tax gains from -7- Asset Sales or abandonments or reserves relating thereto, (b) after-tax items classified as extraordinary or nonrecurring gains, (c) the net income of any Person acquired in a "pooling of interests" transaction accrued prior to the date it becomes a Restricted Subsidiary of the referent Person or is merged or consolidated with the referent Person or any Restricted Subsidiary of the referent Person, (d) the net income (but not loss) of any Restricted Subsidiary of the referent Person to the extent that the declaration of dividends or similar distributions by that Restricted Subsidiary of that income is restricted by a contract, operation of law or otherwise, (e) the net income of any Person, other than a Restricted Subsidiary of the referent Person, except to the extent of cash dividends or distributions paid to the reference Person or to a Wholly-Owned Restricted Subsidiary of the referent Person by such Person, (f) any restoration to income of any contingency reserve, except to the extent that provision for such reserve was made out of Consolidated Net Income accrued at any time following the Issue Date, (g) income or loss attributable to discontinued operations (including, without limitation, operations disposed of during such period whether or not such operations were classified as discontinued), (h) in the case of a successor to the referent Person by consolidation or merger or as a transferee of the referent Person's assets, any earnings of the successor corporation prior to such consolidation, merger or transfer of assets and (i) all gains or losses from the cumulative effect of any change in accounting principles. "Consolidated Net Worth" of any Person means the consolidated stockholders' equity of such Person, determined on a consolidated basis in accordance with GAAP, less (without duplication) amounts attributable to Disqualified Capital Stock of such Person. "Consolidated Non-cash Charges" means, with respect to any Person, for any period, the aggregate depreciation, amortization and other non-cash expenses of such Person and its Restricted Subsidiaries reducing Consolidated Net Income of such Person and its Restricted Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP (excluding any such charges constituting an extraordinary item or loss or any such charge which requires an accrual of or a reserve for cash charges for any future period). "Continuing Directors" means, as of any date, the collective reference to (i) all members of the Board of Directors of the Company who have held office continuously since a date no later than twelve months prior to the Company's initial public equity offering, and (ii) all members of the Board of Directors of the Company who assumed office after such date and whose appointment or nomination for election by the Company's -8- shareholders was approved by a vote of at least 50% of the Continuing Directors in office immediately prior to such appointment or nomination. "Credit Agreement" means the Credit Agreement, dated as of September 30, 1997 among the Company, the lenders party thereto in their capacities as lenders thereunder and The Chase Manhattan Bank as agent, together with the related documents thereto (including, without limitation, any guarantee agreements and security documents), in each case as such Credit Agreement and related documents may be amended (including any amendment and restatement thereof), supplemented or otherwise modified from time to time, including any agreement extending the maturity of, refinancing, replacing (whether or not contemporaneously) or otherwise restructuring (including increasing the amount of available borrowings thereunder (to the extent that such increase in borrowings is permitted by Section 4.12) or adding Restricted Subsidiaries of the Company as additional borrowers or guarantors thereunder) all or any portion of the Indebtedness under such agreement or any successor or replacement agreement and whether by the same or any other agent, lender or group of lenders. "CT Film" means the CT Film Division of Huntsman Polymers Corporation. "CT Film Purchase" means the acquisition of substantially all of the assets of CT Film for an aggregate consideration of not in excess of $70 million pursuant to that certain Asset Purchase Agreement dated August 27, 1997 between the Company and Huntsman Polymers Corporation as in effect on the date hereof. "Currency Agreement" means any foreign exchange contract, currency swap agreement or other similar agreement or arrangement designed to protect the Company or any Restricted Subsidiary of the Company against fluctuations in currency values. "Custodian" means any receiver, trustee, assignee, liquidator, sequestrator or similar official under any Bankruptcy Law. "Default" means an event or condition the occurrence of which is, or with the lapse of time or the giving of notice or both would be, an Event of Default. "Depository" means, with respect to the Notes issued in the form of one or more Global Notes, The Depository Trust Company or another Person designated as depository by the Company, which must be a clearing agency registered under the Exchange Act. -9- "Designated Senior Debt" means (i) Indebtedness under or in respect of the Credit Agreement and (ii) any other indebtedness constituting Senior Debt which, at the time of determination, has an aggregate principal amount of at least $25 million and is specifically designated in the instrument evidencing such Senior Debt as "Designated Senior Debt" by the Company. "Discharged" means that the Company shall be deemed to have paid and discharged the entire indebtedness represented by, and obligations under, the Notes and to have satisfied all the obligations under this Indenture relating to the Notes (and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging the same upon compliance by the Company with the provisions of Article Eight), except (i) the rights of the Holders of Notes to receive, from the trust fund described in Article Eight, payment of the principal of and the interest on such Notes when such payments are due, (ii) the Company's obligations with respect to the Notes under Sections 2.03 through 2.07, 7.07 and 7.08 and (iii) the rights, powers, trusts, duties and immunities of the Trustee hereunder. "Disqualified Capital Stock" means that portion of any Capital Stock which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the sole option of the holder thereof on or prior to the final maturity date of the Notes. "Domestic Overdraft Facility" means an overdraft line of credit in a maximum principal amount of $5 million at any time outstanding. "DTC" means The Depository Trust Company. "Equity Offering" has the meaning provided in paragraph 5 of the Notes. "Event of Default" has the meaning provided in Section 6.01. "Exchange Act" means the Securities Exchange Act of 1934, as amended, or any successor statute or statutes thereto. "Exchange Notes" means the Company's 9 1/8% Series B Senior Subordinated Notes due 2007 issued in exchange for the Initial Notes pursuant to the terms of the Registration Rights Agreement. "fair market value" means, with respect to any asset or property, the price which could be negotiated in an arm's length, -10- free market transaction, for cash, between a willing seller and a willing and able buyer, neither of whom is under undue pressure or compulsion to complete the transaction. Fair market value shall be determined by the Board of Directors of the Company acting reasonably and in good faith and shall be evidenced by a Board Resolution of the Board of Directors of the Company delivered to the Trustee. "Foreign Subsidiary" means any Restricted Subsidiary of the Company organized and conducting its principal operations outside the United States. "Foreign Subsidiary Asset Sale" means any direct or indirect sale, issuance, conveyance, transfer, lease, assignment or other transfer for value by the Company or any of its Restricted Subsidiaries (including any Sale and Leaseback Transaction) to any Person other than the Company or a Restricted Subsidiary of the Company of the Capital Stock of any Foreign Subsidiary or any of the property or assets of any Foreign Subsidiary. "Funds" means the aggregate amount of U.S. Legal Tender and/or U.S. Government Obligations deposited with the Trustee pursuant to Article Eight. "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession of the United States, which are in effect as of the Issue Date. "Global Notes" means one or more IAI Global Notes, Regulation S Global Notes and 144A Global Notes. "Guarantee Obligations" has the meaning provided in Section 12.02. "Guarantees" means the guarantees of the Notes of the Company by the Guarantors. "Guarantor" means (i) each of the Company's present Restricted Subsidiaries listed on the signature pages hereto and (ii) each of the Company's Restricted Subsidiaries that in the future executes a supplemental indenture in which such Restricted Subsidiary agrees to be bound by the terms of this Indenture as a Guarantor; provided, however, that any Person constituting a Guarantor as described above shall cease to constitute a Guarantor -11- when its respective Guarantee is released in accordance with the terms of this Indenture. "Guarantor Payment Blockage Notice" has the meaning provided in Section 12.02(b). "Guarantor Payment Blockage Period" has the meaning provided in Section 12.02(b). "Guarantor Senior Debt" means with respect to any Guarantor, (i) the principal of, premium, if any, and interest (including any interest accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law) on any Indebtedness of a Guarantor, whether outstanding on the Issue Date or thereafter created, incurred or assumed, unless, in the case of any particular Indebtedness, the instrument creating or evidencing the same or pursuant to which the same is outstanding expressly provides that such Indebtedness shall not be senior in right of payment to the Guarantee of such Guarantor. Without limiting the generality of the foregoing, "Guarantor Senior Debt" shall also include the principal of, premium, if any, interest (including any interest accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law) on, and all other amounts owing in respect of, (w) all monetary obligations of every nature of a Guarantor in respect of the Credit Agreement, including, without limitation, obligations to pay principal and interest, reimbursement obligations under letters of credit, fees, expenses and indemnities, (x) all monetary obligations of every nature of a Guarantor evidenced by a promissory note and which is, directly or indirectly, pledged as security for the obligations of the Company under the Credit Agreement, (y) all Interest Swap Obligations and (z) all obligations under Currency Agreements, in each case whether outstanding on the Issue Date or thereafter incurred. Notwithstanding the foregoing, "Guarantor Senior Debt" shall not include (i) any Indebtedness of such Guarantor to a Subsidiary of such Guarantor or any Affiliate of such Guarantor or any of such Affiliate's Subsidiaries other than as described in clause (x), (ii) Indebtedness to, or guaranteed on behalf of, any shareholder, director, officer or employee of such Guarantor or any Restricted Subsidiary of such Guarantor (including, without limitation, amounts owed for compensation), (iii) Indebtedness to trade creditors and other amounts owed to suppliers in connection with obtaining goods, materials or services, (iv) Indebtedness represented by Disqualified Capital Stock, (v) any liability for federal, state, local or other taxes owed or owing by such Guarantor, (vi) Indebtedness to the extent incurred in violation of -12- the Indenture provisions set forth under Section 4.12, (vii) Indebtedness which, when incurred and without respect to any election under Section 1111(b) of Title 11, United States Code, is without recourse to such Guarantor and (viii) any Indebtedness which is, by its express terms, subordinated in right of payment to any other Indebtedness of such Guarantor. "Holder" or "Noteholder" means the Person in whose name a Note is registered on the Registrar's books. "IAI Global Note" means a permanent global note in registered form representing the aggregate principal amount of Notes sold to Institutional Accredited Investors. "Indebtedness" means with respect to any Person, without duplication, (i) all Obligations of such Person for borrowed money, (ii) all Obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (iii) all Capitalized Lease Obligations of such Person, (iv) all Obligations of such Person issued or assumed as the deferred purchase price of property, all conditional sale obligations and all Obligations under any title retention agreement (but excluding trade accounts payable and other accrued liabilities arising in the ordinary course of business that are not overdue by 90 days or more are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted), (v) all Obligations for the reimbursement of any obligor on any letter of credit, banker's acceptance or similar credit transaction, (vi) guarantees and other contingent obligations in respect of Indebtedness referred to in clauses (i) through (v) above and clause (viii) below, (vii) all Obligations of any other Person of the type referred to in clauses (i) through (vi) which are secured by any lien on any property or asset of such Person, the amount of such Obligation being deemed to be the lesser of the fair market value of such property or asset or the amount of the Obligation so secured, (viii) all Obligations under Currency Agreements, Commodity Agreements and Interest Swap Agreements of such Person and (ix) all Disqualified Capital Stock issued by such Person with the amount of Indebtedness represented by such Disqualified Capital Stock being equal to the greater of its voluntary or involuntary liquidation preference and its maximum fixed repurchase price, but excluding accrued dividends, if any; provided, however, notwithstanding the foregoing that, Indebtedness shall not include advances paid by customers for services or products to be provided or delivered in the future. For purposes hereof, the "maximum fixed repurchase price" of any Disqualified Capital Stock which does not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Capital Stock as if such Disqualified Capital Stock were purchased on any date on which Indebtedness shall be required to be -13- determined pursuant to the Indenture, and if such price is based upon, or measured by, the fair market value of such Disqualified Capital Stock, such fair market value shall be determined reasonably and in good faith by the Board of Directors of the issuer of such Disqualified Capital Stock; provided, however, that notwithstanding the foregoing, "Indebtedness" shall not include unsecured indebtedness of the Company and/or its Restricted Subsidiaries incurred to finance insurance premiums in a principal amount not in excess of the insurance premiums to be paid by the Company and/or its Restricted Subsidiaries for a three year period beginning on the date of any incurrence of such indebtedness. "Indenture" means this Indenture, as amended or supplemented from time to time in accordance with the terms hereof. "Independent Financial Advisor" means a firm (i) which does not, and whose directors, officers and employees or Affiliates do not, have a direct or indirect financial interest in the Company and (ii) which, in the judgment of the Board of Directors of the Company, is otherwise independent and qualified to perform the task for which it is to be engaged. "Institutional Accredited Investor" means an institution that is an "accredited investor" as that term is defined in Rule 501(a)(1), (2) (3) or (7) under the Securities Act. "Initial Notes" means the Company's 9 1/8% Series A Senior Subordinated Notes due 2007. "Initial Purchasers" means BT Alex. Brown Incorporated and Chase Securities Inc. "Interest Payment Date" means the stated maturity of an installment of interest on the Notes. "Interest Swap Obligations" means the obligations of any Person pursuant to any arrangement with any other Person, whereby, directly or indirectly, such Person is entitled to receive from time to time periodic payments calculated by applying either a floating or a fixed rate of interest on a stated notional amount in exchange for periodic payments made by such other Person calculated by applying a fixed or a floating rate of interest on the same notional amount and shall include, without limitation, interest rate swaps, caps, floors, collars and similar agreements. "Investment" means, with respect to any Person, any direct or indirect loan or other extension of credit (including, without limitation, a guarantee) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), -14- or any purchase or acquisition by such Person of any Capital Stock, bonds, notes, debentures or other securities or evidences of Indebtedness issued by, any Person. "Investment" shall exclude extensions of trade credit by the Company and its Restricted Subsidiaries on commercially reasonable terms in accordance with normal trade practices of the Company or such Restricted Subsidiary, as the case may be. For the purposes of Section 4.03, (i) "Investment" shall include and be valued at the fair market value of the net assets of any Restricted Subsidiary at the time that such Restricted Subsidiary is designated an Unrestricted Subsidiary and shall exclude the fair market value of the net assets of any Unrestricted Subsidiary at the time that such Unrestricted Subsidiary is designated a Restricted Subsidiary and (ii) the amount of any Investment shall be the original cost of such Investment plus the cost of all additional Investments by the Company or any of its Restricted Subsidiaries, without any adjustments for increases or decreases in value, or write-ups, write-downs or write-offs with respect to such Investment, reduced by the payment of dividends or distributions in connection with such Investment or any other amounts received in respect of such Investment; provided that no such payment of dividends or distributions or receipt of any such other amounts shall reduce the amount of any Investment if such payment of dividends or distributions or receipt of any such amounts would be included in Consolidated Net Income. If the Company or any Restricted Subsidiary of the Company sells or otherwise disposes of any Common Stock of any direct or indirect Restricted Subsidiary of the Company such that, after giving effect to any such sale or disposition, the Company no longer owns, directly or indirectly, greater than 50% of the outstanding Common Stock of such Restricted Subsidiary, the Company shall be deemed to have made an investment on the date of any such sale or disposition equal to the fair market value of the Common Stock of such Restricted Subsidiary not sold or disposed of. "Issue Date" means the date of original issuance of the Notes. "Legal Holiday" has the meaning provided in Section 13.07. "Lien" means any lien, mortgage, deed of trust, pledge, security interest, charge or encumbrance of any kind (including any conditional sale or other title retention agreement, any lease in the nature thereof and any agreement to give any security interest). "Material Subsidiary" means, at any date of determination, any Subsidiary of the Company that, together with its Subsidiaries, (i) for the most recent fiscal year of the -15- Company accounted for more than 10% of the consolidated revenues of the Company or (ii) as of the end of such fiscal year, was the owner of more than 10% of the consolidated assets of the Company, all as set forth on the most recently available consolidated financial statements of the Company and its consolidated Subsidiaries for such fiscal year prepared in conformity with GAAP. "Maturity Date" means October 1, 2007. "Moody's" means Moody's Investors Service, Inc. "Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds in the form of cash or Cash Equivalents including payments in respect of deferred payment obligations when received in the form of cash or Cash Equivalents (other than the portion of any such deferred payment constituting interest) received by the Company or any of its Restricted Subsidiaries from such Asset Sale net of (a) all out-of-pocket expenses and fees relating to such Asset Sale (including, without limitation, legal, accounting and investment banking fees and sales commissions), (b) taxes paid or payable after taking into account any reduction in consolidated tax liability due to available tax credits or deductions and any tax sharing arrangements, including any taxes to be paid by the Company or any of its Subsidiaries upon the repatriation of such cash proceeds to the United States upon consummation of a Foreign Subsidiary Asset Sale, (c) repayment of Indebtedness that is required to be repaid in connection with such Asset Sale, (d) the decrease in proceeds from Qualified Securitization Transactions which results from such Asset Sale and (e) appropriate amounts to be provided by the Company or any Restricted Subsidiary, as the case may be, as a reserve, in accordance with GAAP, against any liabilities associated with such Asset Sale and retained by the Company or any Restricted Subsidiary, as the case may be, after such Asset Sale, including, without limitation, pension and other post-employment benefit liabilities, liabilities relied to environmental matters and liabilities under any indemnification obligations associated with such Asset Sale. "Net Proceeds Offer" has the meaning provided in Section 4.15. "Net Proceeds Offer Amount" has the meaning provided in Section 4.15. "Net Proceeds Offer Payment Date" has the meaning provided in Section 4.15. "Net Proceeds Offer Trigger Date" has the meaning provided in Section 4.15. -16- "Non-U.S. Person" has the meaning assigned to such term in Regulation S. "Non-Payment Default" has the meaning provided in Section 10.02(b). "Notes" means, collectively, Initial Notes and the Exchange Notes, treated as a single class of securities under this Indenture, except as set forth herein. "Obligations" means all obligations for principal, premium, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness. "Officer" means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, any Vice President, the Chief Financial Officer, the Treasurer, the Controller, or the Secretary of such Person, or any other officer designated by the Board of Directors serving in a similar capacity. "Officers' Certificate" means, with respect to any Person, a certificate signed by two Officers or by an Officer and either an Assistant Treasurer or an Assistant Secretary of such Person and otherwise complying with the requirements of Sections 13.04 and 13.05, as they relate to the making of an Officers' Certificate, and delivered to the Trustee. "144A Global Note" means a permanent global note in registered form representing the aggregate principal amount of Notes sold in reliance on Rule 144A under the Securities Act. "Opinion of Counsel" means a written opinion from legal counsel who is reasonably acceptable to the Trustee complying with the requirements of Sections 13.04 and 13.05, as they relate to the giving of an Opinion of Counsel, and delivered to the Trustee. "Participant" has the meaning provided in Section 2.15. "Paying Agent" has the meaning provided in Section 2.03, except that, during the continuance of a Default or Event of Default and for the purposes of Articles Three and Eight and Sections 4.14 and 4.15, the Paying Agent shall not be the Company or any Affiliate of the Company. "Payment Blockage Notice" has the meaning provided in Section 10.02(b). "Payment Blockage Period" has the meaning provided in Section 10.02(b) -17- "Payment Default" has the meaning provided in Section 10.02(a). "Permitted Indebtedness" means, without duplication, each of the following: (i) Indebtedness under the Notes, this Indenture and the Guarantees; (ii) Indebtedness incurred pursuant to the Credit Agreement in an aggregate principal amount not exceeding $225 million at any one time outstanding, less (i) the amount of any principal payments made by the Company under the Credit Agreement with the Net Cash Proceeds of any Asset Sale (which are accompanied by a corresponding permanent commitment reduction to the extent that the amount paid could have otherwise been reborrowed under the Credit Agreement) pursuant to clause (iii)(A) of the first sentence of Section 4.15 and (ii) if the CT Film Purchase is not consummated on or before December 31, 1997, a permanent reduction of the facilities under the Credit Agreement in an aggregate principal amount equal to $70 million. (iii) other Indebtedness of the Company and its Restricted Subsidiaries outstanding on the Issue Date reduced by the amount of any scheduled amortization payments or mandatory prepayments when actually paid or permanent reductions thereon; (iv) Commodity Agreements and Interest Swap Obligations of the Company covering Indebtedness of the Company or any of its Restricted Subsidiaries (or Indebtedness which the Company or such Restricted Subsidiary intends to incur) and Interest Swap Obligations of any Restricted Subsidiary of the Company covering Indebtedness of such Restricted Subsidiary (or Indebtedness which such Restricted Subsidiary intends to incur); provided, however, that such Interest Swap Obligations are entered into to protect the Company and its Restricted Subsidiaries from fluctuations in interest rates on Indebtedness permitted under this Indenture to the extent the notional principal amount of such Interest Swap Obligation, when incurred, does not exceed the principal amount of the Indebtedness incurred or intended to be incurred to which such Interest Swap Obligation relates; (v) Indebtedness under Currency Agreements; provided that in the case of Currency Agreements which -18- relate to Indebtedness, such Currency Agreements do not increase the Indebtedness of the Company and its Restricted Subsidiaries outstanding other than as a result of fluctuations in foreign currency exchange rates or by reason of fees, indemnities and compensation payable thereunder; (vi) Indebtedness of a Restricted Subsidiary of the Company to the Company or to a Wholly-Owned Restricted Subsidiary of the Company for so long as such Indebtedness is held by the Company or a Wholly-Owned Restricted Subsidiary of the Company, in each case subject to no Lien held by a Person other than the Company or a Restricted Subsidiary of the Company; provided that if as of any date any Person other than the Company, or a Wholly-Owned Restricted Subsidiary of the Company owns or holds any such Indebtedness or holds a Lien in respect of such Indebtedness, such date shall be deemed the incurrence of Indebtedness not constituting Permitted Indebtedness by the issuer of such Indebtedness; (vii) Indebtedness of the Company to a Restricted Subsidiary of the Company for so long as such Indebtedness is held by a Restricted Subsidiary of the Company, in each case subject to no Lien; provided that (a) any Indebtedness of the Company to any Restricted Subsidiary of the Company is unsecured and subordinated, pursuant to a written agreement, to the Company's obligations under this Indenture and the Notes and (b) if as of any date any Person other than a Restricted Subsidiary of the Company owns or holds any such Indebtedness or any Person holds a Lien in respect of such Indebtedness (other than pledges securing the Credit Agreement) such date shall be deemed the incurrence of Indebtedness not constituting Permitted Indebtedness by the Company; (viii) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within two Business Days of incurrence; (ix) Indebtedness of the Company or any of its Restricted Subsidiaries represented by letters of credit for the account of the Company or such Restricted Subsidiary, as the case may be, in order to provide -19- security for workers' compensation claims, payment obligations in connection with self-insurance or similar requirements in the ordinary course of business; (x) Refinancing Indebtedness; (xi) Indebtedness arising from agreements of the Company or a Subsidiary providing for indemnification, adjustment of purchase price or similar obligations, in each case, incurred in connection with the disposition of any business, assets or Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Subsidiary for the purpose of financing such acquisition; provided that the maximum aggregate liability in respect of all such Indebtedness shall at no time exceed the gross proceeds actually received by the Company and the Subsidiary in connection with such disposition; (xii) Obligations in respect of performance bonds and completion, guarantee, surety and similar bonds provided by the Company or any Restricted Subsidiary in the ordinary course of business; (xiii) Guarantees by the Company or a Subsidiary of Indebtedness incurred by the Company or a Subsidiary so long as the incurrence of such Indebtedness by the Company or any such Subsidiary is otherwise permitted by the terms of this Indenture; (xiv) Indebtedness of the Company or any Restricted Subsidiary incurred in the ordinary course of business not to exceed $10 million at any time outstanding (A) representing Capitalized Lease Obligations or (B) constituting purchase money Indebtedness incurred to finance property or assets of the Company or any Restricted Subsidiary of the Company acquired in the ordinary course of business; provided, however, that such purchase money Indebtedness shall not exceed the cost of such property or assets and shall not be secured by any property or assets of the Company or any Restricted Subsidiary of the Company other than the property and assets so acquired; (xv) Indebtedness of Foreign Subsidiaries that are Restricted Subsidiaries to the extent that the aggregate outstanding amount of Indebtedness incurred by such Foreign Subsidiaries under this clause (xv) does not exceed at any one time an amount equal to the sum of (A) -20- 80% of the consolidated book value of the accounts receivable of all Foreign Subsidiaries and (B) 60% of the consolidated book value of the inventory of all Foreign Subsidiaries; (xvi) The incurrence by a Securitization Entity of Indebtedness in a Qualified Securitization Transaction that is not recourse to the Company or any Subsidiary of the Company (except for Standard Securitization Undertakings); (xvii) Indebtedness under any Domestic Overdraft Facility; and (xviii) Additional Indebtedness of the Company and its Restricted Subsidiaries in an aggregate principal amount not to exceed $15 million at any one time outstanding. "Permitted Investments" means (i) Investments by the Company or any Restricted Subsidiary of the Company in any Person that is or will become immediately after such Investment a Wholly- Owned Restricted Subsidiary of the Company or that will merge or consolidate into the Company or a Wholly-Owned Restricted Subsidiary of the Company, (ii) Investments in the Company by any Restricted Subsidiary of the Company; provided that any Indebtedness evidencing such Investment is unsecured and subordinated (other than pursuant to intercompany notes pledged under the Credit Agreement), pursuant to a written agreement, to the Company's Obligations under the Notes and this Indenture; (iii) Investments in cash and Cash Equivalents; (iv) loans and advances to employees and officers of the Company and its Restricted Subsidiaries in the ordinary course of business for travel, relocation and similar expenses for bona fide business purposes not in excess of $3 million at any one time outstanding; (v) Commodity Agreements, Currency Agreements and Interest Swap Obligations entered into in the ordinary course of the Company's or its Restricted Subsidiaries' businesses and otherwise in compliance with this Indenture; (vi) Investments in Unrestricted Subsidiaries or joint ventures not to exceed $20 million, plus (A) the aggregate net after-tax amount returned to the Company or any Restricted Subsidiary in cash on or with respect to any Investments made in Unrestricted Subsidiaries and joint ventures whether through interest payments, principal payments, dividends or other distributions or payments (including such dividends, distributions or payments made concurrently with such Investment), (B) the net after-tax cash proceeds received by the Company or any Restricted Subsidiary from the disposition of all or any portion of such Investments (other than to the Company or a Subsidiary of the Company), (C) upon redesignation of an Unrestricted Subsidiary as -21- a Restricted Subsidiary, the fair market value of such Subsidiary and (D) the net cash proceeds received by the Company from the issuance of Specified Venture Capital Stock; (vii) Investments in securities received pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any debtors of the Company or its Restricted Subsidiaries; (viii) Investments made by the Company or its Restricted Subsidiaries as a result of consideration received in connection with an asset sale made in compliance with Section 4.15; (ix) Investments existing on the Issue Date; (x) any Investment by the Company or a Wholly-Owned Subsidiary of the Company in a Securitization Entity or any Investment by a Securitization Entity in any other Person in connection with a Qualified Securitization Transaction; provided that any Investment in a Securitization Entity is in the form of a purchase money note or an equity interest; (xi) Investments constituting guarantees by the Company or a Subsidiary of the Company of Indebtedness incurred by the Company or such Subsidiary so long as the incurrence of such Indebtedness by the Company or any such Subsidiary is otherwise permitted by the terms of this Indenture; and (xii) additional Investments in an aggregate amount not exceeding $2 million at any one time outstanding. "Person" means an individual, partnership, corporation, unincorporated organization, trust or joint venture, or a governmental agency or political subdivision thereof. "Physical Notes" shall have the meaning provided in Section 2.01. "Preferred Stock" of any Person means any Capital Stock of such Person that has preferential rights to any other Capital Stock of such Person with respect to dividends or redemptions or upon liquidation. "principal" of any Indebtedness (including the Notes) means the principal amount of such Indebtedness plus the premium, if any, on such Indebtedness. "Private Placement Legend" means the legend set forth on the Initial Notes in the form set forth on Exhibit A-1. "pro forma" means, unless otherwise provided herein, with respect to any calculation made or required to be made pursuant to the terms of this Indenture, a calculation in accordance with Article 11 of Regulation S-X promulgated under the Securities Act. "Qualified Capital Stock" means any Capital Stock that is not Disqualified Capital Stock. -22- "Qualified Institutional Buyer" or "QIB" shall have the meaning specified in Rule 144A under the Securities Act. "Qualified Securitization Transaction" means any transaction or series of transactions that may be entered into by the Company or any of its Subsidiaries pursuant to which the Company or any of its Subsidiaries may sell, convey or otherwise transfer pursuant to customary terms to (a) a Securitization Entity (in the case of a transfer by the Company or any of its Subsidiaries) and (b) any other Person (in the case of transfer by a Securitization Entity), or may grant a security interest in any accounts receivable (whether now existing or arising or acquired in the future) of the Company or any of its Subsidiaries, and any assets related thereto including, without limitation, all collateral securing such accounts receivable, all contracts and contract rights and all guarantees or other obligations in respect of such accounts receivable, proceeds of such accounts receivable and other assets (including contract rights) which are customarily transferred or in respect of which security interests are customarily granted in connection with asset securitization transactions involving accounts receivable. "Record Date" has the meaning provided in Section 2.05. "Redemption Date" means, with respect to any Notes, the Maturity Date of such Note or the earlier date on which such Note is to be redeemed by the Company pursuant to paragraph 5 of the Notes. "Redemption Price" has the meaning provided in Section 3.03. "Refinance" means, in respect of any security or Indebtedness, to refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue a security or Indebtedness in exchange or replacement for, such security or Indebtedness in whole or in part. "Refinanced" and "Refinancing" shall have correlative meanings. "Refinancing Indebtedness" means any Refinancing by the Company or any Restricted Subsidiary of the Company of Indebtedness incurred in accordance with Section 4.12 (other than pursuant to clause (ii), (iv), (v), (vi), (vii), (viii), (ix), (xi), (xii), (xiii), (xiv), (xv) or (xvi) of the definition of Permitted Indebtedness), in each case that does not (1) result in an increase in the aggregate principal amount of Indebtedness of such Person as of the date of such proposed Refinancing (plus the amount of any premium required to be paid under the terms of the instrument governing such Indebtedness and plus the amount of reasonable expenses incurred by the Company in connection with such -23- Refinancing) or (2) create Indebtedness with (A) a Weighted Average Life to Maturity that is less than the Weighted Average Life to Maturity of the Indebtedness being Refinanced or (B) a final maturity earlier than the final maturity of the Indebtedness being Refinanced; provided that (x) if such Indebtedness being Refinanced is Indebtedness of the Company, then such Refinancing Indebtedness shall be Indebtedness solely of the Company, (y) if such Indebtedness being Refinanced is subordinate or junior to the Notes, then such Refinancing Indebtedness shall be subordinate to the Notes at least to the same extent and in the same manner as the Indebtedness being Refinanced and (z) if such Indebtedness being Refinanced is subordinate or junior to the Guarantee of such Guarantor, then such Refinancing Indebtedness shall be subordinate to the Guarantee of such Guarantor at least to the same extent and in the same manner as the Indebtedness being Refinanced. "Registrar" has the meaning provided in Section 2.03. "Registration Rights Agreement" means the Registration Rights Agreement dated as of September 19, 1997 among the Company, the Guarantors and the Initial Purchasers. "Regulation S" means Regulation S under the Securities Act. "Regulation S Global Note" means a permanent global note in registered form representing the aggregate principal amount of Notes sold in reliance on Regulation S under the Securities Act. "Replacement Assets" has the meaning provided in Section 4.15. "Representative" means the indenture trustee or other trustee, agent or representative in respect of any Designated Senior Debt; provided that if, and for so long as, any Designated Senior Debt lacks such a representative, then the Representative for such Designated Senior Debt shall at all times constitute the holders of a majority in outstanding principal amount of such Designated Senior Debt in respect of any Designated Senior Debt. "Restricted Note" means a Note that constitutes a "Restricted Security" within the meaning of Rule 144(a)(3) under the Securities Act; provided, however, that the Trustee shall be entitled to request and conclusively rely on an Opinion of Counsel with respect to whether any Note constitutes a Restricted Note. "Restricted Subsidiary" of any Person means any Subsidiary of such Person which at the time of determination is not an Unrestricted Subsidiary. -24- "Rule 144A" means Rule 144A under the Securities Act. "S&P" means Standard & Poor's Ratings Group, a division of McGraw Hill Companies. "Sale and Leaseback Transaction" means any direct or indirect arrangement with any Person or to which any such Person is a party, providing for the leasing to the Company or a Restricted Subsidiary of any property, whether owned by the Company or any Restricted Subsidiary at the Issue Date or later acquired, which has been or is to be sold or transferred by the Company or such Restricted Subsidiary to such Person or to any other Person from whom funds have been or are to be advanced by such Person on the security of such property. "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder. "Securitization Entity" means a Wholly-Owned Subsidiary of the Company (or another Person in which the Company or any Subsidiary of the Company makes an Investment and to which the Company or any Subsidiary of the Company transfers accounts receivable or equipment and related assets) which engages in no activities other than in connection with the financing of accounts receivable or equipment and which is designated by the Board of Directors of the Company (as provided below) as a Securitization Entity (a) no portion of the Indebtedness or any other Obligations (contingent or otherwise) of which (i) is guaranteed by the Company or any Subsidiary of the Company (excluding guarantees of Obligations (other than the principal of, and interest on, Indebtedness) pursuant to Standard Securitization Undertakings), (ii) is recourse to or obligates the Company or any Subsidiary of the Company in any way other than pursuant to Standard Securitization Undertakings or (iii) subjects any property or asset of the Company or any Subsidiary of the Company, directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to Standard Securitization Undertakings, (b) with which neither the Company nor any Subsidiary of the Company has any material contract, agreement, arrangement or understanding other than on terms no less favorable to the Company or such Subsidiary than those that might be obtained at the time from Persons that are not Affiliates of the Company, other than fees payable in the ordinary course of business in connection with servicing receivables of such entity and (c) to which neither the Company nor any Subsidiary of the Company has any obligation to maintain or preserve such entity's financial condition or cause such entity to achieve certain levels of operating results. Any such designation by the Board of Directors of the Company shall be evidenced to the Trustee by filing with the Trustee a certified -25- copy of the Board Resolution giving effect to such designation and an officers' certificate certifying that such designation complied with the foregoing conditions. "Senior Debt" means the principal of, premium, if any, and interest (including any interest accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law) on any Indebtedness of the Company, whether outstanding on the Issue Date or thereafter created, incurred or assumed, unless, in the case of any particular Indebtedness, the instrument creating or evidencing the same or pursuant to which the same is outstanding expressly provides that such Indebtedness shall not be senior in right of payment to the Notes. Without limiting the generality of the foregoing, "Senior Debt" shall also include the principal of, premium, if any, interest (including any interest accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law) on, and all other amounts owing in respect of, (x) all monetary obligations of every nature of the Company under the Credit Agreement, including, without limitation, obligations to pay principal and interest, reimbursement obligations under letters of credit, fees, expenses and indemnities, (y) all Interest Swap Obligations and (z) all Obligations under Currency Agreements and Commodity Agreements, in each case whether outstanding on the Issue Date or thereafter incurred. Notwithstanding the foregoing, "Senior Debt" shall not include (i) any Indebtedness of the Company to a Restricted Subsidiary of the Company or any Affiliate of the Company or any of such Affiliate's Subsidiaries, (ii) Indebtedness to, or guaranteed on behalf of, any shareholder, director, officer or employee of the Company or any Subsidiary of the Company (including, without limitation, amounts owed for compensation), (iii) Indebtedness to trade creditors and other amounts owed to suppliers in connection with obtaining goods, materials or services, (iv) Indebtedness represented by Disqualified Capital Stock, (v) any liability for federal, state, local or other taxes owed or owing by the Company, (vi) Indebtedness to the extent incurred in violation of the Indenture provisions set forth under Section 4.12, (vii) Indebtedness which, when incurred and without respect to any election under Section 1111(b) of Title 11, United States Code, is without recourse to the Company and (viii) any Indebtedness which is, by its express terms, subordinated in right of payment to any other Indebtedness of the Company. "Specified Venture Capital Stock" means Qualified Capital Stock of the Company issued to a Person (or Affiliates of such Person) who is not an Affiliate of the Company and the proceeds from the issuance of which are applied within 180 days after the -26- issuance thereof to an Investment in an Unrestricted Subsidiary or joint venture. "Standard Securitization Undertakings" means representations, warranties, covenants and indemnities entered into by the Company or any Subsidiary of the Company which are reasonably customary in an accounts receivable securitization transaction. "Subsidiary", with respect to any Person, means (i) any corporation of which the outstanding Capital Stock having at least a majority of the votes entitled to be cast in the election of directors under ordinary circumstances shall at the time be owned, directly or indirectly, by such Person or (ii) any other Person of which at least a majority of the voting interest under ordinary circumstances is at the time, directly or indirectly, owned by such Person. "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss. 77aaa-77bbbb), as amended, as in effect on the date hereof, except as otherwise provided in Section 9.03. "Trustee" means the party named as such in this Indenture until a successor replaces it in accordance with the provisions of this Indenture and thereafter means such successor. "Trust Officer" means any officer or assistant officer of the Trustee assigned by the Trustee to administer its corporate trust matters or, in the case of a successor trustee, an officer assigned to the department, division or group performing the corporate trust work of such successor. "Unrestricted Notes" means one or more Notes that do not and are not required to bear the Private Placement Legend in the form set forth in Exhibit A-1, including, without limitation, the Exchange Notes. "Unrestricted Subsidiary" of any Person means (i) any Subsidiary of such Person that at the time of determination shall be or continue to be designated an Unrestricted Subsidiary in the manner provided below and (ii) any Subsidiary of an Unrestricted Subsidiary. The Board of Directors may designate any Subsidiary (including any newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary owns any Capital Stock of, or owns or holds any Lien on any property of, the Company or any other Subsidiary of the Company that is not a Subsidiary of the Subsidiary to be so designated; provided that (x) the Company certifies to the Trustee that such designation complies with Section 4.03 and (y) each Subsidiary to be so designated and each of its Subsidiaries has not at the time of designation, and does -27- not thereafter, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable with respect to any Indebtedness pursuant to which the lender has recourse to any of the assets of the Company or any of its Restricted Subsidiaries. The Board of Directors may designate any Unrestricted Subsidiary to be a Restricted Subsidiary only if (x) immediately after giving effect to such designation, the Company is able to incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) in compliance with Section 4.12 and (y) immediately before and immediately after giving effect to such designation, no Default or Event of Default shall have occurred and be continuing. Any such designation by the Board of Directors shall be evidenced to the Trustee by promptly filing with the Trustee a copy of the Board Resolution giving effect to such designation and an officers' certificate certifying that such designation complied with the foregoing provisions. "U.S. Government Obligations" means direct obligations (or certificates representing an ownership interest in such obligations) of the United States of America (including any agency or instrumentality thereof) for the payment of which the full faith and credit of the United States of America is pledged and which are not callable or redeemable at the issuer's option. "U.S. Legal Tender" means such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts. "Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, the number of years obtained by dividing (a) the then outstanding aggregate principal amount of such Indebtedness into (b) the sum of the total of the products obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity or other required payment of principal, including payment at final maturity, in respect thereof, by (ii) the number of years (calculated to the nearest one-twelfth) which will elapse between such date and the making of such payment. "Wholly-Owned Restricted Subsidiary" of any Person means any Restricted Subsidiary of such Person that is a Wholly-Owned Subsidiary of such Person. "Wholly-Owned Subsidiary" of any Person means any Subsidiary of such Person of which all the outstanding voting securities (other than in the case of a foreign Subsidiary, directors' qualifying shares or an immaterial amount of shares required to be owned by other Persons pursuant to applicable law) are owned by such Person or any Wholly-Owned Subsidiary of such Person. -28- SECTION 1.02 Incorporation by Reference of TIA. Whenever this Indenture refers to a provision of the TIA, that portion of such provision that is required to be incorporated for this Indenture to be qualified under the TIA is incorporated by reference in, and made a part of, this Indenture. The following TIA terms used in this Indenture have the following meanings: "Commission" means the SEC. "indenture securities" means the Notes. "indenture security holder" means a Holder or a Noteholder. "indenture to be qualified" means this Indenture. "indenture trustee" or "institutional trustee" means the Trustee. "obligor" on the indenture securities means the Company or any other obligor on the Notes. All other TIA terms used in this Indenture that are defined by the TIA, defined by the TIA by reference to another statute or defined by SEC rule and not otherwise defined herein have the meanings assigned to them therein. SECTION 1.03 Rules of Construction. Unless the context otherwise requires: (1) a term has the meaning assigned to it; (2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP as in effect on the Issue Date; (3) "or" is not exclusive; (4) words in the singular include the plural, and words in the plural include the singular; (5) "herein," "hereof" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision; and (6) all references to Articles, Sections and Exhibits shall mean, unless they clearly indicate otherwise, the Article and Sections hereof and the Exhibits attached hereto, -29- the terms of which Exhibits are hereby incorporated into this Indenture. ARTICLE TWO THE NOTES SECTION 2.01 Form and Dating. The Initial Notes and the Exchange Notes and the Trustee's certificate of authentication relating thereto shall be substantially in the form of Exhibits A-1 and A-2 hereto, respectively. The Notes may have notations, legends or endorsements required by law, stock exchange rule or usage. The Company shall approve the form of the Notes and any notation, legend or endorsement thereon. Each Note shall be dated the date of issuance and shall show the date of its authentication. Each Note shall have an executed Guarantee from each of the Guarantors endorsed thereon substantially in the form of Exhibit E hereto. The terms and provisions contained in the Notes annexed hereto as Exhibits A-1 and A-2, shall constitute, and are hereby expressly made, a part of this Indenture and, to the extent applicable, the Company, the Guarantors and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. Notes offered and sold in reliance on Rule 144A, Notes offered and sold to institutional "accredited investors" (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) and Notes offered and sold in reliance on Regulation S of the Securities Act shall be issued initially in the form of one or more Global Notes, substantially in the form set forth in Exhibit A-1 in the case of the Initial Notes and Exhibit A-2 in the case of the Exchange Notes, deposited with the Trustee, as custodian for the Depository, duly executed by the Company (and having an executed Guarantee from each of the Guarantors endorsed thereon) and authenticated by the Trustee as hereinafter provided and shall bear the legend set forth in Exhibit B. The aggregate principal amount of the Global Notes may from time to time be increased or decreased by adjustments made on the records of the Trustee, as custodian for the Depository, as hereinafter provided. Notes issued in exchange for interests in a Global Note pursuant to Section 2.16 may be issued in the form of permanent certificated Notes in registered form in substantially the form set forth in Exhibits A-1 or A-2, as applicable (the "Physical Notes"). -30- SECTION 2.02 Execution and Authentication; Aggregate Principal Amount. Two Officers, or an Officer and an Assistant Secretary, shall sign, or one Officer shall sign, and one Officer or an Assistant Secretary (each of whom shall, in each case, have been duly authorized by all requisite corporate actions) shall attest to, the Notes for the Company, and one Officer shall sign the Guarantees for the Guarantors, by manual or facsimile signature. If an Officer or Assistant Secretary whose signature is on a Note or a Guarantee, as the case may be, was an Officer or Assistant Secretary at the time of such execution but no longer holds that office or position at the time the Trustee authenticates the Note, the Note shall nevertheless be valid. A Note shall not be valid until an authorized signatory of the Trustee manually signs the certificate of authentication on the Note. The signature of such representative of the Trustee shall be conclusive evidence that the Note has been authenticated under this Indenture. The Trustee shall authenticate (i) Initial Notes for original issue in an aggregate principal amount of $125 million and (ii) Exchange Notes for issue only in a registered exchange offer, pursuant to the Registration Rights Agreement, for Initial Notes for a like principal amount of Initial Notes exchanged pursuant thereto, in each case, upon a written order of the Company in the form of an Officers' Certificate of the Company. Each such written order shall specify the amount of Notes to be authenticated and the date on which the Notes are to be authenticated and whether (subject to Section 2.01) the Notes are to be issued as Physical Notes or Global Notes and such other information as the Trustee may reasonably request. The aggregate principal amount of Notes outstanding at any time may not exceed $125 million, except as provided in Sections 2.07 and 2.08. Notwithstanding the foregoing, all Notes issued under this Indenture shall vote and consent together on all matters (as to which any of such Notes may vote or consent) as one class and no series of Notes will have the right to vote or consent as a separate class on any matter. The Trustee may appoint an authenticating agent reasonably acceptable to the Company to authenticate Notes. Unless otherwise provided in the appointment, an authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same -31- rights as an Agent to deal with the Company and Affiliates of the Company. The Notes shall be issuable in fully registered form only, without coupons, in denominations of $1,000 and any integral multiple thereof. SECTION 2.03 Registrar and Paying Agent. The Company shall maintain an office or agency (which shall be located in the Borough of Manhattan in the City of New York, State of New York, where (a) Notes may be presented or surrendered for registration of transfer or for exchange ("Registrar"), (b) Notes may be presented or surrendered for payment ("Paying Agent") and (c) notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Registrar shall keep a register of the Notes and of their transfer and exchange. The Company, upon notice to the Trustee, may have one or more co-Registrars and one or more additional paying agents reasonably acceptable to the Trustee. The term "Paying Agent" includes any additional paying agent. The Company may change the Paying Agent or Registrar without notice to any Holder. The Company shall enter into an appropriate agency agreement with any Agent not a party to this Indenture, which agreement shall incorporate the provisions of the TIA and implement the provisions of this Indenture that relate to such Agent. The Company shall notify the Trustee, in advance, of the name and address of any such Agent. If the Company fails to maintain a Registrar or Paying Agent, or fails to give the foregoing notice, the Trustee shall act as such. The Company initially appoints the Trustee as Registrar and Paying Agent until such time as the Trustee has resigned or a successor has been appointed. Any of the Registrar, the Paying Agent or any other Agent may resign upon 30 days' notice to the Company. SECTION 2.04 Paying Agent To Hold Assets in Trust. The Company shall require each Paying Agent other than the Trustee to agree in writing that each Paying Agent shall hold in trust for the benefit of the Holders or the Trustee all assets held by the Paying Agent for the payment of principal of, premium, if any, or interest on, the Notes (whether such assets have been distributed to it by the Company or any other obligor on the Notes), and shall notify the Trustee of any default by the Company (or any other obligor on the Notes) in making any such payment. The Company, upon written request to a Paying Agent, at any time -32- may require a Paying Agent to distribute all assets held by it to the Trustee and account for any assets disbursed and the Trustee may at any time during the continuance of any payment Default, upon written request to a Paying Agent, require such Paying Agent to distribute all assets held by it to the Trustee and to account for any assets distributed. Upon distribution to the Trustee of all assets that shall have been delivered by the Company to the Paying Agent and the completion of any accounting required to be made hereunder, the Paying Agent shall have no further liability for such assets. SECTION 2.05 Holder Lists. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of the Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee is not the Registrar, the Company shall furnish to the Trustee five (5) Business Days before each Interest Payment Date and at such other times as the Trustee may request in writing a list as of the applicable Record Date and in such form as the Trustee may reasonably require of the names and addresses of the Holders, which list may be conclusively relied upon by the Trustee. SECTION 2.06 Transfer and Exchange. Subject to Sections 2.15 and 2.16, when Notes are presented to the Registrar or a co-Registrar with a request to register the transfer of such Notes or to exchange such Notes for an equal principal amount of Notes of other authorized denominations, the Registrar or co-Registrar shall register the transfer or make the exchange as requested if its requirements for such transaction are met; provided, however, that the Notes presented or surrendered for transfer or exchange shall be duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Company and the Registrar or co-Registrar, duly executed by the Holder thereof or his attorney duly authorized in writing. To permit registrations of transfers and exchanges, the Company shall execute and the Trustee shall authenticate Notes at the Registrar's or co-Registrar's written request. No service charge shall be made for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith. The Registrar or co-Registrar shall not be required to register the transfer of or exchange of any Note (i) during a period beginning at the opening of business 15 days before the mailing of a notice of redemption pursuant to Section 3.03 and paragraph 5 of the Notes and ending at the close of business on the day of such mailing, (ii) selected for redemption in whole or in part pursuant to Article Three, except the unredeemed portion of -33- any Note being redeemed in part and (iii) during a Change in Control Offer or a Net Proceeds Offer if such Note is tendered pursuant to such Change in Control Offer or Net Proceeds Offer, as applicable, and not withdrawn. Any Holder of a beneficial interest in a Global Note shall, by acceptance of such beneficial interest, agree that transfers of beneficial interests in such Global Notes may be effected only through a book entry system maintained by the Holder of such Global Note (or its agent), and that ownership of a beneficial interest in the Note shall be required to be reflected in a book entry system. SECTION 2.07 Replacement Notes. If a mutilated Note is surrendered to the Trustee or if the Holder of a Note claims that the Note has been lost, destroyed or wrongfully taken, the Company shall issue and the Trustee shall authenticate a replacement Note and each of the Guarantors shall execute a Guarantee thereon if the Trustee's requirements are met. If required by the Trustee or the Company, such Holder must provide an indemnity bond or other indemnity, sufficient in the reasonable judgment of the Company, the Guarantors and the Trustee, to protect the Company, the Guarantors, the Trustee or any Agent from any loss which any of them may suffer if a Note is replaced. Each of the Company and the Trustee may charge such Holder for its reasonable out-of-pocket expenses in replacing a Note, including reasonable fees and expenses of counsel. Every replacement Note shall constitute an additional obligation of the Company and every replacement Guarantee shall constitute an additional obligation of the Guarantors. SECTION 2.08 Outstanding Notes. Notes outstanding at any time are all the Notes that have been authenticated by the Trustee except those cancelled by it, those delivered to it for cancellation and those described in this Section as not outstanding. Subject to Section 2.09, a Note does not cease to be outstanding because the Company or any of its Affiliates holds the Note. If a Note is replaced pursuant to Section 2.07 (other than a mutilated Note surrendered for replacement), it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a bona fide purchaser. A mutilated Note ceases to be outstanding upon surrender of such Note and replacement thereof pursuant to Section 2.07. If on a Redemption Date or the Maturity Date the Paying Agent holds U.S. Legal Tender or U.S. Government Obligations -34- sufficient to pay all of the principal, premium, if any, and interest due on the Notes payable on that date and is not prohibited from paying such money to the Holders thereof pursuant to the terms of this Indenture, then on and after that date such Notes cease to be outstanding and interest on them ceases to accrue. If on any date which is no earlier than 60 days prior to a Redemption Date, the Company has irrevocably deposited in trust with the Trustee U.S. Legal Tender, U.S. Government Obligations or a combination thereof in an amount sufficient to pay all of the principal, premium, if any, and interest due on the Notes payable on such Redemption Date, together with irrevocable instructions from the Company directing the Trustee to apply such funds to the payment thereof on such Redemption Date pursuant to the terms of this Indenture, then and after the date of such deposit such Notes shall be deemed to be not outstanding for purposes of determining whether the Holders of the required aggregate principal amount of Notes have concurred in any direction, waiver, consent or notice which requires the consent of at least a majority in aggregate principal amount of Notes then outstanding. SECTION 2.09 Treasury Notes. In determining whether the Holders of the required aggregate principal amount of Notes have concurred in any direction, waiver, consent or notice, Notes owned by the Company or an Affiliate shall be considered as though they are not outstanding, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes which the Trustee actually knows are so owned shall be so considered. The Company shall notify the Trustee, in writing, when it or any of its Affiliates repurchases or otherwise acquires Notes, of the aggregate principal amount of such Notes so repurchased or otherwise acquired. SECTION 2.10 Temporary Notes. Until Physical Notes are ready for delivery, the Company may prepare and execute and the Trustee shall authenticate temporary Notes upon receipt of a written order of the Company in the form of an Officers' Certificate. The Officers' Certificate shall specify the amount of temporary Notes to be authenticated and the date on which the temporary Notes are to be authenticated. Temporary Notes shall be substantially in the form of Physical Notes but may have variations that the Company considers appropriate for temporary Notes. Without unreasonable delay, the Company shall prepare and execute, and the Trustee shall authenticate upon receipt of a written order of the Company pursuant to Section 2.02, upon surrender of Physical Notes at the -35- office or agency of the Company in exchange for temporary Notes, without charge to the Holder. SECTION 2.11 Cancellation. The Company at any time may deliver Notes to the Trustee for cancellation. The Registrar and the Paying Agent shall forward to the Trustee any Notes surrendered to them for transfer, exchange or payment. The Trustee, or at the direction of the Trustee, the Registrar or the Paying Agent, and no one else, shall cancel and, at the written direction of the Company, shall dispose and deliver evidence of disposal of all Notes surrendered for transfer, exchange, payment or cancellation; provided, however, that in no event shall the Trustee be required to destroy any such Notes. Subject to Section 2.07, the Company may not issue new Notes to replace Notes that the Company has paid or delivered to the Trustee for cancellation. If the Company shall acquire any of the Notes, such acquisition shall not operate as a redemption or satisfaction of the Indebtedness represented by such Notes unless and until the same are surrendered to the Trustee for cancellation pursuant to this Section 2.11. SECTION 2.12 Defaulted Interest. The Company will pay interest on overdue principal from time to time on demand at the rate of interest then borne by the Notes. The Company shall, to the extent lawful, pay interest on overdue installments of interest (without regard to any applicable grace periods) from time to time on demand at the rate of interest then borne by the Notes. Interest on the Notes will be computed on the basis of a 360-day year comprised of twelve 30-day months, and, in the case of a partial month, the actual number of days elapsed. If the Company defaults in a payment of interest on the Notes, it shall pay the defaulted interest, plus (to the extent lawful) any interest payable on the defaulted interest to the Persons who are Holders on a subsequent special record date, which date shall be the fifteenth day next preceding the date fixed by the Company for the payment of defaulted interest or the next succeeding Business Day if such date is not a Business Day. At least 15 days before the subsequent special record date, the Company shall mail to each Holder, with a copy to the Trustee, a notice that states the subsequent special record date, the payment date and the amount of defaulted interest, and interest payable on such defaulted interest, if any, to be paid. Notwithstanding the foregoing, any interest which is paid prior to the expiration of the 30-day period set forth in Section 6.01(a) shall be paid to Holders as of the regular record date for the Interest Payment Date for which interest has not been paid. -36- SECTION 2.13 CUSIP Numbers. The Company in issuing the Notes may use one or more "CUSIP" numbers, and if so, the Trustee shall use the CUSIP numbers in notices of redemption or exchange as a convenience to Holders; provided, however, that no representation is hereby deemed to be made by the Trustee as to the correctness or accuracy of the CUSIP numbers printed in the notice or on the Notes, and that reliance may be placed only on the other identification numbers printed on the Notes. The Company shall promptly notify the Trustee of any change in the CUSIP number. SECTION 2.14 Deposit of Moneys. Prior to 11:00 a.m. New York City time on each Interest Payment Date, Maturity Date, Redemption Date, Change of Control Payment Date, and Net Proceeds Offer Payment Date, the Company shall have deposited with the Paying Agent in immediately available funds money sufficient to make cash payments, if any, due on such Interest Payment Date, Maturity Date, Redemption Date, Change of Control Payment Date, and Net Proceeds Offer Payment Date, as the case may be, in a timely manner which permits the Paying Agent to remit payment to the Holders on such Interest Payment Date, Maturity Date, Redemption Date, Change of Control Payment Date, and Net Proceeds Offer Payment Date, as the case may be. SECTION 2.15 Book-Entry Provisions for Global Notes (a) The Global Notes initially shall (i) be registered in the name of the Depository or the nominee of such Depository, (ii) be delivered to the Trustee as custodian for such Depository and (iii) bear legends as set forth in Exhibit B. Members of, or participants in, the Depository ("Participants") shall have no rights under this Indenture with respect to any Global Note held on their behalf by the Depository, or the Trustee as its custodian, or under the Global Note, and the Depository may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner of the Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depository or impair, as between the Depository and Participants, the operation of customary practices governing the exercise of the rights of a Holder of any Note. (b) Transfers of Global Notes shall be limited to transfers in whole, but not in part, to the Depository, its successors or their respective nominees. Interests of beneficial -37- owners in the Global Notes may be transferred or exchanged for Physical Notes in accordance with the rules and procedures of the Depository and the provisions of Section 2.16. In addition, Physical Notes shall be transferred to all beneficial owners in exchange for their beneficial interests in Global Notes if (i) the Depository notifies the Company that it is unwilling or unable to continue as Depository for any Global Note and a successor Depository is not appointed by the Company within 90 days of such notice or (ii) an Event of Default has occurred and is continuing and the Registrar has received a request from the Depository to issue Physical Notes. (c) In connection with any transfer or exchange of a portion of the beneficial interest in a Global Note to beneficial owners pursuant to paragraph (b), the Registrar shall (if one or more Physical Notes are to be issued) reflect on its books and records the date and a decrease in the principal amount of such Global Note in an amount equal to the principal amount of the beneficial interest in the Global Note to be transferred, and the Company shall execute and the Trustee shall authenticate and deliver, one or more Physical Notes of authorized denominations in an aggregate principal amount equal to the principal amount of the beneficial interest in the Global Note so transferred. (d) In connection with the transfer of a Global Note as an entirety to beneficial owners pursuant to paragraph (b) of this Section 2.15, such Global Note shall be deemed to be surrendered to the Trustee for cancellation, and the Company shall execute, the Guarantors shall execute Guarantees on and the Trustee shall upon written instructions from the Company authenticate and deliver, to each beneficial owner identified by the Depository in exchange for its beneficial interest in such Global Note, an equal aggregate principal amount of Physical Notes of authorized denominations. (e) Any Physical Note constituting a Restricted Note delivered in exchange for an interest in a Global Note pursuant to paragraph (b) or (c) of this Section 2.15 shall, except as otherwise provided by Section 2.16, bear the Private Placement Legend. (f) The Holder of any Global Note may grant proxies and otherwise authorize any Person, including Participants and Persons that may hold interests through Participants, to take any action which a Holder is entitled to take under this Indenture or the Notes. SECTION 2.16 Special Transfer Provisions. (a) Transfers to Non-QIB Institutional Accredited Investors and Non-U.S. Persons. The following additional -38- provisions shall apply with respect to the registration of any proposed transfer of a Restricted Note to any Institutional Accredited Investor which is not a QIB or to any Non-U.S. Person: (i) the Registrar shall register the transfer of any Restricted Note, whether or not such Note bears the Private Placement Legend, if (x) the requested transfer is after the second anniversary of the Issue Date; provided, however, that neither the Company nor any Affiliate of the Company has held any beneficial interest in such note, or portion thereof, at any time on or prior to the second anniversary of the Issue Date or (y) (1) in the case of a transfer to an Institutional Accredited Investor which is not a QIB (excluding Non-U.S. Persons), the proposed transferee has delivered to the Registrar a certificate substantially in the form of Exhibit C hereto and any legal opinions and certifications required thereby and (2) in the case of a transfer to a Non-U.S. Person, the proposed transferor has delivered to the Registrar a certificate substantially in the form of Exhibit D hereto and any legal opinions and certificates required thereby; (ii) if the proposed transferee is a Participant and the Notes to be transferred consist of Physical Notes which after transfer are to be evidenced by an interest in the IAI Global Note or Regulation S Global Note, as the case may be, upon receipt by the Registrar of (x) written instructions given in accordance with the Depository's and the Registrar's procedures and (y) the appropriate certificate, if any, required by clause (y) of paragraph (i) above, the Registrar shall register the transfer and reflect on its books and records the date and an increase in the principal amount of the IAI Global Note or Regulation S Global Note, as the case may be, in an amount equal to the principal amount of Physical Notes to be transferred, and the Trustee shall cancel the Physical Notes so transferred; and (iii) if the proposed transferor is a Participant seeking to transfer an interest in a Global Note, upon receipt by the Registrar of (x) written instructions given in accordance with the Depository's and the Registrar's procedures and (y) the appropriate certificate, if any, required by clause (y) of paragraph (i) above, the Registrar shall register the transfer and reflect on its books and records (A) the date, (B) a decrease in the principal amount of the Global Note from which such interests are to be transferred in an amount equal to the principal amount of the Notes to be transferred and (C) an increase in the principal amount of the IAI Global Note or the Regulation S Global Note, -39- as the case may be, in an amount equal to the principal amount of the Notes to be transferred. (b) Transfers to QIBS. The following provisions shall apply with respect to the registration of any proposed transfer of a Restricted Security to a QIB: (i) the Registrar shall register the transfer of any Restricted Note, whether or not such Note bears the Private Placement Legend, if (x) the requested transfer is after the second anniversary of the Issue Date; provided, however, that neither the Company nor any Affiliate of the Company has held any beneficial interest in such Note, or portion thereof, at any time on or prior to the second anniversary of the Issue Date or (y) such transfer is being made by a proposed transferor who has checked the box provided for on the form of Note stating, or has otherwise advised the Company and the Registrar in writing, that the sale has been made in compliance with the provisions of Rule 144A to a transferee who has signed the certification provided for on the form of Note stating, or has otherwise advised the Company and the Registrar in writing, that it is purchasing the Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a QIB within the meaning of Rule 144A, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as it has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon its foregoing representations in order to claim the exemption from registration provided by Rule 144A; (ii) if the proposed transferee is a Participant and the Notes to be transferred consist of Physical Notes which after transfer are to be evidenced by an interest in the 144A Global Note, upon receipt by the Registrar of written instructions given in accordance with the Depository's and the Registrar's procedures, the Registrar shall register the transfer and reflect on its book and records the date and an increase in the principal amount of the 144A Global Note in an amount equal to the principal amount of Physical Notes to be transferred, and the Trustee shall cancel the Physical Note so transferred; and (iii) if the proposed transferor is a Participant seeking to transfer an interest in the IAI Global Note or the Regulation S Global Note, upon receipt by the Registrar of written instructions given in accordance with the Depository's and the Registrar's procedures, the Registrar shall register -40- the transfer and reflect on its books and records the date and (A) a decrease in the principal amount of the IAI Global Note or the Regulation S Global Note, as the case may be, in an amount equal to the principal amount of the Notes to be transferred and (B) an increase in the principal amount of the 144A Global Note in an amount equal to the principal amount of the Notes to be transferred. (c) Restrictions on Transfer and Exchange of Global Notes. Notwithstanding any other provisions of this Indenture, a Global Note may not be transferred as a whole except by the Depository to a nominee of the Depository or by a nominee of the Depository to the Depository or another nominee of the Depository or by the Depository or any such nominee to a successor Depository or a nominee of such successor Depository. (d) Private Placement Legend. Upon the transfer, exchange or replacement of Notes not bearing the Private Placement Legend, the Registrar or co-Registrar shall deliver Notes that do not bear the Private Placement Legend. Upon the transfer, exchange or replacement of Notes bearing the Private Placement Legend, the Registrar or co-Registrar shall deliver only Notes that bear the Private Placement Legend unless (i) there is delivered to the Trustee an Opinion of Counsel reasonably satisfactory to the Company and the Trustee to the effect that neither such legend nor the related restrictions on transfer are required in order to maintain compliance with the provisions of the Securities Act or (ii) such Note has been sold pursuant to an effective registration statement under the Securities Act. (e) General. By its acceptance of any Note bearing the Private Placement Legend, each Holder of such a Note acknowledges the restrictions on transfer of such Note set forth in this Indenture and in the Private Placement Legend and agrees that it will transfer such Note only as provided in this Indenture. Each Holder of a Note agrees to indemnify the Company and the Trustee against any liability that may result from the transfer, exchange or assignment of such Holder's Note in violation of any provision of this Indenture and/or applicable United States federal or state securities law. The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Note (including any transfers between or among Participants or beneficial owners of interests in any Global Note other than to require delivery of such certificates and other documentation or evidence as are expressly required by the terms of, this Indenture, and to examine the same -41- to determine substantial compliance as to form with the express requirements hereof. The Registrar shall retain copies of all letters, notices and other written communications received pursuant to Section 2.15 or this Section 2.16. The Company shall have the right to inspect and make copies of all such letters, notices or other written communications at any reasonable time upon the giving of reasonable written notice to the Registrar. ARTICLE THREE REDEMPTION SECTION 3.01 Notices to Trustee. If the Company elects to redeem Notes pursuant to paragraph 5 of the Notes, it shall notify the Trustee and the Paying Agent in writing of the Redemption Date and the aggregate principal amount of the Notes to be redeemed. Such notice must be given at least 45 days prior to the Redemption Date (unless a shorter notice shall be satisfactory to the Trustee), but shall not be given more than 60 days before the Redemption Date. Any such notice may be cancelled at any time prior to notice of such redemption being mailed to any Holder and shall thereby be void and of no effect. SECTION 3.02 Selection of Notes To Be Redeemed. If less than all of the Notes are to be redeemed at any time, selection of such Notes for redemption will be made by the Trustee in compliance with the requirements of the principal national securities exchange, if any, on which such Notes are listed or, if such Notes are not listed on a national securities exchange, on a pro rata basis, by lot or by such method as the Trustee shall deem fair and appropriate; provided, however, that no Notes of a principal amount of $1,000 or less shall be redeemed in part. On and after the Redemption Date, interest shall cease to accrue on the Notes or portions thereof called for redemption; provided, further, however, that if a partial redemption is made with the proceeds of an Equity Offering, selection of the Notes or portions thereof for redemption shall be made by the Trustee only on a pro rata basis or on as nearly a pro rata basis as is practicable (subject to DTC procedures), unless such method is otherwise prohibited. -42- SECTION 3.03 Notice of Redemption. At least 30 days but not more than 60 days before a Redemption Date, the Company shall mail or cause to be mailed a notice of redemption by first-class mail to each Holder whose Notes are to be redeemed at its registered address, with a copy to the Trustee. At the Company's request, the Trustee shall give the notice of redemption in the Company's name and at the Company's expense. Each notice for redemption shall identify the Notes to be redeemed and shall state: (1) the Redemption Date; (2) the redemption price and the amount of accrued interest, if any, to be paid (the "Redemption Price"); (3) the paragraph and subparagraph of the Notes pursuant to which the Notes are being redeemed; (4) the name and address of the Paying Agent; (5) that Notes called for redemption must be surrendered to the Paying Agent to collect the Redemption Price; (6) that, unless the Company defaults in making the redemption payment, interest, if any, on Notes or portions thereof called for redemption shall cease to accrue on and after the Redemption Date, and the only remaining right of the Holders of such Notes is to receive payment of the Redemption Price upon surrender to the Paying Agent of the Notes redeemed; (7) that, if any Note is being redeemed in part, the portion of the principal amount of such Note to be redeemed and that, after the Redemption Date, and upon cancellation of such Note, a new Note or Notes in the aggregate principal amount equal to the unredeemed portion thereof will be issued in the name of the Holder; (8) that, if less than all the Notes are to be redeemed, the identification of the particular Notes (or portion thereof) to be redeemed, as well as the aggregate principal amount of Notes to be redeemed and the aggregate principal amount of Notes to be outstanding after such partial redemption; and (9) the CUSIP number, if any, relating to such Notes. -43- The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such rule, laws and regulations are applicable in connection with the purchase of Notes. SECTION 3.04 Effect of Notice of Redemption. Once notice of redemption is mailed in accordance with Section 3.03, Notes called for redemption become due and payable on the Redemption Date and at the Redemption Price. Upon surrender to the Trustee or Paying Agent, such Notes called for redemption shall be paid at the Redemption Price, but installments of interest, the maturity of which is on or prior to the Redemption Date, shall be payable to Holders of record at the close of business on the relevant record dates referred to in the Notes. Interest shall accrue on or after the Redemption Date and shall be payable only if the Company defaults in payment of the Redemption Price. SECTION 3.05 Deposit of Redemption Price. On or before any Redemption Date, the Company shall deposit with the Paying Agent U.S. Legal Tender sufficient to pay the Redemption Price of all Notes to be redeemed on that date. The Paying Agent shall promptly return to the Company any U.S. Legal Tender so deposited that is not required for that purpose, except with respect to monies owed as obligations to the Trustee pursuant to Article Seven. Unless the Company fails to comply with the preceding paragraph and defaults in the payment of such Redemption Price, interest on the Notes to be redeemed will cease to accrue on and after the applicable Redemption Date, whether or not such Notes are presented for payment. SECTION 3.06 Notes Redeemed in Part. Upon surrender of a Note that is to be redeemed in part, the Trustee shall authenticate for the Holder a new Note or Notes equal in principal amount to the unredeemed portion of the Note surrendered. -44- ARTICLE FOUR COVENANTS SECTION 4.01 Payment of Notes. The Company shall pay the interest on the Notes on the dates and in the manner provided in the Notes. An installment of principal of or interest on the Notes shall be considered paid on the date it is due if the Trustee or Paying Agent holds on that date U.S. Legal Tender designated for and sufficient to pay the installment. Interest on the Notes will be computed on the basis of a 360-day year comprised of twelve 30-day months. Notwithstanding anything to the contrary contained in this Indenture, the Company may, to the extent it is required to do so by law, deduct or withhold income or other similar taxes imposed by the United States of America from principal, premium or interest payments hereunder. SECTION 4.02 Maintenance of Office or Agency. The Company shall maintain the office or agency required under Section 2.03. The Company shall give prior notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the address of the Trustee set forth in Section 13.02. SECTION 4.03 Limitation on Restricted Payments. (a) The Company will not, and will not cause or permit any of its Restricted Subsidiaries to, directly or indirectly, (a) declare or pay any dividend or make any distribution (other than dividends or distributions payable solely in Qualified Capital Stock of the Company) on or in respect of shares of Capital Stock of the Company or any Restricted Subsidiary of the Company to holders of such Capital Stock (other than dividends or distributions payable to the Company or any Restricted Subsidiary of the Company), (b) purchase, redeem or otherwise acquire or retire for value any Capital Stock of the Company or any Restricted Subsidiary of the Company or any warrants, rights or options to purchase or acquire shares of any class of such Capital Stock (other than any such Capital Stock, warrants, rights or options owned by the Company or any Restricted Subsidiary of the Company), (c) make any principal payment on, purchase, defease, redeem, prepay, decrease or otherwise acquire or retire for value, prior to any scheduled final maturity, scheduled repayment or scheduled -45- sinking fund payment, any Indebtedness of the Company or any Restricted Subsidiary of the Company that is subordinate or junior in right of payment to the Notes or the Guarantees or (d) make any Investment (other than Permitted Investments) (each of the foregoing actions set forth in clauses (a), (b), (c) and (d) being referred to as a "Restricted Payment"), if at the time of such Restricted Payment or immediately after giving effect thereto, (i) a Default or an Event of Default shall have occurred and be continuing, or (ii) the Company is not able to incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) in compliance with Section 4.12 or (iii) the aggregate amount of all Restricted Payments (including such proposed Restricted Payment) made subsequent to the Issue Date (the amount expended for such purposes, if other than in cash, being the fair market value of such property as determined reasonably and in good faith by the Board of Directors of the Company) shall exceed the sum of: (w) $10 million plus (x) 50% of the cumulative Consolidated Net Income (or if cumulative Consolidated Net Income shall be a loss, minus 100% of such loss) of the Company earned subsequent to the Issue Date and on or prior to the date the Restricted Payment occurs (the "Reference Date") (treating such period as a single accounting period); plus (y) 100% of the aggregate net cash proceeds received by the Company from any Person (other than a Subsidiary of the Company) from the issuance and sale subsequent to the Issue Date and on or prior to the Reference Date of Qualified Capital Stock of the Company; plus (z) without duplication of any amounts included in clause (iii)(y) above, 100% of the aggregate net cash proceeds of any equity contribution received by the Company from a holder of the Company's Capital Stock (excluding, in the case of clauses (iii)(y) and (z), any net cash proceeds from the issuance and sale of Specified Venture Capital Stock). Notwithstanding the foregoing, the provisions set forth in the immediately preceding paragraph shall not prohibit: (1) the payment of any dividend within 60 days after the date of declaration of such dividend if the dividend would have been permitted on the date of declaration; (2) the acquisition of any shares of Capital Stock of the Company, either (i) solely in exchange for shares of Qualified Capital Stock of the Company or (ii) if no Default or Event of Default shall have occurred and be continuing, through the application of net proceeds of a substantially concurrent sale or incurrence for cash (other than to a Subsidiary of the Company) of shares of Qualified Capital Stock of the Company; (3) if no Default or Event of Default shall have occurred and be continuing, the acquisition of any Indebtedness of the Company that is subordinate or junior in right of payment to the Notes either (i) solely in exchange for shares of Qualified Capital Stock of the Company, or (ii) through the application of net proceeds of a substantially concurrent sale or incurrence for cash (other than to a Subsidiary of the Company) of (A) shares of -46- Qualified Capital Stock of the Company or (B) Refinancing Indebtedness; (4) if no Default or Event of Default shall have occurred and be continuing, repurchases by the Company of Common Stock of the Company from employees of the Company or any of its Subsidiaries or their authorized representatives upon the death, disability or termination of employment of such employees, in an aggregate amount not to exceed $2 million in any calendar year; (5) the redemption or repurchase of any Common Stock of the Company held by a Wholly-Owned Restricted Subsidiary of the Company which obtained such Common Stock directly from the Company; or (6) the payment of consideration by an unaffiliated third party to shareholders of the Company. In determining the aggregate amount of Restricted Payments made subsequent to the Issue Date in accordance with clause (iii) of the immediately preceding paragraph, cash amounts expended pursuant to clauses (1), (2) (3)(ii)(A) and (4) shall be included in such calculation. Not later than the date of making any Restricted Payment, the Company shall deliver to the Trustee an Officers' Certificate stating that such Restricted Payment complies with this Section 4.03 and setting forth in reasonable detail the basis upon which the required calculations were computed, which calculations may be based upon the Company's quarterly financial statements last provided to the Trustee pursuant to Section 4.09. SECTION 4.04 Corporate Existence. Except as otherwise permitted by Article Five, the Company shall do or cause to be done all things reasonably necessary to preserve and keep in full force and effect its corporate or other existence and the corporate or other existence each of its Restricted Subsidiaries in accordance with the respective organizational documents of each such Restricted Subsidiary and the material rights (charter and statutory) and franchises of the Company and each such Restricted Subsidiary, except for such noncompliances as are not in the aggregate reasonably likely to have a material adverse effect on the financial condition or results of operations of the Company and its Restricted Subsidiaries taken as a whole. SECTION 4.05 Payment of Taxes and Other Claims. The Company shall pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (i) all material taxes, assessments and governmental charges (including withholding taxes and any penalties, interest and additions to taxes) levied or imposed upon it or any of its Subsidiaries or properties of it or any of its Subsidiaries and (ii) all material lawful claims for labor, materials, supplies and services that, if unpaid, might by law become a Lien upon the property of it or any -47- of its Subsidiaries; except for such noncompliances as are not in the aggregate reasonably likely to have a material adverse effect on the financial condition or results of operations of the Company and its Restricted Subsidiaries as a whole; provided, however, that there shall not be required to be paid or discharged any such tax, assessment or charge, the amount, applicability or validity of which is being contested in good faith by appropriate proceedings and for which adequate provision has been made or where the failure to effect such payment or discharge is not adverse in any material respect to the Holders. SECTION 4.06 Maintenance of Properties and Insurance. (a) The Company shall, and shall cause each of its Restricted Subsidiaries to, make all reasonable efforts to maintain its material properties in normal condition (subject to ordinary wear and tear) and make all reasonably necessary repairs, renewals or replacements thereto as in the judgment of the Company may be reasonably necessary to the conduct of the business of the Company and its Restricted Subsidiaries; except for such noncompliances as are not in the aggregate reasonably likely to have a material adverse effect on the financial condition or results of operations of the Company and its Restricted Subsidiaries taken as a whole. (b) The Company shall provide or cause to be provided, for itself and each of its Restricted Subsidiaries, insurance (including appropriate self-insurance) against loss or damage of the kinds that, in the reasonable, good faith opinion of the Company, are reasonably adequate and appropriate for the conduct of the business of the Company and such Restricted Subsidiaries. SECTION 4.07 Compliance Certificate; Notice of Default. (a) The Company shall deliver to the Trustee, within 120 days after the end of each of the Company's fiscal years, an Officers' Certificate stating that a review of its activities and the activities of its Restricted Subsidiaries during the preceding fiscal year has been made under the supervision of the signing officers with a view to determining whether it has kept, observed, performed and fulfilled its obligations under this Indenture and further stating, as to each such officer signing such certificate, that to the best of his knowledge the Company during such preceding fiscal year has kept, observed, performed and fulfilled each and every such obligation and at the date of such certificate there is no Default or Event of Default that has occurred and is continuing or, if such signers do know of such Default or Event of Default, the certificate shall describe the Default or Event of Default and its status with particularity. The Officers' Certificate shall also notify the Trustee should the Company elect to change the manner in which it fixes its fiscal year end. -48- (b) The copy of the annual report on Form 10-K as filed with the SEC and delivered to the Trustee pursuant to Section 4.09 shall be accompanied by a written report of the Company's independent accountants that in conducting their audit of the financial statements which are a part of such annual report or such annual financial statements nothing has come to their attention that would lead them to believe that the Company has violated any provisions of Article Four, Five or Six insofar as they relate to accounting matters or, if any such violation has occurred, specifying the nature and period of existence thereof, it being understood that such accountants shall not be liable directly or indirectly to any Person for any failure to obtain knowledge of any such violation. (c) So long as any of the Notes are outstanding (i) if any Default or Event of Default has occurred and is continuing or (ii) if any Holder seeks to exercise any remedy hereunder with respect to a claimed Default under this Indenture or the Notes, the Company shall deliver to the Trustee as soon as practicable, and in any event within five days after the Company becomes aware of such event, by registered or certified mail or by facsimile transmission followed by hard copy by registered or certified mail an Officers' Certificate specifying such event, notice or other action. SECTION 4.08 Compliance with Laws. The Company shall comply, and shall cause each of its Restricted Subsidiaries to comply, with all applicable statutes, rules, regulations, orders and restrictions of the United States of America and each other country in which the Company or any of its Restricted Subsidiaries conducts business, all states and municipalities thereof, and of any governmental department, commission, board, regulatory authority, bureau, agency and instrumentality of the foregoing, in respect of the conduct of their respective businesses and the ownership of their respective properties, except for such noncompliances as are not in the aggregate reasonably likely to have a material adverse effect on the financial condition or results of operations of the Company and its Restricted Subsidiaries taken as a whole. SECTION 4.09 Reports to Holders. The Company will deliver to the Trustee within 15 days after the filing of the same with the Commission, copies of quarterly and annual reports and of the information, documents and other reports, if any, which the Company is required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act. Within 180 days after the Issue Date, notwithstanding that the Company may not be subject to the reporting requirements of Section -49- 13 or 15(d) of the Exchange Act, the Company will file with the Commission, to the extent permitted, and provide the Trustee and Holders with such annual reports and such information, documents and other reports specified in Section 13 or 15(d) of the Exchange Act which it would have been required to file had it been subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act. The Company will also comply with the other provisions of the TIA ss. 314(a). Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee's receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company's compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers' Certificates). SECTION 4.10 Waiver of Stay, Extension or Usury Laws. The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law or any usury law or other law that would prohibit or forgive the Company from paying all or any portion of the principal of, premium or interest on the Notes as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the obligations or the performance of this Indenture; and (to the extent that it may lawfully do so) the Company hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. SECTION 4.11 Limitations on Transactions with Affiliates. (a) The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, enter into or permit to exist any transaction or series of related transactions (including, without limitation, the purchase, sale, lease or exchange of any property or the rendering of any service) with, or for the benefit of, any of its Affiliates (each an "Affiliate Transaction"), other than (x) Affiliate Transactions permitted under paragraph (b) below and (y) Affiliate Transactions on terms that are no less favorable than those that might reasonably have been obtained in a comparable transaction at such time on an arm's-length basis from a Person that is not an Affiliate of the Company or such Restricted Subsidiary. All Affiliate Transactions (and each series of related Affiliate Transactions which are similar or part of a common plan) that involve an aggregate fair market value of more than $2 million shall be approved by the Board -50- of Directors of the Company or such Restricted Subsidiary, as the case may be, such approval to be evidenced by a Board Resolution stating that such Board of Directors has determined that such transaction complies with the foregoing provisions. If the Company or any Restricted Subsidiary of the Company enters into an Affiliate Transaction (or a series of related Affiliate Transactions related to a common plan) that involves an aggregate fair market value of more than $5 million, the Company or such Restricted Subsidiary, as the case may be, shall, prior to the consummation thereof, obtain a favorable opinion as to the fairness of such transaction or series of related transactions to the Company or the relevant Restricted Subsidiary, as the case may be, from a financial point of view, from an Independent Financial Advisor and file the same with the Trustee. (b) The restrictions set forth in clause (a) shall not apply to (i) reasonable fees and compensation paid to and indemnity provided on behalf of, officers, directors, employees or consultants of the Company or any Restricted Subsidiary of the Company as determined in good faith by the Company's Board of Directors or senior management; (ii) transactions exclusively between or among the Company and any of its Restricted Subsidiaries or exclusively between or among such Restricted Subsidiaries, provided such transactions are not otherwise prohibited by this Indenture; (iii) any agreement as in effect as of the Issue Date or any amendment thereto or any transaction contemplated thereby (including pursuant to any amendment thereto) or in any replacement agreement thereto so long as any such amendment or replacement agreement is not more disadvantageous to the Holders in any material respect than the original agreement as in effect on the Issue Date; (iv) Restricted Payments permitted by this Indenture; (v) transactions with distributors or other purchases or sales of goods or services, in each case in the ordinary course of business and otherwise in compliance with the terms of this Indenture and which are fair to the Company or the Restricted Subsidiaries as applicable, in the reasonable determination of the Board of Directors of the Company or the senior management thereof, or are on terms at least as favorable as might reasonably have been obtained at such time from an unaffiliated party; and (vi) the CT Film Purchase. SECTION 4.12 Limitation on Incurrence of Additional Indebtedness. The Company will not, and will not cause or permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume, guarantee, acquire, become liable, contingently or otherwise, with respect to, or otherwise become responsible for payment of (collectively, "incur") any Indebtedness (other than Permitted Indebtedness). Notwithstanding the foregoing, if no Default or Event of Default shall have occurred and be continuing -51- at the time of or as a consequence of the incurrence of any such Indebtedness, the Company and its Restricted Subsidiaries which are Guarantors may incur Indebtedness (including, without limitation, Acquired Indebtedness) and Restricted Subsidiaries of the Company which are not Guarantors may incur Acquired Indebtedness, in each case if on the date of the incurrence of such Indebtedness, after giving effect to the incurrence thereof, the Consolidated Fixed Charge Coverage Ratio of the Company is greater than 2.0 to 1.0 if such proposed incurrence is on or prior to the third anniversary of the Issue Date and 2.25 to 1.0 if such proposed incurrence is thereafter. Upon the repayment of Indebtedness which may have been incurred pursuant to more than one provision of this Indenture, the Company may, in its sole discretion, designate which provision such Indebtedness shall have been incurred under. SECTION 4.13 Limitation on Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries. The Company will not, and will not cause or permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or permit to exist or become effective any encumbrance or restriction on the ability of any Restricted Subsidiary of the Company to (a) pay dividends or make any other distributions on or in respect of its Capital Stock; (b) make loans or advances or to pay any Indebtedness or other obligation owed to the Company or any other Restricted Subsidiary of the Company; or (c) transfer any of its property or assets to the Company or any other Restricted Subsidiary of the Company, except for such encumbrances or restrictions existing under or by reason of: (1) applicable law; (2) this Indenture; (3) customary non-assignment provisions of any contract or any lease governing a leasehold interest of any Restricted Subsidiary of the Company; (4) any instrument governing Acquired Indebtedness, which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person or the properties or assets of the Person so acquired; (5) agreements existing on the Issue Date to the extent and in the manner such agreements are in effect on the Issue Date; (6) restrictions imposed by any agreement to sell assets or Capital Stock permitted under this Indenture to any Person pending the closing of such sale; (7) any agreement or instrument governing Capital Stock of any Person that is acquired as in effect at the time of such acquisition which was not entered into in connection with, or in anticipation or contemplation of, such acquisition; (8) Indebtedness or other contractual requirements of a Securitization Entity in connection with a Qualified Securitization Transaction; provided that such restrictions apply only to such Securitization Entity; (9) Liens incurred in accordance with the covenant described under Section 4.18; (10) any restrictions under an agreement governing Indebtedness of a Foreign Subsidiary permitted -52- under Section 4.12; (11) the Credit Agreement; or (12) an agreement governing Indebtedness incurred to Refinance the Indebtedness issued, assumed or incurred pursuant to an agreement referred to in clause (2), (4), (5), (8), (9), (10) or (11) above; provided, however, that the provisions relating to such encumbrance or restriction contained in any such Indebtedness are no less favorable to the Company in any material respect as determined by the Board of Directors of the Company in their reasonable and good faith judgment than the provisions relating to such encumbrance or restriction contained in agreements referred to in such clause (2), (4), (5), (8), (9), (10) or (11). SECTION 4.14 Change of Control. (a) Upon the occurrence of a Change of Control, each Holder will have the right to require that the Company purchase all or a portion of such Holder's Notes in cash pursuant to the offer described below (the "Change of Control Offer"), at a purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the date of purchase. (b) Prior to the mailing of the notice referred to below, but in any event within 30 days following any Change of Control, the Company covenants to (i) repay in full and terminate all commitments under Indebtedness under the Credit Agreement and all other Senior Debt the terms of which require repayment upon a Change of Control or offer to repay in full and terminate all commitments under all Indebtedness under the Credit Agreement and all other such Senior Debt and to repay the Indebtedness owed to each lender which has accepted such offer or (ii) obtain the requisite consents under the Credit Agreement and all other Senior Debt to permit the repurchase of the Notes as provided below. The Company shall first comply with the covenant in the immediately preceding sentence before it shall be required to repurchase Notes pursuant to the provisions described below. The Company's failure to comply with the covenant described in the immediately preceding sentence shall be governed by clause (3), and not clause (2), of Section 6.01. (c) Within 30 days following the date on which a Change of Control occurs (the "Change of Control Date"), the Company shall send, by first class mail, postage prepaid, a notice to each Holder of Notes at their last registered address and the Trustee, which notice shall govern the terms of the Change of Control Offer. The notice to the Holders shall contain all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Change of Control Offer. Such notice shall state: (1) that the Change of Control Offer is being made pursuant to Section 4.14 of the Indenture and that all Notes -53- validly tendered and not withdrawn will be accepted for payment; (2) the purchase price (including the amount of accrued interest, if any) and the purchase date (which shall be no earlier than 30 days nor later than 60 days from the date such notice is mailed, other than as may be required by law) (the "Change of Control Payment Date"); (3) that any Note not tendered will continue to accrue interest; (4) that, unless the Company defaults in making payment therefor, any Note accepted for payment pursuant to the Change of Control Offer shall cease to accrue interest after the Change of Control Payment Date; (5) that Holders electing to have a Note purchased pursuant to a Change of Control Offer will be required to surrender the Note, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Note completed, to the Paying Agent and Registrar for the Notes at the address specified in the notice prior to the close of business on the third Business Day prior to the Change of Control Payment Date; (6) that Holders will be entitled to withdraw their election if the Paying Agent receives, not later than the second Business Day prior to the Change of Control Payment Date, a facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Notes the Holder delivered for purchase and a statement that such Holder is withdrawing his election to have such Note purchased; (7) that Holders whose Notes are purchased only in part will be issued new Notes in a principal amount equal to the unpurchased portion of the Notes surrendered; provided, however, that each Note purchased and each new Note issued shall be in a principal amount of $1,000 or integral multiples thereof; and (8) the circumstances and relevant facts regarding such Change of Control. (d) On or before the Change of Control Payment Date, the Company shall (i) accept for payment Notes or portions thereof (in integral multiples of $1,000) validly tendered pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent in accordance with Section 2.14 U.S. Legal Tender sufficient to pay the purchase price plus accrued and unpaid interest, if any, of all -54- Notes to be purchased and (iii) deliver to the Trustee Notes so accepted together with an Officers' Certificate stating the Notes or portions thereof being purchased by the Company. Upon receipt by the Paying Agent of the monies specified in clause (ii) above and a copy of the Officers' Certificate specified in clause (iii) above, the Paying Agent shall promptly mail to the Holders of Notes so accepted payment in an amount equal to the purchase price plus accrued and unpaid interest, if any, out of the funds deposited with the Paying Agent in accordance with the preceding sentence. The Trustee shall promptly authenticate and mail to such Holders new Notes equal in principal amount to any unpurchased portion of the Notes surrendered. Upon the payment of the purchase price for the Notes accepted for purchase, the Trustee shall return the Notes purchased to the Company for cancellation. Any monies remaining after the purchase of Notes pursuant to a Change of Control Offer shall be returned within three Business Days by the Trustee to the Company except with respect to monies owed as obligations to the Trustee pursuant to Article Seven. For purposes of this Section 4.14, the Trustee shall act as the Paying Agent. (e) The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such rule, laws and regulations are applicable in connection with the purchase of the Notes pursuant to a Change of Control Offer. To the extent the provisions of any securities laws and regulations conflict with the provisions of this Indenture relating to a Change of Control Offer, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations relating to such Change of Control Offer by virtue thereof. SECTION 4.15 Limitation on Asset Sales. (a) The Company will not, and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless (i) the Company or the applicable Restricted Subsidiary, as the case may be, receives consideration at the time of such Asset Sale at least equal to the fair market value of the assets sold or otherwise disposed of (as determined in good faith by the Company's Board of Directors), (ii) at least 75% of the consideration received by the Company or the Restricted Subsidiary, as the case may be, from such Asset Sale shall be in the form of cash or Cash Equivalents (provided that the amount of any liabilities (as shown on the Company's or such Restricted Subsidiary's most recent balance sheet) of the Company or any such Restricted Subsidiary (other than liabilities that are by their terms subordinated to the Notes) that are assumed by the transferee of any such assets shall be deemed to be cash for purposes of this provision) and is received at the time of such disposition; and (iii) upon the consummation of an Asset -55- Sale, the Company shall apply, or cause such Restricted Subsidiary to apply, the Net Cash Proceeds relating to such Asset Sale within 365 days (or in the case of Foreign Subsidiary Asset Sales, 545 days) of receipt thereof either (A) to prepay any Senior Debt, Guarantor Senior Debt or Indebtedness of a Restricted Subsidiary that is not a Guarantor and, in the case of any such Indebtedness under any revolving credit facility, effect a permanent reduction in the availability under such revolving credit facility, (B) to make an investment in or expenditures for properties and assets (including Capital Stock of any entity) that replace the properties and assets that were the subject of such Asset Sale or in properties and assets (including Capital Stock of any entity) that will be used in the business of the Company and its Subsidiaries as existing on the Issue Date or in businesses reasonably related thereto ("Replacement Assets"), or (C) a combination of prepayment and investment permitted by the foregoing clauses (iii)(A) and (iii)(B). On the 366th day (or in the case of Foreign Subsidiary Asset Sales, the 546th day) after an Asset Sale or such earlier date, if any, as the Board of Directors of the Company or of such Restricted Subsidiary determines not to apply the Net Cash Proceeds relating to such Asset Sale as set forth in clauses (iii)(A), (iii)(B) and (iii)(C) of the next preceding sentence (each, a "Net Proceeds Offer Trigger Date"), such aggregate amount of Net Cash Proceeds which have not been applied on or before such Net Proceeds Offer Trigger Date as permitted in clauses (iii)(A), (iii)(B) and (iii)(C) of the next preceding sentence (each a "Net Proceeds Offer Amount") shall be applied by the Company or such Restricted Subsidiary to make an offer to purchase (the "Net Proceeds Offer") on a date (the "Net Proceeds Offer Payment Date") not less than 30 nor more than 45 days following the applicable Net Proceeds Offer Trigger Date, from all Holders on a pro rata basis, that amount of Notes equal to the Net Proceeds Offer Amount at a price equal to 100% of the principal amount of the Notes to be purchased, plus accrued and unpaid interest thereon, if any, to the date of purchase; provided, however, that if at any time any non-cash consideration received by the Company or any Restricted Subsidiary of the Company, as the case may be, in connection with any Asset Sale is converted into or sold or otherwise disposed of for cash (other than interest received with respect to any such non-cash consideration), then such conversion or disposition shall be deemed to constitute an Asset Sale hereunder and the Net Cash Proceeds thereof shall be applied in accordance with this covenant. The Company shall not be required to make a Net Proceeds Offer until there is an aggregate unutilized Net Proceeds Offer Amount equal to or in excess of $10 million resulting from one or more Asset Sales, at which time, the unutilized Net Proceeds Offer Amount, shall be applied as required pursuant to this paragraph; provided, however, that the first $10 million of such Net Proceeds Offer Amount need not be applied as required pursuant to this paragraph. -56- (b) In the event of the transfer of substantially all (but not all) of the property and assets of the Company and its Restricted Subsidiaries as an entirety to a Person in a transaction permitted under Section 5.01 and as a result thereof the Company is no longer an obligor on the Notes, the successor corporation shall be deemed to have sold the properties and assets of the Company and its Restricted Subsidiaries not so transferred for purposes of this covenant, and shall comply with the provisions of this covenant with respect to such deemed sale as if it were an Asset Sale. In addition, the fair market value of such properties and assets of the Company or its Restricted Subsidiaries deemed to be sold shall be deemed to be Net Cash Proceeds for purposes of this covenant. (c) Notwithstanding Section 4.15(a) and (b), the Company and its Restricted Subsidiaries will be permitted to consummate an Asset Sale without complying with such paragraphs to the extent (i) at least 80% of the consideration for such Asset Sale constitutes Replacement Assets and (ii) such Asset Sale is for fair market value; provided, however, that any consideration not constituting Replacement Assets received by the Company or any of its Restricted Subsidiaries in connection with any Asset Sale permitted to be consummated under this paragraph shall constitute Net Cash Proceeds subject to the provisions of Section 4.15(a) and (b). (d) Subject to the deferral right set forth in the final sentence of Section 4.15(a), each notice of a Net Proceeds Offer pursuant to this Section 4.15 shall be mailed, by first-class mail, by the Company to Holders of Notes at their last registered address not more than 30 days following the Net Proceeds Offer Trigger Date, with a copy to the Trustee. The notice shall contain all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Net Proceeds Offer and shall state the following terms: (1) that the Net Proceeds Offer is being made pursuant to Section 4.15 of the Indenture, that all Notes tendered will be accepted for payment; provided, however, that if the aggregate principal amount of Notes tendered in a Net Proceeds Offer plus accrued interest at the expiration of such offer exceeds the aggregate amount of the Net Proceeds Offer, the Company shall select the Notes to be purchased on a pro rata basis (with such adjustments as may be deemed appropriate by the Company so that only Notes in denominations of $1,000 or multiples thereof shall be purchased) and that the Net Proceeds Offer shall remain open for a period of 20 Business Days or such longer periods as may be required by law; (2) the purchase price (including the amount of accrued interest) and the Net Proceeds Offer Payment Date (which shall be not less than 30 nor more than 45 days following the -57- applicable Net Proceeds Offer Trigger Date and which shall be at least five Business Days after the Trustee receives notice thereof from the Company); (3) that any Note not tendered will continue to accrue interest; (4) that, unless the Company defaults in making payment therefor, any Note accepted for payment pursuant to the Net Proceeds Offer shall cease to accrue interest after the Net Proceeds Offer Payment Date; (5) that Holders electing to have a Note purchased pursuant to a Net Proceeds Offer will be required to surrender the Note, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Note completed, to the Paying Agent at the address specified in the notice prior to the close of business on the Business Day prior to the Net Proceeds Offer Payment Date; (6) that Holders will be entitled to withdraw their election if the Paying Agent receives, not later than the second Business Day prior to the Net Proceeds Offer Payment Date, a facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Notes the holder delivered for purchase and a statement that such Holder is withdrawing his election to have such Note purchased; and (7) that Holders whose Notes are purchased only in part will be issued new Notes in a principal amount equal to the unpurchased portion of the Note surrendered; provided, however, that each Note purchased and each new Note issued shall be in an original principal amount of $1,000 or integral multiples thereof. (e) On or before the Net Proceeds Offer Payment Date, the Company shall (i) accept for payment Notes or portions thereof (in integral multiples of $1,000) validly tendered pursuant to the Net Proceeds Offer, (ii) deposit with the Paying Agent in accordance with Section 2.14 U.S. Legal Tender sufficient to pay the purchase price plus accrued and unpaid interest, if any, of all Notes to be purchased and (iii) deliver to the Trustee Notes so accepted together with an Officers' Certificate stating the Notes or portions thereof being purchased by the Company. Upon receipt by the Paying Agent of the monies specified in clause (ii) above and a copy of the Officers' Certificate specified in clause (iii) above, the Paying Agent shall promptly mail or wire transfer to the Holders of Notes so accepted payment in an amount equal to the purchase price plus accrued and unpaid interest, if any, out of the funds deposited with the Paying Agent in accordance with the -58- preceding sentence. The Trustee shall promptly authenticate and make available for delivery to such Holders new Notes equal in principal amount to any unpurchased portion of the Notes surrendered. Upon the payment of the purchase price for the Notes accepted for purchase, the Trustee shall return the Notes purchased to the Company for cancellation. Any monies remaining after the purchase of Notes pursuant to a Net Proceeds Offer shall be returned within three Business Days by the Trustee to the Company except with respect to monies owed as obligations to the Trustee pursuant to Article Seven. For purposes of this Section 4.15, the Trustee shall act as the Paying Agent. (f) To the extent the amount of Notes tendered pursuant to any Net Proceeds Offer is less than the amount of Net Cash Proceeds subject to such Net Proceeds Offer, the Company may use any remaining portion of such Net Cash Proceeds not required to fund the repurchase of tendered Notes for general corporate purposes and such Net Proceeds Offer Amount shall be reset to zero. (g) The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such rule, laws and regulations are applicable in connection with the repurchase of Notes pursuant to a Net Proceeds Offer. To the extent the provisions of any securities laws and regulations conflict with the provisions of this Indenture relating to a Net Proceeds Offer, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations relating to such Net Proceeds Offer by virtue thereof. SECTION 4.16 Prohibition on Incurrence of Senior Subordinated Debt. The Company will not, and will not cause or permit any Guarantor to, incur or suffer to exist Indebtedness that by its terms is senior in right of payment to the Notes or the Guarantees, as the case may be, and subordinate in right of payment to any other Indebtedness of the Company or the Guarantor, as the case may be. SECTION 4.17 Limitation on Preferred Stock of Restricted Subsidiaries. The Company will not permit any of its Restricted Subsidiaries to, issue any Preferred Stock (other than to the Company or to a Wholly-Owned Restricted Subsidiary of the Company) or permit any Person (other than the Company or a Wholly-Owned Restricted Subsidiary of the Company) to own any Preferred Stock of any Restricted Subsidiary of the Company. -59- SECTION 4.18 Limitation on Liens. The Company will not, and will not cause or permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or permit or suffer to exist any Liens of any kind against or upon any property or assets of the Company or any of its Restricted Subsidiaries whether owned on the Issue Date or acquired after the Issue Date, which secures Indebtedness pasi passu with or subordinated to the Notes or the Guarantees unless (i) if such Lien secures Indebtedness which is pari passu with the Notes or the Guarantees, then the Notes or the Guarantees, as the case may be, are secured on an equal and ratable basis with the obligations so secured until such time as such obligation is no longer secured by a Lien or (ii) if such Lien secures Indebtedness which is subordinated to the Notes or the Guarantees, any such Lien shall be subordinated to a Lien granted to the Holders of the Notes in the same collateral as that securing such Lien to the same extent as such subordinated Indebtedness is subordinated to the Notes or the Guarantees, as the case may be. SECTION 4.19 Limitation of Guarantees by Restricted Subsidiaries. The Company will not permit any of its Restricted Subsidiaries, directly or indirectly, by way of the pledge of any intercompany note or otherwise, to assume, guarantee or in any other manner become liable with respect to any Indebtedness of the Company or any other Restricted Subsidiary (other than (A) Indebtedness under Currency Agreements in reliance on clause (v) of the definition of Permitted Indebtedness, (B) Interest Swap Obligations or Commodity Agreements incurred in reliance on clause (iv) of the definition of Permitted Indebtedness or (C) any guarantee by a Foreign Subsidiary of Indebtedness of another Foreign Subsidiary permitted under Section 4.12) unless, in any such case (a) such Restricted Subsidiary that is not a Guarantor executes and delivers a supplemental indenture to this Indenture, providing a Guarantee and (b) (x) if any such assumption, guarantee or other liability of such Restricted Subsidiary is provided in respect of Senior Debt, the guarantee or other instrument provided by such Restricted Subsidiary in respect of such Senior Debt may be superior to the Guarantee pursuant to subordination provisions no less favorable in any material respect to the Holders than those contained in this Indenture and (y) if such assumption, guarantee or other liability of such Restricted Subsidiary is provided in respect of Indebtedness that is expressly subordinated to the Notes, the guarantee or other instrument provided by such Restricted Subsidiary in respect of such subordinated Indebtedness shall be subordinated to the Guarantee pursuant to subordination provisions no less favorable in any material respect to the Holders than those contained in this Indenture. -60- Notwithstanding the foregoing, any such Guarantee by a Restricted Subsidiary of the Notes shall provide by its terms that it shall be automatically and unconditionally released and discharged, without any further action required on the part of the Trustee or any Holder, upon: (i) the unconditional release of such Restricted Subsidiary from its liability in respect of the Indebtedness in connection with which such Guarantee was executed and delivered pursuant to the preceding paragraph; or (ii) any sale or other disposition (by merger or otherwise) to any Person which is not a Restricted Subsidiary of the Company of all of the Company's Capital Stock in, or all or substantially all of the assets of, such Restricted Subsidiary or the parent of such Restricted Subsidiary; provided that (a) such sale or disposition of such Capital Stock or assets is otherwise in compliance with the terms of this Indenture and (b) such assumption, guarantee or other liability of such Restricted Subsidiary has been released by the holders of the other Indebtedness so guaranteed; or (iii) such Guarantor becoming an Unrestricted Subsidiary in accordance with this Indenture. SECTION 4.20 Conduct of Business. The Company and its Restricted Subsidiaries (other than a Securitization Entity) will not engage in any businesses which are not the same, similar or related to the businesses in which the Company and its Restricted Subsidiaries are engaged on the Issue Date, except to the extent that after engaging in any new business, the Company and its Restricted Subsidiaries, taken as a whole, remain substantially engaged in similar lines of business as are conducted by them on the Issue Date. ARTICLE FIVE SUCCESSOR CORPORATION SECTION 5.01 Merger, Consolidation and Sale of Assets. (a) The Company will not, in a single transaction or a series of related transactions, consolidate or merge with or into any Person, or sell, assign, transfer, lease, convey or otherwise dispose of (or cause or permit any Restricted Subsidiary of the Company to sell, assign, transfer, lease, convey or otherwise dispose of) all or substantially all of the Company's assets (determined on a consolidated basis for the Company and its Restricted Subsidiaries) whether as an entirety or substantially as an entirety to any Person unless: (i) either (1) the Company shall be the surviving or continuing entity or (2) the Person (if other than the -61- Company) formed by such consolidation or into which the Company is merged or the Person that acquires by sale, assignment, transfer, lease, conveyance or other disposition the properties and assets of the Company and of the Company's Restricted Subsidiaries substantially as an entirety (the "Surviving Entity") (x) shall be an entity organized and validly existing under the laws of the United States or any State thereof or the District of Columbia and (y) shall expressly assume, by supplemental indenture (in form and substance satisfactory to the Trustee), executed and delivered to the Trustee, the due and punctual payment of the principal of, and premium, if any, and interest on all the Notes and the performance of every covenant of the Notes, this Indenture and the Registration Rights Agreement on the part of the Company to be performed or observed, as the case may be; (ii) immediately after giving effect to such transaction and the assumption contemplated by clause (i)(2)(y) above (including giving effect to any Indebtedness and Acquired Indebtedness incurred or anticipated to be incurred in connection with or in respect of such transaction), the Company or the Surviving Entity, as the case may be, (1) shall have a Consolidated Net Worth equal to or greater than the Consolidated Net Worth of the Company immediately prior to such transaction and (2) shall be able to incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) pursuant to Section 4.12; (iii) immediately before and immediately after giving effect to such transaction and the assumption contemplated by clause (i)(2)(y) above (including, without limitation, giving effect to any Indebtedness and Acquired Indebtedness incurred or anticipated to be incurred and any Lien granted in connection with or in respect of the transaction), no Default or Event of Default shall have occurred or be continuing; and (iv) the Company or the Surviving Entity, as the case may be, shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, sale, assignment, transfer, lease, conveyance or other disposition and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture comply with the applicable provisions of this Indenture and that all conditions precedent in this Indenture relating to such transaction have been satisfied. (b) For purposes of this Section 5.01, the transfer (by lease, assignment, sale or otherwise, in a single transaction or series of related transactions) of all or substantially all of the -62- properties and assets of one or more Restricted Subsidiaries of the Company, the Capital Stock of which constitutes all or substantially all of the properties or assets of the Company, will be deemed to be the transfer of all or substantially all of the properties and assets of the Company unless such transfer is to the Company or one or more Wholly-Owned Restricted Subsidiaries. (c) Each Guarantor (other than any Guarantor whose Guarantee is to be released in accordance with the terms of the Guarantee and this Indenture in connection with any transaction complying with the provisions of Section 4.15) will not, and the Company will not cause or permit any Guarantor to, consolidate with or merge with or into any Person other than the Company or any other Guarantor unless: (i) the entity formed by or surviving any such consolidation or merger (if other than the Guarantor) or to which such sale, lease, conveyance or other disposition shall have been made is an entity organized and existing under the laws of the United States or any State thereof or the District of Columbia; (ii) such entity assumes by supplemental indenture all of the obligations of the Guarantor on its Guarantee; (iii) immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing; and (iv) immediately after giving effect to such transaction and the use of any net proceeds therefrom on a pro forma basis, the Company could satisfy the provisions of clause (a) (ii) above. Any merger or consolidation of a Guarantor with and into the Company (with the Company being the surviving entity) or another Guarantor need not comply with clause (a) above. Any merger of the Company with and into a Guarantor need not comply with clause (a)(ii)(2) above. SECTION 5.02 Successor Corporation Substituted. Upon any consolidation, combination or merger, or any transfer of all or substantially all of the assets of the Company in accordance with Section 5.01 in which the Company is not the continuing entity, the successor Person formed by such consolidation or into which the Company is merged or to which such conveyance, lease or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture and the Notes with the same effect as if such successor Person had been named as the Company herein. When a successor entity assumes all of the obligations of the Company hereunder and under the Notes and agrees to be bound hereby and thereby, the predecessor shall be released from such obligations. -63- ARTICLE SIX DEFAULT AND REMEDIES SECTION 6.01 Events of Default. Each of the following shall be an "Event of Default": (1) the failure to pay interest on the Notes when the same becomes due and payable and such Default continues for a period of 30 days (whether or not such payment shall be prohibited by the provisions described under Article Ten); (2) the failure to pay principal on any Notes, when such principal becomes due and payable, at maturity, upon acceleration, upon redemption or otherwise (including the failure to make a payment to purchase Notes tendered pursuant to a Change of Control Offer or a Net Proceeds Offer) (whether or not such payment shall be prohibited by the provisions described under Article Ten); (3) a default in the observance or performance of any other covenant or agreement contained in this Indenture, which Default continues for a period of 45 days after the Company receives written notice thereof specifying the default (and demanding that such Default be remedied) from the Trustee or the Holders of at least 25% of the outstanding principal amount of the Notes (except in the case of a default with respect to Section 5.01, which will constitute an Event of Default with such notice requirement but without such passage of time requirement); (4) the failure to pay at the final maturity (giving effect to any applicable grace periods and any extensions thereof) the principal amount of any Indebtedness of the Company or any Restricted Subsidiary of the Company or the acceleration of the final stated maturity of any such Indebtedness, if, in either case, the aggregate principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness in default for failure to pay principal at final maturity or which has been accelerated, aggregates $10 million or more at any time and such Indebtedness has not been discharged in full or such acceleration has not been rescinded or annulled within 30 days of such final maturity or acceleration; (5) one or more judgments in an aggregate amount in excess of $10 million (which are not covered by third party insurance as to which the insurer has not disclaimed coverage) shall have been rendered against the Company or any of its -64- Restricted Subsidiaries and such judgment or judgments remain undischarged, unpaid or unstayed for a period of 60 days after such judgment or judgments become final and nonappealable; (6) the Company or any Restricted Subsidiary which is also a Material Subsidiary (A) commences a voluntary case or proceeding under any Bankruptcy Law with respect to itself, (B) consents to the entry of a judgment, decree or order for relief against it in an involuntary case or proceeding under any Bankruptcy Law, (C) consents to the appointment of a custodian of it or for substantially all of its property, (D) consents to or acquiesces in the institution of a bankruptcy or an insolvency proceeding against it or (E) makes a general assignment for the benefit of its creditors; (7) a court of competent jurisdiction enters a judgment, decree or order for relief in respect of the Company or any Restricted Subsidiary which is also a Material Subsidiary in an involuntary case or proceeding under any Bankruptcy Law, which shall (A) approve as properly filed a petition seeking reorganization, arrangement, adjustment or composition in respect of the Company or any Material Subsidiary, (B) appoint a custodian of the Company or any Material Subsidiary or for substantially all of its property or (C) order the winding-up or liquidation of its affairs; and such judgment, decree or order shall remain unstayed and in effect for a period of 60 consecutive days; or (8) any Guarantee of a Material Subsidiary ceases to be in full force and effect or any Guarantee of a Material Subsidiary is declared to be null and void and unenforceable or any Guarantee of a Material Subsidiary is found to be invalid or any of the Guarantors that is a Material Subsidiary denies its liability under its Guarantee (other than by reason of release of a Guarantor in accordance with the terms of this Indenture). SECTION 6.02 Acceleration. (a) If an Event of Default (other than an Event of Default specified in Section 6.01(6) or (7) with respect to the Company) shall occur and be continuing, the Trustee or the Holders of at least 25% in principal amount of outstanding Notes may, declare the principal of all the Notes, together with all accrued and unpaid interest, to be due and payable by notice in writing to the Company and, in the case of an acceleration notice from the Holders of at least 25% in principal amount of the outstanding Notes, the Trustee specifying the respective Event of Default and that it is a "notice of acceleration" (the "Acceleration Notice"), and the same (i) shall become immediately due and payable or (ii) -65- if there are any amounts outstanding under the Designated Senior Debt, shall become immediately due and payable upon the first to occur of an acceleration under the Designated Senior Debt or 5 business days after receipt by the Company and the Representative under the Designated Senior Debt of such Acceleration Notice. If an Event of Default specified in Section 6.01(6) or (7) with respect to the Company occurs and is continuing, then all unpaid principal of and premium, if any, and accrued and unpaid interest on all of the outstanding Notes will ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder. (b) At any time after a declaration of acceleration with respect to the Notes as described in clause (a) above, the Holders of a majority in principal amount of the Notes then outstanding (by notice to the Trustee) may rescind and cancel such declaration and its consequences if (i) the rescission would not conflict with any judgment or decree of a court of competent jurisdiction, (ii) all existing Events of Default have been cured or waived except nonpayment of principal or interest on the Notes that has become due solely because of the acceleration, (iii) to the extent the payment of such interest is lawful, interest (at the same rate specified in the Notes) on overdue installments of interest and overdue payments of principal, which has become due other than by such declaration of acceleration, has been paid, (iv) the Company has paid the Trustee its reasonable compensation and reimbursed the Trustee for its expenses, disbursements and advances and (v) in the event of the cure or waiver of a Default or Event of Default of the type described in Sections 6.01(6) and (7), the Trustee has received an Officers' Certificate and Opinion of Counsel that such Default or Event of Default has been cured or waived and the Trustee shall be entitled to conclusively rely upon such Officers' Certificate and Opinion of Counsel. No such rescission shall affect any subsequent Default or Event of Default or impair any right consequent thereto. SECTION 6.03 Other Remedies. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy by proceeding at law or in equity to collect the payment of principal of, premium, if any, or accrued and unpaid interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture. The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Noteholder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of -66- any other remedy. All available remedies are cumulative to the extent permitted by law. SECTION 6.04 Waiver of Past Defaults. Subject to Sections 6.07 and 9.02, the Holders of a majority in principal amount of the Notes by notice to the Trustee may waive any existing Default or Event of Default and its consequences, except a Default in the payment of the principal of or interest on any Note as specified in clauses (1) and (2) of Section 6.01. SECTION 6.05 Control by Majority. Subject to Section 9.02, the Holders of a majority in aggregate principal amount of the then outstanding Notes may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on it, including, without limitation, any remedies provided for in Section 6.03. Subject to Section 7.01, however, the Trustee may, in its discretion, refuse to follow any direction that conflicts with any law or this Indenture, that the Trustee determines may be unduly prejudicial to the rights of another Holder (it being understood that the Trustee shall have no duty to ascertain whether or not such actions or forbearances are unduly prejudicial to such Holders) or that may involve the Trustee in personal liability; provided, however, that the Trustee may take any other action deemed proper by the Trustee, in its discretion, that is not inconsistent with such direction. SECTION 6.06 Limitation on Suits. A Holder may not pursue any remedy with respect to this Indenture or the Notes unless: (1) the Holder gives to the Trustee notice of a continuing Event of Default; (2) Holders of at least 25% in aggregate principal amount of the then outstanding Notes make a written request to the Trustee to pursue the remedy; (3) such Holders offer to the Trustee indemnity or security against any loss, liability or expense to be incurred in compliance with such request which is satisfactory to the Trustee; (4) the Trustee does not comply with the request within 45 days after receipt of the request and the offer of satisfactory indemnity or security; and -67- (5) during such 45-day period the Holders of a majority in aggregate principal amount of the then outstanding Notes do not give the Trustee a direction which, in the opinion of the Trustee, is inconsistent with the request. A Holder may not use this Indenture to prejudice the rights of another Holder or to obtain a preference or priority over such other Holder. SECTION 6.07 Rights of Holders To Receive Payment. Notwithstanding any other provision of this Indenture, the right of any Holder to receive payment of principal of, premium and interest on a Note, on or after the respective due dates expressed in such Note, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder. SECTION 6.08 Collection Suit by Trustee. If an Event of Default in payment of principal or interest specified in clause (1) or (2) of Section 6.01 occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company or any other obligor on the Notes for the whole amount of principal and accrued interest remaining unpaid, together with interest on overdue principal and, to the extent that payment of such interest is lawful, interest on overdue installments of interest at the rate set forth in the Notes and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. SECTION 6.09 Trustee May File Proofs of Claim. The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, taxes, disbursements and advances of the Trustee, its agents and counsel) and the Holders allowed in any judicial proceedings relating to the Company or any other obligor upon the Notes, any of their respective creditors or any of their respective property, and shall be entitled and empowered to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same, and any custodian in any such judicial proceedings is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, taxes, -68- disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07. The Company's payment obligations under this Section 6.09 shall be secured in accordance with the provisions of Section 7.07. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. SECTION 6.10 Priorities. If the Trustee collects any money pursuant to this Article Six, it shall pay out the money in the following order: First: to the Trustee, its agents and attorneys for amounts due under Sections 6.09 and 7.07; Second: if the Holders are forced to proceed against the Company directly without the Trustee, to Holders for their collection costs; Third: to Holders for amounts due and unpaid on the Notes for principal, premium, if any, and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal, premium, if any, and interest, respectively; and Fourth: to the Company or any other obligor on the Notes, as their interests may appear, or as a court of competent jurisdiction may direct. The Trustee, upon prior notice to the Company, may fix a record date and payment date for any payment to Holders pursuant to this Section 6.10. SECTION 6.11 Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07, or a -69- suit by a Holder or Holders of more than 10% in aggregate principal amount of the outstanding Notes. ARTICLE SEVEN TRUSTEE SECTION 7.01 Duties of Trustee. (a) If a Default or an Event of Default has occurred and is continuing, the Trustee shall exercise such rights and powers vested in it by this Indenture and use the same degree of care and skill in its exercise thereof as a prudent Person would exercise or use under the circumstances in the conduct of its own affairs. (b) Except during the continuance of a Default or an Event of Default: (1) The Trustee need perform only those duties as are specifically set forth in this Indenture or the TIA and no duties, covenants, responsibilities or obligations shall be implied in this Indenture that are adverse to the Trustee. (2) In the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates (including Officers' Certificates) or opinions (including Opinions of Counsel) furnished to the Trustee and conforming to the requirements of this Indenture. However, as to any certificates or opinions which are required by any provision of this Indenture to be delivered or provided to the Trustee, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture. (c) Notwithstanding anything to the contrary herein contained, the Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (1) This paragraph does not limit the effect of paragraph (b) of this Section 7.01. (2) The Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts. -70- (3) The Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.02, 6.04 or 6.05. (d) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (e) Every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b), (c) and (d) of this Section 7.01. (f) The Trustee shall not be liable for interest on any money or assets received by it except as the Trustee may agree with the Company. Assets held in trust by the Trustee need not be segregated from other assets except to the extent required by law. (g) In the absence of bad faith, negligence or willful misconduct on the part of the Trustee, the Trustee shall not be responsible for the application of any money by any Paying Agent other than the Trustee. SECTION 7.02 Rights of Trustee. Subject to Section 7.01: (a) The Trustee may rely and shall be fully protected in acting or refraining from acting upon any document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document. (b) Before the Trustee acts or refrains from acting, it may consult with counsel and may require an Officers' Certificate or an Opinion of Counsel, which shall conform to Sections 13.04 and 13.05. The Trustee shall not be liable for and shall be fully protected in respect of any action it takes or omits to take in good faith in reliance on such Officers' Certificate, or an Opinion of Counsel or advice of counsel. (c) The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent or attorney appointed with due care. -71- (d) The Trustee shall not be liable for any action that it takes or omits to take in good faith that it reasonably believes to be authorized or within its rights or powers. (e) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution (including any Board Resolution), certificate (including any Officers' Certificate), statement, instrument, opinion (including any Opinion of Counsel), notice, request, direction, consent, order, bond, debenture, or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled, upon reasonable notice to the Company, to examine the books, records, and premises of the Company, personally or by agent or attorney. (f) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request, order or direction of any of the Holders of the Notes pursuant to the provisions of this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which may be incurred by it in compliance with such request, order or direction. (g) The Trustee may consult with counsel, and the advice or opinion of counsel with respect to legal matters relating to this Indenture and the Notes shall be full and complete authorization and protection from liability with respect to any action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel. (h) The Trustee shall not be required to give any bond or surety in respect of the performance of its powers and duties hereunder. (i) The permissive rights of the Trustee to do things enumerated in this Indenture shall not be construed as a duty. SECTION 7.03 Individual Rights of Trustee. The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company, any Restricted or Unrestricted Subsidiary, or their respective Affiliates, with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights. However, the Trustee must comply with Sections 7.10 and 7.11. SECTION 7.04 Trustee's Disclaimer. -72- The Trustee makes no representation as to the validity or adequacy of this Indenture or the Notes, and it shall not be accountable for the Company's use of the proceeds from the Notes, and it shall not be responsible for any statement of the Company in this Indenture or the Notes other than the Trustee's certificate of authentication. SECTION 7.05 Notice of Default. If a Default or an Event of Default occurs and is continuing and if the Trustee has actual knowledge of such Default or Event of Default, the Trustee shall mail to each Noteholder notice of the uncured Default or Event of Default within 60 days after such Default or Event of Default occurs. Except in the case of a Default or an Event of Default in the payment of interest or principal of, premium or interest on, any Note, including an accelerated payment and the failure to make payment on the Change of Control Payment Date pursuant to a Change of Control Offer or on the Proceeds Purchase Date pursuant to a Net Proceeds Offer and, except in the case of a failure to comply with Article Five, the Trustee may withhold the notice if and so long as the Trustee's Board of Directors, and/or Trust Officers in good faith determines that withholding the notice is in the interest of the Holders. The Trustee shall not be deemed to have knowledge of a Default or Event of Default other than (i) any Event of Default occurring pursuant to Sections 6.01(1) or 6.01(2); or (ii) any Default or Event of Default of which a Trust Officer shall have received written notification or obtained actual knowledge. As used herein, the term "actual knowledge" means the actual fact or statement of knowing, without any duty to make any investigation with regard thereto. SECTION 7.06 Reports by Trustee to Holders. Within 60 days after April 1 of each year beginning with April 1, 1998, the Trustee shall, to the extent that any of the events described in TIA ss. 313(a) occurred within the previous twelve months, but not otherwise, mail to each Noteholder a brief report dated as of such date that complies with TIA ss. 313(a). The Trustee also shall comply with TIA ss.ss. 313(b) and 313(c). A copy of each report at the time of its mailing to Noteholders shall be mailed to the Company and filed with the SEC and each stock exchange, if any, on which the Notes are listed. The Company shall promptly notify the Trustee if the Notes become listed on any stock exchange, and if the Notes are so listed, the Trustee shall comply with TIA ss. 313(d). -73- SECTION 7.07 Compensation and Indemnity. The Company shall pay to the Trustee from time to time, and the Trustee shall be entitled to, such compensation as may be agreed upon by the Company and the Trustee. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee upon request for all reasonable out-of-pocket expenses, disbursements and advances incurred or made by it in connection with the performance of its duties and the discharge of its obligations under this Indenture. Such expenses shall include the reasonable fees and expenses of the Trustee's agents and counsel. The Company shall indemnify the Trustee and its agents, employees, officers, stockholders and directors for, and hold them harmless against, any loss, liability or expense incurred by them except for such actions to the extent caused by any negligence, bad faith or willful misconduct on their part, arising out of or in connection with the acceptance or administration of this trust including the reasonable costs and expenses of defending themselves against or investigating any claim or liability in connection with the exercise or performance of any of the Trustee's rights, powers or duties hereunder. The Trustee shall notify the Company promptly of any claim asserted against the Trustee or any of its agents, employees, officers, stockholders and directors for which it may seek indemnity. The Company shall defend the claim and the Trustee shall cooperate in the defense. The Trustee and its agents, employees, officers, stockholders and directors subject to the claim may have separate counsel and the Company shall pay the reasonable fees and expenses of such counsel; provided, however, that the Company will not be required to pay such fees and expenses if it assumes the Trustee's defense and there is no conflict of interest between the Company and the Trustee and its agents, employees, officers, stockholders and directors subject to the claim in connection with such defense as reasonably determined by the Trustee; provided, further, that the Company shall not be liable to pay the fees and expenses of more than one local counsel in any one jurisdiction. The Company need not pay for any settlement made without its written consent. The Company need not reimburse any expense or indemnify against any loss or liability to the extent incurred by the Trustee through its negligence, bad faith or willful misconduct. To secure the Company's payment obligations in this Section 7.07, the Trustee shall have a lien prior to the Notes on all assets or money held or collected by the Trustee, in its capacity as Trustee, except assets or money held in trust to pay principal of or interest on particular Notes. -74- When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(6) or (7) occurs, such expenses and the compensation for such services shall be paid to the extent allowed under any Bankruptcy Law. The provisions of this Section 7.07 shall survive the termination of this Indenture. SECTION 7.08 Replacement of Trustee. The Trustee may resign by so notifying the Company in writing at least 30 days in advance. The Holders of a majority in principal amount of the outstanding Notes may remove the Trustee by so notifying the Company and the Trustee and may appoint a successor Trustee with the Company's consent. A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only with the successor Trustee's acceptance of appointment as provided in this Section. The Company may remove the Trustee if: (1) the Trustee fails to comply with Section 7.10; (2) the Trustee is adjudged bankrupt or insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law; (3) a receiver or other public officer takes charge of the Trustee or its property; or (4) the Trustee becomes incapable of acting. If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall notify each Holder of such event and shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Company. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Promptly after that, the retiring Trustee shall transfer all property held by it as Trustee to the successor Trustee, subject to the lien provided in Section 7.07, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. A successor Trustee shall mail notice of its succession to each Holder. -75- If a successor Trustee does not take office within 30 days after the retiring Trustee resigns or is removed, the retiring Trustee (at the expense of the Company), the Company or the Holders of at least 10% in aggregate principal amount of the outstanding Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee. If the Trustee fails to comply with Section 7.10, any Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the Company's obligations under Section 7.07 shall continue for the benefit of the retiring Trustee. SECTION 7.09 Successor Trustee by Merger, Etc. If the Trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the resulting, surviving or transferee corporation without any further act shall, if such resulting, surviving or transferee corporation is otherwise eligible hereunder, be the successor Trustee; provided, however, that such corporation shall be otherwise qualified and eligible under this Article Seven. SECTION 7.10 Eligibility; Disqualification. This Indenture shall always have a Trustee who satisfies the requirement of TIA ss.ss. 310(a)(1) and 310(a)(2). The Trustee (or in the case of a corporation included in a bank holding company system, the related bank holding company) shall have a combined capital and surplus of at least $100 million as set forth in its most recent published annual report of condition. In addition, if the Trustee is a corporation included in a bank holding company system, the Trustee, independently of such bank holding company, shall meet the capital requirements of TIA ss. 310(a)(2). The Trustee shall comply with TIA ss. 310(b); provided, however, that there shall be excluded from the operation of TIA ss. 310(b)(1) any indenture or indentures under which other notes, or certificates of interest or participation in other notes, of the Company are outstanding, if the requirements for such exclusion set forth in TIA ss. 310(b)(1) are met. The provisions of TIA ss. 310 shall apply to the Company and any other obligor of the Notes. SECTION 7.11 Preferential Collection of Claims Against the Company. The Trustee shall comply with TIA ss. 311(a), excluding any creditor relationship listed in TIA ss. 311(b). A Trustee who has -76- resigned or been removed shall be subject to TIA ss. 311(a) to the extent indicated therein. The provisions of TIA ss. 311 shall apply to the Company and any other obligor of the Notes. SECTION 7.12 Trustee's Application for Instructions from the Company. Any application by the Trustee for written instructions from the Company may, at the option of the Trustee, set forth in writing any action proposed to be taken or omitted by the Trustee under this Indenture and the date on and/or after which such action shall be taken or such omission shall be effective. The Trustee shall not be liable for any action taken by, or omission of, the Trustee in accordance with a proposal included in such application on or after the date specified in such application (which date shall not be less than three Business Days after the date any officer of the Company actually receives such application, unless any such officer shall have consented in writing to any earlier date) unless prior to taking any such action (or the effective date in the case of an omission), the Trustee shall have received written instructions in response to such application specifying the action to be taken or omitted. ARTICLE EIGHT DISCHARGE OF INDENTURE; DEFEASANCE SECTION 8.01 Termination of the Company's Obligations. This Indenture will be Discharged and will cease to be of further effect and the obligations of the Company under the Notes and this Indenture shall terminate (except that the obligations under Sections 2.03 through 2.07, 7.01, 7.02, 7.07 and 7.08 and the rights, powers, trusts, duties and immunities of the Trustee hereunder shall survive the effect of this Article Eight) when (a) either (i) all Notes, theretofore authenticated and delivered (except lost, stolen or destroyed Notes which have been replaced or paid and Notes for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust) have been delivered to the Trustee for cancellation or (ii) all Notes not theretofore delivered to the Trustee for cancellation have become due and payable and the Company has irrevocably deposited or caused to be deposited with the Trustee funds in an amount sufficient to pay and discharge the entire Indebtedness on the Notes not theretofore delivered to the Trustee for cancellation, for principal of, premium, if any, and interest on the Notes to the date of deposit together with irrevocable -77- instructions from the Company directing the Trustee to apply such funds to the payment thereof at maturity or redemption, as the case may be; (b) the Company has paid all other sums payable under this Indenture by the Company; and (c) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel stating that all conditions precedent under this Indenture relating to the satisfaction and discharge of this Indenture have been complied with; provided, however, that such counsel may rely, as to matters of fact, on a certificate or certificates of officers of the Company. In addition, at the Company's option, either (a) the Company shall be deemed to have been Discharged from any and all obligations with respect to the outstanding Notes ("Legal Defeasance") after the applicable conditions set forth below have been satisfied (except for the obligations of the Company under Sections 2.03, 2.04, 2.06, 2.07, 7.01, 7.02, 7.07 and this Section 8.01) or (b) the Company shall cease to be under any obligation to comply with any term, provision or condition set forth in Sections 4.03, 4.09 and 4.11 through 4.20 and Section 5.01 and thereafter any omission to comply with such obligations shall not constitute a Default or Event of Default with respect to the Notes ("Covenant Defeasance") after the applicable conditions set forth below have been satisfied: (1) The Company shall have irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust, for the benefit of the Holders cash in U.S. Legal Tender, non-callable U.S. Government Obligations or a combination thereof that, together with the payment of interest and premium thereon and principal in respect thereof in accordance with their terms, will be sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay all the principal of, premium, if any, and interest on the Notes on the dates such payments are due in accordance with the terms of such Notes, as well as the Trustee's fees and expenses; provided, however, that no deposits made pursuant to this Section 8.01(1) shall cause the Trustee to have a conflicting interest as defined in and for purposes of the TIA; and provided, further, that, as confirmed by an Opinion of Counsel, no such deposit shall result in the Company, the Trustee or the trust becoming or being deemed to be an "investment company" under the Investment Company Act of 1940; (2) No Event of Default or Default with respect to the Notes shall have occurred and be continuing on the date of such deposit after giving effect to such deposit (other than a Default or Event of Default resulting from the incurrence of -78- Indebtedness all or a portion of the proceeds of which will be used to defease the Notes pursuant to this Article Eight) or insofar as Events of Default pursuant to Section 6.01(6) or (7) are concerned, at any time in the period ending on the 91st day after the date of deposit; (3) The Company shall have delivered to the Trustee an Opinion of Counsel, to the effect that (A) either (i) the Company has assigned all its ownership interest in the trust funds to the Trustee or (ii) the Trustee has a valid perfected security interest in the trust funds and (B) assuming no intervening bankruptcy of the Company between the date of the deposit and the 124th day following the perfection of a security interest in the deposit and that no Holder is an insider of the Company, after the 124th day following the perfection of a security interest in the deposit, the trust funds will not be subject to avoidance as a preference under Section 547 of the Federal Bankruptcy Code; (4) The Company shall have paid or duly provided for payment of all amounts then due to the Trustee pursuant to Section 7.07; (5) No such deposit will result in a Default under this Indenture or a breach or violation of, or constitute a default under, any other instrument or material agreement to which the Company or any of its Subsidiaries is a party or by which it or its property is bound; (6) The Company shall have delivered to the Trustee an Officers' Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders over any other creditors of the Company or with the intent of defeating, hindering, delaying or defrauding any other creditors of the Company or others; (7) In the case of Legal Defeasance, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (B) since the date of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion of counsel shall confirm that, the Holders will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; -79- (8) In the case of Covenant Defeasance, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that the Holders will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; and (9) The Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel to the effect that all conditions precedent to Legal Defeasance or Covenant Defeasance, as the case may be, have been complied with. Notwithstanding the foregoing, the Opinion of Counsel required by subparagraph 7 above need not be delivered if all Notes not theretofore delivered to the Trustee for cancellation (i) have become due and payable, (ii) will become due and payable on the Maturity Date within one year, or (iii) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company. SECTION 8.02 Acknowledgment of Discharge by Trustee. Subject to Section 8.05, after (i) the conditions of Section 8.01, have been satisfied and (ii) the Company has delivered to the Trustee an Opinion of Counsel, stating that all conditions precedent referred to in clause (i) above relating to the satisfaction and discharge of this Indenture have been complied with, the Trustee upon written request of the Company shall acknowledge in writing the discharge of the Company's obligations under this Indenture except for those surviving obligations specified in this Article Eight. SECTION 8.03 Application of Trust Money. The Trustee shall hold in trust Funds deposited with it pursuant to Section 8.01. It shall apply the Funds through the Paying Agent and in accordance with this Indenture to the payment of all the principal of, or premium, if any, and interest on the Notes. SECTION 8.04 Repayment to the Company. The Trustee and the Paying Agent shall promptly pay to the Company any Funds held by them for the payment of all the principal of, or premium, if any, and interest that remains unclaimed for one year; provided, however, that the Trustee or such -80- Paying Agent may, at the expense of the Company, cause to be published once in a newspaper of general circulation in the City of New York or mailed to each Holder, notice that such Funds remain unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication or mailing, any unclaimed balance of such Funds then remaining will be repaid to the Company. After payment to the Company, Holders entitled to the Funds must look to the Company for payment as general creditors unless an applicable abandoned property law designates another Person and all liability of the Trustee and Paying Agent with respect to such Funds shall cease. SECTION 8.05 Reinstatement. If the Trustee or Paying Agent is unable to apply any Funds by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company's obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.01 until such time as the Trustee or Paying Agent is permitted to apply all such Funds in accordance with Section 8.01; provided, however, that if the Company has made any payment of principal, or premium, if any, and interest on any Notes because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from Funds held by the Trustee or Paying Agent. ARTICLE NINE AMENDMENTS, SUPPLEMENTS AND WAIVERS SECTION 9.01 Without Consent of Holders. The Company, when authorized by a Board Resolution, the Guarantors and the Trustee, together, may amend or supplement this Indenture or the Notes without the consent of any Holders: (1) to cure any ambiguity, defect or inconsistency, so long as such change does not, in the opinion of the Trustee, adversely affect the rights of any of the Holders in any material respect; (2) to comply with Article Five; (3) to provide for uncertificated Notes in addition to or in place of certificated Notes; -81- (4) to comply with requirements of the Commission in order to effect or maintain the qualification of this Indenture under the TIA; (5) to make any other change that would provide any additional benefit or rights to the Holders or that does not adversely affect in any material respect the rights of any Noteholders hereunder; or (6) to provide for the issuance of the Exchange Notes, which will be treated together with any outstanding Initial Notes as a single issue of Notes; provided, however, that the Company has delivered to the Trustee an Opinion of Counsel and an Officers' Certificate, each stating that such amendment or supplement complies with the provisions of this Section 9.01. SECTION 9.02 With Consent of Holders. Subject to Section 6.07, the Company, when authorized by a Board Resolution, the Guarantors and the Trustee, together, with the written consent of the Holder or Holders of at least a majority in principal amount of the then outstanding Notes may make all other modifications, waivers and amendments of this Indenture or the Notes, except that, without the consent of each Holder of Notes affected thereby, no amendment or waiver may, directly or indirectly: (1) reduce the amount of Notes whose Holders must consent to an amendment; (2) reduce the rate of or change or have the effect of changing the time for payment of interest, including defaulted interest, on any Notes; (3) reduce the principal of or change or have the effect of changing the fixed maturity of any Notes, or change the date on which any Notes may be subject to redemption or repurchase, or reduce the redemption or repurchase price thereof; (4) make any Notes payable in money other than that stated in the Notes and this Indenture; (5) make any change in provisions of this Indenture protecting the right of each Holder to receive payment of principal and interest on such Note on or after the due date thereof or to bring suit to enforce such payment or permitting -82- Holders of a majority in principal amount of the Notes to waive Defaults or Events of Default; (6) amend, change or modify in any material respect the obligation of the Company to make and consummate a Change of Control Offer in the event of a Change of Control or make and consummate a Net Proceeds Offer with respect to any Asset Sale that has been consummated or modify any of the provisions or definitions with respect thereto; (7) modify or change any provision of this Indenture or the related definitions affecting the subordination or ranking of the Notes or any Guarantee in a manner which adversely affects the Holders; or (8) release any Guarantor from any of its obligations under its Guarantee or this Indenture otherwise than in accordance with the terms of this Indenture. It shall not be necessary for the consent of the Holders under this Section 9.02 to approve the particular form of any proposed amendment, supplement or waiver, but it shall be sufficient if such consent approves the substance thereof. After an amendment, supplement or waiver under this Section 9.02 becomes effective (as provided in Section 9.04), the Company shall mail to the Holders affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture. SECTION 9.03 Compliance with TIA. Every amendment, waiver or supplement of this Indenture or the Notes shall comply with the TIA as then in effect. SECTION 9.04 Revocation and Effect of Consents. Until an amendment, waiver or supplement becomes effective, a consent to it by a Holder is a continuing consent by the Holder and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder's Note, even if notation of the consent is not made on any Note. Subject to the following paragraph, any such Holder or subsequent Holder may revoke the consent as to his Note or portion of his Note by notice to the Trustee or the Company received before the date on which the Trustee receives an Officers' Certificate certifying that the Holders of the requisite principal amount of Notes have consented (and not theretofore revoked such consent) to the -83- amendment, supplement or waiver (at which time such amendment, supplement or waiver shall become effective). The Company may, but shall not be obligated to, fix such record date as it may select for the purpose of determining the Holders entitled to consent to any amendment, supplement or waiver. If a record date is fixed, then notwithstanding the last sentence of the immediately preceding paragraph, those Persons who were Holders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to revoke any consent previously given, whether or not such Persons continue to be Holders after such record date. No such consent shall be valid or effective for more than 120 days after such record date. After an amendment, supplement or waiver becomes effective, it shall bind every Holder, unless it makes a change described in any of clauses (1) through (8) of Section 9.02, in which case, the amendment, supplement or waiver shall bind only each Holder of a Note who has consented to it and every subsequent Holder of a Note or portion of a Note that evidences the same debt as a consenting Holder's Note; provided, however, that any such waiver shall not impair or affect the right of any Holder to receive payment of principal of and interest on a Note, on or after the respective due dates expressed in such Note, or to bring suit for the enforcement of any such payment on or after such respective dates without the consent of such Holder. SECTION 9.05 Notation on or Exchange of Notes. If an amendment, supplement or waiver changes the terms of a Note, the Trustee may require the Holder of the Note to deliver it to the Trustee. The Trustee may place an appropriate notation on the Note about the changed terms and return it to the Holder. Alternatively, if the Company or the Trustee so determines, the Company in exchange for the Note shall issue and the Trustee shall authenticate a new Note that reflects the changed terms. Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment, supplement or waiver. SECTION 9.06 Trustee to Sign Amendments, Etc. The Trustee shall execute any amendment, supplement or waiver authorized pursuant to and adopted in accordance with this Article Nine; provided, however, that the Trustee may, but shall not be obligated to, execute any such amendment, supplement or waiver which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. The Trustee shall be entitled to receive, and shall be fully protected in relying upon, an Opinion of Counsel and an Officers' Certificate each stating that -84- the execution of any amendment, supplement or waiver authorized pursuant to this Article Nine is authorized or permitted by this Indenture. Such Opinion of Counsel shall not be an expense of the Trustee. ARTICLE TEN SUBORDINATION OF NOTES SECTION 10.01 Notes Subordinated to Senior Debt. Anything herein to the contrary notwithstanding, the Company, for itself and its successors, and each Holder, by his or her acceptance of Notes, agrees that the payment of all Obligations owing to the Holders in respect of the Notes is subordinated, to the extent and in the manner provided in this Article Ten, in right of payment to the prior payment in full in cash or Cash Equivalents, or such payment duly provided for to the satisfaction of the holders of Senior Debt, of all Obligations on Senior Debt, including without limitation, the Company's obligations under the Credit Agreement. This Article Ten shall constitute a continuing offer to all Persons who become holders of, or continue to hold, Senior Debt, and such provisions are made for the benefit of the holders of Senior Debt and such holders are made obligees hereunder and any one or more of them may enforce such provisions. SECTION 10.02 Suspension of Payment When Senior Debt Is in Default. (a) Unless Section 10.03 shall be applicable, upon (1) the occurrence and continuance of any default in the payment when due, whether at maturity, upon any redemption, by declaration or otherwise, of any principal of, interest on, unpaid drawings for letters of credit issued in respect of, or regularly accruing fees (a "Payment Default") with respect to, any Senior Debt and (2) receipt by the Trustee and the Company from a Representative of written notice of such occurrence, then no payment (other than payments previously made pursuant to Article Eight) or distribution of any assets of the Company of any kind or character shall be made by or on behalf of the Company or any other Person on its or their behalf on account of any Obligations under the Notes or on account of the purchase, redemption or other acquisition of Notes for cash or property or otherwise (except that Holders may receive (i) shares of stock and any debt securities that are subordinated at least to the same extent as the Notes to Senior Debt and any securities issued in exchange for Senior Debt and (ii) payments made from the trusts described in Section 8.01) and until such -85- Payment Default shall have been cured or waived or shall have ceased to exist or such Senior Debt as to which such Payment Default relates shall have been discharged or paid in full in cash or Cash Equivalents, or such payment duly provided for to the satisfaction of the holders of Senior Debt, after which the Company shall resume making any and all required payments in respect of the Notes, including any missed payments. (b) Unless Section 10.03 shall be applicable, upon (1) the occurrence and continuance of any event of default (other than a Payment Default) with respect to any Designated Senior Debt (as such event of default is defined in the instrument creating or evidencing such Designated Senior Debt) permitting the holders of such Designated Senior Debt then outstanding (or an agent or trustee on their behalf) to accelerate the maturity thereof (a "Non-payment Default") and (2) the earlier of (i) receipt by the Trustee and the Company from a Representative of written notice of such occurrence stating that such notice is a "Payment Blockage Notice" pursuant to this Section 10.02 or (ii) if such Non-payment Default results from the acceleration of the Notes, the date of such acceleration, no payment (other than payments previously made pursuant to Article Eight) or distribution of any assets of the Company of any kind or character shall be made by or on behalf of the Company or any other Person on its or their behalf on account of any Obligations under the Notes or on account of the purchase or redemption or other acquisition of Notes for cash or property or otherwise (except that Holders may receive (i) shares of stock and any debt securities that are subordinated at least to the same extent as the Notes to Senior Debt and securities issued in exchange for Senior Debt and (ii) payments made from the trusts described in Section 8.01) for a period (the "Payment Blockage Period") commencing on the date of receipt by the Trustee of the Payment Blockage Notice or the date of the acceleration referred to in clause (ii) above, as the case may be, unless and until the earlier to occur of the following events: (w) 180 days shall have elapsed since receipt of the Payment Blockage Notice by the Trustee or the date of the acceleration of the Notes, as the case may be (provided no Designated Senior Debt shall theretofore have been accelerated), (x) such Non-payment Default shall have been cured or waived or shall have ceased to exist, (y) such Designated Senior Debt shall have been discharged or paid in full in cash or Cash Equivalents, or such payment duly provided for to the satisfaction of the holders of such Designated Senior Debt, or (z) such Payment Blockage Period shall have been terminated by written notice to the Company or the Trustee from the Representative initiating such Payment Blockage Period or the holders of at least a majority in principal amount of such issue of Designated Senior Debt initiating such Payment Blockage Period, after which, in the case of clause (w), (x), (y) or (z), the Company shall resume making any and all required payments in respect of the Notes, including any missed -86- payments. Notwithstanding anything herein to the contrary, (x) in no event will a Payment Blockage Period or successive Payment Blockage Periods with respect to the same payment on the Notes extend beyond 180 days after delivery of the Payment Blockage Notice and (y) only one such Payment Blockage Period may be commenced within any 360 consecutive days. For all purposes of this Section 10.02(b), no event of default which existed or was continuing on the date of the commencement of any Payment Blockage Period with respect to the Designated Senior Debt of the Company initiating such Payment Blockage Period shall be, or be made, the basis for the commencement of a second Payment Blockage Period by the holders or by the Representative of such Designated Senior Debt whether or not within a period of 360 consecutive days, unless such event of default shall have been cured or waived for a period of not less than 90 consecutive days (it being acknowledged that any subsequent action, or any breach of any financial covenants for a period commencing after the date of commencement of such Payment Blockage Period that, in either case, would give rise to an event of default pursuant to any provisions under which an event of default previously existed or was continuing shall constitute a new event of default for this purpose). (c) In the event that, notwithstanding the foregoing, the Company shall have made payment to the Trustee or directly to the Holder of any Note prohibited by the foregoing provisions of this Section 10.02, then and in such event such payment shall be segregated from other funds and held in trust by the Trustee or such Holder or Paying Agent for the benefit of, and shall immediately be paid over to, the holders of Senior Debt or to the Representatives or as a court of competent jurisdiction shall direct. SECTION 10.03 Notes Subordinated to Prior Payment of All Senior Debt on Dissolution, Liquidation or Reorganization of Company. Upon any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to creditors upon any liquidation, dissolution, winding-up, reorganization, assignment for the benefit of creditors or marshaling of assets of the Company or in a bankruptcy, reorganization, insolvency, receivership or other similar proceeding relating to the Company or its property, whether voluntary or involuntary: (a) the holders of all Senior Debt shall first be entitled to receive payments in full in cash or Cash Equivalents, or such payment duly provided for to the satisfaction of the holders of Senior Debt, of all amounts payable under Senior Debt before the Holders will be entitled -87- to receive any payment or distribution of any kind or character is made on account of any Obligations on the Notes or for the acquisition of any of the Notes for cash or property or otherwise, and until all Obligations with respect to the Senior Debt are paid in full in cash or Cash Equivalents, or such payment provided for to the satisfaction of the holders of Senior Debt, any distribution to which the Holders would be entitled shall be made to the holders of Senior Debt; (b) any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to which the Holders or the Trustee on behalf of the Holders would be entitled except for the provisions of this Article Ten, shall be paid by the liquidating trustee or agent or other Person making such a payment or distribution, directly to the holders of Senior Debt or their representatives, ratably according to the respective amounts of Senior Debt remaining unpaid held or represented by each, until all Senior Debt remaining unpaid shall have been paid in full in cash or Cash Equivalents, or such payment duly provided for to the satisfaction of the holders of Senior Debt, after giving effect to any concurrent payment or distribution to the holders of such Senior Debt; and (c) in the event that, notwithstanding the foregoing, any payment or distribution of assets of the Company of any kind or character, whether such payment shall be in cash, property or securities, and the Company shall have made payment to the Trustee or directly to the Holders or any Paying Agent on account of any obligations under the Notes before all Senior Debt is paid in full in cash or Cash Equivalents, or such payment duly provided for to the satisfaction of the holders of Senior Debt, such payment or distribution (subject to the provisions of Sections 10.06 and 10.07) shall be received, segregated from other funds, and held in trust by the Trustee or such Holder or Paying Agent for the benefit of, and shall immediately be paid over by the Trustee (if the notice required by Section 10.06 has been received by the Trustee) or by the Holder to, the holders of Senior Debt or their representatives, ratably according to the respective amounts of Senior Debt held or represented by each, until all Senior Debt remaining unpaid shall have been paid in full in cash or Cash Equivalents, or such payment duly provided for to the satisfaction of the holders of Senior Debt, after giving effect to any concurrent payment or distribution to or for the holders of Senior Debt. (d) The consolidation of the Company with, or the merger of the Company with or into, another Person or the liquidation -88- or dissolution of the Company following the conveyance, transfer or lease of its properties and assets substantially as an entirety to another Person upon the terms and conditions set forth in Article Five shall not be deemed a liquidation, dissolution, winding-up, reorganization, assignment for the benefit of creditors or marshaling of assets of the Company, as the case may be, for the purposes of this Article Ten; provided, however, that the Person formed by such consolidation or the surviving entity of such merger or the Person which acquires by conveyance, transfer or lease such properties and assets substantially as an entirety, as the case may be, shall, as a part of such consolidation, merger, conveyance, transfer or lease, comply with the conditions set forth in such Article Five. The Company shall give prompt notice to the Trustee prior to any liquidation, dissolution, winding-up, reorganization, assignment for the benefit of creditors or marshaling of assets. SECTION 10.04 Holders To Be Subrogated to Rights of Holders of Senior Debt. Subject to the payment in full in cash or Cash Equivalents, or such payment duly provided for to the satisfaction of the holders of Senior Debt, of all Senior Debt, the Holders of Notes shall be subrogated to the rights of the holders of Senior Debt to receive payments or distributions of assets of the Company applicable to the Senior Debt until all amounts owing on the Notes shall be paid in full in cash or Cash Equivalents, and for the purpose of such subrogation no payments or distributions to the holders of Senior Debt by or on behalf of the Company, or by or on behalf of the Holders by virtue of this Article Ten, which otherwise would have been made to the Holders shall, as between the Company and the Holders, be deemed to be payment by the Company to or on account of the Senior Debt, it being understood that the provisions of this Article Ten are and are intended solely for the purpose of defining the relative rights of the Holders, on the one hand, and the holders of Senior Debt, on the other hand. If any payment or distribution to which the Holders would otherwise have been entitled but for the provisions of this Article Ten shall have been applied, pursuant to the provisions of this Article Ten, to the payment of all amounts payable under the Senior Debt, then the Holders shall be entitled to receive from the holders of such Senior Debt any such payments or distributions received by such holders of Senior Debt in excess of the amount sufficient to pay all amounts payable under or in respect of the Senior Debt in full in cash or Cash Equivalents, or such payment duly provided for to the satisfaction of the holders of Senior Debt. -89- Each Holder by purchasing or accepting a Note waives any and all notice of the creation, modification, renewal, extension or accrual of any Senior Debt of the Company and notice of or proof of reliance by any holder or owner of Senior Debt of the Company upon this Article Ten and the Senior Debt of the Company shall conclusively be deemed to have been created, contracted or incurred in reliance upon this Article Ten, and all dealings between the Company and the holders and owners of the Senior Debt of the Company shall be deemed to have been consummated in reliance upon this Article Ten. SECTION 10.05 Obligations of the Company Unconditional. Nothing contained in this Article Ten or elsewhere in this Indenture or in the Notes is intended to or shall impair, as between the Company and the Holders, the obligation of the Company, which is absolute and unconditional, to pay to the Holders the principal of and interest on the Notes as and when the same shall become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of the Holders and creditors of the Company other than the holders of the Senior Debt, nor shall anything herein or therein prevent the Trustee or any Holder from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Article Ten, of the holders of Senior Debt in respect of cash, property or Notes of the Company received upon the exercise of any such remedy. Upon any payment or distribution of assets or securities of the Company referred to in this Article Ten, the Trustee, subject to the provisions of Sections 7.01 and 7.02, and the Holders shall be entitled to rely upon any order or decree made by any court of competent jurisdiction in which any liquidation, dissolution, winding-up or reorganization proceedings are pending, or a certificate of the receiver, trustee in bankruptcy, liquidating trustee or agent or other Person making any payment or distribution to the Trustee or to the Holders for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of Senior Debt and other Indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article Ten. Nothing in this Article Ten shall apply to the claims of, or payments to, the Trustee under or pursuant to Section 7.07. The Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing himself or itself to be a holder of any Senior Debt (or a trustee on behalf of, or other representative of, such holder) to establish that such notice has been given by a holder of such Senior Debt or a trustee or representative on behalf of any such holder. -90- In the event that the Trustee determines in good faith that any evidence is required with respect to the right of any Person as a holder of Senior Debt to participate in any payment or distribution pursuant to this Article Ten, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Debt held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article Ten, and if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. SECTION 10.06 Trustee Entitled To Assume Payments Not Prohibited in Absence of Notice. The Trustee shall not at any time be charged with knowledge of the existence of any facts that would prohibit the making of any payment to or by the Trustee unless and until the Trustee or any Paying Agent shall have received written notice thereof from the Company or from one or more holders of Senior Debt or from any Representative therefor and, prior to the receipt of any such notice, the Trustee, subject to the provisions of Sections 7.01 and 7.02, shall be entitled in all respects conclusively to assume that no such fact exists. SECTION 10.07 Application by Trustee of Assets Deposited with It. U.S. Legal Tender or U.S. Government Obligations deposited in trust with the Trustee pursuant to and in accordance with Section 8.01 and 8.02 shall be for the sole benefit of the Holders of the Notes and, to the extent allocated for the payment of Notes, shall not be subject to the subordination provisions of this Article Ten. Otherwise, any deposit of assets or securities by or on behalf of the Company with the Trustee or any Paying Agent (whether or not in trust) for the payment of principal of or interest on any Notes shall be subject to the provisions of this Article Ten; provided, however, that if prior to the third Business Day preceding the date on which by the terms of this Indenture any such assets may become distributable for any purpose (including, without limitation, the payment of either principal of or interest on any Note) the Trustee or such Paying Agent shall not have received with respect to such assets the notice provided for in Section 10.06, then the Trustee or such Paying Agent shall have full power and authority to receive such assets and to apply the same to the purpose for which they were received, and shall not be affected by any notice to the contrary received by it on or after such date. The foregoing shall not apply to the Paying Agent if the Company or any Subsidiary or Affiliate of the Company is acting as Paying Agent. Nothing contained in this Section 10.07 shall -91- limit the right of the holders of Senior Debt to recover payments as contemplated by this Article Ten. SECTION 10.08 No Waiver of Subordination Provisions. (a) No right of any present or future holder of any Senior Debt to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act by any such holder, or by any non-compliance by the Company with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof any such holder may have or be otherwise charged with. (b) Without limiting the generality of subsection (a) of this Section 10.08, the holders of Senior Debt may, at any time and from time to time, without the consent of or notice to the Trustee or the Holders of the Notes, without incurring responsibility to the Holders of the Notes and without impairing or releasing the subordination provided in this Article Ten or the obligations hereunder of the Holders of the Notes to the holders of Senior Debt, do any one or more of the following: (1) change the manner, place, terms or time of payment of, or renew or alter, Senior Debt or any instrument evidencing the same or any agreement under which Senior Debt is outstanding; (2) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Debt; (3) release any Person liable in any manner for the collection or payment of Senior Debt; and (4) exercise or refrain from exercising any rights against the Company and any other Person. SECTION 10.09 Holders Authorize Trustee To Effectuate Subordination of Notes. Each Holder of the Notes by such Holder's acceptance thereof authorizes and expressly directs the Trustee on his behalf to take such action as may be necessary or appropriate to effect the subordination provisions contained in this Article Ten, and appoints the Trustee such Holder's attorney-in-fact for such purpose, including, in the event of any liquidation, dissolution, winding-up, reorganization, assignment for the benefit of creditors or marshaling of assets of the Company tending towards liquidation or reorganization of the business and assets of the Company, the immediate filing of a claim for the unpaid balance of such Holder's Notes in the form required in said proceedings and cause said claim to be approved. If the Trustee does not file a proper claim or proof of debt in the form required in such proceeding prior to 30 days before the expiration of the time to file such claim or claims, then any of the holders of the Senior Debt or their Representative is hereby authorized to file an appropriate claim -92- for and on behalf of the Holders of said Notes. Nothing herein contained shall be deemed to authorize the Trustee or the holders of Senior Debt or their Representative to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof, or to authorize the Trustee or the holders of Senior Debt or their Representative to vote in respect of the claim of any Holder in any such proceeding. SECTION 10.10 Rights of Trustee To Hold Senior Debt. The Trustee shall be entitled to all of the rights set forth in this Article Ten in respect of any Senior Debt at any time held by it to the same extent as any other holder of Senior Debt, and nothing in this Indenture shall be construed to deprive the Trustee of any of its rights as such holder. SECTION 10.11 No Suspension of Remedies. The failure to make a payment on account of principal of or interest on the Notes by reason of any provision of this Article Ten shall not be construed as preventing the occurrence of a Default or an Event of Default under Section 6.01. Nothing contained in this Article Ten shall limit the right of the Trustee or the Holders of Notes to take any action to accelerate the maturity of the Notes pursuant to Article Six or to pursue any rights or remedies hereunder or under applicable law, subject to the rights, if any, under this Article Ten of the holders, from time to time, of Senior Debt. SECTION 10.12 No Fiduciary Duty of Trustee to Holder of Senior Debt. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Debt, and it undertakes to perform or observe such of its covenants and obligations as are specifically set forth in this Article Ten, and no implied covenants or obligations with respect to the Senior Debt shall be read into this indenture against the Trustee. The Trustee shall not be liable to any such holders (other than for its willful misconduct or gross negligence) if it shall pay over or deliver to the Holders of Notes or the Company or any other Person, money or assets in compliance with the terms of this Indenture. Nothing in this Section 10.12 shall affect the obligation of any Person other than the Trustee to hold such payment for the benefit of, and to pay such payment over to, the holders of Senior Debt or their Representative. -93- ARTICLE ELEVEN GUARANTEE OF NOTES SECTION 11.01 Unconditional Guarantee. Subject to the provisions of this Article Eleven, each of the Guarantors hereby, jointly and severally, unconditionally and irrevocably guarantees, on a senior subordinated basis (such guarantees to be referred to herein as the "Guarantee") to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of this Indenture, the Notes or the obligations of the Company or any other Guarantors to the Holders or the Trustee hereunder or thereunder, that: (a) the principal of, premium, if any, and interest on the Notes (and any Additional Interest payable thereon) shall be duly and punctually paid in full when due, whether at maturity, upon redemption at the option of Holders pursuant to the provisions of the Notes relating thereto, by acceleration or otherwise, and interest on the overdue principal and (to the extent permitted by law) interest, if any, on the Notes and all other obligations of the Company or the Guarantors to the Holders or the Trustee hereunder or thereunder (including amounts due the Trustee under Section 7.07 hereof) and all other obligations shall be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (b) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, the same shall be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at maturity, by acceleration or otherwise. Failing payment when due of any amount so guaranteed, or failing performance of any other obligation of the Company to the Holders under this Indenture or under the Notes, for whatever reason, each Guarantor shall be obligated to pay, or to perform or cause the performance of, the same immediately. An Event of Default under this Indenture or the Notes shall constitute an event of default under this Guarantee, and shall entitle the Holders of Notes to accelerate the obligations of the Guarantors hereunder in the same manner and to the same extent as the obligations of the Company. Each of the Guarantors hereby agrees that its obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with respect to any provisions hereof or thereof, any release of any other Guarantor, the recovery of any judgment against the Company, any action to enforce the same, whether or not a Guarantee is affixed to any particular Note, or any other circumstance which might otherwise constitute a legal or -94- equitable discharge or defense of a Guarantor. Each of the Guarantors hereby waives the benefit of diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever and covenants that its Guarantee shall not be discharged except by complete performance of the obligations contained in the Notes, this Indenture and this Guarantee. This Guarantee is a guarantee of payment and not of collection. If any Holder or the Trustee is required by any court or otherwise to return to the Company or to any Guarantor, or any custodian, trustee, liquidator or other similar official acting in relation to the Company or such Guarantor, any amount paid by the Company or such Guarantor to the Trustee or such Holder, this Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect. Each Guarantor further agrees that, as between it, on the one hand, and the Holders of Notes and the Trustee, on the other hand, (a) subject to this Article Eleven, the maturity of the obligations guaranteed hereby may be accelerated as provided in Article Six hereof for the purposes of this Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (b) in the event of any acceleration of such obligations as provided in Article Six hereof, such obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantors for the purpose of this Guarantee. No stockholder, officer, director, employee or incorporator, past, present or future, or any Guarantor, as such, shall have any personal liability under this Guarantee by reason of his, her or its status as such stockholder, officer, director, employee or incorporator. Each Guarantor that makes a payment or distribution under its Guarantee shall be entitled to a contribution from each other Guarantor in an amount pro rata, based on the net assets of each Guarantor, determined in accordance with GAAP. SECTION 11.02 Limitations on Guarantees. The obligations of each Guarantor under its Guarantee are limited to the maximum amount which, after giving effect to all other contingent and tax liabilities of such Guarantor and after giving effect to any collections from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under its Guarantee or pursuant to its contribution obligations under this Indenture, will result in the obligations of such Guarantor under the Guarantee not constituting a fraudulent conveyance or fraudulent transfer under federal or state law. -95- SECTION 11.03 Execution and Delivery of Guarantee. To further evidence the Guarantee set forth in Section 11.01, each Guarantor hereby agrees that a notation of such Guarantee, substantially in the form of Exhibit E hereto, shall be endorsed on each Note authenticated and delivered by the Trustee. Such Guarantee shall be executed on behalf of each Guarantor by either manual or facsimile signature of two Officers of each Guarantor, each of whom, in each case, shall have been duly authorized to so execute by all requisite corporate action. The validity and enforceability of any Guarantee shall not be affected by the fact that it is not affixed to any particular Note. Each of the Guarantors hereby agrees that its Guarantee set forth in Section 11.01 shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of such Guarantee. If an Officer of a Guarantor whose signature is on this Indenture or a Guarantee no longer holds that office at the time the Trustee authenticates the Note on which such Guarantee is endorsed or at any time thereafter, such Guarantor's Guarantee of such Note shall be valid nevertheless. The delivery of any Note by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of any Guarantee set forth in this Indenture on behalf of each Guarantor. SECTION 11.04 Release of a Guarantor. (a) If no Default or Event of Default exists or would exist under this Indenture, upon the sale or disposition of all of the Capital Stock of a Guarantor by the Company, in a transaction or series of related transactions that either (i) does not constitute an Asset Sale or (ii) constitutes an Asset Sale the Net Cash Proceeds of which are applied in accordance with Section 4.15, or upon the consolidation or merger of a Guarantor with or into any Person in compliance with Article Five (in each case, other than to the Company or an Affiliate of the Company), or if any Guarantor is dissolved or liquidated in accordance with this Indenture, or if a Guarantor is designated an Unrestricted Subsidiary, such Guarantor's Guarantee will be automatically discharged and released, and such Guarantor and each Subsidiary of such Guarantor that is also a Guarantor shall be deemed automatically discharged and released from all obligations under this Article Eleven without any further action required on the part of the Trustee or any Holder. Any Guarantor not so released or the entity surviving such Guarantor, as applicable, shall remain or be liable under its Guarantee as provided in this Article Eleven. -96- (b) The Trustee shall deliver an appropriate instrument evidencing the release of a Guarantor upon receipt of a request by the Company or such Guarantor accompanied by an Officers' Certificate and an Opinion of Counsel certifying as to the compliance with this Section 11.04; provided, however, that the legal counsel delivering such Opinion of Counsel may rely as to matters of fact on one or more Officers' Certificates of the Company. (c) The Trustee shall execute any documents reasonably requested by the Company or a Guarantor in order to evidence the release of such Guarantor from its obligations under its Guarantee endorsed on the Notes and under this Article Eleven. (d) Except as set forth in Articles Four and Five and this Section 11.04, nothing contained in this Indenture or in any of the Notes shall prevent any consolidation or merger of a Guarantor with or into the Company or another Guarantor or shall prevent any sale or conveyance of the property of a Guarantor as an entirety or substantially as an entirety to the Company or another Guarantor. SECTION 11.05 Waiver of Subrogation. Until this Indenture is discharged and all of the Notes are discharged and paid in full, each Guarantor hereby irrevocably waives and agrees not to exercise any claim or other rights which it may now or hereafter acquire against the Company that arise from the existence, payment, performance or enforcement of the Company's obligations under the Notes or this Indenture and such Guarantor's obligations under this Guarantee and this Indenture, in any such instance including, without limitation, any right of subrogation, reimbursement, exoneration, contribution, indemnification, and any right to participate in any claim or remedy of the Holders against the Company, whether or not such claim, remedy or right arises in equity, or under contract, statute or common law, including, without limitation, the right to take or receive from the Company, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim or other rights. If any amount shall be paid to any Guarantor in violation of the preceding sentence and any amounts owing to the Trustee or the Holders of Notes under the Notes, this Indenture, or any other document or instrument delivered under or in connection with such agreements or instruments, shall not have been paid in full, such amount shall have been deemed to have been paid to such Guarantor for the benefit of, and held in trust for the benefit of, the Trustee or the Holders and shall forthwith be paid to the Trustee for the benefit of itself or such Holders to be credited and applied to the obligations in favor of the Trustee or the Holders, as the case may be, whether matured or unmatured, in -97- accordance with the terms of this Indenture. Each Guarantor acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by this Indenture and that the waiver set forth in this Section 11.05 is knowingly made in contemplation of such benefits. SECTION 11.06 Immediate Payment. Each Guarantor agrees to make immediate payment to the Trustee on behalf of the Holders of all Obligations owing or payable to the respective Holders upon receipt of a demand for payment therefor by the Trustee to such Guarantor in writing. SECTION 11.07 No Set-Off. Each payment to be made by a Guarantor hereunder in respect of the Obligations shall be payable in the currency or currencies in which such Obligations are denominated, and shall be made without set-off, counterclaim, reduction or diminution of any kind or nature. SECTION 11.08 Obligations Absolute. The obligations of each Guarantor hereunder are and shall be absolute and unconditional and any monies or amounts expressed to be owing or payable by each Guarantor hereunder which may not be recoverable from such Guarantor on the basis of a Guarantee shall be recoverable from such Guarantor as a primary obligor and principal debtor in respect thereof. SECTION 11.09 Obligations Continuing. The obligations of each Guarantor hereunder shall be continuing and shall remain in full force and effect until all the obligations have been paid and satisfied in full. Each Guarantor agrees with the Trustee that it will from time to time deliver to the Trustee suitable acknowledgments of this continued liability hereunder and under any other instrument or instruments in such form as counsel to the Trustee may advise and as will prevent any action brought against it in respect of any default hereunder being barred by any statute of limitations now or hereafter in force and, in the event of the failure of a Guarantor so to do, it hereby irrevocably appoints the Trustee the attorney and agent of such Guarantor to make, execute and deliver such written acknowledgment or acknowledgments or other instruments as may from time to time become necessary or advisable, in the judgment of the Trustee on the advice of counsel, to fully maintain and keep in force the liability of such Guarantor hereunder. -98- SECTION 11.10 Obligations Not Reduced. The obligations of each Guarantor hereunder shall not be satisfied, reduced or discharged solely by the payment of such principal, premium, if any, interest, fees and other monies or amounts as may at any time prior to discharge of this Indenture pursuant to Article Eight be or become owing or payable under or by virtue of or otherwise in connection with the Notes or this Indenture. SECTION 11.11 Obligations Reinstated. The obligations of each Guarantor hereunder shall continue to be effective or shall be reinstated, as the case may be, if at any time any payment which would otherwise have reduced the obligations of any Guarantor hereunder (whether such payment shall have been made by or on behalf of the Company or by or on behalf of a Guarantor) is rescinded or reclaimed from any of the Holders upon the insolvency, bankruptcy, liquidation or reorganization of the Company or any Guarantor or otherwise, all as though such payment had not been made. If demand for, or acceleration of the time for, payment by the Company is stayed upon the insolvency, bankruptcy, liquidation or reorganization of the Company, all such Indebtedness otherwise subject to demand for payment or acceleration shall nonetheless be payable by each Guarantor as provided herein. SECTION 11.12 Obligations Not Affected. The obligations of each Guarantor hereunder shall not be affected, impaired or diminished in any way by any act, omission, matter or thing whatsoever, occurring before, upon or after any demand for payment hereunder (and whether or not known or consented to by any Guarantor or any of the Holders) which, but for this provision, might constitute a whole or partial defense to a claim against any Guarantor hereunder or might operate to release or otherwise exonerate any Guarantor from any of its obligations hereunder or otherwise affect such obligations, whether occasioned by default of any of the Holders or otherwise, including, without limitation: (a) any limitation of status or power, disability, incapacity or other circumstance relating to the Company or any other Person, including any insolvency, bankruptcy, liquidation, reorganization, readjustment, composition, dissolution, winding-up or other proceeding involving or affecting the Company or any other Person; (b) any irregularity, defect, unenforceability or invalidity in respect of any indebtedness or other obligation -99- of the Company or any other Person under this Indenture, the Notes or any other document or instrument; (c) any failure of the Company, whether or not without fault on its part, to perform or comply with any of the provisions of this Indenture or the Notes, or to give notice thereof to a Guarantor; (d) the taking or enforcing or exercising or the refusal or neglect to take or enforce or exercise any right or remedy from or against the Company or any other Person or their respective assets or the release or discharge of any such right or remedy; (e) the granting of time, renewals, extensions, compromises, concessions, waivers, releases, discharges and other indulgences to the Company or any other Person; (f) any change in the time, manner or place of payment of, or in any other term of, any of the Notes, or any other amendment, variation, supplement, replacement or waiver of, or any consent to departure from, any of the Notes or this Indenture, including, without limitation, any increase or decrease in the principal amount of or premium, if any, or interest on any of the Notes; (g) any change in the ownership, control, name, objects, businesses, assets, capital structure or constitution of the Company or a Guarantor; (h) any merger or amalgamation of the Company or a Guarantor with any Person or Persons; (i) the occurrence of any change in the laws, rules, regulations or ordinances of any jurisdiction by any present or future action of any governmental authority or court amending, varying, reducing or otherwise affecting, or purporting to amend, vary, reduce or otherwise affect, any of the Obligations or the obligations of a Guarantor under its Guarantee; and (j) any other circumstance, including release of the Guarantor pursuant to Section 11.04 (other than by complete, irrevocable payment) that might otherwise constitute a legal or equitable discharge or defense of the Company under this Indenture or the Notes or of a Guarantor in respect of its Guarantee hereunder. SECTION 11.13 Waiver. -100- Without in any way limiting the provisions of Section 11.01 hereof, each Guarantor hereby waives notice of acceptance hereof, notice of any liability of any Guarantor hereunder, notice or proof of reliance by the Holders upon the obligations of any Guarantor hereunder, and diligence, presentment, demand for payment on the Company, protest, notice of dishonor or non-payment of any of the Obligations, or other notice or formalities to the Company or any Guarantor of any kind whatsoever. SECTION 11.14 No Obligation To Take Action Against the Company. Neither the Trustee nor any other Person shall have any obligation to enforce or exhaust any rights or remedies or to take any other steps under any security for the Obligations or against the Company or any other Person or any property of the Company or any other Person before the Trustee is entitled to demand payment and performance by any or all Guarantors of their liabilities and obligations under their Guarantees or under this Indenture. SECTION 11.15 Dealing with the Company and Others. The Holders, without releasing, discharging, limiting or otherwise affecting in whole or in part the obligations and liabilities of any Guarantor hereunder and without the consent of or notice to any Guarantor, may (a) grant time, renewals, extensions, compromises, concessions, waivers, releases, discharges and other indulgences to the Company or any other Person; (b) take or abstain from taking security or collateral from the Company or from perfecting security or collateral of the Company; (c) accept compromises or arrangements from the Company; (d) apply all monies at any time received from the Company or from any security upon such part of the Obligations as the Holders may see fit or change any such application in whole or in part from time to time as the Holders may see fit; and (e) otherwise deal with, or waive or modify their right to deal with, the Company and all other Persons and any security as the Holders or the Trustee may see fit. SECTION 11.16 Default and Enforcement. -101- If any Guarantor fails to pay in accordance with Section 11.06 hereof, the Trustee may proceed in its name as trustee hereunder in the enforcement of the Guarantee of any such Guarantor and such Guarantor's obligations thereunder and hereunder by any remedy provided by law, whether by legal proceedings or otherwise, and to recover from such Guarantor the obligations. SECTION 11.17 Amendment, Etc. No amendment, modification or waiver of any provision of this Indenture relating to any Guarantor or consent to any departure by any Guarantor or any other Person from any such provision will in any event be effective unless it is signed by such Guarantor and the Trustee. SECTION 11.18 Acknowledgment. Each Guarantor hereby acknowledges communication of the terms of this Indenture and the Notes and consents to and approves of the same. SECTION 11.19 Costs and Expenses. Each Guarantor shall pay on demand by the Trustee any and all costs, fees and expenses (including, without limitation, legal fees on a solicitor and client basis) incurred by the Trustee, its agents, advisors and counsel or any of the Holders in enforcing any of their rights under any Guarantee. SECTION 11.20 No Merger or Waiver; Cumulative Remedies. No Guarantee shall operate by way of merger of any of the obligations of a Guarantor under any other agreement, including, without limitation, this Indenture. No failure to exercise and no delay in exercising, on the part of the Trustee or the Holders, any right, remedy, power or privilege hereunder or under this Indenture or the Notes, shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder or under this Indenture or the Notes preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges in the Guarantee and under this Indenture, the Notes and any other document or instrument between a Guarantor and/or the Company and the Trustee are cumulative and not exclusive of any rights, remedies, powers and privilege provided by law. SECTION 11.21 Survival of Obligations. Without prejudice to the survival of any of the other obligations of each Guarantor hereunder, the obligations of each -102- Guarantor under Section 11.01 shall survive the payment in full of the Obligations and shall be enforceable against such Guarantor without regard to and without giving effect to any defense, right of offset or counterclaim available to or which may be asserted by the Company or any Guarantor. SECTION 11.22 Guarantee in Addition to Other Obligations. The obligations of each Guarantor under its Guarantee and this Indenture are in addition to and not in substitution for any other obligations to the Trustee or to any of the Holders in relation to this Indenture or the Notes and any guarantees or security at any time held by or for the benefit of any of them. SECTION 11.23 Severability. Any provision of this Article Eleven which is prohibited or unenforceable in any jurisdiction shall not invalidate the remaining provisions and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction unless its removal would substantially defeat the basic intent, spirit and purpose of this Indenture and this Article Eleven. SECTION 11.24 Successors and Assigns. Each Guarantee shall be binding upon and inure to the benefit of each Guarantor and the Trustee and the other Holders and their respective successors and permitted assigns, except that no Guarantor may assign any of its obligations hereunder or thereunder. ARTICLE TWELVE SUBORDINATION OF GUARANTEE SECTION 12.01 Guarantee Obligations Subordinated to Guarantor Senior Debt. Anything herein to the contrary notwithstanding, each of the Guarantors, for itself and its successors, and each Holder, by his or her acceptance of Guarantees, agrees that the payment of all Obligations owing to the Holders in respect of its Guarantee (collectively, as to any Guarantor, its "Guarantee Obligations") is subordinated, to the extent and in the manner provided in this Article Twelve, in right of payment to the prior payment in full in cash or Cash Equivalents, or such payment duly provided for to the satisfaction of the holders of Guarantor Senior Debt, of all Obligations on Guarantor Senior Debt of such Guarantor, including -103- without limitation, the Guarantors' obligations under the Credit Agreement. This Article Twelve shall constitute a continuing offer to all Persons who become holders of, or continue to hold, Guarantor Senior Debt, and such provisions are made for the benefit of the holders of Guarantor Senior Debt and such holders are made obligees hereunder and any one or more of them may enforce such provisions. SECTION 12.02 Suspension of Guarantee Obligations When Guarantor Senior Debt Is In Default. (a) Unless Section 12.03 shall be applicable, upon (1) the occurrence and continuance of a Payment Default with respect to any Guarantor Senior Debt and (2) receipt by the Trustee, the Company and such Guarantor from a Representative of written notice of such occurrence, then no payment (other than payments previously made pursuant to Article Eight) or distribution of any assets of such Guarantor of any kind or character shall be made by or on behalf of such Guarantor or any other Person on its behalf on account of any Guarantee Obligations or on account of the purchase, redemption or other acquisition of Notes for cash or property or otherwise (except that Holders may receive (i) shares of stock and any debt securities that are subordinated at least to the same extent as the Guarantees to Guarantor Senior Debt and any securities issued in exchange for Guarantor Senior Debt and (ii) payments made from the trusts described in Section 8.01) and until such Payment Default shall have been cured or waived or shall have ceased to exist or such Guarantor Senior Debt as to which Payment Default relates shall have been discharged or paid in full in cash or Cash Equivalents, or such payment duly provided for to the satisfaction of the holders of Guarantor Senior Debt, after which such Guarantor shall resume making any and all required payments in respect of its Guarantee Obligations, including any missed payments. (b) Unless Section 12.03 shall be applicable, upon (1) the occurrence and continuance of a Non-Payment Default with respect to any Designated Senior Debt of a Guarantor and (2) the earlier of (i) receipt by the Trustee, the Company and such Guarantor from a Representative of written notice of such occurrence stating that such notice is a "Guarantor Payment Blockage Notice" pursuant to this Section 12.02 or (ii) if such Non-payment Default results from the acceleration of the Notes, the date of the acceleration of the Notes, no payment (other than payments previously made pursuant to Article Eight) or distribution of any assets of such Guarantor of any kind or character shall be made by on or behalf of such Guarantor or any other Person on its or their behalf on account of any Guarantee Obligations or on -104- account of the purchase, redemption or other acquisition of Notes for cash or property or otherwise (except that Holders may receive (i) shares of stock and any debt securities that are subordinated at least to the same extent as the Guarantees to Guarantor Senior Debt and securities issued in exchange for Guarantor Senior Debt and (ii) payments made from the trusts described in Section 8.01) for a period (the "Guarantor Payment Blockage Period") commencing on the date of receipt by the Trustee of the Guarantor Payment Blockage Notice or the date of the acceleration referred to in clause (ii) above, as the case may be, unless and until the earlier to occur of the following events: (w) 180 days shall have elapsed since receipt of the Guarantor Payment Blockage Notice by the Trustee or the date of the acceleration of the Notes, as the case may be (provided no Designated Senior Debt of a Guarantor shall theretofore have been accelerated), (x) such Non-payment Default shall have been cured or waived or shall have ceased to exist, (y) such Designated Senior Debt of a Guarantor shall have been discharged or paid in full in cash or Cash Equivalents, or such payment duly provided for to the satisfaction of the holders of such Designated Senior Debt of a Guarantor or (z) such Guarantor Payment Blockage Period shall have been terminated by written notice to the Company or the Trustee from the Representative initiating such Guarantor Payment Blockage Period or the holders of at least a majority in principal amount of such issue of Designated Senior Debt of a Guarantor initiating such Guarantor Blockage Period, after which, in the case of clause (w), (x), (y) or (z), such Guarantor shall resume making any and all required payments in respect of its Guarantee Obligations, including any missed payments. Notwithstanding anything herein to the contrary, (x) in no event will a Guarantor Payment Blockage Period or successive Guarantor Payment Blockage Periods with respect to the same payment on a Guarantee extend beyond 180 days after delivery of the Guarantor Payment Blockage Notice and (y) only one such Guarantor Payment Blockage Period may be commenced within any 360 consecutive days. For all purposes of this Section 12.02(b), no event of default which existed or was continuing on the date of the commencement of any Guarantor Payment Blockage Period with respect to the Designated Senior Debt of a Guarantor initiating such Guarantor Payment Blockage Period shall be, or be made, the basis for the commencement of a second Guarantor Payment Blockage Period by the holders or by the Representative of such Designated Senior Debt of a Guarantor whether or not within a period of 360 consecutive days, unless such event of default shall have been cured or waived for a period of not less than 90 consecutive days (it being acknowledged that any subsequent action, or any breach of any financial covenants for a period commencing after the date of commencement of such Guarantor Payment Blockage Period that, in either case, would give rise to an event of default pursuant to any provisions under which an event of default previously existed or -105- was continuing shall constitute a new event of default for this purpose). (c) In the event that, notwithstanding the foregoing, a Guarantor shall have made payment to the Trustee or directly to the Holder of any Note prohibited by the foregoing provisions of this Section 12.02, then and in such event such payment shall be segregated from other funds and held in trust by the Trustee or such Holder or Paying Agent for the benefit of, and shall immediately be paid over to, the holders of Designated Senior Debt of a Guarantor or to the Representatives or as a court of competent jurisdiction shall direct. SECTION 12.03 Guarantee Obligations Subordinated to Prior Payment of All Guarantor Senior Debt on Dissolution, Liquidation or Reorganization of Such Subsidiary Guarantor. Upon any payment or distribution of assets of any Guarantor of any kind or character, whether in cash, property or securities to creditors upon any liquidation, dissolution, winding up, reorganization, assignment for the benefit of creditors or marshaling of assets of such Guarantor, whether voluntary or involuntary, or in a bankruptcy, reorganization, insolvency, receivership or other similar proceeding relating to any Guarantor or its property, whether voluntary or involuntary (but excluding any liquidation or dissolution of a Guarantor into the Company or into another Guarantor): (a) the holders of all Guarantor Senior Debt of such Guarantor shall first be entitled to receive payments in full in cash or Cash Equivalents, or such payment duly provided for to the satisfaction of the holders of Guarantor Senior Debt, of all amounts payable under Guarantor Senior Debt before the Holders will be entitled to receive any payment or distribution of any kind or character on account of the Guarantee Obligations of such Guarantor, and until all Obligations with respect to the Guarantor Senior Debt are paid in full in cash or Cash Equivalents, or such payment duly provided for to the satisfaction of the holders of Guarantor Senior Debt, any distribution to which the Holders would be entitled shall be made to the holders of Guarantor Senior Debt of such Guarantor; (b) any payment or distribution of assets of such Guarantor of any kind or character, whether in cash, property or securities, to which the Holders or the Trustee on behalf of the Holders would be entitled except for the provisions of this Article Twelve shall be paid by the liquidating trustee or agent or other Person making such a payment or -106- distribution, directly to the holders of Guarantor Senior Debt of such Guarantor or their representatives, ratably according to the respective amounts of such Guarantor Senior Debt remaining unpaid held or represented by each, until all such Guarantor Senior Debt remaining unpaid shall have been paid in full in cash or Cash Equivalents, or such payment duly provided for to the satisfaction of the holders of Guarantor Senior Debt, after giving effect to any concurrent payment or distribution to the holders of such Guarantor Senior Debt; (c) in the event that, notwithstanding the foregoing, any payment or distribution of assets of such Guarantor of any kind or character, whether such payment shall be in cash, property or securities, and such Guarantor shall have made payment to the Trustee or directly to the Holders or any Paying Agent in respect of payment of the Guarantees before all Guarantor Senior Debt of such Guarantor is paid in full in cash or Cash Equivalents, or such payment duly provided for to the satisfaction of the holders of Guarantor Senior Debt, such payment or distribution (subject to the provisions of Sections 12.06 and 12.07) shall be received, segregated from other funds, and held in trust by the Trustee or such Holder or Paying Agent for the benefit of, and shall immediately be paid over by the Trustee (if the notice required by Section 12.06 has been received by the Trustee) or by the Holder to, the holders of such Guarantor Senior Debt or their representatives, ratably according to the respective amounts of such Guarantor Senior Debt held or represented by each, until all such Guarantor Senior Debt remaining unpaid shall have been paid in full in cash or Cash Equivalents, or such payment duly provided for to the satisfaction of the holders of Guarantor Senior Debt, after giving effect to any concurrent payment or distribution to the holders of Guarantor Senior Debt. Each Guarantor shall give prompt notice to the Trustee prior to any liquidation, dissolution, winding-up, reorganization, assignment for the benefit of creditors or marshaling of assets. SECTION 12.04 Holders of Guarantee Obligations To Be Subrogated to Rights of Holders of Guarantor Senior Debt. Subject to the payment in full in cash or Cash Equivalents, or such payment duly provided for to the satisfaction of the holders of Guarantor Senior Debt, of all Guarantor Senior Debt, the Holders of Guarantee Obligations of a Guarantor shall be subrogated to the rights of the holders of Guarantor Senior Debt of such Guarantor to receive payments or distributions of assets of such Guarantor applicable to such Guarantor Senior Debt until all amounts owing on or in respect of the Guarantee Obligations shall -107- be paid in full in cash or Cash Equivalents, and for the purpose of such subrogation no payments or distributions to the holders of such Guarantor Senior Debt by or on behalf of such Guarantor, or by or on behalf of the Holders by virtue of this Article Twelve, which otherwise would have been made to the Holders shall, as between such Guarantor and the Holders, be deemed to be payment by such Guarantor to or on account of such Guarantor Senior Debt, it being understood that the provisions of this Article Twelve are and are intended solely for the purpose of defining the relative rights of the Holders, on the one hand, and the holders of such Guarantor Senior Debt, on the other hand. If any payment or distribution to which the Holders would otherwise have been entitled but for the provisions of this Article Twelve shall have been applied, pursuant to the provisions of this Article Twelve, to the payment of all amounts payable under such Guarantor Senior Debt, then the Holders shall be entitled to receive from the holders of such Guarantor Senior Debt any such payments or distributions received by such holders of such Guarantor Senior Debt in excess of the amount sufficient to pay all amounts payable under or in respect of such Guarantor Senior Debt in full in cash or Cash Equivalents, or such payment duly provided for to the satisfaction of the holders of Guarantor Senior Debt. Each Holder by purchasing or accepting a Note waives any and all notice of the creation, modification, renewal, extension or accrual of any Guarantor Senior Debt of the Guarantors and notice of or proof of reliance by any holder or owner of Guarantor Senior Debt of the Guarantors upon this Article Twelve and the Guarantor Senior Debt of the Guarantors shall conclusively be deemed to have been created, contracted or incurred in reliance upon this Article Twelve, and all dealings between the Guarantors and the holders and owners of the Guarantor Senior Debt of the Guarantors shall be deemed to have been consummated in reliance upon this Article Twelve. SECTION 12.05 Obligations of the Guarantors Unconditional. Nothing contained in this Article Twelve or elsewhere in this Indenture or in the Guarantees is intended to or shall impair, as between the Guarantors and the Holders, the obligation of the Guarantors, which is absolute and unconditional, to pay to the Holders all amounts due and payable under the Guarantees as and when the same shall become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of the Holders and creditors of the Guarantors other than the holders of the Guarantor Senior Debt, nor shall anything herein or therein prevent the Trustee or any Holder from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Article -108- Twelve, of the holders of Guarantor Senior Debt in respect of cash, property or securities of the Guarantors received upon the exercise of any such remedy. Upon any payment or distribution of assets of any Guarantor referred to in this Article Twelve, the Trustee, subject to the provisions of Sections 7.01 and 7.02, and the Holders shall be entitled to rely upon any order or decree made hy any court of competent jurisdiction in which any liquidation, dissolution, winding up or reorganization proceedings are pending, or a certificate of the receiver, trustee in bankruptcy, liquidating trustee or agent or other Person making any payment or distribution to the Trustee or to the Holders for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of Guarantor Senior Debt and other Indebtedness of any Guarantor, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article Twelve. Nothing in this Article Twelve shall apply to, the claims of, or payments to, the Trustee under or pursuant to Section 7.07. The Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing himself or itself to be a holder of any Guarantor Senior Debt (or a trustee on behalf of, or other representative of, such holder) to establish that such notice has been given by a holder of such Guarantor Senior Debt or a trustee or representative on behalf of any such holder. In the event that the Trustee determines in good faith that any evidence is required with respect to the right of any Person as a holder of Guarantor Senior Debt to participate in any payment or distribution pursuant to this Article Twelve, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Guarantor Senior Debt held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article Twelve, and if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. -109- SECTION 12.06 Trustee Entitled To Assume Payments Not Prohibited in Absence of Notice. The Trustee shall not at any time be charged with knowledge of the existence of any facts that would prohibit the making of any payment to or by the Trustee unless and until the Trustee or any Paying Agent shall have received notice thereof from the Company or any Guarantor or from one or more holders of Guarantor Senior Debt or from any Representative therefor and, prior to the receipt of any such notice, the Trustee, subject to the provisions of Sections 7.01 and 7.02, shall be entitled in all respects conclusively to assume that no such fact exists. SECTION 12.07 Application by Trustee of Assets Deposited with It. U.S. Legal Tender or U.S. Government Obligations deposited in trust with the Trustee pursuant to and in accordance with Sections 8.01 and 8.02 shall be for the sole benefit of Holders of the Notes and, to the extent allocated for the payment of Notes, shall not be subject to the subordination provisions of this Article Twelve. Otherwise, any deposit of assets or securities by or on behalf of a Guarantor with the Trustee or any Paying Agent (whether or not in trust) for payment of the Guarantees shall be subject to the provisions of this Article Twelve; provided, however, that if prior to the third Business Day preceding the date on which by the terms of this Indenture any such assets may become distributable for any purpose (including, without limitation, the payment of either principal of or interest on any Note) the Trustee or such Paying Agent shall not have received with respect to such assets the notice provided for in Section 12.06, then the Trustee or such Paying Agent shall have full power and authority to receive such assets and to apply the same to the purpose for which they were received, and shall not be affected by any notice to the contrary received by it on or after such date. The foregoing shall not apply to the Paying Agent if the Company or any Subsidiary or Affiliate of the Company is acting as Paying Agent. Nothing contained in this Section 12.07 shall limit the right of the holders of Guarantor Senior Debt to recover payments as contemplated by this Article Twelve. SECTION 12.08 No Waiver of Subordination Provisions. (a) No right of any present or future holder of any Guarantor Senior Debt to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of any Guarantor or by any act or failure to act, by any such holder, or by any non-compliance by any Guarantor with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof any such holder may have or be otherwise charged with. -110- (b) Without limiting the generality of subsection (a) of this Section 12.08, the holders of Guarantor Senior Debt may, at any time and from time to time, without the consent of or notice to the Trustee or the Holders of the Securities, without incurring responsibility to the Holders of the Notes and without impairing or releasing the subordination provided in this Article Twelve or the obligations hereunder of the Holders of the Notes to the holders of Guarantor Senior Debt, do any one or more of the following: (1) change the manner, place, terms or time of payment of, or renew or alter, Guarantor Senior Debt or any instrument evidencing the same or any agreement under which Guarantor Senior Debt is outstanding; (2) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Guarantor Senior Debt; (3) release any Person liable in any manner for the collection or payment of Guarantor Senior Debt; and (4) exercise or refrain from exercising any rights against the Guarantors and any other Person. SECTION 12.09 Holders Authorize Trustee To Effectuate Subordination of Guarantee Obligations. Each Holder of the Guarantee Obligations by his acceptance thereof authorizes and expressly directs the Trustee on his behalf to take such action as may be necessary or appropriate to effect the subordination provisions contained in this Article Twelve, and appoints the Trustee his attorney-in-fact for such purpose, including, in the event of any liquidation, dissolution, winding up, reorganization, assignment for the benefit of creditors or marshaling of assets of any Guarantor tending towards liquidation or reorganization of the business and assets of any Guarantor, the immediate filing of a claim for the unpaid balance under its or his Guarantee Obligations in the form required in said proceedings and cause said claim to be approved. If the Trustee does not file a proper claim or proof of debt in the form required in such proceeding prior to 30 days before the expiration of the time to file such claim or claims, then any of the holders of the Guarantor Senior Debt or their Representative is hereby authorized to file an appropriate claim for and on behalf of the Holders of said Guarantee Obligations. Nothing herein contained shall be deemed to authorize the Trustee or the holders of Guarantor Senior Debt or their Representative to authorize or consent to or accept or adopt on behalf of any holder of Guarantee Obligations any plan of reorganization, arrangement, adjustment or composition affecting the Guarantee Obligations or the rights of any Holder thereof, or to authorize the Trustee or the holders of Guarantor Senior Debt or their Representative to vote in respect of the claim of any holder of Guarantee Obligations in any such proceeding. SECTION 12.10 Right of Trustee To Hold Guarantor Senior Indebtedness. -111- The Trustee shall be entitled to all of the rights set forth in this Article Twelve in respect of any Guarantor Senior Debt at any time held by it to the same extent as any other holder of Guarantor Senior Debt, and nothing in this Indenture shall be construed to deprive the Trustee of any of its rights as such holder. SECTION 12.11 No Suspension of Remedies. The failure to make a payment in respect of the Guarantees by reason of any provision of this Article Twelve shall not be construed as preventing the occurrence of a Default or an Event of Default under Section 6.01. Nothing contained in this Article Twelve shall limit the right of the Trustee or the Holders of Notes to take any action to accelerate the maturity of the Notes pursuant to Article Six or to pursue any rights or remedies hereunder or under applicable law, subject to the rights, if any, under this Article Twelve of the holders, from time to time, of Guarantor Senior Debt. SECTION 12.12 No Fiduciary Duty of Trustee to Holders of Guarantor Senior Debt. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Guarantor Senior Debt, and it undertakes to perform or observe such of its covenants and obligations as are specifically set forth in this Article Twelve, and no implied covenants or obligations with respect to the Guarantor Senior Debt shall be read into this Indenture against the Trustee. The Trustee shall not be liable to any such holders (other than for its willful misconduct or gross negligence) if it shall pay over or deliver to the holders of Guarantee Obligations or the Guarantors or any other Person, money or assets in compliance with the terms of this Indenture. Nothing in this Section 12.12 shall affect the obligation of any Person other than the Trustee to hold such payment for the benefit of, and to pay such payment over to, the holders of Guarantor Senior Debt or their Representative. -112- ARTICLE THIRTEEN MISCELLANEOUS SECTION 13.01 TIA Controls. If any provision of this Indenture limits, qualifies, or conflicts with another provision which is required to be included in this Indenture by the TIA, the required provision shall control. If any provision of this Indenture modifies or excludes any provision of the TIA that may be so modified or excluded, the latter provision shall be deemed to apply to this Indenture as so modified or excluded, as the case may be. SECTION 13.02 Notices. Any notices or other communications required or permitted hereunder shall be in writing, and shall be sufficiently given if made by hand delivery, by telex, by telecopier or registered or certified mail, postage prepaid, return receipt requested, addressed as follows: if to the Company or any Guarantor: HUNTSMAN PACKAGING CORPORATION 500 Huntsman Way Salt Lake City, Utah 84108 Attention: Office of General Counsel with a copy to: Skadden Arps Slate Meagher & Flom 919 Third Avenue New York, NY 10022 Attention: Phyllis Korff if to the Trustee: The Bank of New York 101 Barclay Street, Floor 21W New York, New York 10286 Attention: Corporate Trust Trustee Administration The Company, the Guarantors and the Trustee by written notice to each other may designate additional or different addresses for notices. Any notice or communication to the Company, the Guarantors or the Trustee shall be deemed to have been given or -113- made as of the date so delivered if personally delivered; when receipt is acknowledged, if faxed; and five (5) calendar days after mailing if sent by registered or certified mail, postage prepaid (except that a notice of change of address shall not be deemed to have been given until actually received by the addressee). Any notice or communication mailed to a Holder shall be mailed to him by first class mail or other equivalent means at his address as it appears on the registration books of the Registrar and shall be sufficiently given to him if so mailed within the time prescribed. Failure to mail a notice or communication to a Noteholder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it. SECTION 13.03 Communications by Holders with Other Holders. Holders may communicate pursuant to TIA ss. 312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Company, the Trustee, the Registrar and any other Person shall have the protection of TIA ss. 312(c). SECTION 13.04 Certificate and Opinion as to Conditions Precedent. Upon any request or application by the Company or the Guarantors to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee: (1) an Officers' Certificate, in form and substance satisfactory to the Trustee, stating that, in the opinion of the signers, all conditions precedent to be performed by the Company, if any, provided for in this Indenture relating to the proposed action have been complied with; and (2) an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent to be performed by the Company, if any, provided for in this Indenture relating to the proposed action have been complied with. SECTION 13.05 Statements Required in Certificate or Opinion. Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture, other than the Officers' Certificate required by Section 4.07, shall include: -114- (1) a statement that the Person making such certificate or opinion has read such covenant or condition; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of such Person, he has made such examination or investigation as is reasonably necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether or not, in the opinion of each such Person, such condition or covenant has been complied with. SECTION 13.06 Rules by Trustee, Paying Agent, Registrar. The Trustee may make reasonable rules in accordance with the Trustee's customary practices for action by or at a meeting of Holders. The Paying Agent or Registrar may make reasonable rules for its functions. SECTION 13.07 Legal Holidays. A "Legal Holiday" used with respect to a particular place of payment is a Saturday, a Sunday or a day on which banking institutions in New York, New York, Salt Lake City, Utah or at such place of payment are not required to be open. If a payment date is a Legal Holiday at such place, payment may be made at such place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. SECTION 13.08 GOVERNING LAW. THIS INDENTURE, THE NOTES AND THE GUARANTEES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE OR THE NOTES. SECTION 13.09 No Adverse Interpretation of Other Agreements. This Indenture may not be used to interpret another indenture, loan or debt agreement of the Company or any of its -115- Subsidiaries. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. SECTION 13.10 No Recourse Against Others. A past, present or future director, officer, employee, stockholder or incorporator, as such, of the Company or any Guarantor shall not have any liability for any obligations of the Company or any Guarantor under the Notes, the Guarantors or this Indenture or for any claim based on, in respect of or by reason of such obligations or their creations. Each Holder by accepting a Note waives and releases all such liability. Such waiver and release are part of the consideration for the issuance of the Notes. SECTION 13.11 Successors. All agreements of the Company in this Indenture and the Notes shall bind its successors. All agreements of the Trustee in this Indenture shall bind its successors. SECTION 13.12 Duplicate Originals. All parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together shall represent the same agreement. SECTION 13.13 Severability. In case any one or more of the provisions in this Indenture or in the Notes shall be held invalid, illegal or unenforceable, in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions shall not in any way be affected or impaired thereby, it being intended that all of the provisions hereof shall be enforceable to the full extent permitted by law. SECTION 13.14 Independence of Covenants. All covenants and agreements in this Indenture and the Notes shall be given independent effect so that if any particular action or condition is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or otherwise be within the limitations of, another covenant shall not avoid the occurrence of a Default or an Event of Default if such action is taken or condition exists. [Remainder of Page Intentionally Left Blank] -116- SIGNATURES IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, all as of the date first written above. HUNTSMAN PACKAGING CORPORATION By: /s/ Richard P. Durham --------------------------- Name: Richard P. Durham Title: President and CEO GUARANTORS HUNTSMAN DEERFIELD FILMS CORPORATION HUNTSMAN UNITED FILMS CORPORATION HUNTSMAN BULK PACKAGING CORPORATION HUNTSMAN CONTAINER CORPORATION INTERNATIONAL HUNTSMAN PACKAGING GEORGIA, INC. HUNTSMAN FILM PRODUCTS OF MEXICO, INC. HUNTSMAN PREPARATORY, INC. By: /s/ Richard P. Durham --------------------------- Name: Richard P. Durham Title: Vice President THE BANK OF NEW YORK, as Trustee By: /s/ Timothy J. Shea --------------------------- Name: Timothy J. Shea Title: Assistant Treasurer SIGNATURES IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, all as of the date first written above. HUNTSMAN PACKAGING CORPORATION By: --------------------------- Name: Title: GUARANTORS HUNTSMAN DEERFIELD FILMS CORPORATION HUNTSMAN UNITED FILMS CORPORATION HUNTSMAN BULK PACKAGING CORPORATION HUNTSMAN CONTAINER CORPORATION INTERNATIONAL HUNTSMAN PACKAGING GEORGIA, INC. HUNTSMAN FILM PRODUCTS OF MEXICO, INC. HUNTSMAN PREPARATORY, INC. By: --------------------------- Name: Title: THE BANK OF NEW YORK, as Trustee By: --------------------------- Name: Title: EXHIBIT A-1 [FORM OF NOTE] THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) (AN "ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE ISSUER THEREOF OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE FOR THIS SECURITY), (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS SECURITY WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY, IF THE PROPOSED TRANSFEREE IS AN ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE ISSUER SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANING GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. A-2 HUNTSMAN PACKAGING CORPORATION 9 1/8% Senior Subordinated Note due 2007 CUSIP NO. $ No. HUNTSMAN PACKAGING CORPORATION, a Utah corporation (the "Company"), for value received, promises to pay to ____________ or registered assigns, the principal sum of ________________________________ Dollars, on October 1, 2007. Interest Payment Dates: April 1 and October 1 Record Dates: March 15 and September 15 Reference is made to the further provisions of this Note contained herein, which will for all purposes have the same effect as if set forth at this place. A-3 IN WITNESS WHEREOF, the Company has caused this Note to be signed manually or by facsimile by its duly authorized officers. Dated: HUNTSMAN PACKAGING CORPORATION By:___________________________ Name:_________________________ Title:________________________ By:___________________________ Name:__________________________ Title:________________________ Trustee's Certificate of Authentication This is one of the 9 1/8% Senior Subordinated Notes due 2007 referred to in the within-mentioned Indenture. Dated: THE BANK OF NEW YORK, as Trustee By:___________________________ Authorized Signatory A-4 (REVERSE OF NOTE) 9 1/8% Senior Subordinated Note due 2007 (1) Interest. HUNTSMAN PACKAGING CORPORATION, a Utah Corporation (the "Company"), promises to pay interest on the principal amount of this Note at the rate per annum shown above. Interest on the Notes will accrue from the most recent date on which interest has been paid or, if no interest has been paid, from September 30, 1997. The Company will pay interest semi-annually in arrears on each April 1 and October 1 (each, an "Interest Payment Date") and at stated maturity, commencing on April 1, 1998. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Company shall pay interest on overdue principal and on overdue installments of interest from time to time on demand at the rate borne by the Notes and on overdue installments of interest (without regard to any applicable grace periods) to the extent lawful. (2) Method of Payment. The Company shall pay interest on the Notes (except defaulted interest) to the Persons who are the registered Holders at the close of business on the Record Date immediately preceding the Interest Payment Date even if the Notes are cancelled on registration of transfer or registration of exchange after such Record Date. Holders must surrender Notes to a Paying Agent to collect principal payments. The Company shall pay principal, premium and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts ("U.S. Legal Tender"). However, the Company may pay principal, premium and interest by its check payable in such U.S. Legal Tender. The Company may deliver any such interest payment to the Paying Agent or to a Holder at the Holder's registered address. (3) Paying Agent and Register. Initially, THE BANK OF NEW YORK (the "Trustee") will act as Paying Agent and Registrar. The Company may change any Paying Agent, Registrar or co-Registrar without notice to the Holders. The Company or any of its Subsidiaries may, subject to certain exceptions, act as Registrar or co-Registrar. (4) Indenture. The Company issued the Notes under an Indenture, dated as of September 30, 1997 (the "Indenture"), among the Company, each of the Guarantors named therein and the Trustee. This Note is one of a duly authorized issue of Notes of the Company designated as its 9 1/8% Senior Subordinated Notes due 2007 (the "Notes"), limited (except as otherwise provided in the Indenture) A-5 in aggregate principal amount to $125,000,000, which may be issued under the Indenture. Capitalized terms used herein shall have the meanings assigned to them in this Indenture unless otherwise defined herein. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. ss.ss. 77aaa-77bbbb) (the "TIA"), as in effect on the date of the Indenture. Notwithstanding anything to the contrary herein, the Notes are subject to all such terms, and Holders of Notes are referred to the Indenture and the TIA for a statement of them. The Notes are senior subordinated unsecured obligations of the Company. (5) Optional Redemption. (a) The Notes will be redeemable, at the Company's option, in whole at any time or in part from time to time, on and after October 1, 2002, upon not less than 30 nor more than 60 days' notice, at the following redemption prices (expressed as percentages of the principal amount thereof) if redeemed during the twelve-month period commencing on October 1 of the year set forth below, plus, in each case, accrued and unpaid interest thereon, if any, to the date of redemption: Year Percentage ---- ---------- 2002 ........................ 104.563% 2003 ........................ 103.042% 2004 ........................ 101.521% 2005 and thereafter ............... 100.000% (b) At any time, or from time to time, on or prior to October 1, 2000, the Company may, at its option, use the net cash proceeds of one or more Equity Offerings (as defined below) to redeem up to 35% of the aggregate principal amount of the Notes originally issued at a redemption price equal to 109 1/8% of the principal amount thereof plus accrued and unpaid interest thereon, if any, to the date of redemption; provided, however, that at least 65% of the principal amount of the Notes originally issued remain outstanding immediately after any such redemption. In order to effect the foregoing redemption with the proceeds of any Equity Offering, the Company shall make such redemption not more than 120 days after the consummation of any such Equity Offering. As used in the preceding paragraph, "Equity Offering" means any sale of Qualified Capital Stock of the Company or any capital contribution to the equity of the Company. (6) Notice of Redemption. Notice of redemption will be mailed at least 30 days but not more than 60 days before the Redemption Date to each Holder whose Notes are to be redeemed at such Holder's registered address. Notes in denominations larger than $1,000 may be redeemed in part. A-6 (7) Change of Control Offer. In the event of a Change of Control, upon the satisfaction of the conditions set forth in the Indenture, the Company shall be required to offer to repurchase all of the then outstanding Notes pursuant to a Change of Control Offer at a purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the date of purchase. Holders of Notes that are the subject of such an offer to repurchase shall receive an offer to repurchase and may elect to have such Notes repurchased in accordance with the provisions of the Indenture pursuant to and in accordance with the terms of the Indenture. (8) Limitation on Asset Sales. Under certain circumstances set forth in Section 4.15 of the Indenture, the Company is required to apply the net proceeds from Asset Sales to offer to repurchase the Notes at a price equal to 100% of the principal amount thereof plus accrued and unpaid interest thereon, if any, to the date of repurchase. (9) Denominations; Transfer; Exchange. The Notes are in fully registered form only, without coupons, in denominations of $1,000 and integral multiples of $1,000. A Holder shall register the transfer or exchange of Notes in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay certain transfer taxes or similar governmental charges payable in connection therewith as permitted by the Indenture. The Registrar need not register the transfer or exchange of any Notes during a period beginning 15 days before the mailing of a redemption notice for any Notes or portions thereof selected for redemption. (10) Persons Deemed Owners. The registered Holder of a Note shall be treated as the owner of it for all purposes. (11) Unclaimed Money. If money for the payment of principal or interest remains unclaimed for one year, the Trustee and the Paying Agent will pay the money back to the Company. After that, all liability of the Trustee and such Paying Agent with respect to such money shall cease. (12) Discharge Prior to Redemption or Maturity. If the Company at any time deposits with the Trustee U.S. Legal Tender or non-callable U.S. Government obligations sufficient to pay the principal of, premium and interest on the Notes to redemption or maturity and complies with the other provisions of this Indenture relating thereto, the Company will be discharged from certain provisions of the Indenture and the Notes (including certain covenants, but excluding its obligation to pay the principal of, premium and interest on the Notes). A-7 (13) Amendment; Supplement; Waiver. Subject to certain exceptions, the Indenture or the Notes may be amended or supplemented with the written consent of the Holders of at least a majority in aggregate principal amount of the then outstanding Notes, and any existing Default or Event of Default or noncompliance with any provision may be waived with the written consent of the Holders of a majority in aggregate principal amount of the then outstanding Notes. Without consent of any Holder, the parties thereto may amend or supplement the Indenture or the Notes to, among other things, cure any ambiguity, defect or inconsistency, provide for uncertificated Notes in addition to or in place of certificated Notes, or comply with Article Five of the Indenture, make any other change that does not adversely affect in any material respect the rights of any Holder of a Note or provide for the issuance of the Exchange Notes. (14) Restrictive Covenants. The Indenture imposes certain limitations on the ability of the Company and its Subsidiaries to, among other things, incur additional Indebtedness, pay dividends or make certain other restricted payments, enter into transactions with Affiliates, create dividend or other payment restrictions affecting Restricted Subsidiaries and merge or consolidate with any other Person, sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its assets or adopt a plan of liquidation. Such limitations are subject to a number of important qualifications and exceptions. The Company must annually report to the Trustee on compliance with such limitations. (15) Successors. When a successor assumes, in accordance with this Indenture, all the obligations of its predecessor under the Notes and the Indenture, the predecessor will be released from those obligations. (16) Defaults and Remedies. If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable in the manner, at the time and with the effect provided in the Indenture. Holders of Notes may not enforce the Indenture or the Notes except as provided in the Indenture. The Trustee is not obligated to enforce the Indenture or the Notes unless it has been offered indemnity or security reasonably satisfactory to it. The Indenture permits, subject to certain limitations therein provided, Holders of a majority in aggregate principal amount of the Notes then outstanding to direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of Notes notice of any continuing Default or Event of Default (except a Default in payment of principal or interest) if it determines in good faith that withholding notice is in their interest. A-8 (17) Trustee Dealings with Company. The Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with the Company, its Restricted and Unrestricted Subsidiaries or their respective Affiliates as if it were not the Trustee. (18) No Recourse Against Others. No past, present or future stockholder, director, officer, employee or incorporator, as such, of the Company shall have any liability for any obligation of the Company under the Notes or the Indenture or for any claim based on, in respect of or by reason of, such obligations or their creation. Each Holder of a Note by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes. (19) Authentication. This Note shall not be valid until the Trustee or authenticating agent manually signs the certificate of authentication on this Note. (20) Governing Law. This Note shall be governed by, and construed in accordance with, the laws of the State of New York without giving effect to applicable principles of conflicts of laws to the extent that the application of the laws of another jurisdiction would be required thereby. (21) Abbreviations and Defined Terms. Customary abbreviations may be used in the name of a Holder of a Note or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (=Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). (22) CUSIP Numbers. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes as a convenience to the Holders of the Notes. No representation is made as to the accuracy of such numbers as printed on the Notes and reliance may be placed only on the other identification numbers printed hereon. (23) Registration Rights. Pursuant to the Registration Rights Agreement, the Company and the Guarantors will be obligated to consummate an exchange offer pursuant to which the Holder of this Note shall have the right to exchange this Series A Note for a 9 1/8% Senior Subordinated Note due 2007, Series B, of the Company (an "Unrestricted Note") which has been registered under the Securities Act, in like principal amount and having terms identical in all material respects as the Series A Notes. The Holders shall be entitled to receive certain additional interest payments in the event such exchange offer is not consummated and upon certain other A-9 conditions, all pursuant to and in accordance with the terms of the Registration Rights Agreement. (24) Indenture. Each Holder, by accepting a Note, agrees to be bound by all of the terms and provisions of the Indenture, as the same may be amended from time to time. Capitalized terms used herein and not defined herein have the meanings ascribed thereto in the Indenture. (25) Guarantees. This Note will be entitled to the benefits of certain senior subordinated Guarantees, if any, made for the benefit of the Holders. Reference is hereby made to the Indenture for a statement of the respective rights, limitations of rights, duties and obligations thereunder of the Guarantors, the Trustee and the Holders. The Company will furnish to any Holder of a Note upon written request and without charge a copy of the Indenture. Requests may be made to: HUNTSMAN PACKAGING CORPORATION, 500 Huntsman Way, Salt Lake City, Utah 84108, Attention: Office of General Counsel. A-10 [FORM OF ASSIGNMENT] I or we assign to PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER - -------------------------------------- - ----------------------------------------------------------------- (please print or type name and address) - ----------------------------------------------------------------- - ------------------------------------------------------------------ - ----------------------------------------------------------------- the within Note and all rights thereunder, and hereby irrevocably constitutes and appoints - ------------------------------------------------------------------ attorney to transfer the Note on the books of the Company with full power of substitution in the premises. Dated:_________________ ____________________________________ NOTICE: The signature on this assignment must correspond with the name as it appears upon the face of the within Note in every particular without alteration or enlargement or any change whatsoever. Signature Guarantee:____________________________________________ Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. In connection with any transfer of this Note occurring prior to the date which is the earlier of (i) the date of the declaration by the Commission of the effectiveness of a registration statement under the Securities Act of 1933, as amended (the "Securities Act") covering resales of this Note (which effectiveness shall not have been suspended or terminated at the A-11 date of the transfer) and (ii) September 30, 1999 the undersigned confirms that it has not utilized any general solicitation or general advertising in connection with the transfer: [Check One] (26) _____ to the Company or a subsidiary thereof; or (27) _____ pursuant to and in compliance with Rule 144A under the Securities Act of 1933, as amended; or (28) _____ to an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended) that has furnished to the Trustee a signed letter containing certain representations and agreements (the form of which letter can be obtained from the Trustee); or (29) _____ outside the United States to a "foreign purchaser" in compliance with Rule 904 of Regulation S under the Securities Act of 1933, as amended; or (30) _____ pursuant to the exemption from registration provided by Rule 144 under the Securities Act of 1933, as amended; or (31) _____ pursuant to an effective registration statement under the Securities Act of 1933, as amended; or (32) _____ pursuant to another available exemption from the registration statement requirements of the Securities Act of 1933, as amended. and unless the box below is checked, the undersigned confirms that such Note is not being transferred to an "affiliate" of the Company as defined in Rule 144 under the Securities Act of 1933, as amended (an "Affiliate,): |_| The transferee is an Affiliate of the Company. Unless one of the items is checked, the Trustee will refuse to register any of the Notes evidenced by this certificate in the name of any person other than the registered Holder thereof; provided, however, that if item (3), (4), (5) or (7) is checked, the Company or the Trustee may require, prior to registering any such transfer of the Notes, in their sole discretion, such written legal opinions, certifications (including an investment letter in the case of box (3) or (4), and other information as the Trustee or the Company have reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction A-12 not subject to, the registration requirements of the Securities Act of 1933, as amended. If none of the foregoing items are checked, the Trustee or Registrar shall not be obligated to register this Note in the name of any person other than the Holder hereof unless and until the conditions to any such transfer of registration set forth herein and in Section 2.16 of the Indenture shall have been satisfied. Dated:____________ Signed: _________________________ (Sign exactly as name appears on the other side of this Note) Signature Guarantee: TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED The undersigned represents and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act of 1933, as amended, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. Dated:______________ __________________________________________ NOTICE: To be executed by an executive officer A-13 OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Note purchased by the Company pursuant to Section 4.14 or Section 4.15 of the Indenture, check the appropriate box: Section 4.14 [ ] Section 4.15 [ ] - ------------ ------------ If you want to elect to have only part of this Note purchased by the Company pursuant to Section 4.14 or Section 4.15 of the Indenture, state the amount: $____________ Date:__________________ Your Signature:__________________________ (Sign exactly as your name appears on the other side of this Note) Signature Guarantee:_______________________ Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Trustee, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Trustee in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. A-14 EXHIBIT A-2 ------------ FORM OF EXCHANGE NOTE HUNTSMAN PACKAGING CORPORATION 9 1/8% Senior Subordinated Note due 2007 CUSIP NO. $ No. HUNTSMAN PACKAGING CORPORATION, a Utah corporation (the "Company"), for value received, promises to pay to ____________ or registered assigns, the principal sum of ________________________________ Dollars, on October 1, 2007. Interest Payment Dates: April 1 and October 1 Record Dates: March 15 and September 15 Reference is made to the further provisions of this Note contained herein, which will for all purposes have the same effect as if set forth at this place. A-15 IN WITNESS WHEREOF, the Company has caused this Note to be signed manually or by facsimile by its duly authorized officers. Dated: HUNTSMAN PACKAGING CORPORATION By:___________________________ Name:_________________________ Title:________________________ By:___________________________ Name:__________________________ Title:________________________ Trustee's Certificate of Authentication This is one of the 9 1/8% Senior Subordinated Notes due 2007 referred to in the within-mentioned Indenture. Dated: THE BANK OF NEW YORK, as Trustee By:___________________________ Authorized Signatory A-16 (REVERSE OF NOTE) 9 1/8% Senior Subordinated Note due 2007 (1) Interest. HUNTSMAN PACKAGING CORPORATION, a Utah Corporation (the "Company"), promises to pay interest on the principal amount of this Note at the rate per annum shown above. Interest on the Notes will accrue from the most recent date on which interest has been paid or, if no interest has been paid, from September 30, 1997. The Company will pay interest semi-annually in arrears on each April 1 and October 1 (each, an "Interest Payment Date") and at stated maturity, commencing on April 1, 1998. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Company shall pay interest on overdue principal and on overdue installments of interest from time to time on demand at the rate borne by the Notes and on overdue installments of interest (without regard to any applicable grace periods) to the extent lawful. (2) Method of Payment. The Company shall pay interest on the Notes (except defaulted interest) to the Persons who are the registered Holders at the close of business on the Record Date immediately preceding the Interest Payment Date even if the Notes are cancelled on registration of transfer or registration of exchange after such Record Date. Holders must surrender Notes to a Paying Agent to collect principal payments. The Company shall pay principal, premium and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts ("U.S. Legal Tender"). However, the Company may pay principal, premium and interest by its check payable in such U.S. Legal Tender. The Company may deliver any such interest payment to the Paying Agent or to a Holder at the Holder's registered address. (3) Paying Agent and Register. Initially, THE BANK OF NEW YORK (the "Trustee") will act as Paying Agent and Registrar. The Company may change any Paying Agent, Registrar or co-Registrar without notice to the Holders. The Company or any of its Subsidiaries may, subject to certain exceptions, act as Registrar or co-Registrar. (4) Indenture. The Company issued the Notes under an Indenture, dated as of September 30, 1997 (the "Indenture"), among the Company, each of the Guarantors named therein and the Trustee. This Note is one of a duly authorized issue of Notes of the Company designated as its 9 1/8% Senior Subordinated Notes due 2007 (the "Notes"), limited (except as otherwise provided in the Indenture) A-17 in aggregate principal amount to $125,000,000, which may be issued under the Indenture. Capitalized terms used herein shall have the meanings assigned to them in this Indenture unless otherwise defined herein. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. ss.ss. 77aaa-77bbbb) (the "TIA"), as in effect on the date of the Indenture. Notwithstanding anything to the contrary herein, the Notes are subject to all such terms, and Holders of Notes are referred to the Indenture and the TIA for a statement of them. The Notes are senior subordinated unsecured obligations of the Company. (5) Optional Redemption. The Notes will be redeemable, at the Company's option, in whole at any time or in part from time to time, on and after October 1, 2002, upon not less than 30 nor more than 60 days' notice, at the following redemption prices (expressed as percentages of the principal amount thereof) if redeemed during the twelve-month period commencing on October 1 of the year set forth below, plus, in each case, accrued and unpaid interest thereon, if any, to the date of redemption: Year Percentage ---- ----------- 2002 ........................ 104.563% 2003 ........................ 103.042% 2004 ........................ 101.521% 2005 and thereafter ........... 100.000% At any time, or from time to time, on or prior to October 1, 2000, the Company may, at its option, use the net cash proceeds of one or more Equity Offerings (as defined below) to redeem up to 35% of the aggregate principal amount of the Notes originally issued at a redemption price equal to 109 1/8% of the principal amount thereof plus accrued and unpaid interest thereon, if any, to the date of redemption; provided, however, that at least 65% of the principal amount of the Notes originally issued remain outstanding immediately after any such redemption. In order to effect the foregoing redemption with the proceeds of any Equity Offering, the Company shall make such redemption not more than 120 days after the consummation of any such Equity Offering. As used in the preceding paragraph, "Equity Offering" means any sale of Qualified Capital Stock of the Company or any capital contribution to the equity of the Company. (6) Notice of Redemption. Notice of redemption will be mailed at least 30 days but not more than 60 days before the Redemption Date to each Holder whose Notes are to be redeemed at such Holder's registered address. Notes in denominations larger than $1,000 may be redeemed in part. A-18 (7) Change of Control Offer. In the event of a Change of Control, upon the satisfaction of the conditions set forth in the Indenture, the Company shall be required to offer to repurchase all of the then outstanding Notes pursuant to a Change of Control Offer at a purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the date of purchase. Holders of Notes that are the subject of such an offer to repurchase shall receive an offer to repurchase and may elect to have such Notes repurchased in accordance with the provisions of the Indenture pursuant to and in accordance with the terms of the Indenture. (8) Limitation on Asset Sales. Under certain circumstances set forth in Section 4.15 of the Indenture, the Company is required to apply the net proceeds from Asset Sales to offer to repurchase the Notes at a price equal to 100% of the principal amount thereof plus accrued and unpaid interest thereon, if any, to the date of repurchase. (9) Denominations; Transfer; Exchange. The Notes are in fully registered form only, without coupons, in denominations of $1,000 and integral multiples of $1,000. A Holder shall register the transfer or exchange of Notes in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay certain transfer taxes or similar governmental charges payable in connection therewith as permitted by the Indenture. The Registrar need not register the transfer or exchange of any Notes during a period beginning 15 days before the mailing of a redemption notice for any Notes or portions thereof selected for redemption. (10) Persons Deemed Owners. The registered Holder of a Note shall be treated as the owner of it for all purposes. (11) Unclaimed Money. If money for the payment of principal or interest remains unclaimed for one year, the Trustee and the Paying Agent will pay the money back to the Company. After that, all liability of the Trustee and such Paying Agent with respect to such money shall cease. (12) Discharge Prior to Redemption or Maturity. If the Company at any time deposits with the Trustee U.S. Legal Tender or non-callable U.S. Government obligations sufficient to pay the principal of, premium and interest on the Notes to redemption or maturity and complies with the other provisions of this Indenture relating thereto, the Company will be discharged from certain provisions of the Indenture and the Notes (including certain covenants, but excluding its obligation to pay the principal of, premium and interest on the Notes). A-19 (13) Amendment; Supplement; Waiver. Subject to certain exceptions, the Indenture or the Notes may be amended or supplemented with the written consent of the Holders of at least a majority in aggregate principal amount of the then outstanding Notes, and any existing Default or Event of Default or noncompliance with any provision may be waived with the written consent of the Holders of a majority in aggregate principal amount of the then outstanding Notes. Without consent of any Holder, the parties thereto may amend or supplement the Indenture or the Notes to, among other things, cure any ambiguity, defect or inconsistency, provide for uncertificated Notes in addition to or in place of certificated Notes, or comply with Article Five of the Indenture or make any other change that does not adversely affect in any material respect the rights of any Holder of a Note. (14) Restrictive Covenants. The Indenture imposes certain limitations on the ability of the Company and its Subsidiaries to, among other things, incur additional Indebtedness, pay dividends or make certain other restricted payments, enter into transactions with Affiliates, create dividend or other payment restrictions affecting Restricted Subsidiaries and merge or consolidate with any other Person, sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its assets or adopt a plan of liquidation. Such limitations are subject to a number of important qualifications and exceptions. The Company must annually report to the Trustee on compliance with such limitations. (15) Successors. When a successor assumes, in accordance with this Indenture, all the obligations of its predecessor under the Notes and the Indenture, the predecessor will be released from those obligations. (16) Defaults and Remedies. If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable in the manner, at the time and with the effect provided in the Indenture. Holders of Notes may not enforce the Indenture or the Notes except as provided in the Indenture. The Trustee is not obligated to enforce the Indenture or the Notes unless it has been offered indemnity or security reasonably satisfactory to it. The Indenture permits, subject to certain limitations therein provided, Holders of a majority in aggregate principal amount of the Notes then outstanding to direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of Notes notice of any continuing Default or Event of Default (except a Default in payment of principal or interest) if it determines in good faith that withholding notice is in their interest. A-20 (17) Trustee Dealings with Company. The Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with the Company, its Restricted and Unrestricted Subsidiaries or their respective Affiliates as if it were not the Trustee. (18) No Recourse Against Others. No past, present or future stockholder, director, officer, employee or incorporator, as such, of the Company shall have any liability for any obligation of the Company under the Notes or the Indenture or for any claim based on, in respect of or by reason of, such obligations or their creation. Each Holder of a Note by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes. (19) Authentication. This Note shall not be valid until the Trustee or authenticating agent manually signs the certificate of authentication on this Note. (20) Governing Law. This Note shall be governed by, and construed in accordance with, the laws of the State of New York without giving effect to applicable principles of conflicts of laws to the extent that the application of the laws of another jurisdiction would be required thereby. (21) Abbreviations and Defined Terms. Customary abbreviations may be used in the name of a Holder of a Note or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). (22) CUSIP Numbers. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes as a convenience to the Holders of the Notes. No representation is made as to the accuracy of such numbers as printed on the Notes and reliance may be placed only on the other identification numbers printed hereon. (23) Indenture. Each Holder, by accepting a Note, agrees to be bound by all of the terms and provisions of the Indenture, as the same may be amended from time to time. Capitalized terms used herein and not defined herein have the meanings ascribed thereto in the Indenture. (24) Guarantees. This Note will be entitled to the benefits of certain senior subordinated Guarantees, if any, made for the benefit of the Holders. Reference is hereby made to the Indenture for a statement of the respective rights, limitations of A-21 rights, duties and obligations thereunder of the Guarantors, the Trustee and the Holders. The Company will furnish to any Holder of a Note upon written request and without charge a copy of the Indenture. Requests may be made to: HUNTSMAN PACKAGING CORPORATION, 500 Huntsman Way, Salt Lake City, Utah 84108, Attention: Office of General Counsel. A-22 [FORM OF ASSIGNMENT] I or we assign to PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER - -------------------------------------- - ----------------------------------------------------------------- (please print or type name and address) - ----------------------------------------------------------------- - ------------------------------------------------------------------ - ----------------------------------------------------------------- the within Note and all rights thereunder, and hereby irrevocably constitutes and appoints - ------------------------------------------------------------------ attorney to transfer the Note on the books of the Company with full power of substitution in the premises. Dated:_________________ ____________________________________ NOTICE: The signature on this assignment must correspond with the name as it appears upon the face of the within Note in every particular without alteration or enlargement or any change whatsoever. Signature Guarantee:____________________________________________ Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Note purchased by the Company pursuant to Section 4.14 or Section 4.15 of the Indenture, check the appropriate box: A-23 Section 4.14 [ ] Section 4.15 [ ] - ------------ ------------ If you want to elect to have only part of this Note purchased by the Company pursuant to Section 4.14 or Section 4.15 of the Indenture, state the amount: $____________ Date:__________________ Your Signature:__________________________ (Sign exactly as your name appears on the other side of this Note) Signature Guarantee:_________________________________________________________ Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. A-24 EXHIBIT B --------- FORM OF LEGEND FOR GLOBAL NOTE Any Global Note authenticated and delivered hereunder shall bear a legend (which would be in addition to any other legends required in the case of a Restricted Note) in substantially the following form: THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS NOTE IS NOT EXCHANGEABLE FOR NOTES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS NOTE (OTHER THAN A TRANSFER OF THIS NOTE AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTION 2.16 OF THE INDENTURE. EXHIBIT C --------- Form of Certificate To Be Delivered in Connection with Transfers To Non-QIB Accredited Investors ----------------------------------------- C-1 [ ], [ ] [ ] [ ] [ ] Ladies and Gentlemen: In connection with our proposed purchase of 9 1/8% Senior Subordinated Notes due 2007 (the "Notes") of HUNTSMAN PACKAGING CORPORATION, a Utah corporation (the "Company"), we confirm that: 1. We have received a copy of the Offering Memorandum (the "Offering Memorandum"), dated September 19, 1997, relating to the Notes and such other information as we deem necessary in order to make our investment decision. We acknowledge that we have read and agreed to the matters stated in the section entitled "Transfer Restrictions" of such Offering Memorandum, including the restrictions on duplication and circulation of the Offering Memorandum. 2. We understand that any subsequent transfer of subject to certain restrictions and conditions set Indenture relating to the Notes (the "Indenture") in the Offering Memorandum and the undersigned bound by, and not to resell, pledge or otherwise Notes except in compliance with, such restrictions and conditions and the Securities Act of 1933, as amended (the "Securities Act"), and all applicable State securities laws. 3. We understand that the offer and sale of the Notes have not been registered under the Securities Act, and that the Notes may not be offered or sold except as permitted in the following sentence. We agree, on our own behalf and on behalf of any accounts for which we are acting as hereinafter stated, that if we should sell any Notes, we will do so only (i) to the Company or any of its subsidiaries, (ii) inside the United States in accordance with Rule 144A under the Securities Act to a "qualified institutional buyer" (as defined in Rule 144A under the Securities Act), (iii) inside the United States to an institutional "accredited investor" (as defined below) that, prior to such transfer, furnishes (or has furnished on its behalf by a U.S. broker-dealer) to the Trustee (as defined in the Indenture) a signed letter containing certain representations and agreements relating to the restrictions on transfer of the Notes (the form of which letter can be obtained from the Trustee), (iv) outside the United States in accordance with Rule 904 of Regulation S promulgated under the Securities Act to non-U.S. persons, (v) pursuant to the exemption from registration provided by Rule 144 under the Securities Act (if available), or (vi) pursuant to an C-2 effective registration statement under the Securities Act, and we further agree to provide to any person purchasing any of the Notes from us a notice advising such purchaser that resales of the Notes are restricted as stated herein. 4. We understand that, on any proposed resale of any Notes, we will be required to furnish to the Trustee and the Company such certification, legal opinions and other information as the Trustee and the Company may reasonably require to confirm that the proposed sale complies with the foregoing restrictions. We further understand that the Notes purchased by us will bear a legend to the foregoing effect. 5. We are an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Notes, and we and any accounts for which we are acting are each able to bear the economic risk of our or their investment, as the case may be. 6. We are acquiring the Notes purchased by us for our account or for one or more accounts (each of which is an institutional "accredited investor") as to each of which we exercise sole investment discretion. You, the Company, the Trustee and others are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby. Very truly yours, [Name of Transferee] By:______________________ Name: Title: C-3 EXHIBIT D --------- Form of Certificate To Be Delivered in Connection with Transfers Pursuant to Regulation S [ ], [ ] [ ] [ ] [ ] Re: Huntsman Packaging Corporation (the "Company") 9 1/8% Senior Subordinated Notes due 2007 (the "Notes") ------------------------------ Ladies and Gentlemen: In connection with our proposed sale of [$ ] aggregate principal amount of the Notes, we confirm that such sale has been effected pursuant to and in accordance with Regulation S under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, we represent that: (1) the offer of the Notes was not made to a person in the United States; (2) either (a) at the time the buy offer was originated, the transferee was outside the United States or we and any person acting on our behalf reasonably believed that the transferee was outside the United States, or (b) the transaction was executed in, on or through the facilities of a designated off-shore securities market and neither we nor any person acting on our behalf knows that the transaction has been prearranged with a buyer in the United States; (3) no directed selling efforts have been made in the United States in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S, as applicable; (4) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act; and (5) we have advised the transferee of the transfer restrictions applicable to the Notes. D-1 You, the Company, the Trustee and others are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby. Very truly yours, [Name of Transferee] By:____________________________ Authorized Signature D-2 EXHIBIT E --------- GUARANTEE --------- For value received, the undersigned hereby unconditionally guarantees, as principal obligor and not only as a surety, to the Holder of this Note the cash payments in United States dollars of principal of, premium, if any, and interest on this Note in the amounts and at the times when due and interest on the overdue principal, premium, if any, and interest, if any, of this Note, if lawful, and the payment or performance of all other obligations of the Company under the Indenture (as defined below) or the Notes, to the Holder of this Note and the Trustee, all in accordance with and subject to the terms and limitations of this Note, Article Eleven of the Indenture and this Guarantee. This Guarantee will become effective in accordance with Article Eleven of the Indenture and its terms shall be evidenced therein. The validity and enforceability of any Guarantee shall not be affected by the fact that it is not affixed to any particular Note. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Indenture dated as of September 30, 1997, among HUNTSMAN PACKAGING CORPORATION, a Utah corporation, as issuer (the "Company"), each of the Guarantors named therein and THE BANK OF NEW YORK, as trustee (the "Trustee"), as amended or supplemented (the "Indenture"). The obligations of the undersigned to the Holders of Notes and to the Trustee pursuant to this Guarantee and the Indenture are expressly set forth in Article Eleven of the Indenture and reference is hereby made to the Indenture for the precise terms of the Guarantee and all of the other provisions of the Indenture to which this Guarantee relates. THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW. The undersigned Guarantor hereby agrees to submit to the jurisdiction of the courts of the State of New York in any action or proceeding arising out of or relating to this Guarantee. This Guarantee is subject to release upon the terms set forth in the Indenture. E-1 IN WITNESS WHEREOF, each Guarantor has caused its Guarantee to be duly executed. Date:________________________________ [NAME OF GUARANTOR], as Guarantor By:____________________________ Name: Title: By:____________________________ Name: Title: E-2 EX-4.3 19 REGISTRATION RIGHTS AGREEMENT Exhibit 4.3 EXECUTION COPY - -------------------------------------------------------------------------- REGISTRATION RIGHTS AGREEMENT Dated as of September 19, 1997 Among HUNTSMAN PACKAGING CORPORATION and THE GUARANTORS NAMED HEREIN, as Issuers and BT ALEX. BROWN INCORPORATED, and CHASE SECURITIES INC., as Initial Purchasers 9 1/8% Senior Subordinated Notes due 2007 - ------------------------------------------------------------------------------ REGISTRATION RIGHTS AGREEMENT This Registration Rights Agreement (this "Agreement") is dated as of September 19, 1997, among Huntsman Packaging Corporation, a Utah corporation (the "Company"), as issuer, the Guarantors named on the signature pages hereto (the "Guarantors," and together with the Company, the "Issuers"), and BT Alex. Brown Incorporated and Chase Securities Inc., as initial purchasers (the "Initial Purchasers"). This Agreement is entered into in connection with the Purchase Agreement, dated as of September 19, 1997, among the Issuers and the Initial Purchasers (the "Purchase Agreement"), which provides for the sale by the Company to the Initial Purchasers of $125,000,000 aggregate principal amount of the Company's 9 1/8% Senior Subordinated Notes due 2007 (the "Notes"), which Notes will be guaranteed by the Guarantors (the "Guarantees"). In order to induce the Initial Purchasers to enter into Purchase Agreement, the Issuers have agreed to provide the registration rights set forth in this Agreement for the benefit of the Initial Purchasers and any subsequent holder or holders of the Notes. The execution and delivery of this Agreement is a condition to the Initial Purchasers' obligation to purchase the Notes under the Purchase Agreement. The parties hereby agree as follows: 1. Definitions. As used in this Agreement, the following terms shall have the following meanings: Additional Interest: See Section 4(a) hereof. Advice: See the last paragraph of Section 5 hereof. Affiliate: As defined in Rule 405 under the Securities Act. Agreement: See the introductory paragraphs hereto. Applicable Period: See Section 2(b) hereof. Closing Date: The Closing Date as defined in the Purchase Agreement. Company: See the introductory paragraphs hereto. Effectiveness Date: The 150th day after the Issue Date. Effectiveness Period: See Section 3(a) hereof. -2- Event Date: See Section 4(b) hereof. Exchange Act: The Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder. Exchange Notes: See Section 2(a) hereof. Exchange Offer: See Section 2(a) hereof. Exchange Offer Registration Statement: See Section 2(a) hereof. Filing Date: The 60th day after the Issue Date. Guarantee: See the introductory paragraphs hereof. Holder: Any holder of a Registrable Note or Registrable Notes. Indemnified Person: See Section 7(c) hereof. Indemnifying Person: See Section 7(c) hereof. Indenture: The Indenture, dated as of September 30, 1997 by and among the Issuers and The Bank of New York, as Trustee, pursuant to which the Notes and the Guarantees are being issued, as the same may be amended or supplemented from time to time in accordance with the terms hereof. Initial Purchasers: See the introductory paragraphs hereto. Initial Shelf Registration: See Section 3(a) hereof. Inspectors: See Section 5(n) hereof. Issue Date: September 30, 1997, the date of original issuance of the Notes. Issuers: See the introductory paragraphs hereto. NASD: See Section 5(s) hereof. Notes: See the introductory paragraphs hereof. Participant: See Section 7(a) hereof. -3- Participating Broker-Dealer: See Section 2(b) hereof. Person: An individual, trustee, corporation, partnership, joint stock company, trust, unincorporated association, union, business association, firm or other legal entity. Prospectus: The prospectus included in any Registration Statement (including, without limitation, any prospectus subject to completion and a prospectus that includes any information previously omitted from a prospectus filed as a part of an effective registration statement in reliance upon Rule 430A under the Securities Act and any term sheet filed pursuant to Rule 434 under the Securities Act), as amended or supplemented by any prospectus supplement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all materials incorporated by reference or deemed to be incorporated by reference in such Prospectus. Purchase Agreement: See the introductory paragraphs hereof. Records: See Section 5(o) hereof. Registrable Notes: Each Note upon its original issuance and at all times subsequent thereto and each Exchange Note as to which Section 2(c)(iv) hereof is applicable upon original issuance and at all times subsequent thereto, until in the case of any such Note or Exchange Note, as the case may be, the earliest to occur of (i) a Registration Statement (other than with respect to any Exchange Note as to which Section 2(c)(iv) is applicable, the Exchange Offer Registration Statement) covering such Note or Exchange Note, as the case may be, has been declared effective by the SEC and such Note (unless such Note was not tendered for exchange by the Holder thereof) or Exchange Note, as the case may be, has been disposed of in accordance with such effective Registration Statement; (ii) such Note has been exchanged pursuant to the Exchange Offer for an Exchange Note or Exchange Notes that may be resold without restriction under state and federal securities laws; (iii) such Note ceases to be outstanding for purposes of the Indenture; or (iv) such Note may be resold without restriction pursuant to Rule 144 under the Securities Act. Registration Statement: Any registration statement of the Company and/or the Guarantors that covers any of the Notes or the Exchange Notes (and the related Guarantees) filed with the SEC under the Securities Act, including the Prospectus, amendments and supplements to such registration statement, including post-effective amendments, all exhibits, and all material incorporated by reference or deemed to be incorporated by reference in such registration statement. Rule 144: Rule 144 under the Securities Act, as such Rule may be amended from time to time, or any similar rule (other than Rule 144A) or regulation hereafter adopted by the SEC providing for offers and sales of securities made in compliance therewith resulting in offers and sales by subsequent holders that are not Affiliates of the issuer of such securities being free of the registration and prospectus delivery requirements of the Securities Act. -4- Rule 144A: Rule 144A under the Securities Act, as such Rule may be amended from time to time, or any similar rule (other than Rule 144) or regulation hereafter adopted by the SEC. Rule 158: Rule 158 under the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC. Rule 174: Rule 174 under the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC. Rule 415: Rule 415 under the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC. Rule 424: Rule 424 under the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC. SEC: The Securities and Exchange Commission. Securities Act: The Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder. Shelf Effectiveness Date. With respect to any Shelf Registration, the 90th day after such Shelf Registration was filed with the SEC. Shelf Filing Date. The later of (i) the Filing Date or (ii) the 30th day after the delivery of a Shelf Notice. Shelf Notice: See Section 2 hereof. Shelf Registration: See Section 3(b) hereof. Subsequent Shelf Registration: See Section 3(b) hereof. TIA: The Trust Indenture Act of 1939, as amended. Trustee: The trustee under the Indenture and the trustee (if any) under any indenture governing the Exchange Notes. Underwritten registration or underwritten offering: A registration in which securities of one or more of the Issuers are sold to an underwriter for reoffering to the public. 2. Exchange Offer. -5- (a) The Issuers shall file with the SEC, no later than the Filing Date, a Registration Statement (the "Exchange Offer Registration Statement") on an appropriate registration form with respect to a registered offer (the "Exchange Offer") to exchange any and all of the Registrable Notes for a like aggregate principal amount of notes of the Company, guaranteed by the Guarantors, that are identical in all material respects to the Notes, except that the Exchange Notes shall contain no restrictive legend thereon (the "Exchange Notes"), and which are entitled to the benefits of the Indenture or a trust indenture which is identical in all material respects to the Indenture (other than such changes to the Indenture or any such identical trust indenture as are necessary to comply with the TIA) and which, in either case, has been qualified under the TIA. The Exchange Offer shall comply with all applicable tender offer rules and regulations under the Exchange Act and other applicable law. The Issuers shall use their best efforts to: (x) cause the Exchange Offer Registration Statement to be declared effective under the Securities Act on or before the Effectiveness Date; (y) keep the Exchange Offer open for at least 30 days (or longer if required by applicable law) after the date that notice of the Exchange Offer is mailed to Holders; and (z) consummate the Exchange Offer on or prior to the 45th day following the date on which the Exchange Offer Registration Statement is declared effective by the SEC. If, after the Exchange Offer Registration Statement is initially declared effective by the SEC, the Exchange Offer or the issuance of the Exchange Notes thereunder is prevented by any stop order, injunction or other order or requirement of the SEC or any other governmental agency or court, the Exchange Offer Registration Statement shall be deemed not to have become effective for purposes of this Agreement. Each Holder that participates in the Exchange Offer will be required, as a condition to its participation in the Exchange Offer, to represent to the Company in writing (which may be contained in the applicable letter of transmittal) (i) that any Exchange Notes to be received by it will be acquired in the ordinary course of its business, (ii) that at the time of the commencement of the Exchange Offer it has no arrangement or understanding with any person to participate in the distribution (within the meaning of the Securities Act) of the Exchange Notes in violation of the Securities Act, (iii) that it is not an Affiliate of the Company, (iv) if such Holder is not a broker-dealer, that it is not engaged in, and does not intend to engage in, the distribution of Exchange Notes and (v) if such Holder is a Participating Broker-Dealer (as defined below) that will receive Exchange Notes for its own account in exchange for Notes that were acquired as a result of market-making or other trading activities, that it will deliver a prospectus in connection with any resale of such Exchange Notes. Upon consummation of the Exchange Offer in accordance with this Section 2, the provisions of this Agreement shall continue to apply, mutatis mutandis, solely with respect to Exchange Notes as to which Section 2(c)(iv) is applicable and Exchange Notes held by Participating Broker-Dealers, and the Issuers shall have no further obligation to register Registrable Notes (other than in respect of any Exchange Notes as to which Section 2(c)(iv) hereof applies) pursuant to Section 3 hereof. No securities other than the Exchange Notes shall be included in the Exchange Offer Registration Statement. -6- (b) The Issuers shall include within the Prospectus contained in the Exchange Offer Registration Statement a section entitled "Plan of Distribution," which shall contain a summary statement of the positions taken or policies made by the staff of the SEC with respect to the potential "underwriter" status of any broker-dealer that is the beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of Exchange Notes received by such broker-dealer in the Exchange Offer (a "Participating Broker-Dealer"), which have been publicly disseminated by the staff of the SEC. Such "Plan of Distribution" section shall also expressly permit, to the extent permitted by applicable policies and regulations of the SEC, the use of the Prospectus by all Persons subject to the prospectus delivery requirements of the Securities Act, including, to the extent permitted by applicable policies and regulations of the SEC, all Participating Broker-Dealers, and include a statement describing the means by which Participating Broker-Dealers may resell the Exchange Notes in compliance with the Securities Act. The Issuers shall use their best efforts to keep the Exchange Offer Registration Statement effective and to amend and supplement the Prospectus contained therein in order to permit such Prospectus to be lawfully delivered by all Persons subject to the prospectus delivery requirements of the Securities Act for such period of time as is necessary to comply with applicable law in connection with any resale of the Exchange Notes covered thereby; provided, however, that such period shall not exceed 180 days after such Exchange Offer Registration Statement is declared effective (or such longer period if extended pursuant to the last paragraph of Section 5 hereof) (the "Applicable Period"). Interest on the Exchange Notes will accrue (A) from the later of (i) the last interest payment date on which interest was paid on the Notes surrendered in exchange therefor, or (ii) if the Note is surrendered for exchange on a date in a period which includes the record date for an interest payment date to occur on or after the date of such exchange and as to which interest will be paid, the date of such interest payment date or (B) if no interest has been paid on the Notes, from the Issue Date. In connection with the Exchange Offer, the Issuers shall: (1) mail, or cause to be mailed, to each Holder entitled to participate in the Exchange Offer a copy of the Prospectus forming part of the Exchange Offer Registration Statement, together with an appropriate letter of transmittal and related documents; (2) keep the Exchange Offer open for not less than 30 days after the date that notice of the Exchange Offer is mailed to Holders (or longer if required by applicable law); (3) utilize the services of a depositary for the Exchange Offer with an address in the Borough of Manhattan, The City of New York; -7- (4) permit Holders to withdraw tendered Notes at any time prior to the close of business, New York time, on the last business day on which Exchange Offer shall remain open; and (5) otherwise comply in all material respects with all applicable laws, rules and regulations. As soon as practicable after the close of the Exchange Offer, the Issuers shall: (1) accept for exchange all Registrable Notes validly tendered and not validly withdrawn pursuant to the Exchange Offer; (2) deliver to the Trustee for cancellation all Registrable Notes so accepted for exchange; and (3) cause the Trustee to authenticate and deliver promptly to each Holder Exchange Notes equal in principal amount to the Notes of such Holder so accepted for exchange. The Exchange Notes shall be issued under (i) the Indenture or (ii) an indenture identical in all material respects to the Indenture and which, in either case, has been qualified under the TIA or is exempt from such qualification and shall provide that the Exchange Notes shall not be subject to the transfer restrictions set forth in the Indenture. The Indenture or such indenture shall provide that the Exchange Notes and the Notes shall vote and consent together on all matters as one class and that none of the Exchange Notes or the Notes will have the right to vote or consent as a separate class on any matter. (c) If, (i) because of any change in law or in currently prevailing interpretations of the staff of the SEC, the Issuers are not permitted to effect an Exchange Offer, (ii) the Exchange Offer is not consummated within 195 days of the Issue Date, (iii) the Holders of not less than a majority in aggregate principal amount of the Registrable Notes reasonably determine that the interests of the Holders would be materially adversely affected by consummation of the Exchange Offer or (iv) in the case of any Holder that participates in the Exchange Offer, such Holder does not receive Exchange Notes on the date of the exchange that may be sold without restriction under state and federal securities laws (other than due solely to the status of such Holder as an Affiliate of the Company), then in each case, the Company shall (x) promptly deliver to the Holders and the Trustee written notice thereof (the "Shelf Notice") and (y) shall file a Shelf Registration pursuant to Section 3 hereof. -8- 3. Shelf Registration. If at any time a Shelf Notice is delivered as contemplated by Section 2(c) hereof, then: (a) Shelf Registration. The Issuers shall file, no later than the Shelf Filing Date, with the SEC a Registration Statement for an offering to be made on a continuous basis pursuant to Rule 415 covering all of the Registrable Notes not exchanged in the Exchange Offer and Exchange Notes as to which Section 2(c)(iv) is applicable (the "Initial Shelf Registration"). The Initial Shelf Registration shall be on Form S-1 or another appropriate form permitting registration of such Registrable Notes for resale by Holders in the manner or manners designated by them (including, without limitation, one or more underwritten offerings). No securities other than the Registrable Notes shall be included in the Initial Shelf Registration. The Issuers shall use their best efforts to cause the Initial Shelf Registration to be declared effective under the Securities Act on or prior to the Effectiveness Date and to keep the Initial Shelf Registration continuously effective under the Securities Act until the date which is two years from the Issue Date (the "Effectiveness Period"), or such shorter period ending when (i) all Registrable Notes covered by the Initial Shelf Registration have been sold in the manner set forth and as contemplated in the Initial Shelf Registration or (ii) a Subsequent Shelf Registration covering all of the Registrable Notes covered by and not sold under the Initial Shelf Registration or an earlier Subsequent Shelf Registration has been declared effective under the Securities Act; provided, however, that the Effectiveness Period in respect of the Initial Shelf Registration shall be extended to the extent required to permit dealers to comply with the applicable prospectus delivery requirements of Rule 174 and as otherwise provided herein. (b) Subsequent Shelf Registrations. If the Initial Shelf Registration or any Subsequent Shelf Registration ceases to be effective for any reason at any time during the Effectiveness Period (other than because of the sale of all of the securities registered thereunder), the Issuers shall use their best efforts to obtain the prompt withdrawal of any order suspending the effectiveness thereof, and in any event shall within 30 days of such cessation of effectiveness amend the Initial Shelf Registration in a manner to obtain the withdrawal of the order suspending the effectiveness thereof, or file an additional "shelf" Registration Statement pursuant to Rule 415 covering all of the Registrable Notes covered by and not sold under the Initial Shelf Registration or an earlier Subsequent Shelf Registration (each, a "Subsequent Shelf Registration"). If a Subsequent Shelf Registration is filed, the Issuers shall use their best efforts to cause the Subsequent Shelf Registration to be declared effective under the Securities Act as soon as practicable after such filing and to keep such Subsequent Shelf Registrations continuously effective for a period equal to the number of days in the Effectiveness Period less the aggregate number of days during which the Initial Shelf Registration was previously continuously effective. As used herein the term "Shelf Registration" means the Initial Shelf Registration and any Subsequent Shelf Registration. -9- (c) Supplements and Amendments. The Issuers shall promptly supplement and amend any Shelf Registration if required by the rules, regulations or instructions applicable to the registration form used for such Shelf Registration, if required by the Securities Act, or if reasonably requested by the Holders of a majority in aggregate principal amount of the Registrable Notes covered by such Registration Statement or by any underwriter of such Registrable Notes. 4. Additional Interest. (a) The Issuers and the Initial Purchasers agree that the Holders of Registrable Notes will suffer damages if the Issuers fail to fulfill their obligations under Section 2 or Section 3 hereof and that it would not be feasible to ascertain the extent of such damages with precision. Accordingly, the Company agrees to pay, as liquidated damages, additional interest (over and above the stated amount) on the Notes ("Additional Interest") under the circumstances and to the extent set forth below (each of which shall be given independent effect and shall not be duplicative): (i) if (A) neither the Exchange Offer Registration Statement nor the Shelf Registration has been filed on or prior to the Filing Date or (B) notwithstanding that the Company has consummated or will consummate the Exchange Offer, the Company is required to file a Shelf Registration and such Shelf Registration is not filed on or prior to the Shelf Filing Date, then commencing on the day after (x) the Filing Date, in the case of clause (A) above, or (y) the Shelf Filing Date, in the case of clause (B) above, Additional Interest shall accrue on the Notes at a rate of 0.50% per annum for the first 90 days immediately following (a) the Filing Date, in the case of clause (A) above, or (b) the Shelf Filing Date, in the case of clause (B) above, such Additional Interest rate increasing by an additional 0.50% per annum at the beginning of each subsequent 90-day period; (ii) if (A) neither the Exchange Offer Registration Statement nor a Shelf Registration is declared effective by the SEC on or prior to the Effectiveness Date or (B) notwithstanding that the Company has consummated or will consummate an Exchange Offer, the Company is required to file a Shelf Registration and such Shelf Registration is not declared effective by the SEC on or prior to the Shelf Effectiveness Date, then, commencing on the day after (x) the Effectiveness Date, in the case of clause (A) above, or (y) the Shelf Effectiveness Date, in the case of clause (B) above, Additional Interest shall accrue on the Notes at a rate of 0.50% per annum for the first 90 days immediately following (a) the Effectiveness Date, in the case of clause (A) above, or (b) the Shelf Effectiveness Date, in the case of clause (B) above, such Additional Interest rate increasing by an additional 0.50% per annum at the beginning of each subsequent 90-day period; and (iii) if (A) the Company has not exchanged Exchange Notes for all Notes validly tendered in accordance with the terms of the Exchange Offer on or prior to the 45th day after the date on which the Exchange Offer Registration Statement was declared effective or (B) if applicable, a Shelf Registration has been declared effective and such Shelf Registration -10- ceases to be effective at any time prior to the third anniversary of its effective date (other than after such time as all Notes have been disposed of thereunder), then commencing on (x) the 46th day after the date on which the Exchange Offer Registration Statement was declared effective in the case of (A) above, or (y) the day such Shelf Registration ceases to be effective, in the case of (B) above, Additional Interest shall accrue on the Notes at a rate of 0.50% per annum for the first 90 days immediately following (a) the 45th day on which the Exchange Offer Registration Statement was declared effective, in the case of (A) above, or (b) the day such Shelf Registration cease to be effective, in the case of (B) above, such Additional Interest rate increasing by an additional 0.50% per annum at the beginning of each such subsequent 90-day period; provided, however, that the Additional Interest rate on any affected Note may not exceed in the aggregate 1.0% per annum; and provided, further, that (1) upon the filing of the Exchange Offer Registration Statement or a Shelf Registration (in the case of clause (i) of this Section 4(a)), (2) upon the effectiveness of the Exchange Offer Registration Statement or a Shelf Registration (in the case of clause (ii) of this Section 4(a)) or (3) upon the exchange of Exchange Notes for all Notes tendered (in the case of clause (iii)(A) of this Section 4(a)), or upon the effectiveness of the Shelf Registration which had ceased to remain effective (in the case of (iii)(B) of this Section 4(a)), Additional Interest on the Notes as a result of such clause (or the relevant subclause thereof), as the case may be, shall cease to accrue. (b) The Company shall notify the Trustee within one business day after each and every date on which an event occurs in respect of which Additional Interest is required to be paid (an "Event Date"). Any amounts of Additional Interest due pursuant to clauses (a)(i), (a)(ii) or (a)(iii) of this Section 4 will be payable to the Holders of affected Notes in cash semi-annually on each April 1 and October 1 (to the holders of record on the March 15 and September 15 immediately preceding such dates), commencing with the first such date occurring after any such Additional Interest commences to accrue. The amount of Additional Interest will be determined by multiplying the applicable Additional Interest rate by the principal amount of the Registrable Notes of such Holders, multiplied by a fraction, the numerator of which is the number of days such Additional Interest rate was applicable during such period (determined on the basis of a 360-day year comprised of twelve 30-day months and, in the case of a partial month, the actual number of days elapsed), and the denominator of which is 360. 5. Registration Procedures. In connection with the filing of any Registration Statement pursuant to Sections 2 or 3 hereof, the Issuers shall effect such registrations to permit the sale of the securities covered thereby in accordance with the intended method or methods of disposition thereof, and pursuant thereto and in connection with any Registration Statement filed by the Issuers hereunder each of the Issuers shall: -11- (a) Prepare and file with SEC prior to the applicable Filing Date, a Registration Statement or Registration Statements as prescribed by Sections 2 or 3 hereof, and use its best efforts to cause each such Registration Statement to become effective and remain effective as provided herein; provided, however, that, if (1) such filing is pursuant to Section 3 hereof or (2) a Prospectus contained in the Exchange Offer Registration Statement filed pursuant to Section 2 hereof is required to be delivered under the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period relating thereto, before filing any Registration Statement or Prospectus or any amendments or supplements thereto, the Issuers shall furnish to and afford the Holders of the Registrable Notes covered by such Registration Statement or each such Participating Broker-Dealer, as the case may be, a reasonable opportunity to review copies of all such documents (including copies of any documents to be incorporated by reference therein and all exhibits thereto) proposed to be filed (in each case at least five days prior to such filing, or such later date as is reasonable under the circumstances). With respect to any Registration Statement or prospectus to which the Holders are entitled to review prior to the filing thereof, pursuant to the terms of this Agreement, the Issuers shall not file any amendments or supplements thereto if the Holders or a majority in aggregate principal amount of the Registrable Notes covered by such Registration Statement, or any such Participating Broker-Dealer, as the case may be, shall have reasonably objected in writing to the Issuers. (b) Prepare and file with the SEC such amendments and post-effective amendments to each Shelf Registration or Exchange Offer Registration Statement, as the case may be, as may be necessary to keep such Registration Statement continuously effective for the Effectiveness Period or the Applicable Period or until consummation of the Exchange Offer, as the case may be; cause the related Prospectus to be supplemented by any Prospectus supplement required by applicable law, and as so supplemented to be filed pursuant to Rule 424; and comply with the provisions of the Securities Act and the Exchange Act applicable to each of them with respect to the disposition of all securities covered by such Registration Statement as so amended or in such Prospectus as so supplemented and with respect to the subsequent resale of any securities being sold by a Participating Broker-Dealer covered by any such Prospectus. (c) If (1) a Shelf Registration is filed pursuant to Section 3 hereof, or (2) a Prospectus contained in the Exchange Offer Registration Statement filed pursuant to Section 2 hereof is required to be delivered under the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period relating thereto from whom the Company has received written notice that it will be a Participating Broker-Dealer in the Exchange Offer, notify the selling Holders of Registrable Notes, or each such Participating Broker-Dealer, as the case may be, promptly (but in any event within two business days), and confirm such notice in writing, (i) when a Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to a Registration Statement or any post-effective amendment, when the same has become effective under the Securities Act (including in such notice a written statement that any Holder may, upon request, obtain, at the sole expense of the Issuers, one conformed copy of such Registration Statement or post-effective amendment including financial statements and schedules, documents -12- incorporated or deemed to be incorporated by reference and exhibits); (ii) of the issuance by the SEC of any stop order suspending the effectiveness of a Registration Statement or of any order preventing or suspending the use of any preliminary prospectus or the initiation of any proceedings for that purpose; (iii) of the receipt by any Issuer of any notification with respect to the suspension of the qualification or exemption from qualification of a Registration Statement or any of the Registrable Notes or the Exchange Notes to be sold by any Participating Broker-Dealer for offer or sale in any jurisdiction, or the initiation or threatening of any proceeding for such purpose; (iv) of the happening of any event, the existence of any condition or any information becoming known that makes any statement made in such Registration Statement or related Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires the making of any changes in or amendments or supplements to such Registration Statement, Prospectus or documents so that, in the case of the Registration Statement, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and that in the case of the Prospectus, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and (v) of the Issuers' determination that a post-effective amendment to a Registration Statement would be appropriate. (d) If (1) a Shelf Registration is filed pursuant to Section 3 hereof, or (2) a Prospectus contained in the Exchange Offer Registration Statement filed pursuant to Section 2 hereof is required to be delivered under the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period, use its best efforts to prevent the issuance of any order suspending the effectiveness of a Registration Statement or of any order preventing or suspending the use of a Prospectus or suspending the qualification (or exemption from qualification) of any of the Registrable Notes or the Exchange Notes to be sold by any Participating Broker-Dealer, for sale in any jurisdiction, and, if any such order is issued, to use its best efforts to obtain the withdrawal of any such order at the earliest possible moment. (e) If a Shelf Registration is filed pursuant to Section 3 and if requested by the managing underwriter or underwriters (if any), or the Holders of a majority in aggregate principal amount of the Registrable Notes being sold in connection with an underwritten offering, (i) promptly incorporate in a prospectus supplement or post-effective amendment such information as the managing underwriter or underwriters (if any), such Holders, or counsel for any of them reasonably request to be included therein and (ii) make all required filings of such prospectus supplement or such post-effective amendment as soon as practicable after the Issuers have received notification of the matters to be incorporated in such prospectus supplement or post-effective amendment. (f) If (1) a Shelf Registration is filed pursuant to Section 3 hereof, or (2) a Prospectus contained in the Exchange Offer Registration Statement filed pursuant to Section 2 hereof is required to be delivered under the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period, furnish, upon request, to each selling Holder -13- of Registrable Notes and to each such Participating Broker-Dealer who so requests, at the sole expense of the Issuers, one conformed copy of the Registration Statement or Registration Statements and each post-effective amendments thereto, including financial statements and schedules, and all documents incorporated or deemed to be incorporated therein by reference and all exhibits. (g) If (1) a Shelf Registration is filed pursuant to Section 3 hereof, or (2) a Prospectus contained in the Exchange Offer Registration Statement filed pursuant to Section 2 hereof is required to be delivered under the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period, deliver to each selling Holder of Registrable Notes, or each such Participating Broker-Dealer, as the case may be, at the sole expense of the Issuers, as many copies of the Prospectus or Prospectuses (including each form of preliminary prospectus) and each amendment or supplement thereto and any documents incorporated by reference therein as such Persons may reasonably request; and, subject to the last paragraph of this Section 5, the Issuers hereby consent to the use of such Prospectus and each amendment and supplement thereto by each of the selling Holders of Registrable Notes or each such Participating Broker-Dealer, as the case may be, in connection with the offering and sale of the Registrable Notes covered by, or the sale by Participating Broker-Dealers of the Exchange Notes pursuant to, such Prospectus and any amendment or supplement thereto. (h) Prior to any public offering of Registrable Notes or any delivery of a Prospectus contained in the Exchange Offer Registration Statement by any Participating Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period, use its best efforts to register or qualify, and to cooperate with the selling Holders of Registrable Notes or each such Participating Broker-Dealer and their respective counsel in connection with the registration or qualification (or exemption from such registration or qualification) of such Registrable Notes for offer and sale under the securities or Blue Sky laws of such jurisdictions within the United States as any selling Holder or Participating Broker-Dealer reasonably request in writing and keep each such registration or qualification (or exemption therefrom) effective during the period such Registration Statement is required to be kept effective and do any and all other acts or things reasonably necessary or advisable to enable the disposition in such jurisdictions of the Exchange Notes held by Participating Broker-Dealers or the Registrable Notes covered by the applicable Registration Statement; provided, however, that no Issuer shall be required to (A) qualify generally to do business in any jurisdiction where it is not then so qualified, (B) take any action that would subject it to general service of process in any such jurisdiction where it is not then so subject or (C) subject itself to taxation in excess of a nominal dollar amount in any such jurisdiction where it is not then so subject. (i) If a Shelf Registration is filed pursuant to Section 3 hereof, cooperate with the selling Holders of Registrable Notes and the managing underwriter or underwriters, if any, to facilitate the timely preparation and delivery of certificates representing Registrable Notes to be sold, which certificates shall not bear any restrictive legends and shall be in a form eligible for deposit with The Depository Trust Company; and enable such Registrable Notes to be in such denominations -14- and registered in such names as the managing underwriter or underwriters, if any, or Holders may request. (j) Use its best efforts to cause the Registrable Notes covered by the Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be reasonably necessary to enable the seller or sellers thereof to consummate the disposition of such Registrable Notes, except as may be required solely as a consequence of the nature of such selling Holder's business, in which case the Issuers will cooperate in all reasonable respects with the filing of such Registration Statement and the granting of such approvals. (k) If (1) a Shelf Registration is filed pursuant to Section 3 hereof, or (2) a Prospectus contained in the Exchange Offer Registration Statement filed pursuant to Section 2 hereof is required to be delivered under the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period, upon the occurrence of any event of contemplated by Section 5(c)(iv) or 5(c)(v) hereof, as promptly as practicable prepare and (subject to Section 5(a) hereof) file with the SEC, at the sole expense of the Issuers, a supplement or post-effective amendment to the Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Notes being sold thereunder or to the purchasers of the Exchange Notes to whom such Prospectus will be delivered by a Participating Broker-Dealer, any such Prospectus will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. Notwithstanding the foregoing, the Issuers shall not be required to amend or supplement a Registration Statement, any related Prospectus or any document incorporated therein by reference, in the event that, and for a period not to exceed an aggregate of 60 days in any calendar year if, (i) an event occurs and is continuing as a result of which the Shelf Registration would, in the Company's good faith judgment, contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and (ii) (a) the Company determines in its good faith judgment that the disclosure of such event at such time would have a material adverse effect on the business, operations or prospects of the Company or (b) the disclosure otherwise relates to a pending material business transaction that has not yet been publicly disclosed. (l) Use its best efforts to cause the Registrable Notes covered by a Registration Statement or the Exchange Notes, as the case may be, to be rated with the appropriate rating agencies, if so requested by the Holders of a majority in aggregate principal amount of Registrable Notes covered by such Registration Statement or the Exchange Notes, as the case may be, or the managing underwriter or underwriters, if any. (m) Prior to the effective date of the first Registration Statement relating to the Registrable Notes, (i) provide the Trustee with certificates for the Registrable Notes in a form -15- eligible for deposit with The Depository Trust Company and (ii) provide a CUSIP number for the Registrable Notes. (n) In connection with any underwritten offering of Registrable Notes pursuant to a Shelf Registration, enter into an underwriting agreement as is customary in underwritten offerings of debt securities similar to the Notes and take all such other actions as are reasonably requested by the managing underwriter or underwriters, if any, in order to facilitate the registration or the disposition of such Registrable Notes and, in such connection, (i) make such representations and warranties to, and covenants with, the underwriters with respect to the business of the Issuers and their respective subsidiaries and the Registration Statement, Prospectus and documents, if any, incorporated or deemed to be incorporated by reference therein, in each case, as are customarily made by issuers to underwriters in underwritten offerings of debt securities similar to the Notes, and confirm the same in writing if and when requested; (ii) obtain the written opinion of counsel to the Issuers and written updates thereof in form, scope and substance reasonably satisfactory to the managing underwriter or underwriters, addressed to the underwriters covering the matters customarily covered in opinions requested in underwritten offerings of debt similar to the Notes and such other matters as may be reasonably requested by the managing underwriter or underwriters; (iii) obtain "cold comfort" letters and updates thereof in form, scope and substance reasonably satisfactory to the managing underwriter or underwriters from the independent certified public accountants of the Issuers (and, if necessary, any other independent certified public accountants of any subsidiary of any of the Issuers or of any business acquired by any of the Issuers for which financial statements and financial data are, or are required to be, included or incorporated by reference in the Registration Statement), addressed to each of the underwriters, such letters to be in customary form and covering matters of the type customarily covered in "cold comfort" letters in connection with underwritten offerings of debt similar to the Notes and such other matters as reasonably requested by the managing underwriter or underwriters; and (iv) if an underwriting agreement is entered into, the same shall contain indemnification provisions and procedures no less favorable than those set forth in Section 7 hereof (or such other provisions and procedures acceptable to Holders of a majority in aggregate principal amount of Registrable Notes covered by such Registration Statement and the managing underwriter or underwriters or agents) with respect to all parties to be indemnified pursuant to said Section. The above shall be done at each closing under such underwriting agreement, or as and to the extent required thereunder. (o) If (1) a Shelf Registration is filed pursuant to Section 3 hereof, or (2) a Prospectus contained in the Exchange Offer Registration Statement filed pursuant to Section 2 hereof is required to be delivered under the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period, make available for inspection by any selling Holder of such Registrable Notes being sold, or each such Participating Broker-Dealer, as the case may be and any attorney, accountant or other agent retained by any such selling Holder or each such Participating Broker-Dealer, as the case may be (collectively, the "Inspectors"), at the offices where normally kept, during reasonable business hours, all financial and other records, pertinent corporate documents and instruments of the Company and subsidiaries of the Company (collectively, the -16- "Records") as shall be reasonably necessary to enable them to exercise any applicable due diligence responsibilities, and cause the officers, directors and employees of the Company and any of its subsidiaries to supply all information reasonably requested by any such Inspector in connection with such Registration Statement and Prospectus. Each Inspector shall agree in writing that it will keep the Records confidential and that it will not disclose any of the Records that the Company determines, in good faith, to be confidential and notifies the Inspectors in writing are confidential unless (i) the disclosure of such Records is necessary to avoid or correct a material misstatement or material omission in such Registration Statement or Prospectus, (ii) the release of such Records is ordered pursuant to a subpoena or other order from a court of competent jurisdiction, (iii) disclosure of such information is, in the opinion of counsel for any Inspector, necessary in connection with any action, claim, suit or proceeding, directly or indirectly, involving such Inspector and arising out of, based upon, relating to, or involving this Agreement or arising hereunder or (iv) the information in such Records has been made generally available to the public; provided, however, that prior notice shall be provided as soon as practicable to the Company of the potential disclosure of any information by such Inspector pursuant to clauses (i) or (ii) of this sentence to permit the Company to obtain a protective order (or waive the provisions of this paragraph (o)) and that such Inspector shall take such actions as are reasonably necessary to protect the confidentiality of such information (if practicable) to the extent such action is otherwise not inconsistent with, an impairment of or in derogation of the rights and interests of the Holder or any Inspector. (p) Provide an indenture trustee for the Registrable Notes or the Exchange Notes, as the case may be, and cause the Indenture or the trust indenture provided for in Section 2(a) hereof, as the case may be, to be qualified under the TIA not later than the effective date of the first Registration Statement relating to the Registrable Notes; and in connection therewith, cooperate with the Trustee under any such indenture and the Holders of the Registrable Notes, to effect such changes to such indenture as may be required for such indenture to be so qualified in accordance with the terms of the TIA; and execute, and use its best efforts to cause such trustee to execute, all documents as may be required to effect such changes, and all other forms and documents required to be filed with the SEC to enable such indenture to be so qualified in a timely manner. (q) Comply with all applicable rules and regulations of the SEC and make generally available to its securityholders earnings statements satisfying the provisions of Section 11(a) of the Securities Act and Rule 158 no later than 60 days after the end of any fiscal quarter (or 105 days after the end of any 12-month period if such period is a fiscal year) (i) commencing at the end of any fiscal quarter in which Registrable Notes are sold to underwriters in a firm commitment or best efforts underwritten offering; and (ii) if not sold to underwriters in such an offering, commencing on the first day of the first fiscal quarter of the Company after the effective date of a Registration Statement, which statements shall cover said 12-month periods. (r) Upon consummation of the Exchange Offer, obtain an opinion of counsel to the Company, in a form customary for underwritten transactions, addressed to the Trustee for the benefit of all Holders of Registrable Notes participating in the Exchange Offer that the Exchange -17- Notes, the related Guarantees and the related indenture constitute legal, valid and binding obligations of the Issuers, enforceable against them in accordance with their respective terms, subject to customary exceptions and qualifications. (s) If the Exchange Offer is to be consummated, upon delivery of the Registrable Notes by Holders to the Company (or to such other Person as directed by the Company) in exchange for the Exchange Notes the Company shall mark, or cause to be marked, on such Registrable Notes that such Registrable Notes are being canceled in exchange for the Exchange Notes; in no event shall such Registrable Notes be marked as paid or otherwise satisfied. (t) Cooperate with each seller of Registrable Notes covered by any Registration Statement in connection with any filings required to be made with the National Association of Securities Dealers, Inc. (the "NASD"). (u) Use its best efforts to take all other steps reasonably necessary to effect the registration of the Exchange Notes and/or Registrable Notes covered by a Registration Statement contemplated hereby. The Company may require each seller of Registrable Notes as to which any registration is being effected to furnish to the Company such information regarding such seller and the distribution of such Registrable Notes as the Company may, from time to time, reasonably request. The Company may exclude from such registration the Registrable Notes of any seller so long as such seller fails to furnish such information within a reasonable time after receiving such request. Each seller as to which any Shelf Registration is being effected agrees to furnish promptly to the Company all information required to be disclosed in order to make the information previously furnished to the Company by such seller not materially misleading. If any such Registration Statement refers to any Holder by name or otherwise as the holder of any securities of the Company, then such Holder shall have the right to require (i) the insertion therein of language, in form and substance reasonably satisfactory to such Holder, to the effect that the holding by such Holder of such securities is not to be construed as a recommendation by such Holder of the investment quality of the securities covered thereby and that such holding does not imply that such Holder will assist in meeting any future financial requirements of the Company or (ii) in the event that such reference to such Holder by name or otherwise is not required by the Securities Act or any similar federal statute then in force, the deletion of the reference to such Holder in any amendment or supplement to the Registration Statement filed or prepared subsequent to the time that such reference ceases to be required. Each Holder of Registrable Notes and each Participating Broker-Dealer agrees by its acquisition of such Registrable Notes or Exchange Notes to be sold by such Participating Broker-Dealer, as the case may be, that, upon actual receipt of any notice from the Company of the happening of any event of the kind described in Section 5(c)(ii), 5(c)(iii), 5(c)(iv), or 5(c)(v) hereof, -18- such Holder will forthwith discontinue disposition of such Registrable Notes covered by such Registration Statement or Prospectus or Exchange Notes to be sold by such Holder or Participating Broker-Dealer, as the case may be, until such Holder's or Participating Broker-Dealer's receipt of the copies of the supplemented or amended Prospectus contemplated by Section 5(k) hereof, or until it is advised in writing (the "Advice") by the Company that the use of the applicable Prospectus may be resumed, and has received copies of any amendments or supplements thereto. In the event that the Company shall give any such notice, the Applicable Period shall be extended by the number of days during such periods from and including the date of the giving of such notice to and including the date when each seller of Registrable Notes covered by such Registration Statement or Exchange Notes to be sold by such Participating Broker-Dealer, as the case may be, shall have received (x) the copies of the supplemented or amended Prospectus contemplated by Section 5(k) hereof or (y) the Advice. 6. Registration Expenses. All fees and expenses incident to the performance of or compliance with this Agreement by the Issuers (other than any underwriting discounts or commissions) shall be borne by the Company whether or not the Exchange Offer Registration Statement or any Shelf Registration is filed or becomes effective or the Exchange Offer is consummated, including, without limitation, (i) all registration and filing fees (including, without limitation, (A) fees with respect to filings required to be made with the NASD in connection with an underwritten offering and (B) fees and expenses of compliance with state securities or Blue Sky laws (including, without limitation, fees and disbursements of counsel in connection with Blue Sky qualifications of the Registrable Notes or Exchange Notes and determination of the eligibility of the Registrable Notes or Exchange Notes for investment under the laws of such jurisdictions (x) where the holders of Registrable Notes are located, in the case of the Exchange Notes, or (y) as provided in Section 5(h) hereof, in the case of Registrable Notes or Exchange Notes to be sold by a Participating Broker-Dealer during the Applicable Period)), (ii) the expenses relating to printing, word processing and distributing all Registration Statements, Prospectuses, underwriting agreements, indentures and any other documents necessary in order to comply with this Agreement, (iii) fees and disbursements of counsel for the Company and reasonable fees and disbursements of one special counsel for all of the sellers of Registrable Notes, (iv) fees and expenses of all other Persons retained by the Issuers, (v) the expense of any annual audit, (vi) fees and disbursements of all independent certified public accountants referred to in Section 5(n)(iii) hereof (including, without limitation, the expenses of any special audit and "cold comfort" letters required by or incident to such performance) and (vii) any fees and expenses incurred in connection with the listing of the securities to be registered on any securities exchange, and the obtaining of a rating of the securities, in each case, if applicable. 7. Indemnification Contribution. (a) Each of the Issuers, jointly and severally, agrees to indemnify and hold harmless each Holder of Registrable Notes and each Participating Broker-Dealer selling Exchange -19- Notes during the Applicable Period, the Affiliates, officers, directors, representatives, employees and agents of each such Person, and each Person, if any, who controls any such Person within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act (each, a "Participant"), from and against any and all losses, claims, damages, judgments, liabilities and reasonable expenses (including, without limitation, the reasonable legal fees and other expenses actually incurred in connection with any suit, action or proceeding or any claim asserted) caused by, arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement (or any amendment thereto) or Prospectus (as amended or supplemented if the Company shall have furnished any amendments or supplements thereto) or any preliminary prospectus, or caused by, arising out of or based upon any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the case of the Prospectus in light of the circumstances under which they were made, not misleading; provided, however, that the Issuers will not be liable (i) in any such case to the extent that any such loss, claim, damage, or liability arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made in reliance upon and in conformity with information relating to any Participant furnished to the Company in writing by such Participant expressly for use therein or (ii) in any such case with respect to any preliminary prospectus, to the extent that any such loss, claim, damage or liability arises solely from the fact that the Participant sold Registrable Notes to a person to whom there was not sent or given a copy of the Prospectus contained in the Registration Statement at the time it became effective at or prior to the written confirmation of such sale if the Company shall have previously furnished copies thereof to the Participant and such Prospectus would have corrected any such untrue statement or omission. (b) Each Participant agrees, severally and not jointly, to indemnify and hold harmless the Issuers, their respective Affiliates, officers, directors, representatives, employees and agents of each Issuer and each Person who controls each Issuer within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent (but on a several, and not joint, basis) as the foregoing indemnity from the Issuers to each Participant, but only with reference to information relating to such Participant furnished to the Company in writing by such participant expressly for use in any Registration Statement or Prospectus, any amendment or supplement thereto, or any preliminary prospectus. The liability of any Participant under this paragraph shall in no event exceed the proceeds received by such Participant from sales of Registrable Notes or Exchange Notes giving rise to such obligations. (c) If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or asserted against any Person in respect of which indemnity may be sought pursuant to either of the two preceding paragraphs, such Person (the "Indemnified Person") shall promptly notify the Persons against whom such indemnity may be sought (the "Indemnifying Persons") in writing, and the Indemnifying Persons, upon request of the Indemnified Person, shall retain counsel reasonably satisfactory to the Indemnified Person to represent the Indemnified Person and any others the Indemnifying Persons may reasonably designate in such proceeding and shall pay the fees and expenses actually incurred by such counsel related to -20- such proceeding; provided, however, that the failure to so notify the Indemnifying Persons (i) will not relieve it from any liability under paragraph (a) or (b) above unless and to the extent such failure results in the forfeiture by the indemnifying party of substantial rights and defenses of either the Indemnified or Indemnifying Person and (ii) will not, in any event, relieve the indemnifying party from any obligations to any indemnified party other than the indemnification obligation provided in paragraphs (a) and (b) above. In any such proceeding, any Indemnified Person shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Person unless (i) the Indemnifying Persons and the Indemnified Person shall have mutually agreed to the contrary, (ii) the Indemnifying Persons shall have failed within a reasonable period of time to retain counsel reasonably satisfactory to the Indemnified Person or (iii) the named parties in any such proceeding (including any impleaded parties) include both any Indemnifying Person and the Indemnified Person or any Affiliate thereof and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that the Indemnifying Persons shall not, in connection with such proceeding or separate but substantially similar related proceeding in the same jurisdiction arising out of the same general allegations, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all Indemnified Persons, and that all such fees and expenses shall be reimbursed promptly as they are incurred. Any such separate firm for the Participants shall be designated in writing by Participants who sold a majority in interest of Registrable Notes and Exchange Notes sold by all such Participants and shall be reasonably acceptable to the Company, and any such separate firm for the Issuers, their Affiliates, officers, directors, representatives, employees and agents, and such control Persons of such Issuer shall be designated in writing by such Issuer and shall be reasonably acceptable to the Holders. The Indemnifying Persons shall not be liable for any settlement of any proceeding effected without its prior written consent (which consent shall not be unreasonably withheld or delayed), but if settled with such consent or if there be a final non-appealable judgment for the plaintiff for which the Indemnified Person is entitled to indemnification pursuant to this Agreement, each of the Indemnifying Persons agrees to indemnify and hold harmless each Indemnified Person from and against any loss or liability by reason of such settlement or judgment. No Indemnifying Person shall, without the prior written consent of the Indemnified Persons (which consent shall not be unreasonably withheld or delayed), effect any settlement or compromise of any pending or threatened proceeding in respect of which any Indemnified Person is or could reasonably have been a party, or indemnify could have been sought hereunder by such Indemnified Person, unless such settlement (A) includes an unconditional written release of such Indemnified Person, in form and substance reasonably satisfactory to such Indemnified Person, from all liability on claims that are the subject matter of such proceeding and (B) does not include any statement as to an admission of fault, culpability or failure to act by or on behalf of such Indemnified Person. (d) If the indemnification provided for in clauses (a) and (b) of this Section 7 is for any reason unavailable to, or insufficient to hold harmless, an Indemnified Person in respect of any losses, claims, damages or liabilities referred to therein, then each Indemnifying Person under -21- such clauses, in lieu of indemnifying such Indemnified Person thereunder and in order to provide for just and equitable contribution, shall contribute to the amount paid or payable by such Indemnified Person as a result of such losses, claims, damages or liabilities in such proportion as is appropriate to reflect (i) the relative benefits received by the Indemnifying Person or Persons on the one hand and the Indemnified Person or Persons on the other from the offering of the Notes or (ii) if the allocation provided by the foregoing clause (i) is not permitted by applicable law, not only such relative benefits but also the relative fault of the Indemnifying Person or Persons on the one hand and the Indemnified Person or Persons on the other in connection with the statements or omissions or alleged statements or omissions that resulted in such losses, claims, damages or liabilities (or actions in respect thereof) as well as any other relevant equitable considerations. The relative benefits received by the Issuers on the one hand and the Participants on the other shall be deemed to be in the same proportion as the total proceeds from the offering (net of discounts and commissions but before deducting expenses) of the Notes received by the Company bears to the total proceeds received by such Participant from the sale of Registrable Notes or Exchange Notes, as the case may be, in each case as set forth in the table on the cover page of the Offering Memorandum dated September 19, 1997 in respect of the sale of the Notes. The relative fault of the parties shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Issuers on the one hand or such Participant or such other Indemnified Person, as the case may be, on the other, the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission, and any other equitable consideration appropriate in the circumstances. (e) The parties agree that it would not be just and equitable if contribution pursuant to this Section 7 were determined by pro rata or per capita allocation (even if the Participants were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an Indemnified Person as a result of the losses, claims, damages, judgments, liabilities and expenses referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any reasonable legal or other expenses actually incurred by such Indemnified Person in connection with investigation or defending any such action or claim. Notwithstanding the provisions of this Section 6, in no event shall a Participant be required to contribute any amount in excess of the amount by which proceeds received by such Participant from sales of Registrable Notes or Exchange Notes, as the case may be, exceeds the amount of any damages that such Participant has otherwise been required to pay or has paid by reason of such untrue or alleged untrue statement or omission or alleged omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. (f) Any losses, claims, damages, liabilities or expenses for which an indemnified party is entitled to indemnification or contribution under this Section 7 shall be paid by the Indemnifying Party to the Indemnified Party as such losses, claims, damages, liabilities or expenses -22- are incurred. The indemnity and contribution agreements contained in this Section 6 and the representations and warranties of the Issuers set forth in this Agreement shall remain operative and in full force and effect, regardless of (i) any investigation made by or on behalf of any Holder or any person who controls a Holder, the Issuer, its directors, officers, employees or agents or any person controlling the Issuer, and (ii) any termination of this Agreement. (g) The indemnity and contribution agreements contained in this Section 7 will be in addition to any liability which the Indemnifying Persons may otherwise have to the Indemnified Persons referred to above. 8. Rules 144 and 144A. Each of the Issuers covenants and agrees that it will file the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the SEC thereunder in a timely manner in accordance with the requirements of the Securities Act and the Exchange Act and, if at any time such Issuer is not required to file such reports, such Issuer will, upon the request of any Holder or beneficial owner or Registrable Notes, make available such information necessary to permit sales pursuant to Rule 144A. Each of the Issuers further covenants and agrees, for so long as any Registrable Notes remain outstanding that it will take such further action as any Holder of Registrable Notes may reasonably request, all to the extent required from time to time to enable such holder to sell Registrable Notes without registration under the Securities Act within the limitation of the exemptions provided by Rule 144(k) and Rule 144A. 9. Underwritten Registrations If any of the Registrable Notes covered by any Shelf Registration are to be sold in an underwritten offering, the investment banker or investment bankers and manager or managers that will manage the offering will be selected by the Holders of a majority in aggregate principal amount of such Registrable Notes included in such offering, subject to the approval of the Company, which approval shall not be unreasonably withheld. No Holder of Registrable Notes may participate in any underwritten registration hereunder unless such Holder (a) agrees to sell such Holder's Registrable Notes on the basis provided in any underwriting arrangements approved by the Issuers in accordance with Section 5(n) and (b) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements. 10. Miscellaneous. (a) No Inconsistent Agreements. The Issuers have not, as of the date hereof, and the Issuers shall not, after the date of this Agreement, enter into any agreement with respect to any of its securities that is inconsistent with the rights granted to the Holders of Registrable Notes in this -23- Agreement or otherwise conflicts with the provisions hereof. The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of the Issuers' other issued and outstanding securities under any such agreements. (b) Adjustments Affecting Registrable Notes. The Issuers shall not, directly or indirectly, take any action with respect to the Registrable Notes as a class that would adversely affect the ability of the Holders of Registrable Notes to include such Registrable Notes in a registration undertaken pursuant to this Agreement. (c) Amendments and Waivers. The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, otherwise than with the prior written consent of (I) the Company and (II)(A) the Holders of not less than a majority in aggregate principal amount of the then outstanding Registrable Notes and (B) in circumstances that would adversely affect the Participating Broker-Dealers, the Participating Broker-Dealers holding not less than a majority in aggregate principal amount of the Exchange Notes held by all Participating Broker-Dealers; provided, however, that Section 7 and this Section 10(c) may not be amended, modified or supplemented without the prior written consent of each Holder and each Participating Broker-Dealer (including any person who was a Holder or Participating Broker-Dealer of Registrable Notes or Exchange Notes, as the case may be, disposed of pursuant to any Registration Statement) affected by any such amendment, modification or supplement. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of Holders of Registrable Notes whose securities are being sold pursuant to a Registration Statement and that does not directly or indirectly affect, impair, limit or compromise the rights of other Holders of Registrable Notes may be given by Holders of at least a majority in aggregate principal amount of the Registrable Notes being sold pursuant to such Registration Statement. (d) Notices. All notices and other communications (including, without limitation, any notices or other communications to the Trustee) provided for or permitted hereunder shall be made in writing by hand-delivery, registered first-class mail, next-day air courier or facsimile: (i) if to a Holder of the Registrable Notes or any Participating Broker-Dealer, at the most current address of such Holder or Participating Broker-Dealer, as the case may be, set forth on the records of the registrar under the Indenture. (ii) if to the Issuers, at the address as follows: c/o Huntsman Packaging Corporation 500 Huntsman Way Salt Lake City, Utah 84108 -24- Facsimile No.: (801) 584-5782 Attention: Senior Vice President and General Counsel All such notices and communications shall be deemed to have been duly given: when delivered by hand, if personally delivered; five business days after being deposited in the mail, postage prepaid, if mailed; one business day after being timely delivered to a next-day air courier; and when receipt is acknowledged by the addressee, if sent by facsimile. Copies of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Trustee at the address and in the manner specified in such Indenture. (e) Business Day. If the date on which the Company is obligated to act is not a Business Day (as defined in the Indenture), the Company shall be deemed to have complied with this Agreement if it performs its obligations by the first business day after such date. (f) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties hereto, the Holders and the Participating Broker-Dealers. (g) Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (h) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT. (j) Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their best efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby -25- stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any such that may be hereafter declared invalid, illegal, void or unenforceable. (k) Securities Held by the Company or Its Affiliates. Whenever the consent or approval of Holders of a specified percentage of Registrable Notes is required hereunder, Registrable Notes held by the Company or its Affiliates shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage. (l) Third-Party Beneficiaries. Holders of Registrable Notes and Participating Broker-Dealers are intended third-party beneficiaries of this Agreement, and this Agreement may be enforced by such Persons. (m) Entire Agreement. This Agreement, together with the Purchase Agreement and the Indenture, is intended by the parties as a final and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein and therein and any and all prior oral or written agreements, representations, or warranties, contracts, under-standings, correspondence, conversations and memoranda between the Holders on the one hand and the Issuers on the other, or between or among any agents, representatives, parents, subsidiaries, Affiliates, predecessors in interest or successors in interest with respect to the subject matter hereof and thereof are merged herein and replaced hereby. -26- IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. HUNTSMAN PACKAGING CORPORATION By: ____________________________________ Name: __________________________________ Title: _________________________________ GUARANTORS: HUNTSMAN FILM PRODUCTS CORPORATION HUNTSMAN DEERFIELD FILMS CORPORATION HUNTSMAN UNITED FILMS CORPORATION HUNTSMAN BULK PACKAGING CORPORATION HUNTSMAN CONTAINER CORPORATION INTERNATIONAL HUNTSMAN PACKAGING GEORGIA, INC. HUNTSMAN FILM PRODUCTS OF MEXICO, INC. HUNTSMAN PREPARATORY, INC. By: ___________________________________ Name: _________________________________ Title: ________________________________ The foregoing Agreement is hereby confirmed and accepted as of the date first above written. BT ALEX. BROWN INCORPORATED CHASE SECURITIES INC. as Initial Purchasers By: BT Alex. Brown Incorporated By: _________________________________ Name: ___________________________ Title: __________________________ EX-10.1 20 EXCHANGE AGREEMENT EXHIBIT 10.1 EXCHANGE AGREEMENT THIS EXCHANGE AGREEMENT (this "Agreement") is made and entered into as of September 26, 1997 by and among Huntsman Corporation, a Utah corporation (the "Company"), Jon M. Huntsman ("Huntsman") and Richard P. Durham and Elizabeth A. Whitsett, as Successor Trustees (the "Trustees") of The Christena Karen H. Durham Trust (the "Trust"). Recitals A. The Company owns all of the issued and outstanding shares of the capital stock of Huntsman Packaging Corporation, a Utah corporation ("Packaging"). B. Packaging will amend its Articles of Incorporation to provide for two classes of stock, Class A Common Stock ("Packaging A Stock") and Class B stock ("Packaging B Stock") and Class B Common Stock ("Packaging B Stock"), and the issued shares of the capital stock of Packaging will be reclassified as 995,001 shares of Packaging A Stock and 4,999 shares of Packaging B Stock (the "Packaging Recapitalization"). C. Huntsman is the record and beneficial owner of 14,172,343 shares of the Common Stock of the Company ("Company Common Stock"). D. The Trustees are the record owners, and the Trust is the beneficial owner, of 561,021 shares of Company Common Stock. E. The shareholders of the Company desire that, following the Packaging Recapitalization, the Company shall distribute all of the issued Packaging A Stock and Packaging B Stock (collectively, the "Packaging Shares") to Huntsman and the Trustees, for the benefit of the Trust, (collectively, the "Shareholders") in exchange for (i) 1,041,896 shares of Company Common Stock owned by Huntsman and (ii) all 561,021 of the shares of Company Common Stock owned by the Trustees for the benefit of the Trust (collectively, the "Exchange Shares") in a tax-free transaction under Section 355 of the Internal Revenue Code of 1986, as amended (the "Code"). F. This Agreement sets forth the terms and conditions upon which the exchange of the Packaging Shares for the Exchange Shares (the "Exchange") shall occur. Agreement NOW, THEREFORE, intending to be legally bound by this Agreement, the Company and the Shareholders (collectively, the "Parties") agree as follows: 1. Packaging Recapitalization. On or before September 29, 1997, the Company shall cause Packaging to complete the Packaging Recapitalization. 2. Exchange. At the Closing (as defined below), upon the terms and subject to the conditions of this Agreement, (a) the Company shall distribute, assign, transfer and deliver all of the Packaging Shares to the Shareholders, and the Shareholders shall receive, acquire and accept all of the Packaging Shares from the Company as set forth in paragraph 5 below, and (b) the Shareholders shall assign, transfer and deliver all of the Exchange Shares to the Company, and the Company shall receive, acquire, accept and redeem all of the Exchange Shares from the Shareholders. 3. Closing. The Exchange shall close (the "Closing") at the offices of the Company (a) within thirty (30) days after the completion of the Packaging Recapitalization, or (b) at such other time or place as the Parties may agree. 4. Closing Obligations. At the Closing, the following shall occur: (a) The Shareholders shall deliver the certificates representing the Exchange Shares, duly endorsed for redemption by the Company. (b) The Company shall deliver the certificates representing the Packaging Shares, duly endorsed for cancellation, to Packaging with instructions to Packaging to issue certificates for the Packaging Shares to the Shareholders in accordance with paragraph 5 below. 5. Ownership of Packaging Shares. Immediately after the Closing, (a) Huntsman shall own 650,000 shares of Packaging A Stock, and (b) the Trustees shall own 345,001 shares of Packaging A Stock and 4,999 shares of Packaging B Stock. 6. Cancellation of Exchange Shares. Immediately after the Closing, the Exchange Shares shall be canceled by the Company and shall be authorized and unissued shares of Company Common Stock. 7. Acceptance of Consideration. The Company accepts, and hereby agrees that, the receipt by it of the Exchange Shares, as provided for in this Agreement, constitutes payment in full and is the sole consideration for the distribution, assignment, transfer and delivery of the Packaging Shares by the Company to the Shareholders. The Shareholders accept, and hereby agree that, the receipt by them of the Packaging Shares, as provided 2 for in this Agreement, constitutes payment in full and is the sole consideration for the assignment, transfer and delivery of the Exchange Shares by the Shareholders to the Company. 8. Representations and Warranties of the Company. As of the Closing, the Company hereby represents and warrants to the Shareholders as follows: (a) Packaging is a corporation duly organized, validly existing and in good standing under the laws of the State of Utah. (b) All of the Packaging Shares are directly owned, beneficially and of record, by the Company. (c) The Company has the right, without obtaining the consent of any other person or governmental authority, to distribute, assign, transfer and deliver the Packaging Shares to the Shareholders in accordance with this Agreement. (d) Each of the Packaging Shares is validly issued, fully paid and nonassessable. (e) There are no obligations, agreements, contracts, subscriptions, options, warrants, rights, convertible or exchangeable securities, calls, pledges, hypothecations, loans, security interests, notes, trust deeds, mortgages, liens, charges, claims, judgments, limitations, restrictions, commitments or other encumbrances (collectively, "Encumbrances") created by the Company on or with respect to any of the Packaging Shares. None of Packaging Shares was issued in violation of the preemptive rights of any person. There are no voting trusts or other agreements, arrangements or understandings with respect to the voting of the Packaging Shares. 9. Representations and Warranties of the Shareholders. As of the Closing, each Shareholder, solely with respect to the Exchange Shares owned by such Shareholder, hereby represents and warrants to the Company as follows: (a) The Exchange Shares are directly owned by the Shareholder. (b) The Shareholder has the right, without obtaining the consent of any other person or governmental authority, to assign, transfer and deliver the Exchange Shares to the Company in accordance with this Agreement. (c) There are no Encumbrances created by the Shareholder on or with respect to the Exchange Shares. The Shareholder has not created or otherwise established any voting trusts or other agreements, arrangements or understandings with respect to the voting of the Exchange Shares. 3 10. Tax Consequences. The Parties intend that the Exchange shall qualify as a nontaxable transaction under Section 355 of the Code. This Agreement shall be strictly interpreted to assure such qualification. 11. General Provisions. The Parties further agree as follows: (a) All of the terms of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the Parties and their respective successors, assigns, heirs and legal representatives. (b) This Agreement supersedes all prior agreements and/or understandings of the Parties on the subject matter hereof. Any prior negotiations, correspondence, agreements, proposals, understandings or discussions relating to the subject matter of this Agreement shall be deemed to be merged into this Agreement and, to the extent inconsistent with this Agreement, such negotiations, correspondence, agreements, proposals, understandings or discussions shall be deemed to be of no force or effect. (c) There are no representations, warranties or agreements, whether express or implied, oral or written, with respect to the subject matter of this Agreement except as expressly set forth in this Agreement. (d) This Agreement may not be modified by any oral agreement, either express or implied, and all modifications hereto shall be in a written document, signed by the Parties. (e) Paragraph headings in this Agreement are for the purpose of convenience only and shall not limit or otherwise affect any of the terms hereof. (f) Should any Party default in or be in breach of any of the covenants or agreements contained in this Agreement, or in the event a dispute shall arise as to the meaning of any term of this Agreement, the breaching or defaulting Party, or the non-prevailing Party, as the case may be, shall pay all costs and expenses, including reasonable attorneys' fees, that may arise or accrue from enforcing this Agreement, securing an interpretation of any provision of this Agreement, or in pursuing any remedy provided by applicable law, whether such remedy is pursued or interpretation is sought by the filing of a lawsuit, an appeal, and/or otherwise. (g) Whenever the context requires, the singular shall include the plural, the plural shall include the singular, the whole shall include any part thereof, and any gender shall include all other genders. 4 (h) The Parties shall pay all their own costs and expenses (including attorneys' fees and accountants' fees) incurred or to be incurred by them in negotiating and preparing this Agreement and in carrying out the transactions contemplated by this Agreement. (i) None of the rights, duties, or obligations under this Agreement of any Party may be assigned, delegated, or transferred expressly by operation of law (including, but not limited to, a merger or consolidation), or otherwise, without the prior written consent of the other Parties, which consent shall not be unreasonably withheld or delayed. (Signature Page Follows) 5 IN WITNESS WHEREOF, the Company and the Shareholders have executed this Agreement on the day and year first above written. The Company: Huntsman Corporation, a Utah corporation ------------------------------------------ Peter R. Huntsman President and Chief Operating Officer Attest: /s/ Robert B. Lence - --------------------------------- Robert B. Lence Secretary The Shareholders: /s/ Jon M. Huntsman ------------------------------------------ Jon M. Huntsman ------------------------------------------ Richard P. Durham Successor Trustee of The Christena Karen H. Durham Trust /s/ Elizabeth A. Whitsett ------------------------------------------ Elizabeth A. Whitsett Successor Trustee of The Christena Karen H. Durham Trust 6 IN WITNESS WHEREOF, the Company and the Shareholders have executed this Agreement on the day and year first above written. The Company: Huntsman Corporation, a Utah corporation /s/ Peter R. Huntsman ------------------------------------------ Peter R. Huntsman President and Chief Operating Officer Attest: /s/ Robert B. Lence - --------------------------------- Robert B. Lence Secretary The Shareholders: ------------------------------------------ Jon M. Huntsman ------------------------------------------ Richard P. Durham Successor Trustee of The Christena Karen H. Durham Trust /s/ Elizabeth A. Whitsett ------------------------------------------ Elizabeth A. Whitsett Successor Trustee of The Christena Karen H. Durham Trust 6 IN WITNESS WHEREOF, the Company and the Shareholders have executed this Agreement on the day and year first above written. The Company: Huntsman Corporation, a Utah corporation ------------------------------------------ Peter R. Huntsman President and Chief Operating Officer Attest: /s/ Robert B. Lence - --------------------------------- Robert B. Lence Secretary The Shareholders: /s/ Jon M. Huntsman ------------------------------------------ Jon M. Huntsman /s/ Richard P. Durham ------------------------------------------ Richard P. Durham Successor Trustee of The Christena Karen H. Durham Trust /s/ Elizabeth A. Whitsett ------------------------------------------ Elizabeth A. Whitsett Successor Trustee of The Christena Karen H. Durham Trust 6 EX-10.2 21 ASSET PURCHASE AGREEMENT FIRST AMENDED ASSET PURCHASE AGREEMENT Between HUNTSMAN POLYMERS CORPORATION and HUNTSMAN PACKAGING CORPORATION (Regarding Assets of the CT Film Division of Huntsman Polymers Corporation) Dated as of September 26, 1997 TABLE OF CONTENTS Page 1. PURCHASE AND SALE OF ASSETS..........................................2 1.01. Purchase and Sale.........................................2 1.02. Payment of Purchase Price.................................2 1.03. Acquired Assets...........................................2 1.04. Excluded Assets...........................................5 1.05. Assumed Liabilities.......................................6 1.06. Excluded Liabilities......................................6 1.07. Title to Acquired Assets..................................8 1.08. Consents of Third Parties.................................8 2. THE CLOSING..........................................................9 2.01. Closing Date..............................................9 2.02. Transactions to be Effected at the Closing................9 2.03. Other Action.............................................10 2.04. No Additional Obligations................................10 2.05. Loss, Destruction, Condemnation, or Damage...............10 3. REPRESENTATIONS AND WARRANTIES OF SELLER............................10 3.01. Organization.............................................10 3.02. Authorization and Validity of Agreement..................11 3.03. No Violations; Consents and Approvals....................12 3.04. Subsidiary Capitalization................................12 3.05. SEC Reports and Financial Statements.....................13 3.06. Absence of Certain Changes...............................13 3.07. No Undisclosed Liabilities...............................14 3.08. Employee Benefit Plans and ERISA.........................14 3.09. Litigation and Compliance with Law.......................17 3.10. Rexene Intellectual Property.............................18 3.11. Seller Agreements........................................18 3.12. Taxes....................................................19 3.13. Environmental Matters....................................21 3.14. No Default...............................................23 3.15. Brokers..................................................23 3.16. Property.................................................23 3.17. Labor Matters............................................24 i 4. REPRESENTATIONS AND WARRANTIES OF PURCHASER.........................24 4.01. Organization.............................................24 4.02. Authorization and Validity of Agreement..................24 4.03. No Violations; Consents and Approvals....................25 5. COVENANTS...........................................................25 5.01. Plicon Collection. .....................................25 5.02. Access to Information....................................25 5.03. Further Action; Reasonable Best Efforts..................26 5.04. Post-Closing Cooperation.................................27 5.05. Employee Benefits........................................28 5.06. Notification of Certain Matters..........................31 5.07. Expenses.................................................31 5.08. Waiver of Compliance with Bulk Sales Laws................31 5.09. Transfer, Sales, and Use Taxes...........................31 5.10. Purchase Price Allocation................................32 5.11. WARN Compliance..........................................32 6. CONDITIONS..........................................................32 6.01. Conditions to Each Party's Obligation....................32 6.02. Conditions to Obligation of Purchaser....................33 6.03. Conditions to Obligation of Seller.......................35 7. TERMINATION OF AGREEMENT............................................35 7.01. Termination..............................................35 7.02. Effect of Termination....................................36 8. INDEMNIFICATION.....................................................36 8.01. Indemnification by Seller................................36 8.02. Indemnification by Purchaser.............................37 8.03. Calculation of Losses....................................38 8.04. Termination of Indemnification...........................38 8.05. Procedures...............................................38 9. GENERAL PROVISIONS..................................................40 9.01. Assignment...............................................40 9.02. No Third-Party Beneficiaries.............................40 9.03. Amendments and Waivers...................................41 ii 9.04. Notices..................................................41 9.05. Interpretation...........................................41 9.06. Survival of Agreements...................................42 9.07. Counterparts.............................................42 9.08. Entire Agreement.........................................42 9.09. Severability.............................................42 9.10. Governing Law; Waiver of Jury Trial; Enforcement.........42 iii TABLE OF DEFINED TERMS Term: Section: Acquired Assets 1.03 Acquisition 1.01 Affiliate 9.05 Allocation 5.10 Assigned Contracts 1.03(k) Assigned Intellectual Property 1.03(h) Assigned Permits 1.03(j) Assumed Liabilities 1.05 Audits 3.12(b) Business Recitals Business Executives 5.02(a) Buyer Defined Benefit Plan 5.05(b) Chippewa Facility 1.03(a) Clearfield Facility 1.03(a) Closing 2.01 Closing Date 2.01 Code 3.08(e) Company Employees 5.05(a) Company SEC Documents 3.05 Contracts 1.03(k) Dalton Facility 1.03(a) Disclosure Schedule 3. Effective Time 5.05(g) England Shares 1.03(q) England Subsidiary 1.03(q) Environmental Claim 3.13(e) Environmental Laws 3.13(e) ERISA 3.08(a) ERISA Affiliate 3.08(a) ERISA Plans 3.08(a) Exchange Act 3.05 Excluded Assets 1.04 Excluded Liabilities 1.06 Existing Credit Facilities 1.06(c) Film Manufacturing Facilities 1.03(a) iv GAAP 3.05 Governmental Entity 3.03 Harrington Facility 1.03(a) Hazardous Substance 3.13(e) Huntsman Recitals Intellectual Property 1.03(h) Inventory 1.03(f) Investments 1.03(l) Knowledge of Seller 3.06 Liens 1.07 Losses 8.01 Material Adverse Effect 3.01 Material Seller Agreements 3.11 Merger Recitals Merger Agreement Recitals PBGC 3.08(b) Permits 1.03(j) Permitted Liens 1.07 Person 3.01 Personal Property 1.03(d) Plans 3.08(a) Purchase Price 1.01 Purchaser Recitals Receivables 1.03(g) Records 1.03(p) Release 3.13(e) Representatives 5.02(a) Rexene Intellectual Property 3.10 Rexene Pension Plan 5.05(b) Rexene SERP 5.05(f) Sales and Use Taxes 5.09 Sales Office Facilities 1.03(b) SEC 3.05 Securities Act 3.05 Seller Recitals Seller Agreements 3.03 Seller Defined Benefit Plan 5.05(b) Subsidiary 3.01 Tax Return 3.12(j) v Taxes 3.12(j) Technology 1.03(i) Third Party Claim 8.05(a) Transfer Taxes 5.09 Warehouse Facilities 1.03(c) WARN 5.11 vi FIRST AMENDED ASSET PURCHASE AGREEMENT THIS FIRST AMENDED ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered into as of the 26th day of September, 1997, by and between HUNTSMAN POLYMERS CORPORATION, formerly known as Rexene Corporation, a Delaware corporation ("Seller"), and HUNTSMAN PACKAGING CORPORATION, a Utah corporation ("Purchaser"). RECITALS: A. Pursuant to the provisions of a certain Agreement and Plan of Merger (the "Merger Agreement") dated as of June 9, 1997, by and among Seller, Huntsman Centennial Corporation, a Utah corporation ("Centennial"), and Huntsman Corporation, a Utah corporation ("Huntsman"), Centennial was merged with and into Seller (the "Merger"). B. Seller and one or more of its Subsidiaries own and operate a polymer film manufacturing business known as the "CT Film Division" (the "Business"). C. Seller desires to sell to Purchaser, and Purchaser desires to purchase from Seller, all or substantially all of the assets of the Business, upon the terms and subject to the conditions of this Agreement. D. Seller and Purchaser have entered into an Asset Purchase Agreement dated as of August 27, 1997 (the "Original Agreement"), pursuant to the terms, conditions, and provisions of which (among other things) Seller agreed to sell to Purchaser, and Purchaser agreed to purchase from Seller, all or substantially all of the assets of the Business. E. Seller and Purchaser now desire to amend the Original Agreement in its entirety and to agree in writing as to certain related matters. NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, and for other good and valuable consideration, receipt and sufficiency of which are acknowledged, Seller and Purchaser hereby amend the Original Agreement to read in its entirety, and otherwise hereby agree, as follows: 1 1. PURCHASE AND SALE OF ASSETS 1.01. Purchase and Sale. On the terms and subject to the conditions of this Agreement, at the Closing (as defined in Section 2.01), Seller shall sell, assign, transfer, convey, and deliver to Purchaser, and Purchaser shall purchase from Seller, all the right, title, and interest of Seller in, to, and under the Acquired Assets (as defined in Section 1.03), for (a) an aggregate purchase price of Seventy Million Dollars ($70,000,000) (the "Purchase Price"), payable as set forth in Section 1.02, and (b) the assumption of the Assumed Liabilities (as defined in Section 1.05). The purchase and sale of the Acquired Assets and the assumption of the Assumed Liabilities is referred to in this Agreement as the "Acquisition." 1.02. Payment of Purchase Price. The Purchase Price shall be paid to Seller in full at the Closing as provided in Section 2.02(b)(i). 1.03. Acquired Assets. The term "Acquired Assets" means all of the business, properties, assets, good will, and rights of Seller and its Subsidiaries (as defined in Section 3.01) of every kind, character, and description, tangible or intangible, real, personal, or mixed, whether accrued, contingent, or otherwise, that are owned, leased, or licensed by Seller or any of its Subsidiaries on the Closing Date (as defined in Section 2.01) and primarily used, primarily held for use, or intended to be primarily used in the operation or conduct of the Business, wherever located and whether or not reflected in the books and records of Seller or any of its Subsidiaries, other than the Excluded Assets (as defined in Section 1.04), including: (a) Film Manufacturing Facilities. The entire right, title, and interest of Seller and any of its Subsidiaries in and to all manufacturing, warehouse, laboratory, and other facilities located in (i) Chippewa Falls, Wisconsin (the "Chippewa Facility"), (ii) Clearfield, Utah (the "Clearfield Facility"), (iii) Dalton, Georgia (the "Dalton Facility"), and (iv) Harrington, Delaware (the "Harrington Facility"), including Seller's interests in the parcels of real property related thereto, together with and including the entire right, title, and interest of Seller in and to all buildings, structures, installations, fixtures, and other improvements thereto or situated thereon and all other rights, interests, and appurtenances of Seller and any of its Subsidiaries pertaining thereto. The term "Film Manufacturing Facilities" means collectively the Chippewa Facility, the Clearfield Facility, the Dalton Facility, and the Harrington Facility. (b) Sales Office Facilities. The entire right, title, and interest of Seller and any of its Subsidiaries as tenant in and to (i) sales office spaces and 2 appurtenant rights located at the addresses specified in Schedule 1.03(b), and (ii) sales office spaces and appurtenant rights, to the extent primarily used, primarily held for use, or intended to be primarily used in the operation or conduct of the Business, and located at 1515 Woodfield Rd., Suites 280 and 285, Schaumburg, IL 60173. "Sales Office Facilities" means collectively the sales office spaces and appurtenant rights described in this Section 1.03(b)(i) and (ii). (c) Warehouse Facilities. The entire right, title, and interest of Seller and any of its Subsidiaries as tenant in and to warehouse spaces and appurtenant rights, located at the addresses specified in Schedule 1.03(c). "Warehouse Facilities" means collectively the warehouse spaces and appurtenant rights described in this Section 1.03(c). (d) Personal Property. All machinery, equipment, computer hardware, improvements, tools, furniture, furnishings, vehicles, and other tangible personal property of Seller or any of its Subsidiaries that on the Closing Date are located in or upon any of the Manufacturing Facilities, the Office Facilities, or the Warehouse Facilities, and all other machinery, equipment, computer hardware, improvements, tools, furniture, furnishings, vehicles, and other tangible personal property of Seller and any of its Subsidiaries on the Closing Date, wherever located, that are primarily used, primarily held for use, or intended to be primarily used in the operation or conduct of the Business (collectively, the "Personal Property"). (e) This section is reserved. (f) Inventory. All raw materials, work-in-process, finished goods, packaging, supplies, parts, spare parts, and other inventories of Seller or any of its Subsidiaries that on the Closing Date are located at any of the Manufacturing Facilities, the Office Facilities, or the Warehouse Facilities, and all other raw materials, work-in-process, finished goods, packaging, supplies, parts, spare parts, and other inventories of Seller and any of its Subsidiaries (including in transit, on consignment, or in the possession of any third party) on the Closing Date that are primarily used, primarily held for use, or intended to be primarily used in the operation or conduct of the Business (collectively, the "Inventory"). (g) Receivables. All accounts receivable of Seller and any of its Subsidiaries on the Closing Date arising out of the operation or conduct of the Business (the "Receivables"). 3 (h) Intellectual Property. All domestic and foreign patents (including all reissues, divisions, continuations, and extensions thereof), patent applications, patent rights, trademarks, trademark registrations, trademark applications, servicemarks, trade names, business names, brand names, copyrights, copyright registrations, designs, design registrations, and all rights to any of the foregoing ("Intellectual Property") of Seller and any of its Subsidiaries that are primarily used, primarily held for use, or intended to be primarily used in the operation or conduct of the Business (such Intellectual Property being the "Assigned Intellectual Property"). (i) Technology. All domestic and foreign trade secrets, confidential information, inventions, engineering and production designs, drawings, technology, know-how, formulas, processes, procedures, research, records of inventions, test information, ideas, and other similar intangible assets of Seller or any of its Subsidiaries that are primarily used, primarily held for use, or intended to be primarily used in the operation or conduct of the Business (the "Technology"). (j) Permits. All certificates, licenses, authorizations, permits, and approvals ("Permits") issued or granted to Seller or any of its Subsidiaries by Governmental Entities that are primarily used, primarily held for use, or intended to be primarily used in the operation or conduct of the Business (the "Assigned Permits"). (k) Contracts. All contracts, leases, licenses, indentures, agreements, commitments, and all other legally binding arrangements, whether oral or written (including purchase orders and sales orders) ("Contracts"), to which Seller or any of its Subsidiaries is a party or by which Seller or any of its Subsidiaries is bound that are primarily used, primarily held for use, or intended to be primarily used in, or that arise primarily out of, the operation or conduct of the Business (the "Assigned Contracts"). (l) Investments. All partnership interests or any other equity interest of Seller or any of its Subsidiaries in any corporation, company, limited liability company, partnership, joint venture, trust, or other business association ("Investments") that are primarily used, primarily held for use, or intended to be primarily used in, or that arise primarily out of, the operation or conduct of the Business. (m) Products Sold. All rights of Seller or any of its Subsidiaries in and to products sold (including products returned after the Closing and rights of rescission, replevin, and reclamation) in the operation or conduct of the Business. 4 (n) Prepaid Items. All credits, prepaid expenses, deferred charges, advance payments, security deposits, and prepaid items of Seller and any of its Subsidiaries that are primarily used, primarily held for use, or intended to be primarily used in, or that arise primarily out of, the operation or conduct of the Business. (o) Claims. All rights, claims, and credits of Seller and any of its Subsidiaries to the extent relating to any other Acquired Asset or any Assumed Liability, including any such items arising under insurance policies and all guarantees, warranties, indemnities, and similar rights in favor of Seller or any of its Subsidiaries in respect of any other Acquired Asset or any Assumed Liability. (p) Records. All books of account, ledgers, general, financial, accounting, and personnel records, files, invoices, customers' and suppliers' lists, other distribution lists, billing records, sales and promotional literature, manuals, and customer and supplier correspondence (in all cases, in any form or medium) of Seller and any of its Subsidiaries that are primarily used, primarily held for use, or intended to be primarily used in, or that arise primarily out of, the conduct or operation of the Business (the "Records"). (q) England Shares. All right, title, and interest of Seller and any of its subsidiaries in and to shares of stock (of any class, series, type, or designation whatsoever, including any director's qualifying shares) of, and any other interests whatsoever in, Rexene Corporation Limited, a corporation organized under the laws of England (such corporation the "England Subsidiary" and such shares and other interests the "England Shares"). (r) Goodwill. All goodwill of Seller and any of its Subsidiaries generated by or primarily associated with the Business. (s) Other Assets. Other assets of Seller and any of its Subsidiaries specified in Schedule 1.03(s). 1.04. Excluded Assets. The term "Excluded Assets" means: (a) Executive Office Assets. All tangible personal property of Seller and any of its Subsidiaries (other than the England Subsidiary) that on the Closing Date is located at Seller's executive offices at 5005 LBJ Freeway, Dallas, Texas, other than (i) the Records, (ii) motor vehicles, and (iii) items specified in Schedule 1.04(a). 5 (b) Pension Assets. All assets of the Rexene Pension Plan (as defined in Section 5.05(b)). (c) General Ledger. All financial and tax records relating to the Business that form part of Seller's general ledger. (d) Other Businesses. All assets of Seller and its Subsidiaries (other than the England Subsidiary) that are primarily used, primarily held for use, or intended to be primarily used by Seller or any of its Subsidiaries in the operation or conduct of any business other than the Business. (e) Other Excluded Assets. Other assets of Seller or any of its Subsidiaries specified in Schedule 1.04(e). (f) Plicon Rights. All Receivables, Assigned Contracts, Inventory, and Technology arising from or relating to Plicon Corporation, RP Packaging, Inc., and/or its or their Subsidiaries or Affiliates. (g) Cash. All cash and cash equivalents of Seller and any of its Subsidiaries (other than the England Subsidiary). (h) Goodwill. All goodwill that is associated with the "REXENE" mark or any mark containing "REX" as a prefix, suffix, or otherwise. 1.05. Assumed Liabilities. Upon the terms and subject to the conditions of this Agreement, Purchaser shall assume, effective as of the Closing Date, and from and after the Closing Date Purchaser shall pay, perform, and discharge when due, all Assumed Liabilities. The term "Assumed Liabilities" means all liabilities, obligations, and commitments of Seller or any of its Subsidiaries to the extent relating to or arising out of the Business or any Acquired Asset, whether express or implied, liquidated, absolute, accrued, contingent, or otherwise, and that are based upon, arise out of, or result from any fact, circumstance, condition, act, or omission existing on or occurring on or prior to the Closing Date, other than any Excluded Liabilities (as defined in Section 1.06). 1.06. Excluded Liabilities. Notwithstanding Section 1.05, or any other provision of this Agreement, and regardless of any disclosure to Purchaser, Purchaser shall not assume any Excluded Liability, each of which shall be retained and paid, performed, and discharged when due by Seller and its Subsidiaries. The term "Excluded Liability" means: 6 (a) Other Business. Any liability, obligation, or commitment of Seller or any of its Subsidiaries, whether express or implied, liquidated, absolute, accrued, contingent, or otherwise, or known or unknown, to the extent relating to or arising out of the operation or conduct by Seller or any of its Subsidiaries, of any business other than the Business. (b) Excluded Assets. Any liability, obligation, or commitment of Seller or any of its Subsidiaries to the extent relating to or arising out of any Excluded Asset, or to the extent relating to or arising out of the ownership by Seller or any of its Subsidiaries of the Excluded Assets or to the extent associated with the realization of the benefits of any Excluded Asset. (c) Money Borrowed. Any liabilities, obligations, or commitments of Seller or any of its Subsidiaries for money borrowed, whether or not arising from or relating to the operation or conduct of the Business or any of the Acquired Assets, including any liabilities, obligations, or commitments of Seller or any of its Subsidiaries arising from or relating to (i) the Credit Agreement, dated May 8, 1997, by and between Seller and the Bank of Nova Scotia and certain other lenders, (ii) the Participation and Credit Agreement, dated May 8, 1997, by and between Seller and the Bank of Nova Scotia and certain other lenders, (iii) Seller's $175 million Senior Notes, (iv) any indebtedness for money borrowed by Seller from Huntsman, or (v) any loan or lease documents or other agreements related to the agreements referred to in the foregoing clauses (i), (ii), (iii), or (iv) (the agreements and documents referred to in clauses (i), (ii), (iii), (iv), and (v) collectively, the "Existing Credit Facilities"). (d) Pension Liabilities. All obligations and liabilities arising from or relating to the Rexene Pension Plan. (e) This Section is reserved. (f) Terminated Employees. Any liability, obligation, or commitment of Seller or any of its Subsidiaries that relates to, or that arises out of, the employment or the termination of the employment with Seller of any employee or former employee of the Business identified in Schedule 1.06(f) (including as a result of the transactions contemplated by this Agreement). (g) Other Excluded Liabilities. All other liabilities, obligations, and commitments of Seller or any of its Subsidiaries specified in Schedule 1.06(g). 7 (h) Plicon Obligations. Any liability, obligation, or commitment of Seller or any of its Subsidiaries to the extent that it relates to or arises out of any Receivable, Assigned Contract, or Technology arising from or relating to Plicon Corporation, RP Packaging, Inc. and/or its or their Subsidiaries or Affiliates. 1.07. Title to Acquired Assets. Purchaser shall acquire the Acquired Assets free and clear of all liabilities, obligations, and commitments of Seller and any of its Subsidiaries other than the Assumed Liabilities, and free and clear of all liens, charges, security interests, options, claims, or encumbrances of any nature whatsoever (collectively "Liens"), other than Permitted Liens. "Permitted Liens" means (a) liens that primarily relate to or arise from the operation or conduct of the Business (other than Liens that secure any Excluded Liabilities), (b) Liens specified in Schedule 1.07, (c) in the case of personal property, imperfections of title or encumbrances, if any, that could not reasonably be expected to have a Material Adverse Effect (as defined in Section 3.01) on the Business, taken as a whole, and (d) in the case of real property: (i) easements, covenants, rights-of-way, and other similar restrictions of record, (ii) any conditions that may be shown by a current, accurate survey or physical inspection of the involved real property prior to the Closing Date, and (iii) unrecorded easements, covenants, rights-of-way, and other similar restrictions that could not reasonably be expected to have a Material Adverse Effect on the Business, taken as a whole. 1.08. Consents of Third Parties. Notwithstanding anything in this Agreement to the contrary, this Agreement shall not constitute an agreement to assign any asset or any claim or right or any benefit arising under or resulting from such asset if an attempted assignment thereof, without the consent of a third party, would constitute a breach or other contravention of the rights of such third party, would be ineffective with respect to any party to an agreement concerning such asset, or would in any way adversely affect the rights, upon transfer, of Purchaser under such asset. If any transfer or assignment by Seller to, or any assumption by Purchaser of, any interest in, or liability, obligation, or commitment under, any asset requires the consent of a third party, then such assignment or assumption shall be made subject to such consent being obtained. To the extent any Assigned Contract may not be assigned to Purchaser by reason of the absence of any such consent, Purchaser shall not be required to assume any Assumed Liabilities arising under such Assigned Contract. If any such consent is not obtained prior to the Closing, Seller and Purchaser shall cooperate (at their own expense) in any lawful and reasonable arrangement reasonably proposed by Purchaser under which Purchaser shall obtain the economic claims, rights, and benefits under the asset, claim, or right with respect to which the 8 consent has not been obtained in accordance with this Agreement. Such reasonable arrangement may include (i) the subcontracting, sublicensing, or subleasing to Purchaser of any and all rights of Seller against the other party to such third-party agreement arising out of a breach or cancellation thereof by the other party, and (ii) the enforcement by Seller of such rights. To the extent, and only to the extent, Purchaser is able to receive the economic claims, rights, and benefits under such asset, Purchaser shall be responsible for the Assumed Liabilities, if any, arising under such asset. 2. THE CLOSING 2.01. Closing Date. The closing of the Acquisition (the "Closing") shall take place at the offices of Purchaser at 500 Huntsman Way, Salt Lake City, Utah, beginning at 10:00 a.m. on September 30, 1997, or, if on such day any condition set forth in Section 6 has not been satisfied (or, to the extent permitted, waived by the party or parties entitled to the benefit thereof), then as soon as practicable after all the conditions set forth in Section 6 have been satisfied (or, to the extent permitted, waived by the party or parties entitled to the benefits thereof), or at such other place, time, and date as may be agreed between Seller and Purchaser. The "Closing Date" means 11:59 p.m. (Eastern Time) on the date on which the Closing occurs. 2.02. Transactions to be Effected at the Closing. At the Closing: (a) Seller Obligations. Seller shall deliver to Purchaser (i) such appropriately executed deeds (in recordable form), bills of sale, assignments, and other instruments of transfer relating to the Acquired Assets in form and substance reasonably satisfactory to Purchaser and its legal counsel, (ii) a duly executed certification of non-foreign status in the form prescribed by Treasury Regulation ss. 1.1445-2(b)(2)(iii), and (iii) such other documents as Purchaser or its legal counsel may reasonably request to demonstrate satisfaction of the conditions and compliance with the covenants set forth in this Agreement. (b) Purchaser Obligations. Purchaser shall deliver to Seller (i) payment, by wire transfer to a bank account designated in writing by Seller (such designation to be made at least two business days prior to the Closing Date), in immediately available funds in an amount equal to the Purchase Price, (ii) such appropriately executed assumption agreements and other instruments of assumption providing for the assumption of the Assumed Liabilities in form and substance reasonably satisfactory to Seller and it legal counsel, and (iii) such other documents as 9 Seller or its legal counsel may reasonably request to demonstrate satisfaction of the conditions and compliance with the covenants set forth in this Agreement. 2.03. Other Action. At and after the Closing, at the request of Purchaser, Seller shall deliver such further instruments of transfer and take all commercially reasonable action as may be necessary or appropriate (a) to vest in Purchaser all of Seller's right, title, and interest in and to the Acquired Assets, (b) to transfer to Purchaser (to the extent transferrable) all licenses, agreements, and permits necessary for the operation of the Business, and (c) to aid and assist Purchaser in collecting and reducing to possession any or all of the Acquired Assets. 2.04. No Additional Obligations. No instrument specified in Sections 2.02 or 2.03 shall create or be deemed to create any liability or obligation to Purchaser or Seller greater than those created by this Agreement. 2.05. Loss, Destruction, Condemnation, or Damage. If between the date of this Agreement and the Closing Date, any of the Acquired Assets are lost, destroyed, or condemned, or suffer any material damage, and are not repaired or replaced prior to Closing, then Seller shall, on the Closing Date in connection with the Closing, assign to Purchaser all insurance and/or condemnation proceeds payable to Seller on account of such loss, destruction, condemnation, or damage, pursuant to an assignment in form and substance satisfactory to Purchaser and its legal counsel. 3. REPRESENTATIONS AND WARRANTIES OF SELLER Except as specifically set forth in Schedules 3.01 through 3.17 (collectively, the "Disclosure Schedule") (with a disclosure with respect to a Section of this Agreement to require a specific reference in the Disclosure Schedule to the Section of this Agreement to which each such disclosure applies, and no disclosure to be deemed to apply with respect to any Section to which it is not expressly stated to apply), Seller hereby represents and warrants, as of the date of this Agreement (subject to changes effected by the Merger) and, solely with respect to matters contained in Sections 3.01, 3.02, 3.03, 3.04, 3.07, 3.08, 3.09, and 3.12 as of the Closing Date, to Purchaser as follows: 3.01. Organization. Seller and each of its Subsidiaries is a corporation or other entity duly organized, validly existing, and in good standing under the laws of the jurisdiction of its incorporation or organization (or the equivalent thereof in the case of foreign Subsidiaries), has all requisite corporate power and authority and all necessary 10 governmental approvals to own, lease, and operate its properties and to carry on its business (including the Business) as it is now being conducted, and is qualified or licensed to do business as a foreign corporation and is in good standing in each jurisdiction in which the nature of the business (including the Business) conducted by it makes such qualification or licensing necessary, except where the failure to be so organized, existing, and in good standing or to have such power, authority, or governmental approvals, or to be so qualified or licensed would not have a Material Adverse Effect (as defined below) on Seller, or its Subsidiaries taken as a whole. Seller has previously delivered to Purchaser a complete and correct copy of each of its Restated Certificate of Incorporation, as amended, and its Amended and Restated Bylaws, as currently in effect, and complete and correct copies of the certificates of incorporation and bylaws, as currently in effect, or similar organizational documents of all of Seller's Subsidiaries. Schedule 3.01 of the Disclosure Schedule sets forth a complete list of Seller's Subsidiaries. For purposes of this Agreement: (i) Any reference to any event, change, or effect having a "Material Adverse Effect" on or with respect to any entity (or group of entities taken as a whole) means such event, change, or effect, individually or in the aggregate with such other events, changes, or effects, which is materially adverse to the financial condition, businesses, results of operations, assets, liabilities, or properties of such entity (or, if used with respect thereto, of such group of entities taken as a whole); (ii) "Subsidiary" means with respect to any Person, any corporation or other entity of which more than 50% of the securities or other interests having by their terms ordinary voting power to elect a majority of the Board of Directors or others performing similar functions with respect to such entity is directly or indirectly owned by such Person; and (iii) "Person" shall mean an individual, partnership, joint venture, limited liability company, trust, corporation, unincorporated entity, or Governmental Entity (as defined in Section 3.03). The only Person of which Seller beneficially owns 50% of the securities or other equity interests is Orrex Plastics Company LLC ("Orrex"). Orrex does not own, lease, possess, or have any interest in any of the Acquired Assets. Schedule 3.01 sets forth a list of all Orrex charter or governance agreements and related documents. 3.02. Authorization and Validity of Agreement. Seller has the requisite corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery by Seller of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by the Board of Directors of Seller and no other corporate proceedings on the part of Seller are necessary to authorize the execution and delivery of this Agreement by Seller and the consummation of the transactions contemplated hereby. This Agreement has been duly executed and delivered by Seller and, assuming due 11 authorization, execution, and delivery of this Agreement by Purchaser, this Agreement is a valid and binding obligation of Seller enforceable against Seller in accordance with its terms, except that such enforcement may be subject to or limited by (i) bankruptcy, insolvency, or other similar laws, now or hereafter in effect, affecting creditors' rights generally, and (ii) the effect of general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity). 3.03. No Violations; Consents and Approvals. Except as set forth in Schedule 3.03, neither the execution and delivery of this Agreement by Seller nor the consummation by Seller of the transactions contemplated hereby will (i) conflict with or violate any provision of the Restated Certificate of Incorporation or Amended and Restated Bylaws of Seller, or the certificates of incorporation or bylaws or similar organizational documents of any of Seller's Subsidiaries, (ii) require any filing with, or permit, authorization, consent, or approval of, any court, arbitral tribunal, administrative agency, or commission or other governmental or other regulatory authority, agency, or official (a "Governmental Entity"), (iii) assuming the accuracy of the representations and warranties of, and performance of the covenants by Purchaser as set forth herein, result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, amendment, cancellation, or acceleration), or require any consent under, any of the terms, conditions, or provisions of any note, bond, mortgage, indenture, guarantee, other evidence of indebtedness, lease, license, contract, agreement, or other instrument or obligation to which Seller or any of its Subsidiaries is a party or by which any of them or any of their assets may be bound ("Seller Agreements") or result in the imposition or creation of any Lien on the assets of Seller or any of its Subsidiaries or (iv) violate any order, writ, injunction, decree, statute, rule, or regulation applicable to Seller or any of its Subsidiaries or any of their properties or assets; except in the case of clauses (ii), (iii), or (iv), (A) where the failure to obtain such permits, authorizations, consents, or approvals or to make such filings would not have a Material Adverse Effect on Seller and its Subsidiaries, taken as a whole, or (B) for such violations, breaches, or defaults which would not have a Material Adverse Effect on Seller and its Subsidiaries, taken as a whole. 3.04. Subsidiary Capitalization. Except as set forth in Schedule 3.04 all of the outstanding shares of capital stock of the England Corporation are beneficially owned by the Company, directly or indirectly, except for any directors' qualifying shares, and all such shares have been validly issued and are fully paid and nonassessable and are owned by either the Company or one of its Subsidiaries free and clear of all Liens. Except as set forth in Schedule 3.04, there are no voting trusts or other agreements or understandings to which the Company or any of its Subsidiaries is a party with respect 12 to the voting trusts or other agreements or understandings to which the Company or any of its Subsidiaries is a party with respect to the voting of the capital stock of the England Company. 3.05. SEC Reports and Financial Statements. Seller has filed with the Securities and Exchange Commission (the "SEC"), and has heretofore made available to Purchaser (directly or indirectly) true and complete copies of, all forms and documents required to be filed by Seller since January 1, 1994, under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or the Securities Act of 1933, as amended (the "Securities Act") (as such documents have been amended since the time of their filing, collectively, the "Company SEC Documents"). As of their respective dates (or, if amended, as of the date of the last such amendment), the Company SEC Documents, including any financial statements or schedules included therein (i) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading and (ii) complied in all material respects with the applicable requirements of the Exchange Act and the Securities Act, as the case may be, and the applicable rules and regulations of the SEC thereunder. The consolidated financial statements included in the Company SEC Documents (i) have been prepared from, and are in accordance with, the books and records of Seller and its consolidated Subsidiaries, (ii) have been prepared in accordance with United States generally accepted accounting principles ("GAAP") applied on a consistent basis during the periods involved (except as otherwise noted therein and except that the quarterly financial statements are subject to year end adjustments and do not contain all footnote disclosures required by GAAP), (iii) comply in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto, and (iv) fairly present in all material respects the consolidated financial position and the consolidated results of operations and cash flows of Seller and its consolidated Subsidiaries as at the dates thereof or for the periods presented therein. No Subsidiary of Seller is required to file any reports, forms, or other documents with the SEC. 3.06. Absence of Certain Changes. Except as disclosed in the Company SEC Documents filed prior to the date of this Agreement or as disclosed in Schedule 3.06, since December 31, 1996, Seller and its Subsidiaries have conducted their respective businesses and operations (including the Business) only in the ordinary course and consistent with past practice, and there have not occurred (i) any events or changes (including the incurrence of any liabilities of any nature, whether or not accrued, contingent, or otherwise) having or which would have a Material Adverse Effect on 13 Seller and its Subsidiaries, taken as a whole; (ii) except for the payment of regular quarterly cash dividends consistent with past practice, any declaration, setting aside, or payment of any dividend or other distribution (whether in cash, stock, or property) with respect to the equity interests of Seller or any of its Subsidiaries; or (iii) any change by Seller or any of its Subsidiaries in accounting principles or methods, except insofar as may be required by a change in GAAP. Except as disclosed in the Company SEC Documents filed prior to the date of this Agreement or in Schedule 3.06, since December 31, 1996, neither Seller nor any of its Subsidiaries has taken any of the actions prohibited by Section 5.1 of the Merger Agreement. For purposes of this Agreement, "knowledge of the Seller" shall mean the actual knowledge of the individuals specified in Schedule 3.06. 3.07. No Undisclosed Liabilities. Except as disclosed in the Company SEC Documents filed prior to the date of this Agreement or in Schedule 3.07 and except for liabilities and obligations incurred in the ordinary course of business and consistent with past practice since December 31, 1996, neither Seller nor any of its Subsidiaries have incurred any liabilities or obligations of any nature, whether or not accrued, contingent, or otherwise, that have, or would have, a Material Adverse Effect on Seller and its Subsidiaries, taken as a whole, or would be required to be reflected or reserved against in the consolidated financial statements of Seller and its Subsidiaries (including notes thereto) prepared in accordance with GAAP. 3.08. Employee Benefit Plans and ERISA. (a) ERISA and Plans. Schedule 3.08 contains a true and complete list of each bonus, deferred compensation, incentive compensation, stock purchase, stock option, severance or termination pay, hospitalization, or other medical, life, or other insurance, supplemental unemployment benefits, profit-sharing, pension, or retirement plan, program, or agreement and each other employee benefit plan within the meaning of Section 3(3) of ERISA, sponsored, maintained, or contributed to by Seller or by any trade or business, whether or not incorporated (an "ERISA Affiliate"), that together with Seller would be deemed a "single employer" within the meaning of section 4001 of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), for the benefit of any employee or former employee of Seller or any ERISA Affiliate (the "Plans"). Schedule 3.08 identifies each of the Plans that is an "employee benefit plan," as defined in section 3(3) of ERISA (the "ERISA Plans"). 14 (b) Plan Documents. With respect to each Plan, Seller has heretofore delivered or made available to Purchaser, true and complete copies of each of the following documents: (i) the Plan; (ii) the most recent annual report and actuarial report, if required under ERISA; (iii) the most recent Summary Plan Description (as defined in ERISA) required under ERISA with respect thereto; (iv) if the Plan is funded through a trust or any third party funding vehicle, the trust or other funding agreement and the latest financial statements thereof; and (v) the most recent determination letter received from the Internal Revenue Service with respect to each Plan intended to qualify under section 401(a) of the Code. (c) No Liabilities. No liability under Title IV of ERISA has been incurred by Seller or any ERISA Affiliate that has not been satisfied or otherwise discharged in full, and no condition exists that presents a material risk to Seller or any ERISA Affiliate of incurring a liability under such Title, other than liability for contributions due in the ordinary course and premiums due the Pension Benefit Guaranty Corporation ("PBGC") (which contributions and premiums have bene paid when due). (d) No Multiemployer Plans. No ERISA Plan is a "multiemployer pension plan," as defined in section 3(37) of ERISA, nor is any ERISA Plan a plan described in section 4063(a) of ERISA. (e) Qualifications. No ERISA Plan or any trust established thereunder has incurred any "accumulated funding deficiency" (as defined in section 302 of ERISA and section 412 of the Code), whether or not waived, as of the last day of the most recent fiscal year of each ERISA Plan ended prior to the Closing Date. No Lien imposed under the Code or ERISA exists or is likely to be imposed on account of any ERISA Plan. The form of each ERISA Plan intended to be "qualified" within the meaning of section 401(a) of the Code has been determined by the Internal Revenue 15 Service to be so qualified (or timely application has been made therefor); no event has occurred since the date of such determination that would adversely affect such qualification for which the cost of correction would have a Material Adverse Effect on Seller and its Subsidiaries taken as a whole; and each trust maintained thereunder has been determined by the Internal Revenue Service to be exempt from taxation under section 501(a) of the Internal Revenue Code of 1986, as amended (the "Code"). Each Plan has been operated and administered in accordance with its terms and applicable law, including but not limited to ERISA and the Code, except for such non-compliance that would not have a Material Adverse Effect on Seller and its Subsidiaries taken as a whole. (f) No Claims. There are no pending, threatened, or anticipated claims (other than routine claims for benefits) by, on behalf of, or against, any of the Plans or any trusts related thereto that if determined adversely to Seller and its Subsidiaries would have a Material Adverse Effect on Seller and its Subsidiaries taken as a whole. (g) No Proceedings. The PBGC has not instituted proceedings to terminate any of the ERISA Plans and no condition exists that presents a material risk that such proceedings will be instituted. (h) Deficiency. As of December 31, 1996, the present value of all actuarial accrued benefit liabilities under the Seller's defined benefit plans subject to Title IV of ERISA, as determined by the actuary of such plans using the actuarial assumptions and methods described in the actuarial valuation as of January 1, 1996, did not exceed the market value of the assets of such plans by more than $1,500,000. (i) Prohibited Transactions. Neither Seller, any ERISA Affiliate, any of the ERISA Plans, any trust created thereunder, nor any trustee or administrator thereof has engaged in a transaction or has taken or failed to take any action in connection with which Seller, any ERISA Affiliate, any of the ERISA Plans, any such trust, any trustee or administrator thereof, or any party dealing with the ERISA Plans or any such trust could be subject to either a civil penalty assessed pursuant to section 409 or 502(i) of ERISA or a tax imposed pursuant to section 4975, 4976, or 4980B of the Code that would have a Material Adverse Effect on Seller and its Subsidiaries taken as a whole. (j) Taxes. Except as disclosed in Schedule 3.08, no amounts payable under the Plans or any other agreement or arrangement to which Seller is a party will, 16 as a result of the Merger, fail to be deductible for federal income tax purposes by virtue of section 280G of the Code. (k) Benefits. Except as disclosed in Schedule 3.08, no ERISA Plan provides benefits, including without limitation death or medical benefits (whether or not insured), with respect to current or former employees after retirement or other termination of employment (other than (i) coverage mandated by applicable law, (ii) disability, death, or retirement benefits under any "employee pension plan," as that term is defined in section 3(2) of ERISA, (iii) deferred compensation benefits or severance benefits accrued as liabilities on the books of Seller or the ERISA Affiliates, (iv) severance pay, disability benefits, and benefit claims under ERISA Plans incurred on or prior to a termination of employment but not reported or paid until after such termination, or (v) benefits, the full cost of which is borne by the current or former employee (or his beneficiary)). 3.09. Litigation and Compliance with Law. (a) No Litigation. Except as disclosed in the Company SEC Documents filed prior to the date of this Agreement or in Schedule 3.09, there is no suit, claim, action, proceeding, or investigation pending or, to the knowledge of Seller, threatened, against or affecting Seller, or any of its Subsidiaries or any of their respective properties which, if determined adversely to Seller or such Subsidiaries, would have a Material Adverse Effect on Seller and its Subsidiaries taken as a whole or would prevent or delay Seller from consummating the Merger or the transactions contemplated by this Agreement. (b) Compliance. Except as disclosed in the Company SEC Documents filed prior to the date of this Agreement or in Schedule 3.09, Seller and its Subsidiaries are in compliance in all material respects with all laws, statutes, regulations, rules, ordinances, judgments, decrees, orders, writs, and injunctions, of any court or Governmental Entity relating to any of the property owned, leased, or used by them, or applicable to their business (including the Business), including employment and employment practices, labor relations, occupational safety and health, environmental, tax, interstate commerce, and antitrust laws, except for such non-compliance which would not have a Material Adverse Effect on Seller and its Subsidiaries taken as a whole. Except as set forth in the Company SEC Documents filed prior to the date of this Agreement, neither Seller nor any of its Subsidiaries nor any of their respective properties is subject to any judgment, decree, order, writ, or injunction having, or which would have, a Material Adverse Effect on Seller and its Subsidiaries 17 taken as a whole, or which would prevent or delay the consummation of the Merger or the transactions contemplated by this Agreement. (c) Permits. Seller and its Subsidiaries hold all licenses, permits, variances, and approvals of Governmental Entities necessary for the lawful conduct of their respective businesses (including the Business) as currently conducted except where the failure to hold such licenses, permits, variances, or approvals would not have a Material Adverse Effect on Seller and it Subsidiaries taken as a whole. 3.10. Rexene Intellectual Property. Except as disclosed in the Company SEC Documents filed prior to the date of this Agreement or in Schedule 3.10, to the knowledge of Seller, Seller and its Subsidiaries own or possess adequate licenses or other valid rights to use or operate within the scope of all United States and foreign patents, trademarks, trade names, copyrights, service marks, all applications therefor and registrations thereof, confidential or proprietary technical and business information, know-how and trade secrets, and computer software (collectively, "Rexene Intellectual Property") which are material to the operations of Seller and its Subsidiaries, taken as a whole, as currently conducted. Except as disclosed in the Company SEC Documents filed prior to the date of this Agreement or in Schedule 3.10, such Rexene Intellectual Property that is owned by Seller or its Subsidiaries is not subject to any Liens except for such Liens that would not have a Material Adverse Effect on Seller or its Subsidiaries, and, to the knowledge of Seller, there are no infringements or other violations or conflicts with the rights of others with respect to the (a) use of or other conduct by Seller or its Subsidiaries within the scope of, (b) ownership of, (c) validity of, or (d) enforceability of, any Rexene Intellectual Property owned by Seller or its Subsidiaries that has or would have a Material Adverse Effect on Seller and its Subsidiaries taken as a whole. 3.11. Seller Agreements. Each Seller Agreement that is material to the consolidated business and operations of Seller and its Subsidiaries as currently conducted or that is listed on Schedule 3.11 (collectively, the "Material Seller Agreements") is a valid, binding, and enforceable obligation of Seller or the Subsidiary of Seller that is a party thereto, except where the failure to be valid, binding, and enforceable would not have a Material Adverse Effect on Seller and its Subsidiaries taken as a whole, and there are no defaults thereunder on the part of Seller or its Subsidiary (which is a party thereto, as the case may be), or, to the knowledge of Seller, on the part of the other party thereto), except those defaults that would not have a Material Adverse Effect on Seller and its Subsidiaries taken as a whole. Except as disclosed in Schedule 3.11, neither Seller nor any of its Subsidiaries is a party to any 18 technology license agreement or sales agency or distributorship agreement that limits in any material manner the ability of Seller or any of its Subsidiaries to compete in or conduct any significant line of business or compete with any Person or in any geographic area or during any period of time exceeding one year from the date of the Merger Agreement. 3.12. Taxes. Except as set forth in Schedule 3.12: (a) Tax Returns. Seller and its Subsidiaries have (i) filed (or there have been filed on their behalf) with the appropriate Governmental Entity all material Tax Returns (as hereinafter defined) required to be filed by them and such Tax Returns are true, correct, and complete in all material respects, (ii) maintained in all material respects all required records with respect to all material Tax Returns, (iii) paid in full (or there has been paid on their behalf) all material Taxes (as hereinafter defined) that are due and payable for all taxable periods and portions thereof except to the extent of reserves established in accordance with GAAP on the consolidated financial statements included in the Company SEC Documents, and (iv) made provision, in accordance with GAAP, for all future material Tax liabilities (including reserves for deferred Taxes established in accordance with GAAP and for all contingent Tax liabilities) for all taxable periods and portions thereof. (b) Audits. No federal, state, local, or foreign audits or other administrative proceedings ("Audits") or court proceedings are presently pending with regard to any Taxes or Tax Returns of Seller or its Subsidiaries, and none of Seller or its Subsidiaries has received written notice of either the commencement of any such Audits or of the intention on the part of any Governmental Entity to commence any such Audits. (c) Deficiencies. No Governmental Entity has asserted in writing against Seller or any of its Subsidiaries any material deficiency for any Taxes which have not been satisfied in full or adequately reserved for in accordance with GAAP on the consolidated financial statements included in the Company SEC Documents. (d) Liens. There are no Liens for Taxes upon any property or assets of Seller or any of its Subsidiaries (except for current Taxes that are not yet due and payable). (e) Settlement. The income Tax Returns of or including Seller and each of its Subsidiaries have been examined by and settled with the appropriate 19 Governmental Entity (or the applicable statutes of limitation for the assessment of income Taxes for such periods have expired) for all periods through and including December 31, 1992. (f) Waivers. None of Seller or its Subsidiaries has waived any statute of limitation with respect to Taxes (which waiver is currently in effect) or has agreed to any extension of time with respect to a Tax assessment or deficiency (which has not yet been paid) or has extended the time to file any income or other material Tax Return (which Tax Return has not subsequently been filed). (g) Joint Taxes. None of Seller or its Subsidiaries is a party to any income tax allocation, tax indemnity, or tax sharing agreement or arrangement, nor has any of Seller or its Subsidiaries ever joined in the filing of a consolidated, combined, unitary, or other group Tax Return with any corporation other than Seller and its Subsidiaries. None of Seller or its Subsidiaries could have any liability for Taxes of any other corporation, person, or entity (other than Seller and its Subsidiaries) under Treasury Regulation section 1.1502-6 (or any similar provision of state, local, or foreign law), by contract or otherwise, that, individually or in the aggregate, would have a Material Adverse Effect on Seller and its Subsidiaries taken as a whole. (h) Compliance. Seller and its Subsidiaries have complied in all material respects with all applicable laws, rules, and regulations relating to the payment and withholding of Taxes and, except to the extent of any reserves established in accordance with GAAP on the consolidated financial statements included in the Company SEC Documents, have, within the time and manner prescribed by law, withheld and paid over to the proper Governmental Entity all amounts required to be withheld and paid over under all applicable laws. (i) U. S. Property. None of the Subsidiaries of Seller have an investment in "United States property" within the meaning of section 956 of the Code. (j) Definitions. (i) For purposes of this Section 3.12 the term "Subsidiaries" shall include any entity in which Seller or a Subsidiary of Seller is a general partner. (ii) For purposes of this Agreement: (x) "Taxes" shall mean any and all taxes, charges, fees, levies, or other assessments, including all net income, gross income, gross receipts, excise, stamp, real or personal property, ad valorem, withholding, estimated, social security, unemployment, occupation, use, service, service use, license, net worth, payroll, franchise, severance, transfer, recording, or other taxes, assessments, or charges imposed by any Governmental Entity and any interest, 20 penalties, or additions to tax attributable thereto; and (y) "Tax Return" shall mean any return, report, or similar statement required to be filed with respect to any Tax (including any attached schedules), including any information return, claim for refund, amended return, or declaration of estimated Tax. 3.13. Environmental Matters. (a) Compliance. Except as disclosed in the Company SEC Documents filed prior to the date of this Agreement or as disclosed in Schedule 3.13, Seller and its Subsidiaries are and have been in compliance in all material respects with all applicable Environmental Laws (as hereinafter defined) which compliance includes (i) the possession of material permits, licenses, registrations, and other governmental authorizations and financial assurances required under applicable Environmental Laws for Seller and its Subsidiaries to operate their businesses (including the Business) as currently conducted, and (ii) compliance with the terms and conditions thereof, except in all cases above where such noncompliance would not have a Material Adverse Effect on Seller and its Subsidiaries taken as a whole. (b) Claims. Except as disclosed in the Company SEC Documents filed prior to the date of this Agreement or as disclosed in Schedule 3.13, (i) there are no Environmental Claims (as hereinafter defined) pending or, to the knowledge of Seller, threatened, against Seller or its Subsidiaries that would result in a Material Adverse Effect on Seller and its Subsidiaries taken as a whole, (ii) neither Seller nor its Subsidiaries has received any written request for information under any Environmental Law from any Governmental Entity with respect to any actual or alleged environmental contamination which has not been remediated or otherwise resolved and the remediation of which contamination or the resolution of the request would have a Material Adverse Effect on Seller and its Subsidiaries taken as a whole; and (iii) none of Seller, its Subsidiaries, or, to the knowledge of Seller, any Governmental Entity, is conducting or has conducted (or, to the knowledge of Seller, is threatening to conduct) any environmental remediation or investigation which would result in a Material Adverse Effect on Seller and its Subsidiaries, taken as a whole, under any Environmental Law. (c) Other Substances. Except as disclosed in the Company SEC Documents filed prior to the date of this Agreement or as disclosed in Schedule 3.13, (i) to the knowledge of Seller, there is no friable asbestos-containing material in or on any real property currently owned, leased, or operated by Seller or its Subsidiaries, (ii) there are no polychlorinated diphenyls in any equipment currently owned, leased, or operated by Seller or any of its Subsidiaries as a manufacturing facility, and (iii) there 21 are and, to the knowledge of Seller, have been no underground storage tanks (whether or not required to be registered under any applicable law), dumps, landfills, lagoons, surface impoundments, injection wells, or other land disposal units in or on any property currently or, to the knowledge of Seller, formerly owned, leased, or operated by Seller or its Subsidiaries where in each case, the presence, ownership, or operation of which would result in a Material Adverse Effect on Seller and its Subsidiaries, taken as a whole. (d) No Releases. Except as disclosed in the Company SEC Documents filed prior to the date of this Agreement or as disclosed in Schedule 3.13, to the knowledge of Seller, there have been no Releases (as hereinafter defined) of Hazardous Substances (as hereinafter defined) at any of Seller's or its Subsidiaries' properties or of Hazardous Substances which were generated, stored, disposed of, or transported by Seller, which could form the basis of any Environmental Claim against Seller, or to the knowledge of Seller, against any person or entity whose liability for any Releases Seller has or may have retained or assumed either contractually or by operation of law, which would have a Material Adverse Effect on Seller and its Subsidiaries taken as a whole. (e) Definitions. As used in this Agreement: (i) The term "Environmental Claim" means any claim, action, investigation, or written notice to Seller or its Subsidiaries by any person or entity alleging potential liability or responsibility of Seller or any of its Subsidiaries (including potential liability for investigatory costs, cleanup costs, governmental response costs, natural resource damages, personal injuries, or penalties) arising out of, based on, or resulting from (A) the presence, or release into the environment, of any Hazardous Substance (as hereinafter defined) at any location, whether or not owned or operated by Seller or its Subsidiaries or (B) circumstances forming the basis of any violation or alleged violation of any applicable Environmental Law. (ii) The term "Environmental Laws" means all federal, state, local, and foreign laws, rules, regulations, common law, ordinances, decrees, orders, and other binding legal requirements, as in effect as of the date of the Merger Agreement, relating to pollution or protection of the environment, including laws and regulations relating to emissions, discharges, releases, or threatened releases of Hazardous Substances, or otherwise relating to the 22 manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of Hazardous Substances. (iii) The term "Hazardous Substance" means any chemicals, pollutants, contaminants, hazardous wastes, toxic substances, or radioactive materials regulated under any Environmental Law, and oil and petroleum products. (iv) The term "Release" means any release, spill, emission, discharge, leaking, pumping, injection, deposit, disposal, dispersal, leaching, or migration into the indoor or outdoor environment (including ambient air, surface water, groundwater, and surface or subsurface strata). 3.14. No Default. Except as disclosed in the Company SEC Documents filed prior to the date of this Agreement or as disclosed in Schedule 3.14, the business (including the Business) of Seller and each of its Subsidiaries is not being conducted in default or violation of any term, condition, or provision of (a) its respective certificate of incorporation or bylaws or similar organizational documents, (b) any Material Seller Agreement, or (c) any federal, state, local, or foreign law, statute, regulation, rule, ordinance, judgment, decree, writ, injunction, franchise, permit, or license or other governmental authorization or approval applicable to Seller or any of its Subsidiaries, excluding from the foregoing clauses (b) or (c), defaults or violations that would not have a Material Adverse Effect on Seller and its Subsidiaries taken as a whole or would not materially impair the ability of (i) Seller to consummate the Merger or (ii) Seller to consummate the transactions contemplated by this Agreement. 3.15. Brokers. Except for Schroder Wretheim and Smith Barney (true and complete copies of whose engagement letters have been provided to Purchaser, directly or indirectly, no broker, finder, or investment banker is entitled to any brokerage, finder's, or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Seller. 3.16. Property. Seller and its Subsidiaries, as the case may be, have good and valid title to or, in the case of leased property, have valid leasehold interests in all properties and assets necessary to conduct the business (including the Business) of Seller as currently conducted, except to the extent the failure of this representation and warranty to be true would not have a Material Adverse Effect on Seller and its Subsidiaries, taken as a whole. 23 3.17. Labor Matters. Except as disclosed in the Company SEC Documents filed prior to the date of this Agreement, neither Seller nor any of its Subsidiaries is a party to or bound by any collective bargaining agreement or other labor union contract applicable to persons employed by Seller or its Subsidiaries nor, to the knowledge of Seller, as of the date of this Agreement, are there any activities or proceedings of any labor union to organize any such employees. Except as disclosed in the Company SEC Documents filed prior to the date of this Agreement or as disclosed in Schedule 3.17, as of the date of this Agreement, (i) there are no unfair labor practice charges or complaints pending against Seller or any of its Subsidiaries before the National Labor Relations Board or any current union representation questions involving employees of Seller or any of its Subsidiaries and (ii) there is no labor strike, lockout, organized slowdown, or organized work stoppage in effect or, to the knowledge of Seller, threatened against Seller or any of its Subsidiaries, which, in either such case, has had or would have, a Material Adverse Effect on Seller and its Subsidiaries taken as a whole. 4. REPRESENTATIONS AND WARRANTIES OF PURCHASER Purchaser hereby represents and warrants, as of the date hereof and as of the Closing Date, to Seller as follows: 4.01. Organization. Purchaser is a corporation duly organized, validly existing, and in good standing under the laws of Utah. Purchaser has all requisite corporate power and authority to own, lease, and operate its properties and to carry on its business as now being conducted except where the failure to have such power or authority would not have a Material Adverse Effect on Purchaser, taken as a whole, or materially impair or delay the consummation of the transactions contemplated by this Agreement. 4.02. Authorization and Validity of Agreement. Purchaser has the requisite corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery by Purchaser of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by its Board of Directors and no other corporate proceedings on the part of Purchaser are necessary to authorize the execution and delivery of this Agreement by Purchaser and the consummation of the transactions contemplated hereby. This Agreement has been duly executed and delivered by Purchaser. Assuming due authorization, execution, and delivery of this Agreement by Seller, this Agreement is a valid and binding obligation of Purchaser, enforceable against Purchaser in accordance with its terms, except that such enforcement may be subject to or limited by (i) bankruptcy, insolvency, or other similar laws, now or hereafter in effect, affecting 24 creditors' rights generally, and (ii) the effect of general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity). 4.03. No Violations; Consents and Approvals. Except as disclosed in Schedule 4.03, no filing with, and no permit, authorization, consent, or approval of, any Governmental Entity is necessary for the consummation by Purchaser of the transactions contemplated by this Agreement. Neither the execution and delivery of this Agreement by Purchaser nor the consummation by Purchaser of the transactions contemplated hereby nor compliance by Purchaser with any of the provisions hereof will (a) conflict with or violate any provision of the Articles of Incorporation or Bylaws of Purchaser, or (b) violate any order, writ, injunction, decree, statute, rule, or regulation applicable to Purchaser or any of its properties or assets, except in the case of clause (b) where such violations would not have a Material Adverse Effect on Purchaser, taken as a whole. 5. COVENANTS 5.01. Plicon Collection. Seller covenants and agrees that, after the Closing Date, it will (a) use reasonable efforts to collect from Plicon Corporation, RP Packaging, and/or any of its or their Subsidiaries or Affiliates (collectively, the "Plicon Group") any indebtedness or other amount owed as of the Closing Date by any member of the Plicon Group to Seller, and (b) remit promptly to Purchaser all sums collected by Seller after the Closing Date with respect to such indebtedness and other obligations (less any expenses and other obligations or liabilities incurred by Seller in connection with such collection). 5.02. Access to Information. (a) Access. From the date of this Agreement until the Closing Date, Seller shall afford to Purchaser and the Purchaser's officers, directors, employees, representatives, and agents (including investment bankers, attorneys, and accountants) (collectively, "Representatives") reasonable access (during normal business hours) to all of Seller's, and Seller's Subsidiaries', books, records, files, documents, and Company Agreements relating to the Business and, during such period, Seller and each of Seller's Subsidiaries shall furnish promptly to Purchaser such other information including copies of books, records, files, documents, and Seller Agreements, concerning the Business and all related properties and personnel as Purchaser may request; provided, that Purchaser and Purchaser's Representatives will conduct all such inspections in a reasonable manner. Seller and Seller' Subsidiaries shall provide Purchaser and Purchaser's Representatives with reasonable access during normal business hours to Seller's officers 25 and senior operating personnel (collectively, the "Business Executives") and such Business Executives shall reasonably cooperate with Purchaser and Purchaser's Representatives and provide Purchaser and Purchaser's Representatives with such information regarding the Business, the Acquired Assets, and the Assumed Liabilities as may be reasonably requested. Seller shall in addition use its reasonable efforts to provide Purchaser and Purchaser's Representatives with access to the Representatives, commercial bankers, actuaries, trustees, outside Plan administrators, and consultants of Seller and Seller's Subsidiaries and to use its best efforts to cause such Representatives, commercial bankers, actuaries, trustees, outside Plan administrators and consultants to provide Purchaser and Purchaser's Representatives with such information regarding the Business, the Acquired Assets, and the Assumed Liabilities as may be reasonably requested. (b) Seller Confidentiality. For a period of three years after the Closing Date, Seller shall keep confidential, and cause its Affiliates and its and their respective Representatives to keep confidential, all information relating to the Business, except as required by law or administrative process and except for information that is available to the public on the Closing Date, or thereafter becomes available to the public other than as a result of a breach of this Section 5.02(b). 5.03. Further Action; Reasonable Best Efforts. (a) Pre-Closing Action. Upon the terms and subject to the conditions herein provided, each of the parties hereto agrees to use its reasonable best efforts to take, or cause to be taken, all action and to do, or cause to be done, all things necessary under applicable laws and regulations to consummate and make effective the transactions contemplated by this Agreement, including (i) to comply promptly with all legal requirements which may be imposed on it with respect to this Agreement and the transactions contemplated hereby (which actions shall include furnishing all information required by applicable law in connection with approvals of or filings with any Governmental Entity), (ii) to satisfy the conditions precedent to the obligations of such party hereto, (iii) to obtain any consent, authorization, order, or approval of, or any exemption by, any Governmental Entity or other public or private third party required to be obtained or made by Seller, Purchaser, or any of their respective Subsidiaries in connection with the Acquisition or the taking of any action contemplated by this Agreement, (iv) to effect all necessary registrations and filings, and (v) to take any action reasonably necessary to vigorously defend, lift, mitigate, or rescind the effect of any litigation or administrative proceeding adversely affecting the Acquisition or this Agreement, including promptly appealing any adverse court or administrative decision. 26 (b) Information. Subject to appropriate confidentiality protections, each of the parties hereto will furnish to the other parties such necessary information and reasonable assistance as such other parties may reasonably request in connection with the foregoing and will provide the other parties with copies of all filings made by such party with any Governmental Entity and, upon request, any other information supplied by such party to a Governmental Entity in connection with this Agreement and the transactions contemplated hereby. Upon the terms and subject to the conditions herein provided, in case at any time after the Closing Date any further action is necessary or desirable to carry out the purposes of this Agreement, the proper officers and/or directors of the parties shall use their reasonable best efforts to take or cause to be taken all such necessary action. 5.04. Post-Closing Cooperation. (a) Transition. Purchaser and Seller shall cooperate with each other, and shall cause their respective Representatives to cooperate with each other, after the Closing to ensure the orderly transition of the Business from Seller to Purchaser and to minimize any disruption to the Business and the other respective businesses of Seller and Purchaser that might result from the transactions contemplated hereby. After the Closing, upon reasonable written notice, Purchaser and Seller shall furnish or cause to be furnished to each other and their respective Representatives access, during normal business hours, to such information and assistance relating to the Business (to the extent within the control of such party) as is reasonably necessary for financial reporting and accounting and other matters, including defense of claims, disputes, or litigation. (b) Information and Assistance. After the Closing, upon reasonable written notice, Purchaser and Seller shall furnish or cause to be furnished to each other, as promptly as practicable, such information and assistance (to the extent within the control of such party) relating to the Business or Acquired Assets (including access to books and records) as is reasonably necessary for the filing of all Tax returns, and making of any election related to Taxes, the preparation for any Audit by any Governmental Entity, and the prosecution or defense of any claim, suit, or proceeding related to any Tax Return. Seller and Purchaser shall cooperate with each other in the conduct of any Audit or other proceeding relating to Taxes involving the Business. Purchaser shall retain the books and records of Seller included in the Acquired Assets for a period of seven years after the Closing. After the end of such seven-year period, before disposing of such books or records, Purchaser shall give notice to such effect to Seller and give Seller, at Seller's cost and expense, an opportunity to remove and retain all or any part of such books or records as Seller may select. 27 (c) Copies. After the Closing Date, (i) Purchaser shall promptly provide to Seller copies of any of the Records included in the Acquired Assets requested from time to time by Seller, and (ii) Seller shall promptly provide to Purchaser copies of any books of account, ledgers, general, financial, accounting, and personnel records, files, invoices, customers' and suppliers' lists, other distribution lists, billing records, sales and promotional literature, manuals, and customer and supplier correspondence that (A) prior to the Closing Date was used, held for use, or intended to be used in, or arose out of, the conduct or operation of the Business, but (B) is not part of the Records included in the Acquired Assets (including financial and tax records relating to the Business that are part of Seller's general ledger). 5.05. Employee Benefits. (a) Employment Matters. Except with respect to those individuals listed as "Excluded Employees" in Schedule 5.05(a), Purchaser shall offer (i) to all represented and non-represented employees of Seller that are engaged primarily in the operation or conduct of the Business as of the Closing Date (including any employee on vacation, disability, leave of absence, or layoff, as of the Closing Date) and (ii) to those individuals listed as "Additional Employees" on Schedule 5.05(a), employment from the Closing Date at substantially the same salary, wage, or hourly rate (as applicable), and with other applicable benefits as provided in this Agreement. "Company Employees" means all non-bargaining unit employees of Seller engaged in the operation or conduct of the Business as of the Closing Date who accept the offer of Purchaser pursuant to this Section 5.05(a) and become employees of Purchaser as of the Closing Date. Except as provided in Section 5.05(b) below, from and after the Closing Date, Purchaser shall provide on an uninterrupted basis employee benefits (including, if applicable, group medical and dental, life insurance, defined contribution retirement plan, short- and long-term disability, severance, vacation, and sick pay) for Company Employees which are, in the aggregate for each such employee, no less favorable than the employee benefits provided to similarly situated employees of Purchaser. (b) Pension Plans. The following provisions shall be applicable with regard to pension plans: (i) Effective as of the close of business on December 31, 1997, all Company Employees who are participating in the defined benefit plan or plans maintained by Seller as of such date (collectively, the "Seller Defined Benefit Plan") shall cease to accrue benefits in the Seller Defined Benefit Plan. 28 (ii) As soon as practicable after December 31, 1997, and effective as of January 1, 1998, Buyer shall provide under the tax-qualified defined benefit plan of Buyer (the "Buyer Defined Benefit Plan") each Company Employee with service credit for eligibility and vesting purposes (including eligibility for early or normal retirement) equal to the service credit to the Company Employees as of December 31, 1997, under the Seller Defined Benefit Plan and any defined benefit plans maintained by an affiliate of Seller. The accrued benefit with respect to each Company Employee under the Buyer Defined Benefit Plan shall be the sum of (1) and (2), as follows: (1) The accrued benefit of the Company Employee under the Seller Defined Pension Plan as of the close of business on December 31, 1997, but determined by recognizing compensation earned by such Company Employee for the Buyer and its Affiliates after December 31, 1997, minus the accrued benefit of the Company Employee under the Seller Defined Benefit Pension Plan as of December 31, 1997; and (2) The accrued benefit of the Company Employee under the Buyer Defined Benefit, recognizing only service with Buyer after December 31, 1997. (c) Past Service Credit. Except as provided in Section 5.05(b), after the Closing Date all service with Seller and its Subsidiaries shall be counted as service with Purchaser for all purposes, including eligibility to participate, vesting, and determining the amount of a benefit, but without duplication of benefits, under the employee benefit plans and compensation practices (including, if applicable, group medical and dental, life insurance, defined contribution retirement plan, short- and long-term disability, severance, vacation, and sick pay) covering or otherwise benefitting such employees on and after the Closing Date. Purchaser hereby agrees to take such action as may be necessary or appropriate under all employee benefit plans and compensation practices covering or otherwise benefiting Company Employees after the Closing Date to provide for such past service credit. (d) Co-payments and Deductibles. Each Company Employee shall be given credit for any deductible or co-payment amounts paid under Plans maintained by Seller or its Subsidiaries in respect of the Plan year in which the Closing Date occurs, to the extent that, following the Closing Date, they participate in comparable plans maintained by Purchaser for which deductibles or co-payments are required. Purchaser 29 shall also cause each of its Plans to waive any preexisting condition requirement to the extent waived under the terms of any Plan maintained by Seller or its Subsidiaries immediately prior to the Closing Date. (e) Labor Agreements. To the extent required by applicable law or the terms of any contract or agreement disclosed in Schedule 3.17 of the Disclosure Schedule, Purchaser shall honor all labor or collective bargaining agreements pertaining to employees of Seller or any of its Subsidiaries that are primarily engaged in the operation or conduct of the Business as of the Closing Date. (f) Non-Qualified Retirement Plans. Purchaser hereby agrees to honor all liabilities to Company Employees and their beneficiaries arising under all nonqualified, unfunded, deferred compensation programs of Seller or its Subsidiaries listed on Schedule 5.05(f), including the Rexene Corp. Supplemental Executive Retirement Plan (the "Rexene SERP") (g) Retiree Benefits. Purchaser hereby agrees to provide retiree (including early retiree) medical benefits to individuals who have been employed by Seller in the operation or conduct of the Business and who were or would become eligible for such benefits under Seller's retiree medical plans as of the Effective Time (as hereinafter defined) if they terminated their employment on or before the Effective Time and who terminate or had terminated their employment on or before two business days following the Effective Time comparable to the retiree medical benefits provided to similarly situated employees of Seller or, at Purchaser's option, similarly situated employees of Purchaser. "Effective Time" shall have the meaning ascribed thereto in the Merger Agreement. (h) Vacation. Purchaser agrees to provide all vacation entitlement to Company Employees for the 1997 calendar year as determined under the Seller's vacation pay policies in effect as of the Effective Time. (i) Severance Pay. Purchaser hereby agrees to assume and perform the letter agreements described in Schedule 5.05(i). In the event any Company Employee is terminated by Purchaser without cause within one year following the Effective Time, Purchaser shall provide severance pay to such employee which is not less than the amount such employee would have received under the severance pay plans and practices of Seller and its Subsidiaries in effect immediately prior to the Effective Time. 30 (j) COBRA. After the Closing Date, Purchaser agrees to provide continuation coverage for purposes of Part 6 of Title I of ERISA to former nonbargaining unit employees of Seller (who were engaged primarily in the operation or conduct of the Business) and their eligible dependents comparable to the benefits, as from time to time in effect, provided to similarly situated employees of Seller. 5.06. Notification of Certain Matters. Seller shall give prompt notice to Purchaser, and Purchaser shall give prompt notice to the Seller, of (a) the occurrence or non-occurrence of any event the occurrence or non-occurrence of which would cause any representation or warranty contained in this Agreement to be untrue or inaccurate in any material respect, (b) any material failure of the Seller or Purchaser, as the case may be, to comply with or satisfy any covenant, condition, or agreement to be complied with or satisfied by it hereunder, and (c) the commencement or, to the best of their knowledge, the threat, of any action, suit, claim, investigation, or proceeding which relates to this Agreement or the transactions contemplated hereby; provided, however, that the delivery of any notice pursuant to this Section 5.06 shall not limit or otherwise affect the remedies available hereunder to the party receiving such notice. 5.07. Expenses. Except as set forth in Section 8, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such expenses. All fees and expenses payable to Schroder Wertheim or Smith Barney in connection with the Acquisition or any other transactions under this Agreement shall be paid by Seller. 5.08. Waiver of Compliance with Bulk Sales Laws. Seller and Purchaser agree that Purchaser will not notify any creditors of Seller pursuant to any provisions of any laws relating to "bulk sales" and transfers applicable to the transactions contemplated hereby. Seller agrees to indemnify Purchaser and hold it harmless against any and all claims, losses, damages, liabilities, costs, and expenses incurred by Purchaser as a result of any failure to comply with any "bulk sales" or similar laws, unless such claim is based on a liability assumed by Purchaser hereunder. 5.09. Transfer, Sales, and Use Taxes. Seller and Purchaser each shall be responsible for and shall pay one-half of (a) all transfer, recording, real estate excise, and other similar Taxes and fees ("Transfer Taxes"), arising out of or in connection with the transactions contemplated by this Agreement and (b) all applicable sales and use Taxes ("Sales and Use Taxes"). The party which has the primary responsibility under applicable law for the payment of any particular Transfer Taxes or Sales and Use Taxes ("Payor") shall prepare and file the relevant Tax Return, pay the Transfer Taxes or Sales 31 and Use Taxes shown on such Tax Return, and notify the other party ("Other Party") in writing of the Transfer Taxes or Sales and Use Taxes shown on such Tax Return and how such Transfer Taxes or Sales and Use Taxes were calculated, and the Other Party shall reimburse the Payor for one-half of the amount of such Transfer Taxes or Sales and Use Taxes in immediately available funds within ten (10) days of receipt of such notice. 5.10. Purchase Price Allocation. Prior to the Closing, Purchaser and Seller shall agree to an allocation of the Purchase Price among the Acquired Assets (the "Allocation"), a copy of which Allocation shall be attached to this Agreement as Schedule 5.10. Seller and Purchaser shall be bound by and act in accordance with the Allocation in the preparation and filing of all Tax returns (including filing Form 8594 with the relevant Federal income Tax Return for the taxable year that includes the Closing Date) and in any proceeding before any Governmental Entity pertaining to Taxes. Except as may otherwise be required by a determination (as defined in Section 1313 of the Code), Seller and Purchaser shall take no position inconsistent with the Allocation for Tax purposes. Each of Seller and Purchaser shall provide the other a copy of its Form 8594 not later than 30 days prior to filing. In the event that the Allocation is disputed by a Governmental Entity, the party receiving notice of the dispute shall promptly notify the other party concerning the nature of the dispute. 5.11. WARN Compliance. Seller shall not, at any time following the execution of this Agreement, effectuate (i) a "plant closing" (as defined in the Worker Adjustment Retraining Notification Act of 1988 ("WARN")) affecting any site of employment or one or more facilities or operating units within any site of employment or facility of Seller affected by this Agreement, or (ii) a "mass layoff" (as defined in WARN) affecting any site of employment or facility of Seller affected by this Agreement, or (iii) layoffs or employment terminations sufficient in number to trigger application of any similar state or local law. At the Closing, Seller shall provide Purchaser with a schedule of all employees of Seller that were engaged primarily in the operation or conduct of the Business as of the Effective Date who (i) have suffered an "employment loss" (as defined in WARN), (ii) suffered a layoff, or (iii) otherwise suffered a reduction in hours in the period between execution of this Agreement and the Closing Date. 6. CONDITIONS 6.01. Conditions to Each Party's Obligation. The obligation of Purchaser to purchase the Acquired Assets from Seller, and the obligation of Seller to sell the 32 Acquired Assets to Buyer, is subject to the satisfaction (or waiver by Seller and Purchaser) on or prior to the Closing date of the following conditions: (a) Governmental Approvals. All authorizations, consents, orders, or approvals of, or declarations or filings with, or expirations of waiting periods imposed by, any Governmental Entity necessary for the consummation of the Acquisition shall have been obtained or filed or shall have occurred. (b) No Injunctions or Restraints. No applicable law or injunction enacted, entered, promulgated, enforced, or issued by any Governmental Entity or other legal restraint or prohibition preventing the consummation of the Acquisition shall be in effect. (c) Fairness Opinion. Purchaser and Seller each shall have received an opinion from a nationally recognized investment banking firm or other Person satisfactory to both Purchaser and Seller to the effect that, as of the date hereof, the terms and conditions of the Acquisition as set forth in this Agreement are fair to each of Purchaser and Seller, from a financial point of view. 6.02. Conditions to Obligation of Purchaser. The obligation of Purchaser to purchase and pay for the Acquired Assets is subject to the satisfaction (or waiver by Purchaser) on or prior to the Closing Date of the following conditions: (a) Representations and Warranties. The representations and warranties of Seller contained in this Agreement qualified as to materiality shall be true and correct, and those not so qualified shall be true and correct in all material respects, as of the date hereof and as of the time of the Closing as though made as of such time, except to the extent such representations and warranties expressly relate to an earlier date or a single date (in which case such representations and warranties qualified as to materiality shall be true and correct, and those not so qualified shall be true and correct in all material respects, on and as of such earlier date or such single date), and Purchaser shall have received a certificate signed by an appropriate officer of Seller to such effect. (b) Performance of Obligations of Seller. Seller shall have performed or complied in all material respects with all obligations and covenants required by this Agreement to be performed or complied with by Seller by the time of the Closing, and Purchaser shall have received a certificate signed by an appropriate officer of Seller to such effect. 33 (c) Absence of Proceedings. There shall not be pending or threatened by any Governmental Entity any proceeding (or by an other person any proceeding that has a reasonable likelihood of success) (i) challenging or seeking to restrain or prohibit the Acquisition or any other transaction contemplated by this Agreement or seeking to obtain from Purchaser or any of its Affiliates in connection with the Acquisition any damages that are material in relation to Purchaser, (ii) seeking to prohibit or limit the ownership or operation by Purchaser or any of its Affiliates of any material portion of the business or assets of Purchaser (including the Business), or any of its Affiliates, or to compel Purchaser, or any of its Affiliates, to dispose of or hold separate any material portion of the business or assets of Purchaser (including the Business) or any of its Affiliates, in each case as a result of the Acquisition or any of the other transactions contemplated by this Agreement, (iii) seeking to impose limitations on the ability of Purchaser to acquire or hold, or exercise full rights of ownership of, the Acquired Assets, or (iv) seeking to prohibit Purchaser or any of its Affiliates from effectively controlling in any material respect the Business. (d) Financing. Purchaser shall have obtained third party financing necessary to consummate the Acquisition and to pay all related fees and expenses, on terms satisfactory to Purchaser. (e) Consents. Purchaser shall have received written consents from all third parties necessary or appropriate to effect the Acquisition, other than such consents the absence of which, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect on the Business or the Acquired Assets following the Closing. (f) Clearfield Lease Consent. Without limiting the generality of Section 6.02(e), Seller shall have received written consent (in form and substance satisfactory to Purchaser) from the landlord or landlords, as the case may be, under the real property lease or leases relating to the Clearfield Facility, consenting to the assignment of such lease or leases by Seller (as tenant) to Purchaser as contemplated in this Agreement. (g) Due Diligence. Purchaser shall have completed its due diligence examination of the Business, the Acquired Assets, the Assumed Liabilities, and all other matters relating to the Business and the results of such examination shall be satisfactory in all respects to Purchaser. 34 6.03. Conditions to Obligation of Seller. The obligation of Seller to sell, assign, convey, and deliver the Acquired Assets is subject to the satisfaction (or wavier by Seller) on or prior to the Closing Date of the following conditions: (a) Representations and Warranties. The representations and warranties of Purchaser contained in this Agreement qualified as to materiality shall be true and correct, and those not so qualified shall be true and correct in all material respects, as of the date hereof and as of the time of the Closing as though made as of such time, except to the extent such representations and warranties expressly relate to an earlier date or a single date (in which case such representations and warranties qualified as to materiality shall be true and correct, and those not so qualified shall be true and correct in all material respects, on and as of such earlier date or such single date), and Seller shall have received a certificate signed by an authorized officer of Purchaser to such effect. (b) Performance of Obligations of Purchaser. Purchaser shall have performed or complied in all material respects with all obligations and covenants required by this Agreement to be performed or complied with by Purchaser by the time of the Closing, and Seller shall have received a certificate signed by an appropriate officer of Purchaser to such effect. (c) Absence of Proceedings. No court or governmental authority of competent jurisdiction shall have issued an order (which shall not subsequently have been vacated), restraining, enjoining, or otherwise prohibiting the consummation of the Acquisition or any other transaction contemplated by this Agreement, and no action or proceeding shall have been instituted (which has a reasonable likelihood of success and which shall not have been subsequently dismissed), seeking to restrain, enjoin, or prohibit the consummation of the Acquisition or any other transaction contemplated by this Agreement or seeking damages in respect thereof. 7. TERMINATION OF AGREEMENT 7.01. Termination. (a) Termination Events. Notwithstanding anything to the contrary contained in this Agreement, this Agreement may be terminated and the Acquisition and the other transactions contemplated by this Agreement abandoned at any time prior to the Closing: 35 (i) by mutual written consent of Seller and Purchaser; (ii) by Seller if any of the conditions set forth in Sections 6.01 or 6.03 shall have become incapable of fulfillment, and shall not have been waived by Seller; (iii) by Purchaser if any of the conditions set forth in Section 6.01 or 6.02 shall have become incapable of fulfillment, and shall not have been waived by Purchaser; or (iv) by Seller or Purchaser, if the Closing does not occur on or prior to December 31, 1997; provided, however, that the party seeking termination pursuant to clause (ii), (iii), or (iv) is not then in breach in any material respect of any of its representations, warranties, covenants, or agreements contained in this Agreement. (b) Notice. In the event of termination by Seller or Purchaser pursuant to this Section 7.01, written notice thereof shall forthwith be given to the other party and the transactions contemplated by this Agreement shall be terminated, without further action by any party. 7.02. Effect of Termination. If this Agreement is terminated and the transactions contemplated hereby are abandoned as described in Section 7.01, this Agreement shall become null and void and of no further force and effect, except for the provisions of (a) Section 5.07 relating to certain expenses, and (b) Section 7.01 and this Section 7.02. Nothing in this Section 7.02 shall be deemed to release any party from any liability for any breach by such party of the terms and provisions of this Agreement or to impair the right of any party to compel specific performance by any other party of its obligations under this Agreement. 8. INDEMNIFICATION 8.01. Indemnification by Seller. Seller shall indemnify Purchaser, its affiliates, and each of their respective officers, directors, employees, stockholders, agents, and representatives against, and hold them harmless from, any loss, liability, claim, damage, or expense (including reasonable legal fees and expenses) (collectively, "Losses"), as incurred (payable promptly upon written request), arising from, in connection with, or otherwise with respect to: (a) any breach of any covenant of Seller contained in this 36 Agreement, (b) any Excluded Liability, (c) the failure to comply with statutory provisions relating to bulk sales and transfers, if applicable, and (d) any fees, expenses, or other payments incurred or owed by Seller to any brokers, financial advisors, or other comparable persons retained or employed by it in connection with the transactions contemplated by this Agreement. 8.02. Indemnification by Purchaser. Purchaser shall indemnify Seller, its affiliates, and each of their respective officers, directors, employees, shareholders, agents, and representatives against, and hold them harmless from, any Loss, as incurred (payable promptly upon written request), for or on account of or arising from or in connection with or otherwise with respect 37 to: (a) any breach of any covenant of Purchaser contained in this Agreement, (b) any Assumed Liability, (c) all obligations, liabilities, and commitments arising out of the operation or conduct of the Business by Purchaser after the Closing Date, or (d) any fees, expenses, or other payments incurred or owed by Purchaser to any brokers, financial advisors, or other comparable persons retained or employed by it in connection with the transactions contemplated by this Agreement. 8.03. Calculation of Losses. The amount of any Loss for which indemnification is provided under this Section 8 shall be net of any amounts actually recovered by the indemnified party under insurance policies with respect to such Loss and shall be (a) increased to take account of any net Tax cost incurred by the indemnified party arising from the receipt of indemnity payments hereunder (grossed up for such increase) and (b) reduced to take account of any net Tax benefit realized by the indemnified party arising from the incurrence or payment of any such Loss. In computing the amount of any such Tax cost or Tax benefit, the indemnified party shall be deemed to recognize all other items of income, gain, loss, deduction, or credit before recognizing any item arising from the receipt of any indemnity payment hereunder or the incurrence or payment of any indemnified Loss. 8.04. Termination of Indemnification. Except as otherwise provided in Section 9.06 with respect to representations and warranties, the obligations to indemnify and hold harmless any party pursuant to this Section 8 shall survive the Closing and shall not terminate. 8.05. Procedures. (a) In order for a party (the "indemnified party"), to be entitled to any indemnification provided for under this Agreement in respect of, arising out of, or involving a claim made by any person against the indemnified party (a "Third-Party Claim"), such indemnified party must notify the indemnifying party in writing of the Third-Party Claim promptly following receipt by such indemnified party of written notice of the Third-Party Claim; provided, however, that failure to give such notification shall not affect the indemnification provided hereunder except to the extent the indemnifying party shall have been prejudiced as a result of such failure (except that the indemnifying party shall in no event be liable for any expenses incurred during the period in which the indemnified party failed to give such notice). Thereafter, the indemnified party shall deliver to the indemnifying party, promptly following the indemnified party's receipt thereof, copies of all notices and documents (including court 38 papers) received by the indemnified party relating to the Third-Party Claim other than those notices and documents separately addressed to the indemnifying party. (b) If a Third-Party Claim is made against an indemnified party, the indemnifying party shall be entitled to participate in the defense thereof and, if it so chooses, to assume the defense thereof with counsel selected by the indemnifying party; provided, however, that such counsel is not reasonably objected to by the indemnified party. Should the indemnifying party so elect to assume the defense of a Third-Party Claim, the indemnifying party shall not be liable to the indemnified party for any legal expenses subsequently incurred by the indemnified party in connection with the defense thereof. If the indemnifying party assumes such defense, the indemnified party shall have the right to participate in the defense thereof and to employ counsel, at its own expense, separate from the counsel employed by the indemnifying party, it being understood that the indemnifying party shall control such defense. The indemnifying party shall be liable for the fees and expenses of counsel employed by the indemnified party for any period during which the indemnifying party has not assumed the defense thereof (other than during any period in which the indemnified party shall have failed to give notice of the Third-Party Claim as provided above). If the indemnifying party chooses to defend or prosecute a Third-Party Claim, all the indemnified parties shall cooperate in the defense or prosecution thereof. Such cooperation shall include the retention and (upon the indemnifying party's reasonable request) the provision to the indemnifying party of records and information that are reasonably relevant to such Third-Party Claim, and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. If the indemnifying party assumes the defense of a Third- Party Claim, the indemnified party shall not admit any liability with respect to, or settle, compromise, or discharge, such Third-Party Claim without the indemnifying party's prior written consent (which consent shall not be unreasonably withheld). If the indemnifying party assumes the defense of a Third-Party Claim, the indemnified party shall agree to any settlement, compromise, or discharge of a Third-Party Claim that the indemnifying party may recommend and that by its terms obligates the indemnifying party to pay the full amount of the liability in connection with such Third-Party Claim, that releases the indemnified party completely in connection with such Third-Party Claim, and that would not otherwise adversely affect the indemnified party. Notwithstanding the two foregoing paragraphs, the indemnifying party shall not be entitled to assume the defense of any Third-Party Claim (and shall be liable for the fees and expenses of counsel incurred by the indemnified party in defending such 39 Third-Party Claim) if the Third-Party Claim seeks an order, injunction, or other equitable relief or relief for other than money damages against the indemnified party that the indemnified party reasonably determines cannot be separated from any related claim for money damages. If such equitable relief or other relief portion of the Third-Party Claim can be so separated from that for money damages, the indemnifying party shall be entitled to assume the defense of the portion relating to money damages. (c) Other Claims. In the event any indemnified party should have a claim against any indemnifying party under Section 8.01 or 8.02 that does not involve a Third-Party Claim being asserted against or sought to be collected from such indemnified party, the indemnified party shall deliver notice of such claim with reasonable promptness to the indemnifying party. The failure of any indemnified party so to notify the indemnifying party shall not relieve the indemnifying party from any liability that it may have to such indemnified party under Section 8.01 or 8.02, except to the extent that the indemnifying party demonstrates that it has been materially prejudiced by such failure. If the indemnifying party disputes its liability with respect to such claim, the indemnifying party and the indemnified party shall proceed in good faith to negotiate a resolution of such dispute and, if not resolved through negotiations, such dispute shall be resolved by litigation in an appropriate court of competent jurisdiction. 9. GENERAL PROVISIONS 9.01. Assignment. This Agreement and the rights and obligations hereunder shall not be assignable or transferable by any party hereto without the prior written consent of the other parties hereto. Notwithstanding the foregoing, without the consent of the other parties hereto, (a) Purchaser may assign its right hereunder to purchase the Acquired Assets or any portion thereof (including, but not by way of limitation, the England Shares) to an Affiliate of Purchaser, and (b) Purchaser may assign its rights hereunder by way of security and such secured party may assign such rights by way of exercise of remedies; provided, however, that no assignment or transfer shall limit or affect the assignor's obligations hereunder. Any attempted assignment in violation of this Section 9.01 shall be void. 9.02. No Third-Party Beneficiaries. Except as provided in Section 8 with respect to indemnification, this Agreement is for the sole benefit of the parties hereto and their successors and permitted assigns and nothing herein expressed or implied shall give or be construed to give to any person, other than the parties hereto and such successors and assigns, any legal or equitable rights hereunder. 40 9.03. Amendments and Waivers. This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties hereto. By an instrument in writing Purchaser may waive compliance by Seller, or Seller may waive compliance by Purchaser, with any term or provision of this Agreement that such other party was or is obligated to comply with or perform. 9.04. Notices. All notices and other communications hereunder shall be in writing and shall be deemed given upon (a) transmitter's confirmation of a receipt of a facsimile transmission provided that a confirmed delivery by a standard overnight carrier or a hand delivery is made within two business days of the date such facsimile is sent or (b) confirmed delivery by a standard overnight carrier, or (c) when delivered by hand, addressed at the following addresses (or at such other address for a party as shall be specified by like notice): (i) If to Seller, to: Huntsman Polymers Corporation 500 Huntsman Way Salt Lake City, UT 84108 Telephone: (801) 584-5700 Facsimile: (801) 584-5782 Attention: General Counsel (ii) If to Purchaser, to: Huntsman Packaging Corporation 500 Huntsman Way Salt Lake City, UT 84108 Telephone: (801) 584-5700 Facsimile: (801) 584-5782 Attention: General Counsel 9.05. Interpretation. The headings contained in this Agreement, in any Exhibit or Schedule hereto, and in the table of contents and table of defined terms to this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a party of this Agreement as if set forth in full herein. Any capitalized terms used in any Schedule or Exhibit, but not otherwise defined therein, shall have the meaning as defined in this Agreement. When 41 a reference is made in this Agreement to a Section, Exhibit, or Schedule, such reference shall be to a Section of, or an Exhibit or Schedule to, this Agreement unless otherwise indicated. Whenever the words "include," "includes," or "including," are used in this Agreement, they shall be deemed to be followed by the words "without limitation." When used in this Agreement, "Affiliate" of any person means another person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such first person. 9.06. Survival of Agreements. The covenants and agreements of the parties contained in this Agreement shall survive the Closing and shall not terminate; provided, however, that the representations and warranties contained in Section 3 and Section 4 of this Agreement shall not survive the Closing and shall terminate upon consummation of the Closing. 9.07. Counterparts. This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more such counterparts have been signed by each of the parties and delivered to the other parties. 9.08. Entire Agreement. This Agreement, including the Schedules and Exhibits hereto, contains the entire agreement and understanding among the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings relating to such subject matter. No party shall be liable or bound to any other party in any manner by any representations, warranties, or covenants relating to such subject matter except as specifically set forth herein. 9.09. Severability. If any provision of this Agreement (or any portion thereof) or the application of any such provision (or any portion thereof) to any person or circumstance shall be held invalid, illegal, or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality, or unenfoceability shall not affect any other provision hereof (or the remaining portion thereof) or the application of such provision to any other persons or circumstances. 9.10. Governing Law; Waiver of Jury Trial; Enforcement. This Agreement shall be governed by and construed in accordance with the laws of the State of Utah, without giving effect to the principles of conflicts of law thereof. Each party to this Agreement (a) waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any action, suit, or proceeding arising out of or relating to this Agreement, (b) consents to submit itself to the personal jurisdiction of 42 any federal court located in the State of Utah or any Utah state court located in Salt Lake County in the event any dispute arises out of this Agreement or any of the transactions contemplated by this Agreement, (c) agrees that it will not attempt to deny such personal jurisdiction by motion or other request for leave from any such court, and (d) agrees that it will not bring any action relating to this Agreement or any of the transactions contemplated by this Agreement in any court other than a federal or state court sitting in Salt Lake County, State of Utah. IN WITNESS WHEREOF, Seller and Purchaser have executed this Agreement as of the day and year first above written. SELLER: HUNTSMAN POLYMERS CORPORATION, a Delaware corporation, By: ------------------------------ Name: ---------------------------- Title: --------------------------- PURCHASER: HUNTSMAN PACKAGING CORPORATION, a Utah corporation, By: ------------------------------ Name: ---------------------------- Title: --------------------------- 43 SCHEDULE 1.03(B) [Attached to and forming a part of the First Amended Asset Purchase Agreement (the "Agreement") between Huntsman Polymers Corporation, as "Seller", and Huntsman Packaging Corporation, as "Purchaser", regarding the assets of the CT Film Division of Seller (formerly known as Rexene Corporation). Capitalized terms that are defined in the Agreement and used in this Schedule shall have the same meanings as in the Agreement.] SALES OFFICE LOCATIONS 1. [Southern Region] 1355 Terrill Mill Rd. Building 1474, Suite 250 Marietta, GA 90067 2. [Western Region] 3801 University Avenue Suite 260 Riverside, CA 92501 44 SCHEDULE 1.03(C) [Attached to and forming a part of the First Amended Asset Purchase Agreement (the "Agreement") between Huntsman Polymers Corporation, as "Seller", and Huntsman Packaging Corporation, as "Purchaser", regarding the assets of the CT Film Division of Seller (formerly known as Rexene Corporation). Capitalized terms that are defined in the Agreement and used in this Schedule shall have the same meanings as in the Agreement.] WAREHOUSE LOCATIONS 1. [Storage Locker #19] 1515 Woodfield Rd. Schaumberg, IL 60173 2. [Warehouse -- 5,000 RSF] Southwest l/4 of Suite 2, on Lots 1 & 2 Herbert Addition Town of Eagle Point Chippewa County, WI 3. [Warehouse -- 5,000 S.F.] Northwest 5,000 S.F. of Suite 2, on Lots 1 & 2 Herbert Addition Town of Eagle Point Chippewa County, WI 4. [Warehouse -- 3,500 RSF] Westerly 3500 S/F (50x70) of Bldg #2, Lot 5, Block 1 Herbert Addition Town of Eagle Point Chippewa County, WI 45 5. [Warehouse -- 12,000 RSF] 617 Market Street Warehouse 7 Bridgeville, DE 6. [Warehouse -- 40,000 RSF] 617 Market Street Warehouse 7 Bridgeville, DE 46 SCHEDULE 1.03(S) [Attached to and forming a part of the First Amended Asset Purchase Agreement (the "Agreement") between Huntsman Polymers Corporation, as "Seller", and Huntsman Packaging Corporation, as "Purchaser", regarding the assets of the CT Film Division of Seller (formerly known as Rexene Corporation). Capitalized terms that are defined in the Agreement and used in this Schedule shall have the same meanings as in the Agreement.] OTHER ACQUIRED ASSETS 1. IBM AS400 Computer and related hardware and equipment located in Seller's executive offices in Dallas, Texas. 2. Office furniture used by Jack Knott and office furniture located in Seller's executive offices in Dallas, Texas and used by executives of the CT Film Division of Seller. 47 SCHEDULE 1.04(A) [Attached to and forming a part of the First Amended Asset Purchase Agreement (the "Agreement") between Huntsman Polymers Corporation, as "Seller", and Huntsman Packaging Corporation, as "Purchaser", regarding the assets of the CT Film Division of Seller (formerly known as Rexene Corporation). Capitalized terms that are defined in the Agreement and used in this Schedule shall have the same meanings as in the Agreement.] EXECUTIVE OFFICE ACQUIRED ASSETS 1. IBM AS400 Computer and related hardware and equipment located in Seller's executive offices in Dallas, Texas. 2. Office furniture used by Jack Knott and other office furniture located in Seller's executive offices in Dallas, Texas and used by executives of the CT Film Division of Seller. 48 SCHEDULE 1.04(E) [Attached to and forming a part of the First Amended Asset Purchase Agreement (the "Agreement") between Huntsman Polymers Corporation, as "Seller", and Huntsman Packaging Corporation, as "Purchaser", regarding the assets of the CT Film Division of Seller (formerly known as Rexene Corporation). Capitalized terms that are defined in the Agreement and used in this Schedule shall have the same meanings as in the Agreement.] OTHER EXCLUDED ASSETS None. 49 SCHEDULE 1.06(F) [Attached to and forming a part of the First Amended Asset Purchase Agreement (the "Agreement") between Huntsman Polymers Corporation, as "Seller", and Huntsman Packaging Corporation, as "Purchaser", regarding the assets of the CT Film Division of Seller (formerly known as Rexene Corporation). Capitalized terms that are defined in the Agreement and used in this Schedule shall have the same meanings as in the Agreement.] TERMINATED EMPLOYEES None. 50 SCHEDULE 1.06(G) [Attached to and forming a part of the First Amended Asset Purchase Agreement (the "Agreement") between Huntsman Polymers Corporation, as "Seller", and Huntsman Packaging Corporation, as "Purchaser", regarding the assets of the CT Film Division of Seller (formerly known as Rexene Corporation). Capitalized terms that are defined in the Agreement and used in this Schedule shall have the same meanings as in the Agreement.] OTHER EXCLUDED LIABILITIES None. 51 SCHEDULE 1.07 [Attached to and forming a part of the Asset Purchase Agreement (the "Agreement") between Huntsman Polymers Corporation, as "Seller", and Huntsman Packaging Corporation, as "Purchaser", regarding the assets of the CT Film Division of Seller (formerly known as Rexene Corporation). Capitalized terms that are defined in the Agreement and used in this Schedule shall have the same meanings as in the Agreement.] OTHER LIENS None. 52 SCHEDULE 3.01 [Attached to and forming a part of the First Amended Asset Purchase Agreement (the "Agreement") between Huntsman Polymers Corporation, as "Seller", and Huntsman Packaging Corporation, as "Purchaser", regarding the assets of the CT Film Division of Seller (formerly known as Rexene Corporation). Capitalized terms that are defined in the Agreement and used in this Schedule shall have the same meanings as in the Agreement.] ORGANIZATION, SUBSIDIARIES, ETC. 1. Section 3.1 of the "Company's Disclosure Schedule" to the Merger Agreement is by this reference incorporated herein and made a part hereof. 53 SCHEDULE 3.03 [Attached to and forming a part of the First Amended Asset Purchase Agreement (the "Agreement") between Huntsman Polymers Corporation, as "Seller", and Huntsman Packaging Corporation, as "Purchaser", regarding the assets of the CT Film Division of Seller (formerly known as Rexene Corporation). Capitalized terms that are defined in the Agreement and used in this Schedule shall have the same meanings as in the Agreement.] NO VIOLATIONS; CONSENTS AND APPROVALS 1. Section 3.4 of the "Company's Disclosure Schedule" to the Merger Agreement is by this reference incorporated herein and made a part hereof. 54 SCHEDULE 3.04 [Attached to and forming a part of the First Amended Asset Purchase Agreement (the "Agreement") between Huntsman Polymers Corporation, as "Seller", and Huntsman Packaging Corporation, as "Purchaser", regarding the assets of the CT Film Division of Seller (formerly known as Rexene Corporation). Capitalized terms that are defined in the Agreement and used in this Schedule shall have the same meanings as in the Agreement.] SUBSIDIARY CAPITALIZATION 1. Section 3.2(b) of the "Company's Disclosure Schedule" to the Merger Agreement is by this reference incorporated herein and made a part hereof. 2. Schedule 3.2(c) of the "Company's Disclosure Schedule to the Merger Agreement is by this reference incorporated herein and made a part hereof. 55 SCHEDULE 3.06 [Attached to and forming a part of the First Amended Asset Purchase Agreement (the "Agreement") between Huntsman Polymers Corporation, as "Seller", and Huntsman Packaging Corporation, as "Purchaser", regarding the assets of the CT Film Division of Seller (formerly known as Rexene Corporation). Capitalized terms that are defined in the Agreement and used in this Schedule shall have the same meanings as in the Agreement.] ABSENCE OF CERTAIN CHANGES 1. Section 3.6 of the "Company's Disclosure Schedule" to the Merger Agreement is by this reference incorporated herein and made a part hereof. 2. Schedule 5.1 of the "Company's Disclosure Schedule to the Merger Agreement is by this reference incorporated herein and made a part hereof. 56 SCHEDULE 3.07 [Attached to and forming a part of the First Amended Asset Purchase Agreement (the "Agreement") between Huntsman Polymers Corporation, as "Seller", and Huntsman Packaging Corporation, as "Purchaser", regarding the assets of the CT Film Division of Seller (formerly known as Rexene Corporation). Capitalized terms that are defined in the Agreement and used in this Schedule shall have the same meanings as in the Agreement.] NO UNDISCLOSED LIABILITIES 1. Section 3.7 of the "Company's Disclosure Schedule" to the Merger Agreement is by this reference incorporated herein and made a part hereof. 57 SCHEDULE 3.08 [Attached to and forming a part of the First Amended Asset Purchase Agreement (the "Agreement") between Huntsman Polymers Corporation, as "Seller", and Huntsman Packaging Corporation, as "Purchaser", regarding the assets of the CT Film Division of Seller (formerly known as Rexene Corporation). Capitalized terms that are defined in the Agreement and used in this Schedule shall have the same meanings as in the Agreement.] EMPLOYEE BENEFIT PLANS AND ERISA 1. Section 3.9(a) of the "Company's Disclosure Schedule" to the Merger Agreement is by this reference incorporated herein and made a part hereof. 2. Section 3.9(j) of the "Company's Disclosure Schedule" to the Merger Agreement is by this reference incorporated herein and made a part hereof. 3. Section 3.9(k) of the "Company's Disclosure Schedule" to the Merger Agreement is by this reference incorporated herein and made a part hereof. 58 SCHEDULE 3.09 [Attached to and forming a part of the First Amended Asset Purchase Agreement (the "Agreement") between Huntsman Polymers Corporation, as "Seller", and Huntsman Packaging Corporation, as "Purchaser", regarding the assets of the CT Film Division of Seller (formerly known as Rexene Corporation). Capitalized terms that are defined in the Agreement and used in this Schedule shall have the same meanings as in the Agreement.] LITIGATION AND COMPLIANCE WITH LAW 1. Section 3.10 of the "Company's Disclosure Schedule" to the Merger Agreement is by this reference incorporated herein and made a part hereof. 59 SCHEDULE 3.10 [Attached to and forming a part of the First Amended Asset Purchase Agreement (the "Agreement") between Huntsman Polymers Corporation, as "Seller", and Huntsman Packaging Corporation, as "Purchaser", regarding the assets of the CT Film Division of Seller (formerly known as Rexene Corporation). Capitalized terms that are defined in the Agreement and used in this Schedule shall have the same meanings as in the Agreement.] REXENE INTELLECTUAL PROPERTY 1. Section 3.11 of the "Company's Disclosure Schedule" to the Merger Agreement is by this reference incorporated herein and made a part hereof. 60 SCHEDULE 3.11 [Attached to and forming a part of the First Amended Asset Purchase Agreement (the "Agreement") between Huntsman Polymers Corporation, as "Seller", and Huntsman Packaging Corporation, as "Purchaser", regarding the assets of the CT Film Division of Seller (formerly known as Rexene Corporation). Capitalized terms that are defined in the Agreement and used in this Schedule shall have the same meanings as in the Agreement.] SELLER AGREEMENTS 1. Section 3.12(a) of the "Company's Disclosure Schedule" to the Merger Agreement is by this reference incorporated herein and made a part hereof. 2. Section 3.12(b) of the "Company's Disclosure Schedule" to the Merger Agreement is by this reference incorporated herein and made a part hereof. 61 SCHEDULE 3.12 [Attached to and forming a part of the First Amended Asset Purchase Agreement (the "Agreement") between Huntsman Polymers Corporation, as "Seller", and Huntsman Packaging Corporation, as "Purchaser", regarding the assets of the CT Film Division of Seller (formerly known as Rexene Corporation). Capitalized terms that are defined in the Agreement and used in this Schedule shall have the same meanings as in the Agreement.] TAXES 1. Section 3.13 of the "Company's Disclosure Schedule" to the Merger Agreement is by this reference incorporated herein and made a part hereof. 62 SCHEDULE 3.13 [Attached to and forming a part of the First Amended Asset Purchase Agreement (the "Agreement") between Huntsman Polymers Corporation, as "Seller", and Huntsman Packaging Corporation, as "Purchaser", regarding the assets of the CT Film Division of Seller (formerly known as Rexene Corporation). Capitalized terms that are defined in the Agreement and used in this Schedule shall have the same meanings as in the Agreement.] ENVIRONMENTAL MATTERS 1. Section 3.14(a) of the "Company's Disclosure Schedule" to the Merger Agreement is by this reference incorporated herein and made a part hereof. 2. Section 3.14(b) of the "Company's Disclosure Schedule" to the Merger Agreement is by this reference incorporated herein and made a part hereof. 3. Section 3.14(c) of the "Company's Disclosure Schedule" to the Merger Agreement is by this reference incorporated herein and made a part hereof. 4. Section 3.14(d) of the "Company's Disclosure Schedule" to the Merger Agreement is by this reference incorporated herein and made a part hereof. 63 SCHEDULE 3.14 [Attached to and forming a part of the First Amended Asset Purchase Agreement (the "Agreement") between Huntsman Polymers Corporation, as "Seller", and Huntsman Packaging Corporation, as "Purchaser", regarding the assets of the CT Film Division of Seller (formerly known as Rexene Corporation). Capitalized terms that are defined in the Agreement and used in this Schedule shall have the same meanings as in the Agreement.] NO DEFAULT 1. Section 3.15 of the "Company's Disclosure Schedule" to the Merger Agreement is by this reference incorporated herein and made a part hereof. 64 SCHEDULE 3.17 [Attached to and forming a part of the First Amended Asset Purchase Agreement (the "Agreement") between Huntsman Polymers Corporation, as "Seller", and Huntsman Packaging Corporation, as "Purchaser", regarding the assets of the CT Film Division of Seller (formerly known as Rexene Corporation). Capitalized terms that are defined in the Agreement and used in this Schedule shall have the same meanings as in the Agreement.] LABOR 1. Section 3.20 of the "Company's Disclosure Schedule" to the Merger Agreement is by this reference incorporated herein and made a part hereof. 65 SCHEDULE 4.03 [Attached to and forming a part of the First Amended Asset Purchase Agreement (the "Agreement") between Huntsman Polymers Corporation, as "Seller", and Huntsman Packaging Corporation, as "Purchaser", regarding the assets of the CT Film Division of Seller (formerly known as Rexene Corporation). Capitalized terms that are defined in the Agreement and used in this Schedule shall have the same meanings as in the Agreement.] GOVERNMENTAL FILINGS, PERMITS, ETC. None. 66 SCHEDULE 5.05(A) [Attached to and forming a part of the First Amended Asset Purchase Agreement (the "Agreement") between Huntsman Polymers Corporation, as "Seller", and Huntsman Packaging Corporation, as "Purchaser", regarding the assets of the CT Film Division of Seller (formerly known as Rexene Corporation). Capitalized terms that are defined in the Agreement and used in this Schedule shall have the same meanings as in the Agreement.] EXCLUDED EMPLOYEES AND ADDITIONAL EMPLOYEES Prior to the Closing, Purchaser and Seller shall agree as to any employees that are to be designated "Excluded Employees" or "Additional Employees," and the names of any such employees, with the agreed designation, shall be added to this Schedule. 67 SCHEDULE 5.05(F) [Attached to and forming a part of the First Amended Asset Purchase Agreement (the "Agreement") between Huntsman Polymers Corporation, as "Seller", and Huntsman Packaging Corporation, as "Purchaser", regarding the assets of the CT Film Division of Seller (formerly known as Rexene Corporation). Capitalized terms that are defined in the Agreement and used in this Schedule shall have the same meanings as in the Agreement.] NONQUALIFIED, UNFUNDED, DEFERRED COMPENSATION PROGRAMS Prior to the Closing, Purchaser and Seller shall agree as to any Nonqualified, Unfunded, Deferred Compensation Programs that are to be included on this Schedule and any such agreed programs shall be added to this Schedule. 68 SCHEDULE 5.05(I) [Attached to and forming a part of the First Amended Asset Purchase Agreement (the "Agreement") between Huntsman Polymers Corporation, as "Seller", and Huntsman Packaging Corporation, as "Purchaser", regarding the assets of the CT Film Division of Seller (formerly known as Rexene Corporation). Capitalized terms that are defined in the Agreement and used in this Schedule shall have the same meanings as in the Agreement.] LETTER AGREEMENTS FOR SEVERANCE PAY Prior to the Closing, Purchaser and Seller shall agree as to any letter agreements for severance pay that are to be included on this Schedule and any such agreed letter agreements shall be added to this Schedule. 69 SCHEDULE 5.10 [Attached to and forming a part of the First Amended Asset Purchase Agreement (the "Agreement") between Huntsman Polymers Corporation, as "Seller," and Huntsman Packaging Corporation, as "Purchaser," regarding the assets of the CT Film Division of Seller (formerly known as Rexene Corporation). Capitalized terms that are defined in the Agreement and used in this Schedule shall have the same meanings as in the Agreement.] ALLOCATION OF PURCHASE PRICE 1. The Purchase Price will be allocated among the Acquired Assets after the Closing by Purchaser and Seller. 2. The Purchase Price will be allocated first among current assets according to the book value thereof as of the Closing Date. 3. The balance of the Purchase Price (to the extent necessary) will next be allocated among property, plant, equipment, and all other identifiable tangible property, intangibles, and other assets (other than good will) according to the appraised value, or Purchaser's and Seller's best estimate of the fair market value, thereof as of the Closing Date. 4. The balance of the Purchase Price (if any) will be allocated to goodwill. 70 EX-10.3 22 CREDIT AGREEMENT EXECUTION COPY =============================================================================== CREDIT AGREEMENT dated as of September 30, 1997 among HUNTSMAN PACKAGING CORPORATION, as Borrower The Lenders Party Hereto and THE CHASE MANHATTAN BANK, as Administrative Agent ----------------------- CHASE SECURITIES INC., as Arranger =============================================================================== TABLE OF CONTENTS
Page ---- ARTICLE I Definitions SECTION 1.1. Defined Terms...................................................... 1 SECTION 1.2. Classification of Loans and Borrowings......................................................... 33 SECTION 1.3. Terms Generally.................................................... 33 SECTION 1.4. Accounting Terms; GAAP; Treatment of Unrestricted Subsidiaries.......................................... 34 SECTION 1.5. Certain Interim Financial Calcula- tions.............................................................. 34 ARTICLE II The Credits SECTION 2.1. Commitments........................................................ 36 SECTION 2.2. Loans and Borrowings............................................... 36 SECTION 2.3. Requests for Borrowings............................................ 37 SECTION 2.4. Swingline Loans.................................................... 38 SECTION 2.5. Letters of Credit.................................................. 40 SECTION 2.6. Funding of Borrowings.............................................. 47 SECTION 2.7. Interest Elections................................................. 47 SECTION 2.8. Termination and Reduction of Commit- ments.............................................................. 50 SECTION 2.9. Repayment of Loans; Evidence of Debt............................... 51 SECTION 2.10. Amortization of Term Loans......................................... 52 SECTION 2.11. Prepayment of Loans................................................ 54 SECTION 2.12. Fees............................................................... 57 SECTION 2.13. Interest........................................................... 59 SECTION 2.14. Alternate Rate of Interest......................................... 60 SECTION 2.15. Increased Costs.................................................... 60 SECTION 2.16. Break Funding Payments............................................. 62 SECTION 2.17. Taxes.............................................................. 63 SECTION 2.18. Payments Generally; Pro Rata Treat- ment; Sharing of Setoffs........................................... 64 SECTION 2.19. Mitigation Obligations; Replacement of Lenders......................................................... 67 SECTION 2.20. Extension of Revolving Maturity Date............................... 68 i ARTICLE III Representations and Warranties SECTION 3.1. Organization; Powers............................................... 68 SECTION 3.2. Authorization; Enforceability...................................... 69 SECTION 3.3. Governmental Approvals; No Conflicts............................... 69 SECTION 3.4. Financial Condition; No Material Ad- verse Change....................................................... 70 SECTION 3.5. Properties......................................................... 71 SECTION 3.6. Litigation and Environmental Matters............................... 71 SECTION 3.7. Compliance with Laws and Agreements................................ 72 SECTION 3.8. Investment and Holding Company Sta- tus................................................................ 72 SECTION 3.9. Taxes.............................................................. 72 SECTION 3.10. ERISA.............................................................. 73 SECTION 3.11. Disclosure......................................................... 73 SECTION 3.12. Subsidiaries....................................................... 73 SECTION 3.13. Insurance.......................................................... 74 SECTION 3.14. Labor Matters...................................................... 74 SECTION 3.15. Solvency........................................................... 74 SECTION 3.16. Security Documents................................................. 74 SECTION 3.17. Federal Reserve Regulations........................................ 76 SECTION 3.18. Existing Intercompany Indebtedness................................. 76 SECTION 3.19. Agreements and Business Status as of Effective Date..................................................... 76 ARTICLE IV Conditions SECTION 4.1. Effective Date..................................................... 77 SECTION 4.2. Each Credit Event.................................................. 83 ARTICLE V Affirmative Covenants SECTION 5.1. Financial Statements and Other Infor- mation............................................................. 84 SECTION 5.2. Notices of Material Events......................................... 86 SECTION 5.3. Information Regarding Collateral................................... 87 SECTION 5.4. Existence; Conduct of Business..................................... 88 SECTION 5.5. Payment of Obligations............................................. 88 SECTION 5.6. Maintenance of Properties.......................................... 88 SECTION 5.7. Insurance.......................................................... 88 SECTION 5.8. Casualty and Condemnation.......................................... 89 ii SECTION 5.9. Books and Records; Inspection and Audit Rights....................................................... 90 SECTION 5.10. Compliance with Laws............................................... 90 SECTION 5.11. Use of Proceeds and Letters of Cred- it................................................................. 90 SECTION 5.12. Additional Subsidiaries............................................ 91 SECTION 5.13. Further Assurances................................................. 91 ARTICLE VI Negative Covenants SECTION 6.1. Indebtedness....................................................... 93 SECTION 6.2. Certain Equity Securities.......................................... 95 SECTION 6.3. Liens.............................................................. 96 SECTION 6.4. Fundamental Changes................................................ 97 SECTION 6.5. Investments, Loans, Advances, Guaran- tees and Acquisitions.............................................. 98 SECTION 6.6. Asset Sales........................................................100 SECTION 6.7. Sale and Lease-Back Transactions...................................101 SECTION 6.8. Hedging Agreements.................................................102 SECTION 6.9. Restricted Payments; Certain Payments of Indebtedness....................................................102 SECTION 6.10. Transactions with Affiliates.......................................102 SECTION 6.11. Restrictive Agreements.............................................103 SECTION 6.12. Amendment of Material Documents....................................104 SECTION 6.13. Capital Expenditures...............................................104 SECTION 6.14. Leverage Ratio.....................................................105 SECTION 6.15. Interest Coverage Ratio............................................105 SECTION 6.16. Minimum Net Worth..................................................105 SECTION 6.17. Designated Senior Debt.............................................106 ARTICLE VII Events of Default.........................................106 ARTICLE VIII The Administrative Agent......................................110 ARTICLE IX Miscellaneous...........................................113 SECTION 9.1. Notices............................................................113 SECTION 9.2. Waivers; Amendments................................................114 SECTION 9.3. Expenses; Indemnity: Damage Waiver.................................116 SECTION 9.4. Successors and Assigns.............................................118 iii SECTION 9.5. Survival...........................................................121 SECTION 9.6. Counterparts; Integration; Effective- ness...............................................................122 SECTION 9.7. Severability.......................................................123 SECTION 9.8. Right of Setoff....................................................123 SECTION 9.9. Governing Law; Jurisdiction; Consent to Service of Process..............................................123 SECTION 9.10. WAIVER OF JURY TRIAL...............................................124 SECTION 9.11. Headings...........................................................124 SECTION 9.12. Confidentiality....................................................125 SECTION 9.13. Interest Rate Limitation...........................................125
iv SCHEDULES: Schedule 1.01(a) Mortgaged Properties Schedule 2.01 Commitments Schedule 3.05 Owned or Leased Property Schedule 3.12 Subsidiaries Schedule 3.13 Insurance Schedule 3.16(a) Actions to Pledge Stock of Foreign Subsidiaries Schedule 3.16(d) Mortgage Filing Offices Schedule 3.19 Affiliate Agreements Schedule 5.07 Insurance Levels Schedule 6.01 Existing Indebtedness Schedule 6.03 Existing Liens Schedule 6.05 Existing Investments Schedule 6.10 Affiliate Transactions Schedule 6.11 Existing Restrictions EXHIBITS: Exhibit A Form of Assignment and Acceptance Exhibit B-1 Forms of Opinion of Borrower's Counsel Exhibit B-2 Form of Opinion of Borrower's Utah Counsel Exhibit B-3 Form of Opinion of Local Counsel Exhibit B-4 Form of Opinion of Foreign Counsel Exhibit C Form of Guarantee Agreement Exhibit D Form of Indemnity, Subrogation and Contribution Agreement Exhibit E Form of Pledge Agreement Exhibit F Form of Security Agreement v CREDIT AGREEMENT dated as of September 30, 1997, among HUNTSMAN PACKAGING CORPORATION, a Utah corporation, the LENDERS party hereto, and THE CHASE MANHATTAN BANK, as Administrative Agent. The parties hereto agree as follows: ARTICLE I Definitions SECTION 1.1. Defined Terms. As used in this Agreement, the following terms have the meanings specified below: "ABR", when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Alternate Base Rate. "Acquisition Agreement" means the agreement or agreements entered into in connection with the CT Film Acquisition. "Adjusted Consolidated Net Worth" means, as of any date, the capital stock and additional paid-in capital of the Borrower plus retained earnings (or minus accumulated deficit) of the Borrower, plus Excluded Charges, all determined as of such date on a consolidated basis in accordance with GAAP (except that such determination shall be made without taking into account Unrestricted Subsidiaries). "Adjusted LIBO Rate" means, with respect to any Eurodollar Borrowing for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate. "Administrative Agent" means The Chase Manhattan Bank, in its capacity as administrative agent for the Lenders hereunder. "Administrative Questionnaire" means an Administrative Questionnaire in a form supplied by the Administrative Agent. "Affiliate" means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified. The Borrower acknowledges that Richard Durham is an Affiliate of the Borrower. Each of Jon M. Huntsman and Huntsman (and their respective Affiliates) shall be deemed to be an Affiliate of the Borrower for purposes of Section 6.10. "Alternate Base Rate" means, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Base CD Rate in effect on such day plus 1% and (c) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. Any change in the Alternate Base Rate due to a change in the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate shall be effective from and including the effective date of such change in the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate, respectively. "Applicable Percentage" means, with respect to any Revolving Lender, the percentage of the total Revolving Commitments represented by such Lender's Revolving Commitment. If the Revolving Commitments have terminated or expired, the Applicable Percentages shall be determined based upon the Revolving Commitments most recently in effect, giving effect to any assignments. "Applicable Rate" means, for any day with respect to any ABR Loan or Eurodollar Loan that is a Revolving Loan or a Term Loan, or with respect to the commitment fees payable hereunder, as the case may be, the applicable rate per annum set forth below under the caption "ABR Spread", "Eurodollar Spread" or "Commitment Fee Rate", as the case may be, based upon the Leverage Ratio as of the most recent determination date; provided that until the delivery to the Administrative Agent, pursuant to Section 5.01(b), of the Borrower's consolidated financial statements for the Borrower's first full fiscal quarter ending after the Effective Date, the "Applicable Rate" shall be the applicable rate per annum 2 set forth below in Category 1:
=============================================================================================================== Leverage Ratio ABR Spread Eurodollar Spread Commitment Fee Rate - --------------------------------------------------------------------------------------------------------------- Category 1 0.75% 2.00% 0.500% ---------- Equal to or greater than 4.00 to 1.00 - --------------------------------------------------------------------------------------------------------------- Category 2 0.50% 1.75% 0.400% ---------- Less than 4.00 to 1.00 but greater than 3.50 to 1.00 - --------------------------------------------------------------------------------------------------------------- Category 3 0.25% 1.50% 0.375% ---------- Less than or equal to 3.50 to 1.00 but greater than 3.00 to 1.00 - --------------------------------------------------------------------------------------------------------------- Category 4 0.00% 1.25% 0.350% ---------- Less than or equal to 3.00 to 1.00 but greater than 2.50 to 1.00 - --------------------------------------------------------------------------------------------------------------- Category 4 0.00% 1.00% 0.300% ---------- Less than or equal to 2.50 to 1.00 ===============================================================================================================
For purposes of the foregoing, (a) the Leverage Ratio shall be determined as of the end of each fiscal quarter of the Borrower's fiscal year based upon the Borrower's consolidated financial statements delivered pursuant to Section 5.01(a) or (b) and (b) each change in the Applicable Rate resulting from a change in the Leverage Ratio shall be effective during the period commencing on and including the third day (such day, the "Applicable Rate Determination Date") after the date of delivery to the Administrative Agent of such consolidated financial statements indicating such change and ending on the date immediately preceding the effective date of the next such change; provided that the Leverage Ratio shall be deemed to be in Category 1 (i) at any time that an Event of Default has occurred and is continuing or (ii) if the Borrower fails to deliver the consolidated financial statements required to be delivered by it pursuant to Section 5.01(a) or (b), during the period from the expiration of the time for delivery thereof until such consolidated financial statements are delivered. "Assessment Rate" means, for any day, the annual assessment rate in effect on such day that is payable by a member of the Bank Insurance Fund classified as "well-capitalized" and within supervisory subgroup "B" (or a comparable successor risk classification) within the meaning of 12 C.F.R. Part 327 (or any successor 3 provision) to the Federal Deposit Insurance Corporation for insurance by such Corporation of time deposits made in dollars at the offices of such member in the United States; provided that if, as a result of any change in any law, rule or regulation it is no longer possible to determine the Assessment Rate as aforesaid, then the Assessment Rate shall be such annual rate as shall be determined by the Administrative Agent to be representative of the cost of such insurance to the Lenders. "Assignment and Acceptance" means an assignment and acceptance entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 9.04), and accepted by the Administrative Agent, in the form of Exhibit A or any other form approved by the Administrative Agent and the Borrower. "Base CD Rate" means the sum of (a) the Three-Month Secondary CD Rate multiplied by the Statutory Reserve Rate plus (b) the Assessment Rate. "Board" means the Board of Governors of the Federal Reserve System of the United States of America. "Borrower" means Huntsman Packaging Corporation, a Utah corporation. "Borrower Amount" means, at any date, the sum of: (a) the aggregate amount of Excess Cash Flow for each fiscal year of the Borrower completed prior to such date for which financial statements have been delivered pursuant to Section 5.01 (commencing with the fiscal year ending December 31, 1998), less the sum of (i) all prepayments of Term Borrowings required to be made pursuant to Section 2.11(c) and (ii) all reductions of Revolving Commitments required to be made pursuant to Section 2.08(d) in respect of such Excess Cash Flow; plus (b) the aggregate Net Proceeds received by the Borrower after the Effective Date and prior to such date in respect of Prepayment Events described in clause (c) of the definition of "Prepayment Event", less the sum of (i) all prepayments of Term Borrowings required to be made pursuant to clause 4 (ii) of Section 2.11(b) in respect of such Net Proceeds, (ii) all reductions of Revolving Commitments required to be made pursuant to Section 2.08(d) in respect of such Net Proceeds and (iii) any portion of such Net Proceeds reserved for a Permitted Acquisition as provided in clause (ii) of Section 2.11(e); minus (c) the sum of all utilizations of the Borrower Amount pursuant to any provisions of this Agreement permitting utilization of the Borrower Amount. Any provisions of this Agreement that permit an action to be taken by utilizing the Borrower Amount shall be construed to permit such action only to the extent that the Borrower Amount is a positive amount at that time. "Borrowing" means (a) Loans of the same Class and Type, made, converted or continued on the same date and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect, or (b) a Swingline Loan. "Borrowing Request" means a request by the Borrower for a Borrowing in accordance with Section 2.03. "Business Day" means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed; provided that, when used in connection with a Eurodollar Loan, the term "Business Day" shall also exclude any day on which banks generally are not open for dealings in dollar deposits in the London interbank market. For purposes of this Agreement "Pioneer Day" as recognized in the State of Utah shall not be a Business Day. "Capital Expenditures" means, for any period, without duplication, (a) the additions to property, plant and equipment and other capital expenditures of the Borrower and its Restricted Subsidiaries that are (or would be) set forth in a consolidated statement of cash flows of the Borrower and its Restricted Subsidiaries for such period prepared in accordance with GAAP and (b) Capital Lease Obligations incurred by the Borrower and its Restricted Subsidiaries during such period. 5 "Capital Lease Obligations" of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP. "Cash Interest Expense" means, for any period, Consolidated Interest Expense for such period excluding any portion thereof in respect of interest not required to be paid in cash during such period or within one year thereafter. "CERCLA" means the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq. "Change in Control" means, at any time, (a) prior to an IPO, the failure by the Control Group to collectively own and control at least a sufficient amount of the outstanding voting capital stock of the Borrower to elect at least a majority of the Board of Directors of the Borrower; (b) after an IPO, the acquisition of beneficial ownership, directly or indirectly, by any Person or group (within the meaning of the Securities Exchange Act of 1934 and the rules of the Securities and Exchange Commission thereunder as in effect on the date hereof) other than the Control Group, of shares representing more than 35% of the aggregate ordinary voting power represented by the issued and outstanding capital stock of the Borrower; (c) occupation of a majority of the seats (other than vacant seats) on the board of directors of the Borrower by Persons who were neither (i) nominated by members of the Control Group or the board of directors of the Borrower nor (ii) appointed by directors so nominated; or (d) the acquisition of direct or indirect Control of the Borrower by any Person or group other than the Control Group. "Change in Law" means (a) the adoption of any law, rule or regulation after the date of this Agreement, (b) any change in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the date of this Agreement or (c) compli- 6 ance by any Lender or the Issuing Bank (or, for purposes of Section 2.15(b), by any lending office of such Lender or by such Lender's or the Issuing Bank's holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement. "Class", when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans, Term Loans or Swingline Loans and, when used in reference to any Commitment, refers to whether such Commitment is a Revolving Commitment or Term Loan Commitment. "Code" means the Internal Revenue Code of 1986, as amended from time to time. "Collateral" means any and all "Collateral", as defined in any applicable Security Document. "Collateral Agent" means The Chase Manhattan Bank, in its capacity as collateral agent for the Secured Parties under the Security Documents. "Commitment" means a Revolving Commitment, Term Loan Commitment, or any combination thereof (as the context requires). "Consolidated EBITDA" means, for any period, Consolidated Net Income for such period, plus, without duplication and to the extent deducted from revenues in determining Consolidated Net Income, the sum of (a) the aggregate amount of Consolidated Interest Expense for such period, (b) the aggregate amount of letter of credit fees paid during such period, (c) the aggregate amount of income tax expense for such period, (d) all amounts attributable to depreciation and amortization for such period, (e) all extraordinary charges and losses during such period and any Excluded Charges during such period, (f) for the period ended December 31, 1997, $9.5 million, (g) for the period ended March 31, 1998, $7.0 million, (h) for the period ended June 30, 1998, $4.5 million and (i) for the period ended September 30, 1998, $2.0 million, and minus, without duplication and to the extent added to revenues in determining Consolidated Net Income for such period, all extraordinary gains during such 7 period, all as determined on a consolidated basis with respect to the Borrower and the Restricted Subsidiaries in accordance with GAAP. "Consolidated Interest Expense" means, for any period, the interest expense, both expensed and capitalized (including the interest component in respect of Capital Lease Obligations), accrued or paid by the Borrower and the Restricted Subsidiaries during such period (net of payments made or received under interest rate protection agreements), determined on a consolidated basis in accordance with GAAP. "Consolidated Net Income" means, for any period, net income or loss of the Borrower and its Restricted Subsidiaries for such period determined on a consolidated basis in accordance with GAAP, provided that there shall be excluded (a) the income of any Unconsolidated Subsidiary and any Person in which any other Person (other than the Borrower or any of the Restricted Subsidiaries or any director holding qualifying shares in compliance with applicable law or any other third party holding a de minimus number of shares in order to comply with other similar requirements) has a joint interest, except to the extent of the amount of dividends or other distributions actually paid to the Borrower or any of its Restricted Subsidiaries by such Person during such period, and (b) the income (or loss) of any Person accrued prior to the date it becomes a Restricted Subsidiary or is merged into or consolidated with the Borrower or any of its Restricted Subsidiaries or the date that Person's assets are acquired by the Borrower or any of its Restricted Subsidiaries. "Control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. "Controlling" and "Controlled" have meanings correlative thereto. "Control Group" means Jon M. Huntsman, his spouse, direct descendants and their spouses, immediate family, any entities that are Controlled by any of the foregoing individuals and/or by a trust of the type described hereafter, and/or any trusts solely for the benefit of any of the foregoing. 8 "CT Film Acquisition" means the acquisition by the Borrower from Huntsman Polymers Corporation (formerly known as Rexene Corporation) of all or substantially all the assets comprising Huntsman Polymers Corporation's CT Film Division. "Default" means any event or condition that constitutes an Event of Default or that upon notice, lapse of time or both would, unless cured or waived, become an Event of Default. "dollars" or "$" refers to lawful money of the United States of America. "Effective Date" means the date on which the conditions specified in Section 4.01 are satisfied (or waived in accordance with Section 9.02). "Environmental Laws" means all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by or with any Governmental Authority, relating in any way to the environment, preservation or reclamation of natural resources, handling, treatment, storage, disposal, Release or threatened Release of any Hazardous Material or to health and safety matters. "Environmental Liability" means any liability, contingent or otherwise (including, but not limited to, any liability for damages, natural resource damage, costs of environmental remediation, administrative oversight costs, fines, penalties or indemnities), of the Borrower or any Subsidiary directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time. "ERISA Affiliate" means any trade or business 9 (whether or not incorporated) that, together with the Borrower, is treated as a single employer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code. "ERISA Event" means (a) any "reportable event", as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived); (b) the existence with respect to any Plan of an "accumulated funding deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA) , whether or not waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the Borrower or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA. "Eurodollar", when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Adjusted LIBO Rate. "Event of Default" has the meaning assigned to such term in Article VII. "Excess Cash Flow" means, for any period, the sum (without duplication) of: (a) Consolidated Net Income for such period, 10 adjusted to exclude any gains or losses attributable to Prepayment Events; plus (b) depreciation, amortization and other non-cash charges or losses deducted in determining such Consolidated Net Income for such period; plus (c) the sum of (i) the amount, if any, by which Net Working Capital decreased during such period plus (ii) the amount, if any, by which the consolidated deferred revenues of the Borrower and its consolidated Restricted Subsidiaries increased during such period plus (iii) the aggregate principal amount of Capital Lease Obligations and other Indebtedness incurred during such period to finance Capital Expenditures and the investments referred to in clause (e) below, to the extent that mandatory principal payments in respect of such Indebtedness would not be excluded from clause (f) below when made; minus (d) the sum of (i) any non-cash gains included in determining such Consolidated Net Income for such period plus (ii) the amount, if any, by which Net Working Capital increased during such period plus (iii) the amount, if any, by which the consolidated deferred revenues of the Borrower and its consolidated Restricted Subsidiaries decreased during such period; minus (e) the sum of (i) Capital Expenditures for such period, (ii) cash consideration paid in respect of Permitted Acquisitions during such period, including cash generated by the issuance of Indebtedness, and (iii) investments made in cash, including cash generated by the issuance of Indebtedness, pursuant to clause (h) of Section 6.05 during such period; provided that amounts shall not be deducted pursuant to this clause (e) in determining Excess Cash Flow to the extent that such Capital Expenditures, Permitted Acquisitions or investments are made (A) by utilizing the Borrower Amount, (B) by utilizing Net Proceeds of an event that otherwise would be a "Prepayment Event" as provided in the proviso to the definition of "Prepayment Event" or (C) in reliance upon sub-clause (ii) of Section 2.11(e); minus 11 (f) the aggregate principal amount of Indebtedness repaid or prepaid by the Borrower and its consolidated Restricted Subsidiaries during such period, excluding (i) Indebtedness in respect of Revolving Loans and Letters of Credit, (ii) Term Loans prepaid pursuant to Section 2.11(b) or (c), (iii) repayments or prepayments of Indebtedness financed by incurring other Indebtedness, to the extent that mandatory principal payments in respect of such other Indebtedness would, pursuant to this clause (f), be deducted in determining Excess Cash Flow when made, (iv) Indebtedness referred to in clauses (iii), (iv) and (ix) of Section 6.01 and (v) Indebtedness referred to in clauses (v), (vi) and (viii) of Section 6.01, to the extent but only to the extent that such Indebtedness was incurred by utilizing the Borrower Amount. "Excluded Charges" means (a) the non-recurring charges to be incurred in respect of the restructurings, plant closings or similar actions expected to be taken in connection with the Borrower's facilities in Scunthorpe, U.K. and Birmingham, Alabama and the CT Film Acquisition, and (b) any other such non-recurring charges incurred in respect of any restructurings, plant closings or similar actions during the eighteen-month period commencing on the Effective Date, provided that the cash portion of charges referred to in this clause (b) shall be limited to $8,000,000. "Excluded Taxes" means, with respect to the Administrative Agent, any Lender, the Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (a) income or franchise taxes imposed on (or measured by) its net income by the United States of America, or by the jurisdiction under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located, (b) any branch profits taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction in which the Borrower is located and (c) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Borrower under Section 2.19(b)), any withholding tax that is imposed on amounts payable hereunder to such Foreign Lender at the time such Foreign Lender becomes a party to 12 this Agreement (or designates a new lending office) or is attributable to such Foreign Lender's failure to comply with Section 2.17(e), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from the Borrower with respect to such withholding tax pursuant to Section 2.17(a). "Existing Intercompany Indebtedness" means all Indebtedness owed by the Borrower and its Subsidiaries to Huntsman and its subsidiaries (other than the Borrower and its Subsidiaries), together with accrued interest thereon. "Existing Letters of Credit" means the following letters of credit entered into by the Borrower and its Subsidiaries and outstanding as of the Effective Date: (i) the Irrevocable Standby Letter of Credit dated July 30, 1996 issued by U.S. Bank of Utah in the amount of $378,000 to Huntsman United Films Corporation on behalf of Old National Trust Company and (ii) the Irrevocable Standby Letter of Credit dated December 16, 1996 issued by U.S. Bank of Utah in the amount of $5,250,000 to Huntsman Packaging Corporation on behalf of Fleet National Bank. "Federal Funds Effective Rate" means, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the 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 (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it. "Financial Officer" means the chief financial officer, principal accounting officer, treasurer or controller of the Borrower. "Financing Transactions" means (i) the repayment by the Borrower of the Existing Intercompany Indebtedness, (ii) the issuance by the Borrower of the Senior 13 Subordinated Notes, and (iii) the execution, delivery and performance by each Loan Party of the Loan Documents to which it is to be a party, the borrowing of Loans, the use of the proceeds thereof and the issuance of Letters of Credit hereunder. "Foreign Assets" means the assets of or shares or other ownership interests in the Foreign Subsidiaries. "Foreign Lender" means any Lender that is organized under the laws of a jurisdiction other than the United States of America, each State thereof and the District of Columbia. "Foreign Subsidiary" means any Subsidiary that is organized under the laws of a jurisdiction other than the United States of America or any State thereof or the District of Columbia. "GAAP" means, subject to Section 1.04, generally accepted accounting principles in the United States of America. "Governmental Authority" means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government. "Guarantee" of or by any Person (the "guarantor") means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the "primary obligor") in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial 14 statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation; provided that the term "Guarantee" shall not include endorsements for collection or deposit in the ordinary course of business. "Guarantee Agreement" means the Guarantee Agreement, substantially in the form of Exhibit C, made by the Subsidiary Loan Parties in favor of the Administrative Agent for the benefit of the Secured Parties. "Hazardous Materials" means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law, including any material listed as a hazardous substance under Section 101(14) of CERCLA. "Hedging Agreement" means any interest rate protection agreement, foreign currency exchange agreement, commodity price protection agreement or other interest or currency exchange rate or commodity price hedging arrangement. "Huntsman" mean Huntsman Corporation, a Utah corporation. "Immaterial Subsidiaries" mean, at any date, Restricted Subsidiaries affected by one or more events described in clause (h), (i), (j) or (k) of Article VII that (a) have (in the aggregate) consolidated assets representing less than 5% of the consolidated assets of the Borrower and its Restricted Subsidiaries as of such date, determined in accordance with GAAP, and (b) had (in the aggregate) consolidated revenues and consolidated net income, in each case for the period of four consecutive fiscal quarters of the Borrower most recently ended as of such date for which financial statements have been delivered pursuant to Section 5.01, representing less than 5% of the revenues and consolidated net income, respectively, of the Borrower and its Restricted Subsidiaries for 15 such period, determined in accordance with GAAP; provided that all Restricted Subsidiaries affected by events described in such clauses of Article VII shall be consolidated for purposes of determining compliance with clauses (a) and (b) above. "Indebtedness" of any Person means, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (d) all obligations of such Person in respect of the deferred purchase price of property or services (excluding accounts payable incurred in the ordinary course of business that are not overdue by more than 60 days, unless the payment thereof is being contested in good faith), (e) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed, (f) all Guarantees by such Person of Indebtedness of others, (g) all Capital Lease Obligations of such Person, (h) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty and (i) all obligations, contingent or otherwise, of such Person in respect of bankers' acceptances. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person's ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor. Notwithstanding the foregoing, "Indebtedness" shall not include (i) deferred taxes or (ii) unsecured indebtedness of the Borrower or any Subsidiary to finance insurance premiums in a principal amount not in excess of the casualty and other insurance premiums to be paid by the Borrower or any Restricted Subsidiary for a three-year period beginning on the date of any incurrence of such indebtedness. "Indemnified Taxes" means Taxes other than Excluded Taxes. 16 "Indemnity, Subrogation and Contribution Agreement" means the Indemnity, Subrogation and Contribution Agreement, substantially in the form of Exhibit D, among the Borrower, the Subsidiary Loan Parties and the Administrative Agent. "Information Memorandum" means the Confidential Information Memorandum dated July 1997 relating to the Borrower and the Transactions. "Interest Election Request" means a request by the Borrower to convert or continue a Revolving Borrowing or Term Borrowing in accordance with Section 2.07. "Interest Payment Date" means (a) with respect to any ABR Loan (other than a Swingline Loan), the last day of each March, June, September and December, (b) with respect to any Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest Period of more than three months' duration, each day prior to the last day of such Interest Period that occurs at intervals of three months' duration after the first day of such Interest Period, and (c) with respect to any Swingline Loan, the day that such Loan is required to be repaid. "Interest Period" means, with respect to any Eurodollar Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day in the calendar month that is one, two, three or six months thereafter, as the Borrower may elect; provided, that (i) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day and (ii) any Interest Period that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period. For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of 17 such Borrowing. "IPO" means the issuance by the Borrower of shares of its common stock to the public pursuant to a bona fide underwritten public offering. "Issuing Bank" means The Chase Manhattan Bank, in its capacity as the issuer of Letters of Credit hereunder, and its successors in such capacity as provided in Section 2.05(i) and such other financial institutions as may become Issuing Banks as provided in Section 2.05(i). The Issuing Bank may, in its discretion, arrange for one or more Letters of Credit to be issued by Affiliates of the Issuing Bank, subject to the consent of the Borrower which shall not be unreasonably withheld, in which case the term "Issuing Bank" shall include any such Affiliate with respect to Letters of Credit issued by such Affiliate. In the event that there is more than one Issuing Bank at any time, references herein and in the other Loan Documents to the Issuing Bank shall be deemed to refer to the Issuing Bank in respect of the applicable Letter of Credit or to all Issuing Banks, as the context requires. Notwithstanding the foregoing, the U.S. Bank of Utah shall be deemed to be an Issuing Bank with respect to the Existing Letters of Credit but shall not be obligated to issue any additional Letters of Credit hereunder. "LC Availability Period" means the period from and including the Effective Date to but excluding the earlier of (a) the date that is five Business Days prior to the Revolving Maturity Date and (b) the date of termination of the Revolving Commitments. "LC Disbursement" means a payment made by the Issuing Bank pursuant to a Letter of Credit. "LC Exposure" means, at any time, the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time plus (b) the aggregate amount of all LC Disbursements that have not yet been reimbursed by or on behalf of the Borrower at such time. The LC Exposure of any Revolving Lender at any time shall be its Applicable Percentage of the total LC Exposure at such time. "Lenders" means the Persons listed on Schedule 2.01 and any other Person that shall have become a party 18 hereto pursuant to an Assignment and Acceptance, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Acceptance. Unless the context otherwise requires, the term "Lenders" includes the Swingline Lender. "Letter of Credit" means any letter of credit issued pursuant to this Agreement. Each Existing Letter of Credit shall be deemed to constitute a Letter of Credit issued hereunder on the Effective Date for all purposes of the Loan Documents. "Leverage Ratio" means, on any date, the ratio of (a) Total Debt as of such date to (b) Consolidated EBITDA for the period of four consecutive fiscal quarters of the Borrower most recently ended as of such date, all determined on a consolidated basis in accordance with GAAP. "LIBO Rate" means, with respect to any Eurodollar Borrowing for any Interest Period, the rate appearing on Page 3750 of the Telerate Service (or on any successor or substitute page of such Service, or any successor to or substitute for such Service, providing rate quotations comparable to those currently provided on such page of such Service, as determined by the Administrative Agent from time to time for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, as the rate for dollar deposits with a maturity comparable to such Interest Period. In the event that such rate is not available at such time for any reason, then the "LIBO Rate" with respect to such Eurodollar Borrowing for such Interest Period shall be the rate at which dollar deposits of $5,000,000 and for a maturity comparable to such Interest Period are offered by the principal London office of the Administrative Agent in immediately available funds in the London interbank market at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period. "Lien" means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset, (b) the interest of a vendor or a lessor 19 under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities. "Loan Documents" means this Agreement, the Guarantee Agreement, the Indemnity, Subrogation and Contribution Agreement and the Security Documents. "Loan Parties" means the Borrower and the Subsidiary Loan Parties. "Loans" means the loans made by the Lenders to the Borrower pursuant to this Agreement. "Margin Stock" shall have the meaning assigned to such term in Regulation U. "Material Adverse Effect" means a material adverse effect on (a) the business, assets, operations, prospects or condition, financial or otherwise, of the Borrower and the Restricted Subsidiaries taken as a whole, (b) the ability of any Loan Party to perform any of its obligations under any Loan Document or (c) the rights of or benefits available to the Lenders under any Loan Document. "Material Indebtedness" means Indebtedness (other than the Loans and Letters of Credit), or obligations in respect of one or more Hedging Agreements, of any one or more of the Borrower and its Restricted Subsidiaries in an aggregate principal amount exceeding $5,000,000. For purposes of determining Material Indebtedness, the "principal amount" of the obligations of the Borrower or any Restricted Subsidiary in respect of any Hedging Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that the Borrower or such Restricted Subsidiary would be required to pay if such Hedging Agreement were terminated at such time. "Moody's" means Moody's Investors Service, Inc. "Mortgage" means a mortgage, deed of trust, assignment of leases and rents, leasehold mortgage or 20 other security document granting a Lien on any Mortgaged Property to secure the Obligations. Each Mortgage shall be satisfactory in form and substance to the Collateral Agent. "Mortgaged Property" means, initially, each parcel of real property and the improvements thereto owned by a Loan Party and identified on Schedule 1.01(a), and includes each other parcel of real property and improvements thereto with respect to which a Mortgage is granted pursuant to Section 5.12 or 5.13. "Multiemployer Plan" means a multiemployer plan as defined in Section 4001(a)(3) of ERISA. "Net Proceeds" means, with respect to any event (a) the cash proceeds received by the Borrower and the Restricted Subsidiaries in respect of such event including (i) any cash received in respect of any non-cash proceeds, but only as and when received, (ii) in the case of a casualty, insurance proceeds, and (iii) in the case of a condemnation or similar event, condemnation awards and similar payments, net of (b) the sum of (i) all reasonable fees and out-of-pocket expenses paid by the Borrower and the Restricted Subsidiaries to third parties (other than to the Borrower or a Subsidiary) in connection with such event, (ii) in the case of a sale, transfer or other disposition of an asset (including pursuant to a sale and leaseback transaction or a casualty or other insured damage or condemnation or similar proceeding), the amount of all payments required to be made by the Borrower and the Restricted Subsidiaries as a result of such event to repay Indebtedness (other than Loans) secured by such asset or otherwise subject to mandatory prepayment as a result of such event, and (iii) the amount of all taxes paid (or reasonably estimated to be payable) by the Borrower and the Restricted Subsidiaries, and the amount of any reserves established by the Borrower and the Restricted Subsidiaries to fund contingent liabilities reasonably estimated to be payable, in each case during the year that such event occurred or the next succeeding year and that are directly attributable to such event (as determined reasonably and in good faith by the chief financial officer of the Borrower). "Net Working Capital" means, at any date, (a) the consolidated current assets of the Borrower and its 21 consolidated Restricted Subsidiaries as of such date (excluding cash and Permitted Investments) minus (b) the consolidated current liabilities of the Borrower and its consolidated Restricted Subsidiaries as of such date (excluding current liabilities in respect of Indebtedness). Net Working Capital at any date may be a positive or negative number. Net Working Capital increases when it becomes more positive or less negative and decreases when it becomes less positive or more negative. "Obligations" has the meaning assigned to such term in the Security Agreement. "Other Taxes" means any and all current or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made under any Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, any Loan Document. "PBGC" means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions. "Perfection Certificate" means a certificate in the form of Annex 1 to the Security Agreement or any other form approved by the Collateral Agent. "Permitted Acquisition" means any acquisition (other than the CT Film Acquisition) by the Borrower or a Restricted Subsidiary of the Borrower of all or substantially all the assets of, or all the shares of capital stock of or other equity interests in, a Person or division or line of business of a Person if, immediately after giving effect thereto, (a) no Default has occurred and is continuing or would result therefrom, (b) all transactions related thereto are consummated in accordance with applicable laws, (c) each Subsidiary formed for the purpose of or resulting from such acquisition shall be a Restricted Subsidiary and all the capital stock of each such Subsidiary shall be owned directly by the Borrower or a Restricted Subsidiary of the Borrower and all actions required to be taken with respect to such acquired or newly formed Subsidiary under Sections 5.12 and 5.13 have been taken, (d) the Borrower and its Restricted Subsidiaries are in compliance, on a pro forma basis after giving effect to such acquisition, with the 22 covenants contained in Sections 6.14, 6.15 and 6.16 recomputed as at the last day of the most recently ended fiscal quarter of the Borrower for which financial statements are available, as if such acquisition (and any related incurrence or repayment of Indebtedness, with any new Indebtedness being deemed to be amortized over the applicable testing period in accordance with its terms, and assuming that any Revolving Loans borrowed in connection with such acquisition are repaid with excess cash balances when available) had occurred on the first day of each relevant period for testing such compliance and (e) the Borrower has delivered to the Administrative Agent an officers' certificate to the effect set forth in clauses (a), (b), (c) and (d) above, together with all relevant financial information for the Person or assets to be acquired. For purposes of determining pro forma compliance with the covenants referred to in clause (d) above and for purposes of Section 1.05 as provided therein, the Borrower may give effect to synergistic benefits anticipated to be realized in connection with the proposed acquisition to the extent (but only to the extent) that the Borrower would be permitted to give effect to such benefits in pro forma financial statements to be filed with the SEC and prepared in accordance with Article 11 of Regulation S-X under the Securities Exchange Act of 1934, as amended, and the applicable interpretations of the SEC, in each case as in effect on the date of this Agreement. "Permitted Encumbrances" means: (a) Liens imposed by law for taxes that are not yet due or are being contested in compliance with Section 5.04; (b) carriers', warehousemen's, mechanics', materialmen's, processors', landlords', repairmen's and other like Liens imposed by law, arising in the ordinary course of business and securing obligations that are not overdue by more than 30 days or are being contested in compliance with Section 5.04; (c) pledges and deposits made in the ordinary course of business in compliance with workers' compensation, unemployment insurance and other social security laws or regulations; 23 (d) deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, in each case in the ordinary course of business; (e) judgment liens in respect of judgments that do not constitute an Event of Default under clause (k) of Article VII; and (f) Liens disclosed on title policies delivered to the Administrative Agent prior to the execution of this Agreement in respect of any Mortgaged Property and easements, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by law or arising in the ordinary course of business that do not secure any monetary obligations and do not materially detract from the value of the affected property or interfere with the ordinary conduct of business of the Borrower or any Subsidiary; provided that the term "Permitted Encumbrances" shall not include any Lien securing Indebtedness. "Permitted Investments" means (i) a marketable obligation, maturing within two years after issuance thereof, issued or guaranteed by the United States of America or an instrumentality or agency thereof, (ii) a certificate of deposit or banker's acceptance, maturing within one year after issuance thereof, issued by any Lender, or a national or state bank or trust company or a European, Canadian or Japanese bank in each case having capital, surplus and undivided profits of at least $100,000,000 and whose long-term unsecured debt has a rating of "A" or better by S&P or A2 or better by Moody's or the equivalent rating by any other nationally recognized rating agency (provided that the aggregate face amount of all investments in certificates of deposit or banker's acceptances issued by the principal offices of or branches of such European or Japanese banks located outside the United States shall not at an time exceed 33-1/3% of all investments described in this definition), (iii) open market commercial paper, maturing within 270 days after issuance thereof, which has a rating of A1 or better by S&P or P1 or better by Moody's, or the equivalent rating by any other nationally recognized rating 24 agency, (iv) repurchase agreements and reverse repurchase agreements with a term not in excess of one year with any financial institution which has been elected a primary government securities dealer by the Federal Reserve Board or whose securities are rated AA or better by S&P or Aa3 or better by Moody's or the equivalent rating by any other nationally recognized rating agency relating to marketable direct obligations issued or unconditionally guaranteed by the United States of America or any agency or instrumentality thereof and backed by the full faith and credit of the United States of America, (v) "Money Market" preferred stock maturing within six months after issuance thereof or municipal bonds issued by a corporation organized under the laws of any state of the United States, which has a rating of "A" or better by S&P or Moody's or the equivalent rating by any other nationally recognized rating agency and (vi) tax exempt floating rate option tender bonds backed by letters of credit issued by a national or state bank whose long-term unsecured debt has a rating of AA or better by S&P or Aa2 or better by Moody's or the equivalent rating by any other nationally recognized rating agency. "Person" means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity. "Plan" means any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA, Section 412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA. "Pledge Agreement" means the Pledge Agreement, substantially in the form of Exhibit E, among the Borrower, the Subsidiaries party thereto and the Collateral Agent for the benefit of the Secured Parties. "Prepayment Event" means: (a) any sale, transfer or other disposition (including pursuant to a sale and leaseback transaction) of any property or asset of the Borrower or any Restricted Subsidiary, other than (i) disposi- 25 tions described in clauses (a), (b), (c), (d), (e) and (h) of Section 6.06 and (ii) other dispositions resulting in aggregate Net Proceeds not exceeding $1,000,000 during any fiscal year of the Borrower; or (b) any casualty or other insured damage to, or any taking under power of eminent domain or by condemnation or similar proceeding of, any property or asset of the Borrower or any Restricted Subsidiary, other than such events resulting in aggregate Net Proceeds not exceeding $1,000,000 during any fiscal year of the Borrower; or (c) the issuance by the Borrower or any Restricted Subsidiary of any equity securities, or the receipt by the Borrower or any Restricted Subsidiary of any capital contribution, other than (i) any such issuance of equity securities to, or receipt of any such capital contribution from, the Borrower or a Restricted Subsidiary and (ii) the issuance by the Borrower of equity securities to officers and directors of the Borrower and its Restricted Subsidiaries resulting in aggregate Net Proceeds not exceeding $1,000,000 during any fiscal year of the Borrower; or (d) the incurrence by the Borrower or any Re- stricted Subsidiary of any Indebtedness, other than Indebtedness permitted by Section 6.01; provided that, with respect to any event described in clause (a) or (b) above, if the Borrower shall deliver a certificate of a Financial Officer to the Administrative Agent at the time of such event (i) setting forth the Borrower's or a Restricted Subsidiary's intent to use the Net Proceeds of such event to repair the assets that are the subject of such event, or to use the Net Proceeds to acquire other assets to be used in a line of business permitted under Section 6.04(b), in each case within 360 days of receipt of such Net Proceeds, or, in the case of Net Proceeds resulting from the disposition of Foreign Assets, to finance a Permitted Acquisition in the United States or Canada within 540 days of receipt of such Net Proceeds and (ii) certifying that no Default has occurred and is continuing, then such event shall not constitute a Prepayment Event except to the extent the Net Proceeds 26 therefrom are not so used at the end of such 360-day or 540-day period, as applicable, at which time such event shall be deemed a Prepayment Event with Net Proceeds equal to the Net Proceeds so remaining unused; provided further that the provisions of the foregoing exception allowing Net Proceeds to be used to finance Permitted Acquisitions in Canada shall be subject to the requirement that all Subsidiaries resulting from any such Permitted Acquisitions must be treated as Subsidiary Loan Parties for purposes of this Agreement. "Prime Rate" means the rate of interest per annum publicly announced from time to time by The Chase Manhattan Bank as its prime rate in effect at its principal office in New York City; each change in the Prime Rate shall be effective from and including the date such change is publicly announced as being effective. "Register" has the meaning set forth in Section 9.04. "Regulation G" shall mean Regulation G of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof. "Regulation U" shall mean Regulation U of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof. "Regulation X" shall mean Regulation X of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof. "Related Parties" means, with respect to any specified Person, such Person's Affiliates and the respective directors, officers, employees, agents and advisors of such Person and such Person's Affiliates. "Release" has the meaning set forth in Section 101(22) of CERCLA. "Required Lenders" means, at any time, Lenders having Revolving Exposures, Term Loans and unused Commitments representing more than 50% of the sum of the total Revolving Exposures, outstanding Term Loans and unused Commitments at such time. 27 "Restricted Payment" means any dividend or other distribution (whether in cash, securities or other property) with respect to any shares of any class of capital stock of the Borrower or any Restricted Subsidiary, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such shares of capital stock of the Borrower or any Restricted Subsidiary or any option, warrant or other right to acquire any such shares of capital stock of the Borrower or any Restricted Subsidiary. "Restricted Subsidiary" means any Subsidiary that is not an Unrestricted Subsidiary. "Revolving Availability Period" means the period from and including the Effective Date to but excluding the earlier of the Revolving Maturity Date and the date of termination of the Revolving Commitments. "Revolving Commitment" means, with respect to each Lender, the commitment, if any, of such Lender to make Revolving Loans and to acquire participations in Letters of Credit and Swingline Loans hereunder, expressed as an amount representing the maximum aggregate amount of such Lender's Revolving Exposure hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.08 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 9.04. The initial amount of each Lender's Revolving Commitment is set forth on Schedule 2.01, or in the Assignment and Acceptance pursuant to which such Lender shall have assumed its Revolving Commitment, as applicable. The initial aggregate amount of the Lenders' Revolving Commitments is $150,000,000. "Revolving Exposure" means, with respect to any Lender at any time, the sum of the outstanding principal amount of such Lender's Revolving Loans and its LC Exposure and Swingline Exposure at such time. "Revolving Lender" means a Lender with a Revolving Commitment or, if the Revolving Commitments have terminated or expired, a Lender with Revolving Exposure. "Revolving Loan" has the meaning set forth in 28 Section 2.01. "Revolving Maturity Date" means September 30, 2004. "S&P" means Standard & Poors. "SEC" means the Securities and Exchange Commission. "Secured Parties" shall have the meaning assigned to such term in the Security Agreement. "Security Agreement" means the Security Agreement, substantially in the form of Exhibit F, among the Borrower, the Subsidiary Loan Parties and the Collateral Agent for the benefit of the Secured Parties. "Security Documents" means the Security Agreement, the Pledge Agreement, the Mortgages and each other security agreement or other instrument or document executed and delivered pursuant to Section 5.12 or 5.13 to secure any of the Obligations. "Senior Subordinated Note Documents" means the Senior Subordinated Notes, the indenture under which the Senior Subordinated Notes are issued and all other documents evidencing, guaranteeing or otherwise governing the terms of the Senior Subordinated Notes. "Senior Subordinated Notes" means (i) the senior subordinated notes in an aggregate principal amount not less than $100,000,000 and not more than $125,000,000 issued by the Borrower in a Rule 144A or other private placement (the "Initial Notes") and (ii) any senior subordinated notes with substantially identical terms to the Initial Notes which are issued in exchange for the Initial Notes following the issuance of the Initial Notes as contemplated by the Senior Subordinated Note Documents. "Split-Off" means the distribution of all the issued and outstanding capital stock of the Borrower to Richard Durham, the Christena Karen H. Durham Trust and Jon M. Huntsman in exchange for some or all of the capital stock of Huntsman owned by such Persons. 29 "Split-Off Documents" means all agreements and documents providing for or to be entered into in connection with the Split-Off. "Statutory Reserve Rate" means 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 any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Board to which the Administrative Agent is subject (a) with respect to the Base CD Rate, for new negotiable nonpersonal time deposits in dollars of over $100,000 with maturities approximately equal to three months and (b) with respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in Regulation D of the Board). Such reserve percentages shall include those imposed pursuant to such Regulation D. Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under such Regulation D or any comparable regulation. The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage. "subsidiary" means, with respect to any Person (the "parent") at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent's consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity (a) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held, or (b) that is, as of such date, otherwise Controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent. "Subsidiary" means any subsidiary of the Bor- 30 rowers. "Subsidiary Loan Party" means any Restricted Subsidiary; provided that a Foreign Subsidiary shall not be a Subsidiary Loan Party if the Borrower would suffer adverse tax consequences if such Foreign Subsidiary were to be a Subsidiary Loan Party. "Swingline Exposure" means, at any time, the aggregate principal amount of all Swingline Loans outstanding at such time. The Swingline Exposure of any Lender at any time shall be its Applicable Percentage of the total Swingline Exposure at such time. "Swingline Lender" means The Chase Manhattan Bank, in its capacity as lender of Swingline Loans hereunder. "Swingline Loan" has the meaning set forth in Section 2.04. "Taxes" means any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any Governmental Authority. "Term Commitment" means, with respect to each Lender, the commitment, if any, of such Lender to make a Term Loan hereunder on the Effective Date, expressed as an amount representing the maximum principal amount of the Term Loan to be made by such Lender hereunder, as such commitment may be reduced pursuant to Section 2.08. The initial aggregate amount of the Lenders' Term Commitments is $100,000,000. The initial amount of each Lender's Term Commitment is set forth on Schedule 2.01. "Term Loan" has the meaning set forth in Sec- tion 2.01. "Term Loan Lender" means a Lender with a Term Commitment or an outstanding Term Loan. "Term Loan Maturity Date" means September 30, 2005. "Three-Month Secondary CD Rate" means, for any day, the secondary market rate for three-month certificates of deposit reported as being in effect on such day 31 (or, if such day is not a Business Day, the next preceding Business Day) by the Board through the public information telephone line of the Federal Reserve Bank of New York (which rate will, under the current practices of the Board, be published in Federal Reserve Statistical Release H.15(519) during the week following such day) or, if such rate is not so reported on such day or such next preceding Business Day, the average of the secondary market quotations for three-month certificates of deposit of major money center banks in New York City received at approximately 10:00 a.m., New York City time, on such day (or, if such day is not a Business Day, on the next preceding Business Day) by the Administrative Agent from three negotiable certificate of deposit dealers of recognized standing selected by it. "Total Debt" means, as of any date of determination, without duplication, the aggregate principal amount of Indebtedness of the Borrower and the Restricted Subsidiaries outstanding as of such date, determined on a consolidated basis in accordance with GAAP (other than the Indebtedness of the type referred to in clause (h) of the definition of the term "Indebtedness", except to the extent of any unreimbursed drawings thereunder). "Transaction Costs" means the fees and expenses incurred by, or required to be reimbursed or paid by, the Borrower and its Subsidiaries in connection in the Transactions. "Transactions" means the Split-Off and the Financing Transactions. "Type", when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate. "Unrestricted Subsidiary" means (a) any Subsidiary organized after the date of this Agreement for the purpose of acquiring the stock or assets of another Person or for start-up ventures or activities and designated as an Unrestricted Subsidiary by the Borrower by notice to the Administrative Agent at or prior to the time of its organization and (b) any Subsidiary of any Unrestricted Subsidiary. By notice to the Administrative 32 Agent, the Borrower may declare an Unrestricted Subsidiary to be a Restricted Subsidiary; provided that (i) no Default has occurred and is continuing or would result from such declaration and (ii) the representations and warranties of the Borrower herein would be true and correct on and as of the date of such declaration (after giving effect to such declaration). The Borrower may not declare a Restricted Subsidiary to be an Unrestricted Subsidiary. "Wholly Owned Subsidiary" means a Subsidiary of which securities (except for directors' qualifying shares or other de minimus shares) or other ownership interests representing 100% of the equity are at the time owned, directly or indirectly, by the Borrower. "Withdrawal Liability" means liability of the Borrower or any ERISA Affiliate to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA. SECTION 1.2. Classification of Loans and Borrowings. For purposes of this Agreement, Loans may be classified and referred to by Class (e.g., a "Revolving Loan") or by Type (e.g., a "Eurodollar Loan") or by Class and Type (e.g., a "Eurodollar Revolving Loan"). Borrowings also may be classified and referred to by Class (e.g., a "Revolving Borrowing") or by Type (e.g., a "Eurodollar Borrowing") or by Class and Type (e.g., a "Eurodollar Revolving Borrowing"). SECTION 1.3. Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation". The word "will" shall be construed to have the same meaning and effect as the word "shall". Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth 33 herein), (b) any reference herein to any Person shall be construed to include such Person's successors and assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) the words "asset" and "property" shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights. SECTION 1.4. Accounting Terms; GAAP; Treatment of Unrestricted Subsidiaries. (a) Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided that, if the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrower that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith. (b) Except as otherwise expressly provided herein, all accounting and financial calculations and determinations hereunder shall be made without consolidating the accounts of Unrestricted Subsidiaries with those of the Borrower or any Restricted Subsidiary, notwithstanding that such treatment is inconsistent with GAAP. SECTION 1.5. Certain Interim Financial Calculations. Prior to September 30, 1998, solely for purposes of determining compliance with Sections 6.14 and 6.15 and for purposes of determining the Leverage Ratio, Consolidated Net Income for the period of four consecu- 34 tive fiscal quarters ended (a) December 31, 1997, shall be deemed to be equal to the product of (i) Consolidated Net Income for the fiscal quarter ended December 31, 1997, multiplied by (ii) four, (b) March 31, 1998, shall be deemed to be equal to the product of (i) Consolidated Net Income for the two consecutive fiscal quarters ended March 31, 1998, multiplied by (ii) two and (c) June 30, 1998, shall be deemed to be equal to the product of (i) Consolidated Net Income for the three consecutive fiscal quarters ended June 30, 1998, multiplied by (ii) four-thirds. Related calculations for Cash Interest Expense for the same periods shall be determined in the same manner. If a Permitted Acquisition occurs, then prior to the end of the period of four consecutive fiscal quarters commencing with the fiscal quarter during which such Permitted Acquisition occurs (each such quarter hereinafter referred to as an "Acquisition Fiscal Quarter"), solely for purposes of determining compliance with Sections 6.14 and 6.15 and for purposes of determining the Leverage Ratio, Consolidated Net Income for the trailing four fiscal quarters, calculated at the end of each of the Acquisition Fiscal Quarters, shall equal the sum of (a) Consolidated EBITDA for the trailing four fiscal quarters and (b) with respect to the first Acquisition Fiscal Quarter, Acquisition EBITDA multiplied by seven-eighths; (ii) with respect to the second Acquisition Fiscal Quarter, Acquisition EBITDA multiplied by five-eighths; (iii) with respect to the third Acquisition Fiscal Quarter, Acquisition EBITDA, multiplied by three-eighths; and (iv) with respect to the fourth Acquisition Fiscal Quarter, Adjusted EBITDA multiplied by one-eighth. For purposes of the immediately preceding paragraph, "Acquisition EBITDA" means, the sum of (i) the consolidated EBITDA of the entity or business associated with the Permitted Acquisition for the four fiscal quarters immediately preceding the date of effectiveness of the Permitted Acquisition, calculated on the same basis as required in the definition of "Consolidated EBITDA" as if calculated with respect to the Borrower but without giving effect to clauses (f), (g), (h) and (i) and clause (e) to the extent of Excluded Charges, and (ii) any synergistic benefits permitted to be realized pursuant to the last sentence of the definition of "Permitted Acquisition". 35 ARTICLE II The Credits SECTION 2.1. Commitments. Subject to the terms and conditions set forth herein, each Lender agrees (a) to make a loan (a "Term Loan") to the Borrower on the Effective Date in the principal amount of its Term Commitment and (b) to make loans ("Revolving Loans") to the Borrower from time to time during the Revolving Availability Period in an aggregate principal amount that will not result in such Lender's Revolving Exposure exceeding such Lender's Revolving Commitment (after giving effect to the application of any proceeds being applied contemporaneously with the advance of such Revolving Loans). Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, prepay and reborrow Revolving Loans. Amounts repaid in respect of Term Loans may not be reborrowed. SECTION 2.2. Loans and Borrowings. (a) Each Loan (other than a Swingline Loan) shall be made as part of a Borrowing consisting of Loans of the same Class and Type made by the Lenders ratably in accordance with their respective Commitments of the applicable Class. The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided that the Commitments of the Lenders are several and no Lender shall be responsible for any other Lender's failure to make Loans as required. (b) Subject to Section 2.14, each Revolving Borrowing and Term Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request in accordance herewith. Each Swingline Loan shall be an ABR Loan. Each Lender at its option may make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement and shall not result in any increased costs under Section 2.15 or any obligation by the Borrower to make any payment under Section 2.17 in excess of the amounts, if any, that such Lender would be entitled to claim under Section 2.15 or 2.17, as applicable, without giving effect to such change 36 in lending office. (c) At the commencement of each Interest Period for any Eurodollar Borrowing, such Borrowing shall be in an aggregate amount that is an integral multiple of $1,000,000 and not less than $5,000,000. At the time that each ABR Revolving Borrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of $500,000 and not less than $1,000,000; provided that an ABR Revolving Borrowing may be in an aggregate amount that is equal to the entire unused balance of the total Revolving Commitments or that is equal to the amount required to finance the reimbursement of an LC Disbursement as contemplated by Section 2.05(e). Each Swingline Loan shall be in an amount that is an integral multiple of $10,000 and not less than $50,000. Borrowings of more than one Type and Class may be outstanding at the same time; provided that there shall not at any time be more than a total of 8 Eurodollar Borrowings outstanding. (d) Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled to request, or to elect to convert or continue, any Borrowing if the Interest Period requested with respect thereto would end after the Revolving Maturity Date or Term Loan Maturity Date, as applicable. SECTION 2.3. Requests for Borrowings. To request a Revolving Borrowing or Term Borrowing, the Borrower shall notify the Administrative Agent of such request by telephone (a) in the case of a Eurodollar Borrowing, not later than 12:00 noon, New York City time, three Business Days before the date of the proposed Borrowing or (b) in the case of an ABR Borrowing, not later than 1:00 p.m., New York City time, one Business Day before the date of the proposed Borrowing. Each such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written Borrowing Request in a form approved by the Administrative Agent and signed by the Borrower. Each such telephonic and written Borrowing Request shall specify the following information in compliance with Section 2.02: (i) whether the requested Borrowing is to be a Revolving Borrowing or a Term Borrowing; 37 (ii) the aggregate amount of such Borrowing; (iii) the date of such Borrowing, which shall be a Business Day; (iv) subject to Section 2.02, whether such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; (v) in the case of a Eurodollar Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term "Interest Period"; and (vi) the location and number of the Borrower's account to which funds are to be disbursed, which shall comply with the requirements of Section 2.06. If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be an ABR Borrowing. If no Interest Period is specified with respect to any requested Eurodollar Revolving Borrowing, then the Borrower shall be deemed to have selected an Interest Period of one month's duration. Promptly following receipt of a Borrowing Request in accordance with this Section, the Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender's Loan to be made as part of the requested Borrowing. SECTION 2.4. Swingline Loans. (a) Subject to the terms and conditions set forth herein, the Swingline Lender agrees to make loans ("Swingline Loans") to the Borrower from time to time during the Revolving Availability Period, in an aggregate principal amount at any time outstanding that will not result in (i) the aggregate principal amount of outstanding Swingline Loans exceeding $5,000,000 or (ii) the sum of the total Revolving Exposures exceeding the total Revolving Commitments; provided that the Swingline Lender shall not be required to make a Swingline Loan to refinance an outstanding Swingline Loan. Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, prepay and reborrow Swingline Loans. (b) To request a Swingline Loan, the Borrower shall notify the Administrative Agent of such request by telephone (confirmed by telecopy), not later than 1:00 p.m., New York City time, on the day of a proposed 38 Swingline Loan. Each such notice shall be irrevocable and shall specify the requested date (which shall be a Business Day) and amount of the requested Swingline Loan. The Administrative Agent will promptly advise the Swingline Lender of any such notice received from the Borrower. The Swingline Lender shall make each Swingline Loan available to the Borrower by means of a credit to the general deposit account of the Borrower with the Swingline Lender (or, in the case of a Swingline Loan made to finance the reimbursement of an LC Disbursement as provided in Section 2.05(e), by remittance to the Issuing Bank) by 2:00 p.m., New York City time, on the requested date of such Swingline Loan. (c) The Swingline Lender may by written notice given to the Administrative Agent not later than 10:00 a.m., New York City time, on any Business Day require the Revolving Lenders to acquire participations on such Business Day in all or a portion of the Swingline Loans outstanding. Such notice shall specify the aggregate amount of Swingline Loans in which Revolving Lenders will participate. Promptly upon receipt of such notice, the Administrative Agent will give notice thereof to each Revolving Lender, specifying in such notice such Lender's Applicable Percentage of such Swingline Loan or Loans. Each Revolving Lender hereby absolutely and unconditionally agrees, upon receipt of notice as provided above, to pay to the Administrative Agent, for the account of the Swingline Lender, such Lender's Applicable Percentage of such Swingline Loan or Loans. Each Revolving Lender acknowledges and agrees that its obligation to acquire participations in Swingline Loans pursuant to this paragraph is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of a Default or reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. Each Revolving Lender shall comply with its obligation under this paragraph by making a wire transfer to the Administrative Agent for the benefit of the Swingline Lender of immediately available funds, in the same manner as provided in Section 2.06 with respect to Loans made by such Lender (and Section 2.06 shall apply, mutatis mutandis, to the payment obligations of the Revolving Lenders), and the Administrative Agent shall promptly pay to the Swingline Lender the amounts so received by it from the Revolving 39 Lenders. The Administrative Agent shall notify the Borrower of any participations in any Swingline Loan acquired pursuant to this paragraph, and thereafter payments in respect of such Swingline Loan shall be made to the Administrative Agent and not to the Swingline Lender. Any amounts received by the Swingline Lender from the Borrower (or other party on behalf of the Borrower) in respect of a Swingline Loan after receipt by the Swingline Lender of the proceeds of a sale of participations therein shall be promptly remitted to the Administrative Agent; any such amounts received by the Administrative Agent shall be promptly remitted by the Administrative Agent to the Revolving Lenders that shall have made their payments pursuant to this paragraph and to the Swingline Lender, as their interests may appear. The purchase of participations in a Swingline Loan pursuant to this paragraph shall not relieve the Borrower of any default in the payment thereof. SECTION 2.5. Letters of Credit. (a) General. Subject to the terms and conditions set forth herein, the Borrower may request the issuance of Letters of Credit for its own account, in a form reasonably acceptable to the Administrative Agent and the Issuing Bank, at any time and from time to time during the LC Availability Period. In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by the Borrower to, or entered into by the Borrower with, the Issuing Bank relating to any Letter of Credit, the terms and conditions of this Agreement shall control. (b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. To request the issuance of a Letter of Credit (or the amendment, renewal or extension of an outstanding Letter of Credit), the Borrower shall hand deliver or telecopy (or transmit by electronic communication, if arrangements for doing so have been approved by the Issuing Bank) to the Issuing Bank and the Administrative Agent (reasonably in advance of the requested date of issuance, amendment, renewal or extension) a notice requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended, renewed or extended, and specifying the date of issuance, amendment, renewal or extension (which shall be a Business Day), the date on which such Letter of Credit 40 is to expire (which shall comply with paragraph (c) of this Section), the amount of such Letter of Credit, the name and address of the beneficiary thereof and such other information as shall be necessary to prepare, amend, renew or extend such Letter of Credit. If requested by the Issuing Bank, the Borrower also shall submit a letter of credit application on the Issuing Bank's standard form in connection with any request for a Letter of Credit. A Letter of Credit shall be issued, amended, renewed or extended only if (and upon issuance, amendment, renewal or extension of each Letter of Credit the Borrower shall be deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or extension (i) the LC Exposure shall not exceed $20,000,000 and (ii) the total Revolving Exposures shall not exceed the total Revolving Commitments. (c) Expiration Date. Each Letter of Credit shall expire at or prior to the close of business on the earlier of (i) the date one year after the date of the issuance of such Letter of Credit (or, in the case of any renewal or extension thereof, one year after such renewal or extension) and (ii) the date that is five Business Days prior to the Revolving Maturity Date. (d) Participations. By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) and without any further action on the part of the Issuing Bank or the Lenders, the Issuing Bank hereby grants to each Revolving Lender, and each Revolving Lender hereby acquires from the Issuing Bank, a participation in such Letter of Credit equal to such Lender's Applicable Percentage of the aggregate amount available to be drawn under such Letter of Credit. In consideration and in furtherance of the foregoing, each Revolving Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of the Issuing Bank, such Lender's Applicable Percentage of each LC Disbursement made by the Issuing Bank and not reimbursed by the Borrower on the date due as provided in paragraph (e) of this Section, or of any reimbursement payment required to be refunded to the Borrower for any reason. Each Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any 41 amendment, renewal or extension of any Letter of Credit or the occurrence and continuance of a Default or reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. (e) Reimbursement. If the Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit, the Borrower shall reimburse such LC Disbursement by paying to the Administrative Agent an amount equal to such LC Disbursement not later than 12:00 noon, New York City time, on the date that such LC Disbursement is made, if the Borrower shall have received notice of such LC Disbursement prior to 10:00 a.m., New York City time, on such date, or, if such notice has not been received by the Borrower prior to such time on such date, then not later than 12:00 noon, New York City time, on (i) the Business Day that the Borrower receives such notice, if such notice is received prior to 10:00 a.m., New York City time, on the day of receipt, or (ii) the Business Day immediately following the day that the Borrower receives such notice, if such notice is not received prior to such time on the day of receipt; provided that, if the Borrower does not otherwise elect by notice to the Administrative Agent to make such payment, the Borrower shall be deemed to have requested in accordance with Section 2.03 (but without regard to the minimum borrowing amounts specified in Section 2.02) that such LC Disbursement be financed with an ABR Revolving Borrowing in an amount equal to such LC Disbursement, the Administrative Agent shall notify the Revolving Lenders thereof, the Revolving Lenders shall (subject to the conditions to borrowing herein) advance their respective ABR Revolving Loans (which shall be applied to reimburse such LC Disbursement) and, to the extent such ABR Revolving Loans are so advanced and applied, the Borrower's obligation to make such payment shall be discharged and replaced by the resulting ABR Revolving Loans. If and to the extent that the Borrower's obligation to make such payment is not fully discharged and replaced by ABR Revolving Loans as aforesaid (whether as a result of the failure to satisfy any condition to borrowing or otherwise) and if the Borrower otherwise fails to make such payment when due, the Administrative Agent shall notify each Revolving Lender of the applicable LC Disbursement, the payment then due from the Borrower in respect thereof and such Lender's Applicable Percentage thereof. Promptly follow- 42 ing receipt of such notice, each Revolving Lender shall pay to the Administrative Agent its Applicable Percentage of the payment then due from the Borrower, in the same manner as provided in Section 2.06 with respect to Loans made by such Lender (and Section 2.06 shall apply, mutatis mutandis, to the payment obligations of the Revolving Lenders), and the Administrative Agent shall promptly pay to the Issuing Bank the amounts so received by it from the Revolving Lenders. Promptly following receipt by the Administrative Agent of any payment from the Borrower pursuant to this paragraph, the Administrative Agent shall distribute such payment to the Issuing Bank or, to the extent that Revolving Lenders have made payments pursuant to this paragraph to reimburse the Issuing Bank, then to such Lenders and the Issuing Bank as their interests may appear. Any payment made by a Revolving Lender pursuant to this paragraph to reimburse the Issuing Bank for any LC Disbursement (other than the funding of ABR Revolving Loans as contemplated above) shall not constitute a Loan and shall not relieve the Borrower of its obligation to reimburse such LC Disbursement. (f) Obligations Absolute. The Borrower's obligation to reimburse LC Disbursements as provided in paragraph (e) of this Section shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit or this Agreement, or any term or provision therein, (ii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by the Issuing Bank under a Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit, or (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of, or provide a right of setoff against, the Borrower's obligations hereunder. Neither the Administrative Agent, the Lenders nor the Issuing Bank, nor any of their Related Parties, shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irre- 43 spective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of the Issuing Bank; provided that nothing in this Section 2.05 shall be construed to excuse the Issuing Bank from liability to the Borrower to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the Borrower to the extent permitted by applicable law) suffered by the Borrower that are caused by the Issuing Bank's failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. The parties hereto expressly agree that, in the absence of gross negligence or wilful misconduct on the part of the Issuing Bank, the Issuing Bank shall be deemed to have exercised care in each such determination. In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented that appear on their face to be in substantial compliance with the terms of a Letter of Credit, the Issuing Bank may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit. (g) Disbursement Procedures. The Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit. The Issuing Bank shall promptly notify the Administrative Agent and the Borrower by telephone (confirmed by telecopy) of such demand for payment and whether the Issuing Bank has made or will make an LC Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve the Borrower of its obligation to reimburse the Issuing Bank and the Revolving Lenders with respect to any such LC Disbursement. (h) Interim Interest. If the Issuing Bank shall make any LC Disbursement, then, unless the Borrower 44 shall reimburse such LC Disbursement in full on the date such LC Disbursement is made, the unpaid amount thereof shall bear interest, for each day from and including the date such LC Disbursement is made to but excluding the date that the Borrower reimburses such LC Disbursement, at the rate per annum then applicable to ABR Revolving Loans; provided that, if the Borrower fails to reimburse such LC Disbursement when due pursuant to paragraph (e) of this Section, then Section 2.13(c) shall apply. Interest accrued pursuant to this paragraph shall be for the account of the Issuing Bank, except that interest accrued on and after the date of payment by any Revolving Lender pursuant to paragraph (e) of this Section to reimburse the Issuing Bank shall be for the account of such Lender to the extent of such payment. (i) Replacement of the Issuing Bank; Additional Issuing Banks. The Issuing Bank may be replaced at any time by written agreement among the Borrower, the Administrative Agent, the replaced Issuing Bank and the successor Issuing Bank. One or more Lenders may be appointed as additional Issuing Banks by written agreement among the Borrower, the Administrative Agent (whose consent will not be unreasonably withheld) and the Lender that is to be so appointed. The Administrative Agent shall notify the Lenders of any such replacement of the Issuing Bank or any such additional Issuing Bank. At the time any such replacement shall become effective, the Borrower shall pay all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to Section 2.12(b). From and after the effective date of any such replacement, (i) the successor Issuing Bank shall have all the rights and obligations of the Issuing Bank under this Agreement with respect to Letters of Credit to be issued thereafter and (ii) references herein to the term "Issuing Bank" shall be deemed to refer to such successor or to any previous Issuing Bank, or to such successor and all previous Issuing Banks, as the context shall require. After the replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Credit issued by it prior to such replacement, but shall not be required to issue additional Letters of Credit. If at any time there is more than one Issuing Bank hereunder, the Borrower may, in its discretion, select which Issuing Bank is to issue any particular 45 Letter of Credit. (j) Cash Collateralization. If any Event of Default shall occur and be continuing, on the Business Day that the Borrower receives notice from the Administrative Agent or the Required Lenders (or, if the maturity of the Loans has been accelerated, Revolving Lenders with LC Exposure representing greater than 50% of the total LC Exposure) demanding the deposit of cash collateral pursuant to this paragraph, the Borrower shall deposit in an account with the Administrative Agent, in the name of the Administrative Agent and for the benefit of the Lenders, an amount in cash equal to 105% of the LC Exposure as of such date plus any accrued and unpaid interest thereon; that the obligation to deposit such cash collateral shall become effective immediately, and such deposit shall become immediately due and payable, without demand or other notice of any kind, upon the occurrence of any Event of Default with respect to the Borrower described in clause (h) or (i) of Article VII. Each such deposit shall be held by the Administrative Agent as collateral for the payment and performance of the obligations of the Borrower under this Agreement. The Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account. Other than any interest earned on the investment of such deposits, which investments shall be made at the option and sole discretion of the Administrative Agent and at the Borrower's risk and expense, such deposits shall not bear interest. Interest or profits, if any, on such investments shall accumulate in such account. Moneys in such account shall be applied by the Administrative Agent to reimburse the Issuing Bank for LC Disbursements for which it has not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of the reimbursement obligations of the Borrower for the LC Exposure at such time or, if the maturity of the Loans has been accelerated (but subject to the consent of Revolving Lenders with LC Exposure representing greater than 50% of the total LC Exposure), be applied to satisfy other obligations of the Borrower under this Agreement. If the Borrower is required to provide an amount of cash collateral hereunder as a result of the occurrence of an Event of Default, such amount (to the extent not applied as aforesaid) shall be returned to the Borrower within three Business Days after all Events of Default have been cured or waived. 46 SECTION 2.6. Funding of Borrowings. (a) Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds by 12:00 noon, New York City time, to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders; provided that Swingline Loans shall be made as provided in Section 2.04. The Administrative Agent will make such Loans available to the Borrower by promptly crediting the amounts so received, in like funds, to an account of the Borrower maintained with the Administrative Agent in New York City and designated by the Borrower in the applicable Borrowing Request; provided that ABR Revolving Loans made to finance the reimbursement of an LC Disbursement as provided in Section 2.05(e) shall be remitted by the Administrative Agent to the Issuing Bank. (b) Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender's share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with paragraph (a) of this Section and may, in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (i) in the case of such Lender, the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation or (ii) in the case of the Borrower, the interest rate applicable to ABR Loans. If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender's Loan included in such Borrowing. SECTION 2.7. Interest Elections. (a) Each Revolving Borrowing and Term Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a Eurodollar Borrowing, shall have an 47 initial Interest Period as specified in such Borrowing Request. Thereafter, the Borrower may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in this Section. The Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing. This Section shall not apply to Swingline Borrowings, which may not be converted or continued. (b) To make an election pursuant to this Section, the Borrower shall notify the Administrative Agent of such election by telephone by the time that a Borrowing Request would be required under Section 2.03 if the Borrower were requesting a Revolving Borrowing of the Type resulting from such election to be made on the effective date of such election. Each such telephonic Interest Election Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written Interest Election Request in a form approved by the Administrative Agent and signed by the Borrower. (c) Each telephonic and written Interest Election Request shall specify the following information in compliance with Section 2.02 and paragraph (f) of this Section: (i) the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing); (ii) the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day; (iii) whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and 48 (iv) if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term "Interest Period". If any such Interest Election Request requests a Eurodollar Borrowing but does not specify an Interest Period, then the Borrower shall be deemed to have selected an Interest Period of one month's duration. (d) Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each Lender of the details thereof and of such Lender's portion of each resulting Borrowing. (e) If the Borrower fails to deliver a timely Interest Election Request with respect to a Eurodollar Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing and the Administrative Agent, at the request of the Required Lenders, so notifies the Borrower, then, so long as an Event of Default is continuing (i) no outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of the Interest Period applicable thereto. (f) A Borrowing of any Class may not be converted to or continued as a Eurodollar Borrowing if after giving effect thereto (i) the Interest Period therefor would commence before and end after a date on which any principal of the Loans of such Class is scheduled to be repaid and (ii) the sum of the aggregate principal amount of outstanding Eurodollar Borrowings of such Class with Interest Periods ending on or prior to such scheduled repayment date plus the aggregate principal amount of outstanding ABR Borrowings of such Class would be less than the aggregate principal amount of Loans of such Class required to be repaid on such scheduled repayment date. 49 SECTION 2.8. Termination and Reduction of Commitments. (a) Unless previously terminated, (i) the Term Commitments shall terminate at 5:00 p.m., New York City time, on the Effective Date and (ii) the Revolving Commitments shall terminate on the Revolving Maturity Date. (b) The Borrower may at any time terminate, or from time to time reduce, the Revolving Commitments; provided that (i) each reduction of the Revolving Commitments shall be in an amount that is an integral multiple of $1,000,000 and not less than $5,000,000 and (ii) the Borrower shall not terminate or reduce the Revolving Commitments if, after giving effect to any concurrent prepayment of the Revolving Loans in accordance with Section 2.11, the sum of the Revolving Exposures would exceed the total Revolving Commitments. (c) If the estimated Net Proceeds from the issuance of the Senior Subordinated Notes exceeds $100,000,000, then the Term Commitments shall be reduced (effective prior to the open of business on the Effective Date) by an amount equal to such excess. For purposes hereof, if the aggregate principal amount of the Senior Subordinated Notes issued or to be issued on or prior to the Effective Date exceeds $100,000,000, then the Borrower shall deliver to the Administrative Agent, prior to the Effective Date, a certificate of a Financial Officer setting forth a calculation of the estimated Net Proceeds therefrom (rounded to the nearest $1,000,000) and the reduction of the Term Commitments pursuant to this paragraph shall be made based upon such certificate. (d) If any prepayment of a Term Borrowing would be required pursuant to Section 2.11(b) or (c) at a time when there are not any Term Borrowings outstanding, then the Revolving Commitments shall be reduced at such time in an amount equal to the prepayment that would be required if Term Borrowings were outstanding at such time. (e) The Borrower shall notify the Administrative Agent of any election or requirement to terminate or reduce the Commitments under paragraph (b) or (d) of this Section at least three Business Days prior to the effective date of such termination or reduction, specifying such election or requirement and the effective date 50 thereof. Promptly following receipt of any notice, the Administrative Agent shall advise the Lenders of the contents thereof. Each notice delivered by the Borrower pursuant to this Section shall be irrevocable; provided that a notice of termination of the Revolving Commitments delivered by the Borrower under paragraph (b) of this Section may state that such notice is conditioned upon the effectiveness of other borrowings, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied. Any termination or reduction of the Commitments of any Class shall be permanent. Each reduction of the Commitments of any Class shall be made ratably among the Lenders in accordance with their respective Commitments of such Class. SECTION 2.9. Repayment of Loans; Evidence of Debt. (a) The Borrower hereby unconditionally promises to pay (i) to the Administrative Agent for the account of each Lender the then unpaid principal amount of each Revolving Loan of such Lender on the Revolving Maturity Date, (ii) to the Administrative Agent for the account of each Lender the then unpaid principal amount of each Term Loan of such Lender as provided in Section 2.10 and (iii) to the Administrative Agent for the account of the Swingline Lender the then unpaid principal amount of each Swingline Loan on the earlier of the Revolving Maturity Date and the first date after such Swingline Loan is made that is the last day of a calendar month and is at least two Business Days after such Swingline Loan is made; provided that on each date that a Revolving Borrowing is made, the Borrower shall repay all Swingline Loans then outstanding. (b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder. (c) The Administrative Agent shall maintain accounts in which it shall record (i) the amount of each Loan made hereunder, the Class and Type thereof and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become 51 due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender's share thereof. (d) The entries made in the accounts maintained pursuant to paragraph (b) or (c) of this Section shall be prima facie evidence of the existence and amounts of the obligations recorded therein; provided that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay the Loans in accordance with the terms of this Agreement. (e) Any Lender may request that Loans of any Class made by it be evidenced by a promissory note. In such event, the Borrower shall prepare, execute and deliver to such Lender a promissory note payable to the order of such Lender (or, if requested by such Lender, to such Lender and its registered assigns) and in a form approved by the Administrative Agent. Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 9.04) be represented by one or more promissory notes in such form payable to the order of the payee named therein (or, if such promissory note is a registered note, to such payee and its registered assigns). SECTION 2.10. Amortization of Term Loans. (a) Subject to adjustment pursuant to paragraph (d) of this Section, the Borrower shall repay Term Borrowings on each date set forth below in the aggregate principal amount set forth opposite such date: Date Amount December 30, 1998 $1,250,000 March 31, 1999 1,250,000 June 30, 1999 1,250,000 September 30, 1999 l,250,000 December 30, 1999 1,875,000 March 31, 2000 1,875,000 June 30, 2000 1,875,000 September 30, 2000 1,875,000 December 30, 2000 2,500,000 52 March 31, 2001 2,500,000 June 30, 2001 2,500,000 September 30, 2001 2,500,000 December 30, 2001 4,375,000 March 31, 2002 4,375,000 June 30, 2002 4,375,000 September 30, 2002 4,375,000 December 30, 2002 4,375,000 March 31, 2003 4,375,000 June 30, 2003 4,375,000 September 30, 2003 4,375,000 December 30, 2003 4,375,000 March 31, 2004 4,375,000 June 30, 2004 4,375,000 September 30, 2004 4,375,000 December 30, 2004 6,250,000 March 31, 2005 6,250,000 June 30, 2005 6,250,000 September 30, 2005 6,250,000 (b) To the extent not previously paid, all Term Loans shall be due and payable on the Term Loan Maturity Date. (c) If the initial aggregate amount of the Lenders' Term Commitments exceeds the aggregate principal amount of Term Loans that are made on the Effective Date, then the scheduled repayments of Term Borrowings to be made pursuant to this Section shall be reduced by an aggregate amount equal to such excess in the chronological order in which such repayments are scheduled to become due. Any prepayment of a Term Borrowing shall be applied to reduce the subsequent scheduled repayments of the Term Borrowings to be made pursuant to this Section ratably; provided that any prepayment made pursuant to Section 2.11(a) shall be applied, first, to reduce the next four scheduled repayments of the Term Borrowings to be made pursuant to this Section (other than those that have been reduced to zero by operation of this paragraph) unless and until such next four scheduled repayments have been eliminated as a result of reductions hereunder and, second, to reduce the remaining scheduled repayments of the Term Borrowings to be made pursuant to this Section ratably. (d) Prior to any repayment of any Term Borrowings hereunder, the Borrower shall select the 53 Borrowing or Borrowings to be repaid and shall notify the Administrative Agent by telephone (confirmed by telecopy) of such selection not later than 11:00 a.m., New York City time, three Business Days before the scheduled date of such repayment; provided that each repayment of Term Borrowings shall be applied to repay any outstanding ABR Term Borrowings before any other Borrowings. Each repayment of a Borrowing shall be applied ratably to the Loans included in the repaid Borrowing. Repayments of Term Borrowings shall be accompanied by accrued interest on the amount repaid. SECTION 2.11. Prepayment of Loans. (a) The Borrower shall have the right at any time and from time to time to prepay any Borrowing in whole or in part, subject to the requirements of this Section. (b) Subject to the provisions of Sections 2.11(e) and 5.08, in the event and on each occasion that any Net Proceeds are received by or on behalf of the Borrower or any Subsidiary in respect of any Prepayment Event, the Borrower shall, within two Business Days after such Net Proceeds are received, prepay Term Borrowings in an aggregate amount equal to (i) in the case of a Prepayment Event described in clause (a), (b) or (d) of the definition of "Prepayment Event", the entire amount of such Net Proceeds, and (ii) in the case of a Prepayment Event described in clause (c) of the definition of "Prepayment Event", 50% of such Net Proceeds. (c) Following the end of each fiscal year of the Borrower, commencing with the fiscal year ending December 31, 1998, the Borrower shall prepay Term Borrowings in an aggregate amount equal to 50% of Excess Cash Flow for such fiscal year; provided that prepayments shall be required pursuant to this paragraph (c) only until the outstanding principal amount of Term Loans is reduced to an amount equal to or less than 50% of the aggregate principal amount of Term Loans borrowed on the Effective Date. Each prepayment pursuant to this paragraph shall be made on or before the date that is three Business Days after the date on which financial statements are delivered pursuant to Section 5.01 with respect to the fiscal year for which Excess Cash Flow is being calculated (and in any event within 90 days after the end of such fiscal year). 54 (d) If at any time the sum of the total Revolving Exposures exceeds the total Revolving Commitments, the Borrowers shall immediately prepay Revolving Borrowings and Swingline Loans to the extent necessary to eliminate such excess. If any such excess remains after all Revolving Borrowings and Swingline Loans are prepaid, the Borrower shall deposit cash collateral pursuant to Section 2.05(j) in an amount equal to such remaining excess. (e) Notwithstanding the foregoing provisions of Section 2.11(b): (i) in the case of a Prepayment Event described in clause (a) or (b) of the definition of "Prepayment Event", the Borrower may, in lieu of prepaying Term Borrowings, prepay Revolving Borrowings (without reducing Revolving Commitments), or, in the case of a Prepayment Event described in clause (a) of the definition of "Prepayment Event" consisting of a disposition by a Foreign Subsidiary, the Borrower may, in lieu of prepaying Term Borrowings, permit such Foreign Subsidiary to retain the Net Proceeds of such disposition; provided that (A) the Borrower notifies the Administrative Agent that it is exercising such option, specifying the Prepayment Event and the amount of the prepayment, at or prior to the time that the prepayment is required, (B) the Borrower is in compliance with Sections 6.14, 6.15 and 6.16 before and after giving effect to such Prepayment Event and (C) the aggregate principal amount of Revolving Borrowings pre-paid in lieu of Term Borrowings and Net Proceeds retained by Foreign Subsidiaries pursuant to this clause (i) shall not exceed $50,000,000 (on a cumulative basis) during the term of this Agreement; (ii) in the case of a Prepayment Event described in clause (c) of the definition of "Prepayment Event", the Borrower may, at its option, notify the Administrative Agent that the Borrower intends to utilize all or a specified portion of the Net Proceeds of such Prepayment Event to finance a Permitted Acquisition to be consummated within 270 days after such Prepayment Event, in which case the Borrower shall not be required to prepay Term Borrowings pursuant to Section 2.11(b) to the extent 55 of the Net Proceeds so specified; provided that (A) the Borrower delivers such notice, specifying the Prepayment Event and describing the anticipated Permitted Acquisition in reasonable detail, at or prior to the time of such Prepayment Event, (B) no Default has occurred and is continuing at the time of such Prepayment Event and (C) to the extent such Net Proceeds are not applied to finance such Permitted Acquisition within the 270-day period after such Prepayment Event, the Borrower shall prepay Term Borrowings (at the earlier of (1) expiration of such period, (2) the date of abandonment of such Permitted Acquisition or (3) the date of consummation of such Permitted Acquisition) in an amount equal to such Net Proceeds that are not so applied; and (iii) in the case of a Prepayment Event described in clause (c) of the definition of "Prepayment Event", if, as of the end of the most recent fiscal quarter for which financial statements have been delivered to the Administrative Agent pursuant to clause (a) or (b) of Section 5.01 prior to such Prepayment Event, the Leverage Ratio was less than 2.00 to 1.00, then no prepayment pursuant to Section 2.11(b) shall be required in respect of such Prepayment Event. (f) Prior to any optional or mandatory prepayment of Borrowings hereunder, the Borrower shall select the Borrowing or Borrowings to be prepaid and shall specify such selection in the notice of such prepayment pursuant to paragraph (g) of this Section; provided that each prepayment of Borrowings of any Class shall be applied to prepay ABR Borrowings of such Class before any other Borrowings of such Class. (g) The Borrower shall notify the Administrative Agent (and, in the case of prepayment of a Swingline Loan, the Swingline Lender) by telephone (confirmed by telecopy) of any prepayment hereunder (i) in the case of prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., New York City time, three Business Days before the date of prepayment, (ii) in the case of pre-payment of an ABR Borrowing, not later than 11:00 a.m., New York City time, one Business Day before the date of prepayment or (iii) in the case of prepayment of a Swingline Loan, not later than 12:00 noon, New York City 56 time, on the date of prepayment. Each such notice shall be irrevocable and shall specify the prepayment date, the principal amount of each Borrowing or portion thereof to be prepaid and, in the case of a mandatory prepayment, a reasonably detailed calculation of the amount of such prepayment; provided that, if a notice of optional pre-payment is given in connection with a conditional notice of termination of the Revolving Commitments as contemplated by Section 2.08, then such notice of prepayment may be revoked if such notice of termination is revoked in accordance with Section 2.08. Promptly following receipt of any such notice (other than a notice relating solely to Swingline Loans), the Administrative Agent shall advise the Lenders of the contents thereof. Each partial prepayment of any Borrowing shall be in an amount such that the remaining amount of such Borrowing not so prepaid would be permitted in the case of an advance of a Borrowing of the same Type as provided in Section 2.02, except as necessary to apply fully the required amount of a mandatory prepayment. Each prepayment of a Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the extent required by Section 2.13. SECTION 2.12. Fees. (a) The Borrower agrees to pay to the Administrative Agent for the account of each Revolving Lender a commitment fee, which shall accrue at the Applicable Rate on the average daily unused amount of the Revolving Commitment of such Lender during the period from and including the Effective Date to but excluding the date on which such Commitment terminates. Accrued commitment fees shall be payable in arrears on the last day of March, June, September and December of each year and on the date on which the Revolving Commitments terminate, commencing on the first such date to occur after the date hereof. All commitment fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day). For purposes of computing commitment fees with respect to Revolving Commitments, a Revolving Commitment of a Lender shall be deemed to be used to the extent of the outstanding Revolving Loans and LC Exposure of such Lender (and the Swingline Exposure of such Lender shall be disregarded for such purpose). (b) The Borrower agrees to pay (i) to the 57 Administrative Agent for the account of each Revolving Lender a participation fee with respect to its participations in Letters of Credit, which shall accrue at the same Applicable Rate as interest on Eurodollar Revolving Loans on the average daily amount of such Lender's LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Effective Date to but excluding the later of the date on which such Lender's Revolving Commitment terminates and the date on which such Lender ceases to have any LC Exposure, and (ii) to the Issuing Bank a fronting fee, which shall accrue at the rate or rates per annum separately agreed upon between the Borrower and the Issuing Bank on the average daily amount of the LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Effective Date to but excluding the later of the date of termination of the Revolving Commitments and the date on which there ceases to be any LC Exposure, as well as the Issuing Bank's standard fees with respect to the issuance, amendment, renewal or extension of any Letter of Credit or processing of drawings thereunder. Participation fees and fronting fees accrued through and including the last day of March, June, September and December of each year shall be payable on the third Business Day following such last day, commencing on the first such date to occur after the Effective Date; provided that all such fees shall be payable on the date on which the Revolving Commitments terminate and any such fees accruing after the date on which the Revolving Commitments terminate shall be payable on demand. Any other fees payable to the Issuing Bank pursuant to this paragraph shall be payable within 10 days after demand. All participation fees and fronting fees shall be computed on the basis of a year of 365 days (or 366 days in a leap year) and shall be payable for the actual number of days elapsed (including the first day but excluding the last day). (c) The Borrower agrees to pay to the Administrative Agent, for its own account, fees payable in the amounts and at the times separately agreed upon between the Borrower and the Administrative Agent. (d) All fees payable hereunder shall be paid on the dates due, in immediately available funds, to the Administrative Agent (or to the issuing Bank, in the case 58 of fees payable to it) for distribution, in the case of commitment fees and participation fees, to the Lenders entitled thereto. Fees paid shall not be refundable under any circumstances. SECTION 2.13. Interest. (a) The Loans comprising each ABR Borrowing (including each Swingline Loan) shall bear interest at the Alternate Base Rate plus the Applicable Rate. (b) The Loans comprising each Eurodollar Borrowing shall bear interest at the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable Rate. (c) Notwithstanding the foregoing, if any principal of or interest on any Loan or any fee or other amount payable by the Borrower hereunder is not paid when due, whether at stated maturity, upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before judgment, at a rate per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the rate otherwise applicable to such Loan as provided in the preceding paragraphs of this Section or (ii) in the case of any other amount, 2% plus the rate applicable to ABR Revolving Loans as provided in paragraph (a) of this Section. (d) Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan and, in the case of Revolving Loans, upon termination of the Revolving Commitments; provided that (A) interest accrued pursuant to paragraph (c) of this Section shall be payable on demand, (B) in the event of any repayment or prepayment of any Loan (other than a prepayment of an ABR Revolving Loan prior to the end of the Revolving Availability Period), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (C) in the event of any conversion of any Eurodollar Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion. (e) All interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed by reference to the Alternate Base Rate at times 59 when the Alternate Base Rate is based on the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicable Alternate Base Rate or Adjusted LIBO Rate shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error. SECTION 2.14. Alternate Rate of Interest. If prior to the commencement of any Interest Period for a Eurodollar Borrowing: (a) the Administrative Agent determines (which determination shall be conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the Adjusted LIBO Rate for such Interest Period; or (b) the Administrative Agent is advised by the Required Lenders that the Adjusted LIBO Rate for such Interest Period will not adequately and fairly reflect the cost to such Lenders (or Lender) of making or maintaining their Loans (or its Loan) included in such Borrowing for such Interest Period; then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by telephone or telecopy as promptly as practicable thereafter and, until the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such Borrowing shall be made as an ABR Borrowing. SECTION 2.15. Increased Costs. (a) If any Change in Law shall: (i) impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender (except any such reserve requirement reflected in the Adjusted LIBO Rate) or the Issuing Bank; or 60 (ii) impose on any Lender or the Issuing Bank or the London interbank market any other condition affecting this Agreement or Eurodollar Loans made by such Lender or any Letter of Credit or participation therein; and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Eurodollar Loan (or of maintaining its obligation to make any such Loan) or to increase the cost to such Lender or the Issuing Bank of participating in, issuing or maintaining any Letter of Credit or to reduce the amount of any sum received or receivable by such Lender or the Issuing Bank hereunder (whether of principal, interest or otherwise), then the Borrower will pay to such Lender or the Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Bank, as the case may be, for such additional costs incurred or reduction suffered. (b) If any Lender or the Issuing Bank determines that any Change in Law regarding capital requirements has or would have the effect of reducing the rate of return on such Lender's or the Issuing Bank's capital or on the capital of such Lender's or the Issuing Bank's holding company, if any, as a consequence of this Agreement or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by the Issuing Bank, to a level below that which such Lender or the Issuing Bank or such Lender's or the Issuing Bank's holding company could have achieved but for such Change in Law (taking into consideration such Lender's or the Issuing Bank's policies and the policies of such Lender's or the Issuing Bank's holding company with respect to capital adequacy), then from time to time the Borrower will pay to such Lender or the Issuing Bank, as the case may be, following receipt by the Borrower of the certificate referred to in clause (c) below, such additional amount or amounts as will compensate such Lender or the Issuing Bank or such Lender's or the Issuing Bank's holding company for any such reduction suffered. (c) A certificate of a Lender or the Issuing Bank setting forth the amount or amounts necessary to compensate such Lender or the Issuing Bank or its holding company, as the case may be, as specified in paragraph 61 (a) or (b) of this Section shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender or the Issuing Bank, as the case may be, the amount shown as due on any such certificate within 10 days after receipt thereof. (d) Failure or delay on the part of any Lender or the Issuing Bank to demand compensation pursuant to this Section shall not constitute a waiver of such Lender's or the Issuing Bank's right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender or the Issuing Bank pursuant to this Section for any increased costs or reductions incurred more than 180 days prior to the date that such Lender or the Issuing Bank, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender's or the Issuing Bank's intention to claim compensation therefor; provided further that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof. SECTION 2.16. Break Funding Payments. In the event of (a) the payment of any principal of any Eurodollar Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Eurodollar Revolving Loan or Eurodollar Term Loan on the date specified in any notice delivered pursuant hereto (regardless of whether such notice may be revoked under Section 2.11(g) and is revoked in accordance therewith), or (d) the assignment of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Borrower pursuant to Section 2.19, then, in any such event, the Borrower shall compensate each Lender for the loss, cost and expense attributable to such event. Such loss, cost or expense to any Lender shall be deemed to include an amount reasonably determined by such Lender to be the excess, if any, of (i) the amount of interest that would have accrued on the principal amount of such Loan had such event not occurred, at the Adjusted LIBO Rate that would have been applicable to such Loan, for the period 62 from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period for such Loan), over (ii) the amount of interest that would accrue on such principal amount for such period at the interest rate that such Lender would bid were it to bid, at the commencement of such period, for dollar deposits of a comparable amount and period from other banks in the Eurodollar market. A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof. SECTION 2.17. Taxes. (a) Any and all payments by or on account of any obligation of the Borrower hereunder or under any other Loan Document shall be made free and clear of and without deduction for any Indemnified Taxes or Other Taxes; provided that if the Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Administrative Agent, Lender or Issuing Bank (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law. (b) In addition, the Borrower shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law. (c) The Borrower shall indemnify the Administrative Agent, each Lender and the Issuing Bank, within 10 days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent, such Lender or the Issuing Bank, as the case may be, on or with respect to any payment by or on account of any obligation of the Borrower hereunder or under any other Loan Document (including Indemnified Taxes or Other Taxes imposed or asserted on 63 or attributable to amounts payable under this Section) and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender or the Issuing Bank, or by the Administrative Agent on its own behalf or on behalf of a Lender or the Issuing Bank, shall be conclusive absent manifest error. (d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent. (e) Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which the Borrower is located, or any treaty to which such jurisdiction is a party, with respect to payments under this Agreement shall deliver to the Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable law, such properly completed and executed documentation prescribed by applicable law or reasonably requested by the Borrower as will permit such payments to be made without withholding or at a reduced rate. SECTION 2.18. Payments Generally; Pro Rata Treatment; Sharing of Setoffs. (a) The Borrower shall make each payment required to be made by it hereunder or under any other Loan Document (whether of principal, interest, fees or reimbursement of LC Disbursements, or of amounts payable under Section 2.15, 2.16 or 2.17, or otherwise) prior to 12:00 noon, New York City time, on the date when due, in immediately available funds, without setoff or counterclaim. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to the Administrative Agent at its offices at 270 Park Avenue, New York, New York, except payments to be made 64 directly to the Issuing Bank or Swingline Lender as expressly provided herein and except that payments pursuant to Sections 2.15, 2.16, 2.17 and 9.03 shall be made directly to the Persons entitled thereto and payments pursuant to other Loan Documents shall be made to the Persons specified therein. The Administrative Agent shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof. If any payment under any Loan Document shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. All payments under each Loan Document shall be made in dollars. (b) If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, unreimbursed LC Disbursements, interest and fees then due hereunder, such funds shall be applied (i) first, towards payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) second, towards payment of principal and unreimbursed LC Disbursements then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and unreimbursed LC Disbursements then due to such parties. (c) If any Lender shall, by exercising any right of set-off or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Revolving Loans, Term Loans or participations in LC Disbursements or Swingline Loans resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Revolving Loans, Term Loans and participations in LC Disbursements and Swingline Loans and accrued interest thereon than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Revolving Loans, Term Loans and participations in LC Disbursements and Swingline Loans of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective 65 Revolving Loans, Term Loans and participations in LC Disbursements and Swingline Loans; provided that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this paragraph shall not be construed to apply to any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in LC Disbursements to any assignee or participant, other than to the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions of this paragraph shall apply). The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation. (d) Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders or the Issuing Bank hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the Issuing Bank, as the case may be, the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders or the Issuing Bank, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or Issuing Bank with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation. (e) If any Lender shall fail to make any payment required to be made by it pursuant to Section 66 2.01(b), 2.04(c), 2.05(d) or (e), 2.06(b), 2.18(d) or 9.03(c), then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by the Administrative Agent for the account of such Lender to satisfy such Lender's obligations under such Sections until all such unsatisfied obligations are fully paid. SECTION 2.19. Mitigation Obligations; Replacement of Lenders. (a) If any Lender requests compensation under Section 2.15, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.17, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.15 or 2.17, as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment. (b) If any Lender requests compensation under Section 2.15, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.17, or if any Lender defaults in its obligation to fund Loans hereunder, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 9.04), all its interests, rights and obligations under this Agreement to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (i) the Borrower shall have received the prior written consent of the Administrative Agent (and, if a Revolving Commitment is being assigned, the Issuing Bank and Swingline Lender), which consent shall not unreasonably be withheld, (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and 67 participations in LC Disbursements and Swingline Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts) and (iii) in the case of any such assignment resulting from a claim for compensation under Section 2.15 or payments required to be made pursuant to Section 2.17, such assignment will result in a reduction in such compensation or payments. A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply. SECTION 2.20. Extension of Revolving Maturity Date. (a) The Borrower may, by notice to the Administrative Agent and the Revolving Lenders given not less than 30 and not more than 60 days prior to the Revolving Maturity Date, request that the Revolving Lenders extend the Revolving Maturity Date for an additional one year period. Each Revolving Lender shall, by notice to the Borrower and the Administrative Agent given not later than the 10th Business Day after the date of receipt of the Borrower's notice, advise the Borrower whether or not such Lender agrees to such extension (and any Lender that does not so advise the Borrower on or before such day shall be deemed to have advised the Borrower that it will not agree to such extension). The approval of any such extension shall be at the sole discretion of each Revolving Lender. (b) If (and only if) all Revolving Lenders shall have agreed to extend the Revolving Maturity Date as provided in paragraph (a) above, then the Revolving Maturity Date shall be extended to September 30, 2005. ARTICLE III Representations and Warranties The Borrower represents and warrants to the Lenders that: SECTION 3.1. Organization; Powers. Each of the Borrower and its Restricted Subsidiaries is duly 68 organized, validly existing and, where applicable, in good standing under the laws of the jurisdiction of its organization, has all requisite power and authority to carry on its business as now conducted and, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required. SECTION 3.2. Authorization; Enforceability. The Transactions to be entered into by each Loan Party are within such Loan Party's corporate powers and have been duly authorized by all necessary corporate and, if required, stockholder action. This Agreement has been duly executed and delivered by the Borrower and constitutes, and each other Loan Document to which any Loan Party is to be a party, when executed and delivered by such Loan Party, will constitute, a legal, valid and binding obligation of the Borrower or such Loan Party (as the case may be), enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law. SECTION 3.3. Governmental Approvals; No Conflicts. The Transactions (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except such as have been obtained or made and are in full force and effect and except filings necessary to perfect Liens created under the Loan Documents, (b) will not violate any applicable law or regulation or the charter, by-laws or other organizational documents of the Borrower or any of its Restricted Subsidiaries or any order of any Governmental Authority, (c) will not violate or result in a default under any material indenture, agreement or other instrument binding upon the Borrower or any of its Restricted Subsidiaries or its assets, or give rise to a right thereunder to require any payment to be made by the Borrower or any of its Restricted Subsidiaries, and (d) will not result in the creation or imposition of any Lien on any asset of the Borrower or any of its Restricted Subsidiaries, except Liens created under the Loan Documents. 69 SECTION 3.4. Financial Condition; No Material Adverse Change. (a) The Borrower has heretofore furnished to the Lenders its consolidated balance sheet and statements of income, stockholders' equity and cash flows (i) as of and for the fiscal year ended December 31, 1996, reported on by Deloitte & Touche LLP, independent public accountants, and (ii) as of and for the fiscal quarter and the portion of the fiscal year ended June 30, 1997, certified by its chief financial officer. Such financial statements present fairly, in all material respects, the financial position and results of operations and cash flows of the Borrower and its consolidated Subsidiaries, as of such dates and for such periods in accordance with GAAP, subject to year-end audit adjustments and the absence of footnotes in the case of the statements referred to in clause (ii) above. (b) The Borrower has heretofore furnished to the Lenders its pro forma consolidated balance sheet as of June 30, 1997, prepared giving effect to the Transactions as if the Transactions had occurred on such date. Such pro forma consolidated balance sheet (i) has been prepared in good faith based on the same assumptions used to prepare the pro forma financial statements included in the Information Memorandum (which assumptions are believed by the Borrower to be reasonable), (ii) is based on the best information available to the Borrower after due inquiry, (iii) accurately reflects all adjustments necessary to give effect to the Transactions and (iv) presents fairly, in all material respects, the pro forma financial position of the Borrower and its consolidated Subsidiaries as of June 30, 1997, as if the Transactions had occurred on such date. (c) The Borrower has heretofore furnished to the Lenders the consolidated balance sheet and statements of income, stockholders' equity and cash flows of Huntsman Polymer Corporation's CT Film Division as of and for the fiscal year ended December 31, 1996, included in the report of Deloitte & Touche LLP, independent public accountants. Such financial statements present fairly, in all material respects, the financial position and results of operations and cash flows of the CT Film Division, as of such date and for such period in accordance with GAAP. (d) Since December 31, 1996, there has been no 70 material adverse change in the business, assets, operations, prospects or condition, financial or otherwise, of the Borrower and its Restricted Subsidiaries, taken as a whole (with the CT Film Acquisition being deemed to have occurred on December 31, 1996, for the purposes of this representation). SECTION 3.5. Properties. (a) Each of the Borrower and its Restricted Subsidiaries has good title to, or valid leasehold interests in, all its real and personal property material to its business (including its Mortgaged Properties), except for minor defects in title that do not interfere with its ability to conduct its business as currently conducted or to utilize such properties for their intended purposes. (b) Each of the Borrower and its Restricted Subsidiaries owns, or is licensed to use, all trademarks, tradenames, copyrights, patents and other intellectual property material to the business of the Borrower and its Restricted Subsidiaries, taken as a whole, and the use thereof by the Borrower and its Restricted Subsidiaries does not infringe upon the rights of any other Person, except for any such infringements that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. (c) Schedule 3.05 sets forth the address of each real property that is owned or leased by the Borrower or any of its Subsidiaries as of the Effective Date after giving effect to the Transactions. (d) As of the Effective Date, neither the Borrower nor any of its Subsidiaries has received notice of, or has knowledge of, any pending or contemplated condemnation proceeding affecting any Mortgaged Property or any sale or disposition thereof in lieu of condemnation. Neither any Mortgaged Property nor any interest therein is subject to any right of first refusal, option or other contractual right to purchase such Mortgaged Property or interest therein. SECTION 3.6. Litigation and Environmental Matters. (a) There are no actions, suits or proceedings by or before any arbitrator or Governmental Authority pending against or, to the knowledge of the Borrower, threatened against or affecting the Borrower or any of 71 its Subsidiaries (i) as to which there is a reasonable possibility of an adverse determination and that, if adversely determined, could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect or (ii) that involve any of the Loan Documents or the Transactions (other than the Split-Off). (b) Except with respect to any matters that, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect, neither the Borrower nor any of its Subsidiaries (i) has failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law, (ii) has become subject to any Environmental Liability or (iii) has received notice of any claim with respect to any Environmental Liability. SECTION 3.7. Compliance with Laws and Agreements. Each of the Borrower and its Subsidiaries is in compliance with all laws, regulations and orders of any Governmental Authority applicable to it or its property and all indentures, agreements and other instruments binding upon it or its property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. No Default has occurred and is continuing. SECTION 3.8. Investment and Holding Company Status. Neither the Borrower nor any of its Subsidiaries is (a) an "investment company" as defined in, or subject to regulation under, the Investment Company Act of 1940 or (b) a "holding company" as defined in, or subject to regulation under, the Public Utility Holding Company Act of 1935. SECTION 3.9. Taxes. Each of the Borrower and its Subsidiaries has timely filed or caused to be filed all Tax returns and reports required to have been filed and has paid or caused to be paid all Taxes required to have been paid by it, except (a) Taxes that are being contested in good faith by appropriate proceedings and for which the Borrower or such Subsidiary, as applicable, has set aside on its books adequate reserves or (b) to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Effect. 72 SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events for which liability is reasonably expected to occur, could reasonably be expected to result in a Material Adverse Effect. The present value of all accumulated benefit obligations under each Plan (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) did not, as of the date of the most recent financial statements reflecting such amounts, exceed by more than $12,000,000 the fair market value of the assets of such Plan, and the present value of all accumulated benefit obligations of all underfunded Plans (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) did not, as of the date of the most recent financial statements reflecting such amounts, exceed by more than $12,000,000 the fair market value of the assets of all such underfunded Plans. SECTION 3.11. Disclosure. The Borrower has disclosed to the Lenders all agreements, instruments and corporate or other restrictions to which the Borrower or any of its Subsidiaries is subject, and all other matters known to any of them, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. Neither the Information Memorandum nor any of the other reports, financial statements, certificates or other written information furnished by or on behalf of any Loan Party to the Administrative Agent or any Lender in connection with the negotiation of this Agreement or any other Loan Document or delivered hereunder or thereunder (as modified or supplemented by other information so furnished), when made or delivered, contained any material misstatement of fact or omitted to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that, with respect to projected financial information, the Borrower represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time. SECTION 3.12. Subsidiaries. Schedule 3.12 sets forth the name of, and the ownership interest of the Borrower in, each Subsidiary of the Borrower and identifies each Subsidiary that is a Subsidiary Loan Party, in each case as of the Effective Date. 73 SECTION 3.13. Insurance. Schedule 3.13 sets forth a description of all insurance maintained by or on behalf of the Borrower and its Subsidiaries as of the Effective Date. As of the Effective Date, all premiums that are due and payable in respect of such insurance have been paid. SECTION 3.14. Labor Matters. As of the Effective Date, there are no strikes, lockouts or slowdowns against the Borrower or any Subsidiary pending or, to the knowledge of the Borrower, threatened. All payments due from the Borrower or any Restricted Subsidiary, or for which any claim may be made against the Borrower or any Restricted Subsidiary, on account of wages and employee health and welfare insurance and other benefits, have been paid or accrued as a liability on the books of the Borrower or such Restricted Subsidiary. The consummation of the Transactions will not give rise to any right of termination or right of renegotiation on the part of any union under any collective bargaining agreement to which the Borrower or any Subsidiary is bound. SECTION 3.15. Solvency. Immediately after the consummation of the Transactions to occur on the Effective Date and immediately following the making of each Loan made on the Effective Date and after giving effect to the application of the proceeds of such Loans, (a) the fair value of the assets of each Loan Party, at a fair valuation, will exceed its debts and liabilities, subordinated, contingent or otherwise; (b) the present fair saleable value of the property of each Loan Party will be greater than the amount that will be required to pay the probable liability of its debts and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured; (c) each Loan Party will be able to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured; and (d) each Loan Party will not have unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and is proposed to be conducted following the Effective Date. SECTION 3.16. Security Documents. (a) The Pledge Agreement is effective to create in favor of the Collateral Agent, for the ratable benefit of the Secured Parties, a legal, valid and enforceable security interest 74 in the Collateral (as defined in the Pledge Agreement) and, when such Collateral is delivered to the Collateral Agent, the Pledge Agreement shall constitute a fully perfected first priority Lien on, and security interest in, all right, title and interest of the pledgor thereunder in such Collateral, in each case prior and superior in right to any other Person; provided that the actions specified in Schedule 3.16(a) are required to be taken in connection with the pledge of capital stock of Foreign Subsidiaries. (b) The Security Agreement is effective to create in favor of the Collateral Agent, for the ratable benefit of the Secured Parties, a legal, valid and enforceable security interest in the Collateral (as defined in the Security Agreement) and, when financing statements in appropriate form are filed in the offices specified on Schedule 6 to the Perfection Certificate, the Security Agreement shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of the grantors thereunder in such Collateral (other than the Intellectual Property (as defined in the Security Agreement)), in each case prior and superior in right to any other Person, other than with respect to Liens expressly permitted by Section 6.03. (c) When the Security Agreement (or a summary thereof) is filed in the United States Patent and Trademark Office and the United States Copyright Office, the Security Agreement shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of the Loan Parties in the Intellectual Property (as defined in the Security Agreement) in which a security interest may be perfected by filing, recording or registering a security agreement, financing statement or analogous document in the United States Patent and Trademark Office or the United States Copyright Office, as applicable, in each case prior and superior in right to any other Person (it being understood that subsequent recordings in the United States Patent and Trademark Office and the United States Copyright Office may be necessary to perfect a lien on registered trademarks, trademark applications and copyrights acquired by the Loan Parties after the date hereof). (d) The Mortgages are effective to create, subject to the exceptions listed in each title insurance 75 policy covering such Mortgage, in favor of the Collateral Agent, for the ratable benefit of the Secured Parties, a legal, valid and enforceable Lien on all of the Loan Parties' right, title and interest in and to the Mortgaged Properties thereunder and the proceeds thereof, and when the Mortgages are filed in the offices specified on Schedule 3.16(d), the Mortgages shall constitute a Lien on, and security interest in, all right, title and interest of the Loan Parties in such Mortgaged Properties and the proceeds thereof, in each case prior and superior in right to any other Person, other than with respect to the rights of Persons pursuant to Liens expressly permitted by Section 6.03. SECTION 3.17. Federal Reserve Regulations. (a) Neither the Borrower nor any of the Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of buying or carrying Margin Stock. (b) No part of the proceeds of any Loan or any Letter of Credit will be used, whether directly or indirectly, and whether immediately, incidentally or ultimately, for any purpose that entails a violation of the provisions of the Regulations of the Board, including Regulation G, U or X. SECTION 3.18. Existing Intercompany Indebtedness. As of June 30, 1997, there was $198,300,000 of the Existing Intercompany Indebtedness (including accrued and unpaid interest as of such date). During the period from June 30, 1997, to and including the Effective Date, the Existing Intercompany Indebtedness has increased and decreased only as a result of borrowings, repayments and accrual of interest, in each case in the ordinary course of business and in accordance with past practice. SECTION 3.19. Agreements and Business Status as of Effective Date. (a) During the period from the date of the most recent financial statements referred to in Section 3.04(a) to and including the Effective Date, (i) the business of the Borrower and its Subsidiaries has been conducted in the ordinary course in accordance with past practice and (ii) the Borrower and its Subsidiaries have not engaged in any transaction (other than the Split-Off) that would have violated Section 6.10 if this Agreement had been in effect during such period. 76 (b) Schedule 3.19 identifies each agreement or other document to which the Borrower or any Subsidiary is a party or by which it is bound as of the Effective Date that will remain in effect after the Effective Date (i) that relates to the Split-Off or (ii) to which any Person (other than the Borrower or a Subsidiary of the Borrower) that is an Affiliate of the Borrower is a party. True and correct copies of all such agreements and documents have been delivered to the Lenders. ARTICLE IV Conditions SECTION 4.1. Effective Date. The obligations of the Lenders to make Loans and of the Issuing Bank to issue Letters of Credit hereunder shall not become effective until the date on which each of the following conditions is satisfied (or waived in accordance with Section 9.02): (a) The Administrative Agent (or its counsel) shall have received from each party hereto either (i) a counterpart of this Agreement signed on behalf of such party or (ii) written evidence satisfactory to the Administrative Agent (which may include telecopy transmission of a signed signature page of this Agreement) that such party has signed a counterpart of this Agreement. (b) The Administrative Agent shall have received a favorable written opinion (addressed to the Administrative Agent and the Lenders and dated the Effective Date) of each of (i) Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the Borrower, substantially in the form of Exhibit B-1, (ii) Van Cott, Bagley, Cornwall & McCarthy, Utah counsel for the Borrower, substantially in the form of Exhibit B-2, (iii) local counsel in each jurisdiction where a Mortgaged Property is located, substantially in the form of Exhibit B-3 with such changes as are approved by the Administrative Agent, and (iv) local counsel in Canada and the United Kingdom, substantially in the form of Exhibit B-4 with such changes as are approved by the Administrative Agent and, in the case of each such opinion required by this 77 paragraph, covering such other matters relating to the Loan Parties, the Loan Documents or the Transactions as the Administrative Agent shall reasonably request. The Borrower hereby requests such counsel to deliver such opinions. (c) The Administrative Agent shall have received such documents and certificates as the Administrative Agent or its counsel may reasonably request relating to the organization, existence and good standing of each Loan Party, the authorization of the Transactions and any other legal matters relating to the Loan Parties, the Loan Documents or the Transactions, all in form and substance satisfactory to the Administrative Agent and its counsel. (d) The Administrative Agent shall have received a certificate, dated the Effective Date and signed by the President, a Vice President or a Financial Officer of the Borrower, confirming compliance with the conditions set forth in paragraphs (a) and (b) of Section 4.02. (e) The Administrative Agent shall have received all fees and other amounts due and payable on or prior to the Effective Date, including, to the extent invoiced, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by any Loan Party hereunder or under any other Loan Document. (f) The Collateral Agent shall have received counterparts of the Pledge Agreement signed on behalf of the Borrower and each Subsidiary Loan Party, together with stock certificates representing all the outstanding shares of capital stock of each Subsidiary owned by or on behalf of any Loan Party as of the Effective Date after giving effect to the Transactions (except that such delivery of stock certificates representing shares of common stock of a Foreign Subsidiary that is not a Subsidiary Loan Party may be limited to 65% of the outstanding shares of common stock of such Foreign Subsidiary), promissory notes evidencing all intercompany Indebtedness owed to any Loan Party by the Borrower or any Subsidiary as of the Effective Date after giving effect to the Transactions and stock powers and 78 instruments of transfer, endorsed in blank, with respect to such stock certificates and promissory notes. The Collateral Agent shall have received evidence that all actions specified in Schedule 3.16(a) shall have been taken. (g) The Collateral Agent shall have received counterparts of the Security Agreement signed on behalf of the Borrower and each Subsidiary Loan Party, together with the following: (i) all documents and instruments, including Uniform Commercial Code financing statements, required by law or reasonably requested by the Administrative Agent to be filed, registered or recorded to create or perfect the Liens intended to be created under the Security Agreement; and (ii) a completed Perfection Certificate dated the Effective Date and signed by an executive officer or Financial Officer of the Borrower, together with all attachments contemplated thereby, including the results of a search of the Uniform Commercial Code (or equivalent) filings made with respect to the Loan Parties in the jurisdictions contemplated by the Perfection Certificate and copies of the financing statements (or similar documents) disclosed by such search and evidence reasonably satisfactory to the Administrative Agent that the Liens indicated by such financing statements (or similar documents) are permitted by Section 6.03 or have been released. (h) The Collateral Agent shall have received (i) counterparts of a Mortgage with respect to each Mortgaged Property signed on behalf of the record owner of such Mortgaged Property, (ii) a policy or policies of title insurance issued by a nationally recognized title insurance company, insuring the Lien of each such Mortgage as a valid first Lien on the Mortgaged Property described therein, free of any other Liens except as permitted by Section 6.03, in form and substance reasonably acceptable to the Collateral Agent, together with such endorsements, coinsurance and reinsurance as the Collateral Agent 79 or the Required Lenders may reasonably request, (iii) copies of all existing surveys and such other information and documents with respect to the Mortgaged Properties as shall be necessary for the aforesaid title insurance policies to be issued without a survey exception and (iv) such other customary documentation with respect to the Mortgaged Properties as the Administrative Agent may reasonably require. (i) The Administrative Agent shall have received (i) counterparts of the Guarantee Agreement signed on behalf of each Subsidiary Loan Party and (ii) counterparts of the Indemnity, Subrogation and Contribution Agreement signed on behalf of the Borrower and each Subsidiary Loan Party. (j) The Administrative Agent shall have received evidence satisfactory to it that the insurance required by Section 5.07 is in effect. (k) All actions related to the Split-Off (other than consummating the Split-Off), to the extent completed at such time, shall have been completed on terms consistent in all material respects with the information, including pro forma financial statements and projections, furnished to the Lenders prior to the date of this Agreement. (l) The CT Film Acquisition and the transactions related thereto shall have been consummated for aggregate consideration consisting of $70,000,000 in cash and other consideration satisfactory to the Lenders, and otherwise on terms consistent in all material respects with the information, including pro forma financial statements and projections, furnished to the Lenders prior to the date of this Agreement. The Lenders shall have received copies of the CT Film Acquisition Agreement prior to the Effective Date and shall be reasonably satisfied with the terms thereof. (m) The Lenders shall have received (i) audited consolidated balance sheets and related statements of income, stockholders' equity and cash flows of the Borrower for the 1995 and 1996 fiscal years and (ii) unaudited consolidated balance sheets and 80 related statements of income, stockholders' equity and cash flows of the Borrower for (A) the 1997 fiscal quarters preceding the Effective Date for which financial statements are available and (B) each fiscal month after the most recent 1997 fiscal quarter for which financial statements were received by the Lenders as described above and ended 30 days before the Effective Date. (n) The Lenders shall be reasonably satisfied in all respects with the tax position and the contingent tax and other liabilities of, and with any tax sharing agreements involving, the Borrower and its Subsidiaries after giving effect to the Transactions and the other transactions contemplated hereby, and with the plans of the Borrower with respect thereto. (o) The Lenders shall have received appraisals, satisfactory in form and substance to the Administrative Agent (which may include copies of recent existing appraisals, from appraisers satisfactory to the Administrative Agent, of the material real property, personal property and other assets of the Borrower and its Subsidiaries. (p) The Lenders shall have received (i) copies of all existing environmental reports prepared with respect to the Mortgaged Property and any Environmental Liabilities that may be attributable to such properties or operations thereon and (ii) such other materials and reviews relating to the Borrower's compliance with Environmental Laws and actual or potential Environmental Liabilities as shall be reasonably specified by the Administrative Agent, all of which shall be satisfactory to the Administrative Agent. (q) There shall be no litigation or administrative proceeding that would reasonably be expected to have a Material Adverse Effect, or a material adverse effect on the ability of the parties to consummate the Transactions or the other transactions contemplated hereby (other than the Split-off). (r) The Administrative Agent shall be satisfied with the arrangements for the retention of 81 existing management of the Borrower. (s) The Senior Subordinated Notes shall have been issued on terms and conditions (including but not limited to terms and conditions relating to the interest rate, fees, amortization, maturity, subordination, covenants, events of default and remedies) satisfactory to the Lenders in all respects, the Lenders shall have received copies of the Senior Subordinated Note Documents, which shall be satisfactory in form and substance to the Lenders, and the Borrower shall have received gross cash proceeds of not less than $100,000,000 from the issuance of the Senior Subordinated Notes. (t) The Lenders shall be reasonably satisfied with (i) the Split-off Documents and any waivers or amendments thereto, (ii) the capitalization, structure and equity ownership of the Borrower and the Subsidiaries after giving effect to the Transactions, to the extent inconsistent with that set forth in the Information Memorandum and (iii) all legal, tax and accounting matters relating to the Transactions. (u) The Lenders shall be reasonably satisfied with the sufficiency of amounts available under this Agreement to meet the ongoing working capital requirements of the Borrower and the Subsidiaries following consummation of the Transactions. (v) All consents and approvals required to be obtained from any Governmental Authority or other Person in connection with the Transactions (other than the Split-Off) shall have been obtained, all applicable waiting periods and appeal periods shall have expired, in each case without the imposition of any burdensome conditions and there shall be no action by any Governmental Authority, actual or threatened, that has a reasonable Likelihood of restraining, preventing or imposing burdensome conditions on the Transactions or the other transactions contemplated hereby (other than the Split- off). The Administrative Agent shall have received copies of the Split-off Documents and any certificates, opinions and other documents delivered thereunder, certified by a Financial Officer as complete 82 and correct. (w) The Lenders shall have received a pro forma consolidated balance sheet of the Borrower as of the Effective Date, reflecting all adjustments to give effect to the Transactions (including the Split-Off) and such pro forma consolidated balance sheet shall be in form and substance reasonably satisfactory to the Lenders. As of the Effective Date, after giving effect to the Financing Transactions, neither the Borrower nor any of its Subsidiaries shall have outstanding any shares of preferred stock or any Indebtedness, other than (i) Indebtedness incurred under the Loan Documents and the Senior Subordinated Notes and (ii) Indebtedness set forth on Schedule 6.01. The Lenders shall be satisfied with the terms and conditions of all Indebtedness set forth on Schedule 6.01. The aggregate amount of Transaction Costs (including underwriting discounts and commissions in respect of the Senior Subordinated Notes) shall not exceed $8,000,000. (x) The Administrative Agent shall have received a solvency certificate, in form and substance reasonably satisfactory to the Lenders, executed by a senior financial officer of the Borrower, with respect to the solvency of the Loan Parties on a consolidated basis after giving effect to the Financing Transactions. The Administrative Agent shall notify the Borrower and the Lenders of the Effective Date, and such notice shall be conclusive and binding. Notwithstanding the foregoing, the obligations of the Lenders to make Loans and of the Issuing Bank to issue Letters of Credit hereunder shall not become effective unless each of the foregoing conditions is satisfied (or waived pursuant to Section 9.02) at or prior to 3:00 p.m., New York City time, on October 31, 1997 (and, in the event such conditions are not so satisfied or waived, the Commitments shall terminate at such time). SECTION 4.2. Each Credit Event. The obligation of each Lender to make a Loan on the occasion of any Borrowing, and of the issuing Bank to issue, amend, renew or extend any Letter of Credit, is subject to the satis- 83 faction of the following conditions: (a) The representations and warranties of each Loan Party set forth in the Loan Documents shall be true and correct on and as of the date of such Borrowing or the date of issuance, amendment, renewal or extension of such Letter of Credit, as applicable. (b) At the time of and immediately after giving effect to such Borrowing or the issuance, amendment, renewal or extension of such Letter of Credit, as applicable, no Default shall have occurred and be continuing. Each Borrowing and each issuance, amendment, renewal or extension of a Letter of Credit shall be deemed to constitute a representation and warranty by the Borrower on the date thereof as to the matters specified in paragraphs (a) and (b) of this Section. ARTICLE V Affirmative Covenants Until the Commitments have expired or been terminated and the principal of and interest on each Loan and all fees payable hereunder shall have been paid in full and all Letters of Credit shall have expired or terminated and all LC Disbursements shall have been reimbursed, the Borrower covenants and agrees with the Lenders that: SECTION 5.1. Financial Statements and Other Information. The Borrower will furnish to the Administrative Agent and each Lender: (a) within 90 days after the end of each fiscal year of the Borrower, its audited consolidated balance sheet and related statements of operations, stockholders' equity and cash flows as of the end of and for such year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on by Deloitte & Touche LLP or other independent public accountants of recognized national standing (without a "going 84 concern" or like qualification or exception and without any qualification or exception as to the scope of such audit other than as to Unrestricted Subsidiaries) to the effect that such consolidated financial statements present fairly in all material respects the financial condition and results of operations of the Borrower and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied; (b) within 45 days after the end of each of the first three fiscal quarters of each fiscal year of the Borrower, its consolidated balance sheet and related statements of operations, stockholders' equity and cash flows as of the end of and for such fiscal quarter and the then elapsed portion of the fiscal year, setting forth in each case in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all certified by one of its Financial Officers as presenting fairly in all material respects the financial condition and results of operations of the Borrower and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes; (c) concurrently with any delivery of financial statements under clause (a) or (b) above, a certificate of a Financial Officer of the Borrower (i) certifying as to whether a Default has occurred and, if a Default has occurred, specifying the details thereof and any action taken or proposed to be taken with respect thereto, (ii) setting forth reasonably detailed calculations with respect to compliance with Sections 6.13, 6.14, 6.15 and 6.16, (iii) setting forth a reasonably detailed calculation of the Borrower Amount, (iv) stating whether any change in GAAP or in the application thereof has occurred since the date of the Borrower's audited financial statements referred to in Section 3.04 and, if any such change has occurred, specifying the effect of such change on the financial statements accompanying such certificate and (v) if any Unrestricted Subsidiary exists (or existed at any time during the period covered by such financial state- 85 ments), attaching consolidating balance sheets and income statements as of the same dates and covering the same periods, certified as true, correct and complete; (d) concurrently with any delivery of financial statements under clause (a) above, a certificate of the accounting firm that reported on such financial statements stating whether they obtained knowledge during the course of their examination of such financial statements of any Default (which certificate may be limited to the extent required by accounting rules or guidelines); (e) at least 30 days prior to the commencement of each fiscal year of the Borrower, a detailed consolidated budget for such fiscal year (including a projected consolidated balance sheet and related statements of projected operations and cash flow as of the end of and for such fiscal year) and, promptly when available, any significant revisions of such budget; (f) promptly after the same become publicly available, copies of all periodic and other reports, proxy statements and other materials filed by the Borrower or any Subsidiary with the Securities and Exchange Commission, or any Governmental Authority succeeding to any or all of the functions of said Commission, or with any national securities exchange, as the case may be; and (g) promptly following any request therefor, such other information regarding the operations, business affairs and financial condition of the Borrower or any Subsidiary, or compliance with the terms of any Loan Document, as the Administrative Agent or any Lender may reasonably request. SECTION 5.2. Notices of Material Events. The Borrower will furnish to the Administrative Agent and each Lender prompt written notice of the following: (a) the occurrence of any Default; (b) the filing or commencement of any action, suit or proceeding by or before any arbitrator or 86 Governmental Authority against or affecting the Borrower or any Affiliate thereof that, if adversely determined, would reasonably be expected to result in a Material Adverse Effect; (c) the occurrence of any ERISA Event that, alone or together with any other ERISA Events that have occurred, would reasonably be expected to result in liability of the Borrower and its Subsidiaries in an aggregate amount exceeding $5,000,000; and (d) any other development that results in, or would reasonably be expected to result in, a Material Adverse Effect. Each notice delivered under this Section shall be accompanied by a statement of a Financial Officer or other executive officer of the Borrower setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto. SECTION 5.3. Information Regarding Collateral. The Borrower will furnish to the Administrative Agent prompt written notice of any change (i) in any Loan Party's corporate name or in any trade name used to identify it in the conduct of its business or in the ownership of its properties, (ii) in the location of any Loan Party's chief executive office, its principal place of business, any office in which it maintains books or records relating to Collateral owned by it or any office or facility at which Collateral owned by it is located (including the establishment of any such new office or facility), (iii) in any Loan Party's identity or corporate structure or (iv) in any Loan Party's Federal Taxpayer Identification Number. The Borrower agrees not to effect or permit any change referred to in the preceding sentence unless all filings have been made under the Uniform Commercial Code or otherwise that are required in order for the Administrative Agent to continue at all times following such change to have a valid, legal and perfected security interest in all the Collateral; provided that the Administrative Agent shall take any action reasonably requested by the Borrower to maintain a valid, legal and perfected security interest in all the Collateral. 87 SECTION 5.4. Existence; Conduct of Business. The Borrower will, and will cause each of its Restricted Subsidiaries to, do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence and the rights, licenses, permits, privileges, franchises, patents, copyrights, trademarks and trade names material to the conduct of the business of the Borrower and its Restricted Subsidiaries, taken as a whole; provided that the foregoing shall not prohibit any merger, consolidation, liquidation or dissolution permitted under Section 6.4. SECTION 5.5. Payment of Obligations. The Borrower will, and will cause each of its Subsidiaries to, pay its Indebtedness and other obligations, including Tax liabilities, before the same shall become delinquent or in default, except where (a) the validity or amount thereof is being contested in good faith by appropriate procedures or proceedings, (b) the Borrower or such Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP, (c) such contest effectively suspends collection of the contested obligation and the enforcement of any Lien securing such obligation and (d) the failure to make payment pending such contest would not reasonably be expected to result in a Material Adverse Effect. SECTION 5.6. Maintenance of Properties. The Borrower will, and will cause each of its Restricted Subsidiaries to, keep and maintain all property material to the conduct of the business of the Borrower and its Restricted Subsidiaries taken as a whole in good working order and condition, ordinary wear and tear excepted. SECTION 5.7. Insurance. The Borrower will, and will cause each of its Restricted Subsidiaries to, maintain, with financially sound and reputable insurers, insurance with respect to its material properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in such amounts as are customarily carried under similar circumstances by such other Persons. Such insurance shall be maintained with financially sound and reputable insurers, except that a portion of such insurance program (not to exceed that which is customary in the case of companies engaged in the same or similar business or having similar properties 88 similarly situated) may be effected through self-insurance, provided adequate reserves therefor, in accordance with GAAP, are maintained. All insurance policies or certificates (or certified copies thereof) with respect to such insurance (A) shall be endorsed to the Collateral Agent's reasonable satisfaction for the benefit of the Lenders (including, without limitation, by naming the Collateral Agent as loss payee or additional insured, as appropriate); and (B) shall state that such insurance policy shall not be canceled or revised without thirty days' prior to written notice thereof by the insurer to the Administrative Agent and (iii) furnish to the Administrative Agent, on the Effective Date and on the date of delivery of each annual financial statement, full information as to the insurance carried. At any time that insurance at levels described in Schedule 5.07 is not being maintained by or on behalf of the Borrower of any of its Restricted Subsidiaries, the Borrower will notify the Lenders in writing within two Business Days thereof and, if thereafter notified by the Administrative Agent or the Required Lenders to do so, the Borrower or any such Restricted Subsidiary, as the case may be, shall obtain insurance at such levels at least equal to those set forth on Schedule 5.07. SECTION 5.8. Casualty and Condemnation. (a) The Borrower will furnish to the Administrative Agent and the Lenders prompt written notice of any casualty or other insured damage to any portion of any Collateral or the commencement of any action or proceeding for the taking of any Collateral or any part thereof or interest therein under power of eminent domain or by condemnation or similar proceeding, where the aggregate fair market value of the Collateral so affected in connection with casualty events or condemnations is, in the aggregate, at least $2,500,000. (b) If any event described in paragraph (a) of this Section results in Net Proceeds (whether in the form of insurance proceeds, condemnation award or otherwise), the Collateral Agent is authorized to collect such Net Proceeds and, if received by the Borrower or any Subsidiary, such Net Proceeds shall be paid over to the Collateral Agent; provided that (i) if the aggregate Net Proceeds in respect of such event (other than proceeds of business interruption insurance) are less than $5,000,000, such Net Proceeds shall be paid over to the 89 Borrower unless a Default has occurred and is continuing, and (ii) all proceeds of business interruption insurance shall be paid over to the Borrower unless a Default has occurred and is continuing. All such Net Proceeds retained by or paid over to the Collateral Agent shall be held by the Collateral Agent and released from time to time to pay the costs of repairing, restoring or replacing the affected property in accordance with the terms of the applicable Security Document, subject to the provisions of the applicable Security Document regarding application of such Net Proceeds during a Default. (c) If any Net Proceeds retained by or paid over to the Collateral Agent as provided above continue to be held by the Collateral Agent on the date that is 365 days after the receipt of such Net Proceeds, then such Net Proceeds shall be applied to prepay Term Borrowings as provided in Section 2.11(b), subject to Section 2.11(e). SECTION 5.9. Books and Records; Inspection and Audit Rights. The Borrower will, and will cause each of its Subsidiaries to, keep proper books of record and account in which full, true and correct entries are made in all material respects of all dealings and transactions in relation to its business and activities. The Borrower will, and will cause each of its Subsidiaries to, permit any representatives designated by the Administrative Agent or any Lender, upon reasonable prior notice, to visit and inspect its properties, to examine and make extracts from its books and records, and to discuss its affairs, finances and condition with its officers and independent accountants (and the Borrower shall be provided the opportunity to participate in any such discussions with such independent accountants), all at such reasonable times and as often as reasonably requested. SECTION 5.10. Compliance with Laws. The Borrower will, and will cause each of its Subsidiaries to, comply with all laws, rules, regulations and orders of any Governmental Authority applicable to it or its property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. SECTION 5.11. Use of Proceeds and Letters of Credit. The proceeds of the Term Loans, together with a 90 portion of the net proceeds of the Senior Subordinated Notes, will be used solely to (a) repay in full the principal amount of, and all accrued interest with respect to, the Existing Intercompany Indebtedness and (b) pay a portion of the Transaction Costs. The proceeds of the Revolving Loans and Swingline Loans will be used solely for (a) general corporate purposes, (b) in an amount not to exceed $70,000,000, to finance the CT Film Acquisition and to pay related transaction costs and (c) to pay a portion of the Transaction Costs. No part of the proceeds of any Loan will be used, whether directly or indirectly, for any purpose that entails a violation of any of the Regulations of the Board, including Regulations G, U and X. Letters of Credit will be issued only for general corporate purposes. SECTION 5.12. Additional Subsidiaries. If any additional Subsidiary is formed or acquired after the Effective Date, the Borrower will notify the Administrative Agent and the Lenders thereof and (a) if such Sub- sidiary is a Subsidiary Loan Party, the Borrower will cause such Subsidiary to become a party to the Guarantee Agreement, the Indemnity, Subrogation and Contribution Agreement and each applicable Security Document in the manner provided therein within three Business Days after such Subsidiary is formed or acquired and promptly take such actions to create and perfect Liens on such Subsidiary's assets to secure the Obligations as the Administrative Agent or the Required Lenders shall reasonably request and (b) if such Subsidiary is a Restricted Subsidiary and any shares of capital stock or Indebtedness of such Subsidiary are owned by or on behalf of any Loan Party, the Borrower will cause such shares and promissory notes evidencing such Indebtedness to be pledged pursuant to the Pledge Agreement within three Business Days after such Subsidiary is formed or acquired (except that, if such Subsidiary is a Foreign Subsidiary and is not a Subsidiary Loan Party, shares of common stock of such Subsidiary that are owned by or on behalf of the Borrower or a Subsidiary Loan Party and that are to be pledged pursuant to the Pledge Agreement may be limited to 65% of the outstanding shares of common stock of such Subsidiary). SECTION 5.13. Further Assurances. (a) The Borrower will, and will cause each Subsidiary Loan Party to, execute any and all further documents, financing 91 statements, agreements and instruments, and take all such further actions (including the filing and recording of financing statements, fixture filings, mortgages, deeds of trust and other documents), that may be required under any applicable law, or which the Administrative Agent or the Required Lenders may reasonably request, to effectuate the transactions contemplated by the Loan Documents or to grant, preserve, protect or perfect the Liens created or intended to be created by the Security Documents or the validity or priority of any such Lien, all at the expense of the Loan Parties. The Borrower also agrees to provide to the Administrative Agent, from time to time upon request, evidence reasonably satisfactory to the Administrative Agent as to the perfection and priority of the Liens created or intended to be created by the Security Documents. (b) If any material assets (including any real property or improvements thereto or any interest therein) are acquired by the Borrower or any Subsidiary Loan Party after the Effective Date (other than assets constituting Collateral under the Security Agreement that become subject to the Lien of the Security Agreement upon acquisition thereof), the Borrower will notify the Administrative Agent and the Lenders thereof, and, if requested by the Administrative Agent or the Required Lenders, the Borrower will cause such assets to be subjected to a Lien securing the Obligations and will take, and cause the Subsidiary Loan Parties to take, such actions as shall be necessary or reasonably requested by the Administrative Agent to grant and perfect such Liens, including actions described in paragraph (a) of this Section, all at the expense of the Loan Parties, provided that the following property shall not be covered by this Section 5.13(b): (i) intellectual property a security interest in which would require filings or recordations under laws other than the laws of the United States or any jurisdiction thereof, (ii) owned real estate or leasehold interests with an aggregate fair market value of less than $2,500,000, and (iii) other tangible personal property with an aggregate fair market value of less than $2,500,000. (c) Within 60 days after the Effective Date, the Administrative Agent shall have received counterparts of a Mortgage with respect to the Mortgaged Properties located in Chippewa Falls, Wisconsin and Harrington, 92 Delaware signed on behalf of the record owner of such Mortgaged Property and all other documents required by Section 4.1(b)(iii) and clauses (ii), (iii) and (iv) of Section 4.10(h). (d) Within 60 days of the Effective Date, the Administrative Agent shall have received an as-built survey of each Mortgaged Property, in form and substance satisfactory to the Administrative Agent and endorsements to the title policies required by Section 4.1(h) or 5.13(c), as applicable, providing survey, access, ALTA 9, contiguity and tax lot coverage. ARTICLE VI Negative Covenants Until the Commitments have expired or terminated and the principal of and interest on each Loan and all fees payable hereunder have been paid in full and all Letters of Credit have expired or terminated and all LC Disbursements shall have been reimbursed, the Borrower covenants and agrees with the Lenders that: SECTION 6.1. Indebtedness. The Borrower will not, and will not permit any Restricted Subsidiary to, create, incur, assume or permit to exist any Indebtedness, except: (i) Indebtedness created under the Loan Documents; (ii) Indebtedness existing on the date hereof and set forth in Schedule 6.01 and extensions, renewals and replacements of any such Indebtedness that do not increase the outstanding principal amount thereof; (iii) Indebtedness of the Borrower to any Restricted Subsidiary and of any Restricted Subsidiary to the Borrower or any other Restricted Subsidiary; provided that Indebtedness of any Restricted Subsidiary that is not a Loan Party to the Borrower or any Subsidiary Loan Party shall be subject to Section 6.05; 93 (iv) Guarantees by the Borrower of Indebtedness of any Restricted Subsidiary, joint venture or Unrestricted Subsidiary and by any Restricted Subsidiary of Indebtedness of the Borrower, any other Restricted Subsidiary, any joint venture or any Unrestricted Subsidiary; provided that (i) Guarantees by the Borrower or any Subsidiary Loan Party of Indebtedness of any Restricted Subsidiary that is not a Loan Party, and Guarantees by the Borrower or any Restricted Subsidiary of Indebtedness of a joint venture or an Unrestricted Subsidiary, in each case shall be subject to Section 6.5 and (ii) any Guarantee of the Senior Subordinated Notes by a Restricted Subsidiary shall be subordinated on the same terms as the Senior Subordinated Notes, shall be given only by a Restricted Subsidiary that is a Subsidiary Loan Party; (v) Indebtedness of the Borrower or any Restricted Subsidiary incurred to finance the acquisition, construction or improvement of any fixed or capital assets, including Capital Lease Obligations and any Indebtedness assumed in connection with the acquisition of any such assets or secured by a Lien on any such assets prior to the acquisition thereof, including Capital Lease Obligations incurred pursuant to transactions permitted by Section 6.7, and extensions, renewals and replacements of any such Indebtedness that do not increase the outstanding principal amount thereof or result in an earlier maturity date or decreased weighted average life thereof; provided that (A) such Indebtedness is incurred prior to or within 90 days after such acquisition or the completion of such construction or improvement and (B) the aggregate principal amount of Indebtedness permitted by this clause (v) and clause (vi) below shall not exceed $15,000,000 at any time outstanding; (vi) Indebtedness of any Person that becomes a Restricted Subsidiary after the date hereof (other than pursuant to the CT Film Acquisition); provided that (A) such Indebtedness exists at the time such Person becomes a Restricted Subsidiary and is not created in contemplation of or in connection with such Person becoming a Restricted Subsidiary and (B) the aggregate principal amount of Indebtedness 94 permitted by this clause (vi) and clause (v) above shall not exceed $15,000,000 at any time outstanding; (vii) the Senior Subordinated Notes in an aggregate principal amount not exceeding the principal amount thereof issued on or prior to the Effective Date; (viii) unsecured Indebtedness representing the deferred purchase price for Permitted Acquisitions; provided that (a) no Restricted Subsidiary shall be liable (pursuant to a Guarantee or otherwise) for any such Indebtedness incurred in connection with any Permitted Acquisition other than any Restricted Subsidiary resulting from such Permitted Acquisition (b) any financial covenants relating to such Indebtedness shall be no more restrictive to the Borrower and its Subsidiaries than, and the other material terms with respect to such Indebtedness shall be no more restrictive to the Borrower and its Restricted Subsidiaries, taken as a whole, than, the equivalent such covenants and terms contained in this Agreement and (c) the aggregate principal amount of Indebtedness permitted by this clause (ix) shall not exceed $10,000,000 at any time outstanding; and (ix) other Indebtedness (including borrowings under overdraft facilities) in an aggregate principal amount not exceeding $10,000,000 at any time outstanding; provided that (a) the aggregate principal amount of Indebtedness of the Borrower's Restricted Subsidiaries permitted by this clause (x) shall not exceed $5,000,000 at any time outstanding and (b) all such Indebtedness shall be unsecured, except that overdraft facilities may be secured to the extent permitted by clause (f) of Section 6.3. SECTION 6.2. Certain Equity Securities. The Borrower will not, nor will it permit any Restricted Subsidiary to, issue any preferred stock or be or become liable in respect of any obligation (contingent or otherwise) to purchase, redeem, retire, acquire or make any other payment in respect of any shares of capital stock of the Borrower or any Restricted Subsidiary or any option, warrant or other right to acquire any such shares of capital stock, except for actions otherwise permitted 95 under Section 6.9. Notwithstanding the foregoing, the Borrower may issue preferred stock that is not subject to any mandatory right of redemption or any right to require the purchase thereof prior to September 30, 2006, and any Restricted Subsidiary may issue preferred stock to the Borrower or to any other Restricted Subsidiary. SECTION 6.3. Liens. The Borrower will not, and will not permit any Restricted Subsidiary to, create, incur, assume or permit to exist any Lien on any property or asset now owned or hereafter acquired by it, or assign or sell any income or revenues (including accounts receivable) or rights in respect of any thereof, except: (a) Liens created under the Loan Documents; (b) Permitted Encumbrances; (c) any Lien on any property or asset of the Borrower or any Restricted Subsidiary existing on the date hereof and set forth in Schedule 6.03; provided that (i) such Lien shall not apply to any other property or asset of the Borrower or any Restricted Subsidiary and (ii) such Lien shall secure only those obligations that it secures on the date hereof and extensions, renewals and replacements thereof that do not increase the outstanding principal amount thereof; (d) any Lien existing on any property or asset prior to the acquisition thereof by the Borrower or any Subsidiary or existing on any property or asset of any Person that becomes a Subsidiary after the date hereof prior to the time such Person becomes a Subsidiary; provided that (i) such Lien is not created in contemplation of or in connection with such acquisition or such Person becoming a Subsidiary, as the case may be, (ii) such Lien shall not apply to any other property or assets of the Borrower or any Restricted Subsidiary and (iii) such Lien shall secure only those obligations that it secures on the date of such acquisition or the date such Person becomes a Subsidiary, as the case may be and extensions, renewals and replacements thereof that do not increase the outstanding principal amount thereof; 96 (e) Liens on fixed or capital assets acquired, constructed or improved by the Borrower or any Restricted Subsidiary; provided that (i) such Liens secure Indebtedness permitted by clause (v) of Section 6.1, (ii) such Liens and the Indebtedness secured thereby are incurred prior to or within 90 days after such acquisition or the completion of such construction or improvement, (iii) the Indebtedness secured thereby does not exceed 100% of the cost of acquiring, constructing or improving such fixed or capital assets and (iv) such security interests shall not apply to any other property or assets of the Borrower or any Restricted Subsidiary other than property directly related to such fixed or capital assets and of a type customarily covered by such Liens, except that such security interests may not apply to any accounts receivable or inventory; and (f) Liens securing Indebtedness under (i) the Borrower's domestic overdraft facilities in an amount not exceeding $5,000,000 and (ii) foreign overdraft facilities of Foreign Subsidiaries in an amount not exceeding $5,000,000; provided that Liens permitted by clause (ii) shall apply only to properties and assets of Foreign Subsidiaries. SECTION 6.4. Fundamental Changes. (a) The Borrower will not and will not permit any Restricted Subsidiary to, merge into or consolidate with any other Person, or permit any other Person to merge into or consolidate with it, or liquidate or dissolve, except that, if at the time thereof and immediately after giving effect thereto no Default shall have occurred and be continuing (i) any Restricted Subsidiary may merge into the Borrower in a transaction in which the Borrower is the surviving corporation, (ii) any Restricted Subsidiary may merge into any Subsidiary Loan Party in a transaction in which the surviving entity is a Subsidiary Loan Party, (iii) any Restricted Subsidiary that is not a Loan Party may merge into any Restricted Subsidiary that is not a Loan Party and (iv) any Restricted Subsidiary may liquidate or dissolve if the Borrower determines in good faith that such liquidation or dissolution is in the best interests of the Borrower and is not materially disadvantageous to the Lenders; provided that any such merger involving a Person that is not a Wholly Owned Subsidiary 97 immediately prior to such merger shall not be permitted unless also permitted by Section 6.5. (b) The Borrower will not, and will not permit any of its Restricted Subsidiaries to, engage to any material extent in any business other than businesses of the type conducted by the Borrower and its Subsidiaries on the date of execution of this Agreement and businesses reasonably related thereto. SECTION 6.5. Investments, Loans, Advances, Guarantees and Acquisitions. The Borrower will not, and will not permit any of its Restricted Subsidiaries to, purchase, hold or acquire (including pursuant to any merger with any Person that was not a Wholly Owned Subsidiary prior to such merger) any capital stock, evidences of indebtedness or other securities (including any option, warrant or other right to acquire any of the foregoing) of, make or permit to exist any loans or advances to, Guarantee any obligations of, or make or permit to exist any investment or any other interest in, any other Person, or purchase or otherwise acquire (in one transaction or a series of transactions) any assets of any other Person constituting a business unit, except: (a) Permitted Investments; (b) investments existing on the date hereof and set forth on Schedule 6.05, to the extent such investments would not be permitted under any other clause of this Section; (c) investments by the Borrower and its Restricted Subsidiaries in the capital stock of their respective Restricted Subsidiaries; provided that any such shares of capital stock shall be pledged pursuant to the Pledge Agreement (subject to the limitations applicable to common stock of a Foreign Subsidiary that is not a Subsidiary Loan Party, referred to in Section 5.12) and the amount of such investments by the Borrower in Restricted Subsidiaries that are not Loan Parties, plus the amount of all loans and advances referred to in clause (d) below that are made by Loan Parties to Restricted Subsidiaries that are not Loan Parties, plus the amount of Indebtedness referred to in clause (e) below of Restricted Subsidiaries that are not Loan 98 Parties that is Guaranteed by any Loan Party, shall not exceed $10,000,000 in the aggregate at any time outstanding; (d) loans or advances made by the Borrower to any Restricted Subsidiary and made by any Restricted Subsidiary to the Borrower or any other Restricted Subsidiary; provided that any such loans and advances made by a Loan Party shall be evidenced by a promissory note pledged pursuant to the Pledge Agreement and the amount of all such loans and advances by Loan Parties to Subsidiaries that are not Loan Parties shall not exceed the limitations set forth in clause (c) above; (e) Guarantees constituting Indebtedness permitted by Section 6.1; provided that (i) the amount of Indebtedness of Restricted Subsidiaries that are not Loan Parties that is Guaranteed by any Loan Party shall not exceed $5,000,000 in the aggregate at any time outstanding and (ii) the amount of Indebtedness of joint ventures and Unrestricted Subsidiaries that is Guaranteed by the Borrower or any Restricted Subsidiary shall be subject to the limitations of clause (h) below; (f) investments received in connection with the bankruptcy or reorganization of, or settlement of delinquent accounts and disputes with, customers and suppliers, in each case in the ordinary course of business; (g) Permitted Acquisitions; provided that (i) the consideration for each Permitted Acquisition shall consist solely of cash, shares of common stock of the Borrower, the assumption of Indebtedness of the acquired Person or encumbering the acquired assets, Indebtedness referred to in clause (viii) of Section 6.1 or a combination thereof and (ii) at the time of and after giving effect to the consummation of any Permitted Acquisition the sum of the unused Revolving Commitments and the Borrower's and Restricted Subsidiaries' Permitted Investments and cash balances shall not be less than $20,000,000; (h) investments in joint ventures and Unrestricted Subsidiaries in an aggregate amount, on a 99 cumulative basis during the term of this Agreement, not exceeding the sum of (i) $5,000,000, plus (ii) the aggregate amount of dividends, interest, principal payments and returns of capital received from time to time during the term of this Agreement by the Borrower and its Restricted Subsidiaries in respect of investments made under this clause (h), plus (iii) the unutilized portion of the Borrower Amount as of the date of investment, provided that (A) the aggregate amount invested in joint ventures and in Unrestricted Subsidiaries during the term of this Agreement (excluding amounts invested in reliance upon clause (ii) above) shall not at any time exceed $10,000,000, (B) if an Unrestricted Subsidiary is declared to be a Restricted Subsidiary, compliance with the foregoing limitations shall thereafter be determined as though such Subsidiary had never been an Unrestricted Subsidiary and (C) for purposes of determining compliance with the foregoing limitations, any Guarantee by the Borrower or any Restricted Subsidiary of Indebtedness or other monetary obligations of a joint venture or Unrestricted Subsidiary shall be deemed to constitute an investment therein in an amount equal to the Indebtedness or other monetary obligations so Guaranteed; (i) other loans, advances and investments not in excess of $5,000,000 outstanding at any time; and (j) notes or other evidence of Indebtedness acquired as consideration in connection with a sale, transfer, lease or other disposition of any asset by the Borrower or any of the Restricted Subsidiaries. SECTION 6.6. Asset Sales. The Borrower will not, and will not permit any of its Restricted Subsidiaries to, sell, transfer, lease or otherwise dispose of any asset, including any capital stock, nor will the Borrower permit any of it Restricted Subsidiaries to issue any additional shares of its capital stock or other ownership interest in such Restricted Subsidiary, except: (a) sales of inventory, used or surplus equipment and Permitted Investments in the ordinary course of business; 100 (b) sales, transfers and dispositions to the Borrower or a Restricted Subsidiary; provided that any such sales, transfers or dispositions involving a Restricted Subsidiary that is not a Loan Party shall be made in compliance with Section 6.10; (c) leases and licenses entered into in the ordinary course of business; (d) sales in connection with sale-leasebacks permitted under Section 6.7; (e) sales of investments referred to in clauses (a), (b) and (h) of Section 6.5; (f) sales, transfers and dispositions of assets (other than capital stock of a Subsidiary) that are not permitted by any other clause of this Section; provided that the aggregate fair market value of all assets sold, transferred or otherwise disposed of in reliance upon this clause (f) shall not, in the aggregate, exceed $30,000,000 during the term of this Agreement; and (g) sales, transfers and dispositions of Foreign Assets; and (h) transfers and dispositions constituting investments permitted under Section 6.5; provided that all sales, transfers, leases and other dispositions permitted hereby (other than those permitted by clause (b) above) shall be made for fair value and for at least 80% cash consideration (except that those permitted by clause (a) above shall be made on terms that are customary in the ordinary course). SECTION 6.7. Sale and Lease-Back Transactions. The Borrower will not, and will not permit any Restricted Subsidiary to, enter into any arrangement, directly or indirectly, with any Person whereby it shall sell or transfer any property, real or personal, used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such property or other property which it intends to use for substantially the same purpose or purposes as the property being sold or transferred, except for any such sale of fixed or capital 101 assets that is consummated within 90 days after the date the Borrower or such Restricted Subsidiary acquires or finishes construction of such fixed or capital asset. SECTION 6.8. Hedging Agreements. The Borrower will not, and will not permit any of its Restricted Subsidiaries to, enter into any Hedging Agreement, other than Hedging Agreements entered into in the ordinary course of business to hedge or mitigate risks to which the Borrower or any Restricted Subsidiary is or expects to be exposed in the conduct of its business or the management of its liabilities. SECTION 6.9. Restricted Payments; Certain Payments of Indebtedness. (a) The Borrower will not, and will not permit any Restricted Subsidiary to, declare or make, or agree to pay or make, directly or indirectly, any Restricted Payment, except (i) Wholly Owned Subsidiaries may declare and pay dividends with respect to their capital stock and Restricted Subsidiaries that are not Wholly Owned Subsidiaries may declare and pay dividends ratably with respect to their capital stock, (ii) the Borrower may make Restricted Payments, not exceeding $2,000,000 during any fiscal year, pursuant to and in accordance with stock option plans or other benefit plans for management or employees of the Borrower and its Restricted Subsidiaries, and (iii) the Borrower may, subject to Section 6.2, make dividends consisting solely of shares of its capital stock. (b) The Borrower will not, and will not permit any Subsidiary to, make or agree to pay or make, directly or indirectly, any payment or other distribution (whether in cash, securities or other property) of or in respect of principal of or interest on any Senior Subordinated Note, or any payment or other distribution (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any Senior Subordinated Note, except payment of regularly scheduled interest payments as and when due in respect of the Senior Subordinated Notes. SECTION 6.10. Transactions with Affiliates. The Borrower will not, and will not permit any Restricted Subsidiary to, sell, lease or otherwise transfer any property or assets to, or purchase, lease or otherwise 102 acquire any property or assets from, or otherwise engage in any other transactions with, any of its Affiliates (including any Subsidiary), except (a) transactions in the ordinary course of business that are at prices and on terms and conditions not less favorable to the Borrower or such Restricted Subsidiary than could be obtained on an arm's-length basis from unrelated third parties, (b) transactions between or among the Borrower and the Subsidiary Loan Parties not involving any other Affiliate, (c) any Restricted Payment permitted by Section 6.9, and (d) transactions expressly contemplated by Schedule 6.10. SECTION 6.11. Restrictive Agreements. The Borrower will not and will not permit any Restricted Subsidiary to, directly or indirectly, enter into, incur or permit to exist any agreement or other arrangement that prohibits, restricts or imposes any condition upon (a) the ability of the Borrower or any Restricted Subsidiary to create, incur or permit to exist any Lien upon any of its property or assets, or (b) the ability of any Restricted Subsidiary to pay dividends or other distributions with respect to any shares of its capital stock or to make or repay loans or advances to the Borrower or any other Restricted Subsidiary or to Guarantee Indebtedness of the Borrower or any other Restricted Subsidiary; provided that (i) the foregoing shall not apply to restrictions and conditions imposed by law or by any Loan Document, (ii) the foregoing shall not apply to restrictions and conditions existing on the date hereof identified on Schedule 6.11 (but shall apply to any extension, renewal, amendment or modification expanding the scope of, any such restriction or condition), (iii) the foregoing shall not apply to customary restrictions and conditions contained in agreements relating to the sale of a Subsidiary or assets pending such sale, provided such restrictions and conditions apply only to the Subsidiary or assets that are to be sold and such sale is permitted hereunder, (iv) clause (a) of the foregoing shall not apply to restrictions or conditions imposed by any agreement relating to secured Indebtedness permitted by this Agreement if such restrictions or conditions apply only to the property or assets securing such Indebtedness, (v) clause (a) of the foregoing shall not apply to customary provisions in contracts restricting the assignment thereof and (vi) the foregoing shall not apply to restrictions imposed by any agreement relating to Indebtedness of a Foreign Subsidiary that applies only to such Foreign 103 Subsidiary and its assets. SECTION 6.12. Amendment of Material Documents. The Borrower will not, and will not permit any Subsidiary to, amend, modify or waive any of its rights under (a) its certificate of incorporation, by-laws or other organizational documents (other than amendments and modifications that are not adverse to the interests of the Lenders and do not impair the exercise of remedies under any Security Document), (b) the Senior Subordinated Notes or any Senior Subordinated Note Document, (c) any Split-Off Document (other than amendments and modifications made after the Split-Off that are not materially adverse to the interests of the Lenders) or (d) any agreement or document identified on Schedule 3.19 or relating to any transaction referred to on Schedule 6.10; provided that the Borrower or any Subsidiary may amend, modify or waive any of its rights under any agreement or document referred to in clause (d) above if such amendment, modification or waiver (i) is on terms no less favorable to the Borrower and its Subsidiaries than would be obtained on an arm's length basis from unrelated third parties and (ii) could not reasonably be expected to result in a Material Adverse Effect. SECTION 6.13. Capital Expenditures. The Borrower will not make, and will not permit its Restricted Subsidiaries to make, Capital Expenditures other than Capital Expenditures made by the Borrower and its Restricted Subsidiaries in any fiscal year of the Borrower in an amount greater than (a) $30,000,000 plus, for each fiscal year following the Effective Date (commencing with the 1998 fiscal year), an amount equal to the excess, if any, of $30,000,000 over the aggregate amount of Capital Expenditures made in the immediately preceding fiscal year (including, with respect to 1997, those capital expenditures of Huntsman Polymers Corporation's CT Film Division that would qualify as "Capital Expenditures" under this Agreement if made by the Borrower and its Restricted Subsidiaries), plus (b) amounts available from time to time to be invested in joint ventures and Unrestricted Subsidiaries under clause (h) of Section 6.5; provided that, to the extent that Capital Expenditures are made in reliance upon clause (b) above, amounts available to be invested in joint ventures and Unrestricted Subsidiaries under clause (h) of Section 6.5 shall be deemed utilized thereunder for purposes of 104 determining compliance therewith. SECTION 6.14. Leverage Ratio. The Borrower will not permit the Leverage Ratio as of any date during any period set forth below (inclusive of the specified first and last day of such period) to be in excess of the ratio set forth below opposite such period: Period Ratio ------ ----- Effective Date-September 30, 1997 6.00 to 1.00 October 1, 1998-March 31, 1999 5.50 to 1.00 April 1, 1999-September 30, 1999 5.00 to 1.00 October 1, 1999-September 30, 2000 4.50 to 1.00 October 1, 2000-September 30, 2001 4.00 to 1.00 October 1, 2001 and thereafter 3.50 to 1.00 SECTION 6.15. Interest Coverage Ratio. The Borrower will not permit the ratio of Consolidated EBITDA to Cash Interest Expense for any period of four consecutive fiscal quarters ending during any period set forth below (inclusive of the specified first and last day of such period) to be less than the ratio set forth below opposite such period: Period Ratio ------ ----- December 31, 1997-September 30, 1998 1.50 to 1.00 October 1, 1998-March 31, 1999 1.75 to 1.00 April 1, 1999-September 30, 1999 2.00 to 1.00 October 1, 1999-September 30, 2000 2.25 to 1.00 October 1, 2000-September 30, 2001 2.50 to 1.00 October 1, 2001-September 30, 2002 2.75 to 1.00 October 1, 2002 and thereafter 3.00 to 1.00 SECTION 6.16. Minimum Net Worth. The Borrower will not permit its Adjusted Consolidated Net Worth at the end of any fiscal quarter to be less than the sum of (a) $60,400,000 plus (b) 50% of consolidated net income of the Borrower and its consolidated Restricted Subsidiaries for each fiscal quarter of the Borrower ending after the Effective Date and on or prior to such date for which such consolidated net income is positive plus (c), 50% of the amount by which Adjusted Consolidated Net worth shall have been increased during the period from the Effective Date to such date as a result of the issuance by the Borrower of additional shares of its capital 105 stock or any capital contribution to the Borrower. SECTION 6.17. Designated Senior Debt. The Borrower shall not designate any Indebtedness (other than Indebtedness under the Loan Documents) as "Designated Senior Debt" for purposes of and as defined in the Senior Subordinated Note Documents. ARTICLE VII Events of Default If any of the following events ("Events of Default") shall occur: (a) the Borrower shall fail to pay any principal of any Loan or any reimbursement obligation in respect of any LC Disbursement when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or otherwise; (b) the Borrower shall fail to pay any interest on any Loan or any fee or any other amount (other than an amount referred to in clause (a) of this Article) payable under this Agreement or any other Loan Document, when and as the same shall become due and payable, and such failure shall continue unremedied for a period of three Business Days; (c) any representation or warranty made or deemed made by or on behalf of the Borrower or any Subsidiary in or in connection with any Loan Document or any amendment or modification thereof or waiver thereunder, or in any report, certificate, financial statement or other document furnished pursuant to or in connection with any Loan Document or any amendment or modification thereof or waiver thereunder, shall prove to have been incorrect when made or deemed made in any material respect; (d) the Borrower shall fail to observe or perform any covenant, condition or agreement contained in Section 5.02, 5.04 (with respect to the existence of the Borrower) or 5.11 or in Article VI; 106 (e) any Loan Party shall fail to observe or perform any covenant, condition or agreement contained in any Loan Document (other than those specified in clause (a), (b) or (d) of this Article), and such failure shall continue unremedied for a period of 30 days after notice thereof from the Administrative Agent to the Borrower (which notice will be given at the request of any Lender); (f) the Borrower or any Restricted Subsidiary shall fail to make any payment (whether of principal or interest and regardless of amount) in respect of any Material Indebtedness, when and as the same shall become due and payable and following the expiration of any applicable grace period; (g) any event or condition occurs that results in any Material Indebtedness becoming due prior to its scheduled maturity or that enables or permits (with or without the giving of notice) the holder or holders of any Material Indebtedness or any trustee or agent on its or their behalf to cause any Material Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity; provided that this clause (g) shall not apply to secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness; (h) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, reorganization or other relief in respect of the Borrower or any Restricted Subsidiary (other than Immaterial Subsidiaries) or its debts, or of a substantial part of its assets, under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any Restricted Subsidiary (other than Immaterial Subsidiaries) or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall be entered; (i) the Borrower or any Restricted Subsidiary (other than Immaterial Subsidiaries) shall (i) voluntari- 107 ly commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (h) of this Article, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any Restricted Subsidiary (other than Immaterial Subsidiaries) or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any proceeding described in clause (h) of this Article, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing; (j) the Borrower or any Restricted Subsidiary (other than Immaterial Subsidiaries) shall become unable, admit in writing its inability or fail generally to pay its debts as they become due; (k) one or more judgments for the payment of money in an aggregate amount in excess of $5,000,000 (net of amounts covered by insurance as to which the insurer has not denied liability) shall be rendered against the Borrower, any Restricted Subsidiary (other than Immaterial Subsidiaries) or any combination thereof and the same shall remain undischarged for a period of 30 consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to attach or levy upon any assets of the Borrower or any Restricted Subsidiary (other than Immaterial Subsidiaries) to enforce any such judgment; (l) an ERISA Event shall have occurred that, in the opinion of the Required Lenders, when taken together with all other ERISA Events that have occurred, could reasonably be expected to result in liability of the Borrower and its Subsidiaries in an aggregate amount exceeding (i) $2,500,000 in any year or (ii) $5,000,000 for all periods; (m) any Lien purported to be created under any Security Document shall cease to be, or shall be asserted by any Loan Party not to be, a valid and perfected Lien 108 on any Collateral, with the priority required by the applicable Security Document, except (i) as a result of the sale or other disposition of the applicable Collateral in a transaction permitted under the Loan Documents, (ii) as a result of (x) the Collateral Agent's failure to take any action reasonably requested by the Borrower in order to maintain a valid and perfected Lien on any Collateral or (y) any action taken by the Collateral Agent to release any lien on any Collateral or (iii) Liens on Collateral with an aggregate fair market value not exceeding $1,000,000; or (n) a Change in Control shall occur; then, and in every such event (other than an event with respect to the Borrower described in clause (h)or (i) of this Article), and at any time thereafter during the continuance of such event, the Administrative Agent may, and at the request of the Required Lenders shall, by notice to the Borrower, take either or both of the following actions, at the same or different times: (i) terminate the Commitments, and thereupon the Commitments shall terminate immediately, and (ii) declare the Loans then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall become due and payable immediately, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower; and in case of any event with respect to the Borrower described in clause (h) or (i) of this Article, the Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower. 109 ARTICLE VIII The Administrative Agent Each of the Lenders and the Issuing Bank hereby irrevocably appoints the Administrative Agent as its agent and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms of the Loan Documents, together with such actions and powers as are reasonably incidental thereto. The bank serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent, and such bank and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if it were not the Administrative Agent hereunder. The Administrative Agent shall not have any duties or obligations except those expressly set forth in the Loan Documents. Without limiting the generality of the foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing, (b) the Administrative Agent shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated by the Loan Documents that the Administrative Agent is required to exercise in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 9.2), and (c) except as expressly set forth in the Loan Documents, the Administrative Agent shall not have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Subsidiaries that is communicated to or obtained by the bank serving as Administrative Agent or any of its Affiliates in any capacity. The Administrative Agent shall not be liable for any action taken or not taken by it with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in 110 Section 9.2) or in the absence of its own gross negligence or wilful misconduct. The Administrative Agent shall not be deemed not to have knowledge of any Default unless and until written notice thereof is given to the Administrative Agent by the Borrower or a Lender, and the Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with any Loan Document, (ii) the contents of any certificate, report or other document delivered thereunder or in connection therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth in any Loan Document, (iv) the validity, enforceability, effectiveness or genuineness of any Loan Document or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth in Article IV or elsewhere in any Loan Document, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent. The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing believed by it to be genuine and to have been signed or sent by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to be made by the proper Person, and shall not incur any liability for relying thereon. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts. The Administrative Agent may perform any and all its duties and exercise its rights and powers by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers through their respective Related Parties. The exculpatory provisions of the preceding paragraphs shall apply to any such sub-agent and to the Related Parties of each Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activi- 111 ties as Administrative Agent. Subject to the appointment and acceptance of a successor the Administrative Agent as provided in this paragraph, the Administrative Agent may resign at any time by notifying the Lenders, the Issuing Bank and the Borrower. Upon any such resignation, the Required Lenders shall have the right, in consultation with the Borrower, to appoint a successor. If no successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may, on behalf of the Lenders and the Issuing Bank, appoint a successor Administrative Agent that shall be a bank with an office in New York, New York, or an Affiliate of any such bank. Upon the acceptance of its appointment as Administrative Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder. The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the Administrative Agent's resignation hereunder, the provisions of this Article and Section 9.3 shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while it was acting as Administrative Agent. Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender and based on such 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 the Administrative Agent or any other Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or related agreement or any document furnished hereunder or thereunder. 112 The provisions of this Article shall apply to the Collateral Agent as though named herein as the Administrative Agent. ARTICLE IX Miscellaneous SECTION 9.1. Notices. Except in the case of notices and other communications expressly permitted to be given by telephone, all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy, as follows: (a) if to the Borrower, to it at 500 Huntsman Way, Salt Lake City 84108, Attention of Richard P. Durham (Telecopy No. (801) 584-5783), with a copy to Ronald G. Moffitt (Telecopy No. (801) 584-5783); (b) if to the Administrative Agent or the Collateral Agent, to The Chase Manhattan Bank, Loan and Agency Services Group, One Chase Manhattan Plaza, 8th Floor, New York, New York 10081, Attention of Janet Belden (Telecopy No. (212) 552-5658, with a copy to The Chase Manhattan Bank, 270 Park Avenue, New York 10017, Attention of Robert Sacks (Telecopy No. (212) 270-1355); (c) if to the Issuing Bank, to The Chase Manhattan Bank, Loan and Agency Services Group, One Chase Manhattan Plaza, 8th Floor, New York, New York 10081, Attention of Janet Belden (Telecopy No. (212) 552-5658) with a copy to The Chase Manhattan Bank, 270 Park Avenue, New York, New York 10017, Attention of Robert Sacks (Telecopy No. (212) 270-1355); (d) if to the Swingline Lender, to The Chase Manhattan Bank, Loan and Agency Services Group, One Chase Manhattan Plaza, 8th Floor, New York, New York 10081, Attention of Janet Belden (Telecopy No. (212) 552-5658) with a copy to The Chase Manhattan Bank, 270 Park Avenue, New York, New York 10017, Attention of Robert Sacks (Telecopy No. (212) 270-1355); and (e) if to any other Lender, to it at its ad- 113 dress (or telecopy number) set forth in its Administrative Questionnaire. Any party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the other parties hereto. All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt. SECTION 9.2. Waivers; Amendments. (a) No failure or delay by the Administrative Agent, the Issuing Bank or any Lender in exercising any right or power hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agent, the Issuing Bank and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of any Loan Document or consent to any departure by any Loan Party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan or issuance of a Letter of Credit shall not be construed as a waiver of any Default, regardless of whether the Admin- istrative Agent, any Lender or the Issuing Bank may have had notice or knowledge of such Default at the time. (b) Neither this Agreement nor any other Loan Document nor any provision hereof or thereof may be waived, amended or modified except, in the case of this Agreement, pursuant to an agreement or agreements in writing entered into by the Borrower and the Required Lenders or, in the case of any other Loan Document, pursuant to an agreement or agreements in writing entered into by the Administrative Agent or Collateral Agent, as applicable, and the Loan Party or Loan Parties that are parties thereto, in each case with the consent of the Required Lenders; provided that no such agreement shall (i) increase the Commitment of any Lender without the 114 written consent of such Lender, (ii) reduce the principal amount of any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce any fees payable hereunder, without the written consent of each Lender affected thereby, (iii) postpone the scheduled date of payment of the principal amount of any Loan or LC Disbursement, or any interest thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse any such payment, or postpone the scheduled date of expiration of any Commitment, without the written consent of each Lender affected thereby, (iv) change Section 2.18(b) or (c) in a manner that would alter the pro rata sharing of payments required thereby, without the written consent of each Lender, (v) change any of the provisions of this Section or the definition of the term "Required Lenders" or any other provision of any Loan Document specifying the number or percentage of Lenders (or Lenders of any Class) required to waive, amend or modify any rights thereunder or make any determination or grant any consent thereunder, without the written consent of each Lender (or each Lender of such Class, as the case may be), (vi) release any Subsidiary Loan Party from its Guarantee under the Guarantee Agreement (except as expressly provided in the Guarantee Agreement), or limit its liability in respect of such Guarantee, without the written consent of each Lender, (vii) release all or any substantial part of the Collateral from the Liens of the Security Documents (except as expressly provided therein), without the written consent of each Lender or (viii) change any provisions of any Loan Document in a manner that by its terms adversely affects the rights in respect of payments due to Lenders holding Loans of any Class differently than those holding Loans of any other Class, without the written consent of Lenders holding a majority in interest of the outstanding Loans and unused Commitments of each affected Class; provided further that (A) no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent, the Collateral Agent, the Issuing Bank or the Swingline Lender without the prior written consent of the Administrative Agent, the Collateral Agent, the Issuing Bank or the Swingline Lender, as the case may be, and (B) any waiver, amendment or modification of this Agreement that by its terms affects the rights or duties under this Agreement of the Revolving Lenders (but not the Term Loan Lenders) or the Term Loan Lenders (but not the Revolving Lenders) may be effected by an agreement or agreements in writing entered 115 into by the Borrower and the percentage in interest of the affected Class of Lenders that would be required to consent thereto under this Section if such Class of Lenders were the only Class of Lenders hereunder at the time. SECTION 9.3. Expenses; Indemnity: Damage Waiver. (a) The Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the Administrative Agent, the Collateral Agent and their respective Affiliates, including the reasonable fees, charges and disbursements of counsel for the Administrative Agent and the Collateral Agent, in connection with the syndication of the credit facilities provided for herein, the preparation and administration of the Loan Documents or any amendments, modifications or waivers of the provisions thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket expenses incurred by the Issuing Bank in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and (iii) all out-of-pocket expenses incurred by the Administrative Agent, the Collateral Agent, the Issuing Bank or any Lender, including the fees, charges and disbursements of any counsel for the Administrative Agent, the Collateral Agent, the Issuing Bank or any Lender, in connection with the enforcement or protection of its rights in connection with the Loan Documents, including its rights under this Section, or in connection with the Loans made or Letters of Credit issued hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit. (b) The Borrower shall indemnify the Administrative Agent, the Collateral Agent, the Issuing Bank and each Lender, and each Related Party of any of the foregoing Persons (each such Person being called an "Indemni- tee") against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including the fees, charges and disbursements of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee arising out of, in connection with, or as a result of (i) the execution or delivery of any Loan Document or any other agreement or instrument contemplated hereby, the performance by the parties to the Loan Documents of their respective obliga- 116 tions thereunder or the consummation of the Transactions or any other transactions contemplated hereby, (ii) any Loan or Letter of Credit or the use of the proceeds therefrom (including any refusal by the Issuing Bank to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actual or alleged presence or release of Hazardous Materials on or from any Mortgaged Property or any other property currently or formerly owned or operated by the Borrower or any of its Subsidiaries, or any Environmental Liability related in any way to the Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses resulted from the gross negligence or wilful misconduct of such Indemnitee or any Affiliate of such Indemnitee (or of any officer, director, employee, advisor or agent of such Indemnitee or any such Indemnitee's Affiliates). (c) To the extent that the Borrower fails to pay any amount required to be paid by it to the Administrative Agent, the Collateral Agent, the Issuing Bank or the Swingline Lender under paragraph (a) or (b) of this Section, each Lender severally agrees to pay to the Administrative Agent, the Collateral Agent, the Issuing Bank or the Swingline Lender, as the case may be, such Lender's pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent, the Collateral Agent, the Issuing Bank or the Swingline Lender in its capacity as such. For purposes hereof, a Lender's "pro rata share" shall be determined based upon its share of the sum of the total Revolving Exposures, outstanding Term Loans and unused Commitments at the time. (d) To the extent permitted by applicable law, the Borrower shall not assert, and each hereby waives, 117 any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any agreement or instrument contemplated hereby, the Transactions, any Loan or Letter of Credit or the use of the proceeds thereof. (e) All amounts due under this Section shall be payable promptly after written demand therefor. SECTION 9.4. Successors and Assigns. (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby (in- cluding any Affiliate of the Issuing Bank that issues any Letter of Credit), except that the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby (including any Affiliate of the Issuing Bank that issues any Letter of Credit) and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the Collateral Agent, the Issuing Bank and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement. (b) Any Lender may assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it); provided that (i) except in the case of an assignment to a Lender or an Affiliate of a Lender, each of the Borrower and the Administrative Agent (and, in the case of an assignment of all or a portion of a Revolving Commitment or any Lender's obligations in respect of its LC Exposure or Swingline Exposure, the Issuing Bank and the Swingline Lender) must give their prior written consent to such assignment (which consent shall not be unreasonably withheld), (ii) except in the case of an assignment to a Lender or an Affiliate of a Lender or an assignment of the entire remaining amount of the assigning Lender's 118 Commitment or Loans, the amount of the Commitment or Loans cf the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to the Administrative Agent) shall not be less than $5,000,000 unless each of the Borrower and the Administrative Agent otherwise consent, (iii) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender's rights and obligations under this Agreement, except that this clause (iii) shall not be construed to prohibit the assignment of a proportionate part of all the assigning Lender's rights and obligations in respect of one Class of Commitments or Loans, (iv) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Acceptance, together with a processing and recordation fee of $3,500, and (v) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent and the Borrower an Administrative Questionnaire; and provided further that any consent of the Borrower otherwise required under this paragraph shall not be required if an Event of Default under clause (h) or (i) of Article VII has occurred and is continuing. Subject to acceptance and recording thereof pursuant to paragraph (d) of this Section, from and after the effective date specified in each Assignment and Acceptance the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all of the assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.15, 2.16, 2.17 and 9.03). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this paragraph shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (e) of this Section. (c) The Administrative Agent, acting for this purpose as an agent of the Borrower, shall maintain at one of its offices in The City of New York a copy of each 119 Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal amount of the Loans and LC Disbursements owing to, each Lender pursuant to the terms hereof from time to time (the "Register"). The entries in the Register shall be conclusive, and the Borrower, the Administrative Agent, the Issuing Bank and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower, the Issuing Bank and any Lender, at any reasonable time and from time to time upon reasonable prior notice. (d) Upon its receipt of a duly completed Assignment and Acceptance executed by an assigning Lender and an assignee, the assignee's completed Administrative Questionnaire (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section and any written consent to such assignment required by paragraph (b) of this Section, the Administrative Agent shall accept such Assignment and Acceptance and record the information contained therein in the Register. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph. (e) Any Lender may, without the consent of the Borrower, the Administrative Agent, the Issuing Bank or the Swingline Lender, sell participations to one or more banks or other entities (a "Participant") in all or a portion of such Lender's rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans owing to it); provided that (i) such Lender's obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent, the Issuing Bank and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce the Loan Documents and to approve any amendment, 120 modification or waiver of any provision of the Loan Documents; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in the first proviso to Section 9.2(b) that affects such Participant. Subject to paragraph (f) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.15, 2.16 and 2.17 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 9.8 as though it were a Lender, provided such Participant agrees to be subject to Section 2.18(c) as though it were a Lender. (f) A Participant shall not be entitled to receive any greater payment under Section 2.15 or 2.17 than the applicable Lender would have been entitled to receive with respect to the Loans or Commitments with respect to which such participation has been sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower's prior written consent. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 2.17 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section 2.17(e) as though it were a Lender. (g) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto. SECTION 9.5. Survival. All covenants, agreements, representations and warranties made by the Loan Parties in the Loan Documents and in the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Loan Document shall be 121 considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of the Loan Documents and the making of any Loans and issuance of any Letters of Credit, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Administrative Agent, the Collateral Agent, the Issuing Bank or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid or any Letter of Credit is outstanding and so long as the Commitments have not expired or terminated. The provisions of Sections 2.15, 2.16, 2.17 and 9.3 and Article VIII shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination of the Letters of Credit and the Commitments or the termination of this Agreement or any provision hereof. SECTION 9.6. Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement, the other Loan Document and any separate letter agreements with respect to fees payable to the Administrative Agent or the Issuing Bank constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 4.1, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Delivery of an executed counterpart of a signature page of this Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement. 122 SECTION 9.7. Severability. Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction. SECTION 9.8. Right of Setoff. If an Event of Default shall have occurred and be continuing, each Lender and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other obligations at any time owing by such Lender or Affiliate to or for the credit or the account of the Borrower against any of and all the obligations of the Borrower now or hereafter existing under this Agreement held by such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement and although such obligations may be unmatured. The rights of each Lender under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender may have. SECTION 9.9. Governing Law; Jurisdiction; Consent to Service of Process. (a) This Agreement shall be construed in accordance with and governed by the law of the State of New York. (b) The Borrower hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to any Loan Document, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be 123 enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement or any other Loan Document shall affect any right that the Administrative Agent, the Collateral Agent, the Issuing Bank or any Lender may otherwise have to bring any action or proceeding relating to this Agreement or any other Loan Document against the Borrower or its properties in the courts of any jurisdiction. (c) The Borrower hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any other Loan Document in any court referred to in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. (d) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 9.1. Nothing in this Agreement or any other Loan Document will affect the right of any party to this Agreement to serve process in any other manner permitted by law. SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION. SECTION 9.11. Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this 124 Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement. SECTION 9.12. Confidentiality. Each of the Administrative Agent, the Collateral Agent, the Issuing Bank and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates' directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to Whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority, (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party to this Agreement, (e) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement, (g) with the consent of the Borrower or (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to the Administrative Agent, the Collateral Agent, the Issuing Bank or any Lender on a nonconfidential basis from a source other than the Borrower. For the purposes of this Section, "Information" means all information received from the Borrower relating to the Borrower or its business, other than any such information that is available to the Administrative Agent, the Collateral Agent, the Issuing Bank or any Lender on a nonconfidential basis prior to disclosure by the Borrower. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information. SECTION 9.13. Interest Rate Limitation. Notwithstanding anything herein to the contrary, if at any 125 time the interest rate applicable to any Loan, together with all fees, charges and other amounts that are treated as interest on such Loan under applicable law (collectively the "Charges"), shall exceed the maximum lawful rate (the "Maximum Rate") that may be contracted for, charged, taken, received or reserved by the Lender holding such Loan in accordance with applicable law, the rate of interest payable in respect of such Loan hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan but were not payable as a result of the operation of this Section shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Effective Rate to the date of repayment, shall have been received by such Lender. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. HUNTSMAN PACKAGING CORPORATION, by ---------------------- Name: Title: THE CHASE MANHATTAN BANK, individually and as Administrative Agent, by ---------------------- Name: Title: 126 BANK OF MONTREAL, by ---------------------- Name: John K. Harche Title: Director 127 THE BANK OF NEW YORK, by ---------------------- Name: Lisa Brown Title: Vice President 128 THE BANK OF NOVA SCOTIA, by ---------------------- Name: A.S. Norsworthy Title: Sr. Team Leader - Loan Operations 129 BANK OF TOKYO MITSUBISHI TRUST COMPANY, by ------------------------- Name: David C. McLaughlin Title: Vice President 130 BANK ONE, UTAH, N.A., by -------------------- Name: Title: 131 BANQUE PARIBAS, by ------------------------ Name: Matthew C. Bishop Title: Associate by ----------------------- Name: Lynne A. Lueders Title: Director 132 BHF-BANK AKTIENGESELLSCHAFT, by --------------------- Name: Anthony Heyman Title: AT by --------------------- Name: John Sykes Title: AVP 133 CIBC INC., by ----------------------- Name: Timothy E. Doyle Title: Managing Director CIBC Wood Gundy Securities Corp., as Agent by -------------------- Name: Title: 134 CREDIT LYONNAIS LOS ANGELES BRANCH, by ---------------------- Name: Dianne M. Scott Title: Vice President and Manager 135 DRESDNER BANK AG, NEW YORK BRANCH AND GRAND CAYMAN BRANCH, by ---------------------- Name: John W. Sweeney Title: Assistant Vice President by --------------------- Name: Brigitte Sacin Title: Assistant Treasurer 136 THE FIRST NATIONAL BANK OF CHICAGO, by ------------------------- Name: Robert Title: Vice President 137 THE FUJI BANK, LIMITED, LOS ANGELES AGENCY, by ---------------------- Name: Nasahito Fukuda Title: Asst. General Manager 138 HIBERNIA NATIONAL BANK, by ---------------------- Name: Trudy W. Nelson Title: Vice President 139 KEYBANK NATIONAL ASSOCIATION, by -------------------- Name: J.T. Taylor Title: Assistant Vice President 140 THE LONG-TERM CREDIT BANK OF JAPAN, LTD., LOS ANGELES AGENCY, by ------------------------- Name: T. Morgan Edwards II Title: Deputy General Manager by -------------------------- Name: Bryan Read Title: Vice President 141 MELLON BANK, N.A., by ------------------------- Name: John K. Walsh Title: Vice President 142 THE MITSUBISHI TRUST AND BANKING CORPORATION, LOS ANGELES AGENCY, by ----------------------- Name: Yasushi Satomi Title: Senior Vice President 143 NATEXIS BANQUE-BFCE, by ------------------------ Name: Iain A. Whyte Title: Vice President by ------------------------ Name: Daniel Touffer Title: First VP and Regional Manager 144 NATIONAL CITY BANK, by ------------------------ Name: Robert C. Rowe Title: Vice President by ------------------------ Name: Title: 145 NATIONSBANK OF TEXAS, N.A., by ---------------------- Name: Frank Johnson Title: Senior Vice President by ----------------------- Name: Title: 146 PNC BANK, NATIONAL ASSOCIATION, by ----------------------- Name: David J. Egan Title: Senior Vice President 147 THE SUMITOMO BANK, LIMITED, by ------------------------ Name: Goro Hirai Title: Joint General Manager by ------------------------- Name: Title: 148 U.S. BANK NATIONAL ASSOCIATION, by ------------------------- Name: Danielle Lower Title: Vice President 149 (Credit Agreement) SCHEDULE 1.01(a) Mortgaged Property - ------------------ 1. Birmingham, Alabama 2. Carrollton, Ohio (partially owned and partially leased) 3. Danville, Kentucky 4. Deerfield, Massachusetts 5. Lewisburg, Tennessee 6. Merced, California 7. Seattle, Washington 8. Chippewa Falls, Wisconsin (CT Film Facility)* 9. Harrington, Delaware (CT Film Facility)* - --------------------------------- * to be completed within 60 days 150 Schedule 2.01 COMMITMENTS -----------
======================================================================================================================= Lender Contact Person Commitments - ----------------------------------------------------------------------------------------------------------------------- The Chase Manhattan Bank Robert Sacks Term: $4,166,667 270 Park Avenue Tel: 212-270-4118 Revolving: $8,333,333 New York, NY 10017 Fax: 212-270-7939 - ------------------------------------------------------------------------------------------------------------------------ Bank of Montreal Daniel E. Morihiro Term: $3,166,667 601 South Figueroa Street Tel: 213-239-0632 Revolving: $6,333,333 Suite 4900 Fax: 213-239-0880 Los Angeles, CA 90017 For Administrative Mat- ters: Betty Rutherford 115 S. La Salle, 11th Floor Chicago, IL 60603 - ------------------------------------------------------------------------------------------------------------------------ The Bank of New York Jonathan Rollin Term: $3,166,667 10990 Wilshire Blvd., Tel: 310-996-8658 Revolving: $6,333,333 Suite 1125 Fax: 310-996-8667 Los Angeles, CA 90024 - ------------------------------------------------------------------------------------------------------------------------ The Bank of Nova Scotia Bryan Belawa Term: $3,666,667 600 Peachtree Street, 1100 Louisiana Street, Revolving: $7,333,333 N.E. Suite 3000 Suite 2700 Houston, TX 77002 Atlanta, GA 30308 Tel: 713-759-3427 Fax: 713-752-2425 - ------------------------------------------------------------------------------------------------------------------------ Bank of Tokyo Mitsubishi David C. McLaughlin Term: $3,166,667 Trust Company Tel: 212-782-4331 Revolving: $6,333,333 1251 Avenue of the Fax: 212-782-4981 Americas, 12th Floor New York, NY 10020 For Administrative Mat- ters: Rolando Uy Tel: 201-413-8570 Fax: 212-766-3127 - --------------------------------------------------------------------- 151 - ------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------ Bank One, Utah, N.A. Stephen A. Cazier Term: $3,166,667 80 West Broadway, #200 Tel: 801-481-5139 Revolving: $6,333,333 Salt Lake City, UT 84101 Fax: 801-481-5031 - ------------------------------------------------------------------------------------------------------------------------ Banque Paribas Lynne A. Lueder Term: $3,166,667 2029 Century Park East, Tel: 310-551-7319 Revolving: $6,333,333 Suite 3900 Fax: 310-556-3157 Los Angeles, CA 90067 - ------------------------------------------------------------------------------------------------------------------------ BHF-Bank John Holmquist Term: $3,166,667 Aktiengesellschaft 111 West Ocean Blvd., Revolving: $6,333,333 590 Madison Avenue Suite 1325 New York, NY 10022 Long Beach, CA 90802 Tel: 562-983-5009 Fax: 562-983-5015 For Administrative Mat- ters: Renate Boston Tel: 212-756-5582 Fax: 212-756-5536 - ------------------------------------------------------------------------------------------------------------------------- CIBC Inc. Timothy Doyle Term: $3,166,667 2727 Paces Ferry Road 425 Lexington Avenue Revolving: $6,333,333 Suite 1200 New York, NY 10017 2 Paces West, Building 2 Tel: 212-856-3650 Atlanta, GA 30339 Fax: 212-856-3991 For Administrative Mat- ters: Shelia Hogans (same as listed Georgia address) Tel: 770-319-4820 Fax: 770-319-4950 - ------------------------------------------------------------------------------------------------------------------------ Credit Lyonnais David Miller Term: $3,166,667 Los Angeles Branch Tel: 213-362-5946 Revolving: $6,333,333 515 So. Flower Street, Fax: 213-623-3437 Suite 2200 Los Angeles, CA 90071 - ------------------------------------------------------------------------------------------------------------------------ 152 - ------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------- Dresdner Bank AG, Jim Bland Term: $3,166,667 New York Branch & Grand 333 South Grand Avenue Revolving: $6,333,333 Cayman Branch Suite 1700 75 Wall Street Los Angeles, CA 90071 New York, NY 10005 Tel: 213-473-5410 Fax: 213-473-5450 - ------------------------------------------------------------------------------------------------------------------------ The First National Bank Robert Sperhac Term: $3,166,667 of Chicago Tel: 312-732-6371 Revolving: $6,333,333 One First National Plaza Fax: 312-732-3055 Chicago, IL 60670 - ------------------------------------------------------------------------------------------------------------------------ The Fuji Bank, Limited. Ching Lim Term: $3,166,667 Los Angeles Agency Tel: 213-253-4152 Revolving: $6,333,333 333 South Hope Street, Fax: 213-252-4178 Suite 3900 Los Angeles, CA 90071 For Administrative Mat- ters: Mr. Charlene Takata Tel: 213-253-4137 Fax: 213-253-4178 - ----------------------------------------------------------------------------------------------------------------------- Hibernia National Bank Trudy Nelson Term: $3,166,667 313 Carondelet Street, Tel: 504-533-3213 Revolving: $6,333,333 Suite 1300 Fax: 504-533-5434 New Orleans, LA 70130 - ------------------------------------------------------------------------------------------------------------------------ Key Bank National Associ- J.T. Taylor Term: $3,166,667 ation Tel: 206-684-6037 Revolving: $6,333,333 700 Fifth Ave, 48th Fl. Fax: 206-684-6035 Seattle, WA 98104 - ------------------------------------------------------------------------------------------------------------------------ The Long-Term Credit Bank Bryan Reed Term: $3,166,667 of Japan, Ltd. Tel: 213-689-6314 Revolving: $6,333,333 Los Angeles Agency Fax: 213-626-1067 350 South Grand Avenue, Suite 3000 Los Angeles, CA 90071 - ------------------------------------------------------------------------------------------------------------------------- Mellon Bank, N.A. John K. Walsh Term: $1,666,667 One Mellon Bank Center, Tel: 412-234-8479 Revolving: $3,333,333 Room 4401 Fax: 412-234-8888 Pittsburgh, PA 15258 - ------------------------------------------------------------------------------------------------------------------------- 153 - ------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------ The Mitsubishi Trust Dean Kawai Term: $3,166,667 Banking Corporation, Tel: 213-896-4666 Revolving: $6,333,333 Los Angeles Agency Fax: 213-687-4631 801 South Figueroa St., Suite 500 Los Angeles, CA 90017 - ------------------------------------------------------------------------------------------------------------------------ Natexis Banque-BFCE Mr. Iain Whyte Term: $3,166,667 645 Fifth Avenue Los Angeles Representa- Revolving: $6,333,333 New York, NY 10022 tive Office 660 So. Figueroa St., Suite 1400 Los Angeles, CA 90017 Tel: 213-627-8677 Fax: 213-627-2761 - ----------------------------------------------------------------------------------------------------------------------- National City Bank Joseph D. Robinson Term: $3,166,667 1900 East Ninth Street Tel: 216-575-9254 Revolving: $6,333,333 Cleveland, Ohio 44114 Fax: 216-222-0003 For Administrative Mat- ters: Vesta Higgins Tel: 216-575-2183 Fax: 216-575-3207 - ----------------------------------------------------------------------------------------------------------------------- NationsBank of Texas, Kimberly Knop Term: $3,666,666 N.A. Tel: 214-508-3363 Revolving: $7,333,333 901 Main Street, 67th Fl. Fax: 214-508-0890 Dallas, TX 75202 For Administrative Mat- ters: Stacey Smith Tel: 214-508-1864 Fax: 214-508-0944 - ------------------------------------------------------------------------------------------------------------------------ PNC Bank, National Asso- Philip K. Liebscher Term: $3,166,667 ciation Tel: 412-762-3202 Revolving: $6,333,333 249 Fifth Avenue Fax: 412-762-6484 Pittsburgh, PA 15222 For Administrative Matters: Sally Hunter Tel: 412-768-3807 Fax: 412-768-4586 - ----------------------------------------------------------------------------------------------------------------------- 154 - ------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------ The Sumitomo Bank, Ryan Jeon Term: $3,166,667 Limited Tel: 213-955-0877 Revolving: $6,333,333 777 South Figueroa St., Fax: Suite 2600 Los Angeles, CA 90017 For Administrative Matters: Miriam Delgado Tel: 213-955-0883 - ------------------------------------------------------------------------------------------------------------------------ U.S. Bank, National Asso- William Phelps Term: $1,666,667 ciation 601 Second Avenue South Revolving: $3,333,333 107 South Main Street, (MPFP 0804) 3rd Floor Minneapolis, MN 55402 Salt Lake City, UT 84111 Tel: 612-973-0611 Fax: 612-973-0829 ==========================================================================================================================
155 (Credit Agreement) SCHEDULE 3.05 Address of Real Property 1. Huntsman Packaging Corporation ------------------------------ Chief Executive Office 500 Huntsman Way Salt Lake City, Utah 84108 Administration Office/R&D Facility 3575 Forest Lake Drive Uniontown, Ohio 44685 Calhoun Plant 1655 Highway 41 S.W. Calhoun, Georgia 30701 Merced Plant 386 North Tower Road Merced, California 95340 *Bowling Green Plant 5 Memphis Junction Road P.O. Box 149 Bowling Green, Kentucky 42102 Carrollton Plant 750 Garfield Avenue Carrollton, Ohio 44615 Birmingham Plant 2700 7th Avenue, North Birmingham, Alabama 35203 Rochester Plant 200 East Main Street Macedona, New York 14502-0550 - -------- *Property is still owned by plant but was shut down and is being sold. 156 Lewisburg Plant 851 Garrett Parkway Lewisburg, Tennessee 37091 Seattle Plant 8039 S. 192nd Street Kent, Washington 2. Huntsman Film Products of Canada, Ltd. -------------------------------------- Chief Executive Office 500 Huntsman Way Salt Lake City, Utah 84108 Toronto Plant 225 Birmingham Street Toronto, Ontario M8V 2C7 Canada 3. Huntsman United Films Corporation --------------------------------- Chief Executive Office 500 Huntsman Way Salt Lake City, Utah 84108 Office 107 North College Avenue Bloomington, Indiana 47404 Odon Plant County Road 1250 North Rural Route #2 P.O. Box 308 Odon, Indiana 47562 Bloomington Plant 4100 Profile Parkway P.O. Box 6988 Bloomington, Indiana 47404 4. Huntsman Packaging International Corporation -------------------------------------------- Chief Executive Office 500 Huntsman Way Salt Lake City, Utah 84108 157 5. Huntsman Packaging Georgia, Inc. -------------------------------- Chief Executive Office 500 Huntsman Way Salt Lake City, Utah 84108 6. Huntsman Deerfield Films Corporation ------------------------------------ (f/k/a Deerfield Plastics Co., Inc.) Chief Executive Office 500 Huntsman Way Salt Lake City, Utah 84108 Deerfield Plant 10 Greenfield Road South Deerfield, Massachusetts 01373 Danville Plant 1330 Lebanon Road Danville, Kentucky 40422 7. Huntsman Container Company France --------------------------------- Guegon Plant Zone Industrialle de la Croix Blanche Guegon, 56120 Josselin Guegon, France 8. Huntsman Film Products GmbH --------------------------- Philippsburgh Plant BoschtraBe 2 D-6833 Waghausel 1 Philippsburgh, Germany 9. Huntsman Film Products Pty. Ltd. -------------------------------- Melbourne Plant 22 Reserve Street Preston, Victoria Australia 3072 158 10. Huntsman Container Company Ltd. Huntsman Film Products UK Ltd. ------------------------------ Skelmersdale Plant 1 Pikelaw Place Skelmersdale Lancashire WN89PP England, U.K. CT Film Facilities ------------------ 11. Chippewa Falls Plant* 1701 First Avenue Chippewa Falls, Wisconsin 54729 12. Dalton Plant* 109 Poly-Pac Drive Dalton, Georgia 37020 13. Harrington Plant* Route 2 Box 67 299 Ckukey Drive Harrington, Delaware 19952 14. Freeport Business Center* Building M -9 Fairfield, Utah 84016-0370 - --------------------------------------------------------- * will be acquired by Huntsman Packaging Corporation from Huntsman Polymers Corporation (f/k/a Rexene Corporation). 159 (Credit Agreement) SCHEDULE 3.12 Subsidiaries ------------
Jurisdiction of Percentage Name of Subsidiary Incorporation Interest ------------------ ---------------- ----------- 1. Huntsman Deerfield Films Corporation1 Massachusetts 100 2. Huntsman United Films Corporation1 Georgia 100 3. Huntsman Preparatory Inc.1 Utah 100 4. Huntsman Container Corporation International1 Utah 100 5. Huntsman Packaging Georgia, Inc.1 Georgia 100 6. Huntsman Film Products of Mexico, Inc.1 Utah 100 7. Huntsman Film Products of Canada Ltd.1 Canada 100 8. Huntsman Film Products Pty Ltd.1 Australia 98 9. Huntsman Film Products GmbH1 Germany 100 10. Huntsman Bulk Packaging Corporation1 Utah 100 11. Huntsman Film Products UK Ltd.2 U.K. 100 12. Huntsman Container Company Ltd.2 U.K. 99 13. Huntsman Container Company France2 France 98 14. Huntsman/Ipex3 50
- -------- 1 Owned by Huntsman Packaging Corporation 2 Owned by Huntsman Container Corporation International 3 Owned by Huntsman Bulk Packaging Corporation 160 (Credit Agreement) SCHEDULE 3.13 Insurance --------- 161 NOTE: INSERT DOC #s 140508/S7A and Schedule 3.16(a) Schedule 3.16(b) Schedule 3.19 Schedule 5.07 Schedule 6.01 Schedule 6.03 from Doc #139521.06/S7A and 137401.04 and Schedule 6.05 Schedule 6.10 Schedule 6.11 from Doc #139521.06/S7A 162 HUNTSMAN CORPORATION RECORD OF INSURANCE 1997/1998
================================================================================================================================== COMPANY & POLICY POLICY ESTIMATED COVERAGE LIMITS NUMBER PERIOD PREMIUM HUNTSMAN PACKAGING - COMMERCIAL PROPERTY; BOILER & MACHINERY. RMAX & HUNTSMAN CORPORATION HEAD- QUARTERS BUILDING; BOILER & MACHINERY. PROPERTY OF ALL DESCRIPTIONS AND TYPES, INCLUDING Zurich Insurance 07-01-97 BUSINESS INTERRUPTION PPR819546300 07-01-98 $459,701 + Taxes and Fire Levies of $33,494 Perils: Risks of direct physical loss including the perils of earthquake and flood Subject to company terms, conditions and exclu- sions. PROPERTY LOSS LIMIT $200,000,000 Blanket any one occ. Earthquake $100,000,000 Flood $100,000,000 California Earthquake $5,000,000 Newly Acquired Property (Subject to 120 day re- porting) $5,000,000 Builders Risk $5,000,000 Misc. Unscheduled Locations $2,500,000 Service Interruption $5,000,000 Demolition & Increased Cost of Construction $5,000,000 Valuable Papers and Accounts Receivable $5,000,000 - ---------------------------------------------------------------------------------------------------------------------------------- 163 - ---------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------- Debris Removal $5,000,000 Tenants & Neighbors Liability $5,000,000 Foreign Tax Liability $1,000,000 Contingent BI & Extra Expense $10,000,000 Errors and Emissions $500,000 Fine Arts $2,000,000 B&M SUBLIMITS- $100,000 Ammonia Contamination $100,000 Water Damage $100,000 Consequential Damage $100,000 DEDUCTIBLES: Combined PD/BI - Property $50,000 Combined PD/BI - Boiler $50,000 California Earthquake 5% of PD/BI Values or $100,000 Minimum 24 Hours Service Interruption 60 Days Extend- Business Income ed Period of Indemnity Loss of Earnings 12 Month period of Indemnity Loss Profits 24 Hours Ser- vice Inter- ruption - ----------------------------------------------------------------------------------------------------------------------------------- 164 - ---------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------- EMPLOYEE DISHONESTY Federal Ins. Co. 07-01-97 Employee Theft Coverage $15,000,000 8141-4999 07-01-98 $96,270 Premises Coverage $15,000,000 Transit Coverage $15,000,000 Depositor's Forgery $15,000,000 DEDUCTIBLE $250,000 Federal Ins. Co. 07-01-97 Included FIDUCIARY LIABILITY Fiduciary Dishonesty - Applicable $10,000,000 8141-4999 07-01-98 to Employee Benefit Plans Coverage Territory is Worldwide $250,000 & Includes Pension & Profit Sharing Plans Limit: (Each Loss/Each Year) $10,000,000 DEDUCTIBLE $250,000 DIRECTORS AND OFFICERS LIABILITY Gulf Insurance Co. 04-21-96/99 $619,490 GA5828554 Limit per Occurrence $15,000,000 RETENTIONS: INDIVIDUAL D & O $0 AGGREGATE D & O $0 CORPORATE REIMBURSEMENT $150,000 Retro Date: 9-07-90 Extended Reporting Period - 1 Year @ 75% Additional Premium - ----------------------------------------------------------------------------------------------------------------------------------- 165 - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- SPECIAL CONTINGENCY COVERAGE $5,000,000 Reliance Ins. 09-15-95/ $7,500 NFK1394480 09-15-2000 5 year prepaid MARINE OPEN CARGO POLICY 07-01-97/98 $290,395 Coverages: Marine/War Cargo, S.R. & C.C. where applicable limits are per: Any one Vessel per occurrence $5,000,000 MH2094585 Any one Barge per occurrence $1,000,000 Zurich Insurance Co. ATC 81 Barge per shipment $13,000,000 Includes containerized shipments Any one Conveyance - Huntsman $2,000,000 $15,000 Packaging Ocean Movement Inland Shipments for Huntsman $1,000,000 Packaging Operations - Any one Common Carrier DEDUCTIBLE: 1/2 OF 1% OF VALUE SHIPPED No deductible applies to Containerized shipments Huntsman Packaging Ocean & Inland Shipment Deductible $1,000 per occurrence Rates:All bulk per SP13C=.0425 per $100 values shipped ATC81 bulk rate per SP13C=.0595 per $100 values shipped Containerized shipments =.051 per $100 values shipped Guaranteed Outturn- (must request prior to shipment)=.1445 per $100 values shipped. Rates are inclusive of War, Strikes, Riots, and Civil Commotion - ---------------------------------------------------------------------------------------------------------------------------------- 166 - ---------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------- UMBRELLA/EXCESS LIABILITY 1st Umbrella layer of $22,000,000 I.R.I.C. 07-01-97/98 $1,351,648 US$22,000,000 XS of Annual a primary - AIG SELF-INSURED RETENTION OF Per Occurrence National Union US$3,000,000 EACH OCCURRENCE Worldwide Coverage $44,000,000 #BE9322509 Term: 3 $48,840 Annual Per Aggregate Cert #CE-365-01-78 Years from (EPL) 7-1-96 $791,209 Annual Clash Includes: Clash Coverage Per Occurrence $70,000,000 RETENTION ON PROPERTY/CASUALTY $5,000,000 Employment Practices Liability AISLIC RETENTION EACH CLAIM $3,000,000 #CLM818-60-98 RETENTION EACH CLASS ACTION SUIT $5,000,000 Retro Date: 7/1/96 COMMENTS TO LIABILITY: Cigna/XL Risk Solutions layer $100,000,000 excess of $25,000,000 (including deductibles) contains the following provisions: - ----------------------------------------------------------------------------------------------------------------------------------- 167 - ----------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------- 1. Layer limit of $100,000,000 is available in the event of liability only losses. In case of single occurrence producing both significant property and liability losses, the underlying liability limit available could drop to as low as $75,000,000. In such event, overlying reinsurers will drop-down and attach in excess of reduced Risk Solutions recoverables. 2. Consult policy for full explanation of mandatory and optional limit reinstatement. 3. Does not include Rexene Acquisition. All layers exclude Rexene Acquisition except for AIG and Swiss Re which include. 4. Limit reinstatement premium, if any, subject to installments. 5. L.O.C. required to secure one-half of third year premium. 6. Co-insurance penalties apply if cancelled by reinsured/original insured. 2nd Excess Layer Cigna/XL Reinsurance $100,000,000 I.R.I.C. 07-01-97/98 US$100,000,000 XS of Per Claim & Agg X.L./Cigna (Risk $1,960,440 US$25,000,000 Claims made Solutions Annual coverage $50,000,000 Clash cover in TBD $604,396 Annual the event of a combined Clash property & casualty loss 3rd Excess Layer Starr Reinsurance $100,000,000 I.R.I.C. 07-01-97/98 US$100,000,000 XS of Per Claim & Agg Starr Excess $900,000 Annual US$100,000,000 Claims made coverage XS of US$125,000,000 in TBD the event of a mono-line casualty loss - ----------------------------------------------------------------------------------------------------------------------------------- 168 - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- 4th Excess Layer OCIL Reinsurance $75,000,000 I.R.I.C. 07-01-97/98 US$100,000,000 XS of Per Claim & Agg Oil Casualty $416,000 Annual US$200,000,000 Claims made coverage XS of US$225,000,000 in TBD the event of a mono-line casualty loss 5th Excess Layer Swiss Re Reinsurance $100,000,000 I.R.I.C. 07-01-97/98 US$100,000,000 XS of Per Claim & Agg Swiss Re $1,009,616 US$275,000,000 Claims Annual made coverage XS of US$300,000,000 in TBD the event of a mono-line casualty loss 6th Excess Layer ACE Reinsurance $200,000,000 I.R.I.C. 07-01-97/98 US$200,000,000 XS of Per Claim & Agg ACE Insurance $950,000 Annual US$375,000 Claims made coverage XS of US$400,000,000 in TBD the event of a mono-line casualty loss $529,755 + GENERAL/AUTO LIABILITY - FOREIGN American Guarantee & 07-01-97/98 Applicable Local Country Taxes General Aggregate $3,000,000 Liability Ins. Co. Products/Completed Operations Aggregate $3,000,000 CGL804-9302-03 Each Occurrence $3,000,000 Fire Legal Liability $100,000 Premises Medical Payments $10,000 Subject to policy territory Worldwide excluding US & its territories, Canada, Cuba, North Korea Hired & Non-Owned Autos/Excess & DIC $3,000,000 - ----------------------------------------------------------------------------------------------------------------------------------- 169 - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- Employee Benefits ($1,000 Deductible) $1,000,000 Each Employee $1,000,000 Aggregate WORKER'S COMPENSATION - FOREIGN American Guarantee & 07-01-97/98 $20,356 Liability Ins. Co. Coverage A Statutory WC804-9317-03 US Hires &/or US Citizens State of Hire Country of Hire or origin Repatriation Limit $5,000 3rd Country Nationals Local Nationals Coverage B: Employer's Liability Only Excess & DIC $1,000,000 Excludes: UK, Ireland, USA & Australia Foreign Underlyers where required by law POLLUTION LEGAL LIABILITY Commerce & Industry 7-1-97/98 $329,670 Annual Covering S&A/Gradual Pollution 22,000,000 Each Incident $44,000,000 Coverage Sec- tion Agg. Limit $44,000,000 Policy Agg. RETENTION $3,000,000 Coverages and Limits: Coverage D - Third Party Claims for On-Site Cleanup of New Conditions - See Policy for Modifications. - ----------------------------------------------------------------------------------------------------------------------------------- 170 - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- Coverage E - Third Party Claims for On-Site Property Damage Coverage F - Third Party Claims for On-Site Bodily Injury Coverage H - Third Party Claims for Off-Site Cleanup of New Conditions - See Policy for Modifications. Coverage I - Third Party Claims for Off-Site Property Damage Coverage J - Third Party Claims for Off-Site Bodily Injury Coverage K - Third Party Claims for Bodily Injury, Property Damage or Cleanup Costs - Non-Owned Locations - See Policy for Modifications. Coverage M - To be Provided Upon Declarations Coverage N - Third Party Claims from Transportation of the Named Insured's Product or Waste - See Policy for Modifications POLLUTION: CLOSURE/POST CLOSURE American Interna- 07-01-97/98 $1,150,293* tional Coverage provided to site specific locations in Specialty Lines Texas regulated by Texas Natural Resource Insurance Company Conservation Commission (TNRCC) - Regulations #8189435 require demonstration of financial responsibility with respect to these sites for both third party legal liability and closure/post closure costs. - ----------------------------------------------------------------------------------------------------------------------------------- 171 - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- Coverage A - third Party Legal Liability $4,000,000 Each Loss $8,000,000 Aggregate Coverage B - Closure/Post Closure $5,426,526 *Policy is fronted, collateralized and a portion of premium prefunds closure costs. AUTOMOBILE LIABILITY - USA Zurich Ins. 07-01-97/98 $33,488 Annual Combined Single Limit $3,000,000 BAP0820986601 - Uninsured Motorist State Minimum All Other Personal Injury Protection Statutory TAP0820986701 - Medical Payments $5,000 Texas Deductible $3,000,000 MA0820986801 - Mass. Loss Fund $20,000 9992864FM7 - Canada WORKER'S COMPENSATION - US Zurich Ins. 07-01-97/98 $417,945 Annual Except Maine WC8210091000 - AOS Coverage A Statutory WC821009000 - Calif. Coverage B - Employer's Liability State of Hire WC821009200 - G/C Each Accident $3,000,000 Each Employee Disease $3,000,000 Policy Limit Disease $3,000,000 Loss Limit Each Occurrence $3,000,000 Loss Fund $150,000 - ----------------------------------------------------------------------------------------------------------------------------------- 172 - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- GENERAL LIABILITY Zurich Ins. 07-01-97/98 $110,462 Annual GL0820980801 - Occurrence Form $3,000,000 General Aggregate $3,000,000 Products/Completed Operations Aggregate $3,000,000 Personal & Advertising Injury Limit $3,000,000 Medical Expense Limit $50,000 Fire Legal Damage $1,000,000 Deductible - Each Occurrence $3,000,000 Loss Fund $30,000 ===================================================================================================================================
173 (Credit Agreement) SCHEDULE 3.16(a) Actions to pledge stock of Foreign Subsidiaries ------------------------------------------------- 1. England ------- Place charge over shares in U.K. Share certificates together with stock transfer forms are to be deposited with The Chase Manhattan Bank in New York. 2. Canada ------ Enter into a pledge agreement. Deliver share certificates to The Chase Manhattan Bank in New York. The Board of Directors will authorize the pledge of shares to The Chase Manhattan Bank. 3. Germany ------- Execute Notarial Deed in Germany. There is no registration nor are there any share certificates. 4. France ------ Enter into a pledge agreement. Transfer of the pledged stock to a special account in the name of the stockholder. There are no share certificates. Delivery by the pledged account holder of a pledge declaration (declaration de nantissement). Delivery by the corporate records' keeper of a signed certificate of perfection of pledge (attestation de nantissement de compte). 174 (Credit Agreement) SCHEDULE 3.16(d) Mortgage Filing Offices -----------------------
State County Name of Company --------------------------------------------------------------------- 1. Alabama Jefferson Huntsman Packaging Corporation 2. California Merced Huntsman Packaging Corporation 3. Kentucky Boyle Huntsman Deerfield Films Corporation 4. Massachusetts Franklin Huntsman Deerfield Films Corporation 5. Ohio Carroll Huntsman Packaging Corporation 6. Tennessee Marshall Huntsman Packaging Corporation 7. Washington King Huntsman Packaging Corporation 175 (Credit Agreement) SCHEDULE 3.19 Affiliate Agreements -------------------- 1. Huntsman Packaging Corporation ("Huntsman Packaging") leases its headquarters office space from Huntsman Headquarters Corporation, an indirect wholly-owned subsidiary of Huntsman Corporation. Huntsman Packaging is obligated to pay rent calculated as a pro-rata portion (based on its percentage occupancy) of the mortgage loan on the headquarters facility. The term lease expires on December 31, 2005, with an option to extend until December 31, 2015. 2. In connection with the $125,000,000 offering of its 9 1/8% Senior Subordinated Notes due 2007, Huntsman Packaging will repay all outstanding inter-company indebtedness owed to Huntsman Corporation. As of September 30, 1997, this indebtedness amounted to $195,846,462.19 in principal and accrued but unpaid interest. Jon M. Huntsman and his family own approximately 99.6% of the outstanding capital stock of Huntsman Corporation. 3. Huntsman Packaging is a licensee under a license agreement with Huntsman Group Intellectual Property Holdings Corporation to use the "HUNTSMAN" tradename and trademark. It is anticipated that subsequent to the consummation of the Split-Off, Huntsman Packaging will terminate this license agreement. Huntsman Corporation owns all of the outstanding common stock of Huntsman Group Intellectual Property Holdings Corporation. The preferred stock is owned by various affiliates of Huntsman Corporation, including Huntsman Packaging. 4. Huntsman Packaging is a party to agreements with certain affiliates of Huntsman Corporation including, but not limited to, Huntsman Chemical Corporation for the purchase of polystyrene and Huntsman Polymers for the purchase of various resins. All such agreements provide for the purchase of materials or services at prevailing market prices. 5. Huntsman Packaging obtains some of its insurance coverage under policies of Huntsman Corporation. Huntsman Packaging is party to an agreement with Huntsman Corporation that provides for reimbursement of insurance premiums paid by Huntsman Corporation on behalf of Huntsman Packaging. The reimbursement payments are based on premium allocations which are determined in cooperation with Huntsman Corporation's independent insurance broker. It is 176 anticipated that Huntsman Packaging will continue to carry some or all of its insurance coverage under Huntsman Corporation's policies. 6. In connection with the Split-Off, Huntsman Packaging anticipates entering into a services agreement with Huntsman Corporation or certain of its Affiliates covering the provision of tax, finance, treasury and other administrative services. These services will be provided to Huntsman Packaging at prices that would be payable to an unaffiliated third party. 177 (Credit Agreement) SCHEDULE 5.07 Insurance Levels ---------------- 1. Insurance described on Schedule 3.13 will be maintained at levels described therein to the extent such levels are economically feasible and to the extent such insurance is customary and prudent within the industry. 178 (Credit Agreement) SCHEDULE 6.01 Existing Indebtedness --------------------- 1. Existing Letters of Credit in the aggregate amount of $5,628,100 with the U.S. Bank National Association (f/k/a U.S. Bank of Utah).* 2. 3,222,000 British pounds Sterling guarantees issued by ABN AMRO Manchester in favor of Huntsman Container Company Ltd. 3. Capital Leases Current Maturity Interest Balance Date Rate -------- -------- -------- a. Huntsman Packaging Corporation in Roches- ter 1. Wide Bag Machine $44,502 4/1/98 6.01% FMC Corp. b. Huntsman United Films Corporation 1. Odon Building - $265,161 10/1/06 10.5% NDR, Inc. 2. Odon Line #2 - $285,053 4/1/98 14.5% Equipment Credit Services 4. Long term Intercompany notes from Huntsman Packaging Corpo- ration (f/k/a Huntsman Film Products Corporation) to: 1. Huntsman Film Products of Canada Ltd. for US$3,904,533 2. Huntsman Film Products GmbH for US$5,020,000 - -------------------------------------------- * May be deemed to be issued under the Credit Agreement 179 (Credit Agreement) SCHEDULE 6.03 Existing Liens -------------- 180
=================================================================================================================================== Debtor Jurisdiction No. Date Secured Party Description of Collateral Filed - ----------------------------------------------------------------------------------------------------------------------------------- Huntsman Design Prod- SOS, NY 001766 1/4/94 E.I. Dupont De Single Head Drill SHD-32. 1001 8 ucts Corporation Nemours & Co. Drawer Dryer. 3001 Processor Optisol Upgrade. PRI PV-200 OPTISOL HEATEK/ CHILLER. - ----------------------------------------------------------------------------------------------------------------------------------- Huntsman Design Prod- SOS, NY 135080 7/1/94 Crown Credit Crown Lift Trucks, Model RS-3020- ucts Corporation Company 40-268. - ----------------------------------------------------------------------------------------------------------------------------------- Huntsman Design Prod- Wayne County, 94-32 1/10/94 E.I. Dupont De Single Head Drill SHD-32. 1001 8 ucts Corporation NY Nemours & Co. Drawer Dryer. 3001 Processor Optisol Upgrade. - ----------------------------------------------------------------------------------------------------------------------------------- Huntsman Design Prod- Stark County, 25755 6/6/95 Bank One, Utah, Cash Receipts, Inventory, Ac- ucts Corporation OH National Asso- counts, Receivables, Trademarks, ciation General Intangibles and Products and Proceeds of the foregoing. - ----------------------------------------------------------------------------------------------------------------------------------- Huntsman Design Prod- Dep't of Li- 95-093-0947 4/3/95 Banc One Arizo- One (1) Vision Flexographic ucts Corporation censing, WA na Leasing Printing Press, Eight Color, 29" Corp., Assign- Wide. ee; Bank One, Utah, NA - ----------------------------------------------------------------------------------------------------------------------------------- Huntsman Design Prod- Dep't of Li- 95-221-0199 8/9/95 Banc One Arizo- (Change Lessor's Name from Hunts- ucts Corporation censing, WA Amendment of na Leasing man Packaging Products Corpora- 95-093-0947 Corp., Assign- tion to Huntsman Design Products ee; Bank One, Corporation). Utah, NA - ----------------------------------------------------------------------------------------------------------------------------------- Huntsman Design Prod- Dep't of Li- 95-317-1077 11/13/95 Banc One Arizo- Add to other Equipment listed on ucts Corporation censing, WA Amendment of na Leasing Exhibit A attached thereto. 95-093-0947 Corp., Assign- ee; Bank One, Utah, NA - ----------------------------------------------------------------------------------------------------------------------------------- Huntsman Design Prod- Dep't of Li- 95/002/0149 6/2/96 Banc One Arizo- Equipment listed on Exhibit A ucts Corporation censing, WA na Leasing attached thereto pursuant to Corp. Equipment Lease. - ----------------------------------------------------------------------------------------------------------------------------------- 181 - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- Huntsman Design Prod- King County, WA 9504040478 4/4/95 Banc One Arizo- (1) Vision Flexographic Printing ucts Corporation na Leasing Press, Eight Color, 29" Wide. Corp. - ----------------------------------------------------------------------------------------------------------------------------------- Huntsman Design Prod- King County, WA 9507181153 7/18/95 Banc One Arizo- Amend to change name from Hunts- ucts Corporation Amendment of na Leasing man Packaging Products Corpora- 9504040478 Corp. tion to Huntsman Design Products Corporation. - ----------------------------------------------------------------------------------------------------------------------------------- Huntsman Design Prod- King County, WA 9507181153 7/18/95 Banc One Arizo- Amend to change name from Hunts- ucts Corporation Amendment of na Leasing man Packaging Products Corpora- 9504040478 Corp. tion to Huntsman Design Products Corporation. - ----------------------------------------------------------------------------------------------------------------------------------- Huntsman Design Prod- King County, WA 9511161526 11/16/95 Banc One Arizo- Amend to add other equipment ucts Corporation Amendment of na Leasing listed on Exhibit A attached 9504040478 Corp. thereto. - ----------------------------------------------------------------------------------------------------------------------------------- Huntsman Packaging SOS, CA 92253417 11/30/92 Meridian Leas- All Equipment leased under Sup- Corporation (f/k/a ing Corp. plement No. 1 dated Sept. 23, Huntsman Film Prod- 1992, to Master Lease Agreement, ucts Corporation) dated Sept. 12, 1992, as de- scribed in Exhibit A thereto. - ----------------------------------------------------------------------------------------------------------------------------------- Huntsman Packaging SOS, CA Assignment 8/11/93 Meridian Leas- All Equipment leased under Sup- Corporation (f/k/a of 92253417 ing Corp. As- plement No. 1 dated Sept. 23, Huntsman Film Prod- signed to the 1992, to Master Lease Agreement, ucts Corporation) CIT Group/ dated Sept. 12, 1992, as de- Equipment Fi- scribed in Exhibit A thereto. nancing, Inc. - ----------------------------------------------------------------------------------------------------------------------------------- Huntsman Packaging SOS, OH AH73737 10/15/92 Oakcreek Fund- (2) 3196-A10 Displays S/N DX642, Corporation (f/k/a ing Corp. DX745 and (1) 5394-01B Control Huntsman Film Prod- Unit S/N 9050812 pursuant to ucts Corporation) Lease No. 356 Schedule A. - ----------------------------------------------------------------------------------------------------------------------------------- Huntsman Packaging SOS, OH AH93549 1/25/93 Liquid Carbonic (1) 6000 Gallon LN Vessel #11717 Corporation (f/k/a I/M Corp. pursuant to lease. Huntsman Film Prod- ucts Corporation) - ----------------------------------------------------------------------------------------------------------------------------------- 182 - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- Huntsman Packaging SOS, OH AK16899 5/11/93 Toyota Motor (1) New Toyota Forklift Truck, Corporation (f/k/a Credit Corp. Model 42-5FG20-Serial Number Huntsman Film Prod- 76858 and ucts Corporation) () New Toyota Forklift Trucks, Model 5FGC20-Serial Numbers 76722 and 76753. - ----------------------------------------------------------------------------------------------------------------------------------- Huntsman Packaging SOS, OH AK90794 4/11/94 EMC Corporation 1 HX3-51-16C, 2 32MB E45 Array, Corporation (f/k/a and 1 Remote Maintenance Proces- Huntsman Film Prod- sor. ucts Corporation) - ----------------------------------------------------------------------------------------------------------------------------------- Huntsman Packaging SOS, UT 434730 4/14/95 IBM Credit Cor- IBM Equipment pursuant to IBM Sup Corporation (f/k/a poration #210097 dated 11/7/95. Huntsman Film Prod- ucts Corporation) - ----------------------------------------------------------------------------------------------------------------------------------- Huntsman Packaging SOS, UT 526331 2/9/96 Yale Financial (3) New Yale Forklift ERPO4OT Corporation (f/k/a Services, Inc. Pursuant to Lease Huntsman Film Prod- ucts Corporation) - ----------------------------------------------------------------------------------------------------------------------------------- Huntsman Packaging Fulton County, 802269 11/29/93 Eastman Chemi- KODAFLEX Plasticizer Dioctyl Corporation (f/k/a GA cal Company Adipate. Huntsman Film Prod- ucts Corporation) - ----------------------------------------------------------------------------------------------------------------------------------- Huntsman Packaging Fulton County, Amendment of 3/1/94 Eastman Chemi- KODAFLEX Plasticizer Dioctyl Corporation (f/k/a GA 802269 cal Company, as Adipate. Huntsman Film Prod- DE Corp. ucts Corporation) - ----------------------------------------------------------------------------------------------------------------------------------- Huntsman Packaging Warren County, 119486 6/28/96 Yale Financial (3) New Yale Forklifts ERP040T Corporation (f/k/a KY Services, Inc. pursuant to Equipment Lease. Huntsman Film Prod- ucts Corporation) - ----------------------------------------------------------------------------------------------------------------------------------- Huntsman Packaging Warren County, 120223 10/24/96 Yale Trucks (1) New Blue Giant Walkie BGS15- Corporation (f/k/a KY Kentuckiana, 100. Huntsman Film Prod- Inc. ucts Corporation) - ----------------------------------------------------------------------------------------------------------------------------------- 183 - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- Huntsman Packaging Carroll County, 49586 5/6/94 EMC Corporation (1) HX3-51-16C; (2) 32MB E45 Ar- Corporation (f/k/a OH ray. (1) Remote Maintenance Pro- Huntsman Film Prod- cessor. ucts Corporation) - ----------------------------------------------------------------------------------------------------------------------------------- Huntsman Packaging Carroll County, 48706 5/4/93 Toyota Motor (1) New Toyota Forklift Truck, Corporation (f/k/a OH Credit Corp. Model 42-5FG20, Serial Number Huntsman Film Prod- 76858. ucts Corporation) (2) New Toyota Forklift Trucks, Model 5FG020, Serial Number 76722 and 76753. - ----------------------------------------------------------------------------------------------------------------------------------- Huntsman Packaging Div. of Corps 96-527867 7/15/96 Insley-McEntee (2) New Yale Motorized Hand Corporation and Comm Code, Equipment, Trucks MPB040A, and all acces- UT Inc., assigned sions, additions, replacements to Yale Finan- and substitutions thereto. cial Services, Inc. ===================================================================================================================================
184 (Credit Agreement) SCHEDULE 6.05 Existing Investments 1. 50% interest in Huntsman/Ipex through Huntsman Bulk Packag- ing Corporation. 185 (Credit Agreement) SCHEDULE 6.10 Affiliate Transactions ---------------------- (See Schedule 3.19) 186 (Credit Agreement) SCHEDULE 6.11 Existing Restrictions --------------------- 1. Indenture, dated as of September 30, 1997, among Huntsman Packaging Corporation, as Issuer, each of the Guarantors named therein and the Bank of New York, as Trustee and the 9 1/8% Senior Subordinated Notes due 2007 issued therein. 187 EX-10.4 23 GUARANTEE AGREEMENT GUARANTEE AGREEMENT dated as of September 30, 1997 among each of the subsidiaries listed on Schedule I hereto (each such subsidiary individually, a "Subsidiary Guarantor" and collectively, the "Subsidiary Guarantors") of HUNTSMAN PACKAGING CORPORATION, a Utah corporation (the "Borrower"), and THE CHASE MANHATTAN BANK, a New York banking corporation ("Chase"), as administrative agent (the "Administrative Agent") for the Lenders under the Credit Agreement referred to below. Reference is made to the Credit Agreement dated as of September 30, 1997 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among the Borrower, the lenders from time to time party thereto, (the "Lenders") and the Administrative Agent. Capitalized terms used herein and not defined herein shall have the meanings assigned to such terms in the Credit Agreement. The Lenders have agreed to make loans to the Borrower, and the Issuing Bank has agreed to issue Letters of Credit for the account of the Borrower, pursuant to, and upon the terms and subject to the conditions specified in, the Credit Agreement. The Borrower has requested that the Subsidiary Guarantors guarantee the Obligations (as defined below) by entering into this Agreement. Each of the Subsidiary Guarantors is a Subsidiary of the Borrower and acknowledges that it will derive substantial benefit from the making of the Loans by the Lenders, and the issuance of the Letters of Credit by the Issuing Bank. The obligations of the Lenders to make Loans and of the Issuing Bank to issue Letters of Credit are conditioned on, among other things, the execution and delivery by the Subsidiary Guarantors of a Guarantee Agreement in the form hereof. As consideration therefore and in order to induce the Lenders to make Loans and the Issuing Bank to issue Letters of Credit, the Subsidiary Guarantors are willing to execute this Agreement. Accordingly, the parties hereto agree as follows: SECTION 1. Guarantee. Each Subsidiary Guarantor unconditionally guarantees, jointly with the other Subsidiary Guarantors and severally, as a primary obligor and not merely as a surety, (a) the due and punctual payment of (i) the principal of and premium, if any, and interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) on the Loans, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise, (ii) each payment required to be made by the borrower under the Credit Agreement in respect of any Letter of Credit, when and as due, including payments in respect of reimbursement of disbursements, interest thereon and obligations to provide cash collateral and (iii) all other monetary obligations, including fees, costs, expenses and indemnities, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding regardless of whether allowed or allowable in such proceeding), of the Loan Parties to the Secured Parties under the Credit Agreement and the other Loan Documents, (b) the due and punctual performance of all covenants, agreements, obligations and liabilities of the Loan Parties under or pursuant to the Credit Agreement and the other Loan Documents (c) the due and punctual payment and performance of all obligations of the Borrower, monetary or otherwise, under each Hedging Agreement entered into with any counterparty that was a Lender (or an Affiliate thereof) at the time such Hedging Agreement was entered into and (d) the due and punctual payment of all monetary obligations of the Borrower (but not in excess of $5,000,000 in the aggregate) under any domestic overdraft facilities entered into by the Borrower including, but not limited to, the Line of Credit Agreement and Automatic Borrowing Service Agreement entered into with Mellon Bank, N.A. (all the monetary and other obligations referred to in the preceding clauses (a) through (d) being collectively called the "Obligations"). Each Subsidiary Guarantor further agrees that the Obligations may be extended or renewed, in whole or in part, without notice to or further assent from it, and that it will remain bound upon its guarantee notwithstanding any extension or renewal of any Obligation. Anything contained in this Agreement to the contrary notwithstanding, the obligations of each Subsidiary Guarantor hereunder shall be limited to a maximum aggregate amount equal to the greatest amount that would not render such Subsidiary Guarantor's obligations hereunder subject to avoidance as a fraudulent transfer or conveyance under 2 Section 548 of Title 11 of the United States Code or any provisions of applicable state law (collectively, the "Fraudulent Transfer Laws"), in each case after giving effect to all other liabilities of such Subsidiary Guarantor, contingent or otherwise, that are relevant under the Fraudulent Transfer Laws (specifically excluding, however, any liabilities of such Subsidiary Guarantor (a) in respect of intercompany indebtedness to the Borrower or Affiliates of the Borrower to the extent that such indebtedness would be discharged in an amount equal to the amount paid by such Subsidiary Guarantor hereunder and (b) under any Guarantee of senior unsecured indebtedness or Indebtedness subordinated in right of payment to the Obligations which Guarantee contains a limitation as to maximum amount similar to that set forth in this paragraph, pursuant to which the liability of such Subsidiary Guarantor hereunder is included in the liabilities taken into account in determining such maximum amount) and after giving effect as assets to the value (as determined under the applicable provisions of the Fraudulent Transfer Laws) of any rights to subrogation, contribution, reimbursement, indemnity or similar rights of such Subsidiary Guarantor pursuant to (i) applicable law or (ii) any agreement providing for an equitable allocation among such Subsidiary Guarantor and other Affiliates of the Borrower of obligations arising under Guarantees by such parties (including the Indemnity, Subrogation and Contribution Agreement). SECTION 2. Obligations Not Waived. To the fullest extent permitted by applicable law, each Subsidiary Guarantor waives presentment to, demand of payment from and protest to the Borrower of any of the Obligations, and also waives notice of acceptance of its guarantee and notice of protest for nonpayment. To the fullest extent permitted by applicable law, the obligations of each Subsidiary Guarantor hereunder shall not be affected by (a) the failure of the Collateral Agent or any other Secured Party to assert any claim or demand or to enforce or exercise any right or remedy against the Borrower or any other Subsidiary Guarantor under the provisions of the Credit Agreement, any other Loan Document or otherwise, (b) any rescission, waiver, amendment or modification of, or any release from any of the terms or provisions of this Agreement, any other Loan Document, any Guarantee or any other agreement, including with respect to any other Subsidiary Guarantor under this Agreement or (c) the failure to perfect any security interest in, or the release of, any of the 3 security held by or on behalf of the Collateral Agent or any other Secured Party. SECTION 3. Security. Each of the Subsidiary Guarantors authorizes the Collateral Agent and each of the other Secured Parties, to (a) take and hold security pursuant to the Security Agreement for the payment of this Guarantee and the Obligations and exchange, enforce, waive and release any such security, (b) apply such security and direct the order or manner of sale thereof as they in their sole discretion may determine and (c) release or substitute any one or more endorsees, other Subsidiary Guarantors of other obligors. SECTION 4. Guarantee of Payment. Each Subsidiary Guarantor further agrees that its guarantee constitutes a guarantee of payment when due and not of collection, and waives any right to require that any resort be had by the Collateral Agent or any other Secured Party to any of the security held for payment of the Obligations or to any balance of any deposit account or credit on the books of the Collateral Agent or any other Secured Party in favor of the Borrower or any other Person. SECTION 5. No Discharge or Diminishment of Guarantee. The obligations of each Subsidiary Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason (other than the indefeasible payment in full in cash of the Obligations), including any claim of waiver, release, surrender, alteration or compromise of any of the Obligations, and shall not be subject to any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality or unenforceability of the Obligations or otherwise. Without limiting the generality of the foregoing, the obligations of each Subsidiary Guarantor hereunder shall not be discharged or impaired or otherwise affected by the failure of the Administrative Agent or any other Secured Party to assert any claim or demand or to enforce any remedy under the Credit Agreement, any other Loan Document or any other agreement, by any waiver or modification of any provision of any thereof, by any default, failure or delay, wilful or otherwise, in the performance of the Obligations or by any other act or omission that may or might in any manner or to any extent vary the risk of any Subsidiary Guarantor or that would otherwise operate as a discharge of each Subsidiary Guaran- 4 tor as a matter of law or equity (other than the indefeasible payment in full in cash of all the Obligations). SECTION 6. Defenses of Borrower Waived. To the fullest extent permitted by applicable law, each of the Subsidiary Guarantors waives any defense based on or arising out of any defense of the Borrower or the unenforceability of the Obligations or any part thereof from any cause, or the cessation from any cause of the liability of the Borrower, other than the final and indefeasible payment in full in cash of the Obligations. The Collateral Agent and the other Secured Parties may, at their election, foreclose on any security held by one or more of them by one or more judicial or nonjudicial sales, accept an assignment of any such security in lieu of foreclosure, compromise or adjust any part of the Obligations, make any other accommodation with the Borrower or any other guarantor or exercise any other right or remedy available to them against the borrower or any other guarantor without affecting or impairing in any way the liability of any Subsidiary Guarantor hereunder except to the extent the Obligations have been fully, finally and indefeasibly paid in cash. Pursuant to applicable, law, each of the Subsidiary Guarantors waives any defense arising out of any such election even though such election operates, pursuant to applicable law, to impair or to extinguish any right of reimbursement or subrogation or other right or remedy of such Subsidiary Guarantor against the Borrower or any other Subsidiary Guarantor or guarantor, as the case may be , or any security. SECTION 7. Agreement to Pay; Subordination. In furtherance of the foregoing and not in limitation of any other right that the Administrative Agent or any other Secured Party has at law or in equity against any Subsidiary Guarantor by virtue hereof, upon the failure of the Borrower or any other Loan Party to pay any Obligation when and as the same shall become due, whether at maturity by acceleration, after notice of prepayment or otherwise, each Subsidiary Guarantor hereby promises to and will forthwith pay, or cause to be paid, to the Administrative Agent or such other Secured Party as designated thereby in same day funds the amount of such unpaid Obligations. Upon payment by any Subsidiary Guarantor of any sums to the Administrative Agent or any Secured Party as provided above, all rights of such Subsidiary Guarantor against the Borrower arising as a result thereof by 5 way of right of subrogation, contribution, reimbursement, indemnity or otherwise shall in all respects be subordinate and junior in right of payment to the prior indefeasible payment in full in same day funds of all the Obligations. In addition, any indebtedness of the Borrower now or hereafter held by any Subsidiary Guarantor is hereby subordinated in right of payment to the prior payment in full of the Obligations. If any amount shall erroneously be paid to any Subsidiary Guarantor on account of (i) such subrogation, contribution, reimbursement, indemnity or similar right or (ii) any such indebtedness of the Borrower, such amount shall be held in trust for the benefit of the Secured Parties and shall forthwith be paid to the Administrative Agent to be credited against the payment of the Obligations, whether matured or unmatured, in accordance with the terms of the Loan Documents. SECTION 8. Information. Each of the Subsidiary Guarantors assumes all responsibility for being and keeping itself informed of the Borrower's financial condition and assets, and of all other circumstances bearing upon the risk of nonpayment of the Obligations and the nature, scope and extent of the risks that such Subsidiary Guarantor assumes and incurs hereunder, and agrees that none of the Administrative Agent or the other Secured Parties will have any duty to advise any of the Subsidiary Guarantors of information known to it or any of them regarding such circumstances or risks. SECTION 9. Representations and Warranties. Each of the Subsidiary Guarantors represents and warrants as to itself that all representations and warranties relating to it contained in the Credit Agreement are true and correct in all material respects. SECTION 10. Termination. The Guarantees made hereunder (a) shall terminate when all the Obligations have been indefeasibly paid in full and the Lenders have no further commitment to lend under the Credit Agreement, the LC Exposure has been reduced to zero and the Issuing Bank has no further obligation to issue Letters of Credit under the Credit Agreement and (b) shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of any Obligation is rescinded or must otherwise be restored by any Secured Party or any Subsidiary Guarantor upon the bankruptcy or 6 reorganization of the Borrower, any Subsidiary Guarantor or otherwise. SECTION 11. Binding Effect; Several Agreement; Assignments. Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party; and all covenants, promises and agreements by or on behalf of the Subsidiary Guarantors that are contained in this Agreement shall bind and inure to the benefit of each party hereto and their respective successors and assigns. This Agreement shall become effective as to any Subsidiary Guarantor when a counterpart hereof executed on behalf of such Subsidiary Guarantor shall have been delivered to the Administrative Agent, and a counterpart hereof shall have been executed on behalf of the Administrative Agent, and thereafter shall be binding upon such Subsidiary Guarantor and the Administrative Agent and their respective successors and assigns, and shall inure to the benefit of such Subsidiary Guarantor, the Administrative Agent and the other Secured Parties, and their respective successors and assigns, except that no Subsidiary Guarantor shall have the right to assign its rights or obligations hereunder or any interest herein (and any such attempted assignment shall be void). If all of the capital stock of a Subsidiary Guarantor is sold, transferred or otherwise disposed of pursuant to a transaction permitted by Section 6.06 of the Credit Agreement, such Subsidiary Guarantor shall be released from its obligations under this Agreement without further action. This Agreement shall be construed as a separate agreement with respect to each Subsidiary Guarantor and may be amended, modified, supplemented, waived or released with respect to any Subsidiary Guarantor without the approval of any other Subsidiary Guarantor and without affecting the obligations of any other Subsidiary Guarantor hereunder. SECTION 12. Waivers; Amendment. (a) No failure or delay of the Administrative Agent in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right of power. The rights and remedies of the Administrative Agent hereunder and of the other Secured Parties under the other Loan Documents are cumulative and are not 7 exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or consent to any departure by any Subsidiary Guarantor therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) below, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice or demand on any Subsidiary Guarantor in any case shall entitle such Subsidiary Guarantor to any other or further notice or demand in similar or other circumstances. (b) Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to a written agreement entered into between the Subsidiary Guarantors with respect to which such waiver, amendment or modification relates and the Administrative Agent, with the prior written consent of the Required Lenders (except as otherwise provided in the Credit Agreement). SECTION 13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SECTION 14. Notices. All communications and notices hereunder shall be in writing and given as provided in Section 9.01 of the Credit Agreement. All communications and notices hereunder to each Subsidiary Guarantor shall be given to it at its address set forth in Schedule I. SECTION 15. Survival of Agreement; Severability. (a) All covenants, agreements, representations and warranties made by the Subsidiary Guarantors herein and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the Administrative Agent and the other Secured Parties and shall survive the making by the Lenders of the Loans and the issuance of the Letters of Credit by the Issuing Bank regardless of any investigation made by the Secured Parties or on their behalf, and shall continue in full force and effect as long as the principal under this Agreement or any other loan Document is outstanding and unpaid or the LC Exposure does not equal zero and as long as the Commitments have not been terminated. 8 (b) In the event any one or more of the provisions contained in this Agreement or in any other Loan Document should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby (it being understood that the validity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The partes shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions. SECTION 16. Counterparts. This Agreement may be executed in counterparts, each of which shall constitute an original, but all of which when taken together shall constitute a single contract, and shall become effective as provided in Section 11. Delivery of an executed signature page to this Agreement by facsimile transmission shall be as effective as delivery of a manually executed counterpart of this Agreement. SECTION 17. Rules of Interpretation. The rules of interpretation specified in Section 1.03 of the Credit Agreement shall be applicable to this Agreement. SECTION 18. Jurisdiction; Consent to Service of Process. (a) Each Subsidiary Guarantor hereby irrevocable and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or Federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or the other Loan Documents, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New york State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect 9 any right that the Administrative Agent or any other Secured Party may otherwise have to bring any action or proceeding relating to this Agreement or the other Loan Documents against any Subsidiary Guarantor or its properties in the courts of any jurisdiction. (b) Each Subsidiary Guarantor hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or the other Loan Documents in any New York State of Federal court. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. (c) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 14. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law. SECTION 19. Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OR ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 19. SECTION 20. Additional Subsidiary Guarantors. Pursuant to Section 5.12 of the Credit Agreement, each Subsidiary Loan Party that was not in existence on the date of the Credit Agreement is required to enter into this Agreement as a Subsidiary Guarantor upon becoming a Subsidiary Loan party. Upon execution and delivery after the date hereof by the Administrative Agent and such a Subsidiary of an instrument in the form of Annex 1, such 10 Subsidiary shall become a Subsidiary Guarantor hereunder with the same force and effect as if originally named as a Subsidiary Guarantor herein. The execution and delivery of any instrument adding an additional Subsidiary Guarantor as a party to this Agreement shall not require the consent of any other Subsidiary Guarantor hereunder. The rights and obligations of each Subsidiary Guarantor hereunder shall remain in full force and effect notwithstanding the addition of any new Subsidiary Guarantor as a party to this Agreement. SECTION 21. Right of Setoff. If an Event of Default shall have occurred and be continuing, each Secured Party is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other Indebtedness at any time owing by such Secured Party to or for the credit or the account of any Subsidiary Guarantor against any or all the obligations of such Subsidiary Guarantor now or hereafter existing under this Agreement and the other Loan Documents held by such Secured Party, irrespective of whether or not such Secured Party shall have made any demand under this Agreement or any other Loan Document and although such obligations may be unmatured. The rights of each Secured Party under this Section 21 are in addition to other rights and remedies (including other rights of setoff) which such Secured Party may have. IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written. EACH OF THE SUBSIDIARIES LISTED ON SCHEDULE I HERETO. by ---------------------------- Name: Title: Authorized Officer THE CHASE MANHATTAN BANK, as Administrative Agent, by ---------------------------- Name: Robert Anastasio Title: Vice President 11 (Guarantee Agreement) SCHEDULE I Subsidiary Guarantors 1. Huntsman Deerfield Films Corporation 2. Huntsman United Films Corporation 3. Huntsman Preparatory Inc. 4. Huntsman Container Corporation International 5. Huntsman Packaging Georgia, Inc. 6. Huntsman Film Products of Mexico, Inc. 7. Huntsman Bulk Packaging Corporation Annex 1 to the Guarantee Agreement SUPPLEMENT NO. dated as of , to the Guarantee Agreement dated as of September 30, among each of the subsidiar- ies listed on Schedule 1, thereto (each such subsidiary individually, a "Subsid- iary Guarantor" and collectively, the "Subsidiary Guarantors") of HUNTSMAN PACK- AGING CORPORATION, a Utah corporation (the "Borrower"), and THE CHASE MANHATTAN BANK, a New York banking corporation ("Chase"), as administrative agent (the "Administrative Agent") for the Lenders under the Credit Agreement referred to below. A. Reference is made to the Credit Agreement dated as of September 30, 1997 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among the Borrower, the lenders from time to time party thereto (the "Lenders") and the Administrative Agent. Capitalized terms used herein and not defined herein shall have the meanings assigned to such terms in the Credit Agreement. B. The Subsidiary Guarantors have entered into the Guarantee Agreement in order to induce the Lenders to make Loans and the Issuing Bank to issue Letters of Credit. Pursuant to Section 5.12 of the Credit Agreement, each Subsidiary Loan Party that was not in existence or not a Subsidiary on the date of the Credit Agreement is required to enter into the Guarantee Agreement as a Subsidiary Guarantor upon becoming a Subsidiary. Section 20 of the Guarantee Agreement provides that additional Subsidiaries of the Borrower may become Subsidiary Guarantors under the Guarantee Agreement by execution and delivery of an instrument in the form of this supplement. The undersigned Subsidiary of the Borrower (the "New Subsidiary Guarantor") is executing this Supplement in accordance with the requirements of the Credit Agreement to become a Subsidiary Guarantor under the Guarantee Agreement in order to induce the Lenders to make additional Loans and the Issuing Bank to issue additional Letters of Credit and as consideration for Loans previously made and Letters of Credit previously issued. Accordingly, the Administrative Agent and the New Subsidiary Guarantor agree as follows: SECTION 1. In accordance with Section 20 of the Guarantee Agreement, the New Subsidiary Guarantor by its signature below becomes a Subsidiary Guarantor under the Guarantee Agreement with the same force and effect as if originally named therein as a Subsidiary Guarantor and the New Subsidiary Guarantor hereby (a) agrees to all the terms and provisions of the Guarantee Agreement applicable to it as a Subsidiary Guarantor thereunder and (b) represents and warrants that the representations and warranties made by it as a Subsidiary Guarantor thereunder are true and correct on and as of the date hereof. Each reference to a "Subsidiary Guarantor" in the Guarantee Agreement shall be deemed in include the New Subsidiary Guarantor. The Guarantee Agreement is hereby incorporated herein by reference. SECTION 2. The New Subsidiary Guarantor represents and warrants to the Administrative Agent and the other Secured Parties that this Supplement has been duly authorized executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms. SECTION 3. This Supplement may be executed in counterparts, each of which shall constitute an original, but all of which when taken together shall constitutae a single contract. This Supplement shall become effective when the Administrative Agent shall have received counterparts of this Supplement that, when taken together, bear the signatures of the New Subsidiary Guarantor and the Administrative Agent. Delivery of an executed signature page to this Supplement by facsimile transmission shall be as effective as delivery of a manually executed counterpart of this Supplement. SECTION 4. Except as expressly supplemented hereby, the Guarantee Agreement shall remain in full force and effect. SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. SECTION 6. In case any one or more of the provisions contained in this Supplement should be held invalid, illegal or unenforceable in any respect, the validi- 2 ty, legality and enforceability of the remaining provisions contained herein and in the Guarantee Agreement shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision hereof in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties hereto shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions. SECTION 7. All communications and notices hereunder shall be in writing and given as provided in Section 14 of the Guarantee Agreement. All communications and notices hereunder to the New Subsidiary Guarantor shall be given to it at then address set forth under its signature below, with copy to the Borrower. SECTION 8. The New Subsidiary Guarantor agrees to reimburse the Administrative Agent for its out-of-pocket expenses in connection with this Supplement, including the fees, disbursements and other charges of counsel for the Administrative Agent. IN WITNESS WHEREOF, the New Subsidiary Guarantor and the Administrative Agent have duly executed this Supplement to the Guarantee Agreement as of the day and year first above written. [Name of New Subsidiary Guarantor], by: --------------------------------- Name: Title: Address: ------------------------- ------------------------- ------------------------- THE CHASE MANHATTAN BANK, as Administrative Agent, by: --------------------------------- Name: Title: 3 EX-10.5 24 SECURITY AGREEMENT SECURITY AGREEMENT dated as of September 30, 1997, among HUNTSMAN PACKAGING CORPORATION, a Utah corporation (the "Borrower"), each subsidiary of the Borrower listed on Schedule I hereto (each such subsidiary individually a "Guarantor" and collectively, the "Guarantors"; the Guarantors and the Borrower are referred to collectively herein as the "Grantors") and THE CHASE MANHATTAN BANK, a New York banking corporation ("Chase"), as collateral agent (in such capacity, the "Collateral Agent") for the Secured Parties (as defined herein). Reference is made to (a) the Credit Agreement dated as of September 30, 1997 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among the Borrower, the lenders from time to time party thereto (the "Lenders") and Chase, as administrative agent (in such capacity, the "Administrative Agent") for the Lenders, and (b) the Guarantee Agreement dated as of September 30, 1997 (as amended, supplemented or otherwise modified from time to time, the "Guarantee Agreement"), between the Guarantors and the Administrative Agent. The Lenders have agreed to make Loans to the Borrower, and the Issuing Bank has agreed to issue Letters of Credit for the account of the Borrower in an amount up to $250,000,000, pursuant to, and upon the terms and subject to the conditions specified in, the Credit Agreement. The Guarantors have agreed to guarantee, among other things, all the obligations of the Borrower under the Credit Agreement. The obligations of the Lenders to make Loans and of the Issuing Bank to issue Letters of Credit under the Credit Agreement are conditioned upon, among other things, the execution and delivery by the Grantors of an agreement in the form hereof to secure (a) the due and punctual payment by the Borrower of (i) the principal of and premium, if any, and interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) on the Loans, when and as due, whether at matu- rity, by acceleration, upon one or more dates set for prepayment or otherwise, (ii) each payment required to be made by the Borrower under the Credit Agreement in respect of any Letter of Credit, when and as due, including payments in respect of reimbursement of disbursements, interest thereon and obligations to provide cash collateral and (iii) all other monetary obligations, including fees, costs, expenses and indemnities, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), of the Loan Parties to the Secured Parties under the Credit Agreement and the other Loan Documents, (b) the due and punctual performance of all covenants, agreements, obligations and liabilities of the Loan Parties under or pursuant to the Credit Agreement and the other Loan Documents, (c) the due and punctual payment and performance of all obligations of the Borrower monetary or otherwise, under each Hedging Agreement entered into with any counterparty that was a Lender (or an Affiliate thereof) at the time such Hedging Agreement was entered into and (d) the due and punctual payment of all monetary obligations of the Borrower (but not in excess of $5,000,000 in the aggregate) under any domestic overdraft facilities entered into by the Borrower including, but not limited to, the Line of Credit Agreement and Automatic Borrowing Service Agreement entered into with Mellon Bank, N.A. (all the monetary and other obligations described in the preceding clauses (a) through (d) being collectively called the "Obligations"). 2 Accordingly, the Grantors and the Collateral Agent, on behalf of itself and each Secured Party (and each of their respective successors or assigns), hereby agree as follows: ARTICLE I Definitions SECTION 1.1. Definition of Terms Used Herein. Unless the context otherwise requires, all capitalized terms used but not defined herein shall have the meanings set forth in the Credit Agreement. Section 1.2. Definition of Certain Terms Used Herein. As used herein, the following terms shall have the following meanings. "Account Debtor" shall mean any Person who is or who may become obligated to any Grantor under, with respect to or on account of an Account. "Accounts" shall mean any and all right, title and interest of any Grantor to payment for goods and services sold or leased, including any such right evidenced by chattel paper, whether due or to become due, whether or not it has been earned by performance, and whether now or hereafter acquired or arising in the future, including accounts receivable from Affiliates of the Grantors. "Accounts Receivable" shall mean all Accounts and all right, title and interest in any returned goods, together with all rights, titles, securities and guarantees with respect thereto, including any rights to stoppage in transit, replevin, reclamation and resales, and all related security interests, liens and pledges, whether voluntary or involuntary, in each case whether now existing or owned or hereafter arising or acquired. "Collateral" shall mean all (a) Accounts Receivable, (b) Documents, (c) Equipment, (d) General Intangibles, (e) Inventory, (f) cash and cash accounts and (g) Proceeds; provided, however, that Collateral shall not include property or assets which are subject to a purchase money security interest or other similar interest, including but no limited to a Capital Lease 3 Obligation, the terms of which prohibit the granting of a security interest to any other creditor. "Copyright License" shall mean any written agreement, now or hereafter in effect, granting any right to any third party under any Copyright now or hereafter owned by any Grantor or which such Grantor otherwise has the right to license, or granting any right to such Grantor under any Copyright now or hereafter owned by any third party, and all rights of such Grantor under any such agreement. "Copyrights" shall mean all of the following now owned or hereafter acquired by any Grantor: (a) all copyright rights in any work subject to the copyright laws of the United States, whether as author, assignee, transferee or otherwise, and (b) all registrations and applications for registration of any such copyright in the United States, including registrations, recordings, supplemental registrations and pending applications for registration in the United States Copyright Office, including those listed on Schedule II. "Credit Agreement" shall have the meaning assigned to such term in the preliminary statement of this Agreement. "Documents" shall mean all instruments, files, records, ledger sheets and documents covering or relating to any of the Collateral. "Equipment" shall mean all equipment, furniture and furnishings, including tools, parts and supplies of every kind and description, and all improvements. accessions or appurtenances thereto, that are now or hereafter owned by any Grantor. "General Intangibles" shall mean all choses in action and causes of action and all other assignable intangible personal property of any Grantor of every kind and nature (other than Accounts Receivable) now owned or hereafter acquired by any Grantor, including corporate or other business records, indemnification claims, contract rights (including rights under leases, whether entered into as lessor or lessee, Hedging Agreements and other agreements but excluding contract rights in contracts which prohibit assignment or the granting of 4 a security interest), Intellectual Property, goodwill, registrations, franchises, tax refund claims and any letter of credit, guarantee, claim, security interest or other security held by or granted to any Grantor to secure payment by an Account Debtor of any of the Accounts Receivable. "Intellectual Property" shall mean all intellectual and similar property of any Grantor of every kind and nature now owned or hereafter acquired by any Grantor, including inventions, designs, Patents, Copyrights, Licenses, Trademarks, trade secrets, confidential or proprietary technical and business information, know-how, show-how or other data or information, software and databases and all embodiments or fixations thereof and related documentation and registrations, and all additions, improvements and accessions to, and books and records describing or used in connection with, nay of the foregoing. "Inventory" shall mean all goods of any Grantor, whether now owned or hereafter required, held for sale or lease, or furnished or to be furnished by any Grantor under contracts of service, or consumed in any Grantor's business, including raw materials, intermediates, work in process, packaging materials, finished goods, semi-finished inventory, scrap inventory, manufacturing supplies and spare parts, and all such goods that have been returned to or repossessed by or on behalf of any Grantor. "License" shall mean any Patent License, Trademark License, Copyright License or other franchise agreement, license or sublicense to which any Grantor is a party, including those listed on Schedule III (other than those agreements in existence on the date hereof and listed on Schedule III and those agreements entered into after the date hereof, which by their terms prohibit assignment or a grant of a security interest by such Grantor as licensee thereunder). "Obligations" shall have the meaning assigned to such term in the preliminary statement of this Agreement. "Patent License" shall mean any written agreement, now or hereafter in effect, granting to any third 5 party any right to make, use or sell any invention on which a Patent, now or hereafter owned by any Grantor or which any Grantor otherwise has the right to license, is in existence, or granting to any Grantor any right to make, use or sell any invention on which a Patent, now or hereafter owned by any third party, is in existence, and all rights of any Grantor under any such agreement. "Patents" shall mean all of the following now owned or hereafter acquired by any Grantor: (a) all letters patent of the United States, all registrations and recordings thereof, and all applications for letters patent of the United States, including registrations, recordings and pending applications in the United States Patent and Trademark Office, including those listed on Schedule IV, and (b) all reissues, continuations, divisions, continuations-in-part, renewals or extensions thereof, and the inventions disclosed or claimed therein, including the right to make, use and/or sell the inventions disclosed or claimed therein. "Perfection Certificate" shall mean a certificate substantially in the form of Annex 1 hereto, completed and supplemented with the schedules and attachments contemplated thereby, and duly executed by a Financial Officer and the chief legal officer of the Borrower. "Proceeds" shall mean any consideration received from the sale, exchange, license, lease or other disposition of any asset or property that constitutes Collateral, any value received as a consequence of the possession of any Collateral and any payment received from any insurer or other person or entity as a result of the destruction, loss, theft, damage or other involuntary conversion of whatever nature of any asset or property which constitutes Collateral, and shall include, (a) any claim of any Grantor against any third party for (and the right to sue and recover for and the rights to damages or profits due or accrued arising out of or in connection with) (i) past, present or future infringement of any Patent now or hereafter owned by any Grantor, or licensed under a Patent License, (ii) past, present or future infringement or dilution of any Trademark how or hereafter owned by any Grantor or licensed under a Trademark License or injury to the goodwill associated with or symbolized by any Trademark now or hereafter owned by any Grantor, (iii) past, present or future breach of any 6 License and (iv) past, present or future infringement of any Copyright now or hereafter owned by any Grantor or licensed under a Copyright License and(b) any and all other amounts from time to time paid or payable under or in connection with any of the Collateral. "Secured Parties" shall mean (a) the Lenders, (b) the Administrative Agents, (c) the Collateral Agent, (d) the Issuing Bank, (e) each counterparty to an Hedging Agreement entered into with the Borrower if such counterparty was a Lender (or an Affiliate of a Lender) at the time the Hedging Agreement was entered into, (f) the beneficiaries of each indemnification obligation undertaken by any Grantor under any Loan Document, (g) any lender under any domestic overdraft facility entered into by the Borrower (but only tot he extent the aggregate amount outstanding under all such facilities does not exceed $5,000,000) including, but not limited to, Mellon Bank, N.A., pursuant tot he Line of Credit Agreement and Automatic Borrowing Service Agreement entered into with the Borrower, and (h) the permitted successors and assigns of each of the foregoing. "Security Interest" shall have the meaning assigned to such term in Section 2.1. "Trademark License" shall mean nay written agreement, now or hereafter in effect, granting to any third party any right to use any Trademark now or hereafter owned by any Grantor or which any Grantor otherwise has the right to license, or granting to any Grantor any right to use any Trademark now or hereafter owned by any third party, and all rights of any Grantor under such agreement. "Trademarks" shall mean all of the following now owned or hereafter acquired by any Grantor: (a) all trademarks, service marks, trade names, corporate names, company names, business names, fictitious business names, trade styles, trade dress, logos, other source or business identifiers, designs and general intangibles or like nature, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all registration and recording applications filed in connection therewith, including registrations and registration applications in the United States Patent and Trademark Office, any State of the United States, and all exten- 7 sions or renewals thereof, including those listed on Schedule V, (b) all goodwill associated therewith or symbolized thereby and (c) all other assets, rights, and interests that uniquely reflect or embody such goodwill. SECTION 1.3. Rules of Interpretation. The rules of interpretation specified in Section 1.3 of the Credit Agreement shall be applicable to this Agreement. ARTICLE II Security Interest Section 2.1. Security Interest. As security for the payment or performance, as the case may be, in full of the Obligations, each Grantor hereby bargains, sells, conveys, assigns, sets over, mortgages, pledges, hypothecates and transfers to the Collateral Agent, it successors and assigns, for the ratable benefit of the Secured Parties, and hereby grants to the Collateral Agent, its successors and assigns, for the ratable benefit of the Secured Parties, a security interest in, all of such Grantor's right, title and interest in, to and under the Collateral (the "Security Interest"). without limited the foregoing,t he Collateral Agent is hereby authorized to file one or more financing statements, continuation is hereby authorized to file one or more financing statement, continuation statements, filings with the United States Patent and Trademark Office or United States Copyright Office (or any successor office or other documents for the purpose of perfecting, confirming, continuing, enforcing or protecting the Security Interest granted by each Grantor, without the signature of any Grantor (but, prior to the occurrence of any Event of Default or Default, the Collateral Agent shall provide notice of such filing to such Grantor), and naming any Grantor or the Grantors as debtors and the Collateral Agent as secured party. SECTION 2.2. No Assumption of Liability. The Security Interest is granted as security only and shall not subject the Collateral Agent or any other Secured Party to, or in any way alter or modify, and obligation or liability of any Grantor with respect to or arising out of the Collateral. 8 ARTICLE III Representations and Warranties The Grantors jointly and severally represent and warrant to the Collateral Agent and the Secured Parties that: SECTION 3.1. Title and Authority. Each Grantor has good and valid rights in and title to the Collateral with respect to which it has purported to grant a Security Interest hereunder and has full power and authority to grant to the Collateral Agent the Security Interest in such Collateral pursuant hereto and to execute, deliver and perform its obligations in accordance with the terms of this Agreement, without the consent or approval of any other Person other than any consent or approval which has been obtained. SECTION 3.2. Filings. (a) The Perfection Certificate has been duly prepared, completed and executed and the information set forth therein is correct and complete. Fully executed Uniform Commercial Code therein is correct and complete. Fully executed Uniform Commercial Code financing statements, as applicable, or other appropriate filings, recordings or registrations containing a description of the Collateral have been delivered to the Collateral Agent for filing in each governmental, municipal or other office specified in Schedule 6 to the Perfection Certificate, which are all the filings, recordings and registrations (other than filings, recordings and registrations required to be made in the United States Patent and Trademark Office and the United States Copyright Office in order to perfect the Security Interest in Collateral consisting of United States Patents, United States Trademarks and United States Copyrights) that are necessary to publish notice of and protect the validity of and to establish a legal, valid and perfected security interest in favor of the Collateral Agent (for the ratable benefit of the Secured Parties) in respect of all Collateral in which the Security Interest may be perfected by filing, recording or registration in the United States (or any political subdivision thereof), and no further or subsequent filing, refiling, recording, rerecording, registration or reregistration is necessary in any such jurisdiction, except as provided under appli- 9 cable law with respect to the filing of continuation statements and such filings, recordings and registrations as may be necessary to perfect the Security Interest as a result of any event described in Section 5.3 of the Credit Agreement. (b) Each Grantor ensures that fully executed security agreements in the form hereof and containing a description of all Collateral consisting of Intellectual Property shall have been received and recorded within three months after the execution of this Agreement with respect to United States Patents and United States registered Trademarks (and Trademarks for which United States registration applications are pending) and within one month after the execution of this Agreement with respect to United States registered Copyrights by the United States Patent and Trademark Office and the United States Copyright Office pursuant to 35 U.S.C. Section 261, 15 U.S.C. Section 1060 or 17 U.S.C. Section 205 and the regulations thereunder, as applicable, to protect the validity of and to establish a legal, valid and perfected security interest in favor of the Collateral Agent (for the ratable benefit of the Secured Parties) in respect of all Collateral consisting of Patents, Trademarks and Copyrights in which a security interest may be perfected by filing, recording or registration in the United States (or any political subdivision thereof) and no further or subsequent filing,refiling, recording, rerecording, registration or reregistration is necessary (other than such actions as are necessary to perfect the Security Interest with respect to any Collateral consisting of Patents, Trademarks, and Copyrights (or registration or application for registration thereof) acquired or developed after the date hereof). SECTION 3.3. Validity of Security Interest. The Security Interest constitutes (a) a legal and valid security interest in all the Collateral securing the payment and performance of the Obligations, (b) subject to the filings described in Section 3.2 above, a perfected security interest in all Collateral in which a security interest may be perfected by filing, recording or registering a financing statement or analogous document in the United States (or any political subdivision thereof) pursuant tot he Uniform Commercial Code or other applicable law in such jurisdictions and (c) a security 10 interest that shall be perfected in all Collateral in which a security interest may be perfected in the United States Patent and Trademark Office and the United States Copyright Office upon the receipt and recording of this Agreement with the United States Patent and Trademark Office and the United States Copyright Office, as applicable, within the three month period (commencing as of the date hereof) pursuant to 35 U.S.C. Section 261 or 15 U.S.C. Section 1060 or the one-month period (commencing as of the date hereof) pursuant to 17 U.S.C Section 205 and otherwise as may be required pursuant to the laws of any other necessary jurisdiction. The Security Interest is and shall be prior to any other Lien on any of the Collateral, other than Liens expressly permitted to be prior to the Security Interest pursuant to Section 6.3 of the Credit Agreement. SECTION 3.4. Absence of Other Liens. The Collateral is owned by the Grantors free and clear of any Lien, except for Liens expressly permitted pursuant to Section 6.3 of the Credit Agreement. No Grantor has filed or consented to the filing of (a) any financing statement or analogous document under the Uniform Commercial Code or any other applicable laws covering any Collateral, (b) any assignment in which any Grantor assigns any Collateral or any security agreement or similar instrument covering any Collateral in the United States Patent and Trademark Office or the United States Copyright Office or (c) any assignment in which any Grantor assigns any Collateral or any security agreement or similar instrument covering any Collateral with any foreign governmental, municipal or other office, which financing statement or analogous document is still in effect, except, in each case, for Liens expressly permitted pursuant to Section 6.3 of the Credit Agreement. ARTICLE IV Covenants SECTION 4.1. Records. Each Grantor agrees to maintain, at its own costs and expense, such complete and accurate records with respect to the Collateral owned by it as is consistent with its current practices and in accordance with such prudent and standard practices used in industries that are the same as or similar to those in which such Grantor is engaged, but in any event to in- 11 clude complete accounting records indicating all payments and proceeds received with respect to an y part of the Collateral, and, at such time or times as the Collateral Agent may reasonably request, promptly to prepare and deliver to the Collateral Agent a duly certified schedule or schedules in form and detail reasonably satisfactory to the Collateral Agent showing the identity, amount and location of any and all Collateral. SECTION 4.2. Protection of Security. Each Grantor shall, at its own costs and expense, take any and all actions necessary to defend title to the Collateral against all persons and to defend the Security Interest of the Collateral Agent in the Collateral and the priority thereof against any Lien not expressly permitted pursuant to Section 6.3 of the Credit Agreement. SECTION 4.3. Further Assurances. Each Grantor agrees, at its own expense, to execute, acknowledge, deliver and cause to be duly filed all such further instruments and documents and take all such actions as the Collateral Agent may from time to time reasonably request to better assured, preserve, protect and perfect the Security Interest and the rights and remedies created hereby, including the payment of any fees and taxes required in connection with the execution and delivery of this Agreement, the granting of the Security Interest and the filing of any financing statements or other documents in connection herewith or therewith. If any amount payable under or in connection with any of the Collateral shall be or become evidenced by any promissory note or other instrument, such note or instrument shall be immediately pledged and delivered to the Collateral Agent, duly endorsed in a manner satisfactory to the Collateral Agent. Without limiting the generality of the foregoing, each Grantor hereby authorizes the Collateral Agents, with prompt notice thereof tot he Grantors, to supplement this Agreement by supplementing Schedules II, III, IV or V hereto or adding additional schedules hereto to specifically identify any asset or item that may constitute Copyrights, Patents or Trademarks; provided, however, that any Grantor shall have the right, exercisable within thirty (30) days after it has been notified by the Collateral Agent of the specific identification of such Collateral, to advise the Collateral Agent in writ- 12 ing of any inaccuracy of the representations and warranties made by such Grantor hereunder with respect to such Collateral. Each Grantor agrees that it will use its best efforts to take such action as shall be necessary in order that all representations and warranties hereunder shall be true and correct with respect to such Collateral within thirty (30) days after the date it has been notified by the collateral Agent of the specific identification of such Collateral. SECTION 4.4. Inspection and Verification. Subject to the limitations set forth in Section 5.09 of the Credit Agreement, the Collateral Agent and such Persons as the collateral Agent may reasonably designate shall have the right, at the Grantors' own costs and expense, to inspect the Collateral, all records related thereto (and to make extracts and copies form such records) and the premises upon which any of the Collateral is located, to discuss the Grantor's affairs with the officers of the Grantors and their independent accountants and to verify under reasonable procedures the validity, amount, quality, quantity, value, condition and status of, or any other matter relating to, the Collateral, including, in the case of Accounts or Collateral in the possession of any third part, by contacting Account Debtors or the third person possessing such Collateral for the purposes of making such a verification. The Collateral Agent shall have the absolute right to share any information it gains from such inspection or verification with any Secured Party (it being understood that any such information shall be deemed to be "Information" subject to the provisions of Section 9.12 of the Credit Agreement). SECTION 4.5. Taxes; Encumbrances. At it option, the Collateral Agent may discharge past due taxes, assessments, charges, fees, Liens, security interests or other encumbrances at any time levied or placed ont he Collateral and not permitted pursuant to Section 6.3 of the Credit Agreement, and may pay for the maintenance and preservation of the Collateral to the extent any Grantor fails to do so as required by the Credit Agreement or this Agreement, and each Grantor jointly and severally agrees to reimburse the Collateral Agent on demand for any payment made or any expense incurred by the Collateral Agent pursuant to the foregoing authorization; provided, however, that nothing in this Section 4.5 shall 13 be interpreted as excusing any Grantor from the performance of, or imposing any obligation on the Collateral Agent or any Secured Party to cure or perform, any covenants or other promises of any Grantor with respect to taxes, assessments, charges, fees, liens, security interests or other encumbrances and maintenance as set forth herein or in the other Loan Documents. SECTION 4.6. Assignment of Security Interest. If at any time any Grantor shall take a security interest in any property of an Account Debtor or any other Person to secure payment and performance of an Account, such Grantor shall promptly assign such security interest tot he Collateral Agent. Such assignment need not be filed of public record unless necessary to continue the perfected status of the security interest against creditors of and transferees from the Account Debtor or other Person granting the security interest. SECTION 4.7. Continuing Obligations of the Grantors. Each Grantor shall remain liable to observe and perform all the conditions and obligations to be observed and performed by it under each contract, agreement or instrument relating to the Collateral , all in accordance with the terms and conditions thereof, and each Grantor jointly and severally agrees to indemnify and hold harmless the Collateral Agent and the Secured Parties from and against any and all liability for such performance. SECTION 4.8. Use and Disposition of Collateral. None of the Grantors shall make or permit to be made an assignment, pledge or hypothecation of the Collateral or shall grant any other Lien in respect of the Collateral, except as expressly permitted by Section 6.3 of the Credit Agreement. Unless and until the Collateral Agent shall notify the Grantors that (i) an Event of Default shall have occurred and be continuing and (ii) during the continuance thereof the Grantors shall not sell, convey, lease, assign, transfer or otherwise dispose of any Collateral in any lawful manner not inconsistent with the provisions of this Agreement, the Credit Agreement or any other Loan Document. Without limiting the generality of the foregoing, each Grantor agrees that it shall not permit any Inventory to be in the possession or control of any warehouseman, bailee, agent or processor at any time, other than Inventory that is in transit by any 14 means, unless such warehouseman, bailee, agent or processor shall have been notified of the Security Interest and each Grantor shall use its best efforts to obtain a written agreement in form and substance reasonably satisfactory to the Collateral Agent to hold the Inventory subject to the Security Interest and the instructions of the Collateral Agent, and to waive and release any Lien held by it with respect to such Inventory, whether arising by operation of law or otherwise. SECTION 4.9. Limitation on Modification of Accounts. None of the Grantors will, without the Collateral Agent's prior written consent, grant any extension of the time of payment of any of the Accounts Receivable, compromise, compound or settle the same for less than the full amount thereof, release, wholly or partly, any Person liable for the payment thereof or allow any credit or discount whatsoever thereon, other than extensions,credits, discounts, compromises or settlements granted or made in the ordinary course of business and consistent with its current practices and in accordance with such prudent and standard practices used in industries that are the same as or similar to those in which such Grantor is engaged. SECTION 4.10. Insurance. The Grantors, at their own expense, shall maintain or cause to be maintained insurance covering physical loss or damage to the Inventory and Equipment in accordance with Section 5.7 of the Credit Agreement. Each Grantor irrevocable makes, constitutes and appoints the Collateral Agent (and all officers, employees or agents designated by the Collateral Agent) as such Grantor's true and lawful agent (and attorney-in-fact) for the purpose, during the continuance of any Event of Default, of making, settling and adjusting claims in respect of Collateral under policies of insurance, endorsing the name of such Grantor on any check, draft, instrument or other item of payment for the proceeds of such policies of insurance and for making all determinations and decisions with respect thereto. In the event that any Grantor at any time or times shall fail to obtain or maintain any of the policies of insurance required hereby or to pay any premium in whole or part relating thereto, the Collateral Agent may, without waiving or releasing any obligation or liability of the Grantors hereunder or any Event of Default, in its sole discretion, obtain and maintain such policies of insur- 15 ance and pay such premium and take any other actions with respect thereto as the Collateral Agent deems reasonably advisable. All sums disbursed by the Collateral Agent in connection with this Section 4.10, including reasonable attorneys' fees, court costs, expenses and other charges relating thereto, shall be payable, upon demand, by the Grantors to the Collateral Agent and shall be additional Obligations secured hereby. SECTION 4.11. Legend. Each Grantor shall legend, in form and manner reasonably satisfactory to the Collateral Agent, its Accounts Receivable and its books, records and documents evidencing or pertaining thereto with an appropriate reference tot he fact that such Accounts Receivable have been assigned to the Collateral Agent for the benefit of the Secured Parties and that the Collateral Agent has a security interest therein. SECTION 4.12. Covenants Regarding Patent, Trademark and Copyright Collateral. (a) Each Grantor agrees that it will not, nor will it permit any of its licensees to, do any act, or omit to do any act, whereby any Patent which is material tot he conduct of such Grantor's business may become invalidated or dedicated to the public, and agrees, to the extent practical le, that it shall continue to mark any products covered by a Patent with the relevant patent number as necessary and sufficient to establish and preserve its maximum rights under applicable patent laws. (b) Each Grantor (either itself or through its licensees or its sublicensees) will, for each Trademark material to the conduct of such Grantor's business, (i) maintain such Trademark in full force free from any claim of abandonment or invalidity for non-use, (ii) maintain the quality of products and services offered under such Trademark, (iii) display such Trademark with notice of Federal or foreign registration tot he extent necessary and sufficient to establish and preserve its maximum rights under applicable law and (iv) not knowingly use or knowingly permit the use of such Trademark in violation of any third party rights. (c) Each Grantor (either itself or through licensees) will, for each work covered by a material Copyright, continue to publish, reproduce, display, adopt and distribute the work with appropriate copyright notice 16 as necessary and sufficient to establish and preserve its maximum rights under applicable copyright laws. (d) Each Grantor shall notify the Collateral Agent promptly if it knows that any Patent, Trademark or Copyright material to the conduct of its business may become abandoned, lost or dedicated to the public, or of any adverse determination or development (including the institution of, or any such determination and development in, any proceeding in the United States Patent and Trademark Office or United States Copyright Office) regarding such Grantor's ownership of any Patent, Trademark or Copyright, its right to register the same, or to keep and maintain the same. (e) In no event shall any Grantor, either itself or through any agent, employee, licensee or designee, file an application for any Patent, Trademark or Copyright (or for the registration of any Trademark or Copyright) with the United States Patent and Trademark Office, United States Copyright Office or any office or agency in any political subdivision of the United States, unless it promptly informs the Collateral Agent, and, upon request of the Collateral Agent, executes and delivers any and all agreements, instruments, documents and papers as the Collateral Agent may request to evidence the Collateral Agent's security interest in such Patent, Trademark or Copyright, and each Grantor hereby appoints the Collateral Agent as its attorney-in-fact to execute and file such writings for the foregoing purposes (and, prior to the occurrence of any Event of Default or Default, such Grantor shall be notified of such filing), all acts of such attorney being hereby ratified and confirmed; such power, being coupled with an interest, is irrevocable. (f) Each Grantor will take all necessary steps that are consistent with the practice in any proceeding before the United States Patent and Trademark Office, United States Copyright Office or any office or agency in any political subdivision of the United States, to maintain and pursue each material application relating to the Patents, Trademarks and/or Copyrights (and to obtain the relevant grant or registration) and to maintain each issued Patent and each registration of the Trademarks and Copyrights that is material to the conduct of any Grantor's business, including timely filings of applica- 17 tions for renewal, affidavits of use, affidavits of incontestability and payment of maintenance fees, and, if consistent with good business judgment, to initiate opposition, interference and cancellation proceedings against third parties. (g) In the event that any Grantor has reason to believe that any Collateral consisting of a Patent, Trademark or Copyright material to the conduct of any Grantor's business has been or is about to be infringed, misappropriated or diluted by a third party, such Grantor promptly shall notify the Collateral Agent and shall, if consistent with good business judgment, promptly sue for infringement, misappropriation or dilution and to recover any and all damages for such infringement, misappropriation or dilution, and take such other actions as are appropriate under the circumstances to protect such Collateral. (h) Upon and during the continuance of an Event of Default, each Grantor shall use its best efforts to obtain all requisite consents or approvals by the licensor of each Copyright License, Patent License or Trademark License to effect the assignment of all of such Grantor's right, title and interest thereunder to the Collateral Agent or its designee. ARTICLE V Power of Attorney Each Grantor irrevocably makes, constitutes and appoints the Collateral Agent (and all officers, employees or agents designated by the Collateral Agent) as such Grantor's true and lawful agent and attorney-in-fact, and in such capacity the Collateral Agent shall have the right, with power of substitution for each Grantor and in Grantor's name or otherwise, for the use and benefit of the Collateral Agent and the Secured Parties, upon the occurrence and during the continuance of an Event of Default (a) to receive, endorse, assign and/or deliver any and all notes, acceptances, checks, drafts, money orders or other evidences of payment relating to the Collateral or any part hereof; (b) to demand, collect, receive payment of, give receipt for and give discharges and releases of all or any of the Collateral; (c) to sign the name of any Grantor on an invoice or bill of lading 18 relating to any of the Collateral; (d) to send verifications of Accounts Receivable to any Account Debtor; (e) to commence and prosecute any and all suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect or otherwise realize on all or any of the Collateral or to enforce any rights in respect of any Collateral; (f) to settle, compromise, compound, adjust or defend any actions, suits or proceedings relating to all or any of the Collateral; (g) to notify, or to require any Grantor to notify, Accounts Debtors to make payment directly to the Collateral Agent; and (h) to use, sell, assign, transfer, pledge, make any agreement with respect to or otherwise deal with all or any of the Collateral, and to do all other acts and things necessary to carry out the purposes of this Agreement, as fully and completely as though the Collateral Agent were the absolute owner of the Collateral for all purposes; provided, however, that nothing herein contained shall be construed as requiring or obligating the Collateral Agent or any Secured Party to make any commitment or to make any inquiry as to the nature or sufficiency of any payment received by the Collateral Agent or any Secured Party, or to take any action with respect to the Collateral or any part thereof or the moneys due or to become due in respect thereof or any property covered thereby, and no action taken or omitted to be taken by the Collateral Agent or any Secured Party with respect to the Collateral or any part thereof shall give rise to any defense, counterclaim or offset in favor or any Grantor or (unless such action is the result of gross negligence or willful misconduct) to any claim or action against the Collateral Agent or any Secured Party. It is understood and agreed that the appointment of the Collateral Agent as the agent and attorney-in-fact of the Grantors for the purposes set forth above is coupled with an interest and is irrevocable. The provisions of this Section shall in no event relieve any Grantor of any of its obligations hereunder or under any other Loan Document with respect to the Collateral or any part thereof or impose any obligation on the Collateral Agent or any Secured Party to proceed in any particular manner with respect to the Collateral or any part thereof, or in any way limit the exercise by the Collateral Agent or any Secured Party of any other or further right which it may have on the date of this Agreement or hereafter, whether hereunder, under any other Loan Document, by law or otherwise. 19 ARTICLE VI Remedies SECTION 6.1. Remedies upon Default. Upon the occurrence and during the continuance of an Event of Default, each Grantor agrees to deliver each item of Collateral to the Collateral Agent on demand, and it is agreed that the Collateral Agent shall have the right to take any of or all the following actions at the same or different times: (a) with respect to any Collateral consisting of Intellectual Property , on demand, to cause the Security Interest to become an assignment, transfer and conveyance of any of or all such Collateral by the applicable Grantors to the Collateral Agent, or to license or sublicense, whether general, special or otherwise, and whether on an exclusive or non-exclusive basis, any such Collateral throughout the world on such terms and conditions and in such manner as the Collateral Agent shall determine (other than in violation of any then-existing licensing or contractual arrangements to the extent that waivers cannot be obtained), and (b) with or without legal process and with or without prior notice or demand for performance, to take possession of the Collateral and without liability for trespass to enter any premises where the Collateral may be located for the purposes of taking possession of or removing the Collateral and, generally, to exercise any and all rights afforded to a secured party under the Uniform Commercial Code or other applicable law. Without limiting the generality of the foregoing, each Grantor agrees that the Collateral Agent shall have the right, subject to the mandatory requirements of applicable law, to sell or otherwise dispose of all or any part of the Collateral, at public or private sale or at any broker's board or on any securities exchange, for cash, upon credit or for future delivery as the Collateral Agent shall deem appropriate. The Collateral Agent shall be authorized at any such sale (if it deems it advisable to do so) to restrict the prospective bidders or purchasers to persons who will represent and agree that they are purchasing the Collateral for their own account for investment and not with a view to the distribution or sale thereof, and upon consummation of any such sale the Collateral Agent shall have the right to assign, transfer and deliver to the purchaser or purchasers thereof the Collateral so sold. Each such purchaser at any such sale shall hold the 20 property sold absolutely, free from any claim or right on the part of any Grantor, and each Grantor hereby waives (the extent permitted by law) all rights of redemption, stay and appraisal which such Grantor now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted. The Collateral Agent shall give the Grantors ten (10) days' prior written notice (which each Grantor agrees is reasonable notice within the meaning of Section 9-504(3) of the Uniform Commercial Code as in effect in the State of New York or its equivalent in other jurisdictions) of the Collateral Agent's intention to make any sale of Collateral. Such notice, in the case of a public sale,s hall state the time and place for such sale and, in the case of a sale at a broker's board or on a securities exchange, shall state the board or exchange at which such sale is to be made and the day on which the Collateral, or portion thereof, will first be offered for sale at such board or exchange. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as the Collateral Agent may fix and state in the notice (if any) of such sale. At any such sale, the Collateral, or portion thereof, to be sold may be sold in one lot as an entirety or in separate parcels, as the Collateral Agent may (in its sole and absolute discretion ) determine. The Collateral Agent sh all not be obligated to make any sale of any Collateral if it shall determine not to do so, regardless of the fact that notice of sale of such Collateral shall have been given. The Collateral Agent may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for sale, and such sale may, without further notice,be made at the time and place to which the same was so adjourned. In case any sale of all or any part of the Collateral is made on credit or for future delivery, the Collateral so sold may be retained by the Collateral Agent until the sale price is paid by the purchaser or purchasers thereof, but the Collateral Agent shall not incur any liability in case any such purchaser or purchasers shall fail to take up and pay for the collateral so sold and, in case of any such failure, such Collateral may be sold again upon like notice. At any public (or, to the extent permitted by law, private) sale made pursuant to this Section, any Secured Party may bid for or purchase, free (to the 21 extent permitted by law) from any right of redemption, stay, valuation or appraisal on the part of any Grantor (all said rights being also hereby waived and released to the extent permitted by law), the Collateral or any part thereof offered for sale and may make payment on account thereof by using any claim then due and payable to such Secured Party from any Grantor as a credit against the purchase price and such Secured Party may, upon compliance with the terms of sale, hold, retain and dispose of such property without further accountability to any Grantor therefor. For purposes hereof, a written agreement to purchase the Collateral or any portion thereof shall be treated as a sale thereof; the Collateral Agent shall be free to carry out such sale pursuant to such agreement and no Grantor shall be entitled to the return of the Collateral or any portion thereof subject thereto, notwithstanding the fact that after the Collateral Agent shall have entered into such an agreement all Events of Default shall have been remedied and the Obligations paid in full. As the Collateral Agent may proceed by a suit or suits at law or in equity to foreclose this Agreement and to sell the Collateral or any portion thereof pursuant to a judgment or decree of a court or courts having competent jurisdiction or pursuant to a proceeding by a court-appointed received. SECTION 6.2. Application of Proceeds. The Collateral Agent shall apply the proceeds of any collection or sale of the Collateral, as well as any Collateral consisting of cash, as follows: FIRST, to the payment of all costs and expenses incurred by the Administrative Agent or the Collateral Agent (in its capacity as such hereunder or under any other Loan Document) in connection with such collection or sale or otherwise in connection with this Agreement or any of the Obligations, including all court costs and the fees and expenses of its agents and legal counsel, the repayment of all advances made by the Collateral Agent hereunder or under any other Loan Document on behalf of any Grantor and any other costs or expenses incurred in connection with the exercise of any right or remedy hereunder or under any other Loan Document. SECOND, to the payment in full of the Obligations (the amounts so applied to be distributed 22 among the Secured Parties pro rata in accordance with the amounts of the Obligations owed to them on the date of any such distribution); and THIRD, to the Grantors, their successors or assigns, or as a court of competent jurisdiction may otherwise direct. The Collateral Agent shall have absolute discretion as to the time of application of any such proceeds, moneys or balances in accordance with this Agreement. Upon any sale of the Collateral by the Collateral Agent (including pursuant to a power of sale granted by statute or under a judicial proceeding), the receipt of the Collateral Agent or of the officer making the sale shall be a sufficient discharge tot he purchaser or purchasers of the Collateral so sold and such purchaser or purchasers shall not be obligated to see to the application of any part of the purchase money paid over to the Collateral Agent or such officer to be answerable in any way for the misapplication thereof. SECTION 6.3. Grant of License to Use Intellectual Property. For the purpose of enabling the Collateral Agent to exercise rights and remedies under this Article at such time as the Collateral Agent shall be lawfully entitled to exercise such rights and remedies, each Grantor hereby grants to the Collateral Agent an irrevocable, non-exclusive license (exercisable without payment of royalty or other compensation to the Grantors) to the extent that such license does not violate any then existing licensing arrangements (to the extent that waivers cannot be obtained) to use, license or sub-license any of the Collateral consisting of Intellectual Property now owned or hereafter acquired by such Grantor, and wherever the same may be located, and including in such license reasonable access to all media in which any of the licensed items may be recorded or stored and to all computer software and programs used for the compilation or printout thereof and sufficient rights of quality control in favor of Grantor to avoid the invalidation of the Trademarks subject to the license. The use of such license by the Collateral Agent shall be exercised, at the option of that Collateral Agent, upon the occurrence and during the continuation of an Event of Default; provided that any license, sub-license or other transaction entered into by the Collateral Agent in accordance 23 herewith shall be binding upon the Grantors notwithstanding any subsequent cure of an Event of Default. ARTICLE VII Miscellaneous SECTION 7.1. Notices. All communications and notices hereunder shall (except as otherwise expressly permitted herein) be in writing and given as provided in Section 9.1 of the Credit Agreement. All communications and notices hereunder to any Guarantor shall be given to it at its address or telecopy number set forth on Schedule I, with a copy to the Borrower. SECTION 7.2. Security Interest Absolute. All rights of the Collateral Agent hereunder, the Security Interest and all obligations of the Grantors hereunder shall be absolute and unconditional irrespective of (a) any lack of validity or enforceability of the Credit Agreement, any other Loan Document, any agreement with respect to any of the Obligations or any other agreement or instrument relating to any of the foregoing, (b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to any departure from the Credit Agreement, any other Loan Document or any other agreement or instrument, (c) any exchange, release or non-perfection of any Lien on other collateral, or any release or amendment or waiver of or consent under or departure from any guarantee, securing or guaranteeing all or any of the Obligations, or (d) any other circumstance that might otherwise constitute a defense available to, or a discharge of, any Grantor in respect of the Obligations or this Agreement. SECTION 7.3. Survival of Agreement. All covenants, agreements, representations and warranties made by any Grantor herein and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement shall be consider to have been relied upon by the Secured Parties and shall survive the making by the Lenders of the Loans, and the execution and delivery to the Lenders of any notes evidencing such Loans, regardless of any investigation made by the Lenders or on their behalf, and shall continue in 24 full force and effect until this Agreement shall terminate. SECTION 7.4. Binding Effect; Several Agreement. This Agreement shall become effective as to any Grantor when a counterpart hereof executed on behalf of such Grantor shall have been delivered to the Collateral Agent and a counterpart hereof shall have been executed on behalf of the Collateral Agent, and thereafter shall be binding upon such Grantor and the Collateral Agent and their respective successors and assigns, and shall inure to the benefit of such Grantor, the Collateral Agent and the other Secured Parties and their respective successors and assigns, except that no Grantor shall have the right to assign or transfer Collateral (and any such assignment or transfer shall be void) except as expressly contemplated in this Agreement or the Credit Agreement. This Agreement shall be construed as a separate agreement with respect to each Grantor and may be amended, modified, supplemented, waived or released with respect to any Grantor without the approval of any other Grantor and without affecting the obligations of any other Grantor hereunder. SECTION 7.5. Successors and Assigns. Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party; and all covenants, promises and agreements by or on behalf of any Grantor or the Collateral Agent that are contained in this Agreement shall bind and inure to the benefit of their respective successors and assigns. SECTION 7.6. Collateral Agent's Expenses; Indemnification. (a) Each Grantor jointly and severally agrees to pay upon demand to the Collateral Agent the amount of any and all reasonable expenses, including the reasonable fees, disbursements and other charges of its counsel and of any experts or agents, which the Collateral Agent may incur in connection with (i) the administration of this Agreement, (ii) the custody or preservation of, or the sale of, collection from or other realization upon any of the Collateral (iii) the exercise, enforcement or protection of any of the rights of the Collateral Agent hereunder or (iv)the failure of any Grantor to perform or observe any of the provisions hereof. 25 (b) Without limitation of its indemnification obligations under the other Loan Documents, each Grantor jointly and severally agrees to indemnify the Collateral Agent and the other Indemnitees against, and hold each of them harmless from, any and all losses, claims, damages, liabilities and related expenses, including reasonable fees, disbursements and other charges of counsel, incurred by or asserted against any of them arising out of, in any way connected with, or as a result of, the execution, delivery or performance of this Agreement or any claims, litigation, investigation or proceeding relating hereto or to the Collateral, whether or not any Indemnitee is a part thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses have resulted from the gross negligence or willful misconduct of such Indemnitee. (c) Any such amounts payable as provided hereunder shall be additional Obligations secured hereby and by the other Security Documents. The provisions of this Section 7.6 shall remain operative and in full force and effect regardless of the termination of this Agreement or any other Loan Document, the consummation of the transactions contemplated hereby, the repayment of any of the Loans, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document, or any investigation made by or on behalf of the Collateral Agent or any Lender. All amounts due under this Section 7.6 shall be payable on written demand therefor. SECTION 7.7. GOVERNING LAW, THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. SECTION 7.8. Waivers; Amendment. (a) No failure or delay of the Collateral Agent in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Collateral Agent hereunder and of the Collateral Agent, the Issuing Bank, the Administrative Agent and the Lenders under the other Loan Documents are cumulative and are 26 not exclusive of any rights or remedies that they would otherwise have. No waiver of any provisions of this Agreement or any other Loan Document or consent to any departure by any Grantor therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) below, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice to or demand on any Grantor in any case shall entitle such Grantor or any other Grantor to any other or further notice or demand in similar or other circumstances. (b) Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Collateral Agent and the Grantor or Grantors with respect to which such waiver, amendment or modification is to apply, subject to any consent required in accordance with Section 9.2 of the Credit Agreement. SECTION 7.9. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. EACH PARTY HERETO (CERTIFIED THAT NO OTHER REPRESENTATIVE, AGENT OR ATTORNEY OR ANY OTHER PARTY HAS REPRESENTED , EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 7.9. SECTION 7.10. Severability. In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties shall endeavor in good faith negotiations to replace the invalid, illegal or unenforceable 27 provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions. SECTION 7.11. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall constitute an original but all of which when taken together shall constitute but one contract (subject to Section 7.4), and shall become effective as provided in Section 7.4. Delivery of an executed signature page to this Agreement by facsimile transmission shall be effective as delivery of a manually executed counterpart hereof. SECTION 7.12.Headings. Article and Section headings used herein are for the purpose of reference only, are not part of hiis Agreement and are not to affect the construction of, or to be take into consideration in interpreting, this Agreement. SECTION 7.13. Jurisdiction; Consent to Service of Process. (a) Each Grantor hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or Federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or the other Loan Documents, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York Sate or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that the Collateral Agent, the Administrative Agent, the Issuing Bank or any Lender may otherwise have to bring any action or proceeding relating to this Agreement or the other Loan Documents against any Grantor or its properties in the courts of any jurisdiction. (b) Each Grantor hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may 28 now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or the other Loan Documents in any New York State court or Federal court of the United States of America sitting in New York City, Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. (c) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 7.1. Nothing in this Agreement will affect the right of any party to this Agreement to service process in any other manner permitted by law. SECTION 7.14. Termination. This Agreement and the Security Interest shall terminate when all the Obligations have been indefeasibly paid in full, the Lenders have no further commitment to lend, the LC Exposure has been reduced to zero and the Issuing Bank has no further commitment to issue Letters of Credit under the Credit Agreement, at which time the Collateral Agent shall execute and deliver to the Grantors, at the Grantors' expense, all Uniform Commercial Code termination statements and similar documents which the Grantors shall reasonably request to evidence such termination. Any execution and delivery of termination statements or documents pursuant to this Section 7.14 shall be without recourse to or warranty by the Collateral Agent. A Guarantor shall automatically be released from its obligations hereunder and the Security Interest in the Collateral of such Guarantor shall be automatically released in the event that all the capital stock of such Guarantor shall be sold, transferred or otherwise disposed of to a Person that is not an affiliate of the borrower in accordance with the terms of the Credit Agreement; provided that the Required Lenders shall have consented to such sale, transfer or other disposition (to the extent required by the Credit Agreement) and the terms of such consent did not provide otherwise. SECTION 7.15. Additional Guarantors. Upon execution and delivery by the Collateral Agent and a Subsidiary of an instrument in the form of Annex 2 hereto, such Subsidiary shall become a Grantor hereunder with the same force and effect as if originally named as a 29 Grantor herein. The execution and delivery of any such instrument sh all not require the consent of any Grantor hereunder. The rights and obligations of each Grantor hereunder shall remain in full force and effect notwithstanding the addition of any new Grantor as a part to this Agreement. IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written. HUNTSMAN PACKAGING CORPORATION, By: _________________________ Name: Title: EACH OF THE GUARANTORS LISTED ON SCHEDULE I HERETO: By: __________________________ Name: Title: THE CHASE MANHATTAN BANK, as Collateral Agent, By: ___________________________ Name: Title: Authorized Officer 30 (Security Agreement) SCHEDULE I Guarantors 1. Huntsman Deerfield Films Corporation 2. Huntsman United Films Corporation 3. Huntsman Preparatory Inc. 4. Huntsman Container Corporation International 5. Huntsman Packaging Georgia, Inc. 6. Huntsman Film Products of Mexico, Inc. 7. Huntsman Bulk Packaging Corporation 31 (Security Agreement) SCHEDULE II Copyrights None 32 (Security Agreement) SCHEDULE III Licenses Huntsman Film Products Corporation/FMC Corporation, March 1, 1997 Huntsman Film Products Corporation/Saltech Inc., August 25, 1993 Huntsman Film Products Corporation/Saltech Inc., Amendment, July 15, 1994 Huntsman Film Products of Canada Ltd./984427 Ontario Limited, August 25, 1993 Huntsman Film Products of Canada Ltd./984427 Ontario Limited, Amendment, July 15, 1994 Huntsman Film Products Pty. Ltd./First Green Park Pty., Ltd. and Eighth Milieu Nominees Pty. Ltd. (Integrated Packaging), Sub-License, October 7, 1994 Huntsman Film Products GMBH/G.+L. Heikaus Kunststoffverarbeitung und Verpackungen GMBH, Sub-License, January 31, 1995 Huntsman Film Products Corporation-USA/G.+L. Heikaus Kunststoffverarbeitung und Verpackungen GMBH, Sub-License, June 1, 1995 Huntsman Design Products Corporation/A. Dean Garrett, January 1, 1995 Huntsman Film Products Corporation/Tycon Proprietary Limited, June 29, 1992 Huntsman Film Products Corporation/Tycon Proprietary Limited, Technical and Trademark Agreement, June 29, 1992 33 Huntsman Film Products Corporation/Tycon Proprietary Limited, Supplement to Technical and Trademark Agreement, June 29, 1992 Huntsman Film Products Corporation/Tycon Proprietary Limited, Amendment of Technical and Trademark Agreement, June 29, 1992 Huntsman Container Company Limited/Reedy International Corporation, March 28, 1995 Huntsman Ipex/Ipex Bulk System International Pty. Ltd., 1994 Huntsman Group Intellectual Property Holdings Corporation/Huntsman Packaging Corporation, December 30, 1996 34 (Security Agreement) SCHEDULE IV Patents 35 HUNTSMAN PACKAGING CORPORATION (F/K/A HUNTSMAN FILM PRODUCTS CORPORATION) U.S. PATENTS AND PATENT APPLICATIONS
- ------------------------------------------------------------------------------------- PATENT ISSUE DATE EXPIRES SERIAL FILING DOCKET RELEASE COMMENTS NUMBER NUMBER DATE NUMBER - ------------------------------------------------------------------------------------- 4230607 28OC1980 16JA1998 869878 16JA1978 81357 State Street Bank - ------------------------------------------------------------------------------------- 4230774 28OC1980 21FE1998 879824 21FE1978 81358 State Street Bank - ------------------------------------------------------------------------------------- 4362835 07DE1982 08DE2000 213806 08DE1980 81359 State Street Bank - ------------------------------------------------------------------------------------- 4746689 24MY1988 21JL2006 887481 21JL1986 81360 State Street Bank - ------------------------------------------------------------------------------------- 4923750 08MY1990 30DE2007 139776 30DE1987 90048A State Street Bank - ------------------------------------------------------------------------------------- 5116677 26MY1992 05DE2009 446219 05DE1989 90048B State Street Bank - ------------------------------------------------------------------------------------- 4168354 18SE1979 07N01997 849371 07N01977 81356 Will expire 1997 - ------------------------------------------------------------------------------------- 4095730 20JE1978 22AU1997 826501 22AU1977 81355 Expired - -------------------------------------------------------------------------------------
1 HUNTSMAN DEERFIELD FILMS CORPORATION U.S. PATENTS AND PATENT APPLICATIONS
- ------------------------------------------------------------------------------------------------ PATENT ISSUE DATE EXPIRES SERIAL FILING DOCKET RELEASE COMMENTS NUMBER NUMBER DATE NUMBER - ------------------------------------------------------------------------------------------------ - - Not yet as- 7/15/97 81431 signed - ------------------------------------------------------------------------------------------------ - - Not yet as- 8/12/97 81432 Regular signed utility patent application filed on 8/12/97 upon expi- ry of pro- visional application - ------------------------------------------------------------------------------------------------
2 HUNTSMAN PACKAGING CORPORATION U.S. PATENTS AND PATENT APPLICATIONS
- ---------------------------------------------------------------------------------------------- PATENT ISSUE DATE EXPIRES SERIAL FILING DOCKET RELEASE COMMENTS NUMBER NUMBER DATE NUMBER - ---------------------------------------------------------------------------------------------- - - - 510286 8/2/95 81335-1 - ---------------------------------------------------------------------------------------------- 5526934 6/18/96 4/29/2014 235499 4/29/94 81344 - ---------------------------------------------------------------------------------------------- 5495946 3/5/96 3/29/2014 358736 12/19/94 81344-C1 - ---------------------------------------------------------------------------------------------- - - - 504894 7/20/95 81346 - ---------------------------------------------------------------------------------------------- 5537923 7/23/96 5/24/2015 449704 5/24/95 81347 - ----------------------------------------------------------------------------------------------
3 HUNTSMAN UNITED FILMS CORPORATION U.S. PATENTS AND PATENT APPLICATIONS
- ------------------------------------------------------------------------------------------ PATENT ISSUE DATE EXPIRES SERIAL FILING DOCKET RELEASE COMMENTS NUMBER NUMBER DATE NUMBER - ------------------------------------------------------------------------------------------ - - - 478196 6/7/95 81427 - ------------------------------------------------------------------------------------------
4 HUNTSMAN PACKAGING CORPORATION (F/K/A HUNTSMAN FILM PRODUCTS CORPORATION) U.S. PATENTS AND PATENT APPLICATIONS
- ---------------------------------------------------------------------------------------------- PATENT ISSUE DATE EXPIRES SERIAL FILING DOCKET RELEASE COMMENTS NUMBER NUMBER DATE NUMBER - ---------------------------------------------------------------------------------------------- 5522690 04JE1996 11MY2015 438782 11MY1995 81348 - ---------------------------------------------------------------------------------------------- - - - 641899 02MY1996 81348-C1 - ---------------------------------------------------------------------------------------------- - - - 60/037907 11FE1997 81430 Provisional application - ----------------------------------------------------------------------------------------------
5 HUNTSMAN PACKAGING CORPORATION (F/K/A HUNTSMAN POLYPROPYLENE CORPORATION) UNITED STATES PATENTS AND PATENT APPLICATIONS - ------------------------------------------------------------------------------- DOCKET PATENT GRANT DATE APPLICATION APPLICATION EXPIRATION NUMBER NUMBER NUMBER DATE DATE - ------------------------------------------------------------------------------- 21682 4,310,639 1/12/82 505,227 10/26/65 1/12/1999 - ------------------------------------------------------------------------------- 45123 4,297,465 10/27/81 201,955 10/29/80 10/29/2000 - ------------------------------------------------------------------------------- 46814 4,378,451 3/29/83 301,921 9/14/81 9/14/2001 - ------------------------------------------------------------------------------- 49177 4,526,919 7/2/85 625,332 6/27/84 6/27/2004 - ------------------------------------------------------------------------------- 49178 4,528,312 7/9/85 625,331 6/27/84 6/27/2004 - ------------------------------------------------------------------------------- 57262 5,037,888 8/6/91 433,818 11/9/89 11/9/2009 - ------------------------------------------------------------------------------- 60390 5,198,497 3/30/93 814,166 12/30/91 12/30/2011 - ------------------------------------------------------------------------------- 63415-C1 611,480 3/5/96 - ------------------------------------------------------------------------------- 66087 040,050 3/30/93 - ------------------------------------------------------------------------------- 67460 5,414,063 5/9/95 040,049 3/30/93 3/30/2013 - ------------------------------------------------------------------------------- 81406-C1 4,276,400 6/30/81 048,209 6/13/79 6/30/1998 =============================================================================== 6 HUNTSMAN PACKAGING CORPORATION (f/k/a Huntsman Polypropylene) Huntsman Polypropylene Corporation ADPRO USA Reg. No.: 1,753,498 1993/02/23 App. No.: 74/291,441 1992/07/06 Renewal Due: 2003/02/23 Action Due: Affidavit of Use 1999/02/23 - ------------------------------------------------------------------------------- Huntsman Polypropylene Corporation HUNTSMAN POLYPROPYLENE CORPORATION USA Reg. No.: 1919111 1995/09/19 App. No.: 473597 1993/12/28 Renewal Due: 2005/09/19 Action Due: Affidavit of Use 2001/19/19 - ------------------------------------------------------------------------------- 7 (Security Agreement) SCHEDULE V Trademarks 8 HUNTSMAN PACKAGING CORPORATION (F/K/A HUNTSMAN FILM PRODUCTS CORPORATION) U.S. TRADEMARKS AND TRADEMARK APPLICATIONS - ------------------------------------------------------------------------- MARK REG. NO. REG. DATE SERIAL NO. FILING DATE - ------------------------------------------------------------------------- CHEEZFILM 1857675 10/11/1994 74/450529 10/21/1993 - ------------------------------------------------------------------------- CASTFLEX - - 75/154199 08/22/1996 - ------------------------------------------------------------------------- ARCTICWRAP 1564492 11/07/1989 73/785713 03/10/1989 - ------------------------------------------------------------------------- CHOICE-WRAP 857929 10/01/1968 72/266325 03/09/1967 - ------------------------------------------------------------------------- ELASTIFILM 1100744 08/29/1978 73/158208 02/08/1978 - ------------------------------------------------------------------------- FRY-PAK 1959770 03/05/1996 74/563535 08/19/1994 - ------------------------------------------------------------------------- OMNIFILM 1208308 09/14/1982 73/339450 11/30/1981 - ------------------------------------------------------------------------- PERMA-BLOCK 1947873 01/16/1996 74/435949 09/15/1993 - ------------------------------------------------------------------------- PHASE PLUS 1916417 09/05/1995 74/579970 09/29/1994 - ------------------------------------------------------------------------- PRIME-WRAP 819118 11/22/1966 72/239517 02/24/1966 - ------------------------------------------------------------------------- 9 - ------------------------------------------------------------------------- MARK REG. NO. REG. DATE SERIAL NO. FILING DATE - ------------------------------------------------------------------------- TOUGH-GUARD 987894 07/09/1974 72/460278 06/14/1973 - ------------------------------------------------------------------------- VITAFILM 422922 08/20/1946 71/479120 01/29/1945 - ------------------------------------------------------------------------- VITAFRESH 1185722 01/12/1982 73/257088 04/07/1980 - ------------------------------------------------------------------------- VITASPENSER 2049615 04/01/1997 74/619153 01/09/1995 - ------------------------------------------------------------------------- VITAWRAP 839152 11/21/1967 72/620546 12/12/1966 - ------------------------------------------------------------------------- WINWRAP 1882217 03/07/1995 74/487444 02/07/1994 - ------------------------------------------------------------------------- 10 - ------------------------------------------------------------------------- MARK REG. NO. REG. DATE SERIAL NO. FILING DATE - ------------------------------------------------------------------------- SECURALL 1381419 2/4/86 73/547573 7/12/85 - ------------------------------------------------------------------------- CO-EX PLASTICS 1539303 5/16/89 73/730779 5/26/88 - ------------------------------------------------------------------------- 11 HUNTSMAN UNITED FILMS CORPORATION U.S. TRADEMARKS AND TRADEMARK APPLICATIONS - --------------------------------------------------------------------- MARK REG. NO. REG. DATE SERIAL NO. FILING DATE - --------------------------------------------------------------------- UNIVOH 2077576 7/8/97 75/149426 8/13/96 - --------------------------------------------------------------------- 12 HUNTSMAN DEERFIELD FILMS CORPORATION U.S. TRADEMARKS AND TRADEMARK APPLICATIONS - ---------------------------------------------------------------------------- MARK REG. NO. REG. DATE SERIAL NO. FILING DATE - ---------------------------------------------------------------------------- DEERFIELD PLASTICS Design 977946 2/5/74 72/424331 5/15/72 - ---------------------------------------------------------------------------- STRATA 1485267 4/19/88 73/681751 8/31/87 - ---------------------------------------------------------------------------- 13 HUNTSMAN PACKAGING CORPORATION (F/K/A HUNTSMAN FILM PRODUCTS CORPORATION) U.S. TRADEMARKS AND TRADEMARK APPLICATIONS - ------------------------------------------------------------------------- MARK REG. NO. REG. DATE SERIAL NO. FILING DATE - ------------------------------------------------------------------------- BFO 1600830 6/12/90 73/778909 2/6/89 - ------------------------------------------------------------------------- DUBL-PAK 852101 7/9/68 72/215251 3/29/65 - ------------------------------------------------------------------------- HL 1600831 6/12/90 73/779067 2/6/89 - ------------------------------------------------------------------------- POLLY STAR 1602283 6/19/90 73/778903 2/6/89 - ------------------------------------------------------------------------- SHO CASE 1678544 3/10/92 73/779093 2/6/89 - ------------------------------------------------------------------------- 14 Annex 1 to the Security Agreement [Form Of] PERFECTION CERTIFICATE Reference is made to (a) the Credit Agreement dated as of September 30, 1997 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among the HUNTSMAN PACKAGING CORPORATION, a Utah corporation (the "Borrower"), the lenders from time to time party thereto (the "Lenders"), and THE CHASE MANHATTAN BANK, a New York bank corporation ("Chase"), as administrative agent (in such capacity, the "Administrative Agent") for the Lenders, and (b) the Guarantee Agreement dated as of September 30, 1997 (as supplemented or otherwise modified from time to time, the "Guarantee Agreement") between the Guarantors and the Administrative Agent. Capitalized terms used herein and not defined herein shall have meanings assigned to such terms in the Credit Agreement. The undersigned, a Financial Officer and a Legal Officer, respectively, of the Borrower, hereby certify to the Collateral Agent and each other Secured Party as follows: 1. Names. (a) The exact corporate name of each Grantor, as such name appears in its respective certificate of incorporation, is as follows: (b) Set forth below is each other corporate name each Grantor has had in the past five years, together with the date of the relevant change: (c) Except as set forth in Schedule 1 hereto, no Grantor has changed its identity or corporate structure in any way within the past five years. Changes in identity or corporate structure would include mergers, consolidations and acquisitions, as well as any change in the form, nature or jurisdiction of corporate organization. If any such change has occurred, include in Schedule 1 the information required by Sections 1 and 2 of this certificate as to each acquiree or constituent party to a merger or consolidation. (d) The following is a list of all other names (including trade names or similar appellations) used by each Grantor or any of its divisions or other business units in connection with the conduct of its business or the ownership of its properties at any time during the past five years: 15 (e) Set forth below is the Federal Taxpayer Identification Number of each Grantor: 2. Current Locations. (a) The chief executive office of each Grantor is located at the address set forth opposite its name below: Grantor Mailing Address County State - ------- --------------- ------ ----- (b) Set forth below opposite the name of each Grantor are all locations where such Grantor maintains any books or records relating to any Accounts Receivable (with each location at which chattel paper, if any, is kept being indicated by an "*"): Grantor Mailing Address County State - ------- --------------- ------ ----- (c) Set forth below opposite the name of each Grantor are all the material places of business of such Grantor not identified in paragraph (a) or (b) above: Grantor Mailing Address County State - ------- --------------- ------ ----- (d) Set forth below opposite the name of each Grantor are all the locations where such Grantor maintains any Collateral not identified above: Grantor Mailing Address County State - ------- --------------- ------ ----- (e) Set forth below opposite the name of each Grantor are the names and addresses of all Persons other than such Grantor that have possession of any of the Collateral of such Grantor: Grantor Mailing Address County State - ------- --------------- ------ ----- 3. Unusual Transactions. All Accounts Receivable have been originated by the Grantors and all Inventory has been acquired by the Grantors in the ordinary course of business. 16 4. File Search Reports. Attached hereto as Schedule 4(A) are true copies of file search reports from the Uniform Commercial Code filing offices where filings described in Section 3.16 of the Credit Agreement are to be made. Attached hereto as Schedule 4(B) is a true copy of each financing statement or other filing identified in such filing search reports. 5. UCC Filings. Duly signed financing statements on Form UCC-1 in substantially the form of Schedule 5 hereto have been prepared for filing in the Uniform Commercial Code filing office in each jurisdiction where a Grantor has Collateral as identified in Section 2 hereof. 6. Schedule of Filings. Attached hereto as Schedule 6 is a schedule setting forth, with respect to the filings described in Section 5 above, each filing and the filing office in which such filing is to be made. 7. Filing Fees. All filing fees and taxes payable in connection with the filings described in Section 5 above have been paid. 8. Stock Ownership. Attached hereto as Schedule 8 is a true and correct list of all the duly authorized, issued and outstanding stock of each Subsidiary and the record and beneficial owners of such stock. Also set forth on Schedule 8 is each Subsidiary that represents 50% or less of the equity of the entity in which such investment was made. 9. Notes. Attached hereto as Schedule 9 is a true and correct list of all notes held by each Subsidiary and all intercompany notes between the Borrower and each Subsidiary of the Borrower and between each Subsidiary of the Borrower and each other such Subsidiary. 10. Advances. Attached hereto as Schedule 10 is (a) a true and correct list of all advances made by the Borrower to any Subsidiary of the Borrower or made by any Subsidiary of the Borrower to the Borrower or any other Subsidiary of the Borrower, which advances will be on and after the date hereof evidenced by one or more inter-company notes pledged to the Collateral Agent under the Pledge Agreement, and (b) a true and correct list of all unpaid intercompany transfers of goods sold and delivered by or to the Borrower or any Subsidiary of the Borrower. 11. Mortgage Filings. Attached hereto as Schedule 11 is a schedule setting forth, with respect to each Mortgaged Property, (i) the exact corporate name of the corporation that owns such property as such name appears in its certificate of incorporation, (ii) if different from the name identified pursuant to clause (i), the exact name of the current record owner of such property reflected in the records of the filing office for such property identified pursuant to the following clause and (iii) the filing office in 17 which a Mortgage with respect to such property must be filed or recorded in order for the Collateral Agent to obtain a perfected security interest therein. IN WITNESS WHEREOF, the undersigned have duly executed this certificate on this 30th day of September, 1997. HUNTSMAN PACKAGING CORPORATION, by -------------------------------- Name: Title: (Financial Officer) by -------------------------------- Name: Title: (Legal Officer) 18 Annex 2 to the Security Agreement SUPPLEMENT NO. ___ dated as of , to the Security Agreement dated as of September 30, 1997, among HUNTSMAN PACKAGING CORPORATION, a Utah corporation (the "Borrower"), each subsidiary of the Borrower listed on Schedule I thereto (each such subsidiary individually a "Guarantor" and collectively, the "Guarantors"; the Guarantors and the Borrower are referred to collectively herein as the "Grantors") and The Chase Manhattan Bank, a New York banking corporation ("Chase") as collateral agent (in such capacity, the "Collateral Agent") for the Secured Parties (as defined herein). A. Reference is made to (a) the Credit Agreement dated as of September 30, 1997 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among the Borrower, the lenders from time to time party thereto (the "Lenders"), Chase, as administrative agent (in such capacity, the "Administrative Agent") for the Lenders, and (b) the Guarantee Agreement dated as of September 30, 1997 (as amended, supplemented or otherwise modified from time to time, the "Guarantee Agreement"); between the Guarantors and the Administrative Agent. B. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Security Agreement and the Credit Agreement. C. The Grantors have entered into the Security Agreement in order to induce the Lenders to make Loans and the Issuing Bank to issue Letters of Credit. Section 7.15 of Security Agreement provides that additional Subsidiaries of the Borrower may become Grantors under the Security Agreement by execution and delivery of an instrument in the form of this Supplement. The undersigned Subsidiary (the "New Grantor") is executing this Supplement in accordance with the requirements of the Credit Agreement to become a Grantor under the Security Agreement in order to induce the Lenders to make additional Loans and the Issuing Bank to issue additional Letters of Credit and as consideration for Loans previously made and Letters of Credit previously issued. Accordingly, the Collateral Agent and the New Grantor agree as follows: SECTION 1. In accordance with Section 7.15 of Security Agreement, the New Grantor by its signature below becomes a Grantor under the Security Agreement with the same force and effect as if originally named therein as a Grantor and the New Grantor hereby (a) agrees to all the terms and provisions of the Security Agreement 19 applicable to it as a Grantor thereunder and (b) represents and warrants that the representations and warranties made by it as a Grantor thereunder are true and correct on and as of the date hereof. In furtherance of the foregoing, the New Grantor, as security for the payment and performance in full of the Obligations (as defined in the Security Agreement), does hereby create and grant to the Collateral Agent, its successors and assigns, for the benefit of the Secured Parties, their successors and assigns, a security interest in and lien on all of the New Grantor's right, title and interest in and to the Collateral (as defined in the Security Agreement) of the New Grantor. Each reference to a "Grantor" in the Security Agreement shall be deemed to include the New Grantor. The Security Agreement is hereby incorporated herein by reference. SECTION 2. The New Grantor represents and warrants to the Collateral Agent and the other Secured Parties that this Supplement has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms. SECTION 3. This Supplement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Supplement shall become effective when the Collateral Agent shall have received counterparts of this Supplement that, when taken together, bear the signatures of the New Grantor and the Collateral Agent. Delivery of an executed signature page to this Supplement by facsimile transmission shall be as effective as delivery of a manually signed counterpart of this Supplement. SECTION 4. The New Grantor hereby represents and warrants that (a) set forth on Schedule I attached hereto is a true and correct schedule of the location of any and all Collateral of the New Grantor and (b) set forth under its signature hereto, is the true and correct location of the chief executive office of the New Grantor. SECTION 5. Except as expressly supplemented hereby, the Security Agreement shall remain in full force and effect. SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. SECTION 7. In case any one or more of the provisions contained in this Supplement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and in the Security Agreement shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties hereto shall endeavor in good-faith negotiations to replace the invalid, illegal or 20 unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions. SECTION 8. All communications and notices hereunder shall be in writing and given as provided in Section 7.01 of the Security Agreement. All communications and notices hereunder to the New Grantor shall be given to it at the address set forth under its signature below. SECTION 9. The New Grantor agrees to reimburse the Collateral Agent for its reasonable out-of-pocket expenses in connection with this Supplement, including the reasonable fees, other charges and disbursements of counsel for the Collateral Agent. IN WITNESS WHEREOF, the New Grantor and the Collateral Agent have duly executed this Supplement to the Security Agreement as of the day and year first above written. [Name of New Grantor], by ------------------------------- Name: Title: Address: THE CHASE MANHATTAN BANK, as Collateral Agent, by ------------------------------- Name: Title: 21 SCHEDULE I to Supplement No. ___ to the Security Agreement LOCATION OF COLLATERAL ---------------------- Description Location ----------- -------- 22 EX-10.6 25 PLEDGE AGREEMENT PLEDGE AGREEMENT dated as of September 30, 1997, among HUNTSMAN PACKAGING CORPORATION, a Utah corporation (the "Borrower"), each Subsidiary of the Borrower listed on Schedule I hereto (each such Subsidiary individually a "Subsidiary Pledgor" and collectively, the "Subsidiary Pledgors"; the Borrower and the Subsidiary Pledgors are referred to collectively herein as the "Pledgors") and THE CHASE MANHATTAN BANK, a New York banking corporation ("Chase"), as collateral agent (in such capacity, the "Collateral Agent") for the Secured parties (as defined in the Credit Agreement referred to below). Reference is made to (a) the Credit Agreement dated as of September 30, 1997 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among the Borrower, the lenders from time to time party thereto (the "Lenders") and Chase, as administrative agent (in such capacity, the "Administrative Agent") for the Lenders, and (b) the Guarantee Agreement dated as of September 30, 1997 (as amended, supplemented or otherwise modified from time to time, the "Guarantee Agreement") among he Subsidiary Pledgors and the Collateral Agent. The Lenders have agreed to make Loans to the Borrower and the Issuing Bank has agreed to issue Letters of Credit for the account of the Borrower, pursuant to, and upon the terms and subject to the conditions specified in, the Credit Agreement. The Subsidiary Guarantors have agreed to guarantee, among other things, all the obligations of the Borrower under the Credit Agreement. The obligations of the Lenders to make Loans and of the Issuing Bank to issue Letters of Credit are conditioned upon, among other things, the execution and delivery by the Pledgors of a Pledge Agreement in the form hereof to secure (a) the due and punctual payment by the Borrower of (i) the principal of and premium, if any, and interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) on the Loans, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise, (ii) each payment required to be made by the Borrower under the Credit Agreement in respect of any Letter of Credit, when and as due, including payments in respect of reimbursement of disbursements, interest thereon and obligations to provide cash collateral and (iii) all other monetary obligations, including fees, costs, expenses and indemnities, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), of the Loan Parties to be Secured Parties under the Credit Agreement and the other Loan Documents, (b) the due and punctual performance of all covenants, agreements, obligations and liabilities of the Loan Parties under or pursuant to the Credit Agreement and the other Loan Documents, (c) the due and punctual payment and performance of all obligations of the Borrower, monetary or otherwise, under each Hedging Agreement entered into with any counterparty that was a Lender (or an Affiliate thereof) at the time such Hedging Agreement was entered into and (d) the due and punctual payment of all monetary obligations of the Borrower (but not in excess of $5,000,000 in the aggregate) under any domestic overdraft facilities entered into by the Borrower including, but not limited to, the Line of Credit Agreement and Automatic Borrowing Service Agreement entered into with Mellon Bank, N.A. (all the monetary and other obligations referred to in the preceding clauses (a) through (d) being referred to collectively as the "Obligations"). Capitalized terms used herein and not defined herein shall have meanings assigned to such terms in the Credit Agreement. Accordingly, the Pledgors and the Collateral Agent, on behalf of itself and each Secured Party (and each of their respective successors or assigns), hereby agree as follows: SECTION 1. Pledge. As security for the payment and performance, as the case may be, in full of the Obligations, each Pledgor hereby transfers, grants, bargains, sells, conveys, hypothecates, pledges, sets over and delivers, and pursuant to the English charge over shares between Huntsman Container Company International ("HCCI") and Chase, with respect to the shares of Huntsman Container Limited ("HCCL"), and pursuant to the English charge over shares between HCCI and Chase, with respect 2 to the shares of Huntsman Film Products U.K. Limited (together with the shares of HCCL, the "English Pledged Stock"), pledges the English Pledged Stock, unto the Collateral Agent, its successors and assigns, and hereby grants to the Collateral Agent, its successors and assigns, for the ratable benefit of the Secured Parties, a security interest in all of the Pledgor's right, title and interest in, to and under (a) the shares of capital stock owned by it and listed on Schedule II hereto and any shares of capital stock of any Subsidiary obtained in the future by the Pledgor and the certificates representing all such shares (the "Pledged Stock"); (b)(i) the debt securities listed opposite the name of the Pledgor on Schedule II hereto, (ii) any debt securities in the future issued to the Pledgor and (iii) the promissory notes and any other instruments evidencing such debt securities (the "Pledged Debt Securities"); (c) subject to Section 5, all payments of principal or interest, dividends, cash, instruments and other property from time to time received, receivable or otherwise distributed, in respect of, in exchange for or upon the conversion of the securities referred to in clauses (a) and (b) above; (d) subject to Section 5, all rights and privileges of the Pledgor with respect to the securities and other property referred to in clauses (a), (b), (c) and (d) above; and (e) all proceeds of any of the foregoing (the items referred to in clauses (a) through (e) above being collectively referred to as the "Collateral"). Notwithstanding any of the foregoing, the Pledged Stock shall not include (i) more than 65% of the issued and outstanding shares of commons stock of any Foreign Subsidiary that is not a Subsidiary Loan Party or (ii) to the extent that applicable law requires that a Subsidiary of the Pledgor issue directors' qualifying shares, such qualifying shares. Upon delivery to the Collateral Agent, (a) any stock certificates, notes or other securities now or hereafter included in the Collateral (the "Pledged Securities") shall be accompanied by stock powers duly executed in blank or other instruments of transfer satisfactory to the Collateral Agent and by such other instruments and documents as the Collateral Agent may reasonably request and (b) all other property comprising part of the Collateral shall be accompanied by proper instruments of assignment duly executed by the applicable Pledgor and such other instruments or documents as the Collateral Agent 3 may reasonably request. Each delivery of Pledged Securities shall be accompanied by a schedule describing the securities then being pledged hereunder, which schedule shall be attached hereto as Schedule II and made a part hereof. Each schedule so delivered shall supplement any prior schedules so delivered. TO HAVE AND TO HOLD the Collateral, together with all right, title, interest, powers, privileges and preferences pertaining or incidental thereto, unto the Collateral Agent, its successors and assigns, for the ratable benefit of the Secured Parties, forever; subject, however, to the terms, covenants and conditions hereinafter set forth. SECTION 2. Delivery of the Collateral. (a) Each Pledgor agrees promptly to deliver or cause to be delivered to the Collateral Agent any and all Pledged Securities, and any and all certificates or other instruments or documents representing the Collateral. (b) Each Pledgor will cause any Indebtedness for borrowed money owed to the Pledgor by the Borrower or any Subsidiary to be evidenced by a duly executed promissory note that is pledged and delivered to the Collateral Agent pursuant to the terms thereof. SECTION 3. Representations, Warranties and Covenants. Each Pledgor hereby represents, warrants and covenants, as to itself and the Collateral pledged by it hereunder, to and with the Collateral Agent that: (a) the Pledged Stock represents that percentage as set forth on Schedule II of the issued and outstanding shares of each class of the capital stock of the issuer with respect thereto; (b) except for the security interest granted hereunder and except as permitted by the Credit Agreement, the Pledgor (i) is and will at all times continue to be the direct owner, beneficially and of record, of the Pledged Securities indicated on Schedule II, (ii) holds the same free and clear of all Liens, (iii) will make no assignment, pledge, hypothecation or transfer of, or create or permit to exist any security interest in or other Lien on, the Collateral, other than pursuant hereto, and (iv) 4 subject to Section 5, will cause any and all Collateral, whether for value paid by the Pledgor or otherwise, to be forthwith deposited with the Collateral Agent and pledged or assigned hereunder; (c) the Pledgor (i) has the power and authority to pledge the Collateral in the manner hereby done or contemplated and (ii) will defend its title or interest thereto or therein against any and all Liens (other than the Lien created by this Agreement), however arising, of all Persons whomsoever; (d) no consent which has not been obtained of any other Person (including stockholders or creditors of any Pledgor) and no consent or approval which has not been obtained of any Governmental Authority or any securities exchange is necessary to the validity of the pledge effected hereby; (e) by virtue of the execution and delivery by the Pledgors of this Agreement, when the Pledged Securities, certificates or other documents representing or evidencing the Collateral are delivered to the Collateral Agent in accordance with this Agreement, the Collateral Agent will obtain a valid and perfected first lien upon and security interest in such Pledged Securities as security for the payment and performance of the Obligations; (f) the pledge effected hereby is effective to vest in the Collateral Agent, on behalf of the Secured Parties, the rights of the Collateral Agent in the Collateral as set forth herein; (g) all of the Pledged Stock has been duly authorized and validly issued and is fully paid and nonassessable; (h) all information set forth herein relating to the Pledged Stock is accurate and complete in all material respects as of the date hereof; and (i) the pledge of the Pledged Stock pursuant to this Agreement does not violate Regulation G, U or X of the Federal Reserve Board or any successor thereto as of the date hereof. 5 SECTION 4. Registration in Nominee Name; Denominations. The Collateral Agent, on behalf of the Secured Parties, shall have the right (in its sole and absolute discretion) to hold the Pledged Securities in its own name as pledgee, the name of its nominee (as pledgee or as sub-agent) or the name of the Pledgors, endorsed or assigned in blank or in favor of the Collateral Agent. Each Pledgor will promptly give to the Collateral Agent copies of any notices or other communications received by it with respect to Pledged Securities registered in the name of such Pledgor. The Collateral Agent shall at all times have the right to exchange the certificates representing Pledged Securities for certificates of smaller or larger denominations for any purpose consistent with this Agreement. SECTION 5. Voting Rights; Dividends and Interest, etc. (a) Unless and until an Event of Default shall have occurred and be continuing: (i) Each Pledgor shall be entitled to exercise any and all voting and/or other consensual rights and powers inuring to an owner of Pledged Securities or any part thereof for any purpose consistent with the terms of this Agreement, the Credit Agreement and the other Loan Documents; provided, however, that such Pledgor will not be entitled to exercise any such right if the result thereof could materially and adversely affect the rights inuring to a holder of the Pledged Securities or the rights and remedies of any of the Secured Parties under this Agreement or the Credit Agreement or any other Loan Document or the ability of the Secured Parties to exercise the same. (ii) The Collateral Agent shall execute and deliver to each Pledgor, or cause to be executed and delivered to each Pledgor, all such proxies, powers of attorney and other instruments as such Pledgor to exercise the voting and/or consensual rights and powers it is entitled to exercise pursuant to subparagraph (i) above and to receive the cash dividends it is entitled to receive pursuant to subparagraph (iii) below. 6 (iii) Each Pledgor shall be entitled to receive and retain any and all cash dividends, interest and principal paid on the Pledged Securities to the extent and only to the extent that such cash dividends, interest and principal are permitted by, and otherwise paid in accordance with, the terms and conditions of the Credit Agreement, the other Loan Documents and applicable laws. All noncash dividends, interest and principal, and all dividends, interest and principal paid or payable in cash or otherwise in connection with a partial or total liquidation or dissolution, return of capital, capital surplus or paid-in surplus, and all other distributions (other than distributions referred to in the preceding sentence) made on or in respect of the Pledged Securities, whether paid or payable in cash or otherwise, whether resulting from a subdivision, combination or reclassification of the outstanding capital stock of the issuer of any Pledged Securities or received in exchange for Pledged Securities or any part thereof, or in redemption thereof, of as a result of any merger, consolidation, acquisition or other exchange of assets to which such issuer may be a party or otherwise, shall be and become part of the Collateral, and, if received by any Pledgor, shall not be commingled by such Pledgor with any of its other funds or property but shall be held separate and apart therefrom, shall be held in trust for the benefit of the Collateral Agent and shall be forthwith delivered to the Collateral Agent in the same form as so received (with any necessary endorsement). (b) Upon the occurrence and during the continuance of an Event of Default, all rights of any Pledgor to dividends, interest or principal that such Pledgor is authorized to receive pursuant to paragraph (a)(iii) above shall cease, and all such rights shall thereupon become vested in the Collateral Agent, which shall have the sole and exclusive right and authority to receive and retain such dividends, interest or principal. All dividends, interest or principal received by the Pledgor contrary to the provisions of this Section 5 shall be held in trust for the benefit of the Collateral Agent, shall be segregated from other property or funds of such Pledgor and shall be forthwith delivered to the Collater- 7 al Agent upon demand in the same form as so received (with any necessary endorsement). Any and all money and other property paid over to or received by the Collateral Agent pursuant to the provisions of this paragraph (b) shall be retained by the Collateral Agent in an account to be established by the Collateral Agent upon receipt of such money or other property and shall be applied in accordance with the provisions of this Section 7. After all Events of Default have been cured or waived, the Collateral Agent shall, within five Business Days after all such Events of Default have been cured or waived, repay to each Pledgor all cash dividends, interest or principal (without interest), that such Pledgor would otherwise be permitted to retain pursuant to the terms of paragraph (a)(iii) above and which remain in such account. (c) Upon the occurrence and during the continuance of an Event of Default, all rights of any Pledgor to exercise the voting and consensual rights and powers it is entitled to exercise pursuant to paragraph (a)(i) of this Section 5, and the obligations of the Collateral Agent under paragraph (a)(ii) of this Section 5, shall cease, and all such rights shall thereupon become vested in the Collateral Agent, which shall have the sole and exclusive right and authority to exercise such voting and consensual rights and powers, provided that, unless otherwise directed by the Required Lenders, the Collateral Agent shall have the right from time to time following and during the continuance of an Event of Default to permit the Pledgors to exercise such rights. After all Events of Default have been cured or waived, such Pledgor will have the right to exercise the voting and consensual rights and powers that it would otherwise be entitled to exercise pursuant to the terms of paragraph (a)(i) above. SECTION 6. Remedies upon Default. Upon the occurrence and during the continuance of an Event of Default, subject to applicable regulatory and legal requirements, the Collateral Agent may sell the Collateral, or any part thereof, at public or private sale or at any broker's board or on any securities exchange, for cash, upon credit or for future delivery as the Collateral Agent shall deem appropriate. The Collateral Agent shall be authorized at any such sale (if it deems it advisable to do so) to restrict the prospective bidders or purchasers to persons who will represent and agree that they are 8 purchasing the Collateral for their own account for investment and not with a view to the distribution or sale thereof, and upon consummation of any such sale the Collateral Agent shall have the right to assign, transfer and deliver to the purchaser or purchasers thereof the Collateral so sold. Each such purchaser at any such sale shall hold the property sold absolutely free from any claim or right on the part of any Pledgor, and, to the extent permitted by applicable law, the Pledgors hereby waive all rights of redemption, stay, valuation and appraisal any Pledgor now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted. The Collateral agent shall give a Pledgor 10 days' prior written notice (which each Pledgor agrees is reasonable notice within the meaning of Section 9-504(3) of the Uniform Commercial Code as in effect in the State of New York or its equivalent in other jurisdictions) of the Collateral Agent's intention to make any sale of such Pledgor's Collateral. Such notice, in the case of a public sale, shall state the time and place for such sale and, in the case of a sale at a broker's board or on a securities exchange, shall state the board or exchange at which such sale is to be made and the day on which the Collateral, or portion thereof, will first be offered for sale at such board or exchange. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as the Collateral Agent may fix and state in the notice of such sale. At any such sale, the Collateral, or portion thereof, to be sold may be sold in one lot as an entirely or in separate parcels, as the Collateral Agent may (in its sole and absolute discretion) determine. The Collateral Agent shall not be obligated to mark any sale of any Collateral if it shall determine not to do so, regardless of the fact that notice of sale of such Collateral shall have been given. The Collateral Agent may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time any announcement at the time and place fixed for sale, and such sale may, without further notice, be made at the time and place to which the same was so adjourned. In case any sale of all or any part of the Collateral is made on credit or for future delivery, the Collateral so sold may be retained by the Collateral Agent until the sale price is paid in full by the purchaser or purchasers 9 thereof, but the Collateral Agent shall not incur any liability in case any such purchaser or purchasers shall fail to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may be sold again upon like notice. At any public (or, to the extent permitted by applicable law, private) sale made pursuant to this Section 6, any Secured Party may bid for or purchase, free from any right of redemption, stay or appraisal on the part of any Pledgor (all said rights being also hereby waived and released), the Collateral or any part thereof offered for sale and may make payment on account thereof by using any claim then due and payable to it from such Pledgor as a credit against the purchase price, and it may, upon compliance with the terms of sale, hold, retain and dispose of such property without further accountability to such Pledgor therefor. For purposes hereof, (a) a written agreement to purchase the Collateral or any portion thereof shall be treated as a sale thereof, (b) the Collateral Agent shall be free to carry out such sale pursuant to such agreement and (c) such Pledgor shall not be entitled to the return of the Collateral or any portion thereof subject thereto, notwithstanding the fact that after the Collateral Agent shall have entered into such an agreement all Events of Default shall have been remedied and the Obligations paid in full. As an alternative to exercising the power of sale herein conferred upon it, the Collateral Agent may proceed by a suit or suits at law or in or in equity to foreclose upon the Collateral and to sell the Collateral or any portion thereof pursuant to a judgment or decree of a court or courts having competent jurisdiction or pursuant to a proceeding by a court-appointed receiver. Any sale pursuant to the provisions of this Section 6 shall be deemed to conform to the commercially reasonable standards as provided in Section 9-504(3) of the Uniform Commercial Code as in effect in the State of New York or its equivalent in other jurisdictions. SECTION 7. Application of Proceeds of Sale. The proceeds of any sale of Collateral pursuant to Section 6, as well as any Collateral consisting of cash, shall be applied by the Collateral Agent as follows: FIRST, to the payment of all costs and expenses incurred by the Collateral Agent or the Administrative Agent in connection with such sale or otherwise in connection with this Agreement, any other Loan 10 Document or any of the Obligations, including all court costs and the reasonable fees and expenses of its agents and legal counsel, the repayment of all advances made by the Collateral Agent hereunder or under any other Loan Document on behalf of any Pledgor and any other costs or expenses incurred in connection with the exercise of any right or remedy hereunder or under any other Loan Document; SECOND, to the payment in full of the Obligations (the amounts so applied to be distributed among the Secured Parties pro rata in accordance with the amounts of the Obligations owed to them on the date of any such distribution); and THIRD, to the Pledgors, their successors or assigns, or as a court of competent jurisdiction may otherwise direct. The Collateral Agent shall have absolute discretion as to the time of application of any such proceeds, moneys or balances in accordance with this Agreement. Upon any sale of the Collateral by the Collateral Agent (including pursuant to a power of sale granted by statue or under a judicial proceeding), the receipt of the purchase money by the Collateral Agent or of the officer making the sale shall be a sufficient discharge to the purchaser or purchasers of the Collateral so sold and such purchaser or purchasers shall not be obligated to see the application of any part of the purchase money paid over to the Collateral Agent or such officer or be answerable in any way for the misapplication thereof. SECTION 8. Reimbursement of Collateral Agent. (a) The Pledgors agree to pay upon demand to the Collateral Agent the amount of any and all reasonable expenses, including the reasonable fees, other charges and disbursements of its counsel and of any experts or agents, that the Collateral Agent may incur in connection with (i) the administration of this Agreement, (ii) the custody or preservation of, or the sale of, collection from, or other realization upon, any of the Collateral, (iii) the exercise or enforcement of any of the rights of the Collateral Agent hereunder or (iv) the failure by such Pledgor to perform or observe any of the provisions hereof. 11 (b) Without limitation of its indemnification obligations under the other Loan Documents, each Pledgor agrees to indemnify the Collateral Agent and the Indemnitees (as defined in Section 9.03 of the Credit Agreement) against , and hold each Indemnitee harmless from any and all losses, claims, damages, liabilities and related expenses, including reasonable counsel fees, other charges and disbursements, incurred by or asserted against any Indemnitee arising out of, in any way connected with, or as a result of (i) the execution or delivery of this Agreement or any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations thereunder or the consummation of the Transactions and the other transactions contemplated thereby or (ii) any claim, litigation, investigation or proceeding relating to any of the foregoing, whether or not any Indemnitee is a party thereto, provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses resulted from the gross negligence or wilful misconduct of such Indemnitee. (c) Any amounts payable as provided hereunder shall be additional Obligations secured hereby and by the other Security Documents. The provisions of this Section 8 shall remain operative and in full force and effect regardless of the termination of this Agreement, the consummation of the transactions contemplated hereby, the repayment of any of the Obligations, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document or any investigation made by or on behalf of the Collateral Agent or any other Secured Party. All amounts due under this Section 8 shall be payable on written demand therefor and shall bear interest at the rate specified in Section 2.13 of the Credit Agreement. SECTION 9. Collateral Agent Appointed attorney-in- Fact. Each Pledgor hereby appoints the Collateral Agent the attorney-in-fact of such Pledgor for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instrument that the Collateral Agent may deem necessary or advisable to accomplish the purposes hereof, which appointment is irrevocable and coupled with an interest. Without limiting the generality of the foregoing, the Collateral Agent shall have the 12 right, upon the occurrence and during the continuance of an Event of Default, with full power of substitution either in the Collateral Agent's name or in the name of such Pledgor, to ask for, demand, sue for, collect, receive and give acquittance for any and all moneys due or to become due under and by virtue of any Collateral, to endorse checks, drafts, orders and other instruments for the payment of money payable to the Pledgor representing any interest or dividend or any distribution payable in respect of the Collateral or any part thereof or on account thereof and to give full discharge for the same, to settle, compromise, prosecute or defend any action, claim or proceeding with respect thereto, and to sell, assign, endorse, pledge, transfer and to make any agreement respecting, or otherwise deal with, the same; provided, however, that nothing herein contained shall be construed as requiring or obligating the Collateral Agent to make any commitment or to make any inquiry as to the nature or sufficiency of any payment received by the Collateral Agent, or to present or file any claim or notice, or to take any action with respect to the Collateral or any part thereof or the moneys due or to become due in respect thereof or any property covered thereby. The Collateral Agent and the other Secured Parties shall be accountable only for amounts actually received as a result of the exercise of the powers granted to them herein, and neither they nor their officers, directors, employees or agents shall be responsible to any Pledgor for any act or failure to act hereunder, except for their own gross negligence or wilful misconduct. SECTION 10. Waivers; Amendment. (a) No failure or delay of the Collateral Agent in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Collateral Agreement hereunder and of the other Secured Parties under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provisions of this Agreement or consent to any departure by any Pledgor therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) below, and then such waiver or consent shall be effective only in the specific 13 instance and for the purpose for which given. No notice or demand on any Pledgor in any case shall entitle such Pledgor to another or further notice or demand in similar or other circumstances. (b) Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to a written agreement entered into between the Collateral Agent and the Pledgor or Pledgors with respect to which such waiver, amendment or modification is to apply, subject to any consent required in accordance with Section 9.02 of the Credit Agreement. SECTION 11. Securities Act, etc. In view of the position of the Pledgors in relation to the Pledged Securities, or because of other current or future circumstances, a question may arise under the Securities Act of 1933, as now or hereafter in effect, or any similar statute hereafter enacted analogous in purpose or effect (such Act and any such similar statute as from time to time in effect being called the "Federal Securities Laws") with respect to any disposition of the Pledged Securities permitted hereunder. Each Pledgor understands that compliance with the Federal Securities Laws might very strictly limit the course of conduct of the Collateral Agent if the Collateral Agent were to attempt to dispose of all of any part of the Pledged Securities, and might also limit the extent to which or the manner in which any subsequent transferee of any Pledged Securities could dispose of the same. Similarly, there may be other legal restrictions or limitations affecting the Collateral Agent in any attempt to dispose of all or part of the Pledged Securities under applicable Blue Sky or other state securities laws or similar laws analogous in purpose or effect. Each Pledgor recognizes that in light of such restrictions and limitations the Collateral Agent may, with respect to any sale of the Pledged Securities, limit the purchasers to those who will agree, among other things, to acquire such Pledged Securities for their own account, for investment, and not with a view to the distribution or resale thereof. Each Pledgor acknowledges and agrees that in light of such restrictions and limitations, the Collateral Agent, in its discretion, (a) may proceed to make such a sale whether or not a registration statement for the purpose of registering such Pledged Securities or part thereof shall have been filed under the Federal Securities Laws and (b) may approach 14 and negotiate with a single potential purchaser to effect such sale. Each Pledgor acknowledges and agrees that any such sale might result in prices and other terms less favorable to the seller than if such sale were a public sale with without such restrictions. In the event of any such sale, the Collateral Agent shall incur no responsibility or liability for selling all or any part of the Pledged Securities at a price that the Collateral Agent, in its discretion, may in good faith deem reasonable under the circumstances, notwithstanding the possibility that a substantially higher price might have been realized if the sale were deferred until after registration as aforesaid or if more than a single purchaser were approached. The provisions of this Section 11 will apply notwithstanding the existence of a public or private market upon which the quotations or sales prices may exceed substantially the price at which the Collateral Agent sells. SECTION 12. Registration, etc. Each Pledgor agrees that, upon the occurrence and during the continuance of an Event of Default hereunder, if for any reason the Collateral Agent desires to sell any of the Pledged Securities of the Borrower at a public sale, it will, at any time and from time to time, upon the written request of the Collateral Agent, use its best efforts to take or to cause the issuer of such Pledged Securities to take such action and prepare, distribute and/or file such documents, as are required or advisable in the reasonable opinion of counsel for the Collateral Agent to permit the public sale of such Pledged Securities. Each Pledgor further agrees to indemnify, defend and hold harmless the Collateral Agent, each other Secured Party, any underwriter and their respective officers, directors, affiliates and controlling persons from and against all loss, liability, expenses, costs of counsel (including, without limitation, reasonable fees and expenses to the Collateral Agent of legal counsel), and claims (including the costs of investigation) that they may incur insofar as such loss, liability, expense or claim arises out of or is based upon any untrue statement or a material fact contained in any prospectus (or any amendment or supplement thereto) or in any notification or offering circular, or arises out of or is based upon any omission to state a material fact required to be stated therein or necessary to make the statements in any thereof not misleading, except insofar as the same may have been 15 caused by any untrue statement or omission based upon information furnished to such Pledgor or the issuer of such Pledged Securities by the Collateral Agent or any other Secured Party expressly for use therein. Each Pledgor further agrees, upon such written request referred to above, to use its best efforts to qualify, file or register, or cause the issuer of such Pledged Securities to qualify, file or register, any of the Pledged Securities under the Blue Sky or other securities laws of such states as may be requested by the Collateral Agent and keep effective, or cause to be kept effective, all such qualifications, filings or registrations. The Pledgors will bear all costs and expenses of carrying out their obligations under this Section 12. Each Pledgor acknowledges that there is no adequate remedy at law for failure by it to comply with the provisions of this Section 12 and that such failure would not be adequately compensable in damages, and therefore agrees that its agreements contained in this Section 12 may be speficically enforced. SECTION 13. Security Interest Absolute. All rights of the Collateral Agent hereunder, the grant of a security interest in the Collateral and all obligations of each Pledgor hereunder, shall be absolute and unconditional irrespective of (a) any lack of validity or enforceability of the Credit Agreement, any other Loan Document, any agreement with respect to any of the Obligations or any other agreement or instrument relating to any of the foregoing, (b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to any departure from the Credit Agreement, any other Loan Document or any other agreement or instrument relating to any of the foregoing, (c) any exchange, release or nonperfection of any other collateral, or any release or amendment or waiver of or consent to or departure from any guaranty, for all or any of the Obligations of (d) any other circumstance that might otherwise constitute a defense available to, or a discharge of, any Pledgor in respect of the Obligations or in respect of this Agreement (other than the indefeasible payment in full of all the Obligations). SECTION 14. Termination or Release. (a) This Agreement and the security interests granted hereby shall terminate when all the Obligations have been indefeasibly 16 paid in full and the Lenders have no further commitment to lend under the Credit Agreement, the LC Exposure has been reduced to zero and the Issuing Bank has no further obligation to issue Letters of Credit under the Credit Agreement. (b) Upon any sale or other transfer by any Pledgor of any Collateral that is permitted under the Credit Agreement to any Person that is not an Affiliate of the Borrower, or, upon the effectiveness of any written consent to the release of the security interest granted hereby in any Collateral pursuant to Section 9.02(b) of the Credit Agreement, the security interest in such Collateral shall be automatically released. (c) In connection with any termination or release pursuant to paragraph (a) or (b), the Collateral Agent shall execute and deliver to any Pledgor, at such Pledgor's expense, all documents that such Pledgor shall reasonably request to evidence such termination or release. Any execution and delivery of documents pursuant to this Section 14 shall be without recourse to or warranty by the Collateral Agent. SECTION 15. Notices. All communications and notices hereunder shall be in writing and given as provided in Section 9.01 of the Credit Agreement. All communications and notices hereunder to any Subsidiary Pledgor shall be given to it at the address for notices set forth on Schedule I. SECTION 16. Further Assurances. Each Pledgor agrees to do such further acts and things, and to execute and deliver such additional conveyances, assignments, agreements and instruments, as the Collateral Agent may at any time reasonably request in connection with the administration and enforcement of this Agreement or with respect to the Collateral or any part thereof or in order better to assure and confirm unto the Collateral Agent its rights and remedies hereunder. SECTION 17. Binding Effect; Several Agreement; Assignments. Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party; and all covenants, promises and agreements by or on behalf of any Pledgor that are contained in this 17 Agreement shall bind and inure to the benefit of its successors and assigns. This Agreement shall become effective as to any Pledgor when a counterpart hereof executed on behalf of such Pledgor shall have been delivered to the Collateral Agent and a counterpart hereof shall have been executed on behalf of the Collateral Agent, and thereafter shall be binding upon such Pledgor and the Collateral Agent and their respective successors and assigns, and shall inure to the benefit of such Pledgor, the Collateral Agent and the other Secured Parties, and their respective successors and assigns, except that no Pledgor shall have the right to assign its rights hereunder or any interest herein or in the Collateral (and any such attempted assignment shall be void), except as expressly contemplated by this Agreement or the other Loan Documents. If all of the captial stock of a Pledgor is sold, transferred or otherwise disposed of to a Person that is not an Affiliate of the Borrower pursuant to a transaction permitted by Section 6.06 of the Credit Agreement, such Pledgor shall be released from its obligations under this Agreement without further action. This Agreement shall be construed as a separate agreement with respect to each Pledgor and may be amended, modified, supplemented, waived or released with respect to any Pledgor without the approval of any other Pledgor and without affecting the obligations of any other Pledgor hereunder. SECTION 18. Survival of Agreement; Severability. (a) All covenants, agreements, representations and warranties made by each Pledgor herein and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the Collateral Agent and the other Secured Parties and shall survive the making by the Lenders of the Loans and the issuance of the Letters of Credit by the Issuing Bank, regardless of any investigation made by the Secured Parties or on their behalf, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any other fee or amount payable under this Agreement or any other Loan Document is outstanding and unpaid or the LC Exposure does not equal zero and as long as the Commitments have not been terminated. 18 (b) In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions. SECTION 19. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. SECTION 20. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall constitute an original, but all of which, when taken together, shall constitute a single contract, and shall become effective as provided in Section 17. Delivery of an executed counterpart of a signature page to this Agreement by facsimile transmission shall be as effective as delivery of a manually executed counterpart of this Agreement. SECTION 21. Rules of Interpretation. The rules of interpretation specified in Section 1.03 of the Credit Agreement shall be applicable to this Agreement. Section headings used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting this Agreement. SECTION 22. Jurisdiction; Consent to Service of Process. (a) Each Pledgor hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or Federal court of the Untied States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or the other Loan Documents, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally 19 agrees that, to the extent permitted by applicable law, all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgement in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that the Collateral Agent or any other Secured Party may otherwise have to bring any action or proceeding relating to this Agreement or the other Loan Documents against any Pledgor or its properties in the courts of any jurisdiction. (b) Each Pledgor hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or the other Loan Documents in any New York State or Federal court. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action of proceeding in any such court. (c) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 15. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law. SECTION 23. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION. SECTION 24. Additional Pledgors. Pursuant to Section 5.12 of the Credit Agreement, each Subsidiary 20 Loan Party that was not in existence or not a Subsidiary Loan Party on the date of the Credit Agreement is required to enter in this Agreement as a Subsidiary Pledgor upon becoming a Subsidiary Loan Party. Upon execution and delivery by the Collateral Agent and a Subsidiary of an instrument in the form of Annex 1, such Subsidiary shall become a Subsidiary Pledgor hereunder with the same force and effect as if originally named as a Subsidiary Pledgor herein. The execution and delivery of such instrument shall not require the consent of any Pledgor hereunder. The rights and obligations of each Pledgor hereunder shall remain in full force and effect notwithstanding the addition of any new Subsidiary Pledgor as a party to this Agreement. IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written. HUNTSMAN PACKAGING CORPORATION, by ____________________________ Name: Title: THE SUBSIDIARY PLEDGORS LISTED ON SCHEDULE I HERETO by ____________________________ Name: Title: Authorized Officer THE CHASE MANHATTAN BANK, as Collateral Agent, by ___________________________ Name: Robert Anastasio Title: Vice President 21 (Pledge Agreement) SCHEDULE I Subsidiary Pledgors 1. Huntsman Deerfield Films Corporation 2. Huntsman United Films Corporation 3. Huntsman Preparatory Inc. 4. Huntsman Container Corporation International 5. Huntsman Packaging Georgia, Inc. 6. Huntsman Film Products of Mexico, Inc. 7. Huntsman Bulk Packaging Corporation 22 (Pledge Agreement) SCHEDULE 11 Capital Stock & Debt Securities Stock Ownership
Name Authorized Shares Issued Pledged Ownership of Common Stock Shares Shares - --------------------------------------- --------------- ------ ------ --------------------------------- Huntsman Deefiled Films Corporation 200,000 Class A 100 100 100% Huntsman Packaging Corporation Huntsman United Film Corportion 500,000 10,880 10,880 100% Huntsman Packaging Corporation Huntsman Preparatory Inc. 50,000 1,000 1,000 100% Huntsman Packaging Corporation Huntsman Container Corporation International 50,000 1,000 1,000 100% Huntsman Packaging Corporation Huntsman Packaging Georgia, Inc. 1,000 1,000 1,000 100% Huntsman Packaging Corporation Huntsman Film Products of Mexico, Inc. 50,000 1,000 1,000 100% Huntsman Packaging Corporation Huntsman Bulk Packaging Corporation 1,000,000 1,000 1,000 100% Huntsman Packaging Corporation Huntsman Film Prodcuts of Canada Ltd 100 100 65 100% Huntsman Packaging Corporation Huntsman Film Products of GmbH DM 50,000 DM 32,500 DM 32,500 100% Huntsman Packaging Corporation DM 17,500 100% Huntsman Packaging Corporation Huntsman Film Products UK Ltd. 100 100 65 100% Huntsman Container Corporation International Huntsman Container Company Ltd. 6,000,000 4,162,879 2,705,871 99% Huntsman Container Corportion International Huntsman Container Company France FF 250,000 2,500 99% Huntsman Container Corporation International
Debt Securities 1. Intercompany Notes, between Huntsman Packaging Corporation, as lender and Huntsman Deerfield Films Corporation, Huntsman United Films Corporation, Huntsman Preparatory Inc., Huntsman Container Corporation International, Huntsman Packaging Georgia, Inc., Huntsman Film Products of Mexico, Inc., Huntsman Bulk Packaging Corporation, Huntsman Film Products of Canada Ltd., Huntsman Film Products GmbH, Huntsman Film Products UK Ltd., Huntsman Container Company Ltd. and Huntsman Container Company France, as borrowers. 23 Annex 1 to the Pledge Agreement SUPPLEMENT NO. dated as of , to the PLEDGE AGREEMENT dated as of September 30, 1997, among HUNTSMAN PACKAGING CORPORATION, a Utah corporation (the "Borrower"), and each subsidiary of the Borrower listed on Schedule I hereto (each such subsidiary individually a "Subsidiary Pledgor") and collectively, the "Subsidiary Pledgors"; the Borrower and the Subsidiary Pledgors are referred to collectively herein as the "Pledgors") and THE CHASE MANHATTAN BANK, a New York banking corporation ("Chase"), as collateral agent (in such capacity, the "Collateral Agent") for the Secured Parties (as defined in the Credit Agreement referred to below) A. Reference is made to (a) the Credit Agreement dated as of September 30, 1997 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among the Borrower, the lenders from time to time party thereto (the "Lenders") and Chase, as administrative agent (in such capacity, the "Administrative Agent") for the Lenders and (b) the Guarantee Agreement dated as of September 30, 1997 (as amended, supplemented or otherwise modified from time to time, the "Guarantee Agreement") among the Subsidiary Pledgors and the Collateral Agent. B. Capitalized terms used herein and not other wise defined herein shall have the meanings assigned to such terms in the Credit Agreement. C. The Pledgors have entered into the Pledge Agreement in order to induce the Lenders to make Loans and the Issuing Bank to issue Letters of Credit. Pursuant to Section 5.12 of the Credit Agreement, each Subsidiary Loan Party that was not in existence or not a Subsidiary Loan Party on the date of the Credit Agreement is 24 required to enter into the Pledge Agreement as a Subsidiary Pledgor upon becoming a Subsidiary Loan Party. Section 24 of the Pledge Agreement provides that such Subsidiaries may become Subsidiary Pledgors under the Pledge Agreement by execution and delivery of an instrument in the form of this Supplement. The undersigned Subsidiary (the "New Pledgor") is executing this Supplement in accordance with the requirements of the Credit Agreement to become a Subsidiary Pledgor under the Pledge Agreement in order to induce the Lenders to make additional Loans and the Issuing Bank to issue additional Letters of Credit and as consideration for Loans previously made and Letters of Credit previously issued. Accordingly, the Collateral Agent and the New Pledgor agree as follows: SECTION 1. In accordance with Section 24 of the Pledge Agreement, the New Pledgor by its signature below becomes a Pledgor under the Pledge Agreement with the same force and effect as if originally named therein as a Pledgor and the New Pledgor hereby agrees (a) to all the terms and provisions of the Pledge Agreement applicable to it as a Pledgor thereunder and (b) represents and warrants that the representations and warranties made by it as a Pledgor thereunder are true and correct on and as of the date hereof. In furtherance of the foregoing, the New Pledgor, as security for the payment and performance in full of the Obligations (as defined in the Pledge Agreement), does hereby create and grant to the Collateral Agent, its successors and assigns, for the benefit of the Secured Parties, their successors and assigns, a security interest in and lien on all of the New Pledgor's right, title and interest in and to the Collateral (as defined in the Pledge Agreement) of the New Pledgor. Each reference to a "Subsidiary Pledgor" or a "Pledgor" in the Pledge Agreement shall be deemed to include the New Pledgor. The Pledge Agreement is hereby incorporated herein by reference. SECTION 2. The New Pledgor represents and warrants to the Collateral Agent and the other Secured Parties that this Supplement has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms. 25 SECTION 3. This Supplement may be executed in counterparts, each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Supplement shall become effective when the Collateral Agent shall have received counterparts of this Supplement that, when taken together, bear the signatures of the New Pledgor and the Collateral Agent. Delivery of an executed signature page to this Supplement by facsimile transmission shall be as effective as delivery of a manually signed counterpart of this Supplement. SECTION 4. The New Pledgor hereby represents and warrants that set forth on Schedule I attached hereto is a true and correct schedule of all its Pledged Securities. SECTION 5. Except as expressly supplemented hereby, the Pledge Agreement shall remain in full force and effect. SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SECTION 7. In case any one or more of the provisions contained in this Supplement should be held invalid, illegal or unenforceable in any respect, neither party hereto shall be required to comply with such provision for so long as such provision is held to be invalid, illegal or unenforceable, but the validity, legality and enforceability of the remaining provisions contained herein and in the Pledge Agreement shall not in any way be affected or impaired. The parties hereto shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions. SECTION 8. All communications and notices hereunder shall be in writing and given as provided in Section 15 of the Pledge Agreement. All communications and notices hereunder to the New Pledgor shall be given to it at the address set forth under its signature hereto. 26 SECTION 9. The New Pledgor agrees to reimburse the Collateral Agent for its reasonable out-of-pocket expenses in connection with this Supplement, including the reasonable fees, other charges and disbursements of counsel for the Collateral Agent. IN WITNESS WHEREOF, the New Pledgor and the Collateral Agent have duly executed this Supplement to the Pledge Agreement as of the day and year first above written. [Name of New Pledgor], by______________________ Name: Title: Address: THE CHASE MANHATTAN BANK, as Collateral Agent, by______________________ Name: Title: Address: 27 Schedule I to Supplement No. to the Pledge Agreement Pledged Securities of the New Pledgor CAPITAL STOCK Number of Number of Registered Class of Percent Issuer Certificates Owner Shares of Shares - ------ ------------ ----- ------ --------- DEBT SECURITIES Principal Date of Maturity Issuer Amount Note Date - ------ ------ ---- ---- 28 EX-10.7 26 INDEMNITY, SUBROGATION AND CONTRIBUTION AGREEMENT INDEMNITY, SUBROGATION and CONTRIBUTION AGREEMENT dated as of September 30, 1997, among HUNTSMAN PACKAGING CORPORATION, A Utah corporation (the "Borrower"), each Subsidiary of the Borrower listed on Schedule I hereto (the "Guarantors") and THE CHASE MANHATTAN BANK, a New York banking corporation ("Chase"), as collateral agent (in such capacity, the Collateral Agent") for the Secured Parties (as defined in the Credit Agreement referred to below). Reference is made to (a) the Credit Agreement dated as of September 30, 1997 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among the Borrower, the Lenders from time to time party thereto (the "Lenders") and Chase, as administrative agent (in such capacity, the "Administrative Agent" for the Lenders, and (b) the Guarantee Agreement dated as of September 30, 1997, between the Guarantors and the Administrative Agent (the "Guarantee Agreement"). Capitalized terms used herein and not defined herein shall have the meanings assigned to such terms in the Credit Agreement. The Lenders have agreed to make Loans to the Borrower, and the Issuing Bank has agreed to issue Letters of Credit for the account of the Borrower, pursuant to, and upon the terms and subject to the conditions specified in, the Credit Agreement. The Guarantors have guaranteed such Loans and the other Obligations (as defined in the Guarantee Agreement) of the Borrower under the Credit Agreement pursuant to the Guarantee Agreement; the Borrower and the Guarantors also have granted Liens on and security interests in certain of their assets to secure such guarantees. The obligations of the Lenders to make Loans and of the Issuing Bank to issue Letters of Credit are conditioned on, among other things, the execution and delivery by the Borrower and the Guarantors of an agreement in the form hereof. Accordingly, the Borrower, each Guarantor and the Collateral Agent agree as follows: SECTION 1. Indemnity and Subrogation. In addition to all such rights of indemnity and subrogation as the Guarantors may have under applicable law (but subject to Section 3), the Borrower agrees that (a) in the event a payment shall be made by any Guarantor under the Guaran- tee Agreement, the Borrower shall indemnify such Guarantor for the full amount of such payment and such Guarantor shall be subrogated to the rights of the Person to whom such payment shall have been made to the extent of such payment and (b) in the event any assets of any Guarantor shall be sold pursuant to any Security Document to satisfy a claim of any Secured Party, the Borrower shall indemnify such Guarantor in an amount equal to the greater of the book value or the fair market value of the assets so sold. SECTION 2. Contribution and Subrogation. Each Guarantor (a "Contributing Guarantor") agrees (subject to Section 3) that, in the event a payment shall be made by any other Guarantor under the Guarantee Agreement or assets of any other Guarantor shall be sold pursuant to any Security Document to satisfy a claim of any Secured Party and such other Guarantor (the "Claiming Guarantor") shall not have been fully indemnified by the Borrower as provided in Section 1, the Contributing Guarantor shall indemnify the Claiming Guarantor in an amount equal to the amount of such payment or the greater of the book value or the fair market value of such assets, as the case may be, in each case multiplied by a fraction of which the numerator shall be the net worth of the Contributing Guarantor on the date hereof and the denominator shall be the aggregate net worth of all the Guarantors on the date hereof (or, in the case of any Guarantor becoming a party hereto pursuant to Section 12, the date of the Supplement hereto executed and delivered by such Guarantor). Any Contributing Guarantor making any payment to a Claiming Guarantor pursuant to this Section 2 shall be subrogated to the rights of such Claiming Guarantor under Section 1 to the extent of such payment. SECTION 3. Subordination. Notwithstanding any provision of this Agreement to the contrary, all rights of the Guarantors under Sections 1 and 2 and all other rights of indemnity, contribution or subrogation under applicable law or otherwise shall be fully subordinated to the indefeasible payment in full in cash of the Obligations. No failure on the part of the Borrower or any Guarantor to make the payments required by Sections 1 and 2 (or any other payments required under applicable law or otherwise) shall in any respect limit the obligations and liabilities of any Guarantor with respect to its obligations hereunder, and each Guarantor shall remain liable 2 for the full amount of the obligations of such Guarantor hereunder. SECTION 4. Termination. This Agreement shall survive and be in full force and effect so long as any Obligation is outstanding and has not been indefeasibly paid in full in cash, and so long as the LC Exposure has not been reduced to zero or any of the commitments under the Credit Agreement have not been terminated, and shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of any Obligation is rescinded or must otherwise be restored by any Secured Party or any Guarantor upon the bankruptcy or reorganization of the Borrower, any Guarantor or otherwise. SECTION 5. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. Section 6. No Waiver; Amendment. (a) No failure on the part of the Collateral Agent or any Guarantor to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy by the Collateral Agent or any Guarantor preclude any other or further exercise thereof or the exercise of any other right, power or remedy. All remedies hereunder are cumulative and are not exclusive of any other remedies provided by law. None of the Collateral Agent and the Guarantors shall be in writing and signed by such parties. (b) Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to a written agreement entered into between the Borrower, the Guarantors and the Collateral Agent, with the prior written consent of the Required Lenders (except as otherwise provided in the Credit Agreement). SECTION 7. Notices. All communications and notices hereunder shall be in writing and given as provided in the Guarantee Agreement and addressed as specified therein. SECTION 8. Binding Agreement; Assignments. Whenever in this Agreement any of the parties hereto is re- 3 ferred to, such reference shall be deemed to include the successors and assigned of such party; and all covenants, promises and agreements by or on behalf of the parties that are contained in this Agreement shall bind and inure to the benefit of the respective successors and assigns. Neither the borrower nor any Guarantor may assign to transfer any of its rights or obligations hereunder (and any such attempted assignment or transfer shall be void) without the prior written consent of the Required Lenders. Notwithstanding the foregoing, at the time any Guarantor is released from its obligations under the Guarantee Agreement in accordance with such Guarantee Agreement and the Credit Agreement, such Guarantor will cease to have any rights or obligations under this Agreement. SECTION 9. Survival of Agreement; Severability. (a) All covenants and agreements made by the Borrower and each Guarantor herein and in the certificates or other instruments prepared or delivered in connection with this Agreement or the other Loan Documents shall be considered to have been relied upon by the Collateral Agent, the other Secured Parties and each Guarantor and shall survive the making by the Lenders of the Loans and the issuance of the Letters of Credit by the Issuing Bank, and shall continue in full force and effect as long as the principal of or any accrued interest on an on any Loans or any other fee or amount payable under the Credit Agreement or this Agreement or under any of the other Loan Documents is outstanding and or unpaid or the LC Exposure does not equal zero and as long as the Commitments have not been terminated. (b) In case any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, no party hereto shall be required to comply with such provision for so long as such provision is held to be invalid, illegal or unenforceable, but the validity, legality and enforceability of the remaining provisions contained validity, legality and enforceability of the remaining provisions contained herein shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions. 4 SECTION 10. Counterparts. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when take together shall constitute a single contract. This Agreement shall be effective with respect to any Guarantor when a counterpart bearing the signature of such Guarantor shall have been delivered to the Collateral Agent. Delivery of an executed signature page to this Agreement by facsimile transmission shall be as effective as delivery of a manually signed counterpart of this Agreement. SECTION 11. Rules of the Interpretation. The rules of the interpretation specified in Section 1.03 of the Credit Agreement shall be applicable to this Agreement. SECTION 12. Additional Guarantors. Pursuant to Section 5.12 of the Credit Agreement, each Subsidiary Loan Party that was not in existence or not such a Subsidiary Loan Party on the date of the Credit Agreement is required to enter into the Guarantee Agreement as a Guarantor upon becoming such a Subsidiary. Upon execution and delivery, after the date hereof, by the Collateral Agent and such a Subsidiary of the instrument in the form of Annex 1 hereto, such Subsidiary shall become a Guarantor hereunder with the same force and effect as if originally named as a Guarantor hereunder. The execution and delivery of any instrument adding an additional Guarantor as a party to this Agreement shall not require the consent of any Guarantor hereunder. The rights and obligations of each Guarantor hereunder shall remain in full force and effect notwithstanding the addition of any new Guarantor as a party to this Agreement. 5 IN WITNESS WHEREOF, parties hereto have caused this Agreement to be executed by their duly authorized officers as of the date first appearing above. HUNTSMAN PACKAGING CORPORATION, by__________________________________ Name: Title: EACH OF THE SUBSIDIARIES LISTED ON SCHEDULE I HERETO, as a Guarantor, by _______________________________ Name: Title: Authorized Officer THE CHASE MANHATTAN BANK, as Collateral Agent, by _______________________________ Name: Title: 6 (Contribution Agreement) SCHEDULE I Guarantors 1. Huntsman Deerfield Films Corporation 2. Huntsman United Films Corporation 3. Huntsman Preparatory Inc. 4. Huntsman Container Corporation International 5. Huntsman Packaging Georgia, Inc. 6. Huntsman Film Products of Mexico, Inc. 7. Huntsman Bulk Packaging Corporation 7 Annex 1 to the Indemnity, Subrogation and Contribution Agreement SUPPLEMENT NO. dated as of [ ], to the Indemnity, Subrogation and Contribution Agreement dated as of September 30, 1997 (as the same may be amended, supplemented or otherwise modified from time to time, the "Indemnity, Subrogation and Contribution Agreement"), among HUNTSMAN PACKAGING CORPORATION, A Utah corporation (the "Borrower"), each Subsidiary of the Borrower listed on Schedule I thereto (the "Guarantors"), and THE CHASE MANHATTAN BANK, a New York banking corporation ("Chase"), as collateral agent (the "Collateral Agent") for the Secured Parties (as defined in the Credit Agreement referred to below). A. Reference is made to (a) the Credit Agreement dated as of September 30, 1997 (as amended, supplemented or otherwise modified from time to time the "Credit Agreement"), among the Borrower, the Lenders from time to time party thereto (the "Lenders") and Chase, as administrative agent (in such capacity, the "Administrative Agent") for the Lenders, and (b) the Guarantee Agreement dated as of September 30, 1997, between the Guarantors and the Administrative Agent ("the Guarantee Agreement"). B. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Indemnity, Subrogation and Contribution Agreement and Credit Agreement. C. The Borrower and the Guarantors have entered into the Indemnity, Subrogation and Contribution Agreement in order to induce the Lenders to make Loans and the Issuing Bank to issue Letters of Credit. Pursuant to Section 5.12 of the Credit Agreement, each Subsidiary Loan Party that was not in existence or not a Subsidiary Loan Party on the date of the Credit Agreement is required to enter into the Guarantee Agreement as a Guarantor upon becoming a Subsidiary. Section 12 of the Indemnity, Subrogation and Contribution Agreement provides that additional Subsidiaries of the Borrower may become Guarantors under the Indemnity, Subrogation and Contribution Agreement by execution and delivery of an instrument in the form of this Supplement. The undersigned Subsidiary of the Borrower (the "New Guarantor" is executing 8 this Supplement in accordance with the requirements of the Credit Agreement to become a Guarantor under the Indemnity, Subrogation and Contribution Agreement in order to induce the Lenders to make additional Loans and the Issuing Bank to issue additional Letters of Credit and as consideration for Loans previously made and Letters of Credit previously issued. Accordingly, the Collateral Agent and the New Guarantor agree as follows: SECTION 1. In accordance with Section 12 of the Indemnity, Subrogation and Contribution Agreement, the New Guarantor by its signature below becomes a Guarantor under the Indemnity, Subrogation and Contribution Agreement with the same force and effect as if originally named therein as a Guarantor and the New Guarantor hereby agrees to all the terms and provisions of the Indemnity, Subrogation and Contribution Agreement applicable to it as a Guarantor thereunder. Each reference to a "Guarantor" in the Indemnity, Subrogation and Contribution Agreement shall be deemed to include the New Guarantor. The Indemnity, Subrogation and Contribution Agreement is hereby incorporated herein by reference. SECTION 2. The New Guarantor represents and warrants to the Collateral Agent and the other Secured Parties that this Supplement has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms. SECTION 3. This Supplement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This supplement shall become effective when the Collateral Agent shall have received counterparts of this Supplement that, when taken together, bear the signatures of the New Guarantor and the Collateral Agent. Delivery of an executed signature page to this Supplement by facsimile transmission shall be as effective as delivery of the manually signed counterpart of this Supplement. 9 SECTION 4. Except as expressly supplemented hereby, the Indemnity, Subrogation and Contribution Agreement shall remain in full force and effect. SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. SECTION 6. In case any one or more of the provisions contained in this Supplement should be held invalid, illegal or unenforceable in any respect, neither party hereto shall be required to comply with such provision for so long as such provision is held to be invalid, illegal or unenforceable, but the validity, legality and enforceability of the remaining provisions contained herein and in the Indemnity, Subrogation and Contribution Agreement shall not in any way be affected or impaired. The parties hereto shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions. SECTION 7. All communications and notices hereunder shall be in writing and given as provided in Section 7 of the Indemnity, Subrogation and Contribution Agreement. All communications and notices hereunder to the New Guarantor shall be given to it at the address set forth under its signature. IN WITNESS WHEREOF, the New Guarantor and the Collateral Agent have duly executed this Supplement to the Indemnity, Subrogation and Contribution Agreement as of the day and year first above written. [Name of New Guarantor], by --------------------- Name: Title: Address: 10 THE CHASE MANHATTAN BANK, as Collateral Agent, by -------------------------- Name: Title: 11 SCHEDULE I to Supplement No. ___ to the Indemnity, Subrogation and Contribution Agreement Guarantors Name Address 12 EX-21.1 27 LIST OF SUBSIDIARIES EXHIBIT 21.1 HUNTSMAN PACKAGING CORPORATION SUBSIDIARIES STATES OF INCORPORATION AND QUALIFICATION
COMPANY NAME & STATE/ STATE/COUNTRY COUNTRY OF INCORPORATION QUALIFICATIONS - ------------------------ -------------- Huntsman Bulk Packaging Corporation (Utah) ................................... Utah Huntsman Deerfield Films Corporation (Massachusetts) .................................................... Massachusetts Kentucky Huntsman Film Products of Canada Ltd. (Ontario) ........................... Ontario Huntsman Film Products of Mexico, Inc. (Utah) ................................ Utah Huntsman United Films Corporation (Georgia) ............................... Georgia Indiana Utah Huntsman Container Corporation International (Utah) ......................... Utah Huntsman Packaging U.K. Limited (United Kingdom) .......................... England Huntsman Packaging Georgia, Inc. (Georgia) ................................ Georgia Huntsman Preparatory, Inc. (Utah) ............................................ Utah Huntsman Film Products GmbH (Germany) ..................................... Germany Huntsman Film Products Pty. Ltd. (Australia) ........................... Australia
EX-23.1 28 CONSENT OF DELOITTE & TOUCHE LLP EXHIBIT 23.1 INDEPENDENT AUDITORS' CONSENT AND REPORT ON SCHEDULE To the Board of Directors and Stockholders of Huntsman Packaging Corporation Salt Lake City, Utah We consent to the use in this Registration Statement (relating to $125,000,000 9 1/8% Senior Subordinated Notes) of Huntsman Packaging Corporation on Form S-1 of our report dated June 19, 1997 (November 11, 1997 as to Note 12) relating to the consolidated financial statements of Huntsman Packaging Corporation and Subsidiaries and of our report dated September 19, 1997 relating to the combined financial statements of CT Film and Rexene Corporation Limited, appearing in the Prospectus, which is a part of this Registration Statement, and to the reference to us under the heading "Experts" in such Prospectus. Our audits of the financial statements referred to in our aforementioned report also included the consolidated supplemental schedule II of Huntsman Packaging Corporation for the year ended December 31, 1996. This consolidated financial statement schedule is the responsibility of the Corporation's management. Our responsibility is to express an opinion based on our audit. In our opinion, such financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. /s/ DELOITTE & TOUCHE LLP Salt Lake City, Utah November 11, 1997 EX-25.1 29 FORM T-1 =============================================================================== FORM T-1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) |__| ------------------------- THE BANK OF NEW YORK (Exact name of trustee as specified in its charter) New York 13-5160382 (State of incorporation (I.R.S. employer if not a U.S. national bank) identification no.) 48 Wall Street, New York, N.Y. 10286 (Address of principal executive offices) (Zip code) ------------------------- HUNTSMAN PACKAGING CORPORATION (Exact name of obligor as specified in its charter) Utah 87-0496065 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 500 Huntsman Way Salt Lake City, Utah 84108 (Address of principal executive offices) (Zip code) ------------------------- HUNTSMAN DEERFIELD FILMS CORPORATION (Exact name of obligor as specified in its charter) Massachusetts 04-2162223 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 500 Huntsman Way Salt Lake City, Utah 84108 (Address of principal executive offices) (Zip code) ------------------------- HUNTSMAN UNITED FILMS CORPORATION (Exact name of obligor as specified in its charter) Georgia 58-1783013 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 500 Huntsman Way Salt Lake City, Utah 84108 (Address of principal executive offices) (Zip code) --------------------- HUNTSMAN PREPARATORY, INC. (Exact name of obligor as specified in its charter) Utah 87-0563872 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 500 Huntsman Way Salt Lake City, Utah 84108 (Address of principal executive offices) (Zip code) ------------------------- HUNTSMAN CONTAINER CORPORATION INTERNATIONAL (Exact name of obligor as specified in its charter) Utah 87-0473075 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 500 Huntsman Way Salt Lake City, Utah 84108 (Address of principal executive offices) (Zip code) ------------------------- HUNTSMAN PACKAGING GEORGIA, INC. (Exact name of obligor as specified in its charter) Georgia 87-0558537 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 500 Huntsman Way Salt Lake City, Utah 84108 (Address of principal executive offices) (Zip code) ------------------------- -2- HUNTSMAN FILM PRODUCTS OF MEXICO, INC. (Exact name of obligor as specified in its charter) Utah 87-0500805 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 500 Huntsman Way Salt Lake City, Utah 84108 (Address of principal executive offices) (Zip code) ------------------------- HUNTSMAN BULK PACKAGING CORPORATION (Exact name of obligor as specified in its charter) Utah 87-0529726 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 500 Huntsman Way Salt Lake City, Utah 84108 (Address of principal executive offices) (Zip code) ------------------------- 9 1/8% Senior Subordinated Notes due 2007 (Title of the indenture securities) =============================================================================== -3- 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE: (A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT. - ------------------------------------------------------------------------------- Name Address - ------------------------------------------------------------------------------- Superintendent of Banks of the State of 2 Rector Street, New York, New York N.Y. 10006, and Albany, N.Y. 12203 Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045 Federal Deposit Insurance Corporation Washington, D.C. 20429 New York Clearing House Association New York, New York 10005 (B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. Yes. 2. AFFILIATIONS WITH OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. None. 16. LIST OF EXHIBITS. EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R. 229.10(D). 1. A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.) 4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019.) 6. The consent of the Trustee required by Section 321(b) of the Act. (Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.) 7. A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or examining authority. -4- SIGNATURE Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of New York, and State of New York, on the 7th day of November, 1997. THE BANK OF NEW YORK By: /s/ Thomas B. Zakrzewski --------------------------------- Name: Thomas B. Zakrzewski Title: Assistant Vice President Exhibit 7 Consolidated Report of Condition of THE BANK OF NEW YORK of 48 Wall Street, New York, N.Y. 10286 And Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business June 30, 1997, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act. Dollar Amounts ASSETS in Thousands Cash and balances due from depos- itory institutions: Noninterest-bearing balances and currency and coin .................. $ 7,769,502 Interest-bearing balances .......... 1,472,524 Securities: Held-to-maturity securities ........ 1,080,234 Available-for-sale securities ...... 3,046,199 Federal funds sold and Securities pur- chased under agreements to resell...... 3,193,800 Loans and lease financing receivables: Loans and leases, net of unearned income .................35,352,045 LESS: Allowance for loan and lease losses ..............625,042 LESS: Allocated transfer risk reserve........................429 Loans and leases, net of unearned income, allowance, and reserve 34,726,574 Assets held in trading accounts ...... 1,611,096 Premises and fixed assets (including capitalized leases) ................ 676,729 Other real estate owned .............. 22,460 Investments in unconsolidated subsidiaries and associated companies .......................... 209,959 Customers' liability to this bank on acceptances outstanding ............ 1,357,731 Intangible assets .................... 720,883 Other assets ......................... 1,627,267 ----------- Total assets ......................... $57,514,958 =========== LIABILITIES Deposits: In domestic offices ................ $26,875,596 Noninterest-bearing ......11,213,657 Interest-bearing .........15,661,939 In foreign offices, Edge and Agreement subsidiaries, and IBFs ... 16,334,270 Noninterest-bearing .........596,369 Interest-bearing .........15,737,901 Federal funds purchased and Securities sold under agreements to repurchase. 1,583,157 Demand notes issued to the U.S. Treasury ........................... 303,000 Trading liabilities .................. 1,308,173 Other borrowed money: With remaining maturity of one year or less .......................... 2,383,570 With remaining maturity of more than one year through three years.......... 0 With remaining maturity of more than three years ......................... 20,679 Bank's liability on acceptances exe- cuted and outstanding .............. 1,377,244 Subordinated notes and debentures .... 1,018,940 Other liabilities .................... 1,732,792 ----------- Total liabilities .................... 52,937,421 ----------- EQUITY CAPITAL Common stock ........................ 1,135,284 Surplus ............................. 731,319 Undivided profits and capital reserves .......................... 2,721,258 Net unrealized holding gains (losses) on available-for-sale securities ........................ 1,948 Cumulative foreign currency transla- tion adjustments .................. ( 12,272) ------------ Total equity capital ................ 4,577,537 ----------- Total liabilities and equity capital ........................... $57,514,958 =========== I, Robert E. Keilman, Senior Vice President and Comptroller of the above-named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. Robert E. Keilman We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. Thomas A. Renyi | Alan R. Griffith | Directors J. Carter Bacot | -----END PRIVACY-ENHANCED MESSAGE-----