-----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, JF0ZUv9dmbposQgnYNCAvcE63j2pA9cr33xjoPBmWcxNCzN2UQhRC0Y4R4doy39O dakWJeHOJJOV2suZnQ/jdQ== 0000950130-02-004834.txt : 20020703 0000950130-02-004834.hdr.sgml : 20020703 20020703121623 ACCESSION NUMBER: 0000950130-02-004834 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 13 CONFORMED PERIOD OF REPORT: 20011231 FILED AS OF DATE: 20020703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BORDEN CHEMICALS & PLASTICS LIMITED PARTNERSHIP /DE/ CENTRAL INDEX KEY: 0000821202 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS, MATERIALS, SYNTH RESINS & NONVULCAN ELASTOMERS [2821] IRS NUMBER: 311269627 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-09699 FILM NUMBER: 02695963 BUSINESS ADDRESS: STREET 1: HIGHWAY 73 CITY: GEISMAR STATE: LA ZIP: 70734 BUSINESS PHONE: 6142254482 MAIL ADDRESS: STREET 1: PO BOX 427 STREET 2: 180 EAST BROAD STREET 25TH FLOOR CITY: GERSMAR STATE: LA ZIP: 70734 FORMER COMPANY: FORMER CONFORMED NAME: BORDEN CHEMICALS & PLASTICS LIMITED PARTNERSHIP DATE OF NAME CHANGE: 19920703 10-K 1 d10k.txt FORM 10-K - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended: December 31, 2001 Commission file number: 1-9699 BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP Delaware 31-1269627 - ----------------------------- ------------------------------------ (State of organization) (I.R.S. Employer Identification No.) Highway 73, Geismar, Louisiana 70734 (614)225-4482 - ------------------------------------------ ------------------------------------ (Address of principal executive offices) (Registrant's telephone number)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: Title of each class Name of each exchange on which registered ------------------- ----------------------------------------- NONE SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE -------------------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes _____ No X . --- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by the referenced Part III and this Form 10-K or any amendment to this Form 10-K. [X] -------------------------- Aggregate market value of the Common Units held by non-affiliates of the Registrant on March 28, 2002: $73,350.00 Number of Common Units outstanding as of the close of business on March 28, 2002: 36,750,000. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- The Exhibit Index is located herein at sequential page 36. 1 PART I Item I. Business General Borden Chemicals and Plastics Limited Partnership (the "Company" or "Partnership") is a limited partnership formed in 1987 to acquire, own and operate, through its subsidiary operating partnership, Borden Chemicals and Plastics Operating Partnership (the "Operating Partnership"), polyvinyl chloride resins ("PVC"), methanol and other chemical plants located in Geismar, Louisiana, and Illiopolis, Illinois, that were previously owned and operated by Borden, Inc., now known as Borden Chemical, Inc. ("Borden"). In 1995, the Operating Partnership purchased a PVC resin manufacturing facility, from Occidental Chemical Corporation ("OxyChem"), located in Addis, Louisiana ("Addis Facility"). Historically, the Operating Partnership's principal product groups were PVC Polymers Products, which consist of PVC resins and feedstocks (such as vinyl chloride monomer ("VCM") and acetylene), Methanol and derivatives, which consist of methanol and formaldehyde, and Nitrogen Products, which consist of ammonia and urea. The Operating Partnership exited the Methanol and Derivatives and Nitrogen Products businesses in 2000. Due to unprecedented high natural gas costs, poor PVC market conditions and a severe economic downturn, the Operating Partnership and its subsidiary, BCP Finance Corporation, (collectively, the "Debtors") filed voluntary petitions for protection under Chapter 11 of the Bankruptcy Code, 11 U.S.C. Sections 101 - 1330 (the "Bankruptcy Code"), in the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court") under case number 01-1268(RRM) and 01-1269 (RRM) (together "the Operating Partnership Chapter 11") on April 3, 2001. With the approval of the Bankruptcy Court, the Operating Partnership sold the Addis Facility on February 28, 2002, to Shintech Louisiana, LLC for $38 million plus the value of certain inventory and accounts receivable located at the Addis facility. The Operating Partnership announced on March 8, 2002, that it had executed an asset purchase agreement for the plant at Illiopolis, Illinois, with Formosa Plastics Corporation, Delaware. The Bankruptcy Court approved the Illiopolis transaction on March 27, 2002, and it closed on April 17, 2002, realizing net proceeds of approximately $23 million. The Operating Partnership commenced the idling of the Geismar operations in March 2002, scheduled for completion in June 2002, and continues to pursue the disposition of the assets comprising the Geismar complex. On March 22, 2002, BCP Management, Inc, the General Partner of the Company and the Operating Partnership ("BCPM" or the "General Partner"), filed a voluntary petition for protection under Chapter 11 of the Bankruptcy Code, in the Bankruptcy Court under case number 02-10875 (the "General Partner Bankruptcy"). For a discussion of developments in the bankruptcy proceedings and the anticipated impact (including anticipated tax consequences) of the Operating Partnership Chapter 11 and the General Partner Chapter 11 on the Company's Unitholders, see "Operating Partnership Chapter 11", "General Partner Chapter 11" and "Impact of Bankruptcy Proceedings on Unitholders". As a result of the Operating Partnership Chapter 11, the Company is not reporting the Operating Partnership's financial results on a consolidated basis for 2001. The Company does not have any operations or engage in any revenue producing activities independent of the Operating Partnership. Therefore, a discussion of the Company's business is not meaningful, and the following discussion describes the business of the Operating Partnership. During 2001 the principal production activities at Geismar, Louisiana, Illiopolis, Illinois, and the Addis, Louisiana facility produced products for the following applications: Products Location Principal Applications - -------------------------------------------------------------------------------- PVC POLYMERS PRODUCTS PVC Geismar Water distribution pipe, residential 2 Illiopolis siding, wallcoverings, vinyl Addis flooring VCM Geismar Raw material for the Company's PVC operations PVC Polymers Products During 2001 the Operating Partnership operated only in the PVC Polymers Products business segment, which consists of PVC resins, ethylene-based vinyl chloride monomer (for internal consumption), and acetylene and acetylene-based vinyl chloride monomer which were idled throughout the year. See the Consolidated Financial Statement of the Operating Partnership at page 59 of this Form 10-K for financial information regarding this segment. PVC Resins - PVC is the second largest volume plastic material produced in the world. During 2001 the Operating Partnership produced general purpose and specialty purpose PVC resins at three plants - one located at the Geismar complex, one at Illiopolis and another at Addis - with stated annual capacities of 550 million, 400 million and 600 million pounds of PVC resins, respectively. The PVC resin plants operated at approximately 77% and 78% of combined capacity in 2001 and 2000, respectively. Although there have been year-to-year fluctuations in product mix, the Operating Partnership has over time concentrated on the higher margin grades of PVC resin and reduced its dependence on commodity pipe grade PVC resins, which have historically experienced lower margins. Based on data from the Society of the Plastics Industry, the Operating Partnership believes its production accounted for approximately 8% of total industry domestic capacity of PVC resins in 2001. The PVC industry in both the United States and Europe has entered a consolidation and rationalization phase, evidenced by the mergers of OxyChem and Geon, Georgia Gulf and Condea Vista, BASF and Solvay, EVA and BSU Schkopag and Shin-Etso, Shell and Rovin in recent years. Production Process. PVC resins are produced through the polymerization of VCM, an ethylene and chlorine intermediate material internally produced by the Company. The Operating Partnership's production of certain specialty PVC resin grades also involves the consumption of purchased vinyl acetate monomer. The Operating Partnership purchases vinyl acetate monomer from unrelated third parties. During 2001 all the VCM used by the Geismar PVC resin plant and most of the VCM used by the Illiopolis PVC resin plants were obtained from the Operating Partnership's two Geismar VCM plants discussed below. Substantially all of the production of these VCM plants was consumed by the PVC resins plants at Geismar and Illiopolis. The Geismar PVC resin plants obtained VCM from the Operating Partnership's adjacent VCM plants in the Geismar complex and the Illiopolis PVC resin plant obtains VCM from the Company's Geismar plant via rail. The VCM requirement at the Addis Facility was supplied by OxyChem by pipeline via exchange, or by rail car from OxyChem's plant in Deer Park, Texas or from OxyChem's joint venture facility ("OxyMar") in Corpus Christi, Texas. VCM is principally used in the production of PVC resins. During 2001 the Operating Partnership had the capability of producing VCM by two processes: an ethylene process and an acetylene process. The finished product of both of these processes is essentially identical but the production costs vary depending on the cost of raw materials and energy. The ability to produce VCM by either process allows the flexibility of favoring the process that results in the lower cost at any particular time. Ethylene-Based VCM. Ethylene-based VCM ("VCM-E") was produced during 2001 at a 650 million pound stated annual capacity plant at the Geismar complex. The plant operated at approximately 77% and 86% of capacity during 2001 and 2000, respectively. All of the production of the VCM-E plant was consumed by the PVC resin plants at the Geismar complex and Illiopolis. 3 Ethylene and chlorine constitute the principal feedstocks used in the production of VCM-E. Both feedstocks are purchased by the Geismar plant from outside sources. Acetylene-Based VCM. Acetylene-based VCM ("VCM-A") was not produced by the Operating Partnership during 2001. Its 320 million pound stated annual capacity plant at the Geismar complex was idled in December 2000 due to the high cost of raw material feedstock. During 2000, the plant operated at approximately 72% of capacity. All of the VCM-A produced at the Geismar complex during 2000 was consumed by the PVC resin plants at Geismar and Illiopolis. Acetylene. Acetylene is primarily used as a feedstock for VCM-A and for other chemical intermediates. Until January 2000, the Operating Partnership had a 50% interest in a 200 million pound stated annual capacity acetylene plant at the Geismar complex, with the remaining 50% interest held by BASF Corporation ("BASF"). In January 2000, the Operating Partnership purchased BASF's interest in the acetylene plant. The principal feedstocks used in the production of acetylene are natural gas and oxygen. Oxygen is obtained from certain air separation units and related air compression systems, which are jointly owned by the Operating Partnership and Air Liquide America Corporation. For a description of the arrangements for the purchase of natural gas, see "Raw Materials". Due to the dramatic increase in the cost of natural gas during 2000, the acetylene and VCM-A production processes became uneconomical to operate. In December 2000, these units were idled. The principal competitors in the sale of PVC include Shintech, Formosa Plastics, Oxyvinyl, L.P. and Georgia Gulf. Discontinued Operations The Operating Partnership sold its formaldehyde and certain other assets for $48.5 million to Borden on July 28, 2000, with the Operating Partnership receiving $38.8 million in cash and an interest-bearing note for $9.7 million which was paid in January 2001. The nitrogen products facilities were closed in July 2000, and the methanol production ceased in December 2000. Certain Purchase Agreements and Processing Agreements with Borden covering PVC resins, methanol, ammonia, urea, formaldehyde and urea-formaldehyde concentrate were also terminated in 2000 as part of the sale transaction. Raw Materials Historically, the Operating Partnership purchased natural gas for feedstock and as an energy source. Natural gas can be supplied by pipeline to the Geismar complex by six major natural gas pipelines. In 2000, the cost of purchasing natural gas increased to unprecedented levels, with natural gas increasing from an average of $2.25 per million BTU in 1999 to over $3.73 per million BTU, with monthly prices exceeding $6 per million BTU in December and $10 per million BTU in January 2001. As a consequence, the Operating Partnership idled or shutdown its production units that consume natural gas as a feedstock and during 2001 consumed gas only as an energy source. During 2001 the Operating Partnership purchased other raw materials for its operations, principally ethylene and chlorine. Ethylene was supplied during 2001 by pipeline to the Geismar facility by several suppliers. Chlorine was supplied by rail car and pipeline to the Geismar complex by various suppliers. The major raw material for the Illiopolis PVC plant, VCM, was supplied by rail car from the Geismar facility. In addition, in connection with the production of certain specialty grades of PVC resins, the Operating Partnership purchased certain quantities of vinyl acetate monomer. See "PVC Polymers Products-Production Process". The Operating Partnership purchased its VCM requirements for the Addis Facility under a VCM supply agreement entered into with Oxy Vinyl, LP. 4 Despite management's continuing efforts to reduce the exposure to high natural gas prices, depressed resin prices and demand converged with sharply increased energy costs in the first quarter of 2001 to create a critical debt and liquidity situation. During late 2000 and throughout 2001, management took significant steps to improve liquidity, including idling unprofitable or high cost assets and production facilities, wage freezes, reductions-in-force and entering into the credit facilities as described in Note 2 to the Limited Partnership consolidated financial statements. Because raw materials have accounted for a high percentage of the total production costs, the inability to pass on increases in costs of these raw material feedstocks had a significant impact on operating results during 2001 due to the then existing market conditions. Insurance The Operating Partnership maintains property, business interruption and casualty insurance which it believes is in accordance with customary industry practices, but it is not fully insured against all potential hazards incident to its business. It also maintains pollution legal liability insurance coverage. However, because of the complex nature of environmental insurance coverage and the rapidly developing case law concerning such coverage, no assurance can be given concerning the extent to which its pollution legal liability insurance, or any other insurance that the Operating Partnership has, may cover environmental claims against it. Insurance, however, generally does not cover penalties or the costs of obtaining permits. See "Item 3 - Legal Proceedings". Under its risk retention program, the Operating Partnership maintains property damage and liability insurance deductibles of $2.5 million, $1.0 million and $1.0 million per occurrence for property and related damages at the Geismar, Illiopolis and Addis facilities, respectively, and deductibles ranging from $0.1 million to $2.0 million per event for liability insurance. In addition the Operating Partnership is included in Borden's master excess insurance program. Marketing and Sales The 2001 marketing and sales activities were conducted by PVC sales and marketing department comprised of 16 people, including a Vice President of Sales and Marketing, a Director of Sales, two Product Managers, seven Regional Sales personnel, and three Service managers. During the year, the group was relocated from Baton Rouge, LA to the Geismar, LA manufacturing facility as a means to reduce the cost of marketing activities. Additional professional sales personnel were geographically positioned throughout the United States. During 2001 a majority of the sales were made in the United States, and a small portion in Canada. The Operating Partnership has not historically participated in the export market, but retained access to these markets through third party specialists. Utilities During 2001 the Geismar complex operated three high thermal efficiency co-generation units providing the site with low cost electricity and steam. Each unit is composed of a natural gas burning turbine/generator unit combined with a steam producing heat recovery system (i.e., the "co-generation" of electricity and steam). The co-generation units are designed to provide a significant portion of the electricity and steam, and a portion of the reformer combustion air requirements of the Geismar complex at full production levels. These units have electrical outputs of 20, 35 and 35 megawatts, respectively. The electricity is supplied by the units through a substation owned by Monochem, Inc. ("Monochem"), a corporation of which the Operating Partnership owns 50% of the capital stock. The Operating Partnership's interest in Monochem is subject to certain rights of first refusal and limitations on transfer. Water requirements at the Geismar complex are obtained through Monochem from the Mississippi River. At Illiopolis, a municipal water company supplies the facility with its water requirements. Because the Illiopolis facility represents a significant 5 portion of the demand for water supply from the municipal water company, the Operating Partnership manages the operations of the water company on a cost-reimbursed basis. The Addis Facility obtains its electricity and water requirements from local public utilities. Natural gas can be supplied by pipeline from various suppliers. Competition The business in which the Operating Partnership operates was highly competitive in 2001. The Operating Partnership competed with major chemical manufacturers and diversified companies, a number of which have revenues and capital resources exceeding those of the Operating Partnership. Because of the commodity nature of its products, the Operating Partnership is not in a position to protect its position by product differentiation and is not able to pass on cost increases to its customers to the extent its competitors do not pass on such costs. In addition to price, other significant factors in the marketing of the products are delivery, quality and, in the case of PVC resins, technical service. The Operating Partnership's competitive position in 2001 was also adversely affected by the pending Operating Partnership Chapter 11. Security of supply became a major concern for the Operating Partnership's customers given an anticipated improvement in the PVC market. Trademarks The Operating Partnership entered into a Use of Name and Trademark License Agreement ("Use of Name and Trademark License Agreement") with Borden pursuant to which it is permitted to use in its name the Borden name and logo. The Use of Name and Trademark License Agreement and the right to use the Borden name and logo terminate in the event that BCPM ceases to be the General Partner. Management Since April 2001, BCPM as General Partner of the Operating Partnership has managed the activities of the Operating Partnership, subject to orders of the Bankruptcy Court in the Operating Partnership Chapter 11. The General Partner's activities are limited to management of the Company and the Operating Partnership. Since March 2002, management of the Company by BCPM as General Partner has been subject to orders of the Bankruptcy Court in the General Partner Chapter 11. Unitholders do not participate in the management or control of the Company or the Operating Partnership. Subject to the General Partner Chapter 11, the General Partner is liable, as general partner, for all the debts of the Operating Partnership (to the extent not paid by the Operating Partnership) other than any debt (such as the Operating Partnership's outstanding 9.5% Notes due 2005 in the aggregate principal amount of $200 million) incurred by the Operating Partnership that is made specifically nonrecourse to the General Partner. BCPM has a seven member Board of Directors consisting of three outside directors, three members who are officers of BCI and the President and CEO of BCPM and the General Partner. Neither the Company nor the Operating Partnership directly employs any of the persons responsible for managing or operating the business of the Operating Partnership, but as authorized by the bankruptcy court, relies on the officers and employees of the General Partner, and to a limited extent Borden who provide support to or perform services for the General Partner and reimburses the General Partner or Borden (on its own or on the General Partner's behalf) for their services. Environmental and Safety Regulations General. The Operating Partnership's operations are subject to federal, state and local environmental, health and safety laws and regulations, including laws relating to air quality, hazardous and solid wastes, chemical management and water quality. The Operating Partnership has expended substantial resources, both financial and managerial, to comply with environmental regulations and permitting requirements. Although the Operating Partnership believes that its operations are in material compliance with these requirements, there can be no assurance that significant costs, civil and criminal penalties, and liabilities will not be incurred. The Operating Partnership holds various environmental permits for operations at each of its plants. 6 In the event a governmental agency were to deny a permit application or permit renewal, or revoke or substantially modify an existing permit, such agency action could have a material adverse effect on the Operating Partnership's ability to continue the affected plant operations. During 2001 the Operating Partnership maintained an environmental and industrial safety and health compliance program and conducted internal regulatory audits at its Geismar, Illiopolis and Addis plants. The plants have had a history of involvement in regulatory, enforcement and variance proceedings in connection with safety, health and environmental matters. Risks of substantial costs and liabilities are inherent in plant operations and products found at and produced by the plants, as they are with other enterprises engaged in the chemical business, and there can be no assurance that significant costs and liabilities will not be incurred. Air Quality. The Geismar, Illiopolis and Addis plants emit air contaminants and are subject to the requirements of the Clean Air Act and comparable state statutes. Many of the existing requirements under these laws are embodied in permits issued to the plants by state environmental agencies. The Operating Partnership believes that the Geismar, Illiopolis and Addis plants generally are in material compliance with these requirements. The 1990 Amendments to the Clean Air Act (the "1990 Clean Air Act Amendments") require stringent controls on volatile organic compounds ("VOC") emissions in ozone non-attainment areas and also require, subject to certain exceptions, the control of nitrogen oxide ("NOx") emissions in such areas. The Geismar and Addis plants are located in "nonattainment areas" for ozone under the 1990 Clean Air Act Amendments. In March 1998, the United States Department of Justice ("DOJ") and the Operating Partnership signed a consent decree (the "Consent Decree") to resolve an enforcement proceeding brought against the Operating Partnership and BCPM, for alleged violations of the Clean Air Act and other environmental statutes at the Geismar facility. In June 1998, the U.S. District Court for the Middle District of Louisiana entered the Consent Decree which settled and resolved the enforcement proceeding. See "Item 3 - Legal Proceedings". OSHA and Community Right to Know. The Geismar, Illiopolis and Addis plants are subject to the requirements of the federal Occupational Safety and Health Act ("OSHA") and comparable state statutes. The Operating Partnership believes that the Geismar, Illiopolis, and Addis plants were in material compliance during 2001 with OSHA requirements, including general industry standards, vinyl chloride exposure requirements, recordkeeping requirements and chemical process safety standards. The OSHA hazard communication standard and the EPA community right-to-know regulations under the Emergency Planning and Community Right-to-Know Act ("EPCRA") require the Operating Partnership to organize information about the hazardous materials in the plants and to communicate that information to employees and certain governmental authorities. The Operating Partnership has a hazard communication program in place and believes that it generally was in material compliance with EPCRA during 2001. Solid and Hazardous Waste. The Geismar, Illiopolis and Addis plants generate hazardous and nonhazardous solid waste and are subject to the requirements of the Resource Conservation and Recovery Act ("RCRA") and comparable state statutes. The Operating Partnership believes that the Geismar, Illiopolis and Addis plants were in material compliance with RCRA during 2001. However, see "Item 3 - Legal Proceedings". In accordance with the Consent Decree, the Operating Partnership has applied for a RCRA permit for its valorization of chlorinated residuals ("VCR") unit. In addition, the settlement provides guidelines for future investigation and possible remediation of groundwater contamination. See "Item 3 - Legal Proceedings". Superfund. The Comprehensive Environmental Response Compensation and Liability Act ("CERCLA"), also known as the "Superfund" law, imposes liability, without regard to fault or the legality of the original conduct, on classes of persons that are considered to have contributed to the release of a "hazardous substance" into the 7 environment. These persons include the owner or operator of the disposal site or sites where the release occurred and the companies that disposed, or arranged for the disposal of, the hazardous substances found at the site. Persons who are or were responsible for releases of hazardous substances under CERCLA may be subject to joint and several liability for the costs of cleaning up the hazardous substances and for damages to natural resources. In the ordinary course of the Operating Partnership's operations, substances are generated that fall within the CERCLA definition of "hazardous substance". If such wastes have been disposed of at sites which are targeted for cleanup by federal or state regulatory authorities, the Operating Partnership may be among those responsible under CERCLA or analogous state laws for all or part of the costs of such cleanup. The Geismar, Illiopolis and Addis plants have in the past generated hazardous substances and dispose of such hazardous substances at various offsite disposal sites. The Consent Decree signed by DOJ and the Operating Partnership in March 1998 resolved an enforcement proceeding against the Operating Partnership and BCPM for alleged violation of CERCLA's reporting and other environmental requirements at the Geismar facility. See "Item 3 - Legal Proceedings". Toxic Substances Control Act. The Operating Partnership is subject to the Toxic Substances Control Act ("TSCA"), which regulates the development, manufacture, processing, distribution, importation, use, and disposal of thousands of chemicals. Among other requirements, TSCA provides that a chemical cannot be manufactured, processed, imported or distributed in the United States until it has been included on the TSCA Chemical Inventory. Other important TSCA requirements govern recordkeeping and reporting. For example, TSCA requires a company to maintain records of allegations of significant adverse reactions to health or the environment caused by chemicals or chemical processes. The Operating Partnership believes that it generally was in material compliance with TSCA during 2001. Violations of TSCA can result in significant penalties. Water Quality. The Geismar, Illiopolis and Addis plants maintain wastewater discharge permits for their facilities pursuant to the Federal Water Pollution Control Act of 1972 and comparable state laws. Where required, the Operating Partnership also applied for and received permits to discharge stormwater. The Operating Partnership believes that the Geismar, Illiopolis and Addis plants were in material compliance with the Federal Water Pollution Act of 1972 and comparable state laws during 2001. In cases where there are excursions from the permit requirements, the Geismar and Illiopolis plants are taking action to achieve compliance, are working in cooperation with the appropriate agency to achieve compliance or are in good faith pursuing their procedural rights in the permitting process. The EPA has issued effluent regulations specifying amounts of pollutants allowable in direct discharges and in discharges to publicly owned treatment works. The Geismar, Illiopolis and Addis plants manufacture or use as raw materials a number of chemicals subject to additional regulation. Areas of groundwater contamination have been identified at the Operating Partnership's plants. It is the Operating Partnership's policy, where possible and appropriate, to address and resolve groundwater contamination. The Operating Partnership believes that environmental indemnities available to it would cover all, or a substantial portion of, known groundwater contamination. The Operating Partnership believes that the Geismar, Illiopolis and Addis plants generally were in material compliance with all laws with respect to known groundwater contamination during 2001. At the Geismar complex, Borden and the Operating Partnership have complied with the Settlement Agreement with the state of Louisiana, and the Operating Partnership complied with the Consent Decree with DOJ for groundwater remediation during 2001. See "Item 3 - Legal Proceedings". Environmental Capital Expenditures. Although it is the Company's policy to comply with all applicable environmental, health and safety laws and regulations, all of the implementing regulations have not been finalized. Even where regulations or standards have been adopted, they are subject to varying and conflicting interpretations and implementation. In many cases, compliance with environmental regulations or standards can only be achieved by capital expenditures, some of which may be significant. 8 Capital expenditures for environmental control facilities were approximately $0.6 million in 2001 and $3.1 million in 2000. Borden Environmental Indemnity Under the Environmental Indemnity Agreement dated as of November 30, 1987 (the "EIA"), Borden agreed, subject to certain conditions, to indemnify the Operating Partnership in respect of environmental liabilities arising from events or violations which occurred or existed prior to November 30, 1987, the date of the initial sale by Borden of the Geismar and Illiopolis plants to the Operating Partnership (the "Transfer Date"). See "Item 3 - Legal Proceedings". Addis Environmental Indemnity OxyChem has indemnified the Operating Partnership for environmental liabilities arising from the manufacture, generation, treatment, storage, handling, processing, disposal, discharge, loss, leak, escape or spillage of any product, waste or substance generated or handled by OxyChem prior to the closing of the acquisition of the Addis facility from OxyChem in 1995, any condition resulting therefrom relating to acts, omissions or operations of OxyChem prior to such date, and any duty, obligation or responsibility imposed on OxyChem prior to such date under environmental laws in effect prior to such date to address such condition. However, except with regard to claims arising from OxyChem's disposal of waste at sites other than the Addis Facility, OxyChem has no indemnification obligation if the claim for indemnification is the result of a change in applicable law after the closing of the Acquisition. OxyChem's obligation to indemnify the Operating Partnership for environmental liabilities is subject to certain limitations. There can be no assurance that the indemnification provided by OxyChem will be sufficient to cover all environmental liabilities existing or arising at the Addis Facility. Product Liability and Regulation As a result of the Operating Partnership's manufacture, distribution and use of different chemicals, it is, and in the future may be, subject to various lawsuits and claims, such as product liability and toxic tort claims, which arise in the ordinary course of business and which seek compensation for physical injury, pain and suffering, costs of medical monitoring, property damage, and other alleged harms. New or different types of claims arising from the Company's various chemical operations may be made in the future. Employees The Partnership does not directly employ any of the persons responsible for managing and operating the Partnership, but instead reimburses BCPM for their services. On December 31, 2001, BCPM employed 466 individuals. Subsequent to year-end, further employee reductions have taken place. Operating Partnership Chapter 11 On April 3, 2001, the Debtors filed voluntary petitions for protection under Chapter 11 of the Bankruptcy Code. The Chapter 11 cases have been procedurally consolidated for administrative purposes only. The Debtors are currently acting as debtors-in-possession pursuant to the Bankruptcy Code. Subsequent to the commencement of the Operating Partnership Chapter 11, the Debtors sought and obtained several orders from the Bankruptcy Court which were intended to stabilize and continue business operations. The most significant of these orders (i) approved an amendment (the "Primary DIP Facility") to the prepetition Year 2000 Revolving Credit Facility (the "Prepetition Credit Facility") providing up to $100 million of debtor-in-possession financing, (ii) permitted continued operation of the consolidated cash management system during the Operating Partnership Chapter 11 in substantially the same manner as it was operated prior to the commencement of the Operating Partnership Chapter 11, (iii) authorized payment of pre-petition wages, vacation pay and employee benefits and reimbursement of employee business expenses, 9 and (iv) authorized payment of pre-petition obligations to certain vendors critical to the Operating Partnership's ability to continue its operations. The Primary DIP Facility, which received final approval of the Bankruptcy Court on July 11, 2001, provided the Operating Partnership with a revolving line of credit in an aggregate amount not to exceed $100 million, subject to borrowing base limitations. During 2001 the Operating Partnership used amounts borrowed under the Primary DIP Facility for its ongoing working capital needs and for certain other purposes of the Operating Partnership as permitted by that facility. The Operating Partnership granted a security interest to the DIP Lenders in substantially all of the Operating Partnership's assets as security for its obligations under the Primary DIP Facility. All obligations under the Primary DIP Facility are afforded "super-priority" administrative expense status in the Operating Partnership Chapter 11. In light of the possibility that the Primary DIP Facility would be insufficient to finance the Operating Partnership's working capital needs during the period required to obtain confirmation of a plan of reorganization for the Debtors, the Operating Partnership approached a number of institutional lenders to assess their interest in extending additional credit to the Debtors. None of these lenders were willing to provide credit or terms acceptable to the Operating Partnership. The Operating Partnership requested its General Partner, BCPM, to provide a loan to it. On October 31, 2001, the Debtors filed an initial motion with the Bankruptcy Court seeking an interim order to obtain additional, secondary postpetition financing (the "Secondary DIP Facility") from BCPM. The terms of the proposed Secondary DIP Facility were negotiated, on the one hand, by management of the Operating Partnership and the Debtors' legal counsel and, on the other hand, by officers of BCPM and BCPM's legal counsel, with the approval of the Independent Committee of the Board of Directors of BCPM which is comprised of three outside directors who are not employees of BCPM or Borden. The negotiations included efforts to obtain the support of the lenders under the Primary DIP Facility and the Official Committee of Unsecured Creditors (the "Creditors Committee") appointed in the Operating Partnership Chapter 11. The Creditors Committee filed an objection to the initial motion on November 6, 2001. Further negotiations between the Operating Partnership and BCPM occurred, and the parties agreed to revisions to the terms of the proposed Secondary DIP Facility. The Debtors sought interim approval of the revised Secondary DIP Facility. Subject to the terms and conditions of the Secondary DIP Facility, BCPM has agreed to makes loans to the Operating Partnership through March 31, 2002, in an aggregate amount not to exceed $10 million for working capital, other general corporate purposes and to make payments on the Primary DIP Facility. The loans are unsecured, bear interest at the Alternate Base Rate specified in the Primary DIP Facility plus 2.75% and mature on March 31, 2002. The Creditors Committee also objected to the revised Secondary DIP Facility. After a hearing, the Bankruptcy Court entered an order on December 20, 2001, granting interim approval to $5 million in loans under the Secondary DIP Facility. On March 22, 2002, BCPM, the General Partner of the Company and the Operating Partnership, filed a voluntary petition under Chapter 11 of the Bankruptcy Code. As of the date of the filing, BCPM had cash of approximately $26 million, a claim of approximately $4 million against the Operating Partnership for repayment of borrowings under the Secondary DIP Facility, and claims of approximately $7.8 million against the Operating Partnership for unreimbursed expenses of the Company and the Operating Partnership paid by BCPM, the payment of which is subject to the approval of the Bankruptcy Court. BCPM also filed a motion in the General Partner Bankruptcy requesting authority to extend the maturity date of the Secondary DIP Facility to April 30, 2002, and approval of the second $5 million of lending authority under the Secondary DIP Facility. The Bankruptcy Court granted the motion on March 27, 2002. Subsequently, BCPM filed a further motion seeking authority to lend the Operating Partnership up to $6 million (with sub-limits on the use of funds to pay ordinary costs of administration and severance) after expiration of the Secondary DIP Facility on April 30. The Bankruptcy Court entered a "bridge order" on April 24, 2002, authorizing such lending until May 23, 2002, at which time the court authorized loans of up to $4.5 million to the Operating Partnership through June 30, 2002. The maturity date has been further 10 extended to July 17, 2002. There can, however, be no assurance that BCPM will be authorized by the Bankruptcy Court to make further loans to the Operating Partnership or that the Operating Partnership will be authorized by the Bankruptcy Court to make further borrowings from BCPM. The Operating Partnership has explored various strategic alternatives, including possible mergers or joint ventures or a sale or sales of substantially all of its assets. This strategy has been announced by the Company and the Debtors to the public, creditors and the Bankruptcy Court in various public filings, press releases and pleadings. Prior to the filing of the Operating Partnership Chapter 11, the Operating Partnership had retained Taylor Strategic Divestitures Corporation ("Taylor") to provide investment-banking services in connection with its attempts to complete an asset sale or other transaction. On September 28, 2001, the Bankruptcy Court entered an order approving the Debtors' retention of Taylor and a fee structure for its services. Throughout the Operating Partnership Chapter 11, Taylor has worked with the Debtors to identify and contact potential candidates for asset purchases or other transactions. Beginning in June 2001, certain potential purchasers submitted non-binding expressions of interest for certain of the Debtors' assets. On August 24, 2001, the Debtors filed a motion with the Bankruptcy Court for an order approving bidding procedures for the sale of substantially all of the Debtors' assets. An order approving bidding procedures was entered by the Bankruptcy Court on October 12, 2001. The procedures include a five-stage process for marketing assets, negotiating with potential purchasers, conducting an auction if needed, and obtaining court approval of sales of principal assets. Following due diligence by several candidates, the number and amount of the bids declined. Several candidates cited the events of September 11, 2001 and related events for withdrawing from the bidding process, while others offered business reasons for declining to bid. The Operating Partnership has, however, continued to solicit bids and has conducted discussions with a number of candidates. On December 3, 2001, the Debtors filed a motion with the Bankruptcy Court seeking approval of an asset purchase agreement with Shintech Louisiana, LLC ("Shintech") regarding the sale of the assets and operations of the Addis plant. Shintech agreed to pay: (i) $38 million for the Addis plant, (ii) the value of the Addis inventory and accounts receivable, and (iii) the cost of severance benefits for certain Addis employees. The sale excludes certain items such as cash, intercompany accounts, claims against third parties and equity interests in certain entities. The sale was approved by the Bankruptcy Court on December 20, 2001, and closed on February 28, 2002. The Operating Partnership announced on March 8, 2002, that it had executed an asset purchase agreement for the plant at Illiopolis, Illinois, with Formosa Plastics Corporation, Delaware, for the plant and working capital, subject to adjustments. The Bankruptcy Court approved the Illiopolis transaction on March 27, 2002, and it closed on April 17, 2002, realizing net proceeds of approximately $23 million. The Operating Partnership continues to explore possible dispositions of the Geismar plant, but there is no assurance that a sale of this plant will be completed. The Operating Partnership began idling the Geismar plant in March, 2002, and the idlement is scheduled for completion in June 2002. On December 12, 2001, the Creditors Committee filed a motion seeking an order requiring the Debtors to abandon the assets comprising the Geismar plant. The Debtors objected to the motion. The Bankruptcy Court held an initial hearing on this motion on December 20, 2001, and the motion was subsequently withdrawn by the Creditors Committee. On April 16, 2002, the Creditors Committee filed a motion to convert the Operating Partnership Chapter 11 to a case under Chapter 7 of the Bankruptcy Code. The Bankruptcy Court denied the motion at a hearing on May 2, 2002 and management continues to oversee liquidation of the remaining assets. General Partner Chapter 11 11 On March 22, 2002, BCPM, the General Partner of the Company and the Operating Partnership, filed a voluntary petition under Chapter 11 of the Bankruptcy Code. As of the date of the filing, BCPM had cash of approximately $26 million, a claim of approximately $4 million against the Operating Partnership for repayment of borrowings under the Secondary DIP Facility, and claims of approximately $7.8 million against the Operating Partnership for unreimbursed expenses of the Company and the Operating Partnership paid by BCPM, the payment of which is subject to the approval of the Bankruptcy Court. The Operating Partnership has subsequently repaid BCPM the $4 million of borrowings under the Secondary DIP Facility. Impact of Bankruptcy Proceedings on Unitholders Pursuant to its Amended and Restated Agreement of Limited Partnership, the Company is required to distribute 100% of its Available Cash as of the end of each quarter on or about 45 days after the end of such quarter to Unitholders of record as of the applicable record date and to the General Partner. "Available Cash" means generally, with respect to any quarter, the sum of all cash receipts of the Company plus net reductions to reserves established in prior quarters, less cash disbursements and net additions to reserves in such quarter. The Operating Partnership is the sole source of Available Cash for the Company. Since 1998, adverse business conditions, and during 2001 the Operating Partnership Chapter 11, have considerably reduced revenues of the Operating Partnership and caused the Operating Partnership and, in turn, the Company to have net losses. No cash distributions to Unitholders have been declared since the fourth quarter of 1997. In connection with the announcement of the filing of the Operating Partnership Chapter 11 in April, 2001, the Company issued a press release stating that it was unlikely that the publicly traded units of the Company would have any value following resolution of the Operating Partnership Chapter 11 process or that Unitholders would receive any distribution as a result of any asset sales or plan of reorganization. That outlook has not improved. As of the date of this report, sales of the Operating Partnership's assets are not expected to generate enough cash to make a distribution to Unitholders or to satisfy all of the Operating Partnership's debts. For federal income tax purposes, Unitholders take into account their allocable share of income, gains, losses, deductions and credits of the Operating Partnership (which flow to them through the Company), even if they receive no cash distribution. Sales of the Operating Partnership's assets may, and discharge of indebtedness income resulting from the anticipated nonpayment of certain of the Operating Partnership's debts will, result in the allocation of ordinary income and/or capital gain to Unitholders in 2002 or later years without receipt of a cash distribution from which to pay any tax liability. Due to income characterization differences, timing considerations and other potential factors, a Unitholder's tax liability attributable to such income and/or gain may exceed, and not be offset by, any tax benefits resulting from any losses attributable to the Unitholder's allocable share of operating results of the Operating Partnership or the Unitholder's subsequent disposition or write-off of the Company's units. The actual tax impact to a Unitholder is dependent on the Unitholder's overall tax circumstance. Unitholders should consult with their personal tax advisors regarding the federal, state, local and/or foreign tax consequences of purchasing, holding or disposing of units. Under the Company's Amended and Restated Agreement of Limited Partnership, the Company is to dissolve and wind up its affairs upon, among other events, the bankruptcy of the General Partner or the sale of all or substantially all of the assets and properties of the Operating Partnership. It is anticipated that the Company will be dissolved and terminated as a Delaware Limited Partnership in 2002 or thereafter. As explained above, no liquidating distribution will be made to Unitholders upon the dissolution and termination of the Company. Forward-Looking Statements Certain statements in this Form 10-K, in particular, certain statements under "Item 1. Business", "Item 3. Legal proceedings" and "Item 7. Management's Discussion and 12 Analysis of Financial Condition and Results of Operation", are forward-looking. These can be identified by the use of forward-looking words or phrases such as "believe", "expect", "anticipate", "should", "plan", "estimate", "intend" and "potential" among others. The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for such forward-looking statements. While these forward-looking statements are based on the Partnership's reasonable current expectations, a variety of risks, uncertainties and other factors, including many which are outside the control of the Operating Partnership and the General Partner, could cause the actual results of the Operating Partnership and, in turn, the Company to differ materially from the anticipated results or expectations expressed or implied in such forward-looking statements. The risks, uncertainties and other factors that may affect the operations, performance, development and results of the Operating Partnership include the Operating Partnership Chapter 11, the General Partner Bankruptcy, the sale of the Operating Partnership's assets in such bankruptcy proceeding, the idling of the Geismar plant, changes in the demand or pricing of the Operating Partnership's commodity products, changes in industry production capacities, changes in the supply of and costs of natural gas and other significant raw materials, loss of business from major customers, continuing availability of post-petition financing, negative market and credit impact from the Operating Partnership Chapter 11, unanticipated expenses, substantial changes in the financial markets, labor unrest, foreign competition, major equipment failure, unanticipated results in pending legal proceedings, changes in applicable environmental, health and safety laws and regulations and other factors. Item 2. Properties The following is a description of properties of the Operating Partnership as of December 31, 2001. Construction of the Geismar complex began over thirty years ago. Acetylene, methanol and VCM-A plants were completed in the early 1960s and ammonia and urea plants were added during the period 1965 to 1967. A VCM-E plant and a formaldehyde plant were added in the mid 1970s, a second formaldehyde plant was brought on stream in 1986, and a third formaldehyde plant was brought on stream in 1991. In 1983 Borden completed construction of a PVC resin plant at the Geismar complex. During the early 1980s, the methanol, ammonia, and urea plants were modernized, which reduced energy consumption and expanded capacity. The urea plant was further modified to produce granular rather than prill product in 1993. In 2000, the three formaldehyde plants were sold to BCI, the acetylene and VCM-A plants were idled, and the methanol, ammonia and urea plants were shut-down. The PVC resin facility at Illiopolis became operational in 1962, and was significantly upgraded in the late 1980s. The Addis Facility began operations in 1979. The Geismar complex is located on approximately 490 acres in Ascension Parish, Louisiana, adjacent to the Mississippi River between Baton Rouge and New Orleans. The Operating Partnership began idling the operations at the Geismar complex in March 2002 and continues to explore possible dispositions of the assets comprising the Geismar complex. The Illiopolis PVC resin facility is located on approximately 45 acres in central Illinois between Springfield and Decatur. The Operating Partnership announced on March 8, 2002, that it had executed an asset purchase agreement for the Illiopolis plant. The sale of the Illiopolis facility was completed April 17, 2002. The Addis Facility is located on approximately 40 acres of a 220 acre site adjacent to the Mississippi River, approximately 20 miles from the Geismar complex. The Addis Facility was sold on February 28, 2002. The following table sets forth the approximate annual capacity of each of the principal manufacturing plants at the Geismar complex and the PVC plants at Illiopolis and Addis, all of which were owned by the Operating Partnership at December 31, 2001: Annual Stated Capacity Plants (stated in millions) - ------ ---------------------- Geismar, LA: PVC Resins ....................... 550 lbs. Acetylene-based VCM .............. 320 lbs. 13 Ethylene-based VCM ...................................... 650 lbs. Acetylene ............................................... 200 lbs. Illiopolis, IL: PVC Resins .............................................. 400 lbs. Addis, LA: PVC Resins .............................................. 600 lbs. Item 3. Legal Proceedings The following is a description of legal proceedings involving the Operating Partnership and BCPM. Federal Environmental Enforcement Proceeding On March 11, 1998, the Operating Partnership and the DOJ signed a Consent Decree to resolve the enforcement action brought by the DOJ against the Operating Partnership in October 1994. In June 1998, the U.S. District Court for the Middle District of Louisiana entered the Consent Decree, which settled and resolved the enforcement proceeding. The Consent Decree provided for a specific and detailed program of groundwater and other remediation at the Geismar facility. See "Borden Environmental Indemnity" below. In April 1996 and November 1997, adjoining landowners filed separate tort actions in state court asserting personal injury and property value diminution as a result of releases of hazardous materials from the Geismar complex. The Operating Partnership has reached a tentative settlement with the adjoining landowners in the amount of $0.6 million. Litigation has been stayed due to the bankruptcy proceedings. Because of the complex nature of environmental insurance coverage and the rapidly developing case law concerning such coverage, no assurance can be given concerning the extent to which insurance may cover environmental claims against the Operating Partnership. Borden Environmental Indemnity Under the Environmental Indemnity Agreement dated as of November 30, 1987 (the "EIA"), Borden agreed, subject to certain conditions, to indemnify the Operating Partnership in respect of environmental liabilities arising from events or violations which occurred or existed prior to November 30, 1987, the date of the initial sale of the Geismar and Illiopolis plants to the Operating Partnership (the "Transfer Date"). The Operating Partnership is responsible for certain environmental liabilities which arose after the Transfer Date. With respect to environmental liabilities that may arise from events or violations that occurred or existed both prior to and after the Transfer Date, Borden and the Operating Partnership will share liabilities on an equitable basis considering all of the facts and circumstances including, but not limited to, the relative contribution of each to the matter and the amount of time each has operated the asset in question (to the extent relevant). No claims can be made under the EIA for liabilities incurred after November 30, 2002. The United States Environmental Protection Agency ("EPA") has objected to the motion filed by the Creditors Committee in the Operating Partnership Chapter 11 requesting abandonment of the Geismar plant by the Operating Partnership. The motion is also opposed by the Operating Partnership and BCPM. The EPA takes the position that the Debtors should not be permitted to abandon the Geismar plant unless there are appropriate assurances that the obligations of the Consent Decree will be implemented by Borden pursuant to the EIA or otherwise. Representatives of the Operating Partnership, BCPM and Borden are currently engaged in discussions seeking to resolve which obligations under the Consent Decree are subject to indemnification by Borden under the EIA. Any agreement among the Operating Partnership, BCPM and Borden regarding obligations of the parties under the Consent Decree and/or the EIA will be subject to approval by the Bankruptcy Court. 14 Operating Partnership Chapter 11 The Debtors commenced the Operating Partnership Chapter 11 on April 3, 2001. Additional information relating to the Operating Partnership Chapter 11 is set forth in Part I, Item 1 of this Form 10-K under the caption "Operating Partnership Chapter 11" and in Note 2 of the Notes to Consolidated Financial Statements under the caption "Organization, Business and Proceedings under Chapter 11". Such information is incorporated herein by reference. Unsecured claims may be satisfied at less than 100% of their face value. It is impossible at this time to predict the actual recovery, if any, to which creditors of the Operating Partnership may be entitled. For information regarding the equity interests in the Company held by Unitholders, see Part I, Item 1 of this Form 10-K under the caption "Impact of Bankruptcy Proceeding on Unitholders". General Partner Bankruptcy BCPM commenced the General Partner Bankruptcy on March 22, 2002. Additional information relating to the General Partner Bankruptcy is set forth in Part I, Item 1 of this Form 10-K under the caption "General Partner Bankruptcy" and in Note 2 the Notes to Consolidated Financial Statements. Such information is incorporated herein by reference. Other Legal Proceedings The Operating Partnership manufactures, distributes and uses many different chemicals in its business. As a result of its chemical operations the Operating Partnership is subject to various lawsuits in the ordinary course of business which seek compensation for physical injury, pain and suffering, costs of medical monitoring, property damage and other alleged harm. New or different damage claims arising from the Operating Partnership's various chemical operations may be made in the future. In addition, the Operating Partnership is subject to various other legal proceedings and claims which arise in the ordinary course of business. The management of the Operating Partnership believes, based upon the information it presently possesses, that the realistic range of liability to the Operating Partnership of these other matters, taking into account the Operating Partnership's insurance coverage, including its risk retention program, and the Indemnity Agreement with Borden, would not have a material adverse effect on the financial position or results of operations of the Operating Partnership. Many of the claims that are asserted in these other legal proceedings are subject to the automatic stay provided in the Bankruptcy Code and may eventually be resolved as part of the Operating Partnership Chapter 11. Item 4. Submission of Matters to a Vote of Security Holders No matter was submitted during the fourth quarter of 2001 to a vote of security holders, through the solicitation of proxies or otherwise. Part II Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters The New York Stock Exchange suspended trading of the Common Units on April 4, 2001, and the Securities and Exchange Commission by order dated May 17, 2001, granted the application of the New York Stock Exchange to remove the Common Units from listing and registration on the Exchange effective May 18, 2001. The high and low sales prices for the Common Units traded on the New York Stock Exchange on April 3, 2001, were $0.70 and $0.63, respectively. Since April 4, 2001, Common Units have traded in the over-the-counter market. As of December 31, 2001, there were approximately 16,000 holders of record of Common Units. 15 The following table sets forth the 2001 and 2000 quarterly Common Unit data. The transaction prices for the first quarter of 2001 and the four quarters of 2000 are the high and low sales prices quoted on the New York Stock Exchange. The transaction prices for the over-the-counter market for the second, third and fourth quarters of 2001 are high and low closing bid quotations obtained from Pink Sheets LLC, which compiles information from sources it believes to be reliable but does not guarantee the accuracy of such information nor warrant its use for any purpose. The over-the-counter quotations represent inter-dealer prices, without retail mark-up, mark-down or commission, and may not necessarily represent actual transactions. 2001 Quarters --------------------------------- First Second Third Fourth ------ ------ ----- ------ Cash distributions declared $ 0.00 $ 0.00 $ 0.00 $ 0.00 Market price range: High 1.187 0.065 0.038 0.017 Low 0.620 0.01 0.015 0.0015 2000 Quarters --------------------------------- First Second Third Fourth ------ ------- ------ ------ Cash distribution declared $ 0.00 $ 0.00 $ 0.00 $ 0.00 Market price range: High 6 1/4 5 4 5/8 2 1/2 Low 4 1/4 3 1/4 1 1/2 1/2 16 Item 6. Selected Financial Data The following table sets forth selected historical financial information for the Company for each of the five years ended December 31.
(in thousands except per Unit data, which is net of 1% General Partner interest) 2001/(b)/ 2000 1999 1998 1997 ---- ---- ---- ---- ---- Earnings Summary: Net revenues $ - $491,055 $402,763 $372,854 $486,189 Gross profit - 22,941 43,557 8,425 4,398 (Loss) from continuing operations (23,156) (88,573)/(a)/ (12,260) (45,803) (42,581) (Loss) income from discontinued operations - (10,816) (11,731) 5,196 48,178 ------- -------- -------- -------- -------- Net (loss) income ($23,156) ($99,389)/(a)/ $(23,991) $(40,607) $ 5,597 ======= ======== ======== ======== ======== Per Unit data - basic and diluted: (Loss) per unit from continuing operations $ (0.62) $ (2.39) $ (0.33) $ (1.23) $ (1.15) (Loss) income from discontinued operations - (0.29) (0.32) 0.14 1.30 ------- -------- -------- -------- -------- Net (loss) income $ (0.62) $ (2.68) $ (0.65) $ (1.09) $ 0.15 ======= ======== ======== ======== ======== Cash distributions declared per Unit $ - $ - $ - $ - $ 0.15 Financial Statistics: Current assets $ - $156,890 $152,391 $110,485 $149,368 Current liabilities 2,952 88,648 87,010 58,776 85,034 Property and equipment, net - 190,415 269,260 288,300 290,200 Total assets - 388,837 480,851 461,696 500,186 Long-term debt - 272,410 263,200 251,800 225,000 Total partners' capital (4,065) 19,091 118,480 142,471 183,078 Capital expenditures - 13,587 18,328 31,788 19,426 Depreciation - 36,350 36,514 33,369 48,569 Interest expense 152 27,516 25,040 23,084 20,898
(a) Includes a $58,083 charge for impairment of long-lived assets and other charges. (b) As a result of the Operating Partnership's bankruptcy filing, the Company no longer consolidated the Operating Partnership, effective January 1, 2001. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Introduction On April 3, 2001, the Operating Partnership and its wholly owned subsidiary BCP Finance Corporation, (the "Debtors") filed voluntary petitions for protection under Chapter 11 of the Bankruptcy Code, 11 U.S. C. 101-1330 in the United States Bankruptcy Court for the District of Delaware under case number 01-1268 (RRM) and 01-1269 (RRM) ("The Operating Partnership Chapter 11 case"). The Operating Partnership Chapter 11 cases have been procedurally consolidated for administrative purposes only. The Debtors are currently acting as debtors-in-possession pursuant to the Bankruptcy Code. Under the Company's Amended and Restated Agreement of Limited Partnership, the Company is to dissolve and wind up its affairs upon, among other events, the bankruptcy of the General Partner or the sale of all or substantially all of the assets and properties 17 of the Operating Partnership. It is anticipated that the Company will be dissolved and terminated as a Delaware Limited Partnership in 2002 or thereafter. During the fourth quarter 2001, the Operating Partnership began accepting bids for the sale of substantially all of its assets. An asset purchase agreement was entered into on December 21, 2001 for the sale of the Addis facility and the plant was subsequently sold in February 2002. Its Illiopolis facility was sold in April 2002 and the remaining facility, Geismar, began to be idled in March 2002 and is expected to be completed by June 2002. The Operating Partnership continues to explore possible dispositions of the Geismar plant. As a result of the expected dissolution of the Company and the imminent liquidation of the Operating Partnership, the liquidation basis of accounting and financial statement presentation has been adopted by both the Company and the Operating Partnership effective December 31, 2001. The liquidation basis of accounting requires an accrual for the estimate for all liabilities related to expenses to be incurred during the wind down period. Additionally, assets and liabilities are stated at their estimated net realizable value. The estimated net realizable value of assets represents management's best estimate of the recoverable value of the assets, net of selling expenses and without consideration for the effect that the settlement of any litigation may have on the value of the assets. The assets are held at their estimated net realizable value until they are sold or liquidated. There can be no assurance, however, that the Operating Partnership will be successful in selling the assets at the estimated net realizable value. Due to the bankruptcy filing, the Company no longer consolidates the Operating Partnership's financial results in its condensed consolidated financial statements, resulting in a change in reporting entity. As a result of this change in reporting entity, the Company has restated its fiscal 2001 results, effective January 1, 2001, to account for its investment in the Operating Partnership under the equity method. Under the equity method, the Company's share of the Operating Partnership's income or loss is recorded in earnings and as an adjustment to the Company's investment in the Operating Partnership, to the extent that the Company's investment is not reduced below zero. During the first quarter fiscal 2001, the Company's investment in the Operating Partnership was reduced to zero; therefore, further losses incurred by the Operating Partnership are no longer recognized by the Company. The Company did not recognize its 99% share of the Operating Partnership's losses amounting to $255.1 million for the year ended December 31, 2001. The Company is a holding company and does not have its own independent operations, engage in any revenue producing activities, maintain its own bank accounts nor does it have any cash flows. Prior to the Operating Partnership filing for bankruptcy, certain obligations of the Company, including gross margin taxes, were paid by BCPM and reimbursed by the Operating Partnership, as management believes these expenses are reimbursable expenses pursuant to the Partnership Agreement and past practice. The Company's $2.8 million gross margin tax obligation due in April 2001 was paid by BCPM, and, in return, the Company issued a demand note payable to BCPM. Certain other expenses, primarily for accounting and legal services, of approximately $3.1 million through December 31, 2001 have also been funded by BCPM. It is the position of BCPM that these expenses are reimbursable by the Operating Partnership pursuant to the Partnership Agreement and consistent with past practice; however, such reimbursement is subject to approval of the Bankruptcy Court. It is the position of BCPM that it is not required to make capital contributions or further loans to, or advances on behalf of, the Company. However, BCPM will consider making additional loans and advances upon request of the Company, taking into account the interests of its creditors, but there can be no assurance that BCPM will make further loans or advances in the future. The Partnership recorded interest of $0.2 million associated with this note. To the extent that payments for Company obligations are not made by BCPM, are not deemed to be reimbursable expenses from the Operating Partnership by the bankruptcy court, or the Operating Partnership does not have the ability to pay expenses deemed to be reimbursable, the Partnership would not have the wherewithal or ability to pay these obligations. 18 Due to the change in reporting entity discussed above, a comparative analysis and discussion of the Company's operations is not deemed to be meaningful. The following management discussion pertaining to the results of operations and liquidity of the Operating Partnership are included as management believes this is the most meaningful manner in which to explain the changes in the losses from its equity investment in the Operating Partnership. Overview of Business The Operating Partnership exited the Methanol and Derivatives and the Nitrogen Products businesses in 2000, and its revenues during 2001 were derived principally from the sale of PVC resins. The markets for and profitability of PVC resins have been cyclical. Periods of high demand, high capacity utilization and increasing operating margins tend to result in new plant investment and increased production until supply exceeds demand, followed by periods of declining prices and declining capacity utilization and decreased margins until the cycle is repeated. In addition, markets for the Operating Partnership's products have been affected by general economic conditions, a downturn in the economy and the Operating Partnership Chapter 11. The demand for the Operating Partnership's PVC products has been primarily dependent on the construction and automotive industries. Historically, natural gas has been a principal raw material feedstock, the price of which has been volatile in recent years. The other principal feedstocks are ethylene and chlorine. Prices for these raw materials may change significantly from year to year. Prices for PVC improved somewhat during the first half of 1997, but then declined due to competitive market conditions experienced in the second half of 1997. Published prices for PVC during the fourth quarter of 1997 declined to an average of approximately $0.30 per pound. PVC continued to decline in 1998. General competitive conditions and reduced demand for PVC in the Far East kept downward pressure on selling prices through 1998 with the fourth quarter price in the $0.24 per pound range. Prices for PVC steadily increased each quarter in 1999, with the fourth quarter price averaging approximately $0.36 per pound. During the first half of 2000, selling prices continued to increase steadily, with prices reaching a high of approximately $0.42 per pound with strong volumes and profit margins. During the summer months, however, the demand for PVC resins declined significantly as customers took steps to control their inventory levels and due to seasonal customer plant shutdowns. Demand for PVC resins continued to be soft in the fourth quarter of 2000 and into 2001 as general economic conditions weakened the demand for construction and automotive applications. As a result, selling prices for PVC resins decreased every month over the second half of 2000 and continued to decline in 2001. When combined with lower sales volumes due to decreased demand and increased raw material and energy costs due to the significant increases in the cost of natural gas, the Operating Partnership incurred negative profit margins from PVC Products over the second half 2000, and throughout 2001. Results of Operations 2001 Compared to 2000 Total Revenue Total revenue during the year 2001 decreased $145.6 million or 29.6% to $345.5 million from $491.1 million in 2000. The decrease in revenues is attributed to a decrease in average selling prices and volumes in PVC resins. Selling prices and volume decreases are the result of a decreased demand in the marketplace. Cost of Goods Sold Total cost of goods sold decreased $77.8 million to $390.3 million in the current year from $468.1 million last year. The decrease in total cost of goods was due to a decrease in sales volumes and increased raw materials prices. Expressed as percent of 19 revenue, cost of goods sold in 2001 was 113.0% in the current period versus 95.3% in the prior period. As a result of the changes in revenues and cost of goods sold, the contributing margin from continuing operations declined to a negative margin of $44.8 million in 2001 from a positive margin of $22.9 million for 2000. Impairment of Long-lived Assets and Other Charges An impairment charge of $154.1 million was recorded during 2001 to write-down to fair value long-lived assets associated with the Geismar Addis and Illiopolis facilities in accordance with FAS 121 "Accounting for the Impairment of Long-Lived Assets and Assets to be Disposed of" as the Company's estimates of future undiscounted cash flows associated with these facilities no longer recovered the asset's carrying value. Estimates of future undiscounted cash flows were lowered during the third and fourth quarter as a result of several factors including the expected loss of a significant customer contract, continued deterioration in the overall economy, and an extended forecast in the expected upturn of the PVC industry from previous projections. The fair value of the assets was estimated by management based on various sources including binding or non-binding bids or offers from third parties, other discussions with third parties, and an independent asset valuation. In the year ended December 31, 2001, the Company severed 101 employees, at an expense of $3.6 million. The Company continues to pay 75% of the cost of medical and dental insurance for severed employees for up to six months after termination. This will continue as long as the Company has the ability to provide and maintain a group medical plan. In July 2001, the court approved a Severance Plan designed to retain key non-union employees whereby employees will receive severance benefits which vary based on years of service. The plan also provided for stay bonus payments. As a result of the imminent liquidation of the Operating Partnership, it was determined that payment of severance under the Plan to the remaining employees was probable. As a result, additional severance costs in the amount of $9.5 million were accrued in the fourth quarter 2001. These employees were terminated in 2002 and received severance payments in accordance with the plan. Additionally, stay bonuses of $2.3 million were expensed as incurred during 2001. The Company accrued $12.2 million for estimated closure costs associated with the Geismar facility and costs associated with rejecting rail car leases. In December 2000, the Partnership idled its acetylene plant and acetylene-based VCM plant due to unfavorable economic conditions. As a result, the fixed assets and other related assets of the idled facilities were reviewed for impairment and were determined to be impaired under SFAS No. 121. As a result, the Partnership recorded a $58.1 million charge in 2000 to write these assets down to estimated fair value and to accrue for estimated losses on related purchase commitments to be made during 2001. Actual payments on the purchase commitments during 2001 amounted to $4.6 million. The excess accrual of $0.9 million was reversed into income through Impairment of Long-Lived Assets and Other Charges during 2001. Interest Expense Interest expense decreased $15.2 million compared to 2000, which is the result of lower interest rates under the Revolving Credit Facility in 2001 and the bankruptcy proceedings which precludes interest charges on the unsecured Subordinated Notes. Interest expense has been recorded for the first quarter of 2001. However, contractual interest charges on the Subordinated Notes for the period after the bankruptcy filing, which are not expected to be paid, have not been recorded. Tax on Gross Margin Gross margin tax expense represents a deferred tax benefit as a result of the impairment of long-lived assets. No current gross margin tax expense has been 20 incurred or recognized during 2001 as the Partnership does not have taxable income for 2001 due to the losses incurred. Deferred tax benefits were not provided for 2001 tax losses, as it is unlikely that such benefits will be realized in the future. Other Income and Expense Other expense during 2001 was $2.4 million as compared to income of $3.2 million for the same period last year. The change was largely due to accruals for sales tax assessments of $2.5 million, a decrease in non-operating revenues of $1.1 million, and reduced interest income of $0.3 million as a result of the bankruptcy filing. Reorganization Items Professional fees during 2001 related to the reorganization proceedings were $7.5 million compared to no expense for the same period last year. Debt issuance costs of $3.8 million associated with the $200 million of Subordinated Notes were written off in the second quarter of 2001, in accordance with SOP 90-7 as a result of the bankruptcy proceedings. Net Loss from Continuing Operations The net loss for 2001 was $276.9 million compared to a $87.6 million loss for 2000. As discussed above, the primary reasons for the decline were decreased sales volumes and selling prices for PVC resins and an impairment of fixed assets and other closure related costs discussed above. Loss from Discontinued Operations The Partnership exited the Methanol and Derivatives and the Nitrogen Products business in 2000, and its revenues are now derived principally from the sale of PVC resins. A net loss from discontinued operations of $10.8 million was incurred for 2000. Depressed selling prices for Methanol, Ammonia and Urea caused the continued losses from the discontinued businesses. A net gain of $1.4 million was recognized during 2000 on the sale of the Partnership's formaldehyde and related assets. 2000 Compared to 1999 Total Revenues Total revenues for 2000 increased $88.3 million or 22% to $491.1 million from $402.8 million in 1999. This increase was the result of a 28% increase in selling prices, with sales volumes remaining relatively flat. The increase in selling prices occurred over the first half of the year, with prices declining during the second half as industry market conditions worsened. Cost of Goods Sold Total cost of goods sold increased to $468.1 in 2000 from $359.2 million in 1999. Expressed as a percentage of total revenues, cost of goods sold increased in 2000 to 95% compared to 89% in 1999. Gross profit for PVC Polymer Products declined to $22.9 million in 2000 from $43.6 million in 1999. Increased costs of chlorine and natural gas during 2000 more than offset the increased average selling prices of PVC resins during the year. Impairment of Long-lived Assets In December 2000, the Partnership idled its acetylene plant and acetylene-based VCM plant due to unfavorable economic conditions. As a result, the fixed assets and other related assets of the idled facilities were reviewed for impairment and were determined to be impaired under SFAS No. 121. As a result, the Partnership recorded a $58.1 million charge in 2000 to write these assets down to fair value and to accrue 21 for estimated losses on related purchase commitments to be made during 2001. Interest Expense Interest expense during 2000 increased $2.5 million to $27.5 million from $25.0 million in 1999 due to an increase in the average outstanding amounts borrowed under the Partnership's credit facility from 1999 to 2000, and due to the write-off of debt issuance costs associated with the Partnership's previous credit facility. Tax on Gross Margin Taxes on gross margin decreased $2.5 million to $0.2 million from $2.7 million in 1999. The decrease is directly attributable to the decline in profitability vs. the prior year. Loss from Continuing Operations The loss from continuing operations incurred by the Partnership was $87.6 million vs. $12.0 million in 1999. As discussed above, the loss was due to declines in gross margin and the impairment charge recorded to write-down the carrying value of long-lived assets. Loss from Discontinued Operations A net loss from discontinued operations of $12.2 million was incurred from discontinued operations in 2000 vs. a net loss of $11.7 million in 1999. Depressed selling prices for methanol, ammonia and urea, and high natural gas costs caused to the continued losses from the discontinued businesses. In 2000, a net gain of $1.4 million was recognized on the sale of the Partnership's formaldehyde and related assets. Liquidity and Capital Resources Cash Flows from Operations Cash provided by operations for the year 2001 totaled $15.2 million compared to uses of $19.2 million in 2000, primarily due to favorable changes in inventories, receivables and payables as a result of the bankruptcy filing, offset by payments for professional fees associated with the Chapter 11 proceedings. Cash Flows from Investing Activities Capital expenditures totaled $11.6 million and $13.6 million for 2001 and 2000, respectively. The Partnership had a 50% interest in a 200 million pound stated annual capacity acetylene plant at the Geismar complex, with the remaining 50% interest held by BASF Corporation. The Partnership purchased BASF's interest in the acetylene plant in January 2000 for $15.9 million, $8.2 million of which was paid in the first quarter 2000 and the remaining balance was paid in July 2000. Proceeds from a note receivable from the sale of the formaldehyde business of $9.7 million were collected in the first quarter of 2001. Cash Flows from Financing Activities Net repayments of long-term borrowings were $12.4 million in 2001 compared to net borrowings of $9.2 million in 2000. In 2001, a $1.4 million refinancing payment was made on the Primary DIP facility. Liquidity On April 3, 2001, the Debtors commenced the Operating Partnership Chapter 11 case. The Debtors are currently acting as debtors-in-possession pursuant to the Bankruptcy Code. 22 Subsequent to the commencement of the Operating Partnership Chapter 11 case, the Debtors sought and obtained several orders from the Bankruptcy Court which were intended to stabilize and continue business operations. The most significant of these orders (i) approved an amendment (the "Primary DIP Facility") to the prepetition Year 2000 Revolving Credit Facility (the "Prepetition Credit Facility") providing up to $100 million of debtor-in-possession financing, (ii) permitted continued operation of the consolidated cash management system during the Operating Partnership Chapter 11 case in substantially the same manner as it was operated prior to the commencement of the Operating Partnership Chapter 11 case, (iii) authorized payment of pre-petition wages, vacation pay and employee benefits and reimbursement of employee business expenses, and (iv) authorized payment of pre-petition obligations to certain vendors critical to the Operating Partnership's ability to continue its operations. The Primary DIP Facility, which received final Approval of the Bankruptcy Court on July 11, 2001, provides the Operating Partnership with a revolving line of credit in an aggregate amount not to exceed $100 million, subject to borrowing base limitations and bears interest at the Alternate Base Rate plus 1.25%. The Operating Partnership has used amounts borrowed under the Primary DIP Facility for its ongoing working capital needs and for certain other purposes of the Operating Partnership as permitted by that facility. The Operating Partnership granted a security interest to the DIP Lenders in substantially all of the Operating Partnership's assets as security for its obligations under the Primary DIP Facility. All obligations under the Primary DIP Facility are afforded "super-priority" administrative expense status in the Operating Partnership Chapter 11 case. The Primary DIP Facility matured on March 31, 2002, but the lenders agreed, and the Bankruptcy Court approved, the extension of the maturity date to April 30, 2002. The Primary DIP Facility was paid in full on April 18, 2002. In light of the possibility that the Primary DIP Facility would be insufficient to finance the Operating Partnership's working capital needs during the period required to obtain confirmation of a plan of reorganization for the Debtors, the Operating Partnership approached a number of institutional lenders to assess their interest in extending additional credit to the Debtors. None of these lenders were willing to provide credit or terms acceptable to the Operating Partnership. The Operating Partnership requested its general partner, BCPM, to provide a loan to it. On October 31, 2001, the Debtors filed an initial motion with the Bankruptcy Court seeking an interim order to obtain additional, secondary postpetition financing (the "Secondary DIP Facility") from BCPM. The terms of the proposed Secondary DIP Facility were negotiated, on the one hand, by management of the Operating Partnership and the Debtors' legal counsel and, on the other hand, by officers of BCPM and BCPM's legal counsel, with the approval of the Independent Committee of the Board of Directors of BCPM which is comprised of three outside directors who are not employees of the Operating Partnership, BCPM or its affiliates. The negotiations included efforts to obtain the support of the lenders under the Primary DIP Facility and the Official Committee of Unsecured Creditors appointed in the Operating Partnership Chapter 11 case. The Creditors Committee filed an objection to the initial motion on November 6, 2001. Further negotiations between the Operating Partnership and BCPM occurred, and the parties agreed to revisions to the terms of the proposed Secondary DIP Facility. The Debtors sought interim approval of the revised Secondary DIP Facility. Subject to the terms and conditions of the Secondary DIP Facility, BCPM has agreed to makes loans to the Operating Partnership through March 31, 2002, in an aggregate amount not to exceed $10 million for working capital, other general corporate purposes and to make payments on the Primary DIP Facility. The loans are unsecured, bear interest at the Alternate Base Rate specified in the Primary DIP Facility plus 2.75% and originally matured on March 31, 2002. The Creditors Committee also objected to the revised Secondary DIP Facility. After a hearing, the Bankruptcy Court entered an order on December 20, 2001, granting interim approval to $5 million in loans under the Secondary DIP Facility. In 2002, the Operating Partnership has had to make borrowings under the Secondary Facility which amounts have been subsequently repaid. On March 22, 2002, BCPM filed a motion in the General Partner Bankruptcy requesting authority to extend the maturity date of the Secondary DIP Facility and approval of the second $5 million of lending authority under the Secondary DIP Facility. This motion was approved by the Bankruptcy Court on March 27, 2002. Subsequently, BCPM 23 filed a further motion seeking authority to lend the Operating Partnership up to $6 million (with sub-limits on the use of funds to pay ordinary costs of administration and severance) after expiration of the Secondary DIP Facility on April 30. The Bankruptcy Court entered a "bridge order" on April 24, 2002, authorizing such lending until May 23, 2002, at which time the court authorized loans of up to $4.5 million to the Operating Partnership through June 30, 2002. The maturity date has been further extended to July 17, 2002. There can, however, be no assurance that BCPM will be authorized by the Bankruptcy Court to make further loans to the Operating Partnership or that the Operating Partnership will be authorized by the Bankruptcy Court to make further borrowings from BCPM. On March 22, 2002, BCPM, the General Partner of the Company and the Operating Partnership, filed a voluntary petition under Chapter 11 of the Bankruptcy Code. As of the date of the filing, BCPM had cash of approximately $26 million, a claim of approximately $4 million against the Operating Partnership for repayment of borrowings under the Secondary DIP Facility, and claims of approximately $7.8 million against the Operating Partnership for unreimbursed expenses of the Company and the Operating Partnership paid by BCPM, the payment of which is subject to the approval of the Bankruptcy Court. The Operating Partnership has subsequently repaid BCPM the $4 million of borrowings under the Secondary DIP Facility. On May 1, 1995, the Operating Partnership issued $200 million aggregate principal amount of 9.5% Notes due 2005 (the "Notes") pursuant to an Indenture dated as of May 1, 1995. The Notes are senior unsecured obligations of the Operating Partnership and are non-recourse to the Company, BCPM and its affiliates. As a result of the filing of the Operating Partnership Chapter 11 case, no principal or interest payments will be made on any pre-petition debt, including the Notes, except as approved by the Bankruptcy Court. The Operating Partnership explored various strategic alternatives, including possible mergers or joint ventures or a sale or sales of substantially all of its assets. These strategies have been announced by the Company and the Debtors to the public, creditors and the Bankruptcy Court in various public filings, press releases and pleadings. Prior to the filing of the Operating Partnership Chapter 11 case, the Operating Partnership had retained Taylor Strategic Divestitures Corporation ("Taylor") to provide investment-banking services in connection with its attempts to complete an asset sale or other transaction. On September 28, 2001, the Bankruptcy Court entered an order approving the Debtors' retention of Taylor and a fee structure for its services. Throughout the Operating Partnership Chapter 11 case, Taylor has worked with the Debtors to identify and contact potential candidates for asset purchases or other transactions. Beginning in June 2001, certain potential purchasers submitted non-binding expressions of interest for certain of the Debtors' assets. On August 24, 2001, the Debtors filed a motion with the Bankruptcy Court for an order approving bidding procedures for the sale of substantially all of the Debtors' assets. An order approving bidding procedures was entered by the Bankruptcy Court on October 12, 2001. The procedures include a five-stage process for marketing assets, negotiating with potential purchasers, conducting an auction if needed, and obtaining court approval of sales of principal assets. Following due diligence by several candidates, the number and amount of the bids declined. Several candidates cited the events of September 11, 2001 and related events for withdrawing from the bidding process, while others offered business reasons for declining to bid. The Operating Partnership has, however, continued to solicit bids and has conducted discussions with a number of candidates. On December 3, 2001, the Debtors filed a motion with the Bankruptcy Court seeking approval of an asset purchase agreement with Shintech Louisiana, LLC ("Shintech") regarding the sale of the assets and operations of the Addis plant. Shintech agreed to pay: (i) $38 million for the Addis plant, (ii) the value of the Addis inventory and accounts receivable, and (iii) the cost of severance benefits for certain Addis employees. The sale excludes certain items such as cash, intercompany accounts, claims against third parties and equity interests in certain entities. The sale was approved by the Bankruptcy Court on December 20, 2001, and closed on February 28, 24 2002. The proceeds from the sale of the Addis plant were applied to pay expenses of the transaction and outstanding borrowings under the Primary DIP Facility. The Operating Partnership announced on March 8, 2002, that it had executed an asset purchase agreement for the plant at Illiopolis, Illinois, with Formosa Plastics Corporation, Delaware. The Bankruptcy Court approved the Illiopolis transaction at a hearing on March 27, 2002. The transaction closed on April 17, 2002, realizing net proceeds of approximately $23 million. The Operating Partnership continues to explore possible dispositions of the Geismar plant, but there is no assurance that a sale of the plant will be completed. The Operating Partnership began idling the Geismar plant in March 2002, and the idlement is scheduled for completion in June 2002. On December 12, 2001 the Creditors Committee filed a motion seeking an order requiring the Debtors to abandon the assets comprising the Geismar plant. The Debtors objected to the motion. The Bankruptcy Court held an initial hearing on this motion on December 20, 2001, and the motion was subsequently withdrawn by the Creditors Committee. On April 16, 2002, the Creditors Committee filed a motion to convert the Operating Partnership Chapter 11 to a case under Chapter 7 of the Bankruptcy Code. The Bankruptcy Court denied the motion at a hearing on May 2, 2002 and management continues to oversee liquidation of the remaining assets. Management has taken several initiatives to improve liquidity, including idling unprofitable or high cost assets and production facilities, wage freezes and reductions in-force. At this time, sales of Operating Partnership assets are not expected to generate enough cash to make a distribution to unit holders of the Company or to satisfy all of the Operating Partnership's debts. Critical Accounting Policies and Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period, as well as the related disclosure of contingent assets and liabilities at the date of the financial statements. On an on-going basis, management evaluates its estimates and judgments. Management bases its estimates and judgments on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. Management believes the following accounting principles are the most critical because they involve the most significant judgments, assumptions and estimates used in preparation of the financial statements: . Liquidation Basis Adjustments - The preparation of financial statements on the liquidation basis of accounting requires accruals to be established for estimates of costs to be incurred during the wind-down period and for all assets and liabilities to be reported at their estimated net realizable values. The valuation of assets and liabilities necessarily requires many estimates and assumptions and there are substantial uncertainties in liquidation. There can be no assurance that the assets will be sold at their estimated net realizable values, or that costs incurred during the wind-down period will not differ significantly from their estimated amounts. . Claims and Contingencies - The Company and the Operating Partnership is subject to various claims and contingencies related to lawsuits, taxes, and other matters arising out of the normal course of business. The financial statement treatment of claims and contingencies is based on management's view of the expected outcome of the applicable claim or contingency. Management consults with legal counsel on matters related to litigation and seeks input from other experts both within and outside the Company with respect to matters in the ordinary course of business. The Company accrues a liability if the likelihood of an adverse outcome is probable and the amount is estimable. New Accounting Pronouncements 25 In June 2001, the Financial Accounting Standards Board (FASB) issued Statement of Accounting Standard No. 141, "Business Conditions". This statement requires that all business combinations in the scope of this statement are to be accounted for using one method, the purchase accounting method. Also in June 2001, the FASB issued Statement of Accounting Standard No. 142, "Goodwill and Other Intangible Assets". This statement addresses how intangible assets that are acquired individually or within a group of other assets (but not those acquired in a business combination) should be accounted for in financial statements upon their acquisition. This statement also addresses how goodwill and other intangible assets should be accounted for after they have been initially recognized in the financial statements. These statements currently would not have an impact on the Company's financial statements. In August 2001, the FASB issued Statement of Accounting Standard No. 143, "Accounting for Obligations Associated with the Retirement of Long-Lived Assets". This standard is effective for fiscal years beginning after June 15, 2002. The Statement would require that (1) an existing legal obligation associated with the retirement of a tangible long-lived asset be recognized as a liability when incurred and the amount of the liability be initially measured at fair value (2) an entity recognize subsequent changes in the liability that result from (a) the passage of time and (b) revisions in either the timing or amount of estimated cash flows; and (3) upon initially recognizing a liability for an Asset Retirement Obligation, an entity capitalized the cost by recognizing an increase in the carrying amount of the related long-lived asset. The Partnership does not believe this statement will have a material impact on the Company's financial statements. In October 2001, the FASB issued Statement of Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets". This standard is effective for fiscal years beginning after December 15, 2001. The Statement addresses issues relating to the implementation of FASB Statement No. 121 (FAS 121), Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, and to develop a single accounting model, based on the framework established in FAS 121, for long-lived assets to be disposed of by sale, whether previously held and used or newly acquired. The Partnership does not believe this standard will have a material impact on the Company's financial statements. In April 2002, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 145 (SFAS No. 145), Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections. SFAS No. 145 eliminates Statement 4 and as a result, gains and losses from extinguishment of debt should be classified as extraordinary items only if they meet the criteria in APB Opinion No. 30. SFAS No. 145 amends FASB Statement No. 13, Accounting for Leases, to eliminate an inconsistency between the required accounting for sale-leaseback transactions and the required accounting for certain lease modifications that have economic effects that are similar to sale-leaseback transactions. SFAS No. 145 also amends other existing authoritative pronouncements to make various technical corrections, clarify meanings, or describe their applicability under changed conditions. The provisions of this Statement related to the rescission of Statement 4 shall be applied in fiscal years beginning after May 15, 2002. The provisions of this Statement related to Statement 13 shall be effective for transactions occurring after May 15, 2002. All other provisions of this Statement shall be effective for financial statements issued on or after May 15, 2002. The Company does not believe this statement will have a material impact. Item 7-A Quantitative and Qualitative Disclosure About Market Risk Interest Rate Risk - The Primary DIP Facility provides up to $100 million under a revolving credit agreement with Fleet Capital Corporation. Interest on borrowings under the revolving credit facility is determined, at the Operating Partnership's option, either at LIBOR plus 3% or Base Rate plus 1.25%. At December 31, 2001, borrowings under the facility were $60.0 million. The Primary DIP Facility was paid in full on April 18, 2002. The Partnership is exposed to swings in the LIBOR or Base rates. A change of 1.00% in 26 the applicable rate would change the Partnership's annual interest cost by approximately $0.6 million based on the borrowings at December 31, 2001. Commodity Risk - The Partnership generally does not use derivatives or other financial instruments such as futures contracts to manage commodity market risk. The Partnership has entered into a fifteen-year supply agreement (commencing in 1997) to provide a long-term supply of ethylene, a raw material, and minimize price volatility. The purchase price for the product varies with the supplier's raw material and variable costs, which are market-driven, as well as its fixed costs. The Partnership evaluates all such contracts on the basis of whether committed costs are expected to be realized in light of current and expected selling prices when the commodities are consumed in manufactured products. Foreign Exchange and Equity Risk The Partnership is not exposed to significant foreign exchange or equity market risk. Forward-Looking Statements Certain statements in this Form 10-K are forward-looking. These can be identified by the use of forward-looking words or phrases such as "believe", "expect", "may" and "potential", among others and include statements regarding the business outlook for the Operating Partnership and its ability to fund its cash needs. The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for such forward-looking statements. While these forward-looking statements are based on the Partnership's reasonable current expectations, a variety of risks uncertainties and other factors, including many which are outside the control of the Partnership, could cause the Partnership's actual results to differ materially from the anticipated results or expectations expressed in such forward-looking statements. 27 Item 8. Financial Statements and Supplementary Data Sequential Index to Financial Statements Page - ----------------------------- ---------- Report of Independent Accountants 43 Statement of Liabilities in Liquidation as of December 31, 2001 44 Consolidated Balance Sheet as of December 31, 2000 45 Consolidated Statements of Operations for the years ended December 31, 2001, 2000, and 1999 46 Consolidated Statements of Cash Flows for the years ended December 31, 2001, 2000, and 1999 47 Consolidated Statements of Changes in Partners' Capital for the years ended December 31, 2001, 2000, and 1999 48 Notes to Consolidated Financial Statements 49 Financial Statement Schedule: II - Valuation and Qualifying Accounts for the years ended December 31, 2001, 2000, and 1999 68 Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. 28 PART III Item 10. Directors and Executive Officers of the Registrant Each of the Company and the Operating Partnership is a limited partnership (of which BCPM is the General Partner) and has no directors or officers. The directors, officers and employees of the General Partner and Borden perform management and non-supervisory functions for the Company and the Operating Partnership. Independent Committee - BCPM is required to maintain an Independent Committee of its Board of Directors, which shall be composed of at least three directors, each of whom is neither an officer, employee or director of Borden nor an officer or employee of BCPM. Certain actions require special approval from the Independent Committee. Such actions include an expansion of the scope of business of the Partnership, the making of material capital expenditures, the material curtailment of operations of any plant, the material expansion of capacity of any plant, and the amendment of or entry into by the Partnership of any agreement with Borden. The members of the Independent Committee are Edward H. Jennings, George W. Koch, and E. Linn Draper, Jr. As sole stockholder of BCPM, Borden elects directors of BCPM on an annual basis. Set forth below is certain information concerning the Directors and Executive Officers of BCPM as of March 1, 2001. Their terms of office extend to the next annual meeting of BCMP or until their earlier resignation or replacement.
Age on Served in Name Position and Office with Dec. 31 Present General Partner 2001 Position Since - ---------------------------------------------------------------------------------------------- William H. Carter Director and Chairman 48 2000 Mark J. Schneider Director, President and Chief Executive Officer 56 2000 William F. Stoll, Jr. Director and Vice Chairman 53 2001 E. Linn Draper, Jr. Director 59 1996 Edward H. Jennings Director 64 1989 George W. Koch Director 75 1987 Ronald P. Starkman Director 47 1998 Ronald Bryan Vice President- Sales and Marketing 49 2000 Marshall D. Owens, Jr. Vice President - Manufacturing 58 1997 Robert R. Whitlow, Jr. Vice President, Treasurer and Chief Financial Officer 53 2001
William H. Carter, Chairman, has been a director of BCPM since 1995. He was named Chairman of the Board of Directors in January 2000 and acted as interim President and Chief Executive Officer from January to June 2000. He is also Executive Vice President and Chief Financial Officer of Borden Chemical, Inc., (formerly Borden, Inc.), a position he has held since April 1995. He is also a Director of Borden Chemical, Inc., AEP Industries, Inc. and WKI Holding Company, Inc Mark J. Schneider was elected a Director, President and Chief Executive Officer of BCPM June, 2000. Prior to that, from 1992 to September 2000, he was Vice President Olefins and Vinyls for CONDEA Vista Company (now SASOL North America). William F. Stoll, Jr. has been a director of BCPM since 1996. He was elected Vice Chairman of BCPM in February 2001. He was elected Senior Vice President and General Counsel of Borden, Inc., (now Borden Chemical, Inc.) effective July 1996 and promoted to Executive Vice President and General Counsel in December 2000. Prior to joining Borden, he was Vice President and Deputy General Counsel of Westinghouse Electric Corporation, a position he held since January 1993. He is also a Director of AEP Industries, Inc. and Borden Chemical, Inc. 29 E. Linn Draper, Jr. has been a director of BCPM since 1996. He is Chairman, President and Chief Executive Officer of American Electric Power Company, Inc. and American Electric Power Service Corporation, positions he has held since 1993. He is a member of the Independent/Audit Committee. Edward H. Jennings has been a director of BCPM since 1989. He is also a professor and President Emeritus of The Ohio State University. He served as president of The Ohio State University from 1981 to 1990. Mr. Jennings is also a director of Lancaster Colony, Inc. He is a member of the Independent/Audit Committee. George W. Koch has been a director of BCPM since 1987. He has been Of Counsel, in the law firm of Kirkpatrick & Lockhart since January 1992. Prior to that he was a partner of Kirkpatrick & Lockhart since April 1990. He is a member of the Independent/Audit Committee. Ronald P. Starkman has been a director of BCPM since 1998. He is Treasurer of Borden Chemical, Inc. (formerly Borden, Inc.), a position he has held since November 1995. Ronald Bryan was elected Vice President Sales and Marketing of BCPM effective October 25, 2000. Prior thereto he held various management positions with CONDEA Vista Company (now SASOL North America) from July 1996 to October 2000. He was terminated from the Company April 30, 2002. Marshall D. Owens, Jr. is Vice President of Manufacturing for BCPM, a position he has held since October 1997. Prior thereto, he served as Director of Manufacturing since 1993. Robert R. Whitlow, Jr. was elected a Vice President, Treasurer and Chief Financial Officer of BCPM effective February 1, 2001. Prior to joining the Company he was a consultant with Paul L. Comstock Co., investment advisors. From 1994 to 1999 he was Manager of Finance and Treasurer of CONDEA Vista Company (now SASOL North America). Section 16(a) Beneficial Ownership Reporting Compliance No Disclosure Required. 30 Item 11. Executive Compensation The Company has no directors or officers. The directors and officers of BCPM receive no direct compensation from the Company or the Operating Partnership for services to the Company and the Operating Partnership. Under the Amended and Restated Partnership Agreement, the Operating Partnership is to reimburse BCPM for all direct and indirect costs incurred by BCPM in managing the Company and the Operating Partnership. The following table sets forth all cash compensation paid and accrued by BCPM for services rendered during the periods indicated by the Chief Executive Officer and the three other executive officers of BCPM as of December 31, 2001 (the "Named Executive Officers").
- ------------------------------------------------------------------------------------------------------------------------------- SUMMARY COMPENSATION TABLE =============================================================================================================================== LONG TERM ANNUAL COMPENSATION COMPENSATION ===================================================================== AWARDS =============================== NAME AND OTHER ANNUAL SECURITIES UNDERLYING ALL OTHERS PRINCIPAL SALARY BONUS COMPENSATION /(2)/ OPTIONS/LSAR COMPENSATION/(3)/ POSITION YEAR ($) ($) ($) (#) ($) - ----------------------------------------------------------------------------------------------------------------------------------- M.J. SCHNEIDER 2001 358,333 /(4)/ 135,000 8,856 0 15,453 President and CEO 2000 161,538 /(1)/ 86,735 43,790 225,000 12,532 - ----------------------------------------------------------------------------------------------------------------------------------- R.R. WHITLOW, JR. 2001 207,575 /(4)/ 67,500 7,318 0 4,973 VP, Chief Financial Officer and Treasurer - ----------------------------------------------------------------------------------------------------------------------------------- R. BRYAN 2001 191,250 /(4)/ 67,500 0 0 6,375 VP, Sales and Marketing - ----------------------------------------------------------------------------------------------------------------------------------- M.D. OWENS, JR. 2001 209,100 /(4)/ 75,000 0 15,757 V.P. - Manufacturing 2000 193,475 25,000 0 109,000 18,082 1999 172,425 160,474 8,000 - -----------------------------------------------------------------------------------------------------------------------------------
(1) Mr. Schneider's signing bonus was used to purchase units of BCP. (2) Amounts shown in this column represent reimbursements for tax payments. (3) Amounts shown in this column as All Other Compensation consist of matching company contributions to the Retirement Savings Plan and the executive supplemental benefit plans. (4) Amounts represent retention bonuses paid pursuant to the Key Employees Retention Bonus and Severance Plan approved by the Delaware Bankruptcy Court. 31 No options to purchase units or unit appreciation rights ("UARs") were granted during 2001. The following table provides information on the value of unexercised UAR's and phantom units held by the Named Executive Officers at December 31, 2001. Aggregated Options/SAR Exercises in Last Fiscal Year and Fiscal Year-End Options/SAR Values
==================================================================================================== Number of Securities Value of Unexercised Underlying Unexercised In-the-Money Options/UARs At Options/UARs Fiscal Year-End (#) At Fiscal Year-End ($) - ---------------------------------------------------------------------------------------------------- Name Exercisable/(1)/ Unexercisable/(1)/ Exercisable Unexercisable - ---------------------------------------------------------------------------------------------------- M.J. Schneider 0 225,000 (2) (2) - ---------------------------------------------------------------------------------------------------- R.R. Whitlow, Jr. 0 0 (2) (2) - ---------------------------------------------------------------------------------------------------- R. Bryan 0 0 (2) (2) - ---------------------------------------------------------------------------------------------------- M.D. Owens 17,018 113,000 (2) (2) ====================================================================================================
/(1)/ Includes UARs and phantom units. /(2)/ None of the UARs were in-the-money as of December 31, 2001. Pension Plan The executive officers named above are employees of the General Partner or Borden and participate in Borden's pension plans. The Borden Employees Retirement Income Plan ("ERIP") for salaried employees was amended as of January 1, 1987, to provide benefit credits of 3% of earnings which are less than the Social Security wage base for the year plus 6% of earnings in excess of the wage base. Earnings include annual incentive awards paid currently but exclude any long-term incentive awards. Benefits for service through December 31, 1986 are based on the plan formula then in effect and have been converted to opening balances under the plan. Both opening balances and benefit credits receive interest credits at one-year Treasury bill rates until the participant commences receiving benefit payments. For 2000, the interest rate was 5.54% as determined in accordance with the plan language. Benefits vest after completion of five years of employment for employees hired on or after July 1, 1990. Borden has supplemental plans which will provide those benefits which are otherwise produced by application of the ERIP formula, but which, under Section 415 or Section 401(a)(17) of the Internal Revenue Code, are not permitted to be paid through a qualified plan and its related trust. The supplemental plan also provides a pension benefit using the ERIP formula based on deferred incentive compensation awards and certain other deferred compensation, which are not considered as part of compensation under the ERIP. The total projected annual benefits payableunder the formulas of the ERIP at age 65 without regard to the Section 415 or 401(a)(17) limits and recognizing supplemental pensions as described above, are as follows for the above Named Executive Officers: M.J. Schneider - $30,297, R.R. Whitlow, Jr. - $21,487, R. Bryan - $27,342, and M. D. Owens, Jr. - $36,649. Compensation Committee Interlocks and Insider Participation M.J. Schneider, President and Chief Executive Officer, participates in deliberations concerning executive officer compensation; however, all executive compensation decisions are made by the Independent Committee of the Board of Directors of BCPM. 32 Compensation of Directors During 2001 the three independent directors of BCPM received a retainer of $15,000 per year plus a fee of $1,000 for each BCPM Board meeting attended. The Board functions in part through its Independent Committee. The three non-employee members of this committee are paid a meeting fee of $800 for each committee meeting attended. During 2001, the Board met 14 times, and the Independent Committee met three times. Employment Contracts, Termination of Employment and Changes-in-Control Arrangements On August 1, 2001, the Bankruptcy Court approved, in the Operating Partnership Chapter 11, an employee retention and severance plan (the "Retention Plan"), including the Named Executives. Under the Retention Plan, the Named Executives are eligible to receive retention bonuses as follows: M.J. Schneider - - $270,000, R.R. Whitlow, Jr. - $135,000, R. Bryan - $135,000, and M.D. Owens - $150,000; 50% of the retention bonuses was paid to each of the Named Executives in 2001, and the remaining 50% is payable on the occurrence of certain events, including the sale of substantially all of the Operating Partnership's assets. In addition, if employment is involuntarily terminated for reasons other than death, disability, retirement or cause, the Named Executives are eligible to receive severance benefits as follows: M.J. Schneider - 12 months' salary, R.R. Whitlow, Jr. - 9 months' salary, R. Bryan - 12 months' salary, and M.D. Owens - 9 months' salary. Mr. Schneider is also entitled, under the terms of his employment, to a similar severance benefit of salary and medical/dental benefits for 12 months in the event he is terminated without cause within 24 months of his employment date. Mr. Bryan is also entitled, under the terms of his employment, to a similar severance benefit of salary and medical/dental benefits for 12 months in the event he is terminated without cause within 24 months of his employment date. 33 Item 12. Security Ownership of Certain Beneficial Owners and Management Since the Partnership is managed by its General Partner and has no Board of Directors, there are no "voting securities" of the Partnership outstanding within the meaning of Item 403(a) of Regulation S-K and Rule 12b-2 under the Securities Exchange Act of 1934. Based on a review of filings made with the Securities and Exchange Commission, the Partnership is not aware of any beneficial owner of more than five percent of the outstanding units, as of March 1, 2002. Securities Ownership of Management The following table shows for (i) each director, (ii) each Named Executive Officer and (iii) all directors and executive officers as a group, the beneficial ownership of Units as of March 1, 2002. Name of Beneficial Owner Units Percent of Units Held - ------------------------ ----- --------------------- Mark J. Schneider 50,700 * George W. Koch 20,700 * Edward H. Jennings 1,000 * William H. Carter 1,000 * Ronald P. Starkman 0 0 E. Linn Draper, Jr. 0 0 William F. Stoll, Jr. 0 0 Robert R. Whitlow, Jr. 0 0 Marshall D. Owens, Jr. 30 * Ronald Bryan 0 0 All directors and executive officers 73,430 * as a group * Represents less than 1% of the outstanding units. Item 13. Certain Relationships and Related Transactions The Company and the Operating Partnership are managed by BCPM, subject to orders of the ankruptcy Court, pursuant to the Amended and Restated Partnership Agreement of the Company and the Amended and Restated Partnership Agreement of the Operating Partnership, respectively. Neither the Company nor the Operating Partnership directly employs any of the persons responsible for managing or operating the business of the Operating Partnership, but instead relies on the officers and employees of the General Partner and of Borden who provide support to or perform services for the General Partner and reimburses the General Partner or Borden (on its own or on the General Partner's behalf) for their services. Note 7 of Notes to Consolidated Financial Statements of the Partnership contained on pages 55-56 and Note 4 of Notes to Consolidated Debtor-in-Possession Financial Statements of the Operating Partnership, contained on pages 66 - 68 of this Form 10K Annual Report contain information regarding certain relationships and related transactions. As of the filing of the Operating Partnership Chapter 11 on April 3, 2001, the General Partner was the payee of a Demand Note dated November 30, 1987, from Borden in the original principal amount of $37.5 million. Subsequently, the General Partner made a series of demands on the Demand Note, applying such principal payments and interest received on the Demand Note to pay taxes and other expenses of the Company and the Operating Partnership. On January 24, 2002, the General Partner made demand on Borden for payment of the remaining principal due on the Demand Note and accrued interest in the aggregate amount of approximately $32.4 million. On January 29, 2002 Borden transmitted a payment of approximately $24.2 million to the General Partner, stating that the amount represented payment in full of the Demand Note after giving effect to the set-off of obligations of the General Partner to Borden. The amount set-off against the Demand Note consisted of (i) claims in the amount of approximately $1.8 million relating to a Rail Car Sublease Agreement between Borden and the Operating Partnership (the "Rail Car Obligations"), (ii) claims in the amount of 34 approximately $5.6 million relating to a Utilities and Services Agreement between Borden and the Operating Partnership (the "Utilities and Services Agreement Obligations"), (iii) claims in the amount of approximately $648,000 relating to obligations of the General Partner for participation of certain of its employees in Borden's Executive Supplemental Pension Plan (the "ESPP Obligations"), and (iv) claims in the amount of approximately $77,000 for various administrative expenses incurred by Borden on behalf of the Operating Partnership (the "Miscellaneous Obligations"). The General Partner, through the Independent Committee and its legal counsel, negotiated a resolution of the dispute over the set-off amounts with Borden. Effective March 7, 2002, the General Partner, with the authorization of the Independent Committee, entered in a Settlement Agreement and Release with Borden pursuant to which the General Partner agreed that Borden had a valid and enforceable right to set-off the Rail Car Obligations, ESPP Obligations and Miscellaneous Obligations against amounts due under the Demand Note, and Borden relinquished its right to set-off the Utilities and Services Agreement Obligations and paid approximately $5.6 million (plus $27,000 in accrued interest) to the General Partner in full satisfaction of the Demand Note. Under the Environmental Indemnity Agreement dated as of November 30, 1987 (the "EIA"), Borden agreed, subject to certain conditions, to indemnify the Operating Partnership in respect of environmental liabilities arising from events or violations which occurred or existed prior to November 30, 1987, the date of the initial sale of the Geismar and Illiopolis plants to the Operating Partnership. Representatives of the Operating Partnership, the General Partner and Borden are currently engaged in discussions seeking to resolve which obligations under the Consent Decree are subject to indemnification by Borden under the EIA. See "Item 3 - Legal Proceedings." Mr. Koch is Of Counsel, retired, with Kirkpatrick & Lockhart, a law firm which represents the Partnership and its affiliate Borden Chemical, Inc., in connection with environmental, insurance, and other matters. The Partnership believes that the terms of such services are on terms no less favorable to the Partnership and its affiliates than if such services were procured from any other law firm competent to handle the same matters. 35 PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K (a) 1. Financial Statements a. The Consolidated Financial Statements, together with the report thereon of PricewaterhouseCoopers LLP dated April 5, 2002 are contained on pages 43 through 67 of this Form 10-K Annual Report. 2. Financial Statement Schedule II - Valuation and Qualifying Accounts for the years ended December 31, 2001, 2000 and 1999 is contained on page 68 of this Form 10-K Annual Report. 3. Exhibits Management contracts, compensatory plans and arrangements are listed herein at Exhibits 10.40. 2.1/(1)/ Asset Transfer Agreement dated as of August 12, 1994 and amended as of January 10, 1995, and March 16, 1995, between the Borden Chemicals and Plastics Operating Limited Partnership (the "Operating Partnership") and Occidental Chemical Corporation ("OxyChem") and the forms of VCM Supply Agreement and PVC Tolling Agreement annexed thereto 3.1/(2)/ Restated Certificate of Incorporation of BCPM 3.2/(3)/ Amended by-laws of BCPM 3.3/(4)/ Amended and Restated Certificate of Limited Partnership of the Partnership 3.4/(4)/ Amended and Restated Certificate of Limited Partnership of the Operating Partnership 3.5/(4)/ Amended and Restated Agreement of Limited Partnership of the Partnership dated as of December 15, 1988 3.6/(5)/ First Amendment to the Amended and Restated Agreement of Limited Partnership of the Partnership dated as of April 9, 1997. 3.7/(6)/ Second Amendment to the Amended and Restated Agreement of Limited Partnership of the Partnership dated August 14, 1997. 3.8/(7)/ Amended and Restated Agreement of Limited Partnership of the Operating Partnership, dated as of November 30, 1987 4.1/(8)/ Form of Depository Receipt for Common Units 4.2/(9)/ Indenture dated as of May 1, 1995 of 9.5% Notes due 2005 between the Operating Partnership and The Chase Manhattan Bank (National Association), as Trustee 4.3/(5)/ Rights Agreement between the Partnership and Harris Trust 36 and Savings Bank, as Rights Agent, dated as of April 8, 1997. 4.4/(6)/ First Amendment to Rights Agreement between the Partnership and Harris Trust and Savings Bank, as Rights Agent, dated as of August 14, 1997. 10.1/(10)/ Revolving Credit Agreement, dated March 31, 2000, between the Operating Partnership and Fleet Capital Corporation, as Agent and as a lender, and other lenders. 10.2/(3)/ Conveyance and Transfer Agreement Dated as of June 27, 2000 by and between the Operating Partnership and Borden Chemical, Inc. 10.3/(14)/ Utilities and Service Agreement dated as of July 28, 2000 by and between Borden Chemical, Inc. and the Partnership 10.4/(14)/ Barge Dock Agreement dated as of July 28, 2000 by and between Borden Chemical, Inc. and the Partnership 10.5/(14)/ Environmental Indemnity Agreement dated as of July 28, 2000 by and between Borden Chemical, Inc. and the Partnership 10.6/(14)/ Control Room Agreement dated as of July 28, 2000 by and between Borden Chemical, Inc. and the Partnership 10.7/(14)/ Amendment to Intercompany Agreement dated July 28, 2000 by and among the Partnership, the Company, Borden, Inc. and the General Partner 10.8/(14)/ Ground Lease dated as of July 28, 2000 by and between Borden Chemical, Inc. and the Partnership 10.9/(14)/ Mutual Release and Termination Agreement dated as of July 28, 2000 by and between Borden Chemical, Inc. and the Partnership 10.10/(14)/ Act of Declaration of Separate Ownership dated as of July 28, 2000 and recorded as of August 2, 2000 executed by the Partnership and acknowledged by Borden Chemical, Inc. 10.12/(7)/ Service Agreement, dated as of November 30, 1987, between Borden and the Operating Partnership 10.13/(7)/ Intercompany Agreement, dated as of November 30, 1987, among Borden, BCPM, the Partnership and the Operating Partnership 10.14/(4)/ Borden and BCPM Covenant Agreement, dated as of December 15, 1988, among Borden and the Partnership 10.15/(7)/ Use of Name and Trademark License Agreement, dated as of November 30, 1987, among Borden, the Partnership and the Operating Partnership 10.16/(7)/ Patent and Know-how Agreement, dated November 30, 1987, among Borden, the Partnership and the Operating Partnership 37 10.17/(7)/ Environmental Indemnity Agreement, dated as of November 30, 1987, among the Partnership, the Operating Partnership and Borden 10.18/(7)/ Lease Agreement, dated as of November 30, 1987, between the Operating Partnership and Borden 10.19/(11)/ Restructuring Agreement, dated as of December 9, 1980, among Borden, Uniroyal Chemical Company, Inc. (as successor to Uniroyal, Inc.) and Monochem, Inc. 10.20/(11)/ Amendment to Restructuring Agreement, dated as of December 31, 1981, among Borden, Uniroyal Chemical Company, Inc. (as successor to Uniroyal, Inc.) and Monochem, Inc. 10.21/(11)/ Restated Basic Agreement, dated as of January 1, 1982, between Borden and Uniroyal Chemical Company, Inc. (as successor to Uniroyal, Inc.) 10.22/(11)/ Restated Operating Agreement, dated as of January 1, 1982, among Borden, Uniroyal Chemical Company, Inc. (as successor to Uniroyal, Inc.) and Monochem, Inc. 10.23/(11)/ Restated Agreement to Amend Operating Agreement, dated as of January 1, 1983, among Borden, Uniroyal Chemical Company, Inc. (as successor to Uniroyal, Inc.) and Monochem, Inc. 10.24/(11)/ Operating Agreement, dated December 14, 1984 among Borden, BASF, Liquid Air Corporation ("LAC") and LAI Properties, Inc. ("LAI") 10.25/(11)/ Amendment No. 1 to Operating Agreement, dated October 2, 1985, among Borden, BASF, LAC and LAI 10.26/(4)/ Amendment No. 2 to the Operating Agreement, dated February 11, 1988, among Borden, the Operating Partnership, BASF, LAC and LAI 10.27/(11)/ Second Operating Agreement, dated October 2, 1985, among Borden, BASF, LAC and LAI 10.29/(4)/ Restated Second Operating Agreement, dated February 11, 1988 among Borden, the Operating Partnership, BASF, LAC and LAI 10.30/(7)/ Railroad Car Master Sublease Agreement, dated as of November 30, 1987, between Borden and the Operating Partnership, relating to ACF Industries, Incorporated Master Service Contract 10.31/(7)/ Railroad Car Master Sublease Agreement, dated as of November 30, 1987, between Borden and the Operating Partnership, relating to Pullman Leasing Company Lease of Railroad Equipment 10.32/(7)/ Railroad Car Master Sublease Agreement, dated as of November 30, 1987, between Borden and the Operating Partnership, relating to Union Tank Car Company Service Agreement 10.33/(7)/ Railroad Car Master Sublease Agreement, dated as of November 30, 1987, between Borden and the Operating 38 Partnership, relating to General Electric Railroad Service Corporation Car Leasing Agreement 10.34/(7)/ Railroad Car Master Sublease Agreement, dated as of November 30, 1987, between Borden and the Operating Partnership, relating to General American Transportation Corporation Tank Car Service Contract 10.35/(7)/ Railroad Car Sublease Agreement, dated as of November 30, 1987, between Borden and the Operating Partnership, relating to EHF Leasing Corporation Railroad Equipment Lease 10.36/(7)/ Railroad Car Sublease Agreement, dated as of November 30, 1987, between Borden and the Operating Partnership, relating to Bank of New York Lease of Railroad Equipment (as amended) 10.37/(11)/ Form of Rail Service Agreement between Borden and the Operating Partnership 10.38/(12)/ Form of Letter Agreement with Directors 10.39/(7)/ Illiopolis Indemnity Agreement 10.40/(14)/ Amended Agreed Interim and Proposed Final Order Authorizing Debtors: (A) To use cash collateral: (B) To incur postpetition debt; (C) To grant adequate protection and provide security to Fleet Capital Corporation, as agent 10.41/(14)/ Amended and Restated Long-Term Incentive Plan, as of April 18, 2000 10.42 Order Authorizing Debtors and Debtors In Possession to Implement Key Employee Retention Bonus Plan and Severance Plan 10.43 Agreed Final Order Authorizing Debtor: (A) To use cash collateral; (B) To incur postpetition debt; and (C) To grant adequate protection and provide security to Fleet Capital Corporation, as Agent 10.44/(14)/ First Amendment to Agreed Final Order Authorizing Debtor: (A) To use cash collateral; (B) To incur postpetition debt; and (C) To grant adequate protection and provide security to Fleet Capital Corporation, as Agent 10.45 Loan Agreement dated as of January 14, 2002, by and between Borden Chemicals and Plastics Operating Limited Partnership and BCP Management, Inc. 10.46 First Amendment to Loan Agreement dated as of March 29, 2002, by and between Borden Chemicals and Plastics Operating Limited Partnership and BCP Management, Inc. 10.47 Modified Loan Agreement dated as of April 30, 2002, by and between Borden Chemicals and Plastics Operating Limited Partnership and BCP Management, Inc. 10.48 First Amendment to Modified Loan Agreement dated as of May 23, 2002, by and between Borden Chemicals and Plastics Operating Limited Partnership and BCP Management, Inc. 10.49 Final Order Authorizing Secondary Postpetition Financing pursuant to Section 346(b) of the Bankruptcy Code and Rule 4001 of the Federal Rules of Bankruptcy Procedure (Docket No. 489) 10.50 Asset Purchase Agreement dated as of December 3, 2001, by and between Borden Chemicals and Plastics Operating Limited Partnership and Shintech Louisiana, LLC 39 10.51 Order (A) Approving Asset Purchase Agreement, (B) Authorizing sale of Addis assets free and clear of lines, claims and encumbrances, (C) Authorizing assumption and assignment of executory contracts and unexpired leases related thereto; and (D) Granting related relief 10.52 Asset Purchase Agreement dated as of March 8, 2002, by and between Borden Chemicals and Plastics Operating Limited Partnership and Formosa Plastics Corporation, Delaware 10.53 Order (A) Approving Asset Purchase Agreement, (B) Authorizing sale of Illiopolis assets free and clear of lines, claims and encumbrances, (C) Authorizing assumption and assignment of executory contracts and unexpired leases related thereto; and (D) Granting related relief 10.54 Settlement Agreement and Release dated as of March 7, 2002, by and between BCP Management, Inc. and Borden Chemical, Inc. _________________ /(1)/ Filed as an exhibit to Borden Chemicals and Plastics Limited Partnership's Quarterly Report on Form 10-Q for the quarter ended March 31, 1995. Confidential treatment has been granted as to certain provisions. /(2)/ Filed as an exhibit to Borden Chemicals and Plastics Limited Partnership's Quarterly Report on Form 10-Q for the quarter ended June 30, 1995 and is incorporated herein by reference in this Form 10-K Annual Report. /(3)/ Filed as an exhibit to Borden Chemicals and Plastics Limited Partnership's Quarterly Report on Form 10-Q for the quarter ended June 30, 2000 and is incorporated herein by reference in this Form 10-K Annual Report. /(4)/ Filed as an exhibit to the joint Registration Statement on Form S-1 and Form S-3 of the Partnership, Borden, Inc. and Borden Delaware Holdings, Inc. (File No. 33-25371) and is incorporated herein by reference in this Form 10-K Annual Report. /(5)/ Filed as exhibit 99.4 to the Registrant's Current Report on Form 8-K dated April 8, 1997 (filed April 15, 1997) ( File No. 1-9699) and incorporated herein by reference. /(6)/ Filed as exhibit 99.3 to the Registrant's Current Report on Form 8-K dated August 14, 1997 (filed August 18, 1997) (File No. 1-9699) and incorporated herein by reference. /(7)/ Filed as an exhibit to the Partnership's Registration Statement on Form S-1 (File No. 33-18938) and is incorporated herein by reference in this Form 10-K Annual Report. /(8)/ Filed as an exhibit to the Registrant's 1992 Form 10-K Annual Report and is incorporated herein by reference in this Form 10-K Annual Report. /(9)/ Filed as an exhibit to the Registrant's 1995 Form 10-K Annual Report and is incorporated herein by reference in this Form 10-K Annual Report. /(10)/ Filed as an exhibit to Borden Chemicals and Plastics Limited Partnership's Quarterly Report on Form 10-Q for the quarter ended March 31, 2000 and is incorporated herein by reference in this Form 10-K Annual Report. /(11)/ Filed as an exhibit to the Partnership's Registration Statement on Form S-1 (File No. 33-17057) and is incorporated herein by reference in this Form 10-K Annual Report. 40 /(12)/ Filed as an exhibit to the Registrant's 1989 Form 10-K Annual Report and is incorporated herein by reference in this Form 10-K Annual Report. /(13)/ Exhibits 10.17, 10.18 and 10.19, which were previously filed, contain information which has been deleted pursuant to an application for confidential treatment pursuant to Rule 406 of the Securities Act of 1933, with respect to which an order has been granted by the Commission. /(14)/ Filed as an exhibit to the Registrant's 2000 Form 10K Annual Report and is incorporated herein by references in this form 10K Annual Report. Reports on Form 8-K. No reports on Form 8-K were filed during the last quarter of the period covered by this report. 41 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP By BCP Management, Inc., General Partner By /s/ Robert R. Whitlow ----------------------------- Robert R. Whitlow Chief Financial Officer and Treasurer Date: July 2, 2002 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities (with BCP Management, Inc., General Partner) indicated, on the date set forth above. Signature Title /s/ William H. Carter Director, Chairman - ------------------------------ William H. Carter /s/ E. Linn Draper Jr Director - ------------------------------ E. Linn Draper, Jr. /s/ Edward H. Jennings Director - ------------------------------ Edward H. Jennings /s/ George W. Koch Director - ------------------------------ George W. Koch /s/ Mark J. Schneider Director, President and Chief Executive Officer - ------------------------------ Mark J. Schneider /s/ Ronald P. Starkman Director - ------------------------------ Ronald P. Starkman /s/ William F. Stoll Jr. Director, Vice-Chairman - ------------------------------ William F. Stoll, Jr. 42 REPORT OF INDEPENDENT ACCOUNTANTS TO THE PARTNERS OF BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP In our opinion, the consolidated financial statements listed in the accompanying index on page 28 present fairly in all material respects, the financial position of Borden Chemicals and Plastics Limited Partnership (the "Company") at December 31, 2001 and December 31, 2000, and the results of its operations and its cash flows for the three years in the period ended December 31, 2001, in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the accompanying index presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Partnership's management; our responsibility is to express an opinion on these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. As described in Note 1 to the financial statements, the Company is expected to be dissolved due to the bankruptcy filing of its General Partner, and the imminent liquidation of substantially all of the assets of its principal operating subsidiary. As a result, the Company has changed its basis of accounting from the going-concern basis to the liquidation basis effective December 31, 2001. As discussed in Note 1 to the consolidated financial statements, effective January 1, 2001, the Company changed its method of accounting for the Operating Partnership from the consolidation method of accounting to the equity method accounting. The selected quarterly financial data on page 58 contain information that we did not audit, and, accordingly, we do not express an opinion on that data. We attempted but were unable to complete a review of the quarterly data for the year ended December 31, 2000 in accordance with standards established by the American Institute of Certified Public Accountants because of the adjustment discussed in Note 13. /s/ PricewaterhouseCoopers LLP Columbus, Ohio April 5, 2002 except for Note 2, as to which the date is May 2, 2002. 43 BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP STATEMENT OF LIABILITIES IN LIQUIDATION AS OF DECEMBER 31, 2001 (In thousands) LIABILITIES (SEE NOTE 2) Note payable to General Partner $ $2,800 Accrued interest 152 Deferred tax on gross margin 1,113 -------- Total liabilities 4,065 Liabilities in liquidation $ 4,065 ======== See notes to consolidated financial statements 44 BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2000 (In thousands) Assets Cash and equivalents $ 3,223 Accounts receivable (less allowance for doubtful accounts of $1,843) Trade 58,444 Related parties 22,328 Inventories Finished and in process goods 44,024 Raw materials and supplies 12,964 Note receivable 9,700 Other current assets 6,207 --------- Total current assets 156,890 --------- Investments in and advances to affiliated companies 4,124 Other assets 37,408 --------- 41,532 --------- Property, plant and equipment, at cost 486,410 less accumulated depreciation (295,995) --------- Property, plant and equipment, net 190,415 --------- Total assets $ 388,837 ========= LIABILITIES AND PARTNERS' CAPITAL Accounts and drafts payable $ 66,495 Accrued interest 3,673 Other accrued liabilities 18,480 --------- Total current liabilities 88,648 --------- Long-term debt 272,410 Deferred tax on gross margin 4,133 Other liabilities 4,555 --------- Total liabilities 369,746 --------- Commitments and contingencies Partners' capital (deficit) Limited Partners 20,371 General Partner (1,280) --------- Total partners' capital 19,091 --------- Total liabilities and partners' capital $ 388,837 ========= See notes to consolidated financial statements 45 BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per Unit Data)
Year Ended December 31 ---------------------------------------------- 2001 2000 1999 ---------------------------------------------- Revenues Net trade sales $ - $ 468,434 $ 383,071 Net sales to related parties - 22,621 19,692 --------- --------- --------- Total revenues - 491,055 402,763 Expenses --------- --------- --------- Costs of goods sold Trade - 449,382 344,445 Related parties - 18,732 14,761 Impairment of long-lived assets and other charges - 58,083 - Marketing, general & administrative expense - 26,719 27,016 Interest expenses 152 27,516 25,040 Bad debt expense 6,933 - - Tax on gross margin (benefit) expense (3,020) 226 2,673 Equity in loss of unconsolidated subsidiaries 19,091 - - Equity in loss of affiliate - 1,200 905 Other (income) expense, including minority interest - (2,230) 183 --------- --------- --------- Total expenses $ 23,156 $ 579,628 $ 415,023 --------- --------- --------- Loss from continuing operations (23,156) (88,573) (12,260) --------- --------- --------- Discontinued operations: Loss income from discontinued operations, net - (12,213) (11,731) Gain on disposal of discontinued operations, net - 1,397 - -------- --------- --------- Net loss (23,156) (99,389) (23,991) Less 1% General Partner interest 232 994 240 --------- --------- --------- Net loss applicable to Limited Partners' interest $ (22,924) $ (98,395) $ (23,751) ========= ========= ========= Per Unit Data, net of 1% General Partner interest: Loss from continuing operations per Unit $ (0.62) $ (2.39) $ (0.33) Loss from discontinued operations per unit (-) (0.29) (0.32) --------- --------- --------- Net loss per Unit $ (0.62) $ (2.68) $ (0.65) ========= ========= ========= Average number of Units outstanding during the Year 36,750 36,750 36,750 Cash distributions declared per Unit - - -
See notes to consolidated financial statements 46 BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
Year Ended December 31 ----------------------------------------------- 2001 2000 1999 --------------- ----------------- ------------- Cash Flows from Operations Net loss ($23,156) ($99,389) ($23,991) Adjustments to reconcile net loss to Net cash provided by (used in) operating activities: Gain on disposal of discontinued operations, net - (1,397) - Equity on loss of unconsolidated Subsidiaries 19,091 - - Bad debt expense 6,933 - - Depreciation - 36,350 36,514 Amortization - 1,671 1,428 Impairment of long-lived assets - 52,533 - Deferred tax on gross margin (3,020) (2,507) 840 Adjustments to reconcile net loss to net cash provided (used) by operating activities Accounts receivables - 9,884 (20,120) Inventories - (5,455) (22,981) Accounts payables - (22) 24,633 Accrued interest 152 264 219 Other, net - (11,165) 4,957 --------- --------- --------- $ - ($19,233) $ 1,499 --------- --------- --------- Cash Flows from Investing Activities Capital expenditures $ - ($13,587) ($18,328) Proceeds from sale of business segments - 38,800 - Proceeds from sale of equipment - - 3,297 Capital contribution to affiliate - (714) (812) Plant acquisition - (15,880) - --------- --------- --------- $ - $ 8,619 ($15,843) --------- --------- --------- Cash Flows from Financing Activities Proceeds from long-term borrowings $ - $ 139,831 $ 33,800 Repayments of long-term borrowings - (130,621) (22,400) Payment of debt issuance costs - (1,132) - --------- --------- --------- $ - $ 8,078 $ 11,400 --------- --------- --------- (Decrease) increase in cash and equivalents $ - ($2,536) ($2,944) Cash and equivalents at beginning of year - 5,759 8,703 --------- --------- --------- Cash and equivalents at end of year $ - $ 3,223 $ 5,759 --------- --------- --------- Supplemental Disclosures of Cash Flow Information Interest paid during the year - $ 25,247 $ 23,393 Gross margin taxes paid during the year - 1,938 1,348 Supplemental Schedule of Non-Cash Investing and Financing Activities Note receivable in partial payment of asset sale - $ 9,700 - Payment of gross margin tax in exchange for note Payable $ 2,800 - -
See notes to consolidated financial statement 47 BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT) (In thousands) Limited General Partners Partner Total ------------------------------------------ Balances at December 31, 1998 142,517 (46) 142,471 Net loss (23,751) (240) (23,991) --------- --------- --------- Balances as December 31, 1999 118,766 (286) 118,480 Net loss (98,395) (994) (99,389) --------- --------- --------- Balances at December 31, 2000 20,371 (1,280) 19,091 Net loss (22,924) (232) (23,156) --------- --------- --------- Balances at December 31, 2001 $ (2,553) $ (1,512) $ (4,065) ========= ========= ========= See notes to consolidated financial statements 48 BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands except Unit and per Unit data) 1. Basis of Presentation Borden Chemicals and Plastics Limited Partnership (the "Company" or "Partnership") is a Delaware limited partnership which owns a 98.9899% limited partner interest as sole limited partner in Borden Chemicals and Plastics Operating Limited Partnership (the "Operating Partnership"). BCP Management, Inc. ("BCPM"), a wholly owned subsidiary of Borden Chemical, Inc., formerly Borden, Inc. ("Borden"), owns a 1% interest as the sole general partner in the Partnership and a 1.0101% interest as the sole general partner ("General Partner") in the Operating Partnership, resulting in an aggregate 2% ownership interest in the partnerships. BCPM manages the activities of the Partnership and the Operating Partnership, and its activities are limited to such management. The General Partner's interest in the Operating Partnership is reflected as minority interest in the accompanying consolidated condensed financial statements. On April 3, 2001, the Operating Partnership and its wholly owned subsidiary BCP Finance Corporation, filed a voluntary petition in the U.S. Bankruptcy Court to reorganize under Chapter 11 of the U.S. Bankruptcy Code. As of April 3, 2001, the Operating Partnership's operations are subject to the jurisdiction of the Bankruptcy Court and are no longer controlled by the Company. Accordingly, the Company no longer consolidates the Operating Partnership's financial results in its condensed consolidated financial statements, resulting in a change in reporting entity. As a result of this change in reporting entity, the Company changed its method of accounting for the Operating Partnership from the consolidation method to the equity method, effective January 1, 2001. Under the equity method, the Partnership's share of the Operating Partnerships' income or loss is recorded in earnings and as an adjustment to the Partnership's investment in the Operating Partnership, to the extent that the Partnership's investment is not reduced below zero. During the first quarter fiscal 2001, the Partnership's investment in the Operating Partnership was reduced to zero, therefore, further losses incurred by the Operating Partnership are no longer recognized by the Partnership. The Partnership did not recognize its 99% share of the Operating Partnership's losses amounting to $255.1 million for the year ended December 31, 2001. Under the Company's Amended and Restated Agreement of Limited Partnership, the Company is to dissolve and wind up its affairs upon, among other events, the bankruptcy of the General Partner or the sale of all or substantially all of the assets and properties of the Operating Partnership. As further discussed in Note 2, the General Partner has filed for Chapter 11 bankruptcy protection on March 22, 2002 and the Operating Partnership is in the process of liquidating all of its assets. Accordingly, it is anticipated that the Company will be dissolved and terminated as a Delaware Limited Partnership in 2002 or thereafter. As a result of the imminent dissolution and termination of the Company, the liquidation basis of accounting and financial statement presentation has been adopted by the Company effective December 31, 2001. The liquidation basis of accounting requires an accrual for an estimate for all liabilities related to expenses to be incurred during the wind-down period. Additionally, assets are stated at their estimated net realizable value and liabilities are stated at their anticipated settlement amounts. The Company is a holding company and does not have its own independent operations, engage in any revenue producing activities, maintain its own bank accounts or have any cash flows or assets. Costs anticipated to be incurred to dissolve and terminate the Company are not anticipated to be significant. 2. Organization, Business and Proceedings Under Chapter 11 The Partnership is a holding company and does not have its own independent operations and does not engage in any revenue producing activities. As of December 31, 2001, the Operating Partnership had three operating locations: its main operating site in 49 Geismar, Louisiana, which produces PVC resins, vinyl chloride monomer and acetylene; a PVC resins plant located in Illiopolis, Illinois; and a PVC resins plant in Addis, Louisiana. Its finished goods PVC resins are sold for further processing into various end-use applications, such as plastic pipe and pipefittings, vinyl siding and window frames, vinyl flooring and other applications. The acetylene plant located in Geismar, Louisiana has been idled since December 2000. On April 3, 2001, the Operating Partnership and its wholly owned subsidiary, BCP Finance Corporation, (collectively, "the Debtors") elected to seek bankruptcy court protection to develop and implement a financial reorganization because, despite management's continuing efforts to reduce the exposure to natural gas, depressed resin prices and demand converged with sharply increased energy costs in the first quarter of 2001 to create a critical debt and liquidity situation. Subsequent to the commencement of the Operating Partnership Chapter 11 case, the Debtors sought and obtained several orders from the Bankruptcy Court which were intended to stabilize and continue business operations. The most significant of these orders (i) approved an amendment (the "Primary DIP Facility") to the prepetition Year 2000 Revolving Credit Facility (the "Prepetition Credit Facility") providing up to $100 million of debtor-in-possession financing, (ii) permitted continued operation of the consolidated cash management system during the Operating Partnership Chapter 11 case in substantially the same manner as it was operated prior to the commencement of the Operating Partnership Chapter 11 case, (iii) authorized payment of pre-petition wages, vacation pay and employee benefits and reimbursement of employee business expenses, and (iv) authorized payment of pre-petition obligations to certain vendors critical to the Operating Partnership's ability to continue its operations. The Primary DIP Facility, which received final Approval of the Bankruptcy Court on July 11, 2001, provides the Operating Partnership with a revolving line of credit in an aggregate amount not to exceed $100 million, subject to borrowing base limitations and bears interest at the Alternate Base Rate plus 1.25%. The Operating Partnership has used amounts borrowed under the Primary DIP Facility for its ongoing working capital needs and for certain other purposes of the Operating Partnership as permitted by that facility. The Operating Partnership granted a security interest to the DIP Lenders in substantially all of the Operating Partnership's assets as security for its obligations under the Primary DIP Facility. All obligations under the Primary DIP Facility are afforded "super-priority" administrative expense status in the Operating Partnership Chapter 11 case. The Primary DIP Facility matured on March 31, 2002, but the lenders agreed, and the Bankruptcy Court approved, the extension of the maturity date to April 30, 2002. The Primary DIP Facility was paid in full on April 18, 2002. In light of the possibility that the Primary DIP Facility would be insufficient to finance the Operating Partnership's working capital needs during the period required to obtain confirmation of a plan of reorganization for the Debtors, the Operating Partnership approached a number of institutional lenders to assess their interest in extending additional credit to the Debtors. None of these lenders were willing to provide credit or terms acceptable to the Operating Partnership. The Operating Partnership requested its general partner, BCPM, to provide a loan to it. On October 31, 2001, the Debtors filed an initial motion with the Bankruptcy Court seeking an interim order to obtain additional, secondary postpetition financing (the "Secondary DIP Facility") from BCPM. The terms of the proposed Secondary DIP Facility were negotiated, on the one hand, by management of the Operating Partnership and the Debtors' legal counsel and, on the other hand, by officers of BCPM and BCPM's legal counsel, with the approval of the Independent Committee of the Board of Directors of BCPM which is comprised of three outside directors who are not employees of the Operating Partnership, BCPM or Borden. The negotiations included efforts to obtain the support of the lenders under the Primary DIP Facility and the Official Committee of Unsecured Creditors appointed in the Operating Partnership Chapter 11 case. The Creditors Committee filed an objection to the initial motion on November 6, 2001. Further negotiations between the Operating Partnership and BCPM occurred, and the parties agreed to revisions to the terms of the proposed Secondary DIP Facility. The Debtors sought interim approval of the revised Secondary DIP Facility. Subject to the terms and conditions of the Secondary DIP Facility, BCPM has agreed to makes loans to the Operating Partnership through March 31, 2002, in an aggregate amount not to exceed 50 $10 million for working capital, other general corporate purposes and to make payments on the Primary DIP Facility. The loans are unsecured, bear interest at the Alternate Base Rate specified in the Primary DIP Facility plus 2.75% and originally matured on March 31, 2002. The Creditors Committee also objected to the revised Secondary DIP Facility. After a hearing, the Bankruptcy Court entered an order on December 20, 2001, granting interim approval to $5 million in loans under the Secondary DIP Facility. On March 22, 2002, BCPM filed a motion in the General Partner Bankruptcy requesting authority to extend the maturity date of the Secondary DIP Facility and approval of the second $5 million of lending authority under the Secondary DIP Facility. This motion was approved by the Bankruptcy Court on March 27, 2002. Subsequently, BCPM filed a further motion seeking authority to lend the Operating Partnership up to $6 million (with sub-limits on the use of funds to pay ordinary costs of administration and severance) after expiration of the Secondary DIP Facility on April 30, 2002. The Bankruptcy Court entered a "bridge order" on April 24, 2002, authorizing such lending until May 23, 2002. The court extended the "bridge order" through June 30, 2002 in the amount of $4.5 million, based on cash flow needs of the Operating Partnership. The maturity date has been further extended to July 17,2002. There can, however, be no assurance that BCPM will be authorized by the Bankruptcy Court to make further loans to the Operating Partnership or that the Operating Partnership will be authorized by the Bankruptcy Court to make further borrowings from BCPM. On March 22, 2002, BCPM, the General Partner of the Company and the Operating Partnership, filed a voluntary petition under Chapter 11 of the Bankruptcy Code. As of the date of the filing, BCPM had cash of approximately $26 million, a claim of approximately $4 million against the Operating Partnership for repayment of borrowings under the Secondary DIP Facility, and claims of approximately $7.8 million against the Operating Partnership for unreimbursed expenses of the Company and the Operating Partnership paid by BCPM, the payment of which is subject to the approval of the Bankruptcy Court. The Operating Partnership explored various strategic alternatives, including possible mergers or joint ventures or a sale or sales of substantially all of its assets. These strategies had been announced by the Company and the Debtors to the public, creditors and the Bankruptcy Court in various public filings, press releases and pleadings. Prior to the filing of the Operating Partnership Chapter 11 case, the Operating Partnership had retained Taylor Strategic Divestitures Corporation ("Taylor") to provide investment-banking services in connection with its attempts to complete an asset sale or other transaction. On September 28, 2001, the Bankruptcy Court entered an order approving the Debtors' retention of Taylor and a fee structure for its services. Throughout the Operating Partnership Chapter 11 case, Taylor has worked with the Debtors to identify and contact potential candidates for asset purchases or other transactions. Beginning in June 2001, certain potential purchasers submitted non-binding expressions of interest for certain of the Debtors' assets. On August 24, 2001, the Debtors filed a motion with the Bankruptcy Court for an order approving bidding procedures for the sale of substantially all of the Debtors' assets. An order approving bidding procedures was entered by the Bankruptcy Court on October 12, 2001. The procedures include a five-stage process for marketing assets, negotiating with potential purchasers, conducting an auction if needed, and obtaining court approval of sales of principal assets. Following due diligence by several candidates, the number and amount of the bids declined. Several candidates cited the events of September 11, 2001 and related events for withdrawing from the bidding process, while others offered business reasons for declining to bid. The Operating Partnership has, however, continued to solicit bids and has conducted discussions with a number of candidates. On December 3, 2001, the Debtors filed a motion with the Bankruptcy Court seeking approval of an asset purchase agreement with Shintech Louisiana, LLC ("Shintech") regarding the sale of the assets and operations of the Addis plant. Shintech agreed to pay: (i) $38 million for the Addis plant, (ii) the value of the Addis inventory and accounts receivable, and (iii) the cost of severance benefits for certain Addis 51 employees. The sale excluded certain items such as cash, intercompany accounts, claims against third parties and equity interests in certain entities. The sale was approved by the Bankruptcy Court on December 20, 2001, and closed on February 28, 2002. The proceeds from the sale were applied to pay expenses of the transaction and outstanding borrowings under the Primary DIP Facility. The Operating Partnership announced on March 8, 2002, that it had executed an asset purchase agreement for the plant at Illiopolis, Illinois, with Formosa Plastics Corporation, Delaware. The Bankruptcy Court approved the Illiopolis transaction at a hearing on March 27, 2002. The transaction closed April 17, 2002, realizing net proceeds of approximately $23 million. The Operating Partnership continues to explore possible dispositions of the Geismar plant, but there is no assurance that a sale of the plant will be completed. The Operating Partnership began idling the Geismar plant in March 2002, and the idlement is scheduled for completion in June 2002. On December 12, 2001 the Creditors Committee filed a motion seeking an order requiring the Debtors to abandon the assets comprising the Geismar plant. The Debtors objected to the motion. The Bankruptcy Court held an initial hearing on this motion on December 20, 2001, and the motion was subsequently withdrawn by the Creditors Committee. On April 16, 2002, the Creditors Committee filed a motion to convert the Operating Partnership Chapter 11 to a case under Chapter 7 of the Bankruptcy Code. The Bankruptcy Court denied the motion on May 2, 2002 and management continues to oversee liquidation of the remaining assets. Management has taken significant steps to improve liquidity, including idling unprofitable or high cost assets and production facilities, wage freezes, reductions-in-force and entering into the credit facilities as described in Note 2. It is not anticipated that holders of the Company's Common Units will receive any distribution as a result of any sales of the Operating Partnership's assets or the Debtors' plan of reorganization or that the Partnership or Operating Partnership will be able to meet its financial obligations in the future. To the extent that payments for Company obligations are not made by BCPM, are not deemed to be reimbursable expenses from the Operating Partnership by the bankruptcy court, or the Operating Partnership does not have the ability to pay expenses deemed to be reimbursable, the Partnership would not have the wherewithal or ability to pay these obligations. 3. Significant Accounting Policies The consolidated financial statements for 2000 and 1999 include the accounts of the Partnership and the Operating Partnership after elimination of inter-partnership accounts and transactions. As discussed in Note 1, the Partnership accounts for its investment in the Operating Partnership under the equity method effective January 1, 2001. The significant accounting policies discussed below, describe the policies used by the Company for periods prior to the de-consolidation of the Operating Partnership. The significant accounting policies summarized below are in conformity with generally accepted accounting principles; however, this is not the basis for reporting taxable income to Unitholders. Revenues - Sales and related cost of sales are recognized upon shipment of products. Net trade and net related party sales are net of sales discounts and product returns and allowances. Shipping and Handling Costs - Shipping and handling costs are recorded as part of cost of goods sold upon shipment of products. Cash Equivalents - The Partnership considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Inventories - Inventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out method. Investments in and Advances to Affiliated Companies - the Operating Partnership owns 50% of a utility station, Monochem, located at the Geismar complex. Utilities provided are allocated to the owners at cost. The Operating Partnership's allocated costs are included in cost of goods sold. 52 The Operating Partnership owns a 51% partner interest in another partnership, V.E.I., engaged in manufacturing and marketing vinyl esters. Due to the significance of the rights held by the minority partner, the Operating Partnership's interest in this partnership is accounted for using the equity method. Debt Issuance Costs - Debt issuance costs are capitalized and are amortized over the term of the associated debt or credit agreement. Property, Plant and Equipment - The amount of purchase price originally allocated by the Partnership at its formation to land, buildings, and machinery and equipment was based upon their relative fair values. Expenditures made subsequent to that formation of the Partnership have been capitalized at cost except that the purchase price for the Addis, Louisiana plant acquired in 1995 was allocated to properties based upon their relative fair values. When properties are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the accounts. Depreciation is recorded on the straight-line basis by charges to costs and expenses based on the estimated useful lives of the assets. The estimated useful lives of the assets are as follow: Land improvements 10 - 20 years Buildings 20 - 30 years Machinery and equipment 5 - 15 years Computer equipment and software 3 - 8 years Long-Lived Assets - When events or changes in circumstances indicate that assets may be impaired, an evaluation is performed in accordance with Statement of Financial Accounting Standards (SFAS) NO. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of". If it is probable that undiscounted future cash flows will not be sufficient to recover an asset's carrying amount, the asset is written down to its fair value. In December 2000, the Partnership idled its acetylene plant and acetylene-based VCM plant due to unfavorable economic conditions. As a result, the fixed assets and other related assets of the idled facilities were reviewed for impairment and were determined to be impaired under SFAS No. 121. As a result, the Partnership recorded a $58,083 charge in 2000. The charge was comprised of $52,533 to write-down the idled acetylene plant, acetylene-based VCM plant and other related assets to fair value as determined by estimated future discounted cash flows and $5,550 to accrue for estimated losses on related purchase commitments to be made during fiscal 2001. Environmental Expenditures - Environmental related expenditures associated with current operations are generally expenses as incurred. Expenditures for the assessment and/or remediation of environmental conditions related to past operations are charged to expense; in this connection, a liability is recognized when assessment or remediation effort is probable and the costs are estimable. See also Note 5 for discussion of the Environmental Indemnity Agreement ("EIA") with Borden. Income Taxes - Income taxes are accounted for under SFAS No.109, "Accounting for Income Taxes". In accordance with this statement, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and the respective tax bases, as measured by the expected 3.5% gross margin tax rate that will be in effect in the periods when the deferred tax assets and liabilities are expected to be settled or realized. Long-Term Incentive Plan - Under the Long-Term Incentive Plan (the Plan), certain management personnel and employees are awarded phantom appreciation rights. Phantom appreciation rights provide the grantee the opportunity to earn a cash amount equal to the appreciation from the base price to the fair market value of the Partnership's traded units at the time of exercise. The phantom appreciation rights vest 50% after two years, with the balance vesting after three years. Due to declines in the price of the units there was no compensation expense recognized for the phantom appreciation rights during 2001, 2000 or 1999. The plan provides the independent committee of the 53 Board of Directors of the General Partner the discretion to decrease the base price of the phantom appreciation rights in certain events, including changes in ownership or capitalization. Earnings per Unit - Basic income per unit it computed by dividing net income, after subtracting the General Partner's 1% interest, by the weighted average number of units outstanding. Currently, there are no potentially dilutive securities; accordingly, basic income per unit and diluted income per unit are equivalent. Comprehensive Income - SFAS No. 130 "Reporting Comprehensive Income", establishes standards for reporting of comprehensive income and its components. However, the Partnership has no elements of "other comprehensive income" and, accordingly, net incomeand comprehensive income are equivalent. Segment Information - Prior to fiscal 2000, the Partnership operated in three reportable segments as defined by SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information." The segments were PVC Polymers Products, Methanol and Derivatives and Nitrogen Products. The Partnership identifies its reportable segments based on the internal organization that is used by management for making operating decisions and assessing performance. During fiscal 2000, the Partnership exited its Methanol and Derivatives and Nitrogen Products business segments. See Note 4. Consequently, the Partnership now operates in only the PVC Polymers Products business segment, which consists of PVC resigns, ethylene-based vinyl chloride monomer (for internal consumption), and its currently idled acetylene and acetylene-based vinyl chloride monomer operations. Internal Use Software - The Partnership accounts for internal use software costs during the provisions of Statement of Provision ("SOP") 98-1, "Accounting for the Costs of computer Software Developed or Obtained for Internal Use." According to the SOP, costs incurred to develop the software during the application development stage, upgrades and enhancements that provide additional functionality are to be capitalized. Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures during the reporting period. Actual results could differ from those estimates. 4. Discontinued Operations On June 27, 2000, the Partnership announced its decision to exit the methanol and derivatives and nitrogen products business segments, as part of a process that included the sale of its formaldehyde and certain other assets for $48,500 to a subsidiary of Borden. The sale of those assets was completed on July 28, 2000, with the Partnership receiving $38,800 in cash and an interest-bearing note for $9,700 was paid in January 2001. The nitrogen products facilities were closed in July 2000, and the methanol production ceased in December 2000. In connection with the discontinuance of the methanol and derivatives and nitrogen products business segments, a gain of $1,397 (net of taxes) was recognized in 2000. The gain was based on the sales proceeds less associated transaction costs, book value of assets sold, charges for the write-down of methanol and nitrogen products assets to estimated net realizable value, and an accrual for estimated losses was adjusted in the fourth quarter of 2000 to reflect actual losses during the phase-out period. Estimated net realizable value for the methanol and nitrogen products assets was determined based on preliminary discussions with potential buyers. Net revenues and (losses) income from the discontinued operations are as follows: Year ended December 31, ---------------------------- 54 2001 2000 1999 ------ -------- -------- Net sales $0 $170,135 $150,531 ------ -------- -------- (Loss) income from discontinued operations 0 $(12,213) $(11,731) Gain on disposal of business segments 0 1,397 ------ -------- -------- Net (loss) income from discontinued operations $0 $(10,816) $(11,731) ====== ======== ======== 5. Environmental and Legal Proceedings Under an Environmental Indemnity Agreement (the "EIA") with Borden, Inc. ("Borden"), Borden has agreed, subject to certain specified limitations, to indemnify the Partnership in respect of environmental liabilities arising from facts or circumstances that existed and requirements in effect prior to November 30, 1987, the date of the initial sale of the Geismar and Illiopolis plants to the Partnership. The Partnership is responsible for environmental liabilities arising from facts or circumstances that existed and requirements that become effective on or after such date. With respect to certain environmental liabilities that may arise from facts or circumstances that existed and requirements in effect both prior to and after such date, Borden and the Operating Partnership will share liabilities on an equitable basis considering all of the facts and circumstances including, but not limited to, the relative contribution of each to the matter and the amount of time each has operated the assets in question (to the extent relevant). No claims can be made under the EIA for liabilities incurred after November 30, 2002. The Operating Partnership is subject to extensive federal, state and local environmental laws and regulations which impose limitations on the discharge of pollutants into the air and water, establish standards for the treatment, storage, transportation and disposal of solid and hazardous wastes, and impose obligations to investigate and remediate contamination in certain circumstances. The Operating Partnership has expended substantial resources, both financial and managerial, and it anticipates that it will continue to do so in the future. Failure to comply with the extensive federal, state and local environmental laws and regulations could result in significant civil or criminal penalties and remediation costs. The Operating Partnership is subject to legal proceedings and claims which may arise in the ordinary course of business. Management of the Operating Partnership believes, based on the information it currently possesses, that the amount of the ultimate liability, taking into account its insurance coverage, including its risk retention program and Environmental Indemnity Agreement with Borden, is unlikely to have a material adverse effect on the financial position or results of operations of the Operating Partnership. Any potential liability may be impacted by the Operating Partnership Chapter 11 case described in Note 2. 6. Debt On May 1, 1995, the Operating Partnership issued $200 million aggregate principal amount of 9.5% Notes due 2005 (the "Notes") pursuant to an Indenture dated as of May 1, 1995 (the "Indenture"). The Notes are senior unsecured obligations of the Operating Partnership. The Notes include restrictions on the Operating Partnership's ability to make cash distributions, incur additional indebtedness, sell assets, engage in sale/leaseback and to take certain other actions. Upon a Change in Control, the holders of the Notes may require the Operating Partnership to repurchase their Notes at a price equal to 101% of the aggregate principal amount plus accrued and unpaid interest to the date of repurchase. As a result of the filing of the Operating Partnership Chapter 11 case described in Note 2, no payments will be made by the Debtors on the Notes except as approved by the Bankruptcy Court. The Company has no obligation with regards to payment of the Subordinated Notes. 7. Related Party Transactions 55 The Company and the Operating Partnership are managed by BCPM, subject to orders of the Bankruptcy Court, pursuant to the Amended and Restated Partnership Agreement of the Company and the Amended and Restated Partnership Agreement of the Operating Partnership, respectively. Neither the Company nor the Operating Partnership directly employs any of the persons responsible for managing or operating the business of the Operating Partnership, but instead relies on the officers and employees of the General Partner and of Borden who provide support to or perform services for the General Partner and reimburses the General Partner or Borden (on its own or on the General Partner's behalf) for their services. The Operating Partnership sold its formaldehyde and certain other assets for $48.5 million to Borden on July 28, 2000. As part of the transaction, the Operating Partnership and Borden entered into a series of agreements with respect to the operations of the parties at the Geismar complex, including the provision of utilities and other services by the Operating Partnership to Borden's facilities, the provision of dock capacity by Borden to the Operating Partnership at Borden's dock facility, the provision of a control room by Borden to the Operating Partnership, and indemnification of Borden by the Operating Partnership for any environmental liability relating to the assets purchased by Borden during the period in which they were owned by the Operating Partnership. In April 2001, the Partnership borrowed $2.8 million from BCPM in order to pay federal gross margin taxes, and has issued a demand note, bearing interest at prime rate plus 1.50%, payable to BCPM for the same amount. The Partnership recorded a deferred tax liability of $1.6 million and a receivable of $4.4 million from the Operating Partnership for future reimbursement of these expenses. Management believes the Partnership is entitled to reimbursement for these obligations by the Operating Partnership, pursuant to the Partnership Agreement and consistent with past practice; however, such reimbursement is subject to approval of the Bankruptcy Court. This receivable was written down to zero upon the Operating Partnership filing for bankruptcy due to the uncertainty surrounding the ultimate collection of these amounts. See Note D to the Operating Partnership financial statements on page 64 for information regarding related party transactions between BCPM and the Operating Partnership. 8. Tax on Gross Margin In August, 1997 legislation was enacted which extends indefinitely the Partnership's ability to be treated as a partnership for federal income tax purposes provided that the Partnership elected to be subject to a 3.5% tax on taxable gross income beginning on January 1, 1998 (the ability to be treated as a partnership had been scheduled to expire on December 31, 1997). The Partnership made such an election. Taxes on gross margin expense are comprised of: Year ended December 31, ---------------------------- 2001 2000 1999 -------- -------- -------- Current tax expense $ 0 $ 2,733 $ 1,833 Deferred tax (benefit) expense (3,020) (2,507) 840 -------- -------- -------- Total $ (3,020) $ 226 $ 2,673 ======== ======== ======== At December 31, 2000, substantially all of the Partnership's deferred tax liability related to property and equipment. Deferred tax benefits were not provided for 2001 tax losses, as it is unlikely that such benefits will be realized in the future. 56 9. Property, Plant and Equipment Property, plant and equipment at December 31, 2000 consisted of the following: December 31, 2000 ----------------- Land and improvements $ 16,385 Buildings 45,881 Machinery and equipment 400,989 Computer software and equipment 23,155 ---------- $ 486,410 ========== 10. Allocation of Income and Loss Income and loss of the Partnership is allocated in proportion to the partners' percentage interests in the Partnership, provided that at least 1% of the income or loss of the Partnership and Operating Partnership is allocated to the General Partner. For gross margin tax purposes, certain items are specifically allocated to account for differences between the tax basis and fair market value of property contributed to the Partnership by Borden and to facilitate uniformity of Units. In addition, the Partnership Agreement generally provides for an allocation of gross income to the Unitholders and the General Partner to reflect disproportionate cash distributions, on a per Unit basis. 11. Cash Distributions Under the terms of the Partnership Agreement, the Partnership is required to make quarterly distributions to Unitholders and the General Partner of 100% of its Available Cash. Available Cash each quarter generally consists of cash receipts less cash disbursement (excluding cash distributions to Unitholders and the General Partner) and reserves. Distributions of Available Cash are generally made 98% to the Unitholders and 2% to the General Partner, subject to the payment of an incentive distribution to the General Partner after a target level of cash distributions to the Unitholders is achieved for the quarter. The incentive distribution is 20% of any remaining Available Cash for the quarter (in addition to the General Partner's 2% regular distribution). Incentive distributions are accounted for as an expense of the Partnership. Cash distributions are limited by the terms of the Partnership's debt agreements- (See Note 6) and are unlikely to be made in the future during the Chapter 11 process or upon its resolution. 12. Rights to Purchase Units On April 8, 1997, the General Partner declared a distribution of one common unit purchase right (a "right") for each outstanding common unit of the Partnership and the number of Rights most closely approximating 1/99 of the number of the units outstanding corresponding to the General Partner's interest in the Partnership. The Rights are not exercisable until the earlier to occur of: (i) ten days following a public announcement that a person or affiliated group of persons (an "Acquiring person") have acquired 15% or more of the outstanding units or (ii) ten days (or such later date as may be determined by the General Partner prior to someone becoming an Acquiring person) following the commencement of, or announcement of an intention to make, a tender or exchange offer the consummation of which would result in a person or affiliated group of persons acquiring 15% or more of the outstanding units. Until then, the Rights will trade with the units and a Right will be issued with each additional unit issued. The number of Rights outstanding at December 31, 2001 was 37,121,212. 57 Each right entitles the holder to purchase from the Partnership one common unit at a price of $21.00, subject to adjustment in certain circumstances. In the event an Acquiring Person acquires a 15% or more interest in the Partnership, each holder of a Right, with the exception of the Acquiring Person, will have the right to receive upon exercise of the Right at the then exercise price of the Right, that number of Units having market value of two times such exercise price. At any time prior to an Acquiring Person become such, the General Partner may redeem the Rights in whole, but not in part, for $0.01 per Right. The Rights, which do not have voting rights, generally will expire no later than April 8, 2007. 13. The following table sets forth certain unaudited quarterly financial data for the periods indicated (in thousands except per unit data):
2001 Quarters (a) - ----------------------------------------------------------------------------------- First Second Third Fourth -------- -------- ------- ------- Net income (loss) $(19,091) $ (6,983) $ 2,459 $ 459 Net income (loss) per Unit - basic and diluted: $ (0.51) $ (0.19) $ 0.07 $ 0.01
2000 Quarters (Not reviewed) - ----------------------------------------------------------------------------------- First Second Third Fourth -------- -------- ------- ------- Revenues $140,478 $139,707 $113,333 $ 97,537 Gross profit 20,600 23,081 4,246 (24,986) Income (loss) from continuing operations 4,974 8,638 (8,078) (94,107)/(b)/(c)/ Income (loss) from discontinued operations (4,603) (5,589) - (2,021) Net gain on disposal of discontinued operations - 5,012 - (3,615) Net income (loss) 371 8,061 (8,078) (99,743)/(b)/(c)/ Net income (loss) per Unit - basic and diluted: Continuing operations 0.14 0.23 (0.22) (2.71) Discontinued operations (0.12) (0.02) - (0.15) ------- -------- ------- ------- Total 0.02 0.21 (0.22) (2.86)
(a) Reflects the de-consolidation of the Operating Limited Partnership effective January 1, 2001. See Note 1. (b) Includes a $58,083 charge in the fourth quarter for impairment of long-lived assets and other charges. (c) Includes a $15,477 fourth quarter adjustment (allocated $13,456 to cost of sales and $2,021 to discontinued operations) associated with system issues encountered from the implementation of a new enterprise-wide information system. The impact of the situation on specific interim periods could not be determined and as a result, the entire adjustment was recorded in the fourth quarter 2000. 14. Consolidated Debtor-In-Possession Financial Statements of Borden Chemicals and Plastics Operating Limited Partnership The consolidated Debtor-In-Possession financial statements of the Operating Partnership as of and for the year ended December 31, 2001 are as follows: 58 STATEMENT OF NET LIABILITIES IN LIQUIDATION AS OF DECEMBER 31, 2001 (in thousands):
Going Concern Liquidation Basis Liquidation Basis Adjustments Basis ---------------------------------------------------------- ASSETS Cash and equivalents $ 2,791 $ - $ 2,791 Accounts receivable Trade 25,459 - 25,459 Related parties 558 - 558 Inventories Finished and in process goods 18,788 3,162(a) 21,950 Raw materials and supplies 4,080 - 4,080 Assets held for sale 53,907 - 53,907 Other assets 13,074 (1,539)(a) 11,535 ---------- ---------- --------- Total assets $ 118,657 $ 1,623 $ 120,280 ========== ========== ========= LIABILITIES AND PARTNERS' CAPITAL Liabilities not subject to compromise Priority debt $ 60,000 - $ 60,000 Accounts payable 13,856 - 13,856 Accrued severance and closure costs 23,876 18,900(b) 42,776 Accrued interest 310 - 310 Deferred tax on gross margin 1,113 - 1,113 Other accrued liabilities 9,820 (2,183)(a) 7,637 ---------- ---------- --------- Total liabilities not subject to compromise 108,975 16,717 125,692 Total liabilities subject to compromise (see Note C) 267,888 - 267,888 ---------- ---------- --------- Total liabilities $ 376,863 $ 16,717 $ 393,580 ========== ========= Net liabilities in liquidation $ 273,300 ========= Partners' capital (deficit) General Partner (3,156) Limited Partners (255,050) ---------- Total partners' capital (258,206) ---------- Total liabilities and partners' capital $ 118,657 ==========
See notes A-F to Debtor-in-Possession financial statements that follow. (a) Represents adjustments to the stated assets and liabilities at their estimated net realizable values. (b) Represents estimate of net operating costs to be incurred subsequent to December 31, 2001 and throughout the liquidation process. 59 CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2000 (in thousands):
ASSETS Current assets Cash and equivalents $ 3,223 Accounts receivable (less allowance for doubtful accounts of $1,843) Trade 58,444 Related parties 22,328 Inventories Finished and in process goods 44,024 Raw materials and supplies 12,964 Other current assets 15,907 --------- Total current assets 156,890 --------- Property, plant and equipment, net 190,415 Investments in and advances to affiliated companies 4,124 Other assets 37,408 --------- Total assets $ 388,837 ========= LIABILITIES AND PARTNERS' CAPITAL Current liabilities Accounts payable $ 66,495 Accrued interest 3,673 Other accrued liabilities 18,480 -------- Total current liabilities 88,648 -------- Long-term debt 272,410 Deferred tax on gross margin 4,133 Other liabilities 4,914 --------- Total liabilities 370,105 --------- Partners' capital (deficit) General Partner (359) Limited Partners 19,091 --------- Total partners' capital 18,732 --------- Total liabilities and partners' capital $ 388,837 =========
See notes A-F to Debtor-in-Possession financial statements that follow. 60 CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31 (in thousands):
2001 2000 1999 -------------------------------------- Revenues Net trade sales $ 345,522 $ 468,434 $ 383,071 Net sales to related parties - 22,621 19,692 --------- --------- --------- Total revenues 345,522 491,055 402,763 --------- --------- --------- Expenses Costs of goods sold Trade 390,278 449,382 344,445 Related parties - 18,732 14,761 Impairment of long-lived assets and other charges 180,744 58,083 - Marketing, general & administrative expense 26,439 26,719 27,016 Interest expense 12,337 27,516 25,040 Tax on gross margin (2,461) 226 2,673 Equity in loss of affiliate 1,863 1,200 905 Other (income) expense 2,363 (3,244) (62) Reorganization costs: Professional fees 7,519 - - Loss on debt issuance costs 3,755 - - Gain on settlement of pre-petition claims (377) - - --------- --------- --------- Total expenses $ 622,460 $ 578,614 $ 414,778 --------- --------- --------- Loss from continuing operations (276,938) (87,559) (12,015) --------- --------- --------- Discontinued operations: Loss from discontinued operations, net - (12,213) (11,731) Gain on disposal of discontinued operations, net - 1,397 - --------- --------- --------- Net loss (276,938) (98,375) (23,746) ========= ========= =========
See notes A-F to Debtor-in-Possession financial statements that follow. 61 CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31 (in thousands):
2001 2000 1999 --------------------------------------- Cash Flows from Operations Net (loss) ($276,938) ($ 98,375) ($ 23,746) Adjustments to reconcile net (loss) to net cash provided (used) by operating activities: Gain on disposal of discontinued operations, net - (1,397) - Impairment of long-lived assets 180,744 52,533 - Depreciation 21,044 36,350 36,514 Bad debt expense 3,181 1,420 (172) Amortization 2,017 1,671 1,428 Deferred tax on gross margin (3,020) (2,507) 840 Changes in certain assets and liabilities Accounts receivables 51,574 8,464 (19,948) Inventories 34,120 (5,455) (22,981) Accounts payables (12,748) (22) 24,633 Accrued liabilities 33,307 1,660 3,601 Other, net (15,544) (13,575) 1,330 Reorganization items Payment of professional fees (5,867) - - Loss on debt issuance costs 3,755 - - Gain on settlement of pre-petition claims (377) - - --------- --------- --------- Net cash flows provided (used) by operating activities $ 15,248 ($ 19,233) $ 1,499 --------- --------- --------- Cash Flows from Investing Activities Capital expenditures $ (11,610) ($ 13,587) ($ 18,328) Proceeds from sale of business segments - 38,800 - Proceeds from sale of equipment - - 3,297 Capital contribution to affiliate - (714) (812) Proceeds from note receivable 9,700 - - Plant acquisition - (15,880) - --------- --------- --------- Net cash flows provided (used) by investing activities $ (1,910) $ 8,619 ($ 15,843) --------- --------- --------- Cash Flows from Financing Activities Proceeds from long-term borrowings $ 161,774 $ 139,831 $ 33,800 Repayments of long-term borrowings (174,184) (130,621) (22,400) Payment of debt issuance costs (1,360) (1,132) - --------- --------- --------- Net cash flows provided (used) by financing activities $ (13,770) $ 8,078 $ 11,400 --------- --------- --------- (Decrease) increase in cash and equivalents $ (432) ($ 2,536) ($ 2,944) Cash and equivalents at beginning of year 3,223 5,759 8,703 --------- --------- --------- Cash and equivalents at end of year $ 2,791 $ 3,223 $ 5,759 --------- --------- --------- Supplemental Disclosures of Cash Flow Information Interest paid during the year 5,610 25,247 23,393 Gross margin taxes paid during the year - 1,938 1,348 Supplemental Schedule of Non-Cash Investing and Financing Activities Note receivable in partial payment of asset sale $ - $ 9,700 $ -
See notes A-F to Debtor-in-Possession financial statements that follow. 62 NOTES TO CONSOLIDATED DEBTOR-IN-POSSESSION FINANCIAL STATEMENTS: A. Basis of presentation and Bankruptcy Proceedings On April 3, 2001, the Operating Partnership and its wholly-owned subsidiary, BCP Finance Corporation, filed a voluntary petition in the U.S. Bankruptcy Court to reorganize under Chapter 11 of the U.S. Bankruptcy Code. During the fourth quarter 2001, the Operating Partnership began accepting bids for the sale of substantially all of its assets. An asset purchase agreement was entered into on December 21, 2001 for the sale of the Addis facility and the plant was subsequently sold in February 2002. Its Illiopolis facility was sold in April 2002 and the remaining facility, Geismar, began to be idled in March 2002 and is expected to be completed by June 2002. The Operating Partnership continues to explore possible dispositions of the Geismar plant. As a result of the imminent liquidation of the Operating Partnership, the liquidation basis of accounting and financial statement presentation has been adopted by the Operating Partnership effective December 31, 2001. The liquidation basis of accounting requires the Operating Partnership to accrue an estimate for all liabilities related to expenses to be incurred during the wind down period. Additionally, assets and liabilities are stated at their estimated net realizable value. The estimated net realizable value of assets represents management's best estimate of the recoverable value of the assets, net of selling expenses and without consideration for the effect that the settlement of any litigation may have on the value of the assets. The assets are held at their net realizable value until they are sold or liquidated. There can be no assurance, however, that the Operating Partnership will be successful in selling the assets at the net realizable value. The valuation of assets and liabilities necessarily requires many estimates and assumptions, and there are substantial uncertainties in liquidating the Company. The valuations presented in the accompanying Statement of Net Liabilities in Liquidation represent estimates based on present facts and circumstances of the net realizable values of assets, estimated liabilities and estimated costs associated with carrying out the liquidation of the Company. The actual values and costs could be higher or lower than the amounts recorded as of December 31, 2001. Accounts payable and accrued expenses as of December 31, 2001 include estimates of costs to be incurred in carrying out the liquidation of the Company. These costs include a reserve for salary continuation costs, closure costs associated with the Geismar facility and other estimated liabilities including future non-cancelable lease payments. The actual costs could vary significantly from the related provisions due to uncertainty related to the length of time required to liquidate the Company and complexities and contingencies. For more detailed information regarding the proceedings under Chapter 11, see Note 2 to the Limited Partnership financial statements. At this time, the Operating Partnership assets are not expected to generate enough cash to make a distribution to unit holders of the Company or to satisfy all of the Operating Partnership's debts. B. Significant Accounting Policies The consolidated financial statements include the accounts of the Operating Partnership and its subsidiary after elimination of intercompany accounts and transactions. The significant accounting policies discussed in Note 3 to the Limited Partnership financial statements are also applied by the Operating Limited Partnership. C. Liabilities subject to compromise Liabilities subject to compromise refer to liabilities incurred prior to the commencement of the Operating Partnership Chapter 11 case. These liabilities consist primarily of amounts outstanding under the Company's long-term debt and also include accounts payable, accrued interest, and other accrued expenses. These amounts represent management's best estimate of known or potential claims to be resolved in connection with the Operating Partnership Chapter 11 case. Certain creditors have submitted claims in excess of the amounts recorded as liabilities by the Operating 63 Partnership. Such claims remain subject to future adjustments based on reconciliation and negotiations with applicable creditors, actions of the Bankruptcy Court, further developments with respect to disputed claims, or other events. Payment terms for these amounts, which are considered long-term liabilities at this time, will be established in connection with the Operating Partnership Chapter 11 case. The Operating Partnership has received approval from the Bankruptcy Court to pay or otherwise honor certain of its pre-petition obligations, including pre-petition wages, vacation pay, employee benefits and reimbursement of employee business expenses. The Bankruptcy Court also has authorized the Company to pay pre-petition obligations to critical vendors to aid the Company in maintaining its normal operations. Liabilities subject to compromise consist of the following as of December 31, 2001 (in thousands): Long-term debt $200,000 Pre-petition accounts payable 39,891 Accrued interest 8,073 Payable to BCPM 7,706 Other accrued liabilities 12,218 -------- Total liabilities subject to compromise $267,888 D. Related party transactions The Company and the Operating Partnership are managed by BCPM, subject to orders of the Bankruptcy Court, pursuant to the Amended and Restated Partnership Agreement of the Company and the Amended and Restated Partnership Agreement of the Operating Partnership, respectively. Neither the Company nor the Operating Partnership directly employs any of the persons responsible for managing or operating the business of the Operating Partnership, but instead relies on the officers and employees of the General Partner and of Borden who provide support to or perform services for the General Partner and reimburses the General Partner or Borden (on its own or on the General Partner's behalf) for their services. The Operating Partnership sold its formaldehyde and certain other assets for $48.5 million to Borden on July 28, 2000. As part of the transaction, the Operating Partnership and Borden entered into a series of agreements with respect to the operations of the parties at the Geismar complex, including the provision of utilities and other services by the Operating Partnership to Borden's facilities at an annual charge of approximately $1.2 million for 2001, the provision of dock capacity by Borden to the Operating Partnership at Borden's dock facility, the provision of a control room by Borden to the Operating Partnership, and indemnification of Borden by the Operating Partnership for any environmental liability relating to the assets purchased by Borden during the period in which they were owned by the Operating Partnership. The Company subleased 99 railcars from Borden at an annual cost of $0.5 million. As part of the Bankruptcy Court proceedings, the Company elected to reject the sublease agreement with Borden. As a result of this lease rejection, Borden has offset approximately $1.8 million from the proceeds of the $37.5 million note used to capitalize BCPM. BCPM has a claim against the Company for the amount of this offset. As part of the Borden offset, invoices amounting to $0.3 million for exchanges, environmental and utility services were also offset. The employees of BCPM (together with employees providing support to or services for BCPM) operate the Partnership and participate in various General Partner benefit plans including pension, retirement savings, post-retirement other than pension, post employment, and health and life insurance. The Partnership has no direct liability for such benefits since the Partnership does not directly employ any of the persons responsible for managing and operating the Partnership, but instead reimburses the General Partner (on its own or BCPM's behalf) for their services. Charges to the Partnership for such services are actuarially determined where appropriate. The Partnership expenses the full amount of such charges but only reimburses the General Partner (on its own or BCPM's behalf) for actual benefits paid. The difference between cash payments to the General Partner (on its own or BCPM's behalf) and expense is accrued on the Partnership's books. The General Partner maintains a post- 64 retirement and disability plan for employees of the General Partner. This liability was approximately $4.4 million as of December 31, 2001. During 2001, BCPM made unreimbursed severance payments totaling $0.8 million to former employees of the Operating Partnership. In addition, BCPM also made unreimbursed payments for certain professional services and other expenses of $2.3 million. The Operating Partnership has reflected these payments as expense in the condensed statement of operations and have recorded a corresponding payable to BCPM, which liability is included in liabilities subject to compromise in the accompanying consolidated condensed balance sheet at December 31, 2001. In December 2001, the Operating Partnership entered into a Loan Agreement "Loan Agreement" with BCPM whereby BCPM agreed to provide loans up to $10 million for the Operating Partnership to use for working capital requirements or other general corporate purposes in the event that there is no borrowing availability under the Operating Partnership's revolving credit facility with Fleet. The Operating Partnership could only borrow pursuant to this Loan Agreement if there were no positive borrowing availability under the Operating Partnership's revolving credit facility with Fleet. Borrowings under the Loan Agreement were payable on the earlier of a) March 31, 2002, which was subsequently extended to April 30, 2002, b) the date of confirmation of a plan of reorganization, c) the date upon which the sale of substantially all of the Operating Partnership's assets has been completed, or d) an event of default. Borrowings under the Loan Agreement bear interest at the Alternate Base Rate plus 2.75%. The Bankruptcy Court approved the Loan Agreement for borrowings up to $5 million. Borrowings under the Loan Agreement have been granted administrative expense status. On April 24, 2002, the Bankruptcy Court modified the Secondary DIP Facility by the entry of a "bridge order" authorizing BCPM to lend up to $6 million to the Operating Partnership through May 24, 2002. The Bankruptcy Court subsequently revised the bridge order reducing lending authority to $4.5 million through July 17, 2002. Through the normal course of business, the Operating Partnership makes operating payments for two of its joint ventures, V.E.I. and Monochem. The Operating Partnership is then reimbursed in full for these payments from the joint ventures. At December 31, 2001, the receivable from these joint ventures amounted to $4.5 million. E. Impairment of Long-Lived Assets and Other Charges During the year ended December 31, 2001, the Company recorded restructuring and other charges of $192.6 million primarily associated with asset impairment charges, bankruptcy court proceedings, severance, and plant closure costs. Restructuring charges for bankruptcy reorganization include professional fees of $7.5 million, a write off of pre-petition debt issuance costs of $3.8 million and a gain from the settlement of a pre-petition liability of $0.4 million. In the year ended December 31, 2001, the Company severed 101 employees, at an expense of $3.6 million. The Company continues to pay 75% of the cost of medical and dental insurance for severed employees for up to six months after termination. This will continue as long as the Company has the ability to provide and maintain a group medical plan. The cost of these health benefits for severed employees for the year ending December 31, 2001, was $0.2 million. In July 2001, the court approved a Severance Plan designed to retain key non-union employees whereby employees will receive severance benefits which vary based on years of service. The plan also provided for stay bonus payments. As a result of the imminent liquidation of the Operating Partnership, it was determined that payment of severance under the Plan to the remaining employees was probable. As a result, additional severance cost in the amount of $9.5 million were accrued in the fourth quarter 2001. These employees were terminated in 2002 and received severance payments in accordance with the plan. Additionally, stay bonuses of $2.3 million were expensed as incurred during 2001. An impairment charge of $123.0 million was recorded during the third quarter to write-down to fair value long-lived assets associated with the Geismar and Addis facilities 65 in accordance with FAS 121 "Accounting for the Impairment of Long-Lived Assets and Assets to be Disposed of" as the Company's estimates of future undiscounted cash flows associated with these facilities no longer recovered the asset's carrying value. Estimates of future undiscounted cash flows were lowered during the third quarter as a result of several factors including the expected loss of a significant customer contract, continued deterioration in the overall economy, and an extended forecast in the expected upturn of the PVC industry from previous projections. The fair value of the assets was estimated by management based on various sources including binding or non-binding bids or offers from third parties, other discussions with third parties, and an independent asset valuation. During the fourth quarter 2001, the Court approved bidding proceedings for the sale of substantially all of the Operating Partnership's assets and the Company began the process of selling its assets. As a result, the Operating Partnership's long-lived assets became held for sale and were written down to fair value less cost to sell in accordance with FAS 121, resulting in an additional impairment charge of $31.1 million. Additionally, the Company accrued $12.2 million for estimated closure costs associated with the Geismar facility and costs associated with rejecting rail car leases. The following is a schedule of the restructuring and related charges recorded in the year ended December 31, 2001: in millions) Description Type Charge Payment Balance Severance and stay bonuses Cash $ 15.4 $(1.8) $13.6 Closure costs Cash 8.7 - 8.7 Lease rejection costs Cash 3.5 - 3.5 Bankruptcy - professional fees Cash 7.5 (5.8) 1.7 ------------------------------- Total cash $ 35.1 $(7.6) $27.5 Asset impairment Non-cash 154.1 Bankruptcy - debt issuance costs Non-cash 3.8 Bankruptcy - claim settlement Cash (0.4) ------ Total non-cash 157.5 Total $192.6 In December 2000, the Operating Partnership idled its acetylene plant and acetylene-based VCM plant due to unfavorable economic conditions. As a result, the fixed assets and other related assets of the idled facilities were reviewed for impairment and were determined to be impaired under SFAS No. 121. As a result, the Operating Partnership recorded a $58.1 million charge in 2000. The charge was comprised of $52.6 million to write-down the idled acetylene plant, acetylene-based VCM plant and other related assets to fair value as determined by estimated future discounted cash flows and $5.5 million to accrue for losses on related purchase commitments to be made during fiscal 2001. Actual payments on the purchase commitments during 2001 amounted to $4.6 million. The excess accrual of $0.9 million was reversed into income through Impairment of Long-Lived Assets and Other Charges during 2001. F. Commitments & Contingencies Purchase Commitments The Company has entered into a fifteen year supply agreement (commencing in 1997) to provide a long-term supply of ethylene, a raw material, and minimize price volatility. The purchase price for product varies with the supplier's raw material and variable costs, which are market-driven, as well as its fixed processing costs. Subject to rights under the contract and applicable bankruptcy law, the Operating Partnership is required to purchase a specified amount of ethylene per month throughout the term of the contract. As a result of ceasing manufacturing and distribution operations at the Geismar facility, the Operating Partnership did not purchase the full amount required during April 2002 and may not purchase the full amount required thereafter. The Operating Partnership is considering assuming the 66 contract and assigning it to a third party under section 365 of the Bankruptcy Code. There can be no assurance, however, that the Operating Partnership will identify and reach an agreement with a third party. Nor can there be any assurance that the Bankruptcy Court will approve any proposed assumption and assignment. If the Operating Partnership does not assign the contract to a third party, the supplier may take the position that the Operating Partnership is in default under the contract. If so, the supplier may attempt to terminate the contract and assert a claim for breach of the contract. Likewise, the supplier may attempt to assert a claim for breach of the contract if the Operating Partnership chooses to reject the contract under section 365 of the Bankruptcy Code. If the supplier asserts a claim for breach, the supplier may contend that its damages include: (i) amounts owing under the contract that accrued but were unpaid pre-petition, (ii) amounts owing under the contract that accrued but were unpaid postpetition and (iii) amounts the contract purports to impose in the nature of liquidated damages. In the aggregate, the supplier may contend that these three components of damages amount to approximately $26 million. No provision has been made in the financial statements for any damages the supplier may contend arise from breach, because of the possibility of assuming and assigning the contract and thereby eliminating the Operating Partnership's liability for any such damages. If the contract is not assigned and the supplier seeks damages, the Operating Partnership may take the position that all damages constitute pre-petition liabilities subject to compromise. In contrast, the supplier may attempt to obtain administrative priority for some portion of any damages. Although the Operating Partnership most likely would contest administrative priority and assert all possible defenses to all three components of the damages, there can be no assurance that the supplier would not succeed. Environmental and Legal Contingencies The Operating Partnership is subject to extensive state, federal and local laws and regulations. See Note 5 to the Limited Partnership financial statements for further information regarding contingencies relating to these environmental matters. Contingencies for the Company also include lawsuits and claims, which arise in the normal course of business. Provisions of $5.3 million have been recorded as of December 31, 2001, for these various matters. In the opinion of management, the amount of the ultimate liability, taking into account its insurance coverage including its risk retention program and environmental indemnity agreement with Borden, would not materially affect the financial position or results of operations of the Operating Partnership. Any potential liability may be impacted by the Chapter 11 Cases described in Note 2. Liens Liens in the amount of $3.0 million have been filed against specific assets of the Operating Partnership. If the Court approves these liens, the liens would need to be paid before the related assets could be sold by the Operating Partnership. These obligations have been accrued in pre-petition liabilities. Operating Lease Arrangements The Company leases certain railcars under operating leases, which expire over the next fifteen years. Substantially all of these leases were rejected due to the bankruptcy proceedings during 2001 and 2002. Certain obligations exist after the rejection of these leases to clean and return these railcars to the lessor. Estimated costs of $1.7 million for cleaning and returning these railcars has been included in the Impairment of Long-Lived Assets and Other Charges, as discussed in Note 5. No provision has been established at December 31, 2001 for potential claims which may be asserted by lessors for future rentals under the respective lease agreements subsequent to the lease rejection dates as management does not believe that such claims would be allowed by the Bankruptcy Court. 67 Borden Chemicals and Plastics Limited Partnership Schedule II - Valuation and Qualifying Accounts (Dollars in thousands)
Charged Balance at Charged to to other Balance at beginning of cost and accounts- Deductions - end of Description period expenses describe describe period - ----------- ------------ ---------- --------- ------------ ---------- 2001 $1,843 $6,933 $ - $(8,776) (2) $ 0 Allowance for doubtful accounts ====== ======= ==== ============ ======= 2000 $ 456 $1,420 $ - $ (33) (1) $ 1,843 Allowance for doubtful accounts ====== ======= ==== ============ ======= 1999 $ 672 $ (172) $ - $ (44) (1) $ 456 Allowance for doubtful accounts ====== ======= ==== ============ =======
NOTES: (1) Accounts receivable balances written off during the period. (2) Includes $1,843 for the de-consolidation of the Operating Limited Partnership, $3,020 for the reduction of both the receivable and related allowance for amounts due from the Operating Limited Partnership for gross margin tax liabilities as a result of a decrease in the deferred gross margin tax liability, and $3,913 as a result of adjusting receivables to their estimated net realizable value at December 31, 2001 as a result of adopting the liquidation basis of accounting. 68 EX-10.42 3 dex1042.txt ORDER TO IMPLEMENT EMP. RETENTION & SEVERANCE PLAN Exhibit 10.42 UNITED STATES BANKRUPTCY COURT DISTRICT OF DELAWARE In re: : : Jointly Administered BORDEN CHEMICALS AND : Case No. 01-1268 (RRM) PLASTICS OPERATING LIMITED : PARTNERSHIP, a Delaware limited : partnership, et al., : : Chapter 11 Debtors. : ORDER AUTHORIZING DEBTORS AND DEBTORS IN POSSESSION TO IMPLEMENT KEY EMPLOYEE RETENTION BONUS PLAN AND SEVERANCE PLAN --------------------------------------- This matter coming before the Court on the Motion of Debtors and Debtors in Possession for an Order Authorizing Them to Implement Key Employee Retention Bonus Plan and Severance Plan (the "Motion") filed by the above-captioned debtors and debtors in possession (collectively, the "Debtors"); the Court (a) having reviewed the Motion and all pleadings related thereto, including the Limited Objection of Official Committee of Unsecured Creditors to Debtors' Motion for Approval of Key Employee Retention and Severance Plan (the "Creditors' Committee Objection"), which the statutory committee of unsecured creditors in these chapter 11 cases (the "Creditors' Committee") filed on July 6, 2001, and the Reply of Debtors and Debtors in Possession to Limited Objection of Official Committee of Unsecured Creditors to Debtors' Motion for Approval of Key Employee Retention Bonus Plan and Severance Plan (the Debtors' Reply"), which the Debtors filed on July 25, 2001; (b) having heard the statements of counsel regarding the Creditors' Committee Objection, the Debtors' Reply and the relief requested in the Motion at a hearing before the Court (the "Hearing"); (c) having been informed that the Debtors and the Creditors' Committee have agreed to a modification of the relief requested in the Motion; and (d) having determined that the legal and factual bases set forth at the Hearing and in the Motion, the Creditors' Committee Objection and the Debtors' Reply establish just cause for the relief granted herein; THE COURT HEREBY FINDS THAT: 1. The Court has jurisdiction over this matter pursuant to 28 U.S.C. (S)(S) 15 and 1334. 2. This is a core proceeding pursuant to 28 U.S.C. (S) 157(b)(2). 3. Notice of the Motion, the Creditors' Committee Objection, the Debtors Reply and the Hearing was sufficient under the circumstances 4. The employee retention and severance plan (the "Retention Plan"), as modified by agreement between the Debtors and Creditors' Committee, has two main components: the Retention Bonus Plan and the Severance Plan, as defined below./1/ 5. The terms of the Retention Bonus Plan are as follows: (a) Eligibility and Timing. Certain key employees, identified in _________ set forth below, are eligible to earn a specified retention bonus payment (a "Retention Bonus Payment"), which will be payable on the following dates (collectively, the "Vesting Dates") if the employee is actively ( employed by BCP Management, Inc. in the management and operation of the Debtors on such Vesting Dates: i) 50% of the total Retention Bonus Payment will be paid six months after April 3, 2001 (the "Petition Date"), or on October __, 2001; - ---------- /1/ The Motion generally does not identify either (a) the names of employees anticipated to participate in the various components of the Retention Plan or (b) the individual amounts of incentive payments to be paid to these employees under the Retention Plan. For the reasons stated in the Motion, maintaining the confidentiality of this information is necessary and appropriate. For the same reasons, the information is not included herein. -2- ii) 50% of the total Retention Bonus Payment will be paid upon the occurrence of one of the following events: a. the Debtors' emergence from chapter 11; b. a sale of the Debtors' assets as a going concern; c. a sale of substantially all of the Debtors' assets not as a going concern; d. a conversion of the chapter 11 case of Borden Chemicals and Plastics Operating Limited Partnership ("BCP" ) to a case under chapter 7 of the Bankruptcy Code; or e. a shut down of the manufacturing facility at which the employee works. (b) Tiers, The three "tiers" and their respective Retention Bonus Payments are: i) Tier l includes the CEO/President. The amount of Retention Bonus Payments to be made to this Tier 1 employee will be $270,000. ii) Tier 2 includes three members of senior management. The aggregate amount of Retention Bonus Payments to be made to Tier 2 employees will be $420,000. iii) Tier 3 includes four employees representing middle management and other key employees at the director level. The aggregate amount of Retention Bonus Payments to be made to Tier 3 employees will be $145,000. (c) Reserve. The Retention Bonus Plan includes a reserve of $90,000 for the discretionary use of management during the pendency of these chapter l1 cases to provide bonuses for non-union employees not otherwise identified as employees in Tiers 1 through 3. (d) Proration. In general, an eligible employee must be employed in the management and operation of the Debtors on a Vesting Date to earn and receive a Retention Bonus Payment (or the applicable portion of a Retention Bonus Payment). If, however, an eligible employee who remains employed -3- for at least three months after the Petition Date, is thereafter terminated without cause, the employee will receive a prorated Retention Bonus Payment equal to 1/12th of the employee's Retention Bonus Payment for each month employed after the Petition Date. (e) Exceptions. No Retention Bonus Payment will be made to an otherwise eligible employee: i) whose employment is terminated within three months of the Petition Date; ii) who voluntarily terminates employment; or iii) whose employment is terminated for cause. 6. The terms of the Severance Plan, as modified by agreement between the Debtors and Creditors' Committee, are as follows: (a) Structure. The Severance Plan covers all non-union employees only. Under the Severance Plan, the Debtors will make two types of payments: Stay Bonus Payments and Severance Benefits, as defined below. (b) Stay Bonus Payments. An eligible employee's Stay Bonus Payment is equal to 10% of the employee's annual base salary. Employees who receive Retention Bonus Payments are not eligible to receive Stay Bonus Payments. To receive a Stay Bonus Payment, an employee must be actively employed by BCP Management, Inc. in the management and operation of the Debtors upon the occurrence of the sooner of the following events: f. the Debtors' emergence from chapter 11; g. a sale of the Debtors' assets as a going concern; h. a sale of substantially all of the Debtors' assets not as a going concern; -4- i. a conversion of BCP's chapter 11 case to a case under chapter 7 of the Bankruptcy Code; or j. a shut down of the manufacturing facility at which the employee works (c) Separateness of Payments. An employee's eligibility to receive Stay Bonus Payment is independent of the employee's eligibility to receive Severance Benefits. (d) Severance Benefits. Except as provided below in paragraph 6(h), an employee will receive Severance Benefits in the amount set forth below if the employee's employment is involuntarily terminated after the Petition Date for reasons other than death, disability, retirement or cause (e) Amounts for Exempt Employees. Except as provided below, all employees who are exempt from the requirements of the Fair Labor Standards Act will receive Severance Benefits equal to the greater of (a)1 month's salary plus 1 week's salary for each completed year of service, or (b) the following formula: ---------------------------------------- SALARY SEVERANCE BENEFITS ---------------------------------------- $70,000+ 9 months' salary ---------------------------------------- $65,000-$69,999 6 months' salary ---------------------------------------- $60,000-$64,999 5 1/2 months' salary ---------------------------------------- $50,000-$59,999 5 months' salary ---------------------------------------- $40,000-$49,999 4 1/2 months' salary ---------------------------------------- $30,000-$39,999 3 1/2 months' salary ---------------------------------------- Less than $30,000 3 months' salary ---------------------------------------- -5- (f) Certain Exempt Employees. The CEO/President and the Vice President of Marketing and Sales will receive Severance Benefits equal to twelve months' salary. (g) Amounts for Non-Exempt Employees. All other non-union employees not exempt from the requirements of the Fair Labor Standards Act will receive two weeks' notice before termination, plus Severance Benefits equal to one week's salary for each completed year of service. (h) Exceptions. In the event of a sale of the Debtors' assets as a going concern, an employee who is otherwise eligible to receive Severance Benefits will not receive Severance Benefits if: i) the employee receives an offer of Similar Employment as defined below), irrespective of whether the employee accepts the Similar Employment; or ii) the employee accepts an offer of employment with the purchaser of the Debtors' assets, irrespective of whether the offer constitutes Similar Employment. (i) Similar Employment. For purposes of the Severance Plan, the term Similar Employment means employment: i) in the same facility; ii) for substantially similar annual salary or hourly wage; iii) requiring substantially similar weekly hours, if applicable; iv) requiring substantially similar tasks and responsibilities and v) providing substantially similar health benefits, and retirement benefits that are substantially similar except with respect to seniority and vesting requirements. 7. The Retention Plan is fair, reasonable and appropriate under the circumstances. -6- 8. A sound business purpose exists for the Debtors to implement the Retention Plan as set forth above, pursuant to section 363(b) of the Bankruptcy Code. 9. The implementation of the Retention Plan is also appropriate under section 105 of the Bankruptcy Code. IT IS HEREBY ORDERED THAT 1. The Motion is GRANTED as set forth herein. 2. The Debtors are authorized, pursuant to sections 105 and 363 of the Bankruptcy Code, to: (a) implement, and make such payments as are provided for under the terms of the Retention Plan as set forth above; (b) reimburse on a priority basis BCP Management, Inc. for all payments made by BCP Management, Inc. under the Retention Plan as set forth above and (c) enter into such transactions and documents as are necessary or appropriate to implement the provisions of the Retention Plan as set forth above. Dated: August 1, 2001 /s/ Illegible ---------------------------- UNITED STATED DISTRICT JUDGE -7- EX-10.43 4 dex1043.txt AGREED FINAL ORDER AUTHORIZING DEBTOR Exhibit 10.43 UNITED STATES BANKRUPTCY COURT DISTRICT OF DELAWARE IN RE: ) ) Jointly Administered BORDEN CHEMICALS AND ) PLASTICS OPERATING LIMITED ) Case. No. 01-1268 (RRM) PARTNERSHIP, a Delaware limited ) partnership, et al. ) Chapter 11 ) Debtors. AGREED FINAL ORDER AUTHORIZING DEBTOR: (A) TO USE CASH COLLATERAL; (B) TO INCUR POSTPETITION DEBT; AND (C) TO GRANT ADEQUATE PROTECTION AND PROVIDE SECURITY TO FLEET CAPITAL CORPORATION, AS AGENT ----------------------------------------------- This matter came before this Court on the motion (the "Motion") of debtor Borden Chemicals and Plastics Operating Limited Partnership (the "Debtor") requesting that this Court enter an order: (1) authorizing the Debtor to use certain cash collateral; (2) authorizing the Debtor to incur Postpetition Debt (as defined herein); and (3) granting certain liens and other relief to Fleet Capital Corporation, as agent for the Lenders defined herein) (the "Agent"). Unless otherwise indicated, the following terms in this Order shall have the meanings set forth below. Other capitalized terms used in this Order have the meanings set forth for such terms in the Loan Agreement (as defined below). 1. Aggregate Collateral. Collectively, the Prepetition Collateral and the Postpetition Collateral. 2. Aggregate Liens. Collectively, the Prepetition Liens, the Replacement Liens, and the Postpetition Liens. 3. Allowable 506(b) Amounts. All fees, costs, expenses, interest and other charges due or coming due under the Prepetition Documents with respect to the Prepetition Debt (regardless of whether such fees, costs, interest and other charges are included in the Budget) to the extent allowable under Code (S) 506(b), including, without limitation, all reasonable out-of-pocket filing and recording fees, attorneys and paralegals' fees and expenses, external and internal audit fees and expenses, closing fees unused facility fees, letter of credit fees, and all other costs and expenses incurred by Agent and the Lenders under the Prepetition Documents with respect to the Prepetition Debt, including such fees, costs and charges incurred in connection with: (a) the negotiation, preparation and submission of this Order and any other order or document related hereto; and (b) the representation of the Agent and the Lenders in and in connection with the Case. 4. Allowed Claim. Any claim, as that term is defined in Code (S) 101, for which a proof of claim was timely and properly filed, or which has been or hereafter is listed by the Debtor on its schedules as liquidated in amount and not disputed or contingent, provided that: (a) no objection to the allowance of the claim is timely interposed; or (b) if any objection to the allowance of the claim is timely interposed, the claim has been allowed. 5. Appraisal. The report of the appraiser retained by the Agent that has provided an in place valuation of, and orderly liquidation value for, the Debtor's facilities in Geismar, Louisiana, Addis, Louisiana and Illiopolis, Illinois. 6. Budget. The budget attached to this Order as Exhibit A including and allowing for the Permitted Variances, and such revised or updated budgets which the Agent and Lenders consent to in writing, provided that any such revised or updated budget shall be provided to the Committee and shall not be implemented until two business days following delivery to the Committee. 7. Capex Payments. Payments made by the Debtor or its subsidiaries on account of capital expenditures in accordance with generally accepted accounting principles provided that the cumulative capital expenditures from the Filing Date to the dates listed below do not exceed the amounts listed below for such dates: April 30, 2001 $ 800,000 May 31, 2001 $ 1,600,000 June 30, 2001 $ 2,400,000 July 31, 2001 $ 3,500,000 August 31, 2001 $ 4,600,000 September 30, 2001 $ 5,700,000 October 31, 2001 $ 6,800,000 November 30, 2001 $ 7,900,000 December 31, 2001 $ 9,000,000 January 31, 2002 $10,100,000 February 28, 2002 $11,200,000 March 31, 2002 $12,300,000 8. Carveout. The carveout for professional fees of the estate set forth in Paragraph 4(c) of this Order. 9. Case. This chapter 11 case or any superseding chapter 7 case of the Debtor. 10. Cash Collateral. All "cash collateral," as that term is defined in Code (S) 363(a), in which the Lenders have an interest, all deposits subject to setoff rights in favor of the Lenders, and all cash arising from the collection or other conversion to cash of the -2- Aggregate Collateral, including, without limitation, from the sale of inventory and the collection of accounts receivable. To the extent any such cash collected or received is not clearly identifiable as attributable to Prepetition Collateral or Postpetition Collateral, such cash shall be deemed to be proceeds of Prepetition Collateral. 11. Committee. The official creditors' committee appointed to represent unsecured creditors in this Case pursuant to Code (S) 1102. 12. Cure Period. (a) With respect to the occurrence of an Event of Default (a) through (d), none; and (b) with respect to Event of Default (e); three business days following the receipt of Agent's written notice to the Debtor, the United States Trustee, and the Committee, via facsimile or overnight mail, of the occurrence of such Event of Default. 13. Event of Default. Any one or more of the following: (a) the Debtor commits any Event of Default as such term is defined in Section 10 of the Loan Agreement (as modified by this Order and with the exception of Sections 10.1.2 and 10.1.8); provided that (1) it will not be an Event of Default under this Order if the Event of Default occurring under the Loan Agreement occurred prior to the Filing Date or is the result of an event that occurred on or prior to the Filing Date; and (2) no Event of Default will occur under this Order as a result of the Debtor's bankruptcy filing or the resulting requirements or provisions of the Code; (b) any representation or warranty made by the Debtor in any certificate, report or financial statement delivered to the Agent after the Filing Date proves to have been false or misleading in any material respect as of the time when made or given (including by omission of material information necessary to make such representation, warranty or statement not misleading); (c) this chapter 11 case is converted to a case under chapter 7 of the Code; (d) a Trustee is appointed or elected in this Case, or an examiner with the power to operate the Debtor's business is appointed in this Case, and (e) the Debtor fails to perform any of its other obligations in accordance with the terms of this Order or the Budget. Agent (and the Requisite Lenders) shall have the exclusive right to assert or waive any Event of Default. 14. Filing Date. April 3, 2001. 15. First Priority Liens. Liens which are first priority, properly perfected, valid and enforceable security interests, which are not subject to any claims, defenses, or setoffs, and which are otherwise unavoidable under any provisions of the Code. 16. Interim Orders. The Agreed Interim and Proposed Final Order Authorizing Debtor: (A) To Use Cash Collateral; (B) To Incur Postpetition Debt; and (C) To Grant Adequate Protection and Provide Security to Fleet Capital Corporation, as Agent entered on April 5, 2001 pursuant to the Motion and the Amended Agreed Interim and Proposed Final Order Authorizing Debtor: (A) To Use Cash Collateral (B) To Incur Postpetition Debt; and (C) To Grant Adequate Protection and Provide Security to Fleet Capital Corporation, as Agent entered on April 9, 2001 pursuant to the Motion. -3- 17. Lenders. The financial institutions party to the Loan Agreement (defined therein as "Lenders"), which are extending Postpetition Debt to the Debtor. 18. Loan Agreement. That certain Loan and Security Agreement, dated as of March 31, 2000, by Borden Chemicals and Plastics Operating Limited Partnership, Agent, and the Lenders, as amended prior to the Filing Date. 19. Net Cash Flow. The difference between (1) Receipts Less Production Payments, and (2) SG&A Payments. 20. Overadvance. The least of: (a) $35,000,000; (b) 35% of the liquidation value in place of the Debtor's facilities in Geismar, Louisiana, Addis, Louisiana and Illiopolis, Illinois, as determined by the Appraisal; and (c) 80% of the orderly liquidation value as determined by the Appraisal; provided, that the percentages contained in clauses (b) and (c) herein shall be reduced by 1% on the first day of each calendar month, beginning with May 1, 2001. 21. Permitted Liens. Liens in favor of third parties upon any of the Aggregate Collateral with priority over the Lenders' security interests in the Prepetition Collateral, which third-party liens were (i) non-avoidable, valid, properly perfected and enforceable as of the Filing Date, or (ii) existed prior to the Filing Date and become non-avoidable, valid, properly perfected and enforceable after the Filing Date pursuant to Section 546(b) of the Code. 22. Permitted Variances. The amount by which the actual Receipts Less Production Payments, SG&A Payments and Net Cash Flow may differ adversely from the respective amounts included in the Budget, provided that the calculation of Permitted Variances is performed on a "trailing" 4 week basis (i.e. the sum of the cash flows for the 4 prior weeks) and the calculation is performed for the period from June 10, 2001 to July 7, 2001 and weekly thereafter. The Permitted Variance shall be calculated as follows: (a) Receipts less Production Payments: the greater of $500,000 or 20% of the budgeted Receipts less Production Payments, (b) SG&A Payments: 20% of the budgeted SG&A Payments, (c) Net Cash Flow: the greater of $500,000 or 10% of Net Cash Flow. There shall be no Permitted Variances for Capex Payments or Professionals' Fee Payments which, instead, shall be subject to the Budget and the cumulative limits set forth in and calculated pursuant to the definitions of Capex Payments and Professionals' Fee Payments. 23. Positive Borrowing Availability. The amount of positive borrowing availability under the collateral advance formulas set forth in Section 1.1 ___ of the Loan Agreement, plus the Overadvance; provided, (a) the portion of clause (ii) of the definition of Borrowing Base which adds to the Borrowing Base the lesser of $17,000,_00 and 5% of "Consolidated Net Tangible Assets" (as defined in the Indenture referred to ___ Exhibit 8.2.3 of the Loan Agreement) is eliminated, (b) the $10,000,000 Availability restriction contained in Sections 8.3 and 9.4 of the Loan Agreement is eliminated, and (c) the portion of clause (ii) of the definition of Borrowing Base which adds to the Borrowing Base __% of the net amount of Eligible Inventory exclusive of "caustic," "additive" and "solvent" inventories and -4- 50% of the net amount of Eligible Inventory consisting of "caustic," "additive" and "solvent" inventories shall be limited to the lesser of the amount calculated by such provision and $40,000,000; provided, however, that the Postpetition Collateral and the Lender's applications of Cash Collateral to the Prepetition Debt and the Postpetition Debt pursuant to Paragraph 5(d) of this Order shall be included in the calculations of such positive borrowing availability. Notwithstanding the foregoing, (1) the Lenders shall have the rights to establish reserves against such availability pursuant to the terms of the Loan Agreement and a reserve for the Carveout and the unfunded portion (whether or not then earned) of the cumulative Professionals' Fee Payments, and (2) the Agent, with the written consent of the Lenders, shall have the right to increase Positive Borrowing Availability hereunder from time to time, on such terms as it deems appropriate, without the need for further Court hearing. 24. Postpetition Charges. All fees, costs, expenses, interest and other charges due or coming due in connection with the Postpetition Debt (regardless of whether such fees, costs, interest and other charges are included in the Budget), including, without limitation, all reasonable out-of-pocket filing and recording fees, attorneys' fees and paralegals' fees and expenses, external and internal audit fees and expenses, closing fees, unused facility fees, letter of credit fees, and all other costs and expenses incurred by the Agent in connection with the Postpetition Debt including without limitation the $1,000,000 facility fee payable to the Agent on behalf of the Lenders upon entry of this Order, the $333,000 structuring fee payable to the Agent upon entry of this Order, the $__50,000 success fee payable to the Agent on behalf of the Lenders upon the Termination Date or the date on which all Prepetition and Postpetition Debt owing to the Agent and the Lenders is indefeasibly paid in full, the $30,000 initial administrative fee payable to the Agent upon entry of this Order and the $20,000 monthly administrative fee payable to the Agent on the first business day of each successive calendar month, which amounts shall compensate the Agent and the Lenders for all financial accommodations made hereunder. ___ the event the aggregate amount of Prepetition Debt and Postpetition Debt available to the Debtor increases above $100,000,000 pursuant to Paragraph 3(a) of this Order: (a) the $1,000,000 facility fee payable to the Agent on behalf of the Lenders shall increase by the amount of 1% of the increase in the maximum loans available to the Debtor above $100,000,000, and (b) the $333,000 structuring fee payable to the Agent shall increase by the amount of 0.33% of the increase in the maximum loans available to the Debtor above $100,000,000; and the balance of such increased facility fee and structuring fee shall be immediately due and payable. 25. Postpetition Collateral. All of the real and personal property of the Debtor of any description whatsoever, wherever located and whenever arising or acquired, including, without limitation, all cash, accounts, inventory, equipment, fixtures, chattel paper, and general intangibles (excluding claims and recoveries under Code (S)(S) 544, 547, 548, 549, 550 and 553), and all proceeds and products, whether tangible or intangible, of any of the foregoing, including proceeds of insurance covering any of the foregoing. 26. Postpetition Debt. (a) All indebtedness or obligations of the Debtor to the Agent and the Lenders incurred on or after the Filing Date pursuant to this Order or the -5- Interim Orders, including any advances made by the Lenders to pay Allowable 506(b) Amounts, plus (b) the Postpetition Charges. 27. Postpetition Documents. (a) The Loan Agreement, as modified by this Order or the Interim Orders; (b) the Loan Documents (as that term is defined in the Loan Agreement), as modified by this Order or the Interim Orders; and (c) this Order, the Interim Orders, and any financing orders entered by the Court modifying or supplementing such orders. 28. Postpetition Liens. First Priority Liens in the Aggregate Collateral granted to the Agent for the benefit of the Lenders pursuant to this Order and the Interim Orders, subject only to: (a) Permitted Liens; (b) the Carveout; and (c) the claim of the United States Trustee for the payment of fees under 28 U.S.C. (S) 1930 and the fees of the Clerk of the Court (the "UST and Clerk Fees"), which liens are and shall be in addition to the Prepetition Liens, are and shall be, pursuant to Code (S) 364(d), senior to the Prepetition Liens and the Replacement Liens without any further action by the Debtor, the Agent or the Lenders and without the execution, filing or recordation of any financing statements, security agreements, mortgages or other documents or instruments. 29. Prepetition Collateral. All of the Collateral (as that term is defined in the Loan Agreement) existing as of the Filing Date, and all proceeds and products thereof. 30. Prepetition Debt. (a) All indebtedness or obligations under the Prepetition Documents as of the Filing Date, including all fees, interest and expenses (including the LC Amount of $2,500,000, which amount was cash collateralized prior to the Filing Date), plus (b) all Allowable 506(b) Amounts. 31. Prepetition Documents. The Loan Agreement and the Loan Documents (as that term is defined in the Loan Agreement). 32. Prepetition Liens. The Agent's asserted security interests in the Prepetition Collateral under the Prepetition Documents, subject to: (a) the Postpetition Liens; (b) Permitted Liens; (c) the Carveout; and (d) the UST and Clerk Fees. 33. Professionals' Fee Payments. Payments made by the Debtor or its subsidiaries to non-ordinary course professionals (excluding Taylor Strategic Divestitures) retained pursuant to Section 327 or 1103 of the Code (including professionals retained by the Committee), subject to approval by the Court. No Professionals' Fee Payments may be used to prosecute, as opposed to investigate whether to bring, an Avoidance Action (as defined herein). 34. Replacement Liens. First Priority Liens in the Postpetition Collateral granted to the Agent for the benefit of the Lenders pursuant to this Order and the Interim Orders, subject only to: (a) the Postpetition Liens; (b) Permitted Liens; (c) the Carveout; and (d) the UST and Clerk Fees. -6- 35. Receipts Less Production Payments. Cash received by the Debtor or its subsidiaries (in the ordinary course of business and excluding any sale of assets outside the ordinary course of business) less payments made by the Debtor to suppliers of materials used in its production facilities and payments to other vendors or employees providing services in connection with such production including, but not limited to, amounts in relation to the transportation of raw materials or finished goods. 36. Requisite Lenders. As of any date, Lenders holding 66._6% or more of the aggregate Prepetition Debt and Postpetition Debt. 37. SG&A Payments. Payments made by the Debtor or its subsidiaries on account of selling, general and administrative expenses incurred, including for the purposes of this definition, amounts paid on account of Postpetition Charges, other interest charges and tax liabilities of the Debtor. 38. Termination Date. The earliest to occur of: (a) the late of (1) the date on which the written notice to the Debtor, the United States Trustee, and the Committee of the occurrence of an Event of Default is received from the Agent via facsimile or overnight mail, and (2) if any Cure Period is applicable with respect to such Event of Default, the expiration of such Cure Period (provided that the Debtor may cure such Event of Default within any such Cure Period, and the Agent may seek to terminate this Order prior to the expiration of any such Cure Period); and (b) March 31, 2002. 39. Trustee. Any trustee appointed or elected in the Case. Having examined the Motion, being fully advised of the relevant facts and circumstances surrounding the Motion and having completed a hearing pursuant to Code (S)(S) 363 and 364/1/ and Fed. R. Bankr. P. 4001(b) and (c)(2), THE COURT FINDS THAT: A. On the Filing Date, the Debtor filed a voluntary petition for relief under chapter 11 of the Code. The Debtor has retained possession of its property and continues to operate its business as a debtor in possession pursuant to Code (S)(S)1107 and 1108. B. (1) The Prepetition Debt, the Prepetition Liens and the prepetition financing relationship between the Debtor, the Agent and the Lenders is evidenced and governed by the Prepetition Documents; (2) as of the Filing Date, the Prepetition Debt was, at least $84 million; (3) the payment of all of the Prepetition Debt is secured by, among other things, the Prepetition Liens; and (4) the Prepetition Liens are First Priority Liens, subject to Permitted Liens. - ---------- /1/ Unless otherwise indicated, all section references are to the Bankruptcy Code, U.S.C. (S)(S)101 et. seq. -7- C. Upon the entry of this Order, the Lenders' interests in the Prepetition Collateral will be adequately protected, without prejudice to the Agent's right to later assert that the Lenders' interest in the Aggregate Collateral lacks adequate protection, and as of the Filing Date, including for purposes of Code (S) 506(b) and (S) 507(b), the liquidation value of the Prepetition Collateral was not less than $100 million without prejudice to the parties' rights to later seek higher or lower valuations at a subsequent date. D. An immediate need exists for the Debtor to use Cash Collateral and to obtain Postpetition Debt in order to enable the Debtor to minimize disruption to and to avoid the termination of its business operations. Entry of this Order will also enhance the possibility of a successful reorganization. E. Pursuant to Code (S)(S) 364(a) and 364(b), the Debtor has attempted to obtain, but is unable to obtain, unsecured credit or unsecured credit allowable under Code (S) 503(b)(1). The terms of the Postpetition Debt have been negotiated in good faith and at arms' length, and the Postpetition Debt is being extended in good faith, as that term is used in Code (S) 364(e). F. Under the circumstances of the Case, the terms and conditions of this Order are a fair and reasonable response to the Debtor's request for the Lenders' consent to the use of Cash Collateral and for the Debtor's incurrence of Postpetition Debt, and the entry of this Order is in the best interests of the Debtor's estate and its creditors. G. The notice provided by the Debtor of the Motion, the hearing on the Motion, and the entry of this Order satisfy the requirements of Fed. R. Bankr. P. 4001 and were otherwise sufficient and appropriate under the circumstances. H. This Order resolves the Limited Objection of the Committee filed on May 8, 2001 and the Amended Objection of the Committee filed on May 25, 2001. WHEREFORE, IT IS HEREBY ORDERED THAT: 1. Authorization to Use Cash Collateral. The Debtor is authorized to use Cash Collateral solely in accordance with and pursuant to the terms and provisions of this Order. Prior to the Termination Date and indefeasible payment in full of the Postpetition Debt, the Debtor may not use or seek to use Cash Collateral other than pursuant to the terms of this Order. -8- 2. Procedure for Use of Cash Collateral. (a) Delivery of Cash Collateral to Agent. The Debtor is authorized and directed to deposit all Cash Collateral now or hereafter in its possession or under its control into the existing lockbox/blocked account established by the Agent (or to otherwise deliver all such Cash Collateral to the Agent in a manner satisfactory to the Agent) promptly upon receipt thereof. Such Cash Collateral shall thereafter be applied by the Agent in accordance to Paragraph 5(d) of this Order. (b) Account Debtors. The Debtor may, without further order of court, be directed by the Agent to, or the Agent may directly, instruct all account debtors of existing and future accounts receivable included in the Aggregate Collateral to make payments directly into any blocked/lockbox account established by the Agent or such other accounts satisfactory to the Agent, in which event all such proceeds shall be treated in accordance with the provisions of this Order. (c) Cash Collateral in Agent's Possession. The Agent is authorized to collect upon, convert to cash and enforce checks, drafts, instruments and other forms of payment now or hereafter coming into its possession or under its control which constitute Aggregate Collateral or proceeds of Aggregate Collateral. 3. Authorization To Incur Postpetition Debt. (a) Positive Borrowing Availability/Maximum Loans. If there is Positive Borrowing Availability (after giving effect to outstanding Prepetition Debt and Postpetition Debt), the Debtor is authorized to incur Postpetition Debt, and the Lenders shall be required to provide the Debtor with Postpetition Debt pursuant to the terms of the Loan Agreement (as modified by this Order and the Interim Orders), to the extent of such remaining Positive Borrowing Availability. Notwithstanding the amount of Positive Borrowing Availability or anything to the contrary in this Order, the aggregate of Prepetition Debt and Postpetition Debt shall not at any time exceed $120,000,000; provided, however, that until such time as all Lenders and the Debtors agree in writing or the Agent obtains (with the written consent of the Lenders and the Debtor) the agreement of one or more financial institutions (in addition to the Lenders who were parties to the Loan Agreement prior to Filing Date), to extend -9- additional Postpetition Debt to the Debtor pursuant to the terms of this Order and the Postpetition Documents, the aggregate of Prepetition Debt and Postpetition Debt shall not at any time exceed $100,000,000. (b) Budget. The Debtor is authorized to incur Postpetition Debt solely in accordance with and pursuant to the terms and provisions of this Order and only to the extent required to pay those expenses listed in the Budget (including Permitted Variances) as and when such expenses become due and payable (including expenses of the Debtor's subsidiaries to the extent included in the Budget). Notwithstanding anything to the contrary in this Paragraph 3, however: (1) the Debtor is hereby authorized and directed to incur the Postpetition Debt at any time to pay Allowable 506(b) Amounts, the UST and Clerk Fees, and the Postpetition Charges, and (2) if the Lenders advance monies to the Debtor and the Debtor uses such monies other than in accordance with or pursuant to the terms or provisions of this Order, such advances shall be considered Postpetition Debt for purposes of this Order. The cumulative Professionals' Fee Payments (excluding amounts paid to __aylor Strategic Divestitures) from the Filing Date to the following dates shall not exceed the cumulative amounts listed for such dates -- (a) to June 30, 2001, $1.8 million; (b) to July 31, 2001, $2.6 million; (c) to August 31, 2001, $3.4 million; (d) to September 30, 2001, $4.__ million; (e) to October 31, 2001, $5.0 million; (f) to November 30, 2001, $5.8 million; (g) to December 31, 2001, $6.6 million; (h) to January 31, 2002, $7.4 million; (i) to February 28, 2002, $8.2 million; and (j) to March 31, 2002, $9.0 million. Notwithstanding any provision to the contrary in this Order, all professionals shall have the right to seek approval of fees and expenses in excess of the amounts set forth in this Paragraph 3(b) and Paragraph 4(c), provided, however, such professionals shall not seek payment of such fees and expenses, and such amounts shall not be due, until indefeasible and final payment in full ___all allowed or allowable secured Prepetition Debt and all allowed or allowable secured Postpetition Debt, provided further, such fees and expenses shall not be paid out of the Cash Collateral. (c) Superpriority Administrative Expense Status; Postpetition Liens. The Postpetition Debt is hereby granted superpriority administrative expense status under Code (S) 364(c)(1), with priority over all costs and expenses of administration of the Case that are incurred under any provision of the Code, but subject to the Carveout and the UST and Clerk -10- Fees. In addition, the Agent and the Lenders are hereby granted the Postpetition Liens to secure the Postpetition Debt. The Postpetition Liens: (1) are and shall be in addition to the Prepetition Liens; (2) are and shall be, pursuant to Code (S) 364(d), senior to the Prepetition Liens and the Replacement Liens without any further action by the Debtor, the Agent or the Lenders and without the execution, filing or recordation of any financing statements, security agreements, mortgages or other documents or instruments; and (3) shall remain in full force and effect notwithstanding any subsequent conversion or dismissal of the Case. Notwithstanding the foregoing, the Debtor is authorized and directed to execute and deliver to the Agent such financing statements, mortgages, instruments and other documents as the Agent may deem necessary or reasonably desirable from time to time. (d) Conditions Subsequent. Notwithstanding anything to the contrary contained in this Order, the following shall be conditions to Debtor's continued authorization to incur Postpetition Debt: (i) On or before November 1, 2001, the Debtor shall have announced an achievable exit strategy that will enable the Debtor to indefeasibly pay in full all Prepetition Debt and Postpetition Debt; and (ii) On or before March 31, 2002, such exit strategy shall have been implemented and the Lenders shall have been indefeasibly paid in full; provided, that the dates in this Paragraph 2(d) and clause (c) of the definition of Termination Date may be extended with the written consent of the Requisite Lenders and without further order of court. (e) Additional Terms of Postpetition Debt. (i) Letters of Credit. From and after the Filing Date no Letters of Credit shall be issued and no LC Guaranties shall be made by the -11- Agent or the Lenders under the Loan Agreement or the Postpetition Documents. The Letters of Credit and LC Guaranties outstanding as of the Filing Date shall remain outstanding until such time as they are drawn upon or expire in accordance with their respective terms. (ii) Notwithstanding anything to the contrary in the Loan Agreement, the Prepetition Documents or the Postpetition Documents, effective from March 15, 2001, interest on the principal amount of the Prepetition Debt outstanding at the end of each day (after the application of cash collateral in accordance with Paragraph 5(d) of this Order), shall accrue at a fluctuating rate per annum equal to (a) with respect to the Base Rate Portion of Prepetition Debt, 1.25% plus the Alternate Base Rate, and (b) with respect to the LIBOR Portion of the Prepetition Debt, 3.00% plus the LIBOR Rate. The Lenders otherwise waive their right to charge the Default Rate with respect to the Prepetition Debt until the occurrence of an Event of Default. Notwithstanding the foregoing, and notwithstanding anything to the contrary in the Loan Agreement, the Prepetition Documents or the Postpetition Documents, the LIBOR Period for any Postpetition Debt shall not exceed one month, any Prepetition Debt consisting of LIBOR Portion may only be renewed as Base Rate Portion or as a LIBOR Portion with a LIBOR Period one month or less, and any Prepetition Debt consisting of Base Rate Portion may only be converted to a LIBOR Portion with a LIBOR Period of of one month or less. All interest on the Prepetition Debt and the Postpetition Debt shall be -12- paid by the Debtor pursuant to the terms of the Loan Agreement prior to an Event of Default. The Postpetition Debt shall: (1) bear interest at 1.25% plus the Alternate Base Rate for the Base Rate Portion and 3.00% plus the LIBOR Rate for the LIBOR Portion; provided, that such LIBOR Portion shall have no LIBOR Periods in excess of one month; and (2) mature and be paid in full on the Termination Date. (iii) Sale Process Reporting. On Tuesday of each week, beginning with April 10, 2001, the Debtor shall provide the Agent and counsel for the Committee with a report describing the steps the Debtor has taken to comply with Paragraph 3(d) of this Order, including any information on reports received from Taylor Strategic Divestitures. (iv) Disposition of Assets. Notwithstanding the terms of Section 8.2.9 of the Loan Agreement or any other provisions contained in the Prepetition Documents or the Postpetition Documents, or herein, the Debtor shall not dispose of any portion of its assets out of the ordinary course of business, whether pursuant to Code (S) 363 or otherwise, without the Agent's written consent; provided that, notwithstanding the foregoing, so long as the net proceeds of such sale are applied as set forth in paragraph 3(e)(v), the Agent and the Lenders agree that the Debtor shall be permitted to sell or otherwise dispose of (a) the vacant real estate located adjacent to the Geismer, Louisiana facility, (b) the methanol plant that is a part of the Geismer, Louisiana facility (together, the "Permitted Sales"), and/or (c) any ineligible -13- Accounts due from Armstrong World Industries, Inc. (or any related entity) or any of the following Canadian entities or any affiliate thereof --- American Biltrite of Canada, Ltd., Best Glove Manufacturing, Ltd., Plastique Reinier, Inc., and Stedfast, Inc. (the "Ineligible Accounts") sold for at least 85% of the uncollected amount of such Accounts. (v) Mandatory Repayment. All net proceeds (after costs, taxes, and satisfaction of Permitted Liens) received by the Debtor from a sale or disposition of assets (other than Ineligible Accounts) outside the ordinary course of business (consented to by the Agent if required by the immediately foregoing Paragraph 3(e)(iv)), in excess of the amount of Positive Borrowing Availability supported by Accounts and Inventory transferred as part of the non-ordinary course sale or disposition (the "Net Sales Proceeds"), will result in the permanent reduction in the Overadvance as follows: (A) if the Net Sales Proceeds exceed by two times the Lendable Value of the sale or disposition assets other than the Accounts and Inventory, the Overadvance shall be reduced by 50% of the Net Sales Proceeds; (B) if the Net Sales Proceeds exceed the Lendable Value of the sale or disposition assets other than Accounts and Inventory, but are less than two times the Lendable Value of the sale or disposition assets (other than the Accounts and Inventory), the Overadvance shall be reduced by the -14- Lendable Value plus 50% of the amount in excess of the Lendable Value; and (C) if the Net Sales Proceeds are less than or equal to the Lendable Value of the sale or disposition assets other than Accounts and Inventory, the Overadvance shall be reduced by the full amount of the Net Sales Proceeds; provided, that the "Lendable Value" for purposes of this Paragraph 3(e)(v) sha11 be the lesser of 35% of the liquidation value in place or 80% of the orderly liquidation value of the assets being transferred in the sale or disposition, as determined in the Appraisal, and, provided, further, after making application of the proceeds and reducing the Overadvance as provided in this Paragraph 3(e)(v), the Overadvance shall not exceed the least of $35,000,000, 35% of the liquidation value in place, and 80% of the orderly liquidation value of the remaining assets, as determined by the Appraisal (subject to the amortization of such advance percentages in accordance with the definition of "Overadvance" in this Order). Notwithstanding anything in this Paragraph 3(e)(v) to the contrary, upon the consummation of the Permitted Sales and the application of the proceeds thereof, the Overadvance will be permanently reduced by an amount equal to 50% of the Net Sales Proceeds of the Permitted Sales. 4. Termination of Right to Use Cash Collateral And To Incur Postpetition Debt. (a) Termination Date. Unless extended by the Court upon the written agreement of the Agent, this Order and the Debtor's authorization to use Cash Collateral and -15- incur Postpetition Debt pursuant to this Order will immediately terminate on the Termination Date. (b) Rights Upon Termination. On the Termination Date, the Agent and the Debtor shall be entitled to apply to this Court for all appropriate relief, upon such notice as may be appropriate under the circumstances; provided, however, that: (1) the obligations of the Debtor and the rights of the Agent and the Lenders with respect to all transactions which have occurred prior to the Termination Date shall remain unimpaired and unaffected; and (2) the Agent, the Lenders and the Debtor shall retain all of their respective rights and remedies under the Code, including, without limitation, the Debtor's right, after paying the Postpetition Debt, including any Overadvance, in full, to request the continued use of Cash Collateral, and the Agent's right to oppose the Debtor's further use of Cash Collateral and to move for relief from the automatic stay. (c) Carveout. Notwithstanding anything to the contrary in this Order, the Interim Orders, or any of the Prepetition Documents or the Postpetition Documents, or otherwise, should the Lenders' obligations to make loans or other financial accommodations under this Order terminate as a result of an Event of Default or the occurrence of the Termination Date, the Lenders agree that, notwithstanding the termination of such obligations, the Debtor may use the Agent's and the Lenders' cash collateral to pay, in addition to any accrued fees and expenses as of such date permitted by the Budget (a) any unpaid UST Fees and Clerk Fees as such fees are charged to the Debtor; and (b) unpaid fees and expenses allowed by the Bankruptcy Court of professionals or professional firms retained pursuant to Section 327 or 1103 of the Code (excluding Taylor Strategic Dive_titures), which professional fees and expenses do not exceed in the aggregate $1.0 million (the amount of all such professional fees and expenses being defined herein as the "Carveout"). The Agent's and the Lenders' liens on the Aggregate Collateral, and any claim or claim arising under -16- Sections 364(c), 364(d), 506(b), or 507(b) of the Code, shall be subject and subordinate to the Carveout and the UST and Clerk Fees, and (B) the terms of this Paragraph 4(c) shall survive and not be affected by the termination of this Order or the Interim Orders, any default hereunder, the conversion or dismissal of this Chapter 11 case, the confirmation of a plan, or the appointment of any trustee. Notwithstanding the foregoing, no part of the Carveout may be used to prosecute, as opposed to investigate whether to bring, an Avoidance Action (as defined herein). 5. Adequate Protection of Interests of the Lenders in the Aggregate Collateral and the Aggregate Liens. As adequate protection of the interests of the Lenders in the Prepetition Collateral and the Prepetition Liens: (a) Priority of Prepetition Liens/Allowance of Lender's Claim. Subject to the reservation of rights set forth in Paragraph 7(a) of this Order: (1) the Prepetition Liens shall constitute First Priority Liens, subject to Permitted Liens, Postpetition Liens, Replacement Liens, the Carveout, and the UST and Clerk Fees; (2) the Lenders' claim with respect to the Prepetition Debt shall constitute an Allowed Claim in an amount it not less than $84 million, all of which shall be an allowed secured claim within the meaning of Code (S)(S) 506(a) and 506(b); and (3) Debtor waives and releases any and all claim and causes of action it may assert against Agent, any Lender or the Aggregate Collateral. (b) Replacement Liens. The Agent and the Lenders are hereby granted the Replacement Liens to secure Prepetition Debt in an amount equal to the decline (if any) in the value of the Agent's and the Lenders' interests in the Prepetition Collateral during the Case. The Replacement Liens: (1) are and shall be in addition to the Prepetition Liens; (2) are and shall be First Priority Liens that, subject to Permitted Liens, the Carveout, and the UST and Clerk Fees, are properly perfected, valid and enforceable without any further action by the Debtor or the Agent and without the execution, filing or recordation of any financing statements, security agreements, mortgages or other documents or instruments; and (3) shall remain in full force and effect notwithstanding any subsequent conversion or dismissal of the Case. Notwithstanding the foregoing, the Debtor is authorized and directed to execute and -17- deliver to the Agent such financing statements, mortgages, instruments and other documents as the Agent may deem necessary or reasonably desirable from time to time. (c) Allowed Code (S) 507(b) Claim. If and to the extent the adequate protection of the interests of the Agent and the Lenders in the Prepetition Collateral granted to the Agent and the Lenders pursuant to this Order proves insufficient, the Agent and the Lenders shall have an Allowed Claim under Code (S) 507(b) in the amount of any such insufficiency, with priority over: (1) all costs and expenses of administration of the Case (other than the Lenders' claim pursuant to Paragraph 3(c) of this Order) that are incurred under any provision of the Code, including, without limitation, Code (S)(S) 03(b), 506(c), 507(a), or 552(b); and (2) the claims of any other party in interest under Code (S) 507(b), but in each case, subject and subordinate to the Carveout and the UST and Clerk Fees. (d) Application of Cash Collateral. The Agent is authorized to apply all Cash Collateral now or hereafter coming into the Agent's possession or control as follows: (1) first, to payment of Prepetition Debt consisting of Allowable 506(b) Amounts; (2) second, to payment of other Prepetition Debt; (3) third, to payment of Postpetition Charges; and (4) fourth, to payment of other Postpetition Debt. All such applications to Prepetition Debt shall be final in nature, subject only to the right of parties in interest to object to applications to Allowable 506(b) Amounts under and in accordance with Paragraph 6(a) of the Order. (e) Prohibition Against Use of Cash Collateral. With the exception of that certain Order Authorizing the Debtor to Use Cash Collateral, entered by the Court on June 21, 2001 subject to Paragraph 5(f) below, no order shall be entered in this Case authorizing Debtor to use Cash Collateral, unless, in addition to the satisfaction of all requirements of Code (S) 363 for the use of such Cash Collateral: (a) the Agent and the Lenders have consented to such order; (b) no Prepetition Debt or Postpetition Debt is outstanding at the time of the entry of such an order, and no obligation of the Lenders to extend additional Postpetition Debt; or (c) such Cash Collateral is first used to immediately pay the then remaining Prepetition Debt and Postpetition Debt in full. (f) Prohibition Against Additional Debt. No order shall be entered in this case authorizing the Debtor (under Code (S) 364(d) or otherwise) to incur debt other than the Carveout or the UST Fees) secured by a lien which is equal to or superior to the Aggregate -18- Liens, or which is given superpriority administrative expense status under Code (S) 364(c)(1) equal to or superior to the superpriority administrative expense status granted to the Postpetition Debt, unless, in addition to the satisfaction of all requirements of Code (S) 364 for the incurrence of such debt: (a) the Agent and the Lenders have consented to such order; (b) there is no Prepetition Debt or Postpetition Debt outstanding at the time of the entry of such an order and the Agent and Lenders have no obligation under this Order, the Interim Orders or otherwise to extend Postpetition Debt; or (c) such credit or debt is used to immediately pay the Postpetition Debt in full. (g) No Surcharge. At no time during this Case shall the surcharge provisions of Code (S) 506(c) or the enhancement of collateral provisions of Code (S) 552 be imposed upon the Agent or the Lenders or any of the Aggregate Collateral for the benefit of any party in interest, including Debtor, any of Debtor's professionals, the Committee, any of the Committee's professionals, or any Trustee. (h) Waiver of Right to Return/Consent to Setoff. The Debtor hereby waives its right: (1) to return any Prepetition Collateral or Postpetition Collateral pursuant to Bankruptcy Code (S) 546(g); or (2) to consent to setoff pursuant to Bankruptcy Code (S) 553 without 14 days prior notice to the Agent of such proposed setoff and prior approval of the Court for such proposed setoff. 6. Miscellaneous Provisions. (a) Notice of and Objections to Allowable 506(b) Amounts. The Agent shall provide the Debtor's counsel, counsel for any Committee, and the United States Trustee with copies of all invoices sent by the Agent's counsel to the Agent (edited to delete any attorney-client or other confidential information) with respect to the attorneys' fees and related costs and expenses asserted as Allowable 506(b) Amounts. Any such party may object to the reasonableness of any such fees, costs and expenses. However, any objection by any such party to any such fees, costs, or expenses shall be forever waived and barred unless, within thirty days of receipt of the invoice to which the objection relates: (1) the objection is filed with the Court and served upon the Agent; and (2) the objection describes with particularity the items or categories of fees, costs and expenses that are the subject of the objection and provides the specific basis of the objection to each such item or category of -19- fees, costs and expenses. Any hearing on an objection to the fees, costs and expenses of the Agent set forth on any invoice shall be limited to the reasonableness or necessity of the particular items or categories of the fees, costs and expenses that are the subject of such objection. (b) Force and Effect of Prepetition Documents; Conflicts. Except as modified herein, and subject to the other provisions of this Order and the Code, the Prepetition Documents, and the terms and provisions thereof, shall remain in full force and effect with respect to the Prepetition Debt. The Postpetition Debt shall be governed by the Postpetition Documents except where they conflict with the provisions of this Order, in which case the provisions of this Order shall prevail. In addition to the modifications otherwise contained in this Order, the Loan Agreement is further modified as follows: (1) Sections 2.7, 8.3, 9.2 (with respect to prepetition conduct) and 9.4 of the Loan Agreement are eliminated; (2) each representation and warranty set forth in Section 7 of the Loan Agreement is modified to take into account the events and circumstances that customarily occur as a result of the events leading up to and following the commencement of a proceeding under chapter 11 of the Code, or events that have occurred leading up to the commencement of the Case; (3) the reporting requirements of Sections 8.1.3 (i) (with respect to the delivery of an unqualified annual audit), 8.1.3(iii) and 8.1.7 of the Loan Agreement are eliminated; and (4) the conditions precedent set forth Sections 9.5 and 9.6 are modified to take into account the events and circumstances that customarily occur as a result of the events leading up to and following the commencement of a proceeding under chapter 11 of the Code, or events that have occurred leading up to the commencement of the Case. To the extent that any of the Prepetition Documents conflict with the provisions of this Order, the provisions of this Order shall prevail. (c) Modification of Stay. The automatic stay of Code (S) 362 is hereby modified with respect to the Agent and the Lenders to the extent necessary to effectuate the provisions of this Order. (d) Financial Information; Insurance. The Debtor is hereby directed to deliver to the Agent such financial and other information concerning the business and affairs of the Debtor and any of the Aggregate Collateral as may be required pursuant to the -20- Prepetition Documents and such financial information and other information as the Agent shall reasonably request from time to time, including monthly information ___ to the Debtor's post-petition accrued, unpaid expenses, a daily borrowing base report in form and substance substantially identical to that provided immediately prior to the Filing Date, a weekly inventory estimate, information necessary to confirm that the Debtor is within the Budget and Permitted Variances. The Debtor is also directed to allow the Agent (and any consultant retained by the Agent) access to the premises for the purpose of enabling the Agent (or Agent's consultant) to inspect and audit the Aggregate Collateral and the Debtor's books and records. Such access for such purpose shall be permitted during normal business hours and upon forty-eight hours' notice or such shorter notice as may be provided in the Prepetition Documents; provided, however, that if the Agent alleges fraud or gross mismanagement, the Agent (or the Agent's consultant) shall be permitted access to the premises for such purpose at any time without notice. The Debtor is further directed to deliver to the Agent evidence, satisfactory to the Agent, that the Aggregate Collateral is insured for the full replacement value thereof, that all insurance policies required by the Prepetition Documents or obtained in connection with the Aggregate Collateral are maintained in full force and effect, and that the Agent is named as loss payee on all such property insurance policies and named as additional insured on all such liability policies as its interests may appear. Counsel for the Committee shall receive from the Debtor the weekly financial reporting provided to the Agent. (e) No Waiver. Except to the extent expressly set forth in this Order, this Order shall not constitute a waiver by the Agent or the Lenders of any of their rights under the Prepetition Documents, the Code or other applicable law, including, without limitation: (1) its right to later assert that, notwithstanding the terms and provisions of this Order, any of their interests in the Prepetition Collateral lack adequate protection within the meaning of Code (S)(S) 362(d) or 363(e); or (2) their right to later assert a claim under Code (S) 507. The Agent's failure, at any time or times hereafter, to require strict performance by the Debtor (or by any Trustee) of any provision of this Order shall not waive, affect or disminish any right of the Agent and the Lenders thereafter to demand strict compliance and performance therewith. No delay on the part of the Agent in the exercise of any right or remedy under this Order shall preclude any other or further exercise of any such right or remedy or the exercise of any -21- other right or remedy. None of the rights or remedies of the Agent or the Lenders under this Order shall be deemed to have been suspended or waived by the Agent unless such suspension or waiver is in writing, signed by a duly authorized officer of the Agent, consented to in writing by the Lenders and directed to the Debtor specifying such suspension or waiver. 7. Binding Effect. (a) Stipulations and Findings; Reservation of Rights. The findings contained in Paragraphs B and C of this Order shall be binding on all parties in interest in the Case and their respective successors and assigns, including, without limitation, any Trustee, subject only to the provisions of this Paragraph 7(a). The Committee and any party in interest shall have through 45 days from the entry of this Order to file an action in this Court limited solely to (1) challenging the validity, enforceability, extent or priority of the Prepetition Debt or the Lender's liens in the Prepetition Collateral, and (2) as a result, to the extent required by such actions, asserting that the payment of any Prepetition Debt authorized or directed by this Order should be avoided (an "Avoidance Action"). Any timely asserted Avoidance Action may be filed in the name of the Debtor without further leave of Court. To the extent that a party-in-interest or the Committee ultimately prevails with respect to such Avoidance Action (whether initially, on appeal, or otherwise), to the extent required by such Avoidance Action, the Court shall grant any appropriate relief, including appropriate relief in respect of the payment of the Prepetition Debt. Such challenges are limited to those described above and there shall be no challenge to the provisions contained in this Order, including, without limitation, Paragraph 5(d). (b) Order. Except as provided in Paragraph 7(a) of this Order, this Order shall be binding on all parties in interest in this Case and their respective successors and assigns, including, without limitation, any Trustee, except that any Trustee shall have the right to terminate this Order after notice and a hearing. If this Order never becomes a final and nonappealable order, if a Trustee terminates this Order, or if any or all of the provisions of this Order are hereafter modified, vacated or stayed by subsequent order of this Court or any other court, such termination or subsequent order shall not affect any one or more of the following: (a) the priority, validity, enforceability or effectiveness of any lien, security -22- interest, priority, or other benefit authorized hereby with respect to any Cash Collateral used or Postpetition Debt incurred prior to the effective date of such subsequent order (and all such liens, security interests, priorities and other benefits shall be governed in all respects by the original provisions of this Order); (b) the findings contained in Paragraphs B and C of this Order; or (c) the validity, enforceability or effectiveness of the provisions of Paragraphs 5(d), 5(f), and 5(g) of this Order. Except as otherwise explicitly set forth in this Order, no third parties are intended to be or shall be deemed to be third party beneficiaries of this Order. (c) Notice of Entry of Final Order. The Debtor shall, on or before July , 2001, serve by regular mail a copy of this Order on the Agent and each --- of the Lenders, the Agent's counsel at the address set forth at the end of this Order, counsel to the Committee, the twenty (20) largest unsecured creditors of the Debtor as set forth on schedules filed by the Debtor pursuant to Bankruptcy Rule 1007(d), the United States Trustee, any other persons which the Debtor knows are entitled to notice under Bankruptcy Rule 4001 (b) as of such date, and any other party-in-interest for which counsel to the Debtor has received a written request in this Case before 2:00 p.m. (EDT) on such date to receive such a pleading. /s/ Illegible ---------------------------- UNITED STATES DISTRICT JUDGE 7/11/01 Dated: July 10, 2001 AGREED AND ACKNOWLEDGED BY: BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP By: /s/ Illegible ------------------------- One of Its Attorneys JONES, DAY, REAVIS & POGUE -23- Neil P. Olack Brad B. Erens, Esq. 3500 Suntrust Plaza 77 W, Wacker Drive 303 Peachtree Street Suite 3800 Atlanta, Georgia 30308-3242 Chicago, II. 60601-1692 Telephone: (404) 581-8473 Telephone: (312) 782-3939 Telecopier: (404) 581-833 Telecopier: (312) 782-8585 DUANE, MORRIS & HECKSCHER LLP Michael R. Lastowaki, Esq. 1100 North Market Street, Suite 1200 Wilmington, Delaware 19801 Telephone: (302) 657-4900 Telecopier: (302) 657-4901 FLEET CAPITAL CORPORATION, FOR ITSELF AND AS AGENT FOR THE LENDERS By: /s/ Illegible ---------------------- One of Its Attorneys GOLDBERG, KOHN, BELL, BLACK, THE BAYARD FIRM ROSENBLOOM & MORITZ, LTD. Alan P. Solow, Esq. Michael L. Vild, Esq. Dimitri G. Karcazes, Esq. 222 Delaware Ave., Suite 900 55 E.Monroe St., Suite 3700 Wilmington, DE 19899 Chicago, IL 60603 Telephone: (302) 655-5000 Telephone: (312) 201-4000 Telecopier: (302) 658-6395 Telecopier: (312) 332-2196 -24- OFFICIAL UNSECURED CREDITORS'; COMMITTEE By: /s/ Illegible -------------------------------- One of Its Attorneys KRAMER LEVIN NAFTALIS & REED SMITH LLP FRANKEL LLP Mitchell A. Seider, Esq. Kurt F. Gwynne, Esq. 919 Third Avenue 1201 Market Street New York, New York 10022 Suite 1500 Telephone: (212) 715-7582 Wilmington, Delaware 19801 Telecopier: (212) 715-8000 Telephone: (302) 778-7500 Telecopier: (302) 778-7575 -25- EXHIBIT A BUDGET -26-
------------------------ Actual ------------------------ ------------------------------------------ Period Ending 16-Jun 23-Jun 30-Jun 7-Jul 14-Jul 21-Jul 28-Jul 31-Jul ------------------------ ------------------------------------------ Cash Flow Receipts 6,340 4,227 4,472 5,066 7,598 7,598 3,940 3,940 Production Payments (including freight) 8,304 5,710 8,026 3,305 5,966 5,079 3,868 3,305 Deposits 0 0 0 0 500 Critical vendors/first day order payments -- -- 0 413 2,406 236 150 150 Credit from critical vendors -- -- 0 0 (248) (1,443) (142) (90) ------------------------ ------------------------------------------ Total Production Payments 8,304 5,710 8,026 3,718 8,123 3,871 3,876 3,865 (including 1st day order payments, freight) ------------------------ ------------------------------------------ Receipts less Production payments (1,964) (1,483) (3,554) 2,348 (525) 3,727 64 75 SG&A and Other Payments 882 484 553 852 393 695 393 1,018 Net Cash Flow (2,846) (1,967) (4,107) 495 (918) 3,032 (330) (943) Capex 84 44 29 220 220 220 220 220 Chapter 11 Professional Fees 0 0 208 592 Total Cash Flow (2,930) (2,011) (4,344) 275 (1,138) 2,812 (550) (1,755) Trailing 4-week totals Receipts less Production payments (5,653) (4,214) 995 4,613 SG&A and Other Payments 2,771 2,283 2,493 2,334 Net Cash Flow (8,425) (6,497) (1,498) 2,279 Trailing 4-week totals after permitted variances Actual/Outlook 1. Receipts less Production payments, less greater of 20% or $500 20% (6,784) (5,057) 495 3,690 500 2. SG&A and Other Payments, plus 20% 20% 3,326 2,739 2,992 2,800 3. Net Cash Flow less greater of 10% or $500 10% (9,267) (7,147) (1,998) 1,779 500
1
----------------------------------------- --------------------------------- Period Ending 4-Aug 11-Aug 18-Aug 25-Aug 31-Aug 8-Sep 15-Sep 22-Sep 29-Sep ----------------------------------------- --------------------------------- Cash Flow Receipts 4,915 7,372 7,372 3,823 3,823 11,905 7,143 3,704 3,704 Production Payments (including freight) 3,505 6,166 5,279 4,068 3,505 9,679 5,283 4,072 3,509 Deposits 0 0 0 0 0 0 0 0 1,500 Critical vendors/first day order payments 50 545 515 150 150 500 315 150 150 Credit from critical vendors (90) (30) (327) (309) (90) (90) (300) (189) (90) ----------------------------------------- --------------------------------- Total Production Payments 3,465 6,681 5,467 3,909 3,565 10,089 5,298 4,033 5,069 (including 1st day order payments, freight) ----------------------------------------- --------------------------------- Receipts less Production payments 1,450 691 1,905 (87) 258 1,816 1,845 (329) (1,365) SG&A and Other Payments 893 393 695 393 393 1,300 695 1,893 893 Net Cash Flow 557 298 1,210 (480) (136) 517 1,150 (2,222) (2,258) Capex 220 220 220 220 220 440 220 220 220 Chapter 11 Professional Fees 640 1,000 Total Cash Flow 337 78 990 (700) (996) 77 930 (2,442) (3,478) Trailing 4-week totals Receipts less Production payments 4,791 6,007 4,185 4,035 2,767 3,892 3,833 3,590 1,967 SG&A and Other Payments 3,392 3,392 3,392 3,392 1,874 2,781 2,781 4,281 4,781 Net Cash Flow 1,398 2,614 793 642 893 1,112 1,052 (691) (2,813) Trailing 4-week totals after permitted variances Actual/Outlook 1. Receipts less Production payments, less greater of 20% or $500 3,833 4,805 3,348 3,228 2,214 3,114 3,066 2,872 1,467 2. SG&A and Other Payments, plus 20% 4,071 4,071 4,071 4,071 2,249 3,337 3,337 5,137 5,737 3. Net Cash Flow Less greater of 10% or $500 898 2,114 293 142 393 612 552 (1,191) (3,313)
2
------------------------------------------ Period Ending 6-Oct 13-Oct 20-0ct 27-0ct 31-Oct ------------------------------------------ Cash Flow Receipts 4,793 7,189 7,189 3,728 3,728 Production Payments (including freight) 3,428 6,089 5,202 4,357 3,428 Deposits Critical vendors/first day order payments 450 295 220 150 l50 Credit from critical vendors (90) (270) (177) (132) (90) ------------------------------------------ Total Production Payments 3,788 6,114 5,245 4,375 3,488 (including 1st day order payments, freight) ------------------------------------------ Receipts less Production payments 1,005 1,075 1,944 (647) 240 SG&A and Other Payments 884 393 624 393 1,018 Net Cash Flow 121 682 1,321 (1,041) (778) Capex 220 220 220 220 220 Chapter 11 Professional Fees 640 Total Cash Flow (99) 462 1,101 (1,261) (1,638) Trailing 4-week totals Receipts less Production payments 1,156 386 2,660 3,377 SG&A and Other Payments 4,365 4,064 2,794 2,294 Net Cash Flow (3,209) (3,678) (135) 1,083 Trailing 4-week totals after permitted variances Actual/Outlook 1. Receipts less Production payments, less greater of 20% or $500 656 (114) 2,128 2,702 2. SG&A and Other Payments,plus 20% 5,238 4,877 3,353 2,753 3. Net Cash Flow less greater of 10% or $500 (3,709) (4,178) (635) 583 ------------------------------------------ Period Ending 3-Nov 10-Nov 17-Nov 24-Nov 30-Nov ------------------------------------------ Cash Flow Receipts 4,799 7,198 7,198 3,732 3,732 Production Payments (including freight) 3,333 5,994 5,107 4,262 3,333 Deposits Critical vendors/first day order payments 50 495 170 100 100 Credit from critical vendors (90) (30) (297) (102) (60) ------------------------------------------ Total Production Payments 3,293 6,459 4,980 4,260 3,373 (including 1st day order payments, freight) ------------------------------------------ Receipts less Production payments 1,506 739 2,218 (528) 359 SG&A and Other Payments 910 393 624 393 393 Net Cash Flow 596 346 1,594 (921) (34) Capex 220 220 220 220 220 Chapter 11 Professional Fees 640 Total Cash Flow 376 126 1,374 (1,141) (894) Trailing 4-week totals Receipts less Production payments 4,118 3,781 4,055 4,174 2,788 SG&A and Other Payments 3,338 3338 3,338 3,338 1,804 Net Cash Flow 779 443 716 836 984 Trailing 4-week totals after permitted variances Actual/Outlook 1. Receipts less Production payments, less greater of 20% or $500 3,294 3,025 3,244 3,339 2,230 2. SG&A and Other Payments,plus 20% 4,006 4,006 4,006 4,006 2,164 3. Net Cash Flow less greater of 10% or $500 279 (57) 216 336 484
3
----------------------------------------- Period Ending 8-Dec 15-Dec 22-Dec 29-Dec 31-Dec ----------------------------------------- Cash Flow Receipts 4,730 7,095 7,095 3,679 3,679 Production Payments (including freight) 3,166 5,700 4,855 4,095 3,166 Deposits Critical vendors/first day order payments 380 265 100 100 100 Credit from critical vendors (60) (228) (159) (60) (60) ----------------------------------------- Total Production Payments 3,486 5,737 4,796 4,135 3,206 (including 1st day order payments, freight) ----------------------------------------- Receipts less Production payments 1,244 1,358 2,299 (456) 473 SG&A and Other Payments 916 393 624 393 3,393 Net Cash Flow 328 965 1,675 (849) (2,920) Capex 220 220 220 220 220 Chapter 11 Professional Fees 1,120 ----------------------------------------- Total Cash Flow 108 745 1,455 (1,069) (4,260) Trai1ing 4-week totals Receipts less Production Payments 3,293 2,434 5,261 4,445 SG&A and Other Payments 2,326 2,096 2,326 2,326 Net Cash Flow 967 338 2,934 2,119 Trailing 4-week totals after permitted variances Actual/Outlook 1. Receipts less Production payments, less greater of 20% or $500 2,635 1,934 4,208 3,556 2. SG&A and Other Payments, plus 20% 2,792 2,515 2,792 2,792 3. Net Cash Flow less greater of 10% or $500 467 (162) 2,434 1,619 ------------------------------------------ Period Ending 6-Jan 13-Jan 20-Jan 27-Jan 31-Jan ------------------------------------------ Cash Flow Receipts 4,643 6,964 6,964 3,611 3,611 Production Payments (including freight) 3,584 6,118 5,274 4,513 3,584 Deposits Critical vendors/first day order payments 0 Credit from critical vendors (60) --------------------------------- Total Production Payments 3,524 6,118 5,274 4,513 3,584 (including 1st day order payments, freight) ------------------------------------------ Receipts less Production payments 1,119 846 1,691 (902) 27 SG&A and Other Payments 918 393 624 393 3,518 Net Cash Flow 201 453 1,067 (1,295) (3,491) Capex 140 140 140 140 140 Chapter 11 Professional Fees 0 0 0 0 640 ------------------------------------------ Total Cash Flow 61 313 927 (1,435) (4,271) Trai1ing 4-week totals Receipts less Production payments 4,793 4,281 3,672 3,226 SG&A and Other Payments 5,721 5,721 5,721 5,722 Net Cash Flow (928) (1,441) (2,049) (2,495) Trailing 4-week totals after permitted variances Actual/Outlook 1. Receipts less Production payments, less greater of 20% or $500 3,834 3,425 2,938 2,581 2. SG&A and Other Payments, plus 20% 6,866 6,866 6,866 6,866 3. Net Cash Flow less greater of 10% or $500 (1,428) (1,941) (2,549) (2,995)
4
------------------------------------------ --------------------------------- Period Ending 3-Feb 10-Feb 17-Feb 24-Feb 28-Feb 3-Mar 10-Mar 17-Mar 24-Mar ------------------------------------------ --------------------------------- Cash Flow Receipts 4,807 7,210 7,210 3,739 3,739 5,188 7,783 7,783 4,035 Production Payments (including freight) 4,071 6,606 5,761 5,000 4,071 4,558 7,093 6,248 5,488 Deposits Critical vendors/first day order payments Credit from critical vendors ------------------------------------------ --------------------------------- Total Production Payments 4,071 6,606 5,761 5,000 4,071 4,558 7,093 6,248 5,488 (including 1st day order payments, freight) ------------------------------------------ --------------------------------- Receipts less Production payments 736 605 1,450 (1,262) (332) 630 690 1,535 (1,452) SG&A and Other Payments 942 393 624 393 393 974 393 624 393 Net Cash Flow (206) 212 826 (1,655) (726) (344) 297 911 (1,845) Capex 160 160 160 160 160 220 220 220 220 Chapter 11 Professional Fees 0 0 0 0 640 0 0 0 0 ------------------------------------------ --------------------------------- Total Cash Flow (366) 52 666 (1,815) (1,526) (564) 77 691 (2,065) Trailing 4-week totals Receipts less Production payments 2,397 2,156 1,915 1,556 1,091 1,176 1,261 1,070 SG&A and Other Payments 5,871 5,871 5,871 5,871 2,778 2,778 2,778 2,778 Net Cash Flow (3,474) (3,715) (3,956) (4,315) (1,687) (1,602) (1,517) (1,707) Trailing 4-week totals after permitted variances Actual/Outlook 1. Receipts less Production payments, less greater of 20% or $500 1,897 1,656 1,415 1,056 591 676 761 570 2. SG&A and Other Payments, plus 20% 7,045 7,045 7,045 7,045 3,333 3,333 3,333 3,333 3. Net Cash Flow less greater of 10% or $500 (3,974) (4,215) (4,456) (4,815) (2,187) (2,102) (2,017) (2,207)
5 Period Ending 31-Mar ------ Cash Flow Receipts 4,035 Production Payments (including freight) 4,558 Deposits Critical vendors/first day order payments Credit from critical vendors ------ Total Production Payments 4,558 (including 1st day order payments, freight) ------ Receipts less Production payments (523) SG&A and Other Payments 1,143 Net Cash Flow (1,666) Capex 220 Chapter 11 Professional Fees 1,120 ------ Total Cash Flow (3,006) Trailing 4-week totals Receipts less Production payments 250 SG&A and Other Payments 2,554 Net Cash Flow (2,304) Trailing 4-week totals after permitted variances Actual/Outlook 1. Receipts less Production payments, less greater of 20% or $500 (250) 2. SG&A and OtherPayments, plus 20% 3,065 3. Net Cash Flow less greater of 10% or $500 (2,804) 6 EX-10.45 5 dex1045.txt LOAN AGREEMENT DATED JANUARY 14, 2002 Exhibit 10.45 LOAN AGREEMENT THIS LOAN AGREEMENT (the "Agreement") is made and entered into as of January ___, 2002, by and between BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP, a Delaware limited partnership, in its capacity as debtor-in-possession under that certain Chapter 11 bankruptcy case filed as Case No. 01-1268 (the "Case") filed on April 3, 2001 with the United States Bankruptcy Court for the District of Delaware (the "Court") (the "Borrower"), and BCP MANAGEMENT, INC., a Delaware corporation (the "Lender"). For valuable consideration, the receipt, sufficiency and adequacy of which are hereby acknowledged, the Borrower and the Lender, intending to be legally bound, hereby recite and agree as follows: Recitals A. The Borrower is currently party to that certain $100,000,000 Loan and Security Agreement dated March 31, 2000, by and among the Borrower, Fleet Capital Corporation, as agent for the various Lenders party thereto, and the various Lenders party thereto, as the same was subsequently amended prior to the filing of the Case, and as the same was modified subsequent to the filing of the Case by that certain Agreed Final Order Authorizing Debtor: (A) To Use Cash Collateral; (B) To Incur Post-Petition Debt; and (C) To Grant Adequate Protection And Provide Security To Fleet Capital Corporation, As Agent, which was issued by the Court on July 11, 2001 (the "Final Order") and by the Interim Orders (as so amended and modified, the "Fleet DIP Facility"). B. The Borrower has requested that the Lender provide the Borrower with a credit facility of up to $10,000,000. C. The Lender has access to funds sufficient to fund this Agreement by virtue of its being the holder of that certain Demand Note dated November 30, 1987 in the original principal amount of $37,500,000, which was executed and delivered to the Lender by Borden, Inc. D. On December 12, 2001, the Borrower, as a debtor and debtor-in-possession, and the other debtor and debtor-in-possession in the Case, filed with the Court their Amended Motion of Debtors and Debtors In Possession for Entry of Interim and Final Orders Authorizing Secondary Postpetition Financing Pursuant to Section 364(b) of the Bankruptcy Code and Rule 4001 of the Federal Rules of Bankruptcy Procedure (the "Motion"). After a hearing on the Motion on December 20, 2001, the Court entered that certain Agreed Interim and Proposed Final Order Authorizing Secondary Postpetition Financing Pursuant to Section 364(b) of the Bankruptcy Code and Rule 4001 of the Federal Rules of Bankruptcy Procedure (the "Interim Secondary DIP Order"). This Agreement is the Loan Agreement defined in the Interim Secondary DIP Order. A final order approving this Agreement is contemplated following the Final Hearing (as defined in the Interim Secondary DIP Order), which is currently scheduled to be held on January 16, 2002. E. Based upon the foregoing, the Lender has agreed to extend the foregoing credit to the Borrower upon the terms and conditions hereinafter set forth. Agreement SECTION 1. DEFINITIONS 1.1 Defined Terms. In addition to the other terms defined herein, the terms set forth below shall have the meanings indicated below. To the extent that capitalized terms are used but not defined herein, such terms shall have the meanings given such terms in the Fleet DIP Facility (certain of which were modified by the Interim Orders and the Final Order) and, where the definitions of such defined terms make reference to other defined terms, such other defined terms shall also have the meanings given such terms in the Fleet DIP Facility. Borrowing means a borrowing hereunder consisting of any Loan or Loans made to the Borrower by the Lender. Borrowing Date means any Business Day upon which a Borrowing occurs. Business Day means a day other than a Saturday, Sunday or other day on which commercial banks in Ohio are authorized or required by law to close. Periods of days referred to in this Agreement shall be counted in calendar days unless Business Days are expressly prescribed. Code means U.S.C. Title 11, as amended from time to time. Commitment means the commitment of the Lender to make Loans to the Borrower pursuant to Section 2.1 hereof in the amounts referred to therein, as such commitment may be terminated pursuant to Section 2.4 hereof. Commitment Period means the period from and including the date on which the conditions to the initial Loans under Section 3 hereof have been satisfied or waived to but excluding the Maturity Date. Default means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default. Default Rate means 2.0% per annum plus the non-default interest rate otherwise payable hereunder. Dollars and "$" means dollars in lawful currency of the United States of America. Event(s) of Default has the meaning set forth in Section 4 hereof. Excess Cash Flow means all cash received by the Borrower, regardless of source, on any calendar day, which cash is not necessary to make a payment reasonably estimated by the Borrower to be payable on the following Business Day. Notwithstanding the foregoing, an aggregate maximum amount of $500,000 may be maintained by the Borrower at all times across its various bank accounts, in order to comply with certain minimum balance requirements and for other immediate cash needs, and cash received into such bank accounts shall not constitute "Excess Cash Flow" hereunder to the extent that the Borrower's bank accounts have an aggregate balance below such amount. Loan Documents means this Agreement, the Note, and all other written agreements, instruments, certificates, and documents, and all other writings which are now or hereafter executed by or on behalf of the Borrower and delivered to the Lender in connection with or as related to this Agreement -2- or the transactions arising herefrom, and as now in effect or as at any time hereafter amended, modified, supplemented or restated. Loans has the meaning set forth in Section 2.1 hereof. Maturity Date means the earliest of (a) March 31, 2002, (b) such earlier date as the Lender's obligation to make Loans hereunder shall otherwise terminate as provided herein, (c) the date of the confirmation of a plan of reorganization under the Case or (d) the date upon which the sale of substantially all of the Borrower's assets has been completed. Note has the meaning set forth in Section 2.2(a) hereof. Obligations means, as of any date, the Loans, and all debts, liabilities, covenants, duties, obligations of, and amounts owing from, the Borrower to the Lender of every kind and description arising out of or in connection with the Loan Documents, howsoever arising, whether now in existence or hereafter incurred or arising, absolute or contingent, joint or several, matured or unmatured, direct or indirect, and all interest, charges and expenses. Payment Date means the first day of each calendar month after the date hereof. Responsible Officer means, as to the Borrower, the President, Chief Executive Officer, Chief Financial Officer or Senior Vice President - Commercial of such entity. 1.2 Other Definitional Provisions. Unless otherwise specified, (a) All terms defined in this Agreement, whether or not in this Section 1 or by reference to the Fleet DIP Facility, have the defined meanings provided herein when used herein, in the Notes, or in any other Loan Documents, or any other certificate, instrument or other document made or delivered pursuant hereto or thereto, unless otherwise defined therein. The definition of any document or instrument includes all schedules, attachments and exhibits thereto and all renewals, extensions, supplements, restatements and amendments thereof. (b) "Hereunder," "herein," "hereto," "this Agreement" and words of similar import refer to this entire document; "including" is used by way of illustration and not by way of limitation, unless the context clearly indicates the contrary; the singular includes the plural and conversely, and any action required to be taken by the Borrower is to be taken promptly, unless the context clearly indicates the contrary. SECTION 2. AMOUNT AND TERMS OF COMMITMENT 2.1 Commitment. Subject to the terms and conditions of this Agreement, the Lender agrees to make loans to the Borrower from time to time during the Commitment Period in an aggregate principal amount at any one time outstanding not to exceed the aggregate amount of $10,000,000. The Borrower shall use the proceeds of loans made pursuant to the Commitment for working capital and other general corporate purposes, for other purposes for which the Borrower is otherwise permitted to incur Postpetition Debt pursuant to the Final Order or for making payments from time to time on the Fleet DIP Facility if and to the extent necessary to result in there existing at each such time no more than $1 of Positive Borrowing Availability. Following the payment in full of the Fleet DIP Facility, and so long as no Default or Event of Default then exists, the Borrower may use the Commitment by borrowing, prepaying the loans made thereunder in whole or in part, and reborrowing -3- such loans, all in accordance with the terms and conditions hereinafter set forth. The loans made to the Borrower by the Lender pursuant to this Section 2.1 shall be referred to herein as "Loans". 2.2 Notes. (a) The Loans made by the Lender pursuant to Section 2.1 hereof shall be evidenced by a promissory note in the form of Exhibit A hereto made by the Borrower payable to the order of the Lender in the original principal amount of $10,000,000 (the "Note"). The Note shall evidence the obligations of the Borrower to pay the Lender, or any subsequent holder(s) of the Note, the aggregate unpaid principal amount of the Loans made by the Lender and evidenced thereby, together with interest thereon as prescribed herein. (b) The Note shall (i) be dated as of the date hereof, (ii) be stated to mature, with respect to the aggregate principal amount of all of the Loans evidenced thereby, on the Maturity Date, and (iii) bear interest for the period from the date thereof on the unpaid principal amounts of each of the Loans from time to time outstanding at the applicable interest rates per annum determined as provided herein. Interest on the unpaid principal balances of each of the Loans evidenced by the Note shall be payable as specified herein. 2.3 Procedure for Borrowing. The Borrower may borrow under the Commitment during the Commitment Period on any Business Day. Notices by the Borrower to the Lender of Borrowings of Loans shall be irrevocable and shall be effective only if received by the Lender not later than 11:00 a.m., Ohio time, on the day of such Borrowing. Each such notice of Borrowing shall specify the aggregate amount of the requested Borrowing, the requested Borrowing Date (which shall be a Business Day), the location and number of the Borrower's account to which funds are to be disbursed and shall include with such notice a fully-completed and executed certificate of a Responsible Officer substantially in the form of Exhibit B attached hereto. The Lender shall make funds available to the Borrower, subject to the satisfaction of the terms and conditions of this Agreement, including subsection 3.2(e), by transferring immediately available funds to the Borrower's account in the amount of any such Borrowing on the requested date of Borrowing. 2.4 Termination of Commitment Period. Unless earlier terminated pursuant to the terms of this Agreement, the Commitment shall, without notice to the Borrower, terminate at close of business on the last day of the Commitment Period. 2.5 Repayment of Loans. The Borrower hereby promises to pay the outstanding principal amount of any Loans and any other Obligations outstanding in full on the Maturity Date. 2.6 Prepayments of Loans. Following the indefeasible payment in full of the Fleet DIP Facility, the Borrower shall prepay the Loans, in whole or in part, as applicable, with all Excess Cash Flow, on or prior to the date(s) that is/are the Business Day immediately following the date such Excess Cash Flow is received by the Borrower. In the case of any prepayment hereunder, whether in part or in full, the payment received shall be applied in the order set forth in the Note. 2.7 Interest Rates; Computation. (a) The Borrower hereby promises to pay to the Lender interest on the unpaid principal amount of each Loan made by the Lender for the period from and including the date of such Loan to but excluding the date such Loan shall be paid in full, at a fluctuating rate of interest equal to the Alternate Base Rate plus 2.75%. Notwithstanding the foregoing, the Borrower hereby promises to pay to the Lender (upon written notification from the Lender) interest at the applicable Default Rate: -4- (i) on any principal of any Loan or any other Obligation that shall not be paid in full when due (whether at stated maturity, by acceleration, by mandatory prepayment or otherwise), for the period from and including the due date thereof to but excluding the date the same is paid in full; and (ii) during any period when any Event of Default shall have occurred and for so long as such Event of Default shall be continuing. (b) Accrued and unpaid interest on each Loan shall be payable monthly in arrears on each Payment Date, and upon the payment thereof, except that interest payable at the Default Rate shall be payable from time to time on demand. (c) Interest on all Loans and other Obligations shall be calculated on the basis of a 365 or 366, as appropriate, day year for the actual number of days elapsed. 2.8 Payments. (a) Payment of all principal of, and accrued but unpaid interest on, the Loans shall be made not later than 12:00 Noon, Ohio time, on the date when due, in immediately available funds, to the Lender at its address as set forth in Section 5.2 hereof. Whenever any payment of principal of, or interest on, the Loans shall be due on a day which is not a Business Day, the date for payment thereof shall be extended to the next succeeding Business Day. If the date for any payment of principal is extended by order of the Court, operation of law or otherwise, interest thereon shall be payable for such extended time period unless the Court otherwise specifies. (b) All payments of principal and interest with respect to Loans shall be made in Dollars without setoff or counterclaim. SECTION 3. CONDITIONS PRECEDENT 3.1 Conditions to Initial Loans. The obligation of the Lender to make the initial Loans to the Borrower hereunder is subject to the full satisfaction, in the opinion of the Lender, of the following conditions precedent on or prior to the first Borrowing Date: (a) This Agreement, the Note and the other Loan Documents. The Lender shall have received this Agreement, the Note and all other Loan Documents reasonably required by the Lender, duly executed and delivered by a Responsible Officer of the Borrower. (b) Approvals; Court Orders. All governmental and third-party approvals necessary in connection with the execution of this Agreement, the consummation of the transactions contemplated hereby, and the continuing operations of the Borrower, including without limitation the order of the Court (i) that the Borrower may incur the debt contemplated by this Agreement pursuant to Section 364(b) of the Code with the protection afforded by Section 364(e) of the Code, (ii) that such debt shall constitute the debt of the Borrower and not a contribution of capital into the Borrower by the Lender and (iii) that the Obligations shall constitute an allowed administrative expense under Section 503(b)(1)(A) of the Code, shall have been obtained and be in full force and effect and all applicable waiting periods shall have expired without any action being taken or threatened by any competent authority which would restrain, prevent or otherwise impose adverse conditions on the transactions contemplated hereby. -5- (c) No Default or Event of Default. No Default or Event of Default shall have occurred and be continuing hereunder after giving effect to the making of the initial Loans. 3.2 Conditions to All Loans. The obligation of the Lender to make any Loans hereunder on any date, including without limitation the initial Loans, is subject to the full satisfaction, in the opinion of the Lender, of the following conditions precedent as of the Borrowing Date for such Loan: (a) Representations and Warranties. The representations and warranties made by the Borrower in this Agreement or any other Loan Document, and any representations and warranties made by the Borrower which are contained in any certificate, document or financial or other statement or Loan Document furnished at any time under or in connection herewith or therewith, shall be true and correct in all material respects on and as of the Borrowing Date of such Loan as if made on and as of such date other than representations and warranties that by their terms refer to a specific date. (b) No Default or Event of Default. No Default or Event of Default shall have occurred and be continuing on such Borrowing Date or after giving effect to the Loan to be made on such Borrowing Date, unless the same is expressly waived by the Lender. (c) No Availability Under Fleet DIP Facility. There shall be no Positive Borrowing Availability under the Fleet DIP Facility at the date and time the request for such Borrowing is made (after giving effect to borrowings under the Fleet DIP Facility requested contemporaneously therewith). (d) No Revocation of Prior Court Orders. Except with the written consent of the Lender, no order of the Court relating to this Agreement or the Fleet DIP Facility shall have been revoked, rescinded, vacated or modified in any manner and there shall be pending no motions from any party seeking such revocation, rescission, vacation or modification. (e) Lender's Determination of Continued Feasibility of Exit Strategy. The Lender (i) shall have determined, in its reasonable discretion based upon its review of such information as it may reasonably require, that the Borrower's previously announced exit strategy remains achievable and sufficient to indefeasibly pay in full the Obligations and all amounts senior thereto, if any, or (ii) shall have determined, in its sole discretion as to any requested Borrowing, to waive its rights under the foregoing clause (i). Each Borrowing by the Borrower under this Agreement shall constitute a representation and warranty by the Borrower as of the date of such Borrowing that the conditions contained in the foregoing paragraphs (a), (b), (c) and (d) of this Section 3.2 have been fully satisfied. SECTION 4. EVENTS OF DEFAULT AND REMEDIES Upon the occurrence of any of the following events (each an "Event of Default"): (1) the Borrower (a) shall fail to pay any principal on any Loan when such amount becomes due in accordance with the terms hereof; or (b) shall fail to pay any interest on any Loan or any other Obligation within three days of the date when such amount becomes due in accordance with the terms hereof or thereof; or (2) the Borrower shall (a) default in the observance or performance of any covenant or agreement set forth in any Loan Document; (b) fail to deliver or cause to be delivered the -6- information, notices or other items specified in this Agreement, or under the Note or any other Loan Document when due; or (3) any representation or warranty made by the Borrower herein, or in the Note or in any other Loan Document, or which is contained in any certificate, document or financial or other statement or other Loan Document furnished at any time under or in connection herewith or therewith, shall prove to have been incorrect in any material respect on or as of the date made; (4) the Case is either dismissed or converted to Chapter 7 of the Code; or (5) the Agent (a) provides written notice to the Borrower that an Event of Default (as defined in the Fleet DIP Facility) has occurred and is continuing, or (b) without giving notice, exercises a right or remedy available upon the occurrence of an Event of Default (as defined in the Fleet DIP Facility). then, and in any such event: (i) the Lender may, by written notice to the Borrower, declare its obligation to make Loans hereunder to be immediately terminated, whereupon such obligation shall immediately terminate, and (ii) the Lender may, by written notice of default to the Borrower, declare the Loans hereunder (with accrued interest thereon) and all other Obligations to be immediately due and payable, and upon the giving of such notice of default, all such amounts immediately shall become due and payable without further demand, notice or protest of any kind; the giving of any such further demand, notice or protest being hereby expressly waived by the Borrower, and all other Persons directly or indirectly liable for the payment and/or performance of the Obligations; and thereupon, the Lender may proceed to exercise any and all remedies that are provided to it under this Agreement, the Note, the other Loan Documents, applicable law or by order of the Court. SECTION 5. MISCELLANEOUS 5.1 Amendments and Waivers. Unless prohibited from doing so by order of the Court, the Lender and the Borrower may, from time to time, enter into written amendments, supplements or modifications for the purpose of adding any provisions to this Agreement, the Note or any other Loan Documents, or changing in any manner the rights of the Lender or the Borrower hereunder or thereunder, and the Lender may execute and deliver to the Borrower a written instrument waiving, on such terms and conditions as the Lender may specify in such instrument, any of the requirements of this Agreement, the Note or any other any Loan Document, or any Default or Event of Default and its consequences. 5.2 Notices. All notices required or permitted hereunder shall be in writing and shall be deemed to be properly given when personally delivered to any officer or designated representative of the party entitled to receive the notice, or when sent by certified or registered first class mail or nationally recognized overnight courier, postage prepaid, by facsimile transmission (if provided for below) or by e-mail (if provided for below), when properly addressed or sent to the party entitled to receive such notice at the address stated below: If to the Borrower, to: Borden Chemicals and Plastics Operating Limited Partnership Highways 73 & 30 Geismar, Louisiana 70734 Attn: Chief Financial Officer Fax: 225.673.0626 -7- If to the Lender, to: BCP Management, Inc. c/o Borden, Inc. 180 East Broad Street Columbus, Ohio 43215 Attn: Gerald F. Mann, Director, Treasury Operations e-mail: manngf@bordenchem.com Either party may change its address for purposes of notice hereunder by delivering written notice of such change to the other party. 5.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of the Lender, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. 5.4 Survival of Representations and Warranties. All representations and warranties made hereunder and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement and the Note. 5.5 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Borrower, the Lender and their respective successors and assigns permitted hereby. Notwithstanding the foregoing, the rights and obligations of Borrower hereunder may not be assigned or transferred by Borrower without the prior written consent of Lender. 5.6 Counterparts; Effective Date. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts and all of said counterparts taken together shall be deemed to constitute one and the same instrument. A set of the copies of this Agreement signed by all the parties shall be lodged with Borrower and the Lender. This Agreement shall become effective upon the receipt by the Lender of executed counterparts of this Agreement by each of the parties hereto. The parties agree that facsimile counterpart signatures shall be sufficient to bind a party hereto. 5.7 Governing Law. This Agreement, and the Note, and the rights and obligations of the parties hereunder and thereunder, shall be governed by, and construed and interpreted in accordance with, the laws of the State of Ohio, except and only to the extent precluded by other laws of mandatory application. Notwithstanding the foregoing, the Court shall retain jurisdiction over this Agreement and the forum for any action relating hereto shall be the Court. 5.8 Supersession and Headings. Except as specified in Section 5.10 hereof, this Agreement, the Notes and the other Loan Documents contain the entire agreement between the Borrower and the Lender with respect to the subject matter hereof, and replace any prior or contemporaneous understandings and agreements, oral or written, between the Borrower, and the Lender with respect to the subject matter hereof, including any commitment, oral or written, of the Lender previously issued. No representation, warranty, modification, alteration or agreement shall affect this Agreement, unless made in writing and executed with the same formalities as this Agreement. The paragraph headings do not -8- form a part of this Agreement, but are for convenience only, and shall not limit or affect in any way the meaning of its provisions. 5.9 No Joint Venture. The Lender, by entering into this Agreement or by any action taken pursuant hereto, shall not be deemed to be a partner or joint venturer with the Borrower and the Borrower hereby indemnifies and holds the Lender harmless from and against any and all claims, demands, losses, damages and expenses made or incurred, resulting from or arising out of any such construction or alleged construction of any agreement between the Borrower and the Lender, either individually or collectively. 5.10 Incorporation of Interim Secondary DIP Order. The Interim Secondary DIP Order is hereby incorporated in its entirety into this Agreement by this reference. Anything to the contrary contained in this Agreement notwithstanding, and pursuant to the terms of the Interim Secondary DIP Order, the Commitment referenced in Section 2.1 hereof shall only be in the amount of $5,000,000 until such time, if at all, that this Agreement is approved by the Court following the Final Hearing (as defined in the Interim Secondary DIP Order). 5.11 Effect of Court Orders. Subject to the terms of the following sentence, if any provision of this Agreement or any other Loan Document conflicts with the Final Order, the Interim Secondary DIP Order any final or other order of the Court relating to this Agreement or any other order of the Court, the provisions of such order shall control and this Agreement or such other Loan Document shall automatically, without the execution of further documentation, be deemed modified to comply with such order. Notwithstanding the foregoing, no order of the Court shall have the effect of postponing the Maturity Date beyond March 31, 2002 without the prior written consent of the Lender, which may be withheld in the Lender's sole discretion. [The remainder of this page is intentionally left blank.] -9- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written. BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP, a Delaware limited partnership By: BCP Management, Inc., a Delaware corporation, its general partner By: _________________________________________________ Mark J. Schneider President and Chief Executive Officer BCP MANAGEMENT, INC. a Delaware corporation By:__________________________________________________ William H. Carter Chairman of the Board -10- Exhibit A [Form of Note] NOTE $10,000,000 January __, 2002 FOR VALUE RECEIVED, the undersigned ("Borrower") promises to pay to the order of BCP Management, Inc., a Delaware corporation ("Lender"), at the office of Lender, c/o Borden, Inc., 180 East Broad Street, Columbus, Ohio 43215, Attn: Director, Treasury Operations, or at such other place as the holder hereof may, from time to time, in writing designate, the principal sum of Ten Million Dollars ($10,000,000) (or so much thereof as may be disbursed to, or for the benefit of, Borrower and remain unpaid) in lawful money of the United States of America and in immediately available funds, together with interest and payable at such interest rates and for such periods and in such manner, time(s) and place(s) as are specified in the Loan Agreement hereinafter defined. This note ("Note") is the Note identified in the Loan Agreement dated as of January __, 2002 (as the same shall be amended, modified or supplemented from time to time, the "Loan Agreement") between Borrower and Lender, and the Loan Agreement is hereby incorporated into this Note and made a part hereof. Capitalized terms used but not defined herein shall have the meanings ascribed thereto in the Loan Agreement. Principal and interest shall be payable as set forth in the Loan Agreement. Anything to the contrary contained herein or therein notwithstanding, all principal, accrued but unpaid interest and other amounts payable in connection herewith shall be due and payable in full on the Maturity Date. Lender's records of the principal, accrued interest and other charges due hereunder, as well as applicable interest rates and periods are, absent manifest error, conclusive as to and binding upon all Persons. Upon occurrence of an Event of Default, the whole or any part of the unpaid indebtedness evidenced hereby shall, at once or at any time thereafter, at the option of the holder or holders hereof, become due and payable without notice or demand therefor, the same being expressly waived. A failure of the holder thereof to insist upon strict compliance with the terms hereof or to assert any right hereunder shall not be a waiver of any default and shall not be deemed to constitute a modification of the terms hereof or to establish any claim or defense. All payments received under the terms of this Note will be applied by the Lender first to any sums due under this Note other than interest and principal, second to any accrued but unpaid interest hereunder, third to any principal due hereunder. This Note shall bind Borrower and its successors and assigns, and shall inure to the benefit of the Lender and its successors and assigns. Notwithstanding the foregoing, the obligations of Borrower hereunder may not be assigned or transferred by Borrower without the prior written consent of Lender. No delay or omission on the part of the holder in exercising any right hereunder shall operate as a waiver of such right or of any other right under this Note. A waiver on any one occasion shall not be construed as a bar to or waiver of any such right and/or remedy on any future occasion. All persons now or hereafter liable, primarily or secondarily, for the payment of the indebtedness evidenced hereby or any part thereof, do hereby expressly waive presentment for payment, notice of dishonor, protest and notice of protest, and agree that the time for payment or payments of any part of the indebtedness evidenced hereby may be extended without releasing or otherwise affecting their liability hereon. Borrower agrees that the laws of the State of Ohio shall govern its rights and duties hereunder and the construction and effect hereof. However, if any provision hereof is or becomes invalid or unenforceable under any law of mandatory application, it is the intent of Borrower, Lender and all parties primarily or secondarily liable hereunder, that such provision will be deemed severed and omitted herefrom, the remaining portions hereof to remain in full force and effect as written. IN WITNESS WHEREOF, Borrower has executed this Note as of the day and year first above written. BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP, a Delaware limited partnership By: BCP Management, Inc., a Delaware corporation, its general partner By:___________________________________________________ Mark J. Schneider President and Chief Executive Officer 2 Exhibit B [Form of Borrowing Certificate] [Letterhead of Borden Chemicals and Plastics Operating Limited Partnership] _____________________, 200_ BCP Management, Inc. ___________________ ___________________ ___________________ The undersigned, a Responsible Officer of Borden Chemicals and Plastics Operating Limited Partnership, a Delaware limited partnership ("Borrower"), gives this certificate to BCP Management, Inc. ("Lender") in accordance with the requirements of subsection 2.3 of that certain Loan Agreement dated December __, 2001 by and between Borrower and Lender (the "Loan Agreement"). Capitalized terms used in this Certificate, unless otherwise defined herein, shall have the meanings ascribed to them in the Loan Agreement. 1. Borrower hereby requests that Lender make a Loan to Borrower in the amount of $________________ on _________, 200_ by wiring funds to the following account: _______ ______________________________________________. 2. No Default exists on the date hereof, other than: _______________ ___________________________________________________________ [if none, so state]. 3. No Event of Default exists on the date hereof, other than _____________ _____________________________________________ [if none, so state]. 4. There is no Positive Borrowing Availability under the Fleet DIP Facility. 5. All other conditions precedent to Lender's obligation to make the requested Loan, as set forth in Section 3 of the Loan Agreement, have been satisfied. Very truly yours, _______________________________________ Title: __________________ 3 EX-10.46 6 dex1046.txt FIRST AMENDMENT TO LOAN AGREEMENT DATED 3/29/02 Exhibit 10.46 FIRST AMENDMENT TO LOAN AGREEMENT THIS FIRST AMENDMENT TO LOAN AGREEMENT (the "Amendment") is made and entered into as of March 29, 2002, by and between BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP, a Delaware limited partnership, in its capacity as debtor-in-possession under that certain Chapter 11 bankruptcy case filed as Case No. 01-1268 (the "Case") filed on April 3, 2001 with the United States Bankruptcy Court for the District of Delaware (the "Court") (the "Borrower"), and BCP MANAGEMENT, INC., a Delaware corporation, in its capacity as debtor-in-possession under that certain Chapter 11 bankruptcy case filed as Case No. 02-10875 (the "Lender Case") filed on March 22, 2002 with the Court (the "Lender"). For valuable consideration, the receipt, sufficiency and adequacy of which are hereby acknowledged, the Borrower and the Lender, intending to be legally bound, hereby recite and agree as follows: Recitals A. On January 14, 2002, the Borrower and the Lender entered into that certain Loan Agreement (the "Loan Agreement") pursuant to which the Lender agreed to lend to the Borrower up to $10,000,000 subject to the terms and conditions contained therein. The borrowings under the Loan Agreement were evidenced further by that certain Note in the original principal amount of $10,000,000 executed by the Borrower in favor of the Lender on January 14, 2002. B. The Borrower has requested that the Lender extend the maturity date under the Loan Agreement until April 30, 2002. C. The Borrower and the Lender mutually wish to amend the Loan Agreement, according to the terms and conditions hereinafter set forth. D. The Borrower and the Lender have each requested the authority in the Case and the Lender Case, respectively, to perform their respective rights and obligations under the Loan Agreement and to extend the maturity date to April 30, 2002. Agreement 1. Definitions. All capitalized terms used herein which are defined in the Loan Agreement shall have the same meanings when used herein. 2. Amendments to the Loan Agreement. As of the date that all conditions precedent set forth in Section 3 below have been satisfied, the Loan Agreement shall be and hereby is amended and modified as follows: a. The definition of "Maturity Date" contained in Section 1.1 of the Loan Agreement is hereby modified to delete therefrom the phrase "March 31, 2002" and replace it with the phrase "April 30, 2002". b. Section 5.11 of the Loan Agreement is hereby modified to delete there from the phrase "March 31, 2002" and replace it with the phrase "April 30, 2002". 3. Conditions Precedent. The amendments to the Loan Agreement set forth in Section 2 above shall not be effective until the Court, in both the Case and the Lender Case, has issued an order authorizing the extension of the maturity date, and the consummation of the transactions contemplated by the Loan Agreement, by both the Borrower and the Lender, as applicable. 4. Confirmation and Ratification. Except as specifically modified and amended pursuant to the terms hereof, the Loan Agreement remains unchanged and in full force and effect as written. The parties hereto hereby ratify and confirm in all respects, as of the date hereof, all of the terms, conditions, representations, warranties, covenants and provisions contained therein, as modified and amended hereby, and the Borrower hereby confirms and ratifies in all respects all of the Obligations. 5. No Default. The Borrower hereby ratifies and confirms that there are no Defaults or Events of Default which have occurred and are continuing as of the date hereof. 6. Governing Law. This Amendment, and the rights and obligations of the parties hereunder, shall be governed by, and construed and interpreted in accordance with, the laws of the State of Ohio, except and only to the extent precluded by other laws of mandatory application. Notwithstanding the foregoing, the Court shall retain jurisdiction over this Amendment and the forum for any action relating hereto shall be the Court. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written. BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP, a Delaware limited partnership By: BCP Management, Inc., a Delaware corporation, its general partner By:______________________________________ Mark J. Schneider President and Chief Executive Officer BCP MANAGEMENT, INC. a Delaware corporation By:______________________________________ Mark J. Schneider President and Chief Executive Officer 2 EX-10.47 7 dex1047.txt MODIFIED LOAN AGREEMENT DATED APRIL 30, 2002 Exhibit 10.47 MODIFIED LOAN AGREEMENT THIS MODIFIED LOAN AGREEMENT (the "Agreement") is made and entered into to be effective as of April 30, 2002, by and between BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP, a Delaware limited partnership, in its capacity as debtor-in-possession under that certain Chapter 11 bankruptcy case filed as Case No. 01-1268 (the "Case") filed on April 3, 2001 with the United States Bankruptcy Court for the District of Delaware (the "Court") (the "Borrower"), and BCP MANAGEMENT, INC., a Delaware corporation, in its capacity as debtor-in-possession under that certain Chapter 11 bankruptcy case filed as Case No. 02-10875 (the "Lender Case") filed on March 22, 2002 with the Court (the "Lender"). For valuable consideration, the receipt, sufficiency and adequacy of which are hereby acknowledged, the Borrower and the Lender, intending to be legally bound, hereby recite and agree as follows: Recitals A. On January 14, 2002, the Borrower and the Lender entered into that certain Loan Agreement (as amended by that certain First Amendment to Loan Agreement dated March 29, 2002, the "Original Loan Agreement") pursuant to which the Lender agreed to lend to the Borrower up to $10,000,000, subject to the terms and conditions contained therein. The borrowings under the Original Loan Agreement were evidenced further by that certain Note in the original principal amount of $10,000,000 executed by the Borrower in favor of the Lender on January 14, 2002 (the "Original Note"). The Original Loan Agreement and the Original Note provided secondary financing subordinate to that certain $100,000,000 Loan and Security Agreement dated March 31, 2000, by and among the Borrower, Fleet Capital Corporation, as agent for the various Lenders party thereto, and the various Lenders party thereto, as the same was subsequently amended prior to the filing of the Case, and as the same was modified subsequent to the filing of the Case by that certain Agreed Final Order Authorizing Debtor: (A) To Use Cash Collateral; (B) To Incur Post-Petition Debt; and (C) To Grant Adequate Protection And Provide Security To Fleet Capital Corporation, As Agent, which was issued by the Court on July 11, 2001 and by the Interim Orders (as defined therein) (as so amended and modified and as amended or extended by subsequent orders of the Court, the "Fleet DIP Facility"). B. In April, 2002, the Borrower paid the Fleet DIP Facility in full. C. As of April 24, 2002, there were no borrowings outstanding under the Original Loan Agreement, although there may be borrowings before April 30, 2002. D. The Borrower has requested that the Lender continue to provide the Borrower with a credit facility of up to $6,000,000, subject to potential increase after May 23, 2002, as described more fully herein. E. On or about April 24, 2002, the Borrower, as a debtor and debtor-in-possession, and the other debtor and debtor-in-possession in the Case, filed with the Court their Motion of Debtor and Debtor-in-Possession for Authority to Extend Obligations of Borden Chemicals and Plastics Operating Limited Partnership Under Modified Loan Agreement with BCP Management, Inc. (the "Debtor Motion"). After a hearing on April 24, 2002, the Court entered that certain Borrower Bridge DIP Order (the "Borrower Bridge DIP Order"). This Agreement is the Loan Agreement defined in the Borrower Bridge DIP Order. A final order approving this Agreement is contemplated following a final hearing, which is currently scheduled to be held on May 23, 2002. G. On April 24, 2002, the Lender, as a debtor and debtor-in-possession in the Lender Case filed with the Court its Motion of Debtor for Entry of Interim and Final Orders Authorizing an Extension of Its Obligations Under a Modified Loan Agreement with Borden Chemicals and Plastics Operating Limited Partnership (the "Lender Motion"). After a hearing on April 24, 2002, the Court entered that certain Lender Bridge DIP Order (the "Lender Bridge DIP Order"). This Agreement is the Modified Loan Agreement defined in the Lender Bridge DIP Order. A final order approving this Agreement is contemplated following the Final Hearing (as defined in the Lender Bridge DIP Order), which is currently scheduled to be held on May 23, 2002. At such Final Hearing, the Lender intends to request that the Maturity Date (as defined herein) be extended until June 30, 2002 and that the Commitment (as defined herein) be increased commensurate with the Borrower's projected cash needs between May 23, 2002 and June 30, 2002 (the "Extension and Increase Request"). H. Based upon the foregoing, the Lender has agreed to extend the foregoing credit to the Borrower upon the terms and conditions hereinafter set forth. Agreement SECTION 1. DEFINITIONS 1.1 Defined Terms. In addition to the other terms defined herein, the terms set forth below shall have the meanings indicated below. Borrowing means a borrowing hereunder consisting of any Loan or Loans made to the Borrower by the Lender. Borrowing Date means any Business Day upon which a Borrowing occurs. Business Day means a day other than a Saturday, Sunday or other day on which commercial banks in Ohio are authorized or required by law to close. Periods of days referred to in this Agreement shall be counted in calendar days unless Business Days are expressly prescribed. Code means U.S.C. Title 11, as amended from time to time. Commitment means the commitment of the Lender to make Loans to the Borrower pursuant to Section 2.1 hereof in the amounts referred to therein, as such commitment may be terminated pursuant to Section 2.4 hereof. Commitment Period means the period from and including the date on which the conditions to the initial Loans under Section 3 hereof have been satisfied or waived to but excluding the Maturity Date. Default means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default. Default Rate means 2.0% per annum plus the non-default interest rate otherwise payable hereunder. Dollars and "$" means dollars in lawful currency of the United States of America. -2- Employee Expenses has the meaning set forth in Section 2.1 hereof. Event(s) of Default has the meaning set forth in Section 4 hereof. Excess Cash Flow means all cash received by the Borrower, regardless of source, on any calendar day, which cash is not necessary to make a payment reasonably estimated by the Borrower to be payable on the following Business Day. Notwithstanding the foregoing, an aggregate maximum amount of $500,000 may be maintained by the Borrower at all times across its various bank accounts, in order to comply with certain minimum balance requirements and for other immediate cash needs, and cash received into such bank accounts shall not constitute "Excess Cash Flow" hereunder to the extent that the Borrower's bank accounts have an aggregate balance below such amount. Loan Documents means this Agreement, the Note, and all other written agreements, instruments, certificates, and documents, and all other writings which are now or hereafter executed by or on behalf of the Borrower and delivered to the Lender in connection with or as related to this Agreement or the transactions arising herefrom, and as now in effect or as at any time hereafter amended, modified, supplemented or restated. Loans has the meaning set forth in Section 2.1 hereof. Maturity Date means the earliest of (a) any conversion of the Borrower's Chapter 11 case to Chapter 7, (b) May 23, 2002, (c) such earlier date as the Lender's obligation to make Loans hereunder shall otherwise terminate as provided herein, (d) the date of the confirmation of a plan of reorganization under the Case or (e) the date upon which the sale of substantially all of the Borrower's assets has been completed. Note has the meaning set forth in Section 2.2(a) hereof. Obligations means, as of any date, the Loans, and all debts, liabilities, covenants, duties, obligations of, and amounts owing from, the Borrower to the Lender of every kind and description arising out of or in connection with the Loan Documents, howsoever arising, whether now in existence or hereafter incurred or arising, absolute or contingent, joint or several, matured or unmatured, direct or indirect, and all interest, charges and expenses. Ordinary Expenses has the meaning set forth in Section 2.1 hereof. Payment Date means the first day of each calendar month after the date hereof. Responsible Officer means, as to the Borrower, the President, Chief Executive Officer, Chief Financial Officer or Senior Vice President - Commercial of such entity. 1.2 Other Definitional Provisions. Unless otherwise specified, (a) All terms defined in this Agreement have the defined meanings provided herein when used herein, in the Note, or in any other Loan Documents, or any other certificate, instrument or other document made or delivered pursuant hereto or thereto, unless otherwise defined therein. The definition of any document or instrument includes all schedules, attachments and exhibits thereto and all renewals, extensions, supplements, restatements and amendments thereof. (b) "Hereunder," "herein," "hereto," "this Agreement" and words of similar import refer to this entire document; "including" is used by way of illustration and not by way of -3- limitation, unless the context clearly indicates the contrary; the singular includes the plural and conversely, and any action required to be taken by the Borrower is to be taken promptly, unless the context clearly indicates the contrary. SECTION 2. AMOUNT AND TERMS OF COMMITMENT 2.1 Commitment. Subject to the terms and conditions of this Agreement, the Lender agrees to make or continue to make loans to the Borrower from time to time during the Commitment Period in an aggregate principal amount at any one time outstanding not to exceed the aggregate amount of $6,000,000, subject to the sublimits set forth in this Section 2.1. The Borrower shall use the proceeds of loans made pursuant to the Commitment for ordinary and necessary business expenses ("Ordinary Business Expenses"), and payroll and other employee expenses, including severance benefits that may become due on or before May 23, 2002 ("Employee Expenses"); provided, that the Borrower may not borrow an aggregate principal amount that exceeds $1,500,000 for Ordinary Business Expenses and $4,500,000 for Employee Expenses, and provided further that in the sole discretion of the Lender, the $1,500,000 Business Expenses sublimit may be increased and the $4,500,000 Employee Expenses sublimit decreased as Borrower pays or makes provision for payment of the Employee Expenses of Borrower. So long as no Default or Event of Default then exists, the Borrower may use the Commitment by borrowing, repaying the loans made thereunder in whole or in part, and reborrowing such loans, all in accordance with the terms and conditions set forth herein. The loans made to the Borrower by the Lender pursuant to this Section 2.1 shall be referred to herein as "Loans". 2.2 Notes. (a) The Loans made by the Lender pursuant to Section 2.1 hereof shall be evidenced by a promissory note in the form of Exhibit A hereto made by the Borrower payable to the order of the Lender in the original principal amount of $6,000,000 (the "Note"). The Note shall evidence the obligations of the Borrower to pay the Lender, or any subsequent holder(s) of the Note, the aggregate unpaid principal amount of the Loans made by the Lender and evidenced thereby, together with interest thereon as prescribed herein. (b) The Note shall (i) be dated as of the date hereof, (ii) be stated to mature, with respect to the aggregate principal amount of all of the Loans evidenced thereby, on the Maturity Date, and (iii) bear interest for the period from the date thereof on the unpaid principal amounts of each of the Loans from time to time outstanding at the applicable interest rates per annum determined as provided herein. Interest on the unpaid principal balances of each of the Loans evidenced by the Note shall be payable as specified herein. 2.3 Procedure for Borrowing. The Borrower may borrow under the Commitment during the Commitment Period on any Business Day. Notices by the Borrower to the Lender of Borrowings of Loans shall be irrevocable and shall be effective only if received by the Lender not later than 11:00 a.m., Ohio time, on the day of such Borrowing. Each such notice of Borrowing shall specify the aggregate amount of the requested Borrowing, the requested Borrowing Date (which shall be a Business Day), the location and number of the Borrower's account to which funds are to be disbursed and shall include with such notice a fully-completed and executed certificate of a Responsible Officer substantially in the form of Exhibit B attached hereto. The Lender shall make funds available to the Borrower, subject to the satisfaction of the terms and conditions of this Agreement, including subsection 3.2(d), by transferring immediately available funds to the Borrower's account in the amount of any such Borrowing on the requested date of Borrowing. -4- 2.4 Termination of Commitment Period. Unless earlier terminated pursuant to the terms of this Agreement, the Commitment shall, without notice to the Borrower, terminate at close of business on the last day of the Commitment Period. 2.5 Repayment of Loans. The Borrower hereby promises to pay the outstanding principal amount of any Loans and any other Obligations outstanding in full on the Maturity Date. 2.6 Prepayments of Loans. The Borrower shall prepay the Loans, in whole or in part, as applicable, with all Excess Cash Flow, on or prior to the date(s) that is/are the Business Day immediately following the date such Excess Cash Flow is received by the Borrower. In the case of any prepayment hereunder, whether in part or in full, the payment received shall be applied in the order set forth in the Note. 2.7 Interest Rates; Computation. (a) The Borrower hereby promises to pay to the Lender interest on the unpaid principal amount of each Loan made by the Lender for the period from and including the date of such Loan to but excluding the date such Loan shall be paid in full, at a fluctuating rate of interest equal to the Alternate Base Rate (as such term was defined in the Fleet DIP Facility) plus 2.75%. Notwithstanding the foregoing, the Borrower hereby promises to pay to the Lender (upon written notification from the Lender) interest at the applicable Default Rate: (i) on any principal of any Loan or any other Obligation that shall not be paid in full when due (whether at stated maturity, by acceleration, by mandatory prepayment or otherwise), for the period from and including the due date thereof to but excluding the date the same is paid in full; and (ii) during any period when any Event of Default shall have occurred and for so long as such Event of Default shall be continuing. (b) Accrued and unpaid interest on each Loan shall be payable monthly in arrears on each Payment Date, and upon the payment thereof, except that interest payable at the Default Rate shall be payable from time to time on demand. (c) Interest on all Loans and other Obligations shall be calculated on the basis of a 365 or 366, as appropriate, day year for the actual number of days elapsed. 2.8 Payments. (a) Payment of all principal of, and accrued but unpaid interest on, the Loans shall be made not later than 12:00 Noon, Ohio time, on the date when due, in immediately available funds, to the Lender at its address as set forth in Section 5.2 hereof. Whenever any payment of principal of, or interest on, the Loans shall be due on a day which is not a Business Day, the date for payment thereof shall be extended to the next succeeding Business Day. If the date for any payment of principal is extended by order of the Court, operation of law or otherwise, interest thereon shall be payable for such extended time period unless the Court otherwise specifies. (b) All payments of principal and interest with respect to Loans shall be made in Dollars without setoff or counterclaim. -5- SECTION 3. CONDITIONS PRECEDENT 3.1 Conditions to Initial Loans. The obligation of the Lender to make the initial Loans to the Borrower hereunder is subject to the full satisfaction, in the opinion of the Lender, of the following conditions precedent on or prior to the first Borrowing Date: (a) This Agreement, the Note and the other Loan Documents. The Lender shall have received this Agreement, the Note and all other Loan Documents reasonably required by the Lender, duly executed and delivered by a Responsible Officer of the Borrower. (b) Approvals; Court Orders. All governmental and third-party approvals necessary in connection with the execution of this Agreement, the consummation of the transactions contemplated hereby, and the continuing operations of the Borrower, including without limitation the orders of the Court (i) in the Case, (A) that the Borrower may incur the debt contemplated by this Agreement pursuant to Section 364(b) of the Code with the protection afforded by Section 364(e) of the Code, (B) that such debt shall constitute the debt of the Borrower and not a contribution of capital into the Borrower by the Lender and (C) that the Obligations shall constitute an allowed administrative expense under Section 503(b)(1)(A) of the Code, and (ii) in the Lender Case, that the extension of credit and the consummation of the transactions contemplated by this Agreement are approved, shall all have been obtained and be in full force and effect and all applicable waiting periods shall have expired without any action being taken or threatened by any competent authority which would restrain, prevent or otherwise impose adverse conditions on the transactions contemplated hereby. (c) No Default or Event of Default. No Default or Event of Default shall have occurred and be continuing hereunder after giving effect to the making of the initial Loans. 3.2 Conditions to All Loans. The obligation of the Lender to make any Loans hereunder on any date, including without limitation the initial Loans, is subject to the full satisfaction, in the opinion of the Lender, of the following conditions precedent as of the Borrowing Date for such Loan: (a) Representations and Warranties. The representations and warranties made by the Borrower in this Agreement, any other Loan Document, or the Original Loan Agreement, and any representations and warranties made by the Borrower which are contained in any certificate, document or financial or other statement or Loan Document furnished at any time under or in connection herewith or therewith, shall be true and correct in all material respects on and as of the Borrowing Date of such Loan as if made on and as of such date other than representations and warranties that by their terms refer to a specific date. (b) No Default or Event of Default. No Default or Event of Default shall have occurred and be continuing on such Borrowing Date or after giving effect to the Loan to be made on such Borrowing Date, unless the same is expressly waived by the Lender. (c) No Revocation of Prior Court Orders. Except with the written consent of the Lender, no order of the Court relating to this Agreement shall have been revoked, rescinded, vacated or modified in any manner and there shall be pending no motions from any party seeking such revocation, rescission, vacation or modification. (d) Lender's Determination of Continued Feasibility of Exit Strategy. The Lender (i) shall have determined, in its reasonable discretion based upon its review of such information as it may reasonably require, that the Borrower's previously announced exit strategy remains achievable and sufficient to indefeasibly pay in full the Obligations and all amounts senior thereto, if any, or (ii) shall -6- have determined, in its sole discretion as to any requested Borrowing, to waive its rights under the foregoing clause (i). Each Borrowing by the Borrower under this Agreement shall constitute a representation and warranty by the Borrower as of the date of such Borrowing that the conditions contained in the foregoing paragraphs (a), (b) and (c) of this Section 3.2 have been fully satisfied. SECTION 4. EVENTS OF DEFAULT AND REMEDIES Upon the occurrence of any of the following events (each an "Event of Default"): (1) the Borrower (a) shall fail to pay any principal on any Loan when such amount becomes due in accordance with the terms hereof; or (b) shall fail to pay any interest on any Loan or any other Obligation within three days of the date when such amount becomes due in accordance with the terms hereof or thereof; or (2) the Borrower shall (a) default in the observance or performance of any covenant or agreement set forth in any Loan Document; (b) fail to deliver or cause to be delivered the information, notices or other items specified in this Agreement, or under the Note or any other Loan Document when due; or (3) any representation or warranty made by the Borrower herein, in the Note, in any other Loan Document, or in the Original Loan Agreement, or which is contained in any certificate, document or financial or other statement or other Loan Document furnished at any time under or in connection herewith or therewith, shall prove to have been incorrect in any material respect on or as of the date made; or (4) the Case is either dismissed or converted to Chapter 7 of the Code. then, and in any such event: (i) the Lender may, by written notice to the Borrower, declare its obligation to make Loans hereunder to be immediately terminated, whereupon such obligation shall immediately terminate, and (ii) the Lender may, by written notice of default to the Borrower, declare the Loans hereunder (with accrued interest thereon) and all other Obligations to be immediately due and payable, and upon the giving of such notice of default, all such amounts immediately shall become due and payable without further demand, notice or protest of any kind; the giving of any such further demand, notice or protest being hereby expressly waived by the Borrower, and all other Persons directly or indirectly liable for the payment and/or performance of the Obligations; and thereupon, the Lender may proceed to exercise any and all remedies that are provided to it under this Agreement, the Note, the other Loan Documents, applicable law or by order of the Court. SECTION 5. MISCELLANEOUS 5.1 Amendments and Waivers. Unless prohibited from doing so by order of the Court, the Lender and the Borrower may, from time to time, enter into written amendments, supplements or modifications for the purpose of adding any provisions to this Agreement, the Note or any other Loan Documents, or changing in any manner the rights of the Lender or the Borrower hereunder or thereunder, and the Lender may execute and deliver to the Borrower a written instrument waiving, on such terms and conditions as the Lender may specify in such instrument, any of the requirements of this Agreement, the Note or any other any Loan Document, or any Default or Event of Default and its consequences. -7- 5.2 Notices. All notices required or permitted hereunder shall be in writing and shall be deemed to be properly given when personally delivered to any officer or designated representative of the party entitled to receive the notice, or when sent by certified or registered first class mail or nationally recognized overnight courier, postage prepaid, by facsimile transmission (if provided for below) or by e-mail (if provided for below), when properly addressed or sent to the party entitled to receive such notice at the address stated below: If to the Borrower, to: Borden Chemicals and Plastics Operating Limited Partnership Highways 73 & 30 Geismar, Louisiana 70734 Attn: Chief Financial Officer Fax: 225.673.0626 If to the Lender, to: BCP Management, Inc. c/o Borden, Inc. 180 East Broad Street Columbus, Ohio 43215 Attn: Gerald F. Mann, Director, Treasury Operations e-mail: manngf@bordenchem.com Either party may change its address for purposes of notice hereunder by delivering written notice of such change to the other party. 5.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of the Lender, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. 5.4 Survival of Representations and Warranties. All representations and warranties made hereunder and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement and the Note. 5.5 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Borrower, the Lender and their respective successors and assigns permitted hereby. Notwithstanding the foregoing, the rights and obligations of Borrower hereunder may not be assigned or transferred by Borrower without the prior written consent of Lender. 5.6 Counterparts; Effective Date. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts and all of said counterparts taken together shall be deemed to constitute one and the same instrument. A set of the copies of this Agreement signed by all the parties shall be lodged with Borrower and the Lender. This Agreement shall become effective upon the receipt by the Lender of executed counterparts of this Agreement by each of the parties hereto. The parties agree that facsimile counterpart signatures shall be sufficient to bind a party hereto. -8- 5.7 Governing Law. This Agreement, and the Note, and the rights and obligations of the parties hereunder and thereunder, shall be governed by, and construed and interpreted in accordance with, the laws of the State of Ohio, except and only to the extent precluded by other laws of mandatory application. Notwithstanding the foregoing, the Court shall retain jurisdiction over this Agreement and the forum for any action relating hereto shall be the Court. 5.8 Supersession and Headings. Except as specified in Section 5.10 hereof, this Agreement, the Notes and the other Loan Documents contain the entire agreement between the Borrower and the Lender with respect to the subject matter hereof, and replace any prior or contemporaneous understandings and agreements, oral or written, between the Borrower, and the Lender with respect to the subject matter hereof, including any commitment, oral or written, of the Lender previously issued. No representation, warranty, modification, alteration or agreement shall affect this Agreement, unless made in writing and executed with the same formalities as this Agreement. The paragraph headings do not form a part of this Agreement, but are for convenience only, and shall not limit or affect in any way the meaning of its provisions. 5.9 No Joint Venture. The Lender, by entering into this Agreement or by any action taken pursuant hereto, shall not be deemed to be a partner or joint venturer with the Borrower and the Borrower hereby indemnifies and holds the Lender harmless from and against any and all claims, demands, losses, damages and expenses made or incurred, resulting from or arising out of any such construction or alleged construction of any agreement between the Borrower and the Lender, either individually or collectively. 5.10 Incorporation of Borrower Bridge DIP Order and Lender Bridge DIP Order. The Borrower Bridge DIP Order and the Lender Bridge DIP Order are hereby incorporated in their entirety into this Agreement by this reference. Anything to the contrary contained in this Agreement notwithstanding, and pursuant to the terms of the Borrower Bridge DIP Order and the Lender Bridge DIP Order, the Commitment referenced in Section 2.1 hereof shall only be in the amount of $6,000,000 until such time, if at all, that the Court orders the approval of the Extension and Increase Request. Upon such order, if issued, the Borrower shall execute such amendments and other documentation as the Lender deems reasonable necessary to effectuate such order. 5.11 Effect of Court Orders. Subject to the terms of the following sentence, if any provision of this Agreement or any other Loan Document conflicts with any final or other order of the Court relating to this Agreement or any other order of the Court, the provisions of such order shall control and this Agreement or such other Loan Document shall automatically, without the execution of further documentation, be deemed modified to comply with such order. Notwithstanding the foregoing, no order of the Court shall have the effect of postponing the Maturity Date beyond June 30, 2002 without the prior written consent of the Lender, which may be withheld in the Lender's sole discretion. [The remainder of this page is intentionally left blank.] -9- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written. BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP, a Delaware limited partnership By: BCP Management, Inc., a Delaware corporation, its general partner By:______________________________________ Mark J. Schneider President and Chief Executive Officer BCP MANAGEMENT, INC. a Delaware corporation By:______________________________________ Mark J. Schneider President and Chief Executive Officer -10- Exhibit A [Form of Note] NOTE $6,000,000 April 30, 2002 FOR VALUE RECEIVED, the undersigned ("Borrower") promises to pay to the order of BCP Management, Inc., a Delaware corporation ("Lender"), at the office of Lender, c/o Borden, Inc., 180 East Broad Street, Columbus, Ohio 43215, Attn: Director, Treasury Operations, or at such other place as the holder hereof may, from time to time, in writing designate, the principal sum of Six Million Dollars ($6,000,000) (or so much thereof as may be disbursed to, or for the benefit of, Borrower and remain unpaid) in lawful money of the United States of America and in immediately available funds, together with interest and payable at such interest rates and for such periods and in such manner, time(s) and place(s) as are specified in the Loan Agreement hereinafter defined. This note ("Note") is the Note identified in the Modified Loan Agreement dated as of April 30, 2002 (as the same shall be amended, modified or supplemented from time to time, the "Loan Agreement") between Borrower and Lender, and the Loan Agreement is hereby incorporated into this Note and made a part hereof. Capitalized terms used but not defined herein shall have the meanings ascribed thereto in the Loan Agreement. Principal and interest shall be payable as set forth in the Loan Agreement. Anything to the contrary contained herein or therein notwithstanding, all principal, accrued but unpaid interest and other amounts payable in connection herewith shall be due and payable in full on the Maturity Date. Lender's records of the principal, accrued interest and other charges due hereunder, as well as applicable interest rates and periods are, absent manifest error, conclusive as to and binding upon all Persons. Upon occurrence of an Event of Default, the whole or any part of the unpaid indebtedness evidenced hereby shall, at once or at any time thereafter, at the option of the holder or holders hereof, become due and payable without notice or demand therefor, the same being expressly waived. A failure of the holder thereof to insist upon strict compliance with the terms hereof or to assert any right hereunder shall not be a waiver of any default and shall not be deemed to constitute a modification of the terms hereof or to establish any claim or defense. All payments received under the terms of this Note will be applied by the Lender first to any sums due under this Note other than interest and principal, second to any accrued but unpaid interest hereunder, third to any principal due hereunder. This Note shall bind Borrower and its successors and assigns, and shall inure to the benefit of the Lender and its successors and assigns. Notwithstanding the foregoing, the obligations of Borrower hereunder may not be assigned or transferred by Borrower without the prior written consent of Lender. No delay or omission on the part of the holder in exercising any right hereunder shall operate as a waiver of such right or of any other right under this Note. A waiver on any one occasion shall not be construed as a bar to or waiver of any such right and/or remedy on any future occasion. All persons now or hereafter liable, primarily or secondarily, for the payment of the indebtedness evidenced hereby or any part thereof, do hereby expressly waive presentment for payment, notice of dishonor, protest and notice of protest, and agree that the time for payment or payments of any part of the indebtedness evidenced hereby may be extended without releasing or otherwise affecting their liability hereon. Borrower agrees that the laws of the State of Ohio shall govern its rights and duties hereunder and the construction and effect hereof. However, if any provision hereof is or becomes invalid or unenforceable under any law of mandatory application, it is the intent of Borrower, Lender and all parties primarily or secondarily liable hereunder, that such provision will be deemed severed and omitted herefrom, the remaining portions hereof to remain in full force and effect as written. IN WITNESS WHEREOF, Borrower has executed this Note as of the day and year first above written. BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP, a Delaware limited partnership By: BCP Management, Inc., a Delaware corporation, its general partner By:____________________________________ Mark J. Schneider President and Chief Executive Officer 2 Exhibit B [Form of Borrowing Certificate] [Letterhead of Borden Chemicals and Plastics Operating Limited Partnership] _____________________, 200_ BCP Management, Inc. ____________________ ____________________ ____________________ The undersigned, a Responsible Officer of Borden Chemicals and Plastics Operating Limited Partnership, a Delaware limited partnership ("Borrower"), gives this certificate to BCP Management, Inc. ("Lender") in accordance with the requirements of subsection 2.3 of that certain Modified Loan Agreement dated __________, 2002 by and between Borrower and Lender (the "Loan Agreement"). Capitalized terms used in this Certificate, unless otherwise defined herein, shall have the meanings ascribed to them in the Loan Agreement. 1. Borrower hereby requests that Lender make a Loan to Borrower in the amount of $________________ on _________, 200_ by wiring funds to the following account: ___________________________________________________. 2. No Default exists on the date hereof, other than: _________ __________________________________________________ [if none, so state]. 3. No Event of Default exists on the date hereof, other than ___________________________________________________________ [if none, so state]. 4. As a result of this requested Borrowing, the Borrower shall have outstanding Borrowings under the Loan Agreement in the aggregate principal amounts of $__________ which were used for purposes of paying Employee Expenses and $__________ which were used for purposes of paying other Ordinary Expenses. 5. All other conditions precedent to Lender's obligation to make the requested Loan, as set forth in Section 3 of the Loan Agreement, have been satisfied. Very truly yours, _________________________________ Title: __________________ 3 EX-10.48 8 dex1048.txt FIRST AMENDMENT TO MODIFIED LOAN AGREEMENT 5/23/02 Exhibit 10.48 FIRST AMENDMENT TO MODIFIED LOAN AGREEMENT AND FIRST AMENDMENT TO NOTE THIS FIRST AMENDMENT TO MODIFIED LOAN AGREEMENT AND FIRST AMENDMENT TO NOTE (the "Amendment") is made and entered into to be effective as of May 23, 2002, by and between BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP, a Delaware limited partnership, in its capacity as debtor-in-possession under that certain Chapter 11 bankruptcy case filed as Case No. 01-1268 (the "Case") filed on April 3, 2001 with the United States Bankruptcy Court for the District of Delaware (the "Court") (the "Borrower"), and BCP MANAGEMENT, INC., a Delaware corporation, in its capacity as debtor-in-possession under that certain Chapter 11 bankruptcy case filed as Case No. 02-10875 (the "Lender Case") filed on March 22, 2002 with the Court (the "Lender"). For valuable consideration, the receipt, sufficiency and adequacy of which are hereby acknowledged, the Borrower and the Lender, intending to be legally bound, hereby recite and agree as follows: Recitals A. On April 30, 2002, the Borrower and the Lender entered into that certain Modified Loan Agreement (the "Loan Agreement") pursuant to which the Lender agreed to lend to the Borrower up to $6,000,000 subject to the terms and conditions contained therein. The borrowings under the Loan Agreement were evidenced further by that certain Note in the original principal amount of $6,000,000 executed by the Borrower in favor of the Lender on April 30, 2002 (the "Note"). B. The Court has this day issued in the Lender Case a Final Order Authorizing Extension of Debtor's Obligations under a Modified Loan Agreement with Borden Chemicals and Plastics Operating Limited Partnership Through June 30, 2002 (the "Order") authorizing the extension of the maturity date under the Loan Agreement until June 30, 2002 and the reduction of the Commitment to $4,500,000. C. The Borrower and the Lender mutually wish to amend the Loan Agreement, according to the terms and conditions hereinafter set forth. Agreement 1. Definitions. All capitalized terms used herein which are defined in the Loan Agreement shall have the same meanings when used herein. 2. Amendments to the Loan Agreement and Note. As of the date hereof, the Loan Agreement shall be and hereby is amended and modified as follows: a. The definition of "Maturity Date" contained in Section 1.1 of the Loan Agreement is hereby modified to delete therefrom the phrase "May 23, 2002" and replace it with the phrase "June 30, 2002". b. All references in the Loan Agreement and the Note to "Six Million Dollars" and "$6,000,000" are hereby deleted and replaced with "Four Million Five Hundred Thousand Dollars" and "$4,500,000", respectively. c. Section 2.1 of the Loan Agreement is hereby amended (i) by deleting therefrom the phrase ", subject to the sublimits set forth in this Section 2.1" from the first sentence, (ii) by deleting the phrase "May 23, 2002" and replacing it with "June 30, 2002" and (iii) by deleting all words appearing after the semi-colon in the second sentence. d. Exhibit B to the Loan Agreement is hereby amended to delete paragraph 4 therefrom. 3. Confirmation and Ratification. Except as specifically modified and amended pursuant to the terms hereof, the Loan Agreement remains unchanged and in full force and effect as written. The parties hereto hereby ratify and confirm in all respects, as of the date hereof, all of the terms, conditions, representations, warranties, covenants and provisions contained therein, as modified and amended hereby, and the Borrower hereby confirms and ratifies in all respects all of the Obligations. 4. No Default. The Borrower hereby ratifies and confirms that there are no Defaults or Events of Default which have occurred and are continuing as of the date hereof. 5. Governing Law. This Amendment, and the rights and obligations of the parties hereunder, shall be governed by, and construed and interpreted in accordance with, the laws of the State of Ohio, except and only to the extent precluded by other laws of mandatory application. Notwithstanding the foregoing, the Court shall retain jurisdiction over this Amendment and the forum for any action relating hereto shall be the Court. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written. BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP, a Delaware limited partnership By: BCP Management, Inc., a Delaware corporation, its general partner By:_____________________________________________ Mark J. Schneider President and Chief Executive Officer BCP MANAGEMENT, INC. a Delaware corporation By:_____________________________________________ Mark J. Schneider President and Chief Executive Officer 2 EX-10.49 9 dex1049.txt FINAL ORDER AUTHORIZING SECONDARY POSTPETITION Exhibit 10.49 UNITED STATES BANKRUPTCY COURT DISTRICT OF DELAWARE IN RE: BORDEN CHEMICALS AND PLASTICS : Jointly Administered OPERATING LIMITED PARTNERSHIP, : a Delaware limited partnership, et al., : Case No. 01-1268 (RRM) : Debtors. : Chapter 11 AGREED INTERIM AND PROPOSED FINAL ORDER AUTHORIZING SECONDARY POSTPETITION FINANCING PURSUANT TO SECTION 364(b) OF THE BANKRUPTCY CODE AND RULE 4001 OF THE FEDERAL RULES OF BANKRUPTCY PROCEDURE (DOCKET NO. 489) This matter came before this Court on the Amended Motion (the "Motion") of the above-captioned debtors and debtors-in-possession (collectively, the "Debtors"), requesting that this Court enter an Order (1) authorizing Debtor Borden Chemicals and Plastics Operating Limited Partnership ("BCP") to obtain additional, secondary postpetition financing (the "Secondary DIP Facility") pursuant to a loan agreement, the form of which is attached to the Motion as Exhibit A (the "Loan Agreement") by and between BCP, as borrower, and BCP Management Inc. (the "Lender"), as lender; (2) pending the final hearing on this Motion, authorizing BCP to obtain emergency postpetition loans under the Secondary DIP Facility in an amount not to exceed $5,000,000; and (3) scheduling the final hearing for final approval of the Secondary DIP Facility no later than January 16, 2002. Unless otherwise indicated, the following term in this Order shall have the meanings set forth below. Other capitalized terms used in this Order have the meanings set forth for such terms in the postpetition credit facility approved by this Court on a final basis on July 11, 2001 (the "Primary DIP Facility") by and among BCP, Fleet Capital Corporation, as Agent ("Fleet") and the other institutions that are lenders thereunder. 1. Event of Default. An Event of Default defined in the Loan Agreement. 2. Final Hearing. The final hearing on this Motion conducted in accordance with Fed. R. Bankr. P. 4001. 3. Postpetition Debt. All indebtedness and obligations of BCP to the Lender incurred pursuant to this Order and the Loan Agreement. 4. Maturity Date. The Maturity Date defined in the Loan Agreement. Having examined the Motion, being fully advised of the relevant facts and circumstances surrounding the Motion and having completed a preliminary hearing pursuant to Code (S)(S) 363/1/ and 364 and Fed. R. Bankr. P. 4001(b) and (c)(2), BASED UPON THE RECORD AT THE PRELIMINARY HEARING, IT APPEARS TO THE COURT THAT: (a) On the filing date, the Debtors filed voluntary petitions for relief under Chapter 11 of the Code. The Debtors' Chapter 11 cases have been consolidated for procedural purposes only and are being administered jointly. The Debtors are continuing in possession of their respective properties and are acting as debtors-in-possession pursuant to Code (S)(S) 1107 and 1108. (b) The Debtors have stipulated and represented to the Court that: (i) BCP has executed an asset purchase agreement with Shintech Louisiana, LLC providing for the sale of the assets and operations of BCP's plant in Addis, Louisiana; - ---------- /1/ Unless otherwise indicated, all section references are to the Bankruptcy Code, 11 U.S.C.(S)(S) 101 et. seq. 2 (ii) The Debtors continue to pursue various strategic alternatives with respect to BCP's facilities in Geismar, Louisiana and Illiopolis, Illinois, including potential mergers, joint ventures, asset sales or other options; and (iii) The Primary DIP Facility may prove insufficient to finance BCP's working capital needs throughout the timeframe the Debtors anticipate they will need for selling assets and obtaining confirmation of a plan of reorganization and have an immediate need for cash to preserve the value of all of their assets. (c) An immediate need exists for BCP to obtain Postpetition Debt in order to enable BCP to minimize disruption to its business operations. Entry of this Order will also enhance the possibility of a successful reorganization. (d) The terms of the Secondary DIP Facility have been negotiated in good faith and at arms' length and the Secondary DIP Facility is being extended in good faith, as that term is used in Code (S) 364(e). (e) In order to prevent harm to the estates pending the Final Hearing, BCP needs to incur Postpetition Debt to meet their working capital needs through the conclusion of such Final Hearing. (f) Under the circumstances of the Case, the terms and conditions of the Secondary DIP Facility and this Order are a fair and reasonable response to the Debtors' request for BCP's incidence of Postpetition Debt, and the entry of this Order is in the best interest of the Debtors' estates and their creditors. (g) The notice provided by the Debtors of the Motion, the hearing on the Motion, and the entry of this Order satisfy the requirements of Fed. R. Bankr. F 4001 and were otherwise sufficient and appropriate under the circumstances. 3 WHEREFORE, IT IS HEREBY ORDERED THAT: l. The Motion is GRANTED. 2. Authorization To Incur Postpetition Debt. (a) Authorization To Incur Debt. BCP is authorized to incur Postpetition Debt, and the Lender shall be required to provide BCP with Postpetition Debt pursuant to the terms of the Loan Agreement to be executed by BCP and the Lender. The authorization of BCP to incur Postpetition Debt is subject to the purposes for such borrowings as set forth in the Loan Agreement. The Postpetition Debt constitutes the debt of BCP for all purposes and shall not under any circumstances be deemed an investment of equity by the Lender. (b) Administrative Expense Status. The Postpetition Debt is hereby granted administrative expense status under Code (S) 503(b)(1)(A) and BCP is permitted to incur the Postpetition Debt pursuant to Code (S) 364(b) with the protection afforded by Code (S) 364(e). 3. Termination of Right to Incur Postpetition Debt. (a) Maturity Date. Unless extended by the Court upon the written agreement of the Lender, this Order and BCP's authorization to incur Postpetition Debt pursuant to this Order will immediate terminate on the Maturity Date. (b) Rights Upon Termination. On the Maturity Date, the Lender and BCP shall be entitled to apply to this Court for all appropriate relief, upon such notices as may be appropriate under the circumstances; provided, however, that (1) the obligations of BCP and the rights of the Lender with respect to all transactions which have occurred prior to the Maturity Date shall remain unimpaired and unaffected; and (2) the Lender and BCP shall retain all of their respective rights and remedies under the Code. 4 4. Miscellaneous Provisions. (a) Modification of Stay. The automatic stay of Code (S) _62 is hereby modified with respect to the Lender to the extent necessary to effectuate the provisons of this Order. (b) No Waiver. Except to the extent expressly set forth in this Order, this Order shall not constitute a waiver by the Lender of any of its rights under the Code or other applicable law. The Lender's failure, at any time or times hereafter, to require strict performance by BCP (or by any Trustee) of any provision of this Order shall not waive, affect of diminish any right of the Lender thereafter to demand strict compliance or performance therewith. No delay on the part of the Lender in the exercise of any right or remedy under this Order shal1 preclude any other or further exercise of any such right or remedy or the exercise of any other right or remedy. None of the rights or remedies of the Lender under this Order shall be deemed to have been suspended or waived by the Lender unless such suspension or waiver is in writing, signed by a duly authorized officer of the Lender and directed to BCP specifying such suspension or waiver. 5. Authorization To Obtain Interim Credit. Pending the Final Bearing, BCP is authorized, and the Lender shall be required to provide BCP with Postpetition Debt, up to the Interim Amount (as defined in the Motion), pursuant to the terms of the Loan Agreement and subject to all of the rights granted to the Lender pursuant to this Order. 6. Notice of Final Hearing. The Debtors shall, on or before December, 27, 200\, serve copies of a notice of entry of this Order, together with a copy of this Order, on the Lender, the Lender's counsel, Fleet, Fleet's counsel, counsel, to the Committee, counsel to the indenture trustee with respect to the 9 1/2% notes, the United States Trustee, and the other persons 5 entitled to notice under Bankruptcy Rule 4001(c), as of such date, and any other party-in-interest for which counsel to the Debtors has timely received a written request in this case to receive such pleadings. The notice of entry of this Order shall state that any party-in-interest objecting to the entry of a Final Order on the Motion shall file a written objection with the United States Bankruptcy Court Clerk for the District of Delaware no later than 9.00 p.m. on January, 10, 2002, which objection shall be served so that the same is received on or before 9.00 p.m. on such date by the Lender, the Lender's counsel, Fleet, Fleet's counsel, counsel to the Committee, counsel to the indenture trustee with respect to the 9 1/2% notes, counsel for the Debtors, and the United States Trustee. A final hearing shall be held on the Motion and objections thereto on January 16, 2002 at 11.00 a.m. /s/ Illegible ---------------------------- 12/2/2001 UNITED STATES DISTRICT JUDGE 6 EX-10.50 10 dex1050.txt ASSET PURCHASE AGREEMENT DATED DEC. 3, 2001 Exhibit 10.50 EXHIBIT A - -------------------------------------------------------------------------------- ASSET PURCHASE AGREEMENT dated as of December 3, 2001 between BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP and SHINTECH LOUISIANA, L.L.C. - -------------------------------------------------------------------------------- ASSET PURCHASE AGREEMENT ASSET PURCHASE AGREEMENT (this "Agreement") dated as of December 3, 2001, between BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP, a Delaware limited partnership ("Seller"), and SHINTECH LOUISIANA, L.L.C., a Delaware limited liability company ("Acquiror"). RECITALS: A. Seller is engaged in the business of the manufacturing, marketing, distribution and sale of PVC Resins at a plant located in Addis, West Baton Rouge Parish, Louisiana (the "Business"). B. On April 3, 2001, Seller, together with its subsidiary BCP Finance Corporation, a Delaware corporation ("BCP") (Seller and BCP collectively referred to herein as the "Debtors"), filed voluntary petitions for relief under chapter 11 of the "Bankruptcy Code", 11 U.S.C.(S)(S) 101-1330 (as now in effect or hereafter amended, the "Bankruptcy Code" in the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court") and the Debtors' chapter 11 cases (the "Bankruptcy Cases") have been consolidated for procedural purposes only and are being administered jointly as Case No. 01-1268 (RRM). C. The Debtors are continuing in possession of their respective properties and are operating their businesses as debtors in possession pursuant to sections 1107 and 1108 of the Bankruptcy Code. D. Seller desires to sell and Acquiror desires to purchase, pursuant to section 363(b)of the Bankruptcy Code, certain of the assets used by Seller in the conduct of the Business, and Seller desires to assume and assign to Acquiror and Acquiror desires to accept, pursuant to section 365 of the Bankruptcy Code, certain of the executory contracts to which Seller is a party, all on the terms and subject to the conditions hereinafter set forth. E. Seller and Aquiror have determined to enter into this Agreement which, among other things, provides for Seller to sell, transfer and convey ("Transfer") to Acquiror, and Acquiror to purchase and acquire from Seller, all of the Assets (as hereinafter defined). NOW, THEREFORE, in consideration of the representations, warranties, covenants and agreements set forth in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Acquiror and Seller hereby agree as follows: ARTICLE I DEFINITIONS 1.1 Definitions. The following terms used in this Agreement shall have the following meanings: "Accounts" has the meaning set forth in Section 2.l(h). "Acquiror" means Shintech Louisiana, L.L.C., a Delaware limited liability company. "Addis Plant" means Seller's PVC Resins production facilities located on the Real Property. "Affiliate" means, with respect to any Person, any other Person who is directly or indirectly controlling, controlled by or under the common control with such Person. For the purposes of this definition, the term "control," when used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise. "Agreement" means this Asset Purchase Agreement, together with the Schedules and Exhibits hereto. "Assets" has the meaning set forth in Section 2.1. "Assumed Contracts" has the meaning set forth in Section 2.l(d). "Assumed Non-Exclusive Contract" means the Non-Exclusive PVC Resins Supply Contracts as set forth in Section C of Schedule 6.9 "BCP" has the meaning set forth in Recital "B" "Bankruptcy Cases" has the meaning set forth in Recital "B" "Bankruptcy Code" has the meaning set forth in Recital "B" "Bankruptcy Court" has the meaning set forth in Recital "B" "Bankruptcy Court Order" has the meaning set forth in Section 7.2. "Bankruptcy Laws" means the United States Bankruptcy Code, as amended, the Federal Rules of Bankruptcy Procedure, as amended, and the local rules of the Bankruptcy Court. "Beneficiary" has the meaning set forth in Section 2.5(d). "Bid Procedures Order" has the meaning set forth in Section 7.3. "Business" has the meaning set forth in Recital "A" -2- "Business Day" means any day that is not a Saturday, a Sunday or a day in which financial institutions in the City of New York, New York are permitted or required to close. "Closing" has the meaning set forth in Section 2.6. "Closing Date" has the meaning set forth in Section 2.6. "Confidential Contracts" has the meaning set forth in Section 6.9. "Consent" means any consent, waiver, approval, order or authorization of or registration, declaration or filing with or notice to, any Governmental Entity or other Person. "Customer Rebates" has the meaning set forth in Section 2.5(b)(ii). "Debt" means any obligations for borrowed money. "Debtors" has the meaning set forth in Recital "B" "Earnest Money Deposit" has the meaning set forth in Section 2.4(d). "Employees" means all individuals employed exclusively in the operation of the Business immediately prior to the Closing. The Employees as of the date hereof are listed on Schedule 1.1. "Environmental Assessment" has the meaning set forth in Section 6.6. "Environmental Laws" means any and all Laws existing on the Closing Date relating to discharge or releases of Hazardous Materials into the environment including, without limitation, ambient air, surface water, ground water, or land, or otherwise relating to the manufacture, use, transportation, treatment, storage, disposal or handling of Hazardous Materials or the clean-up or other remediation thereof. "EPA" has the meaning set forth in Section 6.2(c). "Equipment Charges" has the meaning set forth in Section 2.5(b)(iii). "Exclusive PVC Resins Supply Contracts" means the PVC Resins Supply Contracts which supply a third party PVC Resins solely produced at the Addis Plant as set forth on Schedule 6.9. "Expense Reimbursement" has the meaning set forth in Section 7.4. "FTC" has the meaning set forth in Section 6.2(b). "Geismar Facility" shall have the meaning set forth in Section 6.12. "General Partner" means BCP Management, Inc., a Delaware corporation, in its capacity as general partner of Seller. -3- "Governmental Entity" means any Foreign or United States federal, state, local or municipal government, court, administrative agency or commission or other governmental or other regulatory authority or agency. "Hazardous Materials" means any substance defined as toxic, radioactive or otherwise hazardous under any Laws. "HSR Act" has the meaning set forth in Section 6.2(b). "Inventory" has the meaning set forth in Section 2.l(c). "Laws" means all applicable laws, regulations, rules, judgments, orders and decrees of Governmental Entities. "LDEQ has the meaning set forth in Section 6.2(c). "Lien" means, with respect to any property or asset, any mortgage, lien, pledge, security interest or other encumbrance. "Material Adverse Effect" means such state of facts, event, change or effect as has had or would reasonably be expected to have, a material adverse effect (i) on the businesses, results of operations, or financial condition of the Business taken as a whole, other than events, changes or developments relating to the economy in general or resulting from industry-wide developments affecting Persons in businesses similar to the Business, or (ii) on the ability of Seller to consummate the transactions contemplated by this Agreement. "Nonassignable Assets" has the meaning set forth in Article III. "Non-Exclusive PVC Resins Supply Contracts" means the PVC Resins Supply Contracts which supply a third party PVC Resins produced from the Addis Plant and Geismar Facility as set forth on Schedule 6.9. "Non-Transferred Employees" has the meaning set forth in Section 6.4(c). "Order Authorizing Severance Plan" means the Order Authorizing Debtors and Debtors in Possession to Implement Key Employee Retention Bonus Plan and Severance Plan issued by the Judge in the Bankruptcy Cases on August 1, 2001. "Production Schedule" shall have the meaning set forth in Section 6.11. "PVC Resins" means polyvinyl chloride resins produced by Seller at the Addis Plant. "PVC Resins Supply Contract" means a written agreement between Seller as supplier and a third party wherein Seller agrees to sell such third party PVC Resins produced, in whole or in part, at the Addis Plant. "Payee" has the meaning set forth in Section 2.5(d). "Payor" has the meaning set forth in Section 2.5(d). -4- "Permit" means any license, franchise, permit, application for permit concession approval or registration from, of or with a Governmental Entity required to own and/or operate the Addis Plant as currently constituted. "Permitted Liens" means (i) Liens listed or described on Schedule 4.3 (ii) easements, covenants, rights-of-way and other encumbrances or restrictions of record which do not have, individually or in the aggregate, a Material Adverse Effect, (iii) Liens related to Taxes not yet due or payable, and (iv) Liens that are created, suffered or assumed by Acquiror. "Person" means an individual, corporation, partnership, limited liability company, association, trust or other entity or organization, including without limitation, a Government Entity. "Personal Property" has the meaning set forth in Section 2.1(b). "Personal Property Taxes" has the meaning set forth in Section 2.5(b)(v). "Proration Items" has the meaning set forth in Section 2.5(a). "Purchase Price" has the meaning set forth in Section 2.4(a). "Real Property" has the meaning set forth in Section 2.l(a) "Real Property Taxes" has the meaning set forth in Section 2.5(b)(iv). "Recipient" has the meaning set forth in Section 2.5(d). "Seller" means Borden Chemicals and Plastics Operating Limited Partnership, a Delaware limited partnership. "Severance Benefits" has the meaning set forth in Section 6.4(d). "Similar Employment" has the meaning set forth in Section 6.4(c). "Tax Return" means any return, report, statement, information statement or similar document required to be filed with respect to taxes. "Transfer" has the meaning set forth in Recital "E." "Utility Charges" has the meaning set forth in Section 2.5(b)(i). "Vendor Charges" has the meaning set forth in Section 2.5(b)(vii). "Vendor Rebates" has the meaning set forth in Section 2.5(b)(vi). -5- ARTICLE II PURCHASE AND SALE OF THE ASSETS AND LIABILITIES 2.1 Sale and Transfer of the Assets. Subject to the conditions to Closing set forth in Article VIII of this Agreement, at the Closing Seller will Transfer to Acquiror all of the manufacturing facilities and assets owned by Seller and located at or attributable solely to the Addis Plant necessary for the continued operation of the Addis Plant as currently operated, more specifically described below (such assets being referred to as the "Assets"): (a) Real Property. The real property listed or described in Schedule 2.l(a) (the "Real Property"). (b) Personal Property. All tangible personal property, plant and equipment, including without limitation, buildings, structures, fixtures, machinery, motor vehicles, furniture, computers, printers, tools, spare parts, equipment, furnishings owned by Seller and related to the Business as currently conducted at the Addis Plant, all to the extent and only as set forth on Schedule 2.1(b) (collectively, the "Personal Property"). (c) Inventory. All inventory and supplies (the "Inventory") owned by Seller as of the Closing Date located at the Addis Plant for use in connection with the Business. (d) Contract Rights. To the extent transferable to Acquiror at Closing, all right, title and interest of Seller relating to the Business at the Closing in and to certain contracts, as set forth on Schedule 2.1(d) as amended pursuant to Sections 6.9, 6.10 and 6.12, (the "Assumed Contracts"). Acquiror will not assume or accept any of Seller's contract rights or contract obligations other than those listed on Schedule 2.1(d) and with respect to the Confidential Contracts, those contracts accepted by Acquiror pursuant to Sections 6.9, 6.10 and 6.12. (e) Permits. All Permits of Seller necessary for the operation of the Business which are set forth on Schedule 2.1(e). (f) Intangible Assets. All intellectual property listed on Schedule 2.l(f) and used in the conduct of and related to the Business, goodwill associated therewith, licenses and sublicenses granted and obtained with respect thereto, and rights thereunder, remedies against infringements thereof, and rights to protection of interests therein under the laws of all jurisdictions. (g) Books and Records. All customer lists, customer files, aging reports and associated records of the Accounts, production and shipping records and all other books and records of the Business except to the extent set forth in Section 2.2(b). (h) Accounts Receivable. All accounts receivable owed to Seller as of the Closing arising from the sale of PVC Resins produced by Seller at the Addis Plant and sold to customers that are parties to one of the Assumed Contracts and that are not past due (i.e., not outstanding by more than fifteen (15) days beyond the payment terms of the Assumed Contracts) as of the Closing Date (the "Accounts"). -6- 2.2 The Excluded Assets. Seller shall not sell and Acquiror shall not purchase or acquire and the Assets shall not include: (a) Any cash or cash equivalents owned or held by Seller's bankruptcy estate; (b) Books and records of the General Partner, including but not limited to, minutes of meeting of directors and stockholders of the General Partner, tax returns and records, books of account and ledgers (except to the extent specifically relating to the Business as currently conducted at the Addis Plant), and such other records having to do with Seller's organization (although access and the ability to copy these documents shall be made available to Acquiror, provided, that, Acquiror will pay all reasonable costs in connection therewith); (c) All accounts, notes and other receivables of the Seller (other than the Accounts); (d) All prepaid expenses, advance payments, deposits and other similar assets including, without limitation, prepaid deposits with suppliers and utilities; (e) All of the (i) issued and outstanding stock of Monochem, Inc. and (ii) equity interests of BEV Management, LLC owned by Seller; and (f) All of Seller's right, title and interest in its State of Louisiana DEQ Trust. (g) All intracompany and intercompany accounts of Seller. (h) All claims of Seller against third parties (including without limitation, (i) all claims of Seller against Occidential Chemical Corporation arising from incidents occurring prior to the Closing Date and (ii) those claims not yet ascertained and/or liquidated) relating to operations of the Business for the period prior to the Closing Date. (i) All right, title and interest in and use of any "Borden" name, Seller name and any derivative thereof including, without limitation, all trademarks, service marks, trade dress, logos, domain names, trade names and corporate names in the United States and all other nations throughout the world. (j) All intellectual property of Seller currently utilized in Seller's production facilities other than the Addis Plant. 2.3 Liabilities. Subject to Article III and Section 2.5, at Closing, Seller will retain, and Acquiror will not assume, any liabilities of the Business, except for liabilities under Assumed Contracts which arise after the Closing Date. 2.4 Purchase Price. (a) In consideration of the sale, transfer, conveyance, assignment and delivery of the Assets, and in reliance upon the representations and warranties made here by Seller, Acquiror shall pay to Seller the amount of Thirty-Eight Million Dollars ($38,000,000), plus (i) the cost of all Inventory with such cost to be established pursuant to the procedures set forth in -7- Section 2.4(b),(ii) the book value of the Accounts as determined pursuant to the procedures set forth in Section 2.4(c) and (iii) the Severance Benefits for the Non-Transferred Employees calculated pursuant to Section 6.4(d) (the "Purchase Price"). The Purchase Price shall be paid to the Seller at Closing by wire transfer. (b) On the day immediately prior to the Closing Date, Seller shall cause a physical inventory of the Inventory as of the Closing Date to be taken using the individuals employed in the Business and shall prepare a report which shall be delivered to Acquiror. Such physical inventory may be observed by representatives of Acquiror. The report to be rendered on the physical inventory shall be based upon procedures reasonably acceptable to Seller and Acquiror. Inventory shall be valued at the lesser of cost or market; provided, however, if Acquiror reasonably determines that certain of the Inventory is not marketable or usable, such non-marketable or unusable Inventory will be valued at $0.00 for purposes of calculating the cost of the Inventory. Such non-marketable or usable Inventory will remain Seller's property. Acquiror will render Seller a reasonable amount of assistance in selling or disposing of such Inventory, if Seller wishes. The value of the Inventory, determined in accordance with this Section 2.4(b), as mutually agreed to between the parties, will be definitive for purposes of valuing the Inventory in connection with determining the Purchase Price. In the event Seller and Acquiror are unable to agree on the valuation of the Inventory, all disputes related thereto shall be submitted to the Bankruptcy Court for resolution. The fees, costs and expenses of such physical inventory, shall be borne equally by Seller and Acquiror. (c) On the day immediately prior to the Closing Date, Seller and Acquiror shall mutually determine the book value of the Accounts as of the Closing Date. Such agreement shall be definitive for purposes of valuing the Accounts in connection with determining the Purchase Price. (d) Within three (3) Business Days from the date hereof, Acquiror will deposit with Seller earnest money in the amount of Five Hundred Thousand Dollars ($500,000.00) (the "Earnest Money Deposit") pursuant to the requirements of the Bid Procedures Order. Such Earnest Money Deposit shall not constitute an asset of the Debtors and shall be held in trust and escrow in a separate interest bearing account containing no other funds of Debtors pursuant to a Trust and Escrow Agreement substantially in the form set forth in Schedule 2.4(c) pending the Closing. The amount of the Earnest Money Deposit, together with all earnings thereon, shall be credited against the Purchase Price at Closing. The Earnest Money Deposit will be refundable to Acquiror upon termination of this Agreement pursuant to Section 9.1 or at Acquiror's election pursuant to Section 9.3(a) but only if Acquiror is not then in breach of this Agreement; provided, however, if Acquiror is in breach of this Agreement the Earnest Money Deposit shall remain the sole property of Seller. 2.5 Prorations. (a) At Closing, Utility Charges (to the extent that meter readings cannot be obtained on the Closing Date), Equipment Charges, Real Property Taxes, Personal Property Taxes, Customer Rebates, Vendor Charges, and Vendor Rebates, including, without limitation, accruals or prepayments thereof (all as individually defined below and collectively called the -8- "Proration Items"), shall be prorated directly between the Seller and the Acquiror as provided in this Section 2.5. (b) For purposes of this Agreement, the capitalized terms set forth below shall have the following meanings: (i) "Utility Charges" shall mean water, sewer, electricity, gas and other utility charges, if any, applicable to the Addis Plant; (ii) "Customer Rebates" shall mean volume rebates, end-of-year discounts and Similar matters offered by Seller to purchasers of PVC Resins under the Assumed Contracts which have not been paid as of Closing and which are properly allocated in part to a time period prior to Closing and in part to a time period after Closing based on the ratio of the volume and actual cost of such Customer Rebates before and after Closing; (iii) "Equipment Charges" shall mean rental charges payable or receivable and other payments or receipts applicable to the equipment of the Business; (iv) "Real Property Taxes" shall mean ad valorem taxes imposed upon Seller with respect to the Real Property, general assessments imposed with respect to the Real Property and special assessments upon the Real Property; (v) "Personal Property Taxes" Shall mean ad valorem taxes imposed upon the Assets other than the Real Property; (vi) "Vendor Rebates" shall mean vendor rebates relating to the Business which are properly allocable in part to a time period prior to Closing and in part to a tine period after Closing based on the ratio of the volume and actual cost of the applicable inventory purchases to Seller and Acquiror, net of all discounts and other purchase price adjustments of any type other than the actual vendor rebate itself; and (vii) "Vendor Charges" shall mean all obligations of Seller under the Assumed Contracts that are for goods, materials or services delivered to Seller or performed by the applicable vendor prior to the Closing Date, but have not been paid for by Seller as of the Closing Date. (c) All Utility Charges, Equipment Charges, Real Property Taxes, Personal Property Taxes, Customer Rebates, Vendor Charges, and Vendor Rebates shall be apportioned through the Closing Date, with Seller being responsible for, and receiving the benefit of, all Proration Items attributable to the period prior to 11:59 P.M., Louisiana time on the Closing Date, and Acquiror being responsible for, and receiving the benefit of all Proration Items attributable to the period after 11:59 P.M., Louisiana time, on the Closing Date. As soon as practicable, but within ten (10) Business Days after the Closing Date, representatives of Seller and Acquiror will examine all relevant books and records of the Business, as of the Closing Date in order to make the determination of the apportionments. Payments in respect thereof shall be made to the appropriate party by check within seven (7) Business Days after such determination. To the extent certain Proration Items, such as Real Property Taxes and Personal Property Taxes, are not known as of the Closing Date, apportionment shall be made on the basis of the best -9- available evidence, such as the prior years' tax bills, and such estimated apportionment will be deemed final and conclusive. (d) If either party (the "Payor") pays a Proration Item for which the other party (the "Payee") is obligated in whole or in part under this Section 2.5, the Payor shall present to the Payee evidence of payment and a statement setting forth the Payee's proportionate share of such Proration Item, and the Payee shall promptly pay such share to the Payor. If either party (the "Recipient") receives payments of a Proration Item to which the other party (the "Beneficiary") is entitled in whole or in part under this Agreement, the Recipient shall promptly pay such share to the Beneficiary. (e) If there exists as of the Closing Date any pending appeals of ad valorem tax assessments with regard to any Assets, the continued prosecution and/or settlement of such appeals shall be subject to the direction and control of Acquiror with respect to assessments for the year within which the Closing occurs. 2.6 Closing. Unless this Agreement has been terminated and the transactions contemplated under this Agreement have been abandoned pursuant to Section 9.1, and subject to the fulfillment or, if permitted, waiver of the conditions set forth in Article VIII, the closing of the Transfer of the Assets (the "Closing") will take place on the tenth (10th)Business Day following the fulfillment or, if permissible, waiver of the conditions set forth in Article VIII, unless another date or time is agreed to in writing by the parties to this Agreement (the "Closing Date"). The Closing will occur at the offices of the Debtor in Geismar, Louisiana, at 10:00 A.M. on the Closing Date, with Closing to be effective as of 11:59 p.m., Louisiana time, on the Closing Date. (a) At the Closing, Seller will deliver to Acquiror the following documents, duly executed as required: (i) a bill of sale conveying to Acquiror the Personal Property Inventory, Intangible Assets and Books and Records, subject only to the Permitted Liens; (ii) an assignment to Acquiror of the Assumed Contracts and the Accounts; (iii) a special warranty deed (act of sale) conveying to Acquiror title to the Real Property, subject only to the Permitted Liens; (iv) certificate of existence or certificate of good standing of Seller, as of a date within thirty (30) days prior to the Closing Date, from the Secretary of State of Delaware; (v) incumbency and "bring-down" certificates from the secretary of the General Partner in a form reasonably satisfactory to Acquiror; and (vi) a copy of the Bankruptcy Court Order approving the Transfer free and clear of all Liens other than the Permitted Liens. (b) At the Closing, Acquiror will deliver to Seller the following documents, duly executed as required: (i) an agreement assuming the Assumed Contracts, (ii) certificate of existence or certificate of good standing of Acquiror, as of a date within thirty (30) days prior to the Closing Date, from the secretary of state of the Acquiror's state of incorporation or organization, and (iii) incumbency and "bring down" certificates from the secretary of Acquiror in a form reasonably satisfactory to Seller. (c) At the Closing, Acquiror will pay the Purchase Price, after receiving credit in the amount of the Earnest Money Deposit and all interest earned thereon, via wire transfer of immediately available funds to an account designated by Seller. -10- 2.7 Limitation of Liability. ACQUIROR ACKNOWLEDGES AND AGREES THAT ACQUIROR AND lTS REPRESENTATIVES HAVE THE EXPERIENCE AND KNOWLEDGE TO EVALUATE THE BUSINESS, FINANCIAL CONDITION AND LIABILITIES OF THE ASSETS; THAT ACQUIROR AND ITS REPRESENTATIVES, BEFORE THE DATE HEREOF, HAVE HAD ACCESS TO SUCH OF THE INFORMATION AND DOCUMENTS AND TO SUCH OF THE ASSETS AS ACQUIROR AND ITS REPRESENTATIVES SHALL HAVE REQUESTED TO SEE AND/OR REVIEW, THAT ACQUIROR AND ITS REPRESENTATIVES SHALL HAVE HAD A FULL OPPORTUNITY TO MEET WITH APPROPRIATE MANAGEMENT AND EMPLOYEES OF SELLER OR ITS AFFILIATES TO DISCUSS THE ASSETS; AND THAT, IN DETERMINING TO ACQUIRE THE ASSETS, ACQUIROR HAS MADE ITS OWN INVESTIGATION INTO, AND BASED THEREON, ACQUIROR HAS MADE ITS OWN INDEPENDENT JUDGMENT CONCERNING THE ASSETS. IT IS THEREFORE EXPRESSLY UNDERSTOOD AND AGREED THAT ACQUIROR ACCEPTS THE CONDITION OF THE ASSETS "AS IS, WHERE IS" WITHOUT ANY IMPLIED REPRESENTATION, WARRANTY OR GUARANTEE AS TO MERCHANT ABILITY, FITNESS FOR A PARTICULAR PURPOSE OR OTHERWISE AS TO THE CONDITION, SIZE, EXTENT, QUANTITY, TYPE OR VALUE OF SUCH PROPERTY, EXCEPT ONLY AS MAY BE OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT AND SELLER AND ITS AFFILIATES, INCLUDING, WITHOUT LIMITATION, THE GENERAL PARTNER, HEREBY EXPRESSLY DISCLAIM ANY AND ALL SUCH IMPLIED REPRESENTATIONS, WARRANTIES OR GUARANTEES. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, NONE OF SELLER OR ANY OF ITS AFFILIATES, INCLUDING, WITHOUT LIMITATION, THE GENERAL PARTNER MAKES ANY REPRESENTATIONS OR WARRANTIES WITH RESPECT TO (i) ANY INFORMATION OR DOCUMENTS MADE AVAILABLE TO ACQUIROR OR ITS COUNSEL, ACCOUNTANTS OR ADVISORS WITH RESPECT TO THE BUSINESS, THE ASSETS, THE ASSUMED LIABILITIES OR THE ASSUMED CONTRACTS OR (ii) EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE CONDITION OF THE ASSETS, INCLUDING WITHOUT LIMITATION, THE ENVIRONMENTAL CONDITION AND COMPLIANCE WITH ANY ENVIRONMENTAL LAWS OR OTHER LAWS. TO THE EXTENT THE LAW OF THE STATE OF LOUISIANA MAY BE APPLICABLE TO MOVABLE AND IMMOVABLE PROPERTY, ACQUIROR SHALL IN THE APPROPRIATE CLOSING DOCUMENTS, WAIVE ANY RIGHT IT MAY OTHERWISE HAVE IN REDHIBITION OR FOR REDUCTION IN THE PURCHASE PRICE OF THE ASSETS PURSUANT TO ARTICLES 2530 THROUGH 2548 OF THE LOUISIANA CIVIL CODE. ARTICLE III NONASSIGNABLE INTERESTS AND CURE PAYMENTS (a) To the extent that any Assumed Contract included in the Assets is not susceptible, under the Bankruptcy Code, of being validly assigned and transferred to Acquiror ("Nonassignable Assets") without Consent or that any such transfer or attempted transfer without such Consent would Constitute a breach thereof, this Agreement shall not constitute a transfer thereof. With respect to such Nonassignable Assets, from and after the date of this Agreement, Seller will reasonably cooperate with Acquiror, to (i) obtain all Contents that are necessary for the valid transfer to Acquiror of all such Nonassignable Assets and (ii) establish at -11- Acquiror's reasonable direction, a reasonable and lawful arrangement to provide to Acquiror the benefits of any such Nonassignable Assets. (b) Notwithstanding the foregoing, to the extent any such Assumed Contracts require payments of monies to cure any default or breach related to such Assumed Contracts, Acquiror shall be solely responsible for such payments, and any such payments in connection with this Article III shall not be deemed to constitute a portion of the Purchase Price. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER Seller hereby represents and warrants to Aquiror as follows: 4.1 Organization. Seller is a limited partnership duly formed, validly existing and in good standing as a limited partnership under the laws of its jurisdiction of organization. 4.2 Authority. Subject to the approval of the Bankruptcy Court and in compliance with the Bid Procedures Order, (i) the execution and delivery of this Agreement by Seller have been or will prior to closing be duly authorized by the Board of Directors of the General Partner and (ii) this Agreement is a valid and binding obligation of Seller, enforceable against it in accordance with its terms. 4.3 Real Property. Subject to Bankruptcy Court approval, at the Closing Seller will convey to Acquiror title to the Real Property free and clear of all Liens except for Permitted Liens. 4.4 Title to Other Assets. Subject to Bankruptcy Court approval, at the Closing Seller will convey to Acquiror title to the Assets other than the Real Property, free and clear of all Liens except for Permitted Liens. 4.5 Assumed Contracts. The Assumed Contracts furnished by Seller to Aquiror are true, correct and complete copies of the Assumed Contracts, as of the date hereof together with all amendments or modifications thereto existing. There are no other agreements oral or written, between Seller and the parties to the Assumed Contracts regarding the subject matter thereof, as of the date hereof. 4.6 No Violation of Laws or Permits. As of the date hereof, Seller is unaware of, and has received no notice from any Governmental Entity or Person asserting or alleging any material actual or threatened violation of any Laws or Permit with respect to the ownership or operation of the Assets, including, but not limited to, the Addis Plant, except to the extent disclosed on Schedule 4.6 hereof. 4.7 Pending or Threatened Litigation. As of the date hereof, Seller is unaware of, and has not received any notice from any Person asserting any claim, lawsuit or action against Seller involving in any way the Assets, including but not limited to, the Addis Plant, or the Assumed Contracts, except to the extent disclosed on Schedule 4.7 hereof. -12- 4.8 Employees. Schedule 1.1 is true and complete as of the date hereof. As of the date hereof, there are no other Employees other than those listed on Schedule 1.1 4.9 PVC Resin Supply Contracts. Seller is not a party to any PVC Resin Supply Contracts except for (i) those described on Schedule 6.9 and (ii) purchase orders in the ordinary course of business. 4.10 Non-Exclusive PVC Resins Supply Contracts. The Non-Exclusive PVC Resins Supply Contracts set forth in (i) Sections B.1 and C of Schedule 6.9 shall expire December 31, 2002 and (ii) Section B.2 of Schedule 6.9 have not been renewed and currently expire December 31, 2001. 4.11 Zoning. The 170 acres, more or less, of the Real Property along and west of the Mississippi levee is currently zoned "I-3 Heavy Industrial" under the West Baton Rouge Parish Zoning Ordinance. All of Seller's representations and warranties in this Article IV will be deemed given at Closing (except to the extent modified or supplemented pursuant to Section 6.1 hereof). ARTICLE V REPRESENTATIONS AND WARRANTIES OF ACQUIROR Acquiror hereby represents and warrants to Seller as follows: 5.1 Organization and Qualification. Acquiror is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware, qualified to do business in Louisiana. 5.2 Authority. Acquiror has the requisite power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by Acquiror and the consummation by it of the transactions contemplated to be performed hereunder have been duly authorized by all necessary actions. This Agreement is a valid and binding obligation of Acquiror, enforceable against it in accordance with the terms hereof except as such enforceability may be limited by bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors' rights generally. 5.3 Conflicts and Defaults. Neither the execution and delivery of this Agreement by Acquiror nor the performance by Acquiror of the transactions contemplated hereby will, to Acquiror's knowledge, violate or constitute an occurrence of default under any provision of, or conflict with, or result in acceleration of any obligation under, or give rise to a right by any party to terminate its obligations under, any material contract, sales committment, purchase order, security agreement, mortgage, conveyance to secure debt, note, deed, loan, Lien, lease, agreement, instrument, order, judgment, decree, or other arrangement to which Acquiror is a party or is bound. Acquiror is not in violation of any of its organizational documents. 5.4 Consents and Approvals. Except as described in Section 8.3 hereof, no consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental -13- Entity or any Person is required with respect to Acquiror in connection with the execution delivery or performance by Acquiror of its obligations under this Agreement. 5.5 Disclosure of information. Acquiror acknowledges that it or its representatives have been furnished with information regarding Seller and its businesses (including the Business and the Assumed Contracts) and assets (including the Assets). Acquiror further represents that it has had an opportunity to access the Addis Plant, to make such inspections as Acquiror has desired, to ask questions of and receive answers from Seller and its Affiliates and its representatives regarding Seller and its business (including the Business and the Assumed Contracts) and assets (including the Assets), results of operations, and financial condition. Acquiror acknowledges that, except as expressly set forth in this Agreement, none of Seller or any of its Affiliates, including without limitation, the General Partner has made any representation or warranty as to Seller's businesses, assets, results of operations or financial condition or the Business, Assets, Assumed Contracts or Assumed Liabilities. All representations and warranties, express or implied, of or on behalf of Seller and its Affiliates that are not expressly set forth in this Agreement are hereby waived and released. 5.6 Brokers and Finders. Neither Acquiror nor any of its directors, officers or employees has employed any broker or finder or incurred any liability for any brokerage fees, commissions or finders fees in connection with the transactions contemplated hereby. 5.7 Funds for the Acguisition. Acquiror has sufficient unencumbered to pay in cash the Purchase Price and all of its fees and expenses relating to this Agreement and the transactions contemplated hereby. ARTICLE VI CERTAIN ADDITIONAL COVENANTS OF SELLER AND ACQUIROR 6.1 Disclosure Supplements. From time to time prior to the Closing (and subject to the rights of Acquiror to terminate this Agreement under Section 9.1(d)), Seller, by written notice to Acquiror, shall supplement or amend the representations and warranties made by Seller pursuant to Article IV hereof and the Schedules to this Agreement with respect to any matter that may arise hereafter that (i) if existing or occurring at or prior to the date hereof would have been required to be set forth or described in the Schedules to this Agreement ,or (ii) is necessary to correct any information in the Schedules to this Agreement or in any representation and warranty of Seller which has been rendered materially inaccurate thereby. The written notice pursuant to this Section 6.1 will be deemed to have amended the appropriate Schedules and to have qualified the representations and warranties contained in Article IV. 6.2 Satisfaction of Conditions. (a) Each party to this Agreement shall use best reasonable efforts to satisfy promptly all conditions precedent to the obligations of such party to consummate the transactions contemplated by this Agreement. (b) Without limiting the generality of Section 6.2(a), each party shall use its best reasonable efforts (i) to obtain any licenses, permits, consents, approvals, authorizations. -14- qualifications and orders of Governmental Entities (except the Bankruptcy Court) as are required in connection with the consummation of the transactions contemplated hereby and (ii) to effect all necessary registrations and filings. Subject to the terms and conditions hereof, Acquiror agrees to use its best efforts to take, or cause to be taken, all action and to do, or cause to be done, all other things necessary, proper or advisable to consummate and make effective the transactions contemplated by this Agreement no later than the Closing Date. Each of the parties will use their best reasonable efforts to obtain approval from the Federal Trade Commission ("FTC") and/or Department of Justice ("DOJ"), as applicable, to the Transfer, and, as soon as possible after the Bankruptcy Court Order is entered, will make all filings with and provide all information to the FTC and DOJ necessary to obtain such approval, including, but not limited to, making filings required by Seller and Acquiror under the Hart Scott Rodino Anti-Trust Improvements Act of 1976, (the "HSR Act") as amended, and similar laws. (c) Acquiror will use best reasonable efforts to obtain approval from the Louisiana Department of Environmental Quality ("LDEQ") and/or the Environmental Protection Agency ("EPA") to the transfer of all Permits issued by LDEQ or EPA involving the operation of the Addis Plant to Acquiror. (d) In connection with satisfying the conditions described in Section 6.2(b) hereof, each party shall be responsible for bearing the respective costs and expenses required to discharge their respective obligations hereunder. 6.3 Further Assurances. From and after the Closing, each of Seller and Acquiror shall execute and deliver, in the name and on behalf of Seller or Acquiror, as appropriate, any assignments or assurances and take and do, in the name and on behalf of Seller or Acquiror, as appropriate, any other actions and things reasonably necessary to carry out the intention of this Agreement. 6.4 Employee Matters. (a) Seller and Acquiror mutually agree that Acquiror has no obligation under this Agreement to offer employment to any of the Employees in connection with the acquisition of the Business. Seller acknowledges that it bears the full responsibility to comply with the provisions of the Worker's Adjustment Retraining and Notification Act, and in that regard, covenants and agrees to provide the Employees with all notices and other benefits required thereunder. (b) Acquiror may decide to offer employment to a certain number of the Employees. In order to assist Acquiror in making such determination, immediately following the date hereof, Seller shall provide Acquiror with full access to the personnel files and records concerning the Employees, will make Seller's human resources professionals available to Acquiror for consultation concerning the Employees, and after the issuance of the Bankruptcy Court Order, will allow Acquiror to communicate directly with the Employees regarding possible employment following Closing. (c) No later than five (5) days prior to the Closing, Acquiror will advise Seller in writing which of the Employees has been extended an offer of Similar Employment (as -15- defined below) by Acquiror and which of the Employees have accepted an offer of employment, irrespective of whether such offer constitutes Similar Employment, with Acquiror. All Employees who qualify for severance benefits under Paragraph 6(d) through (i) of the Order Authorizing Severance Plans solely because either (i) they did not receive an offer of Similar Employment from Acquiror, or (ii) they did not accept an offer of employment with Acquiror irrespective of whether that offer constituted an offer of Similar Employment are herein referred to as "Non-Transferred Employees." For purposes hereof, "Similar Employment" means employment: (i) in the Addis Plant; (ii) for substantially similar annual salary or hourly wage; (iii) requiring substantially similar weekly hours, if applicable; (iv) requiring substantially similar tasks and responsibilities; and (v) providing substantially similar health benefits and retirement benefits that are substantially similar except with respect to seniority and vesting requirements. (d) The amount of the severance benefits for each Employee under the Order Authorizing Severance Plan is set forth on Schedule 6.4 ("Severance Benefits"). Seller and Acquiror agree that the calculation of the Severance Benefits set forth on Schedule 6.4 is final as between Seller and Acquiror for purpose of this Agreement. Concurrently with providing Seller the list of Employees to whom it has offered employment described in clause (c) above, Acquiror will calculate the Severance Benefits for the Non-Transferred Employees in accordance with Schedule 6.4 and provide Seller such calculation in writing. The amount of such Severance Benefits owed to the Non-Transferred Employees will be included and added to the price to be paid for the Assets to determine the Purchase Price pursuant to Section 2.4(a). However, Seller will be responsible for all Severance Benefits owed to the Non-Transferred Employees pursuant to the Order Authorizing Severance Plan and Acquiror will have no responsibility or obligation with respect to any of the Non-Transferred Employees. (e) Seller covenants and agrees that it will neither hire any additional Person who would become an Employee hereunder, nor transfer any other existing employees of Seller to the Addis Plant, without in either instance the prior written consent of the Acquiror. 6.5 Notice of Breaches. Seller will promptly, and in any event prior to the Closing, notify Acquiror in writing if Seller becomes aware prior to the Closing that any representation or warranty made by Seller in this Agreement is inaccurate or untrue in any material respect. 6.6 Access to Addis Plant, Books, Records and Personnel. (a) Following the date hereof, Seller shall provide Acquiror with access to the Addis Plant and allow Acquiror to conduct a environmental assessment of the Addis Plant in accordance with the procedures set forth on Schedule 6.6 (the "Environmental Assessment"), at Acquiror's cost and expense and Acquiror covenants to provide Seller with a copy of all reports and analyses derived from the Environmental Assessment in accordance with Section 8.3(f). (b) Following the entry of the Bankruptcy Court Order, Seller shall, upon Acquiror's reasonable request, afford Acquiror and its authorized representatives access during normal business hours to the books, records and data of the Addis Plant and the Business, as it is currently conducted at the Addis Plant (excluding the Non-Exclusive PVC Resins Supply Contracts). Following the Closing, Acquiror shall, upon reasonable request, fully cooperate with -16- Seller or its successors and assigns and afford to Seller, its Affiliates, or its successors and assigns and their respective counsel, accountants and other authorized representatives, reasonable access with reasonable prior notice during normal business hours to the books, records and data of the Addis Plant covering the period before Closing (and grant Seller the right at its own expense to make copies thereof, to the extent reasonably necessary), and to the Addis Plant, to the extent that such access may be reasonably requested by Seller and its Affiliates due to a claim by or against Seller that relates to the operation of the Addis Plant by Seller prior to Closing (i) to facilitate the investigation, litigation or final disposition of any claim which may have been or may be made against any Seller or its successors and assigns or any of their Affiliates in connection with this Agreement, the Assets, the Assumed Contracts or the Business and (ii) to facilitate the preparation by Seller of materials necessary for any tax filing or audit. 6.7 Continued Operation and Maintenance. Between the date hereof and the Closing Date, Seller shall operate and maintain the Addis Plant and other Assets in the same manner and fashion as the Addis Plant and other Assets are currently being operated and maintained by Seller, reasonable wear and tear excepted. Seller will maintain all insurance in the same amounts with the same deductibles as are currently being maintained by Seller. Seller will make all repairs, replacements and modifications to the Addis Plant between the date hereof and the Closing Date necessary to maintain the condition of the Addis Plant in its current condition and will pay for the cost thereof, in full, prior to the Closing. Seller will promptly notify Acquiror of any damage, casualty, breakdown of any of the facilities constituting the Addis Plant. 6.8 Casuality and Condemnation. (a) Minor Damage. In the event of loss or damage to the Addis Plant as a result of any casualty or condemnation under the provisions of eminent domain law after the date hereof but prior to the Closing Date, which loss or damage is not "major" (as hereinafter defined), this Agreement shall remain in full force and effect, provided (i) the Seller performs any repairs necessary to restore the Addis Plant to its condition immediately prior to such casualty or taking, or (ii) at the Acquiror's option, in the event of a casualty, Seller assigns Acquiror its casually insurance policy claim for such loss or damage and pays Acquiror the amount of any deductible under such policy and, in the event of a condemnation, the Seller shall assign to the Acquiror its rights to any condemnation awards resulting from such condemnation. In the event that the Acquiror elects to cause Seller to perform repairs upon any of the Addis Plant, the Seller shall complete such repairs promptly prior to the Closing Date, and, if necessary, the Closing Date shall be extended a reasonable time in order to allow for the completion of such repairs. (b) Major Damage. In the event of a "major" loss or damage or condemnation, the Acquiror may terminate this Agreement by written notice to the Seller, in which event the Earnest Money Deposit, with interest, shall be promptly returned to the Acquiror, and the parties shall have no further liability or obligation hereunder. If the Acquiror fails to elect to terminate this Agreement within twenty (20) days after the Seller sends the Acquiror written notice of the occurrence of major loss or damage or condemnation, then the Acquiror shall be deemed to have elected to proceed with Closing, in which event the Seller shall have no obligation to repair or replace any damage or destruction caused by the foregoing, but the following shall apply at the Closing: (1) in the event of a casualty, Seller shall asign to -17- Acquiror its casualty insurance policy claim for such loss or damage and pay Acquiror the amount of any deductible under such policy and; and (2) in the event of a taking, the Seller shall assign to the Acquiror its rights to any condemnation proceeds resulting from such taking. (c) Definition of "Major" Loss or Damage. For purposes of this Section 6.8, "major" loss or damage or condemnation refers to the following: (1) loss or damage to the Addis Plant or any portion thereof such that the cost of repairing or restoring same to a condition substantially identical to that existing prior to the event of damage would be, in the opinion of a general contractor mutually acceptable to the Seller and the Acquiror, equal to or greater than an amount equal to $2,000,000, and (2) any loss due to a condemnation which materially impairs the current use, access to or value of the Addis Plant. 6.9 Selection of Confidential Contracts. Within five (5) Business Days after the Bankruptcy Court has authorized the disclosure to Acquiror of certain contracts designated as confidential on Schedule 6.9 (the "Confidential Contracts"), Seller covenants to provide Acquiror with true, complete and correct copies of each Confidential Contract (including, without limitation, the Assumed Non-Exclusive Contract) together with all amendments or modifications thereto existing in accordance with the Bankruptcy Court's order or instruction concerning such disclosure. Notwithstanding the foregoing, nothing in this Agreement shall be construed as requiring Seller to disclose any Non-Exclusive PVC Resins Supply Contract to Acquiror other than the Assumed Non-Exclusive Contract. Acquiror will have five (5) Business Days thereafter to select, in its sole discretion, whether Acquiror wishes to assume and accept the applicable Confidential Contract (including, without limitation, the Assumed Non-Exclusive Contract) as an Assumed Contract hereunder; provided, however, Acquiror shall not be entitled to assume any Non-Exclusive PVC Resins Supply Contract set forth in Section H of Schedule 6.9. On or before the expiration of such five (5) day period, Acquiror will notify Seller, in writing, of whether it has chosen to assume and accept the applicable Confidential Contract (including, without limitation, the Assumed Non-Exclusive Contract) as an Assumed Contract and Schedule 2.1(d) shall be amended to include each accepted Confidential Contract which shall then constitute an Assumed Contract for all purposes hereunder. 6.10 Additional PVC Resin Supply Contracts. If, after the date hereof, Seller modifies, renews or extends any existing Exclusive PVC Resin Supply Contract, or enters into a new Exclusive PVC Resin Supply Contract with a third party, Seller shall provide Acquiror with a full and complete copy thereof, and Acquiror will have the opportunity to either reject or assume such Exclusive PVC Resin Supply Contract(s) and any such assumed Exclusive PVC Resin Supply Contract shall constitute an Assumed Contract and Schedule 2.1(d) shall be amended to include such contract. 6.11 Addis Plant Volume. Within five (5) Business Days after the Bankruptcy Court Order, Seller will supply Acquiror with a schedule showing by customer (identified by name) the billing and payment history and volume of PVC Resins produced at and sold from the Addis Plant each month during the period from January 2001, to the month preceding the date of the Bankruptcy Court Order (the "Production Schedule"). Five (5) Business Days before Closing, Seller will update the Production Schedule for the period from the entry of the Bankruptcy Court Order through the date of the updated Production Schedule. -18- 6.12 No Discrimination Seller and Acquiror acknowledge that Seller has another PVC Resins production facility in Geismar, Louisiana (the "Geismar Facility") which Acquiror is not purchasing. Seller and Acquiror further acknowledge that certain customers of Seller, some of whom are parties to the Non-Exclusive PVC Resins Supply Contracts, have historically been supplied by both the Addis Plant and the Geismar Facility. If Seller elects to renew the Non-Exclusive PVC Resins Supply Contract set forth in Section B.2 of Schedule 6.9, Seller agrees to bifurcate the renewal process and shall pursue separate contracts relating to PVC Resins volume historically supplied by the Geismar Facility and the Addis Plant. During the renewal process, Seller shall not attempt to shift any volume historically supplied by the Addis Plant under a Non-Exclusive PVC Resins Supply Contract to its Geismar Facility. Upon execution of any renewal of a Non-Exclusive PVC Resins Supply Contract related solely to the PVC Resins supplied from the Addis Plant, Seller will provide Acquiror with a true and complete copy of such contract and Acquiror will have the opportunity to either reject or assume such contract. If Acquiror elects to assume such contract it shall constitute an Assumed Contract and Schedule 2.l0 shall be amended to include such contract. In connection with renewing any Exclusive PVC Resins Supply Contract, Seller agrees to continue to source the customer who is a party to such contract solely from the Addis Plant, and agrees not to shift the source of PVC Resins to such customer to the Guismar Facility. With respect to any customer of Seller which has historically purchased PVC Resins from the Addis Plant but is not a party to a PVC Resins Supply Contract, Seller agrees that it will not attempt to materially alter or shift the source of supply for that customer from the Addis Plant prior to Closing. 6.13 Cooperation. Following the date the Bankruptcy Court Order is issued, and up to and including the Closing Date, Seller will assist Acquiror in facilitating a smooth transition of ownership and operation of the Addis Plant, including providing Acquiror's engineers with the information listed on Schedule 6.13, to the extent available. 6.14 No Transfer of Assets. Between the date hereof and the Closing Date, Seller will not transfer or remove any of the Assets physically located at the Addis Plant (except for sales of Inventory in the ordinary course of business), unless Seller shall (i) replace such Asset with a similar Asset in substantially the same condition or (ii) use any insurance proceeds from such Asset to acquire another Asset or series of Assets with an aggregate fair market value no less than the value of the original Asset. 6.15 Cooperation with Contracts. Between the date hereof and the Closing Date, Seller will cooperate in connection with any attempt by Aquiror to bifurcate any Non-Exclusive PVC Resins Supply Contract set forth in Section B.l of Schedule 6.9 and to enter into a new contract solely related to PVC Resins currently supplied from the Addis Plant under such Non-Exclusive PVC Resins Supply Contract. ARTICLE VII BANKRUPTCY COURT APPROVAL 7.1 Approval. Seller and Acquiror acknowledge that, under the Bankruptcy Laws, this Agreement and the sale of the Assets are subject to Bankruptcy Court approval. Seller and Acquiror acknowledge that to obtain such approval, Seller must demonstrate that it has taken reasonable steps to obtain the highest and best price possible for the Assets, including, but not -19- limited to, giving notice of the transactions contemplated by this Agreement to creditors and other interested parties as ordered by the Bankruptcy Court, providing information about the Business to responsible bidders, entertaining higher and better offers from responsible bidders and, if necessary, conducting an auction. 7.2 Motion. Promptly after the execution hereof, but in any event no later than three (3) Business Days after the date hereof, Seller shall file with the Bankruptcy Court a motion, together with appropriate supporting papers and notices, seeking the entry of an order, pursuant to Chapter 11 of the United States Bankruptcy Code Sections 105, 363 and 365, (i) authorizing and approving, inter alia, the conveyance of the Assets on the terms and conditions set forth herein, (ii) providing that the stay contained at Rule 6004(g) of the Federal Rules of Bankruptcy Procedure shall not apply and that the order shall be effective and enforceable immediately upon entry and (iii) containing a finding that Acquiror has acted in "good faith" within the meaning of Section 363(m) of the Bankruptcy Code (the "Bankruptcy Court Order"), (iv) requesting the Bankruptcy Court resolve all issues with respect to the disclosure to Acquiror of the Confidential Contracts, and (v) authorizing the payment of the Earnest Money Deposit together with all earnings thereon to be made to Seller as part of the Purchase Price in accordance with the provisions of Section 2.4, all in form and substance reasonably satisfactory to the Acquiror and Seller. Subject to Section 7.3, Seller agrees to use best reasonable efforts to obtain the Bankruptcy Court Order approving this Agreement and the sale of the Assets to Acquiror hereunder. 7.3 Bid Procedures Order. Acquiror and Seller agree that Seller may inform any and all interested parties that it intends to submit this Agreement to the Bankruptcy Court and that any and all other bids or offers with respect to the Business must be presented to Seller in accordance with the procedures and deadlines set forth in such global bid procedures as were ordered by the Bankruptcy Court by Order dated October 10, 2001 (the "Bid Procedures Order"). If Seller receives any other bids or offers pursuant to the Bid Procedures Order, it will promptly provide Acquiror with a copy of the same. 7.4 Breakup Fee; Expense Reimbursement. In the event, pursuant to the Bid Procedures Order, the Bankruptcy Court Order approving this Agreement and the sale of Assets to Acquiror hereunder is not obtained and the Assets are sold to another entity or Person, then, in addition to the return of the Earnest Money Deposit and all interest earned thereon to Acquiror pursuant to Section 9.2 hereof Seller shall (i) subject to Bankruptcy Court approval, pay Acquiror the sum of $1,000,000, representing the "Breakup Fee" (herein so called) provided for in the Bid Procedures Order, and (ii) reimburse Acquiror for its actual expenses incurred in conducting due diligence of the Business, and negotiating the terms of the Agreement, not to exceed $150,000, (the "Expense Reimbursement") in accordance with the Bid Procedures Order. The foregoing sums shall be paid to Acquiror within ten (10) Business Days after this Agreement is terminated pursuant to Section 9.1(c) hereof. -20- ARTICLE VIII CONDITIONS TO THE TRANSFER 8.1 Conditions to the Obligations of Each Party. The obligations of Seller and Acquiror to consummate the Transfer of the Assets are subject to the satisfaction of the following conditions; (a) no judgment, injunction, order or decree shall prohibit the consummation of the Transfer of the Assets or the transactions contemplated under this Agreement; and (b) the Bankruptcy Court Order approving this Agreement and the sale of the Assets to Acquiror hereunder shall have been obtained. 8.2 Conditions to the Obligations of Seller. The obligation of Seller to consummate the Transfer of the Assets is subject to the satisfaction (or written waiver by Seller) of each of the following further conditions: (a) Acquiror shall have performed and complied with in all material respects all obligations and covenants required to be performed or complied with by it under this Agreement at or prior to the Closing Date and Seller shall have received a certificate signed by an executive officer of Acquiror on behalf of Acquiror to the foregoing effect; (b) the representations and warranties of Acquiror contained in Article V of this Agreement and in any certificate or other writing delivered by Acquiror pursuant to this Agreement shall be true in all material respects at and as of the Closing Date as is made at and as of such time (other than representations and warranties made as of a specific time or date which shall have been true at and as of such time or date) and Seller shall have received a certificate signed by an executive officer of Acquiror on behalf of Acquiror to the foregoing effect; and (c) the Bankruptcy Court Order approving this Agreement and the sale of the Assets to Acquiror hereunder shall have been entered by the Bankruptcy Court and no injunction or stay pending appeal shall have been entered precluding the consummation of the transaction contemplated by this Agreement. 8.3 Conditions to the Obligations of Acquiror. The obligation of Acquiror to consummate the Transfer of the Assets and the assumption of the Assumed Contracts is subject to the satisfaction (or written waiver by Acquiror) of each of the following further conditions: (a) Seller shall have performed and complied with in all material respects all obligations and covenants required to be performed or complied with by it under this Agreement at or prior to the Closing Date and Acquiror shall have received a certificate signed by an executive officer of the General Partner on behalf of Seller to the foregoing effect; (b) the representations and warranties of Seller contained in this Agreement and in any certificate or other writing delivered by Seller pursuant to this Agreement shall be true in all material respects at and as of the Closing Date as if made at and as of such time (other than inaccuracies that in the aggregate would not have a Material Adverse Effect and other than representations and warranties made as of a specific time or date which shall have been true at -21- and as of such time or date) and Acquiror shall have received a certificate signed by an executive officer of Seller on behalf of Seller to the foregoing effect; and (c) Any waiting period pursuant to the HSR Act shall have expired or been waived; (d) The LDEQ and/or EPA shall have approved the transfer of all the Permits from Seller to Acquiror or, in lieu thereof, issued new Permits upon substantially the same terms and conditions to Acquiror; (e) The Addis Plant shall be in substantially the same condition that it is in as of the date hereof, reasonable wear and tear expected; and (f) Acquiror shall be satisfied, in its reasonable discretion, with the results of the Environmental Assessment of the Addis Plant conducted by Acquiror pursuant to Section 6.6 hereof. This condition shall be deemed satisfied unless Acquiror notifies Seller, in writing, that it is not satisfied with the results of such Environmental Assessment and provide Seller with a copy of the Environmental Assessment no later than December 14, 2001. If Acquiror notifies Seller by the date set forth herein, then, unless both Seller and Acquiror have agreed in writing to a mutually acceptable solution, this Agreement shall terminate, the Earnest Money Deposit will be returned to Acquiror, and neither party will have any further rights of obligations hereunder in accordance with Section 9.2. ARTICLE IX TERMINATION; REMEDIES 9.1 Termination. This Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Closing: (a) by mutual written consent of Seller and Acquiror; (b) by Seller, so long as Seller is not then in material breach of this Agreement, after one hundred twenty (120) days after the date the Bankruptcy Court Order is entered approving this Agreement and the sale of the Assets to Acquiror becomes final and non-appealable, if the Closing shall not have occurred on or before such date; (c) by Seller for any reason for which termination by Seller is authorized pursuant to the Bid Procedures Order; and (d) by Acquiror, provided it is not in breach of any of its obligations under this Agreement, if Seller corrects any representation or warranty pursuant to Section 6.1 hereof and the corrected warranty or representation has a Material Adverse Effect on the Business, if the circumstances described in Section 6.8 occur, or if any of the conditions set forth in Sections 8.1 and 8.3 hereof have not been fulfilled or waived within one hundred twenty (120) days following the entry of the Bankruptcy Court Order approving this Agreement and the sale of the Assets to Acquiror, unless such fulfillment has been frustrated or made impossible by any act or failure to act of Acquiror. -22- 9.2 Effect of Termination. In the event of the termination of this Agreement pursuant to Section 9.1 hereof, the Earnest Money Deposit, together with all interest earned thereon, shall be promptly returned to Acquiror, and, if termination occurs pursuant to Section 9.l(c), the Breakup Fee and Expense Reimbursement shall be paid to Acquiror, following which this Agreement except for the provisions of Sections 12.4. 12.7 and 12.9, shall forthwith become null and void and have no effect, without any liability on the part of either party or their respective directors, officers or stockholders. The aforesaid provisions shall survive such termination for the longest period legally permissible. Nothing in this Article IX shall, however, relieve either party to this Agreement of liability for breach of this Agreement occurring prior to such termination, or for breach of any provision of this Agreement which specifically survives termination hereunder. 9.3 Remedies. (a) In the event all of the conditions set forth in Sections 8.1 and 8.2 have been satisfied, and this Agreement not been terminated pursuant to Section 9.1, if Seller refuses or fails for any reason to close the Transfer of the Assets in accordance with the terms of this Agreement, Acquiror shall have the right subject to Bankruptcy Law and Bankruptcy Court approval, to either (i) obtain specific performance of Seller's obligations hereunder, or (ii) receive a return of the Earnest Money Deposit. (b) In the event all of the conditions set forth in Sections 8.1 and 8.3 have been satisfied, and this Agreement has not been terminated pursuant to Section 9.1 if Aquiror refuses or fails for any reason to close the Transfer of the Assets in accordance with the terms of this Agreement, Seller shall have the right subject to Bankruptcy Law and Bankruptcy Court approval, as its sole remedy, to retain the Earnest Money Deposit, with all interest earned thereon, as liquidated damages. (c) Neither party shall be liable to the other party for any incidental, consequential, special, exemplary or punitive damages with respect to any matter related to or arising out of the breach or delay in the performance of this Agreement. ARTICLE x TAX MATTERS 10.1 Transfer Taxes. Acquiror shall be responsible for the payment of all state, local, provincial and municipal transfer taxes (and all recording or filing fees) resulting from the transactions contemplated by this Agreement. ARTICLE XI NO SURVIVAL 11.1 Survival of Representations and Warranties. Except as herein specifically provided, the several representations and warranties of the parties contained in this Agreement (or in any document delivered in connection herewith) will terminate upon the Closing. The several covenants of the parties contained in this Agreement (or in any document delivered in -23- connection herewith) will remain operative and in full force and effect without any time limitation, except as any such covenant will be limited in duration by the express terms hereof. ARTICLE XII MISCELLANEOUS 12.1 Entire Agreement. This Agreement, including the Schedules to the Agreement, constitute the entire agreement of the parties to this Agreement with respect to the subject matter hereof and thereof and supersede all prior agreements and undertakings, both written and oral, with respect to the subject matter hereof and thereof 12.2 Notices. All notices, requests and other communications to any party hereunder shall be in writing (including facsimile) and shall be given if to Seller to: Borden Chemicals and Plastics Operating Limited Partnership Hwy. 73 Geismar, Louisiana 70734 Facsimile: (225) 673-0626 Attention: Mark J. Schneider with a copy to: Jones, Day, Reavis & Pogue 3500 SunTrust Plaza 303 Peachtree Street, N.E. Atlanta, Georgia 30308 Facsimile: (404) 581-8330 Attention: Neil P. Olack, Esq. and: Goldberg, Kohn, Bell, Black, Rosenbloom & Moritz 55 E. Monroe Street Suite 3700 Chicago, Illinois 60603 Facsimile: (312) 332-2196 Attention: Alan P. Solow, Esq. -24- if to Acquiror to: Shintech Louisiana, L.L.C. c/o Shintech Inc. 24 Greenway Plaza, Suite 811 Houston, Texas 77046 Facsimile: (713) 965-0629 Attention: Richard Mason with a copy to: W. David Tidholm Gardere Wynne Sewell LLP 1000 Louisiana, Suite 3400 Houston, Texas 77002-5007 Facsimile: (713) 276-6565 or such other address or facsimile number as such party may hereafter specify for such purpose by notice to the other party to this Agreement. Each such notice, request or other communication shall be effective (i) if given by facsimile transmission, when such facsimile is transmitted to the facsimile number specified in this Section 12.2 and the appropriate confirmation is received, or (ii) if given by any other means, when delivered at the address specified in this Section 12.2. 12.3 Amendments; No Waivers (a) Any provision of this Agreement may be amended or waived prior to the Closing Date if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by Seller and Acquiror or in the case of a waiver, by the party against whom the waiver is to be effective; provided, that, any amendment or waiver of any provisions of this Agreement by Seller shall require prior approved of Foothill Capital Corporation as agent for certain financial lenders. (b) No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. 12.4 Expenses. Except as otherwise provided in this Agreement, all costs and expenses incurred in connection with this Agreement shall be paid by the party incurring such cost or expense. 12.5 Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties to this Agreement and their respective successors and assigns, provided that, Acquiror may not assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the consent of Seller. Notwithstanding anything contained in this Agreement to the contrary, nothing in this Agreement, expressed or implied, is intended to confer on any person other than the parties to this Agreement or their respective -25- successors and permitted assigns, any rights, remedies obligations or liabilities under or by reason of this Agreement. 12.6 Certain Interpretive Matters. (a) Unless the context otherwise requires, (i) all references in this Agreement to Sections, Articles or Schedules are to Sections, Articles or Schedules of or to this Agreement, (ii) each term defined in this Agreement has the meaning ascribed to it and (iii) words in the singular include the plural and vice versa. All references to "$" or dollar amount will be to lawful currency of the United States of America. (b) Titles and headings to Sections in this Agreement are inserted for convenience of reference only, and are not intended to be a part of or to affect the meaning or interpretation of this Agreement. No provision of this Agreement will be interpreted in favor of, or against, any of the parties to this Agreement by reason of the extent to which any such party or its counsel participated in the drafting thereof or by reason of the extent to which any such provision is inconsistent with any prior draft hereof or thereof. 12.7 Governing Law and Jurisdiction. This Agreement shall be construed in accordance with and governed by the internal substantive law of the State of Delaware regardless of the laws that might otherwise governed under principles of conflict of laws applicable thereto. This Agreement is also subject to any applicable order or act of the Bankruptcy Court. In the event either party shall institute a legal action as a result of the default in the other party's performance under this Agreement, any such action shall be brought exclusively in the Bankruptcy Court which shall retain exclusive jurisdiction with respect to the interpretation, performance, and enforcement of this Agreement. 12.8 Counterparts: Effectiveness. This Agreement may be executed in two or more counterparts (including by means of facsimile signature pages), 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 hereto and delivered to the other party (solely for purposes of effectiveness of this Agreement, such delivery may be in the form of facsimile signature pages). 12.9 Severability. If any term, provision, covenant or restriction of this Agreement is determined by a Governmental Entity to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement will remain in full force and effect and will in no way be affected, impaired or invalidated. [SIGNATURES APPEAR ON FOLLOWING PAGE] -26- IN WITNESS WHEREOF, the parties to this Agreement have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. SELLER: BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP By: BCP Management Inc., its General Partner By: /s/ Mark J. Schneider --------------------------------- Name: MARK J. SCHNEIDER ------------------------------- Title: PRESIDENT + CEO ------------------------------ ACQUIROR: SHINTECH LOUISIANA, L.L.C. a Delaware limited liability company By:_________________________________ Name:_______________________________ Title:______________________________ IN WITNESS WHEREOF, the parties to this Agreement have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. SELLER: BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP By: BCP Management Inc., its General Partner By:______________________________________ Name:____________________________________ Title:___________________________________ ACQUIROR: SHINTECH LOUISIANA, L.L.C. a Delaware limited liability company By: R. Maron -------------------------------------- Name: Richard Mason ------------------------------------ Title: Assistant Secretary ----------------------------------- SCHEDULES 1.1. Employees 2.1(a) Description of Real Property 2.1(b) Description of Plant and Personal Property 2.1(d) List of Assumed Contracts 2.1(e) List of Permits 2.1(f) List of Intangible Assets 2.4(d) Form of Trust and Escrow Agreement 4.3 Permitted Liens on Real Property 4.8 List of Violations of Laws or Permits 4.9 List of Pending or Threatened Litigation 6.4 Employee Severance Benefits 6.6 Environmental Assessment Procedures 6.9 Confidential Contracts 6.13 Engineering and Mechanical Information SCHEDULE 1.1 - EMPLOYEES Clerk Senior Process Technician E & I Technician Senior Process Technician E & I Technician Senior Process Technician E & I Technician Senior Process Technician E & I Technician Senior Process Technician E & I Technician Senior Process Technician E & I Technician Senior Process Technician Environmental Coord Senior Process Technician Environmental Technician Senior Process Technician HR Mgr Senior Process Technician Inst Supv Senior Process Technician Maintenance Supt Senior Process Technician Maintenance Supv Senior Process Technician Nurse Senior Process Technician Plant Mgr Senior Process Technician Process Engineer Senior Process Technician Production Engineer Senior Process Technician Production Engineer Senior Process Technician Production Supt Senior Process Technician Qc Supv Senior Process Technician Safety Coord Senior Process Technician Safety Technician Senior Process Technician Secretary Senior Process Technician Secretary Senior Process Technician Senior Laboratory Technician Senior Process Technician Senior Laboratory Technician Senior Process Technician Senior Laboratory Technician Shift Supv Senior Laboratory Technician Shift Supv Senior Laboratory Technician Shift Supv Senior Laboratory Technician Shift Supv Senior Laboratory Technician Stores Supv Senior Process Technician Storekeeper Senior Process Technician Unit Sup 1 SCHEDULE 2.1(A) - REAL PROPERTY The land, buildings, and all improvements thereto located at 8600 Hwy. South, Addis, Louisiana on the property described below: LEGAL DESCRIPTION A certain tract or parcel of land containing a total of 221.929 acres, together with all the buildings and improvements thereon and all the rights, ways, privileges, servitudes, advantages and appurtenances thereunto belonging or in anywise appertaining, including all accretion, alluvion, batture and sandbars forming portions of said land in any way, situated in Sections 30, 31, & 32, T8S, Rl2E, Southeast Land District of Louisiana, West of the Mississippi River, in the Parish of West Baton Rouge (the "Parish"), State of Louisiana, fronting on the right descending bank of the Mississippi River, and being shown on a survey made by Evans-Graves Engineers, Inc., dated April 18, 1995 (the "Survey"), entitled "A Portion of St Mary & St. Delphine Plantations Located in Sections 30, 31 & 32, T8S-R12E, Southeast Land District, West Baton Rouge Parish, Louisiana, for Occidental Chemical Company", said tract of land being bounded on the north by the southerly right of way line of St. Delphine Road (and the projection thereof) which is also the boundary line of lands of Harry L. Laws & Company, Inc.; on the south by the center line of Sid Richardson Road (and the projection thereof) which is also the boundary line of lands owned by Copolymer Rubber and Chemical Corporation; on the east by the Mississippi River; and on the west by the east right of way line of La Highway #l; and being more particularly described in accordance with the Survey, as follows: Begin at the intersection of the center line of Sid Richardson Road, previously called St. Mary Road (shown on said map as the southerly section line of Section 32), with the easterly right of way line of La. Highway 1, said point being marked by a nail in the asphalt surface of said road, for POINT OF BEGINNING; thence proceed along the easterly right of way line of La. Hwy. 1 around a curve to the right having a radius of 2,141.83(feet) a distance of 1,423.74(feet) to an iron pipe, with a central angle of 38(degrees) 05(feet) 11(inches) and a tangent of 739.30(feet); thence continue along said right of way line N 23(degrees) 22(feet) 54(inches) East a distance of 1,091.39(feet) to an iron pipe; thence continue along said right of way line around a curve to the left having a radius of 3,014.79(feet) a distance of 296.67(feet) with a central angel of 05(degrees) 38(feet) 17(inches) and a tangent of 148.45(feet); to an iron pipe on the southerly right of way line of St. Delphine Road for a point and corner; thence proceed along said right of way line N 59(degrees) 32(feet) 15(inches) East a distance of 2,636.34(feet) to an iron pipe; thence turning in a southerly direction and proceeding on a bearing of S 06(degrees) 58(feet) 40(inches) East a distance of 350(feet) to a point and corner; thence turning in an easterly direction and proceeding on a bearing of N 59(degrees) 32(feet) 15(inches) East a distance of 320(feet) to a point and corner on the westerly right of way line of La. Hwy. 988; thence turning in a northerly direction and proceeding along said westerly right of way line of La. Hwy 988 on a bearing of N 06(degrees) 58(feet) 40(inches) West a distance of 350(feet) to a point and corner; thence in a easterly direction on a bearing of N 59(degrees) 32(feet) 15(inches) East a distance of 1,076.24(feet) to the right descending bank of the Mississippi River for point and corner, thence proceed downriver along the right descending bank of the Mississippi River S 03(degrees) 15(feet) 39(inches) East a distance of 202.99(feet), S 12(degrees) 23(feet) 45(inches) East a distance of 916.80(feet) S 18(degrees) 58(feet) 08(inches) East a distance of 400.04(feet), and S 16(degrees) 40(feet) 39(inches) East a distance of 592.24(feet) to the intersection of said bank with the projection of the center line of Sid Richardson Road (shown on said map as the southerly line 2 of Section 32) for point and corner; thence proceed along said line S 59 (degrees) 44(feet) 30(inches) West a distance of 4,228.70 (feet) to a point of inclination marked by a nail; thence S 63(degrees) 44(feet) 00(inches) West a distance of 184.82(inches) to a point on inclination marked by a nail, and S 60(degrees) 19(feet) 00(inches) West a distance of 931.19(feet) to the POINT OF BEGINNING. 3 SCHEDULE 2.1(b) - PERSONAL PROPERTY All personal property set forth herein and any and all personal property currently owned by Seller and used solely in connection with Business as currently conducted at the Addis Plant. In addition, the Personal Property described on Schedule 6.13 shall be included as Personal Property. Utilities Demineralized water tank Demineralized water pump Damineralizad water strainer Demineralized water supply pump Demineralized water booster pump Demineralized water preheater Hot DW tank Hot DW circulating pump Hot DW heater Hot DW feed pump (2 ea.) Hot DW transfer pump DW purge pump Hot water tank Hot water pumps (2 ea.) Equalizatian tank Equalization tank mixer Equalization tank feed pumps (2 ea.) Polymer storage tanks and pumps Deaerator Boiler feedwater pumps (2 ea.) DW makeup pumps (2 ea.) Boiler feedwater polymer tanks and pumps Boiler (2 ea.) Boiler forced draft fan (2 ea.) Demineralized water trains (3 ea.) Caustic day tank Acid day tank Caustic feed pumps (2 ea.) Caustic heater Acid feed pumps (2 ea.) Degas tower Degas tower pump (2 ea.) Degas surge tank Degas tower fan Neutralization tank Potable water tank 4 Potable water pump (2 ea.) Caustic storage tank Caustic transfer pump Caustic pumps (2 ea.) Caustic day tank with agitator Hydrochloric acid tank Hydrochloric acid pumps (2 ea.) Hydrochloric acid tank vent scrubber Sulfuric acid storage tank Sulfuric acid pump Natural gas pipeline meter stations (2 ea.) Chlorinator (2 ea.) Chilled water refrigeration unit (3 ea.) Chilled water return pumps (3 ea.) Seal pumps (2ea.) Lube oil pump (2 ea.) Hermetic pump (2 ea.) Chilled water supply tank Chilled water supply pump (3 ea.) Chilled water return tank Chilled water pump to recovery Centrifugal compressor Diesel fue1 tank Cooling tower Cooling water pumps (3 ea.) Acid feed system Polymer feed system Anthracite filters (4 ea.) Backwater hold tank Backwater hold pump Filtered water storage tank Filtered water pump (2 ea.) Air compressor (2 ea.) Air compressor intercooler (2 ea.) Air compressor aftercooler (2 ea.) Air compressor filters (2 ea.) Fuel oil tank Fuel oil booster pump Fuel oil circulation pump (2 ea.) Fuel oil strainer Fuel oil heater Nitrogen storage vessel and receiver Sanitary sewer treatment plant Sequential batch reactors (2 ea.) SBR mixer (2 ea.) Sludge pumps (2 ea.) 5 Decanter Aeration blowers (8 ea.) Final effluent tank Final effluent pumps (2 ea.) Final effluent sampler pump Sampler package Wastewater cooler package (2 ea.) Condensate return tank Condensate pumps (2 ea) Water wells (2 ea.) Process water tank Firewater storage tanks (3 ea.) Firewater pumps (4 ea.) Firewater jockey pump Stripping Drive Area Slurry tank. (2 ea.) Slurry tank agitator (2 ea.) Slurry pumps (3 ea.) Slurry discharge pump (2 ea.) Slurry discharge tanks (2 ea.) Stripping columns (2 ea.) Steam ejector (2 ea.) Slurry circulating pump (2 ea.) Vacuum tank (2 ea.) Cushion tank with agitator (2 ea.) Slurry feed pump (2 ea.) Condensor (2 ea.) Heat exchanger (2 ea.) Drain pot (2 at.) Vacuum pump (2 ea.) Drain pump (2 ea) Horizontal fluidized bed drycr (2 ea.) Cake disperser (2 ea.) Mechanical scatterer (2 ea.) Main blower with filter (2 ea.) Screw conveyor (2 ea.) Centrifuge (2 ea.) Hot water exchanger (2 ea.) Hot water pump (2 ea.) Cooling blower (2 ea.) Exhaust blower (2 ea.) Condensate pump (2 ea.) Primary dust collector (2 ea.) Air compressor packages (2 ea.) Air receiver 6 Air dryer package Air slide blowers (2 ea.) Conveying dust collector (2 ea.) Dryer product blower (2 ea.) Vibrating screeners (6 ea.) Magnetic separators (2 ea.) Surge bin (2 ea.) Blow tanks(2 ea.) Dense phase blowers (2 ea.) Silo storage (8 ea.) Silo dust collector (8 ea.) Loading spout (8 ea.) Diverter valve (8 ea.) Track weigh scale Trackmobile Switchmaster Packer supply bin Vacuum pump package Product packer with check weigh scale, blowers (2 ea.), bag conveyor, bag flattne, slide valves Conveying blower receiver with filter and blow tank Wastewater collection sump Wastewater sump pumps (2 ea.) Cyclone separator Slurry tank Centrifuge Vibrating dryer With inlet air blower (2 ea.), exhaust blower, cyclone, dust collector and rotary airlock AS-10 tank AS-10 tank agitator AS-10 pump Recovery Area Railcar unloading platforms VCM unloading compressors (2 ea.) VCM bullets (2 ea.) VCM transfer pumps (2 ea.) VCM measuring tank VCM feed pumps (2 ea.) VCM strainers (2 ea.) Vacuum pumps (3 ea.) Vacuum tank VCM gas srubbers (2 ea.) Scrubber circulating pump (2 ea.) Scrubber strainer (2 ea.) Drain tank Drain tank pump 7 VCM recovery blower (2 ea.) Recovery blower oil cooler (2 ea.) Primary gasholder Drain pots (2 ea.) Drain pot pump Secondary gasholder Drain tank Drain tank pump Vacuum pump (2 ea.) Drain pot (2 ea.) Drain pot pump VCM blowers (2 ea.) SH-1 pump SH-1 wastewater tower SH-1 wastewater tower pump Gas/liquid separator Brine cooler Inhibitor tank Inhibitor pump Dehumidifier Caustic circulating pump VCM compressors (3 ea.) VCM compressor intercooler (3 ea.) VCM condenser Crude VCM condenser Crude VCM tank Crude VCM pump Bottoms tower Bottoms tower strainer Bottoms tower tank Bottoms tower heat exchanger Glycol refrigeration unit Rectification column Reboiler Reflux condensers (2 ea.) Reflux tank VCM strainers (3 ea.) Reflux pump Recovered VCM tank Recovered VCM pump Wastewater holding tank Hold tank Decanter tank Decanter pump Liquid seal pump Waste rank 8 Waste tank pump Reactor wastewater tank Wastewater pump SH-IB wastewater tank SH-IB wastewater tank mixer SH-IB wastewater pump VC wastewater tower Tower circulation pump Tower in-line heater Tower spiral heat exchanger, Compressor Separators (2 ea.) Absorber Gas coolers (2 ea.) Spiral exchanger Feed cooler/heater Condenser Reboiler Stripper Stripper bottoms pump Drain tank Overload separator Fuel oil pump Fuel oil heater Duplex strainer Caustic tank Caustic pump (2 ea.) Sump Pump Recirculation tank Recirculation pump Column pump Quench pump Incinerator Incinerator air blower Incinerator outrigger fan Incinerator induced draft fan Solution Prep Building Reactor coating system Chain transfer agent system Ethanol flush system Inhibitor system Oderless mineral spirits system Caustic/hot water system Initiator charge system Suspending agent system 9 PLC control system Polymerization Reactors (4 ea.) Inhibitor tank (4 ea.) Agitator with motor (4 ea.) Wash nozzle & spray ring (4 ea.) Torque converter with oil pump & cooler (4 ea.) Reactor seal oil pots (8 ea.) Reactor seal oil pumps (4 ea.) Reduction gear (4 ea.) Reduction gear oil pumps (8 ea.) Reduction gear oil cooler (4 ea.) Water circulating pump (4 ea.) Reactor condenser (4 ea.) Blowdown tank (2 ea.) Blowdown tank agitator (2 ea.) Stopper tank (2 ea.) Blowdown tank jacket water pump (2 ea.) Slurry pump (2 ea.) Catalyst storage building Refrigeration compressors (2 ea.) Back-up diesel generator General Buildings on site Piping Control systems Instrumentation Electrical Office furniture Laboratory equipment Maintenance shop and tools Spare parts Computer equipment/printers 10 SCHEDULE 2.1(d) - ASSUMED CONTRACTS 1. Nitrogen Supply Contract dated April 1, 1979 between Big Three Industries, Inc. and Firestone Tire and Rubber Company; 2. Assignment Agreement between Big Three Industries, Inc., Big Three Industrial Gas and Occidental Chemical Corporation dated July 1, 1986, of Nitrogen Supply Contract dated April 1, 1979 between Big Three Industries, Inc. and Firestone Tire and Rubber Company; 3. Amendment No. 1 to the Nitrogen Supply Contract between Big Three Industries, Inc., Successor to Big Three Industrial Gas, Inc., Assignee from Big Three Industries, Inc. and Occidental Chemical Corporation, Assignee from The Firestone Tire and Rubber Company dated November 30, 1993. 11 SCHEDULE 2.1(e) - PERMITS 1. Louisiana Department of Environmenta1 Quality Letter Certifying Aeration Basin and Final Effluent Basin Closure Plan dated March 16, 1998; 2. Louisiana Department of Environmental Quality, Office of Air Quality and Radiation Protection, Radioactive Material License, No. LA-3664-L01, issued October 30, 1997; 3. Louisiana Department of Environmental Quality, Louisiana Pollutant Discharge Elimination System Permit (Water Discharge Permit), No. LA0055794, issued October 27, 1998; 4. Borden chemicals and Plastics submission and notification on Form HW-1, Change in Installation Contact, Toxicity Characteristic waste codes dated May 20, 1997; 5. Louisiana Department of Environmental Quality, Administrative amendments, Permit No. 3120-00014-07, November 27, 2000 and July 19, 2000; 6. Louisiana Department of Environmental Quality, Title V, Part 70 Air Permit Application, original dated October 1995, amended December 2000; 7. Louisiana Department of Transportation and Development, waterwell registrations, wells number 155 and 156 located in 85 Range 12E Section 032; 8. Louisiana Department of Transportation and Development, amendment dated February 1, 1980 to permit no. 111754; 9. Louisiana Department of Transportation and Development Letter dated September 11, 1978 approving the installation of waste water line from the Addis Plant to discharge into the Mississippi River. 10. Approval of U.S. Army Corps of Engineers of waste water line from the Addis Plant to cross the Mississippi River levee to discharge into the Mississippi River, if applicable. 12 SCHEDULE 2.1(f) - INTANGIBLE ASSETS Any and all (a) business information (including pricing and cost information, business and marketing plans and customer and supplier lists); (b) know-how (including manufacturing and production processes and techniques and research and development information); (c) industrial designs, drawings and blueprints and product specifications;(d) operating manuals; (e) databases and data collections; (f) computer software, subject to the terms of any license granted to Seller, and (g) copies and tangible embodiments of any of the foregoing which are used in the operations of the Addis Plant as of the Closing Date and those same types of materials which have historically been used at and which are solely related to the Addis Plant as of the Closing Date. To the extent applicable, Intangible Assets includes the information set forth on Schedule 6.13. 13 SCHEDULE 2.4(d)-FORM OF ESCROW AND TRUST AGREEMENT -------------------------------------------------- 14 TRUST AND ESCROW AGREEMENT This Trust and Escrow Agreement ("Agreement") is entered into this ____ day of December __, 2001 by and between Borden Chemicals and Plastics Operating Limited Partnership ("BCP"), Shintech Louisiana, L.L.C. ("Shintech"), and _________ __ (as escrow agent hereunder "Escrow Agent"). RECITALS A. BCP and Shintech are parties to a certain Asset Purchase Agreement dated as of December __, 2001 (the "APA"), wherein BCP has agreed to sell, and Shintech has agreed to purchase, certain assets associated with a polyvinyl chloride resin manufacturing facility located in Addis, West Baton Rouge Parish, Louisiana. B. Section 2.4(d) of the APA requires Shintech to deposit with BCP earnest money in the amount of $500,000.00 (the Earnest Money Deposit"). BCP, together with its subsidiary, BCP Finance Corporation, filed voluntary petitions or relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court") under Bankruptcy Case Number 01-1268 (RN) (the "Bankruptcy Case"). Accordingly, the APA provides that the Earnest Money Deposit does not constitute an asset of BCP and is to be held in trust and escrow in a separate interest-bearing account containing no other funds of BCP pursuant to a trust and escrow agreement pending the closing of the transaction set forth in the APA. C. Pursuant to the provisions of the APA, Shintech and BCP have requested Escrow Agent hold in escrow in accordance with the provisions of the APA and this Agreement the Earnest Money Deposit and the earnings thereon, so further provided herein and to act as Escrow Agent hereunder. 15 D Escrow Agent is willing to hold the Earnest Money Deposit and the earnings thereon in accordance with the provisions of the APA and this Agreement and to act as Escrow Agent hereunder. NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. Appointment of Escrow Agent. BCP and Shintech hereby appoint _________ as the Escrow Agent hereunder subject to and in accordance with the provisions of this Agreement, and Escrow agent accepts such appointment and agrees to act as Escrow Agent hereunder, subject to and in accordance with the provisions of this Agreement. 2. Establishment of Escrow Account. Escrow Agent agrees to receive the Earnest Money Deposit from Shintech and agrees to hold, invest and disburse the Earnest Money Deposit and the earnings thereon in escrow, subject to and in accordance with the provisions of this Agreement. 3. Deposit; No-Commingling. (a) Concurrently with the execution of this Agreement, Shintech has deposited the Earnest Money Deposit direct1y with the Escrow Agent. The Earnest Money Deposit will be held in trust and maintained in a separate interest-bearing deposit account maintained at the Escrow Agent (the "Trust Account"). The Trust Account will contain no funds other than the Earnest Money Deposit and interest earned thereon. The funds in the Trust Account will not be utilized, released, disbursed or relinquished except in strict accordance with the terms of this Agreement. 16 (b) The Escrow Agent shall invest the Earnest Money Deposit Property in Eligible Investments, pursuant to and as directed in by the written instructions of BCP. "Eligible Investments" shall mean (i) obligations (including certificates of deposits and banker's acceptances) of any domestic commercial bank having capital and surplus in excess of $500,000,000: or (ii) investment in the Escrow Agent's U.S. Treasury Securities Money Market Fund. If otherwise qualified, other obligations of the Escrow Agent or any of its affiliates shall qualify as Eligible Investments. All earnings received from the investment of the Earnest Money Deposit shall be credited to, and shall become a part of, the Trust Account. The Escrow Agent shall have no liability for any investment losses, including without limitation any market loss on any investment liquidated prior to maturity in order to make a payment required hereunder. 4. Trust Funds: Waiver of Setoff Rights. Escrow Agent hereby acknowledges receipt of the Earnest Money Deposit and agrees that the Earnest Money Deposit and all interest earned thereon are trust funds to be held and delivered pursuant to the terms of this Agreement. Escrow Agent hereby waives any and all rights of setoff or counterclaim against the funds in the Trust Account. BCP acknowledges that the funds in the Trust Account do not constitute an asset of BCP and are not subject to the claims of any creditor of BCP in BCP's Bankruptcy Case. 5. Disbursement of Earnest Money Deposit. The Earnest Money Deposit, together will all interest earned thereon, will be disbursed from the Trust Account as follows: 17 a. To BCP, (i) upon consummation of the transactions contemplated by the APA pursuant to Section 2.6 of the APA or (ii) pursuant to Section 9.3(b) of the APA. b. To Shintech, if the APA is terminated pursuant to Section 9.1 thereof, or if Shintech exercises its remedy pursuant to Section 9.3(ii) of the APA. 6. Disbursement Procedure. Upon the occurence of any one of the events described in paragraph 5 foregoing, the party entitled to receive the Earnest Money Deposit will provide written notice to the Escrow Agent and the other party requesting disbursement of the Earnest Money Deposit and all interest earned thereon. Unless the Escrow Agent is notified by the other party within five (5) days that such other party contests the claiming party's right to receive the Earnest Money Deposit, the Escrow Agent shall disburse the Earnest Money Deposit, together with all interest earned thereon, to the claiming party on the fifth (5th) day after receipt of the request. If either BCP or Shintech claim entitlement to the Earnest Money Deposit, and the other party contests such claimant's right to the same, the contesting party shall notify the Escrow Agent in writing of the contested claim before the expiration of said five (5) day period, in which event the Escrow Agent will not disburse the Earnest Money Deposit to the party until the dispute is resolved by the Bankruptcy Court. If the disbursement is contested as herein described, upon resolution of the dispute by the Bankruptcy Court, the Escrow Agent will disburse the Earnest Money Deposit, together with interest earned thereon, to the party identified as the proper recipient thereof by the Bankruptcy Court. 18 7. Rights of Escrow Agent. In performing its duties hereunder, the Escrow Agent shall not incur any liability to anyone for damages, losses, or expenses except for willful misconduct or gross negligence, and accordingly; (1) The Escrow Agent undertakes to perform such duties and only such duties as are specifically set forth in this Agreement. The Escrow Agent shall not have any duties or responsibilities except those expressly set forth in this Agreement or be a trustee for or have any fiduciary obligation to any party hereto. (2) The Escrow Agent shall not be liable for any error of judgment made in good faith by an officer or officers of the Escrow Agent, unless it shall be conclusively determined by a court of competent jurisdiction that the Escrow Agent was grossly negligent in ascertaining the pertinent facts. (3) The Escrow Agent shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance this Agreement. (4) None of the provisions of this Agreement shall require the Escrow Agent to expend or risk its own funds or otherwise to incur any liability, financial or otherwise, in the performance of any of its duties hereunder. (5) The Escrow Agent may conclusively rely and shall be fully protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties. 19 (6) The Escrow Agent may consult with counsel and the advice or any opinion of counsel shall be full and compete authorization and protection in respect of any action taken or omitted by it hereunder in good faith and in accordance with such advice or opinion of counsel. (7) The Escrow Agent shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, entitlement order, approval or other paper or document. (8) The Escrow Agent may execute any of the powers hereunder or perform any duties hereunder either directly or by or through agents attorneys, custodians or nominees appointed with due care, and shall not be responsible for any willful misconduct or gross negligence on the part of any agent, attorney, custodian or nominee so appointed. (9) Shintech and BCP agree to pay the Escrow Agent's compensation for its normal services hereunder in accordance with the fee schedule attached hereto as Exhibit A and made a part hereof. (10) The provisions of this Section 10 shall survive the termination of this Agreement or the earlier resignation or removal of the Escrow Agent. In no event shall the Escrow Agent be liable for special, indirect or consequential loss or damage of any kind whatsoever (including, but not limited to, lost profits). 8. Indemnity: BCP and Shintech hereby jointly and severally agree to indemnify the Escrow Agent from and against any claims or expense that the Escrow Agent 20 may incur in performing its duties hereunder provided that the Escrow Agent complies with its obligations under this Agreement. 9. Notices. All notices, requests and other communications to any party hereunder shall be in writing (including facsimile) and shall be given: if to BCP to: Borden Chemicals and Plastics Operating Limited Partnership Hwy. 73 Geismar, Louisiana 70734 Facsimile: (225) 673-0626 Attention: Mark J. Schneider with a copy to: Jones, Day, Reavis & Pogue 3500 SunTrust Plaza 303 Peachtree Street N.E. Atlanta, Georgia 30308 Facsimile: (404) 581-8330 Attention: Neil P. Olack, Esq. if to Shintech to: Shintech Louisiana, L.L.C. c/o Shintech Inc. 24 Greenway Plaza, Suite 811 Houston, TX 77046 Facsimile: (713) 965-0629 Attention: Richard Mason with a copy to: W. David Tidholm Gardere Wynne Sewell LLP 1000 Louisiana, Suite 3400 Houston, Texas 77002-5007 Facsimile: (713) 276-6565 21 if to Escrow Agent to: _______________________________ _______________________________ _______________________________ _______________________________ or such other address or facsimile number as such party may hereafter specify for such purpose by notice to the other party to this Agreement. Each such notice, request or other communication shall be effective (i) if given by facsimile transmission, when such facsimile is transmitted to the facsimile number specified in this paragraph 9 and the appropriate confirmation is received, or (ii) if given by any other means, when delivered at the address specified in this paragraph 9. 10. Binding Obligations. This Agreement shall be binding upon and insure to the benefit of the parties hereto and their respective successors, personal representatives and assigns. 11. Counterparts. This Agreement may be executed in two or more counterparts, each of which together shall constitute a single agreement. 12. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to the principles of conflicts of laws thereof. This Agreement is also subject to any applicable order or act of the Bankruptcy Court. In the event either party shall institute a legal action as a result of the default in the other party's performance under this Agreement, any such action shall be brought exclusively in the Bankruptcy Court which shall retain exclusive jurisdiction with respect to the interpretation, performance, and enforcement of this Agreement. 22 13. Termination. This Agreement shall automatically terminate upon the distribution of all the Earnest Money Deposit and all interest thereon. 14. Execution in Counterparts. This Agreement may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. [SIGNATURES APPEAR ON FOLLOWING PAGES] 23 IN WTNESS WHEREOF, the parties to this Agreement have caused this Agreement to be duly executed by their respective authorized officers as of the date and year first above written. BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP By: BCP Management, Inc., Its General Partner _______________________________ By: Name:______________________ Title:_____________________ SHINTECH LOUISIANA, L.L.C. _______________________________ By: Name:______________________ Title:_____________________ ___________________________________ ESCROW AGENT By: Name:______________________ Title:_____________________ 24 EXHIBIT A SCHEDULE 4.3 - PERMITTED LIENS ON REAL PROPERTY 1. Louisiana Dept. of Highways, Highway 988 (River Road). COB 63, Page 268, Entry 97. 2. Entergy Gulf States, Inc., 50(feet) in width on east side of Louisiana Highway. COB 108, Page 647, Entry 185. 3. Union Pacific Railroad, railroad spur. COB 154, Page 56, Entry 22. 4. Entergy Gulf States, Inc., 50(feet) in width along southern boundary. COB 151, Page 259, Entry 65. 5. Town of Addis, 10(feet) in width along northern boundary. COB 229, Folio 139, Entry 27. 6. Cypress Gas Pipeline, LLC, natural gas pipeline. COB 207, Entry 66. 7. Title to that portion of the Real Property, if any, lying below the mean low water mark of the Mississippi River; obligations of riparian landowners as provided by law; and rights of the United States of America, State of Louisiana and the public general (a) in and to that portion of the Real Property between the mean low water mark and the mean high water mark of the Mississippi River (the banks); (b) to regulate navigation and commerce; and (c) for the construction, maintenance, replacement and operation of the levee system for the Mississippi River. 8. Industrial area affidavit and agreement by in favor of the West Baton Rouge Parish Police Jury and the Parish of West Baton Rouge, COB 280, Folio 48, Entry 23. 9. Right of way for Sid Richardson Road (formerly St. Mary Road) along the southern boundary of the Real Property. 26 SCHEDULE 4.6 - VIOLATIONS OF LAWS OR PERMITS None. 27 SCHEDULE 4.7 - PENDING OR THREATENED LITIGATION 1. Borden Chemicals and Plastic Operating Limited Partnership v. Occidenta Chemical Corporation, Index No. 606300/98, Supreme Court of the State of New York, County of New York; 2. Anderson et al. v. BCP, No. 29282(B), consolidated with Milligan, et al. v. BCP; In the 18th District Court, Parish of West Baton Rouge, Louisiana; No. 29282(B) (5/99); 3. David Edward Hodges v. Entergy Corporation American Rail Car Industries, Inc., ACF Industries, Inc., Charles Smiths, Borden Chemical, Inc., Borden Chemicals and Plastic Operating Limited Partnership, General Electric Rail Car, Wheel and Parts Service Corporation, General Electric Rail Car Repair Services Corporation and J.E. Merit Constructors, Inc,; In the 18th Judicial District Court, Parish of West Baton Rouge, Louisiana; No. 30205 (6/9/99); 4. Dan Williams, III v. Borden Chemical, Inc.; In the 18th Judicial District Court, Parish of West Baton Rouge, Louisiana; No. 31169 (8/21/00). 28 SCHEDULE 6.4 - EMPLOYEE SEVERANCE BENEFITS - -------------------------------------------------------------------------------- Employee Severance Benefits Employee Severance Benefits - -------------------------------------------------------------------------------- 1 7,594.06 34 22,898.07 - -------------------------------------------------------------------------------- 2 20,717.31 35 26,100.00 - -------------------------------------------------------------------------------- 3 59,867.10 36 58,000.05 - -------------------------------------------------------------------------------- 4 25,515.00 37 6,918.64 - -------------------------------------------------------------------------------- 5 15,265.39 38 110,516.40 - -------------------------------------------------------------------------------- 6 21,403.94 39 22,898.07 - -------------------------------------------------------------------------------- 7 26,169.23 40 14,175.00 - -------------------------------------------------------------------------------- 8 14,557.57 41 57,441.15 - -------------------------------------------------------------------------------- 9 68,137.20 42 8,723.07 - -------------------------------------------------------------------------------- 10 58,205.13 43 19,626.93 - -------------------------------------------------------------------------------- 11 36,018.00 44 61,045.65 - -------------------------------------------------------------------------------- 12 13,084.61 45 5,213.91 - -------------------------------------------------------------------------------- 13 20,717.29 46 23,988.46 - -------------------------------------------------------------------------------- 14 68,011.65 47 15,265.30 - -------------------------------------------------------------------------------- 15 36,371.70 48 26,169.23 - -------------------------------------------------------------------------------- 16 26,169.23 49 26,169.23 - -------------------------------------------------------------------------------- 17 18,393.23 50 25,078.84 - -------------------------------------------------------------------------------- 18 23,988.46 51 79,643.25 - -------------------------------------------------------------------------------- 19 25,078.84 52 60,879.60 - -------------------------------------------------------------------------------- 20 15,265.39 53 30,530.77 - -------------------------------------------------------------------------------- 21 20,717.31 54 22,530.46 - -------------------------------------------------------------------------------- 22 41,533.56 55 25,910.03 - -------------------------------------------------------------------------------- 23 9,813.46 56 23,988.46 - -------------------------------------------------------------------------------- 24 26,169.23 57 28,272.88 - -------------------------------------------------------------------------------- 25 15,265.39 58 26,169.23 - -------------------------------------------------------------------------------- 26 11,994.23 59 12,391.76 - -------------------------------------------------------------------------------- 27 21,807.69 60 20,717.31 - -------------------------------------------------------------------------------- 28 39,428.31 61 27,036,56 - -------------------------------------------------------------------------------- 29 11,995.31 62 26,169.23 - -------------------------------------------------------------------------------- 30 21,807.69 63 26,169.23 - -------------------------------------------------------------------------------- 31 26,169.23 64 9,813.46 - -------------------------------------------------------------------------------- 32 31,621.16 65 61,985.25 - -------------------------------------------------------------------------------- 33 21,807.69 66 60,223.50 - -------------------------------------------------------------------------------- Total $1,973,319.63 - -------------------------------------------------------------------------------- 29 SCHEDULE 6.6 - ENVIRONMENTAL ASSESSMENT Phase I ESA ... Site Reconnaissance Providence Engineering personnel will conduct an on-site inspection of the property to identify environmental conditions associated with the property ... Interview with Key Personnel Providence Engineering personnel will interview key personnel with knowledge of plant operation, processes, waste management, and spill/release history. The BCP personnel to be interviewed will include the plant manager, facility environmental staff, and operations personnel. ... Review of on-site regulatory files Providence Engineering personnel will review on-site regulatory files. At a minimum, the following files shall be reviewed: . Wastewater permit, . Air Quality permits, . Solid waste management, . Hazardous waste management, and . EPCRA reporting. Phase II ESA ... Collection of Soil and Groundwater Samples Providence Engineering proposes to collect soil and groundwater samples from areas of concern identified in the October 1994 Baseline Soil and Groundwater Study performed by G&E Engineering, Inc. and any areas identified from the Phase I ESA site reconnaissance, interviews, or regulatory review. The soil and groundwater investigation proposed will conform with the Louisiana Department of Environmental Quality's (LDEQ) Risk Evaluation/Corrective Action Program (RECAP) guidance. The following list provides the anticipated events involved with collection of the soil and groundwater samples: . Coring through concrete to native material, when applicable; . Drill to approximately 15 feet below ground surface (bgs) using geoproble drill rig; . Continuously log and collect soil samples from borehole; . All investigation derived waste (cuttings, purge water, etc.) will be properly collected and containerized for disposal in accordance with applicable LDEQ rules and regulations; . Field screen soil samples for organic vapors using photo-ionization detector (PID) or flame ionization detector (FID); . Install temporary piezometer for collection of groundwater; and . Plug and abandon borings/piezometers in accordance with LDEQ and LDOTD regulations. 30 In accordance with RECAP, the following soil intervals are anticipated to be submitted to the analytical laboratory for analysis. ... Surface soil sample; ... Soil sample from the soil/groundwater interface; ... Soil sample from the bottom depth of boring; and ... Soil sample exhibiting the highest headspace measurement for organic vapours. Based upon current site knowledge, proposed soil and groundwater target analytes for analysis include the following depending upon location and current and historical activities and significant materials handling in the vicinity of a selected boring location: ... Volatile Organic Compounds (VOCs); ... Semi-Volatile Organic Compounds (SVOCs); ... Polychlorinated Biphenyls (PCBs); and ... Selected Metals. The potential exists that additional target analytes and sampling locations may be added to Phase II ESA based upon information obtained during the Phase I ESA. 31 SCHEDULE 6.9 - CONFIDENTIAL CONTRACTS A. Exclusive PVC Resins Supply Contracts 1. Sales Agreement dated March 5, 2001 between Ex-Tech Plastic, Inc. and Borden Chemicals and Plastic Operating Limited Partnership; 2. VCM Supply Agreement dated May 2, 1995 between Occidental Chemical Corporation and Borden Chemicals and Plastic Operating Limited Partnership; 3. Amendment No. 1 to VCM Supply Agreement dated May 2, 1995 between Occidental Chemical Corporation and Borden Chemicals and Plastic Operating Limited Partnership dated January 1, 1998; 4. Amendment letter to VCM Supply Agreement dated May 2, 1995 between Occidental Chemical Corporation and Borden Chemicals and Plastic Operating Limited Partnership dated March 14, 2000; 5. Amendment letter to VCM Supply Agreement dated May 2, 1995 between Occidental Chemical Corporation and Borden Chemicals and Plastic Operating limited Partnership dated July 27, 2001; 6. Letter Agreement dated August 3, 2001 between Oxy Vinyls and Borden Chemicals and Plastic Operating Limited Partnership; 7. PVC Tolling Agreement dated July 1, 1999 between Occidental Chemical Corporation and Borden Chemicals and Plastic Operating Limited Partnership; 8. Sales Agreement dated March 21, 2001 between Borden Chemicals and Plastic Operating Limited Partnership and GPK Products, Inc.; 9. Sales Agreement dated July 31, 2000 between Borden Chemicals and Plastic Operating Limited Partnership and Kappus Plastic Company, Inc.; 10. Sales Agreement dated December 21, 1998 between Borden Chemicals and Plastic Operating Limited Partnership and Keysor-Century Corporation; 11. Sales Agreement dated December 31, 1998 between Borden Chemicals and Plastic Operating Limited Partnership and M. A. Hanna; 12. Sales Agreement dated May 1, 2000 between Borden Chemicals and Plastic Operating Limited Partnership and The Sterling Group; 13. Amendment to Sales Agreement dated May 1, 2000 between Borden Chemicals and Plastic Operating Limited Partnership and The Sterling Group dated August 31, 2001; 14. Amendment to Sales Agreement dated May 1, 2000 between Borden Chemicals and Plastic Operating Limited Partnership and The Sterling Group dated October 15, 2001 15. Sales Agreement dated February 11, 2000 between Alcoa Building Products and Borden Chemicals and Plastic Operating Limited Partnership; 16. Amendment dated January 22, 200l to the Sales Agreement dated February 11, 2000 between Alcoa Building Products and Borden Chemicals and Plastic Operating Limited Partnership; 17 Amendment dated November 26, 2001 to the Sales Agreement dated February 11, 2000 between Alcoa Building Products and Borden Chemicals and Plastic Operating Limited Partnership; 32 B. Non-Exclusive PVC Resins Supply Contracts 1. (a) Sale Agreement dated January 11, 2000 between Omnova Solutions Inc. and Borden Chemicals and Plastic Operating Limited Partnership; (b) Sale Agreement dated January 18, 2001 between Genova Products, Inc. and Borden Chemicals and Plastic Operating Limited Partnership; 2. (a) Sale Agreement dated January 15, 200l between Teknor-Apex Company and Borden Chemicals and Plastic Operating Limited Partnership; (b) Amendment to the Sale Agreement dated January 15, 2001 between Teknor-Apex Company and Borden Chemicals and Plastic Operating Limited Partnership dated May 29, 200l; C. Assumed Non-Exclusive Contracts 1. Sale Agreement dated June 20, 2000 between VPI Mirrex Corp. and Borden Chemicals and Plastic Operating Limited Partnership; D. Other Contracts 1. Rail Transportation Contract between Union Pacific Railroad Company and Borden Chemical and Plastic Operating Limited Partnership for the following shipping locations: From Addis, LA to Addis, LA dated June 4, 2000 From Addis, LA to Anderson, SC dated June 1, 2001 From Addis, LA to Asheville, NC dated June 1, 2001 From Addis, LA to Bakers, NC dated June 1, 2001 From Addis, LA to Birmingham, AL dated March 1, 200l From Addis, LA to Bristol, IN dated June 1, 2001 From Addis, LA to Brownsville, TN dated June 1, 200l From Addis, LA to Bulls Gap, TN dated March 1, 2001 From Addis, LA to Burlington, NJ dated June 1, 2001 From Addis, LA to Calgary, AB dated July 6, 2001 From Addis, LA to Canton JCT, MA dated June 1,200l From Addis, LA to Chicago Heights, IL dated May 1, 200l From Addis, LA to City of Industry, CA dated May 1, 200l 33 From Addis, LA to Concord, ON dated September 1, 2001 From Addis, LA to Cozad, NE dated May 1, 2001 From Addis, LA to Darlington, RI dated September 26, 2001 From Addis, LA to Dennison, TX dated May 1, 2001 From Addis, LA to Edgemoore, DE dated July 10, 2001 From Addis, LA to Elizabethport, NJ dated June 1, 2001 From Addis, LA to Fairbault, MN dated May 1, 2001 From Addis, LA to Florence, AL dated July 1, 2001 From Addis, LA to Fountain Inn, SC dated July 1, 2001 From Addis, LA to Gordonsville, VA dated June 1, 2001 From Addis, LA to Greensboro, GA dated June 1, 2001 From Addis, LA to Guelph, ON dated September 1, 2001 From Addis, LA to Hamilton, ON dated September 1, 2001 From Addis, LA to Hazelton, PA dated June 1, 2001 From Addis, LA to Holden, LA dated September 1, 2001 From Addis, LA to Houston, TX dated May 1, 2001 From Addis, LA to Huntsville, AL dated June 1, 2001 From Addis, LA to Illiopolis, IL dated December 1, 2001 From Addis, LA to Janesville, WI dated September 23, 2001 From Addis, LA to Joplin, MO dated May 1, 2001 From Addis, LA to Lawton, OK dated September 27, 2001 From Addis, LA to Monroe, NC dated June 1, 2001 From Addis, LA to Montreal, PQ dated September 1, 2001 From Addis, LA to Muncy, PA dated June 1, 2001 From Addis, LA to Newark, DE dated June 1, 2001 From Addis, LA to Paramount, CA dated May 1, 2001 From Addis, LA to Pawtucket, RI dated September 26, 2001 From Addis, LA to Philadelphia, PA dated June 1, 2001 From Addis, LA to Pheonix, AZ dated May 1, 2001 From Addis, LA to Pitcarin, PA dated June 1, 2001 From Addis, LA to Pittsburg, KS dated May 1, 2001 From Addis, LA to Reno, NV dated February 28, 2001 34 From Addis, LA to Rensselaer, IN dated June 1, 2001 From Addis, LA to Rural Retreat, VA dated June 1, 2001 From Addis, LA to to S. Plainfield, NJ dated June 1, 2001 From Addis, LA to Saugus, CA dated May 1, 2001 From Addis, LA to Slidell, LA dated June 1, 2001 From Addis, LA to St. Laurent dated September 1, 2001 From Addis, LA to Stevens, NJ dated June 1, 2001 From Addis, LA to Tennent, NJ dated June 1, 2001 From Addis, LA to Thomasville, GA dated June 1, 2001 From Addis, LA to Tuscumbia, AL dated June 1, 2001 From Addis, LA to Wilmington, DE dated June 1, 2001 From Addis, LA to Worcester, MA dated June 1, 2001 2. Second Addendum to Rail Transportation Contract between Union Pacific Railroad Company and Borden Chemicals and Plastic Operating Limited Partnership. 35 SCHEDULE 6.13 - ENGINEERING AND MECHANICAL INFORMATION All the engineering and mechanical information set forth herein to the extent solely related to the Addis Plant. A. General 1. P&I flow diagram showing all equipment in the plant which should also include fire fighting system, VMC unloading system, RW/HW system, cooling water system, utilities such as nitrogen, natural gas, instrument air, well a draw water treatment. 2. Machine list showing specifications for all equipment corresponding to P&I flow diagram. 3. Sequence chart of polymerization. 4. List of laboratory equipment. 5. Document and information of office LAN system to be transferred. 6. Underground pipeline construction drawings 7. Human Resources records 8. Construction bid packages and drawings B. Maintenance for mechanical instrument and electricity 1. Overall (a) List of maintenance equipment (b) Spare parts list (c) Vendor document and drawings for each equipment (d) Engineering standard including piping standard (e) Maintenance record of major equipment (f) Record of mechanical integrity required by OSHA 36 2. Mechanical (a) Piping drawings (b) Drawing for each building (c) Boring data of the plant (d) List of leased equipment such as fork lift, track mobile, trackhoe, etc. 3. Instrument and electrical (a) Document for process computer (both hardware and software) (b) Instrument list (c) Motor list (d) Instrument loop drawing (e) Electrical one line diagram and wiring diagram (f) Document for instrument and electrical UPS system (g) Layout drawings for control room and switchgear room (h) Information of substation equipment E. Safety and Environment 1. List of safety equipment 2. Hazardous area classification drawing 3. Document for monitoring system 4. Printout record of area monitoring and personal monitoring record 5. Record of analysis required by environmental regulations (air, water, hazardous material, etc.) 6. PSM compliance data 37 7. All current and past environmental permits, documents, applications, correspondence, agreements, etc. 8. All current and past safety documents, filings, records, correspondence, agreements, etc. 9. Compliance record for TCLP test for solid waste disposal F. License 1. License agreements with other companies for special technique, chemicals, etc. G. Purchasing and receiving 1. Document for purchasing 2. Document for receiving of material and equipment H. Quality Control and Laboratory 1. Product Specification 2. Customer Specification 3. Test methods 4. ISO certification, if applicable 38 EX-10.51 11 dex1051.txt ORDER APPROVING ASET PUCHASE AGREEMENT Exhibit 10.51 UNITED STATES BANKRUPTCY COURT DISTRICT OF DELAWARE In re: : : Jointly Administered BORDEN CHEMICALS AND : Case No. 01-1268 (RRM) PLASTICS OPERATING LIMITED : PARTNERSHIP, a Delaware limited : partnership, et al., : : Chapter 11 Debtors. : ORDER (A) APPROVING ASSET PURCHASE AGREEMENT; (B) AUTHORIZING SALE OF ADDIS ASSETS FREE AND CLEAR OF LIENS, CLAIMS AND ENCUMBRANCES; (C) AUTHORIZING ASSUMPTION AND ASSIGNMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES RELATED THERETO; AND (D) GRANTING RELATED RELIEF (DOCKET NO. 462) This matter coming before the Court on the Motion of Debtors and Debtors in Possession for an Order (A) Approving Asset Purchase Agreement; (B) Authorizing Sale of Addis Assets Free and Clear of Liens, Claims and Encumbrances; (C) Authorizing Assumption and Assignment of Executory Contracts and Unexpired Leases Related Thereto; and (D) Granting Related Relief (the "Sale Motion"), filed by the above-captioned debtors and debtors in possession (collectively, the "Debtors"); the Court having (a) reviewed the Sale Motion, the underlying Asset Purchase Agreement (the "Agreement") dated December 3, 2001 by and among the Debtors and Shintech Louisiana, L.L.C. (the "Acquiror"), a copy of which is attached to the Sale Motion as Exhibit A, and all pleadings and other filed documents relating thereto and (b) heard the statements of counsel regarding the relief requested in the Sale Motion at a hearing before the Court (the "Sale Hearing"); the Court finding that: (a) the Court has jurisdiction over this matter pursuant to 28 U.S.C. (S)(S)157 and 1334; (b) this is a core proceeding pursuant to 28 U.S.C. (S)157(b)(2); (c) notice of the Sale Motion and the Sale Hearing was sufficient under the circumstances; (d) the Debtors' sale of the Addis Assets/1/ pursuant to the Agreement, free and clear of liens, claims, encumbrances, pledges and security interests of any kind (collectively, "Property Interests"), is allowable under section 363 of the Bankruptcy Code, is a sound exercise of the Debtors' business judgment and is in the best interests of the Debtors' estates; (e) the Assumed Contracts constitute an integral part of the Addis Assets and the Debtors' assumption and assignment of the Assumed Contracts (including, to the extent they become Assumed Contracts pursuant to the Agreement, the Confidential Contracts) is allowable under section 365 of the Bankruptcy Code, is supported by sufficient assurance of the Acquiror's ability to satisfy the requirements of section 365(b)(1) of the Bankruptcy Code, is a sound exercise of the Debtors' business judgment and is in the best interests of the Debtors' estates; (f) the Debtors' disclosure of the terms and provisions of, and any extradocumentary information concerning, the Confidential Contracts, under the limited terms described in the Agreement and Sale Motion, is essential to the sale of the Addis Assets, subject to the conditions set forth herein; (g) the Debtors and the Acquiror have acted in "good faith" as defined by section 363(m) of the Bankruptcy Code; (h) the Debtors have marketed the Addis Assets and conducted the sale process in compliance with the Bid Procedures (as defined in the Sale Motion); and (i) the Transfer is within the scope of section 1146(c) of the Bankruptcy Code; the Court having determined that the legal and factual bases set forth in the Sale Motion and at the Sale Hearing establish just cause for the relief granted herein; IT IS HEREBY ORDERED THAT: 1. The Sale Motion is GRANTED as set forth below. ___________________ /1/ Capitalized terms not defined herein have the meanings ascribed to them in the Sale Motion or in the Agreement. 2. The Agreement is approved in all respects, and the Debtors are authorized to enter into and perform their obligations under the Agreement. 3. The Debtors are authorized to sell the Addis Assets, on the terms described in the Sale Motion and the Agreement, under sections 363(b) and (f) of the Bankruptcy Code. 4. At Closing, the Addis Assets shall be sold and transferred free and clear of all Property Interests, with the exception of Permitted Liens, with all such Property Interests attaching to the proceeds of sale to the same extent and with the same priority as each such Property Interest now attaches to or affects the Addis Assets (including, without limitation, the Property Interests of the Debtors' postpetition secured lenders, as set forth pursuant to prior order of the Court), subject to the Court's power to determine the validity, extent and priority of any such Property Interests, and subject to any claims and defenses the Debtors may possess with respect thereto. 5. Except as expressly permitted or otherwise specifically provided by the Agreement or this Order, all persons and entities holding Property Interests (whether legal or equitable, secured or unsecured, matured or unmatured, contingent or non-contingent, senior or subordinated) in the Addis Assets prior to Closing, including, but not limited to, all debt security holders; equity security holders; governmental, tax and regulatory authorities; lenders, trade and other creditors; hereby are forever barred, estopped and permanently enjoined from asserting their Property Interests against the Acquiror, its successors or assigns, or against the Addis Assets. 6. The Acquiror hereby is granted and shall have the protections provided in section 363(m) of the Bankruptcy Code. 7. The Acquiror shall not be deemed to be a successor to or of the Debtors as a result of the acquisition of the Addis Assets pursuant to the terms of the Agreement and this Order. Nothing in this Order or the Agreement shall be construed to affect or otherwise alter any liability of the Acquiror of the Addis Assets, which such Acquiror would otherwise have under applicable environmental law or regulation as the current owner or operator of the Addis Assets after the date of entry of this Order. 8. The Debtor received no competing bids for the Addis Assets and pursuant to the Agreement, Acquiror will not receive payment of any break-up fees or reimbursement of expenses. In the event the Debtor and Acquiror fail to consummate the transactions contemplated by this Order, Acquiror shall not be entitled to payment of any break-up fees or reimbursement of expenses. 9. Each and every federal, state, and local governmental agency or department shall be, and hereby is, directed to accept any and all documents and instruments necessary and appropriate to consummate the Agreement, including without limitation, documents and instruments for recording in any governmental agency or department required to transfer the Acquiror the names and any and all other licenses or permits under the Debtors' ownership necessary for the operations that are associated with the Addis Assets. 10. The terms and provisions of the Agreement and this Order shall be binding in all respects upon, and shall inure to the benefit of the Acquiror, the Debtors, the Debtors' estates, and their successors and assigns, including any trustee that may be appointed in these cases or any superseding case under chapter 7 of the Bankruptcy Code. 11. The Transfer shall not be taxed under any federal, state, local municipal or other law imposing or claiming to impose a tax within the scope of section 1146(c) of the Bankruptcy Code. 12. Pursuant to section 105(a) of the Bankruptcy Code, the Debtors are authorized to disclose to the Acquiror the terms and provisions of, and any extradocumetary information concerning, the Confidential Contracts, in accordance with Section 6.9 of the Agreement. 13. Pursuant to Sections 105(a) and 365 of the Bankruptcy Code, and subject to and conditioned upon the Closing, the Debtors' assumption of the Assumed Contracts (including, to the extent they become Assumed Contracts pursuant to the Agreement, the Confidential Contracts) and assignment of them to the Acquiror on the terms set forth in the Agreement is hereby approved; provided, however, the Debtors shall not assume and assign that portion of the letter agreement dated August 3, 2001, by and between Debtors and Oxy Vinyls, LP, and relating to the tolling of vinyl chloride monomer ("VCM") into polyvinyl chloride ("PVC") resins. 14. The Acquiror will (i) cure, or provide adequate assurance of cure, of defaults under any of the Assumed Contracts (including, to the extent they become Assumed Contracts pursuant to the Agreement, the Confidential Contracts), within the meaning of section 365(b)(1)(A) of the Bankruptcy Code; and (ii) provide compensation or adequate assurance of compensation for actual pecuniary losses resulting from defaults under any of the Assumed Contracts (including, to the extent they become Assumed Contracts pursuant to the Agreement, the Confidential Contracts), within the meaning of section 365(b)(1)(B) of the Bankruptcy Code; provided, however, the Debtors shall not assume and assign that portion of the letter agreement dated August 3, 2001, by and between Debtors and Oxy Vinyls, LP, and relating to the tolling of VCM into PVC resins. 15. The Debtors and the Acquiror are authorized and directed to take the necessary actions to consummate the transactions contemplated by the Agreement and this Order. 16. In accordance with the prior order of this Court authorizing the Debtors to retain and employ Taylor Strategic Divestitures ("Taylor"), Taylor shall be entitled, in respect of the Transfer of the Addis Assets, to a flat fee in the amount of $l,000,000 less the $350,000 non-refundable retainer the Debtors paid to Taylor before the Petition Date, for a resulting fee of $650,000, which the Debtors are authorized to pay at the Closing. 17. This Court shall retain jurisdiction to determine any claims, disputes or causes of action arising out of or relating to the Asset Purchase Agreement or any of the transactions contemplated under the Asset Purchase Agreement. Dated: 12/21, 2001 /s/ [Illegible] ----------- ------------------------------------- Wilmington, Delaware UNITED STATES DISTRICT JUDGE EX-10.52 12 dex1052.txt ASSET PURCHASE AGREEMENT DATED MARCH 8, 2002 Exhibit 10.52 EXHIBIT A ================================================================================ ASSET PURCHASE AGREEMENT dated as of March 7, 2002 between BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP and FORMOSA PLASTICS CORPORATION, DELAWARE ================================================================================ TABLE OF CONTENTS PAGE ---- 1. DEFINITIONS ..............................................................l 1.1 Definitions .......................................................1 2. PURCHASE AND SALE OF THE ASSETS AND LIABILITIES ..........................6 2.1 Sale and Transfer of the Assets ...................................6 2.2 The Excluded Assets ...............................................7 2.3 Liabilities .......................................................8 2.4 Purchase Price ....................................................8 2.5 Prorations .......................................................10 2.6 Closing ..........................................................11 2.7 Limitation of Liability ..........................................12 3. NONASSIGNABLE INTERESTS AND CURE PAYMENTS ...............................12 4. REPRESENTATIONS AND WARRANTIES OF SELLER ................................13 4.1 Organization .....................................................13 4.2 Financial Statement ..............................................13 4.3 Authority ........................................................13 4.4 Real Property ....................................................13 4.5 Title to Other Assets ............................................13 4.6 Assumed Contracts ................................................13 4.7 No Violation of Laws or Permits ..................................13 4.8 Pending or Threatened Litigation .................................14 4.9 Employees ........................................................14 4.10 Employee Benefits ................................................14 4.11 Environment Matters ..............................................14 4.12 Supply Contracts .................................................15 4.13 Customer Contracts ...............................................15 4.14 Sufficiency of Assets ............................................15 5. REPRESENTATIONS AND WARRANTIES OF ACQUIROR ..............................15 5.1 Organization and Qualification ...................................15 5.2 Authority ........................................................15 5.3 Conflicts and Defaults ...........................................15 i TABLE OF CONTENTS (continued) PAGE ---- 5.4 Consents and Approvals............................................15 5.5 Disclosure of Information.........................................16 5.6 Brokers and Finders...............................................16 5.7 Funds for the Acquisition.........................................16 6. CERTAIN ADDITIONAL COVENANTS OF SELLER AND ACQUIROR......................16 6.1 Disclosure Supplements............................................16 6.2 Satisfaction of Conditions........................................16 6.3 Further Assurances................................................17 6.4 Employee Matters..................................................17 6.5 Notice of Breaches................................................18 6.6 Access to the Business, Books, Records and Personnel..............18 6.7 Continued Operation and Maintenance...............................18 6.8 Casualty and Condemnation.........................................19 6.9 Selection of Confidential Contracts...............................19 6.10 Illiopolis Plant Volume...........................................20 6.11 Cooperation.......................................................20 6.12 No Transfer of Assets.............................................20 6.13 Geismar, Louisiana................................................20 6.14 Computer Access...................................................20 6.15 Borden Environmental Indemnity....................................20 6.16 Alternative Transaction Provisions................................21 6.17 Broker and Finders................................................21 7. BANKRUPTCY COURT APPROVAL................................................21 7.1 Approval..........................................................21 7.2 Bid Procedures Motion and Order...................................21 7.3 Sale Motion.......................................................22 7.4 Breakup Fee; Expense Reimbursement................................23 8. CONDITIONS TO THE TRANSFER...............................................23 8.1 Conditions to the Obligations of Each Party.......................23 8.2 Conditions to the Obligations of Seller...........................23 ii TABLE OF CONTENTS (continued) PAGE ---- 8.3 Conditions to the Obligations of Acquiror.........................24 9. TERMINATION; REMEDIES;...................................................25 9.1 Termination.......................................................25 9.2 Effect of Termination.............................................26 9.3 Remedies..........................................................26 10. TAX MATTERS..............................................................27 10.1 Transfer Taxes....................................................27 11. NO SURVIVAL..............................................................27 11.1 Survival of Representations and Warranties........................27 12. MISCELLANEOUS............................................................27 12.1 Entire Agreement..................................................27 12.2 Notices...........................................................27 12.3 Amendments; No Waivers............................................28 12.4 Expenses..........................................................28 12.5 Successors and Assigns............................................29 12.6 Certain Interpretive Matters......................................29 12.7 Governing Law and Jurisdiction....................................29 12.8 Counterparts; Effectiveness.......................................29 12.9 Severability......................................................29 iii ASSET PURCHASE AGREEMENT ASSET PURCHASE AGREEMENT (this "Agreement") dated as of March 7, 2002, between BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP, a Delaware limited partnership ("Seller"), and FORMOSA PLASTICS CORPORATION, DELAWARE, a Delaware corporation, ("Acquiror"). RECITALS: A. Seller is engaged in the business of the research development, manufacture, marketing, distribution and sale of products manufactured at a plant located in Illiopolis, Illinois, which business utilizes certain research equipment and books and records located at Geismar, Louisiana, but related to the products manufactured at the Illiopolis Plant (the "Business"). B. On April 3, 2001, Seller, together with its subsidiary BCP Finance Corporation, a Delaware corporation ("BCP") (Seller and BCP collectively referred to herein as the "Debtors"), filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code, 11 U.S.C. (S)(S) 101-1330 (as now in effect or hereafter amended, the "Bankrupcy Code") in the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court"), and the Debtors' chapter 11 cases (the "Bankruptcy Cases") have been consolidated for procedural purposes only and are being administered jointly as Case No. 01-1268 (PJW). C. The Debtors are continuing in possession of their respective properties and are operating their businesses as debtors in possession pursuant to sections 1107 and 1108 of the Bankruptcy Code. D. Seller desires to sell and Acquiror desires to purchase, pursuant to section 363(b) of the Bankruptcy Code, certain of the assets used by Seller in the conduct of the Business, and Seller desires to assume and assign to Acquiror and Acquiror desires to accept, pursuant to section 365 of the Bankruptcy Code, certain of the executory contracts to which Seller is a party, all on the terms and subject to the conditions hereinafter set forth. E. Seller and Acquiror have determined to enter into this Agreement which, among other things, provides for Seller to sell, transfer and convey ("Transfer") to Acquiror, and Acquiror to purchase and acquire from Seller, all of the Assets (as hereinafter defined). NOW, THEREFORE, in consideration of the representations warranties, covenants and agreements set forth in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledges Acquiror and Seller hereby agree as follows: 1. DEFINITIONS 1.1 Definitions. The following terms used in this Agreement, shall have the following meanings: "Accounts" has the meaning set forth in Section 2.1(h). 1 "Acquiror" means Formosa Plastics Corporation, Delaware. "Acquisition Proposal" means a proposal relating to any merger, consolidation, business combination, sale or other disposition of one hundred percent (100%) of the Assets of the Seller pursuant to one or more transactions, or similar transaction involving one or more third parties and the Seller. "Affiliate" means, with respect to any Person, any other Person who is directly or indirectly controlling, controlled by or under common control with such Person. For the purposes of this definition, the term "control," when used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise. "Agreement" means this Asset Purchase Agreement, together with the Schedules and Exhibits hereto, by and between Seller and Acquiror. "Alternative Transaction" has the meaning set forth in Section 7.4. "Assets" has the meaning set forth in Section 2.1. "Assumed Contracts" has the meaning set forth in Section 2.1(d) "BCP" has the meaning set forth in Recital "B" "Bankruptcy Cases" has the meaning set forth in Recital "B" "Bankruptcy Code" has the meaning set forth in Recital "B" "Bankruptcy Court" has the meaning set forth in Recital "B" "Bankruptcy Laws" means the United States Bankruptcy Code, as amended, the Federal Rules of Bankruptcy Procedure, as amended, and the local rules of the Bankruptcy Court. "Beneficiary" has the meaning set forth in Section 2.5(d). "Bid Procedures Order" has the meaning set forth in Section 7.2. "Breakup Fee" has the meaning set forth in Section 7.4. "Business" has the meaning set forth in Recital "A." "Business Day" means any day that is not a Saturday, a Sunday or a day on which financial institutions in the City of New York, New York are permitted or required to close. "Closing" has the meaning set forth in Section 2.6. 2 "Closing Date" has the meaning set forth in Section 2.6. "Confidential Contracts" has the meaning set forth in Section 6. "Consent" means any consent, waiver, approval, order or authorization of, or registration, declaration or filing with or notice to, any Governmental Entity or other Person. "Customer Rebates" has the meaning set forth in Section 2.5(b)(_). "Debt" means any obligations for borrowed money. "Debtors" has the meaning set forth in Recital "B". "Earnest Money Deposit" has the meaning set forth in Section 2_(d). "Employees" means all individuals employed exclusively in the Operation of the Business immediately prior to the Closing. The Employees as of the date hereof are listed on Schedule 1.1. "Environmental Assessment" has the meaning set forth in Section 6.6. "Environmental Laws" means any Federal, Illinois, county or local statute, regulation or ordinance which relates to Hazardous Materials, pollution, pollutants, contaminant or the protection of the environment, including without limitation any governmental law, regulation, rule or ordinance relating to the generation, use, treatment, storage, transport, release, discharge, emission or disposal of Hazardous Materials, pollution, pollutants or contaminants, and shall specifically include the Clean Water Act, also known as the Federal Water Pollution Control Act, U.S.C.(S)1251 et. seq., as amended by the Water Quality Act of 198_, Publ. L. No. 100-4 (Feb.4, 1987), the Toxic Substances Control Act, 15 U.S.C.(S)2601 et. seq , the Clean Air Act, 42 U.S.C.(S)7401 et. seq., as amended, the Safe Drinking Water Act, 42 U.S.C. (S)300f et. seq, the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C.(S)9601 et. seq., the Superfund Amendment and Reauthorization Act of 1986 ("SARA"), Public Law 99-499, 100 Stat. 1613, the Solid Waste Disposal Act as amended by the Resource Conservation and Recovery Act ("RCRA") as amended by the Solid and Hazardous Waste Amendments of 1984, 42 U.S.C.(S) 6901 et. seq., the Occupational Safety and Health Act ("OSHA"), 29 U.S.C.(S) 651 et. seq., the Rivers and Harbors Act, 33 U.S.C.(S) 401 et. seq, and Illinois Environmental Protection Act, 415 ILCS 5/1 et. seq., and the rules and regulations promulgated thereunder pursuant to the foregoing statutes. "Equipment Charges" has the meaning set forth in Section 2.5(b)(iii). "Expense Reimbursement" means no more than Two Hundred Fifty Thousand Dollars ($250,000.00) of any and all actual expenses, costs, and other charges, including without limitation all legal, accounting and environmental consulting fees, due diligence costs, and other similar expenses, incurred by Acquiror in connection with and relating to the negotiation, execution and consummation of this Agreement, the sale transaction contemplated herein and all related actions; provided, however, this definition shall not include legal expenses incurred with respect to any adversarial proceedings against the Seller by Acquiror. 3 "General Partner" means BCP Management, Inc., a Delaware corporation, in its capacity as general partner of Seller. "Governmental Entity" means any Foreign or United States federal, state, local or municipal government, court, administrative agency or commission or other governmental or other regulatory authority or agency. "Hazardous Materials" means any waste or other substance including any mixture or solution that is listed, defined, designated, or classified as, or otherwise determined to be, hazardous, radioactive, or toxic or a pollutant or a contaminant under or pursuant to any Environmental Law, and specifically including petroleum and all derivatives thereof or synthetic substitutes therefor and asbestos or asbestos-containing materials. "Illiopolis Plant" means Seller's PVC Resins production facilities located on the Real Property. "Inventory" has the meaning set forth in Section 2.1(c). "Laws" means all applicable laws, regulations, rules, judgments, orders and decrees of Governmental Entities. "Lien" means, with respect to any property or asset, any mortgage, lien, claim, deed of trust, pledge, security interest, security agreement, guarantee, option, easement, servitude, right-of-way, encroachment, hypothecation, charge, obligation, restriction, interest, or any other encumbrance. "Material Adverse Effect" means such state of facts, event, change or effect as has had, or would reasonably be expected to have, a material adverse effect (i) on the businesses, results of operations, or financial condition of the Business taken as a whole, other than events, changes or developments relating to the economy in general or resulting from industry-wide developments affecting Persons in businesses similar to the Business, or (ii) on the ability of Seller to consummate the transactions contemplated by this Agreement. "Nonassignable Assets" has the meaning set forth in Section 3.1. "Non-Transferred Employees" has the meaning set forth in Section 6.4(c). "Order Authorizing Severance Plan" means the Order Authorizing Debtors and Debtors in Possession to Implement Key Employee Retention Bonus Plan and Severance Plan issued by the Judge in the Bankruptcy Cases on August 1, 2001. "PVC Resins" means polyvinyl chloride resins produced by Seller at the Illiopolis Plant. "Payee" has the meaning set forth in Section 2.5(d). "Payor" has the meaning set forth in Section 2.5(d). 4 "Permit" means any license, franchise, permit, application for permit, concession, approval or registration from, of or with a Governmental Entity required to own and/or operate the Illiopolis Plant as currently constituted. "Permitted Liens" means (i) Liens listed or described on Schedule 4.4. (ii) Liens related to Real Property Taxes not yet due or payable, and (iii) Liens that are created, suffered or assumed by Acquiror. "Person" means an individual, corporation, partnership, 1imited liability company, association, trust or other entity or organization, including without limitation, a Governmental Entity. "Production Schedule" has the meaning set forth in Section 6.10. "Proration Items" has the meaning set forth in Section 2.5(a). "Purchase Price" has the meaning set forth in Section 2.4(a). "Qualified Bid" means (i) this Agreement, or (ii) an Acquisition Proposal: (a) the value of which is equal to or greater than the Upset Price; (b) that has substantially the same terms and conditions as this Agreement (as determined in Seller's reasonable discretion); (c) that is accompanied by satisfactory evidence to Seller of committed financing or other ability to perform and a good faith cash deposit in the amount of One Million Dollars ($1,000,000.00), which is refundable, but only on the terms set forth in the Bid Procedures Order; (d) that does not contain due diligence, financing or other contingencies that would allow the Acquisition Proposal to be terminated prior to its closing except for such contingencies that are substantially similar to the contingencies set forth in this Agreement; and (e) such other conditions and requirements as set forth in the Bid Procedures Order. "Qualified Bidder" means (i) Acquiror; or (ii) any third party submitting a Qualified Bid. "Real Property" has the meaning set forth in Section 2.1(a). "Real Property Taxes" has the meaning set forth in Section 2.5(b)(iv). "Recipient" has the meaning set forth in Section 2.5(d). "Sale Order" has the meaning set forth in Section 7.3. 5 "Seller" means Borden Chemicals and Plastics Operating Limited Partnership, a Delaware limited partnership. "Severance Benefits" has the meaning set forth in Section 6.4(d) "Similar Employment" has the meaning set forth in Section 6.4(_). "Tangible Property" has the meaning set forth in Section 2.1(b). "Tangible Property Taxes" has the meaning set forth in Section 2.5(b)(v). "Tax Return" means any return, report, statement, information statement or similar document required to be filed with respect to taxes. "Transfer" has the meaning set forth in Recital "E." "Upset Price" has the meaning set forth in Section 7.2(c). "Utility Charges" has the meaning set forth in Section 2.5(b)(i). "Vendor Charges" has the meaning set forth in Section 2.5(b)(vi_). "Vendor Rebates" has the meaning set forth in Section 2.5(b)(vi) 2. PURCHASE AND SALE OF THE ASSETS AND LIABILITIES 2.1 Sale and Transfer of the Assets. Subject to the conditions to Closing set forth in Section 8 of this Agreement, at the Closing Seller will transfer to Acquiror all of the manufacturing facilities and assets owned by Seller and located at or attributable solely to the Illiopolis Plant or the Business and all of the research equipment owned by Seller and related to the Business located at Geismar, Louisiana or necessary for the continued operation of the Illiopolis Plant as more specifically described below (such assets being referred to as the "Assets"): (a) Real Property. The real property listed or described in Schedule 2.1(a) (the "Real Property"). (b) Tangible Property. All tangible property, plant and equipment, including without limitation, buildings, structures, fixtures, machinery, motor vehicles, furniture, computers, printers, tools, equipment, supplies, furnishings owned by Seller and related to the Business as currently conducted at the Illiopolis Plant including the research equipment related to the products manufactured at the Illiopolis Plant, all to the extent and only as set forth on Schedule 2.1(b) (collectively, the "Tangible Property"). (c) Inventory. All inventory of raw materials, work-in-progress, finished product and spare parts (the "Inventory") owned by Seller as of the Closing Date located at the Illiopolis Plant and/or at any offsite warehouses, consignment sites or other locations listed on Schedule 2.1(c) for use in connection with the Business. 6 (d) Contract Rights. To the extent transferable to Acquiror at Closing, all right, title and interest of Seller relating to the Business at the Closing in and to certain contracts, as set forth on Schedule 2.1(d), as amended pursuant to Section 6.9, (the "Assumed Contracts"). Acquiror will not assume or accept any of Seller's contract rights or contract obligations and liabilities other than those listed on Schedule 2.1 (d) and with respect to the Confidential Contracts, those contracts accepted by Acquiror pursuant to Section 6.9. (e) Permits. All Permits of Seller used in the operation of the Illiopolis Plant or otherwise necessary for the operation of the Business which are set forth on Schedule 2.1(e). (f) Intangible Assets. All intellectual property used in the conduct of or related to the Business including, without limitation, trademarks, trade names, know-how, patents, plant specific, or plant supported software subject to the terms of any license granted to Seller, goodwill associated therewith, licenses and sublicenses granted and obtained with respect thereto, and rights thereunder, remedies against infringements thereof, and rights to protection of interests therein under the laws of all jurisdictions, including items listed on Schedule 2.1(f). (g) Books and Records. All customer lists, customer files, technical service and product development records, environmental records, accounting records, engineering and maintenance files, vendor files, employee files, aging reports and associated records of the Accounts, production and shipping records and all other books and records of the Business except to the extent set forth in Section 2.2(b). (h) Accounts Receivable. All accounts receivable owned to Seller as of the Closing arising from the sale of PVC Resins produced by Seller at the Illiopolis Plant and that are not past due (i.e., not outstanding by more than fifteen (15) days beyond the payment terms of the Assumed Contracts) as of the Closing Date (the "Accounts"). (i) Research Equipment. All of the assets related to the research facility of the Business located at Geismar, Louisiana, all to the extent and only as set forth on Schedule 2.1(i). 2.2 The Excluded Assets. Seller shall not sell and Acquiror shall not purchase or acquire and the Assets shall not include: (a) Any cash or cash equivalents owned or held by Seller's bankruptcy estate; (b) Books and records of the General Partner, including but not limited to, minutes of meetings of directors and stockholders of the General Partner, tax returns and records, books of account and ledgers (except to the extent specifically relating to the Business and such other records having to do with Seller's organization (although access and the ability to copy these documents shall be made available to Acquiror; provided, that, Acquiror will pay all reasonable costs in connection therewith); (c) All accounts, notes and other receivables of the Seller (other than the Accounts); 7 (d) All prepaid expenses, advance payments, deposits and other similar assets including, without limitation, prepaid deposits with suppliers and utilities. (e) All of the (i) issued and outstanding stock of Mor_ochem, Inc, and (ii) equity interests of BEV Management, LLC owned by Seller; (f) All intracompany and intercompany accounts of Seller; (g) All claims of Seller against third parties (including, without limitation, (i) all claims of Seller arising from incidents occurring prior to the Closing Date, (ii) those claims not yet ascertained and/or liquidated and (iii) any avoidance or preference actions) relating to operations of the Business for the period prior to the Closing Date, except for such claims arising from Proration Items paid by Aquiror; (h) All right, title and interest in and use of any "Bord_n" name, Seller name and any derivative thereof including, without limitation, all trademarks service marks, trade dress, logos, domain names, trade names and corporate names in the United States and all other nations throughout the world except with respect to Acquiror's use of the existing inventory of packaging supplies at the Illiopolis Plant acquired by Acquiror; and (i) All intellectual property of Seller currently utilized in Seller's production facilities other than the Illiopolis Plant but only if not necessary for operation of the Business as currently operated (including, without limitation, all J.D. Edwards Labworks and Railtrac software and any shrink wrap licenses). 2.3 Liabilities. Subject to Section 3 and Section 2.5, at Closing, Seller will retain, and Acquiror will not assume, any liabilities of the Business, except for liabilities under Assumed Contracts which arise after the Closing Date. 2.4 Purchase Price. (a) In consideration of the sale, transfer, conveyance, assignment and delivery of the Assets, and in reliance upon the representations and warranties made herein by Seller, Acquiror shall pay to Seller a Purchase Price (together, the "Purchase Price") comprised of the sum of the following amounts: (i) Fifteen Million Dollars for all Assets other than Inventory and Accounts; (ii) an amount not to exceed $11,300,000 (which amount is comprised of $6,900,000 for finished product inventory, $2,000,000 for raw material inventory and $2,400,000 for spare parts inventory) for any Inventory actually accepted by Acquiror pursuant to Section 2.4(b); (iii) an amount not to exceed $8,700,000 for the Accounts actually accepted by Acquiror under Section 2.4(c), and (iv) the costs of severance payments to be made to the Non-Transferred Employees calculated pursuant to Section 6.4(d); provided that such total amount shall be reduced by any adjustments pursuant to Section 8.3(f). The total Purchase Price based on the above, if Acquiror elects to purchase Inventory of $11,3000,000 and Accounts of $8,700,000 shall be Thirty Five Million Dollars ($35,000,000) plus the severance costs identified above. The Purchase Price shall be paid to the Seller at Closing by wire transfer. Except as set forth in this Agreement, the Purchase Price shall not be subject to offset, counterclaim or deduction of any type or kind. 8 (b) On the day immediately prior to the Closing Date, seller shall cause a physical inventory of the Inventory as of the Closing Date to be taken using the individuals employed in the Business and shall prepare a report which shall be delivered to Acquiror. Such physical inventory will be observed by representatives of Acquiror. The report to be rendered on the physical inventory shall be based upon procedures reasonably acceptable to Seller and Acquiror. Acquiror may, in its sole discretion, reject and the Seller shall retain any Inventory and the value of such Inventory shall be removed from the Inventory valuation report. Such rejected Inventory will remain Seller's property and shall be removed at Seller's expense from the Illiopolis Plant within thirty (30) days following Closing. The value of the Inventory, determined in accordance with this Section 2.4(b), as mutually, agreed to between the parties, will be definitive for purposes of valuing the Inventory in connection with determining the Purchase Price. In the event Seller and Acquiror are unable to agree on the valuation of the Inventory before Closing then Buyer may reject and Seller shall retain such disputed inventory. The fees, costs and expenses of conducting such physical inventory and preparing the report, shall be borne equally by Seller and Acquiror. To facilitate continuous operation of the Illiopolis Plant after Closing, if Closing is scheduled to occur on or before April 15, 2002, Seller shall have a minimum of 14 days of inventory of VCM and VAM either at the Illiopolis Plant or on route to the Illiopolis Plant based on current finished product production volumes (of which 7 days of inventory shall be located at the Illiopolis Plant). Notwithstanding anything in this Section to the contrary, Buyer agrees to irrevocably purchase at Closing all such VCM and VAM inventory at the contracted third party price. (c) On the day immediately prior to the Closing Date, Seller and Acquiror shall mutually determine the book value of the Accounts as of the Closing Date and Acquiror shall determine, in its sole discretion, which Accounts it will accept. Any Accounts that Acquiror decides not to accept shall remain the property of the Seller. Such agreeement shall be definitive for purposes of valuing the Accounts in connection with determinig the Purchase Price. (d) Within three (3) Business Days from the date of ____ signature of this Agreement, Acquiror will place into escrow earnest money in the amount of One Million Dollars ($1,000,000.00) (the "Earnest Money Deposit") pursuant to the requirements of the Bid Procedures Order. Such Earnest Money Deposit, together with all interest earned thereon, shall not constitute an asset of the Debtors or their estates and shall be held in trust and escrow in a separate interest bearing account containing no other funds of Debtors pursuant to a Trust and Escrow Agreement substantially in the form set forth in Schedule 2.4(d) pending the Closing. The amount of the Earnest Money Deposit, together with all interest earned thereon, shall be credited against the Purchase Price at Closing. 2.5 Prorations. (a) At Closing, Utility Charges (to the extent that meter readings cannot be obtained on the Closing Date), Equipment Charges, Real Property Taxes, Tangible Property Taxes, Customer Rebates, Vendor Charges, and Vendor Rebates, including, without limitation, accruals or prepayments thereof (all as individually defined below and collectively called the "Proration Items"), shall be prorated directly between the Seller and the Acquiror as provided in this Section 2.5. 9 (b) For purposes of this Agreement, the capitalized terms set forth below shall have the following meanings: (i) "Utility Charges" shall mean water, sewer, electricity, gas and other utility charges, if any, applicable to the Illiopolis Plant; (ii) "Customer Rebates" shall mean volume rebates, end-of- year discounts and similar matters offered by Seller to purchasers of PVC Resins under the Assumed Contracts which have not been paid as of Closing and which are properly allocated in part to a time period prior to Closing and in part to a time period after Closing based on the ratio of the volume and actual cost of such Customer Rebates before and after Closing (iii) "Equipment Charges" shall mean rental charges payable or receivable and other payments or receipts applicable to the equipment of the Business; (iv) "Real Property Taxes" shall mean ad velorem taxes imposed upon Seller with respect to the Real Property, general assessments imposed with respect to the Real Property and special assessments upon the Real Property; (v) "Tangible Property Taxes" shall mean ad velorem taxes imposed upon the Assets other than the Real Property; (vi) "Vendor Rebates" shall mean vendor rebates relating to the Business which are properly allocable in part to a time period prior to Closing and in part to a time period after Closing based on the ratio of the volume and actual cost of the applicable inventory purchases to Seller and Acquiror, net of all discounts and other purchase price adjustments of any type other than the actual vendor rebate itself; and (vii) "Vendor Charges" shall mean all obligations of Seller under the Assumed Contracts that are for goods, materials or services delivered to Seller or performed by the applicable vendor prior to the Closing Date, but have not been paid for by Seller as of the Closing Date. (c) All Utility Charges, Equipment Charges, Real Property Taxes, Tangible Property Taxes, Customer Rebates, Vendor Charges, and Vendor Rebates shall be apportioned through the Closing Date, with Seller being responsible for, and receiving the benefit of, all Proration Items attributable to the period prior to 11:59 P.M., Illinois time on the Closing Date, and Acquiror being responsible for, and receiving the benefit of all Proration Items attributable to the period after 11:59 P.M., Illinois time, on the Closing Date. As soon as practicable, but within ten (10) Business Days after the Closing Date, representatives of Seller and Acquiror will examine all relevant books and records of the Business, as of the Closing Date in order to make the determination of the apportionments. Payments in respect thereof shall be made to the appropriate party by check within seven (7) Business Days after such determination. To the extent certain Proration Items, such as Real Property Taxes and Tangible Property Taxes, are not known as of the Closing Date, apportionment shall be made on the basis of the best available evidence, such as the prior years' tax bills, and such estimated apportionment will be deemed final and conclusive. 10 (d) If either party (the "Payor") pays a Proration Item for which the other party (the "Payee") is obligated in whole or in part under this Section 2.5 the Payor shall present to the Payee evidence of payment and a statement setting forth the Payee's proportionate share of such Proration Item, and the Payee shall promptly pay such share to the Payor. If either party (the "Recipient") receives payments of a Proration Item to which the other party (the "Beneficiary") is entitled in whole or in part under this Agreement, the Recipient shall promptly pay such share to the Beneficiary. (e) If there exists as of the Closing Date any pending appeals of ad valorem tax assessments with regard to any Assets, the continued prosecution and/or settlement of such appeals shall be subject to the direction and control of Acquiror with respect to assessments for the year within which the Closing occurs. 2.6 Closing. Unless this Agreement has been terminated and the transactions contemplated under this Agreement have been abandoned pursuant to Section 9.__, and subject to the fulfillment or, if permitted, waiver of the conditions set forth in Section 8, the closing of the Transfer of the Assets (the "Closing") will take place on the tenth (10th) Business Day following the fulfillment or, if permissible, waiver of the conditions set forth in Section 8 unless another date or time is agreed to in writing by the parties to this Agreement (the "Closing Date"). The Closing will occur at the offices of the Acquiror in Wilmington, Delaware, at 10.00 A.M. on the Closing Date, with Closing to be effective as of 11:59 p.m., Delaware time, on the Closing Date. (a) At the Closing, Seller will deliver to Acquiror the following documents, duly executed as required: (i) a bill of sale conveying to Acquiror the Tangible Property, Inventory, Intangible Assets and Books and Records, subject only to the Permitted Liens; (ii) an assignment to Acquiror of the Assumed Contracts and the Accounts; (iii) a special warranty deed conveying to Acquiror title to the Real Property, subject only to the Permitted Liens; (iv) certificate of good standing of Seller, as of a date within thirty (30) days prior to the Closing Date, from the Secretary of State of Delaware; (v) incumbency and "bring-down" certificates from the secretary of the General Partner in a form reasonably satisfactory to Acquiror; and (vi) a copy of the Sale Order approving the Transfer free and clear of all Liens other than the Permitted Liens. (b) At the Closing, Acquiror will deliver to Seller the following documents, duly executed as required: (i) an agreement assuming the Assumed Contracts, (ii) certificate of good standing of Acquiror or its assignee, as of a date within thirty (30) days prior to the Closing Date, from the secretary of state of the state of incorporation or organization of Acquiror or its assignee, and (iii) incumbency and "bring down" certificates from the secretary of Acquiror or its assignee in a form reasonably satisfactory to Seller. (c) At the Closing, Acquiror will pay the Purchase Price, after receiving credit in the amount of the Earnest Money Deposit and all interest earned thereon and Seller's share of the Escrows Agent's fees, via wire transfer of immediately available funds to an account designated by Seller. 2.7 Limitation of Liability. ACQUIROR ACKNOWLEDGES AND AGREES THAT ACQUIROR AND ITS REPRESENTATIVES HAVE THE EXPERIENCE 11 AND KNOWLEDGE TO EVALUATE THE BUSINESS, FINANCIAL CONDITION AND LIABILITIES OF THE ASSETS; AND THAT, IN DETERMINING TO ACQUIRE THE ASSETS, ACQUIROR HAS MADE ITS OWN INVESTIGATION INTO, AND BASED THEREON, ACQUIROR HAS MADE ITS OWN INDEPENDENT JUDGMENT CONCERNING THE ASSETS. IT IS THEREFORE EXPRESSLY UNDERSTOOD AND AGREED THAT ACQUIROR ACCEPTS THE CONDITION OF THE ASSETS "AS IS, WHERE IS" WITHOUT ANY IMPLIED REPRESENTATION, WARRANTY OR GUARANTEE AS TO MERCHANTABILTY, FITNESS FOR A PARTICULAR PURPOSE OR OTHERWISE AS TO THE CONDITION, SIZE, EXTENT, QUANTITY, TYPE OR VALUE OF SUCH PROPERTY, EXCEPT ONLY AS MAY BE OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT AND SELLER AND ITS AFFILIATES INCLUDING, WITHOUT LIMITATION, THE GENERAL PARTNER, HEREBY EXPRESSLY DISCLAIM ANY AND ALL SUCH IMPLIED REPRESENTATIONS, WARRANTIES OR GUARANTEES. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, NONE OF SELLER OR ANY OF ITS AFFILIATES, INCLUDING, WITHOUT LIMITATION, THE GENERAL PARTNER MAKES ANY REPRESENTATIONS OR WARRANTIES WITH RESPECT TO (i) ANY INFORMATION OR DOCUMENTS MADE AVAILABLE TO ACQUIROR OR ITS COUNSEL, ACCOUNTANTS OR ADVISORS WITH RESPECT TO THE BUSINESS, THE ASSETS, THE ASSUMED LIABILITIES OR THE ASSUMED CONTRACTS OR (ii) EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE CONDITION OF THE ASSETS, INCLUDING, WITHOUT LIMITATION, THE ENVIRONMENTAL CONDITION AND COMPLIANCE WITH ANY ENVIRONMENTAL LAWS OR OTHER LAWS. 3. NONASSIGNABLE INTERESTS AND CURE PAYMENTS 3.1 To the extent that any Assumed Contract included in the Assets is not susceptible, under the Bankruptcy Code, of being validly assigned and transferred to Acquiror ("Nonassignable Assets") without Consent or that any such transfer or attempted transfer without such Consent would constitute a breach thereof, this Agreement shall not constitute a transfer thereof. With respect to such Nonassignable Assets, from and after the date of this Agreement, Seller will reasonably cooperate with Acquiror, to (i) obtain all Consents that are necessary for the valid transfer to Acquiror of all such Nonassignable Assets and (ii) establish at Acquiror's reasonable direction, a reasonable and lawful arrangement to provide to Acquiror the benefits of any such Nonassignable Assets. 3.2 Notwithstanding the foregoing, to the extent any such Assumed Contracts require payments of monies to cure any default or breach related to such Assumed Contracts, Acquiror shall be solely responsible for such payments, and any such payments in connection with this Section 3 shall not be deemed to constitute a portion of the Purchase Price. The amounts required to cure any default or breach related to such Assumed Contract are as listed in Schedule 3.2 hereof, 12 4. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby represents and warrants to Acquiror as follows: 4.1 Organization. Seller is a limited partnership duly formed, validly existing and in good standing as a limited partnership under the laws of its jurisdiction of organization. 4.2 Financial Statement. The unaudited, pro forma income statement of operations of the Business for the calendar year 2001 and for the period beginning on January 1, 2002 and ending on January 31, 2002, a copy of which has been delivered to Acquiror on February 22, 2002, fairly presents the results of the Business for such respective periods except where the failure to do so does not have a Material Adverse Effect. 4.3 Authority. Subject to the approval of the Bankruptcy Court, (i) the execution and delivery of this Agreement by Seller have been or will prior to closing be duly authorized by the Board of Directors of the General Partner and (ii) this Agreement is a valid and binding obligation of Seller, enforceable against it in accordance with its terms. 4.4 Real Property. Subject to Bankruptcy Court approval at the Closing Seller will convey to Acquiror by special warranty deed, fee simple title to the Real Property free and clear of all Liens except for Permitted Liens, as set forth in Schedule 4.4. The Real Property is currently in compliance with all land use laws including zoning laws and local ordinances. 4.5 Title to Other Assets. Subject to Bankruptcy Court approval, at the Closing Seller will convey to Acquiror title to the Assets other than the Real Property, free and clear of all Liens except for Permitted Liens. 4.6 Assumed Contracts. The Assumed Contracts furnished by Seller to Acquiror are true, correct and complete copies of the Assumed Contracts, as of the date hereof, together with all amendments or modifications thereto existing. There are no other agreements, oral or written, between Seller and the parties to the Assumed Contracts regarding the subject matter thereof, as of the date hereof. 4.7 No Violation of Laws or Permits. As of the date hereof, Seller is unaware of, and has received no notice from any Governmental Entity or Person asserting or alleging any actual violation of, any Laws or Permit with respect to the ownership or operation of the Assets, including, but not limited to, the Illiopolis Plant, except to the extent disclosed on Schedule 4.7 hereof. 4.8 Pending or Threatened Litigation. As of the date hereof, Seller is unaware of, and has not received any notice from any Person asserting any claim, lawsuit or action against Seller involving in any way the Assets, including but not limited to, the Illiopolis Plant, or the Assumed Contracts, except to the extent disclosed on Schedule 4.8 Hereof 4.9 Employees. Schedule 1.1 is true and complete as of the date hereof. As of the date hereof, there are no other Employees other than those listed on Schedule 1.1. 13 4.10 Employee Benefits. Schedule 4.10 is a true and complete list of all employee benefits and agreements covering the Employees. 4.11 Environmental Matters. Except as set forth on Schedule 4.11, or as would not reasonably be expected to have a Material Adverse Effect: (a) with respect to the operation of the Business and the ownership or operation of the Real Estate and Assets, the Seller is in compliance with all Environmental Laws; (b) the Seller maintains and is in compliance with all permits, licenses and other authorizations that are required pursuant to Environmental Laws for the operation of the Business or the ownership or operation of the Real Property and Assets; (c) the Seller has not received any written notice regarding any violation of Environmental Laws, or any liabilities arising under Environmental Laws, with respect to the operation of the Business or ownership or the ownership or operation of the Real Property and Assets except to the extent that any such alleged violation or liability has been resolved or satisfied more than three (3) years prior to the date hereof; (d) to the Seller's knowledge, with respect to operation of the Business or the ownership or operation of the Property and Assets, the Seller has not treated, stored, disposed of, arranged for or permitted the disposal of transported, handled, or released any Hazardous Materials, in a manner that has given rise to or would reasonably be expected to give rise to liabilities, including any liability for response costs, corrective action costs, personal injury, property damage, natural resource damages, pursuant to Environmental Laws; and (e) the Seller does not use, and has not used, any underground storage tanks (as defined under RCRA), and to Seller's knowledge and there are not now nor have there ever been any underground storage tanks on the Real Property. 4.12 Supply Contracts. Seller is not a party to any material supply contracts, service, warehousing, tolling, leasing or other contracts except for (i) those described on Schedules 2.1(d) and 6.9 and (ii) purchase orders in the ordinary course of business upon terms consistent with past practice. 4.13 Customer Contracts. Schedule 4.13 is a true and complete list of all customer contracts for the purchase of products manufactured primarily at the Illiopolis Plant and a list of customer purchasing on a spot basis within the past twelve (12) months, except for purchase orders from customers received by Seller in the ordinary course of business and which, in the aggregate are not material. 4.14 Sufficiency of Assets. The Assets, together with the contracts not assumed by Acquiror, the Employees not accepted by Acquiror and the Excluded Assets, represent all of the material Assets used in the operation of the Business as currently conducted. All of Seller's representations and warranties in this Section 4 will be deemed given as of the date hereof and at Closing (except to the extent modified or supplemented pursuant to Section 6.1 hereof). 14 5. REPRESENTATIONS AND WARRANTIES OF ACQUIROR. Acquiror hereby represents and warrants to Seller as follows: 5.1 Organization and Qualification. Acquiror is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware, qualified to do business in Illinois. 5.2 Authority. Acquiror has the requisite power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by Acquiror and the consummation by it of the transactions contemplated to be performed hereunder have been duly authorized by all necessary actions. This Agreement is a valid and binding obligation of Acquiror, enforceable against it in accordance with the terms hereof except as such enforceability may be limited by bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors' rights generally. 5.3 Conflicts and Defaults. Neither the execution and delivery of this Agreement by Acquiror nor the performance by Acquiror of the transactions contemplated hereby will, to Acquiror's knowledge, violate or constitute an occurrence of default under any provision of, or conflict with, or result in acceleration of any obligation under, or give rise to a right by any party to terminate its obligations under, any material contract, sales commitment, purchase order, security agreement, mortgage, conveyance to secure debt, note, deed, loan, Lien, lease, agreement, instrument, order, judgment, decree, or other arrangement to which Acquiror is a party or is bound. Acquiror is not in violation of any of its organizational documents. 5.4 Consents and Approvals. No consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Entity or any Person is required with respect to Acquiror in connection with the execution, delivery or performance by Acquiror of its obligations under this Agreement. 5.5 Disclosure of Information. Acquiror acknowledges that it or its representatives have been furnished with certain information regarding Seller and its businesses (including the Business and the Assumed Contracts) and assets (including the Assets). Acquiror acknowledges that, except as expressly set forth in this Agreement, none of Seller or any of its Affiliates, including without limitation, the General Partner has made any representation or warranty as to Seller's businesses, assets, results of operations or financial condition or the Business, Assets, Assumed Contracts or Assumed Liabilities. All representations and warranties, express or implied, of or on behalf of Seller and its Affiliates that are not expressly set forth in this Agreement are hereby waived and released. 5.6 Brokers and Finders. Neither Acquiror nor any of its directors, officers or employees has employed any broker or finder or incurred any liability for any brokerage fees, commissions or finders fees in connection with the transactions contemplated hereby. 5.7. Funds for the Acquisition. Acquiror has sufficient unencumbered funds to pay in cash the Purchase Price and all of its fees and expenses relating to this Agreement and the transactions contemplated hereby. 15 6. CERTAIN ADDITIONAL COVENANTS OF SELLER AND ACQUIROR 6.1 Disclosure Supplements. From time to time prior to the Closing (and subject to the rights of Acquiror to terminate this Agreement under Section 9.1(d)), Seller, by written notice to Acquiror, shall supplement or amend the representations and warranties made by Seller pursuant to Section 4 hereof and the Schedules to this Agreement with respect to any matter that may arise hereafter that (i) if existing or occurring at or prior to the date hereof, would have been required to be set forth or described in the Schedules to this Agreement, or (ii) is necessary to correct any information in the Schedules to this Agreement or in any representation and warranty of Seller which has been rendered materially inaccurate thereby. The written notice pursuant to this Section 6.1 will be deemed to have amended the appropriate Schedules and to have qualified the representations and warranties contained in Section 4. 6.2 Satisfaction of Conditions. (a) Each party to this Agreement shall use best reasonable efforts to satisfy promptly all conditions precedent to the obligations of such party to consummate the transactions contemplated by this Agreement. (b) Without limiting the generality of Section 6.2(a), each party shall use its best reasonable efforts (i) to obtain any licenses, permits, consents, approvals, authorizations, qualifications and orders of Governmental Entities (except the Bankruptcy Court) as are required in connection with the consummation of the transactions contemplated hereby and (ii) to effect all necessary registrations and filings. Subject to the terms and conditions hereof, Acquiror agrees to use its best efforts to take, or cause to be taken, all action and to do, or cause to be done, all other things necessary, proper or advisable to consummate and make effective the transactions contemplated by this Agreement no later than the Closing Date. (c) In connection with satisfying the conditions described in Section 6.2(b) hereof, each party shall be responsible for bearing the respective costs and expenses required to discharge their respective obligations hereunder. 6.3 Further Assurances. From and after the Closing, each of Seller and Acquiror shall execute and deliver, in the name and on behalf of Seller or Acquiror, as appropriate, any assignments or assurances and take and do, in the name and on behalf of Seller or Acquiror, as appropriate, any other actions and things reasonably necessary to carry out the intention of this Agreement. 6.4 Employee Matters. (a) Seller and Acquiror mutually agree that Acquiror has no obligation under this Agreement to offer employment to any of the Employees in connection with the acquisition of the Business. Seller acknowledges that the General Partner bears the full responsibility to comply with the provisions of the Worker's Adjustment Retraining and Notification Act, and to provide the Employees with all notices and other benefits required thereunder. 16 (b) Acquiror may decide to offer employment to a certain number of the Employees. In order to assist Acquiror in making such determination, immediately following the date hereof, Seller shall provide Acquiror with full access to the personnel files and records concerning the Employees, will make Seller's human resources professionals available to Acquiror for consultation concerning the Employees, and after the issuance of the Sale Order, will allow Acquiror to communicate directly with the Employees regarding possible employment following Closing. (c) No later than five (5) days prior to the Closing Acquiror will advise Seller in writing which Employees have been extended an offer of Similar Employment (as defined below) by Acquiror and which Employees have accepted an offer of employment, irrespective of whether such offer constitutes Similar Employment, with Acquiror. All Employees who qualify for severance benefits under Paragraph 6(d) through (i) of the Order Authorizing Severance Plans solely because either (i) they did not receive an offer of Similar Employment from Acquiror, or (ii) they did not accept an offer of employment with Acquiror irrespective of whether that offer constituted an offer of Similar Employment are herein referred to as "Non-Transferred Employees." For purposes hereof, "Similar Employment" means employment: (i) in the Illiopolis Plant; (ii) for substantially similar annual salary or hourly wage; (iii) requiring substantially similar weekly hours, if applicable; (iv) requiring substantially similar tasks and responsibilities; and (v) providing substantially similar health benefits retirement benefits that are substantially similar except with respect to seniority and vesting requirements. (d) The amount of the severance benefits for each Employee under the Order Authorizing Severance Plan is set forth on Schedule 6.4 ("Severance Benefits"). Seller and Acquiror agree that the calculation of the Severance Benefits set forth on Schedule 6.4 is final as between Seller and Acquiror for purpose of this Agreement. Concurrently with providing Seller the list of Employees to whom it has offered employment described in clause (c) above, Acquiror will calculate the Severance Benefits for the Non-Transferred Employees in accordance with Schedule 6.4 and provide Seller such calculation in writing. The amount of such Severance Benefits owed to the Non-Transferred Employees will be included and added to the price to be paid for the Assets to determine the Purchase Price pursuant to Section 2.4(a). However, Seller will be responsible for all Severance Benefits owed to the Non-Transferred Employees pursuant to the Order Authorizing Severance Plan and Acquiror will have no responsibility or obligation with respect to any of the Non-Transferred Employees. Except for the payment of such Severance Benefits, Acquiror shall assume no obligation or liability under any employee benefit plans of the Seller or Borden Inc., including, without limitation, the pension plan of Borden Inc., any 401(k) plan, and any medical, dental, disability or life insurance plans. (e) Seller covenants and agrees that it will neither hire any additional Person who would become an Employee hereunder, nor transfer any other existing employees of Seller to the Illiopolis Plant, without in either instance the prior written consent of the Acquiror. 6.5 Notice of Breaches. Seller will promptly, and in any event prior to the Closing, notify Acquiror in writing if Seller becomes aware prior to the Closing that any 17 representation or warranty made by Seller in this Agreement is inaccurate or untrue in any material respect. 6.6 Access to the Business, Books, Records and Personnel. (a) Following the date hereof, Seller shall provide Acquiror with access to the Illiopolis Plant and allow Acquiror to conduct an environmental compliance audit and an environmental assessment of the Illiopolis Plant in accordance with the procedures set forth by the American Society for Testing and Materials ("ASTM") in ASTM Designated Documents E1527-00 and E1903-97, regarding Phase I and Phase II site assessments, respectively, to permit Acquiror to evaluate both the nature and extent of environmental compliance and contamination, if any (collectively, the "Environmental Assessment") and a safety and health compliance audit of the Illiopolis Plant, at Acquiror's cost and expense and Acquiror covenants to (i) limit the scope of its Phase II site assessment to issues raised by the Phase I, (ii) provide Seller with the proposed scope of any Phase II site assessment, (iii) obey all applicable health and safety requirements with respect to the Phase I and Phase II assessments and (iv) provide Seller with a copy of all reports and analyses derived from the Environmental Assessment in accordance with Section 8.3(f). (b) Following the entry of the Sale Order, Seller shall, upon Acquiror's reasonable request, afford Acquiror and its authorized representatives access during normal business hours to the books, records and data of the Illiopolis Plant and the Business, as it is currently conducted at the Illiopolis Plant or other locations of Seller. Following the execution of this Agreement, Acquiror shall, upon reasonable request, fully cooperate with Seller or its successors and assigns and afford to Seller, its Affiliates, or its successors and assigns and their respective counsel, accountants and other authorized representatives, reasonable access with reasonable prior notice during normal business hours to the books, records and data of the Illiopolis Plant and the books, records and data located at Geismar, Louisian concerning the products manufactured at the Illiopolis Plant covering the period before Closing and grant Seller the right at its own expense to make copies thereof, to the extent reasonably necessary), and to the Illiopolis Plant, to the extent that such access may be reasonably requested by Seller and its Affiliates due to a claim by or against Seller that relates to the operation of the Illiopolis Plant by Seller prior to Closing (i) to facilitate the investigation, litigation or final disposition of any claim which may have been or may be made against any Seller or its successors and assigns or any of their Affiliates in connection with this Agreement, the Assets, the Assumed Contracts or the Business and (ii) to facilitate the preparation by Seller of materials necessary for any tax filing or audit. 6.7 Continued Operation and Maintenance. Between the date hereof and the Closing Date, Seller shall operate and maintain the Illiopolis Plant and other Assets in the same manner and fashion as the Illiopolis Plant and other Assets are currently being operated and maintained by Seller, reasonable wear and tear excepted. Seller will maintain all insurance in the same amounts with the same deductibles as are currently being maintained by Seller. Seller will make all repairs, replacements and modifications to the Illiopolis Plant between the date hereof and the Closing Date necessary to maintain the condition of the Illiopolis Plant in its current condition and will pay for the cost thereof, in full, prior to the Closing. Seller will promptly 18 notify Acquiror of any damage, casualty, breakdown of any of the facilities constituting the Illiopolis Plant. 6.8 Casualty and Condemnation. (a) Minor Damage. In the event of loss or damage, to the Illiopolis Plant as a result of any casualty or condemnation under the provisions of eminent domain law after the date hereof but prior to the Closing Date, which loss or damage is not "major" (as hereinafter defined), this Agreement shall remain in full force and effect, provided (i) the Seller performs any repairs necessary to restore the Illiopolis Plant to its condition immediately prior to such casualty or taking, or (ii) at the Acquiror's option, in the event of a casualty, Seller assigns Acquiror its casualty insurance policy claim for such loss or damage and pays Acquiror the amount of any deductible under such policy and, in the event of a condemnation, the Seller shall assign to the Acquiror its rights to any condemnation awards resulting from such condemnation. In the event that the Acquiror elects to cause Seller to perform repairs upon any of the Illiopolis Plant, the Seller shall complete such repairs promptly prior to the Closing Date, and, if necessary, the Closing Date shall be extended a reasonable time in order to allow for the completion of such repairs. (b) Major Damage. In the event of a "major" loss or damage or condemnation, the Acquiror may terminate this Agreement by written notice to the Seller, in which event the Earnest Money Deposit, with interest, shall be promptly returned to the Acquiror, and the parties shall have no further liability or obligation hereunder. If the Acquiror fails to elect to terminate this Agreement within twenty (20) days after the Seller sends the Acquiror written notice of the occurrence of major loss or damage or condemnation with a reasonably detailed description thereof, then the Acquiror shall be deemed to have elected to proceed with Closing, in which event the Seller shall have no obligation to repair or replace any damage or destruction caused by the foregoing, but the following shall apply at the Closing: (1) in the event of a casualty, Seller shall assign to Acquiror its casualty insurance policy claim for such loss or damage and pay Acquiror the amount of any deductible under such policy and; and (2) in the event of a taking, the Seller shall assign to the Acquiror its rights to any condemnation proceeds resulting from such taking. (c) Definition of "Major" Loss or Damage. For purposes of this Section 6.8, "major" loss or damage or condemnation refers to the following: (1) loss or damage to the Illiopolis Plant or any portion thereof such that the cost of repairing or restoring same to a condition substantially identical to that existing prior to the event of damage would be, in the opinion of a general contractor mutually acceptable to the Seller and the Acquiror, equal to or greater than an amount equal to $1,000,000, and (2) any loss due to a condemnation which materially impairs the current use, access to or value of the Illiopolis Plant. 6.9 Selection of Confidential Contracts. Within five (5) Business Days after the Bankruptcy Court has authorized the disclosure to Acquiror of certain contracts designated as confidential on Schedule 6.9 (the "Confidential Contracts"), Seller covenants to provide Acquiror with true, complete and correct copies of each Confidential Contract together with all amendments or modifications thereto existing in accordance with the Bankruptcy Court's order or instruction concerning such disclosure. Acquiror will have five (5) Business Days thereafter 19 to select, in its sole discretion, whether Acquiror wishes to assume and accept the applicable Confidential Contract as an Assumed Contract hereunder. On or before the expiration of such five (5) day period, Acquiror will notify Seller, in writing, of whether it has chosen to assume and accept the applicable Confidential Contract as an Assumed Contract and Schedule 2.1(d) shall be amended to include each accepted Confidential Contract which shall then constitute an Assumed Contract for all purposes hereunder. 6.10 Illiopolis Plant Volume. Within three (3) Business Days after the Sale Order is signed, Seller will supply Acquiror with a schedule showing by customer (identified by name) the billing and payment history and volume of PVC Resins produced at and sold from the Illiopolis Plant each month during the period from January 2001, to the month preceding the date of the Sale Order (the "Production Schedule"). Five (5) Business Days before Closing, Seller will update the Production Schedule for the period from the entry of the Sale Order through the date of the updated Production Schedule. 6.11 Cooperation. Following the date the Sale Order is issued and up to and including the Closing Date, Seller will assist Acquiror in facilitating a smooth transition of ownership and operation of the Illiopolis Plant, including providing Acquiror's engineers with the information listed on Schedule 6.11, to the extent available. 6.12 No Transfer of Assets. Between the date hereof and the Closing Date, Seller will not transfer or remove any of the Assets physically located at the Illiopolis Plant (except for sales of Inventory in the ordinary course of business), unless Seller shall (i) replace such Asset with a similar Asset in substantially the same condition or (ii) use any insurance proceeds from such Asset to acquire another Asset or series of Assets with an aggregate fair market value no less than the value of the original Asset. 6.13 Geismar, Louisiana. For a period of sixty (60) days following Closing, Seller shall provide access to the research equipment related to the Business located at Geismar, Louisiana and cooperate with Acquiror in the packaging, removal and shipment of such equipment at Acquiror's expense. 6.14 Computer Access. For a period of sixty (60) days following the Closing Date, Seller shall provide access to Acquiror to the information systems equipment and software located at Geismar, Louisiana and cooperate with Acquiror, at Acquiror's consent, in transitioning computer support services for the Illiopolis Plant to Acquiror's computer system. 6.15 Borden Environmental Indemnity. Seller shall cooperate with Acquiror to extend to Acquiror the full benefit of the Environmental Indemnity Agreement between Seller and Borden, Inc. dated November 30, 1987 and Environmental Indemnity Agreement - Illiopolis between Seller and Borden, Inc. dated July 28, 1999 and shall take any action and sign any documents reasonably requested by Acquiror to achieve the same. 6.16 Alternative Transaction Provisions. (a) Seller shall be entitled to consider Acquisition Proposals from third parties consistent with its fiduciary obligations as a debtor in possession in the Bankruptcy 20 Cases; provided that, Seller shall require that any such Acquisition Proposal be made by a Qualified Bidder. (b) Acquiror acknowledges and agrees that: (i) Seller must, in connection with obtaining the Sale Order, solicit bids for the Assets pursuant to a Bid Procedures Order; (ii) such solicitation is not a breach of this Agreement; and (iii) if the Sale Order authorizes a sale of the Assets to a purchaser or purchasers other than Acquiror, Acquiror shall keep open its offer under this Agreement for twenty (20) calendar days after the conclusion of the auction contemplated by the Bid Procedures so long as a Closing with Acquiror occurs within such twenty (20) calendar day period. 6.17 Broker and Finders. Seller agrees to promptly pay all broker or finders fees for any persons or entities employed, retained or used by Seller or its Affiliates relating to this Agreement and the transactions contemplated hereby. 7. BANKRUPTCY COURT APPROVAL 7.1 Approval. Seller and Acquiror acknowledge that, under the Bankruptcy Laws, this Agreement and the sale of the Assets are subject to Bankruptcy Court approval. Seller and Acquiror acknowledge that to obtain such approval, Seller must demonstrate that it has taken reasonable steps to obtain the highest and best price possible for the Assets, including, but not limited to, giving notice of the transactions contemplated by this Agreement to creditors and other interested parties as ordered by the Bankruptcy Court, providing information about the Business to responsible bidders, entertaining higher and better offers from Qualified Bidders and, if necessary, conducting an auction. 7.2 Bid Procedures Motion and Order. Promptly after the date this Agreement has been executed by Acquiror, but in any event no later than three (3) Business Days after the date this Agreement has been executed by Acquiror, Seller shall file with the Bankruptcy Court a motion, together with appropriate supporting papers and notices, all in a form and substance reasonably satisfactory to Acquiror, seeking the entry of an order, pursuant to Chapter 11 of the United States Bankruptcy Code Sections 105, 363 and 365, authorizing and approving, inter alia, the following (the "Bid Procedures Order"): (a) the Breakup Fee as set forth herein in Section 7.4; (b) a bid deadline for Qualified Bids of at least five (5) Business Days prior to the hearing on the sale motion as set forth in Section 7.3; (c) a requirement that only Qualified Bids whose fair market value is at least One Million Seven Hundred and Fifty Thousand Dollars ($1,750,000.00) greater than the Purchase Price (the "Upset Price") shall be considered at the auction; 21 (d) a requirement that at the auction each incremental Qualified Bid after the initial Qualified Bid (which shall be equal to or greater than the Upset Price) shall be at least Five Hundred Thousand Dollars ($500,000.00) more than each prior Qualified Bid; provided, however, that each incremental bid by Acquiror shall be deemed a higher and better offer if the amount of Acquiror's incremental bid plus the amount of the BreakUp Fee exceeds the prior competing Qualified Bid by at least Five Hundred Thousand Dollars ($500,000.00); (e) copies of any Qualified Bids shall be promptly provided to the Acquiror; (f) the auction, if necessary, shall be held within two (2) business days prior to the hearing on the sale motion as set forth in Section 7.3; (g) auction procedures for the Auction which shall require, inter alia, incremental bid requirements as set forth in Section 7.2(c); and (h) such other terms all in a form and substance reasonably satisfactory to the Acquiror. The Seller shall obtain Bankruptcy Court approval at a hearing and the entry of the Bid Procedures Order on or before March 13, 2002. Because time is of the essence, any delay or failure to have the Bid Procedures Order entered shall constitute a material breach of this Agreement only if (i) the Bid Procedures Order is not entered by April 25, 2002, (ii) the Bankruptcy Court enters any other order regarding the sale of the Assets, or (iii) the Bankruptcy Court denies entry of the Bid Procedures Order. 7.3 Sale Motion. Contemporaneously with the filing of the motion seeking entry of the Bid Procedures Order, Seller shall file with the Bankruptcy Court a motion, together with appropriate supporting papers and notices, all in a form and substance reasonably satisfactory to Acquiror, seeking the entry of an order, pursuant to Chapter 11 of the United States Bankruptcy Code Sections 105, 363 and 365, containing, providing, authorizing and approving, inter alia, the following (the "Sale Order"): (a) this Agreement; (b) the conveyance of the Assets to Acquiror free and clear of all Liens (except the Permitted Liens) pursuant to Section 363(f) of the Bankruptcy Code on the terms and conditions set forth herein; (c) that the stay contained at Rule 6004(g) of the Federal Rules of Bankruptcy Procedure shall not apply and that the Sale Order shall be effective and enforceable immediately upon entry; (d) a finding that Acquiror has acted in "good faith" within the meaning of Section 363(m) of the Bankruptcy Code; 22 (e) that this Agreement and the conveyance of the Assets on the terms and conditions set forth herein shall be exempt from all sales, use, transfer (including without limitation, documentary transfer, stamp and like taxes) and similar taxes pursuant to Section 1146 of the Bankruptcy Code; and (f) such other terms all in a form and substance reasonably satisfactory to the Acquiror. The Seller shall obtain Bankruptcy Court approval at a hearing and the entry of the Sale Order on or before March 31, 2002. Because time is of the essence, any delay or failure to have the Sale Order entered shall constitute a material breach of this Agreement only if (i) the Sale Order is not entered by April 30, 2002, (ii) the Bankruptcy Court enters any other order regarding the sale of the Assets, or (iii) the Bankruptcy Court denies entry of the Sale Order. 7.4 Breakup Fee; Expense Reimbursement. Pursuant to the Bid Procedures Order, in the event that some or all of the Assets are sold, conveyed or otherwise transferred to any other entity or Person, other than the Acquiror (the "Alternative Transaction"), in addition to the return of the Earnest Money Deposit and all interest earned thereon to Acquiror pursuant to Section 9.2, the Seller shall pay Acquiror the sum of One Million Two Hundred Fifty Thousand Dollars ($1,250,000.00) (the "Breakup Fee"). The Breakup Fee shall be paid to Acquiror by wire transfer of immediately available funds to an account designated by Acquiror or its designee within two (2) Business Days after the closing of the Alternative Transaction. Acquiror's right to payment of the Breakup Fee described in this Section shall have a super-priority administrative claim status in the Bankruptcy Cases pursuant to Sections _05 and 507(b) of the Bankruptcy Code, senior to all other priority and super-priority administrative expense claims (except for the claims of the Seller's debtor-in-possession lenders and any claim under the carve-out from such lenders' collateral as provided for in any order authorizing such debtor-in- possession financing entered in the Bankruptcy Cases), and Acquiror shall be entitled to apply to the Bankruptcy Court for specific performance of this Section in the event that Seller fails to pay Acquiror. 8. CONDITIONS TO THE TRANSFER 8.1 Conditions to the Obligations of Each Party. The obligations of Seller and Acquiror to consummate the Transfer of the Assets are subject to the satisfaction of the following conditions: (a) no judgment, injunction, order or decree shall prohibit the consummation of the Transfer of the Assets or the transactions contemplated under this Agreement; and (b) the Sale Order approving this Agreement and the sale of the Assets to Acquiror hereunder shall have been obtained. 8.2 Conditions to the Obligations of Seller. The obligation of Seller to consummate the Transfer of the Assets is subject to the satisfaction (or written waiver by Seller) of each of the following further conditions: 23 (a) Acquiror shall have performed and complied within all material respects all obligations and covenants required to be performed or complied with by it under this Agreement at or prior to the Closing Date and Seller shall have received a certificate signed by an executive officer of Acquiror on behalf of Acquiror to the foregoing effect; (b) the representations and warranties of Acquiror contained in Section 5 of this Agreement and in any certificate or other writing delivered by Acquiror pursuant to this Agreement shall be true in all material respects at and as of the Closing Date as if made at and as of such time (other than representations and warranties made as of a specific time or date which shall have been true at and as of such time or date) and Seller shall have received a certificate signed by an executive officer of Acquiror on behalf of Acquiror to the foregoing effect; and (c) the Bid Procedures Order and the Sale Order shall have been timely entered by the Bankruptcy Court as provided in Section 7 and such orders shall contain the provisions set forth under the respective definition of each such order pursuant to this Agreement and shall otherwise be in form and substance reasonably satisfactory to Acquiror. Any motion for rehearing or reconsideration of the Bid Procedures Order or the Sale Order shall have been denied or withdrawn, and the time allowed for appeals of the Bid Procedures Order or the Sale Order shall have expired without any appeal having been taken or, if the Bid Procedures Order or the Sale Order shall have been appealed, no stay shall be in effect. 8.3 Conditions to the Obligations of Acquiror. The obligation of Acquiror to consummate the Transfer of the Assets and the assumption of the Assumed Contracts is subject to the satisfaction (or written waiver by Acquiror) of each of the following further conditions: (a) Seller shall have performed and complied within all material respects all obligations and covenants required to be performed or complied with by it under this Agreement at or prior to the Closing Date and Acquiror shall have received a certificate signed by an executive officer of the General Partner on behalf of Seller to the foregoing effect; (b) The representations and warranties of Seller contained in this Agreement and in any certificate or other writing delivered by Seller pursuant to this Agreement shall be true in all material respects at and as of the Closing Date as if made at and as of such time (other than inaccuracies that in the aggregate would not have a Material Adverse Effect and other than representations and warranties made as of a specific time or date which shall have been true at and as of such time or date) and Acquiror shall have received a certificate signed by an executive officer of Seller on behalf of Seller to the foregoing effect; and (c) All relevant Government Entities shall have approved the transfer of all the Permits from Seller to Acquiror or, in lieu thereof, issued new Permits upon substantially the same terms and conditions to Acquiror; (d) The Illiopolis Plant shall be in substantially the same condition that it is in as of the date hereof, reasonable wear and tear excepted; 24 (e) Acquiror shall have obtained a title commitment reasonably acceptable to Acquiror covering the Real Estate with no Liens other than Permitted Liens and subject to Acquiror's reasonable satisfaction that the Liens listed on Schedule 4.4 do not materially adversely affect the operation of the Illiopolis Plant; (f) The Motion of Congoleum requesting authority to cancel with Seller filed in the Bankruptcy Cases on January 28, 2002 is either: (i) denied with prejudice and such contract has not otherwise terminated; or (ii) granted in which case the Purchase Price shall be reduced by Three Million Dollars ($3,000,000.00), and all material contracts listed on Schedule 6.9 are assignable to Acquiror or BCP has obtained the third party consent to such assignment or the Bankruptcy Court has ordered such assignment; (g) Acquiror shall be satisfied in its discretion, which shall not be arbitrary and capricious, with the results of the Environmental Assessment and the safety and health compliance audit of the Illiopolis Plant conducted by Acquiror pursuant to Section 6.6 hereof. This condition shall be deemed satisfied unless Acquiror notifies Seller, in writing, that it is not satisfied with the results of such Environmental Assessment or safety and health compliance audit and provides Seller with a copy of the Environmental Assessment and safety and health compliance audit no later than March 31, 2002; provided, that if Acquiror decides, and Seller agrees, that initial or additional Phase II assessment is required to identify environmental issues at the site then the above date shall be postponed until April 30, 2002. If Acquiror notifies Seller by the date set forth herein, then, unless both Seller and Acquiror have agreed in writing to a mutually acceptable solution, this Agreement shall terminate, the Earnest Money Deposit and accrued interest thereon will be returned to Acquiror, and neither party will have any further rights or obligations hereunder in accordance with Section 9.3; (h) Acquiror shall have obtained commitments from third parties to supply, on commercially reasonable terms, all raw materials necessary to continue operation of the Illiopolis Plant after Closing at the same production volumes as currently operated; and (i) the Bid Procedures Order and the Sale Order shall have been timely entered by the Bankruptcy Court as provided in Section 7 and such orders shall contain the provisions set forth under the respective definition of each such order pursuant to this Agreement and shall otherwise be in form and substance reasonably satisfactory to Acquiror. Any motion for rehearing or reconsideration of the Bid Procedures Order or the Sale Order shall have been denied or withdrawn, and the time allowed for appeals of the Bid Procedures Order or the Sale Order shall have expired without any appeal having been taken or, if the Bid Procedures Order or the Sale Order shall have been appealed, no stay shall be in effect. 9. TERMINATION; REMEDIES: 9.1 Termination. This Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Closing: (a) by mutual written consent of Seller and Acquiror; (b) by Seller, so long as Seller is not then in material breach of this Agreement, after May 15, 2002, if the Closing shall not have occurred on or before such date; 25 (c) by Seller for any reason for which terminations by Seller is authorized pursuant to the Bid Procedures Order; (d) by Acquiror, provided it is not in material breach of any of its obligations under this Agreement, if Seller corrects any representation or warranty pursuant to Section 6.1 and the corrected warranty or representation has a Material Adverse Effect on the Business, if the circumstances described in Section 6.8 occur, or if any of the conditions set forth in Sections 8.1 and 8.3, except as provided for in Section 9.1(e), have not been fulfilled or waived before May 15, 2002, unless such fulfillment has been frustrated or made impossible by any act or failure to act of Acquiror; (e) by Acquiror, provided it is not in material breach of any of its obligations under this Agreement, if the Bid Procedures Order or the Sale Order is not entered by the Bankruptcy Court in a timely basis as set forth in Section 7; and (f) by Acquiror, provided it is not in material breach of any of its obligations under this Agreement, if in any of the Bankruptcy Cases an order is entered converting such case to a Chapter 7 proceeding, dismissing such case, appointing a Chapter 11 trustee in such case, or if the Seller files a plan of reorganization or liquidation of the Business which does not permit the sale of the Assets pursuant to this Agreement. 9.2 Effect of Termination. In the event of the termination of this Agreement pursuant to: (a) Section 9.1(a), The Escrow Agent shall return to Acquiror the Earnest Money Deposit, together with all interest earned thereon, within two (2) Business Days after this Agreement is terminated; (b) Sections 9.1(d),(e) and (f), Escrow Agent shall return to Acquiror the Earnest Money Deposit, together with all interest earned thereon, and the Seller shall pay to Acquiror the Expense Reimbursement within two (2) Business Days after this Agreement is terminated; or (c) Section 9.1(c), Escrow Agent shall return to Acquiror the Earnest Money Deposit, together with all interest earned thereon, and the Seller shall pay to Acquiror the Breakup Fee within two (2) Business Days after this Agreement is terminated. 9.3 Acquiror's right to the Earnest Money Deposit together with interest thereon shall not be considered an asset of Seller's estate and Acquiror's payment of the Expenses Reimbursement or Breakup Fee under Section 9.2 shall have a super-priority administrative claim status in the Bankruptcy Cases pursuant to Sections 105 and 507(b)of the Bankruptcy Code, senior to all other priority and super-priority administrative expense claims (except for the claims of the Seller's debtor-in-possession lenders and any claim under the carveout from such lenders' collateral as provided for in any order authorizing such debtor-in-possession financing entered in the Bankruptcy Cases), and Acquiror shall be entitled to apply to the Bankruptcy Court for specific performance of this Section in the event that Seller is in breach. Following such termination, this Agreement, except for the provisions of Sections 12.4, 12.7 and 12.9, shall forthwith become null and void and have no effect, without any liability on 26 the part of either party or their respective directors, officers or stockholders. The aforesaid provisions shall survive such termination for the longest period legally permissible. Nothing in this Section 9 shall, however, relieve either party to this Agreement of liability for breach of any provision of this Agreement which specifically survives termination hereunder. 9.4 Remedies. (a) In the event all of the conditions set forth in Sections 8.1 and 8.2 have been satisfied, and this Agreement has not been terminated pursuant to Section 9.1, if Seller refuses or fails for any reason to close the Transfer of the Assets in accordance with the terms of this Agreement, Acquiror shall have the right at its option to either (i) obtain specific performance of Seller's obligations hereunder, or (ii) receive its Earnest Money Deposit and all interest earned thereon and have Seller pay the Expense Reimbursement. Acquiror's right to such payment described in this Section shall have a super-priority administrative claim status in the Bankruptcy Cases pursuant to Sections 105 and 507(b) of the Bankruptcy Code, senior to all other priority and super-priority administrative expense claims (except for the claims of the Seller's debtor-in-possession lenders and any claim under the carve-out from such lenders' collateral as provided for in any order authorizing such debtor-in-possession financing entered in the Bankruptcy Cases), and Acquiror shall be entitled to apply to the Bankruptcy Court for specific performance of this Section in the event that Seller is in breach. (b) In the event all of the conditions set forth in Sections 8.1 and 8.3 have been satisfied, and this Agreement has not been terminated pursuant to Section 9.1, if Acquiror refuses or fails for any reason to close the Transfer of the Assets in accordance with the terms of this Agreement, Seller shall have the right, as its sole remedy, to retain the Earnest Money Deposit, with all interest earned thereon, as liquidated damages. (c) Neither party shall be liable to the other party for any incidental, consequential, special, exemplary or punitive damages with respect to any matter related to or arising out of the breach or delay in the performance of this Agreement. 10. TAX MATTERS 10.1 Transfer Taxes. Except to the extent set forth in the Sal__ Order, Seller shall be responsible for the payment of all state, local, provincial and municipal transfer taxes (and all recording or filing fees) resulting from the transactions contemplated by this Agreement (including taxes based on the income of Seller). 11. NO SURVIVAL 11.1 Survival of Representations and Warranties. Except as herein specifically provided, the several representations and warranties of the parties contained in this Agreement (or in any document delivered in connection herewith) will terminate upon the Closing. The several covenants of the parties contained in this Agreement (or in any document delivered in connection herewith) will remain operative and in full force and effect without any time limitation, except as any such covenant will be limited in duration by the express terms hereof. 27 12. MISCELLANEOUS 12.1 Entire Agreement. This Agreement, including the Schedules to this Agreement, constitute the entire agreement of the parties to this Agreement with respect to the subject matter hereof and thereof and supersede all prior agreements and undertakings, both written and oral, with respect to the subject matter hereof and thereof. 12.2 Notices. All notices, requests and other communications to any party hereunder shall be in writing (including facsimile) and shall be given if to Seller to: Borden Chemicals and Plastics Operating Limited Partnership Hwy. 73 Geismar, Louisiana 70734 Facsimile: (225) 673-0626 Attention: Mark J. Schneider with a copy to: Jones, Day, Reavis & Pogue 3500 SunTrust Plaza 303 Peachtree Street, N.E. Atlanta, Georgia 30308 Facsimile: (404) 581-8330 Attention: Neil P. Olack, Esq. and: Goldberg, Kohn, Bell, Black, Rosenbloom & Moritz 55 E. Monroe Street Suite 3700 Chicago, Illinois 60603 Facsimile: (312) 332-2196 Attention: Alan P. Solow, Esq. and Dimitri G. Karcazes, Esq. if to Acquiror to: Formosa Plastics Corporation, Delaware 9 Peach Tree Hill Road Livingston, NJ 07039 Attention: Robert Chou, Vice President & General Manager Facsimile: (973)-716-7483 with a copy to: Klett Rooney Lieber & Schorling The Brandywine Building 28 1000 West St. - Suite 1410 Wilmington, DE 19801 Attention: Mark 1. Gundersen, Esq. Facsimile: (302)-552-4295 or such other address or facsimile number as such party may hereafter specify for such purpose by notice to the other party to this Agreement. Each such notice, request or other communication shall be effective (i) if given by facsimile transmission, when such facsimile is transmitted to the facsimile number specified in this Section 12.2 and the appropriate confirmation is received, or (ii) if given by any other means, when delivered at the address specified in this Section 12.2. 12.3 Amendments: No Waivers. (a) Any provision of this Agreement may be amended or waived prior to the Closing Date if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by Seller and Acquiror or in the case of a waiver, by the party against whom the waiver is to be effective; provided, that, any amendment or waiver of any provisions of this Agreement by Seller shall require prior approval of Fleet Capital Corporation, as agent for certain financial lenders. (b) No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. 12.4 Expenses. Except as otherwise provided in this Agreement, all costs and expenses incurred in connection with this Agreement shall be paid by the party incurring such cost or expense. 12.5 Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties to this Agreement and their respective successors and assigns, provided that, Acquiror may not assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the consent of Seller, except to an Affiliate of Acquiror; provided that, such Affiliate agrees in writing to be bound by the terms of this Agreement on a joint and several basis with Acquiror. Notwithstanding anything contained in this Agreement to the contrary, nothing in this Agreement, expressed or implied is intended to confer on any person other than the parties to this Agreement or their respective; successors and permitted assigns, any rights, remedies obligations or liabilities under or by reason of this Agreement. 12.6 Certain Interpretive Matters. (a) Unless the context otherwise requires, (i) all references in this Agreement to Sections, Articles or Schedules are to Sections, Articles or Schedules of or to this Agreement, (ii) each term defined in this Agreement has the meaning ascribed to it and (iii) words in the singular include the plural and vice versa. All references to "$" or dollar amounts will be to lawful currency of the United States of America. 29 (b) Titles and headings to Sections in this Agreement are inserted for convenience of reference only, and are not intended to be a part of or to affect the meaning or interpretation of this Agreement. No provision of this Agreement will be interpreted in favor of, or against, any of the parties to this Agreement by reason of the extent to which any such party or its counsel participated in the drafting thereof or by reason of the extent to which any such provision is inconsistent with any prior draft hereof or thereof. 12.7 Governing Law and Jurisdiction. This Agreement shall be construed in accordance with and governed by the internal substantive law of the State of Delaware regardless of the laws that might otherwise govern under principles of conflict of laws applicable thereto. This Agreement is also subject to any applicable order or act of the Bankruptcy Court. In the event either party shall institute a legal action as a result of the default in the other party's performance under this Agreement, any such action shall be brought exclusively in the Bankruptcy Court which shall retain exclusive jurisdiction with respect to the interpretation, performance, and enforcement of this Agreement. 12.8 Counterparts; Effectiveness. This Agreement may be executed in two or more counterparts (including by means of facsimile signature pages), all of which shall be considered one and the same agreement, and shall become effective when on or more such counterparts have been signed by each of the parties hereto and delivered to he other party (solely for purposes of effectiveness of this Agreement, such delivery may be in the form of facsimile signature pages). 12.9 Severability. If any term, provision, covenant or restriction of this Agreement is determined by a Governmental Entity to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement will remain in full force and effect and will in no way be affected, impaired or invalidated. [Remainder of page intentionally left blank) 30 IN WITNESS WHEREOF, the parties to this Agreement have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. SELLER: BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP By: BCP Management Inc., its General Partner By: Illegible ----------------------------------------- Name/Title: Illegible ------------------------------ President, Chief Executive Officer ACQUIROR: FORMOSA PLASTICS CORPORATION, DELAWARE By: ----------------------------------------- Name/Title: ------------------------------ IN WITNESS WHEREOF, the parties to this Agreement have __________ this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. SELLER: BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP By: BCP Management Inc., its General Partner By: ----------------------------------------- Name/Title: ------------------------------ ACQUIROR: FORMOSA PLASTICS CORPORATION, DELAWARE By: /s/ Illegible ----------------------------------------- Name/Title: ------------------------------ LIST OF SCHEDULES SCHEDULES 1.1 Employees 2.1(a) Description of Real Property 2.1(b) Description of Plant and Tangible Property 2.1(c) List of Offsite Warehouses 2.1(d) List of Assumed Contracts 2.1(e) List of Permits 2.1(f) List of Intangible Assets 2.1(i) List of Research Equipment 2.4(d) Form of Trust and Escrow Agreement 3.2 List of Cure Payments 4.4 Permitted Liens on Real Property 4.7 List of Violations of Laws or Permits 4.8 List of Pending or Threatened Litigation 4.10 Employee Benefits 4.11 Environmental Matters 4.13 Customer Contracts 6.4 Employee Severance Benefits 6.9 Confidential Contracts 6.11 Engineering and Mechanical Information SCHEDULE 1.1 - EMPLOYEES Exempt Employees Position Date of Employment 1. Allen, Penny Administration 1980 2. Davis, Gregory, L. Production 1972 3. Davis, Solange S. L. Administration 1989 4. Deluhery, Craig E. Administration 1991 5. Doddek, Robert L. Production 1996 6. Drabing, David E. Administration 1960 7. Dykes, John M. Administration 2000 8. Greisheirn, Myron R. Administration 1959 9. Havener, Randy W. Production 1976 10. Hernandez, Jeffrey A. Administration 2000 11. Hofferkamp, Steven F. Production 1967 12. Hughes, Brian L. Production 1994 13. Hurt, Thomas M. Production 1980 14. Jantrania, Sailesh B. Administration 1989 15. Johnston, Kathleen L. Administration 1998 16. LaCroix, Larry T. Production 1999 17. Laskowski, Rick A. Administration 1984 18. Lloyd, Kevin Production 1992 19. Lyons, Daniel Production 2000 20. Mandemach, Craig G. Administration 1993 21. Mathis, Michael B. Administration 1978 22. Moffett, David L. Production 1961 23. Peterson, Thomas B. Production 1988 24. Rogers, Donald D. Production 1977 25. Simmons, Daniel H. Production 1982 26. Simmons, Donald H. Production 1978 27. Singh, Anuranjan Administration 1998 28. Spencer, Martin T. Administration 1998 29. Sutton, Thomas W. Production 1969 30. Tague, Kenneth E. Administration 1987 31. Wardall, Dale E. Production 1998 32. Waymire, Joseph L. Administration 1991 Non Exempt Employees Position Date of Employment 1. Brawner, Brenda C. Administration 1994 2. Dudas, Delores A. Administration 1978 3. Floyd, Anna M. Administration 1978 4. Lourant, Marion M. Administration 1998 5. Mc Iver, Patricia A. Administration 1988 6. Mohn, Marcia Administration 2000 7. Rhodemann, Becky J. Administration 1994 8. Simmons, Vicky J. Administration 1978 Illiopolis Union Employees 1. Abbott, Alvin W. Operator 05/26/81 2. Adams, Donald L. Technician 09/27/67 3. Allen, Lyle E. Craft Worker 01/17/68 4. Anders, William L. General Helper 07/19/76 5. Anderson, Robert Operator 10/25/00 6. Ashton, Lewis R. Lead Worker 10/09/65 7. Ball, Lyle D. Lead Worker 08/03/70 8. Ball, Raymond L. Custodian Worker 03/01/69 9. Ballinger, Robert L. Semi-Skilled 11/17/87 10. Bambrough, Walter E. Semi-Skilled 09/30/75 11. Barrett, Kenneth L. Operator 09/18/90 12. Bartolazzi, Larry L. Semi-Skilled 08/25/69 13. Batchelder, Steven R. Operator 01/16/84 14. Bauman II, William H. Lead Worker 06/28/78 15. Bilbrey, Allen L. Operator 09/03/88 16. Birdwell, Cecil E. Operator 01/04/79 17. Blakeman, Terry L. Operator 02/09/68 18. Boehler, David L. Craft Worker 07/14/77 19. Bradshaw, Bradford A. Operator 07/29/81 20. Brown, Douglas J. Lead Worker 02/01/88 21. Brown, Rickey L. Operator 09/28/77 22. Bruce, Richard David Lead Worker 03/24/76 23. Carlson, Timothy J. Lead Worker 03/24/76 24. Chapman, Chester D. Operator 02/08/71 25. Clark, James R. Technician 12/06/78 26. Coe, Mark R. Operator 12/30/74 27. Collett, Katrina M. Operator 05/05/84 28. Courtney, John E. Semi-Skilled 09/30/65 29. Crouse, William L. Operator 09/05/78 30. Curtis, Kenton G. Operator 09/21/81 31. Daubs, Harold A. Technician 07/21/75 32. Davis, Richard M. Operator 05/23/83 33. Dennison, Gregory A. Operator 05/06/81 34. Donaldson, Troy A. Lead Worker 06/07/90 35. Drabing, Gregory L. Operator 09/01/87 36. Dyer, James R. Technician 05/16/77 37. Ealey, Louis E. Semi-Skilled 09/30/94 38. Epperson, Michael L. Lead Worker 08/11/75 39. Fitzgerald, Milo G. Operator 07/17/90 40. Fleck, William J. Technician 04/25/72 41. Floyd, Jimmy E. Semi-Skilled 11/04/67 42. Foster, Robert R. Operator 09/25/79 2 43. Gilbert, Harry D. Operator 09/02/83 44. Gill, Roger D. Operator 02/13/78 45. Goodrich, Kenneth E. Operator 05/03/94 46. Goodrich, Michael D. Operator 10/01/80 47. Graves, Larry L. Operator 05/04/84 48. Graves, William Operator 11/03/69 49. Green, Gary L. Semi-Skilled 05/25/78 50. Grohler, Everett G. Technician 05/21/71 51. Gutman, Scott W. Operator 01/31/00 52. Hagood, Steven C. Lead Worker 02/27/79 53. Hamilton, Wayne E. Operator 10/01/80 54. Hancock, Linda S. Technician 06/27/79 55. Hancock, Randy A. Operator 09/17/74 56. Hartwig, Douglas H. Semi-Skilled 07/23/74 57. Havener, Christopher Lead Worker 06/01/71 58. Hendrickson, Joseph A. Semi-Skilled 01/18/00 59. Hildebrandt, Michael Craft Worker 11/27/74 60. Hill, Brett Operator 2/11/02 61. Hill, Robert A. Semi-Skilled 11/26/74 62. Holloway, Leaster R. Lead Worker 11/01/97 63. Hughes, William T. Operator 01/12/95 64. Hunter, Mark D. Operator 02/16/76 65. Johnson, William L. Operator 06/18/77 66. Jordan, Alva E. Craft Worker 06/25/77 67. Jordan, Ron M. Operator 06/11/81 68. Judge, Robert G. Craft Worker 03/28/79 69. Jump, Jeffrey L. Operator 09/15/75 70. Kapper, Terry L. Operator 05/23/83 71. Karaianis, John T Operator 06/28/78 72. Karrick, David L. Semi-Skilled 01/07/70 73. Knobloch, Jason L. Operator 08/28/00 74. Lake, Kenneth L. Lead Worker 03/24/75 75. Lamb, Gary L. Semi-Skilled 11/15/65 76. LeBeane, Randy A. Operator 03/13/76 77. Lewison, Dean C. Lead Worker 02/16/76 78. Lyman, Glen D. Operator 09/11/79 79. Machalek, Joseph E. Operator 02/08/82 80. Mallory, Roger W. Operator 01/07/02 81. Maple, John A. Operator 10/10/01 82. Marler, Robert L. Operator 01/10/78 83. Marler, Verna L. Operator 05/04/84 84. Mast, William R. Operator 06/03/82 85. Matthews, Chad W. Operator 09/16/88 86. Maynard, David E. Operator 05/27/92 87. McConnell, Jr., Herman Semi-Skilled 03/30/90 88. McLaughlin, Robert L. Operator 10/20/79 3 89. Meister, Michael E. Operator 03/31/82 90. Merritt, Harold G. Operator 05/17/78 91. Merritt, Randy D. Operator 09/30/75 92. Mills, Ricky L. Operator 09/07/87 93. Minix, Vernon W. Semi-Skilled 08/26/98 94. Moffett Jr., John H. Lead Worker 09/03/59 95. Moffett, Jeff T. Semi-Skilled 07/02/87 96. Moore, John S. Operator 10/06/87 97. Morgan, Sherry L. Operator 12/27/94 98. Neilson, David Operator 03/12/98 99. Pickel, Donald W. Operator 06/18/83 100. Porter, Larry W. Operator 02/12/03 101. Pulliam, Ben Operator 09/01/87 102. Rachford, R. Timohy Operator 07/22/97 103. Radzimanowsky, John V. Operator 10/11/84 104. Reynolds, George M. Operator 03/23/94 105. Ridgeway, Gary L. Lead Worker 10/08/74 106. Ridgeway, Russell E. Technician 11/16/65 107. Rogers, David W. Lead Worker 10/29/79 108. Rohdeman, William E. Semi-Skilled 10/13/77 109. Scammahorn, Rickie L. Operator 11/20/74 110. Saulsberry, Harold C. Semi-Skilled 06/25/77 111. Saulsberry, Jerry D. Semi-Skilled 05/02/78 112. Sanders, Dennis, A. Operator 10/05/01 113. Schnepp, Harry W. Operator 10/19/78 114. Shanle, Chester B. Operator 07/24/74 115. Shartzer, Raymond F. Operator 06/07/77 116. Shears, Steven Lead Worker 09/16/87 117. Simpson, David S. Semi-Skilled 05/17/78 118. Sneed, Dennis H. Operator 02/18/84 119. Snyder, John R. Semi-Skilled 08/03/63 120. Stamm, Chad R. Operator 01/05/77 121. Steele, John L. Semi-Skilled 12/10/74 122. Stewart, Gary W. Lead Worker 05/17/78 123. Stewart, Gerald L. Semi-Skilled 07/29/81 124. Stewart, Mark E. Operator 09/18/79 125. Stiles, James F. Operator 01/24/83 126. Striplin, Charles L. Lead Worker 12/01/75 127. Sunderland, Ronnie E. Operator 10/13/88 128. Timmons, Robert L. Operator 06/06/75 129. Tripp, Thomas Dewey Semi-Skilled 01/31/00 130. Turner, Stephen L. Technician 05/21/76 131. Tyler, David E. Technician 11/10/65 132. Tyree, Frank C. Operator 10/19/00 133. Uhrin, John D. Operator 06/09/78 134. Usher, David L. Operator 06/25/70 4 135. Verzbiski, Gregory A. Operator 01/07/02 136. Vince, Kirk Operator 09/04/01 137. Walker, Glenn E. Technician 05/25/78 138. Wang, Stuart L. Operator 07/31/81 139. Ward, Virgi1 O. Custodial Worker 09/29/65 140. Waschevski, Paul A. Operator 12/01/67 141. Wessbecher, K. Judson Operator 11/06/74 142. Wiesner, Larry E. Operator 01/11/83 143. Williams, Larry M. Semi-Skilled 02/28/76 144. Williams, Ted L. Operator 02/01/83 145. Willis, Dennis K. Operator 09/25/91 146. Wingo, Terry L. Craft Worker 12/16/74 147. Woods, Roger Lead Worker 07/20/83 148. Yeager, Robert A. Custodial Worker 09/29/75 149. Yonker, Joseph E. Operator 05/20/69 5 SCHEDULE 2.1(a)- REAL PROPERTY The land, buildings, and all improvements thereto located on the property described below and totaling to approximately 133 acres: PARCEL 1 Part of the east half of section 11, township 16 north, range 2 west of the third principal meridian, Sangamon County, Illinois, described as follows; Beginning at the northeast corner of the southeast quarter of aforesaid section 1_, thence south 00 degrees 00 minutes 00 seconds east on the east line of said southeast quarter, 1637.35 feet; thence north 89 degrees 28 minutes 03 seconds west, 2026.89 feet; thence north 00 degrees 06 minutes 45 seconds east, 746.18 feet; thence south 89 degrees 40 minutes 0_ seconds east, 200.00 feet; thence north 00 degrees 05 minutes 41 seconds east, 90.00 feet; thence south 89 degrees 38 minutes 59 seconds east 474.72 feet; thence south 00 degrees 26 minutes 38 seconds west, 127.00 feet; thence south 01 degrees 27 minutes 07 seconds east, 169.19 feet; thence south 88 degrees 46 minutes 12 seconds east, 47.82 feet; thence south 00 degrees _5 minutes 34 seconds west, 353.07 feet; thence north 87 degrees 27 minutes 36 seconds east, 356.30 feet; thence north 01 degrees 54 minutes 34 seconds east, 186.57 feet; thence north 55 degrees 17 minutes 13 seconds east, 110.63 feet; thence north 28 degrees 01 minutes 22 seconds east, 82.41 feet; thence north 00 degrees 37 minutes 35 seconds east, 363.30 feet; thence north 88 seconds 54 minutes 28 seconds west, 294.60 feet; thence north 09 degrees 59 minutes 4_ seconds west, 111.14 feet; thence north 00 degrees 37 minutes 57 seconds east, 147.21 feet; thence south 89 degrees 22 minutes 03 seconds east 20.00 feet; thence north 00 degrees 37 minutes 57 seconds east, 446.50 feet; thence north 89 degrees 22 minutes 03 seconds west, 246.96 feet, thence north 00 degrees 03 minutes 05 seconds west, 227.61 feet to a point on the south right of way line of the Illinois Terminal Railroad; thence north 89 degrees 56 minutes 14 seconds east on said south right of way line, 20.00 feet; thence north 89 degrees 55 minutes 23 seconds east on said south right of way line, 1118.77 feet; thence north 00 degrees 03 minutes 46 seconds west, 20.00 feet; thence north 89 degrees 56 minutes 14 seconds east, 200.00 feet to a point on the east line of the northeast quarter of aforesaid section 11; thence south 00 degrees 00 minutes 00 seconds east on said east line 225.03 feet to the point of beginning. Except therefrom a tract of land described as follows: Beginning at the quarter corner of sections 11 and 12, being the northeast corner of the southeast quarter of said section 11, thence westerly on and along the north line of said south east quarter of said section 11 a distance of 120 feet; thence north 100 feet; thence east 120 feet, more or less, to the east line of said section 11; thence south on and along the east line of said section 11 a distance of 100 feet, more or less, to the point of beginning. Also excepting therefrom the fo11owing described tract of land: Commencing at the southeast corner of the northeast quarter of section 11, township 16 north, range 2 west of the third principal meridian; thence west a distance of 120 feet to the point of 6 beginning; thence north a distance of 100.00 feet; thence west a distance of 4500 feet; thence south a distance of 100.00 feet; thence east a distance of 45.00 feet to the point of beginning. PARCEL 2A Part of the Southeast Quarter of Section 11 Township 16 North, Range 2 West of the Third Principal Meridian, Sangamon County, Illinois, described as follows: From the Northeast corner of the Southeast Quarter of said Section 11, South 00 degrees 00 minutes 00 seconds East on the Section line for a distance of 675.88 feet; thence South 89 degrees 35 minutes 35 seconds West 803.30 feet; thence South 01 degree 05 minutes 35 seconds West, 54.00 feet; thence North 88 degrees 54 minutes 28 seconds West 294.60 feet to the point of beginning; thence South 00 degrees 15 minutes 43 seconds West 215.69 feet; thence South 44 degrees 24 minutes 04 seconds West 121.33 feet; thence South 87 degrees _0 minutes 19 seconds West 111.79 feet; thence North 40 degrees 34 minutes 36 seconds West 38.69 feet; thence North 01 degree 14 minutes 43 seconds West 94.06 feet; thence North 00 degrees 26 minutes 38 seconds East 862.93 feet; thence South 89 degrees 33 minutes 32 seconds West 22.30 feet; thence North 00 degrees 03 minutes 05 seconds West 26.43 feet, thence South 89 degrees 22 minutes 03 seconds East 246.96 feet; thence South 00 degrees 37 minutes 5_ seconds West 446.50 feet; thence North 89 degrees 22 minutes 03 seconds West 20.00 feet; thence South 00 degrees 37 minutes 57 seconds West 147.21 feet; thence South 09 degrees 9 minutes 41 seconds East 111.14 feet to the point of beginning. PARCEL 2B Part of the Southeast Quarter of Section 11 Township 16 North Range 2 West of the Third Principal Meridian, Sangamon County, Illinois, described as follows: From the Northeast corner of the Southeast Quarter of said Section 11, South 00 degrees 00 minutes 00 seconds East on the Section line for a distance of 675.88 feet; thence South 89 degrees 35 minutes 35 seconds West 803.30 feet, thence South 01 degree 05 minutes 35 seconds West 54.00 feet to the point of beginning; thence South 00 degrees 37 minutes 3_ seconds West 363.30 feet; thence South 28 degrees 01 minute 22 seconds West 82.41 feet; thence South 55 degrees 17 minutes 14 seconds West 110.63 feet; thence South 01 degree 54 minutes 34 seconds West 186.57 feet; thence South 87 degrees 27 minutes 36 seconds West 356._0 feet; thence North 00 degrees 05 minutes 34 seconds East 353.07 feet; thence North 88 degrees 46 minutes 12 seconds West 47.82 feet; thence North 01 degree 27 minutes 07 seconds West 169.19 feet; thence North 00 degrees 26 minutes 38 seconds East 835.47 feet; thence South 39 degrees 05 minutes 12 seconds East 5.96 feet; thence North 00 degrees 03 minutes 05 seconds West 27.67 feet; thence North 89 degrees 33 minutes 32 seconds East 22.30 feet; thence South 00 degrees 26 minutes 38 seconds West 862.93 feet; thence South 01 degree 14 minutes 43 seconds East 94.06 feet; thence South 40 degrees 34 minutes 36 seconds East 38.69 feet; thence North 87 degrees 80 minutes 19 seconds East 111.79 feet; thence North 44 degrees 24 minutes 0_ seconds East 121.33 feet; thence North 00 degrees 15 minutes 43 seconds East 215.69 feet; thence South 88 degrees 54 minutes 28 seconds East 294.60 feet to the point of beginning. PARCEL 2C 7 Part of the Southeast Quarter of Section 11 Township 16 North, Range 2 West of the Third Principal Meridian, Sangamon County, Illinois, described as follows: From the Northeast corner of said Southeast Quarter of Section 11, West on the North line of said Southeast Quarter 1824.08 feet; thence South 00 degrees 05 minutes 4_ seconds West 100.00 feet to the point of beginning; thence continuing South 00 degrees 05 minutes 41 seconds West 712.81 feet; thence South 89 degrees 38 minutes 59 seconds East 474.72 feet, thence North 00 degrees 26 minutes 38 seconds East 708.47 feet, thence North 89 degrees 05 minutes 12 seconds West 477.58 feet to the point of beginning. PARCEL 2D Part of the South half of Section 11 Township 16 North, Range 2 West of the Third Principal Meridian, Sangamon County, Illinois, described as follows: From the Northeast corner of the Southeast Quarter of said Section 11; thence South 00 degrees 00 minutes 00 seconds East on the East line of said Southeast Quarter 2388.83 feet to the point of beginning; thence North 89 degrees 36 minutes 10 seconds West 980.00 feet; thence North 00 degrees 23 minutes 50 seconds East 130.00 feet; thence North 89 degrees 36 minutes 10 seconds West 340.00 feet; thence South 00 degrees 23 minutes 50 seconds West 130._0 feet; thence North 89 degrees 36 minutes 10 seconds West 1309.22 feet; thence North 00 degrees 06 minutes 52 seconds East 659.36 feet; thence North 20 degrees 03 minutes 16 seconds West 758.27 feet; thence North 89 degrees 55 minutes 28 seconds East 359.93 feet; thence North 00 degrees 47 minutes 45 seconds East 129.05 feet; thence South 89 degrees 40 minutes 0_ seconds East 500.81 feet; thence South 00 degrees 06 minutes 45 seconds West 746.18 feet; thence South 89 degrees 28 minutes 03 seconds East 2026.89 feet to a point on the East line of aforesaid Southeast Quarter, thence South 00 degrees 00 minutes 00 seconds East on said East line 751.48 feet to the point of beginning. 8 SCHEDULE 2.1(b)-TANGIBLE PROPERTY All Tangible Property set forth herein and any and all Tangible Property currently owned by Seller and located at or attributable solely to the Illiopolis Plant or necessary for the continued operation of the Business as currently conducted at the Illiopolis Plant. All Tangible Property as set forth in the 21-page document entitled "Equipment List, PVC Illiopolis" attached hereto. 9 Equipment List PVC Illi Asset Equip Number Number Asset Description - ------ ------ ----------------- 50836 FORK LIFT TRUCK CF-40 367-5 50837 BOILER & BOILER HOUSE EQUIP 50839 ROTARY DRYER CENTRIFUGAL FILTE 50840 CONVEYING SYS 7776-1&2 ACTIVAT 50843 2 BULK STORAGE BINS & PIPIN 50844 REACTOR D308 R162-1173 LAYDOWN 50845 BLEND TANK F404 S/N R- 162-1 50846 REACTOR D307 R162-1172 LAYDOWN 50847 CYLINDER ASSEMBLY FOR #4 AIR 50850 REACTOR CLEANING SYSTEM PUMP 50856 FIVE 5400 CU.FT. BULK BIN 50857 PFAUDLER CO. VESSELS 50862 SEVEN 5400 CU.FT. BULK BIN 50863 STENCIL CUTTING MACHINE 50864 HOIST & TROLLEY 50866 RMVC COMPRESSOR C-339 S/N73U10 50887 INSTRUMENT AIR COMPRESSOR 50888 INSTRUMENT AIR COMPRESSOR 50889 INSTRUMENT AIR RECEIVER 50890 INSTRUMENT AIR RECEIVER 50891 INSTRUMENT AIR RECEIVER 50892 AIR OIL SEPARATOR 50893 INSTRUMENT AIR PREFILTER 50894 INSTRUMENT AIR FINAL FILTE 50895 INSTRUMENT AIR PREFILTER 50896 AIR OIL SEPARATOR 50897 INSTRUMENT AIR PREFILTER 50898 INSTRUMENT AIR FINAL FILTE 50899 INSTRUMENT AIR PREFILTER 50900 INSTRUMENT AIR REFRIGERATION D 50901 INSTRUMENT AIR DESSICANT DRYER 50902 INSTRUMENT AIR REFRIGERATION D 50903 INSTRUMENT AIR DESSICANT DRYER 50904 CLARIFIED WATER DEMINERALIZER 50905 CLARIFIED WATER DEMINERALIZER 50906 FILTERED WATER SOFTENER 50907 FILTERED WATER SOFTENER 50908 ACID GAUGING TANK 50909 CAUSTIC GAUGING TANK 50910 ALUM SYSTEM 50911 LIME SYSTEM 50912 RAW WATER CLARIFIER 50913 CAUSTIC BULK STORAGE TANKHEATE 50914 CLEAR WATER SURGE TANK 50915 DEMINERALIZER WASH WATER TANK 50916 SALT SOLUTION PREPARATION TANK 1 of 21 Equipment List PVC Illi 50917 CAUSTIC BULK STORAGE TANK 50918 CLEAN WATER TRANSFER PUMP 50919 CLEAN WATER TRANSFER PUMP 50920 BRINE TRANSFER PUMP 50921 BACK WASH PUMP 50922 CAUSTIC TRANSFER PUMP 50923 BACK WASH PUMP 50924 CLARIFIED WATER PRESSURE FILTE 50925 CLARIFIED WATER PRESSURE FILTE 50926 DEMINERALIZED WATER FILTE 50927 WASTE TREATMENT PUMPING STATIO 50928 WASTE TREATMENT CLARIFIER 50930 STEAM BOILER 50932 STEAM BOILER 50933 BOILER FEED WATER DEAER 50934 BOILER BLOWDOWN FLASH TANK 50936 BOILER FEED PUMP 50937 BOILER FEED PUMP 50938 SULFITE TRANSFER PUMP 50939 PHOSPHATE TRANSFER PUMP 50944 COOLING TOWER CIRCULATING WATE 50945 COOLING TOWER CIRCULATING WATE 50949 CHILLED WATER SUPPLY PUMP TO E 50953 SPENT CHILLED WATER RETURN PUM 50954 SPENT CHILLED WATER RETURN PUM 50955 CHILLED WATER STORAGE TK EXIST 50963 VINYL CHLORIDE UNLOADING COMPR 50964 VINYL CHLORIDE UNLOADING COMPR 50965 VINYL CHLORIDE UNLOADING COMPR 50968 UNLOADING COMPRESSOR KNOCK 50969 UNLOADING COMPRESSOR KNOCK 50970 UNLOADING COMPRESSOR KNOCK 50971 EDC BULK UNLOADING STORA 50974 EDC TRANSFER PUMP 51078 TAILING SCREEN 51148 CLEARWATER SURGE TANK 51150 AIR RECEIVER VE 8001 AA 51151 AIR RECEIVER VE 8002 AA 51152 DRYER DR 80 51153 DRYER DR 80 51157 FILTER FL 8001 CC 51158 FILTER FL 8001 DD 51159 FILTER FL 8002 CC 51160 FILTER FL 8002 DD 51161 FILTER FL 8001 AA 51162 FILTER FL 8001 BB 51163 FILTER FL 8002-AA 51164 FILTER 8002 BB 51165 COMPRESSER CO.8001-AA 2 of 21 Equipment List PVC Illi 51166 COMPRESSER CO-8002-AA 51167 AFTER COOLER HE.8001.AH 51168 AFTER COOLER HE.8002.AA 51177 D I WATER FILTER FI-53 51178 CLEARWATER TRANSFER PUMP PU-50 51179 SOFT WATER PUMP 51180 SOFT WATER PUMP PU-53 51181 D I WATER PUMP PU-53 51182 D I WATER PUMP PU-53 51183 D I WATER PUMP PU-53 51184 BACKWASH WATER TANK VE-53 51185 VCM STORAGE SPHERE VE-10 51194 1 METHOCEL STORAGE TANK 51195 MODEL G-4 FAN SILENCER 48X48 51196 MODEL G-4 FAN SILENCER 48X48 51198 BENDIX-20 STREAM SAMPLE SYSTE 51199 BENDIX-20 STREAM SAMPLE SYSTE 51200 BENDIX ELECTROMETER AMPLI 51201 BENDIX PUMP FOR HYDRO 51202 -30 SCOTT AIR MASKS 4622 35 51204 ISOTHERMAL FID WITH ACCES 51209 WEIGH SCALE 51213 FIRE WATER TANK VE 9001 50000 51215 FIRE WATER TANK VE 9002 50000 51217 FIRE WATER PUMP PU 9001C 51224 FUEL OIL STORAGE TANK VE-6011 51225 FUEL OIL PUMP & HEATER SET 51226 OIL STORAGE TANK HEATER HE-60 51227 FUEL OIL STORAGE TANK HEATE 51228 FUEL OIL UNLOADING PUMP PU- 51234 FUEL OIL UNLOADING PUMP MDL L 51240 FILM CASTING KNIFE S/N 764 51242 DRILL PRESS S/N 21371 51243 GEAR REDUCER & BEARING FOR EXIST 51244 #65 FINENESS OF GRIND GAGE& 51250 CORNER UNIT 1 MODEL 2P553 51251 TABLE FRAME 1 MODEL 50P22 51252 TABLE FRAME 1 MODEL 50P12 51253 END LEG ASSY 1 MODEL 53P23 51254 END LEG ASSY 2 MODEL 52P23 51255 END PANEL 8 MODEL 4P2 51256 17 LIN FT MODEL 24L41 REAGE 51257 SANDBLAST TO REMOVE EXIST 51258 DATA SYSTEM HP2108A SN 1542A 51261 AUTO-RANGING DIGEMETRY SN20701 51262 AUTO RANGING DIGEMETRY SN20707 51274 BULK STORAGE BINS 2-CLO 51324 NAPTHA STORAGE TANK 1STC 51334 REFLUX PUMP 206 3 of 21 Equipment List PVC Illi 51335 REFLUX PUMP 20 6P 51338 SLURRY PUMP 330 6 51339 SLURRY PUMP 330 6 51340 SLURRY PUMP 150 6 51344 SLURRY RECIRC. PUMP 2000 51347 DEMIN WATER PUMP 265 6PM 51349 STRIPPER CONDENSER 51350 SLURRY COOLER 51352 STRIPPING COLUMN 6000 51353 STRIPPING COLUMN 6000 51355 C-2 TANK 500 GAL 51357 C-3 TANK 40 GAL 51370 STRAINERS 51372 STRIPPER SKID 51379 RE-3201 EXISTING PASTE 51380 RE-3202 EXISTING PASTE 51381 RE-3203 EXISTING PASTE 51382 RE-3204 EXISTING PASTE 51383 VE-3341 EXISTING BLOWD 51384 VE-3342 EXISTING BLOWD 51385 PU-3381 EXISTING SEED 51386 ST-3380A EXISTING SEED 51387 ST-3380B EXIST 51388 VE-3382 EXISTING SEED 51389 VE-3383 EXISTING SEED 51390 VE-3384 EXISTING SEED 51391 VE-3351 EXISTING RVCM 51392 VE-3352 EXISTING RVCM 51393 VE-3361 SEAL WATER K O T 51394 VE-3362 SEAL WATER K O T 51395 F-365M EXISTING REC M 51396 INCINERATOR K O TANK 51397 G-367M EXISTING COMPR 51398 FI-3361 EXISTING SEAL 51399 FI-3362 EXISTING SEAL 51400 M-367 EXISTING SEAL 51401 PU-3361 EXISTING COMPR 51402 PU-3362 EXISTING COMPR 51403 FI-3321 EXISTING VCM F 51404 FI-3322 EXISTING VCM F 51405 FI-3323 EXISTING VCM F 51406 FI-3324 EXISTING VCM F 51407 ST-3320 EXISTING STRAINER 51408 VE-3321 EXISTING VCM W 51409 VE-3322 EXISTING VCM W 51410 VE-3323 EXISTING VCM W 51411 VE-3324 EXISTING VCM W 51412 D-313 EXISTING HOMOP 51413 D-314 EXISTING HOMOP 4 of 21 Equipment List PVC Illi 51414 D-315 EXISTING HOMOP 51415 D-316 EXISTING HOMO 51416 D-317 EXISTING HOMOP 51417 D-318 EXISTING HOMOP 51418 D-319 EXISTING HOMOP 51419 D-320 EXISTING HOMOP 51420 F-345 EXISTING RVCM 51421 F-355M EXISTING RVCM 51422 C-2 EXISTING STRIP 51423 F-405 EXISTING SLURR 51424 F-406 EXISTING SLURR 51425 G-2A EXISTING POLYM 51426 G-2B EXISTING POLYM 51427 F-355 EXISTING BULK 51428 F-375 EXISTING BULK 51429 F-390 EXISTING MVC B 51430 M-319 EXISTING MVC S 51431 M-320 EXISTING RVCM 51432 M-352 EXISTING RVCM 51433 M-359 EXISTING MVC B 51434 M-374 EXISTING MVC B 51435 HE-5201 EXISTING SOLUT 51436 D-301 EXISTING COPOL 51437 D-302 EXISTING COPOL 51438 D-303 EXISTING COPOL 51439 D-304 EXISTING COPOL 51440 D-305 EXISTING COPOL 51441 D-306 EXISTING COPOL 51442 F-315 EXISTING RCVM 51443 D-307 EXISTING COPOL 51444 D-308 EXISTING COPOL 51445 F-325 EXISTING RCVM 51446 F-401 EXISTING SLURR 51447 F-402 EXISTING SLURR 51448 F-403 EXISTING SLURR 51449 CO-1005 EXISTING UNLOA 51450 CO-1006 EXISTING UNLOA 51451 CO-1007 EXISTING UNLOA 51452 CO-1008 EXISTING UNLOA 51453 CO-1009 EXISTING UNLOA 51454 F-104 EXISTING VCM S 51455 VE-1001 EXISTING VCM S 51456 VE-1005 EXISTING UNLOA 51457 VE-1006 EXISTING UNLOA 51458 VE-1007 EXISTING UNLOA 51459 VE-1008 EXISTING UNLOA 51460 VE-1009 EXISTING UNLOA 51463 CP-PASTE 31.01 CONTR 51465 CP-3 31.01 CONTROL PANEL 5 of 21 Equipment List PVC Illi 51469 FI-03520A 11.03 SLURR 51471 FI-03552A 11.03 SLURR 51473 FI-03552B 11.03 SLURR 51475 WATER TANK VE-06302 11.2 HOT G 51476 WATER TANK VE-06302 11.2 HO G 51477 TANK PASTE & HOMO WASTE WATER V 51479 TANK PASTE & HOMO WASTE WATER V 51480 HE-03502 21.51 DEION 51481 HE-03551A 21.51 DEION 51482 HE-03551-B 21.51 DEION 51483 HE-06302 21.52 HOT G 51484 G-00101A 22.08 SEAL 51485 G-00101B 22.08 SEAL 51486 G-00101C 22.08 SEAL 51487 G-00355A 22.08 SEAL 51488 G-003557 22.08 SEAL 51489 G-00377A 22.08 SEAL 51490 G-00399 22.08 SEAL 51492 P-01200 22.08 SEAL 51493 P F-0190 DIAPHRAM PUMP 51495 PU-03201B 22.05 SEED 51496 PU-03321 22.08 SEAL 51497 PU-03322 22.08 SEAL 51498 PU-03323 22.08 SEAL 51499 PU-03324 22.08 SEAL 51500 PU-03520 22.09 SLURR 51501 PU-03521 22.09 SLURR 51502 PU-03552A 22.09 SLURR 51503 PU-03552B 22.09 CLURR 51504 PU-05500 22.10 HOT C 51505 PU-06302 22.06 HOT G 51506 PUMP WASTEWATER TRANSFER PU-15 51507 PUMP WASTEWATER TRANSFER PU-15 51508 C-00367M 22.08 51509 CO-03551 22.08 SEAL 51510 CO-03552 22.08 SEAL 51511 G-00401 22.11 SEAL 51512 G-00402 22.11 SEAL 51513 G-00403 22.11 SEAL 51514 G-00405 22.11 SEAL 51515 G-00406 22.11 SEAL 51516 AG-03382 22.11 SEAL 51548 RUCM HOLDING TANK VE-31 51580 VE-03553 F-0267/12.01 GASHO 51582 VE-03556A 11.02 VACUU 51583 VE-03556D 11.02 VACUU 51584 TANK PURGE KO SITE 1 VE-03556C 51585 TANK PURGE KO SITE 1 VE-03556C 51586 TANK PURGE KO SITE 1 VE-03556F 6 of 21 Equipment List PVC Illi 51587 TANK PURGE KO SITE 1 VE-03556F 51588 VE-15004 11.02 BRINE 51589 VE-15504 11.03 VENT 51592 VE-15509 11.02 GASHO 51593 HE-03370 21.50 RECOV 51595 HE-03509 21.50 RECOV 51597 HE-03555 21.50 SEAL 51598 HE-03556A 21.50 SEAL 51599 HE-03556B 21.50 SEAL 51600 HE-03557 21.50 SEAL 51601 HE-03559A 21.50 PURGE 51602 HE-03559B 21.50 PURGE 51603 RF-15004 21.01 BRINE 51605 PU-03556A 22.06 SEAL 51607 PU-15004A 22.06 BRINE 51608 PU-15004B 22.06 BRINE 51609 PU-15004C 22.06 BRINE 51611 PU-15506A 22.06 WASTE 51612 PU-15509 22.07 GASHO 51613 PU-15551A 22.06 K O T 51615 PU-15551B 22.06 K O T 51616 PU-15552 22.06 GASHO 51617 PU-15553A 22.06 WASTE 51618 PU-15553B 22.06 WASTE 51619 CO-03557 23.02 COMPR 51621 VP-03556A 23.02 VACUU 51623 VP-03556B 23.02 VACUU 51625 CP-REC 31.01 CONTR 51627 P-357 EXISTING RVCM 51628 HE-3371 EXISTING PASTE 51629 HE-3372 EXISITNG PASTE 51630 VE-3370 EXISTING RVCM 51631 SP-15006 11.01/11.07 WASTE 51633 VE-15510 11.02 INCIN 51634 NC-15011 21.02/21.03 TRANE WAS 51636 HE-15006 26.02 WASTE 51637 VE-1003 EXISTING WASTE 51638 VE-5019 42807 CAUST 51640 VE-5020A 42803 NEUTR 51641 VE-5020B 42803 NEUTR 51642 VE-5021 42805 CAUST 51644 PU-5021A 42809 CAUST 51645 PU-5021B 42809 CAUST 51646 AG-5020A 42814 AGITA 51647 AG-5020B 42814 AGITA 51648 TYPEWRITER 51649 TYPEWRITER 51672 PURGE K O TANK VE-33 51673 VACUUM PUMP SEPARATOR VE-33 7 of 21 Equipment List PVC ILLi 51674 STRIPPER K O TANK VE-33 51676 PURGE K O TANK VE-33 51677 VACUUM PUMP SEPARATOR VE-33 51678 STRIPPER K O TANK VE-33 51680 K O TANK DISCHARGE PUMP PU-33 51681 K O TANK DISCHARGE PUMP PU-33 51682 SEAL WATER PUMP PU-33 51683 SEAL WATER PUMP PU-33 51684 PURGE STEAM CONDENSER HE-33 51686 PURGE STEAM CONDENSER HE-33 51688 SEAL WATER COOLER HE-33 51689 SEAL WATER COOLER HE-33 51690 SEAL WATER FILTER FIL-3 51691 SEAL WATER FILTER FIL-3 51692 SEED TRANSFER TANK AGITATOR AG 51694 CONCENTRATOR TANK AGITATOR AG- 51695 SEED TRANSFER TANK VE-33 51697 K O TANK AGITATOR AG-33 51698 K O TANK AGITATOR AG-33 51699 VACUUM PUMP & SEALS VP-33 51701 VACUUM PUMP & SEALS UP-33 51703 SEED TRANSFER PUMP PU-32 51704 SEED STRAINER ST-33 51705 SEED STRAINER ST-33 51706 BLOWDOWN TANK VE-33 51707 BLOWDOWN TANK VE-33 51708 VE-3384 51709 VE-3383 51710 VE-3382 51714 FORK LIFT TRUCK 169 51715 FORK LIFT TRUCK 122 51725 SALT BRINE TANK 51726 NASH VACUUM PUMP 51727 CENTRIFUGAL PUMP PV-404 51728 VAPOR LINE FILTER FIL3563 51729 VAPOR LINE FILTER FIL3561 51730 VAPOR LINE FILTER FIL3562 51731 SEAL WATER FILTER FIL-3 51732 SEAL WATER COOLER HE 3560 51733 VACUUM PUMP SEPARATOR TANK 51735 WASTE WATER PUMP PU-3561 51736 SEAL WATER PUMP PU-3560 51737 NASH VACUUM PUMP UP-3560 51739 SEAL WATER COOLER E-326 51740 INHIBITOR PUMP/W AGITATOR AND T 51741 SLURRY TRANSFER PUMP PU-40 51742 SEAL WATER COOLER E-316 51743 WASTE WATER PUMP PU 318 51744 SLURRY TRANSFER PUMP PU 40 8 of 21 Equipment List PVC ILLi 51745 SEAL WATER PUMP G-316 51746 SLURRY COOLER HE 400 51748 RVCM CONDENSER HE-3561B 51750 RVCM CONDENSER HE-3561A 51752 STRIPPER KNOCKOUT TANK VE-35 51754 SEAL WATER PUMP G-326 51755 RVCM CONDENSER E-328 51756 RVCM CONDENSER E-318 51757 VACUUM PUMP SEPARATOR TANK 51758 VACUUM PUMP SEPARATOR TANK 51759 STRIPPER KNOCKOUT TANK F-328 51760 NASH VACUUM PUMP C-326 51761 STRIPPER KNOCKOUT TANK F-318 51762 NASH VACUUM PUMP C-316 51763 COPOLYMER STRIPPING TANK F-403 51765 COPDYMER STRIPPING TANK F-402 51766 COPOLYMER STRIPPING TANK F-401 51792 PUMP 51793 PUMP (INSTALLATION) 51794 PUMP (ELECTRICAL POWER) 51795 WASTE WATER CLARIFIER #2 51796 MECHANICAL (CLARIFIER #2) 51802 OIL FILTRATION UNITS (4) 51820 VACUUM PUMP 51822 VACUUM PUMP 51824 CENTRIFUGAL PUMP MATER 51826 CENTRIFUGAL PUMP MATER 51833 TANK MASTER UNIT FOR C 51835 ATMOSPHERIC MIXING TANK 304 ST 51837 WITH AGITATOR 3/4 HP MOTOR 51839 CENTRIFUGAL PUMP SIZE 1X 1_ 51843 SIGMA-10 UNIT 51845 AIR OPERATED PUMP DOUBLE DIAPH 51851 DIA-VAC PUMP FOR METHOD 106 TE 51865 AIR OPERATED DOUBLE DIAPHRAGM 51867 IN LINE WATER HEATER WITH STAI 51869 MOTOR 30HP 1725 RPM 230/460 51871 VACUUM JET EXHAUSTER SIZE 4 TY 51873 MOTOR 30 HP 1725 RPM 230/4 51875 STEAM JET EXHAUSTER 51877 OPEN IMPELLER CENTRI- FUGAL 51879 DUPLEX PUMP DIAPHRAGM TYPE 51881 STRAINER SIZE 3 WITH 5/16 PERF 51883 COMBUSTION OXYGEN ANALYZER FOR 51909 FUNDA FOAM UNITS 51910 PROVIDE AGITATORS FOR WASTE WA 51915 ECONOMIZER E-308B ENEREX 25 51917 HEATER ENEREX E308A 2572 51919 HEATER ENEREX E-308B PLANT 9 of 21 Equipment List PVC Illi 51921 SOOT BLOWER COPES-VULCAN PLA 51923 SOOTBLOWER COPES-VULCAN PLANT 51925 JACKET FABRICATE AND INSTAL 51927 JACKET BOILER #4 STEEL WIT 51933 INSULATION 30000 BARREL FUEL 51939 AERATOR SA-300-3 QUANTUM SE 51943 AGITATOR LIGHTNIN 821394 51945 AGITATOR LIGHTNIN 71S3 3 HP 51947 AGITATOR LIGHTNIN 71S3 3HP 51949 WATER TANK DI HOT 15'-0 OD 51965 EXTRUDER TEMP CONSOLE S/N 1224 51966 FLOTRAYS 8-5' & 10' FOR BULK 51967 CYCLOBLOWER WITH 75HP MOTOR 51968 BLOWER BARE 51984 PUMP VERTICAL TURBINE DEEP WEL 51986 PUMP VERTICAL TURBINE DEEP WEL 51988 PUMP SPARE FOR WELLS-WELL FI 51990 LIME FEEDERS TIMER CONTROLLER 51992 METER FOR DEKALB WATER SUPPLY 52006 ELECTRICAL WORK FOR WELLS 14 52022 FLOCCULATOR WITH 1/2 HP MOTOR 52043 SLURRY STRIPPER HEAT RECOVERY 52046 QUENCH INK INCINERATOR SPARE 52048 INCINERATOR SPARE COMPLETE WIT 52050 FOUNDATION FOR INCINERATOR 52052 BLOWER WITH 2HP MOTOR FOR SPAR 52054 HEAT EXCHANGER WITH ELECTROPOL 52066 ENGINE GAS POWERED FOR EMERGEN 52068 CHILLED WATER TO COILING COILS 52070 HOSES HIGH PRESSURE AND JETS T 52074 PUMP SPARE FOR WASTE WATER STR 52078 MAINTENANCE SHOP CRANE WELDER 52080 TRACTOR 1972 FORD 60H PT 52081 WATER BLASTER SERIES 8000 WET 52082 CHLORINATOR WALLACE TIERNAN GA 52083 TRACTOR BULK TRUCK WHITE 52085 TRANSMITTER TYPE KA12111 BAILE 52087 CYCLONE TO REMOVE SOLIDS FROM 52088 BLOWER ROOTS AIR LIFT FOR OXYG 52091 CAR WASH SYSTEM HOPPER 52109 GENERATOR EMERGENCY 52110 ROLL MILL-TWO Q-C LAB 52111 SPARE ROLL SET-LAB MILL PD7-50 52113 OVERHAUL 9 DRYER CENTRIFUGE 3 52117 FOUNDATION AND PIPE SUPPORTS F 52119 FREEZER FOR PLANT 1 & 2 IN LP 52120 FREEZER FOR PLANT 1 & 2 IN LP 52129 OVERHAUL 10 DRYER CENTRIFUGE 52130 UPGRADE TANK F-101 FOR WASTE W 10 of 21 Equipment List PVC Illi 52131 PUMP TURBINE WITH MOTOR AND O- 52132 PUMP TURBINE WITH MOTOR AND O- 52133 PUMP TURBINE WITH MOTOR AND O- 52134 PUMP TURBINE WITH MOTOR AND O- 52135 PUMP TURBINE WITH MOTOR AND O- 52136 BLOWER CENTRIFUGAL 52137 LAPPING SEAL MACHINE 32 SPEED 52138 LAPPING SEAL MACHINE 24 SPITF 52139 DATA STATION SIGMA 15 N3340020 52141 FT1001 #1 CLARK FORK TRUCK FOR SITE 52144 CATHE ROCKFORD ECONOMY LATHE F 52149 FREEZER CHESTINITIATOR 7CUBIC 52157 PUMP UPGRADE VINYL ACETATE CHA 52159 PALLET PRESS IN PASTE PKG. (US 52163 SHAKER RO-TAP SIEVE WITH BUILT 52165 -AERATIRS AQUA-JET 5H.P.460 52167 ENCLOSURES RO-TAP SOUND FOR Q 52168 (5) LEVELER DOCK FOR PVC WAREH 52169 GLASSES SIGHT MONOMER UPGRADE 52173 LOADER WITH 72 BUCKET FOR TRAC 52174 MILLING MACHINE ADHOCK & SHIPL 52182 #1 PASTE RESIN BAGGER UPGRADE 52183 PASTE DRYER FEED TANK PD269001 52185 INCINERATOR QUENCH WATER HEAT 52186 BULK ACID SYSTEM-FIBERGLASS P 52188 STEAM COILS PD750151 52189 EQUIP TO IMPROVE LINE SLURRY P 52195 AIR PADS FOR SB-31 PD750221 52199 NEW KNOCK OUT TANK PD750261 MO 52200 NEW AGITATION SYSTEM PD 7-5028 52201 SPARE GANAJET PURCHASED PD7502 52202 PLASMA MACHINE PURCHASED PD750 52205 FILTER UNITS PURCHASED PD75033 52206 RADIO COMMUNICATION SYSTEM 52210 DUMPSTER CONCRETE WORK PD75038 52212 MOTORIZED OPERATORS PD750441 52214 BACKFLOW PREVENTOR PD750461 52216 SELF PRIMING PUMP PURCHASED PD 52218 PUMP FOR POTABLE PURCHASED PD7 52219 PORTABLE WELDER PD750521 52222 ABULK SOAP SYSTEM PD 2-6780 F 52223 GROUT TANK BOTTOMS-BULK SOAP 5 52224 TANK FOUNDATIONS BULK SOAP SYT 52225 REVISE NOZZLES ON NEW DRYER FE 52226 SPRAY NOZZELS-BULK SOAP SYSTEM 52247 PALLBITZER-AUTOMATIC PD 60910 52248 LAYER PUSHER-AUTOMATIC PALLETI 52253 ROTARY COMPRESSOR PD75005 HOUS 52254 SCREEN COMPRESSOR PD 7-5013 11 of 21 Equipment List PVC Illi 52255 SURGE TANK-CLARIFIED WATER PD 52260 CONVEYOR-ACCUMULATION SEMI 52261 PALLETIZER-SEMI BULK LOADING E 52262 SUPPORT SYSTEM-SEMI BULK LOADI 52263 COLLECTOR-SEMI BULK LOADING EQ 52266 KNOCK OUT TANK 304 S/S PD 7-50 52267 PALLET UNLOADER-SEMI BULK PD 8 52269 GRAVITY SECTION-SEMI BULK PALL 52270 CONVEYOR-ACCUMULATION-SEMI 52272 HOIST-COFFING-SEMI BULK PALLE 52276 STRETCH WRAP MACHINE-AUTOMATIC 52277 FORKLIFT TRUCK-RESINITE PVC RA 52291 METERING PUMP BFI PD60950 INCR 52292 METERING PUMP BFI-INCREMENTAL 52293 HEAT EXCHANGER-INCREMENTAL PAS 52295 DUCTWORK-GRINDER SYSTEM INSTA 52296 PRODUCT HOPPER-INCREMEN-TAL 52297 VCM WEIGH TANK SURGE VES-SEL 52298 REACTOR-5200 GALLON-INCREMENTA 52299 MIXER ASSEMBLY-INCREMEN-TAL P 52300 PUMP-POWER DYNAMICS-INCREMENTAL 52302 TANK-SKID GLASS LINED-IN-CREME 52303 TANK-EXPANSION-HORIZONTAL CYLI 52304 PUMP-CENTRIFUGAL-INCREMENTAL P 52305 PUMP-CENTRIFUGAL-INCREMENTAL P 52307 DISCHARGER-GYRATED BIN INCRE 52309 1988 CHEVY 1500 P/U SITE S/N 2 52310 CATHODIC PROTECTION SYS IN ELE 52312 GRINDER-SPARE PASTSE PD 7-5117 52322 EJECTOR MIXER-BULK LIME SLURR 52332 PUMP-LATEX TRANSFER-MOYNO-PAST 52334 -GRINDER LUBRICATION SYS-PD 8 52335 HOPPER-SEMI BULK LOADING EQUI 52337 FT1009 #9 Clark Fork Truck 52338 HOPPER-SEMI BULK PALLET UNLO 52340 WELDER-8 POSITION MILLER PD8-5 52343 AGITATOR SPEED VARI-DRIVE REAC 52345 STRAINER BOX-OXIGEST WINTER HA 52348 PROVOX SYSTEM ON REACTOR UNITS 52350 FLUSH SYS-REFLUX CONDENSER PD 52352 CENTRIFUGAL PUMP-GRUNDFOS-STEA 52353 CENTRIFUGAL PUMP-GRUNDFOS-STEA 52362 60HP VAR SPEED DRIVE-D 309 REA 52363 60HP VAR SPEED DRIVE-D 311 REA 52373 CATALYST ADDITION PUMP PD8-5 52374 CATALYST ADDITION PUMP PD 52375 CATALYST ADDITION PUMP PD 8 52376 CATALYST ADDITION PUMP PD 52377 CATALYST ADDITION PUMP PD 8 12 of 21 Equipment List PVC Illi 52378 CATALYST ADDITION PUMP PD 8 52385 WATER SOFTERNER-ILLI WATER TREA 52406 INJECTION TUBE ASSEMBLY REAC 52412 2500KVA TRANSFORMER BANK-REACT 52443 SCREEN BOWL CENTRIGURE-9FT DR 52444 CENTRIFUGE SYSTEM-9FT DRIER LI 52464 1989 FORD PICK-UP WATER PLT S/ 52465 S/S REACTORS-PRELIMINARY CAP P 52466 REACTOR REPL PHASE II-ADD CAP 52468 PUMP-SUBMERISIBLE WELL # 12A PD 52475 WATER SOFTENER-SIMPLEX AUTOMAT 52477 BAGGER SCALE-VCM CHARGE TANK O 52478 CHECK WEIGHTER-VCM CHARGE TANK 52490 TANK-RECOVERY COMPR SEAL WATER 52491 TANK-RECOVERY COMPR SEAL WATER 52499 PUMP-GRUNDFOS-CONDENSER FLUSH 52504 FUNDAFOM DEFOAMING UNIT PD 9-0 52510 DUST COLLECTOR-BOTTOM PORTION 52523 BULK CYCLONE PD 9-0018 52526 DENSIFIER PD9-0018 52527 12 SCREW CONVEYOR W/SUPPORTS 52528 HYSTER LIFT TRUCK PD 9-0018 52540 2 PIPE-LOWER KO TANKS TO 3 52542 CONCRETE WASTE WATER TAHNK-1M G 52549 80000 GAL CONCRETE TANK @ NORT 52550 80000 GAS CONCRETE TANK @ PVC 52564 SUBMERISIBLE PUMP-GRUNDFOS-WATE 52571 HYSTER FORK LIFT TRUCK-WHSE & 52572 IMM GAL CONCRETE TANK-WASTE T 52573 IMM GAL CONCRETE TANK-WST TREA 52575 SWITCHMASTER TRACKMOBILE-MODE 52577 BLOWER PACKAGE RECEIVER BLOW T 52579 ELECTRICAL-MOC-STARTERS BREAKE 52584 SPOUTING SYSTEM--BUILK DUST ABA 52593 HYSTER LIFT TRUCK 2-0002 52595 INTERCEPTER PIT-RESIN SETTLEM 52609 STEAM JET VACUUM PUMP-REACTOR 52610 STEAM JET VACUUM PUMP-REACTOR 52616 YARD TRACTOR 2-0004 52633 -10' X 10' SEED STORAGE TANK 1 52636 AGITATOR-SEED STORAGE TANK 1-0 52652 S/S DRYER FILTERS & FRAMEWORK 52669 MVA CONCRETE PAD W/CURB PILAST 52670 CONCRETE BETWEEN MOTOR CONTROL 52672 GASOLINE STORAGE TANK PAD AT T 52673 CONCRETE PAD-WATER BLASTER & T 52698 BAG FLIPPER ASSEMBLY 2-0011 52704 COPOLYMER ANTIFOULANT EDUCTOR 52705 HYSTER LIFT TRUCK-SHIPPING ARE 13 of 21 Equipment List PVC Illi 52708 SHIPPING BAG LABELER CONSISTIN 52709 5000 GAL TANK-AQUATEC 8170 52710 6000 GAL CAUSTIC TANK (FIBERGL 52715 CENTRIFUGE SYSTEM-POWER & CONT 52732 RECOVERY SYSTEM COMPRESSOR REP 52737 PASTE AIR SLIDE BLOWER REPLACE 52739 RECOVERY CONDENSER REPLACEMENT 52740 UTILITY CHILLER CONTROLS-MOORE 52741 UTILITY CHILLER CONTROLS-MOORE 52746 MAINTENANCE MANLIFT 52754 SPARE SHARPLES GEARBOX 52765 COPOLYMER MAGNET 52772 SECONDARY CONDENSER IP 4-0031 52774 TRACKSCALE MODEL WLS-TD-115RE 52776 COPOLYNER VAPOR LINES 52777 RECOVERY GAS HOLDER BELL REPL 52778 BOILER FEED VARI DRIVE 5-0007 52781 COLOR INKJET PLOTTER 5-0280 52794 BRULE INCINERATOR CAPITAL REPA 52796 P FT. SECONDARY SIFTER IP5-001 52802 AIR COMPRESSOR IP5-0003 52803 AUTOMATIC SHORT STOP SYSTEM IP 52804 AGITATOR BAFFLE IP6-0009 52807 BULK BIN DUST COLLECTORS IP6-0 52810 GRINDER ROOM CHILLER IP6-0021 52812 9 FT. DUST COLLECTOR IP5-0004 52813 CHILLER HOTWELL IP5-0005 52815 W. PRIMARY CONDENSER REPL. IP6 52818 TANK FARM FILTER IP6-0003 52819 170 SEMI-BULK BAGS & STRIKE PL 52821 SLUDGE TRANSFER PUMP IP6-0014 52823 VACUUM STRIPPING SYSTEM IP7-00 52826 3000 GAL STAINLESS STEEL TANK 52827 3000 GAL STAINLESS STEEL TANK 52828 3000 GAL STAINLESS STEEL TANK 52829 3000 GAL STAINLESS STEEL TANK 52830 3000 GAL STAINLESS STEEL TANK 52848 SPRAY DRYER DUST COLLECTOR AIR 52849 SPRAY DRYER DUST COLLECTOR AIR 52850 SPRAY DRYER DUST COLLECTOR AIR 52851 SPRAY DRYER DUST COLLECTOR AIR 52853 CONVEYING DUST COLLECTOR AIRLO 52859 CONVEYING DUST COLLECTOR BIN K 52860 CONVEYING DUST COLLECTOR BIN K 52861 CONVEYING EXHAUSTER ATTENUA 52862 PRODUCT DUST COLLECTOR EXHAUST 52863 PRODUCT DUST COLLECTOR EXHAUST 52864 PRODUCT DUST COLLECTOR EXHAUST 52865 PASTE RESIN BAG ATTENUATOR 14 of 21 Equipment List PVC Illi 52866 DRYER LUMP SCREEN UNIT 52867 VISCOSITY MODIFIER MIX TANK SC 52868 PASTE RESIN BAG PUT & TAKE SC 52869 SOLUTION WATER HEATER 52870 HOT CHARGE WATER HEATER 52871 HOT SOLUTION WATER PUMP 52872 SEAL WATER PUMP 52873 AMBIENT SERVICE WATER PUMP 52874 HOT CHARGE WATER PUMP 52875 SEED HOLDING TANK AGITATOR 52876 SETTLING AGENT MIX TANK AGITAT 52877 PRECON BLEND TANK AGITATOR 52878 PRECON BLEND TANK AGITATOR 52879 POSTCON BLEND TANK AGITATOR 52880 POSTCON BLEND TANK AGITATOR 52881 POSTCON BLEND TANK AGITATOR 52882 JACKET RECIRCULATING WATER PUM 52883 JACKET RECIRCULATING WATER PUM 52884 JACKET RECIRCULATING WATER PUM 52885 JACKET RECIRCULATING WATER PUM 52886 VCM WEIGH TANK SCALE 52887 VCM WEIGH TANK SCALE 52888 SEED WEIGH TANK SCALE 52889 SALT SOLUTION MIX TANK 52890 VCM WEIGH TANK 52891 EMUL SIFIER MIX TANK 52892 EMUL SIFIER MIX TANK 52893 EMUL SIFIER MIX TANK 52894 EMUL SIFIER MIX TANK 52895 INITATOR MIX TANK 52896 INITATOR MIX TANK 52897 INITATOR MIX TANK 52898 INITATOR MIX TANK 52899 VCM WEIGH TANK 52900 VCM WEIGH TANK 52901 BLOWDOWN TANK 52902 BLOWDOWN TANK 52903 RVCM KNOCKOUT TANK 52904 RVCM KNOCKOUT TANK 52905 RVCM COMPRESSOR SEAL WATER 52906 RVCM COMPRESSOR SEAL WATER 52907 RVCM RECEIVER 52908 SEED TRANSFER TANK 52909 HOT WATER SURGE TANK 52910 EMULSIFIER CON ADD PUMP 52911 EMULSIFIER CHARGE PUMP 52912 EMULSIFIER CON ADD PUMP 52913 EMULSIFIER CHARGE PUMP 52914 EMULSIFIER CON ADD PUMP 15 of 21 Equipment List PVC Illi 52915 EMULSIFIER CHARGE PUMP 52916 EMULSIFIER CON ADD PUMP 52917 EMULSIFIER CHARGE PUMP 52918 VCM CON ADD PUMP 52919 VCM CON ADD PUMP 52920 VCM CON ADD PUMP 52921 VCM CON ADD PUMP 52922 BLOWDOWN TANK TRANSFER PUMP 52923 BLOWDOWN TANK TRANSFER PUMP 52924 ANTI FOAM METERING PUMP 52925 ANTI FOAM METERING PUMP 52926 COMPRESSOR SEAL WATER PUMP 52927 COMPRESSOR SEAL WATER PUMP 52928 SEED TRANSFER TANK PUMP 52929 SEED HOLDING TANK PUMP 52930 PRODUCT HOPPER AIR SLIDE BLOWE 52931 PRODUCT HOPPER AIR SLIDE BLOWE 52932 PRECON BLEND TANK EXHAU 52933 PRECON BLEND TANK EXHAU 52934 LATEX CONCENTRATOR EXHAU 52935 LATEX CONCENTRATOR EXHAU 52936 LATEX CONCENTRATOR EXHAU 52937 POSTCON BLEND TANK EXHAU 52938 POSTCON BLEND TANK EXHAU 52939 POSTCON BLEND TANK EXHAU 52940 PASTE RESIN BAGGER EXHAU 52941 SPRAY DRYER EXHAUSTER 52942 CONVEYING DUST COLLECTOR EXHAU 52943 PRODUCT DUST COLLECTOR EXHAU 52944 PRODUCT DUST COLLECTOR EXHAU 52945 PRODUCT DUST COLLECTOR EXHAU 52946 REVERSE AIR SUPPLY FAN 52947 SPRAY DRYER SUPPLY FAN 52948 SPRAY DRYER 52949 SPRAY DRYER HEATER BANK 52950 SPRAY DRYER HEATER BANK OUTER 52951 SPRAY DRYER HEATER BANK 52952 SPRAY DRYER HEATER BANK 52953 VISCOSITY MODIFIER MIX TANK 52954 LATEX CONCENTRATOR TANK 52955 LATEX CONCENTRATOR TANK 52956 LATEX CONCENTRATOR TANK 52957 BAG REWORK HOPPER 52958 UNGROUND PRODUCT SURGE BIN 52959 PRODUCT HOPPER 52960 PRODUCT HOPPER 52961 PRODUCT HOPPER 52962 CONDENSATE FLASH TANK 52963 CONVEYING DUST COLLECTOR HOPPE 16 of 21 Equipment List PVC Illi 52964 CONDENSATE SURGE TANK 52965 CONDENSATE RETURN PUMP 52966 CONDENSATE RETURN PUMP 52967 SETTLING AGENT TRANSFER PUMP 52968 VISCOSITY MODIFIER TRANS 52969 LATEX CONCENTRATOR TRANS 52970 POSTCON LATEX TRANSFER PUMP 52971 VISCOSITY MODIFIER MIX TANK 52972 SPRAY DRYER FEED PUMP 52973 SPRAY DRYER FEED PUMP 52974 VACCUM CLEANING SYSTEM 52975 PASTE RESIN BAGGER DUST COLLE 52976 SPRAY DRYER HEATER PREFI 52977 SPRAY DRYER DUST COLLE 52978 CONVEYING DUST COLLECTOR 52979 PRODUCT DUST COLLECTOR 52980 PRODUCT DUST COLLECTOR 52981 PRODUCT DUST COLLECTOR 52982 PASTE RESIN BAGGER 52983 PASTE RESIN BAGGER 52984 DUAL DUMP SYSTEM 52985 PASTE RESIN BAG CHECK WEIGH SC 52986 PASTE RESIN BAG CHECK WEIGH SC 52987 PASTE RESIN BAGGER TAKE OFF C 52988 PASTE RESIN BAGGER TAKE OFF C 52989 PASTE RESIN BAG ACCUM 52990 PASTE RESIN BAG REJECT STRGE 52991 PASTE RESIN BAG PALLET TRF C 52992 PASTE RESIN BAG FLATTENER 52993 PASTE RESIN BAG SWIVEL STACK 52994 PASTE RESIN PALLET PLACER 52995 PASTE RESIN BAGGER FLUID 52996 PASTE RESIN BAGGER FLUID 52997 PRODUCT HOPPER AIR SLIDE 52998 PRODUCT HOPPER AIR SLIDE 52999 PRODUCT HOPPER AIR SLIDE 53000 UNGROUND PRODUCT SURGE BIN D 53001 UNGROUND PRODUCT SURGE BIN D 53002 UNGROUND PRODUCT SURGE BIN D 53003 POSTCON LATEX LUMPBREAKER 53004 GRINDER BEARING LUBRICATOR 53005 GRINDER BEARING LUBRICATOR 53006 GRINDER BEARING LUBRICATOR 53007 RESIN GRINDER 53008 RESIN GRINDER 53009 RESIN GRINDER 53010 GRINDER RESIN MICKRO-ATOMIZER 53011 AQUEOUS AMONIA BULK STORAGE TA 53012 AQUEOUS AMONIA BULK STORAGE TA 17 of 21 Equipment List PVC Illi 53013 VCM TRANSFER PUMP 53014 AQUEOUS AMONIA BULK STORAGE PU 53015 AQUEOUS AMONIA TRANSFER FILTE 53016 RCVM COMPRESSOR 53017 RCVM COMPRESSOR 53018 EMULSIFIER MIX TANK FUME EXHAU 53019 EMULSIFIER MIX TANK FUME EXHAU 53020 EMULSIFIER MIX TANK FUME EXHAU 53021 EMULSIFIER MIX TANK FUME EXHAU 53022 SALT SOLUTION MIX TANK EXHAU 53023 SEED TRANSFER TANK EXHAU 53024 SEED HOLDING TANK EXHAU 53025 POLYMERIZATION REACTOR 53026 INSTRUMENTATION UPGRADE-POLYME 53027 POLYMERIZATION REACTOR 53028 INSTRUMENTATION UPGRADE-POLYME 53029 POLYMERIZATION REACTOR 53030 INSTRUMENTATION UPGRADE-POLYME 53031 POLYMERIZATION REACTOR 53032 FLOWMETER 3 VORTEX FOR PASTE 53033 INSTR UPGRD-POLYMERIZATION REA 53034 REACTOR REFLUX CONDENSER 53035 RACTOR STEAM WATER MIXER 53036 REACTOR REFLUX CONDENSER 53037 REACTOR STEAM WATER MIXER 53038 REACTOR REFLUX CONDENSER 53039 REACTOR STEAM WATER MIXER 53040 REACTOR REFLUX CONDENSER 53041 REACTOR STEAM WATER MIXER 53042 VCM RECYCLE COOLER 53043 VCM RECYCLE COOLER 53044 VCM RECYCLE COOLER 53045 VCM RECYCLE COOLER 53046 COMPRESSOR SEAL WATER COOLE 53047 COMPRESSOR SEAL WATER COOLE 53048 RVCM CONDENSER 53049 RVCM CONDENSER 53050 CIRCULATING HOT WATER SURGE 53051 CIRCULATING HOT WATER PUMP 53052 EMULSIFIER MIX TANK AGITA 53053 EMULSIFIER MIX TANK AGITA 53054 EMULSIFIER MIX TANK AGITA 53055 EMULSIFIER MIX TANK AGITA 53056 INITIATOR MIX TANK AGITA 53057 INITIATOR MIX TANK AGITA 53058 INITIATOR MIX TANK AGITA 53059 INITIATOR MIX TANK AGITA 53060 SALT SOLUTION MIX TANK AGITA 53061 BLOWDOWN TANK AGITATOR 18 of 21 Equipment List PVC Illi 53062 BLOWDOWN TANK AGITATOR 53063 HOT WATER SURGE TANK AGITA 53064 EMULSIFIER FILTER 53065 EMULSIFIER FILTER 53066 EMULSIFIER FILTER 53067 EMULSIFIER FILTER 53068 INITIATOR FILTER 53069 INITIATOR FILTER 53070 INITIATOR FILTER 53071 INITIATOR FILTER 53072 VCM FINAL FILTER 53073 VCM FINAL FILTER 53074 VCM FINAL FILTER 53075 VCM FINAL FILTER 53076 VCM PREFILTER 53077 VCM FILTER 53078 VCM FILTER 53079 COMPRESSOR SEAL WATER FILTE 53080 COMPRESSOR SEAL WATER FILTE 53081 CONDENSER VENT FILTER 53082 CONDENSER VENT FILTER 53083 CONDENSER VENT FILTER 53084 CONDENSER VENT FILTER 53085 CONDENSER VENT FILTER 53086 CONDENSER VENT FILTER 53087 CONDENSER VENT FILTER 53088 CONDENSER VENT FILTER 53089 BLOWNDOWN TANK LUMP BREAK 53090 VCM WEIGH TANK SCALE 53091 VCM WEIGH TANK SCALE 53092 SEED STRAINER 53093 SEED STRAINER 53094 BLOWDOWN TANK LUMP BREAK 53095 VCM WEIGH TANK 53096 SEED HOLDING TANK 53097 SEED WEIGH TANK 53098 SETTLING AGENT MIX TANK 53099 PRECON BLEND TANK 53100 PRECON BLEND TANK 53101 POSTCON BLEND TANK 53102 POSTCON BLEND TANK 53103 POSTCON BLEND TANK 53104 AMBIENT SERVICE WATER STORA 53105 AIR RECEIVER 53106 PVC EXPANSION FINAL CLOSI 53107 BALANCE SEPARATOR 53108 BALANCE SEPARATOR PART OF 402 53109 INDIVIDUAL PAGING SYSTEM 53110 MONSANTO TECHNOLOGY 19 of 21 Equipment List PVC Illi 53112 BAG IMPRINTER MODEL A MARSH 53113 S/B TANK 24000 GAL F-419 53114 S/B TANK AGITATOR G-420 S/N 7 53139 AGITATOR SLURRY PIT S/N 120-1 53142 TRACKMOBILE 53150 RAIL CAR UNLOADER-PORTABLE 53299 SCANSTAR COMPUTER-IN COLUMBUS 53301 EXPANSION-INCREMENTAL PASTE 63441 10 FT.DRYER DUST COLLECTOR 63442 GEARBOX:#2 COLD LIME SOFTNER 63443 SOLID STATE DRUM LEVEL CONTROL 63449 PURCHASE NEW FORK TRUCK 63451 MANWAY LID IMPROVEMENTS 63452 10 DRYER SPARE FEED PUMP 63453 REACTOR BAFFLE AND SHAFT 63456 REPLACEMENT DEMINERALIZER 63469 PERMANENT AIR HANDLER 63471 INCINERATOR DETONATION ARRESTE 63472 B/R CHARGE WATER COOLING 63476 PASTE STEAM COILS 63478 PASTE REACTOR CLEANWALL INJECT 63556 VCM EMERGENCY SWITCH SYSTEM 63727 F420 10 Centrifuge Feed Tank 63791 EG500 #17 W/P Emergency Generator 63792 A811 Tank Farm Pump House 64067 VE3558B TERTIARY VCM CONDENSATE TANK 65205 ILLTP001 Diliopolis Telephone System 65246 HE3558A Seal Water Cooler 65247 CO3558 Tertiary VCM Compressor 65248 HE3558B Tertiary VCM Condenser 65249 VE3558A Seal Water Tank 65278 DC4020 13' Dust Collector 65279 DC4021 Dust Transfer System Filter 65280 EX4021 Dust Transfer System Exhauster 65309 ST9000 Stripper Column 65679 BA4293 North Bulk Bagging Station 65680 BA4294 South Bulk Bagging Station 81456 95TM 95TM TRACKMOBILE 81563 CO3555 WEST RECOVERY COMPRESSOR NASH 81573 D301 REACTOR 81574 D302 REACTOR 81575 D303 REACTOR 81576 D304 REACTOR 81577 D305 REACTOR 81578 D306 REACTOR 81579 D307 Reactor 81580 D308 REACTOR 81581 D309 REACTOR 81582 D310 REACTOR 20 of 21 Equipment List PVC Illi 81583 D311 REACTOR 81584 D312 REACTOR 81586 D314 REACTOR 81589 D317 REACTOR 81590 D318 REACTOR 81658 F402 SLURRY BLEND TANK 81659 F403 SLURRY BLEND TANK 81660 F404 SLURRY BLEND TANK 81880 PU3500 CLARIFIED WATER PUMP 81948 VE3552 YARD KO TANK 81957 VE3557A EAST COMP SEAL WATER TANK 81976 BL4009A EAST CONVEYING BLOWER 82006 FI3 111 SLURRY TRANSFER SCALPING FILTE 82097 PU3109 PVA TRANS. PUMP-GP 3196ST 1X1 82140 RD4003 PVC ll 13' DRYER 82142 RE3001 REACTOR 82145 RE3002 REACTOR 82147 RE3003 REACTOR 82149 RE3004 REACTOR 82163 SC4008A PRATER SIFTER(SE) (#1) 82186 VE15105 WASTE WATER TRANSFER TANK 82206 VE3114B MIDDLE RVCM TANK 82312 DC4290 PASTE RESIN BAGGER DUST COLLEC 82593 VE3385 SEED TANK 82749 NC15011 Trane Incinerator 82809 SB6001 #3 BOILER 82811 SB6002 #4 BOILER 82837 VE15011 INCINERATOR QUENCH TANK 21 of 21 SCHEDULE 2.1(c) - LIST OF OFFSITE WAREHOUSES All offsite warehouses, consignment sites or other locations storing products manufactured at the Illiopolis Plant: 1. Young's Warehouse, Illiopolis, Illinois (considered to be an extension of __-site warehouse) 2. PDI Terminal Montreal, Quebec, Canada 3. Delaware Express Termina1, Edgemoor, Delaware 4. Bulkmatic Terminal, Doraville, Georgia 5. Miller Truckline Terminal, Stroud, Oklahoma 6. Specialized Transportation Services Terminal, Greenville, Tennessee 7. Titan Logistics Terminal, Stillwater, Oklahoma 8. EAR, Indianapolis, Indiana (consignment) 9. Bemis, Shirley, Massachusetts (consignment) 10 SCHEDULE 2.1(d) - ASSUMED CONTRACTS 1. Water Supply Agreement with Village of Illiopolis dated February 1, _____ 2. Letter from DOMCO Tarkett, Inc. regarding contract for copolymer __________ October 24, 2001. 3. Contract Extension Agreement with Minnesota Mining and Manufacturing Company (3M) dated January 14, 2000 extending November 14, 1996 Purchase Agreement. 4. Confirmation of Sales Agreement with Wexford International Inc. dated April 30, 2001 re: sale of Borden Chemical and Plastics Operation Limited Partnership _____ material to Radiator Specialty. 5. Sales Agreement with Sunnex Corporation dated September 10, 2001. 6. Sales Agreement with EFTC dated June 25, 2001. 7. Sales Agreement with Interface Flooring Systems Inc. dated October 19, 2000. 8. Environmental Indemnity Agreement between Borden Chemicals and Plastics Limited Partnership, Seller, and Borden, Inc., dated July 28, 1999. 9. Environmental Indemnity Agreement between Borden Chemicals and Plastics Limited Partnership, Seller, and Borden, Inc., dated November 30, 1987. 10. Sales Agreement dated March 20, 1996 between Aventis Rhone Poulenc and Borden Chemicals And Plastics Operating Limited Partnership. 11 SCHEDULE 2.1(e) - PERMITS 1. Illinois Environmental Protection Agency, National Pollution Discharge Elimination System Permit No. IL0001350, issued September 24, 1991, with October _4, 1996 expiration date. New application submitted on April 26, 1996 still pending. 2. Illinois Environmental Protection Agency, Water Pollution Control Permit No. 1997-SC-4302, issued July 17, 1997, with July 1, 2002 expiration date. 3. Illinois Environmental Protection Agency, PVC Manufacturing Facilities Operating Permit, Application No. 82060050, I.D. No. 167812AAG, issued April 14, 1999, with January 11, 2001 expiration date. Clean Air Act Title V permit submitted on March 7, 1996 still pending. 4. Illinois Environmental Protection Agency Division of Water Pollution Control, National Pollutant Discharge Elimination System Reissued Permit no. IL0042366, issued July 27, 1999; 5. Illinois Environmental Protection Agency, Water Pollution Control Permit no. 2000-SC-1733, issued November 15, 2000; 6. Illinois Environmental Protection Agency, Joint Construction and Operating Permit Application no. 99070006, issued October 4, 1999; 7. Illinois Environmental Protection Agency Joint Construction and Operation Permit. Application no. 94040045, issued May 17, 1994. 12 SCHEDULE 2.1(f) INTANGIBLE ASSETS Any and all (a) business information (including pricing and cost information, business and marketing plans and customer and supplier lists); (b) know-how (including manufacturing and production processes and techniques and research and development information); (c) industrial designs, drawings and blueprints and product specifications; (d) operating manuals; (e) databases and data collections; (f) computer software, subject to the terms of any license granted to Seller; and (g) copies and tangible embodiments of any of the foregoing which are used in the operations of the Business as of the Closing Date and those same types of materials, including proprietary suspension agents technology which have historically been used as or which are solely related to the Business as of the Closing Date. 13 SCHEDULE 2.1 (i) RESEARCH EQUIPMENT All research equipment related to the products manufactured at the Illiopolis Plant and located at Geismar, Louisiana: 1. One-Gallon S.S. Mini Reactor - Used for Dispersion resin development work. Equipped with computer controls to monitor continuous addition of VCM, Initiator and Soaps based on BTU (Conversion). Cooling supplied by a separate chiller. 2. Fifteen Gallon S.S. Reactor - Used for Copolymer, Blending resin and other specialty resin suitable for Illiopolis development 50% of the time. Equipped with automatic reactor and condenser temperature control. Cooling supplied by a rental chiller. 3. Centrifuge - Used in conjunction with the fifteen-gallon reactor. 4. Misc. VCM and VAM addition bombs and scales. 5. Niro pilot scale spray dryer for Dispersion resins. 6. Mikro pulverizer grinder for dispersion resin. 7. CPSM - Particle size analyzer for dispersion resin. 8. CPS - Particle size analyzer for dispersion latex development work. 9. Latex Sonifier used in conjunction with CPSM for PSD measurements. 10. Brinkman Brookfield Viscometer 11. Bench Scale fluid bed dryer for Copolymer & Blending resin. 12. Quincy Convection Oven 13. Misc. Hot plates stirrers, glassware, etc. 14. Coulter Counter - Particle size distribution for paste, blending and suspension resins. 15. Microscopy - Optical and Scanning Electron Microscope (SEM) with photographic capabilities. Major use is for morphology and size analysis. 16. Premier model 2000 lab dispersator - plastisol mixing 17. Rheostat - plastisol mixing 18. 2 Gra-Lab model 171 Universal Timers - plastisol mixing, air release timing, film casting, chart heat stability, etc. 19. 2 1000 ml Pyrex beakers - height of rise 20. 2 Vacuum Pumps - Air release, height of rise, film casting 21. 2 Pyrex desiccating bells with wire cages - Air release, height of rise 22. 2 Hobart low shear mixers - plastisol mixing 23. Electronic balance model FX3000 - plastisol mixing, bulk density, etc. 24. Electronic balance model FX6000 - plastisol mixing, bulk density, etc. 25. Brookfield Viscometer with spindles - Brookfield viscosity 26. 2 Hegman fineness of grind gages and knife - Hegman fineness of grind 27. Gel point Apparatus - gelation point 28. Hotplate - gelation point 29. Pocket probe pyrometer - gelation point 30. Precision Quincy Corp Oven - film casting, heat stability 31. Gardner knife #239 (14cm) - film casting 32. Gardner knife #910 (21.5cm) - film casting 33. Bird vacuum plate - film casting 34. CSI calibrated micrometer - blow ratio on foams 35. Triple beam balance - severs viscosity 36. Severs Extrusion rheometer - severs viscosity 14 37. Digital stopwatch - severs viscosity, huff ring test, etc. 38. Huff ring apparatus - huff ring test 39. Fisher Isotemp Circulator - water bath 40. Water chiller - water bath 41. Water bath (green tub) - water bath 42. Ferro plates - film casting 43. Glass plates - film casting 44. Leneta paper - film casting, haze, gloss 45. Release paper - film casting, color 46. BYK-Gardner gloss meter - film gloss 47. C.W. Brabender Aqua Tester - % moisture 15 SCHEDULE 2.4(d) - FORM OF ESCROW AND TRUST AGREEMENT TRUST AND ESCROW AGREEMENT This Trust and Escrow Agreement ("Agreement") is entered into this ___ day of ____________, 2002, by and between Borden Chemicals and Plastics Operating Limited Partnership ("BCP"), Formosa Plastics Corporation, Delaware ("Formosa"), and Wilmington Trust Company (as escrow agent hereunder "Escrow Agent"). RECITALS A. BCP and Formosa are parties to a certain Asset Purchase Agreement dated as of March 7, 2002 (the "APA"), wherein BCP has agreed to sell, and Formosa has agreed to purchase, certain assets associated with a polyvinyl chloride resin manufacturing facility located in Illiopolis, Illinois. B. Section 2.4(d) of the APA requires Formosa to deposit with BCP earnest money in the amount of $1,000,000 (the "Earnest Money Deposit"). BCP, together with its subsidiary, BCP Finance Corporation, filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court") under Bankruptcy Case Number 01-1268 (RN) (the "Bankruptcy Case"). Accordingly, the APA provides that the Earnest Money Deposit does not constitute an asset of BCP and is to be held in trust and escrow in a separate interest-bearing account containing no other funds of BCP pursuant to a trust and escrow agreement pending the closing of the transaction set forth in the APA. C. Pursuant to the provisions of the APA, Formosa and BCP have requested Escrow Agent hold in escrow in accordance with the provisions of the APA and this Agreement the Earnest Money Deposit and the earnings thereon, as further provided herein and to act as Escrow Agent hereunder. D. Escrow Agent is willing to hold the Earnest Money Deposit and the earnings thereon in accordance with the provisions of the APA and this Agreement and to act as Escrow Agent hereunder. NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. Appointment of Escrow Agent. BCP and Formosa hereby appoint Wilmington Trust Company as the Escrow Agent hereunder subject to and in accordance with the provisions of this Agreement, and Escrow Agent accepts such appointment and agrees to act a Escrow Agent hereunder, subject to and in accordance with the provisions of this Agreement. 16 2. Establishment of Escrow Account. Escrow Agent agrees to receive the Earnest Money Deposit from Formosa and agrees to hold, invest and disburse the Earnest Money Deposit and the earnings thereon in escrow, subject to and in accordance with the provisions of this Agreement. 3. Deposit: No-Commingling (a) Concurrently with the execution of this Agreement, Formosa a has deposited the Earnest Money Deposit directly with the Escrow Agent. The Earnest Money Deposit will be held in trust and maintained in a separate interest-bearing deposit account maintained at the Escrow Agent (the "Trust Account"). The Trust Account will contain no funds other than the Earnest Money Deposit and interest earned thereon. The funds in the Trust Account will not be utilized, released, disbursed or relinquished except in strict accordance with the terms of this Agreement. (b) The Escrow Agent shall invest the Earnest Money Deposit Property in Eligible Investments, pursuant to and as directed by the written instruction Of BCP. "Eligible Investments" shall mean (i) obligations (including certificates of deposits and banker's acceptances) of any domestic commercial bank having capital and surplus in excess of $500,000,000 or (ii) investment in the Escrow Agent's U.S. Treasury Securities Money Market Fund. If otherwise qualified, other obligations of the Escrow Agent or any of its, affiliates shall qualify as Eligible Investments. All earnings received from the investment of the Earnest Money Deposit shall be credited to, and shall become a part of, the Trust Account. The Escrow Agent shall have no liability for any investment losses, including without limitation any market loss on any investment liquidated prior to maturity in order to make a payment required hereunder. 4. Trust Funds: Waiver of Setoff Rights. Escrow Agent hereby acknowledges receipt of the Earnest Money Deposit and agrees that the Earnest Money Deposit and all interest earned thereon are trust funds to be held and delivered pursuant to the terms of this Agreement. Escrow Agent hereby waives any and all rights of setoff or counterclaim against the funds in the Trust Account. BCP acknowledges that the funds in the Trust Account do not constitute an asset of BCP and are not subject to the claims of any creditor of BCP in BCP's Bankruptcy Case. 5. Disbursement of Earnest Money Deposit. The Earnest Money Deposit, together will all interest earned thereon, will be disbursed from the Trust Account as follows: (a) To BCP (i) upon consummation of the transactions contemplated by the APA pursuant to Section 2.6 of the APA or (ii) pursuant to Section 9,4(b) of the APA. (b) To Formosa, if the APA is terminated pursuant to Section __ thereof, or if Formosa exercises its remedy pursuant to Sections 9.2 or 9.4(a) of the APA. 6. Disbursement Procedure. Upon the occurrence of any one of the events described in paragraph 5 foregoing, the party entitled to receive the Earnest Money Deposit will provide written notice to the Escrow Agent and the other party requesting disbursement of the Earnest Money Deposit and all interest earned thereon. Unless the Escrow Agent is notified by the other party within five (5) days that such other party contests the claiming party's right to receive the Earnest Money Deposit, the Escrow Agent shall disburse the Earnest Money Deposit, together 17 with all interest earned thereon, to the claiming party on the fifth (5th) day after receipt of the request. If either BCP or Formosa claim entitlement to the Earnest Money Deposit, and the other party contests such claimant's right to the same, the contesting party shall notify the Escrow Agent in writing of the contested claim before the expiration of said five (5) day period, in which event the Escrow Agent will not disburse the Earnest Money Deposit to the party until the dispute is resolved by the Bankruptcy Court. If the disbursement is contested as herein described, upon resolution of the dispute by the Bankruptcy Court, the Escrow Agent will disburse the Earnest Money Deposit, together with interest earned thereon, to the party identified as the proper recipient thereof by the Bankruptcy Court. 7. Rights of Escrow Agent. In performing its duties hereunder, the Escrow Agent shall not incur any liability to anyone for damages, losses, or expenses except for willful misconduct or gross negligence, and accordingly: (l) The Escrow Agent undertakes to perform such duties and only such duties as are specifically set forth in this Agreement. The Escrow Agent shall not have any duties or responsibilities except those expressly set forth in this Agreement or be a trustee for or have any fiduciary obligation to any party hereto. (2) The Escrow Agent shall not be liable for any error of judgment made in good faith by an officer or officers of the Escrow Agent, unless it shall be conclusively determined by a court of competent jurisdiction that the Escrow Agent was grossly negligent in ascertaining the pertinent facts. (3) The Escrow Agent shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance this Agreement. (4) None of the provisions of this Agreement shall require the Escrow Agent to expend or risk its own funds or otherwise to incur any liability, financial or otherwise, in the performance of any of its duties hereunder. (5) The Escrow Agent may conclusively rely and shall be fully protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties. (6) The Escrow Agent may consult with counsel and the advice or any opinion of counsel shall be full and compete authorization and protection in respect of any action taken or omitted by it hereunder in good faith and in accordance with such advice or opinion of counsel. (7) The Escrow Agent shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, entitlement order, approval or other paper or document. (8) The Escrow Agent may execute any of the powers hereunder or perform any duties hereunder either directly or by or through agents, attorneys, custodians econominees 18 appointed with due care, and shall not be responsible for any willful misconduct or gross negligence on the part of any agent, attorney, custodian or nominee so appointed (9) Formosa and BCP agree to equally share the cost of and to pay the Escrow Agent's compensation for its normal services hereunder in accordance with the fee schedule attached hereto as Exhibit A and made a part hereof. (10) The provisions of this Section shall survive the termination of this Agreement or the earlier resignation or removal of the Escrow Agent. In no event shall the Escrow Agent be liable for special, indirect or consequential loss or damage of any kind whatsoever (including, but not limited to, lost profits). 8. Indemnity: BCP and Formosa hereby jointly and severally agree to indemnify the Escrow Agent from and against any claims or expense that the Escrow Agent may incur in performing its duties hereunder provided that the Escrow Agent complies with its obligations under this Agreement. 9. Notices. All notices, requests and other communications to any party hereunder shall be in writing (including facsimile) and shall be given: if to BCP to: Borden Chemicals and Plastics Operating Limited Partnership Hwy. 73 Geismar, Louisiana 70734 Facsimile: (225) 673-0626 Attention: Mark J. Schneider with a copy to: Jones, Day, Reavis & Pogue 3500 SunTrust Plaza 303 Peachtree Street, N.E. Atlanta, Georgia 30308 Facsimile: (404) 581-8330 Attention: Neil P. Olack, Esq. And to: Goldberg, Kohn, Bell, Bleck, Rosenbloom & Moritz 55 E. Monroe Street Suite 3700 Chicago, Illinois 60603 Facsimile: (312)-332-2196 Attention: Alan P. Solow, Esq. and Dimitri G. Karca__s, Esq. if to Formosa to: 19 Formosa Plastics Corporation, Delaware 9 Peach Tree Hill Road Livingston, N.J. 07039 Facsimile: (973)-716-7483 Attention: Robert Chou, Senior Vice President with a copy to: Klett, Rooney, Lieber and Schorling, P.C. The Brandywine Building 1000 West Street, Suite 1410 Wilmington, DE 19801 Facsimile: (302) 552-4295 Attention: Mark J. Gundersen, Esq. 20 if to Escrow Agent to: Wilmington Trust Company Rodney Square North 1100 North Market Street Wilmington, DE 19890 Attention: Corporate Custody Facsimile: (302) 651-1908 or such other address or facsimile number as such party may hereafter specify for such purpose by notice to the other party to this Agreement. Each such notice, request or other communication shall be effective (i) if given by facsimile transmission, when such facsimile is transmitted to the facsimile number specified in this paragraph 9 and the appropriate confirmation is received, or (ii) if given by any other means, when delivered at the address specified in this paragraph 9. 10. Binding Obligations. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors, personal representatives and assigns. 11. Counterparts. This Agreement may be executed in two or more counterparts, each of which together shall constitute a single agreement. 12. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to the principle of conflicts of laws thereof. This Agreement is also subject to any applicable order or act of the Bankruptcy Court. In the event either party shall institute a legal action as a result of the default in the other party's performance under this Agreement, any such action shall be brought exclusively in the Bankruptcy Court which shall retain exclusive jurisdiction with respect to the interpretation, performance, and enforcement of this Agreement. 13. Termination. This Agreement shall automatically terminate upon the distribution of all the Earnest Money Deposit and all interest thereon. 14. Execution in Counterparts. This Agreement may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. 21 IN WITNESS WHEREOF, the parties to this Agreement have caused this Agreement to be duly executed by their respective authorized officers as of the date and year first above written. BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP By: BCP Management, Inc., Its General Partner By: --------------------------------- Name/Title: ------------------------- FORMOSA PLASTICS CORPORATION, DELAWARE By: --------------------------------- Name/Title: ------------------------- ------------------------------------ WILMINGTON TRUST COMPANY By: --------------------------------- Name/Title: ------------------------- 22 SCHEDULE OF FEES Setting up Escrow Account $1,000 Annual Fee $2,500 23 SCHEDULE 3.2 - CURE PAYMENTS NONE 24 SCHEDULE 4.4 -- PERMITTED LIENS ON REAL PROPERTY 1. Document #365846 -- Illinois Power Co. Easement for electric substation. Book 678 Page 305. 2. Document #306540 -- Easements for Illinois Power Co. Location of easements unknown. Location cannot be determined from recorded documents. Book 589 Page 837. 3. Document #285976 -- Illinois Power easement. (Note: title comm. refers to doc. #285975 which appears to be a misprint.) Book 553 Page 88. 4. Document #306235 -- Illinois Power Co. easement for pipeline. Book 589 Page 380. 5. Document #365845 -- Three easements to Illinois Power Co. Book 687 Page 301. 6. Document #231750 -- Easement along north and south roadway for Illinois Power Co. Book 390 Page 143. 7. Document #369757 -- Three easements to Illinois Power Co. Vol. 683 Page 890. 8. Document #309300 -- Easement for Commonwealth Edison Co. transmission online. Book 593 Page 931. 9. Document numbers 306235 and 309300. Also refers to document #33706_ which is easement for 20 foot easement centering on "existing" power lines. Exact location not known and not established from field information. Also refers to document #287983 which is a 10 foot easement for sewer drain. 10. Documents #228766, 235868, and 228820. Restrictions for U.S.A. filed for property released from Sangamon Ordinance Plant. Restrictions include maintenance of "Victory Road" and are not noted on plat. 11. Instrument dated March 9, 1896 and recorded March 10, 1896 in book 123 of mortgages pg. 637 is document allowing 10" field tiles over southeast quarter section _1. 12. Document #287983 -- 10 foot easement for sewer drain. 13. Document #60849 -- Easements for 10" field tile over part of southeast quarter of section 11. Book 557 Page 272. 14. Document #239022 -- Easement for use of "Victory Road" and railroad siding track. 15. Document #241131 -- Easement for use of "Victory Road." (Note: title co__. refers to doc. #341131 which appears to be a misprint.) 16. Document #328270 -- reservation of use of switches, siding, etc. Also restriction on production or sale of agricultural chemicals and fertilizers. Book 622 Page _24 17. Document #335661 -- Restriction of sale of agricultural chemicals and fertilizer. 18. Document #577732 -- Appears to be within the west half of section 11-16-__ third principal meridian, Sangamon County. 19. Documents #247356 and 232951 -- Deeds from U.S.A. to State of Illinois ___ various roads constructed in Townships 17 and 16 north and range 2 west of the third principal meridian, Sangamon County, IL. Originally part of Sangamon Ordinance Plant. Book 396 Page 167. 20. Document #86979 refers to the following: 1. Document #367822 -- 20 foot easement to Illinois Power Co. 2. Document #75159 and 75160 -- field tile agreements for installation of 12" and 15" field tiles in south half of section 11. (Ref. Book 144 of Mortgages, Page 521.) 3. Document #317083 -- Easement for ingress and egress along "Victory Road." 25 4. Document #366009 -- (Reference Book 678, Page 528) describes 100 foot strip (known as Victory Road). Deeded by quit claim October 4, 1974 5. Document #467129 -- indicates a quit claim deed to Illinois Power Co. 45 by 100 feet lying directly west of the "not included" parcel in the southeast corner of the northeast quarter of section 11. 21. Document #311009 easement made by Delcalb Agricultural Association, Inc., to Illinois Power Company, dated August 5, 1965 and recorded October 13, 1965 in Book 596 Page 512 for purpose of constructing/maintaining a 30 inch pipe line. 22. Document #337067 -- 20-foot easement centering on existing power lines Exact location not known and not established from field information. 23. Document #311100 conveys to Illinois Power Company a parcel 45' x 10_' parcel. SCHEDULE 4.7 -- VIOLATIONS OF LAWS OR PERMITS 1. There is a potential NESHAP enforcement action pending with the IEPA. Two VCM releases in 1999 have been combined with two later releases to form this potential action. BCP has met with IEPA on several occasions with no final Agency action at this time. 2. There was a notice of violation resulting from a hazardous waste inspection in September, 2001. A subsequent meeting with IEPA resulted in verbal notice that no further action is expected. 3. Certificate of Publication dated January 27, 2000, for failure to submit source water and optimal corrosion control treatment recommendation as required by USE_A Lead Rule. 4. IEPA Notice of Violation UU -- 1999 -- 00224 dated September 27, 1999. 5. IEPA Notice of Violation A -- 2001 -- 00085 dated April 27, 2001 6. IEPA Notice of Violation A -- 1999 -- 00259 dated August 2, 1999 7. IEPA Notice of Violation A -- 2000 -- 00147 8. IEPA Notice of Violation L -- 2001 -- 01380 dated November 2, 2001 9. IEPA Notice of Violation EPA I.D. No.: ILD 005 158 548 dated August 22, 2000. 27 SCHEDULE 4.8 - PENDING OR THREATENED LITIGATION 1. Dyer, James v. BCP; Index No. 01-CV-3016 (1/17/01), U.S. Dist. C_. Cert. Dist. Of Illinois. (Acquiror shall not assume any obligation or liability for this action.) 2. In re Borden Chemicals and Plastics Operating Limited Partnerships, et al; Case Nos. 01-1268; Motion of Congoleum Corporation for an Order (i) Authorizing Congoleum to Cancel Its Supply Contract with the Debtor, or Alternatively (ii) Vacating the Automatic Stay and Compelling Immediate Rejection of the Supply Contract. 28 SCHEDULE 4.10 - EMPLOYEE BENEFITS Union Employees a. Life Insurance (wADB) Employee, Spouse, Child b. Short Term Disability c. Long Term Disability d. Medical Benefits e. Dental Benefits f. Associate Savings Plan (401k) g. Retirement Income plan (Pension) h. Life Insurance - Cancer Only - $25,000 coverage on each employee i. Vacation - per union contract j. Holidays - per union contract - 12 days k. Bereavement Pay 1. Employee Assistance Program (EAP) m. Safety shoe Plan - $100 allowance n. Tool allowance - $70.00 o. Safety Glasses Program Salaried Employees a. Life Insurance - Employee, Spouse, Child b. Accidental Death & Dismemberment Insurance c. Business Travel Insurance d. Salary Continuance (STD) e. Long Term Disability f. Medical Benefits g. Dental Benefits h. Cash Account Plan (Pension) i. Retirement Savings Plan (401k) j. Vacation - 0-4 years - 10 days January 1 of year 5 - 15 days January 1 of year 10 - 20 days January 1 of year 20 - 25 days k. Holidays - 12 days 1. Employee Assistance Program (EAP) m. Safety shoe Plan - $100 allowance n. Safety Glasses Program 29 SCHEDULE 4.11- ENVIRONMENTAL MATTERS a) None b) None c) 1. Water Issues Certificate of Publication dated January 27, 2000 for failure to submit source waiver and optimal corrosion control treatment recommendation as required by USEPA Lead Rule; Illinois EPA Notice of Violation W-1999-00224 dated September 27, 1999. 2. Air Issues Illinois EPA Notice of Violation A-2001-00085 dated April 27, 2001; Illinois EPA Notice of Violation A-1999-00259 dated August 2, 1999; Illinois EPA Notice of Violation A-2000-00147. 3. IEPA RCRA Issues Illinois EPA Notice of Violation L-2001-01380 dated November 2, 2001. 4. EPA RCRA Issues USEPA Notice of Violation EPA I.D. No.: ILD 005 158 548 dated August 22, 2000. d) 1. There is a potential NESHAP enforcement action pending with the IEPA. Two VCM releases in 1999 have been combined with tow later releases to form this potential action. BCP has met with IEPA on several occasions with no final Agency action at this time. 2. There was a notice of violation resulting from a hazardous waste inspection in September, 2001. A subsequent meeting with IEPA resulted in verbal notice that no further action is expected. 3. Phase II Environmental Assessment - Geotechnology Report No. 062450 dated January 15, 2002. 30 e) Naphtha tank removed in the 1960 - 1970 period. There are no records of this tank at the Illiopolis Plant. SCHEDULE 4.13 - CUSTOMERS Contracts Congoleum Corporation Mannington Resilient Floors Domco Inc Floor Products Seaman Corporation BASF Corporation PolyOne Plastic Compound & Colors Interface Flooring Systems Inc Sherwin Williams Company E-A-R Specialty Composites Sunnex Aventis Crop Science Henkel Surface Technologies Rutland Plastic Technologies DIAB Inc. Bemis Associates Inc Minnesota Mining & Mfg Co Inc Spot basis Armstrong World Industries Eftec North America LLC Belt Concepts of America, Inc. Marchem DuBlon, Inc. Calhoun Plastics & Chemicals, Inc. Nan Ya Plastics Corp. USA Valspar Corporation White Cap Inc Reeves Brothers Inc. Bradford Industries Inc Uniroyal Engineered Products Lakeside Plastics Corp Pandel Chemical The Oak Rubber Co Champion Laboratory Inc Textron Automotive Company Brentwood Industries Inc Textileather Corp Apache Mills Inc Scandura Inc Loes Enterprises Thermoclad Co Inc Saint - Gobain Performance Plastics Riverdale Mills Corp W R Grace & Co 32 Penn Color Inc Plasti Dip International Bruin Plastic Co Inc SCHEDULE 6.4 - EMPLOYEE SEVERANCE BENEFITS Exempt Employees - -------------------- Name Total - ---- ------------- 1 $ 16,447.54 2 $ 42,002.73 3 $ 20,598.30 4 $ 31,761.68 5 $ 20,000.93 6 $ 45,564.50 7 $ 22,500.00 8 $ 73,667.91 9 $ 31,810.52 10 $ 16,848.00 11 5 50,988.64 12 $ 27,709.15 13 $ 73,155.15 14 $ 9,922.50 15 $ 37,324.80 16 $ 23,989.50 17 $ 37,494.90 18 $ 28,820.53 19 $ 36,585.00 20 $ 37,622.62 21 $ 65,498.34 22 $ 62,131.05 23 $ 28,223.35 24 $ 23,399.98 25 $ 27,604.02 26 $ 33,654.72 27 $ 36,180.00 28 $ 65,715.30 29 $ 47,958.12 30 $ 91,513.80 31 $ 57,578.85 32 $ 76,783.95 ------------- $1,301,056.36 34 Non Exempt Employees - -------------------- Name Total - ---- ---------- 1 $ 4,354.92 2 $12,938.80 3 $14,466.51 4 $ 2,456.81 5 $ 7,707.16 6 $ 1,578.85 7 $ 5,151.82 8 $13,468.82 ---------- $62,123.70 Notwithstanding the above, Acquiror shall not be liable for payment of FICA, SUI or FUI associated with payment of severance to the above employees. SCHEDULE 6.9 - CONFIDENTIAL CONTRACTS All material agreements concerning the operation of the Business not otherwise set forth in Schedule 2.1(d): 1. Sales Agreement dated March 15, 2000 between Diab LP and Borden Chemicals And Plastics Operating Limited Partnership; 2. Sales Agreement dated May 24, 2001 between Rutland Plastic Technologies, Inc. and Borden Chemicals And Plastics Operating Limited Partnership; 3. Sales Agreement dated November 19, 1997 between Seaman Corporation and Borden Chemicals And Plastics Operating Limited Partnership; 4. Agreement for Engineering Services dated July 26, 2001 between Unified Theory, Inc. and Borden Chemicals And Plastics Operating Limited Partnership; 5. Freight Rates Agreements between Union Pacific Railroad Company and Borden Chemicals And Plastics Operating Limited Partnership for the following shipping locations: 1. From Allemania, LA to Illiopolis, IL dated December 1, 2000 2. From Freeport, TX to Illiopolis, IL dated December l, 2001 3. From Gregory, TX to Illiopolis, IL, dated December 1, 2001 4. From Lake Charles, LA to Illiopolis, IL dated December 1, 2001 5. From Plaquemine, LA to Illiopolis, IL dated December 1, 2001 6. Sales Agreement dated April 11, 2001 between Henkel Surface Technologies and Borden Chemicals And Plastics Operating Limited Partnership; 7. Sales Agreement dated January 3, 2001 between Mannington Mills, Inc. and Borden Chemicals And Plastics Operating Limited Partnership; 8. Sales Agreement dated March 25, 1999 between BASF (f/k/a Morton International, Inc.) and Borden Chemicals And Plastics Operating Limited Partnership; 9. Sales Agreement dated November 29, 1999 between Congoleum Corporation and Borden Chemicals And Plastics Operating Limited Partnership; 10. Sales Agreement dated February 15, 2000 between Geon Formulator Group ( ______) and Borden Chemicals And Plastics Operating Limited Partnership; 11. Letter Agreement dated October 25, 2001 between Congoleum Corporation and Borden Chemicals And Plastics Operating Limited Partnership; 12. Amendment 4 to Contract Reg-NS-C 14619 dated December 3, 2001 between Borden Chemicals And Plastics Operating Limited Partnership and Canadian Pacific Railway and Norfolk Southern Railway Company. 13. Transportation Contract NS 18051 dated September 14, 2001 between Borden Chemicals And Plastics Operating Limited Partnership and Illinois Central Railroad Company and Norfolk Southern Railway Company. 36 14. Transportation Contract NS 18052 dated September 14, 2001 between Borden Chemicals And Plastics Operating Limited Partnership and CSX Transportation, Inc. and Norfork Southern Railway Company, 15. Transportation Contract Reg-NS-C-18337 dated September 14, 2001 between Borden Chemicals And Plastics Operating Limited Partnership and Norfolk Southern Railway Company. 16. Amendment No.5 to Contract Reg-NS-C 15889 dated September 14, 2001 between Borden Chemicals And Plastics Operating Limited Partnership and Norfolk Southern Railway Company. SCHEDULE 6.11 - ENGINEERING AND MECHANICAL INFORMATION All the engineering and mechanical information set forth herein to the extent solely related to the Illiopolis Plant. A. General 6. P&I flow diagram showing all equipment in the plant which should also include fire fighting system, VCM/VAM unloading system, RW/HW system, cooling water system, utilities such as nitrogen, natural gas, instrument air, well and raw water treatment. 7. Machine list showing specifications for all equipment corresponding to P&I flow diagram. 8. Sequence chart of polymerization, 9. List of laboratory equipment. 10. Document and information of office LAN system to be transferred. 11. Underground pipeline construction drawings 12. Human Resources records 13. Construction bid packages and drawings 14. Standard Operating Procedures B. Maintenance for mechanical instrument and electricity 1. Overall (a) List of maintenance equipment (b) Spare parts list (c) Vendor document and drawings for each equipment (d) Engineering standard including piping standard (e) Maintenance record of major equipment (f) Record of mechanical integrity required by OSHA 2. Mechanical (a) Piping drawings (b) Drawing for each building (c) Boring data of the plant (d) List of leased equipment such as fork lift, track mobile, track shoe, etc. 3. Instrument and electrical (a) Document for process computer (both hardware and software) (b) Instrument list (c) Motor list (d) Instrument loop drawing (e) Electrical one line diagram and wiring diagram (f) Document for instrument and electrical UPS system (g) Layout drawings for control room and switchgear room (h) Information of substation equipment C. Safety and environment 1. List of safety equipment 2. Hazardous area classification drawing 3. Document for monitoring system 4. Printout record of area monitoring and personal monitoring record 5. Record of analysis required by environmental regulations (air, water, hazardous material, etc.) 6. PSM compliance data 7. All current and past environmental permits, documents, applications, correspondence, agreements, etc, 8. All current and past safety documents, filings, records, correspondence, agreements, etc. 9. Compliance record for TCLP test for solid waste disposal 10. Material Safety Data Sheets for all products D. License l. License agreements with other companies for special technique, chemicals, etc. E. Purchasing and receiving 1. Document for purchasing 2. Document for receiving of material and equipment F. Quality Control and Laboratory l. Product Specification 2. Customer Specification 3. Test methods 4. ISO certification, if applicable EX-10.53 13 dex1053.txt ORDER APPROVING ASSET PURCHASE AGREEMENT EXHIBIT 10.53 UNITED STATES BANKRUPTCY COURT DISTRICT OF DELAWARE In re: | | Jointly Administered BORDEN CHEMICALS AND | Case No. 01-1268 (PJW) PLASTICS OPERATING LIMITED | PARTNERSHIP, a Delaware limited | partnership, et al., | -- -- | | Chapter 11 Debtors. | ORDER (A) APPROVING ASSET PURCHASE AGREEMENT; (B) AUTHORIZING SALE OF ILLIOPOLIS ASSETS FREE AND CLEAR OF LIENS, CLAIMS AND ENCUMBRANCES; (C) AUTHORIZING ASSUMPTION AND ASSIGNMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES RELATED THERETO; AND (D) GRANTING RELATED RELIEF (DOCKET NO. 615) ----------------------------------------------------------------- This matter coming before the Court on the Motion of Debtors and Debtors in Possession for (I) an Order Approving Certain Bid Procedures and (II) a Separate Order (A) Approving Asset Purchase Agreement; (B) Authorizing Sale of Illiopolis Assets Free and Clear of Liens, Claims and Encumbrances; (C) Authorizing Assumption and Assignment of Executory Contracts and Unexpired Leases Related Thereto; and (E) Granting Related Relief (D.I. #615) (the "Sale & Procedures Motion"), filed by the above-captioned debtors and debtors in possession (collectively, the "Debtors); the Court having (a) reviewed the Sale & Procedures Motion, the underlying Asset Purchase Agreement, (as may reasonably be amended, the "Agreement")/1/ dated March 4, 2002 by and among the Debtors and Formosa Plastics Corporation, Delaware (the "Acquiror"), a copy of which is attached to the Sale & Procedures Motion as Exhibit A, and all pleadings and other filed documents relating thereto and (b) heard - ---------------- /1/ Capitalized terms not defined herein have the meanings ascribed to them in the Sale & Procedures Motion or in the Agreement. the statements of counsel regarding certain relief requested in the Sale & Procedures Motion at a hearing before the Court (the "Sale Hearing"); NOW THEREFORE, the Court makes the following findings of fact and conclusions of law:/2/ FOUND that the Court has jurisdiction over this matter pursuant to 28 J.S.C. (S) 157 and 1334; FOUND that this is a core proceeding pursuant to 28 U.S.C. (S) 157(b)(I); FOUND that on March 13, 2002, this Court signed its Illiopolis Bid Procedures Order (i) setting the date for the Illiopolis Assets Sale Hearing; (ii) approving minimum initial and incremental overbid amounts, the Breakup Fee and the Expense Reimbursement; (iii) setting a date by which a Qualified Bid must be submitted; (iv) setting procedures for, if necessary, the Illiopolis Assets Auction; and (v) providing other related relief; FOUND that service of, notice of and opportunity to be heard on the Sale & Procedures Motion, the Sale Hearing and all transactions proposed under the Agreement was sufficient and adequate under the circumstances. FOUND that the Debtors' sale of the Illiopolis Assets pursuant to the Agreement, free and clear of any and all claims, causes of action, liens, encumbrances, charges, interests, security interests, assignments, chattel mortgages, pledges or other similar security interests, or any mortgages, deeds of trust, federal, state or local tax liens, any obligations of payment by Debtors or equitable remedies against Debtors, of any kind or nature whatsoever, whether liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, - -------------------- /2/ This Order constitutes the Court's findings of fact and conclusions of law under Fed. R. Civ. P. 52, as made applicable by Bankruptcy Rules 7052 and 9014. Any findings of fact shall equitable, secured or unsecured (collectively, but excluding Permitted Liens as defined in the Agreement and set forth in Schedule 4.4 to the Agreement, "Property Interests"), is allowable under section 363 of the Bankruptcy Code, is a sound exercise of the Debtors' business judgment and is in the best interests of the Debtors' estates; FOUND that the Assumed Contracts constitute an integral part of the Illiopolis Assets and the Debtors' assumption and assignment of the Assumed Contracts (including, to the extent they become Assumed Contracts pursuant to the Agreement, the Confidential Contracts) is allowable under section 365 of the Bankruptcy Code, is supported by sufficient assurance of the Acquiror's ability to satisfy the requirements of section 365(b)(l) of the Bankruptcy Code, is made with any and all defaults having been cured or to be cured according to the Agreement, is inextricably intertwined with the sale of the other Illiopolis Assets, is a sound exercise of the Debtors' business judgment and is in the best interests of the Debtors' estates; FOUND that the Debtors' disclosure of the terms and provisions of, and any extradocumentary information concerning, the Confidential Contracts, under the limited terms described in the Agreement and Sale Motion, is essential to the sale of the Illiopolis Assets, subject to the conditions set forth herein; FOUND, that Debtors and Acquiror are, and at all times relevant hereto have been, unrelated parties, and Acquiror and its principals neither are nor have been insiders of Debtors or any of them. Debtors and Acquiror negotiated and executed the Agreement at arms length, and without collusion, and the offer was made in good faith and Acquiror is a good faith purchaser of the Illiopolis Assets entitled to the protections of 11 U.S.C. section 363(m). Neither the Debtors nor Acquiror have engaged in any conduct that would cause or permit the - -------------------- constitute a conclusion of law even if it is stated as a conclusion of law, and any conclusion of Agreement to be voided under 11 U.S.C. 363(m). Acquiror is paying fair value for the assets, rights and properties to be transferred and is not a successor in interest to any of Debtors for any legal or equitable purpose with respect to any claims on account of their consummation of the Agreement as and to the extent set forth therein; FOUND that the Debtors, during the pendency of the Chapter 11 Cases, adequately marketed the Illiopolis Assets which are the subject of the Agreement and that the Agreement constitutes the highest and best offer for such assets; FOUND, that on March 25, 2002, an auction was conducted in accordance with Illiopolis Bid Procedures Order and, to the extent consistent therewith, the First Bid Procedures Order and that (i) Acquiror was an active bidder at the auction, (ii) Acquiror submitted the highest and best bid at the auction, and (iii) the auction and sale process was conducted in compliance with the Illiopolis Bid Procedures Order and, to the extent consistent therewith, the First Bid Procedures Order; FOUND that the Transfer is within the scope of section 1146(c) of the Bankruptcy Code; the Court having determined that the legal and factual bases set forth in the Sale & Procedures Motion and at the Sale Hearing establish just cause for the relief granted herein; IT IS HEREBY ORDERED THAT: 1. The Sale & Procedures Motion is GRANTED as set forth below. 2. The Agreement is approved in all respects, and the Debtors are authorized to enter into and perform their obligations under the Agreement. - -------------------- law shall constitute a finding of fact even if it is stated as a finding of fact. 3. Pursuant to sections 105, 363(b), 363(f), and 363(m) of the Bankruptcy Code and Bankruptcy Rules 2002 and 6004, the Debtors shall be, and hereby are, authorized to sell, convey, assign, transfer and deliver to Acquiror, and this Court hereby approves and orders such sale, conveyance, assignment, transfer and delivery to Acquiror of, all assets, rights and properties to be sold, conveyed, assigned, transferred and delivered to Acquiror pursuant to the Agreement, on terms consistent with the Agreement, free and clear of all Property Interests, all to the fullest extent contemplated by the Agreement, effective upon the Closing. 4. Except as expressly permitted or otherwise specifically provided for in the Agreement or this Order, (i) Acquiror shall have no liability or responsibility for any liability or other obligation of the Debtors arising under or related to the Illiopolis Assets; and (ii) Acquiror shall have no liability or responsibility for any claims against the Debtors or any of their predecessors or affiliates, and Acquiror shall have no successor or vicarious liabilities of any kind or character whether known or unknown as of the Closing, now existing or hereafter arising, whether fixed or contingent, with respect to the Debtors or any obligations of the Debtors arising prior to the Closing, including but not limited to liabilities on account of any taxes arising, accruing, or payable under, out of, in connection with or in any way relating to the operation of the Debtors' businesses prior to the Closing, and any environmental liabilities of any kind or nature, arising prior to the Closing. 5. Under no circumstances shall Acquiror be deemed a successor of or to the Debtors for any Property Interests against or in the Debtors or the Illiopolis Assets of any kind or nature whatsoever. Except as expressly permitted or otherwise specifically provided in the Agreement or this Order, the sale, transfer, assignment, and delivery of the Illiopolis Assets shall not be subject to any Property Interests, and all Property Interests of any kind or nature. whatsoever shall remain with, and continue to be obligations of, the Debtors, to the same extent and with the same priority as each such Property Interests now attach to or affect the Illiopolis Assets (including, without limitation, the Property Interests of the Debtor's postpetition secured lenders, as set forth pursuant to prior order of the Court), subject to the Court's power to determine the validity, extent and priority of any such Property Interests, and subject to any claims and defenses the Debtors may possess with respect thereto. All persons holding Property Interests against or in the Debtors or the Illiopolis Assets of any kind or nature whatsoever shall be, and hereby are, forever barred, estopped and permanently enjoined from asserting any demands, claims or lawsuits against Acquiror arising out of or relating to the Property Interests; provided, however, that the Debtors are not barred, estopped or enjoined from asserting any demands, claims or lawsuits against Acquiror arising out of or relating to the Agreement. 6. At Closing, the Illiopolis Assets shall be sold and transferred free and clear of all Property Interests and all such Property Interests shall instead attach to the proceeds of sale, and shall not attach the Illiopolis Assets transferred to Acquiror, to the same extent and with the same priority as each such Property Interests now attach to or affect the Illiopolis Assets (including, without limitation, the Property Interests of the Debtors' postpetition secured lenders, as set forth pursuant to prior order of the Court), subject to the Court's power to determine the validity, extent and priority of any such Property Interests, and subject to any claims and defenses the Debtors may possess with respect thereto. All persons or legal entities claiming an interest in, asserting a claim to or in, or a lien or encumbrance upon any of the Illiopolis Assets, including all of Debtors' lenders, are directed to execute and deliver such releases, partial releases, or other evidence of release or satisfaction of lien as are necessary to carry out this Order. 7. Acquiror is a good faith purchaser paying fair value for the Illiopolis Assets and as such is hereby granted and shall have the protections provided in section 363(n) of the Bankruptcy Code, with respect to all aspects of the Transfer, including without limitation the assumption and assignment of Assumed Contracts and, if any, Confidential Contracts under section 365 of the Bankruptcy Code. 8. The amount of consideration to be paid by Acquiror for the Illiopolis Assets is a fair and reasonable price and cannot be voided under Section 363(n) of the Bankruptcy Code. 9. Each and every federal, state, and local governmental agency of department shall be, and hereby is, directed to accept any and all documents, instruments, deeds, assignments or other transfer documents (the "Transfer -------- Instruments") necessary and appropriate to consummate the Agreement, including - ----------- without limitation, documents and instruments for recording in any governmental agency or department required to transfer the Acquiror the names and any and all other licenses or permits under the Debtors' ownership necessary for the operations that are associated with the Illiopolis Assets. 10. The transfer of the Illiopolis Assets is a transfer pursuant to section 1146(c) of the Bankruptcy Code and, therefore, the making or delivery of any Transfer Instruments of the Illiopolis Assets shall not be taxed under any law imposing a stamp tax or similar tax, and all filings and recording officers are hereby directed to accept for filing or recording, and to file or record immediately upon presentation thereof, the Transfer Instruments without payment of any such taxes, and further, that this Court retains jurisdiction to enforce the foregoing direction. 11. Pursuant to section 105(a) of the Bankruptcy Code, the Debtors are authorized to disclose to the Acquiror the terms and provisions of, and any extradocumentary information concerning, the Confidential Contracts, in accordance with Section 6.9 of the Agreement. Pursuant to sections 105(a), 363 and 365 of the Bankruptcy Code, and subject to and conditioned upon the Closing, the Debtors' assumption of the Assumed Contracts (including, to the extent they become Assumed Contracts pursuant to the Agreement, the Confidential Contracts) and assignment of them to the Acquiror shall be, and hereby are, approved, pursuant to sections 105, 363(b), 363(f), 363(m), an 365 of the Bankruptcy Code, as of the Closing. Specifically, pursuant to Sections 105, 363(b), 363(f), 363(m), and 365 of the Bankruptcy Code, and without the making of any payment to cure any prepetition default except as otherwise expressly provided in the Agreement and this Order, the assumption and assignment to Acquiror, on the closing, of each executory contact and unexpired leases identified in the Agreement shall be, and hereby is, approved. Unless Acquiror, in a writing executed by a duly authorized representative of Acquiror, agrees or has agreed otherwise (under the Agreement), the assumption and assignment of executory contracts and unexpired leases to Acquiror (and any other transfer of Assets to Acquiror pursuant to the Agreement) shall be free and clear of any and all Property Interests. 12. Only as required under the Agreement, Acquiror shall (i) cure, or provide adequate assurance of cure, of defaults under any of the Assumed Contracts (including, to the extent they become Assumed Contracts pursuant to the Agreement, the Confidential Contracts), within the meaning of section 365(b)(1)(A) of the Bankruptcy Code; and (ii) provide compensation or adequate assurance of compensation for actual pecuniary losses resulting from defaults under any of the Assumed Contracts (including, to the extent they become Assumed Contracts pursuant to the Agreement, the Confidential Contracts), within the meaning of section 365(b)(1)(B) of the Bankruptcy Code. 13. Each and every holder of any unassumed liability, nonassignable asset or excluded asset is permanently enjoined from commencing, continuing or otherwise pursuing or enforcing any remedy, claim or cause of action against Acquiror relative to such unassumed liability, nonassignable asset or excluded asset. 14. The Debtors and the Acquiror are authorized and directed to take any and all necessary actions to consummate the transactions contemplated by the agreement and this Order. The approvals and authorizations specifically set forth in this Order are nonexclusive and are not intended to limit the authority of Debtors or its representatives and agents, to take any and all actions necessary or appropriate to implement, effectuate and consummate the Agreement or this Order. Without limiting the generality or effect of any other provision of this Order, each Debtor shall be, and hereby is, authorized to execute deliver, file or record such contracts, instruments, releases, mortgages, deeds, assignments, leases, applications, reports or other agreements or documents, including documents necessary to record the transfer, pursuant to the Agreement, of patented or trade-marked property with the appropriate patent and trade-mark recording offices or officials, and take such other actions as are necessary or appropriate to effectuate and further evidence the terms and conditions of the Agreement and this Order, all without further application to or order of this Court and whether or not such actions or documents are specifically referred to in the Agreement or this Order. 15. The terms and provisions of the Agreement and this Order shall be binding in all respects upon, and shall inure to the benefit of the Acquiror, the Debtors, the Debtors' estates, and their successors and assigns, including any trustee that may be appointed in these cases or any superseding case under chapter 7 of the Bankruptcy Code. The provisions of this Order and any actions taken pursuant hereto shall survive the entry of any order which may be entered confirming any reorganization or liquidation plan for the Debtors, converting any or all of the Debtors' cases from Chapter 11 to Chapter 7 of the Bankruptcy Code, or dismissing any or all of the Debtors' cases. 16. In accordance with the prior order of this Court authorizing the Debtors to retain and employ Taylor Strategic Divestitures ("Taylor"), Taylor shall be entitled, in respect of the Transfer of the Illiopolis Assets, to receive a flat fee in the amount of $1,000,000 which the Debtors are authorized to pay at Closing. 17. For cause shown, the enforcement of the terms and provisions of this Order and the Closing of the approved Transfer herein shall be and are hereby exempt from the stay imposed by Rule 6004(g) of the Federal Rules of Bankruptcy Procedure. 18. This Court shall retain exclusive jurisdiction to determine any claims, disputes or causes of action arising out of or relating to the Agreement or any of the transactions contemplated under the Agreement. Dated: March 27, 2002 /s/ ILLEGIBLE -------- -------------------------------- Wilmington, Delaware UNITED STATES BANKRUPTCY JUDGE EX-10.54 14 dex1054.txt SETTLEMENT AGREEMENT AND RELEASE DATED 3/7/02 Exhibit 10.54 SETTLEMENT AGREEMENT AND RELEASE -------------------------------- This SETTLEMENT AGREEMENT AND RELEASE (the "SETTLEMENT AGREEMENT") is made and entered into this 7th day of March, 2002, by and between Borden Chemical, Inc. ("BCI") and BCP Management, Inc. ("BCPM"), each on behalf of themselves and each of their present and former parents, subsidiaries, affiliates, divisions, stockholders, partners, officers, directors, employees, agents and any of their legal representatives (and the predecessors, heirs, executors, administrators, successors and assigns of each of the foregoing). RECITALS -------- WHEREAS, BCPM has asserted that BCI owes certain obligations under a Demand Note dated November 30, 1987 (the "Demand Note"); and WHEREAS, BCI has already paid to BCPM $24,213,734.00 (the "Demand Note Payment") pursuant to the Demand Note; and WHEREAS, BCI has asserted that BCPM owes BCI: 1) the sum of $1,869,835.00 related to a Rail Car Sublease Agreement made and entered into as of November 30, 1987 by and between Borden, Inc. (BCI's predecessor) and Borden Chemical and Plastics Operating Limited Partnership (of which BCPM is a general partner) (the "Rail Car Obligations"); 2) the sum of $648,514.33 in connection with the obligations (the "Pension Obligations") of BCPM to reimburse BCI for payments made by BCI on behalf of BCPM under the Borden Chemical Executive Supplemental Pension Plan (the "ESPP"); 3) the sum of $82,029.00 in connection with obligations owed to BCI relating to certain risk management costs, directors fees, car lease payments, savings plan administration, travel, and other costs (the "Miscellaneous Obligations"); and 4) the sum of $5,623,893 related to a Utilities and Services Agreement (the "Utilities and 2 Services Agreement") dated as of July 28, 2000 by and between BCI and Borden Chemical and Plastics Operating Limited Partnership (the "Utilities and Services Agreement Obligations") (collectively, the "BCPM Obligations"); and WHEREAS, BCI has asserted that the Demand Note Payment represents payment in full under, and full satisfaction of, its obligations under the Demand Note after giving effect to certain rights of set-off BCI has against BCPM as a result of the BCPM Obligations and BCPM has contested the right of BCI to set-off certain of the BCPM Obligations against BCI's obligations under the Demand Note. NOW, THEREFORE, IT IS AGREED BY AND BETWEEN BCI and BCPM, AS FOLLOWS: 1. The Rail Car Obligations, the Pension Obligations and the Miscellaneous Obligations are valid and enforceable obligations of BCPM to BCI and are currently due and owing. 2. BCI has a valid and enforceable right to set-off the Rail Car Obligations, the Pension Obligations and the Miscellaneous Obligations against any amounts which BCPM claims are still due and owing under the Demand Note and, if the parties were to litigate this issue, the most likely outcome would be a judicial recognition of this right of set-off. 3. In exchange for BCPM's recognition of BCI's valid and enforceable right to set-off the other BCPM Obligations against any amounts claimed by BCPM to remain due and owing under the Demand Note, BCI hereby relinquishes its right to set-off the Utilities and Services Agreement Obligations against any amounts claimed by BCPM to remain due and owing under 3 the Demand Note. BCI shall in no way be deemed to have waived any rights it may have to assert a breach of the Utilities and Services Agreement. 4. Within one business day following the execution of this Settlement Agreement by all parties, BCI will wire transfer to BCPM the amount of $5,623,893 plus $27,455.53 in accrued interest as provided in the Demand Note in full and complete satisfaction of any amounts claimed by BCPM to remain due and owing under the Demand Note. 5. If it is subsequently determined that the payments made (from and after January 29, 2002 until all benefits have been paid under the ESPP) by BCI on behalf of BCPM under the ESPP are less than $648,514.33, BCI shall pay to BCPM the difference between the actual payments made (from and after January 29, 2002 until all benefits have been paid under the ESPP) and $648,514.33. If it is subsequently determined that the payments made (from and after January 29, 2002 until all benefits have been paid under the ESPP) by BCI on behalf of BCPM under the ESPP exceed $648,514.33, BCPM shall pay to BCI the difference between the actual payments made (from and after January 29, 2002 until all benefits have been paid under the ESPP) and $648,514.33. Payments made by BCI under the ESPP with respect to the individuals set forth on Annex A shall be deemed to have been made on behalf of BCPM. 6. For good and sufficient consideration, receipt of which is hereby acknowledged, BCPM, and each of its present and former parents, subsidiaries, affiliates, divisions, stockholders, partners, officers, directors, employees, agents and any of their legal representatives (and the predecessors, heirs, executors, administrators, successors and assigns of each of the foregoing) (collectively, the "BCPM Releasors"), release and discharge BCI and each of its present and former parents, subsidiaries, affiliates, divisions, stockholders, partners, officers, directors, employees, agents and any of their legal representatives (and the predecessors, 4 heirs, executors, administrators, successors and assigns of each of the foregoing) (collectively, the "BCI Releasees") from any and all claims (including "Unknown Claims", as defined in paragraph 8 hereof), demands, rights, liabilities and causes of action of every nature and description whatsoever, known or unknown, suspected or unsuspected, whether or not concealed or hidden, asserted or unasserted, matured or unmatured, direct, indirect or derivative, fixed or contingent, including, without limitation, claims for negligence, gross negligence, breach of duty, fraud, constructive fraud, misrepresentation (whether intentional, negligent or innocent), omission (whether intentional, negligent or innocent), suppression (whether intentional, negligent or innocent), breach of contract, contribution, indemnity, or violations of any state or federal statutes, rules or regulations, or any other source of legal or equitable obligation of any kind or description in whatever form, by the BCPM Releasors against the BCI Releasees, arising out of, or related in any way to the Demand Note. 7. For good and sufficient consideration, receipt of which is hereby acknowledged, BCI and each of its present and former parents, subsidiaries, affiliates, divisions, stockholders, partners, officers, directors, employees, agents and any of their legal representatives (and the predecessors, heirs, executors, administrators, successors and assigns of each of the foregoing) (collectively, the "BCI Releasors") release and discharge BCPM and each of its present and former parents, subsidiaries, affiliates, divisions, stockholders, partners, officers, directors, employees, agents and any of their legal representatives (and the predecessors, heirs, executors, administrators, successors and assigns of each of the foregoing) (collectively, the "BCPM Releasees") from any and all claims (including "Unknown Claims", as defined in paragraph 8 hereof), demands, rights, liabilities and causes of action of every nature and description whatsoever, known or unknown, suspected or unsuspected, whether or not concealed or hidden, 5 asserted or unasserted, matured or unmatured, direct, indirect or derivative, fixed or contingent, including, without limitation, claims for negligence, gross negligence, breach of duty, fraud, constructive fraud, misrepresentation (whether intentional, negligent or innocent), omission (whether intentional, negligent or innocent), suppression (whether intentional, negligent or innocent), breach of contract, contribution, indemnity, or violations of any state or federal statutes, rules or regulations, or any other source of legal or equitable obligation of any kind or description in whatever form, by the BCI Releasors against the BCPM Releasees, arising out of, or related in any way to the Demand Note. 8. "Unknown Claims" means any claim which the BCPM Releasors and/or the BCI Releasors do not know or suspect to exist in his, her or its favor at the time of the execution of the Settlement Agreement which if known by him, her or it, might have affected his, her or its settlement with and release of other parties to the Settlement Agreement. The BCPM Releasors and/or the BCI Releasors may hereafter discover facts in addition to or different from those which he, she or it now knows or believes to be true with respect to the subject matter of the releases, but the BCPM Releasors and the BCI Releasors shall each be deemed to have fully, finally, and forever settled and released all claims covered by the releases, known or unknown, suspected or unsuspected, whether or not concealed or hidden, asserted or unasserted, matured or unmatured, direct, indirect or derivative, fixed or contingent, which now exist, or heretofore have existed upon any theory of law or equity now existing or coming into existence in the future, including, but not limited to, conduct which is negligent, intentional, with or without malice, or a breach of any duty, law or rule, without regard to the subsequent discovery or existence of such different or additional facts. The BCPM Releasors and the BCI Releasors separately acknowledge, and shall be deemed by operation of the Settlement Agreement to have 6 acknowledged, that the foregoing waiver was separately bargained for and a key element of the settlement of which the mutual releases are a part, and expressly waive (i) the benefits of the provisions of Section 1542 of the California Civil Code, which provides that "A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor" and (ii) the benefits of any similar, comparable or equivalent law, statute, regulation or legal principle of any other jurisdiction. 9. It is expressly understood and agreed that this Settlement Agreement, and any negotiations or proceedings in connection herewith, do not constitute and may not be construed as, or deemed to be, either evidence or an admission or concession on the part of BCI of any lack of merit whatsoever as to any claims it has asserted respecting any obligations under the Demand Note or rights of set-off relating thereto. The act of entering into or carrying out the Settlement Agreement and any negotiations or proceedings related thereto shall not be used, offered or received into evidence in any action or proceeding in any court, administrative agency or other tribunal for any purpose whatsoever other than to enforce the provisions of the Settlement Agreement, provided that the Settlement Agreement may be filed or submitted by BCI or BCPM to support a claim of res judicata, collateral estoppel, other theory of claim or issue preclusion, release, discharge or satisfaction. 10. The rights, duties and obligations set forth in this Settlement Agreement shall be binding upon and inure to the benefit of any and all predecessors, successors, parent corporations, affiliates, divisions, partners, officers, directors, trustees, employees, agents, subsidiaries, stockholders, liquidators, receivers, executors, administrators, heirs, assigns and legal representatives of the parties hereto. 7 11. BCI and BCPM agree to cooperate fully and to execute promptly any and all other supplementary documents of any nature or kind which the other parties may reasonably require and to take all additional actions which may be necessary and appropriate to give full force and effect to or otherwise implement the provisions, intent and objectives of this Settlement Agreement. 12. Unless another person is designated, in writing, for receipt of notices hereunder, notices to the respective parties shall be sent to the following persons: For BCI: Borden Chemical, Inc. 180 East Broad Street Columbus, Ohio 43215 Attention: Chief Executive Officer Tel: (614) 225-2600 Fax: (614) 225-2188 - and - David J. Sorkin, Esq. William T. Russell, Jr., Esq. Simpson Thacher & Bartlett 425 Lexington Avenue New York, New York 10017-3954 Tel: (212) 455-2000 Fax: (212) 455-2502 For BCPM: Mark J. Schneider Director, President and Chief Executive Officer BCP Management, Inc. Highway 73 and 30 P.O. Box 427 Geismar, LA 70734 Tel: (225) 673-0616 Fax: (225) 673-0626 - and - Robert J. Sidman, Esq. Vorys, Sater, Seymour & Pease LLP 8 P.O. Box 1008 52 East Gay Street Columbus, OH 43216-1008 Tel: (614) 464-6422 Fax: (614) 464-6350 - and - Alec Wightman, Esq. Baker & Hostetler LLP Capitol Square, Suite 2100 65 East State Street Columbus, Ohio 43215 Tel: (614) 462-2636 Fax: (614) 462-2616 13. BCI and BCPM each separately intend the settlement to be a final and complete resolution of all disputes between them with respect to the subject matter of the Settlement Agreement and the mutual releases herein. The settlement compromises claims that are contested by BCI and shall not be deemed an admission by BCI as to the merits of any claim or defense. 14. A committee comprised solely of independent directors of BCPM, represented and advised by separate and independent counsel, has reviewed and agreed to all provisions of this Settlement Agreement and agrees that it is in the best interests of BCPM. 15. This Settlement Agreement may be executed in counterparts by any of the signatories hereto, and as so executed shall constitute one agreement. Facsimile signatures shall be considered as valid signatures. 9 16. This Settlement Agreement contains the entire agreement between the parties as respects its subject matter. All discussions and agreements previously entertained or entered into between the parties concerning the subject matter of the Settlement Agreement are merged into the Settlement Agreement. The Settlement Agreement may not be modified or amended, nor any of its terms or provisions waived, except by an instrument in writing signed by all parties hereto. 17. This Settlement Agreement shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York applicable to contracts made and to be performed therein. 18. BCI and BCPM each individually and separately warrant that they have not assigned or transferred to any person or entity any right to recovery for any claim or potential claim that otherwise would be released under this Settlement Agreement. BORDEN CHEMICAL, INC. By: __________________________ BCP MANAGEMENT, INC. By: __________________________ 10 Annex A ------- Barish Guay Hennings Lattimore Leonard Lunn Owens Paulsen Proto Schneider Stevning Talmadge Whitlow -----END PRIVACY-ENHANCED MESSAGE-----