PERSONAL AND
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CONFIDENTIAL
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July 24, 1997
Borden Chemical, Inc.
180 East Broad Street, 24th Floor
Columbus, OH 43215-3799
Attn: Joseph M. Saggese
Chairman
Dear Mr. Saggese:
Melamine Chemicals, Inc. ("MCI") and Borden Chemical, Inc. (the "Company") are
prepared to engage in discussions with respect to a possible negotiated business
combination involving the Company and MCI (the "Transaction"), and during the
course of such discussions MCI may disclose and make available to the Company
certain information concerning MCI's business, prospects, financial condition,
operations, technology, assets and liabilities. All such information furnished
to the Company or its Representatives (as defined below) by or on behalf of MCI
(irrespective of the form of communication and whether such information is
furnished prior to, on or after the date hereof), and all analyses,
compilations, data, studies, notes, interpretations, memoranda or other
documents prepared by the Company or its Representatives containing or based in
whole or in part on any such furnished information are collectively referred to
herein as the "Confidential Information." As a condition to being furnished the
Confidential Information, the Company agrees as follows:
1. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION. (a) the Company shall (i) use
the Confidential Information solely for the purpose of evaluating a
possible Transaction and for no other competitive or other purpose; (ii)
not disclose the Confidential Information to any third party, except for
disclosures to its directors, officers, employees and representatives of
its advisors (such as independent accountants, investment bankers and
attorneys) acting on
its behalf (such directors, officers, employees and representatives being
referred to hereinafter collectively as its "Representatives") who in each
case, in the Company's reasonable judgment, need to know such information
for the purpose of evaluating a possible Transaction; provided, however,
that prospective financing sources shall not be considered
"Representatives" to whom Confidential Information may be disclosed in
accordance with this paragraph 1 unless specifically requested by the
Company and consented to by MCI in writing; (iii) inform its
Representatives of the confidential nature of the Confidential Information
and direct its Representatives to treat the Confidential Information
confidentially; (iv) take all additional reasonable precautions necessary
to prevent the disclosure of the Confidential Information by its
Representatives to any third party; and (v) be responsible for any breach
of this Agreement (the "Agreement") by its Representatives.
(b) If the Company or its Representatives is requested (by interrogatories,
requests for information or documents, subpoena, civil investigative demand
or similar process) to disclose any Confidential Information, it is agreed
that the Company will provide MCI with prompt notice of such request so
that MCI may seek an appropriate protective order and/or waive the
Company's compliance with the provisions of this Agreement. The Company
and its Representatives may disclose without liability hereunder only that
portion of the Confidential Information that the Company is advised by
written opinion of counsel is legally required to be disclosed; provided
that the Company gives MCI written notice of the information to be
disclosed as far in advance of its disclosure as is practicable and, upon
MCI's request, uses reasonable efforts to obtain assurances that
confidential treatment will be accorded to such information.
2. NON-DISCLOSURE OF NEGOTIATIONS OR AGREEMENTS. Except as required by law,
neither the Company nor its Representatives shall disclose to any person
the existence, status or terms of any discussions, negotiations or
agreements concerning a possible Transaction, including without limitation
any offer, letter of intent, proposal, price, value or valuation, or any
similar terms, agreements or understandings between the Company and MCI
with respect thereto, or that the Company has received from MCI
Confidential Information, without obtaining the prior written consent of
the other, which consent will not be withheld unreasonably.
3. RETURN OF CONFIDENTIAL INFORMATION. All written Confidential Information
delivered by or on behalf of MCI to the Company pursuant to this Agreement
shall be and remain the property of MCI and upon the written request of
MCI, the Company shall (i) promptly return such Confidential Information
and shall not retain any copies or other reproductions or extracts thereof,
(ii) destroy or have destroyed all memoranda, notes, reports, analyses,
compilations, studies, interpretations, or other documents derived from or
containing Confidential Information, and all copies and other reproductions
and extracts thereof, and (iii) upon written request by MCI provide a
certificate to MCI certifying that the foregoing
materials have, in fact, been destroyed or returned, signed by an
authorized officer supervising such destruction or return. Notwithstanding
the return or destruction of the Confidential Information, the Company and
its Representatives will continue to be bound by the confidentiality and
other obligations hereunder, until the expiration of three years from the
date of this Agreement, unless a lesser duration is specified herein.
4. INFORMATION NOT DEEMED CONFIDENTIAL INFORMATION. The term "Confidential
Information" does not include information that (i) is or becomes generally
available to the public other than as a result of a disclosure by the
Company or its Representatives in violation of this Agreement; or (ii) was
or becomes available to the Company from a source other than MCI or its
Representatives, provided that such source is not known by the Company to
be bound by an obligation of confidentiality to MCI or its Representatives
or (iii) was already known to the Company at the time of its disclosure by
MCI.
5. NO REPRESENTATIONS OR WARRANTIES. Neither MCI nor any of its respective
officers, directors, employees, representatives or agents makes any
representation or warranty, express or implied, as to the accuracy and
completeness of any Confidential Information provided by it, and no
liability shall result to MCI from its use, except as set forth in a
definitive agreement for a Transaction. Only the representations and
warranties that are made in a definitive agreement for a Transaction, when,
as, and if it is executed, and subject to such limitations and restrictions
as may be specified therein, shall have any legal effect.
6. NO AGREEMENT. MCI has the absolute right to determine what information,
properties and personnel it wishes to make available to the Company.
Unless a definitive agreement regarding a Transaction between the Company
and MCI has been executed and delivered, neither MCI, the Company nor any
of their stockholders or affiliates will be under any legal obligation of
any kind whatsoever with respect to such a Transaction by virtue of this
Agreement or any other written or oral expression with respect to such
Transaction except, in the case of this Agreement, matters specifically
agreed to herein. Each party further acknowledges and agrees that each
party reserves the right, in its sole discretion, to reject any and all
proposals made by the other party or any of its Representatives with regard
to a Transaction, and to terminate discussions and negotiations with the
other party at any time.
7. CONTACT PERSONS; NO SOLICITATION. All requests by the Company for
Confidential Information, meetings with personnel or inspection of
properties and all other
communications regarding a possible Transaction shall be made only to the
contacts designated by MCI (the "Contact Persons"). The Company agrees
that, for a period of two years from the date of this Agreement, it will
not initiate or maintain contact (except in the ordinary course of
business) with any director, officer, employee, distributor or customer of
MCI regarding MCI's business operations, prospects or finances, except as
may be permitted by the Contact Persons for due diligence purposes. It is
expressly understood that this Agreement is not intended to limit the right
of the parties to compete with one another in the ordinary course. The
Company further agrees that, for a period of two years from the date
hereof, it will not directly or indirectly offer employment to (other than
by means of a general advertisement) or hire any of MCI's employees with
whom it has had contact during the process contemplated by this Agreement.
8. NON-PUBLIC INFORMATION. MCI has outstanding publicly-held securities and
the Confidential Information contains material non-public information. The
Company acknowledges that it is (i) aware, and has advised or will advise
its Representatives, that the United States securities laws prohibit any
person in possession of material non-public information about a company
from purchasing or selling securities of such company, and from
communicating such information to any other person under circumstances in
which it is reasonably foreseeable that such person may purchase or sell
such securities and (ii) familiar with the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and the rules and regulations thereunder,
and the Company agrees that it will neither use nor permit any of its
Representatives to use any Confidential Information in violation of such
Act or rules or regulations, including without limitation Rule 10b-5.
9. STANDSTILL. The Company agrees that, until the expiration of two years
from the date of this Agreement, without the prior written invitation (on
an unsolicited basis) of MCI's Board of Directors, it and its affiliates
will not (i) in any manner acquire, agree to acquire or make any proposal
or offer or otherwise seek to acquire, directly or indirectly, any
securities (or rights in respect thereof), assets or property of MCI or
any of its subsidiaries or of any successor thereto or person in control
thereof, whether such agreements or proposals or offers are made with or to
MCI or any of its subsidiaries (or a successor thereto or person in control
thereof) or a third party; (ii) enter into or agree, offer, seek or propose
to enter into or otherwise be involved in or part of, directly or
indirectly, any merger, acquisition transaction or other business
combination relating to MCI or any of its subsidiaries or any of their
respective assets; (iii) make, or in any way participate in, directly or
indirectly, any "solicitation" of "proxies" (as such terms are used in the
proxy rules under the Exchange Act) to vote, or seek to advise or influence
any person with respect to the voting of, any voting securities of MCI or
any of its subsidiaries or of any successor thereto or person in control
thereof; (iv) form, join or in any way participate in a "group" (within the
meaning of Section 13(d)(3) of the Exchange Act) with respect to any voting
securities of MCI or any of its subsidiaries or of any successor thereto or
person in control thereof; (v) seek or propose, alone or in concert
with others, to control or influence the management, Board of Directors or
policies of MCI; (vi) directly or indirectly enter into any discussions,
negotiations, arrangements or understandings with any other person (except
internal discussions and planning activities involving its Representatives)
with respect to any of the foregoing activities or propose any of such
activities to any other person (other than its Representatives); (vii)
directly or indirectly advise, encourage, assist, act as a financing source
for or otherwise invest in any other person in connection with any of the
foregoing; or (viii) publicly disclose any intention, plan or arrangement
inconsistent with the foregoing. The Company also agrees that, during such
two-year period, neither it nor any of its affiliates will: (i) request MCI
or its advisors, directly or indirectly, to (1) amend or waive any
provision of this paragraph (including this sentence) or (2) otherwise
consent to any action inconsistent with any provision of this paragraph
(including this sentence); or (ii) take any initiative with respect to MCI
or any of it's subsidiaries that could reasonably be expected to require
MCI to make a public announcement regarding (1) such initiative, (2) any of
the activities referred to in this paragraph, (3) the possibility of a
Transaction or any similar transaction or (4) the possibility of the
Company's or any other person's acquiring control of MCI, whether by means
of a business combination or otherwise. Notwithstanding the foregoing
provisions of this paragraph 9, the Company's chief executive officer may
contact MCI's chief executive officer for the purpose of expressing
continuing or renewed interest in a Transaction, provided that, unless
invited to do so by MCI's chief executive officer, no offer or proposal
shall be made that would require public disclosure or formal consideration
by MCI or its Board of Directors.
10. PERSON. The term "person" as used in this Agreement will be interpreted
broadly to include the media and any corporation, company, group,
partnership, governmental body or other entity or individual.
11. NO WAIVER. No failure or delay by MCI 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 right, power or privilege hereunder.
12. REMEDIES. It is understood and agreed that money damages would not be a
sufficient remedy for any breach of this Agreement by the Company and that
MCI shall be entitled to equitable relief, including specific performance
and injunction, as a remedy for any such
breach or threatened breach. Such remedies shall not be deemed to be the
exclusive remedies for a breach of this Agreement by the Company but shall
be in addition to all other remedies available at law or in equity to MCI,
including remedies pursuant to applicable laws relating to trade secrets.
13. BENEFITS; GOVERNING LAW. This Agreement is for the benefit of MCI and its
respective directors, officers, employees, representatives and agents and
its respective successors and assigns and shall be governed by and
construed in accordance with the internal substantive laws and not the
choice of law rules of the State of Louisiana.
14. COUNTERPARTS. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, and all such counterparts
together shall constitute but one and the same Agreement.
15. SEVERABILITY. If any provision of this Agreement is held by a court of
competent jurisdiction to be invalid or unenforceable, such invalidity or
unenforceability shall not be deemed to affect any other provision hereof
or the validity of the remainder of this Agreement, and such invalid or
unenforceable provision shall be deemed deleted herefrom to the minimum
extent necessary to cure such invalidity or unenforceability.
16. MODIFICATIONS. No provision of this Agreement may be waived, amended or
modified except by the written agreement of the Company and MCI.
Please confirm your agreement with the foregoing by signing and returning one
copy of this letter to the undersigned, whereupon this letter shall become a
binding agreement between us.
MELAMINE CHEMICALS, INC.
By: /s/ Goldman, Sachs & Co.
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Goldman, Sachs & Co.
on behalf of Melamine Chemicals, Inc.
Accepted and agreed to as of the 31st
day of July, 1997.
BORDEN CHEMICAL, INC.
By: /s/________________________