SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________
SCHEDULE 14D-9
Solicitation/Recommendation Statement
Pursuant to Section 14(d)(4) of the
Securities Exchange Act of 1934
(Amendment No. 5)
___________________
BORDEN, INC.
(Name of Subject Company)
BORDEN, INC.
(Name of Person(s) Filing Statement)
Common Stock, Par Value $.625 Per Share
(Title of Class of Securities)
099599102
(CUSIP Number of Class of Securities)
___________________
Allan L. Miller, Esq.
Senior Vice President, Chief Administrative Officer
and General Counsel
Borden, Inc.
180 East Broad Street
Columbus, Ohio 43215
(614) 225-4000
(Name, address and telephone number of person
authorized to receive notice and communications on
behalf of the person(s) filing statement)
___________________
With a copy to:
Andrew R. Brownstein, Esq.
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
(212) 403-1000<PAGE>
This Amendment No. 5 amends and supplements the Soli-
citation/Recommendation Statement on Schedule 14D-9 of Borden,
Inc., a New Jersey corporation (the "Company"), filed with the
Securities and Exchange Commission (the "Commission") on
November 22, 1994, as amended by Amendment No. 1 filed with the
Commission on December 1, 1994, Amendment No. 2 filed with the
Commission on December 2, 1994, Amendment No. 3 filed with the
Commission on December 5, 1994 and Amendment No. 4 filed with
the Commission on December 6, 1994 (as so amended, the
"Schedule 14D-9"), with respect to the exchange offer made by
Borden Acquisition Corp., a New Jersey corporation (the
"Purchaser"), Whitehall Associates, L.P., a Delaware limited
partnership (the "Partnership"), and KKR Partners II, L.P., a
Delaware limited partnership (together with the Partnership,
the "Common Stock Partnerships"), to exchange shares, owned by
the Purchaser or its affiliates, of common stock, par value
$.01 per share (the "Holdings Common Stock"), of RJR Nabisco
Holdings Corp., a Delaware corporation ("Holdings"), for all
outstanding shares of the Company's common stock, par value
$.625 per share (the "Shares"), and the associated preferred
stock purchase rights (the "Rights"), not already owned by the
Purchaser or its affiliates, upon the terms and subject to the
conditions set forth in the Offering Circular/Prospectus, dated
November 22, 1994, as amended and supplemented by the Supplement
to the Offering Circular/Prospectus, dated December 7, 1994, and
the related Letter of Transmittal.
Under the terms of the Exchange Offer, each Share accepted by
the Purchaser in accordance with the Exchange Offer shall be
exchanged for that number of fully paid and nonassessable
shares of Holdings Common Stock equal to the Exchange Ratio.
The term "Exchange Ratio" means the quotient (rounded to the
nearest 1/100,000) obtained by dividing (i) $14.25 by (ii) the
average of the average of the high and low sales prices of the
Holdings Common Stock as reported on the New York Stock
Exchange (the "NYSE") Composite Tape on each of the ten full
consecutive trading days ending immediately prior to the ten
business day period ending on the date of expiration of the
Exchange Offer, including any extension thereof (the "Valuation
Period"), provided that the Exchange Ratio shall not be less
than 1.78125 or greater than 2.375; and provided, further,
that, unless the Exchange Offer is extended past 12:00
Midnight, New York City time, on Friday, January 20, 1995, the
Exchange Ratio shall be 2.29146.
Capitalized terms used and not defined herein shall
have the meanings assigned such terms in the Schedule 14D-9 as
heretofore amended and supplemented.
Item 3. Identity and Background.
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(b)(2) The description in the Schedule 14D-9 under
"The Merger Agreement" is hereby amended and supplemented by
adding the following information:
In connection with an agreement-in-principle to
settle the various legal proceedings pending in New Jersey
state court, Ohio state court and in the United States District
Court for the Southern District of New York against the
Company, KKR and their respective directors, executive officers
and related parties described under Item 8(b) in the Schedule
14D-9 (Certain Legal Proceedings) and herein (the "Proposed
Settlement"), the Company, the Partnership and the Purchaser
entered into the Second Amendment to the Merger Agreement,
dated as of December 6, 1994 (the "Second Amendment"). As
amended by the Second Amendment, the Merger Agreement provides
that the Exchange Ratio will mean the quotient (rounded to the
nearest 1/100,000) obtained by dividing (i) $14.25 by (ii) the
average of the average of the high and low sales prices of
Holdings Common Stock as reported on the NYSE Composite Tape on
each of the ten full consecutive trading days ending
immediately prior to the ten business day period ending on the
date of expiration of the Offer; provided that the Exchange
Ratio shall not be less than 1.78125 or greater than 2.375; and
provided, further, that, unless the Exchange Offer is extended
past 12:00 Midnight, New York City time, on Friday, January 20,
1995, the Exchange Ratio shall be 2.29146. For purposes of the
Exchange Offer, a full trading day is a day on which the NYSE
is open for trading and does not close prior to its scheduled
closing time for such day.
Accordingly, unless the Exchange Offer is extended
past 12:00 Midnight, New York City time, on Friday, January 20,
1995, each Share accepted by the Purchaser in accordance with
the Exchange Offer shall be exchanged for 2.29146 fully paid
and nonassessable shares of Holdings Common Stock. Such
Exchange Ratio is the quotient (rounded to the nearest
1/100,000) obtained by dividing (i) $14.25 by (ii) the average
of the average of the high and low sales prices of the Holdings
Common Stock as reported on the NYSE Composite Tape on each of
the ten full consecutive trading days ending on and including
December 6, 1994. The value of 2.29146 shares of Holdings
Common Stock may be more or less than $14.25 at any given time.
In connection with the change to the term Exchange
Ratio discussed above, technical changes have also been made to
the Merger Agreement in the Second Amendment to clarify that
during the period that the Exchange Ratio is fixed at 2.29146
shares, certain calculations contained in the Merger Agreement
based on the average of the average high and low sales prices
of Holdings Common Stock shall not be given effect. Reference
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is made to the Second Amendment for the complete text of such
changes.
The foregoing description of the Second Amendment
should be read together with the Merger Agreement. The Second
Amendment is filed as an exhibit hereto and is incorporated
herein by reference; the foregoing description is qualified in
its entirety by reference to such exhibit.
Item 4. The Solicitation or Recommendation.
(a)-(b) The description in the Schedule 14D-9 under
"Background and Reasons for the Board's Recommendation; Opin-
ions of Financial Advisors -- Background -- Events Subsequent
to Announcement of the KKR Transaction" is hereby amended and
supplemented by adding the following information:
At the Board of Directors meeting held on December 5,
1994, the Board approved, subject to reaching a satisfactory
agreement-in-principle, the form of the Second Amendment and
the proposed settlement of the various legal proceedings
pending in New Jersey state court, Ohio state court and in the
United States District Court for the Southern District of New
York against the Company, KKR and their respective directors,
executive officers and related parties described under Item
8(b) in the Schedule 14D-9 (Certain Legal Proceedings) and
herein. On December 6, 1994, an agreement-in-principle was
reached with respect to the Proposed Settlement and the Second
Amendment was entered into as of that date.
On December 6, 1994, Japonica held its public meeting
which the Company did not attend. Following the meeting,
Japonica released a letter addressed to the Company to the
press which submitted several modifications to the proposal set
forth in the Japonica November 30 letter. The Japonica
December 6 letter is included as an exhibit hereto and is
incorporated herein by reference; the foregoing description of
such letter is qualified in its entirety by reference to such
exhibit.
The Board has not yet reviewed Japonica's December 6,
1994 letter. The Japonica letter does not address in
meaningful detail the fundamental questions raised by the Board
in its December 1 letter. Reports of Japonica's December 6
meeting suggest that these issues were not discussed in
meaningful detail at such meeting. The Japonica December 6
letter also states that Japonica will require double the number
of warrants contained in its November 30 letter and 40% of the
fees approved in connection with the Whitehall transaction,
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while in its November 30 letter Japonica said that its proposed
transaction would have nominal fees. In addition, Japonica has
not provided the Company with any additional evidence of
financing sources or additional information with respect to the
legal and tax issues involved in the spin-offs proposed by
Japonica. The Board will review the Japonica letter and any
additional information provided by Japonica.
Item 8. Additional Information to be Furnished.
(b) The description under "Certain Legal
Proceedings" is hereby amended and supplemented by adding the
following information:
As previously disclosed, on November 30, 1994, a
putative class action captioned Petersen, et al. v. Borden,
Inc., et al., Case No. 94 CIV 8648, was filed by purported
shareholders of the Company in the United States District Court
for the Southern District of New York against the Company,
members of the Company's board of directors, Holdings, members
of Holdings' board of directors, KKR, certain partners and
executives of KKR, and the Company's financial advisors, Lazard
Freres and First Boston. The complaint alleges, among other
things, (1) violations of Sections 14(e) and 20(a) of the
Exchange Act by the Company, KKR and the Company's board of
directors; (2) violations of Section 11 of the Securities Act
by Lazard Freres, First Boston and certain officers and
directors of Holdings and partners and executives of KKR; and
(3) breach of fiduciary duty by the Company and the Company's
board of directors, which breach of fiduciary duty allegedly
was aided and abetted by KKR. The complaint seeks equitable
relief, including, among other things, a preliminary injunction
and declaratory relief, as well as money damages.
On December 6, 1994, the parties to the various legal
proceedings pending in New Jersey state court, Ohio state court
and in the United States District Court for the Southern Dis-
trict of New York against the Company, KKR and their respective
directors, executive officers and related parties agreed to the
Proposed Settlement pursuant to which all such legal
proceedings will be dismissed with prejudice. The Proposed
Settlement will be subject to certain conditions, including,
among other things, court approval and certain other matters
described herein. In addition, in connection with the Proposed
Settlement, plaintiffs will seek court approval for
reimbursement of their attorneys' fees and expenses in an ag-
gregate amount of not more than $3.2 million.
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In connection with the Proposed Settlement, the
Merger Agreement has been amended as described under Item
3(b)(2) in the Schedule 14D-9, as amended.
In connection with the Proposed Settlement, the
Partnership will commit to exercise its Option to acquire all
of the 28,138,000 Shares subject to the Option but not
previously purchased upon the exercise thereof if the Purchaser
or the Partnership or a direct or indirect wholly owned sub-
sidiary of the Partnership acquires more than 41% of the Shares
in accordance with the terms and conditions of the Exchange
Offer. If the Option is exercised and the shares of Holdings
Common Stock received by the Company in connection with such
exercise are sold or otherwise monetized by the Company, there
can be no assurance as to the proceeds which the Company would
receive upon such sale or other monetization.
In addition, under the Proposed Settlement, (i)
certain disclosure has been included in the Supplement to the
Offering Circular/Prospectus as requested by the plaintiffs'
attorneys and (ii) the parties would agree that the plaintiffs'
attorneys have been afforded an opportunity to meet with, and
have met with, Lazard Freres and First Boston to make full and
unrestricted inquiries regarding the financing of the
Transaction and the nature of the expressions of interest
regarding the sale of Borden, including communications received
from Japonica Partners described herein. Such meeting occurred
on December 5, 1993. In addition, the Proposed Settlement is
fully contingent on the Purchaser consummating the Exchange
Offer.
In connection with the Proposed Settlement, the
Partnership will commit that, if Shares are acquired pursuant
to the Exchange Offer, the Partnership will cause, for so long
as KKR and its affiliates retain majority voting control of the
Company, at least two independent directors unaffiliated with
KKR, the Common Stock Partnerships or the Company to be elected
to the board of directors of the Company until the Merger is
consummated.
Item 9. Material to be Filed as Exhibits.
The list of exhibits in the Schedule 14D-9 is hereby
amended and supplemented by adding the following exhibits:
Exhibit 99.87 -- Second Amendment to the Merger
Agreement, dated as of December
6, 1994.
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Exhibit 99.88 -- Joint Press Release dated
December 7, 1994.
Exhibit 99.89 -- Letter from Japonica Partners to
F.J. Tasco, dated December 6,
1994.
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SIGNATURE
After reasonable inquiry and to the best of its
knowledge and belief, the undersigned certifies that the infor-
mation set forth in this statement is true, complete and
correct.
BORDEN, INC.
Dated: December 7, 1994 By: /s/ Allan L. Miller
Name: Allan L. Miller
Title: Senior Vice President,
Chief Administrative
Officer and General
Counsel
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EXHIBIT INDEX
Exhibit Description
Exhibit 99.87 -- Second Amendment to the Merger
Agreement, dated as of December
6, 1994.
Exhibit 99.88 -- Joint Press Release dated
December 7, 1994.
Exhibit 99.89 -- Letter from Japonica Partners to
F.J. Tasco, dated December 6,
1994.
Exhibit 99.87
SECOND AMENDMENT
SECOND AMENDMENT, dated as of December 6, 1994 (this
"Second Amendment"), among BORDEN ACQUISITION CORP., a New
Jersey corporation ("Purchaser"), WHITEHALL ASSOCIATES, L.P., a
Delaware limited partnership ("Parent"), and BORDEN, INC., a
New Jersey corporation (the "Company"), to the Agreement and
Plan of Merger, dated as of September 23, 1994, as amended by
the Amendment thereto dated as of November 15, 1994 (the
"Agreement"), among Purchaser, Parent and the Company.
1. Amendment to Section 1.1. Subsection 1.1(a) of
the Agreement is hereby amended by deleting the third sentence
thereof in its entirety and inserting in lieu thereof the
following:
"The `Exchange Ratio' shall mean the quotient
(rounded to the nearest 1/100,000) obtained by dividing
(i) $14.25 by (ii) the average of the average of the high
and low sales prices of Holdings Common Stock as reported
on the New York Stock Exchange Composite Tape on each of
the ten full consecutive trading days ending immediately
prior to the ten business day period ending on the date of
expiration of the Offer (the `Valuation Period'); provided
that the Exchange Ratio shall not be less than 1.78125 or
greater than 2.375; and provided, further, that, unless
the Offer is extended past 12:00 Midnight, New York City
time, on Friday, January 20, 1995, the Exchange Ratio
shall be 2.29146. For purposes of the preceding sentence,
a full trading day is a day on which the NYSE is open for
trading and does not close prior to its scheduled closing
time for such day)."
2. Amendment to Section 1.2. Subsection 1.2(b) of
the Agreement is hereby amended by deleting the second sentence
thereof in its entirety and inserting in lieu thereof the
following:
"The Company further agrees, subject to clause (iii)
of the proviso to the first sentence in Section 5.3, not
to change the Recommendations unless (i) the second pro-
viso in the definition of Exchange Ratio is not applicable
and (ii) the average of the average of the high and the
low sales prices of the Holdings Common Stock as reported
on the New York Stock Exchange Composite Tape for the
Valuation Period is less than the price per share that
would yield an Exchange Ratio of 2.375 or less without
giving effect to the first proviso in the definition of
Exchange Ratio."<PAGE>
3. Amendment to Section 8.3. Subsection 8.3(b) of
the Agreement is hereby amended by deleting clause (ii) thereof
in its entirety and inserting in lieu thereof the following:
"(ii) prior to the purchase of Shares pursuant to the
Offer, this Agreement is terminated pursuant to Section
7.1(d) (other than solely in the event that the average of
the average of the high and low sales prices of the
Holdings Common Stock as reported on the New York Stock
Exchange Composite Tape for the Valuation Period is less
than the price per share that would yield an Exchange
Ratio of 2.375 or less without giving effect to the first
proviso in the definition of Exchange Ratio, provided that
this exclusion shall not be given effect so long as the
second proviso in the definition of Exchange Ratio is
applicable); or"
4. Authorization; Effectiveness. (a) This Second
Amendment has been duly executed and delivered by each party
hereto and constitutes a valid and binding obligation of each
such party, enforceable against such party in accordance with
its terms subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights gen-
erally, general equitable principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good
faith and fair dealing.
(b) This Second Amendment shall become effective
upon execution and delivery by the parties hereto. Except as
expressly amended hereby, the provisions of the Agreement are
and shall remain in full force and effect.
5. Governing Law. This Second Amendment shall be
governed by and construed in accordance with the laws of the
State of New Jersey, regardless of the laws that might other-
wise govern under applicable principles of conflicts of laws
thereof.
6. Counterparts. This Second Amendment may be ex-
ecuted in two or more counterparts, each of which shall be
deemed to be an original, but all of which shall constitute one
and the same agreement.
[Continued on subsequent page.]
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IN WITNESS WHEREOF, each of the parties has caused
this Second Amendment to be executed on its behalf by its of-
ficers thereunto duly authorized, all as of the day and year
first above written.
WHITEHALL ASSOCIATES, L.P.
By: KKR Associates, a limited
partnership, its General
Partner
By:
Title: General Partner
BORDEN ACQUISITION CORP.
By:
Name: Clifton S. Robbins
Title: President
BORDEN, INC.
By:
Name: Allan L. Miller
Title: Senior Vice President,
Chief Administrative
Officer and General
Counsel
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Exhibit 99.88
[LETTERHEAD OF JAPONICA PARTNERS]
December 6, 1994
Mr. Frank Tasco
Chairman
Borden, Inc.
277 Park Avenue
New York, NY 10172
Dear Mr. Tasco:
Despite your refusal to obtain first-hand responses
to questions you have raised and despite your unwillingness to
thereby avail yourself of the opportunity to follow-on
discussions, we are submitting the following modifications to
our proposal. We believe these modifications both increase the
attractiveness of the proposal to Borden shareholders and
satisfy points that you have raised.
We remain willing to address any concerns in a fair
and open forum. You shouldn't be reluctant to obtain
information that could substantially enhance shareholder value,
nor should you allow your advisors to ask and answer their own
questions without challenge. Such actions are inconsistent
with shareholder democracy and the inclusive process by which
corporations should be governed.
Pursuant to your request for written information on
Japonica's proposed Plan improvements to its November 30th
proposal, please accept the following:
Point One: Increase our Investment in Borden to $660
million. We will inject an additional $230 million cash into
Borden to relieve the current concerns regarding the Company's
financial profile at the $17.00 per share market valuation.
The $230 million additional Japonica investment will be on
terms that should have a positive impact on the Company's
credit rating. We anticipate this will be in the form of
convertible securities with a market rate (which we believe to
be approximately 6 percent for preferred stock) convertible
into common equity at a premium of approximately 20 percent to
the underlying common stock, and with the Borden common stock
trading at $13.625, a 20 percent premium equals almost $17 per
share.<PAGE>
The Convertible Securities will be in the form of
Pay-in-Kind ("PIK") preferred stock but the Company will have
the option to exchange the preferred shares for debt depending
on its tax position. Because of the PIK provision, the Company
will not be obliged to pay cash dividends or interest but could
if it wishes make the payments in securities at a 10 percent
coupon rate.
Point Two: $430 million Stock Purchase Via Tender
Offer. The $430 million stock purchased for $17.00 per share
contemplated by our original proposal would be made by Japonica
directly either in the open market or via a tender offer at the
Company's option.
This should result in substantial improvement in
timing in the execution of the proposal and should alleviate
expressed concerns about the share repurchase.
Point Three: Eliminate the Preferred to be Exchanged
for Common. The $230 million of preferred stock to be
exchanged for common was eliminated to remove any obstacles the
Company's advisors may have in connection with the Japonica
Proposal and to eliminate any concerns over trading values,
additional fixed charges, or increased debt levels.
The proceeds of our increased investment could be
available for corporate purposes or securities repurchases as
the situation merits.
Point Four: Change in Board Composition. In
connection with this increased investment, we would be willing
to allow all the current Board members to withdraw and be
replaced by directors to be designated by major institutional
shareholders. Our assumption is that all directors will wish
to withdraw. Japonica would have board representation equal to
its economic investment.
Point Five: Other. Given our increased investment,
we are required to increase the level of $17.00 warrants to 20
percent. Also, the revised structure will require transaction
fees of approximately 40 percent of the fees approved in
connection with the KKR offer.
We look forward to maximizing Borden's shareholder
value as a proactive white knight. Our proposal is made
pursuant to your on-going request.
Respectfully,
/s/ Japonica Partners
JAPONICA PARTNERS
Exhibit 99.89
Contact:
For Borden: For KKR:
Jim Fingeroth/Fred Spar Ruth Pachman/Dawn Dover/
Kekst and Company Josh Pekarsky
(212) 593-2655 Kekst and Company
Nick Iammartino (212) 593-2655
Borden Inc.
(614) 225-4485
For Immediate Release
Exchange Ratio Set in KKR Offer for Borden Shares and
KKR and Borden Settle Shareholder Suits
NEW YORK, NY and COLUMBUS, OHIO, December 7, 1994 -- Kohlberg
Kravis Roberts & Co. and Borden, Inc. (NYSE:BN) announced today
that, in connection with the exchange offer for all outstanding
Borden shares by KKR's affiliate, Borden Acquisition Corp., and
subject to the terms of the merger agreement among Borden,
Borden Acquisition and Whitehall Associates, L.P. and the
exchange offer, the number of shares of RJR Nabisco Holdings
Corp. (NYSE:RN) common stock to be exchanged in the exchange
offer for each share of Borden common stock will be 2.29146.
The two companies also announced that they have reached an
agreement-in-principle to settle the various lawsuits pending
against them in New Jersey and Ohio state courts, and in the
United States District Court for the Southern District of New
York. The proposed settlement will provide for the dismissal
with prejudice of various federal and state law claims raised
in these lawsuits, including allegations that Borden did not
act fairly with respect to Japonica Partners' proposals for
Borden, as well as other claims with respect to alleged
breaches of fiduciary duties and alleged federal securities law
violations.
In connection with the agreement-in-principle to settle the
lawsuits, Borden, Borden Acquisition and Whitehall Associates
have amended their merger agreement to fix the exchange ratio.
Pursuant to this amendment, if for any reason the exchange
offer is extended past 12:00 midnight, New York City time, on
Tuesday, December 20, 1994, the exchange ratio will continue to
be fixed at 2.29146 shares of RJR Nabisco Holdings common stock
for each shares of Borden common stock during any portion of
the following twenty business days that the offer remains open.
A KKR spokesperson said that KKR expects to be in a position to
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consummate the exchange offer on December 20, 1994, although no
assurance can be given that the offer will not be extended.
Pursuant to the agreement-in-principle to settle the lawsuits,
Whitehall Associates will commit to exercise its option to
acquire 28,138,000 shares of Borden common stock in exchange
for shares of RJR Nabisco valued at approximately $11 per share
if Whitehall or its subsidiary acquires more than 41% of the
Borden shares pursuant to the exchange offer. Previously,
Whitehall had committed to exercise the option if it acquired
more than 41% (but not more than 50%) of the Borden shares in
the exchange offer, although Whitehall could have chosen to
exercise the option if it had received more than 50% of the
Borden shares in the offer. The expanded commitment is
expected to provide a needed equity infusion in Borden,
assuming that the exchange offer is completed.
Under the agreement-in-principle, Whitehall also would commit
to cause Borden's board of directors to continue to have at
least two independent directors until a merger of Borden and a
KKR affiliate is completed. A KKR spokesperson said that KKR
would attempt to consummate a merger as soon as practicable
following the consummation of the exchange offer.
This announcement is neither an offer to exchange nor a so-
licitation of an offer to exchange any securities. The ex-
change offer is being made solely by the Offering Circular/
Prospectus and the related Letter of Transmittal. The exchange
offer is not being made to (nor will tenders be accepted from
or on behalf of) holders of securities in any jurisdiction in
which the making of the exchange offer or the acceptance
thereof would not be in compliance with the laws of such
jurisdiction. In any jurisdiction where the securities, blue
sky or other laws require the exchange offer to be made by a
licensed broker or dealer, the exchange offer shall be deemed
to be made on behalf of Borden Acquisition by Morgan Stanley &
Co. Incorporated, the Dealer Manager for the exchange offer, or
one or more registered brokers or dealers that are licensed
under the laws of such jurisdiction.
# # #
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