<PAGE> 1
FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): Sept. 12, 1994
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BORDEN, INC.
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(Exact Name of Registrant as Specified in Its Charter)
New Jersey I-71 13-0511250
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
180 East Broad Street, Columbus, OH 43215
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(Address of Principal Executive Offices) (Zip Code)
614/225-4000
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Registrant's Telephone Number, Including Area Code)
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
Page 1 of 2
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Item 5. Other Events
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On September 11, 1994 Borden, Inc. entered into a Letter of Intent on
the terms set forth in the attached exhibit.
Item 7. Financial Statements and Exhibits
---------------------------------
(c) Exhibits
99. Letter of Intent
SIGNATURE
Pursuant to the requirements 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, INC.
By: /s/ James C. Van Meter
Date: September 12, 1994 ---------------------------------
James C. Van Meter
Executive Vice President and Chief
Financial Officer
(Principal Financial Officer and
Duly Authorized Signing Officer)
Page 2 of 2
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Borden, Inc.
277 Park Avenue
New York, NY 10172
September 11, 1994
Whitehall Associates, L.P.
c/o Kohlberg Kravis Roberts & Co.
9 West 57 Street
New York, NY 10019
Gentlemen:
This letter will confirm our understanding with respect to the
merger (the "Merger") of a corporation ("Newco") to be formed by Whitehall
Associates, L.P. ("Parent"), a limited partnership affiliated with Kohlberg
Kravis Roberts & Co., into Borden, Inc. (the "Company"), as well as the series
of related transactions described below.
The terms of our understanding are as follows:
1. Following the execution of a definitive merger
agreement (the "Merger Agreement") among Parent,
Newco and the Company and a definitive Conditional
Purchase/Stock Option Agreement (the "Option
Agreement") among Parent, Newco and the Company and
subject to the terms of the Merger Agreement, Newco
shall commence an exchange offer (the "Offer") for
all of the issued and outstanding shares (the
"Shares") of common
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Whitehall Associates, L.P.
September 11, 1994
Page 2
stock, par value $.625 per share, of the Company (the
"Common Stock"). Each Share accepted by Newco or its
designee (collectively, the "Purchaser") in
accordance with the Offer shall be converted into the
right to receive from the Purchaser that number of
shares of common stock, par value $.01 per share
("Holdings Common Stock"), of RJR Nabisco Holdings
Corp. ("Holdings") equal to the Exchange Ratio. 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 prices of Holdings Common Stock as reported
on the New York Stock Exchange Composite Tape on each
of the ten consecutive trading days immediately
preceding the second trading day prior to the date of
expiration of the Offer (the "Valuation Period");
PROVIDED that the Exchange Ratio shall not be greater
than 2.375 nor less than 1.78125. The obligations of
the Purchaser to consummate the Offer shall be
subject to (i) there having been validly tendered and
not properly withdrawn pursuant to the Offer at least
41% of the outstanding Shares (the "Minimum
Condition"), (ii) the obtaining of all consents and
waivers on terms satisfactory to Parent necessary in
order that the consummation of the transactions
contemplated by the Merger Agreement and the Option
Agreement not constitute (A) an event of default or
an event which with or without notice or the passage
of time would constitute an event of default under
any indebtedness, partnership agreement or
equityholders agreement of the Company or any
subsidiary of the Company (including Borden Chemicals
and Plastics Limited Partnership, Borden Chemicals
and Plastics Operating Limited Partnership and T.M.
Investors Limited Partnership) ("Indebtedness"),
including, without limitation, the Citibank/Credit
Suisse $1.4 billion credit agreements, or (B) an
event which would individually or in combination with
other events give rise to an obligation on the part
of the Company to repay or repurchase any
Indebtedness, partnership interest or equity
interest, which event of default or other event would
give rise to, with or without notice or the passage
of time and taking into account any
cross-acceleration or cross-default provisions, the
obligation to repay prior to maturity or the
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Whitehall Associates, L.P.
September 11, 1994
Page 3
acceleration of an aggregate of at least $25 million
of Indebtedness or other obligations, (iii) the
refinancing of existing Indebtedness on terms
satisfactory to Parent consistent with the parameters
for such refinancing to be described in the Merger
Agreement and (iv) other customary conditions,
including conditions relating to the absence of the
bankruptcy or insolvency of the Company. The
Purchaser shall have the right in its sole discretion
to waive any of the conditions to the Offer,
including without limitation, the Minimum Condition.
The Company will redeem its outstanding shares of
Series B Preferred Stock prior to any record date for
any shareholder action in connection with the Merger.
The Merger Agreement will contain appropriate
provisions with respect to outstanding stock options.
2. Subject to receipt, prior to the execution of the
Merger Agreement, of fairness opinions from Lazard
Freres & Co. and CS First Boston Corporation
satisfactory to the Company (which opinions the
Company has no reason to believe it will not obtain),
in the Merger Agreement the Company shall agree to
recommend (the "Recommendation") that holders of the
Shares (i) accept the Offer, (ii) tender their shares
of Common Stock to the Purchaser in accordance with
the Offer and (iii) approve and adopt the Merger and
the Merger Agreement. The Company shall agree not to
change such Recommendation unless the average of the
average of the high and low 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 proviso in the definition of Exchange Ratio.
Notwithstanding any such change in the
Recommendation, the Company will not have the right
to terminate the Merger Agreement as a result of such
change and will continue to be bound by its
representations and warranties and covenants
contained therein (other than representations,
warranties and covenants related to the
Recommendation), including, without limitation, those
with respect to the Rights Agreement, dated as of
January 28, 1986 between the Company and The Bank of
New York, as Rights Agent (the
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Whitehall Associates, L.P.
September 11, 1994
Page 4
"Rights Agreement"), as amended on November 29, 1988
and May 22, 1991, antitrust approvals (assuming that
following receipt of such approvals Purchaser
purchases at least 28,138,000 Shares, or such other
number of Shares as is equal to 19.9% of the
Company's presently outstanding shares), Article VIII
of its Certificate of Incorporation and Section
14A:10A-4 of the New Jersey Business Corporations Act
(the "NJBCA").
3. The Company shall agree to make any divestitures (or
to agree to make any divestitures), in each case only
to the extent such divestitures are acceptable to
Parent and Newco, as may be required to obtain
applicable antitrust approvals in connection with the
transactions contemplated by the Merger Agreement and
the Option Agreement or the purchase of the Committed
Shares. The Merger Agreement and the Option
Agreement will also contain provisions to the effect
that the parties have taken and will take all steps
necessary to permit the consummation of the
transactions contemplated by those agreements,
including with respect to the Rights Agreement,
Section 14A:10A-4 of the NJBCA, Article VIII of the
Company's Certificate of Incorporation and the
Indebtedness.
4. Following (i) the acceptance for exchange of Shares
pursuant to the Offer and/or the purchase of Shares
pursuant to the Option Agreement or (ii) the purchase
of Committed Shares (as defined below), the Company
shall promptly take all actions necessary to cause
the Applicable Percentage of directors (rounded to
the next highest director) to consist of persons
designated by Parent. The term "Applicable
Percentage" means the ratio of (i) the total voting
power of all shares either (A) accepted for exchange
pursuant to the Offer and/or purchased in accordance
with the Option Agreement or (B) purchased as
Committed Shares to (ii) the total voting power of
the outstanding voting securities of the Company,
expressed as a percentage, but in no event (assuming
that Purchaser has acquired at least 28,138,000
Shares, or such other number of Shares as is equal to
19.9% of the Company's presently outstanding shares)
less than 33-1/3%.
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Whitehall Associates, L.P.
September 11, 1994
Page 5
5. Provided that the Minimum Condition is satisfied,
following the acceptance for exchange of Shares
pursuant to the Offer, the parties to the Merger
Agreement will take all steps necessary to attempt to
obtain any required approval of the shareholders of
the Company to the Merger. The Company's obligation
to submit the Merger to a vote of its shareholders
shall not be affected by a change in the
Recommendation described in paragraph 2 (but there
shall be no obligation of the existing Board of
Directors to continue the Recommendation that
shareholders adopt the Merger Agreement). In the
Merger, each issued and outstanding Share (other than
Shares held by the Purchaser) shall be converted into
that number of shares of Holdings Common Stock as
were delivered by the Purchaser with respect to each
share of Common Stock in the Offer.
6. (a) The Company shall agree in the Option Agreement
to grant to the Purchaser an irrevocable option (the
"Option") to purchase out of newly issued Shares or
Shares of treasury stock (as Purchaser may designate)
28,138,000 Shares (or such other number of Shares as
is equal to 19.9% of the number of the Company's
presently outstanding Shares). The purchase price
for each share shall be the number of shares (rounded
to the nearest 1/100,000) of Holdings Common Stock
obtained by dividing (i) $11.00 (the "Option Purchase
Price") by (ii) the average of the average of the
high and low prices of Holdings Common Stock as
reported on the New York Stock Exchange Composite
Tape on each of the ten consecutive trading days
immediately preceding the second trading day prior to
date of notice of exercise (or if exercise is
required as described below in this paragraph 6(a),
the date of exercise). In the event that a
Termination Fee (as defined in paragraph 7 below)
becomes payable, the Option Purchase Price shall be
adjusted upward (retroactively if necessary) to
reflect the price per Share of any third party
transaction that triggers the payment of such
Termination Fee. Subject to applicable law, the
Option may be exercised, in whole or in part, at any
time beginning on the date of the Option Agreement
and ending 180 days thereafter, PROVIDED that if (i)
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Whitehall Associates, L.P.
September 11, 1994
Page 6
the Purchaser has exercised the Option prior to the
expiration of the Offer it shall not be permitted to
waive the Minimum Condition thereunder and (ii) if
the Purchaser has not exercised the Option prior to
the expiration of the Offer, it shall not exercise
the Option thereafter if it waives the Minimum
Condition and accepts fewer than 41% of the
outstanding Shares for payment in the Offer. In the
event that the Purchaser acquires more than 41% of
the outstanding Shares in the Offer but does not
acquire more than 50% of the outstanding Shares in
the Offer, the Purchaser shall be required, subject
to applicable law, to exercise the Option to acquire
such number of Shares under the Option, which when
added to the number of Shares purchased in the Offer
(together with any Shares previously purchased under
the Option), as will result in the Purchaser owning
more than 50% of the outstanding Shares.
(b) In the event that this letter agreement
is terminated prior to the execution of a Merger
Agreement and Option Agreement, the Purchaser
irrevocably commits to purchase and the Company
irrevocably commits to issue (subject only to
compliance with applicable law, including the
obtaining of applicable antitrust approvals), out of
newly issued Shares or Shares of treasury stock (as
Purchaser may designate) 28,138,000 Shares (or such
other number of Shares as is equal to 19.9% of the
number of the Company's presently outstanding Shares)
(the "Committed Shares"). Subject to the last two
sentences of this Section 6(b), the purchase price
for each of the Committed Shares shall be the number
of shares (rounded to the nearest 1/100,000) of
Holdings Common Stock obtained by dividing (i) $11.00
by (ii) the average of the average of the high and
low prices of Holdings Common Stock, as reported on
the New York Stock Exchange Composite Tape on each of
the ten consecutive trading days immediately
preceding the second trading day prior to the date of
the consummation of the purchase. The date of the
consummation of the purchase shall be the second
trading day following the later of (i) the obtaining
of all requisite antitrust approvals and (ii) the
termination of this letter agreement. In connection
with any purchase of
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Whitehall Associates, L.P.
September 11, 1994
Page 7
Committed Shares, each of the parties to such
purchase will make customary representations as to
validity, authorization, ownership, absence of liens,
encumbrances and conflicts and compliance with law
and stock exchange requirements. The Committed
Shares and any shares of Holdings Common Stock
exchanged therefor shall each be registrable (at the
expense of the issuer thereof) in the hands of the
Purchaser or the Company, as the case may be. In the
event that an affiliate or affiliates of Parent
becomes entitled to the $50,000,000 fee described in
Section 7(a) hereof, Parent (or such affiliate or
affiliates) shall promptly disgorge to the Company,
in cash, with respect to each Committed Share, the
per share difference between the price per share paid
for Shares in the transaction giving rise to such fee
(which, to the extent such price consists of non-cash
consideration, shall be based on the trading market
value thereof or if there is no trading market for
such consideration the fair market value as
determined by an independent investment banker) and
$11.00 per share. Such amount shall be deemed to be
an adjustment to the purchase price for the Committed
Shares.
7. (a) From and after the execution of this letter
agreement and whether or not a Merger Agreement or
Option Agreement are ever entered into or any
Committed Shares are ever purchased, the Company
agrees promptly to reimburse Parent and Purchaser
from time to time for all of their Expenses (as
defined below) as incurred in an aggregate amount of
up to $22,000,000 (which includes the reimbursement
of the Initial Advisory Fee (as defined below)). The
term "Expenses" shall include all out-of-pocket
expenses and fees, including the fees and
disbursements of counsel, financial printers,
experts, consultants and accountants, as well as all
fees and expenses payable to investment banking firms
and other financial institutions and their respective
agents and counsel, whether incurred prior to, on or
after the date hereof, incurred in connection with
the transactions contemplated by this Agreement, the
Merger Agreement and the Option Agreement and any
purchase of the Committed Shares. The Company
acknowledges that Purchaser incurred upon the
execution of this
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Whitehall Associates, L.P.
September 11, 1994
Page 8
letter agreement advisory fees to an affiliate of the
Purchaser in the amount of $20,000,000 (the "Initial
Advisory Fee"), which shall be included in Expenses
and reimbursed in same day funds on September 12,
1994 and which in no way shall limit the
reimbursement of any additional advisory fees to
non-affiliates of Purchaser or other Expenses,
subject to the $22 million limitation on total
Expenses. Whether or not any Committed Shares are
ever purchased, the Company agrees that in the event
that no Merger Agreement is entered into and the
Company consummates a Transaction Proposal with
respect to which an initial proposal (whether or not
publicly announced) was made prior to the termination
of this letter agreement, the Company shall pay
promptly upon such consummation to such affiliate or
affiliates of Parent as Parent shall designate
$50,000,000, against which the Initial Advisory Fee
may be credited following payment thereof.
(b) The Merger Agreement will provide for
the reimbursement from time to time by the Company of
all Expenses of Parent and Purchaser as incurred in
an aggregate amount of up to $35,000,000, against
which aggregate amount Expenses actually reimbursed
under this letter agreement prior to the execution of
the Merger Agreement may be credited. In addition,
the Merger Agreement will provide for the payment of
$50,000,000 to such affiliate or affiliates of
Purchaser as shall be set forth therein, against
which the Initial Advisory Fee may be credited
following payment thereof, upon (i) the acquisition
by the Purchaser (in one or more transactions) of
more than 50% of the outstanding Shares or (ii)
certain customary events of termination in connection
with a competing Transaction Proposal (the fee
referred to in this clause (ii) being referred to as
the "Termination Fee").
(c) The costs and expenses of (i) preparing
and distributing any proxy statement related to the
Merger and (ii) obtaining and complying with the
antitrust requirements of any governmental authority
shall be paid by the Company. Except as set forth in
this paragraph 7, each party hereto will pay its own
costs and expenses
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Whitehall Associates, L.P.
September 11, 1994
Page 9
incurred or to be incurred in connection with the
transactions contemplated hereby. No broker,
investment banker, financial advisor or other person,
other than Lazard Freres and Co. and CS First Boston
Corporation, the fees and expenses of which will be
paid by the Company, is entitled to any broker's,
finder's, financial advisor's or other similar fee or
commission in connection with the transactions
contemplated by this letter agreement based upon
arrangements made by or on behalf of the Company.
8. The Company, Parent and Newco will cooperate with
each other to the fullest extent in preparing the
Merger Agreement, the Option Agreement and any
related agreements and other necessary documentation,
obtaining all necessary consents from third parties
and complying with all regulatory requirements. In
addition to the terms set forth in this letter
agreement, the Merger Agreement and Option Agreement
will contain such representations, warranties,
covenants and conditions and other terms as are
customary or appropriate to a transaction of this
type, including, without limitation, appropriate
provisions relating to indemnification, insurance and
existing severance and health, welfare and benefit
programs of the Company. The Company, Parent and
Newco will use their best efforts to negotiate and
execute the Merger Agreement, the Option Agreement
and all related agreements with respect to the
transactions contemplated hereby as soon as possible.
The Company will permit reasonable access to its
properties and personnel and make available to
Parent, Newco and their respective agents and
advisors all books, papers and records relating to
the operations, assets, obligations and liabilities
of the Company, all subject to the Confidentiality
Agreement dated August 1994 between the Company and
Kohlberg Kravis Roberts & Co. Parent will use its
reasonable best efforts to make available to the
Company and its agents and advisors the properties
and personnel of Holdings and all books, papers and
records relating to the operations, assets,
obligations and liabilities of Holdings, all subject
to the Confidentiality Agreement dated September 11,
1994 between Holdings and the Company.
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Whitehall Associates, L.P.
September 11, 1994
Page 10
9. Pending the execution of the Merger Agreement, except
as contemplated by this letter agreement, the Company
will conduct its business and will cause its
subsidiaries to conduct their businesses only in, and
the Company shall not take any action and shall cause
its subsidiaries not to take any action except in,
the ordinary course and will seek to preserve for
Newco and Parent business suppliers, creditors,
customers and others transacting business with the
Company. No additional equity securities or rights
to purchase equity securities will be granted after
the date hereof. Without in any way limiting the
foregoing, the Company will not and will cause its
subsidiaries not to adopt or amend any bonus, profit
sharing, compensation, severance, termination, stock
option, stock appreciation right, restricted stock,
pension, retirement, employment or other employee
benefit agreement, trust, plan or other arrangement
for the benefit or welfare of any director, officer
or, other than in the ordinary course of business,
any other employee, or increase in any manner the
compensation or fringe benefits of any director,
officer or, other than in the ordinary course of
business, any other employee of the Company or any of
its subsidiaries or pay any benefit not required by
any existing agreement or place any assets in any
trust for the benefit of employees or directors, it
being understood and agreed that certain of these
issues may be addressed in the Merger Agreement.
10. Neither the Company nor any of its subsidiaries
shall, nor shall it or any of its subsidiaries
authorize or permit any of its officers, directors or
employees or any investment banker, financial
advisor, attorney, accountant or other representative
retained by it or any of its subsidiaries to (a)
solicit, initiate, encourage (including by way of
furnishing information), or take any other action to
facilitate, any inquiry or the making of any proposal
which constitutes, or may reasonably be expected to
lead to, any acquisition or purchase of a substantial
amount of assets of, or any equity interest in, the
Company or any of its subsidiaries or any tender
offer (including a self tender offer) or exchange
offer, merger, consolidation, business combination,
sale of substantially all assets,
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Whitehall Associates, L.P.
September 11, 1994
Page 11
sale of securities, recapitalization, liquidation,
dissolution or similar transaction involving the
Company or any of its subsidiaries other than the
transactions contemplated by this letter agreement or
any other transaction the consummation of which would
or could reasonably be expected to impede, interfere
with, prevent or materially delay the Merger or which
would or could reasonably be expected to materially
dilute the benefits to Purchaser of the transactions
contemplated hereby (collectively, "Transaction
Proposals") or (b) enter into or participate in any
discussions or negotiations regarding any of the
foregoing, or furnish to any other person any
information with respect to its business, properties
or assets or any of the foregoing, or otherwise
cooperate in any way with, or assist or participate
in, facilitate or encourage, any effort or attempt by
any other person to do or seek any of the foregoing;
PROVIDED, HOWEVER, that the foregoing clauses (a) and
(b) shall not prohibit the Company from (i)
furnishing information pursuant to an appropriate
confidentiality letter concerning the Company and its
businesses, properties or assets to a third party who
has made a Transaction Proposal or (ii) engaging in
discussions or negotiations with such a third party
who has made a Transaction Proposal. Nothing
contained herein or in the Merger Agreement shall
prohibit the Company from taking and disclosing a
position contemplated by Rule 14e-2(a) under the
Securities Exchange Act of 1934, as amended, with
respect to a Transaction Proposal made by a third
party.
11. Parent and the Company will consult with each other
before issuing any press release or otherwise making
any public statements with respect to the
transactions contemplated hereby and shall not issue
any such press release or make any such public
statement prior to such consultation, except as may
be required by law or by obligations pursuant to any
listing agreement with any national securities
exchange. It is contemplated that a joint press
release by Parent and the Company will be issued
prior to the opening of business on September 12,
1994.
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Whitehall Associates, L.P.
September 11, 1994
Page 12
12. Other than the obligation to reimburse the Initial
Advisory Fee and the other Expenses described in
paragraph 7(a) of this letter agreement and the
provisions of paragraphs 14, 7(c), 6(b) and 4 and the
first sentence of paragraph 3 of this letter
agreement, which shall each survive any termination,
this letter agreement may be terminated, and the
transactions contemplated hereby may be abandoned or
terminated:
(a) at any time by mutual agreement of the
Company and Parent; or
(b) by Parent, if by the close of business
on September 23, 1994 the Merger Agreement and Option
Agreement shall not have been executed; or
(c) by the Company, if by the close of
business on September 23, 1994 the Merger Agreement
and Option Agreement shall not have been executed; or
(d) by the Company in the event the Company
desires to enter into an agreement with respect to an
alternative Transaction Proposal.
13. It is understood that this letter of intent merely
constitutes a statement of our mutual intentions and
does not contain all matters upon which agreement
must be reached for the proposed transactions to be
consummated and, therefore, does not constitute a
binding commitment with respect to the proposed
transactions themselves. A binding commitment with
respect to the proposed transactions will result only
from execution of the Merger Agreement and the Option
Agreement, subject to the conditions expressed
therein. Notwithstanding the two preceding sentences
of this paragraph, upon acceptance hereof as
described below, the provisions of paragraphs 4,
6(b), 7(a), 7(c), 9, 11, 12, 14 and 15 and this
paragraph 13 and the first sentence of paragraph 3
shall be legally binding and the provisions of
paragraphs 4, 6(b), 7(a), 7(c) and 14 and the first
sentence of paragraph 3 shall survive any termination
of this letter unless and until they are superseded
by a definitive agreement between the Company, Parent
and Newco.
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Whitehall Associates, L.P.
September 11, 1994
Page 13
14. It is understood that notwithstanding the first two
sentences of the preceding paragraph, the approval of
this letter agreement and the transactions
contemplated hereby (including in the event that any
Committed Shares are purchased, any subsequent
business combination involving Purchaser that is
approved by the directors of the Company that are not
affiliated with Purchaser) by the Board of Directors
of the Company renders inapplicable the provisions of
Section 14A:10A-4 of the NJBCA and Article VIII of
the Company's Certificate of Incorporation with
respect to such transactions. The Company represents
and warrants that pursuant to the Rights Agreement,
the execution of this letter agreement will not
trigger the exercisability of the Rights (as defined
in the Rights Agreement), the separation of the
Rights from the stock certificates to which they are
attached, or any other provisions of the Rights
Agreement, including causing the occurrence of a
Distribution Date or a Share Acquisition Date (each
as defined in the Rights Agreement).
15. This letter agreement may be executed 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.
16. This letter agreement will be governed by and
construed in accordance with the internal laws of the
State of New York.
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Whitehall Associates, L.P.
September 11, 1994
Page 14
If the foregoing accurately summarizes our agreement in
principle, please sign and return the enclosed copy of this letter agreement.
Sincerely,
BORDEN, INC.
By //Ervin R. Shames
-----------------
Name: Ervin R. Shames
Title: President and CEO
ACCEPTED AND AGREED TO:
WHITEHALL ASSOCIATES, L.P.
By: KKR Associates, a limited partnership,
its General Partner
By //Henry R. Kravis
-----------------
Name: Henry R. Kravis
Title: General Partner
