<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D. C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
--- EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
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Commission file number 1-71
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BORDEN, INC.
New Jersey 13-0511250
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
180 East Broad Street, Columbus, OH 43215
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(Address of principal executive offices)
(614) 225-4000
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name, former address and former fiscal year,
if changed since last report.)
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 X No
--- ---
Number of shares of common stock, $0.01 par value, outstanding as of the close
of business on August 11, 1995: 198,974,994.
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CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
BORDEN, INC
<TABLE>
<CAPTION>
Three Months Ended
June 30,
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(In millions, except per share data) 1995 1994
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<S> <C> <C> <C>
REVENUE Net sales $1,487.2 $1,552.3
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COSTS AND Cost of goods sold 1,112.8 1,135.7
EXPENSES Marketing, general and administrative 352.0 361.5
Interest expense 30.4 32.9
Unrealized loss on interest rate swap 9.1
Loss on disposal 20.0
Equity in income of affiliates (3.1) (2.7)
Minority interest 1.7 10.0
Other (income) and expense, net (6.0) 2.2
Income taxes (7.2) 5.2
-------- --------
1,509.7 1,544.8
-------- --------
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EARNINGS (Loss) income from continuing operations (22.5) 7.5
Discontinued operations:
Income from operations 3.6
-------- --------
Net (loss) Income (22.5) 11.1
Preferred stock dividend requirement (22.1)
-------- --------
Net (loss) income applicable to common stock $ (44.6) $ 11.1
======== ========
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SHARE DATA (Loss) income from continuing operations $ (.11) $ .05
Discontinued operations:
Income from operations .03
Preferred stock dividends (.11)
-------- --------
Net (loss) income per common share $ (.22) $ .08
======== ========
Dividends per common share $ .075
Dividends per preferred share $ 1.02
Average number of common shares
outstanding during the period 199.0 141.5
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</TABLE>
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CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
BORDEN, INC
<TABLE>
<CAPTION>
Six Months Ended
June 30,
------------------------------
(In millions, except per share data) 1995 1994
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<S> <C> <C> <C>
REVENUE Net sales $2,982.0 $2,978.3
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COSTS AND Cost of goods sold 2,243.7 2,169.7
EXPENSES Marketing, general and administrative 695.9 704.2
Interest expense 76.6 63.6
Unrealized loss on interest rate swap 32.6
Loss on sale of investment 22.0
Loss on disposal 20.0
Equity in income of affiliates (6.6) (4.9)
Minority interest 13.3 19.2
Other (income) and expense, net (6.6) 18.5
Income taxes (35.0) 3.6
-------- --------
3,055.9 2,973.9
-------- --------
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EARNINGS (Loss) income from continuing operations (73.9) 4.4
Discontinued operations:
Income from operations 7.5 12.5
Reversal of disposal reserve 37.9
-------- ---------
Net (loss) income (28.5) 16.9
Preferred stock dividend requirement (22.1)
-------- ---------
Net (loss) income applicable to common stock $ (50.6) $ 16.9
======== =========
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SHARE DATA (Loss) income from continuing operations $ (.40) $ .03
Discontinued operations:
Income from operations .04 .09
Reversal of disposal reserve .21
Preferred stock dividends (.12)
-------- ----------
Net (loss) income per common share $ (.27) $ .12
======== ==========
Dividends per common share $ .150
Dividends per preferred share $ 1.02
Average number of common shares
outstanding during the period 186.6 141.5
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</TABLE>
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CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
BORDEN, INC.
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------
(In millions) 1995 1994
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<S> <C> <C>
CASH Net (loss) income $ (28.5) $ 16.9
FLOWS Adjustments to reconcile net income to net
USED IN cash from operating activities:
OPERATING Reversal of reserve for loss on disposal
ACTIVITIES of discontinued operations (54.6)
Depreciation and amortization 75.3 83.6
Unrealized loss on interest rate swap 32.6
Loss on sale of investment 22.0
Loss on disposal 20.0
Write-off deferred costs 14.0
Restructuring (18.5) (36.4)
Decrease in receivables sold (150.0)
Net change in assets and liabilities:
Trade receivables .5 (35.5)
Inventories (40.8) (50.8)
Trade payables (15.8) 29.5
Current and deferred taxes (47.3) 22.6
Other assets (33.4) (1.1)
Other, net 52.3 47.6
Discontinued operations 18.8 (57.3)
---------- ----------
(3.4) (130.9)
---------- ----------
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CASH FLOWS Sale of investment in RJR Holdings 282.1
FROM Capital expenditures (73.1) (60.5)
INVESTING Divestiture of businesses .7 87.3
ACTIVITIES Purchase of businesses (7.0)
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202.7 26.8
--------- ---------
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CASH FLOWS (Decrease) increase in short-term debt (191.1) 148.3
(USED IN) FROM Reduction in long-term debt (514.5) (22.4)
FINANCING Long-term debt financing .5 18.2
ACTIVITIES Reduction in minority interest (471.7)
Equity contribution 994.7
Dividends paid (21.2)
Issuance of stock under stock options
and benefits and awards plans 3.3 .9
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(178.8) 123.8
---------- --------
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</TABLE>
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CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (continued)
BORDEN, INC.
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------
(In millions) 1995 1994
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<S> <C> <C> <C>
Increase in cash and equivalents $ 20.5 $ 19.7
Cash and equivalents at beginning of period 125.3 100.3
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Cash and equivalents at end of period $ 145.8 $ 120.0
========= ==========
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SUPPLEMENTAL Interest paid $ 55.3 $ 38.6
DISCLOSURES Income taxes paid 25.2 (11.3)
OF CASH FLOW
INFORMATION
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</TABLE>
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CONSOLIDATED BALANCE SHEETS (UNAUDITED)
BORDEN, INC.
<TABLE>
<CAPTION>
(In millions)
June 30, December 31,
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ASSETS 1995 1994
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<S> <C> <C> <C>
CURRENT Cash and equivalents $ 145.8 $ 125.3
ASSETS Accounts receivable (less allowance
for doubtful accounts of $14.3 and $13.6,
respectively) 665.7 411.8
Inventories:
Finished and in-process goods 369.0 331.0
Raw materials and supplies 194.6 183.9
Investment securities 281.1
Other current assets 208.3 249.8
Net assets of discontinued operations 40.5
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1,583.4 1,623.4
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INVESTMENTS Investments in and advances to
AND OTHER affiliated companies 84.7 86.9
ASSETS Deferred income taxes 311.0 284.0
Other assets 124.4 119.0
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520.1 489.9
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PROPERTY Land 96.7 95.2
AND Buildings 595.1 574.2
EQUIPMENT Machinery and equipment 2,041.8 1,893.1
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2,733.6 2,562.5
Less accumulated depreciation (1,592.3) (1,455.6)
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1,141.3 1,106.9
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INTANGIBLES Intangibles resulting from
business acquisitions 632.6 602.1
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$3,877.4 $3,822.3
======= =======
</TABLE>
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CONSOLIDATED BALANCE SHEETS (UNAUDITED)
BORDEN, INC.
<TABLE>
<CAPTION>
(In millions, except share data)
June 30, December 31,
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LIABILITIES AND SHAREHOLDERS' EQUITY 1995 1994
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<S> <C> <C> <C>
CURRENT Debt payable within one year $ 140.8 $ 331.9
LIABILITIES Accounts and drafts payable 491.8 498.0
Restructuring reserve 33.8 87.1
Income taxes 133.6 146.3
Other current liabilities 516.9 465.9
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1,316.9 1,529.2
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OTHER Long-term debt 1,122.9 1,379.0
Deferred income taxes 48.0 44.3
Non-pension postemployment
benefit obligations 339.9 348.6
Other long-term liabilities 147.0 108.7
Minority interest 33.8 504.6
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1,691.6 2,385.2
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SHAREHOLDERS' Preferred Stock - Issued 24,574,751
EQUITY and -0- shares, respectively 614.4
Common stock - Issued 198,974,994
and 194,983,374 shares, respectively 2.0 121.9
Paid in capital 312.7 120.0
Accumulated translation adjustment (104.0) (140.9)
Minimum pension liability and other (107.3) (145.4)
Retained earnings 151.1 201.8
--------- ---------
868.9 157.4
Less common stock in treasury (at
cost) - 25,124,740 shares
at December 31, 1994 (249.5)
--------- ---------
868.9 (92.1)
--------- ---------
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$ 3,877.4 $ 3,822.3
======== ========
</TABLE>
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<PAGE> 8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions except per share amounts and as otherwise indicated)
1. Interim Financial Statements
The accompanying unaudited interim consolidated financial statements
contain all adjustments, consisting only of normal adjustments, which in
the opinion of management are necessary for a fair statement of the
results for the interim periods. Results for the interim periods are not
necessarily indicative of results for the full years.
2. Capitalization
On March 15, 1995, two investment partnerships affiliated with Kohlberg
Kravis Roberts & Co. ("the Shareholders") contributed 111,047,229 shares
of RJR Holdings common stock in exchange for equity securities of the
Company to be issued in the future pursuant to an agreement dated March
15, 1995. On June 26, 1995, the Company issued 24,574,751 shares of
Series A Cumulative Preferred Stock ("Preferred Stock"). Each share has a
liquidation preference of $25, and is entitled to cumulative dividends at
an annual rate of 12%, payable quarterly in arrears. During the second
quarter a dividend of $1.02 per preferred share was declared. This
dividend was paid on July 17, 1995. The Company may redeem at its option
the Preferred Stock, at any time in whole or from time to time in part
after the date that is three years after the issuance date, at a
redemption price per share of 107% in the first twelve months following
such date, declining ratably in each year to par after the date that is 10
years after the issuance date, together with accrued and unpaid dividends
thereon to the date of redemption.
The Company has used interest rate swaps in the past to manage its
floating interest rate exposure, and at December 31, 1994 the Company had
outstanding swaps with an aggregate notional principal amount of $400.0
which hedged variable rate borrowings. Due to repayments of long-term
debt these interest rate swaps no longer meet the criteria for hedge
accounting. During the first quarter the Company terminated swap
agreements with an aggregate notional principal amount of $200.0 at a cost
of $6.1. The remaining outstanding interest rate swap agreement has been
marked-to-market at June 30, 1995, which resulted in an unrealized loss of
$32.6 being recorded for the first six months of 1995.
Common stock of the Company at June 30, 1995 consisted of 300,000,000
shares authorized and 198,974,994 shares issued at a par value of $0.01.
At December 31, 1994, common stock included 480,000,000 shares authorized
and 194,983,374 shares issued at a par value of $0.625.
3. Discontinued Operations
In December 1993 the Company announced a divestiture and restructuring
program which included the divestment of several business segments. In
April 1995, management decided to retain the remaining salty snacks
business. As a result, the operating losses of the salty snacks segment
previously classified as a discontinued operation have been reclassified
into continuing operations, with an offsetting net of tax credit in income
from discontinued operations, which includes $7.5 of losses for the first
quarter of 1995.
Due to management's decision to retain a portion of the salty snacks
businesses which were classified as a discontinued business segment at
December 31, 1993, operating results for the period ended June, 1994 for
North American Snacks have been reclassified into continuing operations,
which increased sales for continuing operations by $336.3 and decreased
income from continuing
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<PAGE> 9
operations by $12.5. The offsetting $12.5 credit in income from
discontinued operations for the first six months of 1994 includes a $7.7
tax expense.
The $37.9 credit in reversal of disposal reserve reflects the reversal of
the unused portion of the reserve for the loss on disposal of the North
American Snacks businesses, net of a $16.7 tax expense.
There is one remaining business under this divestiture plan which
management expects to divest by the end of 1995. The net assets of this
discontinued operation are $0 as of June 30, 1995 due to the expectation
of cash inflows from proceeds on this business being offset by cash
outflows for exit costs.
4. Sale of Accounts Receivable
During 1995 the Company renegotiated certain terms in the credit line
agreements under which it sells accounts receivable. Among the terms that
changed were those which allowed the Company to sell accounts receivable
without recourse. As a result of the change in terms, which now provide
for the sale of receivables with recourse, the amount of receivables sold
at June 30, 1995 of $250.0 is included in borrowings under the $1.2
billion credit agreement and shown as long-term debt in the consolidated
balance sheet at June 30, 1995.
The reclassification of the $250.0 of receivables sold from operating
flows to financing flows in 1995 results in offseting amounts which are
not reflected in the Statement of Cash Flows since there is no cash
impact.
5. Loss on Disposal
During second quarter 1995 $20.0 was accrued for the estimated loss on
disposal of seven dairies operating in the eastern half of the United
States. Substantially all of this amount is a non-cash charge relating to
the excess of net book value over expected proceeds.
The estimated loss includes management's best assessment of the amounts
expected to be realized on the disposal of the seven eastern dairies. The
amounts the Company will ultimately realize could differ materially in the
near term from the amounts assumed in arriving at the loss on disposal.
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<PAGE> 10
PART I FINANCIAL INFORMATION
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
QUARTER ENDED JUNE 30, 1995 VERSUS QUARTER ENDED JUNE 30, 1994
Net sales from continuing operations for the quarter ended June 30, 1995
decreased 4.2% to $1.49 billion from $1.55 billion in 1994. The Company
reported a net loss applicable to common stock for the second quarter 1995 of
$44.6 million, or $0.22 per share, after the effect of preferred dividends,
compared with net income of $11.1 million, or $0.08 per share, in 1994,
primarily as a result of net pretax charges of $48.6 million ($33.4 million
after tax). These charges consist of a $20.0 million charge for the estimated
loss associated with the planned disposal of certain eastern dairies; a $13.5
million accrual for litigation reserves; $9.1 million relating to unrealized
swap losses; and $6.0 million for reorganization costs.
The loss from continuing operations for the second quarter of 1995 was $22.5
million versus income of $7.5 million in 1994. Results in both periods include
the results of the North American Snacks business segment. The credit in
income from discontinued operations of $3.6 million in 1994 reflects the
reclassification of the North American Snacks results.
Sales for Consumer Packaged Products decreased 12.5% for the quarter to $648.5
million from $740.8 million in 1994 primarily as a result of 1994 divestitures.
Operating income for the division of $16.0 million decreased 55.5% for the
quarter from 1994 income of $36.0 million due to overall decreases in most
businesses.
Sales for Dairy decreased 14.1% for the quarter to $284.2 million from $331.0
million in 1994 primarily due to volume declines in most products, particularly
fluid milk, as well as the closure of several plants in late 1994. Operating
results declined 35.5% for the quarter to a loss of $19.4 million from a loss
of $14.3 million for 1994 due to the charge of $20.0 million for estimated loss
on disposal of certain dairy operations, offset by improved operating results
due to reduced distribution and administrative costs and to lower raw milk
costs.
Sales for Packaging and Industrial Products increased 15.4% for the quarter to
$554.5 million from $480.5 million in 1994, due to substantial increases in
worldwide resins and plastic film products. Second quarter operating income
increased 58.3% to $62.7 million from $39.6 million in 1994, primarily due to
strong operating results in worldwide resins and income from the Borden
Chemicals and Plastics Limited Partnership.
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<PAGE> 11
SIX MONTHS ENDED JUNE 30, 1995 VERSUS SIX MONTHS ENDED JUNE 30, 1994
Net sales from continuing operations for the six months ended June 30, 1995 of
$2.98 billion were flat versus 1994. The Company reported a net loss
applicable to common stock for the first six months of 1995 of $50.6 million,
or $0.27 per share, after the effect of preferred dividends, compared with net
income of $16.9 million, or $0.12 per share in 1994, primarily as a result of
net pretax charges of $136.8 million ($87.2 million after tax). These charges
include unrealized losses on interest rate swaps of $32.6 million; a loss on
the sale of the RJR Holdings stock of $22.0 million; $20.0 million relating to
the planned disposal of certain eastern dairies; $14.0 million relating to the
writeoff of certain deferred costs associated with the TMI Associates
partnership and other; $13.5 million relating to litigation accruals; $13.3
million recognized by North American Snacks primarily relating to asset
writedowns and adjustments of accrued expenses; $9.3 million related to general
insurance provisions; $6.1 million relating to terminating swap agreements; and
$6.0 million for costs associated with the planned reorganization of the
business units. These charges are partially offset by an aftertax credit of
$37.9 million for the reversal of the unused divestiture reserve for the
remaining North American Snacks business. (See Note 3 to the Consolidated
Financial Statements).
The loss from continuing operations for the first six months of 1995 was $73.9
million compared to net income of $4.4 million in 1994. Credits in income from
discontinued operations of $7.5 million in 1995 and $12.5 million in 1994
reflect the reclassification of the North American Snacks results.
Year to date sales for Consumer Packaged Products decreased 11.1% to $1.26
billion from $1.42 billion in 1994 primarily as a result of 1994 divestitures.
Year to date operating income for the division of $16.4 million decreased 72.9%
from 1994 income of $60.4 million due to overall decreases in most businesses.
Year to date sales for Dairy decreased 8.9% to $575.8 million from $631.7
million in 1994 as a result of volume declines in fluid milk and ice cream, as
well as the closure of several plants in late 1994. Year to date operating
results for Dairy improved 40.5% to a loss of $17.4 million from a loss of
$29.3 million in 1994, due to improvements in controlling distribution and
administrative costs and to lower raw milk costs, partially offset by the $20.0
million estimated loss on disposal of several operations.
Year to date sales for Packaging and Industrial Products increased 23.5% to
$1.14 billion from $926.9 million in 1994, due to substantial increases in
worldwide resins and plastic film products. Year to date operating income
increased 70.5% to $127.2 million from $74.6 million in 1994, primarily due to
strong operating results in worldwide resins and income from the Borden
Chemicals and Plastics Limited Partnership.
OUTLOOK
Although the Company anticipates its operating performance will improve in the
second half, due to the pretax charges of $136.8 million discussed above and
continuing weak results in Consumer Packaged Products, the Company expects a
net loss for the full year 1995.
LIQUIDITY AND CAPITAL RESOURCES
Cash used in operating activities during the first six months of 1995 was $3.4
million compared to $130.9 million for the first six months of 1994. The
increase in operating cash flows is primarily a result of a reduction in the
amount of receivables sold during 1994 of $150.0 million.
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<PAGE> 12
Cash expenditures for new facilities and improvements to existing facilities
were $73.1 million in 1995 compared to $60.5 million in 1994.
Cash provided by the divestiture of businesses was $0.7 million in 1995 and
$87.3 million in 1994. The 1995 proceeds include the sale of a dairy operation
and 1994 divestitures consist of the sale of the seafood and foodservice
businesses.
Investing and financing flows reflect the capital contribution by the
Shareholders of $994.7 million, the sale of the $282.1 million investment in
RJR Holdings stock, and the resulting reduction of short and long-term debt by
$705.6 million and of minority interest by $471.7 million.
During second quarter 1995 the Company reduced the amount of its bank credit
facility to $1.2 billion. Terms of the renegotiated agreement include more
favorable pricing and elimination of the requirement for pledging of
collateral. Of the $1.2 billion, $944.3 million was available at the end of
the quarter.
The Company has filed a Registration Statement on Form S-3 which allows the
Company to issue up to $2.0 billion in debt securities or preferred stock which
was declared effective on July 13, 1995. To date none of these securities have
been issued.
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<PAGE> 13
PART II
Item 1: LEGAL PROCEEDINGS
Environmental Proceedings
On March 31, 1995, the Company settled alleged violations of air pollution
regulations by a plant in Haverhill, Massachusetts by agreeing to pay a civil
penalty and interest in the amount of $83,436 to the U.S. Environmental
Protection Agency.
Other Legal Proceedings
The State of West Virginia's suit alleging antitrust violations in connection
with the sale of milk to schools in certain of their school districts was
dismissed in June, 1995 for a payment of $70,000. A private antitrust suit
filed in Federal Court in Oklahoma (4/93) on behalf of four school districts
was dismissed in July, 1995 for a payment involving product and cash totalling
$62,000.
On July 19, 1995, a Fresno, California jury returned a verdict against Borden
for approximately $11.5 million for wrongful termination of a tomato packing
agreement. In granting the award for lost profits to Helm Tomatoes, Inc., a
Fresno based agribusiness, the jury found that while Borden had a legal right
to terminate the agreement, it was estopped from doing so by an oral
representation made by a former Borden employee. Borden intends to vigorously
pursue all available avenues to set aside the jury verdict.
There have been no material developments in the additional ongoing legal
proceedings that are discussed in the Company's Form 10-Q for the period ended
March 31, 1995.
The Company is involved in other litigation throughout the United States which
is considered to be in the ordinary course of the Company's business.
The Company believes, based upon the information it presently possesses, and
taking into account its established reserves for estimated liability and its
insurance coverage, that the ultimate outcome of the foregoing proceedings and
actions is unlikely to have a materially adverse effect on the Company's
financial position or operating results.
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<PAGE> 14
Item 6: EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
(3)(i) Restated Certificate of Incorporation dated
March 14, 1995.
(ii) Certificate of Amendment of Restated
Certificate of Incorporation dated June 23,
1995.
(4)(i) Amendment No.2 dated June 27, 1995
to the Credit Agreement dated as of
December 15, 1994 among Borden, Inc.
and the lenders named therein,
Citibank, N.A. as Administrative
Agent, BT Securities Corporation,
Chemical Securities, Inc., Citicorp
Securities, Inc., and Credit Suisse
as Arrangers.
(ii) Amendment and Consent dated as of
June 27, 1995 to the Second Amended
and Restated Credit Agreement dated
as of December 15, 1994 among T.M.
Investors Limited Partnership and
the lenders named therein, Citibank,
N.A. as Administrative Agent, BT
Securities Corporation, Chemical
Securities, Inc., Citicorp
Securities, Inc., and Credit Suisse
as Arrangers. (Borden does not
control T.M. Investors Limited
Partnership and this exhibit has
been furnished to Borden voluntarily
at Borden's request).
(iii) Registration Statement which was
declared effective July 13, 1995,
incorporated herein by reference to
Form S-3, File No. 33-57577
(10) Agreement with Named Executive officer
dated May 1, 1995.
(27) Financial Data Schedule
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.
Date: August 14, 1995
By/s/William H. Carter
--------------------------
William H. Carter Executive
Vice President and Chief
Financial Officer (Principal
Financial Officer and
duly authorized signing officer)
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<PAGE> 1
EXHIBIT (3)(i)
RESTATED CERTIFICATE OF INCORPORATION
OF
BORDEN, INC.
Pursuant to N.J.S. 14A:9-5(4)
Dated: March 14, 1995
THE UNDERSIGNED corporation certifies that it has adopted the following
restated certificate of incorporation:
ARTICLE I.
CORPORATE NAME
The name of the corporation is Borden, Inc.
ARTICLE II.
PURPOSE
The purpose for which this corporation is organized is to engage in any
activity within the purposes for which corporations may be organized under the
New Jersey Business Corporation Act.
ARTICLE III.
CAPITAL STOCK
1. AUTHORIZED SHARES
The corporation is authorized to issue 400,000,000 shares, divided
into:
(a) 300,000,000 shares of common stock, par value $0.01 per share; and
<PAGE> 2
(b) 100,000,000 shares of preferred stock.
The board is authorized to amend the certificate of incorporation to
divide the preferred shares into one or more series and to determine the
designation, the number, and the relative rights, preferences and limitations of
the shares of each series so created.
For purposes of illustration only, the foregoing power of the board
includes but is not limited to the determination of:
(i) The number of shares constituting each series;
(ii) The rate and times at which, and the terms and conditions on
which, dividends on shares of a series will be paid, and whether the
dividends are cumulative or non-cumulative or are participating or
non-participating;
(iii) The voting rights of the holders of shares of the series,
including whether the shares shall have no voting rights, or multiple,
full, limited or special voting rights;
(iv) The right, if any, of the holders of shares of the series to
convert their shares into, or exchange them for, shares of other classes or
series of stock of the corporation, and the terms and conditions of the
conversion or exchange, including provisions for adjustment of the
conversion price or rate in such events as the board shall determine;
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<PAGE> 3
(v) The right, if any, of the corporation or the holders of the shares
to cause the shares of the series to be redeemed, the redemption price or
prices and the time or times at which, and the terms and conditions on
which, shares of the series may be redeemed, and whether the shares shall
be redeemed in exchange for cash or other property, or a combination
thereof;
(vi) The rights of the holders of shares of the series upon the
voluntary or involuntary dissolution, liquidation or winding-up of the
corporation and whether those rights are limited or participating; and
(vii) The obligation, if any, of the corporation to establish a sinking
fund for the purchase or redemption of the shares of the series, the
amounts and time of payments to that fund, and the other terms and
conditions of that fund.
2. PRE-EMPTIVE RIGHTS
The shareholders of the corporation shall not have pre-emptive rights.
3. SHAREHOLDER VOTE REQUIRED
The affirmative vote of a majority of votes cast by the shareholders
shall be required to authorize or approve any action
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<PAGE> 4
or matter to be voted upon by the shareholders, except that directors shall be
elected as provided by law.
ARTICLE IV.
REGISTERED OFFICE AND AGENT
The address of the corporation's current registered office is 65
Livingston Avenue, Roseland, New Jersey 07068; the name of the corporation's
current registered agent at that address is John R. MacKay 2nd.
ARTICLE V.
CURRENT BOARD OF DIRECTORS
The current board of directors consists of seven persons whose names
and addresses are as follows:
C. Robert Kidder
Henry R. Kravis
George R. Roberts
Clifton S. Robbins
Scott M. Stuart
Alexander Navab
Frank J. Tasco
Wilbert J. LeMelle
c/o Borden, Inc.
180 East Broad Street
Columbus, Ohio
ARTICLE VI.
INDEMNIFICATION
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<PAGE> 5
Every person who is or was a director or an officer of the corporation
shall be indemnified by the corporation to the fullest extent allowed by law,
including the indemnification permitted by N.J.S. 14A:3-5(8), against all
liabilities and expenses imposed upon or incurred by that person in connection
with any proceeding in which that person may be made, or threatened to be made,
a party, or in which that person may become involved by reason of that person
being or having been a director or an officer of or of serving or having served
in any capacity with any other enterprise at the request of the corporation,
whether or not that person is a director or an officer or continues to serve the
other enterprise at the time the liabilities or expenses are imposed or
incurred. During the pendency of any such proceeding, the corporation shall, to
the fullest extent permitted by law, promptly advance expenses that are
incurred, from time to time, by a director or an officer in connection with the
proceeding, subject to the receipt by the corporation of an undertaking as
required by law.
ARTICLE VII.
PERSONAL LIABILITY OF DIRECTORS OR OFFICERS
A director or officer of the corporation shall not be personally liable
to the corporation or its shareholders for the
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<PAGE> 6
breach of any duty owed to the corporation or its shareholders except to the
extent that an exemption from personal liability is not permitted by the New
Jersey Business Corporation Act.
IN WITNESS WHEREOF, the undersigned corporation has caused this
certificate to be executed on its behalf by its duly authorized officer as of
the date first above written.
BORDEN, INC.
By:
-----------------------
Name:
Title:
6
<PAGE> 1
EXHIBIT (3)(ii)
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
BORDEN, INC.
----------------
Pursuant to N.J.S. 14A:7-2(4)
----------------
BORDEN, INC., a corporation organized and existing under the laws of
the State of New Jersey (the "Corporation"), HEREBY CERTIFIES that:
1. The name of the Corporation is Borden, Inc.
2. Pursuant to authority conferred upon the Board of Directors of the
Corporation by N.J.S. 14A:7-2(2) and the provisions of the Restated Certificate
of Incorporation of the Corporation, which provisions authorize (i) the issuance
of up to 100,000,000 shares of preferred stock and (ii) the Board of Directors
of the Corporation to amend the Restated Certificate of Incorporation of the
Corporation to divide the preferred shares into one or more series and to
determine the designation, the number, and the relative rights, preferences and
limitations of the shares of each series so created, the following resolutions
were duly adopted by the Board of Directors of the Corporation on June 23, 1995:
RESOLVED that, pursuant to authority conferred upon the Board of
Directors of the Corporation by N.J.S. 14A:7-2(2) and the provisions of the
Restated Certificate of Incorporation of the Corporation, which provisions
authorize (i) the issuance of up to 100,000,000 shares of preferred stock and
(ii) the Board of Directors of the Corporation to amend the Restated Certificate
of Incorporation of the Corporation to divide the preferred shares into one or
more series and to determine the designation, the number, and the relative
rights, preferences and limitations of
<PAGE> 2
the shares of each series so created, the issue of 24,574,751 shares of Series A
Cumulative Preferred Stock, stated value $25.00 per share, of the Corporation is
hereby authorized and the designation, the number, and the relative rights,
preferences and limitations of all 24,574,751 shares of such series of preferred
stock, in addition to those set forth in the Restated Certificate of
Incorporation of the Corporation as in effect on the date hereof, are hereby
fixed as follows:
(1) Designation. The designation of a series of Preferred Stock shall
be "Series A Cumulative Preferred Stock" (the "Series A Preferred Stock")
consisting of 24,574,751 shares. The stated value of the Series A Preferred
Stock shall be $25.00 per share (the "Stated Value"), which value does not
represent a determination by the Board of Directors for the purposes of the
capital accounts.
(2) Rank. The Series A Preferred Stock shall, with respect to dividend
rights and rights on liquidation, winding up and dissolution, rank prior to
the Common Stock, par value $0.01 per share (the "Common Stock"), of the
Corporation. (All equity securities of the Corporation to which the Series
A Preferred Stock ranks prior, including the Common Stock, are collectively
referred to herein as the "Junior Securities", all equity securities of the
Corporation with which the Series A Preferred Stock ranks on a parity are
collectively referred to herein as the "Parity Securities" and all equity
securities of the Corporation (other than convertible debt securities) to
which the Series A Preferred Stock ranks junior, whether with respect to
dividends or upon liquidation, dissolution, winding up or otherwise, are
collectively referred to herein as the "Senior Securities".) The Series A
Preferred Stock shall be subject to the creation of Junior Securities,
Parity Securities and Senior Securities.
(3) Dividends. (i) The holders of the shares of Series A Preferred
Stock shall be entitled to receive, when, as and if declared by the Board
of Directors, out of funds legally available for the payment of dividends,
cumulative cash dividends at the rate of 12% of the Stated Value per share
per annum, and no more. Such dividends shall be payable in quarterly
payments on January 15, April 15, July 15 and October 15 of each year
commencing with July 15, 1995
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<PAGE> 3
(each of such dates being a "dividend payment date"), in preference to
dividends on the Junior Securities. Such dividends shall be paid to the
holders of record at the close of business on the January 1, April 1, July
1 or October 1, as the case may be, immediately preceding the relevant
dividend payment date (each of such dates being a "dividend payment record
date"). Each of such quarterly dividends shall be fully cumulative and
shall accrue (whether or not declared), without interest, from the previous
dividend payment date, except that with respect to the first dividend, such
dividend shall accrue from March 15, 1995. Dividends payable for the first
dividend period and any partial dividend period shall be calculated on the
basis of a 360-day year and the actual number of days elapsed in the period
for which payable.
(ii) All dividends paid with respect to shares of the Series A
Preferred Stock pursuant to paragraph (3)(i) shall be paid pro rata to the
holders entitled thereto.
(iii) No full dividends shall be declared by the Board of Directors or
paid or set apart for payment by the Corporation on any Parity Securities,
nor shall the Corporation make any distribution in respect of any Parity
Securities, either directly or indirectly, and whether in cash, obligations
or shares of the Corporation or other property, for any period unless full
cumulative dividends have been or contemporaneously are declared and paid
or declared and a sum set apart sufficient for such payment on the Series A
Preferred Stock for all dividend payment periods terminating on or prior to
the date of payment, or setting apart for payment, of such full dividends
on such Parity Securities. If any dividends are not paid in full, as
aforesaid, upon the shares of the Series A Preferred Stock and any other
Parity Securities, all dividends or distributions declared upon shares of
the Series A Preferred Stock and any other Parity Securities shall be
declared pro rata so that the amount of dividends or distributions declared
per share of the Series A Preferred Stock and such Parity Securities shall
in all cases bear to each other the same ratio that accrued dividends per
share on the Series A Preferred Stock and such Parity Securities bear to
each other. No interest, or sum of money in lieu of interest, shall be
payable in respect of any dividend payment or payments on the Series A
Preferred Stock or any other Parity
-3-
<PAGE> 4
Securities which may be in arrears. Any dividend not paid pursuant to
paragraph (3)(i) hereof or this paragraph (3)(iii) shall be fully
cumulative and shall accrue (whether or not declared), without interest, as
set forth in paragraph (3)(i) hereof.
(iv) (a) Holders of shares of the Series A Preferred Stock shall be
entitled to receive the dividends provided for in paragraph (3)(i) hereof
in preference to and in priority over any dividends upon any of the Junior
Securities.
(b) So long as any shares of the Series A Preferred Stock are
outstanding, the Board of Directors shall not declare, and the Corporation
shall not pay or set apart for payment any dividend on any of the Junior
Securities or make any payment on account of, or set apart for payment
money for a sinking or other similar fund for, the repurchase, redemption
or other retirement of, any of the Junior Securities or Parity Securities
or any warrants, rights or options exercisable for or convertible into any
of the Junior Securities or Parity Securities (other than the repurchase,
redemption or other retirement of debentures or other debt securities that
are convertible or exchangeable into any of the Junior Securities or Parity
Securities), or make any distribution in respect of the Junior Securities,
either directly or indirectly, and whether in cash, obligations or shares
of the Corporation or other property (other than distributions or dividends
in Junior Securities to the holders of Junior Securities), and shall not
permit any corporation or other entity directly or indirectly controlled by
the Corporation to purchase or redeem any of the Junior Securities or
Parity Securities or any warrants, rights, calls or options exercisable for
or convertible into any of the Junior Securities or Parity Securities
(other than the repurchase, redemption or other retirement of debentures or
other debt securities that are convertible or exchangeable into any of the
Junior Securities or Parity Securities) unless prior to or concurrently
with such declaration, payment, setting apart for payment, repurchase,
redemption or other retirement or distribution, as the case may be, all
accrued and unpaid dividends on shares of the Series A Preferred Stock not
paid on the dates provided for in paragraph
-4-
<PAGE> 5
(3)(i) hereof (including accrued dividends not paid by reason of the terms
and conditions of paragraph (3)(i) or paragraph (3)(iii) hereof) shall have
been or be paid.
(v) Subject to the foregoing provisions of this paragraph (3), the
Board of Directors may declare and the Corporation may pay or set apart for
payment dividends and other distributions on any of the Junior Securities
or Parity Securities, and may repurchase, redeem or otherwise retire any of
the Junior Securities or Parity Securities or any warrants, rights or
options exercisable for or convertible into any of the Junior Securities or
Parity Securities, and the holders of the shares of the Series A Preferred
Stock shall not be entitled to share therein.
(4) Liquidation Preference. (i) In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the affairs of the
Corporation, the holders of shares of Series A Preferred Stock then
outstanding shall be entitled to be paid out of the assets of the
Corporation available for distribution to its stockholders an amount in
cash equal to the Stated Value for each share outstanding, plus an amount
in cash equal to all accrued but unpaid dividends thereon to the date of
liquidation, dissolution or winding up before any payment shall be made or
any assets distributed to the holders of any of the Junior Securities. If
the assets of the Corporation are not sufficient to pay in full the
liquidation payments payable to the holders of outstanding shares of the
Series A Preferred Stock and any Parity Securities, then the holders of all
such shares shall share ratably in such distribution of assets in
accordance with the amount which would be payable on such distribution if
the amounts to which the holders of outstanding shares of Series A
Preferred Stock and the holders of outstanding shares of such Parity
Securities are entitled were paid in full. Except as provided in this
paragraph (4)(i), holders of Series A Preferred Stock shall not be entitled
to any distribution in the event of liquidation, dissolution or winding up
of the affairs of the Corporation.
(ii) For the purposes of this paragraph (4), neither the voluntary
sale, conveyance, lease, exchange or transfer (for cash, shares of stock,
securities or other consideration) of all or substantially all of the
property or assets of the Corporation nor the consolidation or merger of
the Corporation with or into one or more other
-5-
<PAGE> 6
corporations nor the consolidation or merger of one or more corporations
with or into the Corporation shall be deemed to be a voluntary or
involuntary liquidation, dissolution or winding up.
(5) Redemption at the Option of the Corporation. (i) The Corporation
may, at its option, redeem the Series A Preferred Stock, at any time after
the date that is three years after the date of initial issuance, in whole
or from time to time in part, at the redemption price per share set forth
below, together with accrued and unpaid dividends thereon to the date of
redemption, without interest, to the extent the Corporation shall have
funds legally available for such payment.
If redeemed during the 12 month period beginning on the anniversary of
the date of initial issuance in each of the years set forth below, the
redemption price per share shall be as follows, in each case together with
accrued and unpaid dividends thereon to the date of redemption:
<TABLE>
<CAPTION>
Year Redemption Price Per Share
---- --------------------------
<S> <C>
1998 . . . . . . . . . . . . . . . . . $26.75
1999 . . . . . . . . . . . . . . . . . $26.50
2000 . . . . . . . . . . . . . . . . . $26.25
2001 . . . . . . . . . . . . . . . . . $26.00
2002 . . . . . . . . . . . . . . . . . $25.75
2003 . . . . . . . . . . . . . . . . . $25.50
2004 . . . . . . . . . . . . . . . . . $25.25
2005 and thereafter . . . . . . . . . $25.00
</TABLE>
(ii) So long as any shares of the Series A Preferred Stock are
outstanding, any repurchase, redemption or other retirement of any Parity
Securities or any warrants, rights or options exercisable for or
convertible into any of the Parity Securities (other than the repurchase,
redemption or other retirement of debentures or other debt securities that
are convertible or exchangeable into any Parity Securities) must be made on
a pro rata basis with the Series A Preferred Stock so that the total
redemption prices of the shares
-6-
<PAGE> 7
redeemed of Series A Preferred Stock and such Parity Securities shall in
all cases bear to each other the same ratio that the total redemption
prices of all shares outstanding on the applicable date of Series A
Preferred Stock and such Parity Securities bear to each other, unless prior
to or concurrently with such repurchase, redemption or other retirement, as
the case may be, all accrued and unpaid dividends on shares of the Series A
Preferred Stock not paid on the dates provided for in paragraph (3)(i)
hereof (including accrued dividends not paid by reason of the terms and
conditions of paragraph (3)(i) or paragraph (3)(iii) hereof) shall have
been or be paid.
(iii) Shares of Series A Preferred Stock that have been issued and
reacquired in any manner, including shares purchased, redeemed or
exchanged, shall (upon compliance with any applicable provisions of the
laws of the State of New Jersey) have the status of authorized and unissued
shares of the class of Series A Preferred Stock undesignated as to series
and may be redesignated and reissued as part of any series of the Series A
Preferred Stock.
(6) Procedure for Redemption at the Option of the Corporation. (i) In
the event that fewer than all the outstanding shares of Series A Preferred
Stock are to be redeemed, the number of shares to be redeemed shall be
determined by the Board of Directors and the shares to be redeemed shall be
selected pro rata, except that in any redemption of fewer than all the
outstanding shares of Series A Preferred Stock, the Corporation may redeem
all shares held by any holders of a number of shares not to exceed 100,
including all shares held by holders who, after giving effect to such
redemption, would hold less than 100 shares, as may be specified by the
Corporation.
(ii) In the event the Corporation shall redeem shares of Series A
Preferred Stock, written notice of such redemption shall be given by first
class mail, postage prepaid, mailed not less than 30 days or more than 60
days prior to the redemption date, to each holder of record of the shares
to be redeemed at such holder's address as the same appears on the stock
register of the Corporation; provided, however, that no failure to give
such notice or any defect therein shall affect the validity of the
proceeding for the redemption of any shares of Series A
-7-
<PAGE> 8
Preferred Stock to be redeemed except as to the holder to whom the
Corporation has failed to give said notice or except as to the holder whose
notice was defective. Each such notice shall state: (a) the redemption
date; (b) the number of shares of Series A Preferred Stock to be redeemed
and, if less than all the shares held by such holder are to be redeemed
from such holder, the number of shares to be redeemed from such holder; (c)
the redemption price (including accrued and unpaid dividends to the
redemption date); (d) the place or places where certificates for such
shares are to be surrendered for payment of the redemption price; and (e)
that dividends on the shares to be redeemed will cease to accrue on such
redemption date (unless default shall be made by the Corporation in
providing money for the payment of the redemption price of the shares
called for redemption).
(iii) Notice having been mailed as aforesaid, from and after the
redemption date (unless default shall be made by the Corporation in
providing money for the payment of the redemption price of the shares
called for redemption) dividends on the shares of Series A Preferred Stock
so called for redemption shall cease to accrue and said shares shall no
longer be deemed to be outstanding and shall have the status of authorized
but unissued shares of Preferred Stock, undesignated as to series, and all
rights of the holders thereof as stockholders of the Corporation (except
the right to receive from the Corporation the redemption price and any
accrued and unpaid dividends) shall cease. Upon surrender in accordance
with said notice of the certificates for any shares so redeemed (properly
endorsed or assigned for transfer, if the Board of Directors of the
Corporation shall so require and the notice shall so state), such shares
shall be redeemed by the Corporation at the redemption price aforesaid plus
any accrued and unpaid dividends, without interest. In case fewer than all
the shares represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares without cost
to the holder thereof.
(7) Voting Rights. (i) The holders of record of shares of Series A
Preferred Stock shall not be entitled to any voting rights except as
hereinafter provided in this paragraph (7) or as otherwise provided by law.
-8-
<PAGE> 9
(ii) (a) If at any time or times dividends payable on Series A
Preferred Stock or any Parity Securities shall be in arrears and unpaid for
the six (6) preceding quarters, then the number of directors constituting
the Board of Directors, without further action, shall be increased by two
(2) and the holders of Series A Preferred Stock, together with any holders
of Parity Securities entitled to vote thereon, shall have the exclusive
right, voting separately as a class, to elect the directors of the
Corporation to fill such newly created directorships, the remaining
directors to be elected by the other class or classes of stock entitled to
vote therefor, at each meeting of stockholders held for the purpose of
electing directors; provided that in no event shall the holders of Series A
Preferred Stock, together with any holders of such Parity Securities, have
the right to elect more than twenty-five percent (25%) of the total number
of directors of the Corporation, provided, further, that, notwithstanding
the foregoing proviso, holders of Series A Preferred Stock, together with
any holders of such Parity Securities, shall have the right to elect not
less than one (1) director pursuant to this paragraph (7)(ii)(a).
(b) Whenever such voting right shall have vested, such right may be
exercised initially either at a special meeting of the holders of Series A
Preferred stock, called as hereinafter provided, or at any annual meeting
of stockholders held for the purpose of electing directors, or by written
consent of such holders pursuant to N.J.S. 14A:5-6, and thereafter at such
meetings or by the written consent of such holders pursuant to N.J.S.
14A:5-6. Such voting right shall continue until such time as all cumulative
dividends accrued on all outstanding Series A Preferred Stock, and any
other Parity Securities as to which full dividends have not previously been
paid, shall have been paid in full or declared and set aside for payment in
full, at which time such voting right of the holders of Series A Preferred
Stock shall terminate, subject to revesting in the event of each and every
subsequent failure of the Corporation to pay dividends for the requisite
number of quarters as described above.
(c) At any time when such voting right shall have vested in the holders
of Series A Preferred Stock and if such right shall not already have been
initially exercised,
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<PAGE> 10
a proper officer of the Corporation shall, upon the written request of 10%
of the holders of record of Series A Preferred Stock then outstanding,
addressed to the Secretary of the Corporation, call a special meeting of
holders of Series A Preferred Stock. Such meeting shall be held at the
earliest practicable date upon the notice required for annual meetings of
stockholders at the place for holding annual meetings of stockholders of
the Corporation or, if none, at a place designated by the Secretary of the
Corporation. If such meeting shall not be called by the proper officers of
the Corporation within 30 days after the personal service of such written
request upon the Secretary of the Corporation, or within 30 days after
mailing the same within the United States, by registered mail, addressed to
the Secretary of the Corporation at its principal office (such mailing to
be evidenced by the registry receipt issued by the postal authorities),
then the holders of record of 10% of the shares of Series A Preferred Stock
then outstanding may designate in writing a holder of Series A Preferred
Stock to call such meeting at the expense of the Corporation, and such
meeting may be called by such person so designated upon the notice required
for annual meetings of stockholders and shall be held at the same place as
is elsewhere provided in this paragraph (7)(ii)(c). Any holder of Series A
Preferred Stock that would be entitled to vote at such meeting shall have
access to the stock books of the Corporation for the purpose of causing a
meeting of stockholders to be called pursuant to the provisions of this
paragraph. Notwithstanding the provisions of this paragraph, however, no
such special meeting shall be called during a period within 90 days
immediately preceding the date fixed for the next annual meeting of
stockholders.
(d) At any meeting held for the purpose of electing directors at which
the holders of Series A Preferred Stock shall have the right to elect
directors as provided herein, the presence in person or by proxy of the
holders of at least a majority of the then outstanding shares of Series A
Preferred Stock shall be required and be sufficient to constitute a quorum
of such class for the election of directors by such class. At any such
meeting or adjournment thereof (x) the absence of a quorum of the holders
of Series A Preferred Stock shall not prevent the election of directors
other than those to be elected by the holders of stock of such class and
the absence of a quorum or quorums
-10-
<PAGE> 11
of the holders of capital stock entitled to elect such other directors
shall not prevent the election of directors to be elected by the holders of
Series A Preferred Stock and (y) in the absence of a quorum of the holders
of shares of Series A Preferred Stock, a majority of such holders present
in person or by proxy shall have the power to adjourn the meeting for the
election of directors which the holders of shares of Series A Preferred
Stock may be entitled to elect, from time to time, without notice (except
as required by law) other than announcement at the meeting, until a quorum
shall be present.
(e) The term of office of all directors elected by the holders of
Series A Preferred Stock pursuant to paragraph (7)(ii)(a) in office at any
time when the aforesaid voting rights are vested in the holders of Series A
Preferred Stock shall terminate upon the election of their successors at
any meeting of stockholders for the purpose of electing directors. Upon any
termination of the aforesaid voting rights in accordance with paragraph
(7)(ii)(b), the term of office of all directors elected by the holders of
Series A Preferred Stock pursuant to paragraph (7)(ii)(a) then in office
shall thereupon terminate and upon such termination the number of directors
constituting the Board of Directors shall, without further action, be
reduced by two (2) (or such other lesser number by which the number of
directors constituting the Board of Directors shall have been increased
pursuant to paragraph (7)(ii)(a) hereof), subject always to the increase of
the number of directors pursuant to paragraph (7)(ii)(a) in case of the
future right of the holders of Series A Preferred Stock to elect directors
as provided herein.
(f) In case of any vacancy occurring among the directors so elected,
the remaining director who shall have been so elected may appoint a
successor to hold office for the unexpired term of the director whose place
shall be vacant. If all directors so elected by the holders of Series A
Preferred Stock shall cease to serve as directors before their terms shall
expire, the holders of Series A Preferred Stock then outstanding may, at a
special meeting of the holders called as provided above, elect successors
to hold office for the unexpired terms of the directors whose places shall
be vacant.
-11-
<PAGE> 12
(iii) So long as any shares of the Series A Preferred Stock are
outstanding, the Corporation shall not, without the affirmative vote or
consent of the holders of at least a majority of the shares of Series A
Preferred Stock at the time outstanding, given in person or by proxy,
either in writing or by resolution adopted at an annual or special meeting
called for the purpose, at which the holders of Series A Preferred Stock
shall vote separately as a class, authorize any new class of Parity
Securities.
(iv) So long as any shares of the Series A Preferred Stock are
outstanding, the Corporation shall not, without the affirmative vote or
consent of the holders of at least 66-2/3% of the shares of Series A
Preferred Stock at the time outstanding, given in person or by proxy,
either in writing or by resolution adopted at an annual or special meeting
called for the purpose, at which the holders of Series A Preferred Stock
shall vote separately as a class, authorize any new class of Senior
Securities.
(v) (a) Except as set forth in paragraph (7)(iii) and paragraph (7)(iv)
above, the creation, authorization or issuance of any shares of any Junior
Securities, Parity Securities or Senior Securities, (b) the creation of any
indebtedness of any kind of the Corporation, or (c) the increase or
decrease in the amount of authorized capital stock of any class, including
Preferred Stock, shall not require the consent of the holders of Series A
Preferred Stock and shall not be deemed to affect materially and adversely
the rights, preferences, privileges or voting rights of shares of Series A
Preferred Stock.
(vi) So long as any shares of the Series A Preferred Stock are
outstanding, the Corporation shall not, without the affirmative vote or
consent of the holders of at least 66-2/3% of the shares of Series A
Preferred Stock at the time outstanding, given in person or by proxy,
either in writing or by resolution adopted at an annual or special meeting
called for the purpose, at which the holders of Series A Preferred Stock
shall vote separately as a class, amend the Restated Certificate of
Incorporation so as to affect materially and adversely the specified
rights, preferences, privileges or voting rights of shares of Series A
Preferred Stock.
-12-
<PAGE> 13
(8) Limitations. Except as may otherwise be required by law, the shares
of Series A Preferred Stock shall not have any powers, preferences or
relative, participating, optional or other special rights other than those
specifically set forth in this resolution (as such resolution may be
amended from time to time) or otherwise in the Certificate of Incorporation
of the Corporation.
3. The Restated Certificate of Incorporation of the Corporation is
amended so that the designation and number of shares of the Series A Preferred
Stock, and the relative rights, preferences and limitations of the Series A
Preferred Stock, are as stated in the foregoing resolution.
IN WITNESS WHEREOF, this Certificate of Amendment of the Corporation's
Restated Certificate of Incorporation is executed on behalf of the Corporation
by its Chairman and Chief Executive Officer the 23rd day of June, 1995.
----------------------------
C. Robert Kidder
Chairman and Chief Executive
Officer
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<PAGE> 1
EXHIBIT (4)(i)
AMENDMENT NO. 2 TO THE
CREDIT AGREEMENT
Dated as of June 27, 1995
AMENDMENT NO. 2 TO THE CREDIT AGREEMENT among BORDEN, INC., a New
Jersey corporation (the "Borrower"), the banks, financial institutions and other
institutional lenders parties to the Credit Agreement referred to below
(collectively, the "Lenders"), CITIBANK, N.A., as administrative agent (the
"Administrative Agent"), BT SECURITIES CORPORATION ("BT Securities"), CHEMICAL
SECURITIES, INC. ("Chemical Securities"), CITICORP SECURITIES, INC. and CREDIT
SUISSE, as arrangers (the "Arrangers"), BT Securities and Chemical Securities,
as co-syndication agents, and Credit Suisse, as Issuing Bank and documentation
agent.
PRELIMINARY STATEMENTS:
(1) The Borrower, the Lenders, the Administrative Agent and the
Arrangers have entered into a Credit Agreement dated as of December 15, 1994 (as
amended, supplemented or otherwise modified through the date hereof, the "Credit
Agreement"). Capitalized terms not otherwise defined in this Amendment have the
same meanings as specified in the Credit Agreement.
(2) The Borrower has requested that the Lenders, the Administrative
Agent and the Arrangers agree to amend certain provisions of the Credit
Agreement and the Lenders, the Administrative Agent and the Arrangers have
agreed to amend the Credit Agreement upon the terms and subject to the
conditions set forth herein.
NOW THEREFORE, in consideration of the premises and the mutual
agreements contained herein, and for other valuable consideration the receipt of
which is hereby acknowledged, the Borrower, the Lenders, the Administrative
Agent and the Arrangers hereby agree as follows:
SECTION 1. Amendments to Credit Agreement. The Credit Agreement is,
effective as of the date hereof and subject to the satisfaction of the
conditions precedent set forth in Section 3, hereby amended as follows:
(a) Section 1.01 of the Credit Agreement is amended as follows:
<PAGE> 2
2
(i) The definition of "Applicable Margin" is deleted in its
entirety and the following new definition is inserted in lieu thereof:
"Applicable Margin" means, as of any date, a percentage per
annum determined by reference to the Public Debt Rating in
effect on such date as set forth below:
<TABLE>
<CAPTION>
Applicable Margin for
Public Debt Rating Applicable Margin for Eurodollar Rate
S&P/Moody's Base Rate Advances Advances
<S> <C> <C>
---------------------------------------------------------------
Level 1
BBB or Baa2 or above 0% .50%
---------------------------------------------------------------
Level 2
below BBB or Baa2
but at least BBB- or Baa3 0% .75%
---------------------------------------------------------------
Level 3
below BBB- or Baa3
but at least BB or Ba2 .50% 1.25%
---------------------------------------------------------------
Level 4
Below BB and Ba2 1.0% 2.25%
---------------------------------------------------------------
</TABLE>
(ii) The definition of "Applicable Percentage" is deleted in
its entirety and the following new definition is inserted in lieu
thereof:
"Applicable Percentage" means, as of any date, a percentage
per annum determined by reference to the Public Debt Rating in
effect on such date as set forth below:
<TABLE>
<CAPTION>
Public Debt Rating Applicable
S&P/Moody's Percentage
<S> <C>
-----------------------------------------------------------
Level 1
BBB or Baa2 or above .20%
-----------------------------------------------------------
Level 2
below BBB or Baa2 but at least BBB- or Baa3 .25%
-----------------------------------------------------------
Level 3
below BBB- or Baa3 but at least BB or Ba2 .375%
-----------------------------------------------------------
Level 4
below BB and Ba2 .50%
-----------------------------------------------------------
</TABLE>
(iii) The definition of "Collateral" is deleted in its
entirety.
(iv) The definition of "Excluded Asset Sales" is amended by
deleting subsections (iv), (v) and (vi) thereof in their entirety and
inserting in lieu thereof the following:
<PAGE> 3
3
"(iv) sales of plant, property and equipment to the extent that
the proceeds thereof are used to purchase a similar asset
within 270 days of such sale, (v) intentionally omitted, (vi)
intentionally omitted."
(v) The definition of "Investment" is deleted in its entirety.
(vi) The definition of "Loan Documents" is deleted in its
entirety and the following new definition is inserted in lieu thereof:
"Loan Documents" means this Agreement, the Notes and each
Letter of Credit Agreement, as the same may be amended,
supplemented or otherwise modified from time to time.
(vii) The definition of "Material Subsidiary" is deleted in its
entirety and the following new definition is inserted in lieu thereof:
"Material Subsidiary" means each Subsidiary of the Borrower
now existing or hereafter acquired or formed by the Borrower
which (x) for the most recent fiscal year of the Borrower,
accounted for more than 3% of the consolidated revenues of the
Borrower or (y) as at the end of such fiscal year, was the
owner of more than 4% of the consolidated assets of the
Borrower, in each case as shown on the consolidated financial
statements of the Borrower for such fiscal year.
(viii) The definition of "Net Debt Proceeds" is deleted in its
entirety.
(ix) The definition of "Net Equity Proceeds" is deleted in its
entirety.
(x) The definition of "Pledge Agreement" is deleted in its
entirety.
(xi) The definition of "Prepayment Target" is deleted in its
entirety.
(xii) The definition of "Public Debt Rating" is amended by
deleting the reference to "Level 3" therein and substituting "Level 4"
in lieu thereof.
(xiii) The definition of "Termination Date" is amended by
deleting the reference to "Section 2.04" therein and substituting
"Section 2.05" in lieu thereof.
(xiv) The definition of "Unused Working Capital Commitment" is
amended by deleting Subsection (b)(ii)(D) in its entirety and inserting
"(D) intentionally omitted" in lieu thereof.
<PAGE> 4
4
(xv) The definition of "Working Capital Commitment" is deleted
in its entirety and the following new definition is inserted in lieu
thereof:
"Working Capital Commitment" means, with respect to any
Working Capital Lender at any time, the amount set forth
opposite such Lender's name on Schedule I hereto under the
caption "Working Capital Commitment" or, if such Lender has
entered into one or more Assignment and Acceptances, set forth
for such Lender in the Register maintained by the
Administrative Agent pursuant to Section 8.07(c) as such
Lender's "Working Capital Commitment", as such amount may be
reduced pursuant to Sections 2.05 and 2.06.
(b) Section 2.01 is amended by deleting the figure "$15,000,000" in the
eleventh line therein and substituting for such figure the figure
"$10,000,000".
(c) Section 2.02(b) is amended by deleting the figure "$15,000,000" in
the fourth line therein and substituting for such figure the figure
$10,000,000".
(d) Section 2.05 is amended (i) by adding immediately after the phrase
"Reduction of the Commitments" in the first line thereof the phrase "(a)
Optional." and (ii) by deleting the figure "$15,000,000" in the fifth line
therein and substituting for such figure the figure "$10,000,000".
(e) Section 2.05 is amended by deleting Subsection 2.05(b) in its
entirety and inserting the following new subsection 2.05(b) in lieu
thereof:
"(b) Mandatory. The Working Capital Commitments shall be
terminated in full on the Termination Date."
(f) Section 2.06 is amended (i) by deleting Subsection 2.06(a) in its
entirety and inserting the following new Subsection 2.06(a) in lieu
thereof:
"(a) The Borrower shall apply Cash Asset Proceeds in excess of
an aggregate amount of $750,000,000 computed cumulatively from June 1,
1995 to prepay and reduce commitments under the Borrower's Scheduled
Debt and Senior Bank Facilities.";
and (ii) by deleting Subsections 2.06(c), (d) and (e) in their entirety and
inserting "(c) Intentionally omitted."; "(d) Intentionally omitted."; and
"(e) Intentionally omitted." in lieu thereof.
(g) Section 2.07(a) is amended (i) by deleting the figure "$15,000,000"
in the ninth line therein and substituting for such figure the figure
"$10,000,000" and (ii) by deleting clause (D) from Subsection 2.07(b)(i)(x)
in its entirety.
<PAGE> 5
5
(h) Section 2.10(b) is amended by deleting the figure "$15,000,000" in
the third line therein and substituting for such figure the figure
"$10,000,000".
(i) Section 3.03(a) is amended by deleting the parenthetical "(other
than representations and warranties in respect of the pledge of stock of
the Borrower's Subsidiaries organized outside the United States)" in its
entirety.
(j) Section 4.01(d) is amended by deleting subsections (ii), (iii) and
(iv) in their entirety and inserting in lieu thereof the following:
"or (ii) to the extent obtainable on or prior to the date hereof, the
exercise by the Administrative Agent or any Lender of its rights under
the Loan Documents, have been duly obtained, taken, given or made and
are in full force and effect, except for parties to the Related
Documents."
(k) Section 4.01(f) is amended (i) by deleting the date "December 31,
1993" in the second line therein and substituting for such date the date
"December 31, 1994"; (ii) by deleting the date "September 30, 1994" in the
fifth and ninth lines therein and substituting for such date the date
"March 31, 1995"; (iii) by deleting the phrase "for the nine months then
ended" in the seventh and tenth lines therein and substituting for such
phrase the phrase "for the three months then ended"; and (iv) by deleting
the last sentence therein and substituting for such sentence the following,
"Since March 31, 1995, there has been no Material Adverse Change."
(l) Section 4.01(h) is amended by deleting subsection (i) therein in
its entirety and inserting in lieu thereof the following:
"(i) except as disclosed in the Borrower's Annual Report on Form 10-K
for the fiscal year ended December 31, 1994, would be likely to have a
Material Adverse Effect or".
(m) Section 4.01(m) is amended by deleting the date "December 31, 1993"
in the last line therein and substituting for such date the date "December
31, 1994".
(n) Section 4.01(o) is deleted in its entirety.
(o) Sections 5.01(i) and 5.01(j) are deleted in their entirety.
(p) Section 5.02(a)(iv) is amended by deleting the figure "$50,000,000"
in the last line therein and substituting for such figure the figure
"$100,000,000".
(q) Section 5.02(b)(ii) is amended by deleting the phrase ", the Debt
Proceeds of which are applied as provided in Section 2.06(b)," in the
second and third lines therein in its entirety.
<PAGE> 6
6
(r) Section 5.02(b)(xii) is amended by deleting the figure
"$50,000,000" in the second line therein and substituting for such figure
the figure "$300,000,000".
(s) Section 5.02(c) is deleted in its entirety and the following new
Section 5.02(c) is inserted in lieu thereof:
"(c) Mergers, Etc. Merge into or consolidate with any Person or
permit any Person to merge into it, or permit any of its Subsidiaries
to do so, except that (i) any Subsidiary of the Borrower may merge into
or consolidate with, or transfer all or a portion of its assets to, any
other Subsidiary of the Borrower, provided that, in the case of any
such consolidation, the Person formed by such consolidation shall be a
Subsidiary of the Borrower, (ii) any of the Borrower's Subsidiaries may
merge into the Borrower if the Borrower is the surviving corporation
and (iii) the Borrower may merge into a wholly-owned Subsidiary of the
Borrower that (A) is incorporated under the laws of any of the States
of Delaware, New York or Ohio and (B) has no material assets or
liabilities, for the sole purpose of changing the state of
incorporation of the Borrower if the surviving corporation shall
expressly assume the liabilities of the Borrower under the Loan
Documents; provided, however, that in each case, immediately after
giving effect thereto, no event shall occur and be continuing that
constitutes a Default."
(t) Section 5.02(d) is deleted in its entirety and the following new
Section 5.02(d) is inserted in lieu thereof:
"(d) Sales, Etc. of Assets. Sell, lease, transfer or otherwise
dispose of all or substantially all of the assets of the Company and
its Subsidiaries taken as a whole, except in a transaction authorized
by subsection (c) of this Section; provided, however, that with respect
to any sale, lease, transfer or other disposition of any assets (other
than Excluded Asset Sales), immediately after giving effect thereto, no
event shall occur and be continuing that constitutes an Event of
Default under Sections 6.01(a), (b), (c) or (f)."
(u) Section 5.02(e) is deleted in its entirety and the following new
Section 5.02(e) is inserted in lieu thereof:
"(e) Investments in Other Persons. Intentionally omitted."
(v) Section 5.02(i) is deleted in its entirety.
(w) Section 5.04(c) is amended by deleting the phrase beginning with
the words "plus for any ... " and ending with the words "not used to make
Investments;" before the proviso therein and substituting for such phrase
the following:
"plus for any fiscal year Debt Proceeds and Equity Proceeds;".
<PAGE> 7
7
(x) Section 6.01(h) is deleted in its entirety and the following new
Section 6.01(h) is inserted in lieu thereof:
"(h) Intentionally omitted."
(y) The penultimate sentence of Section 7.06 is deleted in its entirety
and the following new sentence is inserted in lieu thereof:
"Upon the acceptance of any appointment as Administrative Agent
hereunder by a successor Administrative Agent as to all of the
Facilities, such successor Administrative Agent shall succeed to and
become vested with all the rights, powers, discretion, privileges and
duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and
obligations under the Loan Documents."
(z) Schedule I to the Credit Agreement is deleted in its entirety and
Schedule I attached to this Amendment shall be substituted in lieu thereof.
(aa) Exhibit E--Form of Pledge Agreement to the Credit Agreement is
deleted in its entirety.
SECTION 2. Termination of Pledge Agreement. The Lenders executing and
delivering this Amendment hereby consent to the termination of the Pledge
Agreement and the release of all Collateral pledged thereunder or otherwise.
Upon the effectiveness of this Amendment, the Administrative Agent hereby (i)
releases all of the Collateral pledged under the Pledge Agreement or otherwise,
(ii) agrees that the Pledge Agreement and all security interests granted
thereunder are hereby terminated and (iii) agrees promptly to deliver to the
Borrower all certificates and other instruments held by or for the benefit of it
that evidence any of the Collateral.
SECTION 3. Conditions of Effectiveness. This Amendment shall become
effective (a) with respect to the definitions of "Applicable Margin" and
"Applicable Percentage", as of June 12, 1995 (b) with respect to Section
5.01(j), as of June 21, 1995, and (c) with respect to all other provisions of
this Amendment, as of the date first above written, in each case when, and only
when, the Administrative Agent shall have received (i) counterparts of this
Amendment executed by the Borrower and all of the Lenders or, as to any of the
Lenders, advice satisfactory to the Administrative Agent that such Lender has
executed this Amendment and (ii) a favorable opinion of Simpson Thacher &
Bartlett, special New York counsel to the Borrower, and a favorable opinion of
Allan L. Miller, Senior Vice President, Chief Administrative Officer and General
Counsel of the Borrower, as to such matters as the Administrative Agent may
reasonably request. This Amendment is subject to the provisions of Section 8.01
of the Credit Agreement.
SECTION 4. Representations; No Default. By its execution and delivery
of this Amendment, the Borrower hereby states and confirms that (i) the
representations and
<PAGE> 8
8
warranties contained in each Loan Document are correct on and as of the date
hereof as though made on and as of such date other than any such representations
or warranties that, by their terms, refer to a date other than the date hereof;
and (ii) no event has occurred and is continuing that constitutes a Default.
SECTION 5. Reference to and Effect on the Loan Documents. (a) On and
after the effectiveness of this Amendment, each reference in the Credit
Agreement to "this Agreement", "hereunder", "hereof" or words of like import
referring to the Credit Agreement, and each reference in the Notes and each of
the other Loan Documents to "the Credit Agreement", "thereunder", "thereof" or
words of like import referring to the Credit Agreement, shall mean and be a
reference to the Credit Agreement, as amended by this Amendment.
(b) The Credit Agreement, the Notes and each of the other Loan
Documents, as specifically amended by this Amendment, are and shall continue to
be in full force and effect and are hereby in all respects ratified and
confirmed.
(c) The execution, delivery and effectiveness of this Amendment shall
not, except as expressly provided herein, operate as a waiver of any right,
power or remedy of any Lender or the Administrative Agent under any of the Loan
Documents, or constitute a waiver of any provision of any of the Loan Documents.
SECTION 6. Costs, Expenses. The Borrower agrees to pay on demand all
costs and expenses of each Agent in connection with the preparation, execution,
delivery and administration, modification and amendment of this Amendment and
the other instruments and documents to be delivered hereunder (including,
without limitation, the reasonable fees and expenses of counsel for the
Administrative Agent) in accordance with the terms of Section 8.04 of the Credit
Agreement.
SECTION 7. Execution in Counterparts. This Amendment may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute but one and the same agreement.
Delivery of an executed counterpart of a signature page to this Amendment by
telecopier shall be effective as delivery of a manually executed counterpart of
this Amendment.
SECTION 8. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
<PAGE> 9
9
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
BORDEN, INC.
By
-----------------------------------
Title:
CITIBANK, N.A.,
as Administrative Agent and as Lender
By
-----------------------------------
Title:
ARRANGERS
BT SECURITIES CORPORATION,
as Arranger
By
-----------------------------------
Name:
Title:
CHEMICAL SECURITIES INC.,
as Arranger
By
-----------------------------------
Name:
Title:
CITICORP SECURITIES, INC.,
as Arranger
By
-----------------------------------
Name:
Title:
<PAGE> 10
10
CREDIT SUISSE, as Arranger
By
-----------------------------------
Name:
Title:
By
-----------------------------------
Name:
Title:
BANKS
LEAD MANAGING AGENTS
BANKERS TRUST COMPANY
By
-----------------------------------
Name:
Title:
CHEMICAL BANK
By
-----------------------------------
Name:
Title:
CITIBANK, N.A.
By
-----------------------------------
Name:
Title:
<PAGE> 11
11
CREDIT SUISSE
By
-----------------------------------
Name:
Title:
By
-----------------------------------
Name:
Title:
SENIOR MANAGING AGENTS
NATIONAL WESTMINSTER BANK PLC,
NEW YORK BRANCH
By
-----------------------------------
Name:
Title:
NATIONAL WESTMINSTER BANK PLC,
NASSAU BRANCH
By
-----------------------------------
Name:
Title:
<PAGE> 12
12
NATIONSBANK, N.A.
(CAROLINAS)
By
-----------------------------------
Name:
Title:
THE BANK OF NOVA SCOTIA
By
-----------------------------------
Name:
Title:
<PAGE> 13
13
THE CHASE MANHATTAN BANK, N.A.
By
-----------------------------------
Name:
Title:
CREDIT LYONNAIS NEW YORK
BRANCH
By
-----------------------------------
Name:
Title:
CREDIT LYONNAIS CAYMAN
ISLAND BRANCH
By
-----------------------------------
Name:
Title:
MANAGING AGENTS
ABN AMRO BANK N.V.,
NEW YORK BRANCH
By
-----------------------------------
Name:
Title:
By
-----------------------------------
Name:
Title:
<PAGE> 14
14
CIBC INC.
By
-----------------------------------
Name:
Title:
THE BANK OF NEW YORK
By
-----------------------------------
Name:
Title:
THE BANK OF TOKYO TRUST
COMPANY
By
-----------------------------------
Name:
Title:
THE FIRST NATIONAL BANK
OF CHICAGO
By
-----------------------------------
Name:
Title:
THE FUJI BANK, LIMITED
By
-----------------------------------
Name:
Title:
<PAGE> 15
SCHEDULE I
COMMITMENTS AND APPLICABLE LENDING OFFICES
<TABLE>
<CAPTION>
====================================================================================================================================
WORKING CAPITAL Letter of Credit
NAME OF BANK COMMITMENT Commitment DOMESTIC LENDING OFFICE EURODOLLAR LENDING OFFICE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Bankers Trust Company $127,602,409.6415 130 Liberty Street 130 Liberty Street
New York, New York 10006 New York, New York 10006
------------------------------------------------------------------------------------------------------------------------------------
Chemical Bank $127,602,409.6414 270 Park Avenue 270 Park Avenue
New York, New York 10017 New York, New York 10017
------------------------------------------------------------------------------------------------------------------------------------
Citibank, N.A. $127,602,409.6414 399 Park Avenue 399 Park Avenue
New York, New York 10043 New York, New York 10043
------------------------------------------------------------------------------------------------------------------------------------
Credit Suisse $127,602,409.6414 $300,000,000.0000 12 East 49th Street 12 East 49th Street
until Termination Date New York, New York 10017 New York, New York 10017
------------------------------------------------------------------------------------------------------------------------------------
ABN Amro Bank N.V. $53,526,104.4157 500 Park Avenue 500 Park Avenue
New York, New York 10022 New York, New York 10022
------------------------------------------------------------------------------------------------------------------------------------
CIBC Inc. $53,526,104.4157 425 Lexington Avenue 425 Lexington Avenue
New York, New York 10017 New York, New York 10017
------------------------------------------------------------------------------------------------------------------------------------
National Westminster Bank PLC $71,686,746.9879 175 Water Street 175 Water Street
New York, New York 10038 New York, New York 10038
New York Branch
Nassau Branch
====================================================================================================================================
</TABLE>
<PAGE> 16
<TABLE>
<CAPTION>
====================================================================================================================================
WORKING CAPITAL Letter of Credit
NAME OF BANK COMMITMENT Commitment DOMESTIC LENDING OFFICE EURODOLLAR LENDING OFFICE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NationsBank of North Carolina, $71,686,746.9879 767 5th Avenue 767 5th Avenue
N.A. New York, New York 10153 New York, New York 10153
------------------------------------------------------------------------------------------------------------------------------------
The Bank of New York $53,526,104.4157 One Wall Street, 8th Floor One Wall Street, 8th Floor
New York, New York 10286 New York, New York 10286
------------------------------------------------------------------------------------------------------------------------------------
The Bank of Nova Scotia $71,686,746.9879 One Liberty Plaza One Liberty Plaza
New York, New York 10006 New York, New York 10006
------------------------------------------------------------------------------------------------------------------------------------
The Bank of Tokyo Trust $53,526,104.4157 1251 Avenue of the Americas 1251 Avenue ofthe Americas
Company New York, New York 10118 New York, New York 10118
------------------------------------------------------------------------------------------------------------------------------------
The Chase Manhattan Bank, N.A. $71,686,746.9879 1 Chase Plaza 1 Chase Plaza
New York, New York 10081 New York, New York 10081
------------------------------------------------------------------------------------------------------------------------------------
The First National Bank of $53,526,104.4157 One First National Plaza One First National Plaza
Chicago Chicago, Illinois 60670 Chicago, Illinois 60670
------------------------------------------------------------------------------------------------------------------------------------
The Fuji Bank Limited $53,526,104.4157 Two World Trade Center Two World Trade Center
New York, New York 10048 New York, New York 10048
------------------------------------------------------------------------------------------------------------------------------------
Credit Lyonnais $71,686,746.9879 1301 Avenue of the Americas 1301 Avenue ofthe Americas
New York, New York 10019 New York, New York 10019
New York Branch
Cayman Island Branch
====================================================================================================================================
</TABLE>
<PAGE> 1
EXHIBIT (4)(ii)
Dated as of June 27, 1995
AMENDMENT AND CONSENT to the Second Amended and Restated Credit
Agreement dated as of December 15, 1994 among T.M. INVESTORS LIMITED
PARTNERSHIP, a limited partnership organized under the laws of Delaware (the
"Borrower"), the banks (the "Banks") listed on the signature pages hereof,
CITIBANK, N.A. ("Citibank"), as administrative agent (the "Administrative
Agent") for the Lenders (as defined in the Credit Agreement referred to below),
BT SECURITIES CORPORATION ("BT Securities"), CHEMICAL SECURITIES INC. ("Chemical
Securities"), CITICORP SECURITIES, INC. ("CSI") and CREDIT SUISSE ("Credit
Suisse"), as arrangers (the "Arrangers"), and BT SECURITIES and CHEMICAL
SECURITIES as co-syndication agents.
PRELIMINARY STATEMENTS:
(1) The Borrower, the Lenders, the Administrative Agent and the
Arrangers have entered into a Second Amended and Restated Credit Agreement dated
as of December 15, 1994 (the "Credit Agreement"). Capitalized terms not
otherwise defined in this Amendment and Consent have the same meanings as
specified in the Credit Agreement.
(2) The Borrower has requested that the Lenders, the Administrative
Agent, the Security Agent and the Arrangers agree to amend certain provisions of
the Credit Agreement and consent to the Borrower entering into various
agreements and amendments (the "June Amendments") and the Lenders, the
Administrative Agent, the Security Agent and the Arrangers have agreed to amend
the Credit Agreement and to consent to the Borrower entering into such
agreements and the June Amendments upon the terms and subject to the conditions
set forth herein.
NOW THEREFORE, in consideration of the premises and the mutual
agreements contained herein, and for other valuable consideration the receipt of
which is hereby acknowledged, the Borrower, the Lenders, the Administrative
Agent, the Security Agent and the Arrangers hereby agree as follows:
SECTION 1. Amendment to Credit Agreement. Section 1.01 of the Credit
Agreement is, effective as of the date hereof and subject to the satisfaction of
the conditions precedent set forth in Section 3, hereby amended by deleting the
definition of "Applicable Margin" in its entirety and inserting in lieu thereof
the following new definition:
<PAGE> 2
2
"Applicable Margin" means, as of any date, a percentage per
annum determined by reference to the Public Debt Rating in effect
on such date as set forth below:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
Public Debt Rating Applicable Margin Applicable Margin for
S&P/Moody's for Base Rate Advances Eurodollar Rate Advances
<S> <C> <C>
-----------------------------------------------------------------------------
Level 1
-------
BBB or Baa2 or above 0% .50%
-----------------------------------------------------------------------------
Level 2
-------
below BBB or Baa2
but at least BBB- or Baa3 0% .75%
-----------------------------------------------------------------------------
Level 3
-------
below BBB- or Baa3
but at least BB or Ba2 .50% 1.25%
-----------------------------------------------------------------------------
Level 4
-------
Below BB and Ba2 1.0% 2.25%
-----------------------------------------------------------------------------
</TABLE>
SECTION 2. Administrative Agent, Security Agent and Lender Consents.
The Administrative Agent, the Security Agent and each of the Lenders hereby
consent, subject to the satisfaction of the conditions precedent set forth in
Section 3, to the due execution, delivery and performance by the Borrower of the
following:
(a) Amendment No. 4 to the Associates LP Partnership Agreement as
attached hereto as Exhibit A;
(b) Amendment No. 4 to the Guaranteed Reset Note (as defined in the
Associates LP Partnership Agreement") as attached hereto as Exhibit B;
(c) Amendment No. 4 to the Borden #2 Agreement as attached hereto as
Exhibit C;
(d) The Associates Consent as attached hereto as Exhibit D;
(e) The Investors Consent as attached hereto as Exhibit E; and
(f) Amendment No. 4 to the Borrower Partnership Agreement as attached
hereto as Exhibit F.
SECTION 3. Conditions of Effectiveness. This Amendment and Consent
shall become effective as of the date first above written when, and only when,
the Administrative Agent shall have received counterparts of this Amendment and
Consent executed by the Borrower and all of the Lenders or, as to any of the
Lenders, advice satisfactory to the<PAGE> 3
3
Administrative Agent that such Lender has executed this Amendment. Section 1
of this Amendment and Consent is subject to the provisions of Section 8.01 of
the Credit Agreement.
SECTION 4. No Default. By its execution and delivery of this Amendment
and Consent, the Borrower hereby states and confirms that no event has occurred
and is continuing that constitutes a Default.
SECTION 5. Reference to and Effect on the Loan Documents and certain
other Agreements. (a) On and after the effectiveness of this Amendment and
Consent, each reference in the Credit Agreement to "this Agreement",
"hereunder", "hereof" or words of like import referring to the Credit Agreement
and each reference in the Notes and each of the other Loan Documents to "the
Credit Agreement", "thereunder", "thereof" or words of like import referring to
the Credit Agreement shall mean and be a reference to the Credit Agreement as
amended by this Amendment and Consent.
(b) The Credit Agreement, as specifically amended by this Amendment and
Consent, is and shall continue to be in full force and effect and is hereby in
all respects ratified and confirmed.
(c) The execution, delivery and effectiveness of this Amendment and
Consent shall not, except as expressly provided herein, operate as a waiver of
any right, power or remedy of any Lender or the Administrative Agent under any
of the Loan Documents or any of the agreements amended by the June Amendments,
nor constitute a waiver of any provision of any of the Loan Documents or any of
the agreements amended by the June Amendments.
SECTION 6. Costs, Expenses. The Borrower agrees to pay on demand all
costs and expenses of the Administrative Agent in connection with the
preparation, execution, delivery and administration, modification and amendment
of this Amendment and Consent and the other instruments and documents to be
delivered hereunder (including, without limitation, the reasonable fees and
expenses of counsel for the Administrative Agent) in accordance with the terms
of Section 8.04 of the Credit Agreement.
SECTION 7. Execution in Counterparts. This Amendment and Consent may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute but one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Amendment and Consent by telecopier shall be effective as delivery of a manually
executed counterpart of this Amendment and Consent.
SECTION 8. GOVERNING LAW. THIS AMENDMENT AND CONSENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
<PAGE> 4
4
IN WITNESS WHEREOF, the parties hereto have caused this Amendment and
Consent to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
T.M. INVESTORS LIMITED
PARTNERSHIP
By: Pawling Partners, Inc, as General
Partner
By:
-----------------------------
Name:
Title:
CITIBANK, N.A.,as Administrative Agent, as Security
Agent and as Lender
By:
-----------------------------
Name:
Title:
BANKERS TRUST COMPANY
By:
-----------------------------
Name:
Title:
CHEMICAL BANK
By:
-----------------------------
Name:
Title:
<PAGE> 5
5
CREDIT SUISSE
By:
-----------------------------
Name:
Title:
By:
-----------------------------
Name:
Title:
ABN AMRO BANK N.V.,
NEW YORK BRANCH
By:
-----------------------------
Name:
Title:
By:
-----------------------------
Name:
Title:
CIBC INC.
By:
-----------------------------
Name:
Title:
<PAGE> 6
6
CREDIT LYONNAIS NEW YORK BRANCH
By:
-----------------------------
Name:
Title:
CREDIT LYONNAIS
CAYMAN ISLAND BRANCH
By:
-----------------------------
Name:
Title:
NATIONSBANK, N.A. (CAROLINAS)
By:
-----------------------------
Name:
Title:
NATIONAL WESTMINSTER BANK PLC
NEW YORK BRANCH
By:
-----------------------------
Name:
Title:
NATIONAL WESTMINSTER BANK PLC
NASSAU BRANCH
By:
-----------------------------
Name:
Title:
<PAGE> 7
7
THE BANK OF NEW YORK
By:
-----------------------------
Name:
Title:
THE BANK OF NOVA SCOTIA
By:
-----------------------------
Name:
Title:
THE BANK OF TOKYO TRUST COMPANY
By:
-----------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, N.A.
By:
-----------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO
By:
-----------------------------
Name:
Title:
THE FUJI BANK, LIMITED
By:
-----------------------------
Name:
Title:
<PAGE> 1
EXHIBIT (10) May 1, 1995
Mr. Allan L Miller
877 Northbridge
Worthington, OH 43085
Dear Allan:
This letter agreement between you and Borden, Inc. (the "Company") will confirm
our discussion concerning the implementation of your CORE arrangement in
connection with the termination of your employment and the arrangements that
have been agreed upon during the interim period. This agreement shall become
effective seven (7) days after you sign without effecting a cancellation and
shall continue through the period during which you are being paid under
paragraph 1(a) below. Effective April 15, 1995 your annual salary shall be
increased to $370,000. In addition, you will be guaranteed an annual incentive
bonus for 1995 payable in 1996 under the existing annual incentive program of
not less than $166,500. Finally you will be paid on May 1, 1995 a special
bonus in the amount of $289,355.
1. Your official termination date will be December 31, 1995. Commencing
January 1, 1996 and continuing until January 20, 1998, you will
receive the following pay and benefits:
a. Base pay plus MIP and LTIP payments in the annual amount of
$370,000, $166,500 and $140,000, respectively will be paid to
you semi-monthly through Corporate Payroll. In the event of
your death these payments will be made to your legal
representative. Your semi-monthly payments will be $28,187.50.
b. Your benefits will be continued as described in the benefit
attachment to this agreement, Exhibit 1.
2. You understand that except for the 1995 annual incentive program you
will not participate in any management incentive programs and are not
entitled to payment under any such programs for periods prior to your
termination.
<PAGE> 2
Mr. Allan Miller
Page 2
May 1, 1995
3. Your stock options are canceled effective December 31, 1995. However,
if before January 21, 1998 any monetary offer is made to Borden
retirees in exchange for the surrender of their options the same offer
(i.e., based on the same formula) will be made to you in respect of
any of your options that could have been exercised at the time of such
offer had they not been cancelled by this agreement.
4. The Company will use its best efforts in good faith to place your
secretary, Louise Milam, internally in an executive secretary position
without a reduction in pay.
5. To the full extent allowed under New Jersey law, the Company will
indemnify and defend you with regard to any and all claims which may
arise relating to matters which occur prior to January 1, 1996, and
which arise as a result of your employment as long as your acts:
- were not in breach of your duty of loyalty to the Company or
its shareholders;
- were in good faith;
- did not involve a knowing violation of law; or
- did not result in receipt of an improper personal benefit; and
it shall undertake and direct the defense of such proceedings, holding
you harmless against expenses, as they are incurred.
6. You agree that you will not, either during the period of this
agreement, nor thereafter, disclose to any third party or use for your
own benefit without our express authorization, any confidential
information provided by us or our representatives relative to our
business or that of our affiliated corporations, nor information
developed for Borden by you during the performance of your service on
our behalf during your employment.
7. Because of the arrangement being provided to you, we will expect, and
you agree, that after your termination, you will conduct yourself in a
manner which does not disparage Borden, Inc., its current or past
employees, current or past officers, current or past directors,
subsidiaries, and affiliates, and which is not contrary to the best
interest of these organizations.
8. You agree to be available, as reasonably necessary and upon reasonable
notice, with no expense to yourself (expenses include transportation,
meals and lodging) for legal proceedings, whether administrative,
civil, or criminal, if any, with respect to events which occurred
during your employment with Borden, Inc. You further agree to assist
and cooperate with Borden, Inc. in any such proceedings.
9. Under this Agreement your compensation will be reduced by any net
earned income
<PAGE> 3
Mr. Allan Miller
Page 3
May 1, 1995
paid from Borden or any other source during the same period, whether
received as an employee or principal. Your compensation will not be
reduced by royalties from inventions or from honorariums received by
you from part-time teaching or lecturing.
10. We agree that this agreement supersedes any and all other agreements
relating to your employment with the Company including, but not
limited to, any Core Arrangement dated March 15, 1988. This agreement
shall be governed by the laws of the State of Ohio and shall inure to
the benefit of the successors and assigns of Borden, Inc. Any
provision of the agreement deemed by a court to be too broad to be
legally enforced shall be modified but only to the extent required to
be so legally enforceable.
11. In consideration of these foregoing benefits provided to you, you
hereby release and discharge Borden, Inc., its subsidiaries and
affiliates, their officers, employees and agents from any and all
current liabilities, claims for money, employment, re-employment,
reinstatement and for any and all causes of action whatsoever which
you may now have against them including those arising out of your
employment, the termination thereof, or discrimination based on age,
disability, race, sex or other reasons, except any vested pension
rights which you may have acquired; provided, however, that this
release shall not be construed as preventing you from pursuing any
rights you have to enforce the terms of this agreement.
12.. Should a claim or dispute be instituted or arise out of or relating to
any provision of this agreement, the Company agrees to pay all
reasonable legal fees and expenses which you may incur in any such
claim or dispute.
Legal expenses shall include reasonable legal fees, court costs,
arbitration costs, and ordinary and necessary out-of-pocket costs and
fees of attorneys, billed to and payable by you or by anyone claiming
under or through you (such person being hereinafter referred to as
your "beneficiary"), in connection with bringing, prosecuting,
defending, litigating, arbitrating, negotiating or settling any claim
or dispute by or against you or your beneficiary, or any claim or
dispute between you or your beneficiary and the Company or any third
party (excluding any of your creditors or beneficiaries) that may
arise out of or relate to this agreement, or the validity, operation,
interpretation, enforceability or breach thereof, provided that, in
the case of any request that the Company pay attorneys' fees or
expenses, the Company shall have received a statement signed by the
attorney or firm of attorneys rendering the bill, to the effect that
(i) in the opinion of the attorney or firm a bona
<PAGE> 4
Mr. Allan Miller
Page 4
May 1, 1995
fide dispute exists which could lead to or is in litigation, (ii) the
bill for legal fees and expenses was prepared in accordance with the
attorney's or firm's regular schedule of fees (which schedule should
be set forth), and (iii) the services for which the bill was rendered
have already been performed or represent a reasonable retainer for
services to be performed and, in the case of expense, have already
been incurred.
Legal fees and expenses paid by the Company pursuant to this paragraph
10 shall be refunded by you to the Company if you do not prevail in
the dispute and the adjudicating body, e.g., the court or arbitrator,
determines that you have not acted in good faith in bringing or
pursuing the action.
The rights conferred upon you by this paragraph 10 are intended to be
in addition to, and not in limitation or derogation of any other
rights you may have.
13. In the event that any payments under this agreement are determined to
be "parachute payments", as a consequence of which you are required,
pursuant to section 4999 (or any successor section) of the Internal
Revenue Code, to pay any excise tax in respect of such "parachute
payments", the Company shall pay you an amount equal to such excise
tax, plus such additional amount as shall be required to result in a
net amount to you from such "parachute payments" as if no such excise
tax had been imposed.
14. You affirm that you are entering into this agreement and release
voluntarily in order to receive payments and other benefits described
above. You understand that the Company would not make these payments
or extend these benefits to you without your voluntary consent to this
agreement.
15. In making your decision, you recognize that you have the right to seek
advice and counsel from others, including that of an attorney if you
so choose. You acknowledge that you have 21 days within which to
consider this offer.
16. You have seven days from the date you sign this Agreement to cancel it
in writing. You also understand that this Agreement will not bind you
or the Company until after the seven-day period you have to cancel.
No payments will be made under this Agreement until it becomes
binding. You may cancel this Agreement by signing the cancellation
notice below (or by any other written signed notice) and delivering it
to Borden, Inc., within seven days of your signing this Agreement.
I believe this completely and accurately describes our understanding and ask
that you indicate your agreement by signing the original of this letter and
returning it to me. I wish you every success in your future endeavors.
<PAGE> 5
Mr. Allan Miller
Page 5
May 1, 1995
For: Borden, Inc.
By: /s/ Randy Kautto
-------------------------
Randy D. Kautto
READ, UNDERSTOOD AND AGREED TO:
/s/ Allan Miller 5/25/95
------------------------------------------------ -------------------------
Allan L. Miller Date
<PAGE> 6
CANCELLATION NOTICE
(To cancel this Agreement sign below and
deliver this copy of the Agreement to the
Company within 7 days of the date you signed
the Agreement.)
I hereby cancel this Agreement.
------------------------ -------------------------------
Date Signature
<PAGE> 7
EXHIBIT 1
The following is an explanation of the Borden benefits which will be provided
to you upon your termination of employment following a change in control.
These benefits will continue in effect during the term of the separation
agreement:
o Medical and dental coverage may continue, at your election,
during the agreement period at the normal rate of contribution
for active associates (on an after-tax basis). You will then
be eligible for retiree medical coverage and the period of the
agreement will be included in determining any points based on
age and service.
o Basic life insurance, supplemental life insurance, high limit
accident insurance and long-term disability coverage may
continue, at your election, at the normal rate of contribution
for active associates (on an after-tax basis). You will be
eligible for a Company paid annual physical during 1995 but
not thereafter.
o Benefit equivalents for the Retirement Savings (RSP), Cash
Account (CAP), Executive Supplemental Pension (including
special grandfather provision) (ESPP) and Executive Excess
Plans will continue. You must make an equivalent employee
deferral to the ESPP in order to receive your normal RSP
company match. The ESPP is a non-qualified plan. Therefore,
your ESPP contributions cannot be classified as 401(K)
contributions for eventual rollover or continued tax deferral
purposes. You may also continue salary deferrals to the ESPP.
o Additional CORE Management benefits will continue. These
include the survivor protection benefit; the survivor
accumulation account; the capital accumulation account (plan);
excess disability, life and business travel benefits; personal
umbrella coverage; reimbursement for financial counseling
(including legal advice leading to this agreement), auto and
homeowners insurance; paid club memberships and Company match
of charitable contributions up to $2,000 per year.
The benefits listed will be provided through the ESPP.
You may elect distributions of your earned RSP, CAP, Executive Family
Protection, Excess and certain ESPP benefits as of your termination date. Your
salary deferrals are payable on the date(s) elected. The equivalent benefits
earned during the period of your separation agreement become payable when the
term of the agreement expires. Under this arrangement your compensation will be
reduced by any earned income paid from Borden and any other source during the
same time period. Coverage for Borden benefits will be discontinued when other
employment is accepted.
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<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
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<RECEIVABLES> 666
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<TOTAL-LIABILITY-AND-EQUITY> 3,877
<SALES> 2,982
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<CGS> 2,244
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<OTHER-EXPENSES> 0
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<INCOME-PRETAX> (109)
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