<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, 1996
----------------------------------------------
Commission file number 1-71
------------------------------------------------------
BORDEN, INC.
<TABLE>
<S> <C>
New Jersey 13-0511250
- -------------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
180 East Broad Street, Columbus, OH 43215
----------------------------------------------------
(Address of principal executive offices)
(614) 225-4000
----------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
----------------------------------------------------
(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 12, 1996: 198,974,994
<PAGE> 2
- ------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
BORDEN, INC
<TABLE>
<CAPTION>
Three Months Ended
June 30,
----------------------
(In millions, except per share data) 1996 1995
- --------------------------------------------------------------------------
<S> <C> <C>
Net sales $ 1,457.0 $ 1,486.5
Cost of goods sold 995.7 1,035.5
--------- ---------
Gross margin 461.3 451.0
Distribution expense 91.0 93.4
Marketing expense 242.2 233.2
General & admin. expense 82.0 103.5
Loss on divestiture 16.7 20.0
--------- ---------
Operating income 29.4 0.9
Interest expense 29.7 30.4
Minority interest 2.3 1.7
Other (income) expense (5.7) (0.9)
--------- ---------
Income (loss) from continuing operations
before income taxes 3.1 (30.3)
Income tax expense (benefit) 8.6 (7.4)
--------- ----------
Loss from continuing operations (5.5) (22.9)
--------- ---------
Discontinued operations:
Income from operations 0.4
--------- ---------
Net loss (5.5) (22.5)
Preferred stock dividends (18.4) (22.1)
--------- ---------
Net loss applicable to common stock $ (23.9) $ (44.6)
========= =========
</TABLE>
2
<PAGE> 3
- ------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (continued)
BORDEN, INC
<TABLE>
<CAPTION>
Three Months Ended
June 30,
---------------------
(In millions, except per share data) 1996 1995
- ------------------------------------------------------------------------------
<S> <C> <C>
Share Data
----------
Loss from continuing operations $ (0.03) $ (0.11)
Net loss (0.03) (0.11)
Preferred stock dividends (0.09) (0.11)
-------- ---------
Net loss per common share $ (0.12) $ (0.22)
======== =========
Dividends per preferred share $ 0.75 $ 1.02
Average number of common shares outstanding
during the period 199.0 199.0
- ------------------------------------------------------------------------------
</TABLE>
See Notes to Consolidated Financial Statements
3
<PAGE> 4
- ------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
BORDEN, INC
<TABLE>
<CAPTION>
Six Months Ended
June 30,
---------------------
(In millions, except per share data) 1996 1995
- ------------------------------------------------------------------------------
<S> <C> <C>
Net sales $2,887.5 $2,980.1
Cost of goods sold 1,983.3 2,088.0
-------- --------
Gross margin 904.2 892.1
Distribution expense 180.9 186.1
Marketing expense 497.4 469.8
General & admin. expense 156.0 199.5
(Gain) Loss on divestiture (66.2) 20.0
-------- --------
Operating income 136.1 16.7
Interest expense 57.2 76.6
Minority interest 3.2 13.3
Other (income) expense (14.1) 37.4
-------- --------
Income (loss) from continuing operations
before income taxes 89.8 (110.6)
Income tax expense (benefit) 50.9 (35.7)
-------- ---------
Income (loss) from continuing operations 38.9 (74.9)
-------- ---------
Discontinued operations:
Income from operations 8.5
Income from disposal 37.9
-------- --------
Net income (loss) 38.9 (28.5)
Preferred stock dividends (36.9) (22.1)
-------- --------
Net income (loss) applicable to common stock $ 2.0 $ (50.6)
======== ========
</TABLE>
4
<PAGE> 5
- ------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (continued)
BORDEN, INC
<TABLE>
<CAPTION>
Six Months Ended
June 30,
---------------------
(In millions, except per share data) 1996 1995
- ------------------------------------------------------------------------------
<S> <C> <C>
SHARE DATA
----------
Income (loss) from continuing operations $ 0.20 $ (0.40)
Discontinued operations:
Income from operations 0.05
Income from disposal 0.20
------ -------
Net income (loss) 0.20 (0.15)
Preferred stock dividends (0.19) (0.12)
------ -------
Net income (loss) per common share $ 0.01 $ (0.27)
====== =======
Dividends per preferred share $ 1.50 $ 1.02
Average number of common shares outstanding 199.0 186.6
during the period
- ------------------------------------------------------------------------------
See Notes to Consolidated Financial Statements
</TABLE>
5
<PAGE> 6
<TABLE>
- -------------------------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
BORDEN, INC.
<CAPTION>
(In millions)
June 30, December 31,
------------- -------------
ASSETS 1996 1995
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CURRENT Cash and equivalents $ 146.0 $ 146.2
ASSETS Accounts receivable (less allowance
for doubtful accounts of $22.9 and $24.8,
respectively) 689.2 660.1
Inventories:
Finished and in-process goods 376.8 336.2
Raw materials and supplies 169.4 184.1
Deferred income taxes 135.6 45.3
Other current assets 116.5 149.3
---------- ---------
1,633.5 1,521.2
---------- ---------
- -------------------------------------------------------------------------------------------------
INVESTMENTS Investments in and advances to
AND OTHER affiliated companies 34.2 36.7
ASSETS Deferred income taxes 237.5 344.1
Other assets 111.5 110.2
---------- ---------
383.2 491.0
---------- ---------
- -------------------------------------------------------------------------------------------------
PROPERTY Land 90.2 93.6
AND Buildings 546.1 562.4
EQUIPMENT Machinery and equipment 2,009.7 1,968.7
---------- ---------
2,646.0 2,624.7
Less accumulated depreciation (1,470.6) (1,465.8)
---------- ---------
1,175.4 1,158.9
---------- ---------
- -------------------------------------------------------------------------------------------------
INTANGIBLES Intangibles resulting from
business acquisitions 604.3 616.4
---------- ---------
- -------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 3,796.4 $ 3,787.5
========== =========
- -------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Consolidated Financial Statements
6
<PAGE> 7
<TABLE>
- -------------------------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
BORDEN, INC.
<CAPTION>
(In millions)
June 30, December 31,
------------- -------------
LIABILITIES AND SHAREHOLDERS' EQUITY 1996 1995
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CURRENT Debt payable within one year $ 401.2 $ 140.4
LIABILITIES Accounts and drafts payable 496.5 478.7
Restructuring reserve 12.5 15.5
Income taxes 204.5 181.7
Other current liabilities 795.9 764.8
--------- ---------
1,910.6 1,581.1
--------- ---------
- -------------------------------------------------------------------------------------------------
OTHER Long-term debt 920.8 1,211.8
Deferred income taxes 34.6 45.3
Non-pension postemployment
benefit obligations 324.1 331.8
Other long-term liabilities 109.8 116.0
Minority interest 42.3 33.0
--------- ---------
1,431.6 1,737.9
--------- ---------
Commitments and Contingencies
- -------------------------------------------------------------------------------------------------
SHAREHOLDERS' Preferred Stock - Issued 24,574,751 614.4 614.4
EQUITY Common stock - $0.01 par value
Authorized 300,000,000 shares
Issued 198,974,994 2.0 2.0
Paid in capital 312.7 312.7
Accumulated translation adjustment (145.9) (129.6)
Minimum pension liability and other (107.9) (107.9)
Retained earnings (deficit) (221.1) (223.1)
--------- ---------
454.2 468.5
---------- ---------
- -------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 3,796.4 $ 3,787.5
========= =========
- -------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Consolidated Financial Statements
7
<PAGE> 8
<TABLE>
- -------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
BORDEN, INC.
<CAPTION>
Six Months Ended
June 30,
--------------------------------
(In millions) 1996 1995
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS Net income (loss) $ 38.9 $ (28.5)
FROM (USED IN) Adjustments to reconcile net income (loss) to net
OPERATING cash from operating activities:
ACTIVITIES Reversal of reserve for loss on disposal
of discontinued operations (54.6)
Depreciation and amortization 75.7 77.0
(Gain) loss on divestiture, net (66.8) 20.0
Unrealized (gain) loss on interest rate swap (11.7) 32.6
Loss on sale of investment 22.0
Write-off deferred financing costs 14.0
Restructuring (4.5) (18.5)
Net change in assets and liabilities:
Trade receivables (25.5) (1.2)
Inventories (25.9) (45.0)
Trade payables 13.5 (13.4)
Current and deferred taxes 28.2 (47.3)
Other assets 13.3 81.8
Other liabilities (3.5) (48.8)
Discontinued operations (1.0)
--------- ---------
31.7 (10.9)
--------- ---------
- -------------------------------------------------------------------------------------------------
CASH FLOWS Sale of investment in RJR Nabisco Holdings 282.1
FROM Capital expenditures (110.0) (73.5)
INVESTING Divestiture of businesses 135.9 0.7
ACTIVITIES Purchase of businesses (7.0)
--------- ---------
25.9 202.3
--------- ---------
- -------------------------------------------------------------------------------------------------
CASH FLOWS Decrease in receivables sold (250.0)
(USED IN) FROM Decrease in short-term debt (35.9) (191.1)
FINANCING Increase (decrease) in long-term debt 4.9 (256.7)
ACTIVITIES Long-term debt financing 0.8 0.6
Increase (decrease) in minority interest 9.3 (471.7)
Equity contribution 994.7
Dividends paid (36.9)
Issuance of stock under stock options
and benefits and awards plans 3.3
--------- ---------
(57.8) (170.9)
--------- ---------
- -------------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE> 9
- ------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (continued)
BORDEN, INC
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-----------------------------
(In millions) 1996 1995
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(Decrease) increase in cash and equivalents $ (0.2) $ 20.5
Cash and equivalents at beginning
of period 146.2 125.3
--------- ---------
Cash and equivalents at end
of period $ 146.0 $ 145.8
========= ========
- ------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL Cash paid:
DISCLOSURES Interest $ 42.8 $ 54.9
OF CASH FLOW Income taxes 23.0 24.5
INFORMATION Non-cash activity:
Reclassification of note from long-term
to short-term 296.7
- ------------------------------------------------------------------------------------------------------------------
See Notes to Consolidated Financial Statements
</TABLE>
9
<PAGE> 10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(Dollars in millions except per share amounts and as otherwise indicated)
1. Basis of Presentation
Borden, Inc. ("the Company") conducts operations in the following
businesses: pasta and foods ("BFC"), dairy ("BMG Dairies"), European
bakery ("Bakeries"), salty snacks ("Wise"), glue ("Elmer's"), decorative
products and wallcoverings ("Decorative Products"), adhesives and resins
("Chemical"), and packaging and plastic films ("Packaging"). The Company
is finalizing the redesign of its corporate organization along these
business lines to facilitate certain operating and capital market goals of
the Company. Certain of these businesses are now conducted through
direct and indirect subsidiaries.
The accompanying unaudited interim consolidated financial statements of
the Company 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.
During the second quarter 1996 the Company sold participation in its BMG
Dairies, Wise, Elmer's, Decorative Products and Chemical business units to
key management personnel. Management's cash investment totaled $7.8,
resulting in aggregate ownership percentages ranging from 1.08% to 1.87%
in each of the business units. In addition, options issued at fair value
which vest over five years, allow management to purchase additional shares
resulting in ownership of up to 10% of each business unit. Management's
ownership interest in the business units is recorded in the financial
statements as minority interest.
As explained in Note 3, effective July 2, 1996, the Company sold Wise to
an affiliate of the Company's principal stockholder. As part of the
transaction Wise has become a guarantor of the Company's indebtedness
under its $1.2 billion credit facility and under its publicly-held
indebtedness. Beginning in the third quarter 1996, the Company will
include both consolidated and combined (including Wise) financial
statements in its quarterly and year end reporting. The combined financial
statements will include the Company's consolidated financial statements
and the financial statements of Wise.
2. Reclassification
Certain prior year amounts have been reclassified to conform with 1996
presentation.
3. Asset Divestitures
In 1995 the Company began the process of redesigning its operating
structure. As a result of this redesign management determined that
certain businesses did not fit into the Company's long-term strategic
plan, and made the decision to divest these businesses. Businesses
included in this classification, "businesses held for sale," were the
packaging and plastic films business, seven dairy plants, the equity
interest in a Spanish food company, and two food plants. Appropriate
reserves relating to the sale or divestiture of these businesses were
reflected in the December 31, 1995 financial statements of the Company.
The Wise business unit was included in businesses held for sale as of
June 30, 1996.
During the first quarter of 1996, the Company sold its remaining equity
interest in a Spanish food company for $139.8 resulting in a pretax gain
of $82.9 ($42.1 net of tax).
Six dairy plants were sold or closed in the fourth quarter of 1995 and the
seventh dairy was closed in June 1996. The two food plants continue to be
operated by the Company in 1996.
10
<PAGE> 11
On June 20, 1996, the Company announced a definitive agreement for the sale
of its packaging and plastic films business to AEP Industries Inc.
("AEPI"). The purchase price is comprised of $280 in cash and at least $80
in newly issued common shares of AEPI. No fewer than 2,412,818 AEPI shares
would be issued to the Company. If the value of common shares decreases
below $33.16 per share, at the average closing price over a 50 day trading
period prior to AEPI stockholders approval, additional shares will be
issued to equal at least $80 in common shares of AEPI. The average closing
price over the 25 day trading period ending July 31, 1996 was approximately
$39 per share. In no event will AEPI issue more than 4.0 million shares to
the Company. Assuming issuance of 2,412,818 shares, the Company would own
about 34% of AEPI based on a new total of approximately 7.08 million shares
outstanding. A reserve for loss on sale was accrued at December 31, 1995,
when the decision was made to sell the packaging business. The reserve
remains the Company's best estimate of the loss on the transaction. The
financial position and the results of operations for the packaging and
plastic films business are reported in the consolidated financial
statements. The Company intends to use cash proceeds from the sale of the
business primarily for general corporate purposes. The transaction is
expected to be finalized in September 1996, at which time the Company will
have a minority equity interest in AEPI.
On July 2, 1996, the Company sold its Wise business unit to a newly-formed
affiliate of the Company's principal stockholder for $45.1. The purchase
price of the business was determined based upon an independent valuation
by an investment banking firm. The estimated loss on disposal of these
operations of $16.7, $16.5 after tax, was recorded in the second quarter
1996. The loss will only be reflected in the consolidated financial
statements and will have no effect on the combined financial statements.
The proceeds consisted of $34.3 of receivables from the Company's
parent which will be recorded as a reduction to equity, a $10.1 note
receivable from Wise, and $0.7 in cash.
Following are the results of operations and net assets for businesses held
for sale which were owned at June 30, 1996. These amounts are included in
continuing operations in the Consolidated Financial Statements.
<TABLE>
<CAPTION>
1996 1995
---------------------------------------------------------------------
<S> <C> <C>
Net sales:
Quarter ended June 30 $ 263.1 $ 349.5
Year-to-date June 30 519.7 687.5
Operating income (loss):
Quarter ended June 30 4.7 7.4
Year-to-date June 30 2.8 (2.1)
Net assets at June 30, 1996, and
December 31, 1995 397.8 475.3
---------------------------------------------------------------------
</TABLE>
4. Commitments and Contingencies
ENVIRONMENTAL MATTERS - The Company, like others in similar businesses, is
subject to extensive Federal, state and local environmental laws and
regulations. Although Company environmental policies and practices are
designed to ensure compliance with these laws and regulations, future
developments and increasingly stringent regulation could require the
Company to make additional unforseen environmental expenditures.
Environmental accruals are routinely reviewed on an interim basis as events
and developments warrant and are subjected to a comprehensive review
annually during the fiscal fourth quarter.
OTHER COMMITMENTS - A wholly owned subsidiary as general partner of Borden
Chemicals and Plastics Limited Partnership ("BCP") has certain fiduciary
responsibilities to BCP's unitholders. The Company believes that such
responsibilities will not have a material adverse effect on its financial
statements.
11
<PAGE> 12
The Company is subject to various investigations, claims and legal
proceedings covering a wide range of matters that arise in the ordinary
course of its business activities. Each of these matters is subject to
various uncertainties, and some of these matters may be resolved
unfavorably to the Company. The Company has established accruals for
matters that are probable and reasonably estimable. Management believes
that any liability that may ultimately result from the resolution of
these matters in excess of amounts provided will not have a material
adverse effect on the financial position of the Company.
12
<PAGE> 13
PART I FINANCIAL INFORMATION
-----------------------------
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
QUARTER ENDED JUNE 30, 1996 VERSUS QUARTER ENDED JUNE 30, 1995
Following is a comparison of sales and operating income (loss) by business unit:
<TABLE>
<CAPTION>
(Dollars in millions)
- ----------------------------------------------------------------------------------------------------------------------
3 months ended 3 months ended Increase Percent
SALES June 30, 1996 June 30, 1995 (Decrease) Change
----- ------------- ------------- ---------- ------
<S> <C> <C> <C> <C>
BFC $451.2 $425.0 $26.2 6.2%
BMG Dairies 229.8 209.4 20.4 9.7
Bakeries 98.0 101.6 (3.6) (3.5)
Elmer's 27.8 26.7 1.1 4.1
Decorative Products 93.1 85.9 7.2 8.4
Chemical 293.3 288.4 4.9 1.7
Other 0.7 0.0 0.7 N/M
---------- --------- --------
Subtotal 1,193.9 1,137.0 56.9 5.0
Businesses held for
sale 263.1 349.5 (86.4) (24.7)
-------- -------- --------
Net Sales $1,457.0 $1,486.5 $(29.5) (2.0)%
======== ======== =======
</TABLE>
<TABLE>
<CAPTION>
3 months ended 3 months ended Favorable Percent
OPERATING INCOME (LOSS) June 30, 1996 June 30, 1995 (Unfavorable) Change
----------------------- ------------- ------------- ------------ ------
<S> <C> <C> <C> <C>
BFC $ (8.4) $3.7 $(12.1) (327.0)%
BMG Dairies 7.8 4.6 3.2 69.6
Bakeries 2.7 3.3 (0.6) (18.1)
Elmer's 5.3 4.3 1.0 23.3
Decorative Products 8.6 8.5 0.1 1.2
Chemical 36.0 34.9 1.1 3.2
Loss on divestiture (16.7) (20.0) 3.3 16.5
Corporate (10.6) (45.8) 35.2 76.9
-------- ------- -------
Subtotal 24.7 (6.5) 31.2 480.0
Businesses held for
sale 4.7 7.4 (2.7) (36.5)
-------- -------- -------
Total operating
income 29.4 0.9 28.5 3,166.7
Other expense 26.3 31.2 4.9 (15.7)
Income tax expense
(benefit) 8.6 (7.4) (16.0) 216.2
-------- -------- ------
Loss from continuing
operations $ (5.5) $ (22.9) $ 17.4 159.8 %
====== ======= ======
</TABLE>
13
<PAGE> 14
Net sales from continuing operations for the quarter ended June 30, 1996
decreased $29.5 million or 2.0% to $1,457.0 million from $1,486.5 million in
1995 primarily as a result of businesses sold late in 1995. Operating income
totaled $29.4 million, up $28.5 million from $0.9 million in 1995. The Company
reported a net loss applicable to common stock for the second quarter 1996 of
$23.9 million, or $0.12 per share, after the effect of preferred dividends
($0.09 per share), compared to a net loss applicable to common stock for the
second quarter of 1995 of $44.6 million, or $0.22 per share, after the effect
of preferred dividends ($0.11 per share).
Sales for Borden Foods Corporation (BFC) increased $26.2 million or 6.2% due to
volume increases in BFC's International Foods, FunCheese, and Signature Flavors
business units. The increase in International Foods is primarily attributable
to volume increases for Cremora non-dairy creamer in South Africa, and KLIM
milk powder in Colombia. FunCheese increases are primarily attributable to
sales of new "Big Cheese" products which were introduced during the year, and
anticipated July 1996 price increases which accelerated customer purchases
during June 1996. The increase in Signature Flavors is primarily attributable
to volume increases in ReaLemon and bouillon products.
BFC reported an operating loss of $8.4 million in 1996 versus income of $3.7
million in 1995. The decrease is primarily attributable to losses incurred in
the Italian Foods business unit. The gross margin percentage in Italian Foods
decreased as a result of increased raw material and packaging costs which were
not recovered in selling price. In addition, Italian Foods increased its
advertising and trade expenditures due to a more competitive environment.
BMG Dairies sales of $229.8 million increased $20.4 million or 9.7% from 1995.
The increase is attributable to higher volumes in certain western states and
raw milk cost increases during the quarter which were passed on to the
marketplace and reflected in product pricing. Operating income increased $3.2
million to $7.8 million as a result of improved operating efficiencies and an
increase in margins on low fat products.
Bakeries sales decreased 3.5% to $98.0 million in 1996. The decline is due
mainly to unfavorable foreign currency fluctuations as the U.S. dollar has
strengthened from the second quarter of a year ago. Operating income decreased
$0.6 million to $2.7 million as a result of higher promotional costs brought
about by increases in competition.
Sales for Elmer's increased $1.1 million or 4.1% to $27.8 million in 1996
reflecting volume increases in School Glue Gel and a newly introduced no run
product. Earlier than normal shipments of back to school orders also
contributed to the increase. Operating income increased $1.0 million to $5.3
million as a result of manufacturing efficiencies and the timing of advertising
and promotional spending.
Decorative Products sales for 1996 were $93.1 million, up from $85.9 million in
1995. The 8.4% increase is mainly attributable to the expansion of export
sales from the U.K. to Eastern Europe. The North American wallcovering
operations experienced an increase in sales to mass merchants which was offset
by a decrease in sales to dealers. Operating income remained flat from year to
year.
Chemical sales increased 1.7% in 1996 to $293.3 million. The increase is
primarily attributable to volume increases in the North American forest and
industrial products unit partially offset by lower selling prices. Operating
income increased 3.2% to $36.0 million in 1996, as a result of the sales
increase discussed previously.
The $16.7 million loss on divestiture charge in 1996 is the loss accrued for
the July 2, 1996 sale of Wise. The loss will only be reflected in the
consolidated financial statements and will have no effect on the combined
financial statements which will be included in the Company's third quarter
reporting. The combined financial statements will include the Company's
consolidated financial statements and the financial statements of Wise. The
1995 amount reflects a $20.0 million charge for the loss associated with the
planned disposal of certain dairy operations. The decrease in sales for
businesses held for sale is due primarily to the divestiture of six dairy
plants late in 1995. The $2.7 million decrease in operating income is due to
a $4.5 million decrease for Wise attributable to increased advertising and
consumer marketing spending. This decrease is partially offset by savings
from the 1995 divestiture of six dairy plants.
14
<PAGE> 15
Corporate operating expenses decreased $35.2 million to $10.6 million in 1996.
The decrease is primarily a result of non-recurring charges recorded in 1995.
The major 1995 non-recurring charges include $13.5 million in litigation
reserves, $6.0 million in professional fees relating to the Company's redesign,
and $6.0 million for severance accruals. The remainder of the fluctuation is
attributable to decreases in general insurance, legal fees, and other general
corporate expenses.
Non-operating expenses totaled $26.3 million in 1996, down $4.9 million from
the 1995 total of $31.2 million. The decrease is primarily attributable to a
reduction of $12.9 million in costs associated with interest rate swaps,
partially offset by a $10.5 million decrease in income from an equity
investment in Borden Chemicals and Plastics Limited Partnership. The effective
tax rate of 277% in the second quarter of 1996 is primarily due to the $16.7
million loss incurred for the Wise sale, which was primarily composed of
non-deductible goodwill. The effective tax rate, benefit, of 24% in the second
quarter of 1995 is lower than the statutory rate due primarily to valuation
allowances on foreign losses.
15
<PAGE> 16
SIX MONTHS ENDED JUNE 30, 1996 VERSUS SIX MONTHS ENDED JUNE 30, 1995
Following is a comparison of sales and operating income (loss) by business
unit:
<TABLE>
<CAPTION>
(Dollars in millions)
- ----------------------------------------------------------------------------------------------------------------------
6 months ended 6 months ended Increase Percent
SALES June 30, 1996 June 30, 1995 (Decrease) Change
----- ------------- ------------- ---------- ------
<S> <C> <C> <C> <C>
BFC $ 913.2 $ 847.2 $ 66.0 7.8 %
BMG Dairies 452.2 422.9 29.3 6.9
Bakeries 196.9 192.4 4.5 2.3
Elmer's 43.3 41.6 1.7 4.1
Decorative Products 190.7 178.1 12.6 7.1
Chemical 570.2 610.4 (40.2) (6.6)
Other 1.3 0.0 1.3 100.0
----------- ----------- ------------
Subtotal 2,367.8 2,292.6 75.2 3.3
Businesses held for
sale 519.7 687.5 (167.8) (24.4)
--------- --------- ---------
Net Sales $2,887.5 $2,980.1 $ (92.6) (3.1)%
======== ======== =========
</TABLE>
<TABLE>
<CAPTION>
6 months ended 6 months ended Favorable Percent
OPERATING INCOME June 30, 1996 June 30, 1995 (Unfavorable) Change
---------------- ------------- ------------- ------------ ------
(LOSS)
----
<S> <C> <C> <C> <C>
BFC $ (21.2) $ 9.4 $ (30.6) (325.5)%
BMG Dairies 11.0 9.2 1.8 19.6
Bakeries 5.3 5.8 (0.5) (8.6)
Elmer's 7.8 6.1 1.7 27.9
Decorative Products 17.9 14.6 3.3 22.6
Chemical 68.7 73.2 (4.5) (6.1)
Gain (loss) on
divestiture 66.2 (20.0) 86.2 431.0
Corporate (22.4) (79.5) 57.1 71.8
--------- --------- ---------
Subtotal 133.3 18.8 114.5 609.0
Businesses held for
sale 2.8 (2.1) 4.9 233.3
---------- ---------- ----------
Total operating income 136.1 16.7 119.4 715.0
Other expense 46.3 127.3 81.0 63.6
Income taxes 50.9 (35.7) (86.6) (242.6)
-------- -------- --------
Income (loss) from
continuing operations $ 38.9 $ (74.9) $ 113.8 151.9%
======== ======== ========
</TABLE>
Net sales from continuing operations for the six months ended June 30, 1996
decreased $92.6 million or 3.1% to $2,887.5 million from $2,980.1 million in
1995 primarily as a result of businesses sold late in 1995. Operating income
totaled $136.1 million, up $119.4 million from the 1995 total of $16.7 million.
The Company reported net income applicable to common stock for the first six
months of 1996 of $2.0 million, or $0.01 per share, after the effect of
preferred dividends ($0.19 per share), compared to a loss applicable to common
stock for 1995 of $50.6 million, or $0.27 per share, after the effect of
preferred dividends ($0.12 per share).
Sales for BFC increased $66.0 million or 7.8% due to increases in product lines
within the International Foods, FunCheese, and Signature Flavors business
units. The increase in International Foods is primarily attributable to
16
<PAGE> 17
volume increases for Cremora non-dairy creamer in South Africa, and KLIM milk
powder in Colombia, as well as increased selling prices in the Latin America
region. FunCheese increases are primarily attributable to sales volume and
improved private label selling prices. The increase in Signature Flavors is
due mainly to volume increases in Cremora and bouillon products as well as
increased selling prices for Cracker Jack and ReaLemon, partially offset by
decreased volume in Cracker Jack.
The BFC operating loss of $21.2 million in 1996 was down $30.6 million from the
1995 operating income of $9.4 million. The decrease is primarily attributable
to the Italian Foods product line where the gross margin percentage decreased
as a result of increased raw material and packaging costs which were not
recovered in selling price. In addition, Italian Foods increased its
advertising and trade expenditures due to a more competitive environment.
Warehousing costs also increased due to higher inventory levels.
BMG Dairies sales of $452.2 million increased $29.3 million or 6.9% from 1995.
The increase is attributable to volume increases in certain western states and
raw milk cost increases during the 1996 period which were passed on to the
marketplace and reflected in product pricing. Operating income increased $1.8
million to $11.0 million due to the increase in sales and a decrease in
administrative costs as a result of operating efficiencies.
Bakeries sales increased 2.3% to $196.9 million in 1996. The improvement is
primarily attributable to volume increases in the industrial bakery business.
Operating income decreased $0.5 million to $5.3 million as a result of higher
promotional costs brought about by increases in competition.
Sales for Elmer's increased $1.7 million or 4.1% to $43.3 million in 1996
reflecting volume increases in School Glue Gel and a newly introduced no run
product. The timing of back to school orders also contributed to the increase.
Operating income increased $1.7 million to $7.8 million as a result of
manufacturing efficiencies and the timing of advertising and promotional
spending.
Decorative Products sales for 1996 were $190.7 million, up from $178.1 million
in 1995. The 7.1% increase is mainly attributable to the U.K. operations
significant expansion of export sales to Eastern Europe. The North American
wallcovering operations experienced an increase in sales to mass merchants
which was offset by a decrease in sales to dealers and home centers. Sales for
the flexible films and sheeting business were down compared to 1995 because of
lower activity in the pool liner marketplace. Operating income increased $3.3
million to $17.9 million in 1996 as a result of increased gross margin
percentage from higher selling prices in 1996.
Chemical sales decreased 6.6% in 1996 to $570.2 million, as a substantial
volume improvement was more than offset by a steep decline in formaldehyde
prices from 1995 levels. Volume increases were primarily in the North American
forest and industrial products business, where demand led to the opening of two
additional plants late in 1995. Operating income decreased 6.1% to a 1996
level of $68.7 million as a result of the decrease in sales.
Gain (loss) on Divestiture reflects the sale of the remaining equity interest
in a Spanish food company in the first quarter of 1996 partially offset by the
$16.7 million charge in the second quarter for the July 2, 1996 sale of Wise.
The loss on the sale of Wise will only be reflected in the consolidated
financial statements and will not effect the third quarter 1996 combined
financial statements. In addition, during the second quarter 1995, $20.0
million was charged for the loss associated with the planned disposal of
certain dairy operations. The decrease in sales and increase in operating
income for businesses held for sale are due primarily to the divestiture of
six dairy plants late in 1995.
Corporate operating expenses decreased $57.1 million to $22.4 million in 1996.
The decrease is due mainly to the absence of non-recurring charges recorded in
1995 for severance, general insurance, legal and accounting fees associated
with the Company's redesign, and environmental accruals.
Non-operating expenses totaled $46.3 million in 1996, down $81.0 million from
the 1995 total of $127.3 million. The decrease is attributable to a reduction
of $44.3 million in costs associated with interest rate swaps, and a
17
<PAGE> 18
$19.4 million reduction in interest expense attributable to lower debt levels.
In addition, minority interest expense decreased $10.1 million primarily as a
result of the reduction in the limited partner's interest in the TMI
partnership. Amortization of deferred costs declined $10.3 million, and a
loss on the sale of RJR Nabisco Holdings shares of $22.0 million recorded in
1995 was not incurred in 1996. These favorable variances were partially
offset by a $22.3 million drop in income from an equity investment in Borden
Chemicals and Plastics Limited Partnership. The effective tax rate of 57% in
1996 was higher than the statutory rates primarily due to the loss from the
sale of Wise which was not deductible for income tax purposes. The effective
rate, benefit, of 32% in 1995 is lower than the statutory rates due primarily
to valuation allowances on foreign losses.
ORGANIZATION REDESIGN PLAN
The Company is in the process of redesigning its business units. Certain
business units are now held by the Company through direct and indirect
subsidiaries. The assets and liabilities of the Wise business unit were sold
to an affiliate of the Company's principal stockholder on July 2, 1996. Upon
sale, Wise became a guarantor of the Company's $1.2 billion credit facility and
publicly-held indebtedness. The Company is also considering the sale of the
BFC business unit to an affiliate of the Company's principal stockholder. If
such sale occurs BFC will also become a guarantor of the Company's $1.2 billion
credit facility and publicly-held indebtedness.
LIQUIDITY AND CAPITAL RESOURCES
Operating Activities
- --------------------
Operating activities generated cash of $31.7 million in 1996 compared to a
$10.9 million use of cash in 1995. The majority of the increase in operating
cash flow was due to increases in income and favorable changes in assets and
liabilities. This was partially offset by changes in the gain on divestiture
and the unrealized gain on the interest rate swaps.
Investing Activities
- --------------------
Cash expenditures for new facilities and improvements were $110.0 million in
1996 compared to $73.5 million in 1995. Proceeds from divestitures generated
$135.9 million through the first six months of 1996, $125.5 million of which
related to the sale of the remaining interest in a Spanish food company.
Financing Activities
- --------------------
Financing cash flows reflect a net use of cash of $57.8 million as compared to
a net use of $170.9 million in 1995. Proceeds from divestitures were used to
reduce short-term and long-term debt by $31.0 million through the first six
months of 1996. Financing cash flows through the second quarter of 1995
reflect the capital contribution of $994.7 million, which when coupled with the
sale of the RJR investment for $282.1 million, allowed for the resulting
reduction in long-term debt and minority interest.
Non-cash financing flows include the reclassification of a $296.7 million zero
coupon note due 2002 from long-term to short-term as the Company expects the
noteholders to exercise their May 1997 put option.
On May 7, 1996, the Company amended its $1.2 billion credit facility. The
amendment was primarily for the purpose of providing the Company with the
flexibility to implement its redesign plan and includes provisions that certain
subsidiaries sold to affiliates become guarantors of the Company's obligations
under the credit agreement.
18
<PAGE> 19
PART II
Item 1: LEGAL PROCEEDINGS
In December 1994, the Company agreed to a proposed settlement of twelve
putative class actions that were filed by purported company shareholders in the
New Jersey and Ohio state courts against the Company, members of the Board and,
in two of the cases, Kohlberg Kravis Roberts & Co. These actions alleged,
among other things, that the Company was being sold at too low a price, and
that the Company's directors breached their fiduciary duties by failing to
"auction" the Company and by "locking up" a transaction that was not in the
best interests of shareholders. In April 1996, the settlement was approved by
both the Federal District Court in New York and the State Court in New Jersey.
The only monetary settlement was plaintiffs' counsel's fees of $3,250,000 which
were approved by New Jersey State Court in May 1996.
There have been no material developments in the additional ongoing legal
proceedings that are discussed in the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1995 or the Form 10-Q for the period ended
March 31, 1996.
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 material adverse effect on the Company's
financial position or operating results.
19
<PAGE> 20
Item 6: EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
(4)(i) First Supplemental Indenture, dated as of June 26,
1996, to the May 21, 1992 Indenture, providing for
the issuance of Zero Coupon Notes Due 2002, among
Borden, Inc., Wise Holdings, Inc., Borden Foods
Holdings Corporation, and the Bank of New York.
(ii) Second Supplemental Indenture, dated as of June 26,
1996, to the December 15, 1986 Indenture, as
supplemented by a First Supplemental Indenture,
dated as of December 15, 1986, relating to the 9
7/8% Notes Due 1997 and Medium-Term Notes, Series A,
among Borden, Inc., Wise Holdings, Inc., Borden
Foods Holdings Corporation, and The Bank of New
York.
(iii) Third Supplemental Indenture, dated as of June 26,
1996, to the December 15, 1987 Indenture, as
supplemented by a First Supplemental Indenture,
dated as of December 15, 1987, and as supplemented
by a Second Supplemental Indenture, dated as of
February 1, 1993, relating to the following
Debentures:
(a) The 9.2% Debentures due 2021
(b) The 7.875% Debentures due 2023
(c) The 9 1/4% Sinking Fund Debentures due 2019,
among Borden, Inc., Wise Holdings, Inc., Borden
Foods Holdings Corporation, and The Bank of New
York.
(iv) Second Supplemental Indenture, dated as of June 26,
1996, to the Indenture dated as of January 15, 1983,
as supplemented by a First Supplemental Indenture,
dated as of March 31, 1986, relating to the 8 3/8%
Sinking Fund Debentures Due 2016, among Borden,
Inc., Wise Holdings, Inc., Borden Foods Holdings
Corporation, and The First National Bank of Chicago.
(10)(i) Stockholders Agreement, dated as of June 20, 1996,
by and among Borden, Inc. and J. Brendan Barba, Paul
M. Feeny, David MacFarland, Robert Cron, Kenneth J.
Avia, Melanie K. Barba, John Powers, Lauren Powers,
Carolyn Vegliante and Lawrence Noll, incorporated
herein by reference to Exhibit 2 to Schedule 13D,
dated July 1, 1996, File No. 005-37385.
(ii) Voting Agreement, dated as of June 20, 1996, by and
among Borden, Inc. and EGS Partners L.L.C., EGS
Associates, L.P., BEV Partners, L.P., JONAS
Partners, L.P., William Ehrman, Frederic Greenberg,
Frederick Ketcher, Jonas Gerstl, James McLauren,
Beverly Ehrman, Beverly Ehrman as custodian for
Stephanie Ehrman and Linda Greenberg, incorporated
herein by reference to Exhibit 3 to Schedule 13D,
dated July 1, 1996, File No. 005-37385.
(iii) Purchase Agreement, dated as of June 20, 1996,
between Borden, Inc. and AEP Industries Inc.,
incorporated herein by reference to Exhibit 4 to
Schedule 13D, dated July 1, 1996, File No.
005-37385.
(iv) Governance Agreement, dated as of June 20, 1996,
between Borden, Inc. and AEP Industries Inc.,
incorporated herein by reference to Exhibit 5 to
Schedule 13D, dated July 1, 1996, File No.
005-37385.
20
<PAGE> 21
(v) Amended and Restated Credit Agreement dated as of
May 7, 1996 to the Credit Agreement dated as of
December 15, 1994 among Borden, Inc., Borden Foods
Holdings Corporation, Wise Holdings, Inc., and the
lenders named therein, Citibank, N.A., as
administrative agent for the Lenders, BT Securities
Corporation, Chase Securities Inc., Citicorp
Securities Inc. and Credit Suisse, as arrangers, BT
Securities and Chase Securities as co- syndication
agents and Credit Suisse, as Issuing Bank and
documentation agent.
(vi) Employment Agreement with Mr. William F. Stoll, Jr.,
Senior Vice President and General Counsel, dated
June 6, 1996.
(27) Financial Data Schedule
b. Reports on Form 8-K - There were no reports on Form 8-K
filed for the quarter ended June 30, 1996.
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 12, 1996 By /s/ William H. Carter
--------------------------
William H. Carter
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
21
<PAGE> 1
Exhibit 4(i)
FIRST SUPPLEMENTAL INDENTURE
----------------------------
FIRST SUPPLEMENTAL INDENTURE, dated as of June 26, 1996, among
BORDEN, INC., a New Jersey corporation (the "ISSUER"), WISE HOLDINGS, INC., a
Delaware corporation ("WISE"), BORDEN FOODS HOLDINGS CORPORATION, a Delaware
corporation (together with Wise, the "AFFILIATE GUARANTORS"), and The Bank of
New York, as Trustee (the "TRUSTEE").
W I T N E S S E T H :
---------------------
WHEREAS, the Issuer and the Trustee have heretofore executed
and delivered an Indenture, dated as of May 21, 1992 (the "INDENTURE"),
providing for the issuance of Zero Coupon Notes Due 2002 (the "SECURITIES");
WHEREAS, the Indenture provides that the Issuer and the
Trustee may, without the consent of any holder of Securities, enter into one or
more supplemental indentures for the purpose of making provisions with respect
to matters arising under the Indenture, PROVIDED that such supplemental
indenture does not adversely affect the interests of the holders of Securities;
WHEREAS, each of the Affiliate Guarantors has agreed to
unconditionally guarantee the payment of interest and principal (and any
additional amounts, if any) on the Securities (such guarantee is attached hereto
as Exhibit A);
WHEREAS, the Issuer has been authorized by a resolution of its
Board of Directors to enter into this First Supplemental Indenture; and
WHEREAS, all other acts and proceedings required by law, by
the Indenture and by the certificate of incorporation and by-laws of the Issuer
to make this First Supplemental Indenture a valid and binding agreement for the
purposes expressed herein, in accordance with its terms, have been duly
performed;
NOW, THEREFORE, in consideration of the premises and covenants
and agreements contained herein, and for other good and valuable consideration
the receipt of which is hereby acknowledged, and for the equal and proportionate
benefit of the holders of the Securities, the Issuer, the Trustee and the
Affiliate Guarantors hereby agree as follows:
ARTICLE ONE
Section 101. Definitions.
------------
Capitalized terms used in this First Supplemental Indenture
and not otherwise defined herein shall have the meanings assigned to such terms
in the Indenture.
<PAGE> 2
2
ARTICLE TWO
Section 201. Guarantees.
-----------
Each of the Affiliate Guarantors shall enter into the
guarantee attached hereto as Exhibits A. It is expressly acknowledged and agreed
that the guarantee of either or both Affiliate Guarantors may be released in
certain circumstances as set forth in such guarantee and that the Affiliate
Guarantors may, but shall not be required hereunder to, guarantee other
obligations of the Issuer outstanding from time to time.
ARTICLE THREE
Section 301. Continuing Effect of Indenture.
-------------------------------
Except as expressly provided herein, all of the terms,
provisions and conditions of the Indenture and the Securities outstanding
thereunder shall remain in full force and effect.
Section 302. Construction of First Supplemental Indenture.
---------------------------------------------
This First Supplemental Indenture is executed as and shall
constitute an indenture supplemental to the Indenture and shall be construed in
connection with and as part of the Indenture.
Section 303. Trust Indenture Act Controls.
-----------------------------
If any provision of this First Supplemental Indenture limits,
qualifies or conflicts with another provision of this First Supplemental
Indenture or the Indenture that is required to be included by the Trust
Indenture Act of 1939 (the "ACT") as in force at the date as of which this First
Supplemental Indenture is executed, the provision required by the Act shall
control.
Section 304. Trustee Disclaimer.
-------------------
The recitals contained in this First Supplemental Indenture
shall be taken as the statements of the Issuer, and the Trustee assumes no
responsibility for their correctness. The Trustee makes no representations as to
the validity or sufficiency of this First Supplemental Indenture.
Section 305. Counterparts.
-------------
This First Supplemental Indenture may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
Section 306. Governing Law.
--------------
<PAGE> 3
3
This First Supplemental Indenture 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 First
Supplemental Indenture to be duly executed, and their respective corporate seals
to be hereunto affixed and attested, all as of the day and year first above
written.
<TABLE>
<S> <C>
BORDEN, INC.
[Seal]
By ______________________________
Name: Ronald P. Starkman
Title: Sr. Vice President &
Treasurer
Attest:
__________________________
Name: Ellen German Berndt
Title: Secretary
THE BANK OF NEW YORK, as Trustee
[Seal]
By ______________________________
Name: Lucille Firrincieli
Title: Assistant Vice President
Attest:
__________________________
Name: Paul J. Schamlzel
Title: Assistant Treasurer
WISE HOLDINGS, INC.
[Seal]
By ______________________________
Name: Ronald P. Starkman
Title: Vice President &
Treasurer
Attest:
__________________________
Name: Ellen German Berndt
Title: Secretary
</TABLE>
<PAGE> 5
5
<TABLE>
<S> <C>
BORDEN FOODS HOLDINGS CORPORATION
[Seal]
By ______________________________
Name: Ronald P. Starkman
Title Vice President &
Treasurer
Attest:
__________________________
Name: Ellen German Berndt
Title: Secretary
</TABLE>
<PAGE> 6
GUARANTEES EXHIBIT A
---------
of
WISE HOLDINGS, INC.
and
BORDEN FOODS HOLDINGS CORPORATION
FOR VALUE RECEIVED:
1. UNCONDITIONAL GUARANTEE; LIMITATION OF LIABILITY. (a) Each of
Wise Holdings, Inc., a Delaware corporation ("WISE"), and Borden Foods Holdings
Corporation, a Delaware corporation (together with Wise, the "AFFILIATE
GUARANTORS"), hereby unconditionally guarantees the punctual payment when due,
whether at stated maturity, by acceleration or otherwise, of all obligations of
Borden, Inc., a New Jersey corporation (the "ISSUER"), and the other Affiliate
Guarantor now or hereafter existing under the Zero Coupon Notes Due 2002 (the
"SECURITIES") issued under the Indenture, dated as of May 21, 1992 (the
"INDENTURE") whether for principal, interest, expenses or otherwise relating to
such Securities (such obligations being the "GUARANTEED OBLIGATIONS"). Without
limiting the generality of the foregoing, each Affiliate Guarantor's liability
shall extend to all amounts that constitute part of the Guaranteed Obligations
and would be owed by the Issuer or the other Affiliate Guarantor to the Trustee
or the holders of the Securities but for the fact that they are unenforceable or
not allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving the Issuer or the other Affiliate Guarantor.
(b) The aggregate liability of each Affiliate Guarantor hereunder
and under the Other Guaranteed Obligations (as defined below) shall not exceed
the greater of (i) the net benefit realized by such Affiliate Guarantor from the
proceeds of loans or advances made from time to time by the Issuer to such
Affiliate Guarantor or any subsidiary of such Affiliate Guarantor and (ii) the
greater of (x) 95% of the Adjusted Net Assets (as defined below) of such
Affiliate Guarantor on the date hereof and (y) 95% of the Adjusted Net Assets of
such Affiliate Guarantor on the date of any payment hereunder. "ADJUSTED NET
ASSETS" of any Affiliate Guarantor at any date means the lesser of (x) the
amount by which the fair value of the property of such Affiliate Guarantor
exceeds the total amount of liabilities, including, without limitation,
contingent liabilities, but excluding liabilities hereunder and under the Other
Guaranteed Obligations, of such Affiliate Guarantor at such date and (y) the
amount by which the present fair salable value of the assets of such Affiliate
Guarantor at such date exceeds the amount that will be required to pay the
probable liability of such Affiliate Guarantor on its debts, excluding debt in
respect of this
<PAGE> 7
2
Guarantee and debt in respect of Other Guaranteed Obligations, as they become
absolute and matured.
2. GUARANTY ABSOLUTE. Each Affiliate Guarantor guarantees that
the Guaranteed Obligations will be paid strictly in accordance with the terms of
the Indenture, regardless of any law, regulation or order now in effect in any
jurisdiction affecting any such terms or the rights of the Trustee or the
holders of the Securities with respect thereto. The obligations of each
Affiliate Guarantor under this Guarantee are independent of the Guaranteed
Obligations, and a separate action or actions may be brought and prosecuted
against each Affiliate Guarantor to enforce this Guarantee, irrespective of
whether any action is brought against the Issuer or any other Affiliate
Guarantor or whether the Issuer or any other Affiliate Guarantor is joined in
any such action or actions. The liability of each Affiliate Guarantor under this
Guarantee shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of the Indenture or
the Securities or any agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Guaranteed Obligations, or any
other amendment or waiver of or any consent to departure from the
Indenture or the Securities other than this Guarantee;
(c) any taking, exchange, release or non-perfection of any
collateral, or any taking, release or amendment or waiver of or consent
to departure from any other guarantee, for all or any of the Guaranteed
Obligations;
(d) any manner of application of collateral, or proceeds thereof,
to all or any of the Guaranteed Obligations, or any manner of sale or
other disposition of any collateral for all or any of the Guaranteed
Obligations or any other assets of the Issuer, the other Affiliate
Guarantor or any of their respective Subsidiaries;
(e) any change, restructuring or termination of the
corporate structure or existence of the Issuer, the other
Affiliated Guarantor or any of their respective
Subsidiaries; or
(f) any other circumstance (including, without limitation, any
statute of limitations) that might otherwise constitute a defense
available to, or a discharge of, the Issuer, the other Affiliate
Guarantor or any other guarantor.
This Guarantee shall continue to be effective or shall
be reinstated, as the case may be, if at any time any payment of
<PAGE> 8
3
any of the Guaranteed Obligations is rescinded or must otherwise be returned by
the Trustee or any holder of the Securities upon the insolvency, bankruptcy or
reorganization of the Issuer or the other Affiliate Guarantor or otherwise, all
as though such payment had not been made.
3. WAIVERS. Each Affiliate Guarantor hereby waives to
the extent permitted by applicable law:
(a) promptness, diligence, notice of acceptance and any other
notice with respect to any of the Guaranteed Obligations and this
Guarantee;
(b) any requirement that the Trustee, any holder of the
Securities or any other Person protect, secure, perfect or insure any
lien or any property subject thereto or exhaust any right or take any
action against the Issuer or any other Person or any collateral;
(c) any defense arising by reason of any claim or defense based
upon an election of remedies by the Trustee or any holder of the
Securities that in any manner impairs, reduces, releases or otherwise
adversely affects its subrogation, contribution or reimbursement rights
or other rights to proceed against the Issuer or any other Person or
any collateral; and
(d) any duty on the part of the Trustee or any holder of the
Securities to disclose to such Affiliate Guarantor any matter, fact or
thing relating to the business, operation or condition of the Issuer or
the other Affiliate Guarantor and their respective assets now or
hereafter known by the Trustee or such holder, as the case may be.
4. SUBROGATION. No Affiliate Guarantor will exercise any rights
that it may now or hereafter acquire against the Issuer, the other Affiliate
Guarantor or any other insider guarantor that arise from the existence, payment,
performance or enforcement of such Affiliate Guarantor's obligations under this
Guarantee, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution or indemnification and any right to
participate in any claim or remedy of the Trustee or any holder of the
Securities against the Issuer, the other Affiliate Guarantor or any other
insider guarantor or any collateral, whether or not such claim, remedy or right
arises in equity or under contract, statute or common law, including, without
limitation, the right to take or receive from the Issuer, the other Affiliate
Guarantor or any other insider guarantor, directly or indirectly, in cash or
other property or by set-off or in any other manner, payment or security on
account of such claim, remedy or right, unless and until all of the Guaranteed
Obligations and all other amounts payable under this Guarantee shall have been
paid in full in cash. If any amount shall be paid to any Affiliate Guarantor in
violation of the
<PAGE> 9
4
preceding sentence at any time prior to the payment in full in cash of the
Guaranteed Obligations and all other amounts payable under this Guarantee, such
amount shall be held in trust for the benefit of the Trustee, the holders of the
Securities and any other Persons (the "OTHER GUARANTEED PERSONS") the
indebtedness or other obligations owed to whom is guaranteed equally and ratably
with the Guaranteed Obligations (such indebtedness owed to the Other Guaranteed
Persons, the "OTHER GUARANTEED OBLIGATIONS") and shall forthwith be paid to the
Trustee and to the Other Guaranteed Persons, and if delivered to the Trustee
shall be credited and applied to the Guaranteed Obligations and all other
amounts payable under this Guarantee, whether matured or unmatured, in
accordance with the terms of the Guaranteed Obligations, or held as collateral
for any Guaranteed Obligations thereafter arising.
If (i) any Affiliate Guarantor shall make payment to the Trustee
or any holder of Securities of all or any part of the Guaranteed Obligations and
(ii) all of the Guaranteed Obligations and all other amounts payable under this
Guarantee shall be paid in full in cash, the Trustee and the holders of the
Securities will, at such Affiliate Guarantor's request and expense, execute and
deliver to such Affiliate Guarantor appropriate documents, without recourse and
without representation or warranty, necessary to evidence the transfer by
subrogation to such Affiliate Guarantor of an interest in the Guaranteed
Obligations resulting from such payment by such Affiliate Guarantor.
5. RELEASE AND TERMINATION. The Trustee, each holder of
Securities and each other party hereto hereby agree that upon the occurrence of
a Guarantee Release Event (as defined below) with respect to any Affiliate
Guarantor, such Affiliate Guarantor shall automatically, and without the
necessity for any further action or documentation, be released from the
guarantee by such Affiliate Guarantor under this Guarantee and from all other
obligations of such Affiliate Guarantor under the Indenture and the Securities,
all of which obligations shall thenceforth be of no further force and effect
with respect to such Affiliate Guarantor, and such Affiliate Guarantor shall no
longer be an Affiliate Guarantor under and for purposes of this Guarantee. The
Trustee and the holders of the Securities agree to take such further actions or
deliver such further documents or instruments as may reasonably be requested by
such Affiliate Guarantor to further effectuate or evidence such release and
termination.
For the purposes hereof, a "GUARANTEE RELEASE EVENT" with respect
to any Affiliate Guarantor shall mean the earliest of (i) the sale, transfer or
other disposition of all or any portion of the common stock of such Affiliate
Guarantor (including through the primary issuance and sale of shares of common
stock) that the Issuer elects by notice in writing to the Trustee to designate
as a Guarantee Release Event, (ii) the release of such Affiliate Guarantor as a
guarantor of the Other Guaranteed Obligations which the Issuer elects by notice
in
<PAGE> 10
5
writing to the Trustee to designate as a Guarantee Release Event and (iii) the
first date on which all amounts owing with respect to the Securities are paid in
full.
6. MISCELLANEOUS. (a) This Guarantee shall not be construed to
apply to any series of debentures, notes or other indebtedness issued under the
Indenture other than the Securities (as defined herein).
(b) This Guarantee shall be governed by and construed in
accordance with the laws of the State of New York.
(c) This Guarantee may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
(d) Section headings herein are solely for convenience of
reference and shall not affect the interpretation or construction of any of the
provisions hereof.
IN WITNESS WHEREOF, each of the Affiliate Guarantors has caused
this Guarantee to be executed in its corporate name by its authorized officer,
by manual or facsimile signature, as of May 7, 1996.
WISE HOLDINGS, INC.
By _________________________
Name: Ronald P. Starkman
Title: Vice President & Treasurer
BORDEN FOODS HOLDINGS CORPORATION
By _________________________
Name: Ronald P. Starkman
Title: Vice President & Treasurer
<PAGE> 1
Exhibit 4(ii)
SECOND SUPPLEMENTAL INDENTURE
-----------------------------
SECOND SUPPLEMENTAL INDENTURE, dated as of June 26, 1996,
among BORDEN, INC., a New Jersey corporation (the "ISSUER"), WISE HOLDINGS,
INC., a Delaware corporation ("WISE"), BORDEN FOODS HOLDINGS CORPORATION, a
Delaware corporation (together with Wise, the "AFFILIATE GUARANTORS"), and The
Bank of New York, as Trustee (the "TRUSTEE").
W I T N E S S E T H :
---------------------
WHEREAS, the Issuer and the Trustee have heretofore executed
and delivered an Indenture, dated as of December 15, 1986, as supplemented by a
First Supplemental Indenture, dated as of December 15, 1986 (such Indenture, as
so supplemented, the "INDENTURE"), providing for the issuance from time to time
of the Issuer's unsecured debentures, notes or other evidences of indebtedness;
WHEREAS, pursuant to the Indenture, the Issuer has issued its
(i) 9-7/8% Notes Due 1997 and (ii) Medium-Term Notes, Series A (collectively,
the "SECURITIES");
WHEREAS, the Indenture provides that the Issuer and the
Trustee may, without the consent of any holder of Securities, enter into one or
more supplemental indentures for the purpose of making provisions with respect
to matters arising under the Indenture, PROVIDED that such supplemental
indenture does not adversely affect the interests of the holders of Securities
of any series;
WHEREAS, each of the Affiliate Guarantors has agreed to
unconditionally guarantee the payment of interest and principal (and any
additional amounts, if any) on the Securities (such guarantee is attached hereto
as Exhibit A);
WHEREAS, the Issuer has been authorized by a resolution of its
Board of Directors to enter into this Second Supplemental Indenture; and
WHEREAS, all other acts and proceedings required by law, by
the Indenture and by the certificate of incorporation and by-laws of the Issuer
to make this Second Supplemental Indenture a valid and binding agreement for the
purposes expressed herein, in accordance with its terms, have been duly
performed;
NOW, THEREFORE, in consideration of the premises and covenants
and agreements contained herein, and for other good and valuable consideration
the receipt of which is hereby acknowledged, and for the equal and proportionate
benefit of the holders of the Securities, the Issuer, the Trustee and the
Affiliate Guarantors hereby agree as follows:
<PAGE> 2
2
ARTICLE ONE
Section 101. Definitions.
------------
Capitalized terms used in this Second Supplemental Indenture
and not otherwise defined herein shall have the meanings assigned to such terms
in the Indenture.
ARTICLE TWO
Section 201. Guarantees.
-----------
Each of the Affiliate Guarantors shall enter into the
guarantee attached hereto as Exhibits A. It is expressly acknowledged and agreed
that the guarantee of either or both Affiliate Guarantors may be released in
certain circumstances as set forth in such guarantee and that the Affiliate
Guarantors may, but shall not be required hereunder to, guarantee other
obligations of the Issuer outstanding from time to time.
ARTICLE THREE
Section 301. Continuing Effect of Indenture.
-------------------------------
Except as expressly provided herein, all of the terms,
provisions and conditions of the Indenture and the Securities outstanding
thereunder shall remain in full force and effect.
Section 302. Construction of Second Supplemental Indenture.
----------------------------------------------
This Second Supplemental Indenture is executed as and shall
constitute an indenture supplemental to the Indenture and shall be construed in
connection with and as part of the Indenture.
Section 303. Trust Indenture Act Controls.
-----------------------------
If any provision of this Second Supplemental Indenture limits,
qualifies or conflicts with another provision of this Second Supplemental
Indenture or the Indenture that is required to be included by the Trust
Indenture Act of 1939 (the "ACT") as in force at the date as of which this
Second Supplemental Indenture is executed, the provision required by the Act
shall control.
Section 304. Trustee Disclaimer.
-------------------
The recitals contained in this Second Supplemental
Indenture shall be taken as the statements of the Issuer, and the
Trustee assumes no responsibility for their correctness. The
<PAGE> 3
3
Trustee makes no representations as to the validity or sufficiency of this
Second Supplemental Indenture.
Section 305. Counterparts.
-------------
This Second Supplemental Indenture may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
Section 306. Governing Law.
--------------
This Second Supplemental Indenture 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 Second
Supplemental Indenture to be duly executed, and their respective corporate seals
to be hereunto affixed and attested, all as of the day and year first above
written.
<TABLE>
<S> <C>
BORDEN, INC.
[Seal]
By ______________________________
Name: Ronald P. Starkman
Title: Sr. Vice President &
Treasurer
Attest:
__________________________
Name: Ellen German Berndt
Title: Secretary
THE BANK OF NEW YORK, as Trustee
[Seal]
By ______________________________
Name: Lucille Firrincieli
Title: Assistant Vice Presdient
Attest:
__________________________
Name: Paul J. Schmalzel
Title: Assistant Treasurer
WISE HOLDINGS, INC.
[Seal]
By ______________________________
Name: Ronald P. Starkman
Title: Vice President &
Treasurer
Attest:
__________________________
Name: Ellen German Berndt
Title: Secretary
</TABLE>
<PAGE> 5
5
<TABLE>
<S> <C>
BORDEN FOODS HOLDINGS CORPORATION
[Seal]
By ______________________________
Name: Ronald P. Starkman
Title: Vice President &
Treasurer
Attest:
__________________________
Name: Ellen German Berndt
Title: Secretary
</TABLE>
<PAGE> 6
GUARANTEES EXHIBIT A
---------
of
WISE HOLDINGS, INC.
and
BORDEN FOODS HOLDINGS CORPORATION
FOR VALUE RECEIVED:
1. UNCONDITIONAL GUARANTEE; LIMITATION OF LIABILITY. (a) Each of
Wise Holdings, Inc., a Delaware corporation ("WISE"), and Borden Foods Holdings
Corporation, a Delaware corporation (together with Wise, the "AFFILIATE
GUARANTORS"), hereby unconditionally guarantees the punctual payment when due,
whether at stated maturity, by acceleration or otherwise, of all obligations of
Borden, Inc., a New Jersey corporation (the "ISSUER"), and the other Affiliate
Guarantor now or hereafter existing under the (i) 9-7/8% Notes Due 1997 and (ii)
Medium-Term Notes, Series A (the "SECURITIES") issued under the Indenture, dated
as of December 15, 1986, as supplemented by a First Supplemental Indenture,
dated as of December 15, 1986 (such Indenture as so supplemented, the
"INDENTURE") whether for principal, interest, expenses or otherwise relating to
such Securities (such obligations being the "GUARANTEED OBLIGATIONS"). Without
limiting the generality of the foregoing, each Affiliate Guarantor's liability
shall extend to all amounts that constitute part of the Guaranteed Obligations
and would be owed by the Issuer or the other Affiliate Guarantor to the Trustee
or the holders of the Securities but for the fact that they are unenforceable or
not allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving the Issuer or the other Affiliate Guarantor.
(b) The aggregate liability of each Affiliate Guarantor hereunder
and under the Other Guaranteed Obligations (as defined below) shall not exceed
the greater of (i) the net benefit realized by such Affiliate Guarantor from the
proceeds of loans or advances made from time to time by the Issuer to such
Affiliate Guarantor or any subsidiary of such Affiliate Guarantor and (ii) the
greater of (x) 95% of the Adjusted Net Assets (as defined below) of such
Affiliate Guarantor on the date hereof and (y) 95% of the Adjusted Net Assets of
such Affiliate Guarantor on the date of any payment hereunder. "ADJUSTED NET
ASSETS" of any Affiliate Guarantor at any date means the lesser of (x) the
amount by which the fair value of the property of such Affiliate Guarantor
exceeds the total amount of liabilities, including, without limitation,
contingent liabilities, but excluding liabilities hereunder and under the Other
Guaranteed Obligations, of such Affiliate Guarantor at such date and (y) the
amount by which the present fair salable value of the assets of such Affiliate
Guarantor at such date exceeds the amount that will be
<PAGE> 7
2
required to pay the probable liability of such Affiliate Guarantor on its debts,
excluding debt in respect of this Guarantee and debt in respect of Other
Guaranteed Obligations, as they become absolute and matured.
2. GUARANTY ABSOLUTE. Each Affiliate Guarantor guarantees that the
Guaranteed Obligations will be paid strictly in accordance with the terms of the
Indenture, regardless of any law, regulation or order now in effect in any
jurisdiction affecting any such terms or the rights of the Trustee or the
holders of the Securities with respect thereto. The obligations of each
Affiliate Guarantor under this Guarantee are independent of the Guaranteed
Obligations, and a separate action or actions may be brought and prosecuted
against each Affiliate Guarantor to enforce this Guarantee, irrespective of
whether any action is brought against the Issuer or any other Affiliate
Guarantor or whether the Issuer or any other Affiliate Guarantor is joined in
any such action or actions. The liability of each Affiliate Guarantor under this
Guarantee shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of the Indenture or the
Securities or any agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Guaranteed Obligations, or any
other amendment or waiver of or any consent to departure from the
Indenture or the Securities other than this Guarantee;
(c) any taking, exchange, release or non-perfection of any
collateral, or any taking, release or amendment or waiver of or consent
to departure from any other guarantee, for all or any of the Guaranteed
Obligations;
(d) any manner of application of collateral, or proceeds thereof,
to all or any of the Guaranteed Obligations, or any manner of sale or
other disposition of any collateral for all or any of the Guaranteed
Obligations or any other assets of the Issuer, the other Affiliate
Guarantor or any of their respective Subsidiaries;
(e) any change, restructuring or termination of the corporate
structure or existence of the Issuer, the other Affiliated Guarantor or
any of their respective Subsidiaries; or
(f) any other circumstance (including, without limitation, any
statute of limitations) that might otherwise constitute a defense
available to, or a discharge of, the Issuer, the other Affiliate
Guarantor or any other guarantor.
<PAGE> 8
3
This Guarantee shall continue to be effective or shall be
reinstated, as the case may be, if at any time any payment of any of the
Guaranteed Obligations is rescinded or must otherwise be returned by the Trustee
or any holder of the Securities upon the insolvency, bankruptcy or
reorganization of the Issuer or the other Affiliate Guarantor or otherwise, all
as though such payment had not been made.
3. WAIVERS. Each Affiliate Guarantor hereby waives to the extent
permitted by applicable law:
(a) promptness, diligence, notice of acceptance and any other
notice with respect to any of the Guaranteed Obligations and this
Guarantee;
(b) any requirement that the Trustee, any holder of the Securities
or any other Person protect, secure, perfect or insure any lien or any
property subject thereto or exhaust any right or take any action
against the Issuer or any other Person or any collateral;
(c) any defense arising by reason of any claim or defense based
upon an election of remedies by the Trustee or any holder of the
Securities that in any manner impairs, reduces, releases or otherwise
adversely affects its subrogation, contribution or reimbursement rights
or other rights to proceed against the Issuer or any other Person or
any collateral; and
(d) any duty on the part of the Trustee or any holder of the
Securities to disclose to such Affiliate Guarantor any matter, fact or
thing relating to the business, operation or condition of the Issuer or
the other Affiliate Guarantor and their respective assets now or
hereafter known by the Trustee or such holder, as the case may be.
4. SUBROGATION. No Affiliate Guarantor will exercise any rights
that it may now or hereafter acquire against the Issuer, the other Affiliate
Guarantor or any other insider guarantor that arise from the existence, payment,
performance or enforcement of such Affiliate Guarantor's obligations under this
Guarantee, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution or indemnification and any right to
participate in any claim or remedy of the Trustee or any holder of the
Securities against the Issuer, the other Affiliate Guarantor or any other
insider guarantor or any collateral, whether or not such claim, remedy or right
arises in equity or under contract, statute or common law, including, without
limitation, the right to take or receive from the Issuer, the other Affiliate
Guarantor or any other insider guarantor, directly or indirectly, in cash or
other property or by set-off or in any other manner, payment or security on
account of such claim, remedy or right, unless and until all of the Guaranteed
Obligations and all other amounts payable under this
<PAGE> 9
4
Guarantee shall have been paid in full in cash. If any amount shall be paid to
any Affiliate Guarantor in violation of the preceding sentence at any time prior
to the payment in full in cash of the Guaranteed Obligations and all other
amounts payable under this Guarantee, such amount shall be held in trust for the
benefit of the Trustee, the holders of the Securities and any other Persons (the
"OTHER GUARANTEED PERSONS") the indebtedness or other obligations owed to whom
is guaranteed equally and ratably with the Guaranteed Obligations (such
indebtedness owed to the Other Guaranteed Persons, the "OTHER GUARANTEED
OBLIGATIONS") and shall forthwith be paid to the Trustee and to the Other
Guaranteed Persons, and if delivered to the Trustee shall be credited and
applied to the Guaranteed Obligations and all other amounts payable under this
Guarantee, whether matured or unmatured, in accordance with the terms of the
Guaranteed Obligations, or held as collateral for any Guaranteed Obligations
thereafter arising.
If (i) any Affiliate Guarantor shall make payment to the Trustee
or any holder of Securities of all or any part of the Guaranteed Obligations and
(ii) all of the Guaranteed Obligations and all other amounts payable under this
Guarantee shall be paid in full in cash, the Trustee and the holders of the
Securities will, at such Affiliate Guarantor's request and expense, execute and
deliver to such Affiliate Guarantor appropriate documents, without recourse and
without representation or warranty, necessary to evidence the transfer by
subrogation to such Affiliate Guarantor of an interest in the Guaranteed
Obligations resulting from such payment by such Affiliate Guarantor.
5. RELEASE AND TERMINATION. The Trustee, each holder of Securities
and each other party hereto hereby agree that upon the occurrence of a Guarantee
Release Event (as defined below) with respect to any Affiliate Guarantor, such
Affiliate Guarantor shall automatically, and without the necessity for any
further action or documentation, be released from the guarantee by such
Affiliate Guarantor under this Guarantee and from all other obligations of such
Affiliate Guarantor under the Indenture and the Securities, all of which
obligations shall thenceforth be of no further force and effect with respect to
such Affiliate Guarantor, and such Affiliate Guarantor shall no longer be an
Affiliate Guarantor under and for purposes of this Guarantee. The Trustee and
the holders of the Securities agree to take such further actions or deliver such
further documents or instruments as may reasonably be requested by such
Affiliate Guarantor to further effectuate or evidence such release and
termination.
For the purposes hereof, a "GUARANTEE RELEASE EVENT" with respect
to any Affiliate Guarantor shall mean the earliest of (i) the sale, transfer or
other disposition of all or any portion of the common stock of such Affiliate
Guarantor (including through the primary issuance and sale of shares of common
stock) that the Issuer elects by notice in writing to the Trustee to designate
as a Guarantee Release Event, (ii) the release of such Affiliate
<PAGE> 10
5
Guarantor as a guarantor of the Other Guaranteed Obligations which the Issuer
elects by notice in writing to the Trustee to designate as a Guarantee Release
Event and (iii) the first date on which all amounts owing with respect to the
Securities are paid in full.
6. MISCELLANEOUS. (a) This Guarantee shall not be
construed to apply to any series of debentures, notes or other
indebtedness issued under the Indenture other than the Securities
(as defined herein).
(b) This Guarantee shall be governed by and construed in
accordance with the laws of the State of New York.
(c) This Guarantee may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
(d) Section headings herein are solely for convenience of
reference and shall not affect the interpretation or construction of any of the
provisions hereof.
IN WITNESS WHEREOF, each of the Affiliate Guarantors has caused
this Guarantee to be executed in its corporate name by its authorized officer,
by manual or facsimile signature, as of May 7, 1996.
WISE HOLDINGS, INC.
By _________________________
Name: Ronald P. Starkman
Title: Vice President & Treasurer
BORDEN FOODS HOLDINGS CORPORATION
By _________________________
Name: Ronald P. Starkman
Title: Vice President & Treasurer
<PAGE> 1
Exhibit 4(iii)
THIRD SUPPLEMENTAL INDENTURE
----------------------------
THIRD SUPPLEMENTAL INDENTURE, dated as of June 26, 1996, among
BORDEN, INC., a New Jersey corporation (the "ISSUER"), WISE HOLDINGS, INC., a
Delaware corporation ("WISE"), BORDEN FOODS HOLDINGS CORPORATION, a Delaware
corporation (together with Wise, the "AFFILIATE GUARANTORS"), and The Bank of
New York, as Trustee (the "TRUSTEE").
W I T N E S S E T H :
---------------------
WHEREAS, the Issuer and the Trustee have heretofore executed
and delivered an Indenture, dated as of December 15, 1987, as supplemented by a
First Supplemental Indenture, dated as of December 15, 1987, and as supplemented
by a Second Supplemental Indenture, dated as of February 1, 1993 (such
Indenture, as so supplemented, the "INDENTURE"), providing for the issuance from
time to time of the Issuer's unsecured debentures, notes or other evidences of
indebtedness;
WHEREAS, pursuant to the Indenture, the Issuer has issued its
(i) 9.2% Debentures due 2021, (ii) 7.875% Debentures due 2023 and (iii) 9-1/4%
Sinking Fund Debentures due 2019 (collectively, the "SECURITIES");
WHEREAS, the Indenture provides that the Issuer and the
Trustee may, without the consent of any holder of Securities, enter into one or
more supplemental indentures for the purpose of making provisions with respect
to matters arising under the Indenture, PROVIDED that such supplemental
indenture does not adversely affect the interests of the holders of Securities
of any series;
WHEREAS, each of the Affiliate Guarantors has agreed to
unconditionally guarantee the payment of interest and principal (and any
additional amounts, if any) on the Securities (such guarantee is attached hereto
as Exhibit A);
WHEREAS, the Issuer has been authorized by a resolution of its
Board of Directors to enter into this Third Supplemental Indenture; and
WHEREAS, all other acts and proceedings required by law, by
the Indenture and by the certificate of incorporation and by-laws of the Issuer
to make this Third Supplemental Indenture a valid and binding agreement for the
purposes expressed herein, in accordance with its terms, have been duly
performed;
NOW, THEREFORE, in consideration of the premises and covenants
and agreements contained herein, and for other good and valuable consideration
the receipt of which is hereby acknowledged, and for the equal and proportionate
benefit of the holders of the Securities, the Issuer, the Trustee and the
Affiliate Guarantors hereby agree as follows:
<PAGE> 2
2
ARTICLE ONE
Section 101. Definitions.
------------
Capitalized terms used in this Third Supplemental Indenture
and not otherwise defined herein shall have the meanings assigned to such terms
in the Indenture.
ARTICLE TWO
Section 201. Guarantees.
-----------
Each of the Affiliate Guarantors shall enter into the
guarantee attached hereto as Exhibits A. It is expressly acknowledged and agreed
that the guarantee of either or both Affiliate Guarantors may be released in
certain circumstances as set forth in such guarantee and that the Affiliate
Guarantors may, but shall not be required hereunder to, guarantee other
obligations of the Issuer outstanding from time to time.
ARTICLE THREE
Section 301. Continuing Effect of Indenture.
-------------------------------
Except as expressly provided herein, all of the terms,
provisions and conditions of the Indenture and the Securities outstanding
thereunder shall remain in full force and effect.
Section 302. Construction of Third Supplemental Indenture.
---------------------------------------------
This Third Supplemental Indenture is executed as and shall
constitute an indenture supplemental to the Indenture and shall be construed in
connection with and as part of the Indenture.
Section 303. Trust Indenture Act Controls.
-----------------------------
If any provision of this Third Supplemental Indenture limits,
qualifies or conflicts with another provision of this Third Supplemental
Indenture or the Indenture that is required to be included by the Trust
Indenture Act of 1939 (the "ACT") as in force at the date as of which this Third
Supplemental Indenture is executed, the provision required by the Act shall
control.
Section 304. Trustee Disclaimer.
-------------------
The recitals contained in this Third Supplemental Indenture
shall be taken as the statements of the Issuer, and the Trustee assumes no
responsibility for their correctness. The Trustee makes no representations as to
the validity or sufficiency of this Third Supplemental Indenture.
<PAGE> 3
3
Section 305. Counterparts.
-------------
This Third Supplemental Indenture may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
Section 306. Governing Law.
--------------
This Third Supplemental Indenture 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 Third
Supplemental Indenture to be duly executed, and their respective corporate seals
to be hereunto affixed and attested, all as of the day and year first above
written.
<TABLE>
<S> <C>
BORDEN, INC.
[Seal]
By ______________________________
Name: Ronald P. Starkman
Title: Sr. Vice President &
Treasurer
Attest:
__________________________
Name: Ellen German Berndt
Title: Secretary
THE BANK OF NEW YORK, as Trustee
[Seal]
By ______________________________
Name: Lucille Firrincieli
Title: Assistant Vice
President
Attest:
__________________________
Name: Paul J. Schmalzel
Title: Assistant Treasurer
WISE HOLDINGS, INC.
[Seal]
By ______________________________
Name: Ronald P. Starkman
Title: Sr. Vice President &
Treasurer
Attest:
__________________________
Name: Ellen German Berndt
Title: Secretary
</TABLE>
<PAGE> 5
5
<TABLE>
<S> <C>
BORDEN FOODS HOLDINGS CORPORATION
[Seal]
By ______________________________
Name: Ronald P. Starkman
Title: Sr. Vice President &
Treasurer
Attest:
__________________________
Name: Ellen German Berndt
Title: Secretary
</TABLE>
<PAGE> 6
GUARANTEES EXHIBIT A
---------
of
WISE HOLDINGS, INC.
and
BORDEN FOODS HOLDINGS CORPORATION
FOR VALUE RECEIVED:
1. UNCONDITIONAL GUARANTEE; LIMITATION OF LIABILITY. (a) Each of
Wise Holdings, Inc., a Delaware corporation ("WISE"), and Borden Foods Holdings
Corporation, a Delaware corporation (together with Wise, the "AFFILIATE
GUARANTORS"), hereby unconditionally guarantees the punctual payment when due,
whether at stated maturity, by acceleration or otherwise, of all obligations of
Borden, Inc., a New Jersey corporation (the "ISSUER"), and the other Affiliate
Guarantor now or hereafter existing under the (i) 9.2% Debentures due 2021, (ii)
7.875% Debentures due 2023 and (iii) 9-1/4% Sinking Fund Debentures due 2019
(the "SECURITIES") issued under the Indenture, dated as of December 15, 1987, as
supplemented by a First Supplemental Indenture, dated as of December 15, 1987,
and as supplemented by a Second Supplemental Indenture, dated as of February 1,
1993 (such Indenture as so supplemented, the "INDENTURE") whether for principal,
interest, expenses or otherwise relating to such Securities (such obligations
being the "GUARANTEED OBLIGATIONS"). Without limiting the generality of the
foregoing, each Affiliate Guarantor's liability shall extend to all amounts that
constitute part of the Guaranteed Obligations and would be owed by the Issuer or
the other Affiliate Guarantor to the Trustee or the holders of the Securities
but for the fact that they are unenforceable or not allowable due to the
existence of a bankruptcy, reorganization or similar proceeding involving the
Issuer or the other Affiliate Guarantor.
(b) The aggregate liability of each Affiliate Guarantor hereunder
and under the Other Guaranteed Obligations (as defined below) shall not exceed
the greater of (i) the net benefit realized by such Affiliate Guarantor from the
proceeds of loans or advances made from time to time by the Issuer to such
Affiliate Guarantor or any subsidiary of such Affiliate Guarantor and (ii) the
greater of (x) 95% of the Adjusted Net Assets (as defined below) of such
Affiliate Guarantor on the date hereof and (y) 95% of the Adjusted Net Assets of
such Affiliate Guarantor on the date of any payment hereunder. "ADJUSTED NET
ASSETS" of any Affiliate Guarantor at any date means the lesser of (x) the
amount by which the fair value of the property of such Affiliate Guarantor
exceeds the total amount of liabilities, including, without limitation,
contingent liabilities, but excluding liabilities hereunder and under the Other
Guaranteed Obligations, of such Affiliate Guarantor at such date and (y) the
amount by
<PAGE> 7
2
which the present fair salable value of the assets of such Affiliate Guarantor
at such date exceeds the amount that will be required to pay the probable
liability of such Affiliate Guarantor on its debts, excluding debt in respect of
this Guarantee and debt in respect of Other Guaranteed Obligations, as they
become absolute and matured.
2. GUARANTY ABSOLUTE. Each Affiliate Guarantor guarantees that the
Guaranteed Obligations will be paid strictly in accordance with the terms of the
Indenture, regardless of any law, regulation or order now in effect in any
jurisdiction affecting any such terms or the rights of the Trustee or the
holders of the Securities with respect thereto. The obligations of each
Affiliate Guarantor under this Guarantee are independent of the Guaranteed
Obligations, and a separate action or actions may be brought and prosecuted
against each Affiliate Guarantor to enforce this Guarantee, irrespective of
whether any action is brought against the Issuer or any other Affiliate
Guarantor or whether the Issuer or any other Affiliate Guarantor is joined in
any such action or actions. The liability of each Affiliate Guarantor under this
Guarantee shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of the Indenture or the
Securities or any agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Guaranteed Obligations, or any
other amendment or waiver of or any consent to departure from the
Indenture or the Securities other than this Guarantee;
(c) any taking, exchange, release or non-perfection of any
collateral, or any taking, release or amendment or waiver of or consent
to departure from any other guarantee, for all or any of the Guaranteed
Obligations;
(d) any manner of application of collateral, or proceeds thereof,
to all or any of the Guaranteed Obligations, or any manner of sale or
other disposition of any collateral for all or any of the Guaranteed
Obligations or any other assets of the Issuer, the other Affiliate
Guarantor or any of their respective Subsidiaries;
(e) any change, restructuring or termination of the corporate
structure or existence of the Issuer, the other Affiliated Guarantor or
any of their respective Subsidiaries; or
(f) any other circumstance (including, without limitation, any
statute of limitations) that might otherwise constitute a defense
available to, or a discharge of, the
<PAGE> 8
3
Issuer, the other Affiliate Guarantor or any other guarantor.
This Guarantee shall continue to be effective or shall be
reinstated, as the case may be, if at any time any payment of any of the
Guaranteed Obligations is rescinded or must otherwise be returned by the Trustee
or any holder of the Securities upon the insolvency, bankruptcy or
reorganization of the Issuer or the other Affiliate Guarantor or otherwise, all
as though such payment had not been made.
3. WAIVERS. Each Affiliate Guarantor hereby waives to the extent
permitted by applicable law:
(a) promptness, diligence, notice of acceptance and any other
notice with respect to any of the Guaranteed Obligations and this
Guarantee;
(b) any requirement that the Trustee, any holder of the Securities
or any other Person protect, secure, perfect or insure any lien or any
property subject thereto or exhaust any right or take any action
against the Issuer or any other Person or any collateral;
(c) any defense arising by reason of any claim or defense based
upon an election of remedies by the Trustee or any holder of the
Securities that in any manner impairs, reduces, releases or otherwise
adversely affects its subrogation, contribution or reimbursement rights
or other rights to proceed against the Issuer or any other Person or
any collateral; and
(d) any duty on the part of the Trustee or any holder of the
Securities to disclose to such Affiliate Guarantor any matter, fact or
thing relating to the business, operation or condition of the Issuer or
the other Affiliate Guarantor and their respective assets now or
hereafter known by the Trustee or such holder, as the case may be.
4. SUBROGATION. No Affiliate Guarantor will exercise any rights
that it may now or hereafter acquire against the Issuer, the other Affiliate
Guarantor or any other insider guarantor that arise from the existence, payment,
performance or enforcement of such Affiliate Guarantor's obligations under this
Guarantee, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution or indemnification and any right to
participate in any claim or remedy of the Trustee or any holder of the
Securities against the Issuer, the other Affiliate Guarantor or any other
insider guarantor or any collateral, whether or not such claim, remedy or right
arises in equity or under contract, statute or common law, including, without
limitation, the right to take or receive from the Issuer, the other Affiliate
Guarantor or any other insider guarantor, directly or indirectly, in cash or
other property or
<PAGE> 9
4
by set-off or in any other manner, payment or security on account of such claim,
remedy or right, unless and until all of the Guaranteed Obligations and all
other amounts payable under this Guarantee shall have been paid in full in cash.
If any amount shall be paid to any Affiliate Guarantor in violation of the
preceding sentence at any time prior to the payment in full in cash of the
Guaranteed Obligations and all other amounts payable under this Guarantee, such
amount shall be held in trust for the benefit of the Trustee, the holders of the
Securities and any other Persons (the "OTHER GUARANTEED PERSONS") the
indebtedness or other obligations owed to whom is guaranteed equally and ratably
with the Guaranteed Obligations (such indebtedness owed to the Other Guaranteed
Persons, the "OTHER GUARANTEED OBLIGATIONS") and shall forthwith be paid to the
Trustee and to the Other Guaranteed Persons, and if delivered to the Trustee
shall be credited and applied to the Guaranteed Obligations and all other
amounts payable under this Guarantee, whether matured or unmatured, in
accordance with the terms of the Guaranteed Obligations, or held as collateral
for any Guaranteed Obligations thereafter arising.
If (i) any Affiliate Guarantor shall make payment to the Trustee
or any holder of Securities of all or any part of the Guaranteed Obligations and
(ii) all of the Guaranteed Obligations and all other amounts payable under this
Guarantee shall be paid in full in cash, the Trustee and the holders of the
Securities will, at such Affiliate Guarantor's request and expense, execute and
deliver to such Affiliate Guarantor appropriate documents, without recourse and
without representation or warranty, necessary to evidence the transfer by
subrogation to such Affiliate Guarantor of an interest in the Guaranteed
Obligations resulting from such payment by such Affiliate Guarantor.
5. RELEASE AND TERMINATION. The Trustee, each holder of Securities
and each other party hereto hereby agree that upon the occurrence of a Guarantee
Release Event (as defined below) with respect to any Affiliate Guarantor, such
Affiliate Guarantor shall automatically, and without the necessity for any
further action or documentation, be released from the guarantee by such
Affiliate Guarantor under this Guarantee and from all other obligations of such
Affiliate Guarantor under the Indenture and the Securities, all of which
obligations shall thenceforth be of no further force and effect with respect to
such Affiliate Guarantor, and such Affiliate Guarantor shall no longer be an
Affiliate Guarantor under and for purposes of this Guarantee. The Trustee and
the holders of the Securities agree to take such further actions or deliver such
further documents or instruments as may reasonably be requested by such
Affiliate Guarantor to further effectuate or evidence such release and
termination.
For the purposes hereof, a "GUARANTEE RELEASE EVENT" with respect
to any Affiliate Guarantor shall mean the earliest of (i) the sale, transfer or
other disposition of all or any portion of the common stock of such Affiliate
Guarantor (including through
<PAGE> 10
5
the primary issuance and sale of shares of common stock) that the Issuer elects
by notice in writing to the Trustee to designate as a Guarantee Release Event,
(ii) the release of such Affiliate Guarantor as a guarantor of the Other
Guaranteed Obligations which the Issuer elects by notice in writing to the
Trustee to designate as a Guarantee Release Event and (iii) the first date on
which all amounts owing with respect to the Securities are paid in full.
6. MISCELLANEOUS. (a) This Guarantee shall not be construed to
apply to any series of debentures, notes or other indebtedness issued under the
Indenture other than the Securities (as defined herein).
(b) This Guarantee shall be governed by and construed in
accordance with the laws of the State of New York.
(c) This Guarantee may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
(d) Section headings herein are solely for convenience of
reference and shall not affect the interpretation or construction of any of the
provisions hereof.
IN WITNESS WHEREOF, each of the Affiliate Guarantors has caused
this Guarantee to be executed in its corporate name by its authorized officer,
by manual or facsimile signature, as of May 7, 1996.
WISE HOLDINGS, INC.
By _________________________
Name: Ronald P. Starkman
Title: Vice President & Treasurer
BORDEN FOODS HOLDINGS CORPORATION
By _________________________
Name: Ronald P. Starkman
Title: Vice President & Treasurer
<PAGE> 1
Exhibit 4(iv)
SECOND SUPPLEMENTAL INDENTURE
-----------------------------
SECOND SUPPLEMENTAL INDENTURE, dated as of June 26, 1996,
among BORDEN, INC., a New Jersey corporation (the "ISSUER"), WISE HOLDINGS,
INC., a Delaware corporation ("WISE"), BORDEN FOODS HOLDINGS CORPORATION, a
Delaware corporation (together with Wise, the "AFFILIATE GUARANTORS"), and The
First National Bank of Chicago, as Trustee (the "TRUSTEE").
W I T N E S S E T H :
---------------------
WHEREAS, the Issuer and the Trustee have heretofore executed
and delivered an Indenture, dated as of January 15, 1983, as supplemented by a
First Supplemental Indenture, dated as of March 31, 1986 (such Indenture, as so
supplemented, the "INDENTURE"), providing for the issuance from time to time of
the Issuer's unsecured debentures, notes or other evidences of indebtedness;
WHEREAS, pursuant to the Indenture, the Issuer has issued its
8-3/8% Sinking Fund Debentures Due 2016 (the "SECURITIES");
WHEREAS, the Indenture provides that the Issuer and the
Trustee may, without the consent of any holder of Securities, enter into one or
more supplemental indentures for the purpose of making provisions with respect
to matters arising under the Indenture, PROVIDED that such supplemental
indenture does not adversely affect the interests of the holders of Securities
of any series;
WHEREAS, each of the Affiliate Guarantors has agreed to
unconditionally guarantee the payment of interest and principal (and any
additional amounts, if any) on the Securities (such guarantee is attached hereto
as Exhibit A);
WHEREAS, the Issuer has been authorized by a resolution of its
Board of Directors to enter into this Second Supplemental Indenture; and
WHEREAS, all other acts and proceedings required by law, by
the Indenture and by the certificate of incorporation and by-laws of the Issuer
to make this Second Supplemental Indenture a valid and binding agreement for the
purposes expressed herein, in accordance with its terms, have been duly
performed;
NOW, THEREFORE, in consideration of the premises and covenants
and agreements contained herein, and for other good and valuable consideration
the receipt of which is hereby acknowledged, and for the equal and proportionate
benefit of the holders of the Securities, the Issuer, the Trustee and the
Affiliate Guarantors hereby agree as follows:
<PAGE> 2
2
ARTICLE ONE
Section 101. Definitions.
------------
Capitalized terms used in this Second Supplemental Indenture
and not otherwise defined herein shall have the meanings assigned to such terms
in the Indenture.
ARTICLE TWO
Section 201. Guarantees.
-----------
Each of the Affiliate Guarantors shall enter into the
guarantee attached hereto as Exhibits A. It is expressly acknowledged and agreed
that the guarantee of either or both Affiliate Guarantors may be released in
certain circumstances as set forth in such guarantee and that the Affiliate
Guarantors may, but shall not be required hereunder to, guarantee other
obligations of the Issuer outstanding from time to time.
ARTICLE THREE
Section 301. Continuing Effect of Indenture.
-------------------------------
Except as expressly provided herein, all of the terms,
provisions and conditions of the Indenture and the Securities outstanding
thereunder shall remain in full force and effect.
Section 302. Construction of Second Supplemental Indenture.
----------------------------------------------
This Second Supplemental Indenture is executed as and shall
constitute an indenture supplemental to the Indenture and shall be construed in
connection with and as part of the Indenture.
Section 303. Trust Indenture Act Controls.
-----------------------------
If any provision of this Second Supplemental Indenture limits,
qualifies or conflicts with another provision of this Second Supplemental
Indenture or the Indenture that is required to be included by the Trust
Indenture Act of 1939 (the "Act") as in force at the date as of which this
Second Supplemental Indenture is executed, the provision required by the Act
shall control.
Section 304. Trustee Disclaimer.
-------------------
The recitals contained in this Second Supplemental Indenture
shall be taken as the statements of the Issuer, and the Trustee assumes no
responsibility for their correctness. The
<PAGE> 3
3
Trustee makes no representations as to the validity or sufficiency of this
Second Supplemental Indenture.
Section 305. Counterparts.
-------------
This Second Supplemental Indenture may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
Section 306. Governing Law.
--------------
This Second Supplemental Indenture 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 Second
Supplemental Indenture to be duly executed, and their respective corporate seals
to be hereunto affixed and attested, all as of the day and year first above
written.
<TABLE>
<S> <C>
BORDEN, INC.
[Seal]
By ______________________________
Name: Ronald P. Starkman
Title: Sr. Vice President &
Treasurer
Attest:
__________________________
Name: Ellen German Berndt
Title: Secretary
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
[Seal]
By ______________________________
Name: Richard D. Manella
Title: Vice President
Attest:
__________________________
Name: J. T. Cahill
Title: Assistant Vice President
WISE HOLDINGS, INC.
[Seal]
By ______________________________
Name: Ronald P. Starkman
Title: Vice President &
Treasurer
Attest:
__________________________
Name: Ellen German Berndt
Title: Secretary
</TABLE>
<PAGE> 5
5
<TABLE>
<S> <C>
BORDEN FOODS HOLDINGS CORPORATION
[Seal]
By ______________________________
Name: Ronald P. Starkman
Title: Vice President &
Treasurer
Attest:
__________________________
Name: Ellen German Berndt
Title: Secretary
</TABLE>
<PAGE> 6
GUARANTEES EXHIBIT A
---------
of
WISE HOLDINGS, INC.
and
BORDEN FOODS HOLDINGS CORPORATION
FOR VALUE RECEIVED:
1. UNCONDITIONAL GUARANTEE; LIMITATION OF LIABILITY. (a) Each of
Wise Holdings, Inc., a Delaware corporation ("WISE"), and Borden Foods Holdings
Corporation, a Delaware corporation (together with Wise, the "AFFILIATE
GUARANTORS"), hereby unconditionally guarantees the punctual payment when due,
whether at stated maturity, by acceleration or otherwise, of all obligations of
Borden, Inc., a New Jersey corporation (the "ISSUER"), and the other Affiliate
Guarantor now or hereafter existing under the 8-3/8% Sinking Fund Debentures Due
2016 (the "SECURITIES") issued under the Indenture, dated as of January 15,
1983, as supplemented by a First Supplemental Indenture, dated as of March 31,
1986 (such Indenture as so supplemented, the "INDENTURE") whether for principal,
interest, expenses or otherwise relating to such Securities (such obligations
being the "GUARANTEED OBLIGATIONS"). Without limiting the generality of the
foregoing, each Affiliate Guarantor's liability shall extend to all amounts that
constitute part of the Guaranteed Obligations and would be owed by the Issuer or
the other Affiliate Guarantor to the Trustee or the holders of the Securities
but for the fact that they are unenforceable or not allowable due to the
existence of a bankruptcy, reorganization or similar proceeding involving the
Issuer or the other Affiliate Guarantor.
(b) The aggregate liability of each Affiliate Guarantor hereunder
and under the Other Guaranteed Obligations (as defined below) shall not exceed
the greater of (i) the net benefit realized by such Affiliate Guarantor from the
proceeds of loans or advances made from time to time by the Issuer to such
Affiliate Guarantor or any subsidiary of such Affiliate Guarantor and (ii) the
greater of (x) 95% of the Adjusted Net Assets (as defined below) of such
Affiliate Guarantor on the date hereof and (y) 95% of the Adjusted Net Assets of
such Affiliate Guarantor on the date of any payment hereunder. "ADJUSTED NET
ASSETS" of any Affiliate Guarantor at any date means the lesser of (x) the
amount by which the fair value of the property of such Affiliate Guarantor
exceeds the total amount of liabilities, including, without limitation,
contingent liabilities, but excluding liabilities hereunder and under the Other
Guaranteed Obligations, of such Affiliate Guarantor at such date and (y) the
amount by which the present fair salable value of the assets of such Affiliate
Guarantor at such date exceeds the amount that will be required to pay the
probable liability of such Affiliate
<PAGE> 7
2
Guarantor on its debts, excluding debt in respect of this Guarantee and debt in
respect of Other Guaranteed Obligations, as they become absolute and matured.
2. GUARANTY ABSOLUTE. Each Affiliate Guarantor guarantees that the
Guaranteed Obligations will be paid strictly in accordance with the terms of the
Indenture, regardless of any law, regulation or order now in effect in any
jurisdiction affecting any such terms or the rights of the Trustee or the
holders of the Securities with respect thereto. The obligations of each
Affiliate Guarantor under this Guarantee are independent of the Guaranteed
Obligations, and a separate action or actions may be brought and prosecuted
against each Affiliate Guarantor to enforce this Guarantee, irrespective of
whether any action is brought against the Issuer or any other Affiliate
Guarantor or whether the Issuer or any other Affiliate Guarantor is joined in
any such action or actions. The liability of each Affiliate Guarantor under this
Guarantee shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of the Indenture or the
Securities or any agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Guaranteed Obligations, or any
other amendment or waiver of or any consent to departure from the
Indenture or the Securities other than this Guarantee;
(c) any taking, exchange, release or non-perfection of any
collateral, or any taking, release or amendment or waiver of or consent
to departure from any other guarantee, for all or any of the Guaranteed
Obligations;
(d) any manner of application of collateral, or proceeds thereof,
to all or any of the Guaranteed Obligations, or any manner of sale or
other disposition of any collateral for all or any of the Guaranteed
Obligations or any other assets of the Issuer, the other Affiliate
Guarantor or any of their respective Subsidiaries;
(e) any change, restructuring or termination of the corporate
structure or existence of the Issuer, the other Affiliated Guarantor or
any of their respective Subsidiaries; or
(f) any other circumstance (including, without limitation, any
statute of limitations) that might otherwise constitute a defense
available to, or a discharge of, the Issuer, the other Affiliate
Guarantor or any other guarantor.
<PAGE> 8
3
This Guarantee shall continue to be effective or shall be
reinstated, as the case may be, if at any time any payment of any of the
Guaranteed Obligations is rescinded or must otherwise be returned by the Trustee
or any holder of the Securities upon the insolvency, bankruptcy or
reorganization of the Issuer or the other Affiliate Guarantor or otherwise, all
as though such payment had not been made.
3. WAIVERS. Each Affiliate Guarantor hereby waives to the extent
permitted by applicable law:
(a) promptness, diligence, notice of acceptance and any other
notice with respect to any of the Guaranteed Obligations and this
Guarantee;
(b) any requirement that the Trustee, any holder of the Securities
or any other Person protect, secure, perfect or insure any lien or any
property subject thereto or exhaust any right or take any action
against the Issuer or any other Person or any collateral;
(c) any defense arising by reason of any claim or defense based
upon an election of remedies by the Trustee or any holder of the
Securities that in any manner impairs, reduces, releases or otherwise
adversely affects its subrogation, contribution or reimbursement rights
or other rights to proceed against the Issuer or any other Person or
any collateral; and
(d) any duty on the part of the Trustee or any holder of the
Securities to disclose to such Affiliate Guarantor any matter, fact or
thing relating to the business, operation or condition of the Issuer or
the other Affiliate Guarantor and their respective assets now or
hereafter known by the Trustee or such holder, as the case may be.
4. SUBROGATION. No Affiliate Guarantor will exercise any rights
that it may now or hereafter acquire against the Issuer, the other Affiliate
Guarantor or any other insider guarantor that arise from the existence, payment,
performance or enforcement of such Affiliate Guarantor's obligations under this
Guarantee, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution or indemnification and any right to
participate in any claim or remedy of the Trustee or any holder of the
Securities against the Issuer, the other Affiliate Guarantor or any other
insider guarantor or any collateral, whether or not such claim, remedy or right
arises in equity or under contract, statute or common law, including, without
limitation, the right to take or receive from the Issuer, the other Affiliate
Guarantor or any other insider guarantor, directly or indirectly, in cash or
other property or by set-off or in any other manner, payment or security on
account of such claim, remedy or right, unless and until all of the Guaranteed
Obligations and all other amounts payable under this
<PAGE> 9
4
Guarantee shall have been paid in full in cash. If any amount shall be paid to
any Affiliate Guarantor in violation of the preceding sentence at any time prior
to the payment in full in cash of the Guaranteed Obligations and all other
amounts payable under this Guarantee, such amount shall be held in trust for the
benefit of the Trustee, the holders of the Securities and any other Persons (the
"OTHER GUARANTEED PERSONS") the indebtedness or other obligations owed to whom
is guaranteed equally and ratably with the Guaranteed Obligations (such
indebtedness owed to the Other Guaranteed Persons, the "OTHER GUARANTEED
OBLIGATIONS") and shall forthwith be paid to the Trustee and to the Other
Guaranteed Persons, and if delivered to the Trustee shall be credited and
applied to the Guaranteed Obligations and all other amounts payable under this
Guarantee, whether matured or unmatured, in accordance with the terms of the
Guaranteed Obligations, or held as collateral for any Guaranteed Obligations
thereafter arising.
If (i) any Affiliate Guarantor shall make payment to the Trustee
or any holder of Securities of all or any part of the Guaranteed Obligations and
(ii) all of the Guaranteed Obligations and all other amounts payable under this
Guarantee shall be paid in full in cash, the Trustee and the holders of the
Securities will, at such Affiliate Guarantor's request and expense, execute and
deliver to such Affiliate Guarantor appropriate documents, without recourse and
without representation or warranty, necessary to evidence the transfer by
subrogation to such Affiliate Guarantor of an interest in the Guaranteed
Obligations resulting from such payment by such Affiliate Guarantor.
5. RELEASE AND TERMINATION. The Trustee, each holder of Securities
and each other party hereto hereby agree that upon the occurrence of a Guarantee
Release Event (as defined below) with respect to any Affiliate Guarantor, such
Affiliate Guarantor shall automatically, and without the necessity for any
further action or documentation, be released from the guarantee by such
Affiliate Guarantor under this Guarantee and from all other obligations of such
Affiliate Guarantor under the Indenture and the Securities, all of which
obligations shall thenceforth be of no further force and effect with respect to
such Affiliate Guarantor, and such Affiliate Guarantor shall no longer be an
Affiliate Guarantor under and for purposes of this Guarantee. The Trustee and
the holders of the Securities agree to take such further actions or deliver such
further documents or instruments as may reasonably be requested by such
Affiliate Guarantor to further effectuate or evidence such release and
termination.
For the purposes hereof, a "GUARANTEE RELEASE EVENT" with respect
to any Affiliate Guarantor shall mean the earliest of (i) the sale, transfer or
other disposition of all or any portion of the common stock of such Affiliate
Guarantor (including through the primary issuance and sale of shares of common
stock) that the Issuer elects by notice in writing to the Trustee to designate
as a Guarantee Release Event, (ii) the release of such Affiliate
<PAGE> 10
5
Guarantor as a guarantor of the Other Guaranteed Obligations which the Issuer
elects by notice in writing to the Trustee to designate as a Guarantee Release
Event and (iii) the first date on which all amounts owing with respect to the
Securities are paid in full.
6. MISCELLANEOUS. (a) This Guarantee shall not be construed to
apply to any series of debentures, notes or other indebtedness issued under the
Indenture other than the Securities (as defined herein).
(b) This Guarantee shall be governed by and construed in
accordance with the laws of the State of New York.
(c) This Guarantee may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
(d) Section headings herein are solely for convenience of
reference and shall not affect the interpretation or construction of any of the
provisions hereof.
IN WITNESS WHEREOF, each of the Affiliate Guarantors has caused
this Guarantee to be executed in its corporate name by its authorized officer,
by manual or facsimile signature, as of May 7, 1996.
WISE HOLDINGS, INC.
By _________________________
Name: Ronald P. Starkman
Title: Vice President & Treasurer
BORDEN FOODS HOLDINGS CORPORATION
By _________________________
Name: Ronald P. Starkman
Title: Vice President & Treasurer
<PAGE> 1
EXECUTION COPY
CREDIT AGREEMENT
Dated as of December 15, 1994
AMENDED AND RESTATED
as of May 7, 1996
Among
BORDEN, INC.
AS BORROWER,
BORDEN FOODS HOLDINGS CORPORATION
and
WISE HOLDINGS, INC.
as AFFILIATE GUARANTORS,
and
THE BANKS NAMED HEREIN
AS BANKS,
CITIBANK, N.A.
AS ADMINISTRATIVE AGENT,
BANKERS TRUST COMPANY
CHEMICAL BANK
CITIBANK, N.A.
CREDIT SUISSE
AS LEAD MANAGING AGENTS
and
BT SECURITIES CORPORATION
CHASE SECURITIES INC.
CITICORP SECURITIES, INC.
CREDIT SUISSE
AS ARRANGERS
<PAGE> 2
T A B L E O F C O N T E N T S
<TABLE>
<CAPTION>
SECTION PAGE
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
<S> <C> <C>
1.01. Certain Defined Terms.................................................................................. 1
1.02. Computation of Time Periods............................................................................ 25
1.03. Accounting Terms....................................................................................... 25
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
AND THE LETTERS OF CREDIT
2.01. The Advances........................................................................................... 25
2.02. Making the Advances.................................................................................... 26
2.03. The Competitive Bid Advances........................................................................... 28
2.04. Repayment.............................................................................................. 31
2.05. Reduction of the Commitments........................................................................... 32
2.06. Application of Certain Proceeds........................................................................ 32
2.07. Prepayments............................................................................................ 35
2.08. Interest............................................................................................... 35
2.09. Fees................................................................................................... 36
2.10. Conversion of Advances................................................................................. 36
2.11. Increased Costs, Etc................................................................................... 37
2.12. Payments and Computations.............................................................................. 39
2.13. Taxes.................................................................................................. 40
2.14. Sharing of Payments, Etc............................................................................... 42
2.15. Letters of Credit...................................................................................... 43
2.16. Use of Proceeds........................................................................................ 46
2.17. Defaulting Lenders..................................................................................... 46
2.18. Option to Replace Lenders.............................................................................. 49
ARTICLE III
CONDITIONS PRECEDENT
3.01. Conditions Precedent to Certain Borrowings and Issuances............................................... 49
3.02. Conditions Precedent to Each Competitive Bid Borrowing................................................. 50
</TABLE>
<PAGE> 3
ii
<TABLE>
<CAPTION>
SECTION PAGE
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
<S> <C> <C>
4.01. Representations and Warranties of the Obligated Parties................................................ 50
ARTICLE V
COVENANTS OF THE BORROWER
5.01. Affirmative Covenants.................................................................................. 54
5.02. Negative Covenants..................................................................................... 56
5.03. Reporting Requirements................................................................................. 61
5.04. Financial Covenants.................................................................................... 65
ARTICLE VI
EVENTS OF DEFAULT
6.01. Events of Default...................................................................................... 67
6.02. Actions in Respect of the Letters of Credit Upon Default............................................... 69
ARTICLE VII
GUARANTY
7.02. Guaranty Absolute...................................................................................... 70
7.03. Waivers................................................................................................ 72
7.04. Subrogation............................................................................................ 72
7.05. Release and Termination................................................................................ 73
ARTICLE VIII
THE AGENTS
8.01. Authorization and Action............................................................................... 74
8.02. Reliance, Etc.......................................................................................... 74
8.03. Lead Managing Agents and Affiliates.................................................................... 75
8.04. Lender Credit Decision................................................................................. 75
</TABLE>
<PAGE> 4
iii
<TABLE>
<CAPTION>
SECTION PAGE
<S> <C> <C>
8.05. Indemnification........................................................................................ 75
8.06. Successor Administrative Agent......................................................................... 76
ARTICLE IX
MISCELLANEOUS
9.01. Amendments, Etc........................................................................................ 76
9.02. Notices, Etc........................................................................................... 77
9.03. No Waiver; Remedies.................................................................................... 77
9.04. Costs and Expenses..................................................................................... 78
9.05. Right of Set-Off....................................................................................... 80
9.06. Binding Effect......................................................................................... 80
9.07. Assignments and Participations......................................................................... 80
9.08. Governing Law.......................................................................................... 83
9.09. Execution in Counterparts.............................................................................. 83
9.10. Confidentiality........................................................................................ 83
9.11. Receivables Financings Documents....................................................................... 83
9.12. No Liability of the Issuing Banks...................................................................... 84
9.14. Waiver of Jury Trial................................................................................... 85
SCHEDULES
Schedule I - Commitments and Applicable Lending Offices
Schedule II - Redesign
Schedule 1.01 - Scheduled Debt
Schedule 4.01(b) - Material Subsidiaries
EXHIBITS
Exhibit A-1 - Form of Term Note
Exhibit A-2 - Form of Working Capital Note
Exhibit A-3 - Form of Competitive Bid Note
</TABLE>
<PAGE> 5
iv
Exhibit B-1 - Form of Notice of Borrowing
Exhibit B-2 - Form of Notice of Competitive Bid Borrowing
Exhibit C - Form of Assignment and Acceptance
Exhibit D-1 - Form of Opinion of New York Counsel for the Borrower
Exhibit D-2 - Form of Opinion of Internal Counsel to the Borrower
Exhibit E - Form of Assumption Agreement
Exhibit F - Form of Confidentiality Agreement
Exhibit G - Form of Borden Holdings Note
Exhibit H - Form of Amended and Restated Agreement of Limited
Partnership of BFC Investments, L.P.
Exhibit I - Form of Conveyance and Transfer Agreement
Exhibit J - Form of Certificate
Exhibit K - Form of Option Agreement (Stock)
Exhibit L - Form of Option Agreement (Assets)
<PAGE> 6
CREDIT AGREEMENT
DATED AS OF DECEMBER 15, 1994
AMENDED AND RESTATED
AS OF MAY 7, 1996
CREDIT AGREEMENT dated as of December 15, 1994, Amended and
Restated as of May 7, 1996 among Borden, Inc., a New Jersey corporation (the
"BORROWER"), Borden Foods Holdings Corporation, a Delaware corporation ("FOODS
HOLDINGS"), Wise Holdings, Inc., a Delaware corporation ("WISE HOLDINGS" and,
together with Foods Holdings, the "AFFILIATE GUARANTORS"), the banks (the
"BANKS") listed on the signature pages hereof, Citibank, N.A. ("CITIBANK"), as
administrative agent (together with any successor appointed pursuant to Article
VIII, the "ADMINISTRATIVE AGENT") for the Lenders (as hereinafter defined), BT
Securities Corporation ("BT SECURITIES"), Chase Securities Inc. ("CHASE
SECURITIES"), Citicorp Securities, Inc. and Credit Suisse ("CREDIT SUISSE"), as
arrangers (the "ARRANGERS"), BT Securities and Chase Securities as
co-syndication agents and Credit Suisse, as Issuing Bank (as defined below) and
documentation agent.
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. CERTAIN DEFINED TERMS. As used in this
Agreement, the following terms shall have the following meanings (such meanings
to be equally applicable to both the singular and plural forms of the terms
defined):
"ADMINISTRATIVE AGENT" has the meaning specified in the
recital of parties to this Agreement.
"ADMINISTRATIVE AGENT'S ACCOUNT" means the account of the
Administrative Agent maintained by the Administrative Agent with
Citibank at its office at 1 Court Square, 7th Floor, Long Island City,
New York 11120, Account No. 3685 2248, Attention: John Makrinos.
"ADVANCE" means a Working Capital Advance, a Term Advance, a
Competitive Bid Advance or a Letter of Credit Advance.
<PAGE> 7
2
"AFFILIATE" means, as to any Person (other than a Subsidiary),
any other Person that, directly or indirectly, controls, is controlled
by or is under common control with such Person or is a director or
officer of such Person. For purposes of this definition, the term
"control" (including the terms "controlling," "controlled by" and
"under common control with") of a Person means the possession, direct
or indirect, of the power to vote 10% or more of the Voting Stock of
such Person or to direct or cause the direction of the management and
policies of such Person, whether through the ownership of Voting Stock,
by contract or otherwise.
"AFFILIATE GUARANTORS" means each of Foods Holdings, Wise
Holdings and, after any transfer of the Dairy Business to an Affiliate
that executes an Assumption Agreement, such Affiliate, in each case
until it is released from its guarantee obligations under Article VII
in accordance with the provisions of Section 7.05.
"AFFILIATE NOTES" means the senior notes issued by any
Affiliate Guarantor or any of its Subsidiaries to the Borrower as
consideration for the transfer of certain assets.
"AGENTS" means, collectively, the Administrative Agent, the
Lead Managing Agents and the Arrangers.
"APPLICABLE LENDING OFFICE" means, with respect to each
Lender, such Lender's Domestic Lending Office in the case of a Base
Rate Advance and such Lender's Eurodollar Lending Office in the case of
a Eurodollar Rate Advance and, in the case of a Competitive Bid
Advance, the office of such Lender notified by such Lender to the
Administrative Agent as its Applicable Lending Office with respect to
such Competitive Bid Advance.
<PAGE> 8
3
"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
S&P/Moody's for Base Rate for Eurodollar Rate
Advances Advances
======================== ======================= =========================
<S> <C> <C>
LEVEL 1 0% .50%
- -------
BBB or Baa2 or above
- ------------------------ ----------------------- -------------------------
LEVEL 2 0% .75%
- -------
below BBB or Baa2 but
at least BBB- or Baa3
- ------------------------ ----------------------- -------------------------
LEVEL 3 .50% 1.25%
- -------
below BBB- or Baa3
but at least BB or Ba2
- ------------------------ ----------------------- -------------------------
LEVEL 4 1.0% 2.25%
- -------
below BB and Ba2
======================== ======================= =========================
</TABLE>
"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>
"APPROPRIATE LENDER" means, at any time, with respect to any
of the Letter of Credit Facility Sublimit, the Term Facility or Working
Capital Facility, a Lender that has a Commitment with respect to such
Facility at such time.
"ARRANGERS" has the meaning specified in the recital of
parties to this Agreement.
<PAGE> 9
4
"ASSET PROCEEDS" means the aggregate value received in
connection with the sale of assets or the sale of options to acquire
assets of the Affiliate Guarantors, the Borrower and any of their
respective Subsidiaries (other than Excluded Asset Sales) after
deducting therefrom only (a) the costs of sale including reasonable
brokerage commissions, underwriting fees and discounts, legal fees,
finder's fees, severance, legacy and similar costs and other similar
fees and commissions, (b) the amount of taxes paid or estimated to be
payable during the then current or next fiscal year in connection with
or as a result of such transaction and reasonable reserves associated
therewith, (c) the amount of any Indebtedness related to such asset
that, by the terms of such transaction, is required to be repaid upon
such disposition and (d) any such other reasonable exit costs related
to such transaction, in each case to the extent, but only to the
extent, that the amounts so deducted are properly attributable to such
transaction or to the asset that is the subject thereof.
"ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance
entered into by a Lender and an Eligible Assignee, and accepted by the
Administrative Agent, in accordance with Section 9.07 and in
substantially the form of Exhibit C hereto.
"ASSUMPTION AGREEMENT" means an agreement substantially in the
form of Exhibit E hereto.
"AVAILABLE AMOUNT" of any Letter of Credit means, at any time,
the maximum amount available to be drawn under such Letter of Credit at
such time (assuming compliance at such time with all conditions to
drawing).
"BANK" has the meaning specified in the recital of parties to
this Agreement.
"BASE RATE" means a fluctuating interest rate per annum in
effect from time to time, which rate per annum shall at all times be
equal to the highest of:
(a) the rate of interest announced publicly by
Citibank in New York, New York, from time to time, as
Citibank's base rate;
(b) the sum (adjusted to the nearest 1/4 of 1% or, if
there is no nearest 1/4 of 1%, to the next higher 1/4 of 1%)
of (i) 1/2 of 1% per annum, PLUS (ii) the rate obtained by
dividing (A) the latest three-week moving average of secondary
market morning offering rates in the United States for
three-month certificates of deposit of major United States
money market banks, such three-week moving average (adjusted
to the basis of a year of 360 days) being determined weekly on
each Monday (or, if such day is not a Business Day, on the
next succeeding Business Day) for the three-week period ending
on the previous Friday by Citibank on the basis of such rates
reported by certificate of deposit dealers to and published
<PAGE> 10
5
by the Federal Reserve Bank of New York or, if such
publication shall be suspended or terminated, on the basis of
quotations for such rates received by Citibank from three New
York certificate of deposit dealers of recognized standing
selected by Citibank, by (B) a percentage equal to 100% minus
the average of the daily percentages specified during such
three-week period by the Board of Governors of the Federal
Reserve System (or any successor) for determining the maximum
reserve requirement (including, but not limited to, any
emergency, supplemental or other marginal reserve requirement)
for Citibank with respect to liabilities consisting of or
including (among other liabilities) three-month U.S. dollar
non-personal time deposits in the United States, PLUS (iii)
the average during such three-week period of the annual
assessment rates reasonably estimated by Citibank for
determining the then current annual assessment payable by
Citibank to the Federal Deposit Insurance Corporation (or any
successor) for insuring U.S. dollar deposits of Citibank in
the United States; and
(c) 1/2 of one percent per annum above the Federal
Funds Rate.
"BASE RATE ADVANCE" means an Advance that bears interest as
provided in Section 2.08(a)(i).
"BORDEN HOLDINGS" means Borden Holdings, Inc., a Delaware
corporation.
"BORDEN HOLDINGS NOTES" means the senior notes originally
issued by Borden Holdings on September 29, 1995 in the original
aggregate principal amount of $614,368,775 in the form of Exhibit G
hereto.
"BORROWER" has the meaning specified in the recital of parties
to this Agreement.
"BORROWING" means a Competitive Bid Borrowing or a Working
Capital Borrowing.
"BT" means Bankers Trust Company.
"BT SECURITIES" has the meaning specified in the recital of
parties to this Agreement.
"BUSINESS DAY" means a day of the year on which banks are not
required or authorized to close in New York City and, if the applicable
Business Day relates to any Eurodollar Rate Advances, on which dealings
are carried on in the London interbank eurodollar market.
<PAGE> 11
6
"CAPITAL EXPENDITURES" means for any period, the aggregate of
all expenditures (whether paid in cash or accrued as liabilities and
including in all events all amounts expended or capitalized under
Capitalized Leases but excluding any amount representing capitalized
interest) by the Affiliate Guarantors, the Borrower and their
respective Subsidiaries during such period that, in conformity with
GAAP, are or are required to be included as additions during such
period to property, plant or equipment reflected in the Combined
balance sheet of the Affiliate Guarantors, the Borrower and their
respective Subsidiaries, PROVIDED that Capital Expenditures shall in
any event exclude (a) expenditures made in connection with the
replacement, substitution or restoration of assets (i) to the extent
financed from insurance proceeds paid on account of the loss of or
damage to the assets being replaced or restored or (ii) with awards of
compensation arising from the taking by eminent domain or condemnation
of the assets being replaced, (b) the purchase price of equipment that
is purchased simultaneously with the trade-in of existing equipment to
the extent that the gross amount of such purchase price is reduced by
the credit granted by the seller of such equipment for the equipment
being traded in at such time and (c) the purchase of plant, property
and equipment made within 270 days of the sale of a similar asset.
"CAPITALIZED LEASES" has the meaning specified in clause (e)
of the definition of Debt.
"CASH EQUIVALENTS" means (i) securities issued or
unconditionally guaranteed by the United States Government or any
agency or instrumentality thereof, in each case having maturities of
not more than twelve months from the date of acquisition thereof; (ii)
securities issued by any state of the United States of America or any
political subdivision of any such state or any public instrumentality
thereof having maturities of not more than twelve months from the date
of acquisition thereof and, at the time of acquisition, having the
highest rating generally obtainable from either S&P or Moody's (or, if
at any time neither S&P nor Moody's shall be rating such obligations,
then from another nationally recognized rating service); (iii)
commercial paper issued by any Lender or any bank holding company
owning any Lender; (iv) commercial paper maturing no more than twelve
months after the date of creation thereof and, at the time of
acquisition, having a rating of at least A-1 or P-1 from either S&P or
Moody's (or, if at any time neither S&P nor Moody's shall be rating
such obligations, then an equivalent rating from another nationally
recognized rating service); (v) domestic and eurodollar certificates of
deposit or bankers' acceptances maturing no more than one year after
the date of acquisition thereof issued by any Lender or any other bank
having combined capital and surplus of not less than $250,000,000 in
the case of domestic banks and $100,000,000 (or the dollar equivalent
thereof) in the foreign banks; (vi) repurchase agreements with a term
of not more than seven days for underlying securities of the type
described in clauses (i), (ii) and (v) above entered into with any bank
meeting the qualifications specified in clause (v)
<PAGE> 12
7
above or securities dealers of recognized national standing; and (vii)
other customarily utilized high quality instruments in countries where
the Borrower's or any Affiliate Guarantor's foreign Subsidiaries are
located.
"CHEMICAL" means Chemical Bank.
"CHASE SECURITIES" has the meaning specified in the recital of
parties to this Agreement.
"CITIBANK" has the meaning specified in the recital of parties
to this Agreement.
"COMBINED" refers to the combination of accounts in accordance
with GAAP; provided that to the extent that the last sentence of
Section 5.03(b) or (c) is applicable, Combined means "Consolidated".
"COMMITMENT" means a Term Commitment, a Working Capital
Commitment or a Letter of Credit Commitment.
"COMPETITIVE BID ADVANCE" means an advance by a Lender to the
Borrower as part of a Competitive Bid Borrowing resulting from the
auction bidding procedure described in Section 2.03 and refers to a
Fixed Rate Advance or a LIBO Rate Advance.
"COMPETITIVE BID BORROWING" means a borrowing consisting of
simultaneous Competitive Bid Advances from each of the Lenders whose
offer to make one or more Competitive Bid Advances as part of such
borrowing has been accepted under the auction bidding procedure
described in Section 2.03.
"COMPETITIVE BID NOTE" means the promissory note of the
Borrower payable to the order of the Administrative Agent for the
benefit of each Lender making a Competitive Bid Advance, in
substantially the form of Exhibit A-3 hereto, evidencing the
indebtedness of the Borrower to the Lenders resulting from Competitive
Bid Advances made by the Lenders.
"COMPETITIVE BID REGISTER" has the meaning specified in
Section 2.03(a)(vi).
"CONFIDENTIAL INFORMATION" means information that the Borrower
or any Affiliate Guarantor furnishes to any Agent or any Lender in a
writing designated as confidential, but does not include any such
information that is or becomes generally available to the public or
that is or becomes available to such Agent or such Lender from a source
other than the Borrower or any Affiliate Guarantor.
<PAGE> 13
8
"CONSOLIDATED" refers to the consolidation of accounts in
accordance with GAAP.
"CONVERSION," "CONVERT" and "CONVERTED" each refer to a
conversion of Advances of one Type into Advances of the other Type
pursuant to Section 2.10 or 2.11.
"CREDIT SUISSE" has the meaning specified in the recital of
parties to this Agreement.
"DAIRY BUSINESS" means the Dairy business of the Borrower
(which includes dairy related products other than certain foods
included in the Foods Business) as reflected in the PRO FORMA balance
sheet and income statements of Borden/Meadow Gold Dairies Holdings,
Inc. as of December 31, 1995, with such changes as are related to the
ordinary course of the Borrower's Dairy business and including any
additions to such business permitted hereunder.
"DEBT" of any Person means, without duplication, (a) all
indebtedness of such Person for borrowed money, (b) all obligations of
such Person for the deferred purchase price of property or services
(other than trade payables and accrued expenses arising in the ordinary
course of business), (c) all obligations of such Person evidenced by
notes, bonds, debentures or other similar instruments, (d) all
obligations of such Person created or arising under any conditional
sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the
seller or lender under such agreement in the event of default are
limited to repossession or sale of such property), (e) all obligations
of such Person as lessee under leases that have been, in accordance
with GAAP, recorded as capital leases ("CAPITALIZED LEASES") and (f)
all Debt referred to in clauses (a) through (e) above secured by any
Lien on property owned by such Person, even though such Person has not
assumed or become liable for the payment of such Debt, but only to the
extent that, in accordance with GAAP, such Debt would be reflected on
the financial statements of such Person.
"DEFAULT" means any Event of Default or any event that would
constitute an Event of Default but for the requirement that notice be
given or time elapse or both.
"DEFAULTED ADVANCE" means, with respect to any Lender at any
time, the amount of any Advance required to be made by such Lender to
the Borrower pursuant to Section 2.01 at or prior to such time which
has not been so made as of such time; PROVIDED, HOWEVER, any Advance
made by the Administrative Agent for the account of such Lender
pursuant to Section 2.02(d) shall not be considered a Defaulted Advance
even if, at such time, such Lender shall not have reimbursed the
Administrative Agent therefor as provided in Section 2.02(d). In the
event that a portion of a Defaulted Advance shall be deemed made
pursuant to Section 2.17(a), the remaining portion of such Defaulted
<PAGE> 14
9
Advance shall be considered a Defaulted Advance originally required to
be made pursuant to Section 2.01 on the same date as the Defaulted
Advance so deemed made in part.
"DEFAULTED AMOUNT" means, with respect to any Lender at any
time, any amount required to be paid by such Lender to the
Administrative Agent or any other Lender hereunder or under any other
Loan Document at or prior to such time which has not been so paid as of
such time, including, without limitation, any amount required to be
paid by such Lender to (a) any Issuing Bank pursuant to Section 2.15(b)
to purchase a portion of a Letter of Credit Advance made by such
Issuing Bank, (b) the Administrative Agent pursuant to Section 2.02(d)
to reimburse the Administrative Agent for the amount of any Advance
made by the Administrative Agent for the account of such Lender, (c)
any other Lender pursuant to Section 2.14 to purchase any participation
in Advances owing to such other Lender and (d) the Administrative Agent
pursuant to Section 8.05 to reimburse the Administrative Agent for such
Lender's ratable share of any amount required to be paid by the Lenders
to the Administrative Agent as provided therein. In the event that a
portion of a Defaulted Amount shall be deemed paid pursuant to Section
2.17(b), the remaining portion of such Defaulted Amount shall be
considered a Defaulted Amount originally required to be made hereunder
or under any other Loan Document on the same date as the Defaulted
Amount so deemed paid in part.
"DEFAULTING LENDER" means, at any time, any Lender that, at
such time, (a) owes a Defaulted Advance or a Defaulted Amount or (b)
shall take or be the subject of any action or proceeding of a type
described in Section 6.01(f).
"DOMESTIC LENDING OFFICE" means, with respect to any Lender,
the office of such Lender specified as its "Domestic Lending Office"
opposite its name on Schedule I hereto or in the Assignment and
Acceptance pursuant to which it became a Lender, or such other office
of such Lender as such Lender may from time to time specify to the
Borrower and the Administrative Agent.
"EBITDA" means, for any period, net income (or net loss) PLUS
the sum, without duplication, of (a) Net Interest Expense, (b) income
tax expense, (c) depreciation expense, (d) amortization expense, (e)
extraordinary or unusual losses included in net income (net of taxes to
the extent not already deducted in determining such losses and net of
extraordinary or unusual gains included in net income) including,
without limitation, cumulative effects of accounting changes,
discontinued operations, restructuring charges and non-cash charges,
(f) amortization of deferred financing fees and debt discount, (g)
other non-cash charges, (h) gains or losses on asset sales (including
sales of accounts receivable), (i) severance and similar expenses and
(j) dividends accrued on securities other than common stock, in each
case determined in accordance with GAAP for such period.
<PAGE> 15
10
"ELIGIBLE ASSIGNEE" means any of (i) a commercial bank
organized under the laws of the United States, or any State thereof,
and having a combined capital and surplus of at least $250,000,000;
(ii) a savings and loan association or savings bank organized under the
laws of the United States, or any State thereof, and having a combined
capital and surplus of at least $250,000,000; (iii) a commercial bank
organized under the laws of any other country that is a member of the
OECD or has concluded special lending arrangements with the
International Monetary Fund associated with its General Arrangements to
Borrow, or a political subdivision of any such country, and having a
combined capital and surplus of at least $250,000,000, so long as such
bank is acting through a branch or agency located in the United States
or in the country in which it is organized or another country that is
described in this clause (iii); (iv) the central bank of any country
that is a member of the OECD; and (v) a finance company, insurance
company or other financial institution or fund (whether a corporation,
partnership, trust or other entity) that is engaged in making,
purchasing or otherwise investing in commercial loans in the ordinary
course of its business and having a combined capital and surplus of at
least $100,000,000, in each case as approved by the Arrangers and the
Borrower, such approval not to be unreasonably withheld or delayed;
PROVIDED, HOWEVER, that an Affiliate or Subsidiary of the Borrower
shall not qualify as an Eligible Assignee under this definition.
"ENVIRONMENTAL CLAIMS" means any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims,
liens, notices of non-compliance or violation, investigations or
proceedings relating in any way to any Environmental Law (hereafter
"CLAIMS") or any permit issued under any such law, including without
limitation (a) any and all Claims by governmental or regulatory
authorities for enforcement, cleanup, removal, response, remedial or
other actions or damages pursuant to any applicable Environmental Law
and (b) any and all Claims by any third party seeking damages,
contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Materials or arising from
alleged injury or threat or injury to health, safety or the
environment.
"ENVIRONMENTAL LAW" means any federal, state, provincial or
local statute, law, rule, regulation, ordinance, code, policy or rule
of common law now or hereafter in effect and in each case as amended,
and any judicial or administrative interpretation thereof, including
any judicial or administrative order, consent, decree or judgment,
relating to the environment, health, safety or Hazardous Materials.
"EQUITY PROCEEDS" means gross proceeds received by any
Affiliate Guarantor, the Borrower or any of their respective
Subsidiaries from (a) the sale or issuance of any equity security of
such Affiliate Guarantor, the Borrower or such Subsidiary whether by
means
<PAGE> 16
11
of any public offering or private placement or (b) cash capital
contributions to the Borrower or such Affiliate Guarantor from time to
time.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder.
"ERISA AFFILIATE" means each person (as defined in Section
3(9) of ERISA) which together with the Borrower, any Affiliate
Guarantor or any Subsidiary of the Borrower or any Affiliate Guarantor
would be deemed to be a "single employer" within the meaning of Section
414 (b), (c), (m) or (o) of the Internal Revenue Code.
"EUROCURRENCY LIABILITIES" has the meaning specified in
Regulation D of the Board of Governors of the Federal Reserve System,
as in effect from time to time.
"EURODOLLAR LENDING OFFICE" means, with respect to any Lender,
the office of such Lender specified as its "Eurodollar Lending Office"
opposite its name on Schedule I hereto or in the Assignment and
Acceptance pursuant to which it became a Lender (or, if no such office
is specified, its Domestic Lending Office), or such other office of
such Lender as such Lender may from time to time specify to the
Borrower and the Administrative Agent.
"EURODOLLAR RATE" means, for any Interest Period for each
Eurodollar Rate Advance comprising part of the same Borrowing, an
interest rate per annum equal to the rate per annum obtained by
dividing (a) the average (rounded upward to the nearest whole multiple
of 1/16 of 1% per annum, if such average is not such a multiple) of the
rate per annum at which deposits in U.S. dollars are offered by the
principal office of each of the Reference Banks in London, England to
prime banks in the London interbank market at 11:00 A.M. (London Time)
two Business Days before the first day of such Interest Period in an
amount substantially equal to such Reference Bank's Eurodollar Rate
Advance comprising part of such Borrowing to be outstanding during such
Interest Period and for a period equal to such Interest Period by (b) a
percentage equal to 100% minus the Eurodollar Rate Reserve Percentage
for such Interest Period. The Eurodollar Rate for any Interest Period
for each Eurodollar Rate Advance comprising part of the same Borrowing
shall be determined by the Administrative Agent on the basis of
applicable rates furnished to and received by the Administrative Agent
from the Reference Banks two Business Days before the first day of such
Interest Period.
"EURODOLLAR RATE ADVANCE" means an Advance that bears interest
as provided in Section 2.08(a)(ii).
<PAGE> 17
12
"EURODOLLAR RATE RESERVE PERCENTAGE" for any Interest Period
for all Eurodollar Rate Advances comprising part of the same Borrowing
means the reserve percentage if and to the extent actually applicable
two Business Days before the first day of such Interest Period under
regulations issued from time to time by the Board of Governors of the
Federal Reserve System (or any successor) for determining the reserve
requirement (including, without limitation, any emergency, supplemental
or other marginal reserve requirement) for each Lender with respect to
liabilities or assets consisting of or including Eurocurrency
Liabilities (or with respect to any other category of liabilities that
includes deposits by reference to which the interest rate on Eurodollar
Rate Advances is determined) having a term equal to such Interest
Period.
"EVENTS OF DEFAULT" has the meaning specified in Section 6.01.
"EXCLUDED ASSET SALES" means (i) sales of inventory in the
ordinary course of business, (ii) sales of worn out or obsolete
equipment and other property in the ordinary course of business, (iii)
sales of accounts receivable and "Related Security" (as such term is
defined in the Receivables Financing Documents) under the Receivables
Financing Documents and (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.
"EXISTING CREDIT AGREEMENT" means the Credit Agreement dated
as of December 15, 1994 among the Borrower, the banks named therein,
Citibank, as administrative agent, and BT Securities, Chase Securities,
Citicorp Securities and Credit Suisse, as arrangers, BT Securities and
Chase Securities, as co-syndication agents, and Credit Suisse, as
issuing bank and documentation agent, as amended prior to the date
hereof.
"EXISTING INDEBTEDNESS" means Indebtedness of the Borrower and
its Subsidiaries outstanding on the date of the Existing Credit
Agreement.
"FACILITY" means the Term Facility, the Working Capital
Facility or the Letter of Credit Facility Sublimit.
"FAIR MARKET VALUE" means, (a) with respect to any asset or
Option sold to any Person that is an Affiliate of any Obligated Party
for consideration of $10,000,000 or more, the appraised fair market
value of such asset or Option as determined by a nationally recognized
investment banker selected by the Borrower and (b) with respect to any
other asset or Option, the value that the Board of Directors of the
Person owning such asset or the stock or assets subject to such Option
determines to be the fair market value of such asset or option;
PROVIDED, in each case, that (i) the consideration so determined to
equal such fair market value may include notes or other evidence of
indebtedness and (ii) the fair
<PAGE> 18
13
market value of Options (A) with respect to the stock of Elmer's
Holdings, Inc. will be represented by Borden Holdings Notes in an
aggregate principal amount of $13,000,000, (B) with respect to the
stock of Borden Decorative Products Holdings, Inc. will be represented
by Borden Holdings Notes in an aggregate principal amount of
$31,000,000, and (C) with respect to the issuance of Options on assets
to be held by Borden Foods Holdings Corporation and its Subsidiaries
will be represented by Borden Holdings Notes in an aggregate principal
amount of up to $95,000,000, unless, in the case of clauses (A), (B) or
(C), subject to Section 9.13, the Borrower shall have obtained an
appraisal of the fair market value of such Option from a nationally
recognized investment banker selected by the Borrower.
"FEDERAL FUNDS RATE" means, for any period, a fluctuating
interest rate per annum equal for each day during such period to the
weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds
brokers, as published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day that is a
Business Day, the average of the quotations for such day for such
transactions received by the Administrative Agent from three Federal
funds brokers of recognized standing selected by it.
"FIXED RATE ADVANCES" has the meaning specified in Section
2.03(a)(i).
"FOODS BUSINESS" means the Foods business of the Borrower
(which includes the foods business other than included in the Dairy
Business, the Wise Business, or Wilhelm Weber) as currently conducted
by the Borrower, with such changes as are related to the ordinary
course of the Borrower's Foods business.
"GAAP" has the meaning specified in Section 1.03.
"GUARANTEED OBLIGATIONS" has the meaning specified in Section
7.01.
"HAZARDOUS MATERIALS" means (a) petroleum or petroleum
products, radioactive materials, asbestos in any form that is or could
become friable, urea formaldehyde foam insulation, transformers or
other equipment that contained electric fluid containing levels of
polychlorinated biphenyls and radon gas, (b) any chemicals, materials
or substances defined as or included in the definition of "hazardous
substances," "hazardous wastes," "hazardous materials," "extremely
hazardous wastes," "restricted hazardous wastes," "toxic substances,"
"toxic pollutants," "contaminants" or "pollutants," or words of similar
import, under any applicable Environmental Law and (c) any other
chemical, material or substance, exposure to which is prohibited,
limited or regulated by any governmental authority.
<PAGE> 19
14
"HEDGE AGREEMENTS" means interest rate swap, cap or collar
agreements, interest rate future or option contracts, currency swap
agreements, currency future or option contracts and other similar
agreements.
"INDEBTEDNESS" of any Person means, without duplication, (a)
all Debt of such Person, (b) all obligations, contingent or otherwise,
of such Person under acceptance, letter of credit or similar
facilities, (c) all obligations of such Person in respect of Hedge
Agreements and (d) all Indebtedness of others referred to in clauses
(a) through (c) above guaranteed directly or indirectly in any manner
by such Person, or in effect guaranteed directly or indirectly by such
Person through an agreement (i) to pay or purchase such Indebtedness or
to advance or supply funds for the payment or purchase of such
Indebtedness, (ii) to purchase, sell or lease (as lessee or lessor)
property, or to purchase or sell services, primarily for the purpose of
enabling the debtor to make payment of such Indebtedness or to assure
the holder of such Indebtedness against loss, (iii) to supply funds to
or in any other manner invest in the debtor (including any agreement to
pay for property or services irrespective of whether such property is
received or such services are rendered) or (iv) otherwise to assure a
creditor against loss; PROVIDED, HOWEVER, that amount so guaranteed
shall not include endorsements of instruments for deposit or collection
in the ordinary course of business. The amount of any such guarantee
obligation shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation in respect of which such
guarantee obligation is made or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof (assuming
such Person is required to perform thereunder) as determined by such
Person in good faith.
"INDEMNIFIED PARTY" has the meaning specified in Section
9.04(b).
"INFORMATION MEMORANDUM" means the information memorandum
dated November 16, 1994 used by the Arrangers in connection with the
syndication of the Commitments.
"INTEREST PERIOD" means, for each Eurodollar Rate Advance
comprising part of the same Borrowing, the period commencing on the
date of such Eurodollar Rate Advance or the date of the Conversion of
any Base Rate Advance into such Eurodollar Rate Advance, and ending on
the last day of the period selected by the Borrower pursuant to the
provisions below and, thereafter, each subsequent period commencing on
the last day of the immediately preceding Interest Period and ending on
the last day of the period selected by the Borrower pursuant to the
provisions below. The duration of each such Interest Period shall be
one, two, three, six or, to the extent available in the reasonable
judgment of the Administrative Agent, nine or twelve months, as the
Borrower may, upon notice received by the Administrative Agent not
later than 11:00 A.M. (New York City time) on
<PAGE> 20
15
the third Business Day prior to the first day of such Interest Period,
select; PROVIDED, HOWEVER, that:
(a) the Borrower may not select any Interest Period
that ends after any principal repayment installment date
unless, after giving effect to such selection, the aggregate
principal amount of Base Rate Advances and of Eurodollar Rate
Advances having Interest Periods that end on or prior to such
principal repayment installment date shall be at least equal
to the aggregate principal amount of Advances due and payable
on or prior to such date;
(b) Interest Periods commencing on the same date for
Eurodollar Rate Advances comprising part of the same Borrowing
shall be of the same duration;
(c) whenever the last day of any Interest Period
would otherwise occur on a day other than a Business Day, the
last day of such Interest Period shall be extended to occur on
the next succeeding Business Day, PROVIDED, HOWEVER, that, if
such extension would cause the last day of such Interest
Period to occur in the next following calendar month, the last
day of such Interest Period shall occur on the next preceding
Business Day; and
(d) whenever the first day of any Interest Period
occurs on a day of an initial calendar month for which there
is no numerically corresponding day in the calendar month that
succeeds such initial calendar month by the number of months
equal to the number of months in such Interest Period, such
Interest Period shall end on the last Business Day of such
succeeding calendar month.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of
1986, as amended from time to time, and the regulations promulgated and
rulings issued thereunder.
"INVESTMENT GRADE RATING" means the Borrower's long term
senior unsecured public debt is rated at least BBB- by S&P or Baa3 by
Moody's.
"ISSUING BANK" means Credit Suisse, and any other Lender that
is a commercial bank, acting through a domestic branch, as issuer of a
Letter of Credit.
"KKR" has the meaning specified in Section 5.01(h).
"L/C ACCOUNT" means an account to be established by the
Borrower with the Administrative Agent pursuant to an agreement in form
and substance reasonably satisfactory to the Administrative Agent.
<PAGE> 21
16
"L/C RELATED DOCUMENTS" has the meaning specified in Section
2.15(d).
"LEAD MANAGING AGENTS" means BT, Chemical, Citibank and
Credit Suisse.
"LENDERS" means the Banks listed on the signature pages hereof
and each Eligible Assignee that shall become a party hereto pursuant to
Section 9.07.
"LETTER OF CREDIT ADVANCE" means an advance made by any
Issuing Bank or any Working Capital Lender pursuant to Section 2.15(c).
"LETTER OF CREDIT AGREEMENT" has the meaning specified in
Section 2.15(b).
"LETTER OF CREDIT COMMITMENT" means, with respect to any
Lender at any time, the amount set forth opposite such Lender's name on
Schedule I hereto under the caption "Letter of Credit Commitment" or,
if such Lender has entered into one or more Assignments and
Acceptances, set forth for such Lender in the Register maintained by
the Administrative Agent pursuant to Section 9.07(c) as such Lender's
"Letter of Credit Commitment," as such amount may be reduced at or
prior to such time pursuant to Sections 2.05 and 2.06.
"LETTER OF CREDIT FACILITY SUBLIMIT" means $300,000,000.
"LETTERS OF CREDIT" has the meaning specified in Section
2.15(a).
"LIBO RATE ADVANCES" has the meaning specified in Section
2.03(a)(i).
"LIEN" means any lien, security interest or other charge or
encumbrance of any kind, or any other type of preferential arrangement,
including, without limitation, the lien or retained security title of a
conditional vendor.
"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.
"LOAN PARTIES" means the Borrower, each Affiliate Guarantor,
TM and Borden Receivables Corp.
"LYNX PAYMENTS" means all payments, and all obligations or
elections to make any payments under or in connection with (i) the LYNX
Reset Agreement dated May 21, 1992, between the Borrower and Merrill
Lynch & Co., (ii) the Equity Unit Agreement dated May 21, 1992, between
the Borrower and Merrill Lynch & Co. and (iii) the Zero
<PAGE> 22
17
Coupon Bonds due 2002, issued by the Borrower under the Indenture dated
as of May 21, 1992, including, without limitation, the payment by the
Borrower of amounts in connection with the termination of certain
rights of the holders of certain securities related thereto and the
payment of amounts to such holders in connection with the redemption
and retirement of such securities.
"MARGIN STOCK" has the meaning specified in Regulation U.
"MATERIAL ADVERSE CHANGE" means any change in the business,
condition (financial or otherwise), operations, performance or
properties of the Affiliate Guarantors, the Borrower and their
respective Subsidiaries taken as a whole that would materially
adversely affect the ability of the Borrower or any Affiliate Guarantor
to perform its obligations under this Agreement and the other Loan
Documents to which it is a party (taken as a whole).
"MATERIAL ADVERSE EFFECT" means a circumstance or condition
affecting the business, condition (financial or otherwise), operations,
performance or properties of the Affiliate Guarantors, the Borrower and
their respective Subsidiaries taken as a whole which would materially
adversely affect (a) the ability of the Borrower and the Affiliate
Guarantors, taken as a whole, to perform their obligations under this
Agreement, the Notes and the other Loan Documents to which any of them
is a party (taken as a whole) or (b) the rights and remedies of the
Administrative Agent or any Lender under this Agreement and the other
Loan Documents (taken as a whole).
"MATERIAL SUBSIDIARY" means each Subsidiary of the Borrower or
any Affiliate Guarantor now existing or hereafter acquired or formed by
the Borrower or any Affiliate Guarantor which (x) for the most recent
fiscal year of the Borrower and the Affiliate Guarantors, accounted for
more than 3% of the Combined revenues of the Borrower and the Affiliate
Guarantors, taken as a whole, or (y) as at the end of such fiscal year,
was the owner of more than 4% of the Combined assets of the Borrower
and the Affiliate Guarantors, taken as a whole, in each case as shown
on the Combined financial statements of the Affiliate Guarantors, the
Borrower and their respective Subsidiaries for such fiscal year.
"MOODY'S" means Moody's Investor Services, Inc. or any
successor by merger or consolidation to its business.
"NET INTEREST EXPENSE" means, for any fiscal period of the
Borrower, the aggregate of (a) interest expense on all Debt of the
Affiliate Guarantors, the Borrower and their respective Subsidiaries,
net of interest income, in accordance with GAAP (excluding, in any
event, interest expense, if any, on overdue tax assessments, LYNX
Payments and
<PAGE> 23
18
amortization of financing fees and debt discount), (b) the portion of
minority interest as set forth on the Borrower's Consolidated statement
of income equal to the interest payable under the TM Credit Agreement
and (c) dividends required to be paid on Preferred Stock permitted by
Section 5.02(f)(ii).
"NOTE" means a Term Note, the Competitive Bid Note or a
Working Capital Note.
"NOTICE OF BORROWING" has the meaning specified in Section
2.02(a).
"NOTICE OF COMPETITIVE BID BORROWING" has the meaning
specified in Section 2.03(a).
"NOTICE OF ISSUANCE" has the meaning specified in Section
2.15(b).
"OBLIGATED PARTIES" means the Borrower and, until it is
released from its guarantee obligations under Article VII in accordance
with the provisions of Section 7.05, each Affiliate Guarantor.
"OECD" means the Organization for Economic Cooperation and
Development.
"OPTION EXERCISE PROCEEDS" means the aggregate value received
in connection with the exercise of Options.
"OPTIONS" means the options acquired by Persons other than
officers, directors and employees of the Affiliate Guarantors, the
Borrower and their respective Subsidiaries to acquire stock or certain
assets of the Affiliate Guarantors, the Borrower or their respective
Subsidiaries.
"OTHER TAXES" has the meaning specified in Section 2.13(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor thereof.
"PERMITTED LIENS" means (a) Liens for taxes, assessments or
governmental charges or claims not yet due or which are being contested
in good faith and by appropriate proceedings for which appropriate
reserves have been established in accordance with GAAP; (b) Liens in
respect of property or assets of any Affiliate Guarantor, the Borrower
or any of their respective Subsidiaries imposed by law which are
incurred in the ordinary course of business, such as carriers',
warehousemen's and mechanics' Liens and other similar Liens arising in
the ordinary course of business, and which do not individually or in
the aggregate have a Material Adverse Effect; (c) Liens on assets of
any Affiliate Guarantor, the Borrower or any of their respective
Subsidiaries existing on the date hereof
<PAGE> 24
19
securing Indebtedness in an aggregate principal amount not to exceed
$5,000,000 or arising pursuant to any of the Loan Documents; (d) Liens
arising from judgments or decrees in circumstances not constituting an
Event of Default under Section 6.01(g); (e) Liens incurred or deposits
made in connection with workers' compensation, unemployment insurance
and other types of social security, or to secure the performance of
tenders, statutory obligations, surety and appeal bonds, bids, leases,
government contracts, performance and return-of-money bonds and other
similar obligations incurred in the ordinary course of business; (f)
leases or subleases granted to others not interfering in any material
respect with the business of the Affiliate Guarantors, the Borrower and
their respective Subsidiaries taken as a whole; (g) ground leases in
respect of real property on which facilities owned or leased by any
Affiliate Guarantor, the Borrower or any of their respective
Subsidiaries are located; (h) easements, rights-of-way, restrictions,
minor defects or irregularities in title and other similar charges or
encumbrances not interfering in any material respect with the business
of the Affiliate Guarantors, the Borrower and their respective
Subsidiaries taken as a whole; (i) any interest or title of a lessor or
secured by a lessor's interest under any lease permitted by this
Agreement; (j) Liens in favor of customs and revenue authorities
arising as a matter of law to secure payment of customs duties in
connection with the importation of goods; (k) Liens on goods the
purchase price of which is financed by a documentary letter of credit
issued for the account of any Affiliate Guarantor, the Borrower or any
of their respective Subsidiaries where such Lien secures the
obligations of such Affiliate Guarantor, the Borrower or such
Subsidiaries in respect of such letter of credit to the extent
permitted under Section 5.02(b); (l) Liens arising pursuant to purchase
money mortgages securing Indebtedness financing the purchase price of
assets acquired after the date hereof; PROVIDED that any such Liens
attach only to the assets so purchased to the extent permitted under
Section 5.02(b); (m) Liens on assets permitted to be acquired
hereunder; PROVIDED that such Liens were existing at the time of such
acquisition and were not created in anticipation thereof; and (n) Liens
granted in connection with any foreign contract option, futures
contract or similar agreement designed to protect any Affiliate
Guarantor, the Borrower or any of their respective Subsidiaries from
fluctuations in the price of commodities, PROVIDED that such Liens
attach solely to the commodities which are the subject of such options,
contracts or agreements.
"PERSON" means an individual, partnership, corporation
(including a business trust), limited liability company, joint stock
company, trust, unincorporated association, joint venture or other
entity, or a government or any political subdivision or agency thereof.
"PLAN" means any multiemployer or single-employer plan as
defined in Section 4001 of ERISA and which is covered by Title IV of
ERISA, which is maintained or contributed to (or to which there is an
obligation to contribute), by any Affiliate Guarantor, the Borrower,
any of their respective Subsidiaries or any ERISA Affiliate.
<PAGE> 25
20
"PREFERRED STOCK" means, with respect to any corporation,
capital stock issued by such corporation that is entitled to a
preference or priority over any other capital stock issued by such
corporation upon any distribution of such corporation's assets, whether
by dividend or upon liquidation.
"PUBLIC DEBT RATING" means, as of any date, the higher of the
ratings that have been most recently announced by either S&P or
Moody's, as the case may be, for any class of long-term senior
unsecured debt issued by the Borrower. For purposes of the foregoing,
(a) if only one of S&P and Moody's shall have in effect a Public Debt
Rating, the Applicable Margin and the Applicable Percentage shall be
determined by reference to the available rating; (b) if neither S&P nor
Moody's shall have in effect a Public Debt Rating, the Applicable
Margin and the Applicable Percentage will be set in accordance with
Level 4 under the definition of "APPLICABLE MARGIN" or "APPLICABLE
PERCENTAGE", as the case may be; (c) if any rating established by S&P
or Moody's shall be changed, such change shall be effective as of the
date on which such change is first announced publicly by the rating
agency making such change; and (d) if S&P or Moody's shall change the
basis on which ratings are established, each reference to the Public
Debt Rating announced by S&P or Moody's, as the case may be, shall
refer to the then equivalent rating by S&P or Moody's, as the case may
be.
"RATABLE SHARE" of any amount means, with respect to any
Working Capital Lender at any time, the product of (a) a fraction the
numerator of which is the amount of such Lender's Working Capital
Commitment at such time and the denominator of which is the Working
Capital Facility at such time and (b) such amount.
"REAL PROPERTY" of any Person means all of the right, title
and interest of such Person in and to land, improvements and fixtures,
including leaseholds.
"RECEIVABLES BACK-STOP FACILITY AGREEMENT" means,
collectively, the Parallel Purchase Commitment dated as of August 16,
1994 among Borden Receivables Corp., Citibank and the other banks party
thereto and Citicorp North America, Inc., as agent, dated as of August
16, 1994 and the Amended and Restated Asset Purchase Agreement dated as
of December 15, 1994 among the purchasers party thereto and Citicorp
North America, Inc., as agent.
"RECEIVABLES FINANCING AGREEMENTS" means (a) the Receivables
Purchase Agreement dated as of August 16, 1994 among Borden Receivables
Corp., Corporate Asset Funding Company, Inc., Ciesco, L.P., CXC
Incorporated, Citicorp North America, Inc., as agent, and Borden, Inc.,
as collection agent, and (b) the Receivables Back-Stop Facility
Agreement, in each case as such documents are amended as of the date
hereof and may be further amended, supplemented or otherwise modified
from time to time.
<PAGE> 26
21
"RECEIVABLES FINANCING DOCUMENTS" means the Receivables
Financing Agreements and the Receivables Purchase Agreement dated as of
August 16, 1994 between the Borrower and Borden Receivables Corp., in
each case as such documents are amended as of the date hereof and may
be further amended, supplemented or otherwise modified from time to
time.
"REDESIGN" means the restructuring of the businesses of the
Borrower, as more fully described on Schedule II hereto.
"REDESIGN DOCUMENTS" means Borden Holdings Notes held by the
Borrower, each Option Agreement for stock in substantially the form of
Exhibit K hereto, each Option Agreement for assets in substantially the
form of Exhibit L hereto, each Conveyance and Transfer Agreement in
substantially the form of Exhibit I hereto and the Limited Partnership
Agreement of BFC Investments, L.P. in substantially the form of Exhibit
H hereto.
"REFERENCE BANKS" means BT, Chemical, Citibank and Credit
Suisse.
"REGISTER" has the meaning specified in Section 9.07(c).
"REGULATION U" means Regulation U of the Board of Governors of
the Federal Reserve System, as in effect from time to time.
"RELATED DOCUMENTS" means the Receivables Financing Documents
and, until the delivery of the Replacement Notes (as defined in the
Note Exchange Agreement dated as of December 15, 1994 among the
Borrower, the Lenders, the Administrative Agent, TM and Citibank, N.A.,
as administrative agent under the TM Credit Agreement), the TM Credit
Agreement and the "Operative Documents" (as such term is defined in the
TM Credit Agreement).
"REPLACEMENT LENDER" has the meaning specified in Section
2.18.
"REPORTABLE EVENT" means an event described in Section 4043(b)
of ERISA with respect to a Plan as to which the 30-day notice
requirement has not been waived by the PBGC.
"REQUIRED LENDERS" means at any time Lenders owed or holding
at least 51% of the sum of (a) the aggregate principal amount of
Advances outstanding at such time and (b) the aggregate Available
Amount of all Letters of Credit outstanding at such time and (c) the
aggregate Unused Working Capital Commitments at such time; PROVIDED,
HOWEVER, if any Lender shall be a Defaulting Lender at such time, there
shall be excluded from the
<PAGE> 27
22
determination of Required Lenders at such time (i) the aggregate
principal amount of Advances made by such Lender and outstanding at
such time, (ii) if such Lender shall be an Issuing Bank, the aggregate
Available Amount of all Letters of Credit issued by such Lender and
outstanding at such time and (iii) the Commitment of such Lender under
all Facilities at such time. For purposes of this definition, the
Available Amount of each Letter of Credit shall be considered to be
owed to the Lenders ratably in accordance with their respective Working
Capital Commitments.
"RESTATEMENT DATE" means May 7, 1996.
"S&P" means Standard & Poor's Ratings Group or any successor
by merger or consolidation to its business.
"SCHEDULED DEBT" means Debt of the Borrower listed on Schedule
1.01 hereto, including all of the LYNX Payments, to the extent that
such Debt matures or is payable on or before the Termination Date and
any renewal, extension or refinancing thereof that does not increase
the amount thereof that becomes due and payable on or before the
Termination Date.
"SENIOR BANK FACILITIES" means this Agreement, the Receivables
Financing Agreements and the TM Credit Agreement.
"SUBSIDIARY" of any Person shall mean and include (i) any
corporation more than 50% of whose stock of any class or classes having
by the terms thereof ordinary voting power to elect a majority of the
directors of such corporation (irrespective of whether or not at the
time stock of any class or classes of such corporation shall have or
might have voting power by reason of the happening of any contingency)
is at the time owned by such Person directly or indirectly through
Subsidiaries and (ii) any partnership, association, joint venture or
other entity in which such Person directly or indirectly through
Subsidiaries has more than a 50% equity interest at the time.
"TAXES" has the meaning specified in Section 2.13(a).
"TERM ADVANCE" has the meaning specified in Section 2.01(c).
"TERM BORROWING" means a borrowing consisting of simultaneous
Term Advances of the same Type made by the Term Lenders.
"TERM COMMITMENT" means, with respect to any Term Lender at
any time, the amount set forth opposite such Lender's name on Schedule
I hereto under the caption "Term Commitment" or, if such Lender has
entered into one or more Assignments and
<PAGE> 28
23
Acceptances, set forth for such Lender in the Register maintained by
the Administrative Agent pursuant to Section 9.07(c) as such Lender's
"Term Commitment," as such amount may be reduced at or prior to such
time pursuant to Section 2.06.
"TERM FACILITY" means, at any time, the aggregate amount of
the Term Lenders' Term Commitments at such time.
"TERM LENDER" means any Lender that has a Term Commitment.
"TERM NOTE" means a promissory note of the Borrower payable to
the order of any Term Lender, in substantially the form of Exhibit A-1
hereto, evidencing the indebtedness of the Borrower to such Lender
resulting from the Term Advance made by such Lender.
"TERMINATION DATE" means the earlier of December 31, 1999 and
the date of termination in whole of the Working Capital Commitments
pursuant to Section 2.05 or 6.01.
"TM" means T.M. Investors Limited Partnership, a Delaware
limited partnership.
"TM CREDIT AGREEMENT" means the Second Amended and Restated
Credit Agreement dated as of December 15, 1994 among TM, the banks
named therein, Citibank, as administrative agent, and BT Securities,
Chase Securities, Citicorp Securities and Credit Suisse, as arrangers,
as such agreement may be amended, supplemented or otherwise modified
from time to time.
"TMI ASSOCIATES LIMITED PARTNERSHIP AGREEMENT" means the
Amended and Restated Agreement of Limited Partnership of T.M.I.
Associates, L.P. dated as of December 23, 1991 among BDS One, Inc., BDS
Two, Inc., and BDS Four, Inc., as general partners, and TM, as limited
partner, as such agreement is amended by Amendment No. 1 dated as of
August 16, 1994 and as further amended by the amendment dated as of
December 15, 1994, and as it may be further amended, supplemented or
otherwise modified from time to time.
"TOTAL DEBT" means, without duplication, the aggregate of (a)
Debt of the Affiliate Guarantors, the Borrower and their respective
Subsidiaries described in clauses (a) through (e) of the definition of
"DEBT" herein, (b) outstanding "Capital" of all "Receivable Interests"
(as such terms are defined in the Receivables Financing Agreements) and
(c) the portion of minority interest as set forth on the Borrower's
Consolidated balance sheet equal to the principal amount outstanding
under the TM Credit Agreement.
<PAGE> 29
24
"TYPE" refers to the distinction between Advances bearing
interest by reference to the Base Rate and Advances bearing interest by
reference to the Eurodollar Rate.
"UNFUNDED CURRENT LIABILITY" of any Plan means the amount, if
any, by which the present value of the accrued benefits under such Plan
as of the close of its most recent plan year, based upon the actuarial
assumptions which would be required to be used by such Plan's actuary
in connection with the determination of such Plan's accrued benefits
pursuant to its termination, exceeds the fair market value of the
assets allocable thereto, determined in accordance with Section 412 of
the Internal Revenue Code.
"UNUSED WORKING CAPITAL COMMITMENT" means, with respect to any
Working Capital Lender at any time, (a) such Lender's Working Capital
Commitments at such time MINUS (b) the sum of (i) the aggregate
principal amount of all Working Capital Advances and Letter of Credit
Advances made by such Lender and outstanding at such time, PLUS,
without duplication, (ii) such Lender's Ratable Share of (A) the
aggregate Available Amount of all Letters of Credit outstanding at such
time, (B) the aggregate principal amount of all Letter of Credit
Advances made by an Issuing Bank pursuant to Section 2.15(c) and
outstanding at such time other than any such Letter of Credit Advance
which, at or prior to such time, has been assigned in part to such
Working Capital Lender pursuant to Section 2.15(c), (C) the aggregate
outstanding "Capital" of all "Receivable Interests" (as such terms are
defined in the Receivables Financing Agreements) at such time, (D) the
amount of the Working Capital Commitments then unavailable to be
borrowed pursuant to Section 2.01(b) and (E) the aggregate principal
outstanding amount of Competitive Bid Advances.
"VOTING STOCK" means capital stock issued by a corporation, or
equivalent interests in any other Person, the holders of which are
ordinarily, in the absence of contingencies, entitled to vote for the
election of directors (or persons performing similar functions) of such
Person, even though the right so to vote has been suspended by the
happening of such a contingency (but excluding in any event convertible
or exchangeable Preferred Stock prior to conversion or exchange, as the
case may be).
"WISE BUSINESS" means the Wise business of the Borrower (which
includes the salty snacks business) as reflected in the PRO FORMA
balance sheet and income statements of Wise Foods Holdings, Inc. as of
December 31, 1995, with such changes as are related to the ordinary
course of the Borrower's Wise business.
"WORKING CAPITAL ADVANCE" has the meaning specified in Section
2.01.
"WORKING CAPITAL BORROWING" means a borrowing consisting of
simultaneous Working Capital Advances of the same Type made by the
Working Capital Lenders.
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25
"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 9.07(c) as such
Lender's "Working Capital Commitment," as such amount may be reduced
pursuant to Sections 2.05 and 2.06.
"WORKING CAPITAL FACILITY" means, at any time, the aggregate
amount of the Working Capital Lenders' Working Capital Commitments at
such time.
"WORKING CAPITAL LENDER" means any Lender that has a Working
Capital Commitment.
"WORKING CAPITAL NOTE" means a promissory note of the Borrower
payable to the order of any Working Capital Lender, in substantially
the form of Exhibit A-2 hereto, evidencing the indebtedness of the
Borrower to such Lender resulting from the Working Capital Advances
made by such Lender.
SECTION 1.02. COMPUTATION OF TIME PERIODS. In this Agreement
in the computation of periods of time from a specified date to a later specified
date, the word "from" means "from and including" and the words "to" and "until"
each mean "to but excluding."
SECTION 1.03. ACCOUNTING TERMS. All accounting terms not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles ("GAAP").
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
AND THE LETTERS OF CREDIT
SECTION 2.01. THE ADVANCES. (a) WORKING CAPITAL ADVANCES. Each
Working Capital Lender severally agrees, on the terms and conditions hereinafter
set forth, to make advances ("WORKING CAPITAL ADVANCES") to the Borrower from
time to time on any Business Day during the period from the date hereof until
the Termination Date in an amount for each such Advance not to exceed such
Lender's Unused Working Capital Commitment on such Business Day. Each Working
Capital Borrowing shall be in an aggregate amount not less than $10,000,000 or
an integral multiple of $1,000,000 in excess thereof and shall consist of
Working Capital Advances of the same Type made on the same day by the Working
Capital Lenders ratably according to their respective Working Capital
Commitments. Within the limits of each Working
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Capital Lender's Unused Working Capital Commitment in effect from time to time,
the Borrowermay borrow under this Section 2.01(a), prepay pursuant to Section
2.07 and reborrow under this Section 2.01(a).
(b) SET ASIDE OF WORKING CAPITAL COMMITMENTS IN RESPECT OF
SCHEDULED DEBT PREPAYMENTS. Each Working Capital Lender's Ratable Share of an
aggregate amount of Working Capital Commitments equal at any time to the amount
that, at or prior to such time, has been required to be applied to reduce
Commitments under the Senior Bank Facilities or pay or prepay Scheduled Debt
pursuant to Section 2.06 and that the Borrower has (i) elected to be applied to
Scheduled Debt not then due and (ii) not actually applied to pay or prepay such
Scheduled Debt at or prior to such time, shall be unavailable to be borrowed
hereunder except at the time of and for the purpose of making payment on such
Scheduled Debt.
(c) TERM ADVANCES. Upon receipt of a duly executed Replacement
Note (as defined in the Note Exchange Agreement dated as of December 15, 1994
(the "NOTE EXCHANGE AGREEMENT") among the Borrower, the Administrative Agent,
TM, the lenders under the TM Credit Agreement and Citibank, as administrative
agent under the TM Credit Agreement) by Citibank, as administrative agent under
the TM Credit Agreement, for each Lender in accordance with the terms of the
Note Exchange Agreement, each Term Lender is deemed to have made a single
advance (a "TERM ADVANCE") to the Borrower evidenced by such Replacement Note.
Amounts outstanding as Term Advances under this Section 2.01(c) and repaid or
prepaid may not be reborrowed.
SECTION 2.02. MAKING THE ADVANCES. (a) Except as otherwise
provided in Section 2.02(b), each Borrowing shall be made on notice, given not
later than 11:00 A.M. (New York City time) (i) on the third Business Day prior
to the date of the proposed Borrowing in the case of Eurodollar Rate Borrowings
and (ii) on the same Business Day in the case of Base Rate Borrowings, by the
Borrower to the Administrative Agent, which shall give to each Appropriate
Lender prompt notice thereof by telex, telecopier or cable. Each such notice of
a Borrowing (a "NOTICE OF BORROWING") shall be by telephone, telex, telecopier
or cable, confirmed immediately in writing, in substantially the form of Exhibit
B hereto, specifying therein the requested (i) date of such Borrowing, (ii)
Facility under which such Borrowing is to be made, (iii) Type of Advances
comprising such Borrowing, (iv) aggregate amount of such Borrowing and (v) in
the case of a Borrowing consisting of Eurodollar Rate Advances, initial Interest
Period for each such Advance. In the case of a proposed Borrowing comprised of
Eurodollar Rate Advances, the Administrative Agent shall promptly notify each
Appropriate Lender of the applicable interest rate under Section 2.08(a)(ii).
Each Appropriate Lender shall, before 12:00 noon (New York City time) on the
date of such Borrowing, make available for the account of its Applicable Lending
Office to the Administrative Agent at the Administrative Agent's Account, in
same day funds, such Lender's ratable portion of such Borrowing in accordance
with the respective Commitments of such Lender and the other Appropriate
Lenders. After the Administrative Agent's receipt of
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such funds and upon fulfillment of the applicable conditions set forth in
Article III, the Administrative Agent will make such funds available to the
Borrower; PROVIDED, HOWEVER, that, in the case of any Working Capital
Borrowing, the Administrative Agent shall first make a portion of such funds
equal to the aggregate principal amount of any Letter of Credit Advances made
by any Issuing Bank and by any other Working Capital Lender and outstanding on
the date of such Borrowing, plus interest accrued and unpaid thereon to and as
of such date, available to such Issuing Bank and such other Working Capital
Lenders for repayment of such Letter of Credit Advances.
(b) Anything in subsection (a) above to the contrary
notwithstanding, (i) the Borrower may not select Eurodollar Rate Advances for
the initial Borrowing hereunder or for any Borrowing if the aggregate amount of
such Borrowing is less than $10,000,000 or if the obligation of the Appropriate
Lenders to make Eurodollar Rate Advances shall then be suspended pursuant to
Section 2.11, (ii) the Working Capital Advances made on any date as Eurodollar
Rate Advances may not be outstanding as part of more than ten separate Working
Capital Borrowings and (iii) the Term Advances may not be outstanding as part of
more than three separate Term Borrowings.
(c) Each Notice of Borrowing shall be irrevocable and binding
on the Borrower. In the case of any Borrowing that the related Notice of
Borrowing specifies is to be comprised of Eurodollar Rate Advances, the Borrower
shall indemnify each Appropriate Lender, after receipt of a written request by
such Lender (which request shall set forth in reasonable detail the basis for
such amount) against any loss, cost or expense actually incurred by such Lender
(excluding loss of anticipated profits) as a result of any failure to fulfill on
or before the date specified in such Notice of Borrowing for such Borrowing the
applicable conditions set forth in Article III, including, without limitation,
any loss, cost or expense reasonably incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Lender to fund the
Advance to be made by such Lender as part of such Borrowing when such Advance,
as a result of such failure, is not made on such date.
(d) Unless the Administrative Agent shall have received notice
from an Appropriate Lender prior to the time of any Borrowing under a Facility
under which such Lender has a Commitment that such Lender will not make
available to the Administrative Agent such Lender's ratable portion of such
Borrowing, the Administrative Agent may assume that such Lender has made such
portion available to the Administrative Agent on the date of such Borrowing in
accordance with subsection (a) of this Section 2.02 and the Administrative Agent
may, in reliance upon such assumption, make available to the Borrower on such
date a corresponding amount. If and to the extent that such Lender shall not
have so made such ratable portion available to the Administrative Agent, such
Lender and the Borrower severally agree to repay or pay to the Administrative
Agent forthwith on demand such corresponding amount and to pay interest thereon,
for each day from the date such amount is made available to the Borrower until
the date such amount is repaid or paid to the Administrative Agent, at (i) in
the case of the
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Borrower, the interest rate applicable at such time under Section 2.08 to
Advances comprisingsuch Borrowing and (ii) in the case of such Lender, the
Federal Funds Rate. If such Lender shall pay to the Administrative Agent such
corresponding amount, such amount so paid shall constitute such Lender's Advance
as part of such Borrowing for purposes of this Agreement.
(e) The failure of any Lender to make the Advance to be made
by it as part of any Borrowing shall not relieve any other Lender of its
obligation, if any, hereunder to make its Advance on the date of such Borrowing,
but no Lender shall be responsible for the failure of any other Lender to make
the Advance to be made by such other Lender on the date of any Borrowing.
SECTION 2.03. THE COMPETITIVE BID ADVANCES. (a) Each Working
Capital Lender severally agrees that the Borrower may make Competitive Bid
Borrowings under this Section 2.03 from time to time on any Business Day during
the period from the date hereof until the date occurring seven days prior to the
Termination Date in the manner set forth below; PROVIDED that, following the
making of each Competitive Bid Borrowing, no prepayment shall be required
pursuant to Section 2.07(b)(i).
(i) The Borrower may request a Competitive Bid Borrowing under
this Section 2.03 by delivering to the Administrative Agent, by
telecopier or telex, confirmed immediately in writing, a notice of a
Competitive Bid Borrowing (a "NOTICE OF COMPETITIVE BID BORROWING"), in
substantially the form of Exhibit B-2 hereto, together with a
processing fee of $4,000 for each Notice of Competitive Bid Borrowing,
specifying therein (v) the date of such proposed Competitive Bid
Borrowing, (w) the aggregate amount of such proposed Competitive Bid
Borrowing, (x) the maturity date for repayment of each Competitive Bid
Advance to be made as part of such Competitive Bid Borrowing (which
maturity date may not be earlier than the date occurring seven days
after the date of such Competitive Bid Borrowing or later than the
Termination Date), (y) the interest payment date or dates relating
thereto, and (z) any other terms to be applicable to such Competitive
Bid Borrowing, not later than 10:00 A.M. (New York City time) (A) at
least one Business Day prior to the date of the proposed Competitive
Bid Borrowing, if the Borrower shall specify in the Notice of
Competitive Bid Borrowing that the rates of interest to be offered by
the Lenders shall be fixed rates per annum (the Advances comprising any
such Competitive Bid Borrowing being referred to herein as "FIXED RATE
ADVANCES") and (B) at least four Business Days prior to the date of the
proposed Competitive Bid Borrowing, if the Borrower shall instead
specify in the Notice of Competitive Bid Borrowing the basis to be used
by the Lenders in determining the rates of interest to be offered by
them (the Advances comprising such Competitive Bid Borrowing being
referred to herein as "LIBO RATE ADVANCES"). The Administrative Agent
shall in turn promptly notify each Working Capital Lender of each
request for a Competitive Bid Borrowing received by it from the
Borrower by sending such Lender a copy of the related Notice of
Competitive Bid Borrowing.
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(ii) Each Working Capital Lender may, if, in its sole
discretion, it elects to do so, irrevocably offer to make one or more
Competitive Bid Advances to the Borrower as part of such proposed
Competitive Bid Borrowing at a rate or rates of interest specified by
such Lender in its sole discretion, by notifying the Administrative
Agent (which shall give prompt notice thereof to the Borrower), before
10:00 A.M. (New York City time) on the date of such proposed
Competitive Bid Borrowing, in the case of a Competitive Bid Borrowing
consisting of Fixed Rate Advances and three Business Days before the
date of such proposed Competitive Bid Borrowing, in the case of a
Competitive Bid Borrowing consisting of LIBO Rate Advances, of the
minimum amount and maximum amount of each Competitive Bid Advance which
such Lender would be willing to make as part of such proposed
Competitive Bid Borrowing (which amounts may, subject to the proviso to
the first sentence of this Section 2.03(a), exceed such Lender's
Working Capital Commitment), the rate or rates of interest therefor and
such Lender's Applicable Lending Office with respect to such
Competitive Bid Advance; PROVIDED that if the Administrative Agent in
its capacity as a Working Capital Lender shall, in its sole discretion,
elect to make any such offer, it shall notify the Borrower of such
offer before 9:00 A.M. (New York City time) on the date on which notice
of such election is to be given to the Administrative Agent by the
other Working Capital Lenders. If any Working Capital Lender shall
elect not to make such an offer, such Lender shall so notify the
Administrative Agent, before 10:00 A.M. (New York City time) on the
date on which notice of such election is to be given to the
Administrative Agent by the other Working Capital Lenders, and such
Lender shall not be obligated to, and shall not, make any Competitive
Bid Advance as part of such Competitive Bid Borrowing; PROVIDED that
the failure by any Working Capital Lender to give such notice shall not
cause such Lender to be obligated to make any Competitive Bid Advance
as part of such proposed Competitive Bid Borrowing.
(iii) The Borrower shall, in turn, before 11:00 A.M. (New York
City time) on the date of such proposed Competitive Bid Borrowing, in
the case of a Competitive Bid Borrowing consisting of Fixed Rate
Advances and before 1:00 P.M. (New York City time) three Business Days
before the date of such proposed Competitive Bid Borrowing, in the case
of a Competitive Bid Borrowing consisting of LIBO Rate Advances,
either:
(x) cancel such Competitive Bid Borrowing by giving
the Administrative Agent notice to that effect, or
(y) accept one or more of the offers made by any
Working Capital Lender or Lenders pursuant to paragraph (ii)
above, by giving notice to the Administrative Agent of the
amount of each Competitive Bid Advance (which amount shall be
equal to or greater than the minimum amount, and equal to or
less than the maximum amount, notified to the Borrower by the
Administrative Agent
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on behalf of such Lender for such Competitive Bid Advance
pursuant to paragraph (ii) above) to be made by each Lender as
part of such Competitive Bid Borrowing, and reject any
remaining offers made by Lenders pursuant to paragraph (ii)
above by giving the Administrative Agent notice to that
effect.
(iv) If the Borrower notifies the Administrative Agent that
such Competitive Bid Borrowing is cancelled pursuant to paragraph
(iii)(x) above, the Administrative Agent shall give prompt notice
thereof to the Working Capital Lenders and such Competitive Bid
Borrowing shall not be made.
(v) If the Borrower accepts one or more of the offers made by
any Working Capital Lender or Lenders pursuant to paragraph (iii)(y)
above, the Administrative Agent shall in turn promptly notify (A) each
Working Capital Lender that has made an offer as described in paragraph
(ii) above, of the date and aggregate amount of such Competitive Bid
Borrowing and whether or not any offer or offers made by such Lender
pursuant to paragraph (ii) above have been accepted by the Borrower,
(B) each Working Capital Lender that is to make a Competitive Bid
Advance as part of such Competitive Bid Borrowing, of the amount of
each Competitive Bid Advance to be made by such Lender as part of such
Competitive Bid Borrowing, and (C) each Working Capital Lender that is
to make a Competitive Bid Advance as part of such Competitive Bid
Borrowing, upon receipt, that the Administrative Agent has received
forms of documents appearing to fulfill the applicable conditions set
forth in Article III. Each Working Capital Lender that is to make a
Competitive Bid Advance as part of such Competitive Bid Borrowing
shall, before 12:00 noon (New York City time) on the date of such
Competitive Bid Borrowing specified in the notice received from the
Administrative Agent pursuant to clause (A) of the preceding sentence
or any later time when such Lender shall have received notice from the
Administrative Agent pursuant to clause (C) of the preceding sentence,
make available for the account of its Applicable Lending Office to the
Administrative Agent at the Administrative Agent's Account, in same day
funds, such Lender's portion of such Competitive Bid Borrowing. Upon
fulfillment of the applicable conditions set forth in Article III and
after receipt by the Administrative Agent of such funds, the
Administrative Agent will make such funds available to the Borrower at
the Administrative Agent's address referred to in Section 9.02.
Promptly after each Competitive Bid Borrowing the Administrative Agent
will notify each Working Capital Lender of the amount of such
Competitive Bid Borrowing.
(vi) The Administrative Agent shall maintain at its address
referred to in Section 9.02 a copy of each Notice of Competitive Bid
Borrowing delivered pursuant to subsection (a)(i) above and a register
for the recordation of the date, amount, maturity, interest rate,
interest payment dates, other terms and Working Capital Lender of each
Competitive Bid Advance accepted by the Borrower from time to time
pursuant to this subsection (a) (the
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"COMPETITIVE BID REGISTER"). The entries in the Competitive Bid
Register shall be conclusive and binding for all purposes, absent
demonstrable error, and the Borrower, the Administrative Agent and the
Working Capital Lenders may treat the entries recorded in the
Competitive Bid Register as evidence of Competitive Bid Advances made
pursuant to this Section 2.03. The Competitive Bid Register shall be
available for inspection by the Borrower, or by any Working Capital
Lender as to its Competitive Bid Advances, at any reasonable time and
from time to time upon reasonable prior notice.
(b) Each Competitive Bid Borrowing shall be in an aggregate
amount of $10,000,000 or an integral multiple of $1,000,000 in excess thereof
and, following the making of each Competitive Bid Borrowing, the Borrower shall
be in compliance with the limitation set forth in the proviso to the first
sentence of subsection (a) above.
(c) Within the limits and on the conditions set forth in this
Section 2.03, the Borrower may from time to time borrow under this Section 2.03,
repay or prepay pursuant to subsection (d) below, and reborrow under this
Section 2.03, PROVIDED that a Competitive Bid Borrowing shall not be made within
three Business Days of the date of any other Competitive Bid Borrowing.
(d) The Borrower shall repay to the Administrative Agent for
the account of each Working Capital Lender that has made a Competitive Bid
Advance, on the maturity date of each Competitive Bid Advance (such maturity
date being that specified by the Borrower for repayment of such Competitive Bid
Advance in the related Notice of Competitive Bid Borrowing delivered pursuant to
subsection (a)(i) above and recorded in the Competitive Bid Register with
respect to such Competitive Bid Advance), the then unpaid principal amount of
such Competitive Bid Advance.
(e) The Borrower shall pay interest on the unpaid principal
amount of each Competitive Bid Advance from the date of such Competitive Bid
Advance to the date the principal amount of such Competitive Bid Advance is
repaid in full, at the rate of interest for such Competitive Bid Advance
specified by the Working Capital Lender making such Competitive Bid Advance in
its notice with respect thereto delivered pursuant to subsection (a)(ii) above,
payable on the interest payment date or dates specified by the Borrower for such
Competitive Bid Advance in the related Notice of Competitive Bid Borrowing
delivered pursuant to subsection (a)(i) above, as recorded in the Competitive
Bid Register with respect to such Competitive Bid Advance.
(f) The indebtedness of the Borrower resulting from each
Competitive Bid Advance made to the Borrower as part of a Competitive Bid
Borrowing shall be evidenced by a master Competitive Bid Note of the Borrower
payable to the order of the Administrative Agent for the benefit of the Working
Capital Lender making such Competitive Bid Advance.
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SECTION 2.04. REPAYMENT. (a) WORKING CAPITAL ADVANCES. The
Borrower shall repay to the Administrative Agent for the ratable account of the
Working Capital Lenders the aggregate outstanding principal amount of the
Working Capital Advances on the Termination Date.
(b) TERM ADVANCES. The Borrower shall repay to the
Administrative Agent for the ratable account of the Term Lenders the aggregate
outstanding principal amount of the Term Advances on the Termination Date.
(c) LETTER OF CREDIT ADVANCES. The Borrower shall repay to the
Administrative Agent for the account of each Issuing Bank and each other Working
Capital Lender which has made a Letter of Credit Advance the outstanding
principal amount of each Letter of Credit Advance made by each of them on
demand.
SECTION 2.05. REDUCTION OF THE COMMITMENTS. (a) OPTIONAL. The
Borrower may, upon at least one Business Day's notice to the Administrative
Agent, terminate in whole or reduce in part the Unused Working Capital
Commitments and the Letter of Credit Commitments; PROVIDED, HOWEVER, that each
partial reduction of a Facility (i) shall be in an aggregate amount of
$10,000,000 or an integral multiple of $1,000,000 in excess thereof and (ii)
shall be made ratably among the Appropriate Lenders in accordance with their
Commitments with respect to such Facility.
(b) MANDATORY. The Working Capital Commitments shall be
terminated in full on the Termination Date.
SECTION 2.06. APPLICATION OF CERTAIN PROCEEDS. (a) The
Borrower shall reduce the aggregate Commitments under the Senior Bank Facilities
or pay or prepay Scheduled Debt by an amount equal to, and upon receipt of,
Asset Proceeds and Option Exercise Proceeds by the Affiliate Guarantors, the
Borrower and their respective Subsidiaries other than the following, without
duplication:
(i) Asset Proceeds paid to the Borrower for the initial
transfer of the Foods Business and Wise Business to the Affiliate
Guarantors and their Subsidiaries and for the transfer of the Dairy
Business to an Affiliate and its Subsidiaries at the time, if any, such
Affiliate becomes an Affiliate Guarantor;
(ii) Asset Proceeds received by the Borrower or the Affiliate
Guarantors for the sale of the Options to acquire the stock of Borden
Decorative Products Holdings, Inc., the stock of Elmer's Holdings, Inc.
and certain of the assets of the Foods Business;
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(iii) Asset Proceeds in an aggregate amount not to exceed
$1,000,000,000 from, without duplication, (A) the sale of the
Borrower's global packaging business, (B) the sale of the Borrower's
indirect interest in Gallina Blanca, S.A., Broex S.A. and related
entities conducting a boullion and dehydrated soup joint venture with
Agrolimen S.A. and certain of its affiliates, (C) Option Exercise
Proceeds, (D) an amount equal to the portion, if any, of the amount of
the excess of (x) in the case of the exercise of an Option with a
substantially contemporaneous sale of the stock or assets the subject
of such Option, the actual sale price of such stock or assets or, in
each other case, the appraised fair market value (as determined by a
nationally recognized investment banker selected by the Borrower) over
(y) the exercise price of such Options (the "OPTION DIFFERENTIAL"),
which is contributed to the equity of the Borrower or the Affiliate
Guarantors, upon the exercise of such Option, (E) an amount equal to
the portion, if any, of the amount of the appreciation of trademarks
the benefit of which accrues to Borden Foods Holdings, L.L.C. (the
"TRADEMARK APPRECIATION") which is contributed to the equity of the
Borrower or the Affiliate Guarantors, upon the sale of any trademarks
used in the Foods Business, (F) an amount equal to the portion, if any,
of the Affiliate Guarantor Stock Sale Proceeds (as defined in Section
2.06(d)) contributed as equity to the Borrower or the Affiliate
Guarantors and (G) the sale of $500,000,000 of assets not otherwise
described in this clause (iii) and not including consideration
described in clauses (b), (c) and (d) below;
(iv) Asset Proceeds in the form of notes, property and other
consideration other than cash received from entities that are not
Affiliates of the Borrower or the Affiliate Guarantors, to the extent
that the amount thereof outstanding at any time (after giving effect to
monetization, payment or other cash realization thereof) does not
exceed $200,000,000;
(v) Asset Proceeds from the sale, transfer or other
disposition of non-cash consideration to the extent an amount equal to
such non-cash consideration was required to be and was applied in
accordance with this Section 2.06(a) (including pursuant to the
exceptions described therein);
(vi) Asset Proceeds from the sale, transfer or other
disposition of assets between or among (x) the Borrower and its
Subsidiaries or (y) the Affiliate Guarantors and their respective
Subsidiaries (including as an Affiliate Guarantor, for purposes of this
clause (vi), the Dairy Business); and
(vii) Asset Proceeds applied pursuant to clauses (b), (c) and
(d) below, to the extent that Commitments under the Senior Bank
Facilities have been reduced or Scheduled Debt has been paid or prepaid
pursuant to clauses (b), (c), (d) and (e) below, as applicable.
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(b) The Borrower shall reduce the aggregate Commitments under
the Senior Bank Facilities or pay or prepay Scheduled Debt upon receipt of
Option Exercise Proceeds, by an amount equal to the portion of the Option
Differential not contributed to the equity of the Borrower or the Affiliate
Guarantors.
(c) The Borrower shall reduce the aggregate Commitments under
the Senior Bank Facilities or pay or prepay Scheduled Debt upon the sale of any
trademarks the benefit of which sale accrues to Borden Foods Holdings, L.L.C.,
by an amount equal to the portion of the Trademark Appreciation not contributed
to the equity of the Borrower or the Affiliate Guarantors.
(d) The Borrower shall reduce the aggregate Commitments under
the Senior Bank Facilities or pay or prepay Scheduled Debt on the date of each
Guarantee Release Event (as defined in Section 7.05) in an amount equal to the
portion of the "Affiliate Guarantor Stock Sale Proceeds" (as defined below) in
respect thereof not contributed to the equity of the Borrower or the Affiliate
Guarantors. "Affiliate Guarantor Stock Sale Proceeds" means, in respect of any
Affiliate Guarantor, (i) in the event of a sale of all of the common stock of
such Affiliate Guarantor, the amount of Asset Proceeds of such sale received by
the holders of such common stock (or by such Affiliate Guarantor if a primary
issuance and sale) or (ii) in the event of a sale of less than all of the common
stock of such Affiliate Guarantor, the amount equal to the product of (x) the
Asset Proceeds per share of common stock received by the holders thereof in such
partial sale (or by such Affiliate Guarantor, if a primary issuance and sale)
and (y) the total number of shares of common stock of such Affiliate Guarantor
outstanding after giving effect to such partial sale.
(e) The payments and commitment reductions required by
Sections 2.06(a), (b), (c) and (d) shall be made as the Borrower may direct;
PROVIDED, HOWEVER, that an amount equal to the proceeds required to be applied
to reduce the aggregate Commitments under the Senior Bank Facilities or pay or
prepay Scheduled Debt pursuant to this Section 2.06 that the Borrower elects to
apply to Scheduled Debt not then due shall be, to the extent not yet so applied,
applied to prepay the Working Capital Advances (without reduction of Working
Capital Commitments) or Debt of Subsidiaries of the Borrower or any Affiliate
Guarantor and a portion of the Working Capital Commitments equal to the amount
of such proceeds shall be available to be borrowed only as set forth in Section
2.01(b).
(f) For purposes of this Section 2.06, the Borrower and the
Affiliate Guarantors shall be deemed to have received Asset Proceeds on the last
day of the fiscal year following the date of an asset sale transaction in an
amount equal to the EXCESS of the reserve for taxes payable or estimated to be
payable in connection with or as a result of such transaction OVER taxes
actually paid in connection with or as a result of such transaction on or before
the last day of such fiscal
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year. The Borrower shall apply an amount equal to such deemed Asset Proceeds in
accordance with the terms of this Section 2.06.
(g) The Borrower may apply proceeds as required by this
Section 2.06 on the last day of any Interest Period next ending after receipt
or, in the case of Asset Proceeds, deemed receipt, of such proceeds; PROVIDED
that the Borrower shall apply such proceeds on or before 30 days after such
receipt or deemed receipt; PROVIDED FURTHER that in the case of Asset Proceeds
resulting from the sale of an asset located outside the United States, such 30
days after such receipt or deemed receipt shall be extended to 90 days after
such receipt or deemed receipt.
(h) All prepayments of Senior Bank Facilities under this
Section 2.06 shall be made together with accrued interest to the date of such
prepayment on the principal amount prepaid.
SECTION 2.07. PREPAYMENTS. (a) OPTIONAL. The Borrower may,
upon (i) at least one Business Day's notice in the case of Base Rate Borrowings
and (ii) at least three Business Days' notice in the case of Eurodollar Rate
Borrowings, in each case to the Administrative Agent stating the proposed date
and aggregate principal amount of the prepayment, and if such notice is given
the Borrower shall, prepay the outstanding aggregate principal amount of the
Advances comprising part of the same Borrowing in whole or ratably in part,
together with accrued interest to the date of such prepayment on the aggregate
principal amount prepaid; PROVIDED, HOWEVER, that each partial prepayment shall
be in an aggregate principal amount of $10,000,000 or an integral multiple of
$1,000,000 in excess thereof.
(b) MANDATORY. (i) The Borrower shall, on each Business Day,
prepay an aggregate principal amount of the Working Capital Advances comprising
part of the same Borrowings equal to the amount by which the (x) sum of (A)
aggregate principal amount of the Working Capital Advances, Letter of Credit
Advances and Competitive Bid Advances then outstanding, (B) the Available Amount
of all Letters of Credit then outstanding, (C) the aggregate outstanding
"Capital" of all "Receivable Interests" (as such terms are defined in the
Receivables Financing Agreements) and (D) the amount of Working Capital
Commitments then reserved pursuant to Section 2.01(b) exceeds (y) the Working
Capital Facility.
(ii) All prepayments under this subsection (b) shall be made
together with accrued interest to the date of such prepayment on the principal
amount prepaid.
SECTION 2.08. INTEREST. (a) ORDINARY INTEREST. The Borrower
shall pay interest on the unpaid principal amount of each Advance owing to each
Lender from the date of such Advance until such principal amount shall be paid
in full, at the following rates per annum:
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36
(i) BASE RATE ADVANCES. During such periods as such Advance is
a Base Rate Advance, a rate per annum equal at all times to the sum of
(A) the Base Rate in effect from time to time plus (B) the Applicable
Margin in effect from time to time, payable in arrears quarterly on the
first day of each January, April, July, and October during such periods
and on the date such Base Rate Advance shall be Converted or paid in
full.
(ii) EURODOLLAR RATE ADVANCES. During such periods as such
Advance is a Eurodollar Rate Advance, a rate per annum equal at all
times during each Interest Period for such Advance to the sum of (A)
the Eurodollar Rate for such Interest Period for such Advance plus (B)
the Applicable Margin in effect on each day during such Interest
Period, payable in arrears on the last day of such Interest Period and,
if such Interest Period has a duration of more than three months, on
each day that occurs during such Interest Period every three months
from the first day of such Interest Period.
(b) DEFAULT INTEREST. Overdue principal and interest in
respect of each Advance shall bear interest at a rate per annum equal to the
Base Rate in effect from time to time plus the sum of (i) 2% and (ii) the
Applicable Margin; PROVIDED that each Eurodollar Rate Advance and Competitive
Bid Advance shall bear interest after maturity (whether by acceleration or
otherwise) until the end of the Interest Period then applicable thereto at a
rate per annum equal to 2% in excess of the rate of interest applicable thereto
at maturity.
SECTION 2.09. FEES. (a) COMMITMENT FEE. The Borrower shall pay
to the Administrative Agent for the account of the Lenders a commitment fee on
each Working Capital Lender's average daily Unused Working Capital Commitment,
computed without regard to clauses (D) and (E) of the definition of Unused
Working Capital Commitment, MINUS the aggregate amount of Competitive Bid
Advances made by such Lender from the date hereof until the Termination Date at
the Applicable Percentage, payable in arrears quarterly on the first Business
Day of each January, April, July and October, commencing January 3, 1995, and on
the Termination Date; PROVIDED, HOWEVER, that any commitment fee accrued with
respect to any of the Commitments of a Defaulting Lender during the period prior
to the time such Lender became a Defaulting Lender and unpaid at such time shall
not be payable by the Borrower so long as such Lender shall be a Defaulting
Lender except to the extent that such commitment fee shall otherwise have been
due and payable by the Borrower prior to such time; and PROVIDED FURTHER that no
commitment fee shall accrue on any of the Commitments of a Defaulting Lender so
long as such Lender shall be a Defaulting Lender.
(b) ADMINISTRATIVE AGENT'S AND ARRANGERS' FEES. The Borrower
shall pay to the Administrative Agent and the Arrangers for their own respective
account such fees as may from time to time be agreed between the Borrower and
the Administrative Agent and the Arrangers.
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37
SECTION 2.10. CONVERSION OF ADVANCES. (a) OPTIONAL. The
Borrower may on any Business Day, upon notice given to the Administrative Agent
not later than 11:00 A.M. (New York City time) on the third Business Day prior
to the date of the proposed Conversion and subject to the provisions of Section
2.11, Convert all or any portion of the Working Capital Advances or Term
Advances of one Type comprising the same Borrowing into Advances of the other
Type; PROVIDED, HOWEVER, that any Conversion of Base Rate Advances into
Eurodollar Rate Advances shall be in an amount not less than the minimum amount
specified in Section 2.02(b) and no Conversion of any Advances shall result in
more separate Borrowings than permitted under Section 2.02(b). Each such notice
of Conversion shall, within the restrictions specified above, specify (i) the
date of such Conversion, (ii) the Advances to be Converted and (iii) if such
Conversion is into Eurodollar Rate Advances, the duration of the initial
Interest Period for such Advances.
(b) MANDATORY. (i) On the date on which the aggregate unpaid
principal amount of Eurodollar Rate Advances comprising any Borrowing shall be
reduced, by payment or prepayment or otherwise, to less than $10,000,000, such
Advances shall automatically Convert into Base Rate Advances.
(ii) If the Borrower shall fail to select the duration of any
Interest Period for any Eurodollar Rate Advances in accordance with the
provisions contained in the definition of "Interest Period" in Section 1.01, the
Administrative Agent will forthwith so notify the Borrower and the Appropriate
Lenders, whereupon each such Eurodollar Rate Advance will automatically, on the
last day of the then existing Interest Period therefor, Convert into a Base Rate
Advance.
SECTION 2.11. INCREASED COSTS, ETC. (a) If, due to either (i)
the introduction of or any change in or in the interpretation of any law or
regulation after the date hereof or (ii) the compliance with any guideline or
request made after the date hereof from any central bank or other governmental
authority (whether or not having the force of law), there shall be any increase
in the cost to any Lender of agreeing to make or of making, funding or
maintaining Eurodollar Rate Advances or LIBO Rate Advances or of agreeing to
issue or issuing or maintaining Letters of Credit or of agreeing to make or of
making or maintaining Letter of Credit Advances, then the Borrower shall from
time to time, upon demand by such Lender (with a copy of such demand to the
Administrative Agent), pay to the Administrative Agent for the account of such
Lender additional amounts sufficient to compensate such Lender for such
increased cost; PROVIDED, HOWEVER, that each Lender agrees to use reasonable
efforts (consistent with its internal policy and legal and regulatory
restrictions) to designate a different Applicable Lending Office or take other
steps if to do so would avoid the need for, or reduce the amount of, such
increased cost and would not, in the reasonable judgment of such Lender, be
otherwise disadvantageous to such Lender. A certificate as to the amount of such
increased cost accompanied by a statement setting forth in reasonable detail the
basis for, and amount of, such increased cost, submitted to the Borrower by such
Lender, shall be conclusive and binding for all purposes, absent demonstrable
error.
<PAGE> 43
38
(b) If, after the date hereof, (i) the introduction of or any
change in any applicable law or regulation regarding capital adequacy or any
change after the date hereof in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or (ii) the compliance by a Lender or
its parent with any directive or request made after the date hereof regarding
capital adequacy from any central bank or other governmental authority (whether
or not having the force of law), has the effect of reducing the rate of return
on such Lender's or its parent's capital or assets as a consequence of such
Lender's commitment to lend hereunder or other obligations hereunder to a level
below that which such Lender or its parent would have achieved but for such
introduction, change or compliance (taking into consideration such Lender's or
its parent's policies with respect to capital adequacy), then, upon demand by
such Lender (with a copy of such demand to the Administrative Agent), the
Borrower shall pay to the Administrative Agent for the account of such Lender,
from time to time as specified by such Lender, additional amounts sufficient to
compensate such Lender for such reduction, it being understood and agreed,
however, that such Lender shall not be entitled to such compensation as a result
of such Lender's compliance with, or pursuant to any directive or request to
comply with, any such law or regulation as in effect on the date hereof;
PROVIDED, HOWEVER, that each Lender agrees to use reasonable efforts (consistent
with its internal policy and legal and regulatory restrictions) to designate a
different Applicable Lending Office or take other steps if to do so would avoid
the need for, or reduce the amount of, such compensation and would not, in the
reasonable judgment of such Lender, be otherwise disadvantageous to such Lender.
A certificate as to such amounts accompanied by a statement setting forth in
reasonable detail the basis for, and amount of, such increased cost submitted to
the Borrower by such Lender, shall be conclusive and binding for all purposes,
absent demonstrable error.
(c) If, with respect to any Eurodollar Rate Advances, the
Administrative Agent shall have determined that on any date for determining the
Eurodollar Rate for any Interest Period for such Advances that, by reason of
changes arising after the date hereof affecting the London interbank market,
adequate and fair means do not exist for ascertaining the applicable interest
rate on the basis provided for in the definition of Eurodollar Rate (i) each
such Eurodollar Rate Advance will automatically, on the last day of the then
existing Interest Period therefor, Convert into a Base Rate Advance and (ii) the
obligation of the Lenders to make, or to Convert Advances into, Eurodollar Rate
Advances shall be suspended until the Administrative Agent shall notify the
Borrower that such Lenders have determined that the circumstances causing such
suspension no longer exist.
(d) Notwithstanding any other provision of this Agreement, if
after the date hereof the introduction of or any change in or in the
interpretation of any law or regulation shall make it unlawful or impracticable,
or any central bank or other governmental authority shall assert that it is
unlawful, for any Lender or its Eurodollar Lending Office to perform its
obligations hereunder to make Eurodollar Rate Advances or LIBO Rate Advances or
to continue to fund or
<PAGE> 44
39
maintain Eurodollar Rate Advances or LIBO Rate Advances hereunder, then, on
notice thereof and demand therefor by such Lender to the Borrower through the
Administrative Agent, (i) each Eurodollar Rate Advance under which such Lender
has a Commitment or LIBO Rate Advance, as the case may be, will automatically,
upon such demand, Convert into a Base Rate Advance or an Advance that bears
interest at the rate set forth in Section 2.08(a)(i), as the case may be, and
(ii) the obligation of the Appropriate Lenders to make, or to Convert Advances
into, Eurodollar Rate Advances shall be suspended until the circumstances
causing such suspension no longer exist; PROVIDED, HOWEVER, that such Lender
agrees to use reasonable efforts (consistent with its internal policy and legal
and regulatory restrictions) to designate a different Eurodollar Lending Office
or take other steps if to do so would allow such Lender or its Eurodollar
Lending Office to continue to perform its obligations to make Eurodollar Rate
Advances or to continue to fund or maintain Eurodollar Rate Advances would not,
in the reasonable judgment of such Lender, be otherwise disadvantageous to such
Lender.
(e) If the Required Lenders shall so determine, upon the
occurrence and during the continuance of any Default, the obligation of the
Lenders to make, or to Convert Advances into, Eurodollar Rate Advances shall be
suspended.
SECTION 2.12. PAYMENTS AND COMPUTATIONS. (a) The Borrower
shall make each payment hereunder and under the Notes not later than 11:00 A.M.
(New York City time) on the day when due in U.S. dollars to the Administrative
Agent at the Administrative Agent's Account in same day funds. The
Administrative Agent will promptly thereafter cause like funds to be distributed
(i) if such payment by the Borrower is in respect of principal, interest,
commitment fees or any other obligation then payable hereunder and under the
Notes to more than one Lender, to such Lenders for the account of their
respective Applicable Lending Offices ratably in accordance with the amounts of
such respective obligations then payable to such Lenders and (ii) if such
payment by the Borrower is in respect of any obligation then payable hereunder
to one Lender, to such Lender for the account of its Applicable Lending Office,
in each case to be applied in accordance with the terms of this Agreement. Upon
its acceptance of an Assignment and Acceptance and recording of the information
contained therein in the Register pursuant to Section 9.07(d), from and after
the effective date of such Assignment and Acceptance, the Administrative Agent
shall make all payments hereunder and under the Notes in respect of the interest
assigned thereby to the Lender assignee thereunder, and the parties to such
Assignment and Acceptance shall make all appropriate adjustments in such
payments for periods prior to such effective date directly between themselves.
(b) All computations of interest, fees and Letter of Credit
commissions shall be made by the Administrative Agent on the basis of a year of
360 days, in each case for the actual number of days (including the first day
but excluding the last day) occurring in the period for which such interest,
fees or commissions are payable. Each determination by the
<PAGE> 45
40
Administrative Agent of an interest rate, fee or commission hereunder shall be
conclusive and binding for all purposes, absent demonstrable error.
(c) Whenever any payment hereunder or under the Notes shall be
stated to be due on a day other than a Business Day, such payment shall be made
on the next succeeding Business Day, and such extension of time shall in such
case be included in the computation of payment of interest or commitment fee, as
the case may be; PROVIDED, HOWEVER, that, if such extension would cause payment
of interest on or principal of Eurodollar Rate Advances or LIBO Rate Advances to
be made in the next following calendar month, such payment shall be made on the
next preceding Business Day.
(d) Unless the Administrative Agent shall have received notice
from the Borrower prior to the date on which any payment is due to any Lender
hereunder that the Borrower will not make such payment in full, the
Administrative Agent may assume that the Borrower has made such payment in full
to the Administrative Agent on such date and the Administrative Agent may, in
reliance upon such assumption, cause to be distributed to each such Lender on
such due date an amount equal to the amount then due such Lender. If and to the
extent the Borrower shall not have so made such payment in full to the
Administrative Agent, each such Lender shall repay to the Administrative Agent
forthwith on demand such amount distributed to such Lender together with
interest thereon, for each day from the date such amount is distributed to such
Lender until the date such Lender repays such amount to the Administrative
Agent, at the Federal Funds Rate.
(e) If the Administrative Agent receives funds for application
to the obligations under the Loan Documents under circumstances for which the
Loan Documents do not specify the Advances or the Facility to which, or the
manner in which, such funds are to be applied, the Administrative Agent shall
apply such funds to prepay Working Capital Advances (but not reduce the Working
Capital Commitments).
SECTION 2.13. TAXES. (a) Any and all payments by any Obligated
Party hereunder or under the Notes shall be made, in accordance with Section
2.12, free and clear of and without deduction for any and all present or future
taxes, levies, imposts, deductions, charges or withholdings, and all liabilities
with respect thereto, EXCLUDING, in the case of each Lender and the
Administrative Agent, net income taxes and franchise taxes (imposed in lieu of
net income taxes) that are imposed by the United States or any political
subdivision or taxing authority thereof or therein or by a foreign jurisdiction
as a result of a present or former connection between the Administrative Agent
or such Lender and the jurisdiction imposing such tax or any political
subdivision or taxing authority thereof or therein (other than any such
connection arising solely from the Administrative Agent or such Lender having
executed, enforced, delivered or performed its obligations or received a payment
under this Agreement) (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities being hereinafter referred to as
<PAGE> 46
41
"TAXES"). If any Obligated Party shall be required by law to deduct any Taxes
from or in respect of any sum payable hereunder or under any Note to any Lender
or the Administrative Agent, (i) the sum payable shall be increased as may be
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 2.13) such Lender or
the Administrative Agent (as the case may be) receives an amount equal to the
sum it would have received had no such deductions been made, (ii) such Obligated
Party shall make such deductions and (iii) such Obligated Party shall pay the
full amount deducted to the relevant taxation authority or other authority in
accordance with applicable law.
(b) In addition, each Obligated Party shall pay any present or
future stamp, documentary, excise, property or similar taxes, charges or levies
that arise from any payment made hereunder or under the Notes or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement or the Notes (hereinafter referred to as "OTHER TAXES").
(c) Each Obligated Party shall indemnify each Lender and the
Administrative Agent for the full amount of Taxes and Other Taxes, and for the
full amount of taxes imposed by any jurisdiction on amounts payable under this
Section 2.13, paid by such Lender or the Administrative Agent (as the case may
be) and any liability (including penalties, additions to tax, interest and
expenses) arising therefrom or with respect thereto. The Administrative Agent or
such Lender shall provide the applicable Obligated Party with appropriate
receipts for any payments or reimbursements made to such Obligated Party
pursuant to this Section 2.13. This indemnification shall be made within 45 days
from the date such Lender or the Administrative Agent (as the case may be) makes
written demand therefor.
(d) Within 45 days after the date of any payment of Taxes,
each Obligated Party shall furnish to the Administrative Agent, at its address
referred to in Section 9.02, the original receipt of payment thereof or a
certified copy of such receipt. In the case of any payment hereunder or under
the Notes by any Obligated Party through an account or branch outside the United
States or on behalf of such Obligated Party by a payor that is not a United
States person, if such Obligated Party determines that no Taxes are payable in
respect thereof, such Obligated Party shall furnish, or shall cause such payor
to furnish, to the Administrative Agent, at such address, an opinion of counsel
acceptable to the Administrative Agent stating that such payment is exempt from
Taxes. For purposes of this subsection (d) and subsection (e), the terms "UNITED
STATES" and "UNITED STATES PERSON" shall have the meanings specified in Section
7701 of the Internal Revenue Code.
(e) Each Lender organized under the laws of a jurisdiction
outside the United States shall, on or prior to the date of its execution and
delivery of this Agreement in the case of each Bank, and on the date of the
Assignment and Acceptance pursuant to which it became a Lender in the case of
each other Lender, and from time to time thereafter if requested in writing by
any Obligated Party or the Administrative Agent (but only so long thereafter as
such Lender
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42
remains lawfully able to do so), provide the Administrative Agent and each
Obligated Party with Internal Revenue Service form 1001 or 4224, as appropriate,
or any successor form prescribed by the Internal Revenue Service, certifying
that such Lender is entitled to benefits under an income tax treaty to which the
United States is a party that reduces the rate of withholding tax on payments
under this Agreement or the Notes or certifying that the income receivable
pursuant to this Agreement or the Notes is effectively connected with the
conduct of a trade or business in the United States. If the form provided by a
Lender at the time such Lender first becomes a party to this Agreement indicates
a United States interest withholding tax rate in excess of zero, withholding tax
at such rate shall be considered excluded from Taxes unless and until such
Lender provides the appropriate form certifying that a lesser rate applies,
whereupon withholding tax at such lesser rate only shall be considered excluded
from Taxes for periods governed by such form; PROVIDED, HOWEVER, that, if at the
date of the Assignment and Acceptance pursuant to which a Lender assignee
becomes a party to this Agreement, the Lender assignor was entitled to payments
under subsection (a) in respect of United States withholding tax with respect to
interest paid at such date, then, to such extent, the term Taxes shall include
(in addition to withholding taxes that may be imposed in the future or other
amounts otherwise includable in Taxes) United States withholding tax, if any,
applicable with respect to such Lender assignee on such date. If any form or
document referred to in this subsection (e) requires the disclosure of
information, other than information necessary to compute the tax payable and
information required on the date hereof by Internal Revenue Service form 1001 or
4224, that the applicable Lender reasonably considers to be confidential, such
Lender shall give notice thereof to the Obligated Parties and shall not be
obligated to include in such form or document such confidential information.
(f) For any period with respect to which a Lender has failed
to provide the Obligated Parties with the appropriate form described in
subsection (e) (OTHER THAN if such failure is due to a change in law occurring
after the date on which a form originally was required to be provided or if such
form otherwise is not required under subsection (e)), such Lender shall not be
entitled to indemnification under subsection (a) or (c) with respect to Taxes
imposed by the United States; PROVIDED, HOWEVER, that should a Lender become
subject to Taxes because of its failure to deliver a form required hereunder,
each Obligated Party shall take such steps as such Lender shall reasonably
request to assist such Lender to recover such Taxes.
(g) Any Lender claiming any additional amounts payable
pursuant to this Section 2.13 shall use reasonable efforts (consistent with its
internal policy and legal and regulatory restrictions) to change the
jurisdiction of its Eurodollar Lending Office or to take other steps if to do so
would avoid the need for, or reduce the amount of, any such additional amounts
that may thereafter accrue and would not, in the reasonable judgment of such
Lender, be otherwise disadvantageous to such Lender.
SECTION 2.14. SHARING OF PAYMENTS, ETC. If any Lender shall
obtain at any time any payment (whether voluntary, involuntary, through the
exercise of any right of set-off, or
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43
otherwise) (a) on account of obligations due and payable to such Lender
hereunder and under the Notes at such time under any Facility in excess of its
ratable share (according to the proportion of (i) the amount of such obligations
due and payable to such Lender at such time under such Facility to (ii) the
aggregate amount of the obligations due and payable to all Appropriate Lenders
hereunder and under the Notes at such time under such Facility) of payments on
account of the obligations due and payable to all Appropriate Lenders hereunder
and under the Notes at such time under such Facility obtained by all the
Appropriate Lenders at such time or (b) on account of obligations owing (but not
due and payable) to such Lender hereunder and under the Notes at such time under
any Facility in excess of its ratable share (according to the proportion of (i)
the amount of such obligations owing to such Lender at such time under such
Facility to (ii) the aggregate amount of the obligations owing (but not due and
payable) to all Appropriate Lenders hereunder and under the Notes at such time
under such Facility) of payments on account of the obligations owing (but not
due and payable) to all Appropriate Lenders hereunder and under the Notes at
such time under such Facility obtained by all the Appropriate Lenders at such
time, such Lender shall forthwith purchase from the Appropriate Lenders such
participations in the obligations due and payable or owing to them, as the case
may be, as shall be necessary to cause such purchasing Lender to share the
excess payment ratably with each of them; PROVIDED, HOWEVER, that if all or any
portion of such excess payment is thereafter recovered from such purchasing
Lender, such purchase from each other Lender shall be rescinded and such other
Lender shall repay to the purchasing Lender the purchase price to the extent of
such other Lender's ratable share (according to the proportion of (i) the
purchase price paid to such Lender to (ii) the aggregate purchase price paid to
all Appropriate Lenders) of such recovery together with an amount equal to such
Lender's ratable share (according to the proportion of (i) the amount of such
other Lender's required repayment to (ii) the total amount so recovered from the
purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount so recovered. The Borrower
agrees that any Lender so purchasing a participation from another Lender
pursuant to this Section 2.14 may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of set-off) with respect
to such participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation.
SECTION 2.15. LETTERS OF CREDIT. (a) THE LETTER OF CREDIT
FACILITY. The Borrower may request any Issuing Bank, on the terms and conditions
hereinafter set forth, to issue, and any such Issuing Bank shall, subject to the
terms and conditions hereinafter set forth, issue letters of credit (the
"LETTERS OF CREDIT") for the account of the Borrower from time to time on any
Business Day during the period from the date of the initial Borrowing until 30
days before the Termination Date (i) in an aggregate Available Amount for all
Letters of Credit issued by such Issuing Bank not to exceed at any time such
Issuing Bank's Letter of Credit Commitment or Letter of Credit Facility Sublimit
and (ii) in an Available Amount for each such Letter of Credit not to exceed the
Unused Working Capital Commitments of the Working Capital Lenders on such
Business Day; PROVIDED, HOWEVER, that no Issuing Bank shall be obligated to
issue any trade letters of credit. No Letter of Credit shall have an expiration
date (including all rights of the Borrower
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44
or the beneficiary to require renewal) later than the earlier of 30 days before
the Termination Date and one year after the date of issuance thereof, but may by
its terms be renewable annually with the consent of the Issuing Bank. Within the
limits of the Letter of Credit Facility Sublimit, and subject to the limits
referred to above, the Borrower may request the issuance of Letters of Credit
under this Section 2.15(a), repay any Letter of Credit Advances resulting from
drawings thereunder pursuant to Section 2.15(c) and request the issuance of
additional Letters of Credit under this Section 2.15(a).
(b) REQUEST FOR ISSUANCE. (i) Each Letter of Credit shall be
issued upon notice, given not later than 11:00 A.M. (New York City time) on the
fifth Business Day prior to the date of the proposed issuance of such Letter of
Credit, by the Borrower to any Issuing Bank, which shall give to the
Administrative Agent and each Working Capital Lender prompt notice thereof by
telex, telecopier or cable. Each such notice of issuance of a Letter of Credit
(a "NOTICE OF ISSUANCE") shall be by telex, telecopier or cable, confirmed
immediately in writing, specifying therein the requested (A) date of such
issuance (which shall be a Business Day), (B) Available Amount of such Letter of
Credit, (C) expiration date of such Letter of Credit, (D) name and address of
the beneficiary of such Letter of Credit and (E) form of such Letter of Credit,
and shall be accompanied by such Issuing Bank's customary application and
agreement for letter of credit (a "LETTER OF CREDIT AGREEMENT"). If the
requested form of such Letter of Credit is acceptable to such Issuing Bank in
its reasonable discretion, such Issuing Bank will, upon fulfillment of the
applicable conditions set forth in Article III, make such Letter of Credit
available to the Borrower at its office referred to in Section 9.02 or as
otherwise agreed with the Borrower in connection with such issuance. In the
event and to the extent that the provisions of any Letter of Credit Agreement
shall conflict with, or be duplicative of, provisions in this Agreement, the
provisions of this Agreement shall govern.
(ii) Each Issuing Bank shall furnish (A) to the Administrative
Agent on the first Business Day of each week a written report summarizing
issuance and expiration dates of Letters of Credit issued by such Issuing Bank
during the previous week and drawings during such week under all Letters of
Credit issued by such Issuing Bank, (B) to each Working Capital Lender on the
first Business Day of each month a written report summarizing issuance and
expiration dates of Letters of Credit issued by such Issuing Bank during the
preceding month and drawings during such month under all Letters of Credit
issued by such Issuing Bank and (C) to the Administrative Agent and each Working
Capital Lender on the first Business Day of each calendar quarter a written
report setting forth the average daily aggregate Available Amount during the
preceding calendar quarter of all Letters of Credit issued by such Issuing Bank.
(c) DRAWING AND REIMBURSEMENT. The payment by any Issuing Bank
of a draft drawn under any Letter of Credit shall constitute for all purposes of
this Agreement the making by such Issuing Bank of a Letter of Credit Advance,
which shall be a Base Rate Advance, in the amount of such draft. Upon written
demand by any Issuing Bank with an outstanding Letter of
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Credit Advance, with a copy of such demand to the Administrative Agent, each
other Working Capital Lender shall purchase from such Issuing Bank, and such
Issuing Bank shall sell and assign to each such other Working Capital Lender,
such other Lender's Ratable Share of such outstanding Letter of Credit Advance
as of the date of such purchase, by making available for the account of its
Applicable Lending Office to the Administrative Agent for the account of such
Issuing Bank, by deposit to the Administrative Agent's Account, in same day
funds, an amount equal to the portion of the outstanding principal amount of
such Letter of Credit Advance to be purchased by such Lender. The Borrower
hereby agrees to each such sale and assignment. Each Working Capital Lender
agrees to purchase its Ratable Share of an outstanding Letter of Credit Advance
on (i) the Business Day on which demand therefor is made by the Issuing Bank
which made such Advance, provided notice of such demand is given not later than
11:00 A.M. (New York City time) on such Business Day or (ii) the first Business
Day next succeeding such demand if notice of such demand is given after such
time. Upon any such assignment by an Issuing Bank to any other Working Capital
Lender of a portion of a Letter of Credit Advance, such Issuing Bank represents
and warrants to such other Lender that such Issuing Bank is the legal and
beneficial owner of such interest being assigned by it free and clear of any
adverse claim, but makes no other representation or warranty and assumes no
responsibility with respect to such Letter of Credit Advance, the Loan Documents
or any Loan Party. If and to the extent that any Working Capital Lender shall
not have so made the amount of such Working Capital Advance available to the
Administrative Agent, such Working Capital Lender agrees to pay to the
Administrative Agent forthwith on demand such amount together with interest
thereon, for each day from the date of demand by such Issuing Bank until the
date such amount is paid to the Administrative Agent, at the Federal Funds Rate.
If such Lender shall pay to the Administrative Agent such amount for the account
of such Issuing Bank on any Business Day, such amount so paid in respect of
principal shall constitute a Letter of Credit Advance made by such Lender on
such Business Day for purposes of this Agreement, and the outstanding principal
amount of the Letter of Credit Advance made by such Issuing Bank shall be
reduced by such amount on such Business Day. No Lender shall be obligated to
purchase its Ratable Share of Letter of Credit Advances under this Section
2.15(c) to the extent that such Advances result from any Issuing Bank's willful
misconduct or gross negligence.
(d) OBLIGATIONS ABSOLUTE. The obligations of the Borrower
under this Agreement, any Letter of Credit Agreement and any other agreement or
instrument relating to any Letter of Credit shall be unconditional and
irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement, such Letter of Credit Agreement and such other agreement or
instrument under all circumstances, including, without limitation, the following
circumstances:
(i) any lack of validity or enforceability of this Agreement,
any Letter of Credit Agreement, any Letter of Credit or any other
agreement or instrument relating thereto (this Agreement and all of the
other foregoing being, collectively, the "L/C RELATED DOCUMENTS");
<PAGE> 51
46
(ii) any change in the time, manner or place of payment of, or
in any other term of, all or any of the obligations of the Borrower in
respect of any L/C Related Document or any other amendment or waiver of
or any consent to departure from all or any of the L/C Related
Documents;
(iii) the existence of any claim, set-off, defense or other
right that the Borrower may have at any time against any beneficiary or
any transferee of a Letter of Credit (or any Persons for whom any such
beneficiary or any such transferee may be acting), any Issuing Bank,
any Lender or any other Person, whether in connection with the
transactions contemplated by the L/C Related Documents or any unrelated
transaction;
(iv) any statement or any other document presented under a
Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(v) payment by any Issuing Bank under a Letter of Credit
against presentation of a draft or certificate that does not strictly
comply with the terms of such Letter of Credit;
(vi) any exchange, release or non-perfection of any
collateral, or any release or amendment or waiver of or consent to
departure from any guarantee, for all or any of the obligations of the
Borrower in respect of the L/C Related Documents; or
(vii) any other circumstance or happening whatsoever, whether
or not similar to any of the foregoing, including, without limitation,
any other circumstance that might otherwise constitute a defense
available to, or a discharge of, the Borrower or a guarantor;
PROVIDED that notwithstanding the foregoing, the Borrower shall not be obligated
to reimburse any Issuing Bank for any payment made by such Issuing Bank under a
Letter of Credit as a result of acts or omissions constituting willful
misconduct or gross negligence.
(e) COMPENSATION. (i) The Borrower shall pay to the
Administrative Agent for the account of each Working Capital Lender a commission
on such Lender's Ratable Share of the average daily aggregate Available Amount
of all Letters of Credit outstanding from time to time at the Applicable Margin
applicable to Eurodollar Rate Advances payable in arrears quarterly on the first
Business Day of each January, April, July and October, commencing January 3,
1995, and on the Termination Date.
(ii) The Borrower shall pay to each Issuing Bank, for its own
account, such commissions, issuance fees, transfer fees and other fees and
charges in connection with the
<PAGE> 52
47
issuance or administration of each Letter of Credit as the Borrower and such
Issuing Bank shall agree.
SECTION 2.16. USE OF PROCEEDS. The Letters of Credit and the
proceeds of the Advances shall be available to pay transaction fees and
expenses, for general corporate purposes of the Borrower and its Subsidiaries
and for making advances to the Affiliate Guarantors and their Subsidiaries for
general corporate purposes of the Affiliate Guarantors and their Subsidiaries.
SECTION 2.17. DEFAULTING LENDERS. (a) In the event that, at
any one time, (i) any Lender shall be a Defaulting Lender, (ii) such Defaulting
Lender shall owe a Defaulted Advance to the Borrower and (iii) the Borrower
shall be required to make any payment hereunder or under any other Loan Document
to or for the account of such Defaulting Lender, then the Borrower may, so long
as no Default shall occur or be continuing at such time and to the fullest
extent permitted by applicable law, set off and otherwise apply the obligation
of the Borrower to make such payment to or for the account of such Defaulting
Lender against the obligation of such Defaulting Lender to make such Defaulted
Advance. In the event that the Borrower shall so set off and otherwise apply the
obligation of the Borrower to make any such payment against the obligation of
such Defaulting Lender to make any such Defaulted Advance on any date, the
amount so set off and otherwise applied by the Borrower shall constitute for all
purposes of this Agreement and the other Loan Documents an Advance by such
Defaulting Lender made on such date. Such Advance shall bear interest at a rate
equal to the Base Rate (without giving effect to the Applicable Margin) and
shall be considered, for all purposes of this Agreement, to comprise part of the
Borrowing in connection with which such Defaulted Advance was originally
required to have been made pursuant to Section 2.01, even if the other Advances
comprising such Borrowing shall be Eurodollar Rate Advances on the date such
Advance is deemed to be made pursuant to this subsection (a). The Borrower shall
notify the Administrative Agent at any time the Borrower reduces the amount of
the obligation of the Borrower to make any payment otherwise required to be made
by it hereunder or under any other Loan Document as a result of the exercise by
the Borrower of its right set forth in this subsection (a) and shall set forth
in such notice (A) the name of the Defaulting Lender and the Defaulted Advance
required to be made by such Defaulting Lender and (B) the amount set off and
otherwise applied in respect of such Defaulted Advance pursuant to this
subsection (a). Any portion of such payment otherwise required to be made by the
Borrower to or for the account of such Defaulting Lender which is paid by the
Borrower, after giving effect to the amount set off and otherwise applied by the
Borrower pursuant to this subsection (a), shall be applied by the Administrative
Agent as specified in subsection (b) or (c) of this Section 2.17.
(b) In the event that, at any one time, (i) any Lender shall
be a Defaulting Lender, (ii) such Defaulting Lender shall owe a Defaulted Amount
to the Administrative Agent or any of the other Lenders and (iii) the Borrower
shall make any payment hereunder or under any other Loan Document to the
Administrative Agent for the account of such Defaulting Lender, then
<PAGE> 53
48
the Administrative Agent may, on its behalf or on behalf of such other Lenders
and to the fullest extent permitted by applicable law, apply at such time the
amount so paid by the Borrower to or for the account of such Defaulting Lender
to the payment of each such Defaulted Amount to the extent required to pay such
Defaulted Amount. In the event that the Administrative Agent shall so apply any
such amount to the payment of any such Defaulted Amount on any date, the amount
so applied by the Administrative Agent shall constitute for all purposes of this
Agreement and the other Loan Documents payment, to such extent, of such
Defaulted Amount on such date. Any such amount so applied by the Administrative
Agent shall be retained by the Administrative Agent or distributed by the
Administrative Agent to such other Lenders, ratably in accordance with the
respective portions of such Defaulted Amounts payable at such time to the
Administrative Agent and such other Lenders and, if the amount of such payment
made by the Borrower shall at such time be insufficient to pay all Defaulted
Amounts owing at such time to the Administrative Agent and the other Lenders, in
the following order of priority:
(i) FIRST, to the Administrative Agent for any Defaulted
Amount then owing to the Administrative Agent; and
(ii) SECOND, to any other Lenders for any Defaulted Amounts
then owing to such other Lenders, ratably in accordance with such
respective Defaulted Amounts then owing to such other Lenders.
Any portion of such amount paid by the Borrower for the account of such
Defaulting Lender remaining, after giving effect to the amount applied by the
Administrative Agent pursuant to this subsection (b), shall be applied by the
Administrative Agent as specified in subsection (c) of this Section 2.17.
(c) In the event that, at any one time, (i) any Lender shall
be a Defaulting Lender, (ii) such Defaulting Lender shall not owe a Defaulted
Advance or a Defaulted Amount and (iii) the Borrower, the Administrative Agent
or any other Lender shall be required to pay or distribute any amount hereunder
or under any other Loan Document to or for the account of such Defaulting
Lender, then the Borrower or such other Lender shall pay such amount to the
Administrative Agent to be held by the Administrative Agent, to the fullest
extent permitted by applicable law, in escrow or the Administrative Agent shall,
to the fullest extent permitted by applicable law, hold in escrow such amount
otherwise held by it. Any funds held by the Administrative Agent in escrow under
this subsection (c) shall be deposited by the Administrative Agent in an
interest-bearing account with Citibank, in the name and under the control of the
Administrative Agent, but subject to the provisions of this subsection (c). The
terms applicable to such account, including the rate of interest payable with
respect to the credit balance of such account from time to time, shall be
Citibank's standard terms applicable to escrow accounts maintained with it. Any
interest credited to such account from time to time shall be held by the
Administrative Agent in escrow under, and applied by the Administrative Agent
from time to time
<PAGE> 54
49
in accordance with the provisions of, this subsection (c). The Administrative
Agent shall, to the fullest extent permitted by applicable law, apply all funds
so held in escrow from time to time to the extent necessary to make any Advances
required to be made by such Defaulting Lender and to pay any amount payable by
such Defaulting Lender hereunder and under the other Loan Documents to the
Administrative Agent or any other Lender, as and when such Advances or amounts
are required to be made or paid and, if the amount so held in escrow shall at
any time be insufficient to make and pay all such Advances and amounts required
to be made or paid at such time, in the following order of priority:
(i) FIRST, to the Administrative Agent for any amount then due
and payable by such Defaulting Lender to the Administrative Agent
hereunder;
(ii) SECOND, to any other Lenders for any amount then due and
payable by such Defaulting Lender to such other Lenders hereunder,
ratably in accordance with such respective amounts then due and payable
to such other Lenders; and
(iii) THIRD, to the Borrower for any Advance then required to
be made by such Defaulting Lender pursuant to the Commitments of such
Defaulting Lender.
In the event that such Defaulting Lender shall, at any time, cease to be a
Defaulting Lender, any funds held by the Administrative Agent in escrow at such
time with respect to such Defaulting Lender shall be distributed by the
Administrative Agent to such Defaulting Lender and applied by such Defaulting
Lender to the obligations owing to such Lender at such time under this Agreement
and the other Loan Documents ratably in accordance with the respective amounts
of such obligations outstanding at such time.
(d) The rights and remedies against a Defaulting Lender under
this Section 2.17 are in addition to other rights and remedies which the
Borrower may have against such Defaulting Lender with respect to any Defaulted
Advance and which the Administrative Agent or any Lender may have against such
Defaulting Lender with respect to any Defaulted Amount.
SECTION 2.18. OPTION TO REPLACE LENDERS. If any Lender shall
request the Borrower to pay any amounts, or shall assert any other special
rights, under Section 2.11 or 2.13 or if a Lender is a Defaulting Lender, the
Borrower may request one or more other Lenders or other financial institutions,
each of which is an Eligible Assignee (each a "REPLACEMENT LENDER") to take over
all or the affected portion of such Lender's then outstanding Advances and to
assume all or the affected portion of such Lender's Commitments and obligations
hereunder. If one or more Replacement Lenders shall so agree, the Advances and
Commitments of the Lender to be replaced shall, at the direction of the
Borrower, be assigned to such Replacement Lenders in accordance with Section
9.07, in such amounts as the Borrower may designate.
<PAGE> 55
50
ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.01. CONDITIONS PRECEDENT TO CERTAIN BORROWINGS AND
ISSUANCES. The obligation of each Appropriate Lender to make an Advance (other
than a Letter of Credit Advance) on the occasion of each Borrowing, and the
obligation of the Issuing Banks to issue Letters of Credit, that would in either
case cause the aggregate amount of Advances outstanding and the Available Amount
of Letters of Credit outstanding or to be outstanding at the close of business
on such date to exceed the aggregate amount of all Advances outstanding
(including any Advances to be paid on the date of such Borrowing) and the
Available Amount of Letters of Credit outstanding immediately prior to the
making of such Advance or such issuance shall be subject to the further
conditions precedent that on the date of such Borrowing or issuance the
following statements shall be true (and each of the giving of the Notice of
Borrowing and the acceptance by the Borrower of the proceeds of such Borrowing
or such Letter of Credit shall constitute a representation and warranty by the
Borrower that on the date of such Borrowing or issuance such statements are
true):
(a) the representations and warranties contained in each Loan
Document are correct in all material respects on and as of the date of
such Borrowing or issuance, before and after giving effect to such
Borrowing or issuance and to the application of the proceeds therefrom,
as though made on and as of such date (other than any such
representations or warranties that, by their terms, are made as of a
date other than the date of such Borrowing or issuance); and
(b) no event has occurred and is continuing, or would result
from such Borrowing or issuance or from the application of the proceeds
therefrom, that constitutes a Default.
SECTION 3.02. CONDITIONS PRECEDENT TO EACH COMPETITIVE BID
BORROWING. The obligation of each Working Capital Lender that is to make a
Competitive Bid Advance on the occasion of a Competitive Bid Borrowing to make
such Competitive Bid Advance as part of such Competitive Bid Borrowing is
subject to the conditions precedent that (a) the Administrative Agent shall have
received the written confirmatory Notice of Competitive Bid Borrowing with
respect thereto and (b) on or before the date of such Competitive Bid Borrowing,
but prior to such Competitive Bid Borrowing, the Administrative Agent shall have
received for recordation in the Competitive Bid Register information as to each
of the one or more Competitive Bid Advances to be made by the Working Capital
Lenders as part of such Competitive Bid Borrowing, the principal amount of each
such Competitive Bid Advance and such other terms as were agreed to for each
such Competitive Bid Advance in accordance with Section 2.03.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. REPRESENTATIONS AND WARRANTIES OF THE OBLIGATED
PARTIES. Each Obligated Party represents and warrants as follows:
(a) Such Obligated Party (i) is a corporation duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation, (ii) is duly qualified and in good
standing as a foreign corporation in each other jurisdiction in which
it owns or leases property or in which the conduct of its business
requires it to so qualify or be licensed except where the failure to so
qualify or be licensed would not be likely to have a Material Adverse
Effect and (iii) has all requisite corporate power and authority to own
or lease and operate its properties and to carry on its business as now
conducted and as proposed to be conducted.
(b) Set forth on Schedule 4.01(b) hereto is a complete and
accurate list of all Material Subsidiaries of the Obligated Parties as
of the date of this Agreement, showing as of the date of this Agreement
(as to each such Subsidiary) the jurisdiction of its incorporation and
percentage of the outstanding shares of each such class owned (directly
or indirectly) by each Obligated Party. Each such Material Subsidiary
(i) is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, except where the failure
thereof would not be likely to have a Material Adverse Effect, (ii) is
duly qualified and in good standing as a foreign corporation in each
other jurisdiction in which it owns or leases property or in which the
conduct of its business requires it to so qualify or be licensed except
where the failure to so qualify or be licensed would not be likely to
have a Material Adverse Effect and (iii) has all requisite corporate
power and authority to own or lease and operate its properties and to
carry on its business as now conducted and as proposed to be conducted
except where the failure to have such power would not be likely to have
a Material Adverse Effect.
(c) The execution, delivery and performance by each Obligated
Party of this Agreement, the Notes, each other Loan Document and each
Related Document to which it is or is to be a party, and the
consummation of the transactions contemplated hereby or thereby are
within such Obligated Party's corporate powers, have been duly
authorized by all necessary corporate action, and do not (i) contravene
such Obligated Party's charter or by-laws, (ii) violate any law, rule,
regulation, order, writ, judgment, injunction, decree, determination or
award, the consequences of which would be likely to have a Material
Adverse Effect, (iii) conflict with or result in the breach of, or
constitute a default under, any loan agreement, indenture, mortgage,
deed of trust, lease or other instrument in each case involving Debt
obligations of the Borrower and the Affiliate Guarantors of
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52
$1,000,000 or more or (iv) result in or require the creation or
imposition of any Lien upon or with respect to any of the properties of
the Affiliate Guarantors, the Borrower and their respective
Subsidiaries, other than Liens permitted by Section 5.02. None of any
Affiliate Guarantor, the Borrower or any of their respective
Subsidiaries is in violation of any such law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award or in breach
of any such contract, loan agreement, indenture, mortgage, deed of
trust, lease or other instrument, the violation or breach of which
would be likely to have a Material Adverse Effect.
(d) All necessary material governmental and third party
approvals required for (i) the due execution, delivery, recordation,
filing or performance by each Obligated Party of this Agreement, the
Notes, any other Loan Document or any Related Document to which it is a
party 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.
(e) This Agreement has been, and each of the Notes, each other
Loan Document and each Related Document to which each Obligated Party
is a party when delivered hereunder will have been, duly executed and
delivered by such Obligated Party. This Agreement is, and each of the
Notes, each other Loan Document and each Related Document to which the
Borrower or any Affiliate Guarantor is a party when delivered hereunder
will be, the legal, valid and binding obligation of the Obligated
Parties party thereto, enforceable against each such Obligated Party in
accordance with its terms except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws
relating to or limiting creditors' rights or by equitable principles
generally.
(f) The Consolidated balance sheet of the Borrower and its
Subsidiaries as at December 31, 1994, and the related Consolidated
statement of income and cash flows of the Borrower and its Subsidiaries
for the fiscal year then ended, accompanied by an opinion of Price
Waterhouse, independent public accountants, and the Consolidated
balance sheet of the Borrower and its Subsidiaries as at March 31,
1995, and the related Consolidated statement of income and cash flows
of the Borrower and its Subsidiaries for the three months then ended,
duly certified by the chief financial officer of the Borrower, copies
of which have been furnished to each Lender, fairly present, subject,
in the case of said balance sheet as at March 31, 1995, and said
statements of income and cash flows for the three months then ended, to
year-end audit adjustments, the Consolidated financial condition of the
Borrower and its Subsidiaries as at such date and the Consolidated
results of the operations of the Borrower and its Subsidiaries for the
periods ended on such dates, all in accordance with generally accepted
accounting principles applied on a consistent basis. Since March 31,
1995, there has been no Material Adverse Change.
<PAGE> 58
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(g) Neither the Information Memorandum nor any assertion of
fact of the Obligated Parties contained in any other written
information, exhibit or report furnished by the Obligated Parties to
the Administrative Agent or any Lender in connection with the
negotiation of the Loan Documents or pursuant to the terms of the Loan
Documents contained, as of its date, any untrue statement of a material
fact or omitted to state a material fact necessary to make the
statements made in the Information Memorandum and such other
information, exhibits and reports (taken as a whole) not misleading.
(h) There is no action, suit, investigation, litigation or
proceeding affecting any Affiliate Guarantor, the Borrower or any of
their respective Subsidiaries pending or, to the best of any of their
knowledge, threatened before any court, governmental agency or
arbitrator that (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 (ii) would be likely to
materially adversely affect the legality, validity or enforceability of
this Agreement and the other Loan Documents (taken as a whole) or the
consummation of the transactions contemplated hereby.
(i) No Letters of Credit or proceeds of any Advance will be
used to acquire any equity security of a class that is registered
pursuant to Section 12 of the Securities Exchange Act of 1934.
(j) Neither the issuance of any Letter of Credit nor the
making of any Advance hereunder, nor the use of the proceeds thereof,
will violate the provisions of Regulation G, T, U or X of the Board of
Governors of the Federal Reserve System.
(k) Each Plan is in substantial compliance with ERISA and the
Internal Revenue Code; no Reportable Event has occurred with respect to
a Plan; no Plan is insolvent or in reorganization; no Plan has an
accumulated or waived funding deficiency, has permitted decreases in
its funding standard account or has applied for an extension of any
amortization period within the meaning of Section 412 of the Internal
Revenue Code; none of any Affiliate Guarantor, the Borrower, any of
their respective Subsidiaries or any ERISA Affiliate has incurred or
reasonably expects to incur any liability to or on account of a Plan
pursuant to ERISA or the Internal Revenue Code; no proceedings have
been instituted by the PBGC to terminate any Plan; no condition exists
which presents a material risk to any Affiliate Guarantor, the
Borrower, any of their respective Subsidiaries or any ERISA Affiliate
of incurring a liability to or on account of a Plan pursuant to ERISA
or the Internal Revenue Code; no lien imposed under the Internal
Revenue Code or ERISA on the assets of any Affiliate Guarantor, the
Borrower, any of their respective Subsidiaries or any ERISA Affiliate
exists or is likely to arise on account of any Plan; where, with
respect to any of the foregoing representations in this Section
4.01(k), the liability for or the lien which would arise as a result
of, the particular circumstance or event which is the
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54
subject of the representation, would be likely to result in a Material
Adverse Effect. All representations and warranties made with respect to
any Plan which is a Multiemployer Plan shall be made to the best
knowledge of the Borrower and the Affiliate Guarantors.
(l) Each Affiliate Guarantor, the Borrower and each of their
respective Subsidiaries are in material compliance with all material
laws and regulations relating to pollution and environmental control or
employee safety in all domestic jurisdictions in which the Affiliate
Guarantors, the Borrower and their respective Subsidiaries are
presently doing business, other than those the non-compliance with
which would not be likely to have a Material Adverse Effect.
(m) Each Affiliate Guarantor, the Borrower and each of their
respective Subsidiaries has filed, has caused to be filed or has been
included in all tax returns (Federal, state, local and foreign)
required to be filed and has paid all taxes shown thereon to be due,
together with applicable interest and penalties, except where the
failure to so file or pay would not be likely to have a Material
Adverse Effect or as disclosed on the Borrower's Annual Report on Form
10-K for the fiscal year ended December 31, 1994.
(n) None of any Affiliate Guarantor, the Borrower or any of
their respective Subsidiaries is an "investment company," or a company
"controlled" by an "investment company," as such terms are defined in
the Investment Company Act of 1940, as amended.
ARTICLE V
COVENANTS OF THE BORROWER
SECTION 5.01. AFFIRMATIVE COVENANTS. So long as any Advance
shall remain unpaid, any Letter of Credit shall be outstanding or any Lender
shall have any Commitment hereunder, each Obligated Party will, unless the
Required Lenders shall otherwise consent in writing:
(a) COMPLIANCE WITH LAWS, ETC. Comply, and cause each of its
Subsidiaries to comply, with all applicable laws, rules, regulations
and orders except to the extent the failure to do so would not be
likely to have a Material Adverse Effect.
(b) PAYMENT OF TAXES, ETC. Pay and discharge, and cause each
of its Subsidiaries to pay and discharge, before the same shall become
delinquent, (i) all taxes, assessments and governmental charges or
levies imposed upon it or upon its property and (ii) all lawful claims
in excess of $15,000,000 individually or $30,000,000 in the
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aggregate for the Obligated Parties and their respective Subsidiaries
that, if unpaid, would by law become a Lien (other than a Permitted
Lien) upon its property; PROVIDED, HOWEVER, that no Obligated Party or
any of its Subsidiaries shall be required to pay or discharge any such
tax, assessment, charge or claim that is being contested in good faith
and by appropriate proceedings for which appropriate reserves have been
established in accordance with GAAP.
(c) COMPLIANCE WITH ENVIRONMENTAL LAWS. Comply, and cause each
of its Subsidiaries to comply, with all material laws and regulations
relating to pollution and environmental control or employee safety
which may be imposed in the future in jurisdictions in which any
Obligated Party or any of its Subsidiaries may then be doing business,
other than those the non-compliance with which would not be likely to
have a Material Adverse Effect; and if required to do so under any
applicable Environmental Law, undertake, and cause each of its
Subsidiaries to undertake, any cleanup, removal, remedial or other
action necessary to remove and clean up any Hazardous Materials from
any Real Property in accordance with the requirements of all such
applicable Environmental Laws and in accordance with orders and
directives of all governmental authorities; PROVIDED that no Obligated
Party or any of its Subsidiaries shall be required to take any such
action where the failure to do so would not have a Material Adverse
Effect.
(d) MAINTENANCE OF INSURANCE. Maintain, and cause each of its
Material Subsidiaries to maintain, insurance with reputable insurance
companies or associations in such amounts, with such retention and
deductibles, and covering such risks as are in accordance with normal
industry practice.
(e) PRESERVATION OF CORPORATE EXISTENCE, ETC. Preserve and
maintain, and cause each of its Material Subsidiaries to preserve and
maintain, its corporate existence, rights (charter and statutory) and
franchises except to the extent that the failure to do so would not be
likely to have a Material Adverse Effect; PROVIDED, HOWEVER, that the
Obligated Parties and their Subsidiaries may consummate any transaction
permitted under Section 5.02(c); and PROVIDED FURTHER that no Obligated
Party or any of its Subsidiaries shall be required to preserve any
right or franchise if the Board of Directors of such Obligated Party or
such Subsidiary shall determine that the preservation thereof is no
longer desirable in the conduct of the business of such Obligated Party
or such Subsidiary, as the case may be, and that the loss thereof is
not disadvantageous in any material respect to such Obligated Party,
such Subsidiary or the Lenders.
(f) VISITATION RIGHTS. At any reasonable time and upon prior
notice, permit the Administrative Agent or any of the Lenders or any
agents or representatives thereof, to examine and make copies of and
abstracts from the records and books of account of, and
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visit the properties of, such Obligated Party and any of its
Subsidiaries, and to discuss the affairs, finances and accounts of such
Obligated Party and any of its Subsidiaries with any of their officers
or, if reasonably requested by the Administrative Agent or any Lender,
through the officers of such Obligated Party or such Subsidiary and
with their independent certified public accountants.
(g) MAINTENANCE OF PROPERTIES, ETC. Maintain and preserve, and
cause each of its Subsidiaries to maintain and preserve, all of its
properties that are used or useful in the conduct of its business in
good working order and condition, ordinary wear and tear excepted, and
do, or cause to be done, all things necessary to preserve and keep in
full force and effect its material licenses, permits, copyrights,
patents, trademarks, service marks, tradenames and rights with respect
thereto, except in each case to the extent that the failure to do so
would not be likely to have a Material Adverse Effect.
(h) TRANSACTIONS WITH AFFILIATES. Conduct, and cause each of
its Subsidiaries to conduct, all transactions with any of their
Affiliates on terms that are substantially as favorable to such
Obligated Party or such Subsidiary as it would obtain in a comparable
arm's-length transaction with a Person not an Affiliate; PROVIDED that
the foregoing restrictions shall not apply to (i) customary annual fees
paid to Kohlberg Kravis Roberts & Co. ("KKR") and its Affiliates for
management, consulting and financial services rendered to such
Obligated Party and its Subsidiaries, and customary investment banking
fees paid to KKR and its Affiliates for services rendered to such
Obligated Party and its Subsidiaries in connection with divestitures,
acquisitions, financings and certain other transactions; (ii) customary
fees paid to members of the Board of Directors of such Obligated Party
and its Subsidiaries; (iii) loans and advances made by the Borrower to
any of its Subsidiaries or any Affiliate Guarantor; and (iv) the
consummation of the Redesign in accordance with the terms set forth in
Section 9.13.
SECTION 5.02. NEGATIVE COVENANTS. So long as any Advance shall
remain unpaid, any Letter of Credit shall be outstanding or any Lender shall
have any Commitment hereunder, no Obligated Party will, at any time, without the
written consent of the Required Lenders:
(a) LIENS, ETC. Create, incur, assume or suffer to exist, or
permit any of its Subsidiaries to create, incur, assume or suffer to
exist, any Lien on or with respect to any of its properties of any
character whether now owned or hereafter acquired other than:
(i) Permitted Liens;
(ii) Liens securing Indebtedness permitted by
Sections 5.02(b)(viii), (ix) and (xi);
<PAGE> 62
57
(iii) Liens, if any, arising under, financing
statements filed in connection with, and assignments of
accounts pursuant, to the Receivables Financing Documents;
(iv) other Liens securing Indebtedness outstanding in
an aggregate principal amount for the Obligated Parties and
their respective Subsidiaries not to exceed $100,000,000 at
any time; and
(v) the replacement, extension or renewal of any Lien
permitted by clauses (i) through (iv) above upon or in the
same property theretofore subject thereto or the replacement,
extension or renewal (without increase in the amount or change
in any direct or contingent obligor) of the Indebtedness
secured thereby.
(b) INDEBTEDNESS. Create, incur, assume or suffer to exist, or
permit any of its Subsidiaries to create, incur, assume or suffer to
exist, any Indebtedness other than:
(i) Indebtedness arising under the Loan Documents;
(ii) Indebtedness with no principal or sinking fund
payment due prior to June 30, 2000 with covenants (taken as a
whole) customary in United States unsecured public debt
financings or private placements (other than bank financings)
for comparably rated issuers and in any event no more onerous
than those contained in this Agreement (taken as a whole);
(iii) unsecured Indebtedness incurred in the ordinary
course of business for borrowed money, maturing within one
year from the date incurred, evidenced by commercial paper or
comparable instruments customary for evidencing similar
obligations in jurisdictions other than the United States in
an aggregate principal amount not exceeding the Unused Working
Capital Commitments of the Working Capital Lenders;
(iv) Indebtedness in respect of acceptance, trade
letter of credit, warehouse receipt or similar facilities and
non-trade letters of credit issued outside the United States
not supporting Debt entered into in the ordinary course of
business;
(v) Indebtedness, if any, arising under the
Receivables Financing Documents;
(vi) Guaranties in respect of Indebtedness otherwise
permitted hereunder;
<PAGE> 63
58
(vii) Guaranties in the ordinary course of business
in respect of obligations of suppliers, customers, franchisees
and licensees of such Obligated Party and its Subsidiaries;
(viii) Indebtedness of the Subsidiaries of any
Obligated Party organized outside the United States in an
aggregate principal amount for the Obligated Parties and their
respective Subsidiaries not exceeding at any time the excess
of $250,000,000 over the proceeds of sales of accounts
receivable by such Subsidiaries;
(ix) Indebtedness arising under Capitalized Leases
(a) incurred in respect of capital expenditures permitted by
Section 5.04(c) and (b) in an aggregate principal amount for
the Obligated Parties and their respective Subsidiaries not
exceeding $50,000,000 at any time;
(x) Indebtedness in respect of Hedge Agreements in an
aggregate notional amount for the Obligated Parties and their
respective Subsidiaries not to exceed $2,500,000,000 at any
time outstanding;
(xi) Indebtedness of any Obligated Party or any of
its Subsidiaries owed to any Obligated Party or any of its
Subsidiaries;
(xii) Guaranties in respect of Indebtedness listed on
Schedule 5.02(b) hereto;
(xiii) additional Indebtedness not contemplated by
clauses (i)-(xii) above in an aggregate principal amount for
the Obligated Parties and their respective Subsidiaries not
exceeding $300,000,000 at any time;
(xiv) any renewal, extension or refinancing of the
foregoing Indebtedness in an amount not exceeding the amount
outstanding at the time of such renewal, extension or
refinancing and, in the case of any renewal, extension or
refinancing of the Indebtedness specified in clauses (ii) and
(iii) above, otherwise in compliance with the limitations set
forth in clauses (ii) and (iii), respectively; and
(xv) the Existing Indebtedness, and any Indebtedness
extending the maturity of, or refunding or refinancing, in
whole or in part, any Existing Indebtedness, PROVIDED that the
terms of any such extending, refunding or refinancing
Indebtedness, and of any agreement entered into and of any
instrument issued in connection therewith, are otherwise
permitted by the Loan Documents and certain covenants that are
no more onerous than the stricter of those covenants
<PAGE> 64
59
of this Agreement (taken as a whole) or those covenants
applicable to such Existing Indebtedness on the date hereof
and further provided that the principal amount of such
Existing Indebtedness shall not be increased above the
principal amount thereof outstanding immediately prior to such
extension, refunding or refinancing (including additional
Indebtedness to the extent necessary to finance the payment of
premiums, make-wholes or similar payments incurred in
connection with such extension, refunding or refinancing), and
the direct and contingent obligors therefor shall not be
changed, as a result of or in connection with such extension,
refunding or refinancing.
(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 any Obligated Party may
merge into or consolidate with, or transfer all or a portion of its
assets to, any other Subsidiary of an Obligated Party, PROVIDED that,
in the case of any such consolidation, the Person formed by such
consolidation shall be a Subsidiary of an Obligated Party, (ii) any
Subsidiaries of an Obligated Party may merge into, or transfer all or a
portion of its assets to, any Obligated Party, PROVIDED that in the
case of any such merger, such Obligated Party 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.
(d) SALES, ETC. OF ASSETS. Sell, lease, transfer or otherwise
dispose of any assets of such Obligated Party and its Subsidiaries for
less than Fair Market Value; sell, lease, transfer or otherwise dispose
of all or substantially all of the assets of the Obligated Parties and
their Subsidiaries taken as a whole, except in a transaction authorized
by subsection (c) of this Section; or sell or grant Options except that
the Obligated Parties and their Subsidiaries may sell or grant Options
(i) pursuant to terms and conditions substantially similar to those set
forth in Exhibits K and L hereto, (ii) for Fair Market Value and (iii)
in an aggregate amount of proceeds thereof not to exceed $145,000,000
after December 31, 1995; PROVIDED, HOWEVER, that with respect to any
sale, lease, transfer or other disposition of Options or any assets
(other than Excluded Asset Sales) including pursuant to Options,
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).
(e) ACQUISITIONS. Acquire, or permit any of its Subsidiaries
to acquire, other than in connection with the consummation of the
Redesign, assets constituting a business
<PAGE> 65
60
unit or stock after the Restatement Date in an aggregate amount for the
Obligated Parties and their respective Subsidiaries invested not to
exceed at any time $750,000,000; PROVIDED that the foregoing limitation
shall not apply to (i) acquisitions of stock in connection with
employment or employee benefit related plans or arrangements, (ii)
acquisitions of stock of any Obligated Party or any Subsidiary thereof,
(iii) acquisitions of stock received in connection with the bankruptcy
or reorganization of suppliers and customers in settlement of
delinquent obligations of, and other disputes with, customers arising
in the ordinary course, (iv) acquisitions of stock to the extent that
such stock constitutes Asset Proceeds that are applied in accordance
with Section 2.06 (including Asset Proceeds not required to be applied
to reduce Commitments under the Senior Bank Facilities or pay or prepay
Scheduled Debt in accordance with the provisions of Section 2.06), (v)
acquisitions of stock or assets by the Borrower or its Subsidiaries
from (A) any Obligated Party or its Subsidiaries to the extent that
such assets or stock are acquired by such Obligated Party or its
Subsidiaries within the limitation set forth above or (B) any of the
Borrower or any of its Subsidiaries, (vi) acquisitions of stock or
assets by any Affiliate Guarantor or its Subsidiaries from any other
Affiliate Guarantor or its Subsidiaries (including as an Affiliate
Guarantor, for purposes of this clause (vi), the Dairy Business);
PROVIDED, FURTHER, that any portion of any acquisition that the
Borrower elects to include in Capital Expenditures for purposes of
Section 5.04(c) shall be deducted from the amount of such acquisition
for the purpose of determining compliance with this Section 5.02(e).
(f) DIVIDENDS, ETC. Declare or pay any dividends (other than
dividends payable only in common stock or Preferred Stock permitted by
clause (ii) below of the Borrower), purchase, redeem, retire, defease
or otherwise acquire for value any of its capital stock or any
warrants, rights or options to acquire such capital stock, now or
hereafter outstanding, return any capital to its stockholders as such,
make any distribution of assets, capital stock, warrants, rights,
options, obligations or securities to its stockholders as such or issue
or sell any capital stock (other than common stock) or any warrants,
rights or options to acquire such capital stock (other than common
stock), or permit any of its Subsidiaries to purchase, redeem, retire,
defease or otherwise acquire for value any capital stock of the
Borrower or any Affiliate Guarantor or any warrants, rights or options
to acquire such capital stock or to issue or sell any capital stock
(other than common stock) or any warrants, rights or options to acquire
such capital stock (other than common stock), except that, so long as
no Default described in Sections 6.01(a) or (f) and no Event of Default
shall have occurred and be continuing, (i) any Obligated Party or its
Subsidiaries may repurchase capital stock, or any warrants, rights or
options to acquire such capital stock held by its officers, directors
and employees, (ii) the Borrower may issue Preferred Stock and pay
dividends thereon, PROVIDED that such Preferred Stock (A) shall not
obligate the Borrower to redeem at a fixed or determinable date prior
to January 1, 2000, whether by operation of a sinking fund or
otherwise, or upon the occurrence of a condition not solely within the
control of this issuer and (B) shall not be redeemable at the option of
the holder
<PAGE> 66
61
prior to January 1, 2000, (iii) the Borrower may pay dividends on its
common stock to the extent that such dividends are paid to the Borrower
as interest on the notes issued by Borden Holdings then held by the
Borrower or its Subsidiaries; (iv) the Borrower may pay dividends on
its common stock at any time when the ratio of Combined Total Debt to
Combined EBITDA of the Affiliate Guarantors, the Borrower, and their
respective Subsidiaries for the period of four consecutive fiscal
quarters most recently ended is less than 3.00:1.00, in an amount not
to exceed 25% of the Borrower's net income for the fiscal year most
recently ended; and (v) any Subsidiary of any Obligated Party may issue
Preferred Stock to such Obligated Party and pay dividends thereon.
(g) CHANGE IN NATURE OF BUSINESS. Make any material change in
the nature of its business taken as a whole as carried on at the date
of the Existing Credit Agreement, other than as a result of (i)
dispositions of assets or businesses approved by the Board of Directors
of the applicable Obligated Party or (ii) business activities engaged
in by any Obligated Party or its Subsidiaries on or prior to such date
and other similar or related activities.
(h) ACCOUNTING CHANGES. Make or permit, or permit any of its
Material Subsidiaries to make or permit, any change in its fiscal year
or any significant change in accounting policies or reporting
practices, except as required or permitted by generally accepted
accounting principles.
(i) AMENDMENT, ETC. OF REDESIGN DOCUMENTS. After the execution
and delivery of any Redesign Document, cancel or terminate such
Redesign Document or consent to, permit or accept such cancellation or
termination thereof, amend, modify or change in any manner any term or
condition of such Redesign Document or give any consent, waiver or
approval thereunder, waive any default under or any breach of any term
or condition of such Redesign Document, agree in any manner to any
other amendment, modification or change of any term or condition of
such Redesign Document or take any other action in connection with such
Redesign Document, or permit any of its Subsidiaries to do so, except
to the extent that after giving effect to any such action, the
applicable Redesign Document contains terms substantially the same as
those set forth in Exhibits G through L, as applicable, PROVIDED that
after giving effect to any such action the Amended and Restated
Agreement of Limited Partnership of BFC Investments, L.P. shall contain
provisions strictly complying with those set forth in Exhibit H as (i)
the defined term "Percentage Interest" and (ii) Section 5.3(b).
5.03. REPORTING REQUIREMENTS. So long as any Advance shall
remain unpaid, any Letter of Credit shall be outstanding or any Lender shall
have any Commitment hereunder, the Borrower will, unless the Required Lenders
shall otherwise consent in writing, furnish to the Lenders:
<PAGE> 67
62
(a) DEFAULT NOTICE. As soon as possible and in any event
within three Business Days after any officer of the Borrower obtains
knowledge of each Default continuing on the date of such statement, a
statement of the chief financial officer of the Borrower setting forth
details thereof and the action that the Borrower has taken and proposes
to take with respect thereto.
(b) QUARTERLY FINANCIALS. As soon as available and in any
event within 45 days after the end of each of the first three quarters
of each fiscal year of the Obligated Parties, a Consolidated balance
sheet of (x) the Borrower and its Subsidiaries, (y) each Affiliate
Guarantor and its Subsidiaries and (z) Borden Holdings and its
Subsidiaries, respectively, and a Combined balance sheet of the
Affiliate Guarantors, the Borrower and their respective Subsidiaries,
in each case as of the end of such quarter and Consolidated statements
of income and cash flows of (x) the Borrower and its Subsidiaries, (y)
each Affiliate Guarantor and its Subsidiaries and (z) Borden Holdings
and its Subsidiaries, respectively, and Combined statements of income
and cash flows of the Affiliate Guarantors, the Borrower and their
respective Subsidiaries, in each case for the period commencing at the
end of the previous fiscal year and ending with the end of such
quarter, setting forth in each case in comparative form the
corresponding figures for the corresponding date or period of the
preceding fiscal year, certified (subject to year-end audit
adjustments) by the chief financial officer of the Borrower as having
been prepared in accordance with GAAP, together with (i) a certificate
of said officer stating that, to the knowledge of such officer, no
Default has occurred and is continuing or, if a Default has occurred
and is continuing, a statement as to the nature thereof and the action
that the Borrower has taken and proposes to take with respect thereto
and (ii) a schedule setting forth in reasonable detail the computations
used by the Borrower in determining compliance with the covenants
contained in Section 5.04. To the extent that a Combined financial
statement is required to be delivered under this Section, if
Consolidated statements of the Affiliate Guarantors, the Borrower and
their respective Subsidiaries are filed with the Securities and
Exchange Commission in lieu of Combined statements, delivery of such
Consolidated statements shall satisfy the requirements of this Section.
(c) ANNUAL FINANCIALS. As soon as available and in any event
within 90 days after the end of each fiscal year of the Obligated
Parties, a copy of the annual audit report for such year for (w) the
Borrower and its Subsidiaries, the Affiliate Guarantors and their
Subsidiaries, (y) each Affiliate Guarantor and its Subsidiaries and (z)
Borden Holdings and its Subsidiaries, respectively, including therein a
Consolidated balance sheet of (x) the Borrower and its Subsidiaries,
(y) each Affiliate Guarantor and its Subsidiaries and
<PAGE> 68
63
(z) Borden Holdings and its Subsidiaries, respectively, and a Combined
balance sheet of the Affiliate Guarantors, the Borrower and their
respective Subsidiaries, in each case as of the end of such fiscal
year and Consolidated statements of income and cash flows of (x) the
Borrower and its Subsidiaries, (y) each Affiliate Guarantor and its
Subsidiaries and (z) Borden Holdings and its Subsidiaries, respectively
(or audited combining statements including the Borrower and the
Affiliate Guarantors if combining statements are filed with the
Securities and Exchange Commission in lieu of such separate
consolidating statements), and Combined statements of income and cash
flows of the Affiliate Guarantors, the Borrower and their respective
Subsidiaries for such fiscal year, in each case accompanied by either
an unqualified opinion, or an opinion acceptable to the Required
Lenders, of Deloitte & Touche LLP or other independent public
accountants of recognized standing acceptable to the Required Lenders,
together with (i) a certificate of such accounting firm to the Lenders
stating that in the course of the regular audit of the business of (w)
the Borrower and its Subsidiaries, (x) the Borrower, the Affiliate
Guarantors and their Subsidiaries, (y) each Affiliate Guarantor and its
Subsidiaries and (z) Borden Holdings and its Subsidiaries,
respectively, which audit was conducted by such accounting firm in
accordance with generally accepted auditing standards, such accounting
firm has obtained no knowledge that a Default has occurred and is
continuing, or if, in the opinion of such accounting firm, a Default
has occurred and is continuing, a statement as to the nature thereof
(provided that in no event shall such accountants be liable as a result
of this Agreement by reason of any failure to obtain knowledge of any
Default that would not be disclosed in the course of their audit
examination), (ii) a schedule setting forth in reasonable detail the
computations used by such accountants in determining, as of the end of
such fiscal year, compliance with the covenants contained in Section
5.04 and (iii) a certificate of the chief financial officer of the
Borrower stating that, to the knowledge of such officer, no Default has
occurred and is continuing or, if a Default has occurred and is
continuing, a statement as to the nature thereof and the action that
the Borrower has taken and proposes to take with respect thereto. To
the extent that a Combined financial statement is required to be
delivered under this Section, if Consolidated statements of the
Affiliate Guarantors, the Borrower and their respective Subsidiaries
are filed with the Securities and Exchange Commission in lieu of
Combined statements, delivery of such Consolidated statements shall
satisfy the requirements of this Section.
(d) BUDGETS; ETC. Not more than 60 days after the commencement
of each fiscal year of the Obligated Parties, budgets of each Obligated
Party on a Consolidated basis in reasonable detail for each of the four
fiscal quarters of such fiscal year as customarily prepared by
management for its internal use setting forth, with appropriate
discussion, the principal assumptions upon which such budgets are
based.
(e) ERISA. As soon as possible and, in any event, within 10
days after any Affiliate Guarantor, the Borrower, any of their
respective Subsidiaries or any ERISA Affiliate knows of the occurrence
of any of the following events which, in the aggregate would be likely
to have a Material Adverse Effect, the Borrower will deliver to each of
the Lenders a certificate of the chief financial officer or other
authorized officer of the
<PAGE> 69
64
Borrower setting forth details as to such occurrence and such action,
if any, which such Affiliate Guarantor, the Borrower, such Subsidiary,
such ERISA Affiliate, the PBGC, a Plan participant or the Plan
administrator with respect thereto: that a Reportable Event has
occurred; that an accumulated funding deficiency has been incurred or
an application is reasonably likely to be or has been made to the
Secretary of the Treasury for a waiver or modification of the minimum
funding standard (including any required installment payments) or an
extension of any amortization period under Section 412 of the Internal
Revenue Code with respect to a Plan; that a Plan has been or is
reasonably likely to be terminated, reorganized, partitioned or
declared insolvent under Title IV of ERISA; that a Plan has an Unfunded
Current Liability giving rise to a lien under ERISA or the Internal
Revenue Code; that proceedings are reasonably likely to be or have been
instituted to terminate a Plan; that a proceeding has been instituted
pursuant to Section 515 of ERISA to collect a delinquent contribution
to a Plan; or that any Affiliate Guarantor, the Borrower, any of their
respective Subsidiaries or any ERISA Affiliate will or is reasonably
likely to incur any liability (including any contingent or secondary
liability) to or on account of the termination of or withdrawal from a
Plan under Section 4062, 4063, 4064, 4069, 4201 or 4204 of ERISA or
with respect to a Plan under Section 4971 or 2975 of the Internal
Revenue Code or Section 409 or 502(i) or 502(l) of ERISA.
(f) LITIGATION. Promptly after the commencement thereof,
notice of all actions, suits, investigations, litigation and
proceedings before any court or governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign,
affecting any Affiliate Guarantor, the Borrower or any of their
respective Subsidiaries which the Borrower reasonably believes would be
likely to have a Material Adverse Effect.
(g) SECURITIES REPORTS. Promptly after the sending or filing
thereof, copies of all proxy statements, financial statements and
reports that any Affiliate Guarantor, the Borrower or any of their
respective Subsidiaries sends to the public stockholders of the
Borrower or any Affiliate Guarantor and copies of all reports on Forms
10-Q, 10-K and 8-K that any Affiliate Guarantor, the Borrower or any of
their respective Subsidiaries files with the Securities and Exchange
Commission or any governmental authority that may be substituted
therefor.
(h) AGREEMENT NOTICES. Promptly upon receipt thereof, copies
of all notices, requests and other documents received by any Affiliate
Guarantor, the Borrower or any of their respective Subsidiaries under
or pursuant to any Related Document and, from time to time upon request
by the Administrative Agent, such information and reports regarding the
Related Documents as the Administrative Agent may reasonably request.
(i) ENVIRONMENTAL MATTERS. Promptly after obtaining knowledge
of any of the following environmental matters, unless such
environmental matters would not,
<PAGE> 70
65
individually or when aggregated with all other such matters, be likely
to have a Material Adverse Effect, written notice of (i) any pending or
threatened material Environmental Claim against any Affiliate
Guarantor, the Borrower or any of their respective Subsidiaries or any
Real Property; (ii) any condition or occurrence on any Real Property
that (x) results in material noncompliance by any Affiliate Guarantor,
the Borrower or any of their respective Subsidiaries with any
applicable Environmental Law or (y) would be likely to form the basis
of a material Environmental Claim against any Affiliate Guarantor, the
Borrower or any of their respective Subsidiaries or any Real Property;
(iii) any condition or occurrence on any material Real Property that
could reasonably be anticipated to cause such Real Property to be
subject to any restrictions on the ownership, occupancy, use or
transferability of such Real Property under any Environmental Law; and
(iv) the taking of any material removal or remedial action in response
to the actual or alleged presence of any Hazardous Material on any Real
Property. All such notices shall describe in reasonable detail the
nature of the claim, investigation, condition, occurrence or removal or
remedial action and such Affiliate Guarantor's or the Borrower's
response thereto.
(j) OTHER INFORMATION. Such other information respecting the
business, condition (financial or otherwise), operations, performance,
properties or prospects of any Affiliate Guarantor, the Borrower or any
of their respective Subsidiaries as any Lender through the
Administrative Agent may from time to time reasonably request.
SECTION 5.04. FINANCIAL COVENANTS. So long as any Advance
shall remain unpaid, any Letter of Credit shall be outstanding or any Lender
shall have any Commitment hereunder, the Obligated Parties will, unless the
Required Lenders otherwise consent in writing:
(a) EBITDA/NET INTEREST EXPENSE. Maintain a ratio of Combined
EBITDA of the Affiliate Guarantors, the Borrower and their respective
Subsidiaries to Combined Net Interest Expense of not less than the
amount set forth below for each period of four consecutive fiscal
quarters ended at the dates set forth below:
<TABLE>
<CAPTION>
QUARTER ENDING RATIO
-------------- -----
<S> <C>
March 31, 1996 2.00:1.00
June 30, 1996 2.00:1.00
September 30, 1996 2.15:1.00
December 31, 1996 2.25:1.00
March 31, 1997 2.25:1.00
June 30, 1997 2.25:1.00
September 30, 1997 2.35:1.00
December 31, 1997 2.50:1.00
March 31, 1998 2.50:1.00
</TABLE>
<PAGE> 71
66
<TABLE>
<S> <C>
June 30, 1998 2.50:1.00
September 30, 1998 2.60:1.00
December 31, 1998 2.75:1.00
March 31, 1999 2.75:1.00
June 30, 1999 2.75:1.00
September 30, 1999 2.85:1.00
December 31, 1999 3.00:1.00
</TABLE>
(b) TOTAL DEBT/EBITDA RATIO. Maintain a ratio of Combined
Total Debt to Combined EBITDA of the Affiliate Guarantors, the Borrower
and their respective Subsidiaries of not more than the amount set forth
below for each period of four consecutive fiscal quarters ended at the
dates set forth below:
<TABLE>
<CAPTION>
QUARTER ENDING RATIO
-------------- -----
<S> <C>
March 31, 1996 5.25:1.00
June 30, 1996 5.25:1.00
September 30, 1996 5.00:1.00
December 31, 1996 4.75:1.00
March 31, 1997 4.75:1.00
June 30, 1997 4.75:1.00
September 30, 1997 4.55:1.00
December 31, 1997 4.50:1.00
March 31, 1998 4.35:1.00
June 30, 1998 4.35:1.00
September 30, 1998 4.35:1.00
December 31, 1998 4.35:1.00
March 31, 1999 3.90:1.00
June 30, 1999 3.90:1.00
September 30, 1999 3.90:1.00
December 31, 1999 3.90:1.00
</TABLE>
(c) CAPITAL EXPENDITURES. Not make, or permit any of its
Subsidiaries to make, any Capital Expenditures that would cause the
aggregate of all such Capital Expenditures made by the Affiliate
Guarantors, the Borrower and their respective Subsidiaries in any
<PAGE> 72
67
fiscal year ended on the dates set forth below to exceed the amount set
forth below for such fiscal year:
<TABLE>
<CAPTION>
YEAR ENDED AMOUNT
---------- ------
<S> <C>
December 31, 1995 $275,000,000
December 31, 1996 250,000,000
December 31, 1997 225,000,000
December 31, 1998 225,000,000
December 31, 1999 225,000,000
</TABLE>
PLUS for any fiscal year Equity Proceeds received by the Borrower or
any Affiliate Guarantor on or after March 31, 1996; PROVIDED that any
Capital Expenditure permitted but not made in a prior year (commencing
with the year 1995) may be carried forward and added to the amounts set
forth above; PROVIDED FURTHER that for purposes of this Section 5.04(c)
"Capital Expenditures" shall not include any portion of any acquisition
made pursuant to Section 5.02(e) except to the extent that the Borrower
elects to include any portion thereof in "Capital Expenditures" for any
period.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. EVENTS OF DEFAULT. If any of the following
events ("EVENTS OF DEFAULT") shall occur and be continuing:
(a) the Borrower shall fail to pay when due any principal of
any Advance, or the Borrower shall fail to pay any interest or other
amount due under any Loan Document and such failure shall continue for
five or more days; or
(b) any representation or warranty made by any Obligated Party
under or in connection with any Loan Document shall prove to have been
incorrect in any material respect when made; or
(c) any Obligated Party shall fail to perform or observe any
term, covenant or agreement contained in Sections 5.01(e), 5.02 or
5.04; or
(d) any Obligated Party shall fail to perform any other term,
covenant or agreement contained in any Loan Document on its part to be
performed or observed if such
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failure shall remain unremedied for 30 days after written notice
thereof shall have been received by the Borrower from the
Administrative Agent or the Required Lenders; or
(e) any Loan Party or any of its Subsidiaries shall default in
any payment with respect to any Indebtedness in excess of $15,000,000
individually or $30,000,000 in the aggregate (but excluding
Indebtedness outstanding hereunder) of such Loan Party and its
Subsidiaries, when the same becomes due and payable (whether by
scheduled maturity, required prepayment, acceleration, demand or
otherwise), and such failure shall continue after the applicable grace
period, if any, specified in the agreement or instrument relating to
such Indebtedness; or any other event shall occur or condition shall
exist under any agreement or instrument relating to any such
Indebtedness and shall continue after the applicable grace period, if
any, specified in such agreement or instrument, if the effect of such
event or condition is to accelerate, or to permit the acceleration of,
the maturity of such Indebtedness or otherwise to cause, or to permit
the holder thereof to cause, such Indebtedness to mature; or any such
Indebtedness shall be declared to be due and payable or required to be
prepaid or redeemed (other than by a regularly scheduled required
prepayment or redemption), purchased or defeased, or an offer to
prepay, redeem, purchase or defease such Indebtedness shall be required
to be made, in each case prior to the stated maturity thereof; or
(f) any Loan Party or any of its Material Subsidiaries shall
generally not pay its debts as such debts become due, or shall admit in
writing its inability to pay its debts generally, or shall make a
general assignment for the benefit of creditors; or any proceeding
shall be instituted by or against any Loan Party or any of its Material
Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts under
any law relating to bankruptcy, insolvency or reorganization or relief
of debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, or other similar official for it or
for any substantial part of its property and, in the case of any such
proceeding instituted against it (but not instituted by it) that is
being diligently contested by it in good faith, either such proceeding
shall remain undismissed or unstayed for a period of 60 days or any of
the actions sought in such proceeding (including, without limitation,
the entry of an order for relief against, or the appointment of a
receiver, trustee, custodian or other similar official for, it or any
substantial part of its property) shall occur; or any Loan Party or any
of its Material Subsidiaries shall take any corporate action to
authorize any of the actions set forth above in this subsection (f); or
(g) any judgment or order for the payment of money in excess
of $15,000,000 individually or $30,000,000 in the aggregate (to the
extent not paid or fully covered by insurance provided by a carrier
that has acknowledged coverage) shall be rendered against
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any Loan Party or any of its Subsidiaries and any such judgment or
order shall not have been vacated, discharged or stayed or bonded
pending appeal within 60 days from the entry thereof; or
(h) (i) KKR and its Affiliates or Subsidiaries shall cease to
have beneficial ownership (within the meaning of Rule 13d-3 of the
Securities and Exchange Commission under the Securities Exchange Act of
1934), directly or indirectly, of Voting Stock of the Borrower and each
Affiliate Guarantor that has not been released in accordance with
Section 7.05 (or other Securities convertible into such Voting Stock)
representing 50.1% or more of the combined voting power of all Voting
Stock of the Borrower and each such Affiliate Guarantor, PROVIDED that
the percentage required by this subsection (i) shall be reduced to 35%
or more eighteen months from the date of the initial Borrowing provided
that the Borrower's Public Debt Rating is an Investment Grade Rating;
or (ii) individuals selected by KKR and its Affiliates or Subsidiaries
(other than the Borrower or an Affiliate Guarantor that has not been
released in accordance with Section 7.05) shall fail to constitute a
majority of the Board of Directors of the Borrower or such Affiliate
Guarantor; or
(i) (i) Any Plan shall fail to satisfy the minimum funding
standard required for any plan year or part thereof or a waiver of such
standard or extension of any amortization period is sought or granted
under Section 412 of the Internal Revenue Code; any Plan is, shall have
been or is likely to be terminated or the subject of termination
proceedings under ERISA; any Plan shall have an Unfunded Current
Liability; or any Affiliate Guarantor, the Borrower, any of their
respective Subsidiaries or any ERISA Affiliate has incurred or is
likely to incur a liability to or on account of a Plan under Section
409, 502(i), 502(1), 515, 4062, 4063, 4064, 4069, 4201 or 4204 of ERISA
or Section 4971 or 4975 of the Internal Revenue Code; and (ii) there
shall result from any such event or events referred to in clause (i)
above the imposition of a lien, the granting of a security interest, or
a liability or a material risk of incurring a liability, on the part of
any Affiliate Guarantor, the Borrower, any of their respective
Subsidiaries or any ERISA Affiliate, which in each case would be likely
to have a Material Adverse Effect;
then, and in any such event, the Administrative Agent (i) shall at the request,
or may with the consent, of the Required Lenders, by notice to the Borrower,
declare the obligation of each Appropriate Lender to make Advances and of any
Issuing Bank to issue Letters of Credit to be terminated, whereupon the same
shall forthwith terminate, and (ii) shall at the request, or may with the
consent, of the Required Lenders, by notice to the Borrower, declare the Notes,
all interest thereon and all other amounts payable under this Agreement and the
other Loan Documents to be forthwith due and payable, whereupon the Notes, all
such interest and all such amounts shall become and be forthwith due and
payable, without presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived by the Borrower;
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PROVIDED, HOWEVER, that in the event of an actual or deemed entry of an order
for relief with respect to any Loan Party under the Federal Bankruptcy Code, (x)
the obligation of each Lender to make Advances and of each Issuing Bank to issue
Letters of Credit shall automatically be terminated and (y) the Notes, all such
interest and all such amounts shall automatically become and be due and payable,
without presentment, demand, protest or any notice of any kind, all of which are
hereby expressly waived by the Borrower.
SECTION 6.02. ACTIONS IN RESPECT OF THE LETTERS OF CREDIT UPON
DEFAULT. If any Event of Default shall have occurred and be continuing, the
Administrative Agent shall at the request, or may with the consent, of the
Required Lenders, irrespective of whether it is taking any of the actions
described in Section 6.01 or otherwise, make demand upon the Borrower to, and
forthwith upon such demand the Borrower will, pay to the Administrative Agent on
behalf of the Lenders in same day funds at the Administrative Agent's office
designated in such demand, for deposit in the L/C Account, an amount equal to
the aggregate Available Amount of all Letters of Credit then outstanding. If at
any time the total amount of such funds is less than the aggregate Available
Amount of all Letters of Credit, the Borrower will, forthwith upon demand by the
Administrative Agent, pay to the Administrative Agent, as additional funds to be
deposited and held in the L/C Account, an amount equal to the excess of (a) such
aggregate Available Amount over (b) the total amount of funds, if any, then held
in the L/C Account.
ARTICLE VII
GUARANTY
SECTION 7.01. UNCONDITIONAL GUARANTY; LIMITATION OF LIABILITY.
(a) Each Affiliate Guarantor hereby absolutely and unconditionally guarantees
the punctual payment when due, whether at stated maturity, by acceleration or
otherwise, of all obligations of each other Obligated Party now or hereafter
existing under the Loan Documents whether for principal, interest, fees,
expenses or otherwise (such obligations being the "GUARANTEED OBLIGATIONS"), and
agrees to pay any and all reasonable expenses (including reasonable counsel fees
and expenses) incurred by the Administrative Agent or any Lender in enforcing
any rights under this Article VII. Without limiting the generality of the
foregoing, each Affiliate Guarantor's liability shall extend to all amounts that
constitute part of the Guaranteed Obligations and would be owed by any Obligated
Party to the Administrative Agent or any Lender under the Loan Documents but for
the fact that they are unenforceable or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding involving such Obligated Party.
(b) The aggregate liability of each Affiliate Guarantor under this
Article VII and under guaranties by such Affiliate Guarantor permitted by
Section 5.02(b)(xii) shall not exceed the greater of (i) the net benefit
realized by such Affiliate Guarantor from the proceeds of the
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Advances made from time to time by the Borrower to such Affiliate Guarantor or
any Subsidiary of such Affiliate Guarantor and (ii) the greater of (x) 95% of
the Adjusted Net Assets of such Affiliate Guarantor on the date of delivery
hereof and (y) 95% of the Adjusted Net Assets of such Affiliate Guarantor on the
date of any payment hereunder. "ADJUSTED NET ASSETS" of any Affiliate Guarantor
at any date means the lesser of (x) the amount by which the fair value of the
property of such Affiliate Guarantor exceeds the total amount of liabilities,
including, without limitation, contingent liabilities, but excluding liabilities
under this Article VII and liabilities under guaranties by such Affiliate
Guarantor permitted by Section 5.02(b)(xii), of such Affiliate Guarantor at such
date and (y) the amount by which the present fair salable value of the assets of
such Affiliate Guarantor at such date exceeds the amount that will be required
to pay the probable liability of such Affiliate Guarantor on its debts,
excluding debt in respect of this Article VII and debt in respect of guaranties
by such Affiliate Guarantor permitted by Section 5.02(b)(xii), as they become
absolute and matured.
SECTION 7.02. GUARANTY ABSOLUTE. Each Affiliate Guarantor
guarantees that the Guaranteed Obligations will be paid strictly in accordance
with the terms of the Loan Documents, regardless of any law, regulation or order
now or hereafter in effect in any jurisdiction affecting any of such terms or
the rights of the Administrative Agent or any Lender with respect thereto. The
obligations of each Affiliate Guarantor under this Article VII are independent
of the Guaranteed Obligations, and a separate action or actions may be brought
and prosecuted against each Affiliate Guarantor to enforce this Article VII,
irrespective of whether any action is brought against the Borrower or any other
Affiliate Guarantor or whether the Borrower or any other Affiliate Guarantor is
joined in any such action or actions. The liability of each Affiliate Guarantor
under this Article VII shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of any Loan
Document or any agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Guaranteed Obligations, or any
other amendment or waiver of or any consent to departure from any Loan
Document other than this Article VII, including, without limitation,
any increase in the Guaranteed Obligations resulting from the extension
of additional credit to the Borrower or otherwise;
(c) any taking, exchange, release or non-perfection of any
collateral, or any taking, release or amendment or waiver of or consent
to departure from any other guaranty, for all or any of the Guaranteed
Obligations;
(d) any manner of application of collateral, or proceeds
thereof, to all or any of the Guaranteed Obligations, or any manner of
sale or other disposition of any collateral
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for all or any of the Guaranteed Obligations or any other assets of the
Borrower or any other Obligated Party or any of their respective
Subsidiaries;
(e) any change, restructuring or termination of the corporate
structure or existence of the Borrower or any other Obligated Party or
any of their respective Subsidiaries; or
(f) any other circumstance (including, without limitation, any
statute of limitations) that might otherwise constitute a defense
available to, or a discharge of, the Borrower, any other Obligated
Party or a guarantor.
This guaranty shall continue to be effective or shall be reinstated, as the case
may be, if at any time any payment of any of the Guaranteed Obligations is
rescinded or must otherwise be returned by the Administrative Agent or any
Lender upon the insolvency, bankruptcy or reorganization of the Borrower, any
other Obligated Party or otherwise, all as though such payment had not been
made.
SECTION 7.03. WAIVERS. Each Affiliate Guarantor hereby waives
to the extent permitted by applicable law:
(a) promptness, diligence, notice of acceptance and any other
notice with respect to any of the Guaranteed Obligations and this
Article VII;
(b) any requirement that the Administrative Agent, any Lender
or any other Person protect, secure, perfect or insure any Lien or any
property subject thereto or exhaust any right or take any action
against the Borrower, any Affiliate Guarantor or any other Person or
any collateral;
(c) any defense arising by reason of any claim or defense
based upon an election of remedies by the Administrative Agent or any
Lender that in any manner impairs, reduces, releases or otherwise
adversely affects its subrogation, contribution or reimbursement rights
or other rights to proceed against the Borrower, any Affiliate
Guarantor or any other Person or any collateral; and
(d) any duty on the part of the Administrative Agent or any
Lender to disclose to such Affiliate Guarantor any matter, fact or
thing relating to the business, operation or condition of any Obligated
Party and its assets now or hereafter known by the Administrative Agent
or such Lender, as the case may be.
SECTION 7.04. SUBROGATION. No Affiliate Guarantor will
exercise any rights that it may now or hereafter acquire against the Borrower,
any other Obligated Party or any other
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insider guarantor that arise from the existence, payment, performance or
enforcement of such Affiliate Guarantor's obligations under this Article VII
or any other Loan Document, including, without limitation, any right of
subrogation, reimbursement, exoneration, contribution or indemnification and
any right to participate in any claim or remedy of the Administrative Agent or
any Lender against the Borrower, any other Obligated Party or any other insider
guarantor or any collateral, whether or not such claim, remedy or right arises
in equity or under contract, statute or common law, including, without
limitation, the right to take or receive from the Borrower, any other Obligated
Party or any other insider guarantor, directly or indirectly, in cash or other
property or by set-off or in any other manner, payment or security on account
of such claim, remedy or right, unless and until all of the Guaranteed
Obligations and all other amounts payable under this Article VII shall have
been paid in full in cash and the Commitments shall have expired or terminated.
If any amount shall be paid to any Affiliate Guarantor in violation of the
preceding sentence at any time prior to the later of the payment in full in
cash of the Guaranteed Obligations and all other amounts payable under this
Article VII and the Termination Date, such amount shall be held in trust for
the benefit of the Administrative Agent and the Lenders and the beneficiaries
of guaranties made by the Affiliate Guarantors as permitted by Section
5.02(b)(xii) and shall forthwith be paid to the Administrative Agent and such
other beneficiaries, and if delivered to the Administrative Agent shall be
credited and applied to the Guaranteed Obligations and all other amounts
payable under this Article VII, whether matured or unmatured, in accordance
with the terms of the Loan Documents, or held as collateral for any Guaranteed
Obligations or other amounts payable under this Article VII thereafter arising.
If (i) any Affiliate Guarantor shall make payment to the Administrative Agent
or any Lender of all or any part of the Guaranteed Obligations, (ii) all of the
Guaranteed Obligations and all other amounts payable under this Article VII
shall be paid in full in cash and (iii) the Termination Date shall have
occurred, the Administrative Agent and the Lenders will, at such Affiliate
Guarantor's request and expense, execute and deliver to such Affiliate
Guarantor appropriate documents, without recourse and without representation or
warranty, necessary to evidence the transfer by subrogation to such Affiliate
Guarantor of an interest in the Guaranteed Obligations resulting from such
payment by such Affiliate Guarantor.
SECTION 7.05. RELEASE AND TERMINATION. (a) Upon the sale,
transfer or other disposition of all or any portion of the common stock of any
Affiliate Guarantor (including through the primary issuance and sale of shares
of common stock) that the Borrower elects by notice to the Administrative Agent
to designate as a "Guarantee Release Event", the Administrative Agent will, at
the Borrower's expense, execute and deliver to such Affiliate Guarantor such
documents as such Affiliate Guarantor shall reasonably request to evidence the
release of such Affiliate Guarantor from its obligations under this Agreement,
PROVIDED, that (i) at the time of such designation and such release no Default
shall have occurred and be continuing, (ii) such sale, transfer or disposition
is in compliance with Section 5.02(d) and (iii) the proceeds of such sale,
transfer or disposition required to be applied pursuant to Section 2.06 shall be
so applied.
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(b) Upon the payment in full of the Guaranteed Obligations (on
or after the Termination Date), the Administrative Agent will, at the Borrower's
expense, execute and deliver to each Affiliate Guarantor such documents as such
Affiliate Guarantor shall reasonably request to evidence the termination of the
obligations of such Affiliate Guarantor under this Agreement.
(c) Upon the earlier of the occurrence of a "Guarantee Release
Event" in accordance with subsection (a) above or the termination of obligations
pursuant to subsection (b) above, the applicable Affiliate Guarantor shall be
released from the guaranty of such Affiliate Guarantor under this Article VII
and from all other obligations of such Affiliate Guarantor under this Agreement
and each other Loan Document and such Affiliate Guarantor shall cease to be an
"Affiliate Guarantor" or an "Obligated Party" hereunder.
ARTICLE VIII
THE AGENTS
SECTION 8.01. AUTHORIZATION AND ACTION. Each Lender hereby
appoints and authorizes the Administrative Agent to take such action as agent on
its behalf and to exercise such powers and discretion under this Agreement and
the other Loan Documents as are delegated to the Administrative Agent by the
terms hereof and thereof, together with such powers and discretion as are
reasonably incidental thereto. As to any matters not expressly provided for by
the Loan Documents (including, without limitation, enforcement or collection of
the Notes), the Administrative Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Required Lenders, and such instructions shall be
binding upon all Lenders and all holders of Notes; PROVIDED, HOWEVER, that the
Administrative Agent shall not be required to take any action that exposes the
Administrative Agent to personal liability or that is contrary to this Agreement
or applicable law. The Administrative Agent agrees to give to each Lender prompt
notice of each notice given to it by the Borrower pursuant to the terms of this
Agreement.
SECTION 8.02. RELIANCE, ETC. (a) None of the Administrative
Agent, any Lead Managing Agent or any Arranger or any of their respective
directors, officers, agents or employees shall be liable for any action taken or
omitted to be taken by it or them under or in connection with the Loan
Documents, except for its or their own gross negligence or willful misconduct.
Without limitation of the generality of the foregoing, the Administrative Agent:
(i) may treat the payee of any Note as the holder thereof until the
Administrative Agent receives and accepts an Assignment and Acceptance entered
into by the Lender that is the payee of such Note, as assignor, and an Eligible
Assignee, as assignee, as provided in Section 9.07; (ii) may consult with legal
counsel (including counsel for any Loan Party), independent public accountants
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and other experts selected by it and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the advice of such
counsel, accountants or experts; (iii) makes no warranty or representation to
any Lender and shall not be responsible to any Lender for any statements,
warranties or representations made in or in connection with the Loan Documents;
(iv) shall not have any duty to ascertain or to inquire as to the performance or
observance of any of the terms, covenants or conditions of any Loan Document on
the part of any Loan Party or to inspect the property (including the books and
records) of any Loan Party; (v) shall not be responsible to any Lender for the
due execution, legality, validity, enforceability, genuineness, sufficiency or
value of, or the perfection or priority of any Lien created or purported to be
created under or in connection with, any Loan Document or any other instrument
or document furnished pursuant hereto; and (vi) shall incur no liability under
or in respect of any Loan Document by acting upon any notice, consent,
certificate or other instrument or writing (which may be by telegram, telecopy,
cable or telex) believed by it to be genuine and signed or sent by the proper
party or parties.
(b) The Lead Managing Agents and the Arrangers, as such, shall
have no duties or obligations whatsoever with respect to this Agreement, the
Notes or any other document or any matter related thereto.
SECTION 8.03. LEAD MANAGING AGENTS AND AFFILIATES. With
respect to their respective Commitments, the Advances made by them and the Notes
issued to them, each of the Lead Managing Agents shall have the same rights and
powers under the Loan Documents as any other Lender and may exercise the same as
though it or its Affiliate were not the Administrative Agent, a Lead Managing
Agent or an Arranger, as the case may be; and the term "Lender" or "Lenders"
shall, unless otherwise expressly indicated, include each of the Lead Managing
Agents in its individual capacity. Each of the Lead Managing Agents and its
respective affiliates may accept deposits from, lend money to, act as trustee
under indentures of, accept investment banking engagements from and generally
engage in any kind of business with, any Loan Party, any of its Subsidiaries and
any Person who may do business with or own securities of any Loan Party or any
such Subsidiary, all as if such Lead Managing Agent or any of its respective
Affiliates were not the Administrative Agent, a Lead Managing Agent or an
Arranger, as the case may be, and without any duty to account therefor to the
Lenders.
SECTION 8.04. LENDER CREDIT DECISION. Each Lender acknowledges
that it has, independently and without reliance upon the Administrative Agent,
the Lead Managing Agents, any Arranger or any other Lender and based on the
financial statements referred to in Section 4.01 and such other documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Administrative Agent, the Lead
Managing Agents, any Arranger or any other Lender and based on such documents
and information as it shall deem
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appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement.
SECTION 8.05. INDEMNIFICATION. Each Lender severally agrees to
indemnify each Agent (to the extent not promptly reimbursed by the Borrower)
from and against such Lender's ratable share of any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever that may be imposed
on, incurred by, or asserted against such Agent in any way relating to or
arising out of the Loan Documents or any action taken or omitted by such Agent
under the Loan Documents; PROVIDED, HOWEVER, that no Lender shall be liable for
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from such
Agent's gross negligence or willful misconduct. Without limitation of the
foregoing, each Lender agrees to reimburse each Agent promptly upon demand for
its ratable share of any costs and expenses payable by the Borrower under
Section 9.04, to the extent that such Agent is not promptly reimbursed for such
costs and expenses by the Borrower. For purposes of this Section 8.05, the
Lenders' respective Ratable Shares of any amount shall be determined, at any
time, according to the sum of (a) the aggregate principal amount of the Advances
outstanding at such time and owing to the respective Lenders, (b) their
respective Ratable Shares of the aggregate Available Amount of all Letters of
Credit outstanding at such time and (c) their respective Unused Working Capital
Commitments at such time. In the event that any Defaulted Advance shall be owing
by any Defaulting Lender at any time, such Lender's Commitment with respect to
the Advance under which such Defaulted Advance was required to have been made
shall be considered to be unused for purposes of this Section 8.05 to the extent
of the amount of such Defaulted Advance. The failure of any Lender to reimburse
any Agent promptly upon demand for its ratable share of any amount required to
be paid by the Lenders to such Agent as provided herein shall not relieve any
other Lender of its obligation hereunder to reimburse such Agent for its ratable
share of such amount, but no Lender shall be responsible for the failure of any
other Lender to reimburse such Agent for such other Lender's ratable share of
such amount.
SECTION 8.06. SUCCESSOR ADMINISTRATIVE AGENT. The
Administrative Agent may resign as to all of the Facilities at any time by
giving written notice thereof to the Lenders and the Borrower and may be removed
at any time with or without cause by the Required Lenders. Upon any such
resignation or removal, the Required Lenders shall have the right to appoint a
successor Administrative Agent. If no successor Administrative Agent shall have
been so appointed by the Required Lenders, and shall have accepted such
appointment, within 30 days after the retiring Administrative Agent's giving of
notice of resignation or the Required Lenders' removal of the retiring
Administrative Agent, then the retiring Administrative Agent may, on behalf of
the Lenders, appoint a successor Administrative Agent, which shall be a
commercial bank organized under the laws of the United States or of any State
thereof and having a combined capital and surplus of at least $250,000,000. Upon
the acceptance of any appointment as Administrative Agent hereunder by a
successor Administrative Agent as to all of the Facilities, such successor
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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. After any retiring Administrative Agent's
resignation or removal hereunder as Administrative Agent, the provisions of
this Article VIII shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Administrative Agent under this Agreement.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. AMENDMENTS, ETC. No amendment or waiver of any
provision of this Agreement or the Notes, nor consent to any departure by the
Borrower therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Required Lenders, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given; PROVIDED, HOWEVER, that no amendment, waiver or consent shall,
unless in writing and signed by each Lender affected thereby (other than any
Lender which is, at such time, a Defaulting Lender) directly: (i) reduce the
percentage of the Commitments or of the aggregate unpaid principal amount of the
Notes, or the number of Lenders, that shall be required for the Lenders or any
of them to take any action hereunder, (ii) amend this Section 9.01, (iii) extend
the scheduled time of payment of any interest or commitment fee or Letter of
Credit fee owing to such Lender, (iv) increase the aggregate amount of the
Commitments of such Lender, (v) reduce the stated rate of interest borne by the
Advances owing to such Lender (other than as a result of waiving the
applicability of any post-default increase in interest rates), forgive all or
any part of the principal amount thereof or reduce the stated rate for
calculating any commitment fee or Letter of Credit fee owing to such Lender,
(vi) extend the final scheduled maturity of any Advance owing to such Lender or
(vii) release any Affiliate Guarantor from its obligations under Article VII
except as expressly provided in Section 7.05; PROVIDED FURTHER that no
amendment, waiver or consent shall, unless in writing and signed by each Issuing
Bank, in addition to the Lenders required above to take such action, affect the
rights or obligations of the Issuing Banks under this Agreement; and PROVIDED
FURTHER that no amendment, waiver or consent shall, unless in writing and signed
by the Administrative Agent in addition to the Lenders required above to take
such action, affect the rights or duties of the Administrative Agent under this
Agreement or any Note.
SECTION 9.02. NOTICES, ETC. All notices and other
communications provided for hereunder shall be in writing (including
telegraphic, telecopy, telex or cable communication) and mailed, telegraphed,
telecopied, telexed, cabled or delivered, if to the Borrower, at its address at
180 East Broad Street, Columbus, Ohio 43215-3799, Attention: Vice President and
Treasurer; if to Foods Holdings, at its address at 80 East Broad Street,
Columbus, Ohio 43215-3799; if to
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Wise Holdings, at its address at 80 East Broad Street, Columbus, Ohio
43215-3799; if to any Bank, at its Domestic Lending Office specified opposite
its name on Schedule I hereto; if to any other Lender, at its Domestic Lending
Office specified in the Assignment and Acceptance pursuant to which it became a
Lender; if to Credit Suisse, in its capacity as an Issuing Bank, at its address
at One Liberty Plaza, 165 Broadway, New York, New York 10006, Attention: Trade
Services Department, with a copy to 12 East 49th Street, New York, New York
10017, Attention: Lisa Perrotto; and if to the Administrative Agent, at its
address at 1 Court Square, 7th Floor, Long Island City, New York 11120,
Attention: John Makrinos, with a copy to 399 Park Avenue, New York, New York
10043, Attention: Michel Pendill; or, as to the Borrower or the Administrative
Agent, at such other address as shall be designated by such party in a written
notice to the other parties and, as to each other party, at such other address
as shall be designated by such party in a written notice to the Borrower and the
Administrative Agent. All such notices and communications shall, when mailed,
telegraphed, telecopied, telexed or cabled, be effective when deposited in the
mails, delivered to the telegraph company, transmitted by telecopier, confirmed
by telex answerback or delivered to the cable company, respectively, except that
notices and communications to the Administrative Agent pursuant to Article II,
III or VIII shall not be effective until received by the Administrative Agent.
SECTION 9.03. NO WAIVER; REMEDIES. No failure on the part of
any Lender, any Arranger or the Administrative Agent to exercise, and no delay
in exercising, any right hereunder or under any Note shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right preclude any
other or further exercise thereof or the exercise of any other right. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
SECTION 9.04. COSTS AND EXPENSES. (a) The Borrower agrees to
pay on demand (i) all reasonable and documented costs and out-of-pocket expenses
of each Agent in connection with the preparation, execution, delivery and
amendment of the Loan Documents (including, without limitation, (A) all due
diligence, syndication (including printing, distribution and bank meetings),
transportation, computer, telecommunications, duplication, audit, insurance,
consultant, search, filing and recording fees and all other out-of-pocket
expenses in an aggregate amount agreed to by the Arrangers and the Borrower and
(B) the reasonable and documented fees and out-of-pocket expenses of counsel for
the Lead Managing Agents and the Arrangers) with respect thereto, with respect
to advising the Administrative Agent as to its rights and responsibilities, or
the perfection, protection or preservation of rights or interests, under the
Loan Documents, with respect to negotiations with any Loan Party or with other
creditors of any Loan Party or any of its Subsidiaries arising out of any
Default or any events or circumstances that may give rise to a Default and with
respect to presenting claims in or otherwise participating in or monitoring any
bankruptcy, insolvency or other similar proceeding involving creditors' rights
generally and any proceeding ancillary thereto), (ii) all reasonable and
documented costs and out-of-pocket expenses of the Administrative Agent in
connection with the administration of the Loan Documents and (iii) all
reasonable and documented costs and out-of-pocket expenses of the
<PAGE> 84
79
Administrative Agent and the Lenders in connection with the enforcement of the
Loan Documents, whether in any action, suit or litigation, any bankruptcy,
insolvency or other similar proceeding affecting creditors' rights generally or
otherwise (including, without limitation, the reasonable and documented fees and
out-of-pocket expenses of counsel for the Administrative Agent and each Lender
with respect thereto).
(b) The Borrower agrees to indemnify and hold harmless each
Agent and each Lender and each of their respective Affiliates and their
respective officers, directors, employees, agents and advisors (each, an
"INDEMNIFIED PARTY") from and against any and all claims, damages, losses,
liabilities and expenses (including, without limitation, reasonable and
documented fees and expenses of counsel) that may be incurred by or asserted or
awarded against any Indemnified Party, in each case arising out of or in
connection with or by reason of, or in connection with the preparation for a
defense of, any investigation, litigation or proceeding arising out of, related
to or in connection with this Agreement (including, without limitation, the
Notes and any of the transactions contemplated herein or in any other Loan
Document or any Related Document or the actual or proposed use of the Letters of
Credit or the proceeds of the Advances) whether or not such investigation,
litigation or proceeding is brought by any Loan Party, its directors,
shareholders or creditors or an Indemnified Party or any Indemnified Party is
otherwise a party thereto and whether or not the transactions contemplated
hereby are consummated, except to the extent such claim, damage, loss, liability
or expense results from such Indemnified Party's gross negligence or willful
misconduct. The Borrower also agrees not to assert any claim against any Agent
or any Lender or any of their respective Affiliates or any of their respective
directors, officers, employees, attorneys and agents, on any theory of
liability, for special, indirect, consequential or punitive damages arising out
of or otherwise relating to the Notes, this Agreement, any of the transactions
contemplated herein or in any other Loan Document or the actual or proposed use
of the Letters of Credit or the proceeds of the Advances.
Each Indemnified Party agrees to notify the Borrower, promptly
after obtaining actual knowledge thereof, of the assertion against it or any
other Person of any claim or the commencement of any action or proceeding
relating to this Agreement (including, without limitation, the Notes and any of
the transactions contemplated herein or in any other Loan Document or any
Related Document or the actual or proposed use of the proceeds of the Advances)
which such Indemnified Party considers to be a claim, action or proceeding with
respect to which it is entitled to indemnification hereunder, but failure to so
notify will not relieve the Borrower from any liability under this Section
9.04(b). Each Indemnified Party will be entitled to defend any such claim,
action or proceeding, and may employ or retain counsel to represent it in, and
to defend, such claim, action or proceeding and the Borrower will pay the
reasonable and documented fees and out-of-pocket expenses of such counsel;
PROVIDED, HOWEVER, that the Indemnified Parties shall, to the extent
practicable, choose one counsel to act on their behalf at the Borrower's
expense, which counsel, at the request of the Borrower, shall also represent and
defend the Borrower in such claim, action or proceeding unless an Indemnified
Party reasonably determines based on an opinion of outside counsel that having
common counsel
<PAGE> 85
80
would present such counsel with a conflict of interest. In the event of such
determination, such Indemnified Party or Parties shall not be required to share
counsel and shall be entitled to full indemnification for such counsel's fees
and expenses as otherwise provided herein.
(c) If any payment of principal of, or Conversion of, or
failure to Convert as a result of a withdrawn notice of Conversion, any
Eurodollar Rate Advance, LIBO Rate Advance or Fixed Rate Advance is made by the
Borrower to or for the account of a Lender other than on the last day of the
Interest Period for such Advance, as a result of a payment or Conversion
pursuant to Section 2.07, 2.10(b)(i) or 2.11(d), acceleration of the maturity of
the Notes pursuant to Section 6.01 or for any other reason, the Borrower shall,
after receipt of a written request by such Lender (which request shall set forth
in reasonable detail the basis for requesting such amount and shall also be sent
upon demand by such Lender (with a copy of such demand to the Administrative
Agent), pay to the Administrative Agent for the account of such Lender any
amounts required to compensate such Lender for any additional losses, costs or
expenses that it may reasonably incur as a result of such payment, including,
without limitation, any loss cost or expense (excluding loss of anticipated
profits) actually incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by any Lender to fund or maintain such Advance.
(d) Without prejudice to the survival of any other agreement
of the Borrower and each other Obligated Party hereunder, the agreements and
obligations of the Borrower contained in Sections 2.11, 2.13 and 9.04 shall
survive the payment in full of the principal and interest hereunder and under
the Notes.
SECTION 9.05. RIGHT OF SET-OFF. Upon (a) the occurrence and
during the continuance of any Event of Default and (b) the making of the request
or the granting of the consent specified by Section 6.01 to authorize the
Administrative Agent to declare the Notes due and payable pursuant to the
provisions of Section 6.01, each Lender and each of its branches and agencies is
hereby authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and otherwise apply any and all deposits (general
or special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by such Lender, its branches or agencies to or
for the credit or the account of the Borrower against any and all of the
obligations of the Borrower now or hereafter existing under this Agreement and
the Notes held by such Lender, irrespective of whether such Lender shall have
made any demand under this Agreement or such Note and although such obligations
may be unmatured. Each Lender agrees promptly to notify the Borrower after any
such set-off and application; PROVIDED, HOWEVER, that the failure to give such
notice shall not affect the validity of such set-off and application. The rights
of each Lender, its branches or agencies under this Section are in addition to
other rights and remedies (including, without limitation, other rights of
set-off) that such Lender, its branches or agencies may have.
<PAGE> 86
81
SECTION 9.06. BINDING EFFECT. This amendment and restatement
of the Existing Credit Agreement shall become effective when it shall have been
executed by the Borrower, the Affiliate Guarantors and the Administrative Agent
and when the Administrative Agent shall have been notified by each Bank that
such Bank has executed it and thereafter shall be binding upon and inure to the
benefit of the Borrower, the Administrative Agent and each Lender and their
respective successors and assigns, except that the Borrower shall not have the
right to assign its rights or obligations hereunder or any interest herein
without the prior written consent of the Lenders.
SECTION 9.07. ASSIGNMENTS AND PARTICIPATIONS. (a) Each Lender
(x) may assign to one or more of its Affiliates or Subsidiaries and (y) may with
the prior consent of the Administrative Agent and the Borrower (such consents
not to be unreasonably withheld or delayed) assign to one or more banks or other
entities, all or a portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Commitments, the
Advances owing to it and the Notes held by it); PROVIDED, HOWEVER, that such
assignment or any activity intended to give rise to an assignment shall not be
initiated prior to the receipt by the Lenders of notice from the Arrangers that
the syndication of this Agreement has been completed; PROVIDED FURTHER, HOWEVER,
that (i) each such assignment shall be of a uniform, and not a varying,
percentage of all such Lender's rights and obligations under and in respect of
one or more of (A) the Term Facility and (B) the Working Capital Facility and
the Receivables Back-Stop Facility Agreement (other than any right to make
Competitive Bid Advances or Competitive Bid Advances owing to it), (ii) except
in the case of an assignment to a Person that immediately prior to such
assignment was a Lender or an assignment of all of a Lender's rights and
obligations under this Agreement the amount of the Commitments of the assigning
Lender being assigned pursuant to each such assignment (determined as of the
date of the Assignment and Acceptance with respect to such assignment) shall in
no event be less than $10,000,000, (iii) each such assignment shall be to a
Lender, an Eligible Assignee or to an Affiliate or Subsidiary of the assignor,
and (iv) the parties to each such assignment shall execute and deliver to the
Administrative Agent, for its acceptance and recording in the Register, an
Assignment and Acceptance, together with any Note subject to such assignment,
and a processing and recordation fee of $3,000 for each assignment completed
after the notice referred to in the first proviso of this Section 9.07 has been
received. Upon such execution, delivery, acceptance and recording, from and
after the effective date specified in such Assignment and Acceptance, (x) the
assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Lender hereunder and (y) the
Lender assignor thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights and be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all or the remaining
portion of an assigning Lender's rights and obligations under this Agreement,
such Lender shall cease to be a party hereto).
<PAGE> 87
82
(b) By executing and delivering an Assignment and Acceptance,
the Lender assignor thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of, or the perfection or priority of any Lien created or
purported to be created under or in connection with, this Agreement or any other
instrument or document furnished pursuant hereto; (ii) such assigning Lender
makes no representation or warranty and assumes no responsibility with respect
to the financial condition of the Borrower or any other Loan Party or the
performance or observance by the Borrower or any other Loan Party of any of its
obligations under this Agreement or any other instrument or document furnished
pursuant hereto; (iii) such assignee confirms that it has received a copy of
this Agreement, together with copies of the financial statements referred to in
Section 4.01 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such assignee will, independently and without
reliance upon the Administrative Agent, such assigning Lender or any other
Lender and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under this Agreement; (v) such assignee confirms that it is a Lender, an
Eligible Assignee or an Affiliate of the assignor; (vi) such assignee appoints
and authorizes the Administrative Agent to take such action as agent on its
behalf and to exercise such powers and discretion under this Agreement as are
delegated to the Administrative Agent by the terms hereof, together with such
powers and discretion as are reasonably incidental thereto; and (vii) such
assignee agrees that it will perform in accordance with their terms all of the
obligations that by the terms of this Agreement are required to be performed by
it as a Lender.
(c) The Administrative Agent shall maintain at its address
referred to in Section 9.02 a copy of each Assignment and Acceptance delivered
to and accepted by it and a register for the recordation of the names and
addresses of the Lenders and the Commitment under each Facility of, and
principal amount of the Advances owing under each Facility to, each Lender from
time to time (the "REGISTER"). The entries in the Register shall be conclusive
and binding for all purposes, absent manifest error, and the Borrower, the
Administrative Agent and the Lenders may treat each Person whose name is
recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Borrower or any
Lender at any reasonable time and from time to time upon reasonable prior
notice.
(d) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender and an assignee, together with any Note or Notes subject
to such assignment, the Administrative Agent shall, if such Assignment and
Acceptance has been completed and is in substantially the form of Exhibit C
hereto, (i) accept such Assignment and Acceptance, (ii) record the information
contained therein in the Register and (iii) give prompt notice thereof to the
Borrower. Within five Business Days after its receipt of such notice, the
Borrower, at its own
<PAGE> 88
83
expense, shall execute and deliver to the Administrative Agent in exchange for
the surrendered Note or Notes a new Note or Notes to the order of such assignee
in an amount equal to the Commitment assumed by it under a Facility pursuant to
such Assignment and Acceptance and, if the assigning Lender has retained a
Commitment hereunder under such Facility, new Notes to the order of the
assigning Lender in an aggregate amount equal to the aggregate Commitments
retained by it hereunder. Such new Note or Notes shall be in an aggregate
principal amount equal to the aggregate principal amount of such surrendered
Note or Notes, shall be dated the effective date of such Assignment and
Acceptance and shall otherwise be in substantially the form of Exhibit A-1 or
A-2 hereto, as appropriate.
(e) Each Lender may sell participations in or to all or a
portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitments, the Advances owing to it and
the Note or Notes held by it); PROVIDED, HOWEVER, that (i) such Lender's
obligations under this Agreement (including, without limitation, its
Commitments) shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) such Lender shall remain the holder of such Note or Notes for all purposes
of this Agreement, (iv) the Borrower, the Agents and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement and (v) no participant
under any such participation and no sub-participant of such participation shall
have any right to approve any amendment or waiver of any provision of any Loan
Document, or any consent to any departure by the Borrower therefrom, except to
the extent that such amendment, waiver or consent would directly: reduce the
stated rate of interest borne by the Advances owing to such participant (other
than as a result of waiving the applicability of any post-default increase in
interest rates), forgive all or any part of the principal amount thereof, reduce
the stated rate for calculating any commitment fee or Letter of Credit fee owing
to the Lenders or extend the final scheduled maturity of any Advance owing to
such participant, in each case to the extent subject to such participation.
(f) Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
9.07, disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Borrower furnished to such Lender
by or on behalf of the Borrower; PROVIDED, HOWEVER, that, prior to any such
disclosure, the assignee or participant or proposed assignee or participant
shall have executed a confidentiality agreement substantially in the form of
Exhibit F hereto and returned to same to such Lender and the Borrower.
(g) Notwithstanding any other provision set forth in this
Agreement, any Lender may at any time create a security interest in all or any
portion of its rights under this Agreement (including, without limitation, the
Advances owing to it and the Notes held by it) in favor of any Federal Reserve
Bank in accordance with Regulation A of the Board of Governors of the Federal
Reserve System.
<PAGE> 89
84
SECTION 9.08. GOVERNING LAW. This Agreement and the Notes
shall be governed by, and construed in accordance with, the laws of the State of
New York.
SECTION 9.09. EXECUTION IN COUNTERPARTS. This Agreement 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 one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 9.10. CONFIDENTIALITY. Each Lender has heretofore
executed a confidentiality agreement in the form of Exhibit F hereto and
returned a copy thereof to the Borrower. Each Lender shall hold all non-public
information obtained pursuant to this Agreement in accordance with the terms of
such confidentiality agreement and in accordance with safe and sound banking
practices and, subject to Section 9.07, may make disclosure reasonably requested
by any bona fide transferee in connection with the contemplated transfer of any
Advances or participation therein or as required or requested by any
governmental authority or pursuant to legal process; PROVIDED that each such
transferee shall have previously signed and returned to such Lender a
confidentiality agreement in the form of Exhibit F, and such Lender agrees to
send to the Borrower promptly a copy of each such confidentiality agreement
executed by such transferee.
SECTION 9.11. RECEIVABLES FINANCINGS DOCUMENTS. The Lenders
hereto acknowledge that the transfers of receivables and "Related Security" (as
defined in the Receivables Financing Documents) from the Borrower to Borden
Receivables Corp. under the Receivables Purchase Agreement dated as of December
15, 1994 between the Borrower and Borden Receivables Corp. are intended to be
the true sales for valid consideration, that none of such property conveyed
shall remain property of the Borrower, and that Borden Receivables Corp. is a
separate corporate entity with its own creditors who would, in any liquidation
of Borden Receivables Corp. or of its assets, be entitled to be satisfied out of
Borden Receivables Corp.'s assets prior to any value in Borden Receivables Corp.
becoming available to the Borrower, as Borden Receivables Corp.'s equity holder,
or creditors of the Borrower.
SECTION 9.12. NO LIABILITY OF THE ISSUING BANKS. The Borrower
assumes all risks of the acts or omissions of any beneficiary or transferee of
any Letter of Credit with respect to its use of such Letter of Credit. Neither
any Issuing Bank nor any of its officers or directors shall be liable or
responsible for: (a) the use that may be made of any Letter of Credit or any
acts or omissions of any beneficiary or transferee in connection therewith; (b)
the validity, sufficiency or genuineness of documents, or of any endorsement
thereon, even if such documents should prove to be in any or all respects
invalid, insufficient, fraudulent or forged; (c) payment by such Issuing Bank
against presentation of documents that do not comply with the terms of a Letter
of Credit, including failure of any documents to bear any reference or adequate
reference to the
<PAGE> 90
85
Letter of Credit; or (d) any other circumstances whatsoever in making or failing
to make payment under any Letter of Credit, EXCEPT that the Borrower shall have
a claim against such Issuing Bank, and the Issuing Bank shall be liable to the
Borrower, to the extent of any direct, but not consequential, damages suffered
by the Borrower that the Borrower proves were caused by (i) such Issuing Bank's
willful misconduct or gross negligence in determining whether documents
presented under any Letter of Credit comply with the terms of such Letter of
Credit or (ii) such Issuing Bank's willful failure to make lawful payment under
a Letter of Credit after the presentation to it of a draft and certificates
strictly complying with the terms and conditions of such Letter of Credit. In
furtherance and not in limitation of the foregoing, such Issuing Bank may accept
documents that appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to the contrary.
SECTION 9.13. REDESIGN. The Lenders hereby agree that, in
accordance with Section 5.01(h), the Borrower, its Subsidiaries, the Affiliate
Guarantors and their Subsidiaries may enter into the Redesign Documents on the
following terms and conditions:
(a) Trademarks. The Borrower and its Subsidiaries may transfer
trademarks to be used by Borden Foods Holdings, LLC and its Subsidiaries to a
partnership organized pursuant to terms substantially the same as those set
forth in Exhibit H hereto, PROVIDED that the executed Amended and Restated
Agreement of Limited Partnership of BFC Investments, L.P. shall contain
provisions strictly conforming to those set forth in Exhibit H as (i) the
defined term "Percentage Interest" and (ii) Section 5.3(b).
(b) Wise Business. The Borrower and its Subsidiaries may
transfer the Wise Business to an Affiliate Guarantor and any of such Affiliate
Guarantor's Subsidiaries pursuant to terms substantially the same as those set
forth in the form of Conveyance and Transfer Agreement attached as Exhibit I
hereto, PROVIDED that (i) the consideration for the transfer of the subject
assets shall not be less than $45,000,000, which shall include Borden Holdings
Notes in an aggregate principal amount of not more than $35,000,000 and
Affiliate Notes issued by Wise Holdings, Inc. or its Subsidiaries in an
aggregate principal amount of not less than $10,000,000, plus the assumption of
liabilities as provided in the form of Conveyance and Transfer Agreement
attached as Exhibit I hereto and (ii) upon the consummation of such transfer the
Borrower and such Affiliate Guarantor shall deliver to the Administrative Agent
a certificate in the form of Exhibit J hereto.
(c) Foods Business. The Borrower and its Subsidiaries may transfer the
Foods Business to an Affiliate Guarantor and any of such Affiliate Guarantor's
Subsidiaries pursuant to terms substantially the same as those set forth in the
form of Conveyance and Transfer Agreement attached as Exhibit I hereto, PROVIDED
that (i) the consideration for the transfer of the subject assets shall not be
less than $550,000,000, which shall include Borden Holdings Notes in an
aggregate principal amount of not more than $375,000,000 and Affiliate Notes
issued by Borden Foods Holdings Corporation or its Subsidiaries in an aggregate
principal amount of not less than
<PAGE> 91
86
$175,000,000, plus the assumption of liabilities as provided in the form of
Conveyance and Transfer Agreement attached as Exhibit I hereto and (ii) upon
consummation of such transfer the Borrower and such Affiliate Guarantor shall
deliver to the Administrative Agent a certificate in the form of Exhibit J
thereto.
(d) Dairy Business. The Borrower and its Subsidiaries may transfer the
Dairy Business to an Affiliate Guarantor and any of such Affiliate Guarantor's
Subsidiaries having a structure substantially the same as that of Wise Holdings,
Inc. and its Subsidiaries, pursuant to terms substantially the same as those set
forth in the form of Conveyance and Transfer Agreement attached as Exhibit I
hereto, PROVIDED that (i) the consideration for the transfer of the subject
assets shall not be less than Fair Market Value and (ii) upon the consummation
of such transfer the Borrower and such Affiliate Guarantor shall deliver to the
Administrative Agent a certificate in the form of Exhibit J hereto.
(e) Options on Stock. The initial Options granted in respect of the
stock of Borden Decorative Products Holdings, Inc. and the stock of Elmer's
Holdings, Inc. shall be issued pursuant to terms substantially the same as those
set forth in the form of Option Agreement attached as Exhibit K hereto, PROVIDED
that the consideration for the issuance of such Options shall not exceed
$50,000,000 in the aggregate, which may consist of Borden Holdings Notes in
whole or in part.
(f) Options on Assets. The initial Options granted in respect of
certain of the assets of Borden Foods Holdings Corporation and its Subsidiaries
shall be issued pursuant to terms substantially the same as those set forth in
the form of Option Agreement attached as Exhibit L hereto, PROVIDED that the
consideration for the issuance of such Options shall not exceed $95,000,000 in
the aggregate, which may consist of Borden Holdings Notes in whole or in part.
SECTION 9.14. WAIVER OF JURY TRIAL. Each of the Borrower, the
Agents and the Lenders hereby irrevocably waives all right to trial by jury in
any action, proceeding or counterclaim (whether based on contract, tort or
otherwise) arising out of or relating to any of the Loan Documents, the Advances
or the actions of any Agent or any Lender in the negotiation, administration,
performance or enforcement thereof.
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87
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
BORDEN, INC.
By_________________________________
Name:
Title:
BORDEN FOODS HOLDINGS
CORPORATION
By_________________________________
Name:
Title:
WISE HOLDINGS, INC.
By_________________________________
Name:
Title:
CITIBANK, N.A., as Administrative
Agent
By_________________________________
Name:
Title:
<PAGE> 93
88
ARRANGERS
BT SECURITIES CORPORATION,
as Arranger
By_________________________________
Name:
Title:
CHASE SECURITIES INC.,
as Arranger
By_________________________________
Name:
Title:
CITICORP SECURITIES, INC.,
as Arranger
By_________________________________
Name:
Title:
CREDIT SUISSE, as Arranger
By_________________________________
Name:
Title:
By_________________________________
Name:
Title:
<PAGE> 94
89
BANKS
LEAD MANAGING AGENTS
BANKERS TRUST COMPANY
By_________________________________
Name:
Title:
CHEMICAL BANK
By_________________________________
Name:
Title:
CITIBANK, N.A.
By_________________________________
Name:
Title:
CREDIT SUISSE
By_________________________________
Name:
Title:
By_________________________________
Name:
Title:
<PAGE> 95
90
SENIOR MANAGING AGENTS
NATIONAL WESTMINSTER BANK PLC,
NEW YORK BRANCH
By_________________________________
Name:
Title:
NATIONAL WESTMINSTER BANK PLC,
NASSAU BRANCH
By_________________________________
Name:
Title:
NATIONSBANK, N.A.
By_________________________________
Name:
Title:
THE BANK OF NOVA SCOTIA
By_________________________________
Name:
Title:
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91
THE CHASE MANHATTAN BANK, N.A.
By_________________________________
Name:
Title:
CREDIT LYONNAIS NEW YORK
BRANCH
By_________________________________
Name:
Title:
MANAGING AGENTS
ABN AMRO BANK N.V.,
NEW YORK BRANCH
By_________________________________
Name:
Title:
By_________________________________
Name:
Title:
CIBC INC.
By_________________________________
Name:
Title:
<PAGE> 97
92
THE BANK OF NEW YORK
By_________________________________
Name:
Title:
BANK OF TOKYO - MITSUBISHI
TRUST COMPANY
By_________________________________
Name:
Title:
THE FIRST NATIONAL BANK
OF CHICAGO
By_________________________________
Name:
Title:
THE FUJI BANK, LIMITED
By_________________________________
Name:
Title:
<PAGE> 1
Exhibit 10(vi)
June 6, 1996
Mr. William F. Stoll, Jr.
788 Flint Ridge Road
Pittsburgh, PA 15243
Dear Bill:
I am pleased on behalf of Borden, Inc. to extend to you an offer of employment
on and subject to the following terms and conditions.
1. You will be employed as Borden's Chief Legal Officer, with the
title of Senior Vice President and General Counsel, and will be responsible for
management of the legal affairs of Borden and its subsidiaries and such other
duties as assigned to you by the Chairman and Chief Executive Officer of
Borden, to whom you report.
2. You will commence employment with Borden on July 1, 1996.
3. You will be paid an annualized Base Salary of $300,000 payable
semi-monthly in accordance with Borden's regular payroll practices. The Base
Salary shall be reviewed in accordance with Borden policy (currently annually)
for increase in the discretion of the Chairman and Chief Executive Officer.
4. You will be eligible to participate in the Borden Management
Incentive Plan, commencing January 1, 1997, with an initial target opportunity
for 1997 under such Plan or any successor plan of 55% of Base Salary, subject
to the terms of such plan and to the performance standards applicable to all
plan participants.
5. You will be paid (i) $82,500 on commencement of employment
with Borden (which shall be grossed up by an amount equal to the amount of
federal (39.6%) and state (5%) income tax payable thereon if you elect to
invest such amount in the Management Equity Plan and (ii) $82,500 payable in
February, 1997.
6. You will be eligible to participate in Borden's Management
Equity Plan as described in the preliminary Private Placement Memorandum dated
May 20, 1996 with an investment opportunity of $200,000 to $250,000.
7. You will be entitled to participate in all employee pension
and welfare benefit plans and programs made available to Borden's senior-level
executives or its employees generally, in accordance with and such plans and
programs may be in effect from time to time, including, without limitation, the
Borden Salaried Associates Benefits Program and Executive Perquisite Benefits.
Notwithstanding any provision of the plans to the contrary, you will
participate in Borden's long-term disability programs and be entitled to a
vacation of not less than 4 weeks per year (with no proration for 1996)
immediately upon commencement of employment.
<PAGE> 2
JUNE 6, 1996
PAGE 2
8. You will be granted an annual perquisite allowance of $30,000,
payable in accordance with Borden policy. For 1996, such allowance will be
prorated.
9. Under the circumstances described below, Borden will pay the
following retirement, death, disability, or termination benefits, as
applicable, to you or your survivor.
(a) For any retirement occurring on or after July 1,
2006, an amount equal to the "present value" according to the schedule and
assumptions described in section (e) (e.g., July 1, 2006 - $1,962,119) minus as
of the date of retirement:
(i) the accumulated value (including interest
thereon) of the company's contributions to your qualified and non-qualified
retirement savings accounts (salary deductions are not considered company
contributions);
(ii) the accumulated value of one-half (currently
$15,000) of the annual perquisite allowance including interest at a rate of 7%
per year;
(iii) the value of your accounts in the qualified
pension plan and the Executives' Supplemental Pension Plan (ESPP) (Pension Plan
Make-Up);
(b) in the event of a termination of your employment
after July 1, 2001 but prior to July 1, 2006, but only if such termination
occurs for a reason other than your failure to meet performance requirements,
including (i) a job elimination, or (ii) a Change in Control, in both cases
where continued comparable employment is not offered to you by Borden, its
successor or their major Affiliates (other than employment which would
constitute a Constructive Termination Without Cause), an amount equal to the
"present value" according to the schedule described in Section (e) as of the
date of termination as determined using the assumptions shown in paragraph (e)
below, less as of the date of termination, the amounts determined pursuant to
paragraphs (a) (i), (ii), and (iii), payable when you reach age 58.
(c) if you die before retirement or a termination for
which a benefit is payable under paragraphs (a) or (b) above, an amount equal
to the "present value" according to the schedule described in Section (e) as of
the date of your death as determined using the assumptions shown in paragraph
(e) below, less, as of the date of death, the amounts determined pursuant to
paragraphs (a) (i), (ii) and (iii), payable to your survivor when you would
have reached age 65.
(d) if you become disabled before retirement or
termination for which a benefit is payable under paragraphs (a) or (b) above,
an amount equal to the "present value" according to the schedule described in
Section (e) as of the date of your disability as determined by Borden's Actuary
using the assumptions shown in paragraph (e) below, less as of the date of
disability, the amounts determined pursuant to paragraphs (a) (i), (ii), and
(iii), payable when you reach age 65. Nothing in this paragraph will limit or
reduce any benefits which may be payable to you under Borden's salary
continuance, long-term disability or other benefit plans.
(e) the assumptions to be used for purposes of this
paragraph are:
(i) 1996 current employer compensation - $348,000
(ii) Annual pay increases - 5%
(iii) Accumulation of accounts - 7%
(iv) Discount rate for present value calculation 7%
<PAGE> 3
(v) Mortality table - 1983 GAM Male
JUNE 6, 1996
PAGE 3
You have been provided, by separate cover, with a schedule prepared by Borden's
Actuary reflecting benefits which would be available to you under this
paragraph, assuming calculation as of January 1 for each year in question.
(f) Any amounts payable under this paragraph will be
payable at the same time (but not before age 58 or age 65 if payable as a death
benefit) and in the same form as the qualified pension plan benefit.
10. You will be provided with relocation assistance in accordance
with the Borden Relocation Policy, Version H, dated May 16, 1995. If because
of family considerations, your establishment of a permanent residence in the
Columbus area is delayed, Borden will provide an additional temporary living
and commuting allowance of $1,000 (grossed up for tax purposes) per month for
up to six months.
11. If, prior to July 1, 2001, your employment is terminated
without Cause or if a Constructive Termination Without Cause occurs, Borden
will pay to you an amount equal to 2 times your annual Base Salary (payable in
12 monthly payments commencing on the last day of the calendar month in which
the termination of employment occurs) plus 2 times the incentive award target
opportunity at the time of termination payable in a lump sum immediately
following termination. After July 1, 2001, if your employment is terminated
you will be paid severance benefits in accordance with Borden's policy and/or
practice with respect to senior-level executives at the time of termination.
Any severance benefits which may be payable will not be subject to mitigation
or to offset in the event you obtain subsequent employment.
12. As used in this letter, the following terms have the following
meaning:
(a) "Affiliate" means a person, corporation or other
entity that directly or indirectly controls, is controlled by, or is under
common control with the person, corporation or other entity specified.
(b) "Base Salary" means the salary provided for in
paragraph 3 or any increase thereto.
(c) "Cause" means (i) you are convicted of a felony
involving moral turpitude or (ii) you are guilty of willful gross neglect or
willful gross misconduct in carrying out your duties.
(d) "Change in Control" means the occurrence of one of
any of the following events:
(i) Borden adopts a plan of liquidation providing
for the distribution of all or substantially all of its assets;
(ii) all or substantially all of the assets or
businesses of Borden are disposed of pursuant to a merger, consolidation, sale
or other transaction or a series of such transactions;
(iii) Borden combines with another company and is
the surviving corporation, but immediately thereafter, the shareholders of
Borden immediately prior to the combination hold, directly or indirectly, less
than 50% of the capital stock of the combined company.
(e) "Constructive Termination Without Cause" means a
termination of your employment at your initiative following the occurrence,
with your prior written consent, of one or more of the following events:
(i) a reduction in your then current Base Salary
or target award opportunity under any incentive plan of the company (except as
part of an across-the-board reduction applicable to all executive offers of the
company proportionately applied to you) or a material diminution of your duties
and responsibilities or a change in your reporting relationship.
(ii) the failure of Borden to obtain the
assumption in writing of its commitments to you under this letter of employment
by any sucessor acquiring all or substantially all of the assets of Borden upon
a merger, consolidation, sale or similar transaction.
(iii) the relocation of Borden's principal office
or your own office to a location more than 50 miles from Columbus, Ohio.
(f) "Disability" is defined as Long-Term Disability under
the Total Family Protection Plan or eligibility for Social Security Disability
benefits.
If the above terms are satisfactory to you, please sign and return a duplicate
copy ot this letter.
Regards.
ACCEPTED: ________________________________
William F. Stoll, Jr.
DATE: ________________________________
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