<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report
(date of earliest event reported): October 16, 1996 (October 1, 1996)
--------------------------------------------
BORDEN, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
New Jersey I-71 13-0511250
- ------------------------------- ---------------- -------------------
(State or other jurisdiction of (Commission file (IRS Employer
of incorporation) number) Identification No.)
180 East Broad Street, Columbus, Ohio 43215-3799
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(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: 614-225-4000
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<PAGE> 2
ITEM 2. Disposal of Assets.
(Dollars in millions)
On October 1, 1996, Borden, Inc. ("the Company") sold its domestic
and international foods business to an affiliate of the Company's
principal stockholders for $550.0. Proceeds consisted of a note
from the affiliate for $198.9, a note from the Company's parent for
$345.9, and cash of $5.3. The purchase price of the business is the
fair value of the foods business, as determined consistently with
an independent valuation by an investment banking firm.
Management of the Company will continue to control significant
financial and managerial decisions with respect to Borden Foods
Corporation ("BFC"), the entity which purchased the Company's foods
business. The Company's principal stockholders will continue to
control, directly or indirectly, the Company, as well as BFC.
BFC will guarantee obligations under the Company's credit facility
and all of the Company's outstanding publicly held debt on a pari
passu basis. As a result of the continuing control and the
guarantees, the Company will include in its annual report on Form
10-K: (a) the combined financial results of BFC and the Company as
if the transaction did not occur, (b) the Company's consolidated
financial statements, without BFC, and (c) the financial
statements of BFC. The Company's consolidated financial
statements will report the assets and liabilities of BFC in
accordance with SAB Topic 5E, which requires the classification
of the assets and liabilities, at the time of the sale, as
contractual arrangements.
On October 11, 1996, the Company completed its sale of Borden
Global Packaging ("BGP"), its packaging and plastic films
business, to AEP Industries Inc. ("AEPI"). The purchase price
consisted of $280 in cash, subject to adjustment, and 2,412,818
shares of newly issued AEPI common stock valued at $80.0. The
$80.0 investment recorded by the Company represents its value at
June 20, 1996, the date of the definitive agreement. Based on the
appreciation of AEPI's share price since then the value was worth
about $110.0 at the October 11, 1996 closing date. The Company
now owns about 34% of AEPI based on a new total of approximately
7.08 million shares outstanding. The Company will use cash
proceeds from the sale of the business to repay debt and for other
general corporate purposes.
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<PAGE> 3
ITEM 7. Financial Statements and Exhibits.
b. Pro forma consolidated financial statements (unaudited).
The following unaudited pro forma condensed consolidated financial
statements are filed with this report:
<TABLE>
<S> <C>
Pro Forma Condensed Consolidated Balance Sheet at June 30, 1996 . . . . . . . . . . F-1
Pro Forma Condensed Consolidated Statements of Income:
Year Ended December 31, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . F-2
Six Months Ended June 30, 1996 . . . . . . . . . . . . . . . . . . . . . . . . . F-3
</TABLE>
The following pro forma condensed consolidated balance sheet as of
June 30, 1996 and the pro forma condensed consolidated statements
of income for the six month period then ended and the year ended
December 31, 1995 give effect to the sale of businesses described
in Item 2. The adjustments related to the pro forma condensed
consolidated balance sheet assume the transaction was consummated
at June 30, 1996, while the adjustments to the pro forma condensed
consolidated income statements assume the transaction was
consummated at the beginning of the period presented.
The unaudited pro forma condensed consolidated financial
statements have been prepared based upon assumptions deemed proper
by the Company. The unaudited pro forma condensed consolidated
financial statements presented herein are shown for illustrative
purposes only and are not necessarily indicative of the future
financial position or future results of operations of the Company,
or of the financial position or results of operations of the
Company that would have actually occurred had the transaction been
in effect as of the date or for the periods presented.
c. Exhibits
No.
---
2.1 Conveyance and Transfer Agreement, dated as of October 1, 1996
among Borden, Inc., BDH One, Inc., BDH Two, Inc., Borden Foods
Investments Corporation, Borden Foods Holdings, LLC, Borden
Foods Holdings Corporation, Borden Foods Corporation, BFC
Investments L.P., and BDS Two, Inc.
2.2 Purchase 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.
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<PAGE> 4
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: October 16, 1996 /s/ William H. Carter
--------------------------------
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer &
Duly Authorized Signing Officer)
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<PAGE> 5
BORDEN, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
JUNE 30, 1996
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
------------------------------------------------
BORDEN, BGP BFC PRO FORMA
(In millions except per share data) INC. BGP(a) OTHER BFC(a) OTHER BORDEN, INC.
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and equivalents $ 146.0 $ 19.8 $ 11.6 (b) $ 55.3 $ 24.1 (b) $ 106.6
Accounts receivable 689.2 105.1 6.3 (d) 92.8 497.6
Affiliated receivables 78.4 (g) 78.4
Affiliated notes receivable 39.0 (g) 39.0
Inventories:
Finished and in-process goods 376.8 58.8 159.1 158.9
Raw materials and supplies 169.4 30.9 54.3 84.2
Deferred income taxes 135.6 (3.4)(d) (37.5)(d) 94.7
Other current assets 116.5 2.4 38.4 75.7
--------- ------- ------ -------- ------ --------
1,633.5 217.0 14.5 399.9 104.0 1,135.1
--------- ------- ------ -------- ------ --------
INVESTMENTS AND OTHER ASSETS
Investments in and advances to
affiliated companies 34.2 2.8 80.0(c) 13.1 98.3
Deferred income taxes 237.5 3.4(d) (39.3)(d) 201.6
Other assets 111.5 14.9 15.7 80.9
Long-term affiliated receivable 198.8 (h) 198.8
Assets sold under contractual arrangement,
net of allowance
318.3 (i) 318.3
--------- ------- ------ -------- ------ --------
383.2 17.7 83.4 28.8 477.8 897.9
--------- ------- ------ -------- ------ --------
PROPERTY AND EQUIPMENT
Land 90.2 8.7 17.8 63.7
Buildings 546.1 70.0 145.1 331.0
Machinery and equipment 2,009.7 302.7 497.2 1,209.8
--------- ------- ------ -------- ------ --------
2,646.0 381.4 660.1 1,604.5
Less accumulated depreciation (1,470.6) (176.1) (345.0) (949.5)
--------- ------- ------ -------- ------ --------
1,175.4 205.3 315.1 655.0
--------- ------- ------ -------- ------ --------
INTANGIBLES
Intangibles resulting from
business acquisitions 604.3 45.9 370.1 188.3
--------- ------- ------ -------- ------ --------
TOTAL ASSETS $ 3,796.4 $ 485.9 $ 97.9 $1,113.9 $581.8 $2,876.3
========= ======= ====== ======== ====== ========
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to pro forma financial statements. F-1
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<PAGE> 6
BORDEN, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
JUNE 30, 1996
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
------------------------------------------------
BORDEN, BGP BFC PRO FORMA
(In millions except per share data) INC. BGP(a) OTHER BFC(a) OTHER BORDEN, INC.
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
LIABILITIES & SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Debt payable within one year $ 401.2 $ 9.8 $ 12.6 $ 378.8
Affiliated loans-current $ 48.3 (d) 48.3
Accounts and drafts payable 496.5 68.1 152.9 275.5
Restructuring reserve 12.5 0.4 0.3 11.8
Income taxes 204.5 (0.5) $ 0.2 (d) (1.6) 206.8
Other current liabilities 795.9 36.5 (18.7)(d) 111.5 629.2
--------- ------- ------ -------- ------ --------
1,910.6 114.3 (18.5) 275.7 48.3 1,550.4
--------- ------- ------ -------- ------ --------
OTHER
Liabilities sold under contractual
arrangement 318.3 (i) 318.3
Long-term debt 920.8 0.5 (251.0)(e) 10.9 (5.3)(e) 653.1
Deferred income taxes 34.6 10.1 (0.7) 25.2
Non-pension postemployment
benefit obligations 324.1 2.7 3.9 (d) 14.1 311.2
Other long-term liabilities 109.8 5.2 16.6 88.0
Minority interest 42.3 1.7 40.6
--------- ------- ------ -------- ------ --------
1,431.6 18.5 (247.1) 42.6 313.0 1,436.4
--------- ------- ------ -------- ------ --------
Commitments and Contingencies
SHAREHOLDERS' EQUITY
Preferred Stock - Issued 24,574,751 614.4 614.4
Common stock - $0.01 par value
Authorized 300,000,000 shares
Issued 198,974,994 2.0 2.0
Receivable from parent (345.9)(h) (345.9)
Paid in capital 312.7 312.7
Accumulated translation adjustment (145.9) (15.5) (100.4) (30.0)
Minimum pension liability and other (107.9) (107.9)
Retained earnings (deficit) (221.1) 368.6 (j) 363.5 (j) 896.0 (j) 566.4 (j) (555.8)
--------- ------- ------ -------- ------ --------
454.2 353.1 363.5 795.6 220.5 (110.5)
--------- ------- ------ -------- ------ --------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 3,796.4 $ 485.9 $ 97.9 $1,113.9 $581.8 $2,876.3
========= ======= ====== ======== ====== ========
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</TABLE>
See notes to pro forma financial statements. F-1
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<PAGE> 7
BORDEN, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
FOR THE YEAR ENDING DECEMBER 31, 1995
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
------------------------------------------------
Borden, BGP BFC PRO FORMA
(In millions except per share data) INC. BGP(a) OTHER BFC(a) OTHER BORDEN, INC.
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net sales $5,944.0 $ 621.3 $ 1,838.9 $ 3,483.8
Cost of goods sold 4,136.3 506.8 1,114.5 2,515.0
-------- ------- ------- --------- ----- ---------
Gross margin 1,807.7 114.5 724.4 968.8
-------- ------- ------- --------- ----- ---------
Distribution expense 367.2 24.1 97.0 246.1
Marketing expenses 1,013.3 33.7 568.9 410.7
General & admin. expense 428.5 26.8 120.8 280.9
Loss (gain) on divestitures 245.1 $ (21.5)(d) 0.1 223.5
Impairment loss 8.2 8.2
Restructuring (reversal) expense (10.8) (10.8)
-------- ------- ------- --------- ----- ---------
Operating loss (243.8) 29.9 21.5 (62.4) (189.8)
-------- ------- ------- --------- ----- ---------
Interest expense 140.2 2.2 (19.6)(e) 4.4 $ (0.4)(e) 113.6
Affiliated interest income (23.9)(f) (23.9)
Minority interest 16.2 1.1 15.1
Other expense (income) 18.1 (4.5) (12.9)(c) (10.8) 20.5
-------- ------- ------- --------- ----- ---------
(Loss) income from continuing operations
before income taxes (418.3) 32.2 54.0 (57.1) 24.3 (315.1)
Income tax (benefit) 24.2 7.8 16.0 (d) 7.1 9.5 (d) 34.8
-------- ------- ------- --------- ----- ---------
(Loss) income from continuing operations $ (442.5) $ 24.4 $ 38.0 $ (64.2) $ 14.8 $ (349.9)
======== ====== ======= ========= ====== =========
- -----------------------------------------------------------------------------------------------------------------------------------
SHARE DATA:
Loss from continuing operations $ (2.30) $ (1.82)
Average number of common shares
outstanding during the period 192.3 192.3
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to pro forma financial statements. F-2
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<PAGE> 8
BORDEN, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
FOR THE SIX MONTHS ENDING JUNE 30, 1996
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
------------------------------------------------
BORDEN, BGP BFC PRO FORMA
(In millions except per share data) INC. BGP(a) OTHER BFC(a) OTHER BORDEN, INC.
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net sales $ 2,887.5 $ 288.8 $ 913.3 $1,685.4
Cost of goods sold 1,983.3 236.3 570.6 1,176.4
--------- ------- ------ -------- ------ --------
Gross margin 904.2 52.5 342.7 509.0
--------- ------- ------ -------- ------ --------
Distribution expense 180.9 12.1 53.1 115.7
Marketing expense 497.4 16.9 263.1 217.4
General & admin. expense 156.0 14.0 47.8 94.2
(Gain) loss on divestiture (66.2) (66.2)
--------- ------- ------ -------- ------ --------
Operating income 136.1 9.5 (21.3) 147.9
--------- ------- ------ -------- ------ --------
Interest expense 57.2 1.4 $ (8.3)(e) 1.8 $ (0.2)(e) 45.5
Affiliated interest income (11.9)(f) (11.9)
Minority interest 3.2 0.3 2.9
Other (income) expense (14.1) (3.7) (5.1)(c) (3.0) (12.5)
--------- ------- ------ -------- ------ --------
Income (loss) from continuing operations
before income taxes 89.8 11.8 13.4 (20.4) 12.1 123.9
Income tax expense (benefit) 50.9 2.5 3.3 (d) 2.7 4.7 (d) 53.7
--------- ------- ------ -------- ------ --------
Net income (loss) from continuing operations $ 38.9 $ 9.3 $ 10.1 $ (23.1) $ 7.4 $ 70.2
========= ======= ====== ======= ====== ========
- -----------------------------------------------------------------------------------------------------------------------------------
SHARE DATA
Net income (loss) from continuing operations $ .20 $ .35
Average number of common shares outstanding
during the period 199.0 199.0
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to pro forma financial statements. F-3
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<PAGE> 9
NOTES TO PRO FORMA FINANCIAL STATEMENTS
(a) Reflects a reduction for the impact of divested businesses.
(b) Reflects the retention of cash by the Company.
(c) Reflects the investment and equity earnings in AEPI as a result of the
transaction.
(d) Reflects transaction costs, liabilities retained by the Company, and the
tax effects related to the transaction.
(e) Reflects the use of the cash proceeds to reduce the long-term debt
balance, at an average interest rate of 6.6% and 7.8% in 1996 and 1995,
respectively.
(f) Reflects interest income accrued on the BFC note at a 12% interest rate.
(g) Reflects the retention of affiliated balances due to or from BFC.
(h) Reflects affiliated notes receivable as a result of the transaction.
(i) To reverse the impact of the divestiture for accounting purposes in
conjunction with SAB Topic 5E.
(j) Represents the impact on retained earnings had the transactions occurred
on June 30, 1996. The actual reduction in equity on the BFC divestiture
has yet to be determined as the Company is in the process of finalizing
its quarter end results. The estimated reduction is comprised of a
September 30, 1996 net book value exceeding proceeds by approximately $150
and a tax effect of approximately of $75 resulting from an estimated tax
basis net book value less than the proceeds. Additionally, a reversal of
accumulated transaction adjustment of approximately $100 will be
recognized as a reduction in retained earnings.
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<PAGE> 1
Exhibit 2.1
CONVEYANCE AND TRANSFER AGREEMENT
CONVEYANCE AND TRANSFER AGREEMENT DATED AS OF October 1, 1996 (the
"Agreement") among BORDEN, INC., a New Jersey corporation ("BNI"), BDH ONE,
INC., a Delaware corporation ("BDH ONE"), BDH TWO, INC., a Delaware corporation
("BDH TWO"), BORDEN FOODS INVESTMENTS CORPORATION, a Delaware corporation
("BFIC"), BORDEN FOODS HOLDINGS, LLC, a Delaware limited liability company ("BFH
LLC"), BORDEN FOODS HOLDINGS CORPORATION, a Delaware corporation ("BFHC"),
BORDEN FOODS CORPORATION, a Delaware corporation ("BFC"), BFC INVESTMENTS, L.P.,
a Delaware limited partnership ("BFCI LP"), and BDS TWO, INC., a Delaware
corporation ("BDS TWO");
RECITALS
--------
WHEREAS, BNI and certain of its subsidiaries own and/or operate
certain assets, rights and properties utilized in or relating to BNI's worldwide
foods business (the "Business");
WHEREAS, BNI and certain of its subsidiaries propose to transfer
pursuant to a series of transactions described herein to BFC and BFCI LP all of
their right, title and interest in, to and under the Assets (as defined below)
and the Business, for an aggregate consideration of $550 million, subject to the
terms and conditions hereof; and
WHEREAS, BFC and BFCI LP propose to assume all of the Liabilities (as
defined below), subject to the terms and conditions hereof;
NOW THEREFORE, in consideration of the premises and the promises
hereinafter contained, it is agreed by and among the parties hereto as follows:
<PAGE> 2
ARTICLE I
---------
DEFINITIONS
-----------
The following definitions shall for all purposes, unless otherwise
clearly indicated to the contrary, apply to the terms used in this Agreement.
"ASSETS" means all of the assets, rights and property of every kind,
character and description, whether tangible or intangible, whether real,
personal or mixed, whether accrued or contingent, and wherever located,
constituting part of, principally utilized in the or principally related to the
Business as it exists on the date of this Agreement including, without
limitation, the assets of the Business as reflected on the December 31, 1995
Balance Sheet contained in the June 20, 1996 Private Placement Memorandum of BFH
LLC (the "Balance Sheet") and as such assets may have changed in the conduct of
the Business from December 31, 1995 to the date of this Agreement. The Assets
include, without limitation, the following:
(a) all notes and accounts receivable principally relating to the
Business;
(b) all raw materials, feed stock, supplies, work-in process,
finished goods and other materials included in the inventory
of the Business;
(c) all real property and buildings and improvements thereon
principally utilized in or principally relating to the
Business, including without limitation, all real property and
buildings and improvements thereon listed or described in
Schedule A-1 hereto;
(d) all real estate leases and leasehold improvements principally
utilized in or principally relating to the Business,
including, without limitation, all real estate leases and
leasehold improvements listed or described in Schedule A-2
hereto;
(e) all machinery, equipment, vehicles, furniture and other
personal property principally utilized in or principally
relating to the Business, including, without limitation, all
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machinery, equipment, vehicles, furniture and other personal
property listed or described in Schedule A-3 hereto;
(f) all personal property leases principally utilized in or
principally relating to the Business, including, without
limitation, all personal property leases described in Schedule
A-4 hereto;
(g) all contracts, agreements or understandings principally
utilized in or principally relating to the Business,
including, without limitation, all contracts, agreements or
understandings listed or described in Schedule A-5 hereto;
(h) all of the capital stock of the corporations principally
conducting operations of the Business, including, without
limitation, all of the corporations listed or described in
Schedule A-6 hereto and the corporations owned by BDH ONE,
which are listed or described in Schedule A-6(a) hereto;
(i) all trademarks, trade names, corporate names, company names,
business names, fictitious business names, trade styles,
service marks, logos and other source of business identifiers,
and the goodwill associated therewith, all registrations and
recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark
Office or in any similar office or agency of the United
States, any State thereof or any other country or any
political subdivision thereof, or otherwise, and all renewals
thereof (hereinafter, collectively, "Trademarks"), including,
without limitation, all of the Trademarks listed or described
in Schedule A-7 hereto;
(j) all patents, patent applications, patent licenses, copyrights,
copyright licenses, trade secrets, inventions, operating
know-how and other technical information principally utilized
in or principally relating to the Business, including, without
limitation, all of the patents, patent applications, patent
licenses, copyrights, copyright licenses,
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trade secrets, inventions, operating know-how and
other technical information listed or described in Schedule
A-8 hereto;
(k) all other intangible property principally utilized in or
principally relating to the Business, including, without
limitation, all intangible property listed or described in
Schedule A-9 hereto;
(l) all of BNI and BDH/BFIC's rights, claims or causes of action
against third parties relating to the Assets or the Business;
(m) all books and records relating to the Assets or the Business;
(n) equitable title to those assets which constitute part of (i)
BNI's Canadian food business and are held by The Borden
Company Limited ("BCL"), (ii) BNI's Colombian food business
and are held by Companie Columbiana de Alimentos Lacteos, S.A.
("Cicolac"), and/or Alisa S.A. ("Alisa"), and (iii) BNI's
interest in a joint venture in the Republic of China, Qihe
Dairy Corp. Ltd.
(o) the assets of BNI's Puerto Rican food business held by
Productos Borden, Inc.; and
(p) the assets of BNI's Panamanian food business.
Notwithstanding the foregoing, the Assets shall not include the
following:
(i) all cash and cash equivalents of the Business (except
cash and cash equivalents held by the corporations
listed in Schedule A-6 and A-6(a) hereto);
(ii) the name "Borden", and trade names, trademarks and
service marks containing the word "Borden" and all
trademarks containing the word "Elsie" and/or Cow
Design, the use of certain of which are subject to a
Use of Name and Trademark License Agreement of even
date herewith;
4
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(iii) all of BNI and BDH/BFIC's rights, claims or causes of
action against third parties principally relating to
the Assets or the Business which may arise in
connection with the discharge by said entities of the
liabilities and obligations of the Business which are
not expressly assumed by BFC or BFCI LP hereunder;
(iv) any assets, rights or properties that are not
principally utilized in or principally related to the
Assets or the Business, except to the extent provided
in Schedule A-10 hereto;
(v) the assets, rights and properties listed or described
in Schedule B hereto; and
(vi) any assets, rights or property of any kind, character
or description, whether tangible or intangible,
whether real, personal or mixed, whether accrued or
contingent, and wherever located, that are not part
of the Assets ("NON-INCLUDED ASSETS"), including,
without limitation, any such Non-Included Asset which
constitutes part of, is principally utilized in or
principally relates to BNI's global packaging
business.
"LIABILITIES" means all of the claims, liabilities, duties, costs,
expenses, indebtedness and obligations of the Business as it exists on the date
of this Agreement including, without limitation, the liabilities of the Business
as reflected on the Balance Sheet, and as such liabilities may have changed in
the conduct of the Business from December 31, 1995 to the date of this
Agreement, including, without limitation, the following:
(a) all liabilities and obligations under or in connection with
the Assets;
(b) all liabilities and obligations under or in connection with
unfulfilled purchase orders or sales commitments of the
Business;
(c) all liabilities and obligations under or in connection with
returns of products sold as part of the Business; and
(d) all other claims, liabilities, duties, costs, expenses,
indebtedness and obligations listed or described on Schedule C
hereto.
Notwithstanding the foregoing, the Liabilities shall not include
(except to the extent specifically referred to on Schedule C hereto) the
following:
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(i) liabilities and obligations of or relating to
discontinued products, operations, or businesses, or
idled, closed or sold plants, facilities, operations
or businesses, including without limitation,
liabilities and obligations of or relating to
employee relations and benefits;
(ii) liabilities and obligations of or relating to closed
claims, closed litigation, or closed Superfund
matters; and
(iii) liabilities and obligations of BNI or its
subsidiaries or affiliates that are not related to
the Assets or Business.
ARTICLE II
----------
CONVEYANCE OF ASSETS TO TRANSFEREE
----------------------------------
6
<PAGE> 7
(a) The parties hereby agree to sell, convey, assign, transfer and
deliver to the party(ies) described below, their successors and assigns (except
as otherwise provided in Section 2.1(b) and (c)), all of the Assets, to have and
to hold, to and for its and their use forever, effective on the date of this
Agreement, as follows:
(i) in exchange for the Assets (excluding the Trademarks
listed or described in Schedule A-7 and the subsidiaries owned by BDH ONE), BFC
will assume the Liabilities and will transfer cash, debt issued by Borden
Holdings, Inc. and/or debt issued by BFC to BNI and one share of BFC common
stock;
(ii) in exchange for the stock in the food business
subsidiaries owned by BDH ONE and listed on Schedule A-6(a), BFC will transfer
debt issued by Borden Holdings, Inc. and/or BFC debt and one share of BFC common
stock to BDH ONE;
(iii) in exchange for all of the Trademarks owned by BFIC,
which assignment shall be subject to the right of BFIC to approve all future
assignments, BFCI LP will transfer debt issued by Borden Holdings, Inc. to
BFIC; and
(iv) in exchange for a general partnership interest in T.M.I.
Associates, L.P., a Delaware limited partnership, BFCI LP will transfer debt
issued by Borden Holdings, Inc. to BDS TWO.
All such transfers, conveyances, assignments, and deliveries shall be
made by special warranty deeds, bills of sale, assignments, or such other
documents of transfer or assignment as may be necessary or appropriate to vest
in the transferee good and marketable title to
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<PAGE> 8
the Assets.
(b) Notwithstanding anything to the contrary contained herein, if the
sale, conveyance, assignment, transfer or delivery made hereunder of any
agreement, lease, contract, permit, license, right, claim or other asset would
be ineffective as between any transferor and transferee or serve as a cause for
the termination, invalidation or loss thereof or of any rights thereunder
without the consent or approval of any third person or governmental entity, then
such sale, conveyance assignment, transferor or delivery shall not become
effective unless and until such consent or approval is obtained, whereupon such
sale, conveyance, assignment, transfer or delivery shall be deemed to be
effective without any further act or event of any party hereto. During such
period when such sale, conveyance, assignment, transfer or delivery is not yet
effective as provided above, BNI or BDH, as the case may be, shall to the
greatest extent permitted, hold such Asset for the use and benefit of BFC or
BFCI, as the case may be, until such consent or approval has been obtained.
(c) Notwithstanding anything to the contrary contained herein, it is
intended to convey at present only equitable title to any Canadian or Colombian
assets included in the Assets and currently owned by BCL, Cicolac and/or Alisa
including those listed on Schedules A-1, A-2, A-3, A-5, A-7, A-8, A-9, and A-10.
Such assets shall be held in trust by BCL, Alisa and/or Cicolac and/or their
subsidiaries and operated to and for the benefit of BFC and/or its subsidiaries
until such time as BCL, or Cicolac, Alisa and/or their subsidiaries are
dissolved, liquidated or partitioned. Upon the dissolution, liquidation or
partitioning of BCL and/or Cicolac and/or Alisa and/or their subsidiaries, legal
title to such assets, including those acquired after December 31, 1995 (and not
subsequently disposed of), shall be conveyed and assigned to BFC or its Canadian
or Colombian subsidiary, as the case may be, or other subsidiaries.
ARTICLE III
ASSUMPTION OF LIABILITIES; INDEMNIFICATION
------------------------------------------
3.1 As partial consideration for the sale, conveyance, assignment,
transfer and
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delivery of the Assets made under Article II to BFC and to BFCI LP for any
sales, conveyances, assignments, transfers and deliveries to be made to BFC and
to BFCI LP pursuant to Article VI, BFC hereby assumes and agrees to perform and
fully discharge all of the Liabilities in accordance with their respective
terms.
3.2 BFC hereby agrees to indemnify, defend and hold harmless BNI and
each affiliate of BNI (other than BFH LLC or its subsidiaries) and its and their
respective successors and assigns, from and against any and all claims, costs,
damages, liabilities and expenses, including court costs and reasonable
attorneys' fees and expenses, arising from or in connection with (a) the
Liabilities hereby assumed by BFC or (b) BFC's failure to perform or discharge
any of the Liabilities.
BNI hereby agrees to indemnify, defend and hold harmless BFC, and BFH
LLC and their subsidiaries and its and their successors and assigns, from and
against any and all claims, costs, damages, liabilities and expenses, including
court costs and reasonable attorneys' fees and expenses, arising out of or in
connection with any action, claim or proceeding against, and all liabilities,
obligations and indebtedness of, BNI and each of its subsidiaries or affiliates,
except for the Liabilities assumed by BFC hereunder.
3.3 For the purpose of this Agreement, an "INDEMNIFIED PARTY" is a
party who is entitled to indemnity pursuant to the provisions of this Agreement,
and an "INDEMNIFYING PARTY" is a party who has an obligation of indemnity
pursuant to the provisions of this Agreement. An Indemnified Party shall give an
Indemnifying Party prompt written notice of any claim that has given or could
give rise to a right of indemnification under this Agreement and shall provide
reasonable access to such information (whether oral or written), records and
other materials in the possession or control of the Indemnified Party as may be
necessary or appropriate to enable the Indemnifying Party, its employees,
agents, attorneys, consultants and/or contractors to investigate, assess and
otherwise evaluate the claim, prepare its position and take remedial or other
appropriate action. The Indemnifying Party shall have the responsibility of
contesting, defending, litigating, settling or satisfying any
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claim made against the Indemnified Party and shall have the right to employ its
own counsel in connection therewith. The Indemnifying Party's obligation shall
be limited to taking such minimum actions as are reasonably necessary under the
circumstances. The Indemnifying Party shall have full control over any actions
(including, without limitation, any remedial action, negotiation or litigation)
in connection with any such claim; provided that the Indemnifying Party shall,
upon request of the Indemnified Party, consult with the Indemnified Party at
reasonable times regarding its proposed actions; provided, further, that the
Indemnifying Party shall not settle any claim, apart from taking remedial
action, without the consent of the Indemnified Party, but if the Indemnified
Party shall refuse to consent to any settlement recommended by the Indemnifying
party and shall elect to contest the claim, then the Indemnifying Party's
liability for such claim shall not exceed the amount for which the claim could
have been so settled plus expenses incurred by the Indemnified Party up to the
date of such refusal. The Indemnified Party shall have the right to be
represented by separate counsel at the Indemnified Party's expense in connection
with any such claim. The Indemnified Party shall cooperate with and assist the
Indemnifying Party in connection with any such claim. Each party shall maintain
all information, records and other materials in a strictly confidential manner,
except as required to comply with applicable law or regulation or an order of a
court or governmental authority, or to enforce its rights under this Agreement.
Where possible, such information shall be placed under confidential
seal before it is placed in public records. In the event the Indemnifying Party
fails to proceed diligently and in good faith with respect to such claim, the
Indemnified Party may take such course of action as it deems appropriate without
prejudice to its rights to indemnity.
ARTICLE IV
WARRANTIES
----------
Each party represents and warrants to the other that the execution,
delivery and performance of this Agreement by it has been duly authorized by all
necessary corporate
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action on its part and that this Agreement has been duly executed and delivered
by it and constitutes the valid and binding agreement of it in accordance with
its terms. ALL SALES, TRANSFERS, CONVEYANCES, ASSIGNMENTS AND DELIVERIES MADE OR
TO BE MADE HEREUNDER WILL BE MADE WITHOUT REPRESENTATION OR WARRANTY (EXCEPT AS
SET FORTH IN THIS ARTICLE IV) OF ANY KIND (INCLUDING, WITHOUT LIMITATION, ANY
REPRESENTATION OR WARRANTY OF TITLE). ALL ASSETS, RIGHTS AND BUSINESS SOLD,
TRANSFERRED, CONVEYED, ASSIGNED AND DELIVERED HEREUNDER ARE SOLD, TRANSFERRED,
CONVEYED, ASSIGNED AND DELIVERED "AS IS", AND EACH PARTY HERETO EXPRESSLY
DISCLAIMS ANY WARRANTIES OF CONDITION, MERCHANTABILITY OR FITNESS FOR A
PARTICULAR USE OR PURPOSE. This Agreement is made, however, with full rights of
substitution and subrogation of each transferee in, to and under all covenants,
warranties and other rights or indemnification by others heretofore given or
made with respect to any of the Assets, subject to Section 2.1(b) and (c). Each
party hereto hereby waives compliance with the bulk sales law or any similar law
in any applicable jurisdiction in respect of the transactions contemplated by
this Agreement.
ARTICLE V
SALES TAXES AND RECORDING FEES
------------------------------
The parties agree that the party acting as transferor shall pay in
each instance all sales, use and similar taxes arising out of the sales,
transfers, conveyances, assignments and deliveries made or to be made hereunder,
and shall pay all documentary, filing and recording fees required in connection
therewith.
ARTICLE VI
FURTHER ASSURANCES
------------------
6.1 From time to time after the date hereof, and without any further
consideration, the parties will execute and deliver such bills of sale, deeds
and other
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instruments of sale, transfer, conveyance, assignment and delivery, and take
such other actions, as the other may reasonably request in order more
effectively to vest in BFC and BFCI LP ownership of the Assets to be conveyed
and assigned hereunder or intended so to be and to put BFC and BFCI LP in actual
and exclusive possession and control of such Assets and the Business. After the
date hereof, the parties agree to use their best efforts to obtain any and all
consents and approvals which may be necessary to vest or confirm ownership in
BFC and BFCI LP of all the Assets.
6.2 From time to time after the date hereof, and without any further
consideration, each party will execute and deliver such documents, and take such
other actions, as any other party may reasonably request in order that BFC and
BFCI LP shall more effectively assume and become obligated to perform and
discharge all Liabilities. After the date hereof, the parties each agree to use
their best efforts to obtain any and all consents and approvals which may be
necessary to vest or confirm the assumption by BFC and BFCI LP of all the
Liabilities.
6.3 Without limiting the generality of Sections 6.1 and 6.2, in the
event that, after the date hereof, BNI reasonably determines that the transfer
of the Assets or the assumption of the Liabilities would be more effectively
made by an alteration of the provisions of Section 2.1(a) upon notice
from the relevant transferor to the relevant transferee, the relevant transferor
and relevant transferee shall enter into an amendment to this Agreement to so
alter Section 2.1 provided that BFC and BFCI LP shall not be
required to enter into such an amendment if such alteration would be adverse to
BFC's interests hereunder taken as a whole.
6.4 In the event that Non-Included Assets are located or found to exist
after the date of this Agreement, then BFC promptly shall convey or cause the
conveyance of such Non-Included Assets to BNI or a person designated by BNI,
and shall execute and deliver, or cause the execution and delivery of, all other
instruments and documents as may be requested by BNI in order to transfer all
right, title and interest in and to such Non-Included Asset to BNI. Until any
such Non-Included
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Asset is so transferred, it shall be held in trust for the benefit and cost of
BNI by BFC (or any successor to BFC).
ARTICLE VII
GENERAL
-------
7.1 EXECUTION IN COUNTERPARTS. This Agreement may be executed in one
or more counterparts, all of which shall be considered one and the same
agreement, and shall become a binding agreement when one or more counterparts
have been signed by each party and delivered to the other party.
7.2 HEADINGS. All articles or section headings in this Agreement are
for convenience only and shall not be deemed to control or affect the meaning or
construction of any of the provisions hereof.
7.3 SEVERABILITY. If any provision of this Agreement shall be declared
by any court of competent jurisdiction to be illegal, void or unenforceable, all
other provisions of this Agreement shall not be affected and shall remain in
full force and effect.
7.4 BINDING EFFECT. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns.
7.5 APPLICABLE LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of New York; provided that
the conveyance pursuant to this Agreement of real property, fixtures and
personal property located in any particular state shall be governed by and
construed and enforced in accordance with the laws of such state.
IN WITNESS WHEREOF, the parties have executed, delivered and entered
into this Agreement as of the day and year first above written.
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BORDEN, INC.
By: /s/ William H. Carter
---------------------------------------------
Title: Executive Vice President, CFO
------------------------------------------
BDH ONE, INC.
By: /s/ Thomas V. Barr
---------------------------------------------
Title: President
------------------------------------------
BDH TWO, INC.
By: /s/ Thomas V. Barr
---------------------------------------------
Title: President
------------------------------------------
BORDEN FOODS INVESTMENTS CORPORATION
By: /s/ Phyllis Yeatman
---------------------------------------------
Title: Assistant Secretary
------------------------------------------
BORDEN FOODS HOLDINGS, LLC
By: /s/ Phyllis Yeatman
---------------------------------------------
Title: Attorney-in-Fact
------------------------------------------
BORDEN FOODS HOLDINGS CORPORATION
By: /s/ Thomas V. Barr
---------------------------------------------
Title: President
------------------------------------------
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BORDEN FOODS CORPORATION
By: /s/ Nancy G. Brown
---------------------------------------------
Title: Vice President and Secretary
------------------------------------------
BFC INVESTMENTS, L.P.
By: Borden Foods Corporation, its General Partner
By: /s/ Nancy G. Brown
---------------------------------------------
Title: Vice President and Secretary
------------------------------------------
BDS TWO, INC.
By: /s/ Thomas V. Barr
---------------------------------------------
Title: President
------------------------------------------
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