<PAGE> 1
UNITED STATES
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, 1997
--------------------------------------------------
Commission file number 1-71
----------------------------------------------------------
BORDEN, INC.
New Jersey 13-0511250
- ------------------------------------------- ------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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 14, 1997: 198,974,994
<PAGE> 2
BORDEN, INC.
Introduction
- ------------
The following filing with the Securities and Exchange Commission ("SEC") by
Borden, Inc. ("the Company") presents four separate financial statements:
Borden, Inc. Consolidated Financial Statements, Borden, Inc. and Affiliates
Combined Financial Statements, the Financial Statements of Wise Holdings, Inc.
("Wise Holdings") and the Financial Statements of Borden Foods Holdings
Corporation ("Foods Holdings"). The consolidated statements present the Company
after the effect of the sales of (i) the Company's former salty snacks business
("Wise") to Wise Holdings and its subsidiaries and (ii) the Company's former
domestic and international foods business ("Foods") to Foods Holdings and its
subsidiaries, as explained in Note 1 to the consolidated and combined financial
statements. The Company, Wise Holdings, and Foods Holdings are controlled by BW
Holdings, LLC ("BWHLLC"). The consolidated financial statements are those of the
Company, which is the SEC Registrant.
The Borden, Inc. and Affiliates ("the Combined Companies") combined financial
statements are included herein to present the Company on a combined historical
basis, including the financial position, results of operations and cash flows of
Wise and Foods. The Combined Companies financial statements are included because
management of the Company continues to control significant financial and
managerial decisions with respect to Wise Holdings and Foods Holdings. The
Combined Companies financial statements do not reflect push-down accounting and
therefore present financial information on a basis consistent with that on which
credit was originally extended to the Company. Also, in accordance with rule
3-10 of Regulation S-X, the financial statements of Wise Holdings and Foods
Holdings are included in Part II of this Quarterly Report on Form 10-Q because
Wise Holdings and Foods Holdings are guarantors of the Company's credit facility
and all of the Company's outstanding publicly held debt.
2
<PAGE> 3
BORDEN, INC.
INDEX
PART I - FINANCIAL INFORMATION
Borden, Inc. ("Borden") Consolidated and Borden, Inc. and Affiliates Combined
Financial Statements
<TABLE>
<S> <C>
Consolidated Statements of Operations, three months ended June 30, 1997 and 1996........................4
six months ended June 30, 1997 and 1996.............................................................6
Consolidated Balance Sheets, June 30, 1997 and December 31, 1996........................................8
Consolidated Statements of Cash Flows, six months ended June 30, 1997 and 1996.........................10
Consolidated Statement of Shareholders' Equity, six months ended June 30, 1996.........................12
Combined Statements of Operations, three months ended June 30, 1997 and 1996...........................13
six months ended June 30, 1997 and 1996............................................................14
Combined Balance Sheets, June 30, 1997 and December 31, 1996...........................................15
Combined Statements of Cash Flows, six months ended June 30, 1997 and 1996.............................17
Combined Statement of Shareholders' Equity, six months ended June 30, 1997.............................19
Notes to Condensed Consolidated and Combined Financial Statements......................................20
Management's Discussion and Analysis of Financial Condition and Results of Operations.......................24
PART II - OTHER INFORMATION
Item 1. Legal Proceedings..................................................................................29
Item 6. Exhibits, Guarantor Financial Statements, and Reports on Form 8-K..................................29
</TABLE>
3
<PAGE> 4
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
BORDEN, INC.
<TABLE>
<CAPTION>
Three Months Ended
June 30,
-----------------------
(In millions, except per share data) 1997 1996
- ---------------------------------------------------------------------------------
<S> <C> <C>
Net sales $ 488.6 $ 776.0
Cost of goods sold 353.6 539.3
-------- --------
Gross margin 135.0 236.7
-------- --------
Distribution expense 19.1 37.8
Marketing expense 41.2 103.7
General & administrative expense 35.8 65.3
-------- --------
Operating income 38.9 29.9
-------- --------
Interest expense 24.3 28.9
Affiliated interest income (6.4)
Other income (4.2) (2.2)
-------- --------
Income from continuing operations
Before income tax 25.2 3.2
Income tax expense 8.0 9.5
-------- --------
Income (loss) from continuing operations 17.2 (6.3)
-------- --------
Discontinued operations:
Income from operations, net of tax 4.9 0.8
-------- --------
Net income (loss) 22.1 (5.5)
Preferred stock dividends (18.4) (18.4)
-------- --------
Net income (loss) applicable to common stock $ 3.7 $ (23.9)
======== ========
</TABLE>
4
<PAGE> 5
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (continued)
BORDEN, INC.
<TABLE>
<CAPTION>
Three Months Ended
June 30,
------------------------
(In millions, except per share data) 1997 1996
- -----------------------------------------------------------------------------------
Per Share Data
--------------
<S> <C> <C>
Income (loss) from continuing operations $ 0.09 $ (0.03)
Discontinued operations:
Income from operations 0.02
---------- --------
Net income (loss) 0.11 (0.03)
Preferred stock dividends (0.09) (0.09)
---------- --------
Net income (loss) per common share $ 0.02 $ (0.12)
========== ========
Dividends per common share $ 0.06
Dividends per preferred share $ 0.75 $ 0.75
Average number of common shares outstanding
During the period 199.0 199.0
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Consolidated and Combined Financial Statements
5
<PAGE> 6
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
BORDEN, INC.
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-----------------------
(In millions, except per share data) 1997 1996
- ---------------------------------------------------------------------------------
<S> <C> <C>
Net sales $ 946.0 $ 1,522.0
Cost of goods sold 692.8 1,068.9
-------- ----------
Gross margin 253.2 453.1
-------- ----------
Distribution expense 36.2 74.9
Marketing expense 75.5 205.2
General & administrative expense 83.7 93.0
Net (gain) on divestitures (66.2)
-------- ----------
Operating income 57.8 146.2
-------- ----------
Interest expense 47.8 55.4
Affiliated interest income (11.4)
Other income (12.7) (8.4)
-------- ----------
Income from continuing operations
before income taxes 34.1 99.2
Income tax expense 15.6 58.7
-------- ----------
Income from continuing operations 18.5 40.5
-------- ----------
Discontinued operations:
Income (loss) from operations, net of tax 8.9 (1.6)
-------- ----------
Net income 27.4 38.9
Preferred stock dividends (36.9) (36.9)
-------- ----------
Net (loss) income applicable to common stock $ (9.5) $ 2.0
======== ==========
</TABLE>
6
<PAGE> 7
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (continued)
BORDEN, INC.
<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------------------------
(In millions, except per share data) 1997 1996
- ----------------------------------------------------------------------------------
Per Share Data
- --------------
<S> <C> <C>
Income from continuing operations $ 0.09 $ 0.20
Discontinued operations:
Income from operations 0.05
---------- ----------
Net income 0.14 0.20
Preferred stock dividends (0.19) (0.19)
---------- ----------
Net (loss) income per common share $ (0.05) $ 0.01
========== ==========
Dividends per common share $ 0.13
Dividends per preferred share $ 1.50 $ 1.50
Average number of common shares outstanding 199.0 199.0
during the period
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Consolidated and Combined Financial Statements
7
<PAGE> 8
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
BORDEN, INC.
<TABLE>
<CAPTION>
(In millions)
June 30, December 31,
-------- ------------
ASSETS 1997 1996
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CURRENT Cash and equivalents $ 97.5 $ 125.0
ASSETS Accounts receivable (less allowance
for doubtful accounts of $18.4 and $15.7,
respectively) 328.2 355.1
Inventories:
Finished and in-process goods 133.6 142.3
Raw materials and supplies 66.2 77.4
Deferred income taxes 134.8 179.6
Other current assets 42.1 45.9
Net assets of discontinued operation 172.9
---------- ---------
975.3 925.3
---------- ---------
- ------------------------------------------------------------------------------------------------------------------------
INVESTMENTS Investments in affiliated companies 108.5 106.8
AND OTHER Deferred income taxes 159.7 213.4
ASSETS Other assets 70.0 89.0
Assets sold under contractual arrangement
(net of allowance of $873.2 and $866.0) 676.3 701.0
---------- ---------
1,014.5 1,110.2
---------- ---------
- ------------------------------------------------------------------------------------------------------------------------
PROPERTY Land 27.6 54.3
AND Buildings 146.3 267.5
EQUIPMENT Machinery and equipment 742.4 934.3
---------- ---------
916.3 1,256.1
Less accumulated depreciation (440.8) (693.7)
---------- ---------
475.5 562.4
---------- ---------
- ------------------------------------------------------------------------------------------------------------------------
INTANGIBLES Intangibles resulting from
business acquisitions 61.5 114.3
---------- ---------
- ------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 2,526.8 $ 2,712.2
========== =========
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Consolidated and Combined Financial Statements
- --------------------------------------------------------------------------------
8
<PAGE> 9
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
BORDEN, INC.
(In millions)
<TABLE>
<CAPTION>
June 30, December 31,
----------- ------------
LIABILITIES AND SHAREHOLDERS' EQUITY 1997 1996
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CURRENT Debt payable within one year $ 108.6 $ 414.0
LIABILITIES Accounts and drafts payable 200.1 254.9
Income taxes 245.2 282.8
Other current liabilities 436.2 477.2
---------- -----------
990.1 1,428.9
---------- -----------
- ------------------------------------------------------------------------------------------------------------------------
OTHER Liabilities sold under contractual arrangement 434.7 442.9
Long-term debt 914.0 567.8
Non-pension post-employment
benefit obligations 251.0 285.9
Other long-term liabilities 93.2 126.6
---------- -----------
1,692.9 1,423.2
---------- -----------
Commitments and Contingencies
- ------------------------------------------------------------------------------------------------------------------------
SHAREHOLDERS' Preferred stock - Issued 24,754,751 614.4 614.4
EQUITY Common stock - $0.01 par value
Authorized 300,000,000 shares
Issued 198,974,994 2.0 2.0
Paid in capital 382.1 379.9
Receivable from parent (443.6) (443.6)
Accumulated translation adjustment (36.2) (27.2)
Minimum pension liability and other (109.2) (109.2)
Retained deficit (565.7) (556.2)
---------- -----------
(156.2) (139.9)
---------- -----------
- ------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 2,526.8 $ 2,712.2
========== ===========
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Consolidated and Combined Financial Statements
- --------------------------------------------------------------------------------
9
<PAGE> 10
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
BORDEN, INC.
<TABLE>
<CAPTION>
Six Months Ended
-------------------------------
(In Millions) 1997 1996
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS Net income $ 27.4 $ 38.9
(USED IN) FROM Adjustments to reconcile net income to net
OPERATING cash from operating activities:
ACTIVITIES: Depreciation and amortization 22.2 45.1
Gain on divestiture, net (66.2)
Unrealized gain on interest rate swap (2.7) (11.7)
Loss on net assets sold under contractual arrangement 4.5
Restructuring (1.7) (6.4)
Net change in assets and liabilities:
Trade receivables (37.0) (36.7)
Inventories (7.7) 3.2
Trade payables 16.1 4.4
Current and deferred taxes 9.8 28.2
Other assets 6.8 15.1
Other liabilities (41.1) 3.0
Discontinued operations, working capital, cash
and non cash charges (11.4) 14.8
--------- ---------
(14.8) 31.7
--------- ---------
- ---------------------------------------------------------------------------------------------------------------------------
CASH FLOWS
FROM Capital expenditures (63.5) (110.0)
INVESTING Divestiture of businesses 53.9 135.9
ACTIVITIES Investment in affiliates (7.6)
--------- ---------
(17.2) 25.9
--------- ---------
- ---------------------------------------------------------------------------------------------------------------------------
CASH FLOWS
FROM (USED IN) Increase (decrease) in short-term debt 26.0 (35.9)
FINANCING Borrowings of long-term debt 362.4 5.7
ACTIVITIES Repayment of long-term debt (347.0)
Increase in minority interest 9.3
Interest received from parent 25.5
Common stock dividends paid (25.5)
Preferred stock dividends paid (36.9) (36.9)
--------- ----------
4.5 (57.8)
--------- ----------
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE> 11
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (continued)
BORDEN, INC.
<TABLE>
<CAPTION>
Six Months Ended
June 30,
---------------------------------
(In millions) 1997 1996
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Decrease in cash and equivalents $ (27.5) $ (0.2)
Cash and equivalents at beginning
of period 125.0 146.2
---------- --------
Cash and equivalents at end
of period $ 97.5 $ 146.0
========== ========
- -----------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL Cash paid:
DISCLOSURES Interest $ 25.2 $ 42.8
OF CASH FLOW Income taxes 11.7 23.0
INFORMATION Non-cash activity:
Capital contribution by parent 12.2
Reclassification of note from long-term
to short-term 296.7
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Consolidated and Combined Financial Statements
11
<PAGE> 12
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED)
BORDEN, INC.
<TABLE>
<CAPTION>
(In millions)
- ------------------------- ---------- ----------- ----------- ----------- ------------ ----------- ------------ -----------
Minimum
Preferred Common Paid-in Receivable Accumulated Pension Accumulated Total
Stock Stock Capital from Translation Liability Deficit
Parent Adjustment And Other
- -------------------------- ---------- ----------- ----------- ----------- ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1996 $ 614.4 $ 2.0 $ 379.9 $ (443.6) $ (27.2) $ (109.2) $ (556.2) $(139.9)
- -------------------------- ---------- ----------- ----------- ----------- ------------ ----------- ------------ -----------
Net Income 27.4 27.4
Cash dividends - (36.9) (36.9)
preferred
Translation adjustments (9.0) (9.0)
Interest accrued on 15.5 15.5
notes from parent
Cash dividends - common (25.5) (25.5)
stock
Capital contribution
from parent 12.2 12.2
- -------------------------- ---------- ----------- ----------- ----------- ------------ ----------- ------------ -----------
Balance, June 30, 1997 $ 614.4 $ 2.0 $ 382.1 $ (443.6) $ (36.2) $ (109.2) $ (565.7) $(156.2)
- -------------------------- ---------- ----------- ----------- ----------- ------------ ----------- ------------ -----------
</TABLE>
See Notes to Condensed Consolidated and Combined Financial Statements
12
<PAGE> 13
- --------------------------------------------------------------------------------
COMBINED STATEMENTS OF OPERATIONS (UNAUDITED)
BORDEN, INC. AND AFFILIATES
<TABLE>
<CAPTION>
Three Months Ended
June 30,
--------------------------
(In millions) 1997 1996
- ---------------------------------------------------------------------------
<S> <C> <C>
Net sales $ 995.3 $1,227.2
Cost of goods sold 655.3 823.2
-------- --------
Gross margin 340.0 404.0
-------- --------
Distribution expense 50.0 64.3
Marketing expense 171.5 226.9
General & administrative expense 67.6 76.0
-------- --------
Operating income 50.9 36.8
-------- --------
Interest expense 24.6 29.7
Other income (0.5) (4.9)
-------- --------
Income from continuing operations
before income taxes 26.8 12.0
Income tax expense 11.4 4.6
-------- --------
Income from continuing operations 15.4 7.4
-------- --------
Discontinued operations:
Income from operations, net of tax 4.9 3.8
-------- --------
Net income 20.3 11.2
Preferred stock dividends (18.4) (18.4)
-------- --------
Net income (loss) applicable to common stock $ 1.9 $ (7.2)
======== ========
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Consolidated and Combined Financial Statements
13
<PAGE> 14
- --------------------------------------------------------------------------------
COMBINED STATEMENTS OF OPEATIONS (UNAUDITED)
BORDEN, INC AND AFFILIATES
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-----------------------------
(In millions) 1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
Net sales $1,935.1 $2,435.3
Cost of goods sold 1,289.1 1,639.6
-------- --------
Gross margin 646.0 795.7
-------- --------
Distribution expense 95.7 127.9
Marketing expense 346.6 468.3
General & administrative expense 143.8 142.2
Gain on divestiture (82.9)
-------- --------
Operating income 59.9 140.2
-------- --------
Interest expense 48.4 57.2
Other income (20.1) (12.6)
-------- --------
Income from continuing operations
before income taxes 31.6 95.6
Income tax expense 14.3 46.1
-------- --------
Income from continuing operations 17.3 49.5
-------- --------
Discontinued operations:
Income from operations 8.9 6.1
-------- --------
Net income 26.2 55.6
Preferred stock dividends (36.9) (36.9)
-------- --------
Net (loss) income applicable to common stock $ (10.7) $ 18.7
======== ========
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Consolidated and Combined Financial Statements
14
<PAGE> 15
- --------------------------------------------------------------------------------
COMBINED BALANCE SHEETS (UNAUDITED)
BORDEN, INC. AND AFFILIATES
<TABLE>
<CAPTION>
(In millions)
June 30, December 31,
---------- -----------
ASSETS 1997 1996
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CURRENT Cash and equivalents $ 113.9 $ 160.2
ASSETS Accounts receivable (less allowance
For doubtful accounts of $26.0 and $23.0
respectively) 510.2 549.9
Inventories:
Finished and in-process goods 286.2 286.5
Raw materials and supplies 125.4 142.3
Deferred income taxes 165.2 202.3
Other current assets 75.5 82.4
Net assets of discontinued operation 172.9
----------- ------------
1,449.3 1,423.6
----------- ------------
- ---------------------------------------------------------------------------------------------------------------------------
INVESTMENTS Investments in affiliated companies 108.5 106.8
AND OTHER Deferred income taxes 251.1 267.9
ASSETS Other assets 86.3 106.9
----------- ------------
445.9 481.6
----------- ------------
- ---------------------------------------------------------------------------------------------------------------------------
PROPERTY Land 48.7 75.9
AND Buildings 317.9 441.0
EQUIPMENT Machinery and equipment 1,316.8 1,504.3
----------- ------------
1,683.4 2,021.2
Less accumulated depreciation (879.4) (1,116.1)
----------- ------------
804.0 905.1
----------- ------------
INTANGIBLES Intangibles resulting from
business acquisitions 435.6 495.7
----------- ------------
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 3,134.8 $ 3,306.0
=========== ============
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Consolidated and Combined Financial Statements
15
<PAGE> 16
- --------------------------------------------------------------------------------
COMBINED BALANCE SHEETS (UNAUDITED)
BORDEN, INC. AND AFFILIATES
(In millions)
<TABLE>
<CAPTION>
June 30, December 31,
--------- ------------
LIABILITIES AND SHAREHOLDERS' EQUITY 1997 1996
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CURRENT Debt payable within one year $ 121.3 $ 421.8
LIABILITIES Accounts and drafts payable 342.4 412.5
Income taxes 248.9 304.0
Other current liabilities 621.3 646.1
---------- ----------
1,333.9 1,784.4
---------- ----------
- ------------------------------------------------------------------------------------------------------------------------
OTHER Long-term debt 927.9 582.4
Non-pension post-employment
benefit obligations 273.4 308.2
Other long-term liabilities 141.0 135.6
---------- ----------
Commitments Contingencies 1,342.3 1,026.2
---------- ----------
- ------------------------------------------------------------------------------------------------------------------------
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 685.3 683.1
Receivable from parent (443.6) (443.6)
Affiliate's interest in subsidiary 87.6 87.9
Accumulated translation adjustment (149.2) (121.2)
Minimum pension liability and other (109.2) (109.2)
Retained deficit (228.7) (218.0)
---------- ----------
458.6 495.4
---------- ----------
- ------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 3,134.8 $ 3,306.0
========== ==========
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Consolidated and Combined Financial Statements
16
<PAGE> 17
- --------------------------------------------------------------------------------
COMBINED STATEMENTS OF CASH FLOWS (UNAUDITED)
BORDEN, INC. AND AFFILIATES
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-----------------------------
(In millions 1997 1996
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS Net income $ 26.2 $ 55.6
(USED IN) FROM Adjustments to reconcile net income to net
OPERATING cash from operating activities:
ACTIVITIES Depreciation and amortization 51.2 68.7
(Gain) on divestiture (82.9)
Unrealized (gain) on interest rate swap ( 2.7) (11.7)
Restructuring (1.7) (6.5)
Net change in assets and liabilities:
Trade receivables (23.2) (23.9)
Inventories (10.5) (25.9)
Trade payables (4.1) 5.8
Current and deferred taxes (13.2) 27.6
Other assets 19.2 12.6
Other liabilities (59.1) (9.4)
Discontinued operations, working capital, cash and
non cash charges (11.4) 21.7
------- --------
(29.3) 31.7
------- --------
- ----------------------------------------------------------------------------------------------------------------------------
CASH FLOWS
(USED IN) FROM Capital expenditures ( 79.5) (110.0)
INVESTING Divestiture of businesses 53.9 135.9
------- --------
ACTIVITIES (25.6) 25.9
------- --------
- ----------------------------------------------------------------------------------------------------------------------------
CASH FLOWS
FROM (USED IN) Increase (decrease) in short-term debt 30.8 (35.9)
FINANCING Borrowings of long-term debt 361.7 5.7
ACTIVITIES Repayment of long-term debt (347.0)
Increase in minority interest 9.3
Interest received from parent 25.5
Common stock dividends paid (25.5)
Preferred stock dividends paid (36.9) (36.9)
------- --------
8.6 (57.8)
------- --------
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE> 18
- --------------------------------------------------------------------------------
COMBINED STATEMENTS OF CASH FLOWS (UNAUDITED) (continued)
BORDEN, INC.
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-------------------------------
(In millions) 1997 1996
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Decrease in cash and equivalents $ (46.3) (0.2)
Cash and equivalents at beginning
of period 160.2 146.2
--------- --------
Cash and equivalents at end
of period $ 113.9 $ 146.0
========= ========
- ----------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL Cash paid:
DISCLOSURES Interest $ 35.1 $ 42.8
OF CASH FLOW Income taxes 33.2 23.0
INFORMATION Non-cash activity:
Capital contribution by parent 12.2
Reclassification of note from long-term
to short-term 296.7
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Consolidated and Combined Financial Statements
18
<PAGE> 19
COMBINED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED)
BORDEN, INC. AND AFFILIATES
<TABLE>
<CAPTION>
(In millions)
- -------------------------- ---------- --------- ----------- ----------- ----------- ------------ ----------- ------------ ----------
Minimum
Preferred Common Paid-in Receivable Affiliate's Accumulated Pension Accumulated Total
Stock Stock Capital From Interest Translation Liability Deficit
Parent in Adjustment And Other
Subsidiary
- -------------------------- ---------- --------- ----------- ----------- ----------- ------------ ----------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1996 $ 614.4 $ 2.0 $ 683.1 $ (443.6) $ 87.9 $ (121.2) $ (109.2) $ (218.0) $ 495.4
- -------------------------- ---------- --------- ----------- ----------- ----------- ------------ ----------- ------------ ----------
Net Income 26.2 26.2
Cash dividends - (36.9) (36.9)
preferred
Translation adjustments (28.0) ( 28.0)
Interest accrued on 15.5 15.5
notes from parent
Cash dividends - common (25.5) (25.5)
stock
Capital contribution 12.2 12.2
from parent
Affiliate's interest in ( 0.3) (0.3)
subsidiary
- -------------------------- ---------- --------- ----------- ----------- ----------- ------------ ----------- ------------ ----------
Balance, June 30, 1997 $ 614.4 $ 2.0 $ 685.3 $ (443.6) $ 87.6 $ (149.2) $ (109.2) $ (228.7) $ 458.6
- -------------------------- ---------- --------- ----------- ----------- ----------- ------------ ----------- ------------ ----------
</TABLE>
See Notes to Condensed Consolidated and Combined Financial Statements
19
<PAGE> 20
NOTES TO CONDENSED CONSOLIDATED AND COMBINED 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: adhesives and resins ("Chemical"), fresh dairy products
("Dairy"), decorative products and wallcoverings ("Decorative Products")
and consumer adhesives and business services ("Other"). Borden, Inc. and
Affiliates (the "Combined Companies") includes the financial condition and
results of operations of the Company with the financial condition and
results of operations of the Company's former international and domestic
food operations ("Foods") and former salty snacks business ("Wise"). As
explained in Note 4, the Company has signed a definitive agreement to sell
its Dairy business.
The Company's principal lines of business formerly included Foods and Wise.
Subsidiaries of BWHLLC, an affiliate of the Company's parent, together with
subsidiaries of Wise Holdings, Inc. ("Wise Holdings") and subsidiaries of
Borden Foods Holdings Corporation ("Foods Holdings"), purchased Wise and
Foods on July 2, 1996 and October 1, 1996, respectively. As a result of
these sales, Wise and Foods, as of their respective sale dates, are no
longer legally part of Borden, Inc. (the "Registrant") on a consolidated
basis. However, management of the Registrant continues to exercise
significant operating and financial control over Wise and Foods. In
addition, Wise Holdings and Foods Holdings provide financial guarantees to
obligations under the Company's credit facility and all of the Company's
outstanding publicly held debt. Because of the aforementioned control and
guarantees, the Company has included, supplementally in this filing, the
Combined Companies financial condition and results of operations and cash
flows. The Combined Companies present financial information on a basis
consistent with that upon which credit was originally extended to the
Company.
The accompanying unaudited interim consolidated and combined financial
statements contain all adjustments, consisting only of normal adjustments,
which in the opinion of management are necessary for a fair statement of
the results for the interim periods. Results for the interim periods are
not necessarily indicative of results for the full years.
2. Summary of Significant Accounting Policies
ASSETS AND LIABILITIES HELD UNDER CONTRACTUAL ARRANGEMENTS - Because
management of the Company exercises significant control over Wise and
Foods, the assets and liabilities of Wise and Foods, as of their respective
sale dates, are classified as "sold under contractual arrangements" in the
consolidated financial statements. In addition, any future losses incurred
by Wise and Foods will be recorded in the consolidated financial statements
to the extent of the Company's net investment in Wise and Foods. At June
30, 1997 the Company's net investment in Wise and Foods was $6.8 and
$234.8, respectively. The Company recorded losses totaling $1.4 for Wise
and $3.1 for Foods through June 30, 1997. The losses are recorded as a
non-operating item in the consolidated results of operations.
The Combined Companies continue to report Wise and Foods at the Company's
historical values since they remain a member of the controlled group and
since in management's best estimate, future operating cash flows from Wise
and Foods are expected to exceed the historical carrying value of the
business.
RECENTLY ISSUED ACCOUNTING STATEMENTS - The Financial Accounting Standards
Board has recently issued two new accounting standards, Statement 130,
Reporting Comprehensive Income and Statement 131, Disclosures about
Segments of an Enterprise and Related Information. These statements will
affect the disclosure requirement
20
<PAGE> 21
for the 1998 annual financial statements. The Company is currently
evaluating the effect of these new statements.
RECLASSIFICATION - Certain prior year amounts have been reclassified to
conform with the 1997 presentation.
3. ASSET WRITE-DOWNS AND BUSINESS REALIGNMENT
In December 1996, management approved the closure of certain domestic pasta
plants in 1997 in order to reduce its product line complexity and
manufacturing capacity. Accordingly, the Combined Company provided 27.8
million in 1996 to write down the facilities to their net realizable
value. Management anticipates certain additional costs to be incurred in
1997 related to these plant closures; such charges totaled $3.3 million
for the six month period ended June 30, 1997. On July 11, 1997 operations
at two of these plants were ceased.
In March 1997, Foods announced its intention to sell certain businesses
from its current portfolio which are considered not to be aligned with its
"grain-based meal solution" strategy. Among the businesses to be sold are
milk powder, processed cheese, sweetened condensed milk and reconstituted
lemon juice. The method of disposition, timing and estimated proceeds are
currently being evaluated. Management expects the proceeds from such
dispositions to exceed their current carrying cost.
4. DISCONTINUED OPERATIONS
On May 22, 1997, the Company announced a definitive agreement for the sale
of its Dairy business to Mid-America Dairymen, Inc. for cash proceeds of
$435 million, subject to adjustments. The transaction is expected to close
in the third quarter of 1997. The after tax gain on the transaction is
expected to be in excess of $120 million. Proceeds from the transaction
will be used by the Company to pay down debt and invest in its businesses.
The Dairy operations are a segment of the Company's business as defined in
APB 30 and as such the results of the Dairy operations have been
reclassified to discontinued operations. The gain on the sale will be
recorded in discontinued operations once the transaction is completed. Net
assets of $172.9 related to the discontinued operation have been segregated
in the June 30, 1997 balance sheets. This amount consists of the assets and
liabilities of the business to be sold.
On October 1, 1996, the Company sold Foods to Foods Holdings and its
subsidiaries for $550.0 less assets transferred and liabilities assumed of
$22.9. Proceeds consisted of $354.8 of receivables and accrued interest
from the Company's parent recorded as a reduction of shareholders' equity,
a note receivable from Foods Holdings for $167.0, and cash of $5.3. The
purchase price of the business was determined based upon a valuation by an
investment banking firm. Foods management is realigning its current
portfolio of businesses. In connection with this process the valuation and
the purchase price may be reevaluated. A loss on disposal of $330.7 ($263.5
pretax) has been recorded as a loss on discontinued operations in the
consolidated financial statements in the third quarter of 1996.
Since Foods remains a member of the controlled group and because
management's best estimate of future operating cash flows from Foods is
expected to exceed the historical carrying value of the business, no loss
was incurred in the Combined Companies' financial statements.
The results indicated below for Dairy and Foods have been reported
separately as discontinued operations in the consolidated statements of
operations. Dairy is included in the 1997 and 1996 results while Foods is
included in the 1996 results only.
21
<PAGE> 22
<TABLE>
<CAPTION>
1997 1996
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Sales:
Quarter Ended June 30 210.4 681.0
Year-to-date June 30 414.2 1,365.4
Income (loss) before income taxes
Quarter ended June 30 8.5
Year-to-date June 30 15.0 (9.4)
Income tax expense
Quarter ended June 30 3.5 (0.8)
Year-to-date June 30 6.1 (7.8)
Income (loss) from discontinued operations
Quarter ended June 30 4.9 0.8
Year-to-date June 30 8.9 (1.6)
- -----------------------------------------------------------------------------------------------------------
</TABLE>
The results indicated below for Dairy have been reported separately
as discontinued operations in the combined statements of operations.
<TABLE>
<CAPTION>
1997 1996
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net sales:
Quarter ended June 30 210.4 229.8
Year-to-date June 30 414.2 452.2
Income before taxes
Quarter ended June 30 8.5 7.8
Year-to-date June 30 15.0 11.0
Income tax expense
Quarter ended June 30 3.5 4.0
Year-to-date June 30 6.1 4.9
Income from discontinued operations
Quarter ended June 30 4.9 3.8
Year-to-date June 30 8.9 6.1
- -----------------------------------------------------------------------------------------------------------
</TABLE>
5. 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 unforeseen 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.
22
<PAGE> 23
LEGAL MATTERS - The Company has recorded liabilities for environmental
remediation costs in amounts which it believes are probable and reasonably
estimable. Based on currently available information and analysis, the
Company believes that it is reasonably possible that costs associated with
such sites may exceed current reserves by amounts that may prove
insignificant or by amounts, in the aggregate, up to $30 million. In
addition, the Company may be held responsible for certain environmental
liabilities incurred at Borden Chemicals and Plastics Limited Partnership
("BCP") facilities which were previously owned by the Company. The Company
is in litigation with the Internal Revenue Service on proposed adjustments
to the utilization of certain capital losses in the Company's tax returns
for the period 1989 to 1993. The Company is also in litigation in
connection with the 1994 sale of its Brazilian pasta business to Quaker
Oats Company. The lawsuit alleges that the Company made misrepresentations
and omissions of significant information in connection with the sale. The
Company believes, based upon the information it currently 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.
OTHER COMMITMENTS - BCP Management, Inc., a wholly owned subsidiary of the
Company, is general partner of BCP and 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.
BCP has entered into an agreement to convert existing ownership interests
in the partnership into shares of a newly formed corporation. Conversion to
corporate form is subject to unitholder approval. If this conversion is
approved, a subsidiary of the Company will no longer be the general
partner of BCP. Recent tax legislation will permit BCP to continue to be
taxed as a partnership and not as a corporation as would have been the
case prior to the legislation's enactment. The board of directors of BCP's
general partner will consider the effects of this legislation in their
decision whether BCP should convert to corporate form or to remain a
master limited partnership.
23
<PAGE> 24
PART I FINANCIAL INFORMATION
----------------------------
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Following is a comparison of sales and operating income by business unit:
<TABLE>
<CAPTION>
(Dollars in millions)
- ------------------------------------------------------------------------------------------------
THREE MONTHS ENDED JUNE 30 SIX MONTHS ENDED JUNE 30
SALES 1997 1996 1997 1996
- ------------------------------------ ---------- --------- -------- --------
<S> <C> <C> <C> <C>
Chemical $ 328.1 $ 293.3 $ 646.4 $ 570.2
Decorative Products 101.6 93.1 197.3 190.7
Other 31.1 28.5 48.9 44.6
-------- -------- -------- --------
Subtotal 460.8 414.9 892.6 805.5
Business held for sale (1) 27.8 361.1 53.4 716.5
-------- -------- -------- --------
CONSOLIDATED NET SALES 488.6 776.0 946.0 1,522.0
Foods 435.0 451.2 853.6 913.3
Wise (2) 71.7 73.5 135.5 144.1
Combining Adjustments (3) (73.5) (144.1)
-------- -------- -------- --------
COMBINED NET SALES $ 995.3 $1,227.2 $1,935.1 $2,435.3
======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30 SIX MONTHS ENDED JUNE 30
OPERATING INCOME 1997 1996 1997 1996
- ------------------------------------ ---------- --------- -------- --------
<S> <C> <C> <C> <C>
Chemical $ 34.3 $ 36.0 $ 65.0 $ 68.5
Decorative Products 11.4 8.6 18.5 17.9
Other 2.6 5.3 3.7 7.8
Corporate (9.9) (27.4) (31.5) 43.6
-------- -------- -------- --------
Subtotal 38.4 22.5 55.7 137.8
Business held for sale (1) 0.5 7.4 2.1 8.4
-------- -------- -------- --------
CONSOLIDATED OPERATING INCOME 38.9 29.9 57.8 146.2
Foods 12.5 (9.8) 3.9 (22.7)
Wise(2) (0.5) (2.0) (1.8) (6.1)
Combining Adjustments(3) 18.7 22.8
-------- -------- -------- --------
COMBINED OPERATING INCOME $ 50.9 $ 36.8 $ 59.9 $ 140.2
======== ======== ======== ========
- --------------------------------------------------------------------------------
<FN>
(1) Includes Wise results prior to sale to affiliate on July 2, 1996.
(2) Represents 100% of Wise results for the applicable period presented
(3) Represents an adjustment to exclude the Wise results included with
consolidated results.
</TABLE>
24
<PAGE> 25
CONSOLIDATED AND COMBINED QUARTER ENDED JUNE 30, 1997
VERSUS QUARTER ENDED JUNE 30, 1996
Consolidated net sales from continuing operations for the three months ended
June 30, 1997 decreased $287.4 million to $488.6 million. This 37.0% decrease
was mainly the result of businesses divested in 1996, which are included in 1996
sales. Excluding the effect of these divested businesses, consolidated sales
rose from $414.9 million in 1996 to $460.8 million in 1997, an 11.1% increase.
Operating income for the three months ended June 30, 1997 was $38.9 million, an
increase of $9.0 million from 1996 operating income of $29.9 million. This
change was primarily the result of a $16.7 million loss on the sale of Wise in
1996. This loss was partially offset in 1996 by higher income from businesses
held for sale, which were later divested in 1996.
Chemical sales increased $34.8 million or 11.9% in the second quarter of 1997.
The increase was due mainly to volume increases in Forest Products. Forest
Products and Foundry & Industrial Products have both experienced increases in
raw materials costs in 1997 which were only partly passed on to customers. The
resulting margin declines, as well as infrastructure investments, have more than
offset the profits on increased volume in 1997 and have contributed to a $1.7
million decline in operating income.
Decorative Products sales increased $8.5 million or 9.1% in the second quarter
of 1997. The increase is largely due to increased wallcoverings sales in the US
and into Eastern Europe offset partially by a reduction in sales in the UK.
Sales for the flexible films and sheeting business improved in 1997 mainly
because of increased volume in the pool liner and industrial film lines.
Operating income increased $2.8 million or 32.6% primarily due to reduced
selling expenses and improving manufacturing efficiencies in the North America
operation.
Corporate operating expenses for the second quarter improved from $27.4 million
in the second quarter of 1996 to $9.9 million in 1997. This change was due to a
$16.7 million one-time charge for the loss on the sale of Wise to an affiliate
of the Company in the second quarter of 1996.
Food sales decreased $16.2 million or 3.6% from the second quarter of 1996.
Sales for the pasta business decreased due to the rationalization of
unprofitable sales volume. Cheese sales were also down as a result of lower
spending on promotions when compared to 1996. Operating income improved from a
loss of $9.8 million in the second quarter of 1996 to income of $12.5 million in
the second quarter of 1997. The improvement was due mainly to favorable raw
materials costs and reduction of unprofitable volume in the pasta business,
trade spending reductions and improved margins in the Signature Flavors
business, and favorable raw material costs in the International Foods business.
Wise sales decreased $1.8 million or 2.4% from the second quarter of 1996. The
lower sales resulted from the continued program to eliminate unprofitable
promotional pricing on potato chips. Increased volume of Cheez Doodles helped to
mitigate the potato chip decline. Operating results improved from a loss of $2.0
million in the second quarter of 1996 to a loss of $0.5 million in 1997. The
earnings improvement was the result of decreased marketing expenditures and
ongoing manufacturing cost savings.
25
<PAGE> 26
CONSOLIDATED AND COMBINED SIX MONTHS ENDED JUNE 30, 1997
VERSUS SIX MONTHS ENDED JUNE 30, 1996
Consolidated net sales from continuing operations for the six months ended June
30, 1997 decreased $576.0 million or 37.8% to $946.0 million from $1,522.0
million in 1996 primarily as a result of businesses divested in 1996. Sales for
the Company's ongoing operations rose $87.1 million from $892.6 million to
$805.5 million for the first six months of 1997. Consolidated operating income
totaled $57.8 million, down $88.4 million from the 1996 total of $146.2 million.
The decrease in operating income is due mainly to the recognition of an $82.9
million gain on the sale of a Spanish food company in the first quarter of 1996.
Chemical sales for the six months ended June 30, 1997 have increased 13.3%. The
majority of the volume increase took place in Forest Products. Income from
higher volume was more than offset by infrastructure investments and by lower
margins due to higher materials costs and competitive pressures. These factors
contributed to a year-to-date decrease of $3.5 million of operating income.
Decorative Products year-to-date sales for 1997 increased 3.5% from 1996. The
increase is largely due to increased wallcoverings sales into Eastern Europe
offset partially by lower sales in the US and UK domestic markets. Sales for the
flexible films and sheeting business improved in 1997 mainly because of
increased volume in the pool liner and industrial film lines. Year-to-date
operating income increased $0.6 million in 1997 primarily due to reduced selling
expenses in the North American operation.
Corporate operating expenses were $31.5 million for the first six months of
1997, compared to income of $43.6 million in the comparable period in 1996. This
change is due mainly to the $82.9 million gain on the sale of a Spanish food
company in the first quarter of 1996, partially offset by the $16.7 million loss
on the sale of Wise to an affiliate of the Company in the second quarter of
1996.
Food sales decreased $59.7 million or 6.5% from the first six months of 1996.
Sales for the pasta business decreased due to the rationalization of
unprofitable sales volume. Cheese sales were also down as a result of lower
spending on promotions in 1997. Operating income improved $26.6 million to $3.9
million through the second quarter of 1997 from a loss of $22.7 million through
the second quarter of 1996. The improvement was due mainly to favorable raw
materials costs and reduction of unprofitable volume in the pasta business,
trade spending reductions and improved margins in the Signature Flavors
business, and favorable raw material costs in the International Foods business.
Wise sales decreased $8.6 million or 6.0% from the first half of 1996. The lower
sales resulted from the continued program to eliminate unprofitable promotional
pricing on potato chips. Increased volume of Cheez Doodles helped to mitigate
the potato chip decline. Operating results improved $4.3 million, from a loss of
$6.1 million in the first half of 1996 to a loss of $1.8 million in 1997. The
earnings improvement was the result of decreased marketing expenditures and
ongoing manufacturing cost savings.
26
<PAGE> 27
Following is a comparison of other non-operating expenses and income tax expense
for the Company and the Combined Companies:
<TABLE>
<CAPTION>
(Dollars in millions)
- ------------------------------------------------------------------------------------------------
THREE MONTHS ENDED JUNE 30
--------------------------
CONSOLIDATED COMBINED
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Other non-operating expense $ 13.7 $ 26.7 $ 24.1 $ 24.8
Income tax expense 8.0 9.5 11.4 4.6
SIX MONTHS ENDED JUNE 30
------------------------
CONSOLIDATED COMBINED
1997 1996 1997 1996
---- ---- ---- ----
Other non-operating expense $ 23.7 $ 47.0 $ 28.3 $ 44.6
Income tax expense 15.6 58.7 14.3 46.1
- ------------------------------------------------------------------------------------------------
</TABLE>
Consolidated other non-operating expense for the three months ended June 30,
1997 decreased to $13.7 million from $26.7 million for the comparable period in
1996. The $13.0 million improvement was caused primarily by the recognition in
1997 of $6.4 million of affiliated interest income from Foods related to the
1996 loan agreement between the Company and Foods The remainder of the
fluctuation was caused by an adjustment to the Company's continuing investment
in the foods business.
Consolidated other non-operating expense was $23.7 million for the six months
ended June 30, 1997. The decrease of $23.3 million from the 1996 total of $47.0
million was due mainly to the recognition of affiliated interest from the Foods
borrowings.
LIQUIDITY AND CAPITAL RESOURCES
OPERATING ACTIVITIES
Consolidated and combined operating activities used cash of $14.8 million and
$29.3 million in 1997, respectively, compared to $31.7 million generated in
1996. The use of cash is primarily as a result of the working capital changes
in inventory and receivables.
INVESTING ACTIVITIES
The 1997 consolidated investing activities used cash of $17.2 million compared
to $25.9 million generated in 1996. The 1997 cash flows consisted of the receipt
of a $40 million nonrefundable deposit for the pending sale of the dairy
business and the collection of a receivable associated with the 1996 sale of a
Spanish food company. Consolidated investing activities also used $7.6 million
in cash associated with an increase in loans to the Company's foods and salty
snacks businesses that were divested in 1996. These inflows were partially
offset by $63.5 million in 1997 capital expenditures. The 1997 capital
expenditures were $46.5 million greater than 1996 capital expenditures as a
result of the sale of businesses during 1996. In addition, proceeds from the
sale of a Spanish food company amounted to $139.9 million in 1996.
Combined investing activities used cash of $25.6 million . The difference
between Combined and Consolidated is the inclusion of Foods and Wise capital
expenditures for 1997. Because the foods and salty snacks businesses are
included in the 1997 combined financial statements, the investments in these
businesses are eliminated.
The Company anticipates closing the sale of the dairy business in the third
quarter of 1997. Upon closing the Company expects to receive $395 million in
cash, the balance of the transaction. The additional proceeds will be used to
pay down bank debt and invested into continuing businesses.
27
<PAGE> 28
FINANCING ACTIVITIES
1997 financing activities generated $4.5 million on a consolidated basis and
$8.6 million on a combined basis. Financing activity consisted of approximately
$45 million in short and long term bank borrowings used to fund working capital.
In addition, the Company received $25.5 million of interest on a note receivable
from the Company's parent, funded by $25.5 million in common stock dividends.
The Company paid $36.9 million in preferred dividends.
In July 1997 the Company amended and restated its $1.2 billion credit facility.
The facility was restructured into a $950 million five year revolver (maturing
July 1, 2002) and a $50 million 364 day convertible revolver. Current pricing
under the LIBOR based borrowing option was reduced from LIBOR plus 125 basis
points to LIBOR plus 60 basis points. The commitment fee on the unused portion
of the facility, previously 37.5 basis points, was reduced to 20 basis points
for the five year revolver and 10 basis points for the 364 days revolver. Future
pricing will vary based on a grid tied to the Combined Company's leverage at the
end of each fiscal quarter. In addition, certain covenants were changed to
provide the company with greater flexibility to complete divestitures and
acquisitions.
28
<PAGE> 29
PART II
Item 1: LEGAL PROCEEDINGS
The Company is involved in 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.
Item 6: EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORT ON FORM 8-K
a. Exhibits
(10) (i) Stock Purchase and Merger Agreement dated as of
May 22, 1997 among Mid-America Dairymen, Inc.,
BDH Two, Inc. and Borden, Inc.
(ii) Credit agreement dated as of December 15, 1994
amended and restated as of July 14, 1997.
(iii) 364-Day credit agreement dated as of July 14,
1997.
(27) Financial Data Schedule
b. Financial Statement Schedules
Included are the separate financial statements of Foods Holdings
and Wise Holdings filed in accordance with rule 3-10 of
Regulation S-X. Foods Holdings and Wise Holdings are guarantors
of the Company's credit facility and all of the Company's
outstanding publicly held debt.
c. Report on Form 8-K.
On May 28, 1997, Borden, Inc. and Mid-America Dairymen, Inc.
(Mid-Am) announced a definitive agreement for Mid-Am to acquire
Borden/Meadow Gold Dairies, Inc.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BORDEN, INC.
Date: August 14, 1997 By/
--------------------------------
William H. Carter
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
29
<PAGE> 30
BORDEN FOODS HOLDINGS CORPORATION
STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
------------------------------- -----------------------------------
($ IN 000'S, EXCEPT PER SHARE DATA) 1997 1996 1997 1996
<S> <C> <C> <C> <C>
NET TRADE SALES $435,040 $451,200 $853,624 $913,238
COSTS AND EXPENSES
Cost of goods sold 260,901 283,566 517,188 569,666
Selling, general and administrative 135,874 149,077 283,094 309,926
Distribution expense 24,234 26,451 46,584 53,067
------------------------------- -----------------------------------
OPERATING INCOME (LOSS) 14,031 (7,894) 6,758 (19,421)
Interest expense, net 5,460 3,960 9,453 7,505
Other expense (income), net 15 741 (670) 933
------------------------------- -----------------------------------
INCOME (LOSS) BEFORE INCOME TAXES 8,556 (12,595) (2,025) (27,859)
Income tax provision (benefit) 1,470 (5,674) (2,130) (11,848)
------------------------------- -----------------------------------
NET INCOME (LOSS) $7,086 ($6,921) $105 ($16,011)
=============================== ===================================
PER SHARE INFORMATION:
- -------------------------------------
Net income (loss) per common share $70,860 ($69,210) $1,050 ($160,110)
Average number of common shares outstanding 100 100 100 100
during the period
</TABLE>
See accompanying notes to the condensed financial statements
<PAGE> 31
BORDEN FOODS HOLDINGS CORPORATION
BALANCE SHEETS (UNAUDITED)
AS OF JUNE 30, 1997 AND DECEMBER 31, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
ASSETS ($ IN 000'S) JUNE 30, DECEMBER 31,
1997 1996
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CURRENT ASSETS
Cash and equivalents $15,467 $33,234
Accounts receivable (net of allowance for
doubtful accounts of $5,974 and $5,944) 137,508 153,654
Other receivables 17,409 17,332
Inventories:
Finished and in-process goods 148,271 140,452
Raw materials and supplies 55,178 59,523
Deferred income taxes 19,897 17,559
Loans due from affiliates 4,925 9,349
Other amounts due from affiliates 4,315 24,972
Other current assets 29,000 32,435
------------------------------------------
431,970 488,510
OTHER NON CURRENT ASSETS 9,484 10,329
PROPERTY AND EQUIPMENT
Land 22,842 23,147
Buildings and improvements 81,510 82,568
Machinery and equipment 246,644 243,212
------------------------------------------
350,996 348,927
Less: accumulated depreciation (79,572) (66,606)
------------------------------------------
271,424 282,321
------------------------------------------
INTANGIBLES
Goodwill 158,821 161,296
Trademarks and other intangibles 201,079 203,987
------------------------------------------
359,900 365,283
==========================================
$1,072,778 $1,146,443
==========================================
</TABLE>
See accompanying notes to the condensed financial statements
<PAGE> 32
BORDEN FOODS HOLDINGS CORPORATION
BALANCE SHEETS (UNAUDITED)
AS OF JUNE 30, 1997 AND DECEMBER 31, 1996
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
LIABILITIES & SHAREHOLDER'S EQUITY ($ IN 000'S) JUNE 30, DECEMBER 31,
1997 1996
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CURRENT LIABILITIES
Debt payable within one year $19,501 $15,707
Loans due to affiliates 67,019 56,396
Accounts and drafts payable 126,764 145,363
Other amounts due to affiliates 10,234 32,527
Accrued customer allowances 63,275 72,447
Other current liabilities 103,246 116,568
------------------------------------------
390,039 439,008
LONG-TERM LIABILITIES
Long-term debt payable to Borden 166,990 166,990
Other long-term debt 7,035 6,701
Deferred income taxes 40,937 41,527
Non-pension postemployment obligations 12,636 12,906
Other noncurrent liabilities 10,831 11,053
Minority interest 3,684 3,540
------------------------------------------
242,113 242,717
COMMITMENTS AND CONTINGENCIES
SHAREHOLDER'S EQUITY
Common stock ($.01 par; 100 shares authorized, issued and outstanding) - -
Shareholder's investment in affiliate 87,586 87,859
Paid-in capital 343,391 349,475
Accumulated translation account 7,216 25,056
Retained earnings from October 1, 1996 2,433 2,328
------------------------------------------
440,626 464,718
==========================================
$1,072,778 $1,146,443
==========================================
</TABLE>
See accompanying notes to the condensed financial statements
<PAGE> 33
BORDEN FOODS HOLDINGS CORPORATION
STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
-------------------------------------------------
($ IN 000'S) 1997 1996
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net loss 105 (16,011)
Adjustments to reconcile net income (loss) to net cash provided by (used for)
operating activities:
Depreciation and amortization 22,818 22,061
Change in assets and liabilities:
Accounts receivable 16,146 15,663
Other receivables (77) (2,897)
Inventories (3,474) (29,118)
Deferred income taxes (2,338)
Other current assets 3,435 (2,515)
Accounts payable (18,599) 1,429
Accrued customer allowances (9,172) 5,074
Other current liabilities (13,322) 5,317
Other net amounts due to / from affiliates (12,684)
Long-term assets and liabilities (93) 5,094
Other, net (9,931) (41)
-------------------------------------------------
Net cash provided by (used for) operating activities (27,186) 4,056
-------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (13,617) (17,600)
-------------------------------------------------
Net cash used for investing activities (13,617) (17,600)
-------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Other changes in owner's investment 29,988
Increase (decrease) in long term debt 334 (7,107)
Increase in net loans due to / from affiliates 18,908
Increase in debt payable within one year 3,794 (3,543)
-------------------------------------------------
Net cash provided by financing activities 23,036 19,338
-------------------------------------------------
Change in cash and equivalents (17,767) 5,794
Cash and equivalents at beginning of year 33,234 49,538
=================================================
Cash and equivalents at end of year $15,467 $55,332
=================================================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
CASH RECEIVED (PAID) DURING THE YEAR FOR:
Interest , net (25,663) 1,791
Income taxes, foreign (5,471) (5,387)
</TABLE>
See accompanying notes to the condensed financial statements
<PAGE> 34
BORDEN FOODS HOLDINGS CORPORATION
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
($ IN 000'S)
1. BACKGROUND AND NATURE OF OPERATIONS
In September 1994, Borden, Inc. ("Borden") entered into a merger
agreement providing for the acquisition of all of Borden's outstanding
common stock by affiliates of Kohlberg Kravis Roberts & Co. ("KKR").
The acquisition was completed on March 14, 1995. Borden, a public
registrant as a result of public debt that was outstanding prior to the
acquisition, elected not to apply push down accounting in its
consolidated financial statements and as such, Borden's financial
statements (including Borden Foods through October 1, 1996) are
reported on Borden's historical cost basis. As discussed in the basis
of presentation, the accompanying financial statements have been
prepared on a purchase accounting basis from the date of KKR's
acquisition of Borden.
In 1996, Borden Foods Corporation ("BFC") was formed for the purposes
of acquiring and operating certain of Borden's food businesses ("Borden
Foods"). Borden Foods Holdings Corporation ("Holdings"), a wholly owned
subsidiary of Borden Foods Holdings, LLC (the "LLC"), owns
approximately 98% of BFC; the remaining interest in BFC is owned
directly by the LLC. The LLC is controlled by KKR. BFC Investments L.P.
(the "Investments LP"), which is owned 30% by the LLC and 70% by BFC,
was formed for the purposes of acquiring, holding and sub-licensing
certain trademarks associated with the operation of Borden Foods. In
certain circumstances, allocation of income and gains may differ from
the ownership percentages indicated.
Effective October 1, 1996, Borden, in a taxable transaction, sold
Borden Foods and certain trademarks to BFC and the Investments L.P.,
respectively, for $550,000 less assets transferred and liabilities
assumed of $22,909. In connection with this sale, BFC issued long-term
notes to Borden of $166,990 (see Note 4). The purchase price was based
on an independent valuation of Borden Foods. There was no change in the
book basis of Borden Foods' assets and liabilities as of October 1,
1996 because the sale was between related parties and Borden's
principal stockholder will continue to control BFC. Borden will
continue to exercise significant operating and financial control over
BFC. Holdings has fully and unconditionally guaranteed obligations
under Borden's Credit Facility and all of Borden's publicly held debt
on a pari passu basis. In connection with this guarantee, Holdings
charges Borden an annual fee of $1,050.
BFC is a manufacturer and distributor of a variety of food products
worldwide, including pasta, milk powder, processed cheese, sweetened
condensed milk, concentrated lemon juice and bouillon. BFC's operations
include 34 production facilities, 15 of which are located in the United
States. The remaining facilities are located primarily in Europe and
Latin America.
The accompanying unaudited condensed financial statements contain all
adjustments, consisting only of normal adjustments, which in the
opinion of management are necessary for the fair presentation of
operating results for the interim period. Results for the interim
period are subject to significant seasonal variations and are not
necessarily indicative of results for the full year.
2. BASIS OF PRESENTATION
As a result of the financial guarantee and in accordance with
Regulation S-X rule 3-10, Borden is required to include in its filings
with the Securities and Exchange Commission separate condensed
financial statements for Holdings as if it were a registrant. The
accompanying condensed financial statements for the three months and
six months ended June 30, 1997 and 1996 were prepared on a purchase
accounting basis which allocated approximately $750 million, plus cash
retained, less debt assumed, of the December 1994 KKR purchase price to
Holdings. The purchase price was allocated to tangible and intangible
assets and liabilities of Borden Foods based on independent appraisals
and management estimates.
2QNOTES
<PAGE> 35
Prior to October 1, 1996, Borden Foods was managed as a division of
Borden. Under this structure, Borden incurred various costs related to
Borden Foods which included corporate and administrative expenses (see
Note 4). The allocation of these costs, as well as intercompany
purchases and sales, cash infusions and withdrawals and other
transactions, were reflected in an Owner's Investment account through
September 30, 1996. In connection with the formation of Holdings and
the October 1,1996 sale, the net assets of Borden Foods have been
recapitalized to reflect the resulting capital structure.
The condensed financial statements include the accounts of Holdings
after elimination of material intercompany accounts and transactions.
Minority interest reflects the consolidation of international
operations in which BFC owns more than a 50% interest but less than a
100% interest. The portion of BFC and the Investment LP directly owned
by the LLC is recorded in Shareholder's Investment in Affiliate as of
October 1, 1996.
During 1996, the LLC sold equity interests to certain members of BFC's
management for $5,323, resulting in an ownership interest in the LLC of
approximately 2%.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
The most significant estimates in the accompanying financial statements
are the accruals for trade promotions, unfavorable litigation and
general insurance. Actual results could differ from those estimates.
INCOME TAXES - Income taxes are accounted for using the liability
method in accordance with SFAS No. 109 "Accounting for Income Taxes".
Subsequent to October 1, 1996, Holdings is not included in the domestic
consolidated tax return for Borden and deferred income taxes are
recorded to recognize the future effects of temporary differences which
arise between financial statement assets and liabilities and their
bases for income tax reporting purposes. Prior to October 1, 1996, the
domestic operations of Borden Foods were included in Borden's
consolidated tax return and, accordingly, income tax assets and
liabilities were included in an Owner's Investment account. Taxes
related to foreign operations have been provided for in accordance with
SFAS No. 109.
Income tax benefits for the interim periods have been recorded in
accordance with APB No. 28, "Interim Financial Reporting," which
prescribes that each interim period is an integral part of the annual
period and that interim tax provisions be computed under the effective
rate approach.
RECENTLY ISSUED FINANCIAL ACCOUNTING STANDARDS - In June 1997, the
Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 130 (FAS No. 130), "Reporting Comprehensive
Income," which requires adoption in periods beginning after December
15, 1997. The new statement establishes standards for reporting and
display of comprehensive income and its components in a full set of
general-purpose financial statements. Adoption of the new standard by
Holdings is expected in 1998.
In addition, in June 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 131 (FAS No.
131), "Disclosures about Segments of an Enterprise and Related
Information," which requires adoption in periods beginning after
December 15, 1997. The statement establishes standards for the way that
business enterprises report information about operating segments in
annual financial statements. It also establishes standards for related
disclosures about products and services, geographical areas and major
customers. Adoption of the new standard by Holdings is expected in
1998.
2QNOTES
<PAGE> 36
4. RELATED PARTIES
BFC is engaged in various transactions with Borden and its affiliates
in the ordinary course of business. Subsequent to January 1, 1996, a
subsidiary of Borden has provided certain administrative services to
BFC at negotiated fees. These services include: processing of payroll
and active and retiree group insurance claims, administration of
workers compensation claims, and securing insurance coverage for
catastrophic claims. BFC reimburses the Borden subsidiary for payments
for general disbursements, and general and group insurance and
postemployment benefit claims. The amount owed by BFC for reimbursement
of payments and for services was $5,700 and $11,678 as of June 30, 1997
and December 31, 1996, respectively.
BFC is generally self-insured for general insurance claims and
postemployment benefits other than pensions. The liabilities for these
obligations are included in Holdings' financial statements. By
agreement, Borden has retained the obligation for active group
insurance claims incurred in 1996 and paid in 1997.
Employee pension benefits are provided under the Borden domestic
pension plans to which BFC contributes. The U.S. employees participate
in the Borden retirement savings plan. Borden also provides certain
health and life insurance benefits for eligible employees. BFC has
recognized expenses associated with these benefits, certain of which
are determined and allocated by Borden's actuary. BFC has assumed an
actuarially-determined portion of Borden's U.S. net pension liability,
however this amount is considered to be an amount due to affiliate
since Borden retains the legal obligation for these benefits.
Subsequent to January 1, 1996, BFC has managed its own receipts,
disbursements and net cash position. Cash balances in international
businesses which are not repatriated to the U.S. can be loaned to other
Borden affiliates at a variable rate (currently LIBOR plus 0.75%) for
generally a 30 day period. Net lendings or borrowings by international
businesses subsequent to October 1, 1996 are included in amounts due
from or to affiliates. Net loans due to international affiliates were
$17,094 and $22,687 at June 30, 1997 and December 31, 1996,
respectively.
During 1996, BFC entered into a loan agreement (the "Loan Agreement")
to borrow funds from Borden under a revolving loan facility and term
loans. The revolving loan facility, which terminates on December 31,
1997, provides for borrowings up to $100 million. Effective February 3,
1997, the interest rate on the revolving loan facility was changed such
that borrowings with three days notice and which are outstanding at
least 30 days will bear interest at a spread over LIBOR; currently
LIBOR plus 1.50%. Same day borrowings will bear interest at a spread
over prime; currently prime plus 0.50%. A commitment fee of 0.375% is
paid on the unused portion of the revolving loan facility. The
outstanding balance under the revolving loan facility was $45,000 and
$24,360 at June 30, 1997 and December 31, 1996, respectively.
Commitment fees charged on the unused portion of the revolving
facility were $137 and $330 for the three month and six month
periods ended June 30, 1997, respectively.
The loan agreement contains certain restrictions on the activities of
BFC, including restrictions on liens, the incurrence of indebtedness,
mergers and consolidations, sales of assets, investments, payments of
dividends, changes in nature of business, prepayments of certain
indebtedness, transactions with affiliates, capital expenditures,
changes in control of BFC and the use of proceeds from asset sales.
As an affiliated guarantor, Holdings' aggregate liability shall not
exceed the greater of its outstanding affiliated borrowings or 95% of
its adjusted net assets while Borden or any other obligated parties
have obligations outstanding. Borden's outstanding credit facility and
public borrowings amounted to approximately $940 million at June 30,
1997.
In connection with the October 1, 1996 transaction, BFC issued $166,990
in long-term notes to Borden at a fixed 12% interest rate due on
November 30, 1999. Effective January 1, 1997, the interest rate on the
long-term notes to Borden was changed to 10.25%.
2QNOTES
<PAGE> 37
Interest expense on the long-term notes was $4,278 and $8,556 for the
three month and six month periods ended June 30, 1997, respectively. By
agreement with Borden, interest charges and commitment fees under the
Loan Agreement were calculated as if the borrowings under the Loan
Agreement were outstanding as of January 1, 1996. Amounts payable for
such charges were $4,534 and $20,849 as of June 30, 1997 and December
31, 1996, respectively.
BFC performs certain administrative services on behalf of other Borden
affiliates. These services include sales administration, promotion,
purchasing, and research and development. BFC charged these affiliates
$1,611 and $2,188 for such services for the three month period ended
June 30, 1997 and 1996, respectively, and $3,492 and $4,438 for the six
month periods ended June 30, 1997 and 1996, respectively. $1,584 and
$1,261 were receivable at June 30, 1997 and December 31, 1996,
respectively. BFC also sells certain merchandise to Borden affiliates,
for which $2,731 and $12,984 were receivable at June 30, 1997 and
December 31, 1996, respectively.
Borden continues to provide executive, financial and strategic
management to BFC for which it charges a quarterly fee of $250.
5. ASSET WRITE-DOWNS AND BUSINESS REALIGNMENT
In December 1996, management approved the closure of certain domestic
pasta plants in 1997 in order to reduce its product line complexity and
manufacturing capacity. Accordingly, $27,817 was provided in 1996 to
write down the facilities to their net realizable value. Management
anticipates certain additional costs to be incurred in 1997 related to
these plant closures; such charges totaled $3,345 for the three month
period ended June 30, 1997. On July 11, 1997 operations at two of these
plants were ceased
In March 1997, BFC announced its intention to sell certain businesses
from its current portfolio which are considered not to be aligned with
its "great tasting, wholesome, grain-based meal solution" strategy.
Among the businesses to be sold are milk powder, processed cheese,
sweetened condensed milk and reconstituted lemon juice. The method of
disposition, timing and estimated proceeds are currently being
evaluated. Management expects the proceeds from such dispositions to
exceed their current carrying cost.
6. COMMITMENTS AND CONTINGENCIES
In July 1995, a Fresno, California jury returned a verdict against BFC
for wrongful termination of a tomato packing agreement, for which $14.5
million was previously provided. In granting the award for lost profits
to Helm Tomatoes, Inc., the jury found that while the business had a
legal right to terminate the agreement, it was estopped from doing this
by an oral representation made by a former employee. BFC is contesting
the verdict.
BFC is involved in certain other legal proceedings arising through the
normal course of business. Other than that mentioned above, management
is of the opinion that the final outcomes of such proceedings should
not have a material impact on BFC's results of operations or financial
position.
2QNOTES
<PAGE> 38
[WISE HOLDINGS, INC. AND SUBSIDIARIES LOGO]
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR SIX MONTHS ENDED JUNE 30, 1997 AND 1996
<PAGE> 39
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
WISE HOLDINGS, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
Three Months Ended
June 30,
------------------------
(Dollars in thousands) 1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
Net sales $ 71,695 $ 73,523
Cost of goods sold 39,720 43,339
-------- --------
Gross margin 31,975 30,184
Distribution expense 6,657 6,488
Marketing expense 20,364 21,997
General & administrative expense 5,135 3,786
-------- --------
Operating loss (181) (2,087)
Interest expense 238 338
Other expense 60 110
-------- --------
Loss before income taxes (479) (2,535)
Income tax benefit (218) (744)
-------- --------
Net loss $ (261) $ (1,791)
======== ========
Per Share Data
- --------------
Net loss $ (2.61) $ (17.91)
Average number of common shares outstanding
during the period 100 100
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Condensed Consolidated Financial Statements
<PAGE> 40
- --------------------------------------------------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
WISE HOLDINGS, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------------------------------
(Dollars in thousands) 1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
Net sales $ 135,451 $ 144,070
Cost of goods sold 76,996 85,273
--------- ---------
Gross margin 58,455 58,797
Distribution expense 12,873 12,942
Marketing expense 37,849 44,485
General & administrative expense 9,231 7,786
--------- ---------
Operating loss (1,498) (6,416)
Interest expense 503 647
Other (income) expense (95) 58
--------- ---------
Loss before income taxes (1,906) (7,121)
Income tax benefit (760) (1,791)
--------- ---------
Net loss $ (1,146) $ (5,330)
========= =========
Per Share Data
- --------------
Net loss $ (11.46) $ (53.30)
Average number of common shares outstanding
during the period 100 100
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Condensed Consolidated Financial Statements
<PAGE> 41
- --------------------------------------------------------------------------------
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
WISE HOLDINGS, INC. AND SUBSIDIARIES
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
June 30, December 31,
ASSETS 1997 1996
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CURRENT Cash and cash equivalents $ 5,321 $ 3,027
ASSETS Accounts receivable (less allowance 27,003 23,771
for doubtful accounts of $1,618 and $1,345,
respectively)
Affiliated receivables 1,629 1,251
Inventories:
Finished and in-process goods 4,345 3,744
Raw materials and supplies 4,024 5,339
Prepaids and other current assets 4,568 4,807
------- -------
46,890 41,939
------- -------
- -----------------------------------------------------------------------------------------------------------------------------
PROPERTY Land 1,331 1,331
AND Buildings and improvements 4,851 4,583
EQUIPMENT Machinery and equipment 36,805 35,178
------- -------
42,987 41,092
Less: Accumulated depreciation 14,302 11,524
------- -------
28,685 29,568
------- -------
- -----------------------------------------------------------------------------------------------------------------------------
INTANGIBLES Trademarks (net of accumulated amortization of 17,630 17,865
AND $1,175 and $940 respectively)
OTHER ASSETS Other assets 1,103 1,307
------- -------
18,733 19,172
------- -------
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $94,308 $90,679
======= =======
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Condensed Consolidated Financial Statements
<PAGE> 42
- --------------------------------------------------------------------------------
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
WISE HOLDINGS, INC. AND SUBSIDIARIES
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
June 30, December 31,
LIABILITIES AND SHAREHOLDER'S EQUITY 1997 1996
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CURRENT Accounts and drafts payable $ 15,604 $ 15,924
LIABILITIES Affiliated payables 2,167 2,163
Accrued liabilities 18,712 14,415
------- -------
36,483 32,502
------- -------
- -----------------------------------------------------------------------------------------------------------------------------
OTHER Affiliated long-term debt 10,145 10,145
Post-employment benefits other than pensions 10,269 9,928
Other long-term liabilities 1,906 1,472
Minority interest 702 683
------- -------
23,022 22,228
------- -------
Commitments and Contingencies
- -----------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER'S Common stock - ($0.01 par value
EQUITY 100 shares authorized, issued
and outstanding)
Paid in capital 34,200 34,200
Retained earnings (from July 2, 1996) 603 1,749
------- -------
34,803 35,949
------- -------
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $94,308 $90,679
======= =======
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Condensed Consolidated Financial Statements
<PAGE> 43
- --------------------------------------------------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
WISE HOLDINGS, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
Six Months Ended
June 30,
------------------------------
(Dollars in thousands) 1997 1996
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS Net loss $ (1,146) $(5,330)
FROM (USED IN) Adjustments to reconcile net loss to net cash
OPERATING from (used in) operating activities:
ACTIVITIES Minority interests' share in income (21)
Depreciation 3,120 2,858
Amortization 235 235
Other non-cash 206 201
Net change in assets and liabilities:
Accounts receivables (3,505) (4,003)
Affiliated receivables (378)
Inventories 714 1,689
Prepaids and other current assets 239 (1,077)
Other assets 204 34
Accounts and drafts payable (320) 2,799
Affiliated payables 4
Accrued liabilities 4,297 1,388
Post-employment benefits other than pensions 341 (171)
Other long-term liabilities 434 926
----------- --------
4,424 (451)
----------- --------
- -----------------------------------------------------------------------------------------------------------------------------
CASH FLOWS Capital expenditures (2,424) (1,458)
USED IN Proceeds from sales of equipment 254 219
INVESTING ----------- --------
ACTIVITIES (2,170) (1,239)
----------- --------
- -----------------------------------------------------------------------------------------------------------------------------
CASH FLOWS Other increase in owner's investment 1,813
FROM Minority interests' equity contribution 40
FINANCING Borrowings under affiliated revolving loan agreement 11,700
ACTIVITIES Repayments under affiliated revolving loan agreement (11,700)
----------- --------
40 1,813
----------- --------
- -----------------------------------------------------------------------------------------------------------------------------
Increase in cash and equivalents 2,294 123
Cash and equivalents at beginning of period 3,027 601
----------- --------
Cash and equivalents at end of period $ 5,321 $ 724
=========== ========
- -----------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL Cash paid:
DISCLOSURES Interest $ 630 $ 44
OF CASH FLOW Taxes - -
INFORMATION
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Condensed Consolidated Financial Statements
<PAGE> 44
WISE HOLDINGS, INC. SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share information)
1. BACKGROUND AND NATURE OF OPERATIONS:
Wise Holdings, Inc. ("Wise") is a leading producer and distributor of salty
snacks in the eastern United States. Wise's product line includes potato chips,
cheese flavored baked and fried corn snacks, pretzels, tortilla chips, corn
chips, onion rings, pork rinds and other assorted snacks. Wise markets its
products under the brand names of WISE(R), CHEEZ DOODLES(R), QUINLAN(R), NEW
YORK DELI(R), KRUNCHERS!(R), BRAVOS(R), MOORE'S(R) AND WISE CHOICE(TM) and
conducts its business through three principal divisions: Wise, Moore's and
Caribbean Snacks. The Wise and Moore's divisions manufacture and distribute
primarily in the eastern United States. Caribbean Snacks, located in Puerto
Rico, serves as a distribution center throughout Puerto Rico and the Caribbean.
Wise's products are distributed through both independent and company-owned
distribution networks.
In September 1994, Borden, Inc. ("Borden") entered into a merger agreement,
culminating in December 1994, that provided for the acquisition of all of
Borden's outstanding common stock by affiliates of Kohlberg Kravis Roberts & Co.
("KKR"). Borden, a public registrant as a result of public debt that was
outstanding prior to the acquisition, elected not to apply push down accounting
in its consolidated financial statements and as such, Borden's financial
statements (including Wise) are reported on Borden's historical cost basis. As
discussed in the "Basis of Presentation," Wise's financial statements have been
prepared on a purchase accounting basis from the date of KKR's acquisition of
Borden. The effective date of the merger agreement was January 1, 1995 for
accounting and financial statement presentation purposes.
Effective July 2, 1996, in a taxable transaction (the "Incorporation"), Borden
sold its salty snacks business ("Wise operations") to BWHLLC, a KKR affiliate,
for $45 million. The purchase price was based on an independent valuation of the
business. There was no change in the financial reporting basis of the assets and
liabilities as of July 2, 1996 from that described below under "Basis of
Presentation" because Borden's principal stockholder continues to exercise
significant financial control over Wise. Wise will fully and unconditionally
guarantee obligations under Borden's credit facility and all of Borden's
publicly held debt on a pari passu basis. In connection with this guarantee,
Wise will receive an annual fee of $210.
The accompanying unaudited interim consolidated financial statements contain all
adjustments, consisting only of normal adjustments, which in the opinion of
management are necessary for a fair statement of the results for the interim
periods. Results for the interim periods are not necessarily indicative of
results for the full years.
2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
- ---------------------
As a result of the financial guarantee and in accordance with Regulation S-X
rule 3-10, Borden is required to include in its filings with the Securities and
Exchange Commission separate financial statements for Wise as if it were a
registrant. The financial statements subsequent to the purchase by KKR have been
prepared on a purchase accounting basis which allocates approximately $51
million of the original KKR purchase price of Borden to the salty snacks
business. The purchase price has been allocated to tangible and intangible
assets and liabilities of Wise based on the fair values at the date of
acquisition.
The condensed consolidated financial statements of Wise include the financial
position of Wise Holdings, Inc. and subsidiaries as of June 30, 1997 and
December 31, 1996. These financial statements also include the statements of
operations of Wise for the three- and six-month periods ended June 30, 1997, and
the salty snacks business of Borden, Inc. for the three- and six-month periods
ended June 30, 1996. In addition, these financial statements include the
statements of cash flow of Wise for the six month period ended June 30, 1997 and
the salty snacks business of Borden, Inc. for the six month period ended June
30, 1996.
Prior to the July 2, 1996 sale, Wise operated as a profit center of Borden.
Under this structure, Borden incurred various costs in connection with the
operation of Wise's business which included corporate controlled expenses, such
as accounting, legal, tax, credit and informational services departments and
executive management, which have been included in the consolidated financial
statements of Wise. Costs for these services have been allocated to Wise based
on usage of resources such as personnel and data processing equipment.
Management believes these amounts in the accompanying financial statements have
been allocated in a reasonable and consistent manner in order to depict balance
sheets, statements of operations and cash flows of Wise on a stand-alone basis.
Reclassification
- ----------------
Certain prior year amounts have been reclassified to conform with the 1997
presentation.
<PAGE> 45
Income Taxes
- ------------
Wise accounts for income taxes pursuant to Statement of Financial Accounting
Standard (FAS) No. 109, Accounting for Income Taxes, which uses the liability
method to calculate deferred income taxes. Subsequent to July 2, 1996, deferred
income taxes are recorded to recognize the future effects of temporary
differences which arise between financial statement assets and liabilities and
their basis for income tax reporting purposes. Prior to July 2, 1996, Wise was
included in Borden's consolidated tax return, and accordingly, income tax
liabilities and assets determined on a separate return basis were included in
Owner's Investment.
Per Share Information
- ---------------------
Net loss per common share at June 30, 1997 is computed by dividing net loss by
the weighted average number of common shares outstanding during the period ended
June 30, 1997. Net loss per common share at June 30, 1996 is computed assuming
that the shares were outstanding from July 2, 1996 to December 31, 1996.
Use of Estimates
- ----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting periods. The
most significant estimates in Wise's financial statements are related to
allowance for doubtful accounts, accruals for trade promotions, general and
group insurance, income taxes, post-retirement benefits, asset lives and
corporate allocations. Actual results could differ from those estimates.
Recently Issued Accounting Statements
- -------------------------------------
The Financial Accounting Standards Board has recently issued two new accounting
standards, Statement No. 130, Reporting Comprehensive Income and Statement No.
131, Disclosures about Segments of an Enterprise and Related Information. These
statements may affect disclosure requirements for the 1998 annual financial
statements. Wise is currently evaluating the effects of these new statements.
3. AFFILIATED LONG-TERM DEBT
In conjunction with the Incorporation, Wise entered into a long-term loan
agreement (the "Loan Agreement") to borrow funds from Borden. The Loan Agreement
provides for a revolving loan facility of up to $10 million maturing in December
1997, at a variable interest rate equal to Borden's cost of similar borrowings
at 1/2% above a given bank's "base rate", and a $10.145 million term loan
maturing in 1999 with a fixed interest rate of 11% and 12% in 1997 and 1996,
respectively. Effective February 3, 1997, an additional interest rate option was
added to the credit facility. Under this new option, borrowings with three days
notice and which are outstanding at least 30 days will bear interest at Borden's
cost of funds for similar borrowings plus .25%; currently Libor plus 1.50%. A
commitment fee of .375% is paid on the unused portion of the revolving loan.
Wise did not have any borrowings under the revolving agreement at June 30, 1997
or December 31, 1996. By agreement with Borden, interest charges and commitment
fees under the term loan were calculated as if the borrowings were outstanding
from January 1, 1996.
The Loan Agreement contains certain restrictions on the activities of Wise and
its subsidiaries, including restrictions on liens, the incurrence of
indebtedness, mergers and consolidations, sales of assets, investments, payment
of dividends, changes in nature of business, prepayments of certain
indebtedness, transactions with affiliates, capital expenditures, changes in
control of the Company and the use of proceeds from asset sales.
As an affiliate guarantor, Wise has guaranteed Borden's credit facility and all
of Borden's outstanding publicly held debt on a pari passu basis. Wise's
aggregate liability under this guarantee shall not exceed the greater of its
outstanding affiliated borrowings, or 95% of its adjusted net assets while
Borden or any other obligated parties have obligations outstanding.
4. COMMITMENTS AND CONTINGENCIES
Environmental Contingencies
- ---------------------------
<PAGE> 46
Wise, like others in similar businesses, is subject to extensive Federal, state
and local environmental laws and regulations. Although Wise's environmental
policies and practices are designed to ensure compliance with these laws and
regulations, future developments and increasingly stringent regulation could
require Wise to make additional unforeseen environmental expenditures.
Environmental accruals are routinely reviewed on an interim basis as events and
developments warrant and are subject to an annual comprehensive review.
Litigation
- ----------
Wise is subject to various investigations, claims and legal proceedings covering
a wide range of matters in the ordinary course of its business activities. Each
of these matters are subject to various uncertainties and some of these matters
may be resolved unfavorably to Wise. Wise 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 statements of Wise.
5. RELATED PARTIES
In addition to affiliated debt and lease agreements, Wise is engaged in various
transactions with Borden and its affiliated companies in the ordinary course of
business. A subsidiary of Borden provides certain administrative services to
Wise at negotiated fees. These services include: processing of payroll and
active and retiree group insurance claims, administration of workers'
compensation claims and securing insurance coverage for catastrophic claims.
Wise reimburses the Borden subsidiary for payments for general disbursements,
and general and group insurance and retirement benefit claims. The amount owed
by Wise for these services is included in affiliated payables and was $1,100 and
$703 at June 30, 1997 and December 31, 1996, respectively.
The following table summarizes the charges to Wise for these costs in the six
months ended June 30, 1997 and 1996:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
1997 1996
<S> <C> <C>
Employee benefits $ 1,033 $ 785
Group and general insurance 2,783 3,084
Information services 100 -
Corporate staff departments and
overhead 756 804
---------------------------------
$ 4,672 $ 4,673
=================================
</TABLE>
- --------------------------------------------------------------------------------
Wise is generally self-insured for post-employment benefits other than pensions.
In addition, Wise has insurance policies to cover potential losses and
liabilities relating to general insurance. Many of these policies have
deductibles of $100 and in some cases higher amounts. Losses are accrued for the
estimated aggregate liability for claims incurred using certain actuarial
assumptions followed in the insurance industry and Wise's experience. By
agreement, Borden has retained the obligation for active group insurance claims
incurred in 1996 and paid in 1997.
Wise also invests excess cash with Borden in one-day investments which totaled
$4,300 and $1,800 at June 30, 1997 and December 31, 1996, respectively.
6. SUBSEQUENT EVENT
On July 31 1997, for a purchase price of $1.9 million Wise acquired certain
assets (accounted for under the purchase method) of Quality Foods of North
Carolina, an independent distributor of Wise products and other snack food
products throughout North and South Carolina. As of the purchase date, Wise
intends to continue to use the acquired assets for the purpose of distribution
of snack foods.
<PAGE> 1
Exhibit 10(i)
STOCK PURCHASE AND MERGER AGREEMENT
DATED AS OF MAY 22, 1997
AMONG
MID-AMERICA DAIRYMEN, INC.,
BORDEN/MEADOW GOLD DAIRIES HOLDINGS, INC.,
BDH TWO, INC.
AND
BORDEN, INC.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE I
THE STOCK PURCHASE AND MERGER....................................2
1.1 Stock Purchase...................................................2
1.2 The Merger.......................................................3
1.3 Surviving Entity.................................................4
1.4 Closing..........................................................4
1.5 Effective Time...................................................5
1.6 Certificate of Incorporation and By-Laws.........................5
1.7 Directors........................................................6
1.8 Officers.........................................................6
ARTICLE II
STATUS AND CONVERSION OF SECURITIES..............................6
2.1 Conversion of Securities.........................................6
2.2 Stock Options and Related Matters................................7
2.3 Exchange of Certificates.........................................8
ARTICLE III
REPRESENTATIONS AND WARRANTIES................................. 11
3.1 Representation and Warranties of Borden.........................11
3.2 Representations and Warranties of Holdings......................13
3.3 Representations and Warranties of Parent........................43
3.4 Representations and Warranties of the Parties...................46
3.5 Survival of Representations and Warranties......................46
3.6 Schedules and Exhibits..........................................47
ARTICLE IV
COVENANTS...................................................... 47
4.1 Access; Information and Records; Confidentiality............... 47
4.2 Conduct of the Businesses of Holdings Prior to
the Closing Date............................................ 49
4.3 Antitrust Laws................................................. 50
4.4 Non-Solicitation............................................... 55
4.5 Equipment...................................................... 57
4.6 Earnings....................................................... 58
4.7 Termination of Affiliate Relations............................. 63
4.8 Further Actions................................................ 64
4.9 Preparation of Returns and Payment of Taxes.................... 66
4.10 No Shopping.................................................... 67
4.11 USDA Compliance Agreement...................................... 67
4.12 Post-Closing Services.......................................... 68
4.13 Financing Best Efforts......................................... 68
ARTICLE V
CONDITIONS PRECEDENT........................................... 69
5.1 Conditions Precedent to Obligations of Parties................. 69
5.2 Conditions Precedent to Obligation of Parent................... 69
5.3 Conditions Precedent to the Obligation of
Holdings and Borden......................................... 72
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE VI
PROVISIONS AS TO TAXES......................................... 73
6.1 Access to Records Following Closing.............................73
6.2 Section 338 Elections...........................................74
6.3 Post-Closing Cooperation........................................77
6.4 Tax Indemnification.............................................79
6.5 Other Tax Matters...............................................85
ARTICLE VII
LABOR MATTERS, EMPLOYEE
RELATIONS AND BENEFITS......................................... 86
7.1 Conduct Prior to the Closing................................... 86
7.2 Continuity of Employment....................................... 87
7.3 Collective Bargaining Agreements............................... 87
7.4 Comparable Benefits............................................ 88
7.5 Business Plan Participation.................................... 88
7.6 Business Plan Liabilities...................................... 89
7.7 Defined Benefit Plan........................................... 90
7.8 Defined Contribution Plans..................................... 92
7.9 Withdrawal Liability........................................... 96
7.10 Post-Retirement Benefits....................................... 96
7.11 Welfare Plans.................................................. 96
7.12 Accrued Vacation............................................... 97
7.13 Severance...................................................... 97
7.14 Service Credit................................................. 98
7.15 WARN Act....................................................... 98
7.16 COBRA.......................................................... 98
7.17 No Rights Conferred on Employees............................... 98
ARTICLE VIII
ASSUMPTION OF CERTAIN OBLIGATIONS
AND LIABILITIES; INDEMNIFICATION............................... 99
8.1 Assumption and Indemnification................................. 99
8.2 Procedure......................................................102
ARTICLE IX
MISCELLANEOUS..................................................104
9.1 Termination and Abandonment....................................104
9.2 Fees and Expenses..............................................108
9.3 Notices........................................................108
9.4 Entire Agreement...............................................110
9.5 No Third Party Beneficiaries...................................110
9.6 Assignability..................................................110
9.7 Amendment and Modification; Waiver.............................112
9.8 Public Announcements...........................................112
9.9 Section Headings...............................................113
9.10 Counterparts...................................................113
9.11 Enforcement....................................................113
9.12 Governing Law..................................................115
</TABLE>
<PAGE> 4
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
Term Page
<S> <C>
Accounting Period .........................................................58
Acquisition ................................................................1
Aggregate Earnings Payment.................................................62
Antitrust Authorities......................................................54
Antitrust Division ........................................................50
Antitrust Improvements Act.................................................12
Antitrust Law .......................................................55
Applicable Antitrust Conditions...........................................107
Applicable Funding Conditions.............................................107
BDH ........................................................................1
BMGD .....................................................................111
Borden ..................................................................1, 4
Borden Corporation .......................................................25
Borden Indemnified Liabilities............................................100
Borden Indemnified Parties.................................................99
Borden Names ..............................................................65
Borden Pension Plan .......................................................90
Borden Shares ..............................................................1
Borden, Inc. ...............................................................1
Borden's Actuary ..........................................................90
Business Employees ........................................................38
Business Plans ............................................................38
Certificate of Merger.......................................................5
Clause (iv) Termination Date..............................................106
Closing ....................................................................4
Closing Date ...............................................................5
Closing Date Statement.....................................................58
Closing Payment Amount.....................................................59
Closing Period ............................................................60
COBRA .....................................................................98
Code ......................................................................29
Collective Bargaining Agreements...........................................87
Common Share ...............................................................3
Common Share Consideration..................................................3
Common Stock ...............................................................1
Company Intellectual Property..............................................37
Conclusive Earnings Statement..............................................62
Contemplated Assignment...................................................110
Controlled Group ..........................................................40
Damages ...................................................................80
December 31, 1996 Balance Sheet............................................22
Dissenting Shares ..........................................................7
Earliest Borden Antitrust Termination Date.................................53
Earnings ..................................................................59
Earnings Statement ........................................................60
Effective Time .............................................................5
Electing Subsidiaries......................................................74
Elections .................................................................74
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
Term Page
<S> <C>
Employee Pension Benefit Plan..............................................38
Equipment .................................................................57
ERISA .....................................................................38
Establishment Date .......................................................62
Exchange Act ..............................................................12
Final Determination .......................................................74
Final Payment Amount.......................................................62
Financial Statements.......................................................17
FTC .......................................................................50
GCL ........................................................................1
Governmental Authority.....................................................33
Group .....................................................................25
Health and Environmental Laws..............................................35
Holdings ...................................................................1
Indemnified Liabilities...................................................102
Indemnified Parties ......................................................100
Insurance Matters Agreement................................................71
Interim Period ............................................................79
IRS .......................................................................39
Leases ....................................................................24
Licenses and Permits.......................................................34
Master Lease Agreement.....................................................57
Master Services Agreement Amendment........................................71
Material Adverse Effect....................................................14
Material Contracts ........................................................32
Meadow Gold Trademark License Agreement....................................72
Merger .....................................................................1
Merger Consideration........................................................6
Neutral Auditors ..........................................................61
Newco ....................................................................111
Option .....................................................................8
Option Plan ................................................................8
Option Settlement Amount....................................................8
Parcel ....................................................................22
Parent .....................................................................1
Parent Indemnified Liabilities............................................102
Parent Indemnified Parties................................................100
Parent Indemnitees .......................................................80
Parent Pension Plan .......................................................90
Parent Savings Plan .......................................................93
Parent Termination Notice.................................................105
PBGC ......................................................................40
Permitted Assignee ......................................................111
Post-Closing Period .......................................................79
Post-Retirement Benefits...................................................96
Pre-Closing Period ........................................................78
Preferred Share ............................................................2
Preferred Stock ............................................................1
Real Estate Transfer Tax...................................................85
Real Property Gains Tax....................................................85
Related Transaction Parties................................................51
</TABLE>
<PAGE> 6
<TABLE>
<CAPTION>
Term Page
<S> <C>
Required Consents .........................................................69
Resolution Period .........................................................61
Returns ...................................................................26
Savings Plans .............................................................93
Section 338 Allocation.....................................................76
Section 338 Forms .........................................................75
Shares .....................................................................7
Short Period ..............................................................78
Stock Purchase .............................................................1
Subsidiaries ..............................................................14
Surviving Entity ...........................................................3
Tax Claim .................................................................81
Tax Sharing Agreement......................................................28
Taxes .....................................................................26
Terminated Services .......................................................68
Total Transfer Amount......................................................94
Trademark License Agreement................................................71
Transaction-Based Taxes....................................................78
Transfer Date .............................................................94
Transfer Taxes ............................................................85
Vacation Policy ...........................................................97
WARN ......................................................................98
</TABLE>
<PAGE> 7
STOCK PURCHASE AND MERGER AGREEMENT
STOCK PURCHASE AND MERGER AGREEMENT dated as of May 22, 1997 among
MID-AMERICA DAIRYMEN, INC., a Kansas cooperative marketing association
("Parent"), BORDEN/MEADOW GOLD DAIRIES HOLDINGS, INC., a Delaware corporation
("Holdings"), BDH TWO, INC., a Delaware corporation ("BDH"), and BORDEN, INC.,
a New Jersey corporation ("Borden, Inc."; together with BDH, "Borden").
W I T N E S S E T H :
WHEREAS, Borden owns 14,754,429 shares of Holdings' Common Stock, par
value $0.01 per share (the "Common Stock"), and 3,400,000 shares of Holdings'
Preferred Stock, par value $0.01 per share (the "Preferred Stock"), and Parent
desires to purchase (the "Stock Purchase") from Borden such shares (the "Borden
Shares") pursuant to this Agreement;
WHEREAS, immediately after the Stock Purchase, Parent intends to
effect the merger of a newly formed wholly owned subsidiary of Parent (referred
to herein as "Acquisition") with and into Holdings in accordance with the
General Corporation Law of the State of Delaware (the "GCL") and the provisions
of this Agreement (the "Merger"), pursuant to which the other holders of shares
of Common Stock shall receive the merger consideration set forth herein and
Holdings will become a wholly owned subsidiary of Parent;
NOW, THEREFORE, in consideration of the mutual terms, conditions and
other agreements set forth herein and intending to be legally bound hereby, the
parties hereto hereby agree as follows:
1
<PAGE> 8
ARTICLE I
THE STOCK PURCHASE AND MERGER
1.1 Stock Purchase. (a) In consideration of Borden, Inc. entering into
this Agreement, on the date hereof, Parent shall pay to Borden, Inc. by wire
transfer in immediately available funds $40,000,000. Except as provided in
Section 9.11(b), such amount shall be non-refundable regardless of whether or
not any of the transactions contemplated by this Agreement is consummated but,
upon the consummation of the Stock Purchase, shall be credited towards the
amounts payable to Borden, Inc. pursuant to Section 1.1(b).
(b) Upon the terms and subject to the conditions of this Agreement, at
the Closing (as defined below) and prior to the Effective Time (as defined
below), Borden shall sell to Parent, and Parent shall purchase from Borden, the
Borden Shares. In consideration for the sale and transfer of the Borden Shares
and, in part, for the right to license certain trademarks from Borden pursuant
to the Trademark License Agreement (as defined herein), and upon the terms and
subject to the conditions of this Agreement, on the Closing Date, Parent shall
pay or cause to be paid to Borden by wire transfer in immediately available
funds (in full satisfaction of Parent's obligations to Borden, Inc. and BDH
Two, Inc. under this Section 1.1) (subject to the credit described in Sections
1.1(a) and 4.3(f)), (x) for each share of Preferred Stock (a "Preferred
Share"), an amount equal to $25, plus the amount of accrued and unpaid
dividends on such share to and including the Closing Date, and (y) for each
share of Common
2
<PAGE> 9
Stock (a "Common Share") owned by Borden, an amount equal to the Common Share
Consideration (as defined below). On the Closing Date, upon the terms and
subject to the conditions of this Agreement, Borden shall deliver to Parent
certificates representing the Borden Shares, duly endorsed, or accompanied by
stock powers duly executed, with all necessary stock transfer stamps attached
thereto and cancelled. The "Common Share Consideration" shall be determined in
accordance with the following formula:
CSC = $435,000,000 - ($25 x PS) - [(CSC x OPT) - ($5 x OPT)]
------------------------------------------------------
CS
where CS = Number of Common Shares outstanding on the
Closing Date
CSC = Common Share Consideration
OPT = Number of Options outstanding on the Closing
Date
PS = Number of Preferred Shares outstanding on the
Closing Date
1.2 The Merger. At the Effective Time, and subject to the terms and
conditions of this Agreement and the GCL, Parent shall cause the Merger of
Acquisition with and into Holdings to occur, the separate corporate existence
of Acquisition shall thereupon cease, and Holdings shall be the surviving
corporation in the Merger. Holdings hereinafter sometimes is referred to as the
"Surviving Entity". Notwithstanding anything to the contrary in this Agreement,
but subject to Section 8.1(a) and the receipt of Borden, Inc.'s prior written
consent, which consent shall not be unreasonably withheld, the Merger may be
structured so that Acquisition is the Surviving Entity, and Borden, Inc. and
BDH
3
<PAGE> 10
agree to enter into such amendment to this Agreement as shall be required to
effect such change to the structure of the Merger; provided that Borden, Inc.
may withhold its consent to any such change to the structure of the Merger if
such change would have an adverse tax or other consequence to Borden, Inc. or
any of its affiliates.
1.3 Surviving Entity. At the Effective Time, the Surviving Entity
shall continue its corporate existence under the laws of the State of Delaware.
The Merger shall have the effects set forth in the GCL. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all
the properties, rights, privileges, powers and franchises of a public as well
as of a private nature of Holdings and Acquisition shall vest in the Surviving
Entity, and all debts, liabilities and duties of Holdings and Acquisition shall
become the debts, liabilities and duties of the Surviving Entity. The name of
the Surviving Entity shall be such name as shall be set forth in the
Certificate of Merger (as defined below) by Parent, with the prior written
consent of Borden, Inc., which consent shall not be unreasonably withheld if
such name does not include the word "Borden" or any name similar thereto or
derivative thereof.
1.4 Closing. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Section
9.1, and subject to the satisfaction or waiver of the conditions set forth in
Article V, the closing of the Stock Purchase and the Merger (the "Closing")
will take place at 10:00 a.m. on the 28th day (or, if such day is
4
<PAGE> 11
not a business day, the immediately succeeding business day) following the date
on which the last to be satisfied or waived of the conditions set forth in
Article V hereof shall be satisfied or waived in accordance with this Agreement
(the "Closing Date"), at the offices of Simpson Thacher & Bartlett, New York,
New York, unless another date, time or place is agreed to in writing by the
parties hereto.
1.5 Effective Time. On the Closing Date, immediately after the
consummation of the Stock Purchase, Parent shall file, or shall cause the
filing of, a certificate of merger (the "Certificate of Merger") with the
Secretary of State of the State of Delaware, and shall make or cause to be made
all other filings or recordings required by the GCL in connection with the
Merger. The Merger shall become effective at such time as the Certificate of
Merger is duly filed with the Secretary of State of the State of Delaware, or
at such later time as shall be specified in the Certificate of Merger with the
prior written consent of Borden, Inc. (the "Effective Time").
1.6 Certificate of Incorporation and By-Laws. (a) The Certificate of
Incorporation of Acquisition in effect at the Effective Time shall be attached
to the Certificate of Merger as an amendment to the Certificate of
Incorporation of Holdings, with the effect that such Certificate of
Incorporation shall become the Certificate of Incorporation of the Surviving
Entity, until thereafter amended as provided therein and under the GCL.
5
<PAGE> 12
(b) The By-laws of Acquisition in effect at the Effective Time shall
be the By-laws of the Surviving Entity until thereafter amended in accordance
with applicable law.
1.7 Directors. The directors of Acquisition at the Effective Time
shall be the initial directors of the Surviving Entity, each to hold office in
accordance with the Certificate of Incorporation and By-laws of the Surviving
Entity and until his or her successor is duly elected and qualified.
1.8 Officers. The officers of Acquisition at the Effective Time shall
be the initial officers of the Surviving Entity, each to hold office in
accordance with the Certificate of Incorporation and By-laws of the Surviving
Entity and until his or her successor is duly appointed and qualified.
ARTICLE II
STATUS AND CONVERSION OF SECURITIES
2.1 Conversion of Securities. At the Effective Time, by virtue of the
Merger and without any action on the part of Acquisition, Holdings or the
holders of any of the following securities:
(a) Each Common Share issued and outstanding immediately prior to the
Effective Time (other than Common Shares to be cancelled pursuant to Section
2.1(b) hereof and Dissenting Shares (as hereinafter defined)) shall be
converted into the right to receive in cash an amount equal to the Common Share
Consideration (the "Merger Consideration"), without any interest thereon, upon
the surrender of the certificate representing such Common Share.
6
<PAGE> 13
(b) Each Share (as defined below) which is held in the treasury of
Holdings or its Subsidiaries (as defined below) or which is held by Parent or
any of its subsidiaries (including the Borden Shares purchased by Parent
pursuant to Section 1.1(b)) shall be cancelled and retired and no payment shall
be made with respect thereto. Preferred Shares and Common Shares are herein
together referred to as the "Shares".
(c) Each share of common stock of Acquisition issued and outstanding
immediately prior to the Effective Time shall be converted into one share of
common stock, par value $0.01 per share, of the Surviving Entity.
(d) Notwithstanding anything in this Agreement to the contrary, Shares
outstanding immediately prior to the Effective Time and held by a holder who
has not voted in favor of the Merger and who has demanded appraisal for such
Shares in accordance with the GCL, if the GCL provides for appraisal rights for
such Shares in the Merger ("Dissenting Shares"), shall not be converted into a
right to receive the Merger Consideration unless such holder fails to perfect
or withdraws or otherwise loses such holder's right to appraisal. If, after the
Effective Time, such holder fails to perfect or withdraws or loses such
holder's right to appraisal, such Dissenting Shares shall be treated as if they
had been converted as of the Effective Time into the right to receive the
Merger Consideration without interest thereon.
2.2 Stock Options and Related Matters. On the Closing Date,
immediately prior to the Effective Time, Holdings shall notify Parent of the
amount of, and Parent shall pay to Holdings,
7
<PAGE> 14
the Option Settlement Amount (as defined below) and immediately thereafter each
holder of a then outstanding option (an "Option") to purchase Common Shares
granted under the 1996 Stock Purchase and Option Plan of Holdings (the "Option
Plan") will be entitled (whether such Option is immediately exercisable or not)
to receive in settlement thereof a cash payment from Holdings in an amount
equal to the excess of the Common Share Consideration (as determined pursuant
to Section 1.1(b)) over the exercise price of $5.00 per Share for each such
Option, multiplied by the number of Common Shares covered by such Option (the
"Option Settlement Amount"), net of any applicable withholding Taxes (as
defined below). Holdings, acting through its Board of Directors or a duly
authorized committee thereof, shall take all required action under each Option
and the Option Plan so that, at the Effective Time, any Options with respect to
which the holder thereof has not consented to cancellation in exchange for the
receipt of the Option Settlement Amount will be converted into, and thereafter
represent only the right to receive, the Option Settlement Amount. All such
Options shall be cancelled upon the payment of such cash in settlement thereof.
Immediately following the Effective Time, the Option Plan will be terminated
and no further stock awards, stock options or stock appreciation rights will be
granted thereunder subsequent to the Effective Time.
2.3 Exchange of Certificates. (a) Promptly upon the surrender of any
certificate representing Common Shares entitled to payment pursuant to Section
2.1, Parent shall pay the holder of such certificate the Merger Consideration
multiplied by the
8
<PAGE> 15
number of Common Shares formerly represented by such certificate, in exchange
therefor, and such Share certificate shall forthwith be cancelled. Until so
surrendered and exchanged, each such certificate (other than certificates
representing Dissenting Shares or shares held by Parent, Acquisition or
Holdings, or any direct or indirect subsidiary thereof) shall represent solely
the right to receive the Merger Consideration. If the Merger Consideration (or
any portion thereof) is to be paid to a person other than the holder in whose
name the certificate representing Common Shares surrendered in exchange
therefor is registered, it shall be a condition of such exchange that the
certificate so surrendered shall be properly endorsed or otherwise in proper
form for transfer and that the person requesting such exchange shall pay to
Parent any transfer or other Taxes required by reason of the payment of the
Merger Consideration to a person other than the registered holder of the Common
Shares formerly represented by the certificate surrendered, or shall establish
to the satisfaction of Parent that such Tax has been paid or is not applicable.
Notwithstanding the foregoing, neither Parent nor any party hereto shall be
liable to a holder of Shares for any Merger Consideration delivered pursuant
hereto to a public official pursuant to applicable abandoned property laws.
(b) Promptly following the date which is six months after the
Effective Time, Parent shall return to the Surviving Entity all cash,
certificates and other instruments in its possession relating to the
transactions described in this Agreement, and Parent's duties under this
Section 2.3 shall
9
<PAGE> 16
terminate. Thereafter, each holder of a certificate formerly representing a
Common Share may surrender such certificate to the Surviving Entity and
(subject to applicable abandoned property, escheat and similar laws) receive in
exchange therefor the Merger Consideration, without any interest thereon, but
shall have no greater rights against the Surviving Entity than may be accorded
to general creditors of the Surviving Entity under Delaware law.
(c) The right of any holder of a certificate representing Common
Shares to receive the Merger Consideration shall be subject to and reduced by
the amount of any required Tax withholding obligation.
(d) Promptly after the Effective Time, Parent shall mail or deliver to
each record holder of certificates which immediately prior to the Effective
Time represented Common Shares a form of letter of transmittal and instructions
for use in surrendering such certificates and receiving the Merger
Consideration in exchange therefor.
(e) After the Effective Time, there shall be no transfers on the stock
transfer books of the Surviving Entity of any Common Shares. If, after the
Effective Time, certificates previously representing Common Shares are
presented to the Surviving Entity or Parent, they shall be cancelled and
exchanged for the Merger Consideration as provided in this Article II, subject
to applicable law in the case of Dissenting Shares.
(f) Notwithstanding any other provision in this Section 2.3 to the
contrary, Parent shall cause the Merger Consideration to be paid in immediately
available funds on the
10
<PAGE> 17
date of the Effective Time with respect to any certificates representing Common
Shares which are surrendered to Parent prior to or at the Effective Time, and
Parent will not be required to comply with Section 2.3(d) with respect to such
Shares.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representation and Warranties of Borden. Borden represents and
warrants to Parent as follows:
(a) Due Organization and Power of Borden. Each of Borden, Inc. and BDH
is a corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization and has all requisite
corporate power and authority to enter into this Agreement and to perform its
obligations hereunder.
(b) Authorization and Validity of Agreement. The execution, delivery
and performance by Borden of this Agreement and the consummation by them of the
transactions contemplated hereby have been duly authorized by their respective
Boards of Directors, and no other corporate action on the part of Borden is
necessary for the execution, delivery and performance by Borden of this
Agreement and the consummation by them of the transactions contemplated hereby.
This Agreement has been duly executed and delivered by Borden and is a legal,
valid and binding obligation of Borden, enforceable against Borden in
accordance with its terms, except to the extent that its enforceability may be
limited by bankruptcy, insolvency,
11
<PAGE> 18
reorganization, moratorium or other laws relating or affecting creditors'
rights generally and by general equity principles.
(c) No Conflict. Except as set forth on Schedule 3.1(c) hereto, except
as would not have a Material Adverse Effect (as defined in Section 3.2(a)) and
except as would not prevent, materially hinder or materially delay the ability
of Borden to perform their obligations under this Agreement or to consummate
the transactions contemplated hereby, the execution, delivery and performance
by Borden of this Agreement and the consummation by them of the transactions
contemplated hereby: (i) will not violate any provision of law, rule or
regulation, order, judgment or decree applicable to Borden; (ii) will not
require any consent or approval of, or filing with or notice to, any
governmental or regulatory authority under any provision of law applicable to
Borden, except for the requirements of Title II of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "Antitrust Improvements
Act"), and the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and except for any consent, approval, filing or notice requirements
which become applicable solely as a result of the specific regulatory status of
Parent or its affiliates or which Parent or its affiliates are otherwise
required to obtain; (iii) will not violate any provision of the Certificate of
Incorporation or Bylaws of Borden; and (iv) will not require any consent,
approval or notice under, and will not conflict with, or result in the breach
or termination of, or constitute a default under, or result in the acceleration
of the performance by Borden under, any indenture,
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mortgage, deed of trust, lease, license, franchise, contract, agreement or
other instrument to which Borden is a party or by which any of them, or any of
their assets are bound or encumbered.
(d) Ownership of the Borden Shares. Borden is and will be on the
Closing Date the record and beneficial owner and holder of the Borden Shares,
free and clear of all liens, claims, charges, security interests, options,
other legal or equitable encumbrances, agreements, voting trusts, proxies or
other arrangements or restrictions whatsoever. All of the Borden Shares have
been duly authorized and validly issued and are fully paid and nonassessable.
Upon transfer of the Borden Shares to Parent on the Closing Date in accordance
with Section 1.1(b), Parent will receive good and marketable title to the
Borden Shares, free and clear of all liens, claims, charges, security
interests, options or other legal or equitable encumbrances.
3.2 Representations and Warranties of Holdings. Holdings represents
and warrants to Parent as follows:
(a) Due Organization of Holdings and Subsidiaries. Each of Holdings
and its Subsidiaries (as defined in Section 3.2(c)) is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization. Holdings has all requisite corporate power and authority to enter
into this Agreement and to perform its obligations hereunder. Each of Holdings
and its Subsidiaries (i) has all requisite corporate power and authority to own
its properties and assets and to carry on its business as it is now being
conducted and (ii) is in good
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<PAGE> 20
standing and is duly qualified to transact business in each jurisdiction set
forth on Schedule 3.2(a)(ii), which are all of the jurisdictions in which the
failure to so qualify would have a material adverse effect on the business or
financial condition of Holdings and its Subsidiaries taken as a whole (a
"Material Adverse Effect"). Complete and correct copies of Holdings'
Certificate of Incorporation and Bylaws, as amended to date, have been made
available to Parent.
(b) Authorization and Validity of Agreement. The execution, delivery
and performance by Holdings of this Agreement and the consummation by it of the
transactions contemplated hereby have been duly authorized by its Board of
Directors, and no other corporate action on the part of Holdings or its
stockholders is necessary for the execution, delivery and performance by
Holdings of this Agreement and the consummation by it of the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Holdings and is a legal, valid and binding obligation of Holdings, enforceable
against Holdings in accordance with its terms, except to the extent that its
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting creditors' rights generally
and by general equity principles.
(c) Subsidiaries. Holdings has no entities in which it directly or
indirectly owns 50% or more of the effective voting power or equity interest
except as set forth in Schedule 3.2(c) hereto (the "Subsidiaries"). Complete
and correct copies of the Certificate of Incorporation and Bylaws of each
Subsidiary
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<PAGE> 21
of Holdings, as amended to date, have been made available to Parent. None of
Holdings or its Subsidiaries is a party to any partnership agreement or joint
venture agreement with any other person.
(d) Capitalization. The authorized capital stock of Holdings consists
of 30,000,000 shares of Common Stock and 5,000,000 shares of Preferred Stock,
of which 14,995,000 Common Shares and 3,400,000 Preferred Shares are
outstanding as of the date hereof. Except as set forth on Schedule 3.2(d)(i)
hereto, all of the outstanding shares of capital stock or other equity
interests of each of the Subsidiaries have been validly issued and are fully
paid and nonassessable and are owned by Holdings and/or one or more of its
Subsidiaries free and clear of all liens, claims, charges, security interests,
options or other legal or equitable encumbrances. Except as indicated in
Schedule 3.2(d)(ii) hereto, (i) there are no outstanding options, warrants or
other rights of any kind relating to the sale, issuance or voting of any shares
of capital stock of any class of, or other ownership interests in, Holdings or
of any of its Subsidiaries which have been issued, granted or entered into by
Holdings or any of its Subsidiaries or any securities convertible into or
evidencing the right to purchase any shares of capital stock of any class of,
or other ownership interests in, Holdings or any of its Subsidiaries; (ii) no
shares of the capital stock of Holdings or any of its Subsidiaries are reserved
for any purpose other than for the issuance of shares upon the exercise of the
Options; (iii) there are no preemptive or similar rights with respect to
15
<PAGE> 22
the issuance, sale or other transfer (whether present, past or future) of the
capital stock of Holdings or its Subsidiaries; and (iv) there are no agreements
or other obligations (contingent or otherwise) which may require Holdings or
its Subsidiaries to repurchase or otherwise acquire any shares of its capital
stock other than as described in Section 2.2. All dividends on the Preferred
Shares have been declared and paid on or as of the dates when such dividends
are required to be declared and paid in accordance with the terms of the
Preferred Shares.
(e) No Conflict. Except as set forth on Schedule 3.2(e) hereto, except
as specifically contemplated in this Agreement and except as would not have a
Material Adverse Effect, the execution, delivery and performance by Holdings of
this Agreement and the consummation by it of the transactions contemplated
hereby: (i) will not violate any provision of law, rule or regulation, order,
judgment or decree applicable to Holdings or any of its Subsidiaries; (ii) will
not require any consent or approval of, or filing with or notice to, any
governmental or regulatory authority under any provision of law applicable to
Holdings or its Subsidiaries, except for the Antitrust Improvements Act and the
Exchange Act and except for any consent, approval, filing or notice
requirements which become applicable solely as a result of the specific
regulatory status of Parent or its affiliates or which Parent or its affiliates
are otherwise required to obtain; (iii) will not violate any provision of the
Certificate of Incorporation or Bylaws of Holdings or any of its Subsidiaries;
(iv) will not require any
16
<PAGE> 23
consent, approval or notice under, and will not conflict with, or result in the
breach or termination of, or constitute a default under, or result in the
acceleration of the performance by Holdings or any of its Subsidiaries under,
any indenture, mortgage, deed of trust, lease, license, franchise, contract,
agreement or other instrument to which Holdings or any of its Subsidiaries is a
party or by which any of them, or any of their assets are bound or encumbered;
or (v) will not entitle any employee of Holdings or its Subsidiaries to
severance or other related payments, or create any other material change in
control related obligations to employees.
(f) Financial Statements. Attached as Schedule 3.2(f)(i) are an
unaudited balance sheet of Holdings and its Subsidiaries at December 31, 1996
and a statement of Holdings' and its Subsidiaries' earnings before income taxes
for the year ended December 31, 1996, together with the notes thereto
(collectively, the "Financial Statements"). The Financial Statements were
prepared in accordance with Holdings' accounting practices and present fairly
in all material respects the financial position and earnings before income
taxes of Holdings and its Subsidiaries at and for the year ended December 31,
1996. Set forth on Schedule 3.2(f)(ii) hereto are the material differences
between generally accepted accounting principles and Holdings' accounting
practices. Except as set forth on the Financial Statements or in Schedule
3.2(f)(iii), except for those that would not have a Material Adverse Effect and
except for liabilities and obligations incurred in the ordinary course of
17
<PAGE> 24
business since December 31, 1996, neither Holdings nor any of its Subsidiaries
has any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) required to be set forth on the Financial Statements
under Holdings' accounting practices.
(g) Books and Records. The minute books of Holdings and each of its
Subsidiaries contain substantially accurate and complete records of all
meetings held of, and corporate action taken by, the stockholders, the Boards
of Directors and the committees of the Boards of Directors of Holdings and each
of its Subsidiaries, and no meeting of any such stockholders, Board of
Directors or committee has been held in which substantive corporate action was
taken and for which minutes have not been prepared and are not contained in
such minute books. At the Closing, all of those books and records will be in
the possession of Holdings and its Subsidiaries.
(h) Absence of Material Adverse Change. Except as a result of the
execution and delivery of this Agreement or as expressly contemplated hereby
(including, without limitation, by clause (iii) of Section 4.6(a) or by clause
(C) of Section 4.6(d)(ii)) and except as set forth on Schedule 3.2(h), from
December 31, 1996 to the date of this Agreement, and from December 31, 1996 to
the Closing Date, Holdings and its Subsidiaries have conducted or will conduct
business only in the ordinary course, and except as would not, individually or
in the aggregate, have a Material Adverse Effect, none of Holdings or any of
its Subsidiaries has or will have:
18
<PAGE> 25
(i) redeemed or purchased, directly or indirectly, any shares
of its capital stock or declared or paid any dividends or distributions
with respect to any shares of its capital stock, except for dividends
due during such period with respect to the Preferred Shares, except for
other dividends the amount of which is referred to in clause (i) of
Section 4.6(a) or clause (A) of Section 4.6(d)(ii) and except for
repurchases of Common Shares held by employees of Holdings or its
Subsidiaries pursuant to the respective Management Stockholder's
Agreements between Holdings and such employees;
(ii) except for issuances of Shares of Common Stock upon the
exercise of outstanding Options, issued, sold or transferred any of its
equity securities, securities convertible into its equity securities or
warrants, options or other rights to acquire its equity securities, or
any bonds or other securities issued by it;
(iii) borrowed or become liable as a guarantor for any amount
in excess of $1,000,000 in the aggregate, except for current
liabilities incurred in the ordinary course of business and liabilities
under contracts entered into in the ordinary course of business;
(iv) discharged or satisfied any lien or encumbrance in excess
of $1,000,000, other than in the ordinary course of business;
(v) mortgaged, pledged or subjected to any lien, charge or any
other encumbrance, any of its properties or
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<PAGE> 26
assets, except liens for current property taxes or assessments not yet
due and payable and those arising in the ordinary course of business;
(vi) sold, assigned or transferred any of its material
tangible assets, except in the ordinary course of business, or canceled
without reasonable consideration any material debts owing to or held by
it;
(vii) sold, assigned or transferred any patents, trademarks,
trade names, copyrights, trade secrets or other intangible assets,
other than any of the foregoing which is not material; provided that
neither Borden, Holdings nor any of its Subsidiaries has sold, assigned
or transferred, for use in connection with the Products (as defined in
the Trademark License Agreement (as defined below)) or in connection
with any of the other products of Holdings or its Subsidiaries, any of
the intangible assets subject to the Trademark License Agreement or
otherwise used in connection with the products of Holdings or its
Subsidiaries;
(viii) made or granted any bonus or any wage or salary
increase to any employee or group of employees other than in the
ordinary course of business in accordance with past practice, or made
or granted any increase in any employee benefit plan or arrangement, or
amended or terminated any existing employee benefit plan or arrangement
or adopted any new employee benefit plan or arrangement;
(ix) other than as reflected in Holdings' 1997 capital budget
(a copy of which has been furnished to
20
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Parent), made capital expenditures or commitments therefor that
aggregate in excess of $500,000;
(x) made any loans or advances to, or guarantees for the
benefit of, any person, including Borden and its affiliates (other than
loans or advances made to employees in the ordinary course or made to
Borden, Inc. and for which Holdings or its Subsidiaries are entitled to
repayment);
(xi) amended or otherwise altered any contracts or other
agreements to which it is a party or waived any rights or obligations
thereunder, except in the ordinary course of business in accordance
with past practice;
(xii) entered into any other transaction or agreement in
excess of $100,000 other than in the ordinary course of business; or
(xiii) suffered any material adverse change in the financial
condition or business of Holdings and its Subsidiaries taken as a whole
(except as may be disclosed in this Agreement or in the Schedules
hereto and except for changes affecting the economy generally, the
dairy industry generally or the dairy industry within any of the
jurisdictions in which Holdings or its Subsidiaries is operating).
(i) Absence of Undisclosed Liabilities. As of the Closing, none of
Holdings or its Subsidiaries will have any obligations or liabilities (whether
accrued, absolute, contingent, unliquidated or otherwise, whether due or to
become due and regardless of when or by whom asserted) arising out of
21
<PAGE> 28
transactions entered into prior to the Closing Date, or any action or inaction
prior to the Closing Date, except (i) obligations under Material Contracts (as
hereinafter defined) or under contracts and commitments entered into in the
ordinary course of business as permitted by Section 3.2(h), (ii) liabilities
reflected on the balance sheet of Holdings and its Subsidiaries at December 31,
1996 and the notes thereto, included in the Financial Statements (the "December
31, 1996 Balance Sheet"), (iii) liabilities which in the aggregate would not
have a Material Adverse Effect and (iv) obligations and liabilities otherwise
expressly disclosed (or within any materiality threshold contained in any other
representation) in this Agreement or the Schedules hereto.
(j) Real Property Ownership. Schedule 3.2(j) lists all real property
(by street address) owned by each of Holdings and its Subsidiaries as of the
date hereof. With respect to each parcel of real property (a "Parcel") listed
in Schedule 3.2(j), except as would not, individually or in the aggregate, have
a Material Adverse Effect:
(i) except as disclosed on Schedule 3.2(j) hereto, the entity
owning such Parcel has marketable title to such Parcel, free and clear
of all mortgages, pledges, security interests, encumbrances, charges or
other liens, easements and other restrictions, other than (A)
installments of special assessments not yet delinquent, (B) Taxes not
yet due and payable, or (C) encumbrances, encroachments and recorded
easements, covenants and restrictions, including
22
<PAGE> 29
exceptions listed on any title insurance policy, or deeds or other
documents of record relating to such Parcel, copies of which have been
delivered to Parent prior to the date hereof, which do not impair the
current use, occupancy or value of the property subject thereto;
(ii) except as disclosed on Schedule 3.2(j) hereto, there are
no pending or, to the knowledge of Holdings or its Subsidiaries,
threatened condemnation proceedings or litigation or administrative
actions relating to any Parcel;
(iii) except as disclosed on Schedule 3.2(j) hereto, there are
no subleases, licenses, concessions or other agreements, written or
oral, granting to any party the right of use or occupancy of any
portion of any Parcel;
(iv) except as disclosed on Schedule 3.2(j) hereto, there are
no outstanding options or rights of refusal to purchase any Parcel, any
portion thereof or interest therein;
(v) there are no parties (other than one or more of Holdings
and any of its Subsidiaries) in possession of any Parcel, other than
tenants under any leases disclosed on Schedule 3.2(j) who are in
possession of space to which they are entitled; and
(vi) Holdings and its Subsidiaries have sufficient title to
such easements or rights of way or other rights appurtenant to each
Parcel to access public roads or rights of way.
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(k) Real Property Leases. Schedule 3.2(k) contains a complete and
accurate list of all real property leased by Holdings and its Subsidiaries as
of the date hereof pursuant to any real property leases (the "Leases"). Except
as would not, individually or in the aggregate, have a Material Adverse Effect,
with respect to each Lease: (i) such Lease is pursuant to a written Lease which
has been executed and is in full force and effect; (ii) neither Holdings or any
of its Subsidiaries, as applicable, which is a party to such Lease nor, to the
knowledge of Holdings or its Subsidiaries, any other party to such Lease, is in
breach or default, and no event has occurred which, with notice or lapse of
time or both, would constitute such a breach or default or permit termination,
modification or acceleration, under such Lease; (iii) such Lease will continue
to be binding in accordance with its terms following the Closing, except as may
result from actions that may be taken by Parent or its affiliates following the
Closing; (iv) to Holdings or any of its Subsidiaries' knowledge, no party to
such Lease has repudiated any provision thereof; and (v) to Holdings or its
Subsidiaries' knowledge, there are no oral agreements or delayed payment
programs in effect as to such Lease.
(l) Condition of Properties. Except as would not, individually or in
the aggregate, have a Material Adverse Effect, (i) Holdings and its
Subsidiaries own or lease under valid leases all buildings, machinery,
equipment and other tangible assets used in or necessary for the conduct of
their business as presently conducted (except for assets and properties of
Borden
24
<PAGE> 31
and its affiliates (other than Holdings and its Subsidiaries) used to provide
services to Holdings and its Subsidiaries) and (ii) the buildings, fixtures and
equipment owned or leased by Holdings or its Subsidiaries are in sufficiently
good operating condition and repair to permit their use in the continuing
operations of Holdings or its Subsidiaries as such operations are presently
conducted, subject to normal wear and tear, and are not in need of maintenance
or repairs except for ordinary, routine maintenance.
(m) Tax Matters. (i) Certain Defined Terms. For purposes of this
Agreement, the following definitions shall apply:
(A) The term "Borden Corporation" shall mean one of the group of
corporations consisting of Holdings and its Subsidiaries. Any reference to
a Borden Corporation refers to that entity only and does not refer to the
group of corporations of which such Borden Corporation is a member.
(B) The term "Group" shall mean, individually and collectively, (1)
Holdings, (2) its Subsidiaries and (3) any individual, trust, corporation,
partnership or any other entity as to which Holdings or any of its
Subsidiaries are liable for Taxes incurred by such individual or entity
either as a transferee, pursuant to Treasury Regulations Section 1.1502-6
or pursuant to any other provision of federal, territorial, state, local
or foreign law or regulations.
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(C) The term "Taxes" shall mean all taxes, however denominated,
including any interest, penalties or other additions to tax that may
become payable in respect thereof, imposed by any federal, territorial,
state, local or foreign government or any agency or political subdivision
of any such government, which taxes shall include, without limiting the
generality of the foregoing, all income or profits taxes (including, but
not limited to, federal income taxes and state income taxes), real
property gains taxes, payroll and employee withholding taxes, unemployment
insurance taxes, social security taxes, sales and use taxes, ad valorem
taxes, excise taxes, franchise taxes, gross receipts taxes, business
license taxes, occupation taxes, real and personal property taxes, stamp
taxes, environmental taxes, transfer taxes, workers' compensation,
governmental charges, and other obligations of the same or of a similar
nature to any of the foregoing, which the Borden Corporations are required
to pay, withhold or collect.
(D) The term "Returns" shall mean all reports, estimates, declarations
of estimated Tax, information statements and returns relating to, or
required to be filed in connection with, any Taxes, including information
returns or reports with respect to backup withholding and other payments
to third parties.
(ii) Returns Filed and Taxes Paid. All material Returns required to be
filed by or on behalf of the Borden Corporations have been duly filed on a
timely basis and such
26
<PAGE> 33
Returns are true, complete and correct in all material respects. All Taxes
shown to be payable on the Returns or on subsequent assessments with respect
thereto have been paid in full on a timely basis, and no other Taxes are
payable by the Borden Corporations with respect to items or periods covered by
such Returns (whether or not shown on or reportable on such Returns) or with
respect to any period prior to the date of this Agreement. Each of the Borden
Corporations has withheld and paid over all material Taxes required to have
been withheld and paid over, and complied with all information reporting and
backup withholding requirements, including maintenance of required records with
respect thereto, in connection with material amounts paid or owing to any
employee, creditor, independent contractor or other third party. There are no
liens on any of the assets of any of the Borden Corporations with respect to
Taxes, other than liens for Taxes not yet due and payable or for Taxes that a
member of the Group is contesting in good faith through appropriate proceedings
and for which appropriate reserves have been established.
(iii) Returns Furnished. Parent has been provided access by Borden or
Holdings to true and complete copies of (A) relevant portions of any separate
federal and state income or franchise tax Returns relating to the Borden
Corporations for periods ending on and after December 31, 1991; provided,
however, that no such Return will be provided if it relates to or includes any
corporation or group of corporations other than the Borden Corporations.
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<PAGE> 34
(iv) Tax Deficiencies; Audits; Statutes of Limitations. Except as set
forth on Schedule 3.2(m)(iv) and except as would not have a Material Adverse
Effect: (A) there is no audit by a governmental or Taxing authority in process
or pending with respect to the Returns of the Borden Corporations; (B) no
deficiencies exist or have been asserted (either in writing or verbally,
formally or informally) with respect to Taxes of the Borden Corporations and
none of the Borden Corporations has received notice (either in writing or
verbally, formally or informally) that it has not filed a Return or paid Taxes
required to be filed or paid by it; (C) the Borden Corporations are neither
parties to any action or proceeding for assessment or collection of Taxes, nor
has such event been asserted (either in writing or verbally, formally or
informally) against the Borden Corporations or any of their assets; and (D) no
waiver or extension of any statute of limitations is in effect with respect to
Taxes or Returns of the Borden Corporations.
(v) Tax Sharing. Except as set forth in Schedule 3.2(m)(v) and with
respect to the tax sharing agreement dated as of January 1, 1996 between Borden
Holdings, Inc. and Holdings (the "Tax Sharing Agreement"), Holdings and its
Subsidiaries are not parties to any tax sharing agreement and have not assumed
the liability for taxes of any other person under contract, and, except as
provided in this Agreement, any payments to be made by Holdings to Borden, Inc.
prior to the Closing Date with respect to Taxes for the period ended on
December 31, 1996 or for the Short Period and any accruals of amounts with
respect to Taxes
28
<PAGE> 35
for the period ended on December 31, 1996 or for, only with respect to Taxes
other than income Taxes, the Short Period will be made in accordance with the
Tax Sharing Agreement.
(vi) Tax Elections and Special Tax Status. Except as set forth in
Schedule 3.2(m)(vi) or except as would not have a Material Adverse Effect: (A)
none of the Borden Corporations is a party to any safe harbor lease within the
meaning of Section 168(f)(8) of the Internal Revenue Code of 1986, as amended
(the "Code"), as in effect prior to amendment by the Tax Equity and Fiscal
Responsibility Act of 1982; (B) none of the Borden Corporations has entered
into any compensatory agreements with respect to the performance of services
which payment thereunder would result in a nondeductible expense to the Borden
Corporations pursuant to Section 280G of the Code or an excise tax to the
recipient of such payment pursuant to Section 4999 of the Code; (C) none of the
Borden Corporations is a "consenting corporation" under Section 341(f) of the
Code; (D) none of the Borden Corporations has participated in an international
boycott as defined in Section 999 of the Code; (E) none of the Borden
Corporations has agreed to make, nor is any Borden Corporation required to
make, any adjustment under Code Section 481(a) of the Code by reason of a
change in accounting method or otherwise; (F) none of the assets of any of the
Borden Corporations is "tax exempt use property" within the meaning of Section
168(h) of the Code; (G) Holdings has not made and will not make a deemed
dividend election under Treasury Regulations Section 1.1502-32(f)(2) or a
consent dividend election under Section 565
29
<PAGE> 36
of the Code; (H) none of the Borden Corporations has had a permanent
establishment in any foreign country, as defined in any applicable tax treaty
or convention between the United States of America and such foreign country;
(I) none of the Borden Corporations is a party to any joint venture,
partnership, or other arrangement or contract which could be treated as a
partnership for federal income tax purposes; and (J) none of the Borden
Corporations is or was "25-percent foreign owned" within the meaning of Section
6038A of the Code at any time during any taxable period which remains open
under the statute of limitations applicable for federal income tax purposes.
(n) Material Contracts. (i) Except as set forth on Schedule 3.2(n)
hereto, except as would not, individually or in the aggregate, have a Material
Adverse Effect, except for agreements entered into in the ordinary course of
business or as permitted by Section 3.2(h) and except for licenses of, and
other agreements with respect to, Company Intellectual Property (as defined in
Section 3.2(r)) and Leases, as to which no representations or warranties are
made other than as set forth in Sections 3.2(r) and 3.2(k), respectively, none
of Holdings or its Subsidiaries is a party to or bound by, nor are any of their
assets affected by, as of the date of this Agreement, any:
(A) agreement or indenture relating to the borrowing of money or to
the mortgaging or pledging any of its assets;
(B) agreement with respect to the lending or investing of funds;
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<PAGE> 37
(C) guaranty of any obligation for borrowed money or otherwise, other
than endorsements made for collection in the ordinary course of business;
(D) indemnification or other reimbursement obligations, except for
indemnities and other reimbursement obligations in the ordinary course of
business;
(E) license or royalty agreements involving more than $100,000;
(F) lease or agreement under which it is lessee of or holds or
operates any personal property owned by any other party for which the
annual payment exceeds $100,000;
(G) lease or agreement under which it is lessor of or permits any
third party to hold or operate any property, real or personal, owned or
controlled by it for which the annual payment exceeds $100,000;
(H) contract or group of related contracts with the same party for the
purchase or sale of products or services under which the undelivered
balance of such products and services has a selling price in excess of
$100,000;
(I) other contract or group of related contracts with the same party
continuing over a period of more than thirty days from the date or dates
thereof involving more than $100,000;
(J) contract which prohibits it from freely engaging in business
anywhere in the world;
(K) contract with distributors of its products involving payments of
more than $100,000 per annum;
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(L) contract with any officer, director, shareholder or other
affiliate;
(M) contract with any labor union or any bonus or any other form of
deferred compensation plan or any stock purchase, stock option, or similar
written plan or practice, or any severance agreements;
(N) contract for the employment or retention of any officer, employee
or consultant on a full-time or part-time basis (except for consultants in
the ordinary course of business); or
(O) any other contracts not described above which involve the payment
by Holdings or its Subsidiaries of $100,000 or more in any 12 month
period.
(ii) Except as specifically disclosed on Schedule 3.2(n) and except as
would not, individually or in the aggregate, have a Material Adverse Effect:
(A) each contract or commitment listed on Schedule 3.2(n) (the "Material
Contracts") is valid, binding and enforceable against Holdings or, if a
Subsidiary of Holdings is the party to such Material Contract, such Subsidiary;
(B) each of Holdings and its Subsidiaries has performed all obligations under
the Material Contracts required to be performed by it and Holdings and its
Subsidiaries have not received any claim of default under any Material
Contract; and (C) Holdings and its Subsidiaries do not have knowledge of any
breach or anticipated breach by any other party to any Material Contract.
(iii) A true and correct copy of each Material Contract as of the date
of this Agreement (other than those which are not
32
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located at the executive offices of Holdings in Ogden, Utah or of Borden, Inc.
in Columbus, Ohio and those which are not written) has been supplied or made
available to Parent, together with all amendments, waivers or other changes
thereto.
(o) Legal Proceedings. Except as set forth on Schedule 3.2(o) and
except as would not, individually or in the aggregate, have a Material Adverse
Effect:
(i) there are no actions, suits, proceedings (including debarment
proceedings) or orders pending or (to the knowledge of Holdings and its
Subsidiaries, after reasonable review) threatened or (to the knowledge of
Holdings and its Subsidiaries after reasonable review) investigations
pending or threatened against or affecting Holdings and its Subsidiaries
at law or in equity, or before or by any federal, state, municipal,
foreign or other governmental department, commission, board, bureau,
agency, court or instrumentality, domestic or foreign ("Governmental
Authority");
(ii) Holdings and its Subsidiaries are not subject to any order
(including debarment orders), writ, injunction, judgment or decree of any
court or any Governmental Authority;
(iii) there are no inquiries of any Governmental Authority pending, or
to the knowledge of Holdings and its Subsidiaries, threatened (including
inquiries as to the qualifications of Holdings and its Subsidiaries to
hold or receive any license or permit); and
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(iv) neither Holdings nor any of its Subsidiaries is in violation of
any term of any judgment, decree, injunction, or order entered by any
Governmental Authority or court and outstanding against Holdings or any of
its Subsidiaries.
(p) Government Licenses, Permits and Related Approvals. Except as set
forth on Schedule 3.2(p) hereto and except as would not, individually or in the
aggregate, have a Material Adverse Effect:
(i) Holdings and its Subsidiaries own or possess all permits,
licenses, franchises, certificates, approvals and other authorizations
which are required under foreign, federal, state and local laws and
regulations by such entity in the conduct of its business as it is
presently conducted (collectively, the "Licenses and Permits"), including,
without limitation, all Licenses and Permits required to operate each of
Holdings and its Subsidiaries' dairies and all Licenses and Permits
required under current public health and safety, worker health and safety
and pollution or environmental protection laws, including laws relating to
emissions, discharges, releases or threatened releases of pollutants,
contaminants or hazardous or toxic materials or wastes into ambient air,
surface water, ground water, or lands or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of any pollutant, contaminant or hazardous or toxic
substance, material or waste or any regulation, code, plan, order, decree,
judgment or notice or demand letter
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issued, entered, promulgated or approved thereunder ("Health and
Environmental Laws").
(ii) No loss of any License or Permit is pending, or, to the knowledge
of Holdings or its Subsidiaries, threatened or reasonably foreseeable as a
result of the transaction contemplated by this Agreement or otherwise,
except for normal expiration in accordance with the terms thereof.
(iii) Holdings and its Subsidiaries have complied, and are in
compliance, in all material respects with all terms and conditions of all
required Licenses and Permits and with all other limitations,
restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in any applicable Health
and Environmental Laws.
(iv) Holdings and its Subsidiaries have complied, and are in
compliance, in all material respects with all applicable laws and
regulations of all Governmental Authorities which affect the businesses or
any owned or leased properties of Holdings and its Subsidiaries and to
which Holdings and its Subsidiaries may be subject (including, without
limitation, all Health and Environmental Laws), and no claims have been
filed against Holdings and its Subsidiaries alleging a violation of any
such laws or regulations.
(v) Neither Holdings nor its Subsidiaries has received any notice or
claim to the effect that it is or may be liable to any person as a result
of a release or
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threatened release of any hazardous or non-hazardous substance, material
or waste at any location nor has it filed any notice required under
applicable law of any such release or threatened release.
(vi) Neither Holdings nor any of its Subsidiaries is presently subject
to (A) any outstanding order from or agreement with any Governmental
Authority or person respecting environmental or health matters under any
Health and Environmental Laws or (B) any outstanding claims, liens,
judicial or administrative proceedings or investigations arising under any
Health and Environmental Laws.
(q) Employee Matters. (i) Schedule 3.2(q)(i) contains a list of (A)
any persons on leave of absence who are currently collecting disability
payments; and (B) all employment, consulting or similar compensation agreements
of Holdings or its Subsidiaries which may not be terminated by Holdings or its
Subsidiaries without penalty within thirty days after the Closing.
(ii) Except as disclosed in this Agreement or the Schedules hereto,
except as would not have a Material Adverse Effect and except for the
provisions of the Management Stockholder's Agreements between Holdings and
certain of its or its Subsidiaries' employees, none of the employees of
Holdings and its Subsidiaries is subject to any non-compete, nondisclosure,
confidentiality, employment, consulting or similar agreement relating to or
affecting the present or proposed business activities of Holdings and its
Subsidiaries.
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(r) Intellectual Property. Schedule 3.2(r)(i) hereof lists all United
States, state and foreign patents and patent applications, United States, state
and foreign trademark and service mark registrations and applications and
United States, state and foreign copyright registrations and applications
therefor owned by or licensed to Holdings or any of its Subsidiaries (herein
collectively referred to as the "Company Intellectual Property"). Except as set
forth on Schedule 3.2(r)(ii) hereto and except as would not have a Material
Adverse Effect, Holdings and its Subsidiaries own or have the right to use all
listed patents, patent applications, trademark and service mark registrations
and applications, and copyright registrations and applications and hold
unexpired licenses or other rights to use all other intellectual property
necessary to the conduct of the business of Holdings and its Subsidiaries.
Except as set forth on Schedule 3.2(r)(iii) hereto and except as would not have
a Material Adverse Effect, there are no existing or, to Holdings' or its
Subsidiaries' knowledge, threatened claims of any third party based on the use
by, or challenging the ownership of, Holdings or any of its Subsidiaries of any
of the Company Intellectual Property and none of Borden, Holdings or its
Subsidiaries has received a notice of conflict between the Company Intellectual
Property and the asserted rights of others within the last five years. Except
as set forth on Schedule 3.2(r)(iv) hereto and except as would not have a
Material Adverse Effect, to Holdings' and its Subsidiaries' knowledge, there is
no infringing use or contrary claim of ownership by any third person
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of the Company Intellectual Property and all other intellectual property
necessary to the conduct of the business of Holdings and its Subsidiaries as
presently conducted.
(s) Employee Benefit Plans. (i) For purposes of this Agreement,
"Business Plans" shall mean all "employee benefit plans" (within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), including, without limitation, "multiemployer plans" (within the
meaning of Sections 3(37) and 4001(a)(3) of ERISA)), retirement, savings, stock
purchase, stock option, severance, employment, change-in-control, fringe
benefit, collective bargaining, bonus, incentive, deferred compensation and all
other employee benefit plans, agreements, programs, policies or other
arrangements (A) under which any employee or former employee of Holdings or its
Subsidiaries (collectively, the "Business Employees") has any present or future
right to benefits and (B) under which Borden, Holdings or its Subsidiaries has
any present or future liability.
(ii) Schedule 3.2(s)(ii) sets forth a list of (A) each Business Plan
that is an employee pension benefit plan, as defined in Section 3(2) of ERISA
(an "Employee Pension Benefit Plan"), (B) each Business Plan that is a
multiemployer plan and (C) each other material Business Plan.
(iii) Except where a breach of the following, individually or in the
aggregate, would not have a Material Adverse Effect:
(A) each Business Plan sponsored by Borden, Holdings or its
Subsidiaries has been established and administered in
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accordance with its terms and in compliance with ERISA, the Code and all
other applicable laws, rules and regulations; provided, however, that
"compliance" shall not be achieved for purposes of this Section
3.2(s)(iii)(A) if an act or failure to act with respect to a Business Plan
has resulted in or could reasonably be expected to result in unpaid excise
taxes, penalties or fines under ERISA, the Code or other applicable laws,
rules or regulations;
(B) a favorable determination letter as to the qualification under
Section 401(a) or Section 505(c) of the Code of each Business Plan
designed or intended to be a plan qualified under such sections has been
issued by the Internal Revenue Service (the "IRS"), and nothing has
occurred, to Borden's knowledge, which would cause the loss of such
qualification or tax-exempt status;
(C) there are no actions, suits or claims to Borden's knowledge (other
than routine claims for benefits in the ordinary course) that are pending,
threatened, choate or inchoate with respect to Business Employees covered
by any Business Plan (including, without limitation, claims by
governmental regulatory agencies);
(D) no "prohibited transaction" (as defined in Section 4975 of the
Code and for which no exemption exists under the Code) exists with respect
to any Business Plan;
(E) no "reportable event" (as defined in Section 4043 of ERISA and the
regulations thereunder and with respect to
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which the 30 day notice requirement has not been waived) exists with
respect to any Business Plan;
(F) each member of a controlled group of organizations (within the
meaning of Section 414(b), (c), (m) or (o) of the Code) of which Borden,
Holdings or any of its Subsidiaries is also a member (the "Controlled
Group") has paid all premiums (and interest charges and penalties for late
payment, if applicable) due the Pension Benefit Guaranty Corporation (the
"PBGC") with respect to each Employee Pension Benefit Plan during the last
five plan years; and as of the Closing, all members of the Controlled
Group will have made all required premium payments to the PBGC that are
due on or prior to such date with respect to such plans; and none of
Borden, Holdings, its Subsidiaries or any Controlled Group member has
engaged in a transaction that has subjected them to liability under
Section 4069 of ERISA;
(G) true, correct and complete copies of the following have been
delivered to Parent: (I) each Business Plan (but excluding any
"multiemployer plans") listed on Schedule 3.2(s)(ii); (II) current summary
plan descriptions that are routinely delivered to the Business Employees
with respect to the Business Plans (but excluding any "multiemployer
plans") listed on Schedule 3.2(s)(ii); and (III) to the extent applicable,
the most recent determination letters issued by the IRS with respect to
each Pension Benefit Plan; and
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(H) no amounts have been contributed to any voluntary employees'
beneficiary association maintained by Borden, Holdings or its Subsidiaries
that was intended to fund any Business Plan providing benefits other than
disability income benefits.
(t) Insurance. As of the date of this Agreement, none of Borden,
Holdings or its Subsidiaries has received any notice of cancellation of any
insurance policy maintained in favor of Holdings or its Subsidiaries or been
denied insurance coverage, which, in either case, would have a Material Adverse
Effect.
(u) Brokers, Finders, etc. None of Borden, Holdings or its
Subsidiaries has employed, or is subject to any valid claim of, any broker,
finder, consultant or other intermediary in connection with the transactions
contemplated by this Agreement who might be or is entitled to a fee or
commission in connection with such transactions.
(v) Transactions with Affiliates. Except as set forth herein,
including, without limitation, as set forth in Article IV hereof, in Schedule
3.2(v) hereto or as contemplated or permitted by Schedule 4.2 hereto, or as set
forth in the Financial Statements, Holdings and its Subsidiaries have not
engaged in any transaction, other than the movement of monetary assets, outside
the ordinary course of business consistent with past practice with Borden or
its affiliates (other than Holdings and its Subsidiaries) since December 31,
1996, which was (i) material to the business of Holdings and its Subsidiaries
taken as a whole or (ii) undertaken in contemplation of the sale of Holdings.
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(w) Bank Accounts. Schedule 3.2(w) lists all of the concentration bank
accounts of each of Holdings and its Subsidiaries. None of Holdings or its
Subsidiaries has granted a power of attorney to any person or entity which will
not be terminated as of the Closing Date.
(x) Product Warranty; Product Recall; Product Liability. Except as set
forth on Schedule 3.2(x) and except as would not, individually or in the
aggregate, have a Material Adverse Effect, (i) all products, and the delivery
thereof, processed, manufactured, distributed or sold by Holdings and its
Subsidiaries have been in conformity with all applicable contractual
commitments and all express or implied warranties, (ii) in the last year, none
of Holdings nor its Subsidiaries has recalled any products manufactured,
distributed or sold by it and (iii) none of Holdings nor its Subsidiaries has,
or at Closing will have, any liability to any person or entity relating to
damage to property, personal injury or death caused by or relating to products
processed, manufactured, distributed or sold by Holdings or its Subsidiaries
prior to the Closing, to the extent such damage to property, personal injury or
death arose or arises out of actions by or the inaction of Borden, Holdings or
its Subsidiaries prior to the Closing.
(y) No Losses of Significant Customers. Except as set forth on
Schedule 3.2(y), no customer of Holdings and its Subsidiaries which accounted
for more than $17,000,000 of Holdings and its Subsidiaries' gross sales during
the fiscal year of Holdings ended December 31, 1996 ceased purchasing all dairy
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products of the types theretofore purchased by such customer from Holdings or
its Subsidiaries during the fiscal year of Holdings ended December 31, 1996.
Except as set forth on Schedule 3.2(y), no customer of Holdings and its
Subsidiaries which accounted for more than $4,000,000 of Holdings and its
Subsidiaries' gross sales during the fiscal year of Holdings ended December 31,
1996 has, during the period from January 1, 1997 through the date of this
Agreement, ceased purchasing all dairy products of the types theretofore
purchased by such customer from Holdings or its Subsidiaries during the fiscal
year of Holdings ended December 31, 1996.
3.3 Representations and Warranties of Parent. Parent represents and
warrants to Holdings and Borden as follows:
(a) Due Organization and Power. Parent is a cooperative association
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has all requisite corporate power and
authority to enter into this Agreement and perform its obligations hereunder.
Complete and correct copies of the Certificate of Incorporation and By-Laws of
Parent, as amended to date, have been delivered to Holdings. At the time of the
Closing, Acquisition will be a duly organized corporation, limited liability
company or limited partnership, validly existing and in good standing under the
laws of Delaware, will have all requisite power and authority to consummate the
Merger and will not have engaged in any transaction or business, except
incident to its formation and the consummation of the Merger.
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(b) Authorization and Validity of Agreement. The execution, delivery
and performance by Parent of this Agreement and the consummation by Parent of
the transactions contemplated hereby have been, and, at the time of the
Closing, the performance by Acquisition of this Agreement and the consummation
by Acquisition of the transactions contemplated hereby will have been, duly
authorized by the Board of Directors of Parent and Acquisition, and no other
corporate action on the part of Parent or Acquisition is or will be necessary
for the execution, delivery and performance by Parent of this Agreement and the
consummation by Parent or Acquisition of the transactions contemplated hereby.
After the Stock Purchase, the Merger will be duly authorized by Acquisition
pursuant to Section 253 of the GCL, and no other corporate action on the part
of Acquisition, Holdings or their respective stockholders will be necessary for
the consummation of the Merger. This Agreement has been duly executed and
delivered by Parent and is a legal, valid and binding obligation of Parent,
enforceable against Parent in accordance with its terms, except to the extent
that enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting creditors' rights generally
and by general equity principles.
(c) No Conflict. Except as set forth in Schedule 3.3(c) hereto and
except for any consent, approval, filing or notice that would not, if not given
or made, or any violation, conflict, breach, termination, default or
acceleration which does not, materially impair the ability of Parent to
consummate the
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transactions contemplated hereby, the execution, delivery and performance by
Parent of this Agreement and the consummation by Parent of the transactions
contemplated hereby: (i) will not violate any provision of law, rule or
regulation, order, judgment or decree applicable to Parent; (ii) will not
require any consent or approval of, or filing or notice to, any Governmental
Authority under any provision of law applicable to Parent, except for the
requirements of the Antitrust Improvements Act and the Exchange Act and except
for any consent, approval, filing or notice requirements which become
applicable solely as a result of the specific regulatory status of Borden or
which Borden or any of its affiliates are otherwise required to obtain; (iii)
will not violate any provision of the Certificate of Incorporation or By-Laws
of Parent; and (iv) will not require any consent, approval or notice under, and
will not conflict with, or result in the breach or termination of, or
constitute a default under, or result in the acceleration of the performance by
Parent under, any indenture, mortgage, deed of trust, lease, license,
franchise, contract, agreement or other instrument to which Parent is a party
or by which it or any of its assets is bound or encumbered.
(d) Brokers, Finders, etc. Parent has not employed, nor is subject to
the valid claim of, any broker, finder, consultant or other intermediary in
connection with the transactions contemplated by this Agreement who might be
entitled to a fee or commission from Borden or Holdings in connection with such
transactions.
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(e) Available Funds. Parent, together with any Permitted Assignees,
will have sufficient funds available at the Closing to pay all amounts payable
pursuant to Articles I and II.
(f) USDA Suspension or Debarment. Except as set forth on Schedule
3.3(f), neither Parent nor any of its affiliates has been suspended or debarred
from Federal procurement or non- procurement programs, no cause for any such
suspension or debarment of Parent exists and, to Parent's knowledge, no cause
for any such suspension or debarment of any of Parent's affiliates exists.
3.4 Representations and Warranties of the Parties. Each party hereto
represents and warrants to the other that it is the explicit intent of each
party hereto that, except for the express representations and warranties
contained in this Article III, Borden is making no representation or warranty
whatsoever, express or implied, including but not limited to any implied
warranty or representation as to condition, merchantability or suitability as
to any of the properties or assets of Holdings and its Subsidiaries and that
Parent takes Holdings and its Subsidiaries "as is" and "where is." It is
understood that any cost estimates, projections or other predictions, any data,
any financial information or any memoranda or offering materials or
presentations provided or addressed to Parent are not and shall not be deemed
to be or to include representations or warranties of Borden.
3.5 Survival of Representations and Warranties. The respective
representations and warranties of Borden, Holdings and
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Parent contained in this Article III shall not survive the Closing, and no
party shall have any liability or obligation in connection with any such
representation or warranty following the Closing, except that the
representations and warranties contained in Sections 3.1(b), 3.1(d), 3.2(b),
3.3(b) and 3.4 shall survive the Closing.
3.6 Schedules and Exhibits. Disclosure of any fact or item in any
Schedule or Exhibit hereto referenced by a particular paragraph or section in
this Agreement shall, should the existence of the fact or item or its contents
be relevant to any other paragraph or section, be deemed to be disclosed with
respect to that other paragraph or section whether or not a specific cross
reference appears. Disclosure of any fact or item in any Schedule or Exhibit
hereto shall not necessarily mean that such item or fact individually is
material to the business or financial condition of any of Holdings and its
Subsidiaries individually or of Holdings and its Subsidiaries taken as a whole.
ARTICLE IV
COVENANTS
4.1 Access; Information and Records; Confidentiality. (a) During the
period commencing on the date hereof and ending on the Closing Date, Borden,
Inc. shall, and Holdings shall and shall cause its Subsidiaries to, upon
reasonable request and notice, afford to Parent, its counsel, accountants and
other authorized representatives reasonable access during normal business hours
to the plants, properties, senior management,
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books and records of Holdings and its Subsidiaries, in order that Parent may
have the opportunity to make such reasonable investigations as it shall desire
to make of the affairs of Holdings and its Subsidiaries; provided that, any
contacts with such senior management shall be approved in advance by Borden.
Each of Borden, Inc. and Holdings will cause its officers, employees,
accountants and other agents to furnish to Parent such additional financial and
operating data and information with respect to Holdings and its Subsidiaries
(including information relating to the liabilities and obligations referred to
in Sections 8.1(a)(i) and 8.1(a)(iii)) as Parent may from time to time
reasonably request.
(b) (i) Prior to the Closing, Borden, Inc. shall deliver, or shall
cause Holdings to deliver, to Parent a statement setting forth, as of a date
not more than 10 days prior to the Closing Date, any changes that would be
required to Schedules 3.2(j), 3.2(k) and 3.2(m) if such Schedules were being
delivered for purposes of Sections 3.2(j), 3.2(k) and 3.2(m), respectively, as
of such date; provided that none of Borden or Holdings makes or will be deemed
to have made any representation or warranty with respect to such information
and only the representations and warranties contained in Article III hereof
shall have any legal effect.
(ii) Promptly after they become available following each Accounting
Period (as defined in Section 4.6) ending after the date hereof and prior to
the Closing Date, Holdings shall deliver to Parent a copy of Holdings' and its
Subsidiaries'
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balance sheet and statement of earnings before income taxes for such Accounting
Period to the extent that, and in such form as, such information is prepared in
the ordinary course of business; provided that none of Borden or Holdings makes
or will be deemed to have made any representation or warranty with respect to
such information and only the representations and warranties contained in
Article III hereof shall have any legal effect.
(c) Parent will hold, and will cause its respective directors,
officers, employees, accountants, counsel, financial advisors and other
representatives and affiliates to hold, any nonpublic information in confidence
to the extent required by, and in accordance with, the provisions of the letter
dated February 7, 1997, between Parent and Borden, Inc.
4.2 Conduct of the Businesses of Holdings Prior to the Closing Date.
Borden, Inc. and Holdings agree that, except as permitted, required or
specifically contemplated by this Agreement, including, without limitation,
those actions contemplated on Schedule 4.2 or in this Article IV, or as
otherwise consented to or approved in writing by Parent, during the period
commencing on the date hereof and ending at the Closing Date:
(a) the businesses of Holdings and its Subsidiaries shall be conducted
only in the ordinary course of business;
(b) neither Holdings nor any of its Subsidiaries will amend its
Certificate of Incorporation or By-Laws;
(c) Holdings and its Subsidiaries will use their reasonable efforts to
preserve intact their business
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organization, to keep available the services of their present officers and
key employees, and to preserve the good will of those having business
relationships with them; and
(d) neither Holdings nor any of its Subsidiaries will take any other
action which would result in the representation and warranty contained in
Section 3.2(h) being untrue at and as of the Closing Date.
4.3 Antitrust Laws. (a) Each party hereto shall (i) take promptly all
actions necessary to make the filings required of it or any of its affiliates
under the applicable Antitrust Laws (as defined in Section 4.3(e) hereof) in
connection with this Agreement and the transactions contemplated hereby, (ii)
comply at the earliest practicable date with any request for additional
information or documentary material received by it or any of its affiliates
from the Federal Trade Commission (the "FTC") or the Antitrust Division of the
Department of Justice (the "Antitrust Division") and (iii) cooperate with one
another in connection with any filing under applicable Antitrust Laws and in
connection with resolving any investigation or other inquiry concerning the
transactions contemplated by this Agreement initiated by any Antitrust
Authority (as defined in Section 4.3(e) hereof).
(b) Each party hereto shall use all best efforts to resolve such
objections, if any, as may be asserted with respect to the transactions
contemplated by this Agreement under any Antitrust Law. Without limiting the
generality of the foregoing, "best efforts" shall include, without limitation:
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(i) in the case of each of Parent and Borden:
(A) filing with the appropriate Antitrust Authorities no later than
the business day following the date hereof a Notification and Report Form
with respect to the transactions contemplated by this Agreement; and
(B) if Parent or Borden receives a second request for information and
documents from an Antitrust Authority, substantially complying with such
second request within 21 days following the date of its receipt thereof;
(ii) in the case of Parent only:
(A) (1) filing with the appropriate Antitrust Authorities, and causing
each of Parent's Affiliates and/or Permitted Assignees and/or other
Persons with whom Parent or any of its Permitted Assignees intends to
consummate any transaction related to any of the assets or businesses of
Holdings or its Subsidiaries or related to any assets or businesses of
Parent, Parent's Affiliates and/or Permitted Assignees, in either case in
connection with, or in order to permit the consummation of, the
transactions contemplated hereby (such Affiliates of Parent, Permitted
Assignees and other Persons, collectively, "Related Transaction Parties")
to file with the appropriate Antitrust Authorities, no later than five
business days following the date hereof a Notification and Report Form
with
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respect to any and all such transactions (including without limitation any
and all such transactions contemplated by Parent's filing under Section
4.3(b)(i)(A)) for which such a filing with the appropriate Antitrust
Authorities is required and (2) if Parent or Related Transaction Party
receives a second request for information and documents from an Antitrust
Authority, substantially complying (and causing each applicable Related
Transaction Party to substantially comply) with such second request within
21 days following the date of its receipt thereof; and
(B) taking any and all actions and doing any and all other things
necessary, proper or advisable to cause the condition contained in Section
5.1(b)(ii) hereof to be satisfied and to permit the Closing to occur as
soon as possible but in any event on or prior to the Earliest Borden
Antitrust Termination Date (as defined below) (it being understood that,
without limiting Parent's obligations hereunder, the timing of the Closing
shall be as set forth in Section 1.4); and
(iii) in the case of Borden only, subject to Parent's compliance with
clauses (i) and (ii) above, not frustrating or impeding Parent's strategy or
negotiating positions with any Antitrust Authority, except to the extent such
strategy would cause Borden or any of its Affiliates to take any action with
respect to their assets or businesses, other than actions required by this
Agreement with respect to
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Holdings and its Subsidiaries and their assets and businesses.
For purposes of this Agreement, the term "Earliest Borden Antitrust Termination
Date" shall mean, at any time, the earliest date when Borden would then be
permitted to terminate this Agreement pursuant to Section 9.1(a)(iii) hereof.
(c) If any administrative, judicial or legislative action or
proceeding is instituted (or threatened to be instituted) challenging the
transactions contemplated by this Agreement as violative of any Antitrust Law,
each party hereto shall cooperate with one another to contest and resist any
such action or proceeding, and to have vacated, lifted, reversed or overturned
any decree, judgment, injunction or other order (whether temporary, preliminary
or permanent) that is in effect and that restricts, prevents or prohibits
consummation of the transactions contemplated by this Agreement, including,
without limitation, by pursuing all reasonable avenues of administrative and
judicial appeal. Without limiting the generality of the foregoing, Parent's
obligations pursuant to Section 4.3(b)(ii)(B) above shall include litigating
against any Antitrust Authority or other person necessary, proper or advisable
in order that the condition contained in Section 5.1(b)(ii) hereof may be
satisfied and any and all objections raised by any Antitrust Authority will not
prevent the Closing from occurring on or prior to the Earliest Borden Antitrust
Termination Date (it being understood that, without limiting Parent's
obligations hereunder, the timing of the Closing shall be as set forth in
Section 1.4).
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(d) Each party hereto shall promptly inform the other parties of any
material communication made to, or received by such party from, any Antitrust
Authority or any other Governmental Authority regarding any of the transactions
contemplated hereby. In addition, and without limiting the generality of the
foregoing, Parent and Borden, Inc. each shall cause its counsel to (i) afford
to the other party's counsel the opportunity to receive and to review for a
reasonable period in advance of filing or submission to any Antitrust Authority
all forms, documents, letters, memoranda and other materials proposed to be
filed or submitted to any Antitrust Authority regarding the transactions
contemplated hereby, and give reasonable consideration to any comments or
proposals such counsel may make with respect to any such forms, documents,
letters, memoranda or other materials, (ii) give reasonable advance notice to
the other party's counsel of each meeting, pre-arranged telephone call or
telephone call initiated by a party or its counsel with any Antitrust Authority
regarding the transactions contemplated hereby, so that such counsel may attend
or otherwise participate therein, and permit the other party's counsel to
attend or otherwise participate therein, and (iii) promptly inform the other
party's counsel of the substance of each other communication (written or oral,
in person or by telephone) with any Antitrust Authority regarding the
transactions contemplated hereby.
(e) For purposes hereof, (i) "Antitrust Authorities" means the FTC,
the Antitrust Division and the attorneys general
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of the several states of the United States and (ii) "Antitrust Law" means the
Sherman Act, as amended, the Clayton Act, as amended, the Antitrust
Improvements Act, the Federal Trade Commission Act, as amended, and all other
federal and state statutes, rules, regulations, orders, decrees, administrative
and judicial doctrines, and other laws that are designed or intended to
prohibit, restrict or regulate actions having the purpose or effect of
monopolization or restraint of trade.
(f) Parent shall pay to Borden, Inc. by wire transfer in immediately
available funds $10,000,000 within one business day following the satisfaction
of the condition contained in Section 5.1(b)(ii). Except as provided in Section
9.11(b), such amount shall be non-refundable regardless of whether or not any
of the transactions contemplated by this Agreement is consummated but, upon the
consummation of the Stock Purchase, shall be credited towards the amounts
payable to Borden, Inc. pursuant to Section 1.1(b).
4.4 Non-Solicitation. (a) Parent will not, from and after the date
hereof and for a period of three years following the earlier of the termination
of this Agreement and the Closing Date, without the prior written approval of
Borden, directly or indirectly, solicit, encourage, entice or induce any person
who is an employee of Borden or any of its Subsidiaries, at the date hereof or
at any time hereafter until the earlier of the termination of this Agreement
and the Closing Date, to terminate his or her employment with Borden or any of
its Subsidiaries; provided that the foregoing shall not prohibit Parent from,
after
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the Closing Date, soliciting, encouraging, enticing or inducing any such person
who is an employee of Holdings or its Subsidiaries on the Closing Date. Parent
agrees that any remedy at law for any breach by it of this Section 4.4(a) would
be inadequate, and Borden would be entitled to injunctive relief in such a
case. If it is ever held that the restriction placed on Parent by this Section
4.4(a) is too broad to permit enforcement of such restriction to its fullest
extent, Parent agrees that a court of competent jurisdiction may enforce such
restriction to the maximum extent permitted by law, and Parent hereby consents
and agrees that such scope may be judicially modified accordingly in any
proceeding brought to enforce such restriction.
(b) Borden will not, from and after the date hereof and for a period
of three years following the earlier of the termination of this Agreement and
the Closing Date, without the prior written approval of Parent, directly or
indirectly, solicit, encourage, entice or induce any person who is an employee
of Parent or any of its affiliates known to Borden at the date hereof or at any
time hereafter until the earlier of the termination of this Agreement and the
Closing Date and with whom Borden or its affiliates has had contact in the
course of the negotiation of the transactions contemplated hereby, to terminate
his or her employment with Parent or any of such affiliates. In addition,
Borden will not, for a period of three years following the Closing Date,
without the prior written approval of Parent, directly or indirectly, solicit,
encourage, entice or induce any person who is an employee of Holdings or
Subsidiaries at the
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Closing Date to terminate his or her employment with Parent or any of its
affiliates known to Borden, including Holdings or its Subsidiaries. Borden
agrees that any remedy at law for any breach by it of this Section 4.4(b) would
be inadequate, and Parent would be entitled to injunctive relief in such a
case. If it is ever held that the restriction placed on Borden by this Section
4.4(b) is too broad to permit enforcement of such restriction to its fullest
extent, Borden agrees that a court of competent jurisdiction may enforce such
restriction to the maximum extent permitted by law, and Borden hereby consents
and agrees that such scope may be judicially modified accordingly in any
proceeding brought to enforce such restriction.
4.5 Equipment. Borden, Inc. shall use its reasonable efforts to obtain
Bankers Leasing Corporation's consent to the assignment of that portion of the
Master Lease Agreement (the "Master Lease Agreement") between Borden, Inc. and
Bankers Leasing Corporation relating to the equipment subject thereto that is
used in the operation of Holdings' and its Subsidiaries' business (the
"Equipment"); provided that, in connection with any such assignment, unless
Borden, Inc. otherwise consents thereto in writing, Holdings or its Subsidiary
or Subsidiaries shall assume all of Borden, Inc.'s obligations under the Master
Lease Agreement with respect to such Equipment. Upon reasonable request and
notice, Parent shall, and shall cause its counsel, accountants and other
representatives to, cooperate with Borden, Inc. in connection with obtaining
such consent and in connection with any such assignment, including without
limitation by
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providing such financial and other information with respect to Parent and its
Subsidiaries as Borden, Inc. or Bankers Leasing Corporation may from time to
time reasonably request; provided that neither Parent nor any of its
Subsidiaries shall be required to pay any amount to Bankers Leasing Corporation
in order to obtain such consent from Bankers Leasing Corporation. If such
consent is not obtained prior to the 40th day after the date hereof, then,
subject to Borden's obligations under Section 6.5(a), Parent shall purchase or
cause the purchase of the Equipment on or prior to the Closing Date. Schedule
4.5 hereto sets forth a list of the Equipment as of the date hereof.
4.6 Earnings. (a) Holdings shall prepare and deliver to Parent on the
Closing Date a statement, prepared in accordance with Holdings' accounting
practices applied consistently (subject to normal year-end adjustments) with
Holdings' accounting practices used in the preparation of the Financial
Statements (the "Closing Date Statement"), of the Earnings (as defined below)
for the period from and including January 1, 1997 through the close of business
of the last full accounting period of Holdings (which consists, for each fiscal
quarter of Holdings, of two four-week periods followed by one five-week period
(each, an "Accounting Period")) preceding the Closing for which Holdings has
closed its accounting records in accordance with its normal practices. If the
Earnings set forth on the Closing Date Statement exceed the sum of (i) the
amount of dividends, if any (including, without limitation, dividends on the
Common Stock and any special or regular quarterly dividends on the Preferred
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Stock), paid by Holdings during the period covered by the Closing Date
Statement (less the amount of any cash contributions received by Holdings
during such period), plus (ii) the amount of accrued and unpaid dividends on
the Preferred Stock as of the last day covered by such Closing Date Statement,
plus (iii) the aggregate amount of tax sharing payments (including advances
thereof) made by Holdings pursuant to the Tax Sharing Agreement for and during
the period covered by the Closing Date Statement (the amount of such excess, if
any, the "Closing Payment Amount"), then, on the Closing Date, Parent shall pay
to Borden, Inc. by intra-bank transfer at The Chase Manhattan Bank, New York,
New York (ABA #021000021) (Credit to Borden, Inc. 015-1- 013521) cash in U.S.
dollars and in immediately available funds in an amount equal to the Closing
Payment Amount.
"Earnings" means the consolidated earnings before income taxes (but
net of all other Taxes) of Holdings and its Subsidiaries as reported by
Holdings using Holdings' accounting practices applied consistently (subject to
normal year-end adjustments) with Holdings' accounting practices used in the
preparation of the Financial Statements, determined without giving effect to
(i) any extraordinary charges or (ii) any fees or expenses incurred by Holdings
and its Subsidiaries in connection with the transactions contemplated by this
Agreement, but only to the extent such fees and expenses were incurred
specifically at the request of Parent or its affiliates or in connection with
Parent obtaining financing for the transactions contemplated by this Agreement.
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(b) Not later than 20 business days after Holdings would close its
accounting records in accordance with its normal practices (as in effect prior
to the Closing) for the full Accounting Period in which the Closing occurs
(such Accounting Period, the "Closing Period"), Parent shall, or shall cause
the Surviving Entity to, prepare and deliver to Borden, Inc. a statement,
prepared in accordance with the same accounting practices as are used for
purposes of the Closing Date Statement (the "Earnings Statement") of the
Earnings for the period from and including January 1, 1997 through the last day
of the Closing Period. The Earnings Statement shall include separate
calculations of (i) the Earnings for the period covered by the Closing Date
Statement, together with a reconciliation of any amounts that differ from the
amounts contained in the Closing Date Statement and a reasonably detailed
statement of the reasons for each such difference, (ii) the Earnings for each
full Accounting Period beginning immediately following the period covered by
the Closing Date Statement and ending before the Closing Period, (iii) the
Earnings for the Closing Period and (iv) the Earnings for the Closing Period,
multiplied by a fraction, the numerator of which is the number of days from and
including the first day of the Closing Period through the Closing Date and the
denominator of which is the number of days in the Closing Period.
(c) Borden, Inc. will have 20 business days to review the Earnings
Statement, together with the workpapers used in its preparation. Parent shall
make the books and records of
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Holdings, the Surviving Entity and the Subsidiaries available to Borden, Inc.
for purposes of its review of the Earnings Statement. Unless Borden, Inc.
delivers written notice to Parent on or prior to the 20th business day after
its receipt of the Earnings Statement of its objection to the Earnings
Statement, the parties hereto will be deemed to have accepted and agreed to the
Earnings Statement, and such agreement will be final and binding. If Borden,
Inc. so notifies Parent of its objection to the Earnings Statement and delivers
to Parent a reasonably detailed itemized basis for such objection, Parent shall
have 20 business days to prepare and deliver a revised Earnings Statement to
Borden, Inc. or to notify Borden, Inc. in writing that it does not intend to do
so. Thereafter, Parent and Borden, Inc. will, within 20 business days following
the delivery of such revised Earnings Statement or written notice (the
"Resolution Period"), attempt to resolve their differences. Any resolution by
Parent and Borden, Inc. during the Resolution Period as to any disputed amounts
will be final, binding and conclusive. If Parent and Borden, Inc. do not
resolve all disputed items by the end of the Resolution Period, then all items
remaining in dispute will be submitted within ten days after the expiration of
the Resolution Period to an independent accounting firm of national reputation
mutually acceptable to Parent and Borden, Inc. (the "Neutral Auditors"). All
fees and expenses relating to the work, if any, to be performed by the Neutral
Auditors will be borne equally by Parent and Borden, Inc. The Neutral Auditors
will deliver to Parent and Borden, Inc. a written determination (such
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determination to include a worksheet setting forth all material calculations
used in arriving at such determination and to be based solely on information
provided to the Neutral Auditors by Parent and Borden, Inc.) of the disputed
items within 30 days of receipt of the disputed items, which determination will
be final, binding and conclusive. The final, binding and conclusive Earnings
Statement, which either is agreed upon by Parent and Borden, Inc. or is
delivered by the Neutral Auditors in accordance with this Section, will be the
"Conclusive Earnings Statement" and the date on which an Earnings Statement
becomes a Conclusive Earnings Statement will be the "Establishment Date".
(d) If the amount of Earnings set forth on the Conclusive Earnings
Statement is different from the amount of the amount of Earnings set forth on
the Closing Date Statement, Parent or Borden, Inc., as the case may be, shall
pay to the other, by wire transfer in immediately available funds on the second
business day following the Establishment Date, an amount in cash equal to the
difference between the Aggregate Earnings Payment (as defined below) and the
Closing Payment Amount (the amount of such difference is referred to herein as
the "Final Payment Amount"). For purposes of this Agreement, "Aggregate
Earnings Payment" means:
(i) the sum of (A) the Earnings for the period from and including
January 1, 1997 through the last day of the full Accounting Period
immediately preceding the Closing Period, plus (B) the Earnings for the
Closing Period, multiplied, in the case of this clause (B) only, by a
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fraction, the numerator of which is the number of days from and including
the first day of the Closing Period through the Closing Date and the
denominator of which is the number of days in the Closing Period; minus
(ii) the sum of (A) the amount of dividends, if any (including,
without limitation, dividends on the Common Stock and any special or
regular quarterly dividends on the Preferred Stock), paid by Holdings
during the period from and including January 1, 1997 through the Closing
Date (less the amount of any cash contributions received by Holdings
during such period), plus (B) the amount of accrued and unpaid dividends
on the Preferred Stock as of the Closing Date, plus (C) the aggregate
amount of tax sharing payments (including advances thereof) made by
Holdings pursuant to the Tax Sharing Agreement for and during the period
covered by the Closing Date Statement.
The Final Payment Amount payable by Parent or Borden, Inc. pursuant to this
Section 4.6(d) shall bear interest for the period from and including the
Closing Date to the date of payment (calculated on the basis of a 365-day year)
at the rate per annum equal to the prime rate publicly announced on the Closing
Date by The Chase Manhattan Bank in New York, New York minus 1%, which interest
shall be payable together with the payment of the Final Payment Amount.
4.7 Termination of Affiliate Relations. Except as contemplated by this
Agreement or as set forth on Schedule 4.7 hereto, on or prior to the Closing
Date, Holdings and its
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Subsidiaries shall have repaid all of their outstanding indebtedness (including
interest thereon) and satisfied all of their other liabilities owed to Borden
or Borden's affiliates (other than Holdings and its Subsidiaries) and Borden
and its affiliates (other than Holdings and its Subsidiaries) shall have repaid
all of their outstanding indebtedness (including interest thereon) and
satisfied all of their other liabilities owed to Holdings and its Subsidiaries.
All agreements between Holdings and its Subsidiaries and Borden and its
affiliates (other than agreements solely between Holdings and its Subsidiaries,
agreements contemplated by this Agreement and agreements listed on Schedule
4.7) shall be terminated as of the Closing, and all obligations and liabilities
thereunder shall have been satisfied.
4.8 Further Actions. (a) Subject to the terms and conditions of this
Agreement, and without limiting (or, with respect to the matters covered by
Section 4.3, expanding) the obligations of the parties contained in Section
4.3, each of the parties hereto agrees to use its reasonable best efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective the
transactions contemplated by this Agreement, including using its reasonable
best efforts: (i) to obtain, in addition to approvals discussed in Section 4.3
hereof, any licenses, permits, consents, approvals, authorizations,
qualifications and orders of federal, state, local and foreign Governmental
Authorities and parties to contracts with Holdings or any of its Subsidiaries
as are required in connection with the
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consummation of the transactions contemplated hereby; (ii) to effect, in
addition to filings discussed in Section 4.3 hereof, all necessary
registrations and filings; (iii) to defend any lawsuits or other legal
proceedings, whether judicial or administrative, whether brought derivatively
or on behalf of third parties (including Governmental Authorities or
officials), challenging this Agreement or the consummation of the Stock
Purchase, the Merger or the other transactions contemplated hereby; (iv) in the
case of Parent, to obtain the funds necessary to consummate the transactions
contemplated by this Agreement on the Closing Date; and (v) to furnish to each
other such information and assistance and to consult with respect to the terms
of any registration, filing, application or undertaking as reasonably may be
requested in connection with the foregoing.
(b) Except as permitted in the Trademark License Agreement, neither
Holdings nor any of its Subsidiaries shall in any way use, after the end of the
three month period beginning on the Closing Date, any trademark, tradename,
brandmark, brandname, tradedress or logo owned or used in the continuing
business of Borden or any of its affiliates (collectively, the "Borden Names"),
or use any trademark, tradename, brandmark, brandname, tradedress or logo which
is likely to cause confusion with any Borden Name or be associated with Borden
or any of its affiliates, on or as of the Closing Date. If this Section 4.8(b)
is breached or threatened to be breached, Parent expressly consents that in
addition to any other remedy Borden and its affiliates may have, Borden or such
affiliate shall be entitled
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to apply for and receive injunctive relief in order to prevent the continuation
of any existing breach or the occurrence of any threatened breach.
(c) Promptly after the Closing, Borden, Inc. shall cause all books of
account, minute books, stock record books and other records of Holdings and its
Subsidiaries to be delivered to Holdings; provided that Borden, Inc. may
deliver copies of, or relevant extracts from, any such documents which contain
information with respect to Borden or affiliates of Borden, Inc. other than
Holdings or its Subsidiaries.
4.9 Preparation of Returns and Payment of Taxes. Holdings shall
prepare and timely file all Returns and amendments thereto required to be filed
by the Borden Corporations on or before the Closing Date. Parent shall have a
reasonable opportunity to review any such Returns to the extent that such
Returns do not include or relate to any corporation or group of corporations
other than the Borden Corporations. Borden and each of the Borden Corporations
shall pay and discharge all Taxes, assessments and governmental charges upon or
against it or any of its properties or assets, and all liabilities at any time
existing, before the same shall become delinquent and before penalties accrue
thereon prior to the Closing Date, except to the extent and as long as: (a) the
same are being contested in good faith and by appropriate proceedings pursued
diligently and in such a manner as not to cause any Material Adverse Effect;
and (b) Holdings shall have set aside on its books reserves (segregated to the
extent required by sound accounting practice)
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in the amount of the demanded principal imposition (together with interest and
penalties relating thereto, if any).
4.10 No Shopping. Until the earlier of the Closing and the termination
of this Agreement, Borden and Holdings and those acting on behalf of them will
not (and Borden will use its best efforts to cause its officers, employees,
shareholders, agents and representatives not to), directly or indirectly,
solicit, encourage or initiate any discussions with, or negotiate with or
provide any information to, any person or entity other than Parent and Parent's
officers, employees and agents concerning any merger, sale of material assets
or similar transaction involving Holdings and its Subsidiaries or any sale of
any capital stock of Holdings and its Subsidiaries (other than sales of common
stock pursuant to the exercise of outstanding Options). Without the prior
written consent of Parent during such period, neither Borden nor Holdings will
furnish to any person or entity (other than Parent) any non-public information
concerning Holdings and its Subsidiaries or their respective businesses,
financial affairs or prospects for the purpose of or with the intent of
permitting such person or entity to evaluate a possible acquisition of any
capital stock or (other than in the ordinary course of business) assets of
Holdings and its Subsidiaries.
4.11 USDA Compliance Agreement. Parent agrees that it will assume the
obligations of Borden, Inc. and/or Borden/Meadow Gold Dairies, Inc. under the
Compliance Agreement in Lieu of Debarment among Borden, Inc., Borden/Meadow
Gold Dairies, Inc.
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and the Food and Consumer Service of the United States Department of
Agriculture if Parent is requested to assume such obligations by the Food and
Consumer Service pursuant to Section 7(a) of such Compliance Agreement.
4.12 Post-Closing Services. No later than 30 days after the date of
this Agreement, Parent shall notify Borden, Inc. in writing of the services
under the Master Customer Services Agreement currently in effect that Parent
desires to terminate as of the Closing Date (the "Terminated Services"). Unless
Borden Services Company and Parent otherwise agree in writing prior to the
Closing Date, Borden, Inc. agrees to cause Borden Services Company to terminate
the Terminated Services effective as of the Closing Date.
4.13 Financing Best Efforts. Parent shall use all best efforts to
obtain the funds needed to permit the Closing to occur as soon as possible but
in any event no later than the Clause (iv) Termination Date (as defined in
Section 9.1). Without limiting the generality of the foregoing, "best efforts"
shall include, without limitation, taking any and all actions and doing any and
all other things necessary, proper or advisable to obtain such funds and to
permit the Closing to occur as soon as possible but in any event on or prior to
the Clause (iv) Termination Date.
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ARTICLE V
CONDITIONS PRECEDENT
5.1 Conditions Precedent to Obligations of Parties. The respective
obligations of each of the parties hereto hereunder are subject to the
satisfaction, at or prior to the Closing Date, of each of the following
conditions:
(a) No Injunction. At the Closing Date, there shall be no injunction,
restraining order or decree of any nature of any court or Governmental
Authority of competent jurisdiction that is in effect that restrains or
prohibits the consummation of the Stock Purchase or the Merger; provided,
however, that the parties invoking this condition shall use their best efforts
to have such injunction, order or decree vacated or denied.
(b) Regulatory Authorizations. All (i) consents, approvals,
authorizations and orders of federal and state Governmental Authorities as are
required to be obtained prior to the Closing in connection with the
transactions contemplated by this Agreement (the "Required Consents") shall
have been obtained, except for Required Consents the failure to obtain which,
individually or in the aggregate, would not have a Material Adverse Effect; and
(ii) applicable waiting periods specified under the Antitrust Improvements Act
with respect to the transactions contemplated by this Agreement shall have
lapsed or been terminated.
5.2 Conditions Precedent to Obligation of Parent. The obligation of
Parent to consummate the transactions contemplated
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by this Agreement is subject to the satisfaction at or prior to the Closing
Date of each of the following additional conditions:
(a) Accuracy of Representations and Warranties. The representations
and warranties of Borden, Inc. and Holdings contained in this Agreement shall
be true and accurate as of the Closing Date as if made at and as of such date
(except for changes permitted or contemplated by this Agreement and except
those representations and warranties that address matters only as of a
particular date or only with respect to a specific period of time, which need
only be true and accurate as of such date or with respect to such period),
except where the failure of such representations and warranties to be so true
and correct (without giving effect to any exception contained therein for
matters that would or would not, as the case may be, have a Material Adverse
Effect), would not, individually or in the aggregate, have Material Adverse
Effect.
(b) Performance of Agreement. Each of Borden and Holdings shall have
performed in all material respects all obligations and agreements, and complied
in all material respects with all covenants and conditions, contained in this
Agreement to be performed or complied with by it prior to or at the Closing
Date.
(c) Absence of Material Adverse Change. Since the date of this
Agreement, there shall not have been any material adverse change, individually
or in the aggregate, in the financial condition or business of Holdings and its
Subsidiaries taken as a whole (except for changes affecting the economy
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generally, the dairy industry generally or the dairy industry within any of the
jurisdictions in which Holdings or its Subsidiaries is operating).
(d) Certificate. Parent shall have received a certificate of Holdings,
dated the Closing Date, executed on behalf of Holdings by its President or any
Vice President, to the effect that the conditions specified in paragraphs (a),
(b) and (c) above have been satisfied.
(e) Delivery of the Borden Shares. Borden shall have delivered to
Parent certificates representing all of the Borden Shares owned by such
corporation, each of which shall have been duly endorsed or accompanied by
stock powers duly executed, with all necessary stock transfer stamps attached
thereto.
(f) Ancillary Agreements. Borden Services Company shall have executed
and delivered to Parent or Holdings the Amendment to the Master Customer
Services Agreement, substantially in the form of Exhibit A hereto (the "Master
Services Agreement Amendment"), Borden shall have executed and delivered to
Parent or Holdings the Trademark License Agreement, substantially in the form
of Exhibit B hereto (the "Trademark License Agreement"), Borden, Inc. shall
have executed and delivered to Parent the Insurance Matters Agreement,
substantially in the form of Exhibit C hereto (the "Insurance Matters
Agreement"), and Borden Foods Corporation or another affiliate of Borden, Inc.
shall have executed and delivered to Holdings or its subsidiary the Trademark
License Agreement,
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substantially in the form of Exhibit D hereto (the "Meadow Gold Trademark
License Agreement").
5.3 Conditions Precedent to the Obligation of Holdings and Borden. The
obligation of Holdings and Borden to consummate the transactions contemplated
by this Agreement is subject to the satisfaction at or prior to the Closing
Date of each of the following additional conditions:
(a) Accuracy of Representations and Warranties. The representations
and warranties of Parent contained in this Agreement shall be true and accurate
as of the Closing Date as if made at and as of such date (except for changes
permitted or contemplated by this Agreement and except those representations
and warranties that address matters only as of a particular date or only with
respect to a specific period of time, which need only be true and accurate as
of such date or with respect to such period), except where the failure of such
representations and warranties to be so true and correct (without giving effect
to any exception or threshold with respect to materiality contained therein),
would not, individually or in the aggregate, prevent, materially hinder or
materially delay the ability of Parent to perform its obligations under this
Agreement or to consummate the transactions contemplated hereby.
(b) Performance of Agreements. Parent shall have performed in all
material respects all obligations and agreements, and complied in all material
respects with all covenants and conditions, contained in this Agreement to be
performed or complied with by it prior to or at the Closing Date.
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(c) Certificate. Borden shall have received a certificate of Parent,
dated the Closing Date, executed on behalf of Parent by its President or any
Vice President, to the effect that the conditions specified in paragraphs (a)
and (b) above have been satisfied.
(d) PBGC Actions. The PBGC shall not have (i) threatened to terminate
or terminated any Employee Pension Benefit Plan, (ii) imposed any lien on any
assets of Borden or any of their affiliates or (iii) required any agreement or
guarantee by Borden or any of their affiliates of any obligations in respect of
pension plans of Borden or any of their affiliates as a condition to
withdrawing any threat to terminate any Employee Pension Benefit Plan.
(e) Ancillary Agreements. Parent or Holdings shall have executed and
delivered to Borden Services Company the Master Services Agreement Amendment,
to Borden, Inc. the Insurance Matters Agreement and to Borden the Trademark
License Agreement, and Holdings or its subsidiary shall have executed and
delivered to Borden Foods Corporation or another affiliate of Borden, Inc. the
Meadow Gold Trademark License Agreement.
ARTICLE VI
PROVISIONS AS TO TAXES
6.1 Access to Records Following Closing. Parent and Borden agree that
so long as any books, records and files retained by Borden relating to the
business of the Borden Corporations, or the books, records and files delivered
to the control of Parent pursuant to this Agreement to the extent they
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relate to the operations of the Borden Corporations prior to the Closing Date,
remain in existence and available, each party (at its expense) shall have the
right upon prior notice to inspect and to make copies of the same at any time
during business hours for any proper purpose. Parent and Borden shall use
reasonable efforts not to destroy or allow the destruction of any such books,
records and files without first offering in writing to deliver them to the
other.
6.2 Section 338 Elections. (a) If requested by Parent, Borden and
Parent shall jointly make timely and irrevocable elections under Section
338(h)(10) of the Code (the "Elections"), and, if permissible, similar
Elections under any applicable state or local income tax laws with respect to
Holdings and those Subsidiaries set forth on Schedule 6.2 ("Electing
Subsidiaries"). Borden, Parent and Holdings and the Electing Subsidiaries shall
report the transaction consistent with such Elections under Section 338(h)(10)
of the Code or any similar state or local tax provision and agree not to take
any action that could cause such Elections to be invalid, and shall take no
position contrary thereto unless required to do so pursuant to a Final
Determination (as hereinafter defined). For purposes of this Agreement, "Final
Determination" shall mean final resolution by (i) a decision of the Tax Court
or judgment, decree, or other order by a court of competent jurisdiction, which
has become final and unappealable; (ii) IRS Form 870, 870- AD, 870-L,
870-L(AD), 870-P, 870-P(AD), 870-S, 870-S(AD) (or any successor forms thereto),
on the date of acceptance by or on
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behalf of the Internal Revenue Service, or by comparable agreement form under
the laws of other jurisdictions; except that a Form 870, 870-AD, 870-L,
870-L(AD), 870-P, 870-P(AD), 870-S, 870-S(AD) or comparable form that reserves
the right of the taxpayer to file a claim for refund and/or the right of the
taxing authority to assert a further deficiency shall not constitute a Final
Determination; (iii) a closing agreement or compromise under Sections 7121 or
7122 of Code or under corresponding provisions of any subsequently enacted
Federal tax laws, or comparable agreements under the laws of other
jurisdictions; (iv) any allowance of a refund or credit in respect of any
overpayment of Tax, including any related interest or penalties, but only after
the expiration of all periods during which such refund may be recovered
(including by the way of offset) by the Tax imposing jurisdiction; or (v) any
other final disposition by reason of the expiration of the applicable statute
of limitations or the expiration of the period during which a protest may be
filed.
(b) To the extent possible, Parent, Borden, Holdings and the Electing
Subsidiaries shall execute as of the Closing Date any and all forms necessary
to effectuate the Elections (including, without limitation, Internal Revenue
Service Form 8023 and any similar forms under applicable state and local income
tax laws (the "Section 338 Forms")). To the extent, however, that any Section
338 Forms are not executed by the Closing Date, Parent, Borden, Holdings and
the Electing Subsidiaries shall prepare and complete each such Section 338
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Form no later than 15 days prior to the date such Section 338 Form is required
to be filed. Parent, Borden, Holdings and each of the Electing Subsidiaries
each agree to cause the Section 338 Forms to be duly executed by an authorized
person for such entity and each shall duly and timely file the Section 338
Forms in accordance with applicable tax laws and the terms of this Agreement.
(c) As soon as practicable after the Closing Date, Parent shall
reasonably determine the fair market value of the assets of Holdings and the
Electing Subsidiaries and the allocation of the deemed sales price of the
assets of Holdings and the Electing Subsidiaries resulting from the Elections
(as required pursuant to Section 338(h)(10) of the Code and regulations
promulgated thereunder) among such assets (the "Section 338 Allocation").
Parent shall deliver to Borden a schedule setting forth the Section 338
Allocation within 120 days after the Closing. If the Section 338 Allocation
would have a material adverse effect on Borden as reasonably demonstrated to
Parent by Borden, then Borden shall be entitled to have Borden's comments
incorporated into the Allocation Schedule. Parent, Borden, Holdings and the
Electing Subsidiaries shall file all Returns consistently with the Section 338
Allocation.
(d) Borden shall be responsible for and shall pay any income,
franchise or similar Taxes arising as a result of any Section 338(h)(10)
Election or any comparable or resulting election under state law filed by
Parent or Borden. Notwithstanding the preceding sentence, Parent shall be
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responsible for and shall pay any income, franchise or similar Taxes imposed by
any state or local taxing authority as a result of any resulting mandatory
Section 338(g) election (or any comparable election under state law) if such
state or local taxing authority does not allow or respect a Section 338(h)(10)
Election (or any comparable or resulting election under state law) with respect
to the purchase and sale of the Borden Shares contemplated hereby.
6.3 Post-Closing Cooperation. (a) Borden, Parent and each of the
Borden Corporations shall reasonably cooperate, and shall cause their
respective affiliates, officers, employees, agents, auditors and other
representatives reasonably to cooperate, in preparing and filing all Returns,
including maintaining and making available to each other all records necessary
in connection with Taxes and in resolving all disputes and audits with respect
to all taxable periods relating to Taxes.
(b) Borden shall be responsible for and shall pay all Taxes for the
Borden Corporations that become due before or after the Closing Date that are
properly allocable under this Section to the period prior to and including the
Closing Date, except that the Borden Corporations and Parent, and not Borden,
shall be responsible for and shall pay either to Borden or to the appropriate
taxing authorities (a) the amounts accrued therefor in the Financial Statements
(including amounts accrued with respect to the Tax Sharing Agreement
notwithstanding the fact that such Tax Sharing Agreement has been terminated
pursuant to Section 6.5(d) hereof) but not paid on or before the Closing
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Date, and (b) the amounts (other than income Taxes) accrued therefor but not
paid on or before the Closing Date which are reflected as expenses in
determining the Earnings for the period from and including January 1, 1997
through the last day of the Closing Period. In order to appropriately apportion
any of these Taxes relating to a period that includes (but that would not, but
for this section, close on) the Closing Date, the parties hereto will, to the
extent permitted by applicable law, elect with the relevant taxing authorities
to treat for all purposes the Closing Date as the last day of a taxable period
of Holdings, and such period shall be treated as a "Short Period" and a
"Pre-Closing Period" for purposes of this Agreement.
In any case where applicable law does not permit Holdings to treat the
Closing Date as the last day of a taxable period, then for purposes of this
Agreement, the Taxes attributable to the operations of Holdings or its
Subsidiaries for such Interim Period (as defined below) shall be (i) in the
case of any transaction-based Tax (such as sales, transfer and other similar
Taxes) ("Transaction-Based Taxes"), any such Tax attributable to a transaction
occurring in such Interim Period; (ii) in the case of Taxes other than
Transaction-Based Taxes that are not based on income or gross receipts, the
total amount of such Taxes for the period in question multiplied by a fraction,
the numerator of which is the number of days in the Interim Period, and the
denominator of which is the total number of days in the entire period in
question, and (iii) in the case of Taxes that are based on income or gross
receipts, the Taxes other than
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Transaction-Based Taxes that would be due with respect to the Interim Period,
if such Interim Period were a Short Period. "Interim Period" means with respect
to any Taxes imposed on Holdings or its Subsidiaries on a periodic basis for
which the Closing Date is not the last day of a Short Period, the period of
time beginning on the first day of the actual taxable period that includes (but
does not end on) the Closing Date and ending on and including the Closing Date.
An Interim Period shall be treated as a Pre-Closing Period for purposes of this
Agreement. "Post- Closing Period" means with respect to any Taxes imposed on
Holdings or its Subsidiaries on a periodic basis for which the Closing Date is
not the last day of a Short Period, the period of time beginning on the day
immediately following the Closing Date and ending on and including the last day
of the actual taxable period that includes (but does not end on) the Closing
Date. Any Taxes relating to a period that includes (but does not end on) the
Closing Date which are not attributed to the Interim Period pursuant to this
paragraph shall be attributed to the Post- Closing Period.
(c) If in any period ending after the Closing Date Holdings earns any
credit or recognizes any loss which cannot be applied against its Tax liability
for such period, such loss or credit shall not be carried back to any period
prior to the Closing Date.
6.4 Tax Indemnification. (a) Borden's Indemnification. From and after
the Closing Date, Borden shall protect, defend and indemnify Parent and its
affiliates
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(including Holdings and its Subsidiaries) and each of their respective
officers, directors, employees, agents and other representatives (collectively,
the "Parent Indemnitees"), and hold each Parent Indemnitee harmless, from any
diminution in value, demand, damage, claim, action, cause of action,
deficiency, fine, liability, Tax or other loss or expense including, without
limitation, interest, penalties and attorneys' fees and expenses (collectively,
"Damages") arising out of or resulting from any and all Taxes which are (i)
imposed on Borden or any member (other than the Borden Corporations) of the
consolidated, unitary or combined group which includes or included any one or
more of the Borden Corporations that (a) Parent or any one or more of the
Borden Corporations pays or otherwise satisfies in whole or in part, or (b)
results in liens or encumbrances on any assets of any one or more of the Borden
Corporations or Parent, or (ii) imposed on any one or more of the Borden
Corporations in respect of its income, business, property or operations or for
which any one or more of the Borden Corporations may otherwise be liable (A)
for any taxable period ending prior to the Closing Date and for any Pre-Closing
Period, (B) resulting by reason of the several liability of any one or more of
the Borden Corporations pursuant to Treasury Regulations Section 1.1502-6 or
any analogous state, local or foreign law or regulation or by reason of any one
or more of the Borden Corporations having been a member of any consolidated,
combined or unitary group on or prior to the Closing Date, (C) resulting from
any one or more of the Borden Corporations ceasing to be a
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member of the affiliated group (within the meaning of Section 1504(a) of the
Code) that includes Borden, (D) attributable to any discharge of indebtedness
that may result from any capital contributions by Borden (or an affiliate of
Borden) prior to the Closing Date to any one or more of the Borden Corporations
of any intercompany indebtedness owed by such Borden Corporation or
Corporations to Borden (or an affiliate of Borden), or (E) resulting from the
making of the Elections except as provided in Section 6.2(d); provided,
however, that Borden's liability for Damages under the foregoing provisions of
this paragraph shall be reduced to the extent that, as of the time of the
payment of the indemnity claim by Borden, the Borden Corporations and/or Parent
have not satisfied the obligation, if any, imposed on them in the first
sentence of Section 6.3(b) hereof.
(b) Parent's Indemnification. Following the Closing Date, Parent
shall, and shall cause Holdings and each of its Subsidiaries to, indemnify
Borden and its affiliates and each of their respective officers, directors,
employees, and agents and hold them harmless from: (i) all liability for Taxes
of Holdings and any of its Subsidiaries for any period beginning after the
Closing Date and any Post-Closing Period; and (ii) all liability for Taxes of
Holdings or any of its Subsidiaries for the Pre- Closing Period to the extent
of the obligation imposed on the Borden Corporations to pay such Taxes in the
first sentence of Section 6.3(b) hereof.
(c) Tax Audits. With respect to any claim made by any taxing authority
relating to the Borden Corporations (a "Tax
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Claim") relating to any taxable period ending on or before the Closing Date,
Borden shall, at its expense, control all proceedings and may make all
decisions taken in connection with such Tax Claim (including selection of
counsel) and, without limiting the foregoing, may in its sole discretion pursue
or forego any and all administrative appeals, proceedings, hearings and
conferences with any taxing authority with respect thereto, and may, in its
sole discretion, either pay the Tax claimed and sue for a refund where
applicable law permits such refund suits or contest the Tax Claim in any
permissible manner, provided, however, that if the results of such proceeding
could reasonably be expected to have a Material Adverse Effect on the business,
financial condition or results of operations of Parent or the Borden
Corporations for any taxable period including or ending after the Closing Date,
there shall be no settlement or closing or other agreement with respect thereto
without the consent of Parent, which consent will not be unreasonably withheld.
Parent shall, at its expense, control all proceedings and make all decisions
taken in connection with any Tax Claim relating solely to Taxes of Holdings or
any of its Subsidiaries for any taxable period beginning after the Closing Date
(including selection of counsel) and, without limiting the foregoing, may in
its sole discretion pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with any taxing authority with respect
thereto, and may, in its sole discretion, either pay the Tax claimed and sue
for a refund where applicable law permits such refund suits or contest the Tax
Claim in any permissible
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manner; provided, however, that if the results of such proceeding could
reasonably be expected to have a Material Adverse Effect on the business,
financial condition or results of operations of Borden (or any member of the
group of which it is the common parent) for any taxable period including or
ending after the Closing Date, there shall be no settlement or closing or other
agreement with respect thereto without the consent of Borden, which consent
will not be unreasonably withheld.
With respect to any taxable period of the Borden Corporations
beginning before and ending after the Closing Date, Borden and Parent shall
jointly control the defense and settlement of any Tax audit or administrative
or court proceeding relating to any Tax covered by Section 6.4(a) or (b) and
each party shall cooperate with the other party at its own expense and there
shall be no settlement or closing or other agreement with respect thereto
without the consent of the other party, which consent will not be unreasonably
withheld.
In no case shall any of Parent, Holdings or any of Holdings'
Subsidiaries settle or otherwise compromise any Tax Claim relating to a
Pre-Closing Period without Borden's prior written consent. None of Borden,
Parent, Holdings or any of Holdings' Subsidiaries shall settle a Tax Claim
relating to a Post-Closing Period without Parent's prior written consent. In
the event that any party violates the provisions of this paragraph (relating to
the settlement of Tax Claims), such party shall not be entitled to any
indemnity payments with respect to
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any indemnifiable claim (relating to such Tax Claims) pursuant to this Section
6.4.
(d) Tax Refunds. Parent agrees to pay (and to cause each Borden
Corporation to pay) to Borden all refunds of any Taxes for which Borden is
liable under Sections 6.3 and 6.4 hereof, but only to the extent such refund
has not been specifically included as a receivable in the Financial Statements.
Borden agrees to pay to Parent all refunds of any Taxes for which Parent is
liable under Sections 6.3 and 6.4 hereof. The parties shall cooperate in order
to take all reasonably necessary steps to claim any such refund. Any such
refund received by a party (considering, for purposes of this sentence, Parent
and the Borden Corporations as one party and Borden as the other party) or its
affiliates for the account of the other party shall be paid to such other party
within thirty (30) days after such refund is received. For purposes of this
Agreement, a refund of Tax includes the application of an amount otherwise
refundable as a reduction of amounts owed or to be owed.
(e) Computation of Indemnifiable Losses. Subject to Section 6.5(c)
hereof, any amount payable pursuant to this Section 6.4 shall be decreased to
the extent of (i) any net Tax benefit actually recognized and utilized to
offset or reduce the Tax liability of the indemnified party as a result of the
adjustment to Taxes giving rise to the indemnifiable loss and (ii) any
insurance proceeds received or receivable by the indemnified party in respect
of an indemnifiable loss. The
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indemnification provisions set forth in this Section 6.4 shall survive the
Closing until ninety days after the expiration of the applicable statute of
limitations (and any extensions thereof). Anything to the contrary
notwithstanding, the termination or expiration of any indemnification
obligation hereunder shall not affect any claims made in writing prior to such
expiration or termination.
6.5 Other Tax Matters. (a) Except for stock transfer taxes
and other Taxes referred to in Articles I and II hereof and except for any
Transfer Taxes, as hereinafter defined, imposed in connection with any purchase
by Parent or Parent's designee of the Equipment pursuant to Section 4.5, which
shall be paid by Borden, Inc., all Transfer Taxes incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by
Parent, and Borden and Parent shall cooperate in timely making all filings,
returns, reports and forms as may be required to comply with the provisions of
such tax laws. For purposes of this Agreement, (i) "Transfer Taxes" shall mean
transfer, documentary, sales, use, registration and other such taxes (including
all applicable Real Estate Transfer Taxes, as hereinafter defined, and Real
Property Gains Taxes, as hereinafter defined) and related fees (including any
penalties, interest and additions to tax) incurred with respect to such taxes,
(ii) "Real Estate Transfer Tax" shall mean the New York Real Estate Transfer
Tax and any other similar state or local taxes imposed by New York State or any
other state or local jurisdiction, and (iii) "Real Property Gains Tax" shall
mean any
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state or local taxes similar to the New York Real Property Gains Tax prior to
its repeal.
(b) There shall be no withholding pursuant to Section 1445 of
the Code; provided that Borden delivers to Parent at the Closing a certificate
complying with the Code and Treasury Regulations, in form and substance
satisfactory to Parent, duly executed and acknowledged, certifying that the
transactions contemplated hereby are exempt from withholding under Section 1445
of the Code.
(c) Borden and Parent agree to treat any amounts payable
pursuant to this Article VI as an adjustment to the purchase price of the
Borden Shares.
(d) Except as provided in Section 6.3(b), Borden shall cause
all tax allocation agreements or tax sharing agreements with respect to each of
the Borden Corporations (including without limitation the Tax Sharing
Agreement) to be terminated as of the Closing Date, and shall ensure that such
agreements are of no further force or effect as to any of the Borden
Corporations on and after the Closing Date and that there shall be no further
liabilities or obligations imposed on any of the Borden Corporations under any
such agreements.
ARTICLE VII
LABOR MATTERS, EMPLOYEE
RELATIONS AND BENEFITS
7.1 Conduct Prior to the Closing. Prior to the Closing,
Parent shall take no action to cause Borden, Holdings or their Subsidiaries to
terminate the employment of any Business
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Employee, and neither Borden, Holdings nor their Subsidiaries shall be under
any obligation to terminate any Business Employee prior to or at the Closing.
7.2 Continuity of Employment. The parties hereto intend that
there shall be continuity of employment with respect to all Business Employees;
provided that nothing contained herein to the contrary shall prohibit Parent,
Holdings or its Subsidiaries from terminating any non-union employee following
the Closing, and nothing contained herein to the contrary shall prohibit
Parent, Holdings or its Subsidiaries from terminating any union employee
following the Closing pursuant to the terms of an valid Collective Bargaining
Agreement (as defined in Section 7.3 below).
7.3 Collective Bargaining Agreements. Parent shall continue
to employ all Business Employees covered by any of the collective bargaining
agreements listed on Schedule 7.3 (the "Collective Bargaining Agreements") as
of the Closing. For each Collective Bargaining Agreement in effect as of the
Closing, Parent agrees to (a) recognize the union which is a party to such
Collective Bargaining Agreement as the exclusive collective bargaining
representative for the Business Employees covered under the terms of the
Collective Bargaining Agreement and (b) negotiate with the union over the terms
of a new collective bargaining agreement upon timely demand by the union.
Nothing contained herein to the contrary shall prohibit Parent, Holdings or its
Subsidiaries from terminating any Business Employee
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covered under an existing Collective Bargaining Agreement pursuant to the terms
of that agreement.
7.4 Comparable Benefits. For one year following the Closing,
Parent shall, or shall cause an affiliate to, offer employee benefits,
effective as of the Closing (including, but not limited to, health, welfare,
pension, vacation, savings and severance benefits) to the Business Employees
that are comparable in the aggregate to the employee benefits that are in
effect for such employees immediately prior to the Closing. Prior to Closing,
Parent and Borden shall mutually agree upon what employee benefits shall be
offered to non-union Business Employees during the one-year period following
the Closing, in order to provide comparable benefits within the meaning of this
Section 7.4. If the parties are unable to agree as to what employee benefits
offered by Parent are "comparable," the decision of an independent third-party
actuary (the selection of which shall be acceptable to both parties) shall be
binding. With respect to Business Employees who are covered by Collective
Bargaining Agreements, Parent agrees to negotiate with the certified bargaining
representative(s) for such Business Employees over the employee benefits to be
offered following the Closing.
7.5 Business Plan Participation. Except as expressly provided
in this Section 7.5 or except as otherwise required by applicable law, Business
Employees shall cease active participation in (and accrual of additional
benefits under) all Borden-sponsored Business Plans as of the Closing.
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7.6 Business Plan Liabilities. Except as otherwise
specifically provided in this Article VII, Parent shall be responsible and
liable for all liabilities and obligations (a) relating to the participation of
the Business Employees under the Business Plans and the Parent Business Plans
before, on or after the Closing (including, but not limited to, medical, dental
and life insurance benefits for the benefit of Business Employees who are
receiving disability income payments under any Business Plan, but excluding
long-term disability income benefits payable to Business Employees for
long-term disability claims (i) in pay status prior to Closing or (ii)
converted directly from short-term disability claims in pay status prior to
Closing, without any intervening period between short-term disability status
and long-term disability status) and (b) in connection with the employment (or
termination of employment) of the Business Employees before, on or after the
Closing. Other than the liabilities and obligations expressly assumed by Parent
pursuant to this Agreement relating to the participation of Business Employees
in the Business Plans and in the Parent Business Plans (including, without
limitation, the liabilities and obligations assumed by Parent in the
immediately preceding sentence), Borden shall be responsible and liable for all
liabilities and obligations relating to the Business Plans accruing prior to
Closing. Parent shall have no liabilities or obligations under any Business
Plans that are welfare benefit plans (as defined in Section 3(1) of ERISA)
under which Business Employees have ceased active participation pursuant to
Section 7.5 of this Agreement,
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except that Parent shall be responsible and liable for all accruals or claims
relating to the participation of Business Employees for all periods of time
prior to such cessation with respect to such welfare benefit plans.
7.7 Defined Benefit Plan. (a) As of the Closing, Borden shall
cause the participation by the Business Employees in the Borden, Inc. Employees
Retirement Income Plan (the "Borden Pension Plan") to cease. Assets shall be
transferred in cash or other marketable assets as determined by Borden (valued
at their fair market value as of the date or dates of transfer) as soon as
practicable (but in no event later than nine months) after the Closing to such
defined benefit plan designated by Parent (the "Parent Pension Plan");
provided, however, that unless Parent agrees otherwise, all assets so
transferred shall be a pro rata portion of plan assets on hand at Closing in
approximately the same ratio that liabilities transferred bear to total plan
liabilities. The amount of assets to be transferred shall be equal to:
(i) the funded percentage of "current liability" under
the Borden Pension Plan of the Business Employees as of the Closing
(with assets valued at fair market value as of such date), using an
interest rate equal to the highest permissible rate under Section
412(l)(7) of the Code at the Closing. Current liability shall be
determined as of January 1, 1997 and actuarially rolled forward from
January 1, 1997 to the Closing, determined by an actuary retained by
Borden ("Borden's Actuary"), utilizing the actuarial methods
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and assumptions (other than the aforementioned interest rate) used for
determining the minimum funding requirements for the Borden Plan for
1996, minus
(ii) any benefit payments made to or in respect of a
Business Employee during the period from the Closing to the date of
transfer, plus
(iii) interest on the net amount described in clauses (i)
and (ii) above at the same interest rate used to determine the amount
in clause (i) above from the Closing Date to the date of transfer.
The foregoing method is accepted by the parties to this Agreement as a
reasonable basis on which to determine the present value of accrued benefits in
compliance with the provisions of Section 414(l) of the Code. Parent's actuary
may review Borden's Actuary's calculations for accuracy in the application of
the agreed actuarial methods, assumptions and interest rates specified in
clause (i) above as well as the calculations pursuant to clauses (ii) and (iii)
above. Should the actuaries be unable to agree upon the calculations, the
matter shall be submitted to an independent third-party actuary (the selection
of which shall be acceptable to both parties) for final resolution. Prior to
the transfer date, all benefit payments shall be made from the Borden Pension
Plan. In consideration of the transfer of assets described herein, the Parent
Pension Plan shall, as of the Closing, assume all liabilities in respect of
participants for whom assets are transferred.
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(b) Parent shall (i) give Borden written notice of the name
of the trustee of the Parent Pension Plan, accompanied by a copy of the most
recent favorable IRS determination letter for such plan received by Parent, as
promptly as possible after the Closing, but in any event prior to the date on
which such transfer is to occur; and (ii) as soon as practicable (but in no
event later than nine months) after the Closing, make all required filings and
submissions to appropriate Governmental Authorities. As soon as practicable
after the Closing, Borden shall cause the trustee of the Borden Pension Plan to
transfer to the trustee of the Parent Pension Plan the amount of assets
described in Section 7.7(a) above. Borden, Parent and each of the Borden
Corporations shall reasonably cooperate, and shall cause their respective
affiliates, officers, employees, agents and other representatives reasonably to
cooperate, in preparing and filing all returns, reports and other documents
with governmental regulatory agencies, including maintaining and making
available to each other all records necessary in connection with such filings
or reasonably necessary to resolve disputes or audits with respect to Business
Employees covered by Business Plans (other than those records that, absent a
specific judicial order or decree requiring disclosure, are privileged or that
otherwise may not be disclosed pursuant to contract, judicial order or other
similar circumstances).
7.8 Defined Contribution Plans. (a) As of the Closing,
Borden shall cause the active participation by the Business Employees in the
Borden, Inc. Retirement Savings Plan,
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the Borden, Inc. Union Savings Plan and the Borden, Inc. Associate Savings Plan
(collectively, the "Savings Plans") to cease. Borden shall (i) as of the
Closing cause the trustees of the Savings Plans to identify, in accordance with
the applicable spinoff provisions set forth under Section 414(l) of the Code,
the assets of the Savings Plans representing the full account balances of the
Business Employees for all periods of participation through the Closing
(including, as applicable, all employee contributions, employer contributions
and all earnings attributable thereto); and (ii) as soon as practicable (but in
no event later than nine months) after the Closing, make all required filings
and submissions to appropriate Governmental Authorities and all required
amendments to the Savings Plans and related trust agreements necessary to
provide for the transfer of assets described in this Section 7.8. The Savings
Plans shall be amended to provide that (i) there shall be no contributions
thereto with respect to the Business Employees for periods after the Closing
and (ii) all transferred employer contributions shall be fully vested.
(b) Parent shall (i) give Borden written notice of the name
of the trustee of the defined contribution plan designated by Parent to which
the assets and liabilities for benefits of the Savings Plans are to be
transferred (the "Parent Savings Plan"), accompanied by a copy of the most
recent favorable IRS determination letter for such plan received by Parent, as
promptly as possible after the Closing, but in any event prior to the date on
which such transfer is to occur; and (ii) as soon as
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practicable (but in no event later than nine months) after the Closing, make
all required filings and submissions to appropriate Governmental Authorities.
As soon as practicable after the Closing, and pursuant to the procedures set
forth below, Borden shall cause the trustees of the Savings Plans to transfer
to the trustee of the Parent Savings Plan the following amount (the "Total
Transfer Amount"): (A) the full account balances (in kind or in cash as
determined by Borden, and notes for any loans to the Business Employees) of all
Business Employees, whose account balances shall have been credited with
appropriate earnings and contributions, if any, attributable to the period
ending on the close of business on the day preceding the Closing, plus (B)
earnings on such account balances attributable to the period from the Closing
to the Transfer Date, reduced by (C) any benefit or withdrawal payments in
respect of the Business Employees prior to the Transfer Dates. The "Transfer
Date" shall be the first day of the month following a 15th day of a month by
which Parent has requested the transfer and Borden has received copies of the
applicable favorable IRS determination letters. On the Transfer Date, Borden
shall transfer 90% of its good faith estimate of the Total Transfer Amount.
Upon the completion of a calculation of the Total Transfer Amount by the
recordkeeper for the Savings Plans (such calculation to occur no later than 120
days after the Transfer Date and such calculation to be binding on Parent), the
Savings Plans shall transfer to the Parent Savings Plan an amount equal to the
difference between the Total Transfer Amount and any amounts previously
transferred to the Parent Savings Plan or, if
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applicable, the Parent Savings Plan shall transfer to the Savings Plans an
amount equal to the difference between any amounts previously transferred to
the Parent Savings Plan and the Total Transfer Amount. In consideration of the
transfer of assets hereunder, Parent shall, as of the Transfer Date, cause the
Parent Savings Plan to assume the liabilities for benefits payable to plan
participants and beneficiaries in respect of participants for whom assets
(including notes) are transferred.
(c) Periods of employment by the Business Employees with
Borden for which credit was given under the Savings Plans shall be taken into
account for all purposes under the Parent Savings Plan to the same extent they
were taken into account under the Savings Plans.
(d) Parent shall (i) permit repayment to the Parent Savings
Plan of the outstanding loans of the Business Employees (under the Savings
Plans) by way of regular paycheck deductions and (ii) take all steps required
to effectuate such repayment (including amending its plans).
(e) Any transfer of plan assets shall consist of (i) cash,
(ii) the loan balances described below in this Section 7.8(e) and (iii) fixed
investment contracts as determined by Borden (valued at their fair market value
as of the date or dates of transfer); provided, however, that unless Parent
agrees otherwise, all fixed investment contracts so transferred shall be a pro
rata portion of such contracts on hand at Closing in approximately the same
ratio as the account balances transferred bear to total account balances.
Should any outstanding loans of
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Business Employees (under the Savings Plans) be transferred to the trustee or
trustees of the Parent's Savings Plan, Borden shall cause such loans to be
transferred only with respect to such Business Employees who are identified in
writing to Parent by the Transfer Date as having executed new notes in favor of
Parent's Savings Plan.
7.9 Withdrawal Liability. As of the Closing, Parent shall
assume the liability for any pension withdrawal liability to the Central States
Southeast and Southwest Areas Pension Fund thereafter due resulting from
participation in the pension fund of employees or former employees of Holdings
or its Subsidiaries. Claims for multiemployer plan withdrawal liability
triggered by events occurring prior to the Closing shall be the responsibility
of Borden.
7.10 Post-Retirement Benefits. Subject to Sections 7.7 and
7.8 above, as of the Closing, no Business Employee shall be eligible to receive
"Post-Retirement Benefits" from Borden (including, but not limited to, pension,
retiree medical and retiree life benefits). To the extent that Business
Employees receive (or are eligible to receive) Post-Retirement Benefits from
Borden immediately prior to the Closing, such Business Employees shall receive
Post-Retirement Benefits from Parent following the Closing.
7.11 Welfare Plans. With respect to any Parent Business
Plan that is a "welfare benefit plan" (as defined in Section 3(1) of ERISA)
maintained for the benefit of Business Employees on and after the Closing,
Parent shall (a) cause there
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to be waived any pre-existing condition limitations and (b) give effect, in
determining any deductible and maximum out-of-pocket limitations, to claims
incurred and amounts paid by, and amounts reimbursed to, such employees with
respect to similar plans maintained by Borden immediately prior to the Closing.
7.12 Accrued Vacation. With respect to any accrued but unused
vacation time to which any Business Employee is entitled pursuant to the
vacation policy applicable to such employee immediately prior to the Closing
(the "Vacation Policy"), Parent shall allow such Business Employee to use such
accrued vacation; provided, however, that if Parent deems it necessary to
disallow such employee from taking such accrued vacation, Parent shall be
liable for and pay in cash to such employee an amount equal to such vacation
time in accordance with terms of the Vacation Policy; provided, further, that
Parent shall be liable for and pay in cash an amount equal to such accrued
vacation time to any Business Employee whose employment terminates for any
reason subsequent to the Closing; provided, further, that Parent shall be under
no obligation to recognize any unused vacation time accrued prior to the year
in which the Closing occurs.
7.13 Severance. Parent shall provide severance benefits in
accordance with Schedule 7.13 to Business Employees (who are either salaried or
non-union hourly employees) terminated within 12 months of the Closing under
the same terms as the Business Plans that are severance plans.
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7.14 Service Credit. With respect to the Business
Employees, Parent shall recognize all service with Borden for purposes of
eligibility and vesting under the Parent Business Plans.
7.15 WARN Act. Parent agrees to provide any required notice
under the Worker Adjustment and Retraining Notification Act ("WARN") and any
other applicable law and to otherwise comply with any such statute with respect
to any "plant closing" or "mass layoff" (as defined in WARN) or similar event
affecting employees and occurring on or after the Closing or arising as a
result of the transactions contemplated hereby.
7.16 COBRA. Parent agrees to provide any required notice
under the Consolidated Omnibus Budget Reconciliation Act of 1986, as amended
("COBRA"), and any other applicable law on or after the Closing.
7.17 No Rights Conferred on Employees. Nothing herein,
expressed or implied, shall confer upon any employee or former employee of
Borden, Parent, Holdings and its Subsidiaries, or any of their affiliates
(including, without limitation, the Business Employees), any rights or remedies
(including, without limitation, any right to employment or continued employment
for any specified period) of any nature or kind whatsoever, under or by reason
of this Agreement.
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ARTICLE VIII
ASSUMPTION OF CERTAIN OBLIGATIONS
AND LIABILITIES; INDEMNIFICATION
8.1 Assumption and Indemnification. (a) Parent hereby agrees
to assume all obligations and liabilities of Borden and its affiliates
(collectively, the "Borden Indemnified Parties"), and to indemnify, defend and
hold the Borden Indemnified Parties harmless from and against and in respect of
any and all claims, losses, damages, expenses, obligations and liabilities
(including costs of collection, attorney's fees and other costs of defense)
incurred by them in respect of or arising out of:
(i) except for liabilities and obligations expressly
assumed by Borden under this Agreement, any liabilities or obligations
of or related to Holdings or any of its Subsidiaries, whether arising
prior to, on or after the Closing Date;
(ii) any breach (A) by Parent or the Surviving Entity of
any of its agreements or covenants contained in this Agreement, the
Master Customer Services Agreement, as amended by the Master Services
Agreement Amendment, the Insurance Matters Agreement, the Trademark
License Agreement or the Meadow Gold Trademark License Agreement, or
(B) by Parent of the representation and warranty contained in Section
3.3(b); and
(iii) (A) any assignment of Parent's rights or
obligations pursuant to Section 9.6, any modification of any
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of the provisions of this Agreement, the Master Customer Services
Agreement, as amended by the Master Services Agreement Amendment, the
Trademark License Agreement or the Meadow Gold Trademark License
Agreement made in connection with such assignment and any filing,
notice, waiver, agreement, document or other action made or required
in connection with such assignment and (B) any change to the structure
of the Merger referred to in the last sentence of Section 1.2.
All such claims, losses, damages, expenses, obligations and liabilities are
collectively referred to as "Borden Indemnified Liabilities".
Notwithstanding any other provision of this Agreement, Parent
agrees that it shall have no cause of action against any Indemnified Party
under Section 107 of the Comprehensive Environmental Response, Compensation and
Liability Act, as the same has been or may be amended from time to time, or any
other cause of action with respect to chemicals in the soil or groundwater at,
near or from any property or facility owned or operated by any of Holdings and
its Subsidiaries.
(b) Borden, Inc. hereby agrees to assume all obligations and
liabilities of Parent, Holdings, the Surviving Entity and their affiliates
(collectively, the "Parent Indemnified Parties" and, together with the Borden
Indemnified Parties, the "Indemnified Parties"), and to indemnify, defend and
hold the Parent Indemnified Parties harmless from and against and in respect of
any and all claims, losses, damages, expenses,
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obligations and liabilities (including costs of collection, attorney's fees and
other costs of defense) incurred by them in respect of or arising out of:
(i) any demand for appraisal of Shares made by a holder
of Common Shares who has not voted in favor of the Merger, or any
other claim by a holder of Common Shares that such holder is entitled
to additional consideration as a holder of Common Shares as a result
of the transactions contemplated by this Agreement;
(ii) any breach (A) by Borden of any of their agreements
or covenants contained in this Agreement (but expressly excluding,
notwithstanding anything to the contrary that may be contained herein,
Sections 3.1 and 3.2 hereof, except as expressly provided in clause
(C), (D) or (E) below), (B) after the Closing, by Borden or their
affiliates of the Master Customer Services Agreement, as amended by
the Master Services Agreement Amendment, the Insurance Matters
Agreement, the Trademark License Agreement or the Meadow Gold
Trademark License Agreement, (C) by Borden of the representation and
warranty contained in Section 3.1(b) or 3.1(d), (D) by Holdings of the
representation and warranty contained in Section 3.2(b) or (E) by
Holdings of the representation and warranty contained in the second
sentence of Section 3.2(d) insofar as it pertains to Holdings' or its
Subsidiaries' ownership of all of the outstanding shares of capital
stock or other equity interests of each of the Subsidiaries;
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(iii) any claim by any holder of shares of Common Stock on
the date hereof that the original offer and sale by Holdings of shares
of its Common Stock to such holder violated applicable federal or
state securities laws;
(iv) any shares of capital stock or options outstanding
immediately prior to the Closing which are not taken into account in
determining the Common Share Consideration pursuant to Section 1.1 or
otherwise settled pursuant to Section 2.2; and
(v) any liability for long-term disability income
benefits payable to Business Employees, but only to the extent
retained by Borden after the Closing pursuant to Section 7.6(a) of
this Agreement.
All such claims, losses, damages, expenses, obligations and liabilities are
collectively referred to as "Parent Indemnified Liabilities" and, together with
the Borden Indemnified Liabilities, as "Indemnified Liabilities". Parent hereby
agrees, on behalf of each Parent Indemnified Party, that, if the consideration
to be paid to any holder of Dissenting Shares is less than the Common Share
Consideration, then Parent shall pay to Borden, Inc., in cash and immediately
available funds, an amount equal to the excess of the Common Share
Consideration over the amount required to be paid to such holder of a
Dissenting Share.
8.2 Procedure. If a claim by a third party (which term shall
include a holder of Dissenting Shares) is made against an Indemnified Party,
and if such party intends to seek indemnity
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with respect thereto under this Article VIII, such Indemnified Party shall
promptly notify the indemnifying party in writing of such claims setting forth
such claims in reasonable detail. The indemnifying party shall have 10 days
after receipt of such notice to undertake, conduct and control, through counsel
of its own choosing and at its own expense, the settlement or defense thereof,
and the Indemnified Party shall cooperate with it in connection therewith;
provided that the Indemnified Party may participate in such settlement or
defense through counsel chosen by such Indemnified Party if the fees and
expenses of such counsel shall be borne by such Indemnified Party. So long as
the indemnifying party is reasonably contesting any such claim in good faith,
the Indemnified Party shall not pay or settle any such claim. Notwithstanding
the foregoing, the Indemnified Party shall have the right to pay or settle any
such claim; provided that in such event it shall waive any right to indemnity
therefor by the indemnifying party. If the indemnifying party does not notify
the Indemnified Party within 10 days after the receipt of the Indemnified
Party's notice of a claim of indemnity hereunder that it elects to undertake
the defense thereof, the Indemnified Party shall have the right to contest,
settle or compromise the claim but shall not thereby waive any right to
indemnity therefor pursuant to this Agreement. The indemnifying party shall
not, except with the consent of the Indemnified Party, enter into any
settlement that does not include as an unconditional term thereof the giving by
the person or persons asserting such claim to all Indemnified Parties an
unconditional release from all liability
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with respect to such claim or consent to entry of any judgment. Notwithstanding
the foregoing, following the Closing, each party hereto will afford to the
other parties hereto, and cause its counsel and its accountants, during normal
business hours, reasonable access to the books, records and other data with
respect to Holdings and its Subsidiaries, to the extent that such access may be
reasonably required by such other parties to facilitate the investigation,
litigation and final disposition of any claims which may have been or may be
made against them in connection with Holdings and its Subsidiaries.
ARTICLE IX
MISCELLANEOUS
9.1 Termination and Abandonment. (a) General. This
Agreement may be terminated and the transactions contemplated hereby may be
abandoned at any time, but not later than the Closing Date:
(i) by mutual written consent of Parent and Borden; or
(ii) by Parent or Borden if an injunction, restraining
order or decree of any nature of any Governmental Authority of
competent jurisdiction is issued that prohibits the consummation of
the Stock Purchase or the Merger and such injunction, restraining
order or decree is final and non-appealable; provided, however, that
the party seeking to terminate this Agreement pursuant to this clause
(ii) shall have used its best efforts to have such injunction, order
or decree vacated or denied; or
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(iii) by Borden at any time on or after the 110th day from
the date hereof if the conditions contained in Sections 5.1(a) and
5.1(b) hereof shall not have been satisfied with respect to all
matters under or with respect to Antitrust Laws, or the Closing
otherwise could not occur for any reason relating to Antitrust Laws;
provided that, if Parent has fulfilled its obligations under Section
4.3, such 110th day shall be extended by one additional day for each
day following the 21st day after receipt by Borden of a second request
for information and documents under the Antitrust Improvements Act and
the regulations thereunder in connection with the transactions
contemplated hereby that Borden shall not have substantially complied
with such second request; or
(iv) by Borden at any time on or after the Clause (iv)
Termination Date (as defined below) if the Closing shall not have
occurred by the Clause (iv) Termination Date; or
(v) by Borden if Borden shall not have received the
payment referred to in Section 4.3(f) on the date such payment becomes
due and payable under such Section 4.3(f); or
(vi) by Parent at any time after the 30th day following
receipt by Borden, Inc. of written notice from Parent (the "Parent
Termination Notice") that any of the conditions contained in Sections
5.2(a), 5.2(b) and 5.2(c) has not been satisfied unless on or prior to
such 30th day Borden, Inc. shall have caused each such condition to be
satisfied;
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provided that Parent shall not be permitted to deliver the Parent
Termination Notice or to terminate this Agreement pursuant to this
clause (vi) unless each of the conditions contained in Sections 5.1,
5.3(a), 5.3(b) and 5.3(d) shall have been satisfied or waived by
Borden and Parent otherwise is ready, willing and able to perform the
obligations to be performed by it at the Closing and to consummate the
transactions contemplated hereby.
For purposes of this Agreement, the "Clause (iv) Termination
Date" means the earlier of (i) the 28th day after the satisfaction of the
condition contained in Section 5.1(b)(ii) and (ii) the 138th day after the date
of this Agreement; provided that, if Parent has fulfilled its obligations under
Section 4.3, then the Clause (iv) Termination Date shall be extended by one
additional day for each day following the 21st day after receipt by Borden of a
second request for information and documents under the Antitrust Improvements
Act and the regulations thereunder in connection with the transactions
contemplated hereby that Borden shall not have substantially complied with such
second request.
(b) Procedure Upon Termination. (i) In the event of the
termination and abandonment of this Agreement, written notice thereof shall
promptly be given to the other parties hereto and this Agreement shall
terminate and the transactions contemplated hereby shall be abandoned without
further action by any of the parties hereto; provided, however, that nothing
herein shall relieve any party from liability for any breach hereof, except as
otherwise provided in Sections 9.1(b)(ii) and 9.1(b)(iii).
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(ii) If Borden shall terminate this Agreement at any time
when both of the Applicable Antitrust Conditions (as defined in the immediately
succeeding sentence) shall have been satisfied, then none of Parent, Borden or
Holdings shall have any further liability hereunder for breach of this
Agreement (other than for the payment by Parent to Borden of non-refundable
amounts due under this Agreement) and all non-refundable amounts paid by Parent
to Borden hereunder shall be retained by Borden (notwithstanding the provisions
of Section 9.11(b)). For purposes of this Agreement, "Applicable Antitrust
Conditions" means (A) Parent shall have complied in all respects with Section
4.3 hereof and (B) either (1) the condition set forth in Section 5.1(a) shall
not have been satisfied with respect to all matters under or with respect to
Antitrust Laws or (2) the condition set forth in Section 5.1(b) shall not have
been satisfied with respect to all matters under or with respect to Antitrust
Laws.
(iii) If Borden shall terminate this Agreement at any time
when all of the Applicable Funding Conditions (as defined in the immediately
succeeding sentence) shall have been satisfied, then none of Parent, Borden or
Holdings shall have any further liability hereunder for breach of this
Agreement (other than for the payment by Parent to Borden of non-refundable
amounts due under this Agreement) and all non-refundable amounts paid by Parent
to Borden hereunder shall be retained by Borden (notwithstanding the provisions
of Section 9.11(b)). For purposes of this Agreement, "Applicable Funding
Conditions" means (A) Parent shall have complied in all respects with Sections
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4.3(f) and 4.13 hereof, (B) all conditions contained in Section 5.1 hereof
shall have been satisfied, (C) the conditions contained in Sections 5.3(a) and
5.3(b) shall have been satisfied and (D) Parent shall be ready, willing and
able to consummate the Closing, including by satisfying all other conditions to
be satisfied by Parent at or prior to the Closing, except only that Parent is
unable to make the required payments under Articles I and II hereof because it
does not have the required funds.
(c) Survival of Certain Provisions. The respective
obligations of the parties hereto pursuant to Sections 4.1(c), 4.4 and this
Article IX shall survive any termination of this Agreement.
9.2 Fees and Expenses. Whether or not the transactions
contemplated hereby are consummated, each of the parties hereto shall pay its
own fees and expenses incident to the negotiation, preparation and execution of
this Agreement, including attorneys', accountants' and other advisors' fees and
the fees and expenses of any broker, finder or agent retained by such party in
connection with the transactions contemplated by the Agreement; provided,
however, that Borden shall pay all fees and expenses incurred by Holdings and
its Subsidiaries in connection with the transactions contemplated by this
Agreement except to the extent such fees and expenses were incurred
specifically at the request of Parent or its affiliates or in connection with
Parent obtaining financing for the transactions contemplated by this Agreement.
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9.3 Notices. All notices, requests, demands, waivers and
other communications required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given if delivered
personally or mailed, certified or registered mail with postage prepaid, or
sent by telex, telegram or telecopy, as follows:
(a) if to Borden or, prior to the Closing, Holdings, to it
at:
Borden, Inc.
180 East Broad Street
Columbus, Ohio 43215
Attention: William F. Stoll, Jr., Esq., Senior
Vice President and General Counsel
Telecopy: 614-627-8374
with copies to:
Kohlberg Kravis Roberts & Co.
9 West 57th Street
New York, New York 10019
Attention: Scott M. Stuart
Telecopy: 212-750-0003
-and-
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: David J. Sorkin, Esq.
Telecopy: 212-455-2502
(b) if to Parent, to it at:
Mid-America Dairymen, Inc.
3253 East Chestnut Expressway
Springfield, Missouri 65802
Attention: Gerald L. Bos, Vice President and
Chief Financial Officer
Telecopy: 417-865-1093
with a copy to:
Mid-America Dairymen, Inc.
3253 East Chestnut Expressway
Springfield, Missouri 65802
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Attention: David A. Giesler, Esq., Vice
President--Legal
Telecopy: 417-865-1093
or to such other person or address as a party shall specify by notice in
writing to the other parties. All such notices, requests, demands, waivers and
communications shall be deemed to have been received on the date of personal
delivery or on the third business day after the mailing thereof or, in the case
of notice by telecopier, when receipt thereof is confirmed by telephone.
9.4 Entire Agreement. This Agreement (including the Exhibits
hereto and the documents referred to herein) constitutes the entire agreement
between the parties hereto and supersedes all prior agreements and
understandings, oral and written, between the parties hereto with respect to
the subject matter hereof.
9.5 No Third Party Beneficiaries. This Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
successors and assigns. Nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties hereto or their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
9.6 Assignability. This Agreement shall not be assigned by
any of the parties hereto without the prior written consent of the other
parties hereto. Notwithstanding the foregoing, Borden shall not unreasonably
withhold its consent to any of the following assignments by Parent (each a
"Contemplated
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Assignment"), unless (x) the Contemplated Assignment would have an adverse tax
or other consequence to Borden, Inc. or any of its affiliates, or (ii) in the
case of a Contemplated Assignment referred to in clause (b) or (c) below, the
request for consent to such Contemplated Assignment is not received by Borden
within five business days after the date hereof:
(a) an assignment by Parent of all or any part of its rights
and obligations to a direct or indirect wholly owned subsidiary of
Parent;
(b) an assignment by Parent of all or any part of its rights
and obligations under this Agreement to Southern Foods Group, L.P. or
a direct or indirect wholly owned subsidiary of Southern Foods Group,
L.P.; or
(c) an assignment by Parent of its indirect right under this
Agreement to purchase all the outstanding shares of common stock of
Borden/Meadow Gold Dairies, Inc. ("BMGD") to a newly formed entity
controlled by Mr. Allen Meyer ("Newco"), provided that, as part of
such assignment, Parent directs Newco to pay, and Newco agrees to pay
the consideration to be paid by Newco for BMGD directly to Borden in
accordance with the provisions of Section 1.1;
provided that, with respect to each Contemplated Assignment, (i) the assignee
(to the extent Borden consents to a Contemplated Assignment as set forth
herein, a "Permitted Assignee") shall enter into a written agreement with
Borden, in form and substance satisfactory to Borden, pursuant to which the
Permitted Assignee agrees to be bound by, and to comply with, all of Parent's
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obligations under this Agreement (other than those obligations which relate
solely to Parent's rights under this Agreement which have not been assigned to
such Permitted Assignee) as if such Permitted Assignee were "Parent" for
purposes of this Agreement (it being understood that, in connection with a
Contemplated Assignment to Newco, Newco shall agree, with respect to BMGD, to
be bound by, and to comply with, all of Parent's obligations relating to
Holdings). No assignment permitted by this Section 9.6, including without
limitation any Contemplated Assignment, shall relieve Parent of any of its
obligations under this Agreement, including without limitation the obligations
to pay to Borden the full amount of consideration set forth in Section 1.1
hereof and to pay the Merger Consideration.
9.7 Amendment and Modification; Waiver. Subject to applicable
law, this Agreement may be amended, modified and supplemented by a written
instrument authorized and executed on behalf of the parties hereto at any time
prior to the Closing Date with respect to any of the terms contained herein. No
waiver by any party of any of the provisions hereof shall be effective unless
explicitly set forth in writing and executed by the party so waiving. Except as
provided in the preceding sentence, no action taken pursuant to this Agreement,
including without limitation, any investigation by or on behalf of any party,
shall be deemed to constitute a waiver by the party taking such action of
compliance with any representations, warranties, covenants, or agreements
contained herein, and in any documents delivered or to be delivered pursuant to
this Agreement and in
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connection with the Closing hereunder. The waiver by any party hereto of a
breach of any provision of this Agreement shall not operate or be construed as
a waiver of any other or subsequent breach.
9.8 Public Announcements. Unless otherwise required by law,
prior to the Closing Date, no news release or other public announcement
pertaining to the transactions contemplated by this Agreement will be made by
or on behalf of any party without the prior approval of the other party. Prior
to issuing a press release or other public announcement with respect to the
execution and delivery of this Agreement, Parent and Borden, Inc. shall agree
on the form of such press release or other public announcement.
9.9 Section Headings. The section headings contained in
this Agreement are inserted for reference purposes only and shall not affect
the meaning or interpretation of this Agreement.
9.10 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, and
all of which together shall be deemed to be one and the same instrument.
9.11 Enforcement. (a) The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this
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Agreement in any court of the United States located in the State of Delaware,
this being in addition to any other remedy to which they are entitled at law or
in equity. In addition, each of the parties hereto (i) consents to submit
itself to the personal jurisdiction of the United States District Court for the
District of Delaware or any court of the State of Delaware located in such
district in the event any dispute arises out of this Agreement or any of the
transactions contemplated by this Agreement, (ii) agrees that it will not
attempt to deny or defeat such personal jurisdiction or venue by motion or
other request for leave from any such court and (iii) agrees that it will not
bring any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any court other than such courts sitting in
the State of Delaware.
(b) Notwithstanding any statement herein that an amount paid
by Parent to Borden is non-refundable, Parent shall be entitled, in the event
that this Agreement shall be terminated without the Closing having occurred, to
a refund of such amounts actually paid by Parent to Borden if and to the extent
that a court of competent jurisdiction determines in a final and non-appealable
judgment that Borden, Holdings or any of its Subsidiaries has breached this
Agreement and that the aggregate amount of such payments by Parent constitutes
all or a portion of Parent's damages for such breach; provided that Parent
shall not be entitled to any such refund if the provisions of Section
9.1(b)(ii) or 9.1(b)(iii) shall have been applicable to such termination of
this Agreement.
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9.12 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware without giving
effect to the principles of conflicts of law thereof.
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the date first above written.
MID-AMERICA DAIRYMEN, INC.
By:
--------------------------------
Name:
Title:
BORDEN/MEADOW GOLD DAIRIES
HOLDINGS, INC.
By:
--------------------------------
Name:
Title:
BDH TWO, INC.
By:
--------------------------------
Name:
Title:
BORDEN, INC.
By:
--------------------------------
Name:
Title:
115
<PAGE> 1
Exhibit (10)(ii)
EXECUTION COPY
CREDIT AGREEMENT
Dated as of December 15, 1994
AMENDED AND RESTATED
as of July 14, 1997
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
THE CHASE MANHATTAN BANK
CITIBANK, N.A.
CREDIT SUISSE FIRST BOSTON
as Lead Managing Agents
and
BT SECURITIES CORPORATION
CHASE SECURITIES INC.
CITICORP SECURITIES, INC.
CREDIT SUISSE FIRST BOSTON
as Arrangers
<PAGE> 2
T A B L E O F C O N T E N T S
SECTION PAGE
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
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........................................ 29
2.04. Repayment........................................................... 33
2.05. Reduction of the Commitments........................................ 33
2.06. Application of Certain Proceeds..................................... 33
2.07. Prepayments......................................................... 36
2.08. Interest............................................................ 37
2.09. Fees................................................................ 37
2.10. Conversion of Advances.............................................. 38
2.11. Increased Costs, Etc................................................ 38
2.12. Payments and Computations........................................... 40
2.13. Taxes............................................................... 42
2.14. Sharing of Payments, Etc............................................ 44
2.15. Letters of Credit................................................... 45
2.16. Use of Proceeds..................................................... 48
2.17. Defaulting Lenders.................................................. 48
2.18. Option to Replace Lenders........................................... 51
2.19. Increase in the Aggregate Commitments............................... 51
ARTICLE III
CONDITIONS PRECEDENT
3.01. Conditions Precedent to Certain Borrowings and Issuances............ 53
3.02. Conditions Precedent to Each Competitive Bid Borrowing.............. 53
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
<PAGE> 3
ii
SECTION PAGE
4.01. Representations and Warranties of the Obligated Parties............. 54
ARTICLE V
COVENANTS OF THE BORROWER
5.01. Affirmative Covenants............................................... 58
5.02. Negative Covenants.................................................. 60
5.03. Reporting Requirements.............................................. 65
5.04. Financial Covenants................................................. 69
ARTICLE VI
EVENTS OF DEFAULT
6.01. Events of Default................................................... 71
6.02. Actions in Respect of the Letters of Credit upon Default............ 73
ARTICLE VII
GUARANTY
7.01. Unconditional Guaranty; Limitation of Liability..................... 74
7.02. Guaranty Absolute................................................... 74
7.03. Waivers............................................................. 76
7.04. Subrogation......................................................... 76
7.05. Release and Termination............................................. 77
ARTICLE VIII
THE AGENTS
8.01. Authorization and Action............................................ 78
8.02. Reliance, Etc....................................................... 78
8.03. Lead Managing Agents and Affiliates................................. 79
8.04. Lender Credit Decision.............................................. 79
8.05. Indemnification..................................................... 79
8.06. Successor Administrative Agent...................................... 80
ARTICLE IX
MISCELLANEOUS
9.01. Amendments, Etc..................................................... 81
9.02. Notices, Etc........................................................ 81
<PAGE> 4
iii
9.03. No Waiver; Remedies................................................. 82
9.04. Costs and Expenses.................................................. 82
9.05. Right of Set-Off.................................................... 84
9.06. Binding Effect...................................................... 85
9.07. Assignments and Participations...................................... 85
9.08. Governing Law....................................................... 88
9.09. Execution in Counterparts........................................... 88
9.10. Confidentiality..................................................... 88
9.11. No Liability of the Issuing Banks................................... 88
9.12. Redesign............................................................ 89
9.13. Waiver of Jury Trial................................................ 89
<PAGE> 5
CREDIT AGREEMENT
DATED AS OF DECEMBER 15, 1994
AMENDED AND RESTATED
AS OF JULY 14, 1997
CREDIT AGREEMENT dated as of December 15, 1994, Amended and
Restated as of July 14, 1997 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) and
the Swing Line Bank (as hereinafter defined), BT Securities Corporation ("BT
Securities"), Chase Securities Inc. ("Chase Securities"), Citicorp Securities,
Inc. and Credit Suisse First Boston ("Credit Suisse First Boston"), as arrangers
(the "Arrangers"), BT Securities and Chase Securities, as co-syndication agents,
and Credit Suisse First Boston, 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):
"Acquired Entity" means any Person, business unit or assets of
any Person invested in or acquired by any Affiliate Guarantor, the
Borrower or any of their respective Subsidiaries.
"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
<PAGE> 6
2
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 Swing Line
Advance, a Competitive Bid Advance or a Letter of Credit Advance.
"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 Assumption Agreement" means an agreement
substantially in the form of Exhibit E hereto.
"Affiliate Guarantors" means each of Foods Holdings, Wise
Holdings and, after any transfer of the Dairy Business to an Affiliate
that executes an Affiliate 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> 7
3
"Applicable Margin" means, as of any date, a percentage per
annum determined by reference to the Performance Level in effect on
such date as set forth below:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
Applicable Margin for
Applicable Margin for Eurodollar Rate
Performance Level Base Rate Advances Advances
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Level 1 0% .25%
- ----------------------------------------------------------------------------------------
Level 2 0% .375%
- ----------------------------------------------------------------------------------------
Level 3 0% .50%
- ----------------------------------------------------------------------------------------
Level 4 0% .60%
- ----------------------------------------------------------------------------------------
Level 5 0% .875%
- ----------------------------------------------------------------------------------------
Level 6 .125% 1.125%
- ----------------------------------------------------------------------------------------
</TABLE>
"Applicable Percentage" means, as of any date, a percentage
per annum determined by reference to the Performance Level in effect on
such date as set forth below:
<TABLE>
- --------------------------------------------------------------------------------
Applicable
Performance Level Percentage
- --------------------------------------------------------------------------------
<S> <C>
Level 1 .10%
- --------------------------------------------------------------------------------
Level 2 .15%
- --------------------------------------------------------------------------------
Level 3 .20%
- --------------------------------------------------------------------------------
Level 4 .20%
- --------------------------------------------------------------------------------
Level 5 .375%
- --------------------------------------------------------------------------------
Level 6 .50%
- --------------------------------------------------------------------------------
</TABLE>
"Appropriate Lender" means, at any time, with respect to (a)
any of the Letter of Credit Facility Sublimit or Working Capital
Facility, a Lender that has a Commitment with respect to such Facility
at such time and (b) the Swing Line Facility, (i) the Swing Line Bank
and (ii) if any other Working Capital Lenders have made Swing Line
Advances pursuant to Section 2.02(b) that are outstanding at such time,
each such other Working Capital Lender.
<PAGE> 8
4
"Arrangers" has the meaning specified in the recital of
parties to this Agreement.
"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 (including such amounts paid or payable by direct or indirect
partners, members or other holders of direct or indirect equity or
other ownership interests in the assets or options subject to such
sale), (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.
"Assuming Lender" has the meaning specified in Section
2.19(d).
"Assumption Agreement" has the meaning specified in Section
2.19(d)(ii).
"Attributable Share" means (a) with respect to any Person of
which an Obligated Party directly or indirectly owns or
controls up to 50% of the equity interests, 0%, (b) with
respect to any Person of which an Obligated Party directly or
indirectly owns or control more than 50% but less than 90% of
the equity interests, such percentage equity interest directly
or indirectly owned or controlled and (c) with respect to any
Person of which an Obligated Party directly or
<PAGE> 9
5
indirectly owns or controls 90% or more of the equity
interests, 100%.
"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 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
<PAGE> 10
6
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, a Working
Capital Borrowing or a Swing Line 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.
"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
<PAGE> 11
7
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
<PAGE> 12
8
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) 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.
"Chase" means The Chase Manhattan 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.
"Commitment" means a Working Capital Commitment or a Letter of
Credit Commitment.
"Commitment Date" has the meaning specified in Section
2.19(b).
"Commitment Increase" has the meaning specified in Section
2.19(a).
"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,
<PAGE> 13
9
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.
"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 First Boston" has the meaning specified in the
recital of parties to this Agreement.
"Dairy Business" means the Dairy business of the Borrower as
reflected in the total adjusted balance sheet and statements of income
and cash flows of Meadow Gold Dairies West as of December 31, 1996,
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
<PAGE> 14
10
("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(e) 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(e). 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
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) the Swing Line Bank pursuant to Section
2.02(b) to purchase a portion of the Swing Line Advances made by the
Swing Line Bank, (b) any Issuing Bank pursuant to Section 2.15(b) to
purchase a portion of a Letter of Credit Advance made by such Issuing
Bank, (c) the Administrative Agent pursuant to Section 2.02(e) to
reimburse the Administrative Agent for the amount of any Advance made
by the Administrative Agent for the account of such Lender, (d) any
other Lender pursuant to Section 2.14 to purchase any participation in
Advances owing to such other Lender and (e) 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
<PAGE> 15
11
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 Assumption Agreement
or the Assignment and Acceptance, as the case may be, 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, (j)
dividends accrued on securities other than common stock, in each case
determined in accordance with GAAP for such period and (k) any
deduction from such net income for minority interests held by
management for such period.
"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
<PAGE> 16
12
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.
<PAGE> 17
13
"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 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 Assumption Agreement
or the Assignment and Acceptance, as the case may be, 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
<PAGE> 18
14
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).
"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 and other
assets (including, without limitation, worn out or obsolete equipment)
in the ordinary course of business, (ii) sales of accounts receivable
pursuant to Section 5.02(d) and (iii) 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, Amended and Restated as of May 7, 1996 among
the Borrower, Foods Holdings, Wise Holdings, 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,
<PAGE> 19
15
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 Working Capital Facility, the Letter of
Credit Facility Sublimit or the Swing Line Facility.
"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 fair market value of such
asset or Option as determined by the Board of Directors of the Borrower
and (b) with respect to any other asset sold for consideration of
$10,000,000 or more 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 market value of Options 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,
subject to Section 9.12, 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).
<PAGE> 20
16
"Foods Business" means the business of Foods Holdings and its
Subsidiaries.
"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.
"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.
"Increase Date" has the meaning specified in Section 2.19(a).
"Increasing Lender" has the meaning specified in Section
2.19(b).
"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
<PAGE> 21
17
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 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 the Termination Date;
<PAGE> 22
18
(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 First Boston, 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.
"L/C Related Documents" has the meaning specified in Section
2.15(d).
"Lead Managing Agents" means BT, Chase, Citibank and Credit
Suisse First Boston.
<PAGE> 23
19
"Lenders" means the Banks listed on the signature pages
hereof, each Assuming Lender that shall become a party hereto pursuant
to Section 2.19 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.
"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
<PAGE> 24
20
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 Investors Service, 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 and
amortization of financing fees and debt discount) and (b) dividends
required to be paid on Preferred Stock permitted by Section
5.02(f)(ii).
"Note" means the Competitive Bid Note or a Working Capital
Note.
<PAGE> 25
21
"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).
"Notice of Swing Line Borrowing" has the meaning specified in
Section 2.02(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.
"Performance Level" means, as of any date of determination,
the numerically lowest level set forth below as then in effect, as
determined in accordance with the following provision of this
definition:
Level 1 Total Debt/EBITDA Ratio is less than 2.00:1.00;
Level 2 Total Debt/EBITDA Ratio is 2.00:1.00 or greater but
less than 2.50:1.00;
<PAGE> 26
22
Level 3 Total Debt/EBITDA Ratio is 2.50:1.00 or greater but
less than 3.00:1.00;
Level 4 Total Debt/EBITDA Ratio is 3.00:1.00 or greater but
less than 3.50:1.00;
Level 5 Total Debt/EBITDA Ratio is 3:50:1.00 or greater but
less than 4:00:1.00;
Level 6 Total Debt/EBITDA Ratio is 4:00:1.00 or greater;
provided, for purposes of this definition, the Performance Level shall
be determined as at the end of each of the first three fiscal quarters
of the Borrower and as of the end of the fiscal year of the Borrower,
based on the relevant financial statements delivered pursuant to
Section 5.03; changes in the Performance Level shall become effective
on the date such financial statements are delivered to the Lenders and
shall remain in effect until the next change to be effected pursuant to
this definition.
"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 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
<PAGE> 27
23
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 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 (m) 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> 28
24
"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.
"Pro Forma EBITDA" means, for any period, (a) the sum of (i)
EBITDA, (ii) from and after the making of any investment or acquisition
in or of an Acquired Entity during such period, the Obligated Parties'
Attributable Share of the EBITDA of each Acquired Entity so invested in
or acquired for such period (including the portion thereof accruing
prior to the date of such acquisition or investment and determined as
of the last day of such period) and (iii) an amount equal to 50% of the
increase or decrease in EBITDA of such Acquired Entity that the
Borrower in good faith projects will occur as a result of reasonably
identifiable and supportable net cost savings or additional net costs
that are projected to be realizable during such period by combining the
operations of such Acquired Entity with the operations of the Borrower,
an Affiliate Guarantor or any of their respective Subsidiaries;
provided that, so long as such net cost savings or additional net costs
are projected to be realizable at any time during such period it shall
be assumed, for purposes of projecting such pro forma increase or
decrease in EBITDA of such Acquired Entity, that such net cost savings
or additional net costs will be realizable during the entire such
period; provided further that any such pro forma increase or decrease
in EBITDA of such Acquired Entity shall be without duplication of any
net cost savings or additional net costs actually realized during such
period and already included in clause (ii) above; minus (b) from and
after the disposition outside of the ordinary course of business of any
assets constituting a business unit or any Subsidiary, (i) the
proportion of the EBITDA of such assets or Subsidiary so disposed of
for cash consideration and (ii) with respect to any such period of
determination ended on or after the last day of the next full fiscal
quarter following the date of such disposition, the proportion of the
EBITDA of such assets or Subsidiary so disposed of for consideration
other than cash. For purposes of the foregoing, clauses (a)(ii) and (b)
above shall not apply to any investment, acquisition or disposition
made prior to December 31, 1996.
<PAGE> 29
25
"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 Financing Transaction" means any financing
secured by or based on the sale or transfer of, accounts receivable of
any Affiliate Guarantor, the Borrower or any of their respective
Subsidiaries on terms and conditions reasonably satisfactory to the
Required Lenders; provided that the aggregate program amount of
Receivable Financing Transactions shall not exceed $350,000,000.
"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, Chase, Citibank and Credit Suisse
First Boston.
"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.
"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.
<PAGE> 30
26
"Required Lenders" means at any time Lenders having at least
51% of the Working Capital Commitments or, if the Working Capital
Commitments have been terminated, Lenders owed or holding at least 51%
of the aggregate principal amount of Advances outstanding at such time.
"Restatement Date" means July 14, 1997.
"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, 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 and the 364-Day
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.
"Swing Line Advance" means an advance made by (a) the Swing
Line Bank pursuant to Section 2.01(b) or (b) any Working Capital Lender
pursuant to Section 2.02(b).
"Swing Line Bank" means Citibank.
"Swing Line Borrowing" means a borrowing consisting of a Swing
Line Advance made by the Swing Line Bank.
"Swing Line Facility" has the meaning specified in Section
2.01(b).
<PAGE> 31
27
"364-Day Credit Agreement" means the 364-Day Credit Agreement
dated as of July 14, 1997 among the Borrower, Foods Holdings, Wise
Holdings, the banks named therein, Citibank, as administrative agent,
BT Securities, Chase Securities, Citicorp Securities and Credit Suisse
First Boston, as arrangers, BT Securities and Chase Securities, as
co-syndication agents, and Credit Suisse First Boston, as documentation
agent, as amended, supplemented or otherwise modified from time to
time.
"Taxes" has the meaning specified in Section 2.13(a).
"Termination Date" means the earlier of July 13, 2002 and the
date of termination in whole of the Working Capital Commitments
pursuant to Section 2.05 or 6.01.
"Total Debt" means, on any date of determination, (a) Debt of
the Affiliate Guarantors, the Borrower and their respective
Subsidiaries described in clauses (a) through (e) of the definition of
"Debt" herein minus (b) cash of the Affiliate Guarantors, the Borrower
and their respective Subsidiaries at such date in excess of
$75,000,000.
"Total Debt/EBITDA Ratio" means the ratio determined as of the
last day of each fiscal quarter for the twelve month period ended on
such day of (a) Combined Total Debt of the Affiliate Guarantors, the
Borrower and their Subsidiaries on such day to (b) to Combined Pro
Forma EBITDA of the Affiliate Guarantors, the Borrower and their
Subsidiaries for such period; provided, that for purposes of this
definition, Total Debt of any Subsidiary of any Obligated Party shall
be determined as such Obligated Party's Attributable Share of the Total
Debt of such Subsidiary.
"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.
<PAGE> 32
28
"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, Swing Line 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 principal outstanding amount of Competitive Bid Advances
and (D) the aggregate principal amount of all Swing Line Advances made
by the Swing Line Bank pursuant to Section 2.01(b) and outstanding at
such time.
"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).
"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.
"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 become a Lender hereunder pursuant
to an Assumption Agreement, the amount set forth as the Commitment of
such Lender in such Assumption Agreement or, if such Lender has entered
into one or more Assignment and Acceptances, the amount set forth for
such Lender in the Register maintained by the Administrative Agent
pursuant to Section 9.07(c) as
<PAGE> 33
29
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 Capital Lender's Unused Working
Capital Commitment in effect from time to
<PAGE> 34
30
time, the Borrower may borrow under this Section 2.01(a), prepay pursuant to
Section 2.07 and reborrow under this Section 2.01(a).
(b) The Swing Line Advances. The Borrower may request the
Swing Line Bank to make, and the Swing Line Bank may, if in its sole discretion
it elects to do so, make, on the terms and conditions hereinafter set forth,
Swing Line Advances to the Borrower from time to time on any Business Day during
the period from the date hereof until the Termination Date (i) in an aggregate
amount not to exceed at any time outstanding $20,000,000 (the "Swing Line
Facility") and (ii) in an amount for each such Swing Line Borrowing not to
exceed the aggregate of the Unused Working Capital Commitments of the Working
Capital Lenders at such time. No Swing Line Advance shall be used for the
purpose of funding the payment of principal of any other Swing Line Advance.
Each Swing Line Borrowing shall be in an amount of $1,000,000 or an integral
multiple of $1,000,000 in excess thereof and shall be made as a Base Rate
Advance. Within the limits of the Swing Line Facility and within the limits
referred to in clause (ii) above, so long as the Swing Line Bank, in its sole
discretion, elects to make Swing Line Advances, the Borrower may borrow under
this Section 2.01(b), repay pursuant to Section 2.04(c) or prepay pursuant to
Section 2.07 and reborrow under this Section 2.01(b).
SECTION 2.02. Making the Advances. (a) Except as otherwise
provided in Section 2.02(b) and Section 2.15, 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,
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31
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 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 Swing Line
Advances and Letter of Credit Advances made by the Swing Line Bank or any
Issuing Bank, as the case may be, 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 the Swing Line Bank or such Issuing
Bank, as the case may be, and such other Working Capital Lenders for repayment
of such Swing Line Advances and Letter of Credit Advances.
(b) Each Swing Line Borrowing shall be made on notice, given
not later than 11:00 A.M. (New York City time) on the date of the proposed Swing
Line Borrowing, by the Borrower to the Swing Line Bank and the Administrative
Agent. Each such notice of a Swing Line Borrowing (a "Notice of Swing Line
Borrowing") shall be by telephone, confirmed immediately in writing, or telex or
telecopier, specifying therein the requested (i) date of such Borrowing, (ii)
amount of such Borrowing and (iii) maturity of such Borrowing. If, in its sole
discretion, it elects to make the requested Swing Line Advance, the Swing Line
Bank will make the amount thereof available to the Administrative Agent at the
Administrative Agent's Account, in same day funds. After the Administrative
Agent's receipt of 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 by crediting the Borrower's Account. Upon written
demand by the Swing Line Bank, with a copy of such demand to the Administrative
Agent, each other Working Capital Lender shall purchase from the Swing Line
Bank, and the Swing Line Bank shall sell and assign to each such other Working
Capital Lender, such other Lender's Pro Rata Share of such outstanding Swing
Line Advance as of the date of such demand, by making available for the account
of its Applicable Lending Office to the Administrative Agent for the account of
the Swing Line 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 Swing Line Advance to be purchased by such Lender.
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32
The Borrower hereby agrees to each such sale and assignment. Each Working
Capital Lender agrees to purchase its Pro Rata Share of an outstanding Swing
Line Advance on (i) the Business Day on which demand therefor is made by the
Swing Line Bank, provided that 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 the Swing Line Bank to any other Working
Capital Lender of a portion of a Swing Line Advance, the Swing Line Bank
represents and warrants to such other Lender that the Swing Line Bank is the
legal and beneficial owner of such interest being assigned by it, but makes no
other representation or warranty and assumes no responsibility with respect to
such Swing Line Advance, the Loan Documents or any Obligated Party. If and to
the extent that any Working Capital Lender shall not have so made the amount of
such Swing Line 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 the Swing Line 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 the Swing Line Bank on any Business Day,
such amount so paid in respect of principal shall constitute a Swing Line
Advance made by such Lender on such Business Day for purposes of this Agreement,
and the outstanding principal amount of the Swing Line Advance made by the Swing
Line Bank shall be reduced by such amount on such Business Day.
(c) 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 and (ii) the Working Capital Advances made on any date as
Eurodollar Rate Advances may not be outstanding as part of more than 20 separate
Working Capital Borrowings.
(d) Each Notice of Borrowing and Notice of Swing Line
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
<PAGE> 37
33
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 Borrower, the interest rate applicable at such time under
Section 2.08 to Advances comprising such 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
<PAGE> 38
34
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.
(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
<PAGE> 39
35
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
<PAGE> 40
36
(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 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
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37
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 "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
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38
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.
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) 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.
(c) Swing Line Advances. The Borrower shall repay to the
Administrative Agent for the account of the Swing Line Bank and each other
Working Capital Lender that has made a Swing Line Advance the outstanding
principal amount of each Swing Line Advance made by each of them on the earlier
of the maturity date specified in the applicable Notice of Swing Line Borrowing
and the Termination Date.
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39
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. (i) The Working Capital Commitments shall be
terminated in full on the Termination Date.
(ii) The Working Capital Commitments shall be reduced by an
amount equal to the aggregate program amount of any Receivables Financing
Transaction.
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 Dairy Business to an Affiliate and its Subsidiaries at
the time, if any, such Affiliate becomes an Affiliate Guarantor;
(ii) Asset Proceeds from, without duplication, (A) the sale of
the Borrower's Dairy Business, (B) the sale of Foods Businesses other
than the pasta, soups and related businesses, (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 fair market value (as determined by the board of
directors of 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.
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40
(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 $1,000,000,000 of assets
not otherwise described in this clause (iii) and not including
consideration described in clauses (b), (c) and (d) below;
(iii) Asset Proceeds in the form of notes, property and other
consideration other than cash received other than pursuant to
transactions described in clause (ii) above 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;
(iv) 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);
(v) 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
(vi) Asset Proceeds from sales of stock of, or equity interest
in, any Affiliate Guarantor or any Subsidiary of any Obligated Party to
any Obligated Party, any Subsidiary thereof or any employee of any
Obligated Party or its Subsidiaries by the exercise of stock options or
otherwise, provided that the aggregate amount of such sales made to
such employees (other than in respect of the exercise of stock options
issued to employees before the Restatement Date) with respect to any
Affiliate Guarantor or Subsidiary of any Obligated Party shall not
exceed the greater of $10,000,000 and 15% of the equity interests of
such Affiliate Guarantor or Subsidiary of an Obligated Party.
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41
(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.
(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.
(f) For purposes of this Section 2.06, the Borrower and the
Affiliate Guarantors shall be deemed to have received
<PAGE> 46
42
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 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 and Swing Line Advances equal to the amount by which
the (x) sum of (A) aggregate principal amount of the Working Capital Advances,
Letter of Credit Advances, Swing Line Advances and Competitive Bid Advances then
outstanding and (B) the Available Amount of all Letters of Credit then
outstanding exceeds (y) the Working Capital Facility.
<PAGE> 47
43
(ii) Prepayments of the Working Capital Facility made pursuant
to clause (i) above shall be first applied to prepay Letter of Credit Advances
then outstanding until such Advances are paid in full, second applied to prepay
Swing Line Advances then outstanding until such Advances are paid in full and
third applied to prepay Working Capital Advances then outstanding comprising
part of the same Borrowings until such Advances are paid in full.
(iii) 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:
(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
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44
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 (C) and (D) 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 October 3, 1997, 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.
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 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(c) and no Conversion of any Advances shall result in more separate
Borrowings than permitted under Section 2.02(c). 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.
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45
(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.
(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
<PAGE> 50
46
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.
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47
(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 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
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48
for the account of its Applicable Lending Office, in each case to be applied in
accordance with the terms of this Agreement. Upon any Assuming Lender's becoming
a Lender hereunder as a result of a Commitment Increase pursuant to Section
2.19, and upon the Administrative Agent's receipt of such Lender's Assumption
Agreement and recording of the information contained therein in the Register,
from and after the applicable Increase Date, the Administrative Agent shall make
all payments hereunder and under the Notes issued in connection therewith in
respect of the interest assumed thereby to the Assuming Lender. 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 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
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49
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 "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
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50
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
Assumption Agreement or the Assignment and Acceptance pursuant to which it
became a Lender in
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51
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 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 Assumption Agreement or the Assignment and
Acceptance,as the case may be, 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
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52
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 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
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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 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
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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 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 (B) to the Administrative Agent 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 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
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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 Obligated 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:
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(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");
(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
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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 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 acquisitions and general corporate purposes of the Borrower and
its Subsidiaries and for making advances to the Affiliate Guarantors and their
Subsidiaries for acquisitions and 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
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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 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
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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 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
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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
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of the Borrower, be assigned to such Replacement Lenders in accordance with
Section 9.07, in such amounts as the Borrower may designate.
SECTION 2.19. Increase in the Aggregate Commitments. (a) The
Borrower may, at any time but in any event not more than once in any year prior
to the Termination Date, by notice to the Administrative Agent, request that the
aggregate amount of the Commitments be increased by an amount of $50,000,000 or
an integral multiple of $5,000,000 in excess thereof (each a "Commitment
Increase") to be effective as of a date that is at least 90 days prior to the
scheduled Termination Date then in effect (the "Increase Date") as specified in
the related notice to the Administrative Agent; provided, however, that (i) in
no event shall the aggregate amount of the Commitments at any time exceed
$1,200,000,000, (ii) no Default shall have occurred and be continuing as of the
date of such request or as of the applicable Increase Date, or shall occur as a
result thereof and (iii) the aggregate amount of the Commitments and of the
"Commitments" under the 364-Day Credit Agreement shall not exceed
$1,200,000,000.
(b) The Administrative Agent shall promptly notify the Lenders
of a request by the Borrower for a Commitment Increase, which notice shall
include (i) the proposed amount of such requested Commitment Increase, (ii) the
proposed Increase Date and (iii) the date by which Lenders wishing to
participate in the Commitment Increase must commit to an increase in the amount
of their respective Commitments (the "Commitment Date"). Each Lender that is
willing to participate in such requested Commitment Increase (each an
"Increasing Lender") shall give written notice to the Administrative Agent on or
prior to the Commitment Date of the amount by which it is willing to increase
its Commitment. If the Lenders notify the Administrative Agent that they are
willing to increase the amount of their respective Commitments by an aggregate
amount that exceeds the amount of the requested Commitment Increase, the
requested Commitment Increase shall be allocated among the Lenders willing to
participate therein in such amounts as are agreed between the Borrower and the
Administrative Agent.
(c) Promptly following each Commitment Date, the
Administrative Agent shall notify the Borrower as to the amount, if any, by
which the Lenders are willing to participate in the requested Commitment
Increase. If the aggregate amount by which the Lenders are willing to
participate in any requested Commitment Increase on any such Commitment Date is
less than the
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requested Commitment Increase, then the Borrower may extend offers to one or
more Eligible Assignees to participate in any portion of the requested
Commitment Increase that has not been committed to by the Lenders as of the
applicable Commitment Date; provided, however, that the Commitment of each such
Eligible Assignee shall be in an amount of $10,000,000 or an integral multiple
of $1,000,000 in excess thereof.
(d) On each Increase Date, each Eligible Assignee that accepts
an offer to participate in a requested Commitment Increase in accordance with
Section 2.19(c) (an "Assuming Lender") shall become a Lender party to this
Agreement as of such Increase Date and the Commitment of each Increasing Lender
for such requested Commitment Increase shall be so increased by such amount (or
by the amount allocated to such Lender pursuant to the last sentence of Section
2.19(b)) as of such Increase Date; provided, however, that the Administrative
Agent shall have received on or before such Increase Date the following, each
dated such date:
(i) an assumption agreement from each Assuming Lender, if any,
in form and substance satisfactory to the Borrower and the
Administrative Agent (each an "Assumption Agreement"), duly executed by
such Eligible Assignee, the Administrative Agent and the Borrower; and
(ii) confirmation from each Increasing Lender of the increase
in the amount of its Commitment in a writing satisfactory to the
Borrower and the Administrative Agent.
On each Increase Date, upon fulfillment of the conditions set forth in the
immediately preceding sentence of this Section 2.19(d), the Administrative Agent
shall notify the Lenders (including, without limitation, each Assuming Lender)
and the Borrower, on or before 1:00 P.M. (New York City time), by telecopier or
telex, of the occurrence of the Commitment Increase to be effected on such
Increase Date and shall record in the Register the relevant information with
respect to each Increasing Lender and each Assuming Lender on such date.
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 Swing Line Advance made
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by a Working Capital Lender pursuant to Section 2.02(b) and 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, and the right of the Borrower to request a Swing Line Borrowing, 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, Notice of Issuance or Notice of Swing Line
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
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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.
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
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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 and each other Loan 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 $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 or any other Loan 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.
(e) This Agreement has been, and each of the Notes and each
other Loan 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 and each
other Loan Document to which the Borrower or any Affiliate Guarantor is
a party when delivered hereunder will be, the legal, valid and binding
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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, 1996, 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 Deloitte &
Touche LLP, independent public accountants, and the Consolidated
balance sheet of the Borrower and its Subsidiaries as at March 31,
1997, 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, 1997, 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 December 31,
1996, there has been no Material Adverse Change.
(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
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as disclosed in the Borrower's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996, 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 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
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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
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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 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);
<PAGE> 74
70
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 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 (other than the Borrower and its Subsidiaries) 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
<PAGE> 75
71
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 9.12.
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);
(iii) Liens, if any, arising under, financing
statements filed in connection with, and assignments of
accounts pursuant, to a Receivables Financing Transaction;
(iv) other Liens securing Indebtedness outstanding in
an aggregate principal amount for the Obligated Parties and
their respective Subsidiaries not to exceed $200,000,000 at
any time;
(v) purchase money Liens upon or in any capital
assets acquired or held by the Borrower, any Affiliate
Guarantor or any of their respective Subsidiaries in the
ordinary course of business to secure the purchase price of
such asset or to secure Debt incurred solely for the purpose
of financing the acquisition, construction or improvement of
such asset, or Liens existing on such asset at the time of its
acquisition (other than any such Liens created in
contemplation of such acquisition that were not incurred to
finance the
<PAGE> 76
72
acquisition of such asset) or extensions, renewals or
replacements of any of the foregoing for the same or a lesser
amount, provided, however, that no such Lien shall extend to
or cover any properties of any character other than the asset
being acquired, and no such extension, renewal or replacement
shall extend to or cover any properties not theretofore
subject to the Lien being extended, renewed or replaced,
provided further that the aggregate principal amount of the
indebtedness secured by the Liens referred to in this clause
(v) shall not exceed $100,000,000 at any time outstanding.
(vi) the replacement, extension or renewal of any
Lien permitted by clauses (i) through (v) 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 December 31, 2002 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
<PAGE> 77
73
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 a Receivables
Financing Transaction;
(vi) Guaranties in respect of Indebtedness otherwise
permitted hereunder;
(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 in
an aggregate principal amount for the Obligated Parties and
their respective Subsidiaries not exceeding $100,000,000 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) Indebtedness secured by Liens permitted by
Section 5.02(a)(v).
(xiii) Guaranties in respect of Indebtedness listed
on Schedule 5.02(b) hereto;
(xiv) 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;
<PAGE> 78
74
(xv) 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
(xvi) 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 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 Person, provided that,
in the case of any such merger or consolidation, the Person formed by such
merger or consolidation, or the Person to which all or a portion of such assets
were transferred, 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, (iii) the Borrower
may merge into a wholly owned Subsidiary of the Borrower that (A) is
incorporated
<PAGE> 79
75
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 and (iv) any
Subsidiary of any Obligated Party may merge into any Person pursuant to a
transaction not prohibited by Section 5.02(d); 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, provided, that the foregoing shall not apply to (i) sales of
inventory and other assets (including, without limitation, worn out and obsolete
equipment) in the ordinary course of business, (ii) dispositions of assets
conducted on an arm's length basis for a consideration of less than $10,000,000
and (iii) dispositions of assets between or among an Obligated Party and any of
its Subsidiaries; 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 $101,000,000 after June 30, 1997; 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) 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
<PAGE> 80
76
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 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; (vi) the Borrower may make non-cash dividends
after the Effective Date in an aggregate amount not to exceed $50,000,000; (vii)
the Borrower may make a non-cash dividend of its Borden Services division; and
(viii) any Affiliate Guarantor may make and pay dividends or distributions in
amounts necessary to pay taxes paid or payable in connection with any sale or
disposition of assets by such Affiliate Guarantor or its Subsidiaries.
(f) 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,
<PAGE> 81
77
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.
(g) 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.
(h) 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 or any Lender shall have any Commitment hereunder, the Borrower will,
unless the Required Lenders shall otherwise consent in writing, furnish to the
Lenders:
(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.
<PAGE> 82
78
(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
<PAGE> 83
79
therein 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 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
<PAGE> 84
80
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 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
<PAGE> 85
81
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) Environmental Matters. Promptly after obtaining knowledge
of any of the following environmental matters, unless such
environmental matters would not, 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,
<PAGE> 86
82
condition, occurrence or removal or remedial action and such Affiliate
Guarantor's or the Borrower's response thereto.
(i) 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 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>
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
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
and thereafter
</TABLE>
(b) Total Debt/EBITDA Ratio. Maintain a Total Debt/EBITDA
Ratio of not more than the amount set forth below for each period of
four consecutive fiscal quarters ended at the dates set forth below:
<PAGE> 87
83
<TABLE>
<CAPTION>
QUARTER ENDING RATIO
-------------- -----
<S> <C>
June 30, 1997 4.50:1.00
September 30, 1997 4.50:1.00
December 31, 1997 4.50:1.00
March 31, 1998 4.50:1.00
June 30, 1998 4.50:1.00
September 30, 1998 4.50:1.00
December 31, 1998 4.50:1.00
March 31, 1999 4.00:1.00
June 30, 1999 4.00:1.00
September 30, 1999 4.00:1.00
December 31, 1999 4.00:1.00
March 31, 2000 3.90:1.00
and thereafter
</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 to exceed
$275,000,000 in fiscal year 1997 or $250,000,000 in any fiscal year
thereafter, plus for the first year following any acquisition or
investment by the Borrower, any Affiliate Guarantor or their respective
Subsidiaries, an amount equal to 10% of the sales attributable to the
Person or assets acquired or investment made for the period of twelve
consecutive calendar months ended immediately prior to the date of
determination, plus for each year following the first anniversary of
any acquisition, an amount equal to 7.5% of such acquisition's target's
sales for the period of twelve consecutive calendar months ended
immediately prior to the date of determination and plus for any fiscal
year Equity Proceeds received by the Borrower or any Affiliate
Guarantor on or after March 31, 1997; provided that any Capital
Expenditure permitted but not made in a prior year (commencing with the
year 1997) 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 outside of the ordinary course of business.
ARTICLE VI
EVENTS OF DEFAULT
<PAGE> 88
84
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 Section 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 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 Obligated 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 Obligated 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
<PAGE> 89
85
be made, in each case prior to the stated maturity thereof; or
(f) any Obligated 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 Obligated 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
Obligated 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 any Obligated
Party or any of its Subsidiaries and any such judgment or order shall
not have been vacated, discharged, satisfied 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
<PAGE> 90
86
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 provided that the Borrower maintains 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 Lender to make Advances 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
<PAGE> 91
87
of which are hereby expressly waived by the Borrower; provided, however, that in
the event of an actual or deemed entry of an order for relief with respect to
any Obligated Party under the Federal Bankruptcy Code, (x) the obligation of
each Lender to make Advances 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
<PAGE> 92
88
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 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
<PAGE> 93
89
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 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:
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90
(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 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
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91
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.
(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
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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 (in its
capacities as a Lender, the Swing Line Bank (if applicable) and an Issuing Bank
(if applicable)) 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
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93
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
Assumption Agreement entered into by an Assuming Lender as provided in Section
2.19 or 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 Obligated Party), independent public accountants 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 Obligated Party or to inspect the property (including the books and records)
of any Obligated 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
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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 Obligated Party, any of its Subsidiaries and
any Person who may do business with or own securities of any Obligated 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 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,
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95
(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; provided that the aggregate principal
amount of Swing Line Advances owing to the Swing Line Bank shall be considered
to be owed to the Working Capital Lenders ratably in accordance with their
respective Working Capital Commitments. 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
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
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96
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 the Swing
Line Bank or each Issuing Bank, as the case may be, in addition to the Lenders
required above to take such action, affect the rights or obligations of the
Swing Line Bank or the Issuing Banks, as the case may be, 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
<PAGE> 101
97
(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 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 Assumption Agreement or
the Assignment and Acceptance pursuant to which it became a Lender, as the case
may be; if to Credit Suisse First Boston, in its capacity as an Issuing Bank, at
its address at 5 World Trade Center, 8th Floor, New York, New York 10048,
Attention: Trade Services Department, with a copy to 11 Madison Avenue, New
York, New York 10010, 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: Steve Sellhausen; 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,
<PAGE> 102
98
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 Obligated Party or with
other creditors of any Obligated 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 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 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 Obligated Party, its directors, shareholders or creditors or an
Indemnified Party or any Indemnified Party is
<PAGE> 103
99
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 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 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
<PAGE> 104
100
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> 105
101
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
the Working Capital Facility (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
<PAGE> 106
102
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).
(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 Obligated Party or the
performance or observance by the Borrower or any other Obligated 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
<PAGE> 107
103
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 Assumption Agreement and 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 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
hereto.
(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
<PAGE> 108
104
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.
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
<PAGE> 109
105
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. 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 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
<PAGE> 110
106
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 9.12. 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) 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.
(c) 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.
<PAGE> 111
107
SECTION 9.13. 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.
<PAGE> 112
108
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> 113
109
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 FIRST BOSTON,
as Arranger
By
------------------------------------------
Name:
Title:
By
------------------------------------------
Name:
Title:
<PAGE> 114
110
BANKS
LEAD MANAGING AGENTS
BANKERS TRUST COMPANY
By
--------------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK
By
--------------------------------------------
Name:
Title:
CITIBANK, N.A.
By
--------------------------------------------
Name:
Title:
CREDIT SUISSE FIRST BOSTON
By
--------------------------------------------
Name:
Title:
By
--------------------------------------------
Name:
Title:
<PAGE> 115
111
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:
MANAGING AGENTS
THE BANK OF NEW YORK
By
-----------------------------------------
Name:
<PAGE> 116
112
Title:
BANK OF TOKYO -
MITSUBISHI TRUST COMPANY
By
-----------------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO
By
-----------------------------------------
Name:
Title:
<PAGE> 117
113
THE FUJI BANK, LIMITED
By
-----------------------------------------
Name:
Title:
<PAGE> 1
Exhibit (10)(iii)
364-DAY CREDIT AGREEMENT
Dated as of July 14, 1997
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
THE CHASE MANHATTAN BANK
CITIBANK, N.A.
CREDIT SUISSE FIRST BOSTON
as Lead Managing Agents
and
BT SECURITIES CORPORATION
CHASE SECURITIES INC.
CITICORP SECURITIES, INC.
CREDIT SUISSE FIRST BOSTON
as Arrangers
<PAGE> 2
T A B L E O F C O N T E N T S
<TABLE>
<CAPTION>
SECTION PAGE
<S> <C>
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.01. Certain Defined Terms............................................ 1
1.02. Computation of Time Periods...................................... 23
1.03. Accounting Terms................................................. 23
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
2.01. The Advances..................................................... 24
2.02. Making the Advances.............................................. 24
2.03. The Competitive Bid Advances..................................... 25
2.04. Repayment........................................................ 29
2.05. Reduction of the Commitments..................................... 29
2.06. Application of Certain Proceeds.................................. 30
2.07. Prepayments...................................................... 32
2.08. Interest......................................................... 33
2.09. Fees............................................................. 34
2.10. Conversion of Advances........................................... 34
2.11. Increased Costs, Etc............................................. 35
2.12. Payments and Computations........................................ 36
2.13. Taxes............................................................ 38
2.14. Sharing of Payments, Etc......................................... 40
2.15. Use of Proceeds.................................................. 41
2.16. Defaulting Lenders............................................... 41
2.17. Option to Replace Lenders........................................ 44
2.18. Extension of Revolver Termination Date........................... 44
2.19. Increase in the Aggregate Commitments............................ 46
ARTICLE III
CONDITIONS PRECEDENT
3.02. Conditions Precedent to Certain Borrowings....................... 50
3.03. Conditions Precedent to Each Competitive Bid Borrowing........... 50
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.01. Representations and Warranties of the Obligated Parties.......... 51
ARTICLE V
COVENANTS OF THE BORROWER
5.01. Affirmative Covenants............................................ 54
5.02. Negative Covenants............................................... 56
5.03. Reporting Requirements........................................... 62
5.04. Financial Covenants.............................................. 66
ARTICLE VI
EVENTS OF DEFAULT
6.01. Events of Default................................................ 67
ARTICLE VII
GUARANTY
7.02. Guaranty Absolute................................................ 71
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........................................... 76
8.05. Indemnification.................................................. 76
8.06. Successor Administrative Agent................................... 76
ARTICLE IX
MISCELLANEOUS
9.01. Amendments, Etc.................................................. 77
9.02. Notices, Etc..................................................... 78
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
9.03. No Waiver; Remedies.............................................. 78
9.04. Costs and Expenses............................................... 78
9.05. Right of Set-Off................................................. 80
9.06. Binding Effect................................................... 81
9.07. Assignments and Participations................................... 81
9.08. Governing Law.................................................... 84
9.09. Execution in Counterparts........................................ 84
9.10. Confidentiality.................................................. 84
9.11. Redesign......................................................... 84
9.12. Waiver of Jury Trial............................................. 85
</TABLE>
<PAGE> 5
364-DAY CREDIT AGREEMENT
DATED AS OF JULY 14, 1997
364-DAY CREDIT AGREEMENT dated as of July 14, 1997 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 First Boston ("Credit Suisse First Boston"), as arrangers
(the "Arrangers"), BT Securities and Chase Securities, as co-syndication agents,
and Credit Suisse First Boston, as 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):
"Acquired Entity" means any Person, business unit or assets of
any Person invested in or acquired by any Affiliate Guarantor, the
Borrower or any of their respective Subsidiaries.
"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 or a Competitive Bid
Advance.
<PAGE> 6
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 Assumption Agreement" means an agreement
substantially in the form of Exhibit E hereto.
"Affiliate Guarantors" means each of Foods Holdings, Wise
Holdings and, after any transfer of the Dairy Business to an Affiliate
that executes an Affiliate 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.
"Applicable Margin" means, as of any date, a percentage per
annum determined by reference to the Performance Level in effect on
such date as set forth below:
<TABLE>
<CAPTION>
========================================================
Applicable Margin for
Performance Margin for Eurodollar
========================================================
<S> <C> <C>
</TABLE>
<PAGE> 7
3
<TABLE>
<CAPTION>
========================================================
Base Rate Rate
Level Advances Advances
========================================================
<S> <C> <C>
Level 1 0% .25%
--------------------------------------------------------
Level 2 0% .375%
--------------------------------------------------------
Level 3 0% .50%
--------------------------------------------------------
Level 4 0% .60%
--------------------------------------------------------
Level 5 0% .875%
--------------------------------------------------------
Level 6 .125% 1.125%
--------------------------------------------------------
</TABLE>
"Applicable Percentage" means, as of any date, a percentage
per annum determined by reference to the Performance Level in effect on
such date as set forth below:
<TABLE>
<CAPTION>
------------------------------------
Applicable
Performance Level Percentage
------------------------------------
<S> <C>
Level 1 .10%
------------------------------------
Level 2 .10%
------------------------------------
Level 3 .10%
------------------------------------
Level 4 .10%
------------------------------------
Level 5 12.5%
------------------------------------
Level 6 12.5%
------------------------------------
</TABLE>
"Arrangers" has the meaning specified in the recital of
parties to this Agreement.
"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 (including such amounts paid or payable by direct or indirect
partners,
<PAGE> 8
4
members or other holders of direct or indirect equity or other
ownership interests in the assets or options subject to such sale), (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.
"Assuming Lender" has the meaning specified in Section
2.19(d).
"Assumption Agreement" has the meaning specified in Section
2.18(c).
"Attributable Share" means (a) with respect to any Person of
which an Obligated Party directly or indirectly owns or controls up to
50% of the equity interests, 0%, (b) with respect to any Person of
which an Obligated Party directly or indirectly owns or control more
than 50% but less than 90% of the equity interests, such percentage
equity interest directly or indirectly owned or controlled and (c) with
respect to any Person of which an Obligated Party directly or
indirectly owns or controls 90% or more of the equity interests, 100%.
"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
<PAGE> 9
5
(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 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.
<PAGE> 10
6
"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.
"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.
<PAGE> 11
7
"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) 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.
"Chase" means The Chase Manhattan 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.
<PAGE> 12
8
"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 "Commitment" or, if such Lender has become a Lender
hereunder pursuant to an Assumption Agreement, the amount set forth as
the Commitment of such Lender in such Assumption Agreement or, if such
Lender has entered into one or more Assignment and Acceptances, the
amount set forth for such Lender in the Register maintained by the
Administrative Agent pursuant to Section 9.07(c) as such Lender's
"Commitment," as such amount may be reduced pursuant to Sections 2.05
and 2.06.
"Commitment Date" has the meaning specified in Section
2.19(b).
"Commitment Increase" has the meaning specified in Section
2.19(a).
"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
<PAGE> 13
9
available to such Agent or such Lender from a source other than the
Borrower or any Affiliate Guarantor.
"Consenting Lender" has the meaning specified in Section
2.18(c).
"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 First Boston" has the meaning specified in the
recital of parties to this Agreement.
"Dairy Business" means the Dairy business of the Borrower as
reflected in the total adjusted balance sheet and statements of income
and cash flows of Meadow Gold Dairies West as of December 31, 1996,
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.
<PAGE> 14
10
"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 2.16(a), the remaining portion of such Defaulted
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) 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, (b) any other Lender pursuant to Section 2.14 to purchase any
participation in Advances owing to such other Lender and (c) 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 2.16(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).
<PAGE> 15
11
"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 Assumption Agreement
or the Assignment and Acceptance, as the case may be, 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, (j)
dividends accrued on securities other than common stock, in each case
determined in accordance with GAAP for such period and (k) any
deduction from such net income for minority interests held by
management for such period.
"Effective Date" has the meaning specified in Section 3.01.
"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
<PAGE> 16
12
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 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.
<PAGE> 17
13
"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 Assumption Agreement
or the Assignment and Acceptance, as the case may be, 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> 18
14
"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 or other
assets (including, without limitation, worn out or obsolete equipment)
in the ordinary course of business, (ii) sales of accounts receivable
pursuant to Section 5.02(d) and (iii) 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, Amended and Restated as of May 7, 1996 among
the Borrower, Foods Holdings, Wise Holdings, the banks named therein,
Citibank, as administrative agent, 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.
"Extension Date" has the meaning specified in Section 2.18(b).
"Facility" means, at any time, the aggregate amount of the
Lenders' Commitments at such time.
<PAGE> 19
15
"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 fair market value of such
asset or Option as determined by the Board of Directors of the Borrower
and (b) with respect to any other asset sold for consideration of
$10,000,000 or more 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 market value of Options 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,
subject to Section 9.11, 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.
"Five-Year Credit Agreement" means the Credit Agreement dated
as of December 15, 1994, Amended and Restated as of July 14, 1997 among
the Borrower, Foods Holdings, Wise Holdings, the banks named therein,
Citibank, as administrative agent and swing line bank, BT Securities,
Chase Securities, Citicorp Securities and Credit Suisse First Boston,
as arrangers, BT Securities and Chase Securities, as co-syndication
agents, and Credit Suisse First Boston, as issuing bank and
documentation agent, as amended, supplemented or otherwise modified
from time to time.
<PAGE> 20
16
"Fixed Rate Advances" has the meaning specified in Section
2.03(a)(i).
"Foods Business" means the business of Foods Holdings and its
Subsidiaries.
"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.
"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.
"Increase Date" has the meaning specified in Section 2.19(b).
"Increasing Lender" has the meaning specified in Section
2.19(a).
"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
<PAGE> 21
17
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 the third Business Day
prior to the first day of such Interest Period, select; provided,
however, that:
<PAGE> 22
18
(a) the Borrower may not select any Interest Period
that ends after scheduled Revolver Termination Date then in
effect or, if the Advances have been converted to a term loan
pursuant to Section 2.04 prior to the time of such selection,
that ends after the Maturity 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.
"KKR" has the meaning specified in Section 5.01(h).
"Lead Managing Agents" means BT, Chase, Citibank and Credit
Suisse First Boston.
"Lenders" means the Banks listed on the signature pages
hereof, each Assuming Lender that shall become a party hereto pursuant
to Section 2.18 or Section 2.19 and each
<PAGE> 23
19
Eligible Assignee that shall become a party hereto pursuant to Section
9.07.
"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 and the Notes, as the
same may be amended, supplemented or otherwise modified from time to
time.
"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
<PAGE> 24
20
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.
"Maturity Date" means the earlier of (a) July 13, 2002 and (b)
the date of termination in whole of the aggregate Commitments pursuant
to Section 2.05 or 6.01.
"Moody's" means Moody's Investors Service, 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 and
amortization of financing fees and debt discount) and (b) dividends
required to be paid on Preferred Stock permitted by Section
5.02(f)(ii).
"Non-Consenting Lender" has the meaning specified in Section
2.18(b).
"Note" means 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).
"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.
<PAGE> 25
21
"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.
"Performance Level" means, as of any date of determination,
the numerically lowest level set forth below as then in effect, as
determined in accordance with the following provision of this
definition:
Level 1 Total Debt/EBITDA Ratio is less than 2.00:1.00;
Level 2 Total Debt/EBITDA Ratio is 2.00:1.00 or greater but
less than 2.50:1.00;
Level 3 Total Debt/EBITDA Ratio is 2.50:1.00 or greater but
less than 3.00:1.00;
Level 4 Total Debt/EBITDA Ratio is 3.00:1.00 or greater but
less than 3.50:1.00;
Level 5 Total Debt/EBITDA Ratio is 3:50:1.00 or greater but
less than 4:00:1.00;
Level 6 Total Debt/EBITDA Ratio is 4:00:1.00 or greater;
provided, for purposes of this definition, the Performance Level shall
be determined as at the end of each of the first three fiscal quarters
of the Borrower and as of the end of the fiscal year of the Borrower,
based on the relevant financial statements delivered pursuant to
Section 5.03; changes in the Performance Level shall become effective
on the date such financial statements are delivered to the Lenders and
shall remain in effect until the next change to be effected pursuant to
this definition.
"Permitted Liens" means (a) Liens for taxes, assessments or
governmental charges or claims not yet due or
<PAGE> 26
22
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 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 on assets permitted to be
acquired hereunder; provided that such Liens were existing at the time
of such acquisition and were not
<PAGE> 27
23
created in anticipation thereof; and (m) 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.
"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.
"Pro Forma EBITDA" means, for any period, (a) the sum of (i)
EBITDA, (ii) from and after the making of any investment or acquisition
in or of an Acquired Entity during such period, the Obligated Parties'
Attributable Share of the EBITDA of each Acquired Entity so invested in
or acquired for such period (including the portion thereof accruing
prior to the date of such acquisition or investment and determined as
of the last day of such period) and (iii) an amount equal to 50% of the
increase or decrease in EBITDA of such Acquired Entity that the
Borrower in good faith projects will occur as a result of reasonably
identifiable and supportable net cost savings or additional net costs
that are projected to be realizable during such period by combining the
operations of such Acquired Entity with the operations of the Borrower,
an Affiliate Guarantor or any of their respective Subsidiaries;
provided that, so long as such net cost savings or additional net costs
are projected to be realizable at any time during such period it
<PAGE> 28
24
shall be assumed, for purposes of projecting such pro forma increase or
decrease in EBITDA of such Acquired Entity, that such net cost savings
or additional net costs will be realizable during the entire such
period; provided, further that any such pro forma increase or decrease
in EBITDA of such Acquired Entity shall be without duplication of any
net cost savings or additional net costs actually realized during such
period and already included in clause (ii) above; minus (b) from and
after the disposition outside of the ordinary course of business of any
assets constituting a business unit or any Subsidiary, (i) the
proportion of the EBITDA of such assets or Subsidiary so disposed of
for cash consideration and (ii) with respect to any such period of
determination ended on or after the last day of the next full fiscal
quarter following the date of such disposition, the proportion of the
EBITDA of such assets or Subsidiary so disposed of for consideration
other than cash. For purposes of the foregoing, clauses (a)(ii) and (b)
above shall not apply to any investment, acquisition or disposition
made prior to December 31, 1996.
"Ratable Share" of any amount means, with respect to any
Lender at any time, the product of (a) a fraction the numerator of
which is the amount of such Lender's Commitment at such time and the
denominator of which is the 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 Financing Transaction" means any financing
secured by or based on the sale or transfer of, accounts receivable of
any Affiliate Guarantor, the Borrower or any of their respective
Subsidiaries on terms and conditions reasonably satisfactory to the
Required Lenders; provided that the aggregate program amount of
Receivable Financing Transactions shall not exceed $350,000,000.
"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
<PAGE> 29
25
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, Chase, Citibank and Credit Suisse
First Boston.
"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.
"Replacement Lender" has the meaning specified in Section
2.16.
"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 having at least
51% of the Commitments or, if the Commitments have been terminated,
Lenders owed or holding at least 51% of the aggregate principal amount
of Advances outstanding at such time.
"Revolver Termination Date" means the earlier of (a) July 13,
1998, subject to the extension thereof pursuant to Section 2.18, and
(b) the date of termination in whole of the aggregate Commitments
pursuant to Section 2.05 or 6.01; provided, however, that the Revolver
Termination Date of any Lender that is a Non-Consenting Lender to any
requested extension pursuant to Section 2.18 shall be the Revolver
Termination Date in effect immediately prior to the applicable
Extension Date for all purposes of this Agreement.
"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, to the extent that such Debt matures or is payable on or
before July 13, 2002 and any renewal, extension or refinancing thereof
that does not increase the amount thereof that becomes due and payable
on or before July 13, 2002.
<PAGE> 30
26
"Senior Bank Facilities" means this Agreement and the
Five-Year 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 Loan Conversion Date" means the Revolver Termination
Date on which all Advances outstanding on such date are converted into
a term loan pursuant to Section 2.04.
"Term Loan Election" has the meaning specified in Section
2.04.
"Total Debt" means, on any date of determination, (a) Debt of
the Affiliate Guarantors, the Borrower and their respective
Subsidiaries described in clauses (a) through (e) of the definition of
"Debt" herein minus (b) cash of the Affiliate Guarantors, the Borrower
and their respective Subsidiaries at such date in excess of
$75,000,000.
"Total Debt/EBITDA Ratio" means the ratio determined as of the
last day of each fiscal quarter for the twelve month period ended on
such day of (a) Combined Total Debt of the Affiliate Guarantors, the
Borrower and their Subsidiaries on such day to (b) to Combined Pro
Forma EBITDA of the Affiliate Guarantors, the Borrower and their
Subsidiaries for such period; provided, that for purposes of this
definition, Total Debt of any Subsidiary of any Obligated Party shall
be determined as such Obligated Party's Attributable Share of the Total
Debt of such Subsidiary.
<PAGE> 31
27
"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 Commitment" means, with respect to any Lender at any
time, (a) such Lender's Commitment at such time minus (b) the sum of
(i) the aggregate principal amount of all Advances made by such Lender
and outstanding at such time, plus, without duplication, (ii) such
Lender's Ratable Share of 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).
"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
Lenders.
"Working Capital Note" means a promissory note of the Borrower
payable to the order of any 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
<PAGE> 32
28
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
SECTION 2.01. The Advances. Each 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 Revolver Termination Date in an amount
for each such Advance not to exceed such Lender's Unused 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 Lenders ratably according to their respective Commitments. Within the
limits of each Lender's Unused Commitment in effect from time to time, the
Borrower may borrow under this Section 2.01, prepay pursuant to Section 2.07 and
reborrow under this Section 2.01.
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 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) Type of
Advances comprising such Borrowing, (iii) aggregate amount of such Borrowing and
(iv) 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 Lender of the
<PAGE> 33
29
applicable interest rate under Section 2.08(a)(ii). Each 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 Lenders. After the Administrative Agent's receipt of 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.
(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 Lenders to
make Eurodollar Rate Advances shall then be suspended pursuant to Section 2.11
and (ii) the Working Capital Advances made on any date as Eurodollar Rate
Advances may not be outstanding as part of more than 20 separate Working Capital
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 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 a Lender prior to the time of any Borrowing 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
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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 Borrower,
the interest rate applicable at such time under Section 2.08 to Advances
comprising such 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 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 Revolver
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
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or later than the Revolver 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
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.
(ii) Each 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 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 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 Lenders. If
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any 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 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
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
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 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 Lenders and such Competitive Bid Borrowing shall not be
made.
(v) If the Borrower accepts one or more of the offers made by
any Lender or Lenders pursuant to paragraph (iii)(y) above, the
Administrative Agent shall in turn promptly
<PAGE> 37
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notify (A) each 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 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 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 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 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 Lender of each Competitive Bid
Advance accepted by the Borrower from time to time pursuant to this
subsection (a) (the "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 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
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34
available for inspection by the Borrower, or by any 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 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 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 Lender
making such Competitive Bid Advance.
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35
SECTION 2.04. Repayment. The Borrower shall, subject to the
next succeeding sentence, repay to each Lender on the Revolver Termination Date
the aggregate principal amount of the Advances owing to such Lender on such
date. The Borrower may, upon not less than 15 days' notice to the Administrative
Agent, elect (the "Term Loan Election") to convert all of the Advances
outstanding on the Revolver Termination Date in effect at such time into a term
loan which the Borrower shall repay in full ratably to the Lenders on the
Maturity Date; provided that no Default has occurred and is continuing on the
date of notice of the Term Loan Election or on the Term Loan Conversion Date on
which such election is to be effected.
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 Commitments; provided,
however, that each partial reduction of the Commitments (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 Lenders in accordance with
their Commitments.
(b) Mandatory. On the Revolver Termination Date, if the
Borrower has made the Term Loan Election in accordance with Section 2.04 prior
to such date, and from time to time thereafter upon each prepayment of the
Advances, the aggregate Commitments of the Lenders under this Agreement shall be
automatically and permanently reduced on a pro rata basis by an amount equal to
the amount by which the aggregate Commitments of the Lenders under this
Agreement immediately prior to such reduction exceeds the aggregate unpaid
principal amount of the Advances outstanding at such time.
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 Dairy Business to an Affiliate and its Subsidiaries at
the time, if any, such Affiliate becomes an Affiliate Guarantor;
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36
(ii) Asset Proceeds from, without duplication, (A) the sale of
the Borrower's Dairy Business, (B) the sale of Foods Businesses other
than the pasta, soups and related businesses, (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 fair market value (as determined by the board of
directors of 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 $1,000,000,000 of assets
not otherwise described in this clause (iii) and not including
consideration described in clauses (b), (c) and (d) below;
(iii) Asset Proceeds in the form of notes, property and other
consideration other than cash received other than pursuant to
transactions described in clause (ii) above 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;
(iv) 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);
(v) 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
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37
Guarantor, for purposes of this clause (vi), the Dairy Business); and
(vi) Asset Proceeds from sales of stock of, or equity
interests in, any Affiliate Guarantor to any Obligated Party or any
Subsidiary of any Obligated Party, any Subsidiary thereof or any
employee of any Obligated Party or any Subsidiaries by the exercise of
stock options or otherwise, provided that the aggregate amount of such
sales made to such employees (other than in respect of the exercise of
stock options issued to employees before the Restatement Date) with
respect to any Affiliate Guarantor or Subsidiary of any Obligated Party
shall not exceed the greater of $10,000,000 and 15% of the equity
interests of such Affiliate Guarantor or Subsidiary of an Obligated
Party.
(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.
(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
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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.
(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 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
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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
aggregate principal amount of the Working Capital Advances and Competitive Bid
Advances then outstanding exceeds (y) the 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:
(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
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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 Lender's average daily Unused Commitment, computed without regard to
clause (ii) of the definition of Unused Commitment, minus the aggregate amount
of Competitive Bid Advances made by such Lender from the date hereof until the
Revolver Termination Date at the Applicable Percentage, payable in arrears
quarterly on the first Business Day of each January, April, July and October,
commencing October 3, 1997, and on the Revolver 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.
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 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
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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 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, 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.
(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
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42
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
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43
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 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 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
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44
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
any Assuming Lender's becoming a Lender hereunder as a result of an extension of
the Revolver Termination Date pursuant to Section 2.18 or as a result of a
Commitment Increase pursuant to Section 2.19, and upon the Administrative
Agent's receipt of such Lender's Assumption Agreement and recording of the
information contained therein in the Register, from and after the applicable
Extension Date or Increase Date, as the case may be, the Administrative Agent
shall make all payments hereunder and under the Notes issued in connection
therewith in respect of the interest assumed thereby to the Assuming Lender.
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 and fees 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 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
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45
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 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 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 "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
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46
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
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47
date of its execution and delivery of this Agreement in the case of each Bank,
and on the date of the Assumption Agreement or 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 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 Assumption Agreement or the Assignment and Acceptance, as the case may be,
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
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48
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 otherwise) (a) on account of obligations
due and payable to such Lender hereunder and under the Notes at such time 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 to (ii) the
aggregate amount of the obligations due and payable to all Lenders hereunder and
under the Notes at such time) of payments on account of the obligations due and
payable to all Lenders hereunder and under the Notes at such time obtained by
all the 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 in excess
of its ratable share (according to the proportion of (i) the amount of such
obligations owing to such Lender at such time to (ii) the aggregate amount of
the obligations owing (but not due and payable) to all Lenders hereunder and
under the Notes at such time) of payments on account of the obligations owing
(but not due and payable) to all Lenders hereunder and under the Notes at such
time obtained by all the Lenders at such time, such Lender shall forthwith
purchase from the 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
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proportion of (i) the purchase price paid to such Lender to (ii) the aggregate
purchase price paid to all 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. Use of Proceeds. The proceeds of the Advances
shall be available to pay transaction fees and expenses, for acquisitions and
general corporate purposes of the Borrower and its Subsidiaries and for making
advances to the Affiliate Guarantors and their Subsidiaries for acquisitions and
general corporate purposes of the Affiliate Guarantors and their Subsidiaries.
SECTION 2.16. 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
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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 2.16.
(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 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:
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(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 2.16.
(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 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
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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 2.16 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 2.17. 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
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accordance with Section 9.07, in such amounts as the Borrower may designate.
SECTION 2.18. Extension of Revolver Termination Date. (a) At
least 45 days but not more than 60 days prior to the Revolver Termination Date
in effect at any time, the Borrower, by written notice to the Administrative
Agent, may request an extension of the Revolver Termination Date in effect at
such time for a period of 364 days from its then scheduled expiration; provided,
however, that the Borrower shall not have made the Term Loan Election for
Advances outstanding on such Revolver Termination Date prior to the then
scheduled Revolver Termination Date. The Administrative Agent shall promptly
notify each Lender of such request, and each Lender shall in turn, in its sole
discretion, not earlier than 30 days but at least 20 days prior to such Revolver
Termination Date, notify the Borrower and the Administrative Agent in writing as
to whether such Lender will consent to such extension. If any Lender shall fail
to notify the Administrative Agent and the Borrower in writing of its consent to
any such request for extension of the Revolver Termination Date at least 20 days
prior to the scheduled occurrence thereof at such time, such Lender shall be
deemed to be a Non-Consenting Lender with respect to such request. The
Administrative Agent shall notify the Borrower not later than 15 days prior to
the scheduled Revolver Termination Date in effect at such time of the decision
of the Lenders regarding the Borrower's request for an extension of the Revolver
Termination Date.
(b) If all of the Lenders consent in writing to any such
request in accordance with subsection (a) of this Section 2.18, the Revolver
Termination Date shall, effective as at the Revolver Termination Date otherwise
in effect at such time (the "Extension Date"), be extended for a period of 364
days from such Extension Date; provided that on each Extension Date, no Default
shall have occurred and be continuing, or shall occur as a consequence thereof.
If Lenders holding at least a majority in interest of the aggregate Commitments
at such time consent in writing to any such request in accordance with
subsection (a) of this Section 2.18, the Revolver Termination Date in effect at
such time shall, effective as at the applicable Extension Date, be extended as
to those Lenders that so consented (each a "Consenting Lender") but shall not be
extended as to any other Lender (each a "Non-Consenting Lender"). To the extent
that the Revolver Termination Date is not extended as to any Lender pursuant to
this Section 2.18 and the Commitment of such Lender is not assumed in accordance
with subsection (c) of this Section
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2.18 on or prior to the applicable Extension Date, the Commitment of such
Non-Consenting Lender shall automatically terminate in whole on such unextended
Revolver Termination Date without any further notice or other action by the
Borrower, such Lender or any other Person; provided that such Non-Consenting
Lender's rights under Sections 2.11, 2.13 and 9.04, and its obligations under
Section 8.05, shall survive the Revolver Termination Date for such Lender as to
matters occurring prior to such date. It is understood and agreed that no Lender
shall have any obligation whatsoever to agree to any request made by the
Borrower for any requested extension of the Revolver Termination Date.
(c) If Lenders holding at least a majority in interest of the
aggregate Commitments at any time consent to any such request pursuant to
subsection (a) of this Section 2.18, the Borrower may arrange for one or more
Consenting Lenders or other Eligible Assignees as Assuming Lenders to assume,
effective as of the Extension Date, any Non-Consenting Lender's Commitment and
all of the obligations of such Non-Consenting Lender under this Agreement
thereafter arising, without recourse to or warranty by, or expense to, such
Non-Consenting Lender; provided, however, that the amount of the Commitment of
any such Assuming Lender as a result of such substitution shall in no event be
less than $10,000,000 unless the amount of the Commitment of such Non-Consenting
Lender is less than $10,000,000, in which case such Assuming Lender shall assume
all of such lesser amount; and provided further that:
(i) any such Consenting Lender or Assuming Lender shall have
paid to such Non-Consenting Lender (A) the aggregate principal amount
of, and any interest accrued and unpaid to the effective date of the
assignment on, the outstanding Advances, if any, of such Non-Consenting
Lender plus (B) any accrued but unpaid facility fees owing to such
Non-Consenting Lender as of the effective date of such assignment;
(ii) all additional costs reimbursements, expense
reimbursements and indemnities payable to such Non-Consenting Lender,
and all other accrued and unpaid amounts owing to such Non-Consenting
Lender hereunder, as of the effective date of such assignment shall
have been paid to such Non-Consenting Lender; and
(iii) with respect to any such Assuming Lender, the applicable
processing and recordation fee required under Section 9.07(a) for such
assignment shall have been paid;
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provided further that such Non-Consenting Lender's rights under Sections 2.11,
2.13 and 9.04, and its obligations under Section 8.05, shall survive such
substitution as to matters occurring prior to the date of substitution. At least
three Business Days prior to any Extension Date, (A) each such Assuming Lender,
if any, shall have delivered to the Borrower and the Administrative Agent an
assumption agreement, in form and substance satisfactory to the Borrower and the
Administrative Agent (an "Assumption Agreement"), duly executed by such Assuming
Lender, such Non-Consenting Lender, the Borrower and the Administrative Agent,
(B) any such Consenting Lender shall have delivered confirmation in writing
satisfactory to the Borrower and the Administrative Agent as to the increase in
the amount of its Commitment and (C) each Non-Consenting Lender being replaced
pursuant to this Section 2.18 shall have delivered to the Administrative Agent
the Note or Notes held by such Non-Consenting Lender. Upon the payment or
prepayment of all amounts referred to in clauses (i), (ii) and (iii) of the
immediately preceding sentence, each such Consenting Lender or Assuming Lender,
as of the Extension Date, will be substituted for such Non-Consenting Lender
under this Agreement and shall be a Lender for all purposes of this Agreement,
without any further acknowledgment by or the consent of the other Lenders, and
the obligations of each such Non-Consenting Lender hereunder shall, by the
provisions hereof, be released and discharged.
(d) If all of the Lenders (after giving effect to any
assignments pursuant to subsection (b) of this Section 2.18) consent in writing
to a requested extension (whether by execution or delivery of an Assumption
Agreement or otherwise) not later than one Business Day prior to such Extension
Date, the Administrative Agent shall so notify the Borrower, and, so long as no
Default shall have occurred and be continuing as of such Extension Date, or
shall occur as a consequence thereof, the Revolver Termination Date then in
effect shall be extended for the 364-day period described in subsection (a) of
this Section 2.18, and all references in this Agreement, and in the Notes to the
"Revolver Termination Date" shall, with respect to each Consenting Lender and
each Assuming Lender for such Extension Date, refer to the Revolver Termination
Date as so extended. Promptly following each Extension Date, the Administrative
Agent shall notify the Lenders (including, without limitation, each Assuming
Lender) of the extension of the scheduled Revolver Termination Date in effect
immediately prior thereto and shall thereupon record in the Register the
relevant information with respect to each such Consenting Lender and each such
Assuming Lender.
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SECTION 2.19. Increase in the Aggregate Commitments. (a) The
Borrower may, at any time but in any event not more than once prior to the
Revolver Termination Date, by notice to the Administrative Agent, request that
the aggregate amount of the Commitments be increased by an amount of $50,000,000
or an integral multiple of $5,000,000 in excess thereof (each a "Commitment
Increase") to be effective as of a date that is at least 90 days prior to the
scheduled Revolver Termination Date then in effect (the "Increase Date") as
specified in the related notice to the Administrative Agent; provided, however,
that (i) in no event shall the aggregate amount of the Commitments at any time
exceed $250,000,000, (ii) no Default shall have occurred and be continuing as of
the date of such request or as of the applicable Increase Date, or shall occur
as a result thereof and (iii) the aggregate amount of the Commitments and of the
"Commitments" under the Five-Year Credit Agreement shall not exceed
$1,200,000,000.
(b) The Administrative Agent shall promptly notify the Lenders
of a request by the Borrower for a Commitment Increase, which notice shall
include (i) the proposed amount of such requested Commitment Increase, (ii) the
proposed Increase Date and (iii) the date by which Lenders wishing to
participate in the Commitment Increase must commit to an increase in the amount
of their respective Commitments (the "Commitment Date"). Each Lender that is
willing to participate in such requested Commitment Increase (each an
"Increasing Lender") shall give written notice to the Administrative Agent on or
prior to the Commitment Date of the amount by which it is willing to increase
its Commitment. If the Lenders notify the Administrative Agent that they are
willing to increase the amount of their respective Commitments by an aggregate
amount that exceeds the amount of the requested Commitment Increase, the
requested Commitment Increase shall be allocated among the Lenders willing to
participate therein in such amounts as are agreed between the Borrower and the
Administrative Agent.
(c) Promptly following each Commitment Date, the
Administrative Agent shall notify the Borrower as to the amount, if any, by
which the Lenders are willing to participate in the requested Commitment
Increase. If the aggregate amount by which the Lenders are willing to
participate in any requested Commitment Increase on any such Commitment Date is
less than the requested Commitment Increase, then the Borrower may extend offers
to one or more Eligible Assignees to participate in any portion of the requested
Commitment Increase that has not been committed to by the Lenders as of the
applicable Commitment Date;
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provided, however, that the Commitment of each such Eligible Assignee shall be
in an amount of $10,000,000 or an integral multiple of $1,000,000 in excess
thereof.
(d) On each Increase Date, each Eligible Assignee that accepts
an offer to participate in a requested Commitment Increase in accordance with
Section 2.19(c) (each such Eligible Assignee and each Eligible Assignees that
agrees to an extension of the Revolver Termination Date in accordance with
Section 2.18(c), an "Assuming Lender") shall become a Lender party to this
Agreement as of such Increase Date and the Commitment of each Increasing Lender
for such requested Commitment Increase shall be so increased by such amount (or
by the amount allocated to such Lender pursuant to the last sentence of Section
2.19(b)) as of such Increase Date; provided, however, that the Administrative
Agent shall have received on or before such Increase Date the following, each
dated such date:
(i) an Assumption Agreement from each Assuming Lender, duly
executed by such Eligible Assignee, the Administrative Agent and the
Borrower; and
(ii) confirmation from each Increasing Lender of the increase
in the amount of its Commitment in a writing satisfactory to the
Borrower and the Administrative Agent.
On each Increase Date, upon fulfillment of the conditions set forth in the
immediately preceding sentence of this Section 2.19(d), the Administrative Agent
shall notify the Lenders (including, without limitation, each Assuming Lender)
and the Borrower, on or before 1:00 P.M. (New York City time), by telecopier or
telex, of the occurrence of the Commitment Increase to be effected on such
Increase Date and shall record in the Register the relevant information with
respect to each Increasing Lender and each Assuming Lender on such date.
ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.01. Conditions of Effectiveness. This Agreement
shall become effective as of the date first above written (the "Effective Date")
when, and only when, the following conditions precedent have been satisfied:
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(a) There shall have occurred no Material Adverse Change since
December 31, 1996.
(b) The representations and warranties contained in each Loan
Document are correct in all material respects on and as of the
Effective Date, 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 Effective Date).
(c) No event shall have occurred and be continuing that
constitutes a Default.
(d) 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, 1996, 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.
(e) The Borrower shall have paid such fees as have been agreed
to in writing to be payable in connection herewith and expenses of the
Administrative Agent, the Arrangers and the Lenders (including the
reasonable fees and expenses of counsel to the Administrative Agent and
the Arrangers).
(f) The Administrative Agent shall have received, on or before
the Effective Date, the following, each dated such day (unless
otherwise specified), in form and substance satisfactory to the
Administrative Agent (unless otherwise specified) and in sufficient
copies (other than the Notes) for each Lender:
(i) The Notes to the order of such Lender.
(ii) Certified copies of the resolutions of the Board
of Directors of the Borrower and each Affiliate Guarantor
approving this Agreement and each Loan Document to which it is
or is to be a party, and of all documents evidencing other
necessary corporate action
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and governmental approvals, if any, with respect to this
Agreement and each Loan Document to which it is a party.
(iii) A certificate of each Obligated Party, signed
on behalf of such Obligated Party by its President or a Vice
President and its Secretary or any Assistant Secretary, dated
the Effective Date (the statements made in which certificate
shall be true on and as of the Effective Date), certifying as
to (A) a true and correct copy of the charter of such
Obligated Party as in effect on the Effective Date, (B) a true
and correct copy of the bylaws of such Affiliate Guarantor as
in effect on the Effective Date, (C) the due incorporation and
good standing of such Affiliate Guarantor as a corporation
organized under the laws of the State of the jurisdiction of
its incorporation and the absence of any proceeding for the
dissolution or liquidation of such Affiliate Guarantor (D) the
truth or the representations and warranties contained in the
Loan Documents as though made on and as of the Effective Date
(other than any such representations or warranties that, by
their terms, are made as of a date other than the Effective
Date) and (E) the absence of any event continuing on the
Effective Date that constitutes a Default.
(iv) A certificate of the Secretary or an Assistant
Secretary of each Obligated Party certifying the names and
true signatures of the officers of such Obligated Party
authorized to sign this Agreement and each Loan Document to
which it is or is to be a party and the other documents to be
delivered hereunder and thereunder.
(v) A favorable opinion of Simpson Thacher &
Bartlett, special New York counsel to the Borrower and the
Affiliate Guarantors, and a favorable opinion of William F.
Stoll, Jr., Senior Vice President and General Counsel of the
Borrower, in substantially the forms of Exhibits D-1 and D-2,
respectively.
(vi) A favorable opinion of Shearman & Sterling,
counsel for the Lead Managing Agents and the Administrative
Agent, in form and substance reasonably satisfactory to the
Lead Managing Agents and the Administrative Agent.
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SECTION 3.02. Conditions Precedent to Certain Borrowings. The
obligation of each Lender to make an Advance on the occasion of each Borrowing
that would cause the aggregate amount of Advances 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) outstanding immediately prior to the making of such Advance
shall be subject to the further conditions precedent that on the date of such
Borrowing 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 shall constitute a representation and warranty by the Borrower that on
the date of such Borrowing 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, before and after giving effect to such Borrowing 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); and
(b) no event has occurred and is continuing, or would result
from such Borrowing or from the application of the proceeds therefrom,
that constitutes a Default.
SECTION 3.03. Conditions Precedent to Each Competitive Bid
Borrowing. The obligation of each 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 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.
ARTICLE IV
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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 and each other Loan 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,
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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 $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 or any other Loan 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.
(e) This Agreement has been, and each of the Notes and each
other Loan 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 and each
other Loan 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.
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(f) The Consolidated balance sheet of the Borrower and its
Subsidiaries as at December 31, 1996, 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 Deloitte &
Touche LLP, independent public accountants, and the Consolidated
balance sheet of the Borrower and its Subsidiaries as at March 31,
1997, 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, 1997, 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 December 31,
1996, there has been no Material Adverse Change.
(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, 1996, 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.
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(i) No 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 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 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.
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(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 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 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.
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(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
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examine and make copies of and abstracts from the records and books of
account of, and 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 (other than the Borrower and its Subsidiaries) 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 9.11.
SECTION 5.02. Negative Covenants. So long as any Advance shall
remain unpaid or any Lender shall have any
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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);
(iii) Liens, if any, arising under, financing
statements filed in connection with, and assignments of
accounts pursuant, to a Receivables Financing Transaction;
(iv) other Liens securing Indebtedness outstanding in
an aggregate principal amount for the Obligated Parties and
their respective Subsidiaries not to exceed $200,000,000 at
any time;
(v) purchase money Liens upon or in any capital
assets acquired or held by the Borrower, any Affiliate
Guarantor or any of their respective Subsidiaries in the
ordinary course of business to secure the purchase price of
such asset or to secure Debt incurred solely for the purpose
of financing the acquisition, construction or improvement of
such asset, or Liens existing on such asset at the time of its
acquisition (other than any such Liens created in
contemplation of such acquisition that were not incurred to
finance the acquisition of such asset) or extensions, renewals
or replacements of any of the foregoing for the same or a
lesser amount, provided, however, that no such Lien shall
extend to or cover any properties of any character other than
the asset being acquired, and no such extension, renewal or
replacement shall extend to or cover any properties not
theretofore subject to the Lien being extended, renewed or
replaced, provided further that the aggregate principal amount
of the indebtedness secured by the Liens referred to in this
clause (v) shall not exceed $100,000,000 at any time
outstanding.
<PAGE> 73
69
(vi) the replacement, extension or renewal of any
Lien permitted by clauses (i) through (v) 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 December 31, 2002 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
Commitments of the 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 a Receivables
Financing Transaction;
(vi) Guaranties in respect of Indebtedness otherwise
permitted hereunder;
(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;
<PAGE> 74
70
(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 in
an aggregate principal amount for the Obligated Parties and
their respective Subsidiaries not exceeding $100,000,000 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) Indebtedness secured by Liens permitted by
Section 5.02(a)(v).
(xiii) Guaranties in respect of Indebtedness listed
on Schedule 5.02(b) hereto;
(xiv) 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;
(xv) 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
(xvi) 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
<PAGE> 75
71
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 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 Person, provided that, in the case of any such merger or
consolidation, the Person formed by such merger or consolidation, or
the Person to which all or a portion of such assets were transferred,
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, (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 and (iv) any Subsidiary of any
Obligated Party may merge into any Person pursuant to a transaction not
prohibited by Section 5.02(d); 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, provided, that the foregoing shall not
apply to (i) sales of inventory
<PAGE> 76
72
and other assets (including, without limitation, worn out and obsolete
equipment) in the ordinary course of business, (ii) dispositions of
assets conducted on an arm's length basis for a consideration of less
than $10,000,000 and (iii) dispositions of assets between or among an
Obligated Party and any of its Subsidiaries; 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 $101,000,000 after June 30, 1997; 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) 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
<PAGE> 77
73
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 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; (vi) the Borrower may make non-cash
dividends after the Effective Date in an aggregate amount not to exceed
$50,000,000; (vii) the Borrower may make a non-cash dividend of its
Borden Services division; and (viii) any Affiliate Guarantor may make
and pay dividends or distributions in amounts necessary to pay taxes
paid or payable in connection with any sale or disposition of assets by
such Affiliate Guarantor or its Subsidiaries.
(f) 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.
(g) 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.
(h) 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,
<PAGE> 78
74
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 or any Lender shall have any Commitment hereunder, the Borrower
will, unless the Required Lenders shall otherwise consent in writing, furnish to
the Lenders:
(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
<PAGE> 79
75
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 (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
<PAGE> 80
76
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
<PAGE> 81
77
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
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
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78
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) Environmental Matters. Promptly after obtaining knowledge
of any of the following environmental matters, unless such
environmental matters would not, 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.
(i) 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 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
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79
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>
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
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
and thereafter
</TABLE>
(b) Total Debt/EBITDA Ratio. Maintain a Total Debt/EBITDA
Ratio 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>
June 30, 1997 4.50:1.00
September 30, 1997 4.50:1.00
December 31, 1997 4.50:1.00
March 31, 1998 4.50:1.00
June 30, 1998 4.50:1.00
September 30, 1998 4.50:1.00
December 31, 1998 4.50:1.00
March 31, 1999 4.00:1.00
June 30, 1999 4.00:1.00
September 30, 1999 4.00:1.00
December 31, 1999 4.00:1.00
March 31, 2000 3.90:1.00
and thereafter
</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 to exceed
$275,000,000 in fiscal year 1997 or $250,000,000 in any fiscal year
thereafter,
<PAGE> 84
80
plus for the first year following any acquisition or investment by the
Borrower, any Affiliate Guarantor or their respective Subsidiaries, an
amount equal to 10% of the sales attributable to the Person or assets
acquired or investment made for the period of twelve consecutive
calendar months ended immediately prior to the date of determination,
plus for each year following the first anniversary of any acquisition,
an amount equal to 7.5% of such acquisition's target's sales for the
period of twelve consecutive calendar months ended immediately prior to
the date of determination and plus for any fiscal year Equity Proceeds
received by the Borrower or any Affiliate Guarantor on or after March
31, 1997; provided that any Capital Expenditure permitted but not made
in a prior year (commencing with the year 1997) 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 outside of the ordinary
course of business.
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 Section 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 failure shall remain unremedied for 30
days after written
<PAGE> 85
81
notice thereof shall have been received by the Borrower from the
Administrative Agent or the Required Lenders; or
(e) any Obligated 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 Obligated 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 Obligated 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 Obligated 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
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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
Obligated 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 any Obligated
Party or any of its Subsidiaries and any such judgment or order shall
not have been vacated, discharged, satisfied 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 provided that the Borrower maintains 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
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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 Lender to make Advances 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;
provided, however, that in the event of an actual or deemed entry of an order
for relief with respect to any Obligated Party under the Federal Bankruptcy
Code, (x) the obligation of each Lender to make Advances 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.
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
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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 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
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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 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:
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(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 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
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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
Revolver Termination Date, or, if the Term Loan Election shall have been made in
accordance with Section 2.04, the Maturity 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 Revolver Termination Date or, if the
Term Loan Election shall have been made in accordance with Section 2.04, the
Maturity 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
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disposition required to be applied pursuant to Section 2.06 shall be so applied.
(b) Upon the payment in full of the Guaranteed Obligations (on
or after the Revolver Termination Date or, if the Term Loan Election shall have
been made in accordance with Section 2.04, the Maturity 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
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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 Assumption Agreement entered into
by an Assuming Lender as provided in Section 2.18, or 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 Obligated Party),
independent public accountants 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 Obligated Party or to inspect
the property (including the books and records) of any Obligated 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
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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
Obligated Party, any of its Subsidiaries and any Person who may do business with
or own securities of any Obligated 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 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
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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 and (b) their
respective Unused 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
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
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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 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 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 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 Wise Holdings, at its address at 80 East Broad
Street, Columbus, Ohio 43215-3799; if to
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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 Assumption Agreement or the Assignment and Acceptance pursuant to which it
became a Lender, as the case may be; 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: Steve Sellhausen; 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 Obligated Party or with
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other creditors of any Obligated 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 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 the actual or proposed use of the proceeds of the Advances) whether
or not such investigation, litigation or proceeding is brought by any Obligated
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 proceeds of the Advances.
<PAGE> 99
95
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 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 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.
<PAGE> 100
96
(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.
SECTION 9.06. Binding Effect. This 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
<PAGE> 101
97
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 the Facility (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).
(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,
<PAGE> 102
98
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 Obligated Party or the performance or observance by the
Borrower or any other Obligated 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 Assumption Agreement and 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 of, and
principal amount of the Advances owing 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
<PAGE> 103
99
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 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 pursuant to such Assignment and Acceptance and, if the assigning Lender
has retained a Commitment hereunder, 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 hereto.
(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 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.
<PAGE> 104
100
(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.
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.
<PAGE> 105
101
SECTION 9.11. 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) 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.
(c) 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 9.12. 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.
<PAGE> 106
102
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> 107
103
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 FIRST BOSTON,
as Arranger
By_________________________________
Name:
Title:
By_________________________________
Name:
Title:
<PAGE> 108
104
BANKS
LEAD MANAGING AGENTS
BANKERS TRUST COMPANY
By ______________________________
Name:
Title:
THE CHASE MANHATTAN BANK
By ______________________________
Name:
Title:
CITIBANK, N.A.
By ______________________________
Name:
Title:
CREDIT SUISSE FIRST BOSTON
By ______________________________
Name:
Title:
By ______________________________
Name:
Title:
SENIOR MANAGING AGENTS
<PAGE> 109
105
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:
MANAGING AGENTS
THE BANK OF NEW YORK
By ___________________________________
Name:
Title:
BANK OF TOKYO - MITSUBISHI
TRUST COMPANY
<PAGE> 110
106
By ___________________________________
Name:
Title:
THE FIRST NATIONAL BANK
OF CHICAGO
By ___________________________________
Name:
Title:
<PAGE> 111
107
THE FUJI BANK, LIMITED
By ___________________________________
Name:
Title:
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<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
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