RBX CORP, 10-Q, 1996-08-14

RBX CORP
10-Q, 1996-08-14
FABRICATED RUBBER PRODUCTS, NEC

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<PAGE>

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities

Exchange Act of 1934
FOR THE PERIOD ENDED JUNE 30, 1996

OR
____ Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934

COMMISSION FILE NUMBER: 333-1992

RBX CORPORATION

(Exact name of Registrants as specified in their charters)
---------------------------------------------------------

DELAWARE 94-3231901

(State or other jurisdiction of (I.R.S. Employer
incorporate or organization) Identification No.)

5225 VALLEYPARK DRIVE
ROANOKE, VIRGINIA 24019
(Address of principal executive offices)

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
------ ------

The number of Common Shares of RBX Corporation, $0.01 per share par value,
outstanding as of June 30, 1996 was 1,000.
<PAGE>

RBX CORPORATION

Index
-----
<TABLE>
<CAPTION>
Pages
Part I. Financial Information

Item 1. Financial Statements
<S> <C>
Condensed Consolidated Balance Sheets as of December 31, 1995 and June 30,
1996 (unaudited)............................................................. 2
Condensed Consolidated Statements of Operations for the quarters ended June
30, 1996 and June 30, 1995 and 6 months ended June 30, 1996 and June 30, 1995
(unaudited).................................................................. 3
Condensed Consolidated Statements of Cash Flows for the quarters ended June
30, 1996 and June 30, 1995 and 6 months ended June 30, 1996 and June 30, 1995
(unaudited).................................................................. 4
Notes to Condensed Consolidated Financial Statments (unaudited)................ 5

Item 2: Management's Discussion and Analysis of Financial Condition and
Results of Operations.......................................................... 9-12

Part II. Other Information

Item 6: Exhibits and reports on Form 8-K.................................. 13
Signature................................................................. 14
</TABLE>

Note: On March 5, 1996, RBX Corporation filed a registration statement under the
Securities Act of 1933 (File #333-1992), registering the issuance of $100
million of debt securities, which was amended on April 15, 1996 and April 24,
1996.
<PAGE>

Part 1 - Financial Information
Item 1 - Financial Statements

RBX CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands of dollars, except share data)

ASSETS

<TABLE>
<CAPTION>
December 31, June 30,
1995 1996
---------- ---------
<S> <C> <C>
Cash and cash equivalents........................................................... $ 5,823 $ 2,286
Accounts receivable, less allowance for doubtful accounts of $1,678 and $1,797
respectively...................................................................... 38,198 46,260
Inventories......................................................................... 42,364 42,924
Deferred income taxes............................................................... 3,129 2,971
Prepaid and other current assets.................................................... 2,000 2,840
---------- ---------
Total current assets............................................................. 91,514 97,281

Property, plant and equipment, net.................................................. 81,277 85,959
Deferred income taxes, non-current.................................................. 1,411 2,869
Intangibles and other assets, net................................................... 111,534 125,989
---------- ---------

Total assets.................................................................... $ 285,736 $ 312,098
========== =========

LIABILITIES AND STOCKHOLDER'S EQUITY

Accounts payable.................................................................... $ 13,886 $ 15,471
Accrued liabilities................................................................. 14,367 15,919
Current portion of postretirement benefit obligation................................ 1,850 1,850
Current portion of long-term debt................................................... 356 350
---------- ---------
Total current liabilities......................................................... 30,459 33,590

Long-term debt...................................................................... 171,389 182,715
Postretirement benefit obligation................................................... 31,745 32,214
Other liabilities................................................................... 11,569 11,784

Commitments and contingencies....................................................... - -

Stockholder's equity:
Common stock, $0.01 par value, 1,000 shares authorized, issued and outstanding... - -
Additional paid-in-capital....................................................... 43,895 58,925
Retained deficit................................................................. (3,321) (7,130)
---------- ---------

Total stockholder's equity....................................................... 40,574 51,795
---------- ---------

Total liabilities and stockholder's equity....................................... $ 285,736 $ 312,098
========== =========
</TABLE>

See notes to condensed consolidated financial statements.

2
<PAGE>

RBX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands of dollars)

<TABLE>
<CAPTION>
Predecessor Company Predecessor Company
-------------- -------------- -------------- --------------
3 Months 3 Months 6 Months 6 Months
Ended June 30, Ended June 30, Ended June 30, Ended June 30,
1995 1996 1995 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Net sales........................................................... $ 70,003 $ 70,552 $ 143,668 $ 138,538
Cost of goods sold.................................................. 56,561 59,953 116,753 117,923
---------- ---------- ---------- ----------
Gross profit........................................................ 13,442 10,599 26,915 20,615

Selling, general and administrative costs........................... 6,825 6,881 13,787 13,878
Settlement with former owners....................................... 620 0 620 0
Management fees..................................................... 94 249 190 501
Amortization of goodwill and other intangibles...................... 178 920 360 1,801
Other income........................................................ (9) (3) (13) (9)
---------- ---------- ---------- ----------
Operating income ................................................... 5,734 2,552 11,971 4,444

Interest expense, including amortization of deferred financing fees. 2,226 4,636 4,437 9,158
---------- ---------- ---------- ----------
Income (loss) before income taxes.................................. 3,508 (2,084) 7,534 (4,714)
Income taxes (benefit)............................................. 861 (331) 2,484 (905)
---------- ---------- ---------- ----------
Net income (loss).................................................. $ 2,647 $ (1,753) $ 5,050 $ (3,809)
========== ========== ========== ==========
</TABLE>

See notes to condensed consolidated financial statements.

<PAGE>

RBX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of dollars)
<TABLE>
<CAPTION>
Predecessor Company Predecessor Company
----------- --------- ----------- ---------
3 Months 3 Months 6 Months 6 Months
Ended Ended Ended Ended
30-Jun-95 30-Jun-96 30-Jun-95 30-Jun-96
----------- --------- --------- ---------
<S> <C> <C> <C> <C>
Operating activities
Net income (loss)...................................................... $ 2,647 $ (1,753) $ 5,050 $ (3,809)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation.......................................................... 1,839 1,841 3,675 3,598
Amortization.......................................................... 281 1,137 558 2,238
Gain on disposition of equipment...................................... (33) (3) (13) (9)
Provision for deferred income taxes................................... 154 (638) 332 (1,458)
Changes in assets and liabilities net of effect of
business acquisition:
(Increase) decrease in receivables ................................... 587 (242) (5,901) (4,324)
(Increase) decrease in inventories.................................... (800) 3,022 (1,701) 1,282
Increase (decrease) in accounts payable............................... 692 (1,283) 3,228 691
Increase (decrease) in accrued liabilities............................ (1,632) (2,242) (578) 609
Increase in prepaid and other assets.................................. (58) (56) (719) (703)
Increase (decrease) in other liabilities.............................. 193 (207) 424 585
-------- --------- --------- ---------
Net cash provided by (used in) operating activities.................... 3,870 (424) 4,355 (1,300)

Investing activities
Capital expenditures................................................... (2,033) (1,437) (3,056) (2,577)
Acquisitions, net of cash acquired..................................... (1,337) (20,538) (1,337) (20,538)
Proceeds from disposition of equipment................................. 48 3 64 9
-------- --------- --------- ---------
Net cash used in investing activities.................................. (3,322) (21,972) (4,329) (23,106)

Financing activities
Contribution to capital................................................ 0 10,030 0 10,030
Proceeds from borrowings............................................... 0 19,500 2,000 19,500
Payments of financing fees............................................. 0 (300) 0 (481)
Principal payments on long-term debt................................... (2,633) (8,086) (3,781) (8,180)
-------- --------- --------- ---------
Net cash provided by (used in) financing activities.................... (2,633) 21,144 (1,781) 20,869

Net increase (decrease) in cash and cash equivalents................... (2,085) (1,252) (1,755) (3,537)
Cash and cash equivalents at beginning of period....................... 536 3,538 206 5,823
-------- --------- --------- ---------
Cash and cash equivalents at end of period............................. $ (1,549) $ 2,286 $ (1,549) $ 2,286
======== ========= ========= =========
</TABLE>

See notes to condensed consolidated financial statements.

4
<PAGE>

RBX CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(DOLLAR AMOUNTS ARE IN THOUSANDS, EXCEPT AS OTHERWISE NOTED)

1. SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The balance sheet at December 31, 1995 is condensed financial information taken
from the audited balance sheet. The interim financial statements are unaudited.
The financial statements of RBX Investors Inc. and subsidiaries (the
"Predecessor") and RBX Corporation and subsidiaries (the "Company") have been
prepared in accordance with generally accepted accounting principles and, in the
opinion of management, reflect all adjustments (consisting of normal recurring
accruals) necessary for a fair presentation in accordance with generally
accepted accounting principles for the periods presented. The results of
operations and cash flows for the interim periods presented are not necessarily
indicative of the results for the full year.

2. ACQUISITIONS

On October 16, 1995, pursuant to a plan of merger, the Company acquired the
Predecessor for approximately $201.6 million plus direct expenses of the
acquisition of approximately $3.6 million (the "Acquisition"). The purchase cost
was composed of $94.1 million in cash, $3.9 million in Preferred Stock of RBX
Group, Inc. (having an aggregate liquidation value of $9.0 million) and
assumption of $95.5 million in debt and $8.1 million in unpaid seller expenses.

The Acquisition has been accounted for using the purchase method of accounting,
whereby the excess of the purchase cost over the recorded book value of net
assets acquired has been allocated to the fair value of tangible and
identifiable intangible assets acquired and liabilities assumed based on
independent valuations and other studies that are substantially complete. The
Company does not expect the effect of any final adjustment to such valuations
and studies to result in a material adjustment to the final purchase allocation.

The Acquisition was financed through an equity contribution from RBX Group, Inc.
of $43.9 million in cash and in-kind payments in exchange for all of the
outstanding shares of the Company's common stock, the sale of $100 million in
11-1/4% Senior Subordinated Notes, and proceeds of approximately $61.3 million
from borrowings under the Credit Agreement. In addition, certain options to
purchase the common stock of the Predecessor that were held by continuing
management employees prior to the time of the Acquisition, were converted into
options to acquire the common stock of RBX Group Inc. The rollover of such
options does not represent a change in the basis of underlying assets or
liabilities in the Acquisition, since RBX Group's basis in the options was equal
to the predecessor option holders basis of zero.

Interest on the Senior Subordinated Notes is payable semi-annually on April 15
and October 15 of each year. The terms of the Credit Agreement and the Senior
Subordinated Notes include various financial covenants which place limits on,
among other things, the ability of RBX Corporation and its subsidiaries to incur
additional indebtedness and issue preferred stock, incur liens, pay dividends or
make other distributions, repurchase equity interests or subordinated
indebtedness. As of June 30, 1996 the Company was in compliance with all
covenants which pertain to the Credit Agreement and Senior Subordinated Notes
(See Note 6).

On June 10, 1996, Rubatex Corporation, a wholly owned subsidiary of the Company,
acquired certain assets and assumed certain liabilities of the Ensolite(R)
division of Uniroyal Technology Corporation ("Uniroyal") for an aggregate
purchase price of $25.0 million plus direct expenses of approximately $1.8

5
<PAGE>

RBX CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

million ("Ensolite Acquisition"). Ensolite is a manufacturer of certain types
of closed-cell foam. The Company obtained the funds necessary to consummate
this transaction from the proceeds of additional Tranche B Term Loans of $10.0
million and a equity contribution by RBX Group of $15.0 million. The equity
contribution was derived from a $10.0 million cash contribution to RBX Group by
American Industrial Partners Capital Fund, L.P. and from a subordinated
unsecured note of $5.0 million issued by RBX Group to Uniroyal, bearing interest
at 11.75% per annum.

3. INVENTORIES

Components of inventory are as follows:

<TABLE>
<CAPTION>
As of As of
December 31, 1995 June 30, 1996
----------------- -------------
<S> <C> <C>

Raw materials $15,096 $14,890
Work-in-process 4,354 4,552
Finished goods 22,914 23,482
------- -------
$42,364 $42,924
======= =======
</TABLE>

4. INCOME TAXES

During 1996, the Company's effective income tax rate changed from an expense of
39.8% through the first six months of 1995 to a benefit of 19.2% through the
first six months of 1996. This change is primarily the result of a loss in 1996
compared to income in 1995, and an increase in the amount of nondeductible
goodwill amortization for the first six months of 1996 related to the
Acquisition.

5. GOODWILL

In connection with the Ensolite Acquisition, $16.1 million of goodwill
represents the excess of cost over fair value of the net assets acquired and is
being amortized on a straight line basis over 40 years.

6. LONG TERM DEBT

RBX Corporation is a holding company with no assets or operations other than its
investments in its subsidiaries. All of RBX Corporation's subsidiaries are
wholly owned and have guaranteed the Senior Subordinated Notes on a full,
unconditional, and joint and several basis. Management has determined that
separate financial statements of the guarantor subsidiaries would not be
material to an investor. Accordingly, separate financial statements of the
guarantor subsidiaries have not been presented.

In connection with the Ensolite Acquisition (see note 2) and the decline in
sales and operating profits, the Company has entered into an amendment of the
Credit Agreement dated February 28, 1996 (the "Credit Agreement Amendment"). The
Credit Agreement Amendment modifies the financial covenants of the Company to
provide the Company with greater flexibility. Such changes to the Company's
financial covenants under the Credit Agreement were not contingent on the
consummation of the Ensolite Acquisition. In addition, the Credit Agreement
Amendment modified certain restrictions under the Credit Agreement that would
otherwise prohibit the consummation of the Ensolite Acquisition, provided an
additional $10 million in term loans which could be borrowed only in connection
with the consummation of the Ensolite Acquisition and provided modified
financial covenants with the consummation of the Ensolite Acquisition. As a
result of the amendment, the Company incurred $0.2 million in financing fees
paid at the effective date of the amendment. The Company also agreed to pay a
0.125% additional applicable margin on all Tranche A ABR and Eurodollar loans
and 0.25% on all Tranche B ABR and Eurodollar loans effective with the date of
the amendment.

6
<PAGE>

RBX CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

On April 15, 1996, the Company obtained revised loan covenant restrictions by
amending the Credit Agreement ("Credit Agreement Amendment No. 2") due to the
decline in sales and operating profits compared to prior year's quarters. As a
result of Credit Agreement Amendment No. 2 and the additional Tranche B loan
required to complete the Ensolite Acquisition, the Company incurred $0.3 million
in financing fees paid at the consummation of the Ensolite Acquisition. The
Company also agreed to pay a 0.25% additional applicable margin on all Tranche A
and Tranche B ABR and Eurodollar loans effective as of the date of Credit
Agreement Amendment No. 2.

As of June 30, 1996, the Company had an outstanding irrevocable standby letter
of credit of $2.2 million as part of its casualty insurance program. The Company
also had outstanding borrowings under the revolving credit facility in the
amount of $1.5 million. At June 30, 1996, the Company had available unused
borrowing capacity under the revolving credit facility of $26.3 million.

On July 10, 1996, the Company paid off the outstanding borrowings under the
revolving credit facility and currently has no outstanding revolving loans. The
available revolving loan facility is $27.8 million.

The Company's Credit Agreement includes certain financial covenants including
leverage ratios, interest expense ratios, and minimum levels of Earnings Before
Interest, Taxes, Depreciation and Amortization (EBITDA), as defined by the
Credit Agreement. As of June 30, 1996, the Company was in compliance with all
the covenants.

7. CONTINGENT LIABILITIES

The Company and its subsidiaries are involved in various suits and claims in the
normal course of business. In the opinion of management, after consultation with
counsel, the ultimate liabilities and losses, if any, that may result from such
suits and claims are not expected to have a material adverse effect on the
financial position, and results of operations or liquidity of the Company.

The Company is subject to federal, state and local environmental laws which
regulate air and water emissions and discharges; the generation, storage,
treatment, transportation and disposal of solid and hazardous waste; and, the
release of hazardous substances, pollutants and contaminants into the
environment. In addition, in some circumstances, the Company is responsible for
the environmental condition of the property prior to transfer or sale to the
Company. The Company is involved in various environmental remediation activities
resulting from past operations, including designation as a potentially
responsible party, with others, at various EPA designated Superfund sites. In
developing its estimate of environmental remediation costs, the Company
considers, among other things, currently available technological solutions,
alternative cleanup methods and risk-based assessments of the contamination, and
estimates developed by independent environmental consultants. The Company does
not maintain insurance coverage for environmental matters.

Reserves have been recorded which, in management's best estimate, will be
sufficient to satisfy anticipated costs of known remediation requirements. At
June 30, 1996, approximately $2.1 million for estimated environmental
remediation costs have been accrued of which $1.4 million relates to estimated
costs to remove underground storage tanks; substantially all of this amount is
included in long-term liabilities. Expenditures relating to costs currently
accrued are expected to be made over the next 5 to 10 years. As a result of
factors such as the continuing evolution of environmental laws and regulatory
requirements, the availability and application of technology, the identification
of presently unknown remediation sites, estimated costs for future environmental
compliance and remediation are necessarily imprecise, and it is not possible to
predict the amount or timing of future costs of environmental remediation
requirements which may subsequently be determined. Based upon information
presently available, such future costs are not expected to have a material
adverse effect on the Company's competitive or financial position or its ongoing
results of operations. However, such costs could be material to results of
operations in a future period.

7
<PAGE>

RBX CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

8. SUPPLEMENTAL CASH FLOW INFORMATION

Non-cash investing and financing activities of the Company for the six month
period ended June 30, 1996 are as follows:

<TABLE>
<CAPTION>
<S> <C>
Acquisition of Ensolite:
Fair value of assets acquired $ 27,700
Cash paid (20,538)
Non-cash capital contribution (5,000)
--------
Liabilities assumed $ 2,162
========
</TABLE>

8
<PAGE>

ITEM 2.

RBX CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

INTRODUCTION

As further discussed in Note 2 to the Company's Consolidated Financial
statements, pursuant to a plan of merger, the Company acquired RBX Investors Inc
(the "Predecessor") on October 16, 1995, (the "Acquisition Transactions"). In
addition, the Predecessor acquired OleTex on September 30, 1994, Halstead on
December 30, 1994 and the Company purchased Ensolite on June 10, 1996. All such
acquisitions (the "Acquisitions") were accounted for using the purchase method
of accounting and accordingly, the operating results of the Predecessor and the
Company reflect the operations of OleTex, Halstead and Ensolite subsequent to
the dates of their respective acquisitions.

The Company experienced a decline in sales and operating profits in the last
half of 1995 compared to results for the same period in 1994, pro forma for the
Halstead and OleTex acquisitions. This decline continued into the first quarter
of 1996 but a recovery began in the second quarter of 1996. The Company
attributes the performance decline to an overall decrease in demand for rubber
foam in the second half of 1995 paired with quality and service problems at the
Company's Bedford, Virginia operation. In addressing these problems, management
has undertaken or expects to undertake a number of manufacturing and service
improvement initiatives. In connection with these initiatives, the Company hired
a new general manager for the Bedford plant in January of 1996. Programs have
been initiated to improve work practices and operating procedures. Capital
projects are being developed to improve process controls and production flow.
The recovery of sales in the second quarter reflects the benefit of these
initiatives. As Bedford's quality and service issues continue to be addressed,
the Company anticipates sales and operating profits will continue to recover.

BASIS OF PRESENTATION

The following table sets forth, for the periods shown, net sales, cost of goods
sold, gross profit, selling, general and administrative expense, operating
income in millions of dollars and as a percentage of net sales.

<TABLE>
<CAPTION>
Three months ended June 30 Six Months Ended June 30
--------------------------- --------------------------
1995 1996 1995 1996
---- ---- ---- ----
$ % $ % $ % $ %
------ ---- ------ ---- ------ ---- ------ -----

<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Sales 70.0 100.0 70.6 100.0 143.7 100.0 138.5 100.0
Cost of goods sold 56.6 80.9 60.0 85.0 116.8 81.3 117.9 85.1
Gross profit 13.4 19.1 10.6 15.0 26.9 18.7 20.6 14.9
SG&A 6.8 9.7 6.9 9.8 13.8 9.6 13.8 10.0
Operating Income 5.7 8.1 2.6 3.7 12.0 8.4 4.4 3.2
Net Income 2.6 3.7 -1.7 -2.4 5.0 3.5 -3.8 -2.7
</TABLE>

COMPARISON OF RESULTS OF OPERATIONS

Three Months Ended June 30, 1996 Compared to Three Months Ended June 30, 1995

Net Sales. Net sales increased to $70.6 million for the three months ended June
30, 1996 from $70.0 million for the comparable period in 1995 an increase of
$0.6 million or 0.9%. Ensolite added $1.3 million since its acquisition. Without
Ensolite sales would have decreased by $0.7 million or 1%. Sales for the Foam
group increased to $52.8 million from $50.6 million, an increase of $2.2 million
or 4.3%. Excluding Ensolite, sales increased $0.9 million or 1.8%. Sales
increased at Rubatex, Groendyk and

9
<PAGE>

Universal Polymer. The increase at Rubatex represents a reversal of the trend
over the last three quarters of unfavorable comparisons with sales from the
prior periods and is a 7.8% increase over the 1996 first quarter's sales.
Increases over the prior year have been in sheets, extruded shapes, drink cup
holders and fabricated parts. OleTex sales continued their recovery in
comparison to the levels experienced at the end of 1995, and represent a 14.4%
increase over the 1996 first quarter's sales. Sales of the Mixing Group
decreased to $19.7 million from $21.0 million in the second quarter of 1995, a
decrease of $1.3 million or 6.2% due to a general overall economic slowdown in
their markets.

Gross Profit. Gross profit decreased to $10.6 million in the second quarter of
1996 from $13.4 million in the second quarter of 1995, a decrease of $2.8
million or 20.9%. As a percentage of net sales, gross profit decreased to 15.0%
in the second quarter of 1996 from 19.1% in the same period in 1995. Rubatex
profits were hurt by $0.5 million due to losses related to a fire and physical
inventory adjustment at Bedford. Rubatex profits were also affected by $0.7
million due to sale of products that carried the higher costs associated with
less efficient operations from the first quarter of the year. The Groendyk
profits were down $0.2 million due to less favorable sales mix. All other
operations in the Foam Group experienced increases in gross profit for the
second quarter of 1996 in comparison to the year earlier period. The Mixing
Group experienced a decline in gross profit of $1.0 million due to lower volumes
and a more competitive pricing market.

SG&A SG&A was $6.9 million in the quarter ended June 30, 1996, an increase of
$0.1 million, from the second quarter of 1995. As a percentage of sales, SG&A
increased to 9.8% in the quarter from 9.7% in the 1995 period.

Operating Income. Operating income decreased to $2.6 million in the first
quarter of 1996 from $5.7 million in 1995, a decrease of $3.1 million or 63.3%.
As a percentage of net sales, operating income decreased to 3.7% in 1996 from
8.1% in 1995. The decrease is primarily due to the decrease in gross profits.
In addition the combination of a $0.9 million increase in management fees and
increased amortization of goodwill, partially offset by the impact of a $0.6
million settlement with former owners in 1995, reduced operating profit by $0.3
million. Operating income improved by $0.7 million or 36.8% over the 1996 first
quarter.

Net Income. Net income decreased to a net loss of $1.7 million for the three
months ended June 30, 1996 from net income of $2.6 million for the comparable
period in 1995, a decrease of $4.3 million. Interest expense increased $2.4
million in 1996 due to the increased debt related to the Acquisitions.

Six Months Ended June 30, 1996 Compared to Six Months Ended June 30, 1995

Net Sales. Net sales decreased to $138.5 million for the six months ended June
30, 1996 from $143.7 million for the comparable period in 1995, a decrease of
$5.2 million or 3.6%. Sales for the Foam Group decreased to $101.1 million from
$103.2 million, a decrease of $2.1 million or 2.0%. OleTex sales were down 13.9%
as they had experienced market softness in the last half of 1995 and are in the
process of a gradual recovery in the first half of 1996. Rubatex sales,
excluding the Ensolite acquisition, were down 2.9%, which also represents a
recovery from being down 8.6% in the first quarter. Sales of the Mixing Group
decreased to $41.4 million from $44.2 million, a decrease of $2.8 million or
6.3% due to a general overall economic slowdown in their markets.

Gross Profit. Gross profit decreased to $20.6 million in the first half of 1996
from $26.9 million in the first half of 1995, a decrease of $6.3 million or
23.4%. As a percentage of net sales, gross profit decreased to 14.9% in the
first half of 1996 from 18.7% in the first half of 1995. Rubatex, OleTex and
Groendyk experienced lower profits due to a combination of lower sales volumes
and increased raw material costs. Quality problems also hurt the Bedford
operation early in the year, and Groendyk experienced a non-recurring $0.7
million net reduction in earnings, principally as a result of an inventory
adjustment. Other operations in the Foam Group experienced increases in gross
profit for the first half of 1996 in

10
<PAGE>

comparison to the year earlier period. The Mixing Group experienced a decline in
gross profit due to lower volumes and a more competitive pricing market.

SG&A. SG&A was $13.8 million in the first half of 1996, the same as in the first
half of 1995. As a percentage of sales, SG&A increased to 10.9% in the first
half of 1996 from 9.6% for the same period in 1995.

Operating Income. Operating income decreased to $4.4 million in the first half
of 1996 from $12.0 million for the same period in 1995, a decrease of $7.5
million or 62.8%. The decrease is primarily due to the decrease in gross
profits. In addition the combination of a $1.8 million increase in management
fees and increased amortization of goodwill, partially offset by the impact of
$0.6 million settlement in 1995, reduced operating profit by $1.2 million.

Net Income. Net income decreased to a net loss of $3.8 million for the first
half of 1996 from net income of $5.0 million for the comparable period in 1995,
a decrease of $8.8 million. Interest expense increased $4.5 million in 1996 due
to the increased debt related to the Acquisitions.

LIQUIDITY AND CAPITAL RESOURCES

The Company's primary source of liquidity is cash flow from operations,
supplemented by borrowings under the Credit Agreement.

Cash Flow From Operating Activities. Cash flows from operations for the three
months ended June 30, 1995 and the three months ended June 30, 1996 was $3.9
million and a negative $0.4 million, respectively. Cash flows from operating
activities are lower than historical levels because of the lower operating
profit and the increased interest expense resulting from the debt incurred in
connection with the Acquisitions.

Cash Flows From Investing Activities. The Company's cash used in investing
activities was $27.0 million in the three months ended June 30, 1996 compared to
$3.3 million in the same period of 1995. The Ensolite acquisition required $20.5
million in the 1996 second quarter whereas in the 1995 second quarter $1.3
million was spent to complete the Halstead acquisition. An additional $1.0
million is expected to be spent in the third quarter in connection with the
Ensolite acquisition and additional $7.3 million is expected over the next three
quarters to relocate the Ensolite assets. The Company anticipates increases in
capital spending of approximately $3.7 million related to the proposed
expansion/modernization project at Groendyk and $2.3 million for the
modernization project at the Rubatex-Bedford facility in the 1996 and 1997 time
frame, and approximately $0.5 million in capital related to the proposed
combining of the Universal Rubber and Rubatex Polymer facilities.

Cash Flows From Financing Activities: Concurrently with the Acquisition
Transactions, the Company entered into the Credit Agreement with certain banks.
The Credit Agreement has a maximum borrowing capacity of $100 million and is
secured by the assets of the Company and its subsidiaries. The Company uses $2.2
million of its line of credit for standby letters of credit as part of its
casualty insurance program which leaves availability under the revolving credit
facility at $27.8 million. At June 30, 1996 $1.5 million had been borrowed
against this facility which was subsequently paid off as of July 10, 1996. The
Company financed the Ensolite Acquisition with a $10 million cash equity
contribution from its parent and a $10 million term loan with payments beginning
on December 31, 1997 and maturing in December 2003. The Company also agreed to
an additional margin on all ABR and Eurodollar loans, modifications to certain
covenant provisions, and incurred $0.3 million in finance fees related to the
second quarter amendment in addition to the $0.2 million related to the first
quarter amendment to the Credit Agreement which allowed the financing for the
Ensolite Acquisition.

EBITDA: Earnings Before Interest Taxes Depreciation and Amortization (EBITDA) as
defined by the Credit Agreement, prior to subordinated management fees,
decreased to $5.7 million for three months

11
<PAGE>

ended June 30, 1996 from $9.4 million for the comparable period in 1995, a
decrease of $3.7 million. Reasons for the decline in EBITDA are the same as
those given for the decline in operating income as discussed above.

Management believes EBITDA is one indicator of a company's liquidity. However,
EBITDA, as presented above, may not be comparable to similarly titled measures
of other companies unless such measures are calculated in substantially the same
fashion. The Company believes that EBITDA, while providing useful information,
does not represent cash available to service debt and that it should not be
considered in isolation or as a substitute for the consolidated income statement
prepared in accordance with generally accepted accounting principles. For
example, EBITDA should not be considered an alternative to net income as an
indicator of operating performance or an alternative to the use of cash flows as
a measure of liquidity. Moreover, EBITDA does not reflect, as does cash flow
from operations, the cash needed to support changes in the working capital.

12
<PAGE>

PART II: OTHER INFORMATION

RBX CORPORATION

ITEM 6: EXHIBITS AND REGISTRATION FORM 8-K

a. Exhibits - Financial Data Schedule
b. Report on Form 8-K:
During the second quarter of 1996, the Company filed the following
report on Form 8-K:
Current report dated June 25, 1996 reporting the Rubatex
Corporation (a wholly-owned subsidiary of RBX Corporation)
acquisition of certain assets and liabilities of the Ensolite(R)
division of Uniroyal Technology Corporation.

13
<PAGE>

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, each of the
Registrants has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

RBX CORPORATION
---------------
(REGISTRANT)

Date: August 14, 1996 /s/ THOMAS F. LEMKER
----------------------- -----------------------------
THOMAS F. LEMKER
VICE PRESIDENT, CHIEF FINANCIAL
OFFICER & TREASURER

14
<PAGE>

RBX CORPORATION
---------------

EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit Page No.
- ------- -------
<S> <C> <C>
3.1 Certificate of Incorporation of RBX Corporation.*

3.2 By-laws of RBX Corporation.*

3.3 Certificate of Incorporation of each Subsidiary Guarantor.*

3.4 By-laws of each Subsidiary Guarantor.*

4.1 Indenture, dated as of October 16, 1995, among RBX Corporation,
each Subsidiary Guarantor and United States Trust Company of New
York, as Trustee.*

4.2 Forms of Series A and Series B 11 1/4% Senior Subordinated Notes
including the Form of Subsidiary Guarantees.*

4.3 Purchase Agreement, dated as of October 6, 1995, among RBX
Corporation, each Subsidiary Guarantor (effective as of October
16, 1995), Donaldson, Lufkin & Jenrette Securities Corporation
and Chemical Securities Inc.*

4.4 Registration Rights Agreement, dated as of October 16, 1995, by
and among RBX Corporation, each Subsidiary Guarantor, Donaldson,
Lufkin & Jenrette Securities Corporation and Chemical Securities
Inc.*

4.5 Stockholders Agreement, dated as of October 16, 1995, among RBX
Group, Inc., American Industrial Partners Capital Fund II, L.P.
and certain other signatories thereto.*

4.6 Securities Purchase Agreement, dated as of June 10, 1996, among
RBX Group, Inc. and American Industrial Partners Capital Fund,
L.P.

4.7 Stockholders Agreement, dated as of June 10, 1996, among RBX
Group, Inc. and American Industrial Partners Capital Fund, L.P.

10.1 Credit Agreement (the "Credit Agreement"), dated as of October
16, 1995, among RBX Corporation, RBX Group, Inc., the several
banks and other financial institutions from time to time parties
thereto (the "Lenders") and Chemical Bank (the "Agent").*

10.2 Amendment No. 1 dated as of February 28, 1995, to the Credit
Agreement among RBX Corporation, RBX Group, Inc., the Lenders and
the Agent.*

10.3 Amendment No. 2 dated as of April 15, 1996, to the Credit
Agreement among RBX Corporation, RBX Group, Inc., and the Lenders
and the Agent.

10.4 Toll Manufacturing Agreement dated as of June 10, 1996 by and
between Rubalex Corporation and Uniroyal Technology Corporation.

10.5 Security Agreement, dated as of October 16, 1995, made by RBX
Corporation, in favor of the Agent.*

10.6 Pledge Agreement, dated as of October 16, 1995, made by RBX
Corporation in favor of the Agent.*

10.7 Form of Security Agreement, dated as of October 16, 1995, made by
each Subsidiary Guarantor in favor of the Agent.*
</TABLE>

- --------------------------------------------
* Incorporated by reference to Registration Statement of RBX Corporation on Form
S-4, File #333-1992, filed March 5, 1996 and amended on April 15, 1996 and April
24, 1996.

-ii-
<PAGE>

<TABLE>
<CAPTION>
Exhibit Page No
- ------- -------
<S> <C> <C>
10.8 Form of Pledge Agreement, dated as of October 16, 1995, made by
each Subsidiary Guarantor in favor of the Agent.*

10.9 Form of Subsidiaries' Guarantee, dated as of October 16, 1995,
made by each Subsidiary Guarantor in favor of the Agent.*

10.10 Agreement and Plan of Merger, dated as of August 2, 1995, by and
among RBX Investors, Inc. RBX Group, Inc., RBX-AIP Acquisition,
Inc. and AEA Investors, Inc.*

10.11 Amendment to Agreement and Plan of Merger, dated as of September
25, 1995, by and among RBX Investors, Inc., RBX Group, Inc., RBX-
AIP Acquisition, Inc. and AEA Investors, Inc.*

10.12 Management Services Agreement, dated as of October 16, 1995, by
and among RBX Group, Inc., RBX Corporation, each of the
Subsidiary Guarantors, and American Industrial Partners.*

10.13 Management Stock Option Plan Adopted by the Board of Directors of
RBX Group, Inc. as of October 16, 1995.*

10.14 Employment Agreement between RBX Corporation and Steven W.
Schaefer.*

10.15 Employment Agreement between RBX Corporation and John D. Fisher.*

10.16 Employment Agreement between RBX Corporation and Thomas F.
Lemker.*

10.17 Employment Agreement between RBX Corporation and Frank H. Roland.*

10.18 Employment Agreement between RBX Corporation and Gerald J. Kirschke.*

10.19 Executive Employees Supplemental Retirement Plan as Amended and
Restated December 15, 1993.*

10.20 Pension Plan effective as of January 1, 1991.*

27 Financial Data Schedule.

</TABLE>

-ii-

<PAGE>
Exhibit 4.6

SECURITIES PURCHASE AGREEMENT

SECURITIES PURCHASE AGREEMENT dated as of June 10, 1996 among RBX
GROUP, INC., a Delaware corporation (the "Company"), and American Industrial
Partners Capital Fund, L.P. (the "Purchaser").

This Agreement provides for the purchase (the "Purchase") by the
Purchaser of 100,000 shares of the Company's common stock, $.01 par value (the
"Common Stock"), all upon the terms and subject to the conditions set forth
herein.

NOW, THEREFORE, in consideration of the mutual undertakings contained
herein, the parties agree as follows:

Section 1. Purchase of Shares. On the date of execution of this
Agreement, (i) the Purchaser shall purchase, and the Company shall sell to the
Purchaser, 100,000 shares of Common Stock at $100 per share for a total purchase
price of Ten Million Dollars ($10,000,000), and (ii) the Purchaser shall execute
the Stockholders Agreement in the form of Exhibit A hereto (the "Stockholders
Agreement"). The purchase price for the Common Stock purchased by the Purchaser
pursuant to this Section 1 shall be payable by certified check or by wire
transfer of immediately available funds.

Section 2. Conditions. The obligation of the Purchaser to purchase the
shares of Common Stock to be acquired by the Purchaser hereunder is subject to
the concurrent consummation of the transactions contemplated by the Asset
Purchase Agreement, dated as of June 5, 1996, by and among Rubatex Corporation
and Uniroyal Technology Corporation.

Section 3. Investment Representations. The Purchaser represents and
warrants (i) that the Common Stock to be acquired by the Purchaser pursuant to
this Agreement will be acquired for the Purchaser's own account and not with a
view to, or present intention of, distribution thereof in violation of the
Securities Act of 1933, as amended (the "Securities Act"), and will not be
disposed of in contravention of the Securities Act, this Agreement or the
Stockholders Agreement; (ii) that the Purchaser is able to bear the economic
risk of an investment in the Common Stock for an indefinite period of time
inasmuch as the Common Stock has not been registered under the Securities Act
and, therefore, cannot be sold unless subsequently registered under the
Securities Act or an exemption from such registration is available; and (iii)
that the Purchaser has had an opportunity to ask questions and receive answers
concerning the terms and conditions of their purchase of the Common Stock, has
had full access to such other information concerning the Company and its
subsidiaries as the Purchaser has requested.

Section 4. Notices. All notices, demands or other communications to be
given or delivered under or by reason of the provisions of this Agreement will
be in writing and will be deemed to have been given when delivered personally,
mailed by certified or registered mail,
<PAGE>

return receipt requested and postage prepaid, sent via a nationally recognized
overnight courier, or via facsimile confirmed in writing to the recipient. Such
notices, demands and other communications will be sent to the address indicated
below:

To the Company:

RBX Group, Inc.
5221 ValleyPark Drive
Roanoke, VA 24019
Attention: President
Telecopy No.: (540) 561-6033

With copies to:

American Industrial Partners
One Maritime Plaza, Suite 2525
San Francisco, CA 94111
Attention: W. Richard Bingham
Telecopy No.: (415) 788-5302

To the Purchaser:

American Industrial Partners Capital Fund, L.P.
c/o American Industrial Partners
One Maritime Plaza, Suite 2525
San Francisco, CA 94111

or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party.

Section 5. Expenses. In the event a dispute between the Company and
the Purchaser shall develop over the terms or operation of this Agreement or the
Stockholders Agreement and the Purchaser obtains a final judgment against the
Company with respect to such dispute, the Company shall promptly reimburse the
Purchaser for his reasonable attorney's fees and out-of-pocket expenses incurred
in connection with such dispute.

Section 6. Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.

2
<PAGE>

Section 7. Entire Agreement. This Agreement and those documents
expressly referred to herein embody the complete agreement and understanding
among the parties and supersede and preempt any prior understandings, agreements
or representations by or among the parties, written or oral, which may have
related to the subject matter hereof in any way. This Agreement shall be binding
upon the parties hereto and their respective successors, heirs, representatives
and assigns. This Agreement may not be assigned by the Purchaser without the
prior written consent of the Company.

Section 8. Amendments and Waivers. Any provision of this Agreement may
be amended or waived only with the prior written consent of the Company and the
Purchaser.

Section 9. Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of New York, without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of New York or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of New York.

[END OF PAGE]
[SIGNATURE PAGE FOLLOWS]

3
<PAGE>

IN WITNESS WHEREOF, the parties have executed this Securities Purchase
Agreement as of the date set forth above.

RBX GROUP, INC.

By:
-------------------------------------
Title:
----------------------------------

AMERICAN INDUSTRIAL PARTNERS
CAPITAL FUND, L.P.

BY: AMERICAN INDUSTRIAL PARTNERS, L.P.

BY: AMERICAN INDUSTRIAL PARTNERS
MANAGEMENT COMPANY, INC.

By:
-------------------------------------
Title:
----------------------------------

<PAGE>

EXHIBIT 4.7

Stockholders Agreement
----------------------
<PAGE>
- -------------------------------------------------------------------------------

STOCKHOLDERS AGREEMENT

Dated as of June 10, 1996

Among

RBX GROUP, INC.,

AND

AMERICAN INDUSTRIAL PARTNERS CAPITAL FUND, L.P.

- --------------------------------------------------------------------------------
<PAGE>

TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>

PAGE
----
<S> <C> <C>
Section 1. Definitions.......................... 1

Section 2. Voting Arrangements.................. 1

Section 3. Additional Restrictions on Transfer.. 2
(a) Stock Legend......................... 2
(b) Additional Legends................... 2
(c) Opinion of Counsel................... 2

Section 4. Participation Rights................. 2

Section 5. Registration Rights.................. 2

Section 6. Transfers in Violation of Agreement.. 2

Section 7. Amendment and Waiver................. 2

Section 8. Severability......................... 3

Section 9. Entire Agreement..................... 3

Section 10. Successors and Assigns............... 3

Section 11. Counterparts......................... 3

Section 12. Remedies............................. 3

Section 13. Notices.............................. 3

Section 14. Governing Law........................ 4

Section 15. Descriptive Headings................. 4

Section 16. Termination; Survival................ 4
</TABLE>

ii
<PAGE>

STOCKHOLDERS AGREEMENT
----------------------

This STOCKHOLDERS AGREEMENT (this "AGREEMENT") is dated as of June 10,
1996 among RBX GROUP, INC., a Delaware corporation (the "COMPANY"), AMERICAN
INDUSTRIAL PARTNERS CAPITAL FUND, L.P., a Delaware limited partnership ("AIP"
and/or the "STOCKHOLDER").

The parties hereby agree as follows:

SECTION 1. DEFINITIONS. For purposes of this Agreement, the
following terms have the indicated meanings:

"AIP" is defined in the preface.

"AIP SHARES" means (a) all shares of Common Stock held by AIP and (b)
all shares of Common Stock or other securities issued or issuable directly or
indirectly with respect to the securities referred to in clause (a) by way of
stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. AIP Shares
shall cease to be such when they have been sold (i) pursuant to a registered
public offering under the Securities Act or (ii) to the public pursuant to Rule
144 under the Securities Act, or any successor provision.

"BOARD" means the Company's Board of Directors.

"COMMON STOCK" means the Company's common stock, par value $.01 per
share.

"PERSON" means any individual, corporation, partnership, firm, joint
venture, association, limited liability company, joint-stock company, trust,
unincorporated organization, governmental or regulatory body or other legal
entity.

"QUALIFIED PUBLIC OFFERING" means the sale, in an underwritten public
offering registered under the Securities Act, of shares of the Company's Common
Stock having an aggregate offering value (before underwriters' discounts and
selling commissions) of at least $30 million.

"SECURITIES ACT" means the Securities Act of 1933, as amended.

"STOCKHOLDER" is defined in the preface.

SECTION 2. VOTING ARRANGEMENTS. Stockholder agrees that it will
vote, or cause to be voted, all voting securities of the Company over which it
has the power to vote or direct the voting in the manner provided for
Stockholders in Section 2 of the Stockholder Agreement, dated as of October 16,
1995, between and among RBX Group, Inc. and its Shareholders (the "Shareholders
Agreement, dated as of October 16, 1995"), a copy of which is attached as
Exhibit 1.
<PAGE>

SECTION 3. RESTRICTIONS ON TRANSFER.

(a) STOCK LEGEND. The certificates representing AIP Shares shall bear
the following legends:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED ON
JUNE 10, 1996, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), OR UNDER ANY STATE SECURITIES LAWS AND MAY NOT BE
SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION FROM
REGISTRATION THEREUNDER.

(b) ADDITIONAL LEGENDS. The certificates representing AIP Shares
shall bear the following legend in addition to the legend set forth in Section
6(a) above:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE CONSTITUTE AIP SHARES UNDER,
AND ARE SUBJECT TO, A STOCKHOLDERS AGREEMENT DATED AS OF JUNE 10, 1996,
AMONG RBX GROUP, INC. AND AMERICAN INDUSTRIAL PARTNERS CAPITAL FUND, L.P.,
A COPY OF WHICH MAY BE OBTAINED WITHOUT CHARGE BY THE HOLDER HEREOF AT THE
PRINCIPAL PLACE OF BUSINESS OF RBX GROUP, INC.

(c) OPINION OF COUNSEL. No holder of AIP Shares may sell, transfer or
dispose of any such stock (other than pursuant to an effective registration
statement under the Securities Act) without first delivering to the Company, if
the Company so requests, an opinion of counsel reasonably acceptable in form and
substance to the Company that registration under the Securities Act is not
required in connection with such transfer.

SECTION 4. PARTICIPATION RIGHTS. AIP shall have the same
Participation Rights as the "Other Stockholders" have under Section 8 of the
Stockholders Agreement, dated as of October 16, 1996.

SECTION 5. REGISTRATION RIGHTS. At any time after the date
hereof, the holders of a majority of the then outstanding AIP Shares shall have
the right to require the Company to effect up to two registrations of their
Common Stock in the manner prescribed for holders of AIP Shares in Section 9 of
the Stockholders Agreement, dated as of October 16, 1995.

SECTION 6. TRANSFERS IN VIOLATION OF AGREEMENT. Any transfer or
attempted transfer of any AIP Shares in violation of this Agreement shall be
void, and the Company shall not be obligated to record such transfer on its
books or treat any purported transferee of such AIP Shares as the owner of such
shares for any purpose.

SECTION 7. AMENDMENT AND WAIVER. Except as otherwise provided
herein, no amendment or waiver of any provision of this Agreement shall be
effective against the Company or Stockholder unless such amendment or waiver is
approved in writing by the Company and

2
<PAGE>

Stockholder. The failure of any party to enforce any provision of this Agreement
shall not be construed as a waiver of such provision and shall not affect the
right of such party thereafter to enforce each provision of this Agreement in
accordance with its terms.

SECTION 8. SEVERABILITY. If any provision of this Agreement is
held to be invalid, illegal or unenforceable in any respect under any applicable
law or rule in any jurisdiction, such invalidity, illegality or unenforceability
shall not affect any other provision or any other jurisdiction, but this
Agreement shall be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision had never been contained
herein.

SECTION 9. ENTIRE AGREEMENT. Except as otherwise expressly set
forth herein, this document embodies the complete agreement and understanding
among the parties hereto with respect to the subject matter hereof and
supersedes and preempts any prior understandings, agreements or representations
by or among the parties, written or oral, which may have related to the subject
matter hereof in any way.

SECTION 10. SUCCESSORS AND ASSIGNS. This Agreement shall bind and
inure to the benefit of and be enforceable by the Company, and the Stockholder
and its respective permitted successors and assigns so long as such Stockholder
and its respective permitted successors and assigns hold AIP Shares.

SECTION 11. COUNTERPARTS. This Agreement may be executed in
separate counterparts each of which shall be an original and all of which taken
together shall constitute one and the same agreement.

SECTION 12. REMEDIES. The Company and Stockholder shall be
entitled to enforce their rights under this Agreement specifically to recover
damages by reason of any breach of any provision of this Agreement and to
exercise all other rights existing in their favor. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and that the Company or any Stockholder may in
its sole discretion apply to any court of law or equity of competent
jurisdiction for specific performance and/or injunctive relief (without posting
a bond or other security) in order to enforce or prevent any violation of the
provisions of this Agreement.

SECTION 13. NOTICES. Any notice provided for in this Agreement
shall be in writing and shall be either personally delivered, or mailed first
class mail (postage prepaid) or sent by reputable overnight courier service
(charges prepaid) to the Company at its address set forth below and to any other
recipient at the address indicated on the schedules hereto and to any subsequent
holder of AIP Shares subject to this Agreement at such address as indicated by
the Company's records, or at such address or to the attention of such other
person as the recipient party has specified by prior written notice to the
sending party. Notices will be deemed to have been given hereunder when
delivered personally, three days after deposit in the U.S. mail and one day
after deposit with a reputable overnight courier service.

3
<PAGE>

The Company's address is: c/o RBX Group, Inc.
5221 ValleyPark Drive
Roanoke, Virginia 24019
Attention: President

with a copy to: American Industrial Partners
One Maritime Plaza, Suite 2525
San Francisco, CA 94111
Attention: W. Richard Bingham

SECTION 14. GOVERNING LAW. The corporate law of Delaware shall
govern all issues concerning the relative rights of the Company and its
stockholders. All other questions concerning the construction, validity and
interpretation of this Agreement shall be governed by the internal law, and not
the law of conflicts, of New York.

SECTION 15. DESCRIPTIVE HEADINGS. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.

SECTION 16. TERMINATION; SURVIVAL. Section 2 hereof shall
terminate on the date on which AIP owns less than 20% of the outstanding Common
Stock of the Company. All rights and obligations under Sections 3, 4 and 5(c)
hereof shall terminate upon the consummation of a Qualified Public Offering.

[END OF PAGE]
[SIGNATURE PAGES FOLLOW]

<PAGE>
Exhibit 10.3

AMENDMENT No. 2 dated as of April 15, 1996 (this "Amendment"), to the
Credit Agreement dated as of October 16, 1995, as amended by Amendment No. 1
thereto ("Amendment No. 1") dated as of February 28, 1996 (as so amended and as
the same may be further amended, restated, supplemented, waived or otherwise
modified from time to time, the "Credit Agreement"), among RBX GROUP, INC., a
Delaware corporation ("RBX Group"), RBX CORPORATION, a Delaware corporation and
a wholly owned subsidiary of RBX Group (the "Borrower"), the several banks and
other financial institutions party to the Credit Agreement (the "Lenders"), and
CHEMICAL BANK, a New York banking corporation, as agent for the Lenders (in such
capacity, the "Agent").

A. The Borrower has requested that certain amendments, among other
amendments, be made to Sections 2 and 3 of Amendment No. 1 to the Credit
Agreement to extend to August 15, 1996 the period during which Rubatex may
consummate the Ensolite Transaction (as defined in Amendment No. 1).

B. The Borrower has requested that the definition of "Indebtedness" be
amended to provide that the obligation of Rubatex to make "earn-out" payments in
connection with the Ensolite Transaction as permitted by Amendment No. 1 shall
not constitute "Indebtedness" of the Borrower and its Subsidiaries.

C. The Borrower has requested that certain amendments, among other
amendments, be made to Subsection 8(a), Subsection 8(b) and Subsection 8(c) of
the Credit Agreement in the event that the Effective Date (as defined herein)
occurs and the Ensolite Transaction is consummated prior to August 15, 1996.

D. The Borrower and the Required Lenders have agreed to the foregoing
amendments, in each case on the terms and subject to the conditions set forth
herein.

E. Capitalized terms used but not defined herein shall have the meanings
assigned to them in the Credit Agreement as amended hereby.

Accordingly, in consideration of the mutual agreements herein contained and
other good and valuable consideration, the sufficiency and receipt of which are
hereby acknowledged, the parties hereto agree as follows:

SECTION 1. Amendments to Amendment No. 1.
------------------------------

(a) Amendment to Section 1. Section 1 of Amendment No. 1 is hereby amended
as set forth below:

(i) Subsection 1(b)(i) of Amendment No. 1 hereby deleted in its entirety;
and

(ii) Subsection 1(b)(ii) of Amendment No. 1 hereby deleted in its entirety.
<PAGE>

(b) Amendment to Section 2. The first sentence of Section 2 of Amendment
No. 1 is hereby amended by deleting the date "April 15, 1996" and inserting in
place thereof the date "August 15, 1996".

(i) The first paragraph of Section 3 of Amendment No. 1 is hereby
amended by deleting the date "April 15, 1996" and inserting in place thereof the
date "August 15, 1996"; and

(ii) Subsection 3(a)(v) of Amendment No. 1 is hereby deleted in its
entirety and inserting in the place thereof:

"(v) The definition of the term "Consolidated Interest Expense" shall
be amended by adding at the end of such definition the following material:

Notwithstanding the foregoing, (a) Interest Expense for the
four-fiscal quarter period ending on Jun 30, 1996, shall be deemed
equal to the sum of (i) Consolidated Interest Expense (other than the
portion thereof that is attributable to the Additional Trache B Term
Loans) for such period (as determined in accordance with the preceding
sentence), and (ii) Consolidated Interest Expense that is attributable
to the Additional Trache B Term Loans, which shall be deemed, for
calculation purposes only, to be $990,000, (b) Consolidated Interest
Expense for the four-fiscal-quarter period ending on September 30,
1996, shall be deemed equal to the sum of (i) Consolidated Interest
Expense (other than the portion thereof that is attributable to the
Additional Trache B term Loans) for such period, and (ii) Consolidated
Interest Expense that is attributable to the Additional Trache B Term
Loans for the fiscal quarter ending on September 30, 1996, multiplied
by 4, (c) Consolidated Interest Expense for the four-fiscal-quarter
period ending on December 31, 1996, shall be deemed equal to the sum of
(i) Consolidated Interest Expense (other than the portion thereof that
is attributable to the Additional Trache B Term Loans) for such period,
(ii) Consolidated Interest Expense that is attributable to the
Additional Trache B Term Loans for the fiscal quarter ending on
September 30, 1996, and (iii) Consolidated Interest Expense that is
attributable to the Additional Trance B term Loans for the fiscal
quarter ending on December 31, 1996, multiplied by 3; and (d)
Consolidated Interest Expense for the four-fiscal-quarter period ending
March 31, 1997, shall be deemed equal to the sum of (i) Consolidated
Interest Expense (other than the portion thereof that is attributable
to the Additional Tranche B Term Loans) for such period, (ii)
Consolidated Interest Expense that is attributable to the Additional
Trache B Term Loans for the two fiscal quarters ending on December 31,
1996, and (iii) Consolidated Interest Expense that is attributable to
the Additional Tranche B Term Loans for the fiscal quarter ending on
March 31, 1997, multiplied by 2."

2
<PAGE>

(iii) Subsection 3(b) of Amendment No. 1 is hereby amended by deleting the
date "April 15, 1996" and inserting in place thereof the date "August 15, 1996".

(iv) Subsection 3(f) of Amendment No. 1 is hereby deleted in its
entirety.

(v) Subsection 3(g) of Amendment No. 1 is hereby deleted in its
entirety.

(vi) Subsection 3(h) of Amendment No. 1 is hereby deleted in its
entirety.

SECTION 2. Amendment to the Credit Agreement.

(a) Amendment to Subsection 1.1. Subsection 1.1 of the Credit Agreement is
hereby amended by adding at the end of the definition of the term "Indebtedness"
the following material:

"Notwithstanding the foregoing, "Indebtedness" shall not include any
obligation of Rubatex pursuant to the Earn-Out Agreement dated as of
the date the Ensolite Transaction is consummated, by and between
Uniroyal Technology Corporation and Rubatex, entered into in
connection with the Ensolite Transaction."

(b) Amendments to Subsection 4.1. Subsection 4.1 of the Credit Agreement
is amended as set forth below:

(i) the last sentence of Subsection 4.1(a) is hereby amended by
deleting 2.75% and inserting in the place thereof 3%; and

(ii) the last sentence of Subsection 4.1(b) is hereby amended by
deleting 1.75% and inserting in the place thereof 2%.

SECTION 3. Additional Amendments to the Credit Agreement Effective Upon
Consummation of the Ensolite Transaction. In the event that the Effective Date
occurs and the Ensolite Transaction is consummated on or prior to August 15,
1996, then (as defined in Amendment No. 1) the Credit Agreement shall be further
amended without the necessity of any further action by RBX Group, the Borrower
or the Lenders, as follows:

(a) Amendments to Subsection 8.1(a). Subsection 8.1(a) of the Credit
Agreement shall be amended by deleting the ratio set forth therein opposite each
date set forth below and inserting in place thereof the ratio set forth opposite
such date below:

3
<PAGE>

<TABLE>
<CAPTION>
Consolidated
Interest
Date Expense Ratio
- ---- -------------

<S> <C>
June 30, 1996 1.25 to 1.00

September 30, 1996 1.30 to 1.00

December 31, 1996 1.40 to 1.00

March 31, 1997 1.50 to 1.00

June 30, 1997 1.60 to 1.00

September 30, 1997 1.65 to 1.00

December 31, 1997 1.70 to 1.00

</TABLE>
(b) Amendment to Subsection 8.1(b). Subsection 8.1(b) of the Credit
Agreement is hereby amended and restated in its entirety as follows:

"(b) Maintenance of Consolidated EBITDA. Permit for any period of four
consecutive fiscal quarters ending on (i) any fiscal quarter set forth below or
(ii) any fiscal quarter included in any fiscal year set forth below, the
Consolidated EBITDA for the Borrower to be less than the amount set forth below
opposite the applicable fiscal quarter or fiscal year:
<TABLE>
<CAPTION>

Consolidated
Fiscal Quarter Ending EBITDA
--------------------- ------------

<S> <C>
June 30, 1996 $24,000,000

September 30, 1996 24,000,000

December 31, 1996 26,000,000

March 31, 1997 $27,500,000

June 30, 1997 30,000,000

September 30, 1997 30,000,000

December 31, 1997 30,000,000
</TABLE>

4
<PAGE>

Consolidated
Fiscal Year Ending EBITDA
- ------------------ ------------

December 31, 1998 $39,650,000

December 31, 1999 40,650,000

December 31, 2000 41,650,000

December 31, 2001 42,650,000

December 31, 2002 43,650,000

December 31, 2003 43,650,000

(c) Amendment to Subsection 8.1(c). Subsection 8.1(c) of the Credit
Agreement is hereby amended by deleting the ratio set forth therein opposite
each date set forth below and inserting in place thereof the ratio set forth
opposite such date below:
<TABLE>
<CAPTION>

Fiscal Quarter Ending Leverage Ratio
- ---------------------- --------------

<S> <C>
June 30, 1996 7.75 to 1.00

September 30, 1996 7.50 to 1.00

December 31, 1996 6.75 to 1.00

March 31, 1997 6.25 to 1.00

June 30, 1997 5.75 to 1.00

September 30, 1997 5.50 to 1.00

</TABLE>

SECTION 4. Fees. In consideration of the agreements of the Lenders
contained herein, the Borrower agrees to pay to each Lender, through the Agent,
an amendment fee (the "Amendment Fee") to any Lender that shall execute and
deliver this Amendment to the Agent on or prior to June 7, 1996, an amount equal
to 1/8 of 1% of the sum of (1) the outstanding Term Loans of such Lender and
(ii) the Revolving Credit Commitment (whether used or unused) of such Lender. In
addition, the Borrower agrees to pay to each Lender having an Additional Tranche
B Term Loan Commitment (as defined in Amendment No. 1), through the Agent, an
additional amendment fee (the "Additional Amendment Fee") to any such Lender
that shall execute and deliver this Amendment to the Agent on or prior to June
7, 1996, an amount equal to 3/4 of 1% of such Lender's allocated commitment of
the Additional Tranche B Term Loans (as defined in Amendment No. 1). The
Amendment Fee will be payable in immediately available funds on the Effective
Date. The Additional Amendment Fee shall be payable in immediately available
funds on the date the Additional Tranche B Term commitment is drawn-down. Once

5
<PAGE>

paid, neither the Amendment Fee nor the Additional Amendment Fee shall be
refundable under any circumstances.

SECTION 5. Representations and Warranties. To induce the other parties
hereto to enter into this Amendment, the Borrower represents and warrants to
each of the Lenders and the Agent, that, after giving effect to this Amendment,
(a) the representations and warranties set forth in Section 5 of the Credit
Agreement are true and correct in all material respects on and as of the date
hereof with the same effect as though made on and as of the date hereof, except
to the extent such representations and warranties expressly relate to an earlier
date, and (b) no Default or Event of Default has occurred and is continuing.

SECTION 6. Conditions to Effectiveness. This Amendment shall become
effective on the date (the "Effective Date") that the Agent shall have received
counterparts of this Amendment that, when taken together, bear the signatures of
RBX Group, the Borrower and the Required Lenders.

SECTION 7. Effect of Amendment. Except as expressly set forth herein, this
Amendment shall not by implication or otherwise limit, impair, constitute a
waiver of, or otherwise affect the rights and remedies of the Lenders, the
Agent, RBX Group or the Borrower under the Credit Agreement, Amendment No. 1 or
any other Loan Document, and shall not alter, modify, amend or in any way affect
any of the terms, conditions, obligations, covenants or agreements contained in
the Credit Agreement, Amendment No. 1 or any other Loan Document, all of which
are ratified and affirmed in all respects and shall continue in full force and
effect. Nothing herein shall be deemed to entitle RBX Group or the Borrower to a
consent to, or a waiver, amendment, modification or other change of, any of the
terms, conditions, obligations, covenants or agreements contained in the Credit
Agreement, Amendment No. 1 or any other Loan Document in similar or different
circumstances.

SECTION 8. Counterparts. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument. Delivery
of any executed counterpart of a signature page of this Amendment by facsimile
transmission shall be as effective as delivery of a manually executed
counterpart hereof.

SECTION 9. APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

SECTION 10. Headings. The headings of this Amendment are for purposes of
reference only and shall not limit or otherwise affect the meaning hereof.

6
<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their duly authorized officers, all as of the date and year
first above written.

RBX GROUP, INC.

By
_______________________________
Name:
Title:

RBX CORPORATION

By
_______________________________
Name:
Title:

<PAGE>

Exhibit 10.4

================================================================================

EXHIBIT I-1
_______________

FORM OF TOLL MANUFACTURING AGREEMENT

================================================================================

<PAGE>

================================================================================

TOLL MANUFACTURING AGREEMENT

BETWEEN

RUBATEX CORPORATION

AND

UNIROYAL TECHNOLOGY CORPORATION

JUNE 10, 1996

================================================================================

1
<PAGE>

TABLE OF CONTENTS
-----------------

1. Definitions ....................................................... 1

2. Production by Uniroyal ............................................ 3

3. Changes in Specifications ......................................... 4

4. Non-Conforming Products ........................................... 6

5. RBX Production Obligations ........................................ 7

6. Title to Goods; Security Interest ................................. 7

7. Price; Payment .................................................... 8

8. Uniroyal Employees ................................................ 10

9. Technology License ................................................ 10

10. Removal of Assets ................................................. 11

11. Risk of Loss; Insurance; Indemnification .......................... 11

12. Notices ........................................................... 14

13. Force Majeure Events .............................................. 16

14. Independent Contractors ........................................... 16

15. Survival .......................................................... 17

16. General ........................................................... 17
(a) Entire Agreement ............................................ 17
(b) Section Headings ............................................ 17
(c) Governing Law ............................................... 17
(d) Arbitration ................................................. 17
(e) Counterparts ................................................ 18
(f) Assignment .................................................. 18
(g) Benefit ..................................................... 18
(h) Amendment ................................................... 18
(i) Language .................................................... 18
(j) Partial Invalidity .......................................... 18
(k) Effectiveness ............................................... 18
(l) Additional Provisions ....................................... 18

LIST OF EXHIBITS ........................................................ 20

<PAGE>

A - Description of current Ensolite(R) products ............... 20
B - Description of fixed cost and depreciation expenses ....... 20
C - Details of variable costs ................................. 20
D - List of initial Support Services to be provided ........... 20
E - Form of monthly documentation of the impact of changes
in natural gas rates on the prices of the Products ........ 20
F - Form of monthly documentation of the impact of production
increases and the impact of overtime costs ................ 20
G - Insurance certificates .................................... 20

3
<PAGE>

TOLL MANUFACTURING AGREEMENT
----------------------------

THIS TOLL MANUFACTURING AGREEMENT (which, together with all exhibits
hereto, is hereinafter referred to as the "Agreement"), dated as of the 10th day
of June, 1996, is made by and between RUBATEX CORPORATION, 5221 Valleypark
Drive, Roanoke, VA 24019-3074 ("RBX"), and UNIROYAL TECHNOLOGY CORPORATION, Two
North Tamiami Trail, Suite 900, Sarasota, FL 34236 ("Uniroyal").

WHEREAS, on June 5, 1996 RBX and Uniroyal entered into an Asset Purchase
Agreement (the "Purchase Agreement"), pursuant to which RBX will purchase
certain assets (the "Assets") and will assume certain liabilities of the
Ensolite Division (the "Division") of Uniroyal; and

WHEREAS, Uniroyal has granted to RBX an option to purchase an F270 Banbury,
including all equipment necessary to operate on a stand-alone basis (the
"Optioned Banbury"); and

WHEREAS, RBX desires the Division to produce Ensolite(R) products in
finished or semi-finished state at the plant in Mishawaka, Indiana operated by
the Division (the "Plant") during the period between the closing under the
Purchase Agreement (the "Closing") and the completion of the removal of Assets
from the Plant and to provide certain support services for RBX (which production
and services, as more fully described in Section 2(a), are hereinafter referred
to as the "Production"); and

WHEREAS, Uniroyal is willing to cause the Division to engage in the
Production and acknowledges that the Purchase Agreement provides Uniroyal
incentives to optimize production of the Products (as hereinafter defined) under
this Agreement;

NOW THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency whereof are hereby
acknowledged, the parties agree as follows:

1. DEFINITIONS
-----------

(a) "Adverse Consequences" means all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands, injunctions,
judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs,
amounts paid in settlement, Liabilities, obligations, losses, expenses and fees,
including court costs and attorneys' fees and expenses.

(b) "Fiscal 1995" means the twelve-month period ended on October 1, 1995.

(c) "Intellectual Property" means (a) all inventions (whether patentable
or unpatentable and whether or not reduced to practice), all improvements
thereto, and all patents, patent applications, and patent disclosures, together
with all reissuances, continuations, continuations-in-part, revisions,
extensions and reexaminations thereof, (b) all trademarks, service marks logos
and trade names, together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith, and all
applications, registrations and renewals in connection therewith, (c) all
copyrightable works, all copyrights, and all applications, registrations, and
renewals in connection therewith, (d) all trade secrets and confidential
business information (including customer lists, ideas, research and

<PAGE>

development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and business and
marketing plans and proposals), (e) all computer software (including data and
related documentation), (f) the Ensolite trade name, (g) all other proprietary
rights, and (h) all copies and tangible embodiments thereof (in whatever form or
medium. Intellectual Property shall include the above items, regardless of
whether they are registered, licensed, or located in the United States or in a
foreign country but shall be limited to items that are currently owned by
Uniroyal for the sole benefit of the Division or to which the Division has
rights. The Intellectual Property consists of "Assigned Intellectual Property,"
consisting of Intellectual Property used exclusively by the Division, which
Uniroyal has assigned to RBX, and "Licensed Intellectual Property," consisting
of Intellectual Property used by the Division as well as other divisions of
Uniroyal, which Uniroyal has licensed to RBX on a non-exclusive basis.

(d) "Products" means the current commercially available Ensolite(R)
products manufactured in accordance with current Ensolite(R) specifications and
formulations as of the date of this Agreement, as described in Exhibit A, which
may be amended from time to time during the term of this Agreement, as
hereinafter provided. "Commercially available" describes Products that are being
manufactured or were manufactured or available in Fiscal 1995 for commercial use
rather than research and development or other testing use. Products shall become
"commercially available" Products in accordance with past practice of the
Division.

(e) "Specifications" mean ingredients, formulas, processing and testing
procedures, quality procedures, finished product specifications and any other
specifications of products to be produced under this Agreement. All such
Specifications shall be provided in writing to RBX upon closing of the
transactions contemplated by the Purchase Agreement (the "Closing").

(f) "Support Services" are (a) services to support the sales and
administration of the Production, all of which have been historically accounted
for by Uniroyal as operating expenses as distinguished from cost of goods, and
(b) Additional Support Services (as defined in Section 7(a)(iii).

(g) "Tolling Period" means the period between the Closing and the
completion of the removal of the Assets from the Plant and any cleanup pursuant
to the Purchase Agreement, but in no event later than July 31, 1997.

Any term not specifically defined herein shall be defined as set forth in the
Purchase Agreement.

2. PRODUCTION BY UNIROYAL
----------------------

(a) Production. During the Tolling Period, Uniroyal shall

(i) produce Products at the Plant in such quantities as ordered by
RBX, from time to time, such Products to be produced in accordance with the
Specifications as set forth in Sections 3 through 5 hereof, consistent with
mechanical capabilities and prior practice;

(ii) maintain all goods owned by RBX segregated in distinctly
separate areas from all other goods held, owned or otherwise possessed by
Uniroyal;

<PAGE>

(iii) furnish proof that RBX has been added to Uniroyal's applicable
insurance policies as an additional named insured or loss payee as its interest
may appear;

(iv) keep the Assets and the Optioned Banbury in good repair,
provided that RBX will pay for all repairs that are capital in nature (i.e.,
have a useful life of more than one year) and exceed $1,000 individually.
Uniroyal shall notify RBX in advance of any such capital repairs ;

(v) deliver the Products in a timely fashion consistent with past
practice to RBX or its designees, f.o.b. the Plant;

(vi) provide security for raw materials, work-in-process and finished
Products inventory;

(vii) consistent with prior practice (any written documentation of
which will be supplied to RBX), establish and enforce schedules, including
manufacturing, storage and shipping schedules, cost controls, and accounting and
reporting systems with respect to the operation of the Plant and Production as
required to carry out Uniroyal's obligations hereunder;

(viii) conduct a physical inventory at least quarterly for work-in-
process and annually for raw materials and finished goods, any loss of inventory
being the responsibility of Uniroyal; provide an accounting to RBX for inventory
at the end of each month; and allow cycle accounting of the inventory from time
to time as may be reasonably deemed necessary by RBX;

(ix) maintain the existing quality control system of the Division in
the manner currently performed at the Plant;

(x) provide Support Services set forth in Exhibit D as requested by
RBX; and

(xi) maintain exclusive responsibility for the operation of the
Plant, direction of Support Services, and production of Products (except as
otherwise provided in this Agreement).

(b) Warranty. Uniroyal warrants to RBX that each Product shall conform to
the Specifications for such Product set forth in Exhibit A (and that Exhibit A
is true, accurate and complete) or, in the case of new products or changes in
specified Products requested by RBX, the Specifications mutually agreed upon by
RBX and Uniroyal.

(c) Access. Uniroyal shall permit RBX to have access to only the areas of
the Plant used pursuant to this Agreement. Uniroyal will afford RBX technical
personnel the opportunity and access to be present when Uniroyal is producing
Products. Uniroyal will afford RBX personnel, auditors and other authorized
representatives all reasonable opportunity and access to inspect, investigate
and perform internal quality and inventory audits for purposes of inspecting
Assets and Products, reviewing production methods and systems, and developing a
plan for the removal of Assets pursuant to Section 10 during mutually agreed
upon times and on reasonable prior notice.

3. CHANGES IN SPECIFICATIONS
-------------------------

<PAGE>

(a) During the Tolling Period, if RBX requests that a change be made in
Specifications of any of the Products, RBX's Designated Representative (as
hereinafter defined) shall request such change by written notice to the Uniroyal
Designated Representative (as hereinafter defined). Within five (5) working days
of such request, the Uniroyal Designated Representative shall inform the RBX
Designated Representative in writing of either:

(i) Uniroyal's agreement to implement the change along with its
estimate (which shall not constitute a representation or
warranty) as to what effect such change will have on such things
as product performance, production costs and processes (including
yields and throughputs), and on the Assets, in which event
Uniroyal, subject to the obtaining of any necessary license or
permit, which Uniroyal shall use its best efforts to obtain
promptly, shall implement the change upon written order from the
RBX Designated Representative, in accordance with the schedule
provided pursuant to Section 5(a); or

(ii) Uniroyal's refusal to implement the change, which must be based
on Uniroyal's reasonable belief that the change would be unsafe,
would violate applicable laws or regulations, could require the
consent of a third party which could not reasonably be obtained,
or would be uneconomical or unfeasible without making a capital
expenditure, in which event the change shall not be implemented
unless and until Uniroyal's objections have been resolved to the
reasonable satisfaction of Uniroyal and RBX. Uniroyal and RBX
shall cooperate and work in good faith to so resolve such
objections.

(b) At RBX's request Uniroyal will produce samples of new products as
developed by RBX to RBX's designated formula or produce samples required for a
revised formula for a commercial product, except in the case Uniroyal reasonably
determines that the formula exceeds reasonable safety limitations or would
otherwise violate any applicable law or regulation. RBX will provide any
technical support that may reasonably be requested by Uniroyal in connection
with such products. For a new product or a Product where a revised formulation
is requested, a mutually agreed upon cost will be determined. During the testing
period RBX will be responsible for scrap and all costs associated with such new
products, except to the extent that such costs are caused by errors made by
Uniroyal in the testing or Production of such new products. For seven (7)
production runs of such product without modification, RBX and Uniroyal will
estimate a targeted cost level for each product. After seven (7) production runs
of such product without modification, scrap costs will be adjusted to reflect
the actual production experience, and variable costs will be adjusted
accordingly. At that time RBX and Uniroyal will agree on the addition of such
product to Exhibit A and it will be treated as a "commercially available"
Product under this Agreement.

(c) All communications relating to changes under this Section 3 shall be
made only by written request signed by the Roger Smith of RBX (or his successor)
on behalf of RBX (the "RBX Designated Representative") or by the Plant Manager
on behalf of Uniroyal (the "Uniroyal Designated Representative"), as the case
may be, and the parties agree that neither party is authorized to take any
action under this Section 3 at the request of any person who is not the
respective Designated Representative of the party sought to be bound. Each party
may change its Designated Representative by written notice given as provided in
Section 12.

7
<PAGE>

(d) Uniroyal will not make any changes in the ingredients or
Specifications of the Products as set forth in Exhibit A (except as otherwise
provided in this Section 3) without the prior written approval of RBX.

4. NON-CONFORMING PRODUCTS
-----------------------

(a) Uniroyal will notify RBX promptly and in writing of any raw materials
that it receives that do not meet Uniroyal's Specifications ("Off-Spec Raw
Materials"). RBX will then notify Uniroyal within 48 hours after receipt of such
notice whether (1) Uniroyal should reject such Off-Spec Raw Materials, in which
case Uniroyal will return such Off-Spec Raw Materials to the supplier, or (2)
Uniroyal should use such Off-Spec Raw Materials in production, in which case RBX
will be responsible for any non-conformance of Products incorporating such Off-
Spec Raw Materials.

(b) If Uniroyal does not receive notice from RBX within 48 hours after
Uniroyal's notice pursuant to Section 4(a), Uniroyal shall reject the Off-Spec
Raw Materials and return them to the supplier. Uniroyal shall have no liability
under this Agreement for any delay caused by the return of any Off-Spec Raw
MaterialS under this Section 4.

(c) RBX will be responsible for the disposition and replacement of
Products not meeting Specifications where the non-conforming condition is the
result of the Off-Spec Raw Materials supplied by or at the direction of RBX or
the failure to meet Specifications results from a process change specified in
writing by RBX. RBX will reimburse Uniroyal for its additional out-of-pocket
costs incurred by reason of the non-conformance, to include, without limitation,
overtime wage costs.

(d) Uniroyal will be responsible for the disposition and replacement of
Products not meeting Specifications for reasons other than Off-Spec Raw
Materials or changes specified in writing by RBX. Such disposition and
replacement will be at no additional cost to RBX. Any disposition of non-
conforming Products hereunder will not be subject to any non-competition
agreement between RBX and Uniroyal and will be on conditions, including pricing,
determined by Uniroyal. Uniroyal will give RBX a right of first refusal to
purchase such Products within ten (10) days following receipt by RBX of written
notice thereof. If RBX fails to exercise such right, Uniroyal may dispose of the
ProductS as it sees fit; however, Uniroyal will not market such Products as
first quality Products or under the Ensolite name.

(e) If no agreement can be reached between the parties as to the cause of
the failure to meet Specifications, the parties will negotiate a settlement of
the disagreement. If the parties are unable to reach a settlement, they will
arbitrate their disagreement as provided in Section 16(d).

5. RBX PRODUCTION OBLIGATIONS
--------------------------

(a) Quantity Forecasts. Uniroyal will continue to make forecasts for
future production of Products in substantially the same manner as it has at the
date of this Agreement. On or before the date of the Closing, Uniroyal will
provide to RBX a forecast of the firm requirements for the next two (2) weeks
and estimated requirements for the following three (3) weeks. Thereafter, by
12:00 noon, E.S.T., each Friday during the Tolling Period Uniroyal will provide
to RBX a forecast of the firm requirements for the next two (2) weeks and
estimated requirements for the following three (3) weeks. RBX will send written
consent to the production schedule in response within four (4) days after
receipt of each forecast. If Uniroyal does not receive a response from RBX
within the four (4) days, Uniroyal shall proceed with

8
<PAGE>

Production as though RBX had consented to the forecast. Lead times for
Production will be consistent with Uniroyal's existing quality systems. Uniroyal
reserves the right to schedule preventive maintenance if required, in Uniroyal's
sole discretion.

(b) Raw Materials. RBX will supply, at its own expense and on a timely
basis, all raw materials to be used in Production to the Division's
Specifications in quantities based on Uniroyal's Fiscal 1995 historical
utilization rates on a product-by-product basis. Uniroyal will supply RBX with
written verification of receipt of raw materials from suppliers to the Plant and
a requisition of materials used by Uniroyal for Production hereunder. Costs of
raw materials will be developed based on Fiscal 1995 costs for individual
Ensolite/R/ products, including a scrap allowance rate. A scrap rate not to
exceed the scrap rate incurred by Uniroyal in Fiscal 1995 for the production of
Ensolite/R/ Products will be allowed for each Product scheduled for Production.
The risk/reward for exceeding/improving on the historic scrap levels will accrue
to Uniroyal.

6. TITLE TO GOODS; SECURITY INTEREST
---------------------------------

(a) Title to Goods. Title to all raw materials, work-in-process inventory
and completed Products and products related to Production will remain in RBX at
all times free and clear of any lien, pledge, security interest, claim, charge,
easement, restriction, or encumbrance of any kind or nature whatsoever
(including taxes that have been or were created by or during or prior to the
period of Uniroyal's ownership of the Division or the Assets). Notwithstanding
that title to such goods shall be in RBX, all risk of loss, damage to, or
destruction of such goods, except as results from the sole direct negligence of
RBX, shall pass to Uniroyal upon delivery of such goods to the Plant and shall
remain in Uniroyal during its possession of such goods.

(b) Security Interest. All raw materials, work-in-process and finished
goods inventory held by Uniroyal pursuant to this Agreement are subject to a
Security Interest in favor of RBX, and Uniroyal will take all reasonable steps
to protect the Security Interest of RBX in such property. At the Closing,
Uniroyal will execute financing statements and such other documents as RBX may
reasonably deem necessary to protect its Security Interest. Uniroyal will not
take any action that would impose on the Assets or the raw materials, work in
process or finished goods inventory any liens, encumbrances, Security Interests
of others, or taxes that have been or were created by or during or prior to the
period of Uniroyal's ownership of the Division or the Assets.

7. COST; SERVICES; PRICE; PAYMENT
------------------------------

(a) Price. Price will be a function of fixed costs, variable costs, and
Support Services.

(i) Fixed costs. RBX will pay for fixed costs, exclusive of
depreciation expense, at the rate incurred by Uniroyal in Fiscal 1995, less
taxes related to Assets (including inventory) and the Optioned Banbury plus (a)
a three percent (3%) increase for salaries and wages, including fringe benefits,
and (b) depreciation expense other than the deprecation expense incurred for
Assets purchased or the Optioned Banbury. The fixed costs and depreciation
expense to be paid by RBX are detailed in Exhibit B.

9
<PAGE>

The monthly rate for the fixed costs will be constant for the first six months
of the Tolling Period at $323,250 per month and thereafter will be adjusted
monthly with a thirty (30)-day written advance notification by mutual agreement
to reflect the removal of Assets by RBX from the Plant.

(ii) Variable Costs. RBX will pay for variable costs at the same rate
as the variable costs incurred by Uniroyal for production of Ensolite/R/
products in Fiscal 1995, plus a three percent (3%) increase for salaries and
wages, including fringe benefits, and the actual amount of any increase in
natural gas costs attributable to Production of Ensolite/R/ Products above the
rate for such costs incurred by Uniroyal in Fiscal 1995. The variable costs for
each Product expected to be produced, exclusive of the impact of any increase in
natural gas costs, are detailed on Exhibit C. Variable costs will be adjusted to
reflect changes in Specifications requested by RBX and, upon mutual agreement,
they may be adjusted to reflect increases in volume levels above levels for
comparable periods in Fiscal 1995, as detailed in Exhibit F.

(iii) Support Services.
----------------

(A) The parties acknowledge that during the Tolling Period RBX may
require Uniroyal to supply some level of Support Services. Uniroyal will supply
such Support Services to RBX and charge RBX at Uniroyal's cost, which will be
the same as the rate of costs of such Support Services that Uniroyal incurred in
Fiscal 1995 plus a three percent (3%) increase for salaries and wages, including
fringe benefits. The initial Support Services to be provided immediately after
closing of the transaction and the related costs thereof are detailed on Exhibit
D. The level of Support Services may thereafter be reduced by RBX by giving
Uniroyal thirty (30) days' advance notice.

(B) In addition to the initial Support Services described on Exhibit
D, Uniroyal's information systems personnel will train RBX employees how to: (w)
properly use all of Uniroyal's computer software that will be transferred to RBX
pursuant to the Purchase Agreement (the "Software"); (x) maintain the Software
properly; (y) maintain the modifications to the original Software properly; and
(z) create user documentation and system documentation for all modifications to
the Software to ensure trouble free future operation of the Software
(collectively, the "Additional Support Services"). Notwithstanding anything to
the contrary in this Agreement, there shall be no charge for the Additional
Support Services, provided, however, that Uniroyal shall only be required to
provide these Additional Support Services which are reasonable in time and scope
such that RBX will obtain a basic working knowledge of the software and the
related systems, and such that the services will not unduly interfere with the
other work duties of those Uniroyal employees covered by this Section.
Notwithstanding anything to the contrary in this Agreement, and notwithstanding
an earlier termination of this Agreement, Uniroyal covenants to provide the
Additional Support Services for a period commensurate with the Tolling Period
set forth herein.

(iv) Natural Gas Costs. Within ten (10) days after the end of each
month, Uniroyal will supply to RBX documentation in the form of Exhibit E
detailing the impact of changes in natural gas rates as they relate to the
month's production of Ensolite/R/ Products and an invoice for the resulting
change in such costs from those incurred by Uniroyal in the corresponding month
in Fiscal 1995. After review and acceptance of the supporting documentation, RBX
will reimburse Uniroyal for such increase within ten (10) days after the date of
Uniroyal's invoice. For any month in which gas rates stay the same as or
decrease from the level in the corresponding month in Fiscal 1995, no payment
will due from RBX to Uniroyal under this Section 7(a).

10
<PAGE>

(b) Payment
-------

(i) Invoicing. Uniroyal will invoice RBX in arrears (a) on the
fifteenth and final day of each fiscal month of Uniroyal (or the closest
business day to each of such dates) for fixed costs and Support Services, and
(b) weekly for variable costs for finished goods produced and any costs under
Section 3(b). The invoice for variable costs will detail the finished goods
produced extended by their variable costs. The amount due will be reduced by the
quantity of raw materials requisitioned by Uniroyal from raw material inventory
during the week extended by their standard costs. Within sixty (60) days after
the end of the Tolling Period, Uniroyal shall provide RBX with a final invoice
detailing all remaining costs for which RBX is responsible for payment pursuant
to this Agreement. RBX will remit payment within ten (10) days after the date of
each invoice, except that, where an invoice or a portion of the invoice is being
disputed in good faith by RBX, RBX will remit payment for only the undisputed
portion until the dispute has been resolved. If the parties are unable to
resolve any undisputed portion of any invoice, the dispute will become the
subject of arbitration pursuant to Section 16(d).

(ii) Reduction of payments. In the event that Uniroyal fails or is
unable to produce or deliver Products for RBX for a period of ten (10)
consecutive days during the Tolling Period, RBX will be entitled to reduce
payments due or becoming due to Uniroyal under this Agreement by the amount of
expense incurred by RBX by reason of such failure or inability; provided that
such expense shall be limited to raw materials, freight charges and variable and
fixed costs hereunder. The reduced payments will be quantified by mutual
agreement of RBX and Uniroyal within thirty (30) days after the date of the
failure or inability. Upon such agreement the reduction will be applied only to
fixed costs until the full amount of the reduction has been credited. The
foregoing reduction shall not apply to situations in which the non-conformance
results from Off-Spec Raw Materials or deviations, in either case requested or
specified by RBX, from the Specifications at the date of this Agreement.
Notwithstanding the foregoing, in the event of and during the continuation of a
Force Majeure Event, RBX shall have no obligation to pay for the fixed costs. If
the aforesaid payments are insufficient to cover the loss, Uniroyal will
compensate RBX directly.

8. UNIROYAL EMPLOYEES
------------------

(a) RBX hereby acknowledges and agrees that:

(i) Uniroyal shall have sole authority to determine:

(A) the means and details of all work performed by all full-time
and/or part-time employees of Uniroyal, and

(B) all wages, hours, awards, disciplinary or corrective action
and any other terms and conditions of employment of all
full-time and/or part-time employees of Uniroyal.

(ii) If RBX has any concern with respect to the performance or conduct
of any employee of Uniroyal, RBX shall notify Uniroyal in writing of such
concern, and Uniroyal shall have sole authority to determine the
appropriate action (if any) to be taken.

11
<PAGE>

(iii) Notwithstanding anything to the contrary contained or implied
in this Agreement, RBX shall not as a consequence of its being a party to
this Agreement be required to be a party to any employment matters
(including, but not limited to, any collective bargaining agreement to
which Uniroyal is party), and Uniroyal shall have sole authority to bargain
or otherwise deal with any labor organization which is now, or may
hereafter become, the lawful collective bargaining representative of
employees of Uniroyal.

(b) Uniroyal represents and warrants to RBX that:

(i) Except as disclosed in Section 3(v) of the Disclosure Schedule
to the Purchase Agreement, the Division is not party to or bound by any
collective bargaining agreement or relationship with any labor
organization. With respect to the Division, except as disclosed in Section
3(v) of the Disclosure Schedule to the Purchase Agreement, to the Knowledge
of Seller, and to the knowledge of any of the directors and officers (and
employees with responsibility for employment matters) of the Division (i)
no executive, key employee or group of employees has any plans to terminate
employment; (ii) no labor organization or group of employees has filed any
representation petition or made any written or oral demand for recognition;
(iii) no union organizing campaigns are underway and no other question
concerning representation exists; (iv) no labor strike, work stoppage or
slowdown, or other material labor dispute is underway; (v) there is no
employment-related charge, complaint, investigation, inquiry or obligation
of any kind, pending or threatened in any forum, relating to an alleged
violation by the Division of any law, regulation or contract.

(ii) Any notice required under any law or collective bargaining
agreement has been given, and all bargaining obligations with any employee
representative have been satisfied, including but not limited to
obligations relating to the effects on bargaining unit employees of the
transaction contemplated by this Agreement or the Tolling Agreement. The
Division has not implemented any plant closing or mass layoff of employees
as those terms are defined in the Worker Adjustment Retraining and
Notification ("WARN") Act of 1988, as amended, or any similar state or
local law or regulation, and no layoffs that could implicate such laws or
regulations will be implemented before Closing or before expiration of the
Tolling Agreement without advance notification to the Buyer.

9. TECHNOLOGY LICENSE
------------------

(a) RBX has, or will by the Closing have, acquired from Uniroyal certain
rights to the Intellectual Property.

(b) RBX hereby grants to Uniroyal a non-exclusive, royalty-free right and
license to use the Assigned Intellectual Property to make Products for RBX
hereunder. The license rights granted herein are expressly limited to the
Production as ordered by RBX during the Tolling Period.

(c) Uniroyal agrees that it will not use the Assigned Intellectual
Property for any purpose other than for the Production and will treat it as
Confidential Information, as defined in the Purchase Agreement. Uniroyal shall
continue to have its existing rights to the software used by the banbury that it
is retaining and all other Licensed Intellectual Property.

12
<PAGE>

(d) Uniroyal agrees that, except in Production hereunder, it will not use
the Licensed Intellectual Property in any business in which the Division is
engaged at the date of Closing and that it will not transfer or license any
interest in such Licensed Intellectual Property (except the software associated
with the banbury being retained by Uniroyal) to any entity which is engaged in
any business in which the Division is engaged at the date of Closing.

10. REMOVAL OF ASSETS
-----------------

During the Tolling Period, RBX will, from time to time, remove Assets from
the operation. RBX will coordinate removals with Uniroyal to facilitate a smooth
transition and minimal disruption of Production and in any event will use its
best efforts to give Uniroyal at least a thirty (30)-days' prior notice of each
such removal that will substantially curtail production or may affect other
businesses of Uniroyal in the Plant. RBX will comply with the cleanup provisions
of the Purchase Agreement in connection with any such removal.

11. RISK OF LOSS; INSURANCE; INDEMNIFICATION
----------------------------------------

(a) During the time that the Assets and Products (including raw materials,
work-in-process and finished goods inventory) are within the control of Uniroyal
or are located at the Plant, Uniroyal shall be responsible for all damage to or
loss of the Assets arising out of, resulting from or related to any intentional
or negligent act or omission of Uniroyal or its affiliates, employees or agents.

(b) Uniroyal shall:

(i) protect any raw materials, work-in-process or finished goods
inventory subject to this Agreement and keep the Assets and
Products in good repair and not alter or modify the Assets or
Products in any way, except with the prior written consent of
RBX or except (with respect to capital repairs) as otherwise
provided in this Agreement;

(ii) not remove the Assets or Products to a location other than
their present location at the Plant without RBX's prior written
consent;

(iii) not create or suffer to exist any mortgage, pledge,
encumbrance, lien or charge of any kind upon the Assets,
Products or any raw materials, work-in-process or finished
goods inventory subject to this Agreement; and

(iv) identify the Assets, Products, raw materials, work-in-process
or finished goods inventory subject to this Agreement in such
manner as RBX shall reasonably require.

(c) Uniroyal shall execute any document which in the reasonable opinion of
RBX is appropriate or desirable to protect the interest of RBX in the Assets or
the raw materials, work-in-process or finished goods inventory subject to this
Agreement or to evidence the fact that the same is owned by RBX.

13
<PAGE>

(d) In the event that the Assets or any part thereof shall be destroyed,
lost, stolen, damaged or rendered unfit for normal use for any reason
whatsoever, Uniroyal shall promptly notify RBX thereof and include in such
notice its estimate of the amount of the loss, and take such emergency action as
may be reasonably required to prevent further damage thereto, and shall use its
best efforts to repair or replace the same promptly with another part of
equipment of like kind and such replacement part of equipment shall immediately
become part of the Assets for all purposes.

(e) Uniroyal shall obtain and maintain all governmental licenses and
permits necessary to operate the Plant and discharge its obligations hereunder
in compliance with all applicable rules, laws and regulations, whether state or
federal, including, but not limited to, those relating to (i) the treatment,
storage and disposal of all waste materials, whether hazardous or not; (ii) the
discharge of air emissions or effluent; and (iii) otherwise concerning
pollution, the environment or the protection of health and safety.

(f) Uniroyal shall be solely responsible for all environmental matters in
connection with the Production, including, but not limited to, the cleanup of
spills, the discharge of effluent or emissions (whether or not permitted) and
the disposal of all waste materials arising out of, connected with or resulting
from all activities conducted by Uniroyal hereunder, including, without
limitation, storage and use of materials, the operation of the Plant or
Production of Products hereunder. Uniroyal may refuse to run trials or accept
orders for any reformulations or new products if Uniroyal believes that such
production could increase Uniroyal's liability in any material respect under
this Section 11. Subject to the limitations in Section 6(d) of the Purchase
Agreement, RBX shall be responsible for any environmental consequences of the
acts of RBX or any of its employees, agents or advisors.

(g) Uniroyal shall indemnify and hold harmless RBX, its directors,
officers, employees and agents from Adverse Consequences arising out of,
resulting from or related to:

(i) injury to persons (including employees and agents of Uniroyal),
including illness or death, and for damages to property arising
out of, resulting from or related to the Plant, or the operation
or use of the Plant by Uniroyal, its employees or agents; or

(ii) any failure of Uniroyal to perform or observe any term,
provision, covenant or agreement to be performed or observed by
Uniroyal pursuant to Sections 2, 3(a)(i), 3(d), 4(a), 4(d), 6,
8(c), 9(c), 9(d), 11, 15, and 16(l) of this Agreement.

(iii) any Division collective bargaining agreement or relationship
(none of which are assumed by RBX), and any other claim of any
sort whatsoever brought by or pertaining to employees of Uniroyal
(who are employed by the Division), applicants for employment, or
their representatives, including but not limited to any claim of
labor law "joint employer" liability.

RBX shall indemnify and hold harmless Uniroyal and its directors, officers,
employees and agents from Adverse Consequences arising out of, resulting from,
or related to products liability claims arising in connection with Products
produced hereunder that meet the Specifications set forth on Exhibit A or
involve Off-Spec Raw Materials or a material process change specified in writing
by RBX. Such indemnification shall be provided to the extent of RBX's insurance
coverage for such matters.

14
<PAGE>

In the event that Uniroyal breaches (or in the event that any third party
alleged facts that, if true, would mean that Uniroyal has breached) any of its
obligations under this Section 11, then Uniroyal agrees to indemnify RBX from
and against the entirety of any Adverse Consequences RBX may suffer through and
after the date of the claim for indemnification resulting from, arising out of,
relating to or caused by, but only to the extent of the breach (or the alleged
breach); provided however, that Uniroyal shall not have any obligation to
indemnify RBX from and against any Adverse Consequences by reason of any such
breach (or alleged breach) under this Agreement until RBX has suffered or
incurred Adverse Consequences (A) of $25,000 in respect of each incident for a
claim other than for loss of business, provided that Uniroyal's liability for
the aggregate of payments in respect of such claims shall be limited to $500,000
or (B) of an aggregate of $100,000 for loss of business. Uniroyal's aggregate
obligation to indemnify RBX pursuant to (A) and (B) above and any other
indemnification obligation under this Agreement shall be capped at $3 million.
Nothing in this Agreement shall limit Uniroyal's and RBX's indemnification
rights and obligations under the Purchase Agreement.

(h) During the term of this Agreement, Uniroyal shall effect and maintain,
with reputable insurance companies, or through self-insurance programs,
insurance on such of its property and the Assets, and against such liabilities
in at least such amounts, against at least such risks and with such deductibles
or self-insured retentions as in each case are customarily insured against in
the same general area by companies engaged in the same or a similar business or
consistent with the past practices of Uniroyal. The costs for such insurance
shall be included in Exhibit B. RBX shall be designated as an additional party
insured under Uniroyal's Comprehensive General Liability, Comprehensive
Automobile Liability, and umbrella or excess liability insurance policies and as
a loss payee under Uniroyal's "all risk" property insurance policy, in each case
to the extent of its interest hereunder, and no such insurance shall be
cancelled without thirty (30) days' prior written notice to RBX. Certificates
evidencing all such insurance coverage shall be contained in Exhibit F.

(i) If any legal proceedings are instituted or any claim or demand is
asserted by any person not a party to this Agreement in respect of which one
party (the "Indemnitee") may seek payments from the other (the "Indemnitor")
under this Agreement, the Indemnitee shall promptly cause written notice of the
institution of the legal proceedings or the assertion of any claims or demands
of which it has knowledge and which is covered by the indemnification provisions
hereof to be forwarded to the Indemnitor. Failure to give such notice in a
timely fashion shall be deemed a waiver of the Indemnitee's rights to
indemnification with respect to such proceeding, claim or demand. The Indemnitor
shall have the right, at its option and expense, using counsel of its own
choice, to control the defense of such proceeding, claim or demand which relates
to any Adverse Consequences indemnified against hereunder. The Indemnitee may
participate in any such proceeding with counsel of its choice and at its
expense. To the extent that the Indemnitor elects not to defend such proceeding,
claim or demand and the Indemnitee defends against, settles or otherwise deals
with any such proceeding, claim or demand, which settlement may be made without
the consent of the Indemnitor, the Indemnitee will act reasonably and in
accordance with its good faith business judgment. The parties agree to cooperate
fully with each other in connection with the defense, negotiation or settlement
of any such legal proceeding, claim or demand.

(j) RBX expressly disclaims all responsibility for injury to persons
(including death) or for damage to property arising out of, resulting from or
related to the presence of the Assets in the Plant or the use or operation of
the Plant by Uniroyal, its employees or agents or others except to the extent
such injury or damage is caused by the negligence of RBX or in connection with
the removal of Assets.

15
<PAGE>

12. NOTICES
-------

(a) All notices and communications required or permitted to be given under
this Agreement shall be deemed to have been duly given if in writing and
delivered personally or mailed first-class, postage prepaid, registered or
certified mail, or by facsimile transmission to the following addresses, except
as otherwise specified herein:

If to Uniroyal:

Vice President and General Manager
Ensolite Division, Uniroyal Technology Corporation.
312 North Hill Street
Mishawaka, Indiana 46544
facsimile number (219) 256-8871

with a copy to:

Uniroyal Technology Corporation
Two North Tamiami Trail, Suite 900
Sarasota, Florida 34236
Attention: Vice President & General Counsel
facsimile number (941) 361-2214

If to RBX:

President
RBX Corporation
5221 Valleypark Drive
Roanoke, VA 24019-3074
facsimile number (540) 561-6027

with a copy to:

John Fitzgerald, Esq.
Kirkland & Ellis
655 Fifteenth Street, N.W.
Washington, D.C. 20005
facsimile number (202) 879-5200

All reports required to be delivered hereunder shall also be addressed as
provided in this Section 12.

(b) All payments required to be made by RBX hereunder shall be addressed
to:

Uniroyal Technology Corporation
Two North Tamiami Trail, Suite 800
Sarasota, FL 34236
Attention: Accounts Receivable

16
<PAGE>

(c) Either party may change the address to which any communication, report
or payment is to be directed to it by giving written notice to the other in the
manner provided in this Section 12.

13. FORCE MAJEURE EVENTS
--------------------

The time for performance by either party hereunder may be extended for any
failure of or delay in performance of its obligations under this Agreement to
the extent that such failure or delay is due to any act of God , the other party
or the public enemy; fire, flood, war, civil disturbance, sabotage,
insurrection, blockade, embargo, explosion, tornado or other major storm; damage
to its plant, labor dispute (involving a supplier of goods or services or caused
by RBX, but such "cause" shall not include RBX's purchase of the Assets); act of
any governmental body (whether civil or military, foreign or domestic),
including without limitation eminent domain and condemnation proceedings, any
peril of the seas and other waters; failure or delay of machinery or equipment
(other than by reason of failure to maintain the machinery or equipment), delay
in the shipment of materials, supplies, equipment (other than by reason of
failure to maintain the equipment), or delay in transportation, (collectively
referred to herein as "Force Majeure Events"). Each party shall use reasonable
efforts to minimize the duration and consequences of any failure of or delay in
performance resulting from a Force Majeure Event. RBX shall have the right to
extend the term of the Tolling Period if a Force Majeure Event materially
adversely affects the Production, but a Force Majeure Event shall not extend the
expiration of the Tolling Period by more than six (6) months and in no event
beyond July 31, 1997.

14. INDEPENDENT CONTRACTORS
-----------------------

The relationship of Uniroyal to RBX shall be that of vendor and vendee of
goods and services, and nothing herein contained shall be construed as (a)
creating any other relationship or (b) to limit in any way the relationship and
obligations set forth in the Purchase Agreement. Uniroyal shall accept exclusive
liability for the payment of any taxes or contributions for social security,
unemployment and workers' compensation insurance, old age payments, annuities,
retirement benefits required by law which are measured by wages, salaries, or
other remuneration paid by Uniroyal to any and all persons employed by it in the
performance of its obligations hereunder, and Uniroyal shall comply with all
valid federal and state administrative regulations respecting the assumption of
liability for any of the aforesaid taxes or contributions. Uniroyal agrees to
hold RBX harmless from and against any and all liability for the delay or
failure of Uniroyal to pay all such taxes or contributions. RBX shall have no
responsibility for any of the foregoing.

15. SURVIVAL
--------

The obligations of the parties hereunder shall not survive the termination
or expiration of this Agreement, except that claims under Section 11(g) shall
survive until eighteen (18) months after the delivery of or failure to deliver
any Product as to which a claim may be made, except that any such claim
concerning underlayment for Astroturf shall survive until twenty-four (24)
months after the date of delivery of or failure to deliver the Product.

16. GENERAL
-------

(a) Entire Agreement. This Agreement and the Purchase Agreement, including
the exhibits hereto and thereto, set forth the entire agreement and
understanding of the parties with respect to the

17
<PAGE>

subject matter hereof and thereof and supersede all prior agreements,
arrangements, and understandings between the parties relating to the subject
matter hereof and thereof, and no representation, promise, inducement or
statement of intention relating to the transactions contemplated by this
Agreement or the Purchase Agreement has been made by any party which is not set
forth in this Agreement or the Purchase Agreement, including the exhibits hereto
and thereto, or the documents referred to herein and therein, and no party shall
be bound by or liable for any such representation, promise, inducement or
statement of intention not so set forth. Without limiting the foregoing, the
post-closing covenants in Section 6 of the Purchase Agreement shall apply to the
relationship of RBX and Uniroyal under this Agreement, as though such covenants
were restated herein.

(b) Section Headings. The section headings contained in this Agreement are
for convenience of reference only, and shall not in any way affect the meaning
or interpretation of this Agreement or any provision hereof.

(c) Governing Law. This Agreement shall be governed by the laws of the
State of Indiana, excluding the conflict-of-laws provisions thereof.

(d) Arbitration. Uniroyal and RBX hereby irrevocably submit in any dispute,
action or proceeding arising out of or relating to this Agreement or any of the
transactions contemplated hereby to binding arbitration under the rules of the
American Arbitration Association. In the event of a dispute, each of the parties
shall select one arbitrator; the two arbitrators shall attempt to decide the
dispute; in the event that the two arbitrators are unable to agree, they shall
choose a third arbitrator, who shall resolve the dispute.

(e) Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one and the same
agreement.

(f) Assignment. This Agreement may not be assigned by either party hereto
without the consent of the other.

(g) Benefit. This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and permitted assigns. In
the event of any permitted assignment, the transferor and the transferee shall
be jointly and severally liable for the obligations of the transferor.

(h) Amendment. This Agreement may be amended, superseded or cancelled, and
any of the terms hereof may be waived only by a written instrument specifically
referring to this Agreement and specifically stating that it amends, supersedes
or cancels this Agreement or waives any of its terms, executed by all parties
(or, in the case of a waiver, by the party waiving compliance). The failure of
any party at any time or times to require performance of any provision of this
Agreement shall in no manner affect such party's right at a later time to
enforce the same. No waiver by any party of any breach of any provision of this
Agreement in any one or more instances shall be deemed to be or construed as a
further or continuing waiver of such breach, or a waiver of any breach of any
other provision.

(i) Language. The language used in this Agreement will be deemed to be the
language chosen by the parties hereto to express their mutual intent and no rule
of strict construction will be applied against any person. The term, "including"
as used herein shall be by way of example, and shall not be deemed to constitute
a limitation of any term or provision contained herein.

18
<PAGE>

(j) Partial Invalidity. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.

(k) Effectiveness. The parties' obligations under this Agreement are
conditional upon the Closing, the occurrence of which is subject to various
conditions set forth in the Purchase Agreement. This Agreement shall become
operative if and when the Closing occurs and shall be null and void if the
Closing does not occur for any reason.

(l) Additional Provisions. Sections 10(b) (Third Party Beneficiaries),
10(j) (Construction) and 10(n) (Specific Performance) of the Purchase Agreement
are incorporated herein and made a part hereof.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.

UNIROYAL TECHNOLOGY RUBATEX CORPORATION
CORPORATION

By: By:
--------------------------------------- ----------------------------
George J. Zulanas, Jr., Vice President, Frank H. Roland, President
Treasurer & Chief Financial Officer

19
<PAGE>

LIST OF EXHIBITS TO TOLL MANUFACTURING AGREEMENT

A - Description of current Ensolite(R) products

B - Description of fixed cost and depreciation expenses

C - Details of variable costs

D - List of initial Support Services to be provided

E - Form of monthly documentation of the impact of changes in natural gas
rates on the prices of the Products

F - Form of monthly documentation of the impact of production increases and
the impact of overtime costs

G - Insurance certificates

[THESE EXHIBITS HAVE BEEN INTENTIONALLY OMITTED FROM THIS 10-Q FILING BECAUSE
THEY ARE NOT MATERIAL TO THE UNDERSTANDING OF THE TERMS OF THE TOOL
MANUFACTURING AGREEMENT. RBX CORPORATION WILL PROVIDE THESE EXHIBITS TO THE SEC
UPON REQUEST]

<PAGE>

<ARTICLE> 5
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 2,286
<SECURITIES> 0
<RECEIVABLES> 47,457
<ALLOWANCES> 1,797
<INVENTORY> 42,924
<CURRENT-ASSETS> 97,281
<PP&E> 90,736
<DEPRECIATION> 4,777
<TOTAL-ASSETS> 312,098
<CURRENT-LIABILITIES> 33,590
<BONDS> 182,715
<COMMON> 0
0
0
<OTHER-SE> 51,795
<TOTAL-LIABILITY-AND-EQUITY> 312,098
<SALES> 138,538
<TOTAL-REVENUES> 138,538
<CGS> 117,923
<TOTAL-COSTS> 132,302
<OTHER-EXPENSES> 1,792
<LOSS-PROVISION> 269
<INTEREST-EXPENSE> 9,158
<INCOME-PRETAX> (4,714)
<INCOME-TAX> (905)
<INCOME-CONTINUING> (3,809)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,809)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0

</TABLE>