<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
__________________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): February 1, 1997
--------------------
RPM, INC.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Ohio 0-5132 34-6550857
- ---------------------------- --------------- ------------------------
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification Number)
2628 Pearl Road, P.O Box 777 Medina, Ohio 44258
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (330) 273-5090
----------------------------
- --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Effective as of February 1, 1997, RPM, Inc. (the "Company")
acquired 100% of the issued and outstanding Common Shares of Tremco
Incorporated, an Ohio corporation ("Tremco") from The B.F.Goodrich Company
("B.F.Goodrich"). The acquisition was accomplished pursuant to a Stock Purchase
Agreement, dated as of October 21, 1996, between B.F.Goodrich and the Company
(the "Stock Purchase Agreement"), as amended by Amendment No. 1 to the Stock
Purchase Agreement, dated as of February 1, 1997, between B.F.Goodrich and the
Company (the "Amendment"). Copies of the Stock Purchase Agreement and of the
Amendment are filed as Exhibits hereto.
Tremco manufactures and sells roofing systems, sealants and
coatings. Tremco is headquartered in Cleveland, Ohio and employs about 1,700
employees at office and manufacturing locations in the United States, Canada,
the United Kingdom, the Netherlands and Australia, with offices and joint
ventures in several other countries. The roofing systems, sealants and coatings
manufactured under the Tremco brand name are sold to customers primarily in
building, construction, building maintenance and retail markets. Tremco had
sales in 1995 of approximately $350 million.
As consideration for the acquisition of Tremco, the Company
paid B.F.Goodrich approximately $230,700,000.00 in cash. The purchase price and
the other terms of the Stock Purchase Agreement were determined through
arms-length negotiations. There are no material relationships between Tremco
and the Company or any of their affiliates, directors or officers.
The cash portion of the purchase price paid for Tremco by RPM
was financed under a Credit Agreement, dated as of February 1, 1997, between the
Company, certain Banks, National City Bank, N.A., as Documentation Agent, and
The Chase Manhattan Bank, N.A., as Administrative Agent (the "Credit
Agreement"). A copy of the Credit Agreement is filed as an Exhibit hereto. The
principal amount advanced and paid on February 3, 1997 is subject to variable
interest rate based on the London Interbank Borrowing Rate (LIBOR) plus 37.5
basis points.
2
<PAGE> 3
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Businesses Acquired.
--------------------------------------------
Tremco Incorporated Combined Financial Statements as of
October 31, 1996
Report of Independent Auditors
Combined Statement of Assets To Be Acquired and
Liabilities To Be Assumed
Combined Statement of Revenues and Expenses
Combined Statement of Cash Flows
Notes to Combined Financial Statements
(b) Pro Forma Financial Information. *
----------------------------------
(c) Exhibits.
---------
Exhibit No. Description
----------- -----------
2.1 Stock Purchase Agreement, dated as of
October 21, 1996, between B.F.Goodrich
and the Company.**
2.2 Amendment No. 1 to the Stock Purchase
Agreement, dated as of February 1, 1997,
between B.F.Goodrich and the Company.
4.1 Form of Credit Agreement, dated as of
February 1, 1997, between the Company,
the Banks identified on the Signature
Pages thereto, National City Bank as
Documentation Agent, and The Chase
Manhattan Bank as Administrative Agent
23.1 Consent of Independent Auditors.
- -------------------
* The pro forma financial information required pursuant to Article 11 of
Regulation S-X currently is not available; such information will be
filed as soon as is practicable, but not later than 60 days after the
date this Report is due.
** The Registrant agrees by this filing to supplementally furnish a copy
of the Exhibits and Schedules to this Stock Purchase Agreement to the
Commission upon request.
3
<PAGE> 4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
RPM, INC.
By: /s/ Paul A. Granzier
-----------------------------------
Paul A. Granzier
Vice President, Secretary
and General Counsel
Date: February 18, 1997
4
<PAGE> 5
Report of Independent Auditors
Board of Directors
The BFGoodrich Company
We have audited the accompanying combined statement of assets to be acquired
and liabilities to be assumed of Tremco Incorporated (as defined in Note A) (a
subsidiary of The BFGoodrich Company) as of October 31, 1996, and the related
combined statements of revenues and expenses and of cash flows for the
ten-month period then ended. These financial statements are the responsibility
of the management of Tremco Incorporated. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
As described in Note A, the accompanying combined financial statements were
prepared solely to present the assets to be acquired and liabilities to be
assumed pursuant to the Stock Purchase Agreement between The BFGoodrich Company
and RPM, Inc., and are not intended to be a complete presentation of the assets
and liabilities and revenues and expenses of Tremco Incorporated.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the combined assets to be acquired and liabilities to be
assumed of Tremco Incorporated (as defined in Note A) at October 31, 1996, and
its combined revenues and expenses and its combined cash flows for the
ten-month period then ended, in conformity with generally accepted accounting
principles.
/s/ Ernst & Young LLP
----------------------------
Ernst & Young LLP
Cleveland, Ohio
January 22, 1997
<PAGE> 6
<TABLE>
<CAPTION>
TREMCO INCORPORATED
COMBINED STATEMENT OF ASSETS TO BE ACQUIRED AND LIABILITIES TO BE ASSUMED
OCTOBER 31, 1996
(DOLLARS IN MILLIONS)
<S> <C>
Current assets:
Cash and cash equivalents $ 13.8
Accounts receivable, less allowance for doubtful
accounts of $2.0 55.7
Inventory 31.2
Other current assets 2.2
--------
Total current assets 102.9
Property, plant and equipment - net 62.6
Goodwill - net 28.8
Identifiable intangible assets - net 0.8
Other assets 5.5
--------
Total assets 200.6
--------
Current liabilities:
Short-term bank debt 0.7
Accounts payable 26.8
Accrued expenses 21.2
Accrued product warranties 5.5
Foreign income taxes payable 3.1
--------
Total current liabilities 57.3
Long-term debt 0.5
Deferred warranty revenue 8.5
Accrued product warranties 6.4
Other non-current liabilities 8.9
--------
Total liabilities 81.6
--------
Net assets $ 119.0
========
</TABLE>
See notes to financial statements.
- 1 -
<PAGE> 7
<TABLE>
<CAPTION>
TREMCO INCORPORATED
COMBINED STATEMENT OF REVENUES AND EXPENSES
FOR THE TEN-MONTH PERIOD ENDED OCTOBER 31, 1996
(DOLLARS IN MILLIONS)
<S> <C>
Net sales $285.4
Operating costs and expenses:
Cost of sales 159.4
Selling and administrative expenses 104.2
-----
263.6
-----
Operating income 21.8
Other income (expense):
Interest expense (0.6)
Interest income 1.7
Other expense-net (0.3)
-----
Income Before Income Taxes $22.6
=====
</TABLE>
See notes to financial statements.
- 2 -
<PAGE> 8
TREMCO INCORPORATED
COMBINED STATEMENT OF CASH FLOWS
FOR THE TEN-MONTH PERIOD ENDED OCTOBER 31, 1996
(DOLLARS IN MILLIONS)
[S] [C]
Operating Activities
Income before income taxes $ 22.6
Adjustments to reconcile income before income taxes to
net cash provided by operating activities:
Depreciation and amortization 8.9
Foreign income taxes (5.3)
Changes in assets and liabilities:
Accounts receivable (13.6)
Inventory (3.5)
Other current assets (.7)
Accounts payable 4.1
Accrued expenses 1.2
Other - net 1.7
-------
Net cash provided by operating activities 15.4
Investing Activities
Purchases of property, plant and equipment (6.8)
Proceeds from sale of property, plant and equipment .5
-------
Net cash used by investing activities (6.3)
Financing Activities
Changes in short-term bank debt (.8)
Repayment of long-term debt (.2)
Intercompany transactions with BFGoodrich - net (18.8)
-------
Net cash used by financing activities (19.8)
Effect of exchange rate changes on cash and cash equivalents .2
-------
Net decrease in cash and cash equivalents (10.5)
Cash and cash equivalents at beginning of period 24.3
-------
Cash and cash equivalents at end of period $ 13.8
=======
Supplemental cash flow information:
Interest paid (net of amount capitalized) $ 0.6
=======
See notes to financial statements.
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<PAGE> 9
TREMCO INCORPORATED
NOTES TO COMBINED FINANCIAL STATEMENTS
FOR THE TEN-MONTH PERIOD ENDED OCTOBER 31, 1996
(DOLLARS IN MILLIONS)
NOTE A. BASIS OF PRESENTATION
On October 21, 1996, The BFGoodrich Company ("BFG") entered into a Stock
Purchase Agreement (the "Agreement") with RPM, Inc. ("RPM") whereby RPM agreed
to purchase all of the capital stock of Tremco (as defined below), other than
certain assets and liabilities to be retained by BFG as defined in the
Agreement. The transaction is expected to close as of February 1, 1997, and the
Agreement may be amended by mutual agreement of the parties as of that date. The
accompanying financial statements include the assets, liabilities, and the
revenues and expenses of the businesses to be acquired by RPM. Those businesses
include Tremco Incorporated and the following subsidiaries of Tremco
Incorporated and certain affiliates (direct or indirect subsidiaries of BFG):
Tremco Service Corporation (U.S.); Tremco Limited (Canada); Tremco Ltd. (U.K.)
and subsidiaries; Kamia Chemical GmbH (Germany); Tremco Asia Pacific Pty.
Limited and subsidiaries (Australia); Tremco Far East Limited and subsidiary
(Hong Kong); H&P Extrusions B.V., H&P Mixings B.V. and Tremco B.V. (Holland); Oy
Tremco Ltd. Finland; Tremco A.B. (Sweden) and certain operations in Mexico and
Japan (collectively "Tremco" or the "Company"). The Company operates in the
building maintenance and construction business segment. Tremco manufactures
insulating glass sealants, construction sealants and waterproofing coatings,
commercial glazing products and commercial roofing products.
The accompanying Combined Statement of Assets To Be Acquired and Liabilities To
Be Assumed, Combined Statement of Revenues and Expenses and Combined Statement
of Cash Flows have been prepared from the historical books and records of the
Company. In accordance with the Agreement, these financial statements reflect
the net assets of the businesses to be acquired and their revenues and expenses
and cash flows. Assets and liabilities of Tremco that will not be acquired or
assumed and have no continuing significance to the businesses to be acquired
have been omitted from the Combined Statement of Assets To Be Acquired and
Liabilities To Be Assumed. Assets and liabilities to be retained by BFG
primarily consist of certain property and equipment, current and deferred income
taxes attributable to U.S. operations, liabilities for U.S. defined benefit
pension and postretirement arrangements, bank debt of Tremco Asia Pacific Pty.
Limited, and the intercompany balance with BFG.
Tremco Incorporated and its U.S. subsidiaries are included in the consolidated
federal income tax return of BFG. BFG's policy is to account for all U.S. income
taxes at the parent company level. As a result, no U.S. income tax assets or
liabilities relating to temporary differences and no income tax expense
(benefit) have been reflected in the accompanying financial statements. Foreign
income taxes have been excluded from the Combined Statement of Revenues and
Expenses for presentation purposes. The cash flow effect of accrued foreign
income taxes to be paid by foreign businesses has been included in the Combined
Statement of Cash Flows.
- 4 -
<PAGE> 10
TREMCO INCORPORATED
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN MILLIONS)
NOTE A. BASIS OF PRESENTATION (CONTINUED)
BFG provides various treasury functions for Tremco in the U. S. and maintains a
cash management program under which cash generated by Tremco is transferred to
BFG and working capital requirements of Tremco are paid by BFG. Incident to this
system, BFG maintains an interest-bearing intercompany account to record the net
amount owed to or due from Tremco. Interest income in the accompanying Combined
Statement of Revenues and Expenses includes the interest earned ($1.3) by Tremco
from BFG on this intercompany account balance at BFG's variable rate of
interest. The intercompany account balance with BFG is not to be acquired by RPM
and, accordingly, this balance has been excluded from the net assets at October
31, 1996.
BFG also provides certain services to the Company such as insurance and employee
benefits management, telecommunications, tax and legal, among others. Costs
charged to the Company for these services are allocated by BFG based on
management's estimates of the Company's proportionate share of the total
expenses; however, these allocations are not necessarily indicative of the
expenses that would have been incurred had Tremco been operated as a stand-alone
business. BFG allocates costs related to defined benefit pension and
postretirement plans based on actuarial valuations. Total expenses - net
allocated to the Company by BFG totaled $4.3 for the ten-month period ended
October 31, 1996 (including allocations related to defined benefit pension and
postretirement plans). Net expenses charged to the Company are not settled in
cash and become part of the intercompany account balance with BFG.
NOTE B. SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF COMBINATION
The combined financial statements reflect the accounts of Tremco (see note A).
Investments in 20 to 50 percent owned affiliates are accounted for using the
equity method. Equity in earnings (losses) from these businesses, which are not
significant, are included in Other expense-net. Intercompany accounts and
transactions have been eliminated. The operations of Tremco's foreign
operations, excluding Canada, are consolidated on a one-month time lag in order
to achieve the month-end reporting requirements of BFG.
CASH AND CASH EQUIVALENTS
Cash equivalents consist of highly liquid investments with a maturity of three
months or less at the time of purchase.
- 5 -
<PAGE> 11
TREMCO INCORPORATED
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN MILLIONS)
NOTE B. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INVENTORIES
Inventories are stated at the lower of cost or market. Certain domestic
inventories are valued by the last-in, first-out (LIFO) cost method. Inventories
not valued by the LIFO method are valued principally by the first-in, first-out
cost method.
LONG-LIVED ASSETS
Property, plant and equipment are recorded at cost. Depreciation and
amortization is principally computed by either the straight-line method or the
sum-of-the-years digits method over the following estimated useful lives:
buildings and improvements, 15 to 40 years; machinery and equipment, 3 to 15
years. Repair and maintenance costs are expensed as incurred.
Tremco was acquired by BFG in 1979. Goodwill was recorded for the excess of the
purchase price over the fair value of the net tangible assets and identifiable
intangible assets acquired, and is being amortized using the straight-line
method over 40 years. Goodwill also includes the excess of the purchase price
over the fair value of the net assets of businesses acquired by Tremco since
1979 and is being amortized by the straight-line method over 10 to 20 years.
Identifiable intangible assets are recorded at cost, or when acquired as a part
of a business combination, at estimated fair value. These assets include
trademarks, patents and other technology agreements and licenses. They are
amortized using the straight-line method over estimated useful lives of 5 to 40
years.
Impairment of long-lived assets and related goodwill is recognized when events
or changes in circumstances indicate that the carrying amount of the asset, or
related groups of assets, may not be recoverable. Measurement of the amount of
impairment may be based on appraisal, market values of similar assets or
estimated discounted future cash flows resulting from use and ultimate
disposition of the asset.
REVENUE RECOGNITION
The Company recognizes revenues from sale of products at the point of passage of
title, which is at the time of shipment. Revenues earned from providing services
are recognized when the service is performed. Revenues from warranties
separately purchased by customers are recognized over an average warranty period
of approximately ten years, on a straight-line basis.
- 6 -
<PAGE> 12
TREMCO INCORPORATED
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN MILLIONS)
NOTE B. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FINANCIAL INSTRUMENTS
The Company's significant financial instruments recorded in the Combined
Statement of Assets To Be Acquired and Liabilities To Be Assumed include cash
and cash equivalents, accounts receivable, accounts payable and short-term bank
debt. Because of their short maturity, the carrying amount of these financial
instruments approximates fair value.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
NOTE C. FINANCING ARRANGEMENTS
SHORT-TERM BANK DEBT
At October 31, 1996, the Company had available unused formal foreign lines of
credit and overdraft facilities of $9.2.
LONG-TERM DEBT
Long-term debt represents notes payable to foreign banks. Notes payable to banks
consist of fixed rate instruments which have principal maturing through 2015.
Fixed interest rates on all notes payable to banks range from 7.6 percent to
12.5 percent.
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<PAGE> 13
TREMCO INCORPORATED
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN MILLIONS)
NOTE D. LEASE COMMITMENTS
The Company leases certain of its office and manufacturing facilities as well as
machinery and equipment under operating leases. The future minimum lease
payments, by year and in the aggregate, under noncancelable operating leases
with initial or remaining noncancelable lease terms in excess of one year,
consisted of the following:
1997 $2.2
1998 1.6
1999 1.1
2000 0.9
2001 0.7
Thereafter 2.9
----
Total minimum payments $9.4
====
Net rent expense for the ten-month period ended October 31, 1996, consisted of
the following:
Minimum rentals $2.4
Contingent rentals 0.8
----
$3.2
====
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<PAGE> 14
TREMCO INCORPORATED
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN MILLIONS)
NOTE E. EMPLOYEE BENEFIT PLANS
PENSION PLANS
Substantially all U.S. employees of the Company are participants in BFG's
defined benefit pension plan. BFG allocates pension costs to the Company based
on actuarial valuations. Pension expense of $0.9 was allocated to the Company
during the ten-month period ended October 31, 1996.
In addition, Tremco has several contributory and noncontributory defined benefit
pension plans covering employees outside the U.S., principally in Canada. Plans
generally provide benefit payments using a formula that is based on an
employee's compensation and length of service.
Accumulated benefits and related assets for Tremco's Canadian defined benefit
pension plan as of December 31, 1996, the most recent valuation date, are as
follows:
Actuarial present value of accumulated benefit obligation:
Vested $ 12.1
Non-vested --
-------
Accumulated benefit obligation 12.1
Plan assets at fair value 20.8
-------
Plan assets in excess of accumulated
benefit obligation $ 8.7
-------
Projected benefit obligation $ 14.0
Plan assets at fair value 20.8
-------
Plan assets in excess of projected
benefit obligation $ 6.8
=======
Consisting of:
Unrecognized transition asset $ 0.6
Unrecognized prior service cost (0.5)
Unrecognized net gain 5.2
Prepaid pension cost at December 31, 1996 1.5
-------
Total $ 6.8
=======
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<PAGE> 15
TREMCO INCORPORATED
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN MILLIONS)
NOTE E. EMPLOYEE BENEFIT PLANS (CONTINUED)
The major assumptions used in the December 31, 1996 actuarial valuation for the
Canadian pension plan are as follows: discount rate - 8.25 percent; rate of
increase in compensation levels - 4.5 percent; expected long-term rate of return
on plan assets - 9 percent. The plan's assets consist principally of investments
in mutual funds invested in equities, debt and real estate.
The components of net periodic pension income of ($0.1) for the Canadian plan
for the ten-month period ended October 31, 1996 are: service cost - $0.4;
interest cost - $1.0; actual return on plan assets - ($2.6); net amortization -
$1.1.
Prepaid pension cost of $1.8 is reflected in the Combined Statement of Assets To
Be Acquired and Liabilities To Be Assumed at October 31, 1996.
SAVINGS PLAN
The Company also sponsors an unfunded defined contribution plan for employees of
Tremco Canada. Amounts credited to participant's accounts are based on a
percentage of the amount employees contribute to other plans. During the
ten-month period ended October 31, 1996, the Company expensed $0.3, including
interest. A non-current liability of $3.0 is reflected in the Combined Statement
of Assets To Be Acquired and Liabilities To Be Assumed.
The Company also participates in a BFG defined contribution savings plan, which
covers most U.S. salaried employees of the Company. The Company matches from
three to six percent of eligible earnings depending upon investment options
elected. For the ten-month period ended October 31, 1996, Company contributions
amounted to $2.1 under this plan.
OTHER POSTRETIREMENT BENEFIT PLANS
The Company's U.S. employees participate in a BFG defined benefit postretirement
plan that provides certain health-care and life insurance benefits to eligible
employees. The health-care plan is contributory, with retiree contributions
adjusted periodically, and contain other cost-sharing features, such as
deductibles and coinsurance. The life insurance plan is generally
noncontributory. Net periodic postretirement benefit expense for the ten-month
period ended October 31, 1996, allocated to the Company was $0.6.
- 10 -
<PAGE> 16
TREMCO INCORPORATED
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN MILLIONS)
NOTE E. EMPLOYEE BENEFIT PLANS (CONTINUED)
The Company also sponsors a defined benefit postretirement plan that provides
certain health-care benefits to employees of Tremco Canada. Net periodic
postretirement benefit expense for the ten-month period ended October 31, 1996
was $0.3. A non-current liability of $3.7 is reflected in the Combined Statement
of Assets To Be Acquired and Liabilities To Be Assumed.
NOTE F. GEOGRAPHIC INFORMATION
The Company's operations are principally in the United States, Canada and
Europe. Sales are not concentrated in any one customer. The Company does not
believe that business risks in countries in which it operates, including
currency restrictions, could have a significant adverse effect on cash flow,
liquidity or capital resources.
Net assets of consolidated foreign subsidiaries amounted to $70.3 (including
$13.6 of cash and cash equivalents) at October 31, 1996.
The Company also exports products manufactured in the United States to
affiliated and unaffiliated companies worldwide. Intercompany transfers made at
prevailing prices to foreign subsidiaries amounted to $6.0 for the ten-month
period ended October 31, 1996. Export sales to unaffiliated foreign customers
amounted to $1.0 for the ten-month period ended October 31, 1996.
Operating Identifiable
Sales Income (Loss) Assets
----- ------------- ------
[S] [C] [C] [C]
Geographic Areas:
United States $171.5 $13.1 $ 89.2
Canada 90.7 8.6 63.0
Europe 43.7 1.3 41.9
Other Foreign 13.2 (1.1) 8.5
Inter-area eliminations (33.7) (0.1) (2.0)
---- ----- -----
Total $285.4 $21.8 $200.6
===== ==== =====
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<PAGE> 17
TREMCO INCORPORATED
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN MILLIONS)
NOTE G. RESEARCH AND DEVELOPMENT EXPENSE
Research and development expense amounted to $6.8 for the ten-month period ended
October 31, 1996.
NOTE H. INVENTORIES
The major classes of inventories are as follows:
At first-in, first-out or average cost (which
approximates current costs):
Finished products $26.3
Raw materials and supplies 6.5
---
32.8
Reserve to reduce certain inventories
to LIFO basis (1.6)
-----
$31.2
=====
At October 31, 1996, approximately 22 percent of inventory was valued by the
LIFO method.
- 12 -
<PAGE> 18
TREMCO INCORPORATED
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN MILLIONS)
NOTE I. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following:
Land $ 4.3
Buildings and improvements 39.6
Machinery and equipment 75.0
Construction in progress 7.2
-------
126.1
Less allowances for depreciation
and amortization (63.5)
-----
$62.6
=====
Interest costs capitalized were $0.2 for the ten-month period ended October 31,
1996. Depreciation and amortization of property, plant and equipment for the
ten-month period ended October 31, 1996 was $7.1.
NOTE J. GOODWILL AND IDENTIFIABLE INTANGIBLE ASSETS
Goodwill and identifiable intangible assets include the following:
Goodwill $48.7
Accumulated amortization (19.9)
-----
$28.8
=====
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<PAGE> 19
TREMCO INCORPORATED
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN MILLIONS)
NOTE J. GOODWILL AND IDENTIFIABLE INTANGIBLE ASSETS (CONTINUED)
Identifiable intangible assets $ 1.7
Accumulated amortization (.9)
---
$ 0.8
=====
Amortization of goodwill and identifiable intangible assets was $1.8 for the
ten-month period ended October 31, 1996.
NOTE K. ACCRUED EXPENSES
Accrued expenses include the following:
Wages, vacations, pensions and other
employment costs $11.6
Deferred warranty revenue 1.3
Other 8.3
-----
$21.2
=====
NOTE L. COMMITMENTS AND CONTINGENCIES
Tremco has various purchase commitments for materials, supplies and energy
incident to the ordinary course of business.
There are pending or threatened against Tremco various claims, lawsuits and
administrative proceedings, all arising from the ordinary course of business
with respect to commercial and product liability matters, which seek remedies or
damages. Tremco believes that any liability that may finally be determined with
respect to commercial and product liability claims in excess of amounts provided
should not have a material effect on the Company's consolidated financial
position or results of operations. The Company is also involved in legal
proceedings as a plaintiff involving contract and other matters. Gain
contingencies, if any, are recognized when realized.
- 14 -
<PAGE> 1
Exhibit 2.1
STOCK PURCHASE AGREEMENT
between
THE B.F.GOODRICH COMPANY
and
RPM, INC.
<PAGE> 2
TABLE OF CONTENTS
-----------------
Page
----
RECITALS ...................................................... 1
ARTICLE I PURCHASE AND SALE OF STOCK ........................... 1
1.1 Purchase and Sale .................................... 1
1.2 Retained Assets ...................................... 2
1.3 Retained Liabilities ................................. 2
1.4 Transfer and Consent of Third Parties ................ 3
ARTICLE II PURCHASE PRICE ....................................... 3
2.1 Purchase Price ....................................... 3
2.2 Purchase Price Adjustment ............................ 4
2.2(a) Closing Statement Preparation ........................ 4
2.2(b) Closing Statement Review ............................. 4
2.2(c) Closing Statement Dispute ............................ 5
2.2(d) Cost of Independent Accountants ...................... 5
2.2(e) Post-Closing Refund .................................. 5
2.2(f) Time of Post-Closing Refund .......................... 5
ARTICLE III CLOSING AND TERMINATION .............................. 5
3.1 Closing .............................................. 5
3.2 Grounds for Termination .............................. 5
3.3 Effect of Termination ................................ 6
ARTICLE IV REPRESENTATIONS OF SELLER ............................ 7
4.1 Representations of Seller ............................ 7
4.1(a) Capital Stock ........................................ 7
4.1(b) Title to Stock ....................................... 7
4.1(c) organization and Good Standing ....................... 8
4.1(d) Authorization ........................................ 8
4.1(e) No Default Upon Transfer ............................. 9
4.1(f) Tangible Assets ...................................... 9
4.1(g) Patents, Trademarks and Service Marks ................ 9
4.1(h) Taxes ................................................ 10
4.1(i) Litigation ........................................... 10
4.1(j) Contracts ............................................ 12
4.1(k) Laws and Regulations ................................. 12
4.1(l) Environmental Matters ................................ 12
4.1(m) Real Property ........................................ 14
4.1(n) Employee Benefit Plans ............................... 14
4.1(o) Financial Information ................................ 17
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4.1(p) No Approvals .............................................. 17
4.1(q) Brokerage or Finder's Fee ................................. 17
4.1(r) Litigation ................................................ 17
4.1(s) No Undisclosed Liabilities ................................ 18
4.1(t) Absence of Certain Changes ................................ 18
4.1(u) Insurance ................................................. 19
4.1(v) Employees ................................................. 20
4.1(w) Certain Payments .......................................... 20
4.1(x) Relationships with Related Persons ........................ 21
4.1(y) Suppliers and Customers ................................... 21
4.1(z) Accounts Receivable and Inventories ....................... 22
4.1(aa) Labor Relations; Compliance ............................... 22
ARTICLE V REPRESENTATIONS OF BUYER .................................. 23
5.1 Representations of Buyer .................................. 23
5.1(a) Corporate organization .................................... 23
5.1(b) Authorization ............................................. 23
5.1(c) Financial Capability ...................................... 23
5.1(d) Brokerage or Finder's Fee ................................. 24
5.1(e) Litigation ................................................ 24
5.1(f) No Approvals .............................................. 24
5.1(g) Acquisition of Common Stock for Investment Purposes ....... 24
ARTICLE VI COVENANTS OF SELLER ....................................... 24
6.1 Conduct of the Business ................................... 24
6.2 Information ............................................... 25
6.3 Covenant of Cooperation ................................... 25
6.4 Insurance Coverage ........................................ 25
6.5 Retained Business ......................................... 26
6.6 Intercompany Accounts ..................................... 26
6.7 No Solicitation ........................................... 26
6.8 Associated Assets ......................................... 27
6.9 Delivery of Audited Statements ............................ 27
6.10 Seller's Non-Competition Covenant ......................... 27
6.11 Cash Balances ............................................. 29
6.12 Debt ...................................................... 29
ARTICLE VI-A MUTUAL COVENANTS .......................................... 30
6.1A Notification .............................................. 30
6.2A Best Efforts .............................................. 30
6.3A Ancillary Agreements ...................................... 30
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ARTICLE VII COVENANTS OF BUYER ............................... 31
7.1 Covenants ........................................ 31
7.2 Maintenance of Books and Records ................. 32
7.3 Transition Services .............................. 32
7.4 Trademarks ....................................... 32
7.5 Employees; Employee Benefits ..................... 33
7.6 Employee Benefits ................................ 34
7.6(a) General .......................................... 34
7.6(b) Retirement Plans ................................. 34
7.6(b)(1) 401(k) Plan ...................................... 34
7.6(b)(2) Defined Benefit Pension Plan ..................... 34
7.6(c) Welfare Benefit Plans ............................ 35
7.6(d) Retiree Medical Coverage ......................... 36
7.6(e) Employee Notice .................................. 36
7.7 Workers' Compensation ............................ 36
ARTICLE VIII TAX MATTERS ...................................... 37
8.1 Tax Definitions .................................. 37
8.2 Covenants ........................................ 38
8.3 Cooperation on Tax Matters ....................... 40
ARTICLE IX CONDITIONS TO CLOSING ............................ 41
9.1 Conditions to Obligation of Seller ............... 41
9.1(a) Representations and Warranties ................... 41
9.1(b) Performance ...................................... 42
9.1(c) Governmental Approvals ........................... 42
9.1(d) No Prohibition ................................... 42
9.1(e) Ancillary Agreements ............................. 42
9.1(f) Other Approvals .................................. 42
9.1(g) Financial Statements ............................. 42
9.2 Conditions to Obligations of Buyer ............... 42
9.2(a) Representations and Warranties ................... 43
9.2(b) Performance ...................................... 43
9.2(c) Governmental Approvals ........................... 43
9.2(d) No Prohibition ................................... 43
9.2(e) Ancillary Agreements ............................. 43
9.2(f) Other Approvals .................................. 43
9.2(g) Financial Statements ............................. 44
9.2(h) IBNR Policy ...................................... 44
ARTICLE X DELIVERIES AT CLOSING ............................ 44
10.1 Deliveries of Seller ............................. 44
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10.1(a) Stock Certificates .................................. 44
10.1(b) Opinion of Counsel .................................. 44
10.1(c) Certificates ........................................ 44
10.1(d) Resignation ......................................... 44
10.1(e) Secretary's Certificate ............................. 44
10.2 Deliveries of Buyer ................................. 45
10.2(a) Purchase Price ...................................... 45
10.2(b) Opinion of Counsel .................................. 45
10.2(c) Officer's Certificate ............................... 45
10.2(d) Secretary's Certificate ............................. 45
ARTICLE XI INDEMNITY ........................................... 45
11.1 Indemnification ..................................... 45
11.1(a) Seller's Indemnity .................................. 45
11.1(b) Tax Indemnification by Seller ....................... 46
11.1(c) Buyer's Indemnity ................................... 47
11.1(d) Tax Indemnification by Buyer ........................ 47
11.1(e) Special Indemnification by Seller ................... 48
11.1(e)(1) General Provisions .................................. 48
11.1(e)(2) Terms ............................................... 49
11.1(e)(3) Cost-Sharing ........................................ 49
11.1(e)(4) Covenants ........................................... 50
11.1(e)(5) Notice of Claims .................................... 50
11.1(e)(6) Claims Management ................................... 50
11.1(e)(7) Defense ............................................. 52
11.2 Limitations of Seller's Liability ................... 52
11.2(a) Monetary Thresholds and Limitations ................. 52
11.2(b) Time Limitations .................................... 52
11.2(c) Exclusions from Sub-Sections (a) and (b) ............ 53
11.3 Notice of Claim ..................................... 53
11.4 Exclusive Remedy .................................... 54
ARTICLE XII MISCELLANEOUS PROVISIONS ............................ 54
12.1 Certain Definitions ................................. 54
12.2 Governmental Approvals and Consents ................. 54
12.3 Representations and Warranties of Seller ............ 55
12.4 Entire Agreement .................................... 56
12.5 Binding Effect; Assignment .......................... 56
12.6 Notices ............................................. 57
12.7 Waiver, Consent ..................................... 58
12.8 Other and Further Covenants of Seller ............... 58
12.9 Governing Law ....................................... 58
12.10 Expenses ............................................ 59
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12.11 No Third Party Beneficiaries ...................... 59
12.12 Public Announcements .............................. 59
12.13 Disputes .......................................... 59
12.14 Counterparts ...................................... 59
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DEFINITIONS
-----------
ACCOUNTING REFEREE: Section 8.2(b)
AFFILIATES: Section 4.1(a)(2)
AGREEMENT: Intro
BFGOODRICH INSURANCE POLICIES: Section 4.1(u)
BUSINESS EMPLOYEES: Section 7.5
BUSINESS: SECTION 12.1(b)
BUYER: Introduction
BUYER'S LOSS: Section 11.1(b)(1)
BUYER'S PENSION PLANS: Section 7.6(b)(2)(i)
BUYER'S SAVINGS PLAN: Section 7.6(b)(1)
CLAIM: Section 11.3
CLAIMANT: Section 11.3
CLOSING STATEMENT: Section 2.2(a)
CLOSING DATE: Section 3.1
CLOSING: Section 3.1
CODE: Section 8.1(a)
COMMON STOCK: Recitals
COMPANY: Recitals
COMPETING ACTIVITY: Section 6.10(b)
ENVIRONMENTAL LAWS: Section 4.1(l)(6)
FCPA: Section 4.1(w)
FINAL CLOSING STATEMENT: Section 2.2(b)
INCOME TAX: Section 8.1(b)
INDEMNITOR: Section 11.3
INDEPENDENT ACCOUNTS: Section 2.2(c)
LAWS: Section 4.1(k)
MODIFIED AGGREGATE DEEMED SALES PRICE: Section 8.1(c)
NET WORTH: Section 2.2(e)
ORDER: Section 4.1(i)
PBGC: Section 4.1(n)(13)
PERMITTED ENCUMBRANCES: Section 4.1(m)
PLAN: Section 12.1(a)
PRE-CLOSING TAX PERIOD: Section 8.1(d)
PRICE ALLOCATION SCHEDULE: Section 8.2(b)
PRODUCT: Section 6.10(c)
PRODUCTS: Section 6.10(c)
PROPRIETARY RIGHTS AGREEMENT: Section 4.1(v)(2)
PURCHASE PRICE: Section 2.1
REAL PROPERTY: Section 4.1(m)
RETAINED ASSETS: Section 1.2
RETAINED LIABILITIES: Section 1.3
RETAINED BUSINESS: Section 6.5
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SCHEDULE: Section 4.1
SCHEDULES: Section 4.1
SECTION 338 ELECTIONS: Section 8.2(a)
SECTION 338(h)(10) ELECTION: Section 8.2(a)
SECTION 338(g) ELECTION: 8.2(a)
SELLER LOSS: Section 11.1(d)(1)
SELLER: Introduction
SELLER'S PENSION PLAN: Section 7.6(b)(2)(i)
SELLER'S SAVINGS PLAN: Section 7.6(b)(1)
TAX ASSET: Section 8.1(f)
TAX: Section 8.1(e)
TAX RETURN: Section 4.1(h)
TAXING AUTHORITY: Section 8.1(e)
TREMCO INSURANCE POLICIES: Section 4.1(u)
TREMCO PRODUCTS: Section 6.10(c)
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SCHEDULES AND EXHIBITS
----------------------
Schedule 1.2(g) Retained Technology
Schedule 1.3(b) Retained Claims and Litigation
Schedule 1.3(d) Plans Constituting Retained Liabilities
Schedule 4.1(a)(1) Capital Stock
Schedule 4.1(a)(2) Affiliates
Schedule 4.1(a)(3) Other Shareholdings
Schedule 4.1(b)(2) Share Ownership
Schedule 4.1(c) State Qualifications
Schedule 4.1(f) Tangible Assets
Schedule 4.1(g) Patents, Trademarks and Service Marks
Schedule 4.1(i) Litigation
Schedule 4.1(j) Contracts
Schedule 4.1(k) Laws and Regulations
Schedule 4.1(l) Environmental
Schedule 4.1(m) Real Property
Schedule 4.1(n) Plans
Schedule 4.1(0) Financial Information
Schedule 4.1(p) Approvals or Other Matters
Schedule 4.1(q) Seller Broker
Schedule 4.1(s) Liabilities
Schedule 4.1(t) Absence of Changes
Schedule 4.1(u) Insurance
Schedule 4.1(v) Employees
Schedule 4.1(y) Suppliers and Customers
Schedule 4.1(aa) Labor Matters
Schedule 5.1(f) Approvals or Other Matters
Schedule 6.5 Retained Business
Schedule 6.6 Intercompany Accounts
Schedule 10.1(d) Directors and Officers
Schedule 12.4 Confidentiality Agreement
EXHIBITS
--------
Exhibit A Ancillary Agreements
Exhibit A-1 -- License Agreement for Retained Technology
Exhibit A-2 -- Distributor Agreement for Tremco S.A.
Exhibit A-3 -- Put/Call Agreement for Tremco S.A.
Exhibit A-4 -- License Agreement for Tremco S.A.
Exhibit A-S -- Transition Services Agreement
Exhibit A-6 -- Ultrem Toll Agreement
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STOCK PURCHASE AGREEMENT
------------------------
THIS STOCK PURCHASE AGREEMENT ("Agreement") is made and entered into
as of the 21st day of October, 1996, by and between THE B.F.GOODRICH COMPANY,
a New York corporation ("Seller") and RPM, INC., an Ohio corporation ("Buyer").
RECITALS
--------
A. Seller owns one hundred percent (100%) of the issued and
outstanding shares of common stock, par value $1.00 per share (the "Common
Stock"), of TREMCO INCORPORATED, an Ohio corporation ("Company").
B. Seller desires to transfer, sell, and assign to Buyer and Buyer
desires to purchase from Seller, one hundred percent (100%) of the Common Stock
on the terms and conditions set forth in this Agreement.
C. Seller desires to retain the following subsidiaries of Company:
Tremco S.A., Tremco Italia S.R.L., Tremco GMBH, BFGoodrich de Mexico S.A. de
C.V. and Tremco Autobody Technologies, Inc.
NOW, THEREFORE, in consideration of the mutual promises herein
contained, Seller and Buyer agree as follows:
ARTICLE I. PURCHASE AND SALE OF STOCK
-------------------------------------
1.1 PURCHASE AND SALE. Upon the terms and subject to the conditions
set forth in this Agreement, Seller shall transfer, sell and assign to Buyer and
Buyer agrees to purchase on the Closing Date (as defined herein), all of the
Common Stock, free and clear of any and all restrictions, security interests,
liens, assessments or encumbrances of any kind or nature whatsoever.
1.2 RETAINED ASSETS. Notwithstanding the provisions of SECTION 1.1
above, Seller shall retain and shall transfer or cause to be transferred to
itself or its designee the following assets of Company on or prior to the
Closing Date (collectively, the "Retained
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Assets"):
(a) all books and records of Seller and its affiliates or related
corporations, other than Company or its Affiliates (as hereinafter defined);
(b) all rights of any nature in or to the names "The B.F.Goodrich
Company," "BFGoodrich," and the names of any of their respective segments,
subsidiaries and affiliates (other than those listed on Schedule 4.1(g) hereof),
all logos and designs relating thereto, and all variations thereof;
(c) Seller's rights under this Agreement;
(d) subject to the provisions of SECTION 6.13, all rights and interests
in and under the BFGoodrich Insurance Policies (as hereinafter defined in
SECTION 4.1(u));
(e) all amounts: (i) relating to prepaid items which cannot be
transferred to Buyer by Seller; (ii) subject to the provisions of SECTION 6.11
hereof, of cash on hand or on deposit with or in the name of Company or its
Affiliates;
(f) the Retained Business as defined in SECTION 6.5 hereof, and the
books and records of Seller or Company relating thereto; and,
(g) the Retained Technology (as is defined and more fully identified in
Schedule 1.2(g)), any other assets listed in Schedule 1.2(g) hereof.
1.3 RETAINED LIABILITIES. Seller shall retain the following liabilities
(the "Retained Liabilities"):
(a) Income Taxes (as defined in SECTION 8.1 hereof) resulting from the
sale of the Common Stock and the treatment of the transaction contemplated in
SECTION 8.2 hereunder
(b) any claims or litigation and other proceedings identified in
Schedule 1.3(b) hereof;
(c) all claims, demands, obligations and liabilities associated with or
arising in connection with the Retained Business, including claims, demands,
obligations and liabilities now or hereafter imposed upon Company or any of its
Affiliates associated or arising in connection with the Retained Business;
(d) all claims, obligations, expenses and liabilities associated with
or arising in connection with any Plan (as defined in SECTION 12.1 hereof)
identified on
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Schedule 1.3(d) hereof shall be retained by Seller without regard to the time
or monetary limitations set forth in Article Xl; except that any severance
obligation arising under any Plan due to the termination of the employment of
any employee of the Business (as defined in SECTION 12.1 hereof) on or after the
Closing Date shall not be a Retained Liability hereunder; and,
(e) the Company's manufacturing facility at 8701 Kinsman Road,
Cleveland, Ohio, known as the Kinsman Facility.
1.4 TRANSFER AND CONSENT OF THIRD PARTIES. Anything in this Agreement to
the contrary notwithstanding, this Agreement shall not constitute any agreement
to transfer or assign any interest in any asset, instrument, contract, permit,
or other agreement or any claim, right or benefit arising thereunder or
resulting therefrom, if an attempted transfer thereof, without the required
consent of a third party, would constitute a breach, violation or other
contravention thereof or materially adversely affect the rights of Buyer or
Seller thereunder. Seller and Buyer will use their reasonable efforts to obtain
any required consents to the transfer herein to Buyer; provided that, neither
Buyer nor Seller shall be required to make any payment or agree to any material
undertaking in connection therewith. If any such consent is not obtained prior
to the Closing Date, or if an attempted transfer would be ineffective or would
materially adversely affect Seller's ability to transfer such interest to Buyer,
Seller and Buyer will cooperate in a mutually agreeable, lawful and economically
feasible arrangement under which Buyer would obtain the benefits and assume the
obligations thereunder in accordance with this Agreement, including performance
by Buyer or Seller as agent for the other.
ARTICLE II. PURCHASE PRICE
--------------------------
2.1 PURCHASE PRICE. In consideration of the sale, transfer, conveyance,
assignment, and delivery of the Common Stock by Seller to Buyer and the mutual
covenants, undertakings, and agreements herein contained, Buyer shall on the
Closing Date pay to Seller Two Hundred Thirty One Million Seven Hundred Thousand
Dollars ($231,700,000) (the "Purchase Price") by wire transfer in immediately
available funds to
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Seller's bank account, which Seller shall identify in writing at least forty
eight (48) hours prior to the Closing.
2.2 PURCHASE PRICE ADJUSTMENT.
(a) CLOSING STATEMENT PREPARATION. Promptly after the Closing Date,
Seller shall prepare a statement as of the Closing Date (the "Closing
Statement"). The Closing Statement shall be prepared on a basis consistent with
the unaudited pro forma consolidated balance sheet of Company at December
31, 1995, set forth in Schedule 4.1(o) and past practice, subject to the absence
of footnote disclosure.
(b) CLOSING STATEMENT REVIEW. Not later than 30 days after the
Closing Date, Seller will deliver the Closing Statement to Buyer. All work
papers, documents and records used or generated by Seller and its accountants in
connection with the preparation of the Closing Statement will be made available
to Buyer. Unless Buyer gives Seller a written objection by the thirtieth day
after Buyer's receipt of the Closing Statement, the Closing Statement will
become final and binding on the parties and will be deemed to be the "Final
Closing Statement."
(c) CLOSING STATEMENT DISPUTE. If Buyer objects (as provided in the
last sentence of SECTION 2.2(b)) to the Closing Statement and Buyer and Seller
are able to resolve their dispute within 15 days after Buyer's objection, the
Closing Statement (reflecting the resolution) will be final and binding on the
parties and will be deemed to be the "Final Closing Statement." If Buyer objects
(as provided in last sentence of SECTION 2.2(b)) to the Closing Statement and
Buyer and Seller are unable to resolve their dispute within 15 days after
Buyer's objection, the dispute will be resolved by the Cleveland, Ohio office of
Deloitte & Touche (the "Independent Accountants"). The Independent Accountants
will be instructed to perform their services as expeditiously as possible. The
resolution of the Independent Accountants shall be presented in an "Arbitrator's
Award Report", prepared by the Independent Accountants, which shall be final and
binding on the parties. The decision of the Independent Accountants as reflected
in the Arbitrator's Award Report shall be reflected in a "Final Closing
Statement" to be issued by Seller as soon as possible thereafter.
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(d) COST OF INDEPENDENT ACCOUNTANTS. The fees and expenses of the
Independent Accountants for the resolution of the dispute shall be shared
equally by Buyer and Seller.
(e) POST-CLOSING REFUND. For the purposes of this SECTION 2.2(e),
the term "Net Worth" means the line item Equity/Intercompany prepared on a basis
consistent with the line item Equity/Intercompany in the unaudited proforma
consolidated balance sheet of Company at December 31, 1995, set forth in
Schedule 4.1(o). To the extent the Net Worth of the Company as shown in the
Final Closing Statement is less than $66.5 million, Seller will refund to
Buyer, by wire transfer of immediately available funds, an amount equal to
such shortfall.
(f) TIME OF POST-CLOSING REFUND. Any post-closing refund under
SECTION 2.2(e) will be made not more than three (3) business days after the
Closing Statement has become the Final Closing Statement.
ARTICLE III. CLOSING AND TERMINATION
3.1 CLOSING. The closing of the transactions contemplated by this
Agreement, and all deliveries to be made at such time in connection therewith,
shall occur at the offices of Seller or its legal counsel in Cleveland, Ohio the
later of five (5) business days after all conditions of closing set forth in
Article IX have been satisfied, or February 3, 1997. The "Closing Date" as used
herein shall mean 12:01 a.m. on February 1, 1997. The Closing may occur at such
later date as may be mutually agreed upon in writing by Seller and Buyer.
3.2 GROUNDS FOR TERMINATION. This Agreement may be terminated at any
time prior to the Closing, by the party desiring to terminate this Agreement
providing written notice of such termination to the other party, only:
(a) by mutual written agreement of Seller and Buyer;
(b) by Seller if the Closing shall not have been consummated on or
before February 17, 1997;
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(c) by Buyer if the Closing shall not have been consummated on or
before February 17, 1997;
(d) by either Seller or Buyer if there shall be any law or
regulation that makes consummation of the transaction contemplated hereby
illegal or otherwise prohibited or if consummation of the transactions
contemplated hereby would violate any order, decree or judgment of any court or
governmental body having competent jurisdiction;
(e) by Buyer if any of the conditions in SECTION 9.2 has not been
satisfied or cured as of the Closing Date or if satisfaction of such a condition
is or becomes legally impossible (other than through the failure of Buyer to
comply with its obligations under this Agreement) and Buyer has not waived such
condition on or before the Closing Date; or
(f) by Seller if any of the conditions in SECTION 9.1 has not been
satisfied or cured as of the Closing Date or if satisfaction of such a condition
is or becomes legally impossible (other than through the failure of Seller to
comply with its obligations under this Agreement) and Seller has not waived such
condition on or before the Closing Date.
3.3 EFFECT OF TERMINATION. If this Agreement is terminated as permitted
by SECTION 3.2, such termination shall be without liability of either party (or
any shareholder, director, officer, employee, agent, consultant or
representative of such party) to the other party to this Agreement; provided,
that, if this Agreement is terminated by a party because of the wilful breach of
the Agreement by the other party or because one or more of the conditions to the
terminating party's obligations under this Agreement is not satisfied as a
result of the other party's wilful failure to comply with its obligations under
this Agreement, the terminating party's right to pursue all such legal remedies
will survive such termination unimpaired and the non-terminating party shall be
fully liable to the terminating party for any and all damages, loss, liability
and expense (including without limitation, reasonable expenses of investigation
and reasonable attorney's fees and expenses in connection with any action, suit
or proceeding).
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ARTICLE IV. REPRESENTATIONS OF SELLER
-------------------------------------
4.1 REPRESENTATIONS OF SELLER. Seller hereby represents and warrants to
Buyer that, except as set forth in one of the disclosure schedules attached
hereto and made a part hereof (individually, a "Schedule" and collectively, the
"Schedules"), it being expressly understood and acknowledged by Buyer that none
of the following representations or warranties in any way relate to or concern
the Retained Business unless expressly identified herein:
(a) CAPITAL STOCK.
(1) The authorized capital stock of Company consists of 1000
shares of Common Stock, par value $1.00 per share, of which 1000 shares are
issued and outstanding. There are no options, agreements, warrants or
commitments of any kind or nature or any outstanding securities or other
instruments exchangeable or convertible into the Common Stock of Company or any
shares of any class of capital stock of Company 5 Affiliates except as set forth
in Schedule 4.1(a)(1). Each outstanding share of Common Stock of Company is duly
authorized, validly issued and outstanding, and fully paid and non-assessable.
(2) Other than as to companies that are included in the term
Retained Business, Company's subsidiary and affiliated companies listed in
Schedule 4.1(a)(2) hereto are herein referred to as "Affiliates". The authorized
capital stock of each Affiliate is set forth on Schedule 4.1 (a)(2), and all of
the authorized capital stock of each Affiliate is duly authorized, validly
issued and outstanding, and fully paid and non-assessable.
(3) Companies in respect of which Company owns 50% or less of
the issued and outstanding equity interest are listed in Schedule 4.1(a)(3)
hereto. Except as set forth in Schedule 4.1(a)(2) or (3) hereto and except as to
the Retained Business, Company has no subsidiaries, nor does it own, directly or
indirectly, any of the outstanding capital stock or securities convertible into
capital stock of any corporation or any interest in any partnership, joint
venture or any other business enterprise.
(b) TITLE TO STOCK.
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(1) Seller is the legal, beneficial and record owner of all of
the Common Stock of Company and has full power and authority to transfer all
right, title and interest in and to such shares of Common Stock without the
consent of any other person. The delivery to Buyer of the certificates for such
shares of Company's Common Stock in the manner contemplated by this Agreement
will transfer to Buyer valid title to such shares, free and clear of all liens,
claims, encumbrances, restrictions or limitations.
(2) The legal, beneficial and record owners of all of the
capital stock of each of the Affiliates is set forth on Schedule 4.1(b)(2) and
all of such capital stock is owned free and clear of any liens, claims,
encumbrances, restrictions or limitations except as set forth in Schedule
4.1(b)(2).
(c) ORGANIZATION AND GOOD STANDING. Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Ohio. Each of the Affiliates is a corporation duly organized and in good
standing under the laws of each jurisdiction listed on Schedule 4.1(c) hereof.
Company and each of its Affiliates has full corporate power to own its
respective properties and conduct the Business as currently conducted. Company
and each of its Affiliates is duly qualified as a foreign corporation authorized
to do business in, and is in the good standing under the laws of, each state or
other jurisdiction in which either the ownership or use of the properties owned
or used by it, or the nature of the activities conducted by it requires such
qualification, except as indicated in Schedule 4.1(c) hereof. Seller has made
available to Buyer copies of the Articles/Certificates of Incorporation and the
Code of Regulations or By-Laws, each as amended, of Company, which are in full
force and effect.
(d) AUTHORIZATION. Seller has full corporate power and authority to
own the Common Stock and to enter into and perform this Agreement. The
execution, delivery and performance of this Agreement and the other transactions
contemplated hereby by Seller have been duly authorized by all necessary
corporate action, and this Agreement, when duly authorized, executed and
delivered by Buyer and Seller, will be a valid and binding obligation of Seller
enforceable in accordance with its terms (subject as to the enforcement of
remedies, to applicable laws governing the recovery of attorneys' fees;
bankruptcy, reorganization, insolvency, moratorium, or other similar laws
affecting the enforcement of
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creditors' or obligees' rights generally from time to time in effect; and
subject to general principles of equity including those limiting the right to
obtain specific performance of obligations of Seller thereunder). Neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will violate Seller's Certificate of
Incorporation or By-laws.
(e) NO DEFAULT UPON TRANSFER. Neither the execution and delivery of
this Agreement nor the Closing of the transactions contemplated hereby will
result in a violation or breach of or constitute a default under, any material
indenture, mortgage, deed of trust, promissory note or other contract, license
or other agreement to which Seller or Company or any of its Affiliates is bound.
(f) TANGIBLE ASSETS. Except as provided in Schedule 4.1(f) hereto
and except for matters which would not materially interfere with the use of such
property in the ordinary course of business, Company and its Affiliates have
valid title in and to, or in the case of leased property has valid leasehold
interests in, their respective tangible assets (other than the Real Property as
hereinafter defined), free and clear of any lien, mortgage, security interest,
pledge or other encumbrance or adverse claim other than any such item which
exists in respect of leased property which relates to the lease agreement and
any security interest created in favor of the lessor or owner. The tangible
assets of Company and its Affiliates are sufficient for the continued conduct of
the Business on the Closing Date in substantially the same manner as conducted
by Company and its Affiliates prior to the Closing.
(g) PATENTS, TRADEMARKS AND SERVICE MARKS.
(1) Schedule 4.1(g) contains a list and description of (i) all
United States and foreign patents and patent applications, all United States,
state and foreign copyrights, trademarks, service marks, trade names and trade
dress for which registrations have been issued or applied for, and all trade
names, owned by Company and its Affiliates or in which Company or its Affiliates
hold any right, license or interest; (ii) all material agreements, commitments,
contracts, understandings, licenses, assignments and indemnities relating or
pertaining to any asset, property or right listed in Schedule 4.1(g) to which
Company or any of its Affiliates is a party; (iii) all material licenses or
agreements
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pertaining to know-how, copyrights, trademarks, service marks, trade names,
trade dress, trade secrets, inventions (whether patented or unpatented),
disclosures or uses of ideas to which Company or any of its Affiliates is a
party; and (iv) all registered assumed or fictitious names under which Company
or any of its Affiliates is conducting business;
(2) Except as set forth in Schedule 4.1(g): (i) no proceedings
are pending or, to the knowledge of Seller or Company, threatened against
Company and its Affiliates which challenge the validity or ownership of any
trade secrets, patents, copyrights, trademarks, trade name, trade dress, or
servicemark or the ownership of any other right or property referred to in this
SECTION 4.1(g); and, (ii) since October 1, 1991 Company and its Affiliates have
not received any written notice, nor does Seller have knowledge, of any
infringement of any of the same by any other person; and
(3) Except as set forth in Schedule 4.1(g), since October
1, 1991 Company and its Affiliates have not received any written notice, nor
does Seller have knowledge, that the operations, activities, products,
equipment, machinery or processes of Company or its Affiliates infringe the
patents, trademarks, servicemarks, trade names, copyrights or other property
rights of any other person in any material respect.
(h) TAXES. The Company and each of its Affiliates have filed all
Tax Returns required to have been filed on or before the date hereof, and all
Taxes required to have been paid on or before the date hereof by the Company and
its Affiliates have been timely paid. The Closing Statement shall contain
adequate reserves and accruals for all Taxes (other than U.S. Federal Income
Taxes) due but not yet payable for all periods prior to the Closing Date. All
deficiencies asserted or assessments made in writing as a result of any
examination of Tax Returns by a Taxing Authority are being disputed in good
faith or have been paid in full; "Tax Return" shall mean any return, report or
similar statement required to be filed with respect to any such Tax ,including,
without limitation, any information return, claim for refund, amended return,
and declaration of estimated Tax.
(i) LITIGATION. Except as set forth in Schedule 4.1(i), there is no
material claim, action, suit, litigation or proceeding of any nature pending or,
to Seller's knowledge, threatened against or affecting Company or any of its
Affiliates or in which Company or any of its Affiliates is a plaintiff or
otherwise joined as a party, in any court or before any federal,
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state, county, municipal or foreign department, commission, board, bureau,
agency or other governmental instrumentality, nor before any private or public
arbitration tribunal. Except as set forth in Schedule 4.1(i):
(1) Seller is not party or subject to any Order (as hereinafter
defined) relating to or with respect to Company or any of its Affiliates or the
Business, or the conduct or operation of the Business;
(2) there is no Order to which Company or any of its
Affiliates, or any of the assets owned or used by Company or any of its
Affiliates, is presently subject;
(3) to the knowledge of Seller or Company or any of its
Affiliates, no officer, Director, agent, or employee of Company or any of its
Affiliates is presently subject to any Order that prohibits such officer,
Director, agent, or employee from engaging in or continuing any conduct,
activity, or practice involving the Business of Company.
Except as set forth in Schedule 4.1(i), and except as to any violation or
failure by Company or any of its Affiliates to comply which has been cured or
otherwise addressed so as to remove the violating, failing or noncomplying
condition:
(1) Company and its Affiliates are, and at all times since
October 1, 1991 have been, in compliance with the terms and requirements of any
Order to which they, or any of the assets owned or used by them, is or has been
subject;
(2) no event has occurred or circumstance exists that may
constitute or result in a material violation of or material failure to comply
with any term or requirement of any Order to which Company or any of its
Affiliates, or any of the assets owned or used by Company or any of its
Affiliates, is presently subject; and
(3) neither Company nor any of its Affiliates has received, at
any time since October 1, 1991 any notice or other communication from any
governmental body or any other person regarding the material violation by
Company or any of its Affiliates of, or material failure by Company or any of
its Affiliates to comply with, any term or requirement of any Order to which
Company or any of its Affiliates, or any of the assets owned or used by Company
or any of its Affiliates, is or has been subject.
For purposes of this SECTION 4.1(i), the term "Order" means any final
material award, decision, injunction, judgment, order, ruling or verdict
entered, issued, made, or
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rendered by any court, administrative agency, or other governmental body or by
any arbitrator which has not been either fully performed, discharged or complied
with as of the date hereof; the term "Order" does not include garnishments,
domestic relations orders or similar matters involving employees which are
served upon Company or any of its Affiliates solely in the capacity as the
employer of such persons.
(j) CONTRACTS. Attached hereto as Schedule 4.1(j) is a list of all
of contracts which are considered by the Company's management to be material,
either individually or in the aggregate, to either of the Company's two major
business segments (roofing and sealants). Company's management is not aware of
any facts or circumstances which would indicate that the listed material
contracts are not valid and binding obligations of Company or its Affiliates (as
appropriate), and to the best knowledge of Company's management, same are
enforceable in accordance with their respective terms and are in full force and
effect. Except as indicated in Schedule 4.1(j), no consent by any third party is
required with respect to any listed material contract by reason of the
transactions contemplated herein. Company or its Affiliates (as appropriate)
have, and to the best knowledge of Company's management the other parties
thereto have, performed all obligations under any listed material contract
required to be performed respectively by it and there presently exists no
default by Company or its Affiliates (as appropriate), nor any event which after
notice or lapse of time would constitute such a default or otherwise result in a
right to accelerate a loss of Company's or its Affiliate's (as appropriate)
rights under any listed material contract binding upon Company or its Affiliates
(as appropriate).
(k) LAWS AND REGULATIONS. Except as listed on SCHEDULE 4.1(k),
since October 1, 1991 Company and each of its Affiliates have not been and are
not presently in material violation of the laws, regulations, orders or decrees
("Laws") of any federal, state, or local court or any foreign or U.S.
governmental authority applicable to the Business. The foregoing representation
is expressly not a representation with respect to any environmental matters,
such matters being dealt with solely and exclusively in Section 4.1(l) hereof.
(l) ENVIRONMENTAL MATTERS. Except as listed on Schedule 4.1(l),
since January 1, 1991:
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(1) Company and each of its Affiliates have not been and are
not presently in material violation of Environmental Laws (as hereinafter
defined);
(2) neither Company nor any of its Affiliates has received any
notice of alleged material violation by Company or any of its Affiliates of any
Environmental Law from any governmental authority which has not since been
complied with;
(3) there has been no spill, discharge or other release of a
Hazardous Substance, as that term is defined in the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. sec. 9601 ET SEQ.
("CERCLA"), by Company or any of its Affiliates on the Real Property (as
defined herein) during the period of their ownership or occupancy thereof,
which spill, discharge or other release presently requires any report or
remedial or response action by Company or any of its Affiliates under
applicable Environmental Laws;
(4) neither Company nor any of its Affiliates has received a
Section 104(e) notice alleging that Company or any of its Affiliates is a liable
party under CERCLA;
(5) to the knowledge of Company's management, no underground
storage tanks are located on any portion of the Real Property located in the
U.S. or Canada;
(6) to the knowledge of Company's management, there are no (i)
asbestos-containing materials incorporated into the buildings or interior
improvements that are a part of the Real Property located in the U.S. or Canada,
or (ii) asbestos materials in products currently manufactured by Company and its
Affiliates.
Since January 1, 1989, all U.S. locations of Company and its Affiliates
have timely filed all SARA Title III, Section 313 reports to the extent required
under Environmental Laws.
For the purposes hereof, the term "Environmental Laws" means any federal,
state, local or foreign law, statute, ordinance, rule or regulation, or any
order, judgment or decree issued pursuant to any of the foregoing, applicable to
the Business and which is in effect on the date hereof and governs or regulates
any of the following: (i) the emission, discharge or release of any substance
into the air, water, soil, or substrata; or (ii) the generation, treatment,
processing, storage, disposal, transport, labeling or other
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management of any solid waste or hazardous waste or the clean-up or remediation
thereof; (iii) the health and safety of employees; including, without
limitation: CERCLA; the Resource Conservation and Recovery Act, as amended, 42
U.S.C. Section 6901 ET SEQ.; the Clean Water Act, 33 U.S.C. Section 1251 ET
SEQ.; the Clean Air Act, 42 U.S.C. Section 7401 ET SEQ.; the Toxic Substances
Control Act, 15 U.S.C. Section 2601 ET SEQ.; and the Safe Drinking Water Act,
42 U.S.C.300f through 300j).
(m) REAL PROPERTY. Schedule 4.1(m) lists the facilities and offices
owned or leased by Company or any of its Affiliates in the conduct of the
Business (the "Real Property"). With respect to the parcels of the Real Property
which are owned by Company or any of its Affiliates, Company or its Affiliates
have good and marketable fee simple title thereto, except as set forth on
Schedule 4.1(m) hereto and except for Permitted Encumbrances (as defined
herein). With respect to parcels of Real Property which are leased by Company or
its Affiliates, Company or its Affiliates (as appropriate) are currently in
possession thereof and has valid leasehold interests therein in accordance with
the terms of the controlling lease, except as set forth in Schedule 4.1(m) and
except for Permitted Encumbrances. In addition, the real estate leases
applicable to leased Real Property are included in Schedule 4.1(j) and the
representations and warranties contained in SECTION 4.1(j) are made INTER ALIA
with respect thereto. No parcel of Real Property is subject to a mortgage, lien,
covenants, restrictions, easements, encumbrances or security interests except as
set forth in Schedule 4.1(m) and except for Permitted Encumbrances. As used in
this Agreement, "Permitted Encumbrances" means: (i) real estate taxes and
assessments (general and special) not yet due and payable; (ii) zoning
ordinances and municipal land use regulations; (iii) utility distribution line
easements serving that parcel of the Real Property; (iv) the rights of the
public in and to any public roads abutting that parcel of the Real Property; (v)
any matters set forth on Schedule 4.1(m) hereto; and (vi) any easements,
restrictions, encumbrances, imperfections of title or other matters of record
which would not unreasonably interfere with the use and occupancy thereof by
Company or its Affiliates.
(n) EMPLOYEE BENEFIT PLANS.
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(1) Seller shall list all of the Plans on Schedule 4.1(n), and
has provided to Buyer, where in existence, copies of all Plans, as defined in
SECTION 12.1(a) below, including any trust agreements or other funding
arrangements established and maintained by Company, its Affiliates and/or Seller
covering Business Employees.
(2) Company and its Affiliates, or Seller on their behalf, have
made all payments due under each Plan with respect to Business Employees (as
defined in SECTION 7.5 hereof), and all related amounts that are expenses or
liabilities of Company or its Affiliates under each such Plan have been accrued
to date as expenses and liabilities of Company or its Affiliates and have been
recorded on the consolidated books and records of Company.
(3) Except as otherwise set forth on Schedule 4.1(n), no
insurance policy or other insured funding medium through which benefits are
provided under any Plan is subject to any retroactive rate adjustment or the
payment of additional premiums with respect to any periods prior to the Closing.
(4) Except as otherwise set forth on Schedule 4.1(n), each Plan
has been operated in all material respects in accordance with its terms and with
applicable law.
(5) Except as otherwise set forth on Schedule 4.1(n), no Plan
provides (or by its terms is designed to provide) benefits for persons who are
not active employees or Directors of Company or any Affiliate.
(6) Seller, Company and, to the best of Seller's or Company 5
knowledge, no other person, has engaged in any prohibited transaction (within
the meaning of Section 406 of ERISA or Section 4975 of the Internal Revenue
Code, excluding any transactions which are exempt under Section 408 of ERISA or
Section 4975 of the Internal Revenue Code) with respect to any Plan, which could
subject Company or any such other person to any liability. No event has occurred
and no condition exists that would subject Company to any tax under Internal
Revenue Code Sections 4971, 4972, 4977 or 4979, or to a fine under ERISA
Sections 502(c) or 502(l).
(7) Except as otherwise set forth on Schedule 4.1(n), there are
no actions, suits or claims pending (other than routine claims for benefits) or,
to the best knowledge of Seller or Company, any actions, suits, or claims (other
than routine claims
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for benefits) which could reasonably be expected to be asserted, against any
Plan or the assets thereof.
(8) Company or its Affiliates as applicable, has the right to
amend or terminate, without the consent of any other person, any Plan which it
maintains or under which Company or its Affiliates has any obligation to provide
benefits, except as proscribed by law, or as set forth on Schedule 4.1(n).
(9) Except with respect to the Plans currently maintained by
Company or its Affiliates, Company and its Affiliates have no liability of any
nature, whether absolute or contingent, with respect to any Plan which was in
the past maintained by it or to which it was required to contribute.
(10) Company has no liability of any nature, whether absolute
or contingent, with respect to any Plan which was in the past or is currently
maintained by any other sponsor or to which any other employer or sponsor was in
the past or is currently required to contribute.
(11) Neither Company nor any Affiliate maintains any Plan under
which it would be obligated to pay benefits because of the consummation of the
transaction contemplated by this Agreement, other than severance plans which
will provide severance benefits to Business Employees whose employment is
terminated as a result of this transaction.
(12) Each trust forming a part of any pension, profit sharing,
401(k) or other qualified retirement plan meets, and for all prior periods has
met, all requirements for qualification under Sections 401 and 501 of the
Internal Revenue Code, and all applicable related rules and final regulations,
except that no representation is made as to the satisfaction of any such formal
qualification requirement with respect to which the remedial amendment period
set forth in Section 401(b) of the Internal Revenue Code, and any regulations,
rulings or other IRS releases thereunder, has not expired.
(13) No liability to the Pension Benefit Guaranty Corporation
("PBGC"), other than payment of required premiums (all of which have been paid),
has been incurred by Company with respect to any Plan.
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(14) Except as otherwise set forth on Schedule 4.1(n), Company
is not required, nor has it ever been required, to contribute with respect to
any multi-employer plan within the meaning of Section 3(37) of ERISA.
(o) FINANCIAL INFORMATION. Buyer has heretofore been furnished with
copies of the following: (i) unaudited pro forma consolidated income statements
of Company for the years ended December 31, 1994 and December 31, 1995, and for
the nine (9) months ended September 30, 1996; and, (ii) unaudited pro forma
consolidated balance sheet of Company at December 31, 1994, December 31, 1995
and September 30, 1996; copies of which are included in Schedule 4.1(o).
Schedule 4.1(o) also includes the detail page for accruals and reserves in the
unaudited pro forma consolidated balance sheet of Company at December 31, 1995
and September 30, 1996. Except as set forth in Schedule 4.1(o), these pro forma
statements have been prepared from and are consistent with the books and
records of Company, and in accordance with generally accepted accounting
principles as applied by Seller to its wholly-owned subsidiaries.
(p) NO APPROVALS. Except as set forth in Schedule 4.1(p), no
consent, approval, order or authorization of, or material registration, notice,
declaration or filing with, any governmental authority is required under
applicable law to be given, filed or obtained by Company, Seller or Company's
Affiliates, in connection with the execution, delivery or performance of this
Agreement or the consummation of the transactions contemplated herein.
(q) BROKERAGE OR FINDER'S FEE. Seller and Company have not utilized
any finder, broker or similar source in connection with this transaction and has
not incurred any obligation or liability, contingent or otherwise, for brokers'
commissions, finders' fees or other payments or liabilities in connection with
the transactions contemplated by this Agreement or otherwise, except for the
fees payable solely by Seller pursuant to the arrangement disclosed in Schedule
4.1(q) hereof, which shall be paid by Seller.
(r) LITIGATION. There is no legal action, suit, arbitration,
governmental investigation or other legal or administrative proceeding, nor any
order, decree or judgment in progress, pending or in effect, or to the knowledge
of Seller threatened, against or relating to Seller in connection with or
relating to the transactions contemplated by this
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Agreement or which would adversely impact Seller's ability to consummate the
transactions contemplated hereby, and Seller does not know or have any reason to
be aware of any basis for the same.
(s) NO UNDISCLOSED LIABILITIES. Except as set forth in Schedule
4.1(s) or otherwise disclosed in Schedules hereto, Company or any of its
Affiliates have no material liabilities or obligations except for liabilities
or obligations: (1) reflected or reserved against in the September 30, 1996
balance sheet set forth in Schedule 4.1(o), (2) incurred in the ordinary course
of business consistent with past practice, (3) of a nature not required to be
reflected or disclosed in the financial statements of the Company as of the
date hereof or the Closing Date, (4) incurred after the date hereof with the
knowledge or approval of Buyer, (5) incurred in respect of the Retained
Business, or (6) disclosed pursuant to this Agreement. The foregoing
representation and warranty includes liabilities or obligations related to
product warranty or product liability claims pending or, to the knowledge of
Seller or Company, threatened against Company or any of its Affiliates.
(t) ABSENCE OF CERTAIN CHANGES. Since September 30, 1996, the
Business has been operated only in the ordinary course and consistent with past
practices, and, except in respect of the Retained Business or as set forth in
Schedule 4.1(t) or any other Schedule hereto, there has not been with respect to
Company or any of its Affiliates:
(1) Any change in its condition (financial or other), assets,
liabilities, business or earnings, other than changes in the ordinary course of
business, or changes which individually or in the aggregate have not had a
material adverse effect upon Company or any of its Affiliates taken as a whole
(other than the sale of the Adhesives Systems Division and the proposed sale of
Tremco Autobody Technologies, Inc.);
(2) Any damage, destruction or loss materially and adversely
affecting its properties, assets or business, or notice to take by condemnation
or eminent domain any real property owned or leased by it;
(3) Any change in its authorized or issued capital stock; grant
of any stock option or right to purchase shares of its capital stock; issuance
of any security convertible into such capital stock; grant of any registration
rights; any declaration, setting aside or payment of any dividend or other
distribution in respect of its capital stock or any
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direct or indirect redemption, retirement, purchase or other acquisition by it
of any shares of its capital stock;
(4) Any indebtedness for borrowed money;
(5) Any change in existing credit arrangements with any bank or
other institution;
(6) Any loan or advance made to any officer, director,
consultant, agent, employee or shareholder or any other loan or advance made
otherwise than in the ordinary course of business or any cash dividends paid to
Seller;
(7) Any payment of, or commitment to pay, any severance or
termination pay to any officer, director or shareholder;
(8) Any change in its accounting methods or practices or any
change in depreciation or amortization policies or rates theretofore adopted by
it;
(9) Any acquisition of all or any part of the stock or the
business or operating assets of any other person, firm, association, corporation
or business organization;
(10) Any mortgage, pledge, lien (other than statutory liens
arising in the ordinary course and securing liabilities not yet due and
payable), charge, security interest or other encumbrance against any of its
assets;
(11) Any sale, transfer or grant of any material rights under
any leases, licenses, agreements, patents, inventions, trademarks, trade names,
service marks, copyrights or with respect to any trade secrets or know-how; or,
(12) Any amendment to the organizational documents of Company
or any Affiliate.
(u) INSURANCE. Seller has heretofore delivered to Buyer information
relating to the insurance policies described in Schedule 4.1(u) hereto as the
"BFGoodrich Insurance Policies" and the "Tremco Insurance Policies". Except as
set forth in Schedule 4.1(u): (i) all premiums have been paid when due, and all
material obligations have otherwise been performed, under each policy to which
Company or its Affiliates are a party or that provides coverage to Company or
its Affiliates; (ii) notice has been given to the third party insurer of all
insurable claims; and (iii) to the knowledge of Company's or its Affiliates'
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management, the applications for current insurance policies when submitted were
true and correct in all material respects.
(v) EMPLOYEES.
(1) Schedule 4.1(v) contains a complete and accurate list of the
following information for each employee of Company and its Affiliates, including
each employee on leave of absence or layoff status: employer; name; job title;
current compensation paid or payable and any change in compensation since
January 1, 1996; vacation accrued; and service credited for purposes of vesting
and eligibility to participate under any of Company s or any Affiliate's
pension, retirement, profit-sharing, deferred compensation, stock bonus, stock
option, cash bonus, severance pay, insurance, medical, welfare, or vacation
plan, other employee pension benefit plan or employee welfare benefit plan, or
any other employee benefit plan;
(2) No employee of Company or its Affiliates is a party to, or is
otherwise bound by, any agreement or arrangement, including any confidentiality,
non-competition, or proprietary rights agreement, between such employee and any
other person ("Proprietary Rights Agreement") that in any way adversely affects
or will affect (i) the performance of his duties as an employee of Company or
its Affiliates, or (ii) the ability of Company or its Affiliates to conduct the
Business, including any Proprietary Rights Agreement with Seller or Company or
its Affiliates by any such employee. To Seller's knowledge, no officer or other
key employee of Company or its Affiliates intends to terminate his or her
employment with Company or its Affiliates; and
(3) Schedule 4.1(v) also contains a complete and accurate list of
the following information for each retired foreign employee of Company or its
Affiliates, or their dependents, receiving benefits or scheduled to receive
benefits in the future: name, pension benefit, pension option election, retiree
medical insurance coverage, retiree life insurance coverage, and other benefits,
and any U.S. employees of Company or its Affiliates who will be eligible for
retirement as of the Closing Date.
(w) CERTAIN PAYMENTS. Neither the Company nor any of its
Affiliates nor any director, officer, agent, or employee thereof, nor any other
person associated with or acting for or on their behalf, has directly or
indirectly (1) made any contribution, gift, bribe,
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rebate, payoff, influence payment, kick-back, or other payment to any person,
private or public, regardless of form, whether in money, property, or services
in violation of the Foreign Corrupt Practices Act ("FCPA"), or (2) established
or maintained any fund or asset that has not been recorded in the books and
records of Company on a consolidated basis in accordance with the requirements
of the FCPA.
(x) RELATIONSHIPS WITH RELATED PERSONS. Neither Company nor its
Affiliates, nor any related person thereof, has, or since January 1, 1991 has
had, any interest in any property (whether real, personal, or mixed and whether
tangible or intangible), used in or pertaining to the Business, other than
intercompany transactions undertaken in the ordinary course of business
consistent with past practice. To the knowledge of Company's or its Affiliates'
management, neither Company nor its Affiliates, nor any related person thereof,
is, or since January 1, 1991 has owned (of record or as a beneficial owner) an
equity interest or any other financial or profit interest in, a person that has
(1) had business dealings or a material financial interest in any transaction
with Company or its Affiliates other than business dealings or transactions
conducted in the ordinary course of business at substantially prevailing market
prices and on substantially prevailing market terms, or (2) engaged in
competition with Company or its Affiliates with respect to any line of the
products or services of Company or its Affiliates in any market presently served
by Company or its Affiliates. The foregoing representation and warranty excludes
the holding of shares in Affiliates (undertaken in order to comply with
applicable legal requirements) to the extent set forth in SCHEDULE 4.1(a)(1),
(2) or (3).
(y) SUPPLIERS AND CUSTOMERS. Except as set forth on Schedule
4.1(y), none of the five (5) largest suppliers to or twenty (20) largest
customers of the Business, nor any supplier who is the sole source of supply of
any product essential to the Business, has since December 31, 1995 canceled or
otherwise terminated, or since September 30, 1996 communicated to Company or its
Affiliates any threat to cancel or otherwise terminate, its relevant contract(s)
or order(s) with Company or its Affiliates. Except as set forth on Schedule
4.1(y), neither Seller, Company nor its Affiliates has received notice that any
such supplier or customer intends to cancel or otherwise terminate its relevant
contract(s) or order(s).
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(z) ACCOUNTS RECEIVABLE AND INVENTORIES.
(1) All of the accounts receivable included in the consolidated
books and records of the Company at the Closing Date have arisen in the ordinary
course of business, and are valid and collectible except to the extent of the
allowance for doubtful accounts therein contained.
(2) All of the inventories included in the consolidated books and
records of the Company at the Closing Date are good and usable, not obsolete and
reasonably capable of being sold, used or consumed in the ordinary course of the
Business as now conducted and consistent with past practice, and are valued at
the lower of cost or market consistent with the standards of financial
presentation set forth in SECTION 4.1(o) hereof, with all obsolete items and
items significantly below standard quality having been written down to net
realizable market or scrap value on an annual basis.
(aa) LABOR RELATIONS: COMPLIANCE. Except as set forth on Schedule
4.1(aa), since January 1, 1991, the Company or its Affiliates have not been nor
is a party to any collective bargaining or other labor contract. Except as set
forth on Schedule 4.1(aa), since January 1, 1991, there has not been, there is
not presently pending or existing, and, to the best of Seller's or Company's
knowledge, there is not threatened (1) any strike, slowdown, picketing, work
stoppage, or employee grievance process, (2) any proceeding against or affecting
Company or its Affiliates relating to the alleged violation of any legal
requirement pertaining to labor relations or employment matters, including any
charge or complaint filed by an employee or union with the National Labor
Relations Board, the Equal Employment Opportunity Commission, or any comparable
governmental body, organizational activity, or other labor or employment dispute
against or affecting Company or its Affiliates or their premises, or (3) any
application for certification of a collective bargaining agent. Neither Seller,
Company nor any of its Affiliates has reason to believe that any event has
occurred or circumstance exists that could provide the basis for any work
stoppage or other labor dispute. There is no lockout of any employees by Company
or its Affiliates, and no such action is contemplated by Company or its
Affiliates. Company and its Affiliates have complied in all material respects
with all legal requirements relating to employment, workers' compensation, equal
employment opportunity, nondiscrimination,
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immigration, wages, hours, benefits, collective bargaining, the payment of
social security and similar taxes, occupational safety and health, and plant
closings. Company and its Affiliates are not liable for the payment of any
compensation, damages, taxes, fines, penalties, or other amounts, however
designated, for failure to comply with any of the foregoing legal requirements.
ARTICLE V. REPRESENTATIONS OF BUYER
-----------------------------------
5.1 REPRESENTATIONS OF BUYER. Buyer hereby represents and warrants to
Seller as follows:
(a) CORPORATE ORGANIZATION. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of Ohio.
(b) AUTHORIZATION. The execution, delivery and performance of
this Agreement and the other transactions contemplated hereby have been duly
authorized by Buyer by all necessary corporate action, and this Agreement, when
duly authorized, executed and delivered by Buyer and Seller, will be the valid
and binding obligation of Buyer enforceable in accordance with its terms
(subject as to the enforcement of remedies, to applicable laws governing the
recovery of attorneys' fees; bankruptcy, reorganization, insolvency, moratorium,
or other similar laws affecting the enforcement of creditors' or obligees'
rights generally from time to time in effect; and subject to general principles
of equity, including those limiting the right to obtain specific performance of
obligations of Buyer thereunder). Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
violate Buyer's Articles of Incorporation or Code of Regulations, each as
amended, or any agreement, including any agreements or covenants relating to the
financing of this transaction, to which it is a party or by which it is bound.
(c) FINANCIAL CAPABILITY. Buyer has secured a commitment letter
from a reputable lender bank which, subject to its terms, provides Buyer with
financial commitments which will enable Buyer to perform its obligation under
this Agreement to pay on the Closing Date the full amount of the Purchase Price.
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(d) BROKERAGE OR FINDER'S FEE. Buyer has not utilized any finder,
broker or similar source in connection with this transaction and has not
incurred any obligation or liability, contingent or otherwise, for brokers'
commissions, finders' fees or other like payments in connection with the
transactions contemplated by this Agreement.
(e) LITIGATION. There is no legal action, suit, arbitration,
governmental investigation or other legal or administrative proceeding, nor any
order, decree or judgment in progress, pending or in effect, or to the knowledge
of Buyer threatened, against or relating to Buyer in connection with or relating
to the transactions contemplated by this Agreement or which would adversely
impact Buyer's ability to consummate the transactions contemplated hereby, and
Buyer does not know or have any reason to be aware of any basis for the same.
(f) NO APPROVALS. Except as set forth in Schedule 5.1(D, no
material consent, approval, order or authorization of, or material registration,
notice, declaration, or filing with, any governmental authority is required to
be given, filed or obtained by the Buyer in connection with the execution,
delivery or performance of this Agreement by the Buyer or the consummation of
the transactions contemplated herein.
(g) ACQUISITION OF COMMON STOCK FOR INVESTMENT PURPOSES. Buyer is
acquiring the Common Stock for its own account, solely for investment purposes
and with no present view to any public distribution thereof within the meaning
of SECTION 2(11) of the Securities Act of 1933, as amended.
ARTICLE VI. COVENANTS OF SELLER
-------------------------------
6.1 CONDUCT OF THE BUSINESS. Between the dates hereof and the
Closing Date, Seller shall cause Company and its Affiliates to conduct the
Business only in the ordinary course consistent with past practices, except for
actions taken pursuant to this Agreement or with the prior consent of Buyer, and
Seller shall promptly notify Buyer of any condition which cause a breach or
violation of SECTION 4.1(t) hereof in accordance with the provisions of SECTION
6.1A hereof.
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6.2 INFORMATION. After the date of execution hereof, Seller shall
give to Buyer and to Buyer's attorneys, accountants, insurance agents, and other
representatives reasonable access, to the properties and books and records and
officers and other managerial personnel applicable to the Business and shall
furnish Buyer with information concerning Company, its Affiliates and the
Business as Buyer may reasonably request. Seller reserves the right to require
that Seller representatives be present during any and all meetings between Buyer
and employees of Seller, Company or its Affiliates, and to schedule such
meetings so as to minimize disruption or interruption of the Company's and its
Affiliates' business and operations. Buyer's due diligence inquiries shall be
substantially completed by December 20, 1996.
6.3 COVENANT OF COOPERATION. After the Closing Date, Seller will
give or cause to be given to Buyer and its representatives, upon Buyer's
request, reasonable access to any records of Seller relating to Company and its
Affiliates (except those described in SECTION 1.2(a) hereof) to the extent not
previously transferred to Buyer. Prior to the Closing Date, Seller shall
cooperate in good faith with Buyer and its independent auditors with respect to
the establishment of an opening consolidated balance sheet for Company.
6.4 INSURANCE COVERAGE. For the purposes of this SECTION 6.4, the
term "Seller Insurance" means the BFGoodrich Insurance Policies in effect on and
before the Closing Date, in excess of Seller's applicable self-insured retention
amounts. From and after the Closing Date, Seller agrees to provide Company and
its Affiliates with continuing access as an insured party to Seller Insurance,
subject always to the terms, conditions and limitations thereof, which are
applicable to insurable claims and litigation asserted against Company and its
Affiliates as of the Closing Date. Seller shall be solely responsible for
notification of the underwriters of the Seller Insurance and thereafter for the
management of claims and litigation asserted against Company and its Affiliates
prior to, on or within thirty (30) days after the Closing Date. Provided
however, that Seller may, in its sole discretion, elect to purchase tail
insurance coverage which shall be reasonably acceptable to Buyer and which will
provide the same level and quality of coverage to Company and its Affiliates as
would have otherwise been provided by the Seller Insurance ("Tail Insurance").
In the event Seller elects to so provide the Tail Insurance, Company and its
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Affiliates shall not have any access to the Seller Insurance after the Closing
Date. The foregoing does not constitute, and shall not be construed to
constitute, an independent assumption, assurance, guarantee or indemnity of any
nature whatsoever by Seller with respect to claims and litigation asserted
against Company and its Affiliates as of the Closing Date. Seller will also
provide on or before the Closing Date an IBNR (incurred-but-not-reported)
claims insurance policy reasonably acceptable to Buyer, and if the cost thereof
exceeds $1.7 million, then the excess cost thereof shall be paid by Buyer;
provided however, that if the terms thereof as notified to Buyer on or before
December 20, 1996 are not reasonably acceptable to Buyer, then Buyer may elect
to purchase its own policy in lieu thereof; in the event of such election, the
Purchase Price shall be reduced by $1.7 million.
6.5 RETAINED BUSINESS. Company or its Affiliates have from time
to time heretofore engaged in business more fully described in Schedule 6.5 (the
"Retained Business"). Prior to the Closing, Seller shall have caused all of the
Retained Business, and all of the assets and liabilities associated therewith,
to be transferred and assigned to Seller or its subsidiaries or affiliates.
Prior to the Closing, Seller shall have caused Tremco GMBH and Tremco Autobody
Technologies, Inc. to have made all filings necessary to change their corporate
names to remove any and all references to the name "Tremco". For the purposes of
this Agreement, all of the assets and liabilities of the Retained Business are
expressly retained as Retained Assets and Retained Liabilities, respectively,
and same are expressly excluded from the sales transaction provided for herein.
6.6 INTERCOMPANY ACCOUNTS. All amounts (i) due and owing from
Seller and its subsidiaries or affiliates to Company and its Affiliates or (ii)
due and owing to Seller and its subsidiaries or affiliates from Company and its
Affiliates shall be eliminated as of the Closing Date as set forth on Schedule
6.6 or as mutually agreed to by the parties.
6.7 NO SOLICITATION. Until such time, if any, as this Agreement
is terminated pursuant to SECTION 3.2, Seller will not, and will cause Company
and its Affiliates and their representatives not to, directly or indirectly,
solicit, initiate, or encourage any inquiries or proposals from, discuss or
negotiate with, or consider the merits of any unsolicited inquiries or proposals
from, any person (other than Buyer or any person acting on its behalf) relating
to the sale of the business or assets (other than in the ordinary course of
business) of
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Company and its Affiliates, or the capital stock of Company and its Affiliates,
or any merger, consolidation, business combination, or similar transaction
involving Company and its Affiliates. The foregoing shall not in any way
preclude any actions by Seller in respect of the Retained Business, provided
that any actions with respect to Tremco S.A. and Tremco Italia, S.R.L. shall be
limited and governed by the applicable agreements included in Exhibit A hereto.
6.8 ASSOCIATED ASSETS. Seller has informed Buyer that Seller
shall retain the corporate entities existing in Mexico and Japan which presently
house local Company operations. In connection with the transactions contemplated
herein, Seller shall transfer to Buyer the assets and business of Company (if
any), and Buyer shall assume and perform the liabilities and obligations of
Company (if any), associated with such operations, including any employment
obligations. In addition, Seller will provide appropriate transitional services
to allow the orderly transition of such operations to Buyer's local legal
entities.
6.9 DELIVERY OF AUDITED STATEMENTS. Seller shall not less than
five (5) days prior to the Closing Date deliver to Buyer the audited
consolidated balance sheet of the Company and all of the subsidiaries listed on
Schedule 4.1(a)(2) as at October 31, 1996 and the related audited consolidated
statements of income and cash flows for such period then ended, together with
the unqualified report thereon of Ernst & Young LLP. Such financial statement
shall be in compliance with Regulation S-X of the Securities and Exchange
Commission, and satisfy the one-year financial statement requirement under Item
7(a) of Form 8-K assuming such Form 8-K is filed by March 28, 1997. Seller shall
invoice Buyer for the full amount of Ernst & Young LLP's charges in connection
with the preparation of such financial statements, and Buyer shall promptly pay
such invoice in full contingent upon the Closing of the transaction contemplated
herein.
6.10 SELLER'S NON-COMPETITION COVENANT.
(a) In consideration of Buyer's entering into and fulfilling its
obligations under this Agreement, and ancillary to the sale of the Common Stock
and Business as provided herein, Seller agrees that, without the prior written
consent of Buyer, Seller and its subsidiaries and affiliates shall not for a
period of five (5) years after the Closing Date:
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(i) engage in any Competing Activity (as hereinafter defined) within the
geographic area in which Company or its Affiliates has conducted the Business,
it being understood and agreed by the parties that such geographic area is
world-wide; or (ii) either for its own benefit or purposes or the benefit or
purposes of any other person, interfere with, attempt to divert, entice away, or
accept any business from any person who was a customer of Company or its
Affiliates for the purpose of a Competing Activity.
(b) For the purposes of this Agreement, "Competing Activity"
means any participation in, or other ownership or organization of, any person or
entity, which is engaged in, or hereafter engages in, the design, development,
manufacture, distribution or sale of any Product, whether Seller or its
affiliates or subsidiaries is acting as an agent, consultant, investor, partner,
shareholder, proprietor or in any representative capacity.
(c) For the purposes of this Agreement, the term "Products" means
(i) that group of products which has been designed, developed, and/or produced
and which is presently sold or offered for sale by Company or its Affiliates in
the operation of the Business, other than the Retained Technology or the
Retained Business ("Tremco Products"), and (ii) products which are competitive
with Tremco Products or which perform substantially the same functions as them
or which are similar thereto; provided, however, that the term "Products" shall
not include any products or applications designed, developed, produced, sold or
offered for sale by Seller or its subsidiaries and affiliates at any time which
are now within the product lines of any business of Seller or its affiliates
other than the Business. Any one of the Products is referred to herein as a
"Product."
(d) Provided, however, that nothing herein shall prevent or
prohibit Seller or its affiliates or subsidiaries in any way from conducting any
activities other than the Business or prohibit Seller from acquiring, investing
in, controlling, or otherwise having an interest in a business so long as not
more than five percent (5%) of such business' sales and profits are derived from
an operation which is a Competing Activity, or from acquiring, investing in, or
otherwise having an interest in not more than a five percent (5%) equity
interest or capital stock interest in a business whose sales and profits are
derived from a Competing Activity. Further provided, that nothing herein shall
prohibit Seller from acquiring any interest in, or making an acquisition of,
another entity which conducts
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business involving products substantially comparable to Products or competes
with the Business in any manner other than as its primary or exclusive business
objective.
(e) It is understood and agreed that, any activity of Seller
which is conducted after Closing in a manner consistent with its prior practice
as a part of any of the divisions, business units, or segments of Seller or its
affiliates other than Company and its Affiliates as constituted and operated on
and after December 31, 1996, whether as the commencement, continuation, or
restructuring of any such activity, shall be deemed not to constitute a
Competing Activity for the purposes hereof, and nothing in this Agreement shall
restrict or limit, or be deemed to restrict or limit, any such activity as may
be hereafter conducted by Seller.
6.11 CASH BALANCES. The parties agree that all cash balances located
outside the U.S. of Company and its Affiliates will be left on deposit in the
accounts of Company and its Affiliates on the Closing Date, and Seller will,
under terms mutually agreed between Seller and Buyer, provide cash management
services with respect thereto for up to thirty (30) days after the Closing Date
pursuant to the terms of the Transition Services Agreement. In the event that
the aggregate amount of such cash on the Closing Date is greater than U.S.$2.0
million, then the amount equivalent to such excess shall be paid by Buyer to
Seller by wire transfer of immediately available funds within thirty (30) days
from the Closing Date. In the event that the aggregate amount of such cash on
the Closing Date is less than U.S.$2.0 million, then the amount equivalent to
such excess shall be paid by Seller to Buyer by wire transfer of immediately
available funds within thirty (30) days from the Closing Date.
6.12 DEBT. Third party debt in existence on the date hereof is
identified in Schedule 4.1(t) hereof and reflected in the September 30,1996
balance sheet included in Schedule 4.1(o). In the event one or more of said debt
facilities is paid or otherwise discharged in full on or prior to the Closing
Date, then the Purchase Price shall be increased by the amount equivalent
thereto.
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ARTICLE VI-A MUTUAL COVENANTS
-----------------------------
6.1A NOTIFICATION. Each party will promptly notify the other party
in writing if it is or becomes aware of any fact or condition that causes
or constitutes a breach of any representation or warranty as of the date of this
Agreement, or if it is or becomes aware of the existence or occurrence after the
date of this Agreement of any fact or condition that would (except as expressly
contemplated by this Agreement) cause or constitute a breach of any
representation or warranty had such representation or warranty been made as of
the time of the existence, occurrence or discovery of such fact or condition.
Neither party is as of the date of execution hereof aware of any such fact or
condition which it has not heretofore disclosed to the other party. Should any
such fact or condition causing or constituting a breach require any change in
the Schedules as if the Schedules were dated the date of the occurrence or
discovery of any such fact or condition, the party making such representation or
warranty will promptly deliver to the other a supplement to the Schedules
specifying such change, which if materially adverse shall be subject to the
reasonable acceptance of the other party. The party whose representation or
warranty has been breached shall have the opportunity to cure said breach, and
such party shall notify the other party promptly upon the cure thereof,
providing a further supplement to the Schedules reflecting the cure together
with evidence of the cure which is reasonably acceptable to the other party.
During the same period, each party will promptly notify the other of the
occurrence of any breach of any covenant or of the occurrence of any event that
may make the satisfaction of the conditions in SECTION 9.1 or 9.2, as
applicable, impossible or unlikely. The Schedules set forth in this Agreement
shall be updated to reflect any changes so notified and accepted between the
date hereof and the Closing Date by the delivery of a complete set of updated
Schedules at Closing.
6.2A BEST EFFORTS. Between the date of this Agreement and the Closing
Date, Seller and Buyer will use their best efforts to cause the conditions in
Article IX to be satisfied.
6.3.A ANCILLARY AGREEMENTS. After the date of execution hereof, the
parties shall negotiate in good faith the following ancillary agreements:
License Agreement for Retained
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Technology; Distributor Agreement for Tremco S.A.; Put/Call Agreement for Tremco
S.A.; License Agreement for Tremco S.A.; Transition Services Agreement; Ultrem
Toll Agreement. From and after the Closing Date, Seller and Buyer agree that
they shall cause their respective subsidiaries and affiliates to perform and
comply with the duties and obligations of such ancillary agreements in
accordance with the terms of the executed agreements.
ARTICLE VII. COVENANTS OF BUYER
-------------------------------
7.1 COVENANTS.
(a) After the Closing Date, Buyer will give, or cause to be
given, to Seller and its representatives, during normal business hours at
Company's premises and at Seller's expense, such access to the management,
personnel, properties, titles, contracts, books, records, files, documents and
affairs of Company and copies thereof (at the expense of Seller) as may be
reasonably requested by Seller from time to time, including without limitation
such access as may be necessary or desirable in connection with:
(1) any Tax examination or audit of Company, Seller or its
affiliates, or preparation of any Tax Return of Company, Seller or its
affiliates;
(2) any claims, demands, other audits, suits, actions or
proceedings by or against Seller or its affiliates or related corporations in
any way relating to or otherwise concerning Company (including claims or
investigations arising under or in connection with this Agreement);
(3) any investigation of Seller, its affiliates or related
companies conducted by any governmental organizations relating to the Company;
or,
(4) any matter reasonably relating to any indemnification,
representation, warranty, covenant, or any other term of this Agreement.
Buyer agrees to cooperate fully with Seller after the Closing Date
with respect of any such claims, demands, audits, suits, actions, proceedings or
other matters by or against Seller, its affiliates or related corporations. It
is specifically agreed that Buyer shall cooperate with Seller at Seller's
expense in Seller's continued defense of the litigation and
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claims described in Schedule 1.3(b) hereto, and shall provide technical advice
and assistance in connection therewith as reasonably required by Seller at
Seller's sole expense.
(b) After the Closing Date, Buyer will provide or cause to be
provided to Seller all financial statements, exhibits and supporting schedules
and access to Company's books, records and files as required for fiscal year end
closing by Seller. Buyer shall use reasonable efforts to afford Seller access to
the employees of the Business as Seller shall reasonably request for its proper
business purposes, including, without limitation, the defense of legal
proceedings. Such access may include interviews or attendance at depositions or
legal proceedings; provided, however, that in any event all out-of-pocket
expenses (excluding wages and salaries) reasonably incurred by Buyer in
connection therewith shall be paid or promptly reimbursed by Seller.
7.2 MAINTENANCE OF BOOKS AND RECORDS. Buyer agrees to preserve and
keep and shall not destroy or otherwise dispose of all books and records
relating to Company and the Business in the Buyer's possession for a period of
at least five (5) years from the Closing Date or such later period as may be
required by applicable laws or regulations. After the five year period and
before Buyer shall dispose of any of such books and records, Buyer shall give
Seller at least ninety (90) days prior written notice of such disposal and
Seller shall be given an opportunity, at its own cost and expense, to remove and
retain all or any part of such books and records as Seller may select. During
such five year period, representatives of Seller shall, upon reasonable notice,
have access thereto during normal business hours to examine, inspect and copy
such books and records.
7.3 TRANSITION SERVICES. Services or products which Company and its
Affiliates may require from Seller after Closing may be provided upon Company's
or its Affiliates' request pursuant to the terms of a Transition Services
Agreement mutually agreed by the parties, which shall be executed and delivered
by the parties at the Closing.
7.4 TRADEMARKS. Buyer agrees that beginning on the Closing Date, no
inventories or supplies of any kind on hand bearing the name "BFGoodrich," or
any variation thereof or any other mark or name retained by Seller under SECTION
1.2(b), shall be used or sold unless they are maintained in their original
packaging. Buyer shall cause
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Company and its Affiliates to remove all references to the trade names and
trademarks retained by Seller in SECTION 1.2(b) (whether in product packaging,
sales literature, signage or in any other form) within one (1) year from the
Closing Date.
7.5 EMPLOYEES; EMPLOYEE BENEFITS. All employees of the Company or its
Affiliates engaged in the Business who are actively employed immediately prior
to the Closing Date, including without limitation, those on short-term
disability or other leave of absence, whether for medical reasons or otherwise,
shall continue as employees of the Company or its Affiliates on the Closing
Date. Such employees shall be referred to herein as the "Business Employees."
Notwithstanding the foregoing, the Business Employees shall not include any
person who is receiving benefits under a long-term disability plan provided to
employees of the Company or its Affiliates including, without limitation, the
VEBA with respect to such Business Employees, or who has applied for benefits
under such plan. If any such employees are able to return to work any time after
the Closing Date, they shall become Business Employees, and shall be the
responsibility of the Buyer. Buyer shall maintain the collective bargaining
agreements between the Company or its Affiliates and the bargaining units
representing Business Employees at the Barbourville, Kentucky and Cleveland,
Ohio locations of Seller, and at any foreign locations of the Company where
collective bargaining agreements are in force. Buyer agrees that with respect to
any Business Employee who is terminated within one (1) year after the Closing
Date, whether such termination is actual or constructive, it shall indemnify,
and hold harmless and defend Seller, its affiliates and their respective
officers, directors, employees, agents, successors and assigns, from and against
any claim, course of action, demand, loss, liability, expense, or cost of any
kind or amount whatsoever (including court costs and attorneys' fees) incurred
or suffered by Seller, or one or more of said parties, arising as a direct or
indirect result of such termination, including without limitation any liability
for severance costs, whether under a severance plan of Seller or the Company or
its Affiliates or as a result of a failure to comply with the provisions of any
statute or governmental requirement regarding the provision of notice of
termination to any employee or group of employees, or as a result of any charge
of employment discrimination, or failure to comply with any laws or other
requirements governing the employment relationship.
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Notwithstanding the foregoing, however, Buyer's indemnification obligation shall
not apply to liabilities arising under any Plans which were not disclosed to
Buyer under SECTION 4.1(n).
7.6 EMPLOYEE BENEFITS.
(a) GENERAL. Buyer agrees to provide the Business Employees in
the United States with employee benefits which are comparable in the aggregate
to those employee benefits that are being provided to other similarly situated
subsidiary employees of Buyer. The following subparagraphs set forth certain
specific covenants of Buyer and agreements between the parties with respect to
particular benefits to be provided to the Business Employees by Buyer pursuant
to this SECTION 7.6.
(b) RETIREMENT PLANS.
(1) 401(k) PLAN. Commencing on the Closing Date, Business
Employees who are eligible to participate in the Seller's Retirement Plus
Savings Plan ("Seller's Savings Plan") shall be eligible to participate in a
defined contribution 401(k) plan of Buyer (the "Buyer's Savings Plan"). The
parties agree that, to the extent permitted by law, each participant in the
Seller's Savings Plan shall have the right to make an elective transfer of his
or her account balance in that Plan to the applicable Buyer's Savings Plan,
under the rules set forth in Treasury Reg. Section 1.411(d)-4. Any such
transfers shall be made in cash. Upon such transfer, Buyer shall assume all of
the obligations of Seller in respect of the account balances so transferred. In
particular, the transfer shall be effected in such a way that outstanding loan
obligations of the Business Employees under the Seller's Savings Plan will be
continued under Buyer's Savings Plan, and will not be characterized as taxable
distributions as of the Closing Date. The Buyer's Savings Plan shall contain
provisions accepting eligible rollover distributions, as such term is defined
in the Code to the Buyer's Savings Plan from the Seller's Savings Plan. The
Buyer's Savings Plan will recognize service with Seller for all purposes for
which service is a criterion in the Plan. Seller will vest all Business
Employees in their entire account balances in the Seller's Savings Plan as of
the Closing Date.
(2) DEFINED BENEFIT PENSION PLAN.
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i) Buyer currently maintains defined benefit pension plans
("Buyer's Pension Plans") for its eligible employees, and it agrees that such
Business Employees who were participating in the BFGoodrich Retirement Program
for Salaried Employees ("Seller's Pension Plan") immediately prior to the
Closing Date will be immediately eligible to participate in Buyer's Pension
Plans. Under Buyer's Pension Plans, each such Business Employee will be credited
with the service with which such Business Employee was credited under Seller's
Pension Plan with Seller for purposes of determining eligibility to participate
and vesting.
ii) All Business Employees will be fully vested in their
accrued benefit under the Seller's Pension Plan as of the Closing Date
regardless of their length of service at that time.
(c) WELFARE BENEFIT PLANS. Buyer agrees that the welfare benefit
plans and all fringe benefit programs which are provided to the Business
Employees shall not contain any pre-existing condition exclusions, evidence of
insurability provisions, waiting period requirements and similar provisions and
shall recognize service with Seller or the Company or its Affiliates as
applicable for all purposes for which service is a criterion under such welfare
benefit plans. Buyer further agrees that it will offer as of the Closing Date
health care coverage under a group health plan to all Business Employees in the
United States who are covered on the Closing Date under Seller's group health
plan. Buyer further agrees to recognize all expenses incurred by the Business
Employees in Seller's welfare benefit plans prior to the Closing Date in a
manner that insures that no Business Employee will be required to incur any
coinsurance expense, expense with respect to deductible amounts, or other
out-of-pocket welfare expenses greater than those that would have been incurred
by the Business Employees during the 1996 plan year had a change in coverage
under such plans not occurred. Seller shall remain responsible under its group
health plans for all services rendered prior to the Closing Date, but shall have
no responsibility for any services rendered after the Closing Date, regardless
of when the illness or injury giving rise to the services took place. The
parties further agree to work together to reach a mutually satisfactory
agreement to enable the balances in the medical and dependent care reimbursement
accounts of the Business Employee to be available
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for expenses incurred for the remainder of the calendar year following the
Closing Date. The parties further agree to mutually determine which of the
parties should receive all or a portion of any such amounts which are forfeited
by the Business Employee as of the end of the year in which the Closing Date
occurs.
(d) RETIREE MEDICAL COVERAGE. Business Employees who are eligible
to retire from Company as of the Closing Date shall, together with their spouses
and other eligible dependents, be entitled to retiree medical and life insurance
coverage from Seller, to the extent set forth under the plans of Seller then in
effect, which coverage, if elected as of the Closing Date shall be secondary to
the medical coverage provided to such employees of Buyer while they are actively
employed by Buyer. Buyer agrees that it will not induce any Business Employee to
elect Seller's retiree medical coverage in lieu of participation in Buyer's
group health plan. Seller shall otherwise retain all claims, obligations,
expenses and liabilities as well as any Plan that provides employee benefits
after retirement to the Business Employees, including specifically
post-retirement medical, pension or life insurance benefits.
(e) EMPLOYEE NOTICE. Seller and Buyer agree to give notice to the
Business Employees employed in the United States on a date before the Closing
Date as agreed by Buyer and Seller that (1) any benefits previously promised
under any Plan by Seller and/or Company before the Closing Date are the sole
responsibility of Seller and that any obligation of Company to provide such
benefits promised before the Closing Date are terminated as of the Closing Date;
and (2) any benefits payable by Company after the Closing Date shall be under
the terms of appropriate plans of Buyer.
7.7 WORKERS' COMPENSATION. Company and its Affiliates shall retain
full responsibility for all workers' compensation claims that have been filed by
Business Employees in respect of occurrences prior to the Closing Date, and
Buyer shall indemnify and hold Seller harmless against all claims, payments,
expenses, costs and losses incurred or accrued by Seller with respect to or
arising out of such claims up to the extent of the reserves and accruals
established in the consolidated books and records of the Company as of the
Closing Date. Seller shall indemnify and hold Buyer harmless against all claims,
payments, expenses, costs and losses incurred or accrued by Buyer with
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respect to or arising out of such claims in excess of the reserves and accruals
established in the consolidated books and records of the Company as of the
Closing Date. Company and its Affiliates will also be responsible for all
workers compensation claims that are filed by Business Employees in respect of
occurrences on and after the Closing Date, including claims for injuries or
illnesses that result from aggravation of pre-existing conditions that were in
existence prior to or as of the Closing Date. Buyer acknowledges that Seller, as
a self-insured employer under the Ohio and Kentucky Workers' Compensation
statutes, retains by law ultimate legal responsibility for claims filed for
pre-Closing Date occurrences, and the parties agree to cooperate to the extent
necessary to insure that the handling of such claims is consistent with this
paragraph, with Seller's underlying obligation under state law and with the
foregoing agreement.
ARTICLE VIII. TAX MATTERS
-------------------------
8.1 TAX DEFINITIONS. The following terms, as used herein, have the
following meanings:
(a) "Code" means the Internal Revenue Code of 1986, as amended.
(b) "Income Tax" means (i) any net income, alternative or add-on
minimum tax together with any interest, penalty, addition to tax or additional
amount imposed by any federal, state or local governmental authority of the
United States and (ii) any liability of Company, its Affiliates or Seller for
the payment of any amounts of the type described in (i) as a result of being a
member of an affiliated, consolidated, combined or unitary group or as a result
of any obligations under any arrangements or agreements with respect to any
amounts of the type described in clause (i), together with any capital gain tax
arising from the sale of the Common Stock hereunder.
(c) "Modified Aggregate Deemed Sales Price" means the modified
ADSP (as such term is defined in Treasury Regulations Section 1.338(h)(10)-1(f)
of the assets of Company and its Affiliates.
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(d) "Pre-Closing Tax Period" means any Tax period (or portion
thereof) ending on or before the close of business on the Closing Date.
(e) "Tax" means any (i) income, profits, franchise, gross
receipts, capital, capital gain, sales, use, transfer, property, value-added,
employment, license, lease, service, transportation, withholding, payroll,
severance, environmental, customs, excise, alternative minimum or other
governmental tax or assessment of any kind whatsoever (including interest and
penalties thereon and additions thereto) imposed by any federal, state, local or
foreign governmental authority (a "Taxing Authority") with respect to Company
and its Affiliates, and (ii) any liability of Company and its Affiliates for the
payment of any amounts of the type described in (i) as a result of being a
member of affiliated, consolidated, combined or unitary group or as a result of
any obligations under any arrangements or agreements with respect to any amounts
of the type described in clause (i).
(f) "Tax Asset" means any net operating loss, net capital loss,
investment tax credit, charitable deduction or any other credit or tax attribute
which could reduce Taxes (including, without limitation, deductions and credits
related to alternative minimum taxes).
8.2 COVENANTS.
(a) Buyer shall make a timely federal tax election under Section
338(g) of the Code (the "Section 338(g) Election") with respect to the
acquisition of Company. Seller shall join with Buyer in making a timely federal
tax election under Section 338(h)(10) of the Code (the "Section 338(h)(10)
Election") with respect to the acquisition of Company. Seller and Buyer shall
treat the transaction consistently with the Section 338(g) Election and the
Section 338(h)(10) Election (collectively, the "Section 338 Elections") for all
federal, state, and local tax purposes. As soon as practicable after the Closing
Date, Buyer shall prepare a fully completed Internal Revenue Service Form 8023
including all additional data and materials required to be attached to such form
pursuant to the applicable regulations, and shall deliver such Form 8023 and the
accompanying materials to the Seller. In determining the amount of the Modified
Aggregate Deemed Sales Price for the assets of Company reflected on such Form,
the amount of liabilities of (or assumed
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with respect to) Company shall equal the amount of liabilities accrued as of the
Closing Date on the books of Company (excluding any liability that is not fixed
and determinable as of the Closing Date subject to adjustment, as such
liabilities become fixed and determinable, pursuant to applicable law and
regulations). Any objections by Seller to the Form 8023 or any accompanying
materials (which shall be raised within fifteen (15) business days after receipt
by Seller of the Form 8023) unresolved within fifteen (15) business days after
Seller has raised the objections shall be resolved pursuant to the procedures
set forth in SECTION 8.2(b), and, if necessary, a revised Form 8023 shall be
prepared in accordance with the final resolution as soon as possible by Buyer
thereafter. The Form 8023 prepared and, if necessary pursuant to this SECTION
8.2(a), revised by Buyer shall be executed by each party, and Seller shall file
such Form 8023 and the accompanying materials in accordance with the reasonable
written directions of Buyer.
(b) Buyer shall prepare and deliver to Seller a schedule (the
"Price Allocation Schedule"), allocating, with the consent of Seller, the
appropriate Modified Aggregate Deemed Sales Price of Company among the assets of
Company in accordance with the Treasury regulations promulgated under Section
338(h)(10) of the code. The Price Allocation Schedule shall be prepared and
agreed upon as soon as practicable after the Closing. At the time of delivery of
the Price Allocation Schedule, Buyer shall provide Seller with a copy of any
appraisal report utilized by Buyer in the preparation of such Schedule. The
costs of any such appraisal obtained by Buyer in connection with the Price
Allocation Schedule will be borne by Buyer. Any objections by Seller to the
Price Allocation Schedule prepared by Buyer (which shall be raised within twenty
(20) business days after the receipt by Seller of such Schedule) unresolved
within twenty (20) business days after Seller has raised the objections shall be
referred for binding arbitration to the Cleveland office of Deloitte & Touche
(the "Accounting Referee"). The resolution by the Accounting Referee shall be
final and binding upon Buyer and Seller and shall constitute an arbitral award
upon which judgment may be entered in any court having jurisdiction thereof. The
costs and expenses of such accounting firm shall be borne equally by Seller and
Buyer, and, if necessary, a revised Price Allocation Schedule shall be prepared
by Buyer in accordance with the final resolution as soon as possible thereafter.
The Price Allocation
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Schedule prepared and, if necessary pursuant to this SECTION 8.2(b), revised by
Buyer shall be binding on the parties hereto, and Seller and Buyer agree to act
in accordance with such Schedule in the preparation, filing and audit of any Tax
Return.
(c) Buyer will not, without the prior consent of Seller, make a
Section 338 election for any of the Company's foreign Affiliates.
(d) Except as contemplated in (a) above, Buyer covenants that it
will not, and will not cause or permit Company or any of its Affiliates, to (i)
take any action on the Closing Date other than in the ordinary course of
business, including but not limited to the distribution of any dividend or the
effectuation of any redemption that could give rise to any Tax liability of
Seller or any Seller Loss (as defined in SECTION 11.1(d) hereof), (ii) make or
change any Tax election, amend any Tax Return or take any Tax position on any
Tax Return, take any action, omit to take any action or enter into any
transaction that results in any increased Tax liability or reduction of any Tax
Asset of Seller or any of its affiliates (including Company) in respect of any
Pre-Closing Tax Period. Buyer agrees that Seller is to have no liability for any
Tax resulting from any action, referred to in the preceding sentence, of Buyer
or any Affiliate of Buyer (including Company), and agrees to indemnify and hold
harmless Seller and its affiliates against any such Tax.
(e) Buyer shall promptly pay or shall cause prompt payment to be
made to Seller of all refunds and interest thereon received by Buyer, any
affiliates of Buyer or Company that are attributable to Taxes subject to
indemnity under SECTION 11.1(b) (whether or not such indemnity has been paid).
(f) On or prior to the Closing Date, Seller shall have signed and
delivered a certification to the effect that such Seller is not a "foreign
person" as defined in Section 1445 of the Code.
(g) Seller covenants that all Tax sharing or similar agreements
or arrangements with respect to or involving Company shall be terminated on or
prior to the Closing Date and that, after the Closing Date Company shall not be
bound under any such Tax sharing or similar agreement or arrangement or have any
liability (current or contingent) to Seller or any Affiliate of Seller
thereunder.
8.3 COOPERATION ON TAX MATTERS.
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(a) Buyer and Seller agree to furnish or cause to be furnished to
each other, upon request, as promptly as practicable, such information
(including access to books and records) and assistance relating to Company as is
reasonably necessary for the filing of any return, for the preparation for any
audit, and for the prosecution or defense of any claim, suit or proceeding
relating to any proposed adjustment. Buyer and Seller agree to retain or cause
to be retained all books and records pertinent to Company until the applicable
period for assessment under applicable law (giving effect to any and all
extensions or waivers) has expired, and to abide by or cause the abidance with
all record retention agreements entered into with any Taxing Authority. Buyer
agrees to give or cause its affiliates to give Seller reasonable notice prior to
transferring, discarding or destroying any such books and records relating to
Tax matters and, if Seller so requests, Buyer shall allow or cause its
affiliates to allow Seller to take possession of such books and records. Buyer
and Seller shall cooperate with each other in the conduct of any audit or other
proceedings involving Company for any Tax purposes and each shall execute and
deliver such powers of attorney and other documents as are necessary to carry
out the intent of this subsection.
(b) Buyer and Seller further agree, upon request, to provide the
other party with all information that either party may be required to report
pursuant to Section 6043 of the Code and all Treasury department Regulations
promulgated thereunder.
ARTICLE IX. CONDITIONS TO CLOSING
---------------------------------
9.1 CONDITIONS TO OBLIGATION OF SELLER. The obligation of Seller to
consummate the Closing is subject to the satisfaction of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Buyer contained in this Agreement (considered collectively), and
each of these representations and warranties (considered individually), must
have been true in all material respects as of the date of this Agreement and
must be true in all material respects as of the Closing Date, as if made at and
as of such date;
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(b) PERFORMANCE. Buyer shall have performed in all material
respects all of its agreements, covenants and obligations hereunder required to
be performed by it at or prior to the Closing Date, including payment of the
Purchase Price pursuant to ARTICLE II and delivery of documents pursuant to
SECTION 10.2 hereof, and the delivery by Buyer and acceptance by Seller, if
applicable, of the updated Schedules pursuant to the terms of SECTION 6.1A;
(c) GOVERNMENTAL APPROVALS. Any applicable waiting period under
the HSR Act or any other U.S. or foreign applicable governmental approval
relating to the transactions contemplated hereby shall have expired or been
obtained or terminated;
(d) NO PROHIBITION. No provision of any applicable law or
regulation and no judgment, injunction, order or decree shall prohibit the
consummation of the Closing, and there shall not be (i) any law or regulation
that otherwise makes consummation of the transactions contemplated hereby
illegal or otherwise prohibited, (ii) any order, decree or judgment of any court
or governmental body having competent jurisdiction that otherwise prevents or
delays the consummation of the transactions contemplated hereby or (iii) any
suit or proceeding brought by any person or entity seeking an injunction in
connection with the transactions contemplated hereby in which there is a
reasonable probability of an adverse determination;
(e) ANCILLARY AGREEMENTS. Execution and delivery of: License
Agreement for Retained Technology; Distributor Agreement for Tremco S.A.;
PutiCall Agreement for Tremco S.A.; License Agreement for Tremco S.A.;
Transition Services Agreement; Ultrem Toll Agreement;
(f) OTHER APPROVALS. The receipt of such approvals as are
necessary or required under applicable U.S. union contracts or foreign union or
works council rules by reason of the transactions contemplated herein; and,
(g) FINANCIAL STATEMENTS. Delivery of the financial statements
referred to in SECTION 6.9.
9.2 CONDITIONS TO OBLIGATIONS OF BUYER. The obligation of Buyer to
consummate the Closing is subject to the satisfaction of the following
conditions:
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(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Seller contained in this Agreement (considered collectively), and
each of these representations and warranties (considered individually), must
have been true in all material respects as of the date of this Agreement and
must be true in all material respects as of the Closing Date, as if made at and
as of such date.
(b) PERFORMANCE. Seller shall have performed in all material
respects all of its agreements, covenants and obligations hereunder required to
be performed by it at or prior to the Closing Date, including delivery of
documents pursuant to SECTION 10.1 hereof, and the delivery by Seller and
acceptance by Buyer, if applicable, of the updated Schedules pursuant to the
terms of SECTION 6.1A;
(c) GOVERNMENTAL APPROVALS. Any applicable waiting period under
the HSR Act or any other U.S. or foreign applicable governmental approval
relating to the transactions contemplated hereby shall have expired or been
obtained or terminated;
(d) NO PROHIBITION. No provision of any applicable law or
regulation and no judgment, injunction, order or decree shall prohibit the
consummation of the Closing, and there shall not be (i) any law or regulation
that otherwise makes consummation of the transactions contemplated hereby
illegal or otherwise prohibited, (ii) any order, decree or judgment of any court
or governmental body having competent jurisdiction that otherwise prevents or
delays the consummation of the transactions contemplated hereby or (iii) any
suit or proceeding brought by any person or entity seeking an injunction in
connection with the transactions contemplated hereby in which there is a
reasonable probability of an adverse determination;
(e) ANCILLARY AGREEMENTS. Execution and delivery of: License
Agreement for Retained Technology; Distributor Agreement for Tremco S.A.;
Put/Call Agreement for Tremco S.A.; License Agreement for Tremco S.A.;
Transition Services Agreement; Ultrem Toll Agreement;
(f) OTHER APPROVALS. The receipt of such approvals as are
necessary or required under applicable U.S. union contracts or foreign union or
works council rules by reason of the transactions contemplated herein; Draft
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(g) FINANCIAL STATEMENTS. Delivery of the financial statements
referred to in SECTION 6.9; and,
(h) IBNR POLICY. Delivery of the IBNR claims insurance policy
referred to in SECTION 6.4.
ARTICLE X. DELIVERIES AT CLOSING
--------------------------------
10.1 DELIVERIES OF SELLER. At the Closing, Seller shall deliver or
cause the following to be delivered to Buyer, duly executed:
(a) STOCK CERTIFICATES. Stock certificates for all of the shares
of Common Stock, each duly endorsed to Buyer or its designee or accompanied by
duly endorsed stock transfer powers, together with the minute books, stock
ledgers and corporate seal of Company and its Affiliates; together with such
documentation and materials for the Company's Affiliates;
(b) OPINION OF COUNSEL. The legal opinion of in-house counsel to
Seller, dated the Closing Date, in a form reasonably acceptable to Buyer;
(c) CERTIFICATES. A certificate signed by Seller's authorized
representative, dated the Closing Date, to fulfill the requirements of the
condition set forth at SECTION 9.2(a) hereof; a good standing certificate for
Company issued by the Secretary of State of Ohio; a true and correct copy of the
Articles of Incorporation of Company certified by the Secretary of State of
Ohio; and, a true and correct copy of the Code of Regulations of Company
certified by the Secretary of Company;
(d) RESIGNATION. Resignations of such Officers and Directors of
Company as are specified in Schedule 10.1(d); and,
(e) SECRETARY'S CERTIFICATE. A certificate executed by the
Secretary or by another authorized officer of Seller certifying (i) the
resolutions of the Board of Directors of Seller authorizing the execution,
performance and delivery of this Agreement and the other instruments, documents
and transactions contemplated hereby; and (ii) the names and signatures of the
officers of Seller executing such documents.
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10.2 DELIVERIES OF BUYER. At the Closing, Buyer shall deliver or cause
to be delivered to Seller:
(a) PURCHASE PRICE. The Purchase Price to be paid at Closing
pursuant to the provisions of ARTICLE II hereof;
(b) OPINION OF COUNSEL. The legal opinion of counsel to Buyer,
dated the Closing Date, in a form reasonably acceptable to Seller;
(c) OFFICER'S CERTIFICATE. A certificate signed by Buyer's
authorized representative, dated the Closing Date, to fulfill the requirements
of the condition set forth at SECTION 9.1(a) hereof; and,
(d) SECRETARY'S CERTIFICATE. A certificate executed by the
Secretary or another authorized officer of Buyer certifying (i) the resolutions
of the Board of Directors of Buyer authorizing the execution, performance and
delivery of this Agreement and the other instruments, documents and transactions
contemplated hereby; and (ii) the names and signatures of the officers of Buyer
authorized to execute such documents.
ARTICLE Xl. INDEMNITY
---------------------
11.1 INDEMNIFICATION.
(a) SELLER'S INDEMNITY. Subject to the conditions, limitations
and provisions of this ARTICLE Xl, Seller agrees to hold harmless, indemnify and
defend Buyer, its affiliates and their respective officers, directors,
employees, agents, successors and assigns, from and against any claim, cause of
action, demand, damage, loss, liability, expense or cost of any kind or amount
whatsoever (including court costs, expenses and reasonable accountants and
attorneys fees) incurred or suffered by any one or more of said parties, arising
or resulting from the following, including the enforcement thereof:
(1) the breach of any representation or warranty made by
Seller in this Agreement, it being expressly understood and agreed that except
as and to the extent set forth in this ARTICLE XI, Seller shall not indemnify,
defend or hold harmless any party or entity with respect to the representations
or warranties made by Seller;
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(2) the breach of or failure to perform any covenant, obligation
or agreement of Seller set forth herein; or
(3) any Retained Liability.
(b) Tax Indemnification By Seller.
(1) Seller hereby agrees to indemnify, defend and hold Buyer
harmless against and agrees to hold it harmless from (x) any and all Income
Taxes of Company and Affiliates for any Pre-Closing Tax Periods, (y) any and all
Taxes to the extent not accrued or reserved for in the Final Closing Statement,
and (z) liabilities, costs, expenses (including, without limitation, reasonable
expenses of investigation and attorneys' fees and expenses), arising out of or
incident to the imposition, assessment or assertion of any such Income Tax,
including those incurred in the contest in good faith in appropriate proceedings
relating to the imposition, assessment or assertion of any such Income Tax
("Buyer's Loss").
(2) If any claim or demand for Income Tax in respect of which
indemnity may be sought pursuant to this SECTION is asserted in writing against
Buyer, any of its affiliates, or, effective upon the Closing, Company, Buyer
shall notify Seller of such claim or demand within thirty (30) days of receipt
thereof, or such earlier time that would allow Seller to timely respond to such
claim or demand, and shall give Seller such information with respect thereto as
Seller may reasonably request. Seller may, at its own expense, participate in
and, upon notice to Buyer, assume and control the defense of any such claim,
suit, action, litigation or proceeding (including any Tax audit). If Seller
assumes and controls such defense, Buyer shall have the right (but not the duty)
to participate in the defense thereof and to employ counsel, at its own expense,
separate from the counsel employed by Seller. Whether or not Seller chooses to
defend or prosecute any claim, (i) all of the parties thereto shall cooperate in
the defense or prosecution thereof and (ii) Seller may discharge, at any time,
its indemnification obligation under this SECTION by paying to Buyer the amount
of the applicable Buyer's Loss, calculated on the date of such payment pursuant
to SECTION 11.1(b)(1) hereof.
(3) Seller shall not be liable under this SECTION for any Income
Tax resulting from any claim, suit, action, litigation or proceeding in which
Seller was not
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permitted an opportunity to participate as provided under SECTION 11.1(b)(2)
hereof.
(4) for purposes of this SECTION, the amount of Income Tax
for the Pre-Closing Tax Period shall be deemed equal to the amount which would
be payable if the relevant tax period ended at the close of business on the
Closing Date. To the extent that the portion of an item of income or deduction
attributable to the Pre-Closing Tax Period cannot be determined, Buyer and
Seller shall negotiate in good faith and use their best efforts to determine the
appropriate allocation for such items. If Buyer and Seller are unable to reach
such agreement, the disputed item shall be resolved as provided for in SECTION
8.2(b) hereof.
(c) BUYER'S INDEMNITY. Subject to the conditions, limitations and
provisions of this ARTICLE XI, Buyer agrees to hold harmless, indemnify and
defend Seller, its affiliates and their respective officers, directors,
employees, agents, successors and assigns, from and against any claim, cause of
action, demand, damage, loss, liability, expense or cost of any kind or amount
whatsoever (including court costs, expenses and reasonable accountants and
attorneys fees) incurred or suffered by any one or more of said parties, arising
or resulting from:
(1) the breach of any representation or warranty made by
Buyer in this Agreement, it being expressly understood and agreed that except as
and to the extent set forth in this ARTICLE Xl, Buyer shall not indemnify,
defend or hold harmless any party or entity with respect to the representations
or warranties made by Buyer;
(2) the breach of or failure to perform any covenant,
obligation or agreement of Buyer made herein;
(3) the ownership of Company by Buyer or operation of the
Business, except to the extent (i) Seller has expressly agreed in this Agreement
to hold harmless, indemnify and defend Buyer, or (ii) Seller has breached or
otherwise violated its covenants or agreements hereunder; and,
(4) liability to any federal, state, local or foreign taxing
body for any sales, documentary or other transfer taxes, including interest or
penalties thereon, arising in connection with the transaction contemplated by
this Agreement.
(d) TAX INDEMNIFICATION BY BUYER.
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(1) Buyer hereby agrees to indemnify, defend and hold Seller
harmless against and agrees to hold it harmless from (x) any and all Taxes of
Company and its Affiliates arising or relating to any taxable period, other than
Income Taxes and Taxes described in SECTION 11.1(b)(1), and (y) liabilities,
costs, expenses (including, without limitation, reasonable expenses of
investigation and attorneys' fees and expenses), arising out of or incident to
the imposition, assessment or assertion of any such Tax, including those
incurred in the contest in good faith in appropriate proceedings relating to the
imposition, assessment or assertion of any such Tax, the sum of (x) and (y)
being referred to herein as a "Seller Loss".
(2) If any claim or demand for Taxes in respect of which
indemnity may be sought pursuant to this SECTION is asserted in writing against
Seller, Seller shall notify Buyer of such claim or demand within thirty (30)
days of receipt thereof, or such earlier time that would allow Buyer to timely
respond to such claim or demand, and shall give Buyer such information with
respect thereto as Buyer may reasonably request. Buyer may, at its own expense,
participate in and, upon notice to Seller, assume and control the defense of any
such claim, suit, action, litigation or proceeding (including any tax audit). If
Buyer assumes or controls such defense, Seller shall have the right (but not the
duty) to participate in the defense thereof and to employ counsel, at its own
expense, separate from the counsel employed by Buyer. Whether or not Buyer
chooses to defend or prosecute any claim, (i) all of the parties hereto shall
cooperate in the defense or prosecution thereof and (ii) Buyer may discharge, at
any time, its indemnification obligation under this SECTION by paying to Seller
the amount of the applicable Seller Loss, calculated on the date of such payment
pursuant to SECTION 11.1(d)(1) hereof.
(e) SPECIAL INDEMNIFICATION BY SELLER.
(1) GENERAL PROVISIONS. Seller hereby agrees to indemnify, defend
and hold harmless Buyer, Company and their officers, directors and employees
from and against any and all third-party Claims for Net Qualified Abatement
Costs (as such terms are defined in Section 11.1 (e)(2)) arising after the
Closing Date attributable to an asbestos-containing single ply roofing product
sold and marketed prior to the Closing Date by Company under the trade name
Tremply ("Tremply Roofing Materials"), provided that
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Buyer provides Seller with initial notification of the Claim prior to the tenth
(10th) anniversary of the Closing Date and fully complies with the requirements
of Section 11.1(e)(3).
(2) TERMS. For purposes of this Section 11.1(e):
(i) "Qualified Abatement Costs" means the additional costs and
expenses, if any, of removing and disposing of Tremply Roofing Materials which
are in excess of the costs and expenses for removal and disposal that would be
incurred if such materials did not contain asbestos, that Company is obligated
to pay due solely to the presence of asbestos compounds in such Tremply Roofing
Materials, including reasonable expenses for investigating, defending and
compromising third-party Claims for such costs (including attorneys' fees and
expenses). The term "Qualified Abatement Costs" does not include costs or
expenses (whether for labor, materials or otherwise) for repair, removal,
disposal and replacement that: are incurred as a result of settlement or other
resolution of a warranty concerning service life, performance or absence of
defects given with respect to Tremply Roofing Materials or a roof containing
such materials; result from ordinary wear and tear or exposure to the elements;
or, involve the repair, as distinguished from removal and replacement, of
roofing containing Tremply Roofing Materials. The term "Qualified Abatement
Costs" does not include consequential damages due to defective or worn roofs,
such as damage to real and personal property caused by water (unless incurred in
connection with the performance of work pursuant to the indemnification
provisions hereof).
(ii) "Net Qualified Abatement Costs" means Qualified Abatement
Costs less all insurance proceeds that are recovered by Company or Buyer under
the Tremco Insurance Policies.
(iii) "Claim" means any written claim or demand, lawsuit or
written threat thereof or other written statement of rights by a third-party
which is specific as to the asbestos content of Tremply Roofing Materials.
(3) COST-SHARING. With respect to Claims for Net Qualified Abatement
Costs which arise after the Closing Date, Seller and Buyer shall each be
responsible for fifty percent (50%) of all such Net Qualified Abatement Costs
incurred by Company and Buyer, until the aggregate of such Net Qualified
Abatement Costs reaches
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Six Million U.S. Dollars (U.S.$6,000,000). Thereafter, Seller shall be
responsible for one hundred percent (100%) of Net Qualified Abatement Costs
incurred by Company and Buyer; provided however, that Seller will have no
liability for Net Qualified Abatement Costs with respect to Claims that are
first notified to it more than ten (10) years from the Closing Date, at which
time Seller will have no further obligation to Buyer or the Company for
Qualified Abatement Costs thereafter arising.
(4) COVENANTS. After the Closing Date, Company will exercise its
best efforts to minimize the occurrence of third-party Claims for asbestos
abatement related to Tremply Roofing Materials in a manner consistent with
current practices. In addition, Buyer shall not, without Seller's express
written consent, release, assign, sell, compromise or otherwise impair or
prejudice coverage rights under any policy of insurance in existence on the
Closing Date that may provide coverage for Qualified Abatement Costs (including,
without limitation, the Tremco Insurance Policies).
(5) NOTICE OF CLAIMS. If, after the Closing Date, Company
receives a Claim for which indemnification is available pursuant to this Section
11.1(e) or which Buyer otherwise considers may result in Qualified Abatement
Costs, Buyer shall deliver to Seller an initial written notification in
accordance with Section 12.6 within thirty (30) business days after receipt of
the Claim, but in no event later than ten (10) business days before any
responsive pleading is required. A delay in giving notice shall only relieve the
recipient of liability to the extent the recipient suffers actual prejudice
because of the delay. Buyer shall as soon as practicable after delivery of such
notice furnish to Seller any written materials and other information as are
available related to such Claim, as well as any materials or information which
it thereafter receives related to such Claim.
(6) CLAIMS MANAGEMENT. Seller and Buyer shall promptly assess
such Claim in order to determine whether or not such Claim should be submitted
for coverage under the Tremco Insurance Policies. In the event the parties
determine to make such a submission, the parties shall thereafter mutually
cooperate in order to present such Claim and otherwise cooperate with the
relevant insurer(s) so as to maximize the opportunities for the applicable
insurer to provide defense and indemnity coverage. Seller shall thereafter
defend such Claim pursuant to this Section 11.1(e), at the sole cost and
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expense of Seller (unless such costs are covered by the applicable Tremco
Insurance Policies), by all appropriate proceedings, which proceedings will be
vigorously and diligently prosecuted by Seller to a final conclusion or will be
settled at the discretion of Seller; provided, however, without the prior
written consent of Buyer, Seller shall not enter into any settlement which would
lead to liability or create any financial or other obligation for Buyer or
Company for which Buyer or Company is not entitled to insurance coverage or
other indemnification. If a firm offer is made to settle a Claim (a) which
provides for a full and complete release of the Claim without liability or
obligation for Buyer or Company for which Buyer or Company is not entitled to
insurance coverage or other indemnification and (b) Seller desires to accept
such offer, Seller shall give written notice to Buyer to that effect. If Buyer
fails to consent to such firm settlement offer within ten (10) business days
after its receipt of such notice, Buyer may continue to contest or defend the
Claim and, in such event, the maximum liability of Seller for such Claim shall
not exceed the amount of the firm settlement offer. Seller shall have full
control of the defense and proceedings referred to in this clause (6), including
(except as provided above) any settlement thereof. Buyer may retain separate
counsel to represent it in, but not control, any defense or settlement of any
Claim controlled by Seller pursuant to this clause (6), and Buyer will bear its
own costs and expenses with respect to such separate counsel except that Seller
will pay the costs and expenses of such separate counsel, if (x) in Buyer's good
faith judgment, it is advisable, based on advice of counsel, for Buyer to be
represented by separate counsel because a conflict or potential conflict exists
between Seller and Buyer which makes representation of both parties
inappropriate under applicable standards of professional conduct or (y) the
named parties to such Claim include both Seller and Buyer and Buyer determines
in good faith, based on advice of counsel, that defenses are available to it
that are unavailable to Seller. Notwithstanding the foregoing, Buyer may assume
control of the defense or settlement of any Claim, the defense of which Seller
has elected to control, (i) if the parties mutually agree that Buyer shall
assume control, or (ii) if Buyer irrevocably waives its right to indemnity under
Section 11.1(e) with respect to such Claim.
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(7) DEFENSE. Seller shall control the defense of any Claim for
which Buyer or Company seeks indemnification under this Section 11.1(e)
(including, without limitation, investigation of the Claim, appeal of any
adverse rulings) and Buyer shall assist and cooperate fully with respect to such
defense (including, without limitation, the assertion of counterclaims and
cross-claims, if any), provided that Seller reimburses Buyer for any
out-of-pocket costs incurred by Buyer in providing such assistance. If Seller
has notified Buyer that Seller disputes its liability under this Section 11.1(e)
to Buyer with respect to such Claim and if such dispute is finally resolved in
favor of Seller, Buyer will reimburse Seller for all reasonable costs and
expenses incurred by Seller in connection with such Claim.
11.2 LIMITATIONS ON SELLER'S LIABILITY.
(a) MONETARY THRESHOLDS AND LIMITATIONS. Seller shall have no
obligation to hold harmless, defend and indemnify Buyer pursuant to the terms
and conditions of this Agreement unless: the individual claim for indemnity
exceeds $25,000; and, the aggregate amount of all claims in excess of $25,000
exceeds one percent (1%) of the Purchase Price. In the event the foregoing
thresholds on liability for indemnification are reached, then in such event
Seller shall be liable for such claims in accordance with the terms and
conditions of this Agreement from the first dollar without regard to said one
percent (1%) threshold. Seller shall have no obligation to hold harmless, defend
and indemnify Buyer pursuant to the terms and conditions of this Agreement in
respect of any individual claim or in respect of any and all claims in the
aggregate in excess of ten percent (10%) of the Purchase Price. Buyer hereby
waives, releases and agrees not to assert any such right, and Buyer agrees to
cause the Company to waive, release and agree not to assert any such right, to
the extent that, after the application of the provisions of this Article XI, any
such items of Buyer and/or Company in the aggregate exceed ten percent (10%) of
the Purchase Price.
(b) TIME LIMITATIONS. No claim by Buyer pursuant to SECTION
11.1(a)(1) or (2) may be asserted against Seller unless written notice thereof
is received by Seller within one (1) year after the Closing Date, and the
indemnities contained in SECTION 11.1(a)(1) or (2) shall expire one (1) year
from the Closing Date except as to any claim as
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to which notice has been given to and received by Seller pursuant to SECTION
11.3 within such period (in which case the indemnification period shall be
extended in respect of such claim until after the final resolution thereof. The
indemnity provided in SECTION 11.1(b) shall expire concurrent with the statute
of limitations otherwise applicable to the underlying Tax Liability.
(c) EXCLUSIONS FROM SUB-SECTIONS (a) AND (b). Notwithstanding any
other provision of this Agreement, the monetary thresholds and limitations of
SECTION 11.2(a) and the time limitations of SECTION 11.2(b) shall not apply to
any Buyer claim for indemnity hereunder which arises under or relates to: breach
of the representations and warranties contained in SECTIONS 4.1(b) or 4.1(q);
violations of the covenants set forth in SECTIONS 6.4, 6.10 or 7.7; Retained
Liabilities under SECTION 11.1(a)(3); Taxes or Income Taxes under SECTION
11.1(b); Special Indemnification by Seller under SECTION 11.1(e); and, breach or
violation of the ancillary agreements set forth in Exhibit A.
(d) If any claim suffered by Buyer or Seller results in either an
entitlement to insurance recovery or any tax benefits, then any amount required
to be paid by Seller or Buyer in respect of such claim pursuant to SECTION
11.1(a) (after giving effect to the provisions of SECTIONS 11.2(a), (b) and (c))
shall be limited to the excess of the claim over and above the aggregate amount
of such insurance proceeds and such tax benefits.
11.3 NOTICE OF CLAIM. If either party hereto (the "Claimant") desires
to assert an indemnity claim ("Claim") against the other ("Indemnitor") under
SECTION 11.1(a) or (c) hereof, respectively, the Claimant shall give notice in
writing to the Indemnitor setting forth the amount, nature and circumstances of
the Claim. No communication between the parties shall be deemed to constitute
valid notice under this SECTION 11.3 unless: (i) the notice is provided in
writing in accordance with SECTION 12.6, and (ii) a specific Claim for
indemnification is asserted with reference to particular facts and circumstances
described therein. In the event of the assertion by any third party of
circumstances giving rise to a Claim with respect to which Buyer or Seller is
entitled to indemnification hereunder, the Indemnitor and its legal
representatives shall have the right to compromise or defend any such Claim (and
the Claimant shall cooperate with respect to any such compromise or defense);
provided that, the Indemnitor shall indemnify Claimant against any loss
resulting
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from the Indemnitor's failure to pay any such liability as may finally be
determined. Upon payment of indemnification by the Indemnitor, the Claimant will
assign to Indemnitor its right against any applicable account debtor or other
responsible party to the extent of the indemnification payment.
11.4 EXCLUSIVE REMEDY. The parties hereto mutually agree that the
remedies provided by this ARTICLE XI shall be exclusive with respect to the
matters described herein and the transactions contemplated by this Agreement,
except as to common law fraud.
ARTICLE XII. MISCELLANEOUS PROVISIONS
-------------------------------------
12.1 CERTAIN DEFINITIONS. For purposes of this Agreement the following
definitions shall apply:
(a) "Plan" means any (i) "employee benefit plan" within the
meaning of Section 3(3) of ERISA, or similar plan offered to any employees
outside of the United States (ii) plan or policy or practice, whether written or
oral, providing for "fringe benefits," including but not limited to vacation,
paid holiday, personal leave, medical, hospitalization, dental, vision, life
insurance, post-employment medical life insurance or any other post-retirement
benefits, employee discount, educational benefit, severance, group insurance,
disability, death benefit, flexible spending plan or similar programs, or (iii)
any other plan or policy or practice, whether written or oral, including but not
limited to any employment, non-competition, management, agency or consulting
arrangement, bonus, profit sharing, deferred compensation, incentive, stock
option, stock ownership or stock purchase plan, policy, arrangement or agreement
which Seller or Company or its Affiliates maintains for the benefit of, or to
which Seller or Company or its Affiliates is a party, covering the Business
Employees.
(b) "Business" means the commercial activities and operations
undertaken by Company or its Affiliates in connection with its global sealants,
coatings and adhesives businesses as heretofore conducted, but excluding: the
Retained Business.
12.2 GOVERNMENTAL APPROVALS AND CONSENTS.
(a) Each party hereto will use its best efforts to obtain all
authorizations,
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consents, orders and approvals of governmental authorities that may be or become
necessary for the performance of its obligations pursuant to this Agreement and
will cooperate fully with the other party in promptly seeking to obtain all such
authorizations, consents, orders and approvals. Each party hereto agrees to make
an appropriate filing of a Notification and Report Form pursuant to the HSR Act
with respect to the transactions contemplated hereby within five (5) business
days of the date hereof and to supply promptly any additional information and
documentary material that may be requested pursuant to the HSR Act. The parties
hereto will not take any action that will have the effect of delaying, impairing
or impeding the receipt of any required approvals.
(b) Without limiting the generality of the parties' undertakings
hereunder, each of the parties hereto shall use all reasonable efforts to (i)
respond to any inquiries by any governmental authority regarding antitrust or
other matters with respect to the transactions contemplated by this Agreement,
(ii) avoid the imposition of any order or the taking of any action that would
restrain, alter or enjoin the transactions contemplated by this Agreement and
(iii) in the event any governmental order adversely affecting the ability of the
parties to consummate the transactions contemplated by this Agreement has been
issued, to have such governmental order vacated or lifted.
12.3 REPRESENTATIONS AND WARRANTIES OF SELLER.
(a) The representations and warranties of Seller contained in
this Agreement or in any certificate or writing delivered pursuant hereto or in
connection herewith shall survive the Closing for a period of one (1) year;
provided, that the representations and warranties of Seller contained in SECTION
4.1(b) and (q) shall survive the Closing without limitation; and, provided
further, that the representations and warranties of Seller contained in SECTION
4.1(i) shall expire concurrent with the statute of limitations otherwise
applicable to the underlying Tax Liability.
(b) Except as specifically provided in ARTICLE IV, it is the
explicit intent and understanding of each party hereto that Seller is making no
representation or warranty whatsoever, express or implied, to Buyer or any other
person, of any kind or nature whatsoever, including, without limitation, any
implied warranties of merchantability, fitness for a particular purpose or
physical condition regarding the Business or any of Company's
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assets, and, subject to the terms and conditions of this Agreement, Buyer agrees
to accept the same "as is, where is" and buyer is relying on its own examination
thereof.
(c) Notwithstanding anything to the contrary contained in this
Agreement, Seller makes no representation or warranty to Buyer with respect to
(i) the information set forth in the confidential offering memorandum prepared
regarding the Company, or any updates thereto, or (ii) any financial projection
or forecast relating to the business, financial condition, results of operations
or prospects of the Company. With respect to any projection or forecast
delivered by or on behalf of Seller to Buyer, Buyer acknowledges that: there are
uncertainties inherent in attempting to make such projections and forecasts;
Buyer is familiar with such uncertainties; Buyer is taking full responsibility
for making its own evaluation of the adequacy and accuracy of all such
projections and forecasts furnished to it; and, Buyer shall have no claim of any
nature whatsoever against Seller with respect thereto.
12.4 ENTIRE AGREEMENT. This Agreement, the Schedules hereto and the
agreements and other documents expressly referred to herein embody the entire
agreement and understanding of the parties hereto with respect to the subject
matter hereof, and supersede all prior and contemporaneous letters, agreements
and understandings concerning said subject matter. Notwithstanding the
foregoing, Buyer's obligations under the Confidentiality Agreement dated July
23,1996 between Buyer and Seller (a copy of which is attached in Schedule 12.4)
shall survive this Agreement until the Closing and consummation of the
transactions contemplated hereby, at which time such obligations shall terminate
as to the Common Stock being purchased or conveyed hereunder. In the event this
Agreement is terminated without Closing occurring, then the obligations set
forth in the aforesaid Confidentiality Agreement shall survive the termination
hereof in accordance with the terms thereof.
12.5 BINDING EFFECT: ASSIGNMENT. This Agreement and the various rights
and obligations arising hereunder shall inure to the benefit of and be binding
upon Buyer, Seller and their respective successors and assigns; provided,
however, that no party hereto may assign this Agreement or any rights hereunder
without the written consent of the others. Notwithstanding the foregoing, Buyer
may assign this Agreement to a wholly-owned
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subsidiary of Buyer; provided, however, that such assignment shall not relieve
Buyer from or in any way limit Buyer's primary responsibility for the full and
timely payment and performance of all of Buyer's duties, liabilities, and other
obligations under this Agreement; and provided further, that Buyer advises
Seller of such assignment not less than five (5) business days prior to Closing.
In the event of any such assignment, Buyer shall (i) provide to Seller at
Closing a guaranty in such form as Seller may furnish to Buyer; and (ii) such
other certificates, instruments and documents as Seller or its counsel may
reasonably require, including, without limitation, certified copies of the
Articles/Certificate of Incorporation and Code of Regulations of such
subsidiary, and a certificate of good standing dated the Closing Date.
12.6 NOTICES. All notices, requests, demands and other communications
required or permitted under this Agreement shall be made in writing and shall be
deemed to have been duly given and made when delivered as follows:
If to Seller:
-------------
The B.F.Goodrich Company
3925 Embassy Parkway
Akron, Ohio 44333
Attention: General Counsel
Fax: 216-374-3338
with a copy to:
---------------
The B.F.Goodrich Company
9911 Brecksville Road
Cleveland, Ohio 44141-3247
Attention: Vice President-Legal
Fax: 216-447-5730
If to Buyer:
------------
RPM, Inc.
2628 Pearl Road
P.O. Box 777
Medina, Ohio 44078
Attention: Thomas C. Sullivan
Fax: 330-225-8743
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with a copy to:
---------------
Calfee, Halter & Griswold
1400 McDonald Investment Center
800 Superior Avenue
Cleveland, Ohio 44114-2688
Attention: William A. Papenbrock
Fax: (216) 241-0816
provided, however, that if any party shall have designated a different address
by notice to the other, then the last address so designated shall be the address
for notices hereunder.
12.7 WAIVER, CONSENT. Whenever the consent, approval, agreement,
waiver, designation, notice, demand or other written action by Buyer or Seller
is provided for in this Agreement, the same may be given on behalf of such party
in a writing signed by its President or a Vice President. Except to the extent
that a party hereto may have otherwise agreed in writing, no waiver by that
party of any condition of this Agreement or breach by the other party of any of
its obligations or representations hereunder shall be deemed to be a waiver of
any other condition or subsequent breach of the same or any other obligation or
representation by the other party, nor shall any forbearance by the first party
to seek a remedy for any non-compliance or breach by the other party be deemed
to be a waiver by the first party of its rights and remedies with respect to
such non-compliance or breach.
12.8 OTHER AND FURTHER COVENANTS OF SELLER. At any time after the
Closing, and without further consideration, Seller will execute and deliver such
other and further instruments of conveyance, transfer and confirmation as Buyer
may reasonably request in order more effectively to convey, confirm and transfer
to Buyer any of the assets used in the Business transferred hereunder; provided,
however, that Buyer shall reimburse Seller for all out-of-pocket expenses
incurred therewith.
12.9 GOVERNING LAW. This Agreement shall in all respects be construed
in accordance with and governed by the laws of the State of Ohio (without
reference to conflicts of laws principles).
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12.10 EXPENSES. Each of the parties to this Agreement shall bear all
expense incurred by it in connection with the negotiation of this Agreement and
in the consummation of the transactions provided for herein and the preparation
therefor.
12.11 NO THIRD PARTY BENEFICIARIES. This Agreement does not and is not
intended to confer upon any employee or agent of Seller or Company or its
Affiliates, or upon or any other person other than the parties signatory hereto
any rights or remedies hereunder, including specifically rights as a third party
beneficiary.
12.12 PUBLIC ANNOUNCEMENTS. Except as may be required by law or the
rules of the New York Stock Exchange or the NASD, no party hereto shall make any
public announcement or filing with respect to the transactions provided for
herein without the prior written consent of the other party hereto.
12.13 DISPUTES. Buyer and Seller agree that, in the event of any
dispute of conflict arising in connection with or under this Agreement, they
shall use their best efforts to amicably resolve such dispute or conflict.
12.14 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original but all of which taken
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, Seller and Buyer have caused this Agreement to be
executed by their respective duly authorized officers as of the day and year
first above written.
THE B.F.GOODRICH COMPANY
By: /s/ John D. Ong
--------------------------------
John D. Ong
Chairman of the Board and
Chief Executive Officer
RPM, INC.
By: /s/ Thomas C. Sullivan
---------------------------------
Thomas C. Sullivan
Chairman
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Exhibit 2.2
EXECUTION COPY
AMENDMENT NO. 1 TO STOCK PURCHASE AGREEMENT
This Amendment No. 1 is made and entered into effective as of the 1st
day of February, 1997, by and between THE B.F. GOODRICH COMPANY, a New York
corporation ("Seller"), and RPM, INC., an Ohio corporation ("Buyer").
RECITALS
A. Seller owns one hundred percent (100%) of the issued and outstanding
shares of common stock, par value $1.00 per share (the "Common Stock"), of
TREMCO INCORPORATED, an Ohio corporation ("Company").
B. Seller and Buyer entered into a Stock Purchase Agreement as of
October 21, 1996 (the "Stock Purchase Agreement") whereby Seller agreed to
transfer, sell and assign to Buyer and Buyer agreed to purchase from Seller, one
hundred percent (100%) of the Common Stock on the terms and conditions set forth
in the Stock Purchase Agreement.
C. Seller and Buyer desire to amend the Stock Purchase Agreement as
set forth below.
NOW, THEREFORE, in consideration of the mutual promises herein
contained, Seller and Buyer agree as follows:
SECTION 1. AMENDMENTS TO THE STOCK PURCHASE AGREEMENT.
1.01 SECTION 1.2(d) of the Stock Purchase Agreement is deleted in its
entirety and restated as follows:
"(d) subject to the provisions of SECTION 6.4, all rights and interests
in and under the BFGoodrich Insurance Policies (as hereinafter defined in
SECTION 4.1(u));"
1.02 A new SECTION 1.3(f) is added to the Stock Purchase Agreement as
follows:
"(f) subject to the terms contained in ARTICLE XI-A, all Litigation
Costs (as hereinafter defined) and Warranty Costs (as hereinafter defined)
associated with Non-roofing Products (as hereinafter defined) shipped by the
Company prior to the Closing Date."
1.03 SECTION 2.1 of the Stock Purchase Agreement is deleted in its
entirety and restated as follows:
"2.1 PURCHASE PRICE. In consideration of the sale, transfer,
conveyance, assignment, and delivery of the Common Stock by Seller to Buyer and
the mutual covenants, undertakings, and agreements herein contained, Buyer shall
on the Closing Date pay to Seller Two Hundred Thirty Million Seven Hundred
Thousand Dollars ($230,700,000) (the "Purchase
1
<PAGE> 2
Price") by wire transfer in immediately available funds to Seller's bank
account, which Seller shall identify in writing at least forty-eight (48) hours
prior to the Closing."
1.04 SECTION 6.4 of the Stock Purchase Agreement is deleted in its
entirety and restated to read as follows:
"6.4 INSURANCE COVERAGE. For the purposes of this SECTION 6.4,
the term "Seller Insurance" means the BFGoodrich Insurance Policies in effect on
and before the Closing Date, in excess of Seller's applicable self-insured
retention amounts. From and after the Closing Date, Seller agrees to provide
Company and its Affiliates with continuing access as an insured party to Seller
Insurance, subject always to the terms, conditions and limitations thereof,
which are applicable to insurable claims and litigation asserted against Company
and its Affiliates as of the Closing Date. Seller shall be solely responsible
for notification of the underwriters of the Seller Insurance and thereafter for
the management of claims and litigation asserted against Company and its
Affiliates prior to, on or within thirty (30) days after the Closing Date.
Provided however, that Seller may, in its sole discretion, elect to purchase
tail insurance coverage which shall be reasonably acceptable to Buyer and which
will provide the same level and quality of coverage to Company and its
Affiliates as would have otherwise been provided by the Seller Insurance ("Tail
Insurance"). In the event Seller elects to so provide the Tail Insurance,
Company and its Affiliates shall not have any access to the Seller Insurance
after the Closing Date. The foregoing does not constitute, and shall not be
construed to constitute, an independent assumption, assurance, guarantee or
indemnity of any nature whatsoever by Seller with respect to claims and
litigation asserted against Company and its Affiliates as of the Closing Date."
SECTION 9.2(h) of the Stock Purchase Agreement is deleted in its
entirety.
1.05 SECTION 6.11 of the Stock Purchase Agreement is deleted in its
entirety and restated to read as follows:
"6.11 CASH BALANCES. The parties agree that all cash balances
located outside the U.S. of Company and its Affiliates will be left on deposit
in the accounts of Company and its Affiliates on the Closing Date. In the event
that the aggregate amount of such cash on the Closing Date is greater than
U.S.$2.0 million, then, subject to the Net Worth provisions of SECTION 2.2(e),
the amount equivalent to such excess (less an amount equal to the face amount of
all checks written by or on behalf of Company before the Closing Date that have
not been paid as of the Closing Date) shall be paid by Buyer to Seller by wire
transfer of immediately available funds within seven (7) days after the Closing
Date. In the event that the aggregate amount of such cash on the Closing Date is
less than U.S.$2.0 million, then the amount equivalent to such shortfall (plus
an amount equal to the face amount of all checks written by or on behalf of
Company before the Closing Date that have not been paid as of the Closing Date)
shall be paid by Seller to Buyer by wire transfer of immediately available funds
within seven (7) days after the Closing Date."
2
<PAGE> 3
1.06 SECTION 6.1A of the Stock Purchase Agreement is amended by adding
the following sentence to the end of such section:
"It is hereby agreed that Buyer will accept the Schedules set
forth in this Agreement as updated to include statements to the effect that: (i)
Company's Cleveland plant may be operating its felt line in excess of air
operating permit limits based on throughput; (ii) Company's Cleveland plant may
not have records of earlier service on a chiller system, which may have involved
addition of CFCs to the chillers; (iii) Company's plants operated in Wigan,
England and Slough, England may be subject in the future to a statute similar to
CERCLA, which has been enacted in the UK, but is not yet effective; (iv)
volatile organic compounds have been detected in the groundwater beneath
Company's Toronto plant's Wicksteed Avenue Buildings and an adjacent property;
and (v) asbestos-containing material is present in buildings at Company's
facility in Beachwood, Ohio."
1.07 SECTION 6.3A of the Stock Purchase Agreement is deleted in its
entirety and restated to read as follows:
"6.3A ANCILLARY AGREEMENTS. After the date of execution
hereof, the parties shall negotiate in good faith the following agreements:
License Agreement for Retained Technology related to Ultrem; Joint Development
Agreement related to Ultrem; Agreement for High Solids Polymer and Dispersion
Products; Lease Agreement for the Pilot Plant; Distribution Agreement for Tremco
S.A.; Manufacturing License Agreement for Tremco S.A.; Services Agreement for
Tremco S.A.; and Transition Services Agreement. From and after the Closing Date,
Seller and Buyer agree that they shall cause their respective subsidiaries and
affiliates to perform and comply with the duties and obligations of such
ancillary agreements in accordance with the terms of the executed agreements."
SECTIONS 9.1(e) and 9.2(e) of the Stock Purchase Agreement are
deleted in their entirety and restated to read as follows:
"9.1(e) ANCILLARY AGREEMENTS. Execution and delivery of the agreements
identified in SECTION 6.3A.
"9.2(e) ANCILLARY AGREEMENTS. Execution and delivery of the agreements
identified in SECTION 6.3A."
All references to the Ancillary Agreements in the Agreement shall be
deemed to only refer to those agreements set forth in SECTION 6.3A, including
the list of Exhibits, which shall be revised as follows:
"Exhibit A Ancillary Agreements
Exhibit A-1 --License Agreement for Retained Technology for Ultrem
Exhibit A-2 --Joint Development Agreement for Ultrem
3
<PAGE> 4
Exhibit A-3 --Agreement for High Solids Polymer and Dispersion
Products
Exhibit A-4 --Lease Agreement for Pilot Plant
Exhibit A-5 --Distribution Agreement for Tremco S.A.
Exhibit A-6 --Manufacturing License Agreement for Tremco S.A.
Exhibit A-7 --Services Agreement for Tremco S.A.
Exhibit A-8 --Transition Services Agreement"
1.08 SECTION 11.1(a) of the Stock Purchase Agreement is deleted in its
entirety and restated to read as follows:
"11.1 INDEMNIFICATION.
(a) SELLER'S INDEMNITY. Subject to the conditions,
limitations and provisions of this ARTICLE XI, Seller agrees to hold harmless,
indemnify and defend, with respect to SECTIONS 11.1(a)(1) AND 11.1(a)(2) Buyer
and its affiliates and their respective officers, directors, employees, agents,
successors and assigns, and with respect to SECTION 11.1(a)(3) Buyer, Company
and their affiliates and their respective officers, directors, employees,
agents, successors and assigns, from and against any claim, cause of action,
demand, damage, loss, liability, expense or cost of any kind or amount
whatsoever (including court costs, expenses and reasonable accountants and
attorneys fees) incurred or suffered by any one or more of said parties, arising
or resulting from the following, including the enforcement thereof:
(1) the breach of any representation or warranty made
by Seller in this Agreement, it being expressly understood and agreed that
except as and to the extent set forth in this ARTICLE XI, Seller shall not
indemnify, defend or hold harmless any party or entity with respect to the
representations or warranties made by Seller;
(2) the breach of or failure to perform any covenant,
obligation or agreement of Seller set forth herein; or
(3) any Retained Liability.
SECTION 12.11 shall not be construed to limit the indemnification provided by
Seller to Company and its affiliates and their respective officers, directors,
employees, agents, successors and assigns to the extent such entities or persons
are expressly indemnified by Seller under ARTICLES XI or XI-A."
1.09 A new ARTICLE XI-A is added to the Stock Purchase Agreement as
follows:
"ARTICLE XI-A
COST-SHARING OF CERTAIN RETAINED LIABILITIES
(1) TERMS. For purposes of this Agreement:
4
<PAGE> 5
(i) "Litigation Costs" means the damages, losses, liabilities,
expenses, deficiencies or costs of any kind or amount whatsoever (including
court costs, expenses, reasonable accountants and attorneys fees, and any costs
resulting from any settlement or judgment, but not including any allocated
compensation expense for employees of Buyer or Company for assisting in any way
in the administration of claims that may result in Litigation Costs (as used in
this ARTICLE XI-A, the term "Company" shall include Company's subsidiaries))
incurred or suffered by Buyer, Company or their respective officers, directors
or employees, arising out of any legal proceeding, arbitration, hearing,
litigation or suit brought by a third party connected in any way with (a) any
defect or alleged defect in the manufacture, design, materials or workmanship of
a Non-roofing Product shipped by Company before the Closing Date which results
in or is alleged to result in damage to person or property (including damage to
the product itself) or (b) any failure or alleged failure of a Non-roofing
Product to meet or conform to express or implied warranties or representations
with respect thereto shipped by Company before the Closing Date, net of any
unaffiliated, third party insurance recoveries.
(ii) "Non-roofing Products" means all products manufactured,
sold or distributed by Company that have been shipped prior to the Closing Date,
other than those sheet & liquid membranes, adhesives and sealants, and
accessories used in the installation, repair, refurbishment and replacement of
roofs for the purpose of weather proofing such roofs in new and existing
buildings.
(iii) "Warranty Costs" means any losses, liabilities,
expenses, deficiencies or costs of any kind or amount whatsoever incurred or
suffered by Buyer, Company or their respective officers, directors or employees
resulting from any claim relating to failures or alleged failures of Non-roofing
Products to meet or conform to express or implied warranties or representations
with respect thereto, shipped by Company before the Closing Date of which
Company has received written notification at any time during the period from
prior to the Closing Date to the tenth anniversary of the Closing Date, net of
any unaffiliated, third party insurance recoveries and not including (i) costs
associated with the resolution of customer complaints by Company in the ordinary
course of business through the provision of product and/or other minor repair
services at Company's cost that do not exceed an aggregate of $5,000 in any one
instance, or (ii) allocated compensation expense for employees of Buyer or
Company for assisting in any way in the administration of claims that may result
in Warranty Costs.
(2) THRESHOLD AMOUNT. Seller and Buyer acknowledge and agree that
notwithstanding SECTION 1.3(f), Buyer and Company shall be responsible for the
first $3,000,000 (the "Threshold Amount") of the sum of Warranty Costs and
Litigation Costs in the aggregate before Seller shall be liable to Buyer,
Company or their respective officers, directors or employees under SECTION
1.3(f) or the Cost-Sharing provisions of subparagraph (3) below.
5
<PAGE> 6
(3) COST-SHARING. Notwithstanding SECTION 1.3(f), after satisfaction of
the Threshold Amount, for each successive one-year period ending on the
anniversary of the Closing Date through the tenth anniversary of the Closing
Date, Buyer and Company shall be responsible for all Warranty Costs and
Litigation Costs incurred until the aggregate sum of such Warranty Costs and
Litigation Costs in such one-year period reaches $2,000,000 (the "Cost-Sharing
Limit"). Buyer's and Company's responsibility for Warranty Costs and Litigation
Costs shall be non-cumulative, i.e., to the extent such aggregate costs do not
exceed the Cost-Sharing Limit in any given year, the shortfall shall not be
added to the next year's Cost-Sharing Limit. For each such one-year period
through the tenth anniversary of the Closing Date, to the extent the aggregate
sum of such Warranty Costs and Litigation Costs in such one-year period exceeds
the Cost-Sharing Limit, Seller shall be responsible for one hundred percent
(100%) of the Warranty Costs and Litigation Costs incurred by Buyer and Company
in excess of said Cost-Sharing Limit. Notwithstanding SECTION 1.3(f), Seller
shall have no liability for Warranty Costs that it first receives notification
of after the tenth anniversary of the Closing Date. However, after the tenth
anniversary of the Closing Date, Seller shall be solely liable for Litigation
Costs, and Buyer and Company shall have no liability whatsoever for Litigation
Costs.
(4) Claims Management.
-----------------
(i) COVENANTS. On and after the Closing Date, Company will
service the product warranties (including warranties which may have been implied
or otherwise created by law in the ordinary course of the Business) extended
prior to such date by Company with respect to Non-roofing Products shipped by
Company or its subsidiaries prior to the Closing Date. With respect to a claim
which may result in Warranty Costs asserted after the Closing Date which
involves a Non-roofing Product shipped by Company or its subsidiaries prior to
the Closing Date, Company will proceed to investigate, defend and resolve such
claim with respect thereto in accordance with any and all applicable warranty
obligations in a manner consistent with past practices.
(ii) LITIGATION COSTS. Until the Threshold Amount and the
Cost-Sharing Limit have been met, Company shall manage matters relating to
Litigation Costs pursuant to this ARTICLE XI-A, including but not limited to
full control of the defense and proceedings relating to any such matter,
including any settlement thereof. Seller may retain separate counsel to
represent it in, but not control, any defense or settlement of any matter
relating to Litigation Costs controlled by Company pursuant to this clause
(4)(ii), and Seller will bear its own costs and expenses with respect to such
separate counsel. In the event either party should reasonably conclude, based
upon the Information (as hereinafter defined), that a particular matter relating
to Litigation Costs is of sufficient nature and potential liability to exceed
the Threshold Amount and the Cost-Sharing Limit, respectively, then the
concluding party shall have the right to have Seller assume full control of the
management of such matter, including defense and any settlement thereof with the
amount of such defense or settlement to be applied against any remaining balance
of the Threshold Amount and/or the Cost-Sharing Limit. Any matters relating to
Litigation Costs that arise (a) after the Threshold Amount and the Cost-Sharing
Limit have been met or (b) after the tenth anniversary of the Closing Date,
shall be managed
6
<PAGE> 7
by Seller, and Seller shall have full control of the defense and proceedings
relating to any such matter, including any settlement thereof. With respect to
settlements related to Litigation Costs, the party controlling the settlement
shall not, without the prior written consent of the non-controlling party (which
consent shall not be unreasonably withheld), enter into any compromise or
settlement which commits the non-controlling party to take, or to forbear to
take, any action other than the payment of money in an amount equal to or less
than $100,000 and shall be reasonable under the circumstances and made in good
faith. Once a matter related to Litigation Costs is being managed by Seller,
Seller shall retain such management even though, as the result of the passage of
time, a new Cost-Sharing Limit must be satisfied by Buyer and Company.
(iii) WARRANTY COSTS. With respect to any claim which may
result in Warranty Costs, Company shall have the exclusive right to handle and
resolve such claims, which will be handled by Company in a reasonable manner
and, to the extent appropriate, in accordance with Company's past practice;
provided, however, that once the Threshold Amount and the Cost-Sharing Limit
have been met, Company must obtain the prior written consent of Seller to the
payment of Warranty Costs of over $100,000 in the aggregate related to any one
claim, which consent shall not be unreasonably withheld.
(iv) REPORTING AND COOPERATION. Company shall provide Seller
with access to all reports, reserve information, insurance information,
technical service analysis, consultants' evaluations, reports and opinions of
counsel, and other data and information of Company ("Information") to allow for
regular and complete evaluation of claims which may result in Litigation Costs
or Warranty Costs. This Information shall be provided to Seller on a regular
basis consistent with preparation and distribution to Company and Buyer, and in
accordance with Seller's reasonable requests to fulfill requirements of Seller's
insurance. Due to the commonality of interest of the parties hereto and Company,
the parties agree that the Information shall be kept strictly confidential, and
if privileged, will be held and maintained as privileged. The parties hereto and
Company shall exercise their best efforts to avoid waiving any protection for
privileged or confidential information, or similar protection such as attorney
work product or internal critical review, without the prior written consent of
the other, or as required by law. Seller will have access with reasonable notice
to Company files, counsel, employees and consultants, and expenses thereof, to
allow review and evaluation of Litigation Costs and Warranty Costs. The parties
hereto and Company mutually agree to use all reasonable efforts to establish
technical and legal defenses and to cooperate in order to maximize the
opportunities for an applicable unaffiliated, third party insurer to provide
defense and indemnity coverage for any of the matters set forth herein.
Communication with an applicable insurer shall be controlled by the party with
the insurable interest.
(5) PAYMENT OF CLAIMS. Notwithstanding any other payment or claim
procedure for indemnification set forth in ARTICLE XI of this Agreement, on a
quarterly basis, Buyer or Company, as appropriate, shall provide Seller with a
reasonably detailed summary with supporting documentation of Litigation Costs
and Warranty Costs incurred by Buyer, Company or their respective officers,
directors or employees and, to the extent Buyer or
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<PAGE> 8
Company is entitled to reimbursement under the provisions of subparagraph (3)
above, such amounts shall be processed and paid by Seller promptly, but no later
than 30 days following the date the summary of Litigation Costs and Warranty
Costs was received from Buyer or Company, as applicable.
(6) DRYVIT SYSTEMS, INC. In the event that Company has actual knowledge
that a structure that is the subject of a claim that may lead to Litigation
Costs or Warranty Costs contains products manufactured by Dryvit Systems, Inc.,
an indirect subsidiary of Buyer ("Dryvit"), Company shall give Seller notice of
such fact within thirty (30) days. A delay in giving notice shall only relieve
the recipient of liability to the extent the recipient suffers actual prejudice
because of the delay. In the event Dryvit and Company become co-defendants in
any litigation which involves Non-roofing Products, Buyer shall tender the
defense of the Company in such litigation to Seller and Seller shall manage such
defense pursuant to this ARTICLE XI-A. Buyer and Company shall not disclose any
information which has been classified by Company or its legal counsel as
attorney-client-privileged, or similar protection, such as attorney work product
or internal critical review. Further, Seller shall not disclose any information
which has been classified by Company or its legal counsel as
attorney-client-privileged, or similar protection, such as attorney work product
or internal critical review."
SECTION 2. REFERENCE TO AND EFFECT ON AGREEMENT.
2.01 Unless otherwise defined herein, capitalized terms used herein
shall have the meanings given to such terms in the Stock Purchase Agreement.
2.02 Each reference in the Stock Purchase Agreement to "this
Agreement," "hereunder," "hereof," "herein," or words of like import shall mean
and be a reference to the Stock Purchase Agreement as amended hereby, and each
reference to the Stock Purchase Agreement in any other document, instrument or
agreement shall mean and be a reference to the Stock Purchase Agreement as
amended hereby.
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2.03 Except as specifically amended above, the Stock Purchase Agreement
shall remain in full force and effect.
IN WITNESS WHEREOF, Seller and Buyer have caused this Amendment No. 1
to Stock Purchase Agreement to be executed by their respective duly authorized
officers as of the day and year first above written.
THE B.F.GOODRICH COMPANY
By:__________________________________
David L. Burner
President and
Chief Executive Officer
RPM, INC.
By:_________________________________
Thomas C. Sullivan
Chairman
<PAGE> 1
Exhibit 4.1
EXECUTION COPY
************************************************************
RPM, INC.
CREDIT AGREEMENT
Dated as of February 3, 1997
$500,000,000
NATIONAL CITY BANK
as Documentation Agent
THE CHASE MANHATTAN BANK
as Administrative Agent
************************************************************
<PAGE> 2
TABLE OF CONTENTS
PAGE
SECTION 1. Definitions and Accounting Matters..............................1
1.01 Certain Defined Terms..............................................1
1.02 Accounting Terms and Determinations...............................13
1.03 Class and Types of Loans..........................................14
SECTION 2. Commitments....................................................14
2.01 Loans.............................................................14
2.02 Reductions of Commitments.........................................15
2.03 Fees..............................................................15
2.04 Lending Offices...................................................16
2.05 Several Obligations...............................................16
2.06 Notes.............................................................16
2.07 Use of Proceeds...................................................16
SECTION 3. Borrowings, Conversions and Prepayments........................17
3.01 Borrowings........................................................17
3.02 Prepayments and Conversions.......................................17
3.03 Competitive Bid Procedure.........................................17
SECTION 4. Payments of Principal and Interest.............................20
4.01 Repayment of Loans................................................20
4.02 Interest..........................................................20
SECTION 5. Payments; Pro Rata Treatment; Computations; Etc................22
5.01 Payments..........................................................22
5.02 Pro Rata Treatment................................................23
5.03 Computations......................................................23
5.04 Minimum and Maximum Amounts; Types................................23
5.05 Certain Notices...................................................23
5.06 Non-Receipt of Funds by the Administrative Agent..................24
5.07 Sharing of Payments, Etc..........................................25
5.08 Taxes.............................................................25
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<PAGE> 3
PAGE
SECTION 6. Yield Protection and Illegality................................28
6.01 Additional Costs..................................................28
6.02 Limitation on Types of Loans......................................29
6.03 Illegality........................................................30
6.04 Substitute Base Rate Loans........................................30
6.05 Compensation......................................................31
6.06 Capital Adequacy..................................................31
6.07 Substitution of Lender............................................32
SECTION 7. Conditions Precedent...........................................32
7.01 Initial Loans.....................................................32
7.02 Initial and Subsequent Loans......................................34
SECTION 8. Representations and Warranties.................................34
8.01 Corporate Existence...............................................34
8.02 Information.......................................................34
8.03 Litigation........................................................36
8.04 No Breach.........................................................36
8.05 Corporate Action..................................................36
8.06 Approvals.........................................................37
8.07 Regulations U and X...............................................37
8.08 ERISA.............................................................37
8.09 Taxes.............................................................37
8.10 Subsidiaries......................................................37
8.11 Investment Company Act............................................38
8.12 Public Utility Holding Company Act................................38
8.13 Ownership and Use of Properties...................................38
8.14 Environmental Matters.............................................38
SECTION 9. Covenants......................................................38
9.01 Information.......................................................38
9.02 Taxes and Claims..................................................40
9.03 Insurance.........................................................41
9.04 Maintenance of Existence; Conduct of Business.....................41
9.05 Maintenance of and Access to Properties...........................41
9.06 Compliance with Applicable Laws...................................41
9.07 Litigation........................................................42
ii
<PAGE> 4
PAGE
9.08 Leverage Ratio....................................................42
9.09 Interest Coverage Ratio...........................................42
9.10 Mergers, Asset Dispositions, Etc..................................42
9.11 Liens.............................................................42
9.12 Investments.......................................................43
9.13 Transactions with Affiliates......................................43
9.14 Lines of Business.................................................44
9.15 Environmental Matters.............................................44
9.16 Lease Payments....................................................44
SECTION 10. Defaults......................................................45
10.01 Events of Default.................................................45
SECTION 11. The Administrative Agent......................................48
11.01 Appointment, Powers and Immunities................................48
11.02 Reliance by Administrative Agent..................................48
11.03 Defaults..........................................................49
11.04 Rights as a Lender................................................49
11.05 Indemnification...................................................49
11.06 Non-Reliance on Administrative Agent and Other Lenders............50
11.07 Failure to Act....................................................50
11.08 Resignation or Removal of Administrative Agent....................50
11.09 Documentation Agent...............................................51
SECTION 12. Miscellaneous.................................................51
12.01 Waiver............................................................51
12.02 Notices...........................................................51
12.03 Expenses, Etc.....................................................52
12.04 Indemnification...................................................52
12.05 Amendments, Etc...................................................52
12.06 Successors and Assigns............................................53
12.07 Confidentiality...................................................54
12.08 Survival..........................................................54
12.09 Captions..........................................................55
12.10 Counterparts; Integration.........................................55
12.11 GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF
JURY TRIAL........................................................55
iii
<PAGE> 5
SCHEDULES
PRICING SCHEDULE
SCHEDULE I - Subsidiaries and Joint Ventures
EXHIBITS
EXHIBIT A - Form of Note
EXHIBIT B-1 - Form of Opinion of Counsel to
the Company
EXHIBIT B-2 - Form of Opinion of General Counsel
of the Company
EXHIBIT C - Form of Opinion of Special Counsel to
the Administrative Agent
iv
<PAGE> 6
CREDIT AGREEMENT
AGREEMENT dated as of February 3, 1997 among: RPM, INC., a corporation
duly organized and validly existing under the laws of the State of Ohio
(together with its successors, the "COMPANY"); each of the lenders which is or
which may from time to time become a signatory hereto (individually, together
with its successors, a "LENDER" and, collectively, together with their
respective successors, the "LENDERS"); NATIONAL CITY BANK, as documentation
agent for the Lenders (in such capacity, the "DOCUMENTATION AGENT"); and THE
CHASE MANHATTAN BANK, as administrative agent for the Lenders (in such capacity,
together with its successors in such capacity, the "ADMINISTRATIVE AGENT").
The parties hereto agree as follows:
SECTION 1. Definitions and Accounting Matters.
1.01 Certain Defined Terms. As used herein, the following terms shall
have the following meanings (all terms defined in this Section 1.01 or in other
provisions of this Agreement in the singular to have the same meanings when used
in the plural and vice versa):
"ABSOLUTE RATE" shall mean, with respect to any Competitive Loan (other
than a Eurodollar Competitive Loan), the fixed rate of interest per annum
specified by the Lender making such Competitive Loan in its related Competitive
Bid.
"ACCEPTABLE INSURER" means an insurance company (i) having an A.M. Best
rating of "A-" or better and being in a financial size category of X or larger
(as such category is defined as of the date hereof) or (ii) otherwise acceptable
to the Majority Lenders. First Colonial Insurance Company, a wholly-owned
Subsidiary of the Company, is deemed to be acceptable with respect to the dollar
amount of insurance it is providing on the date of this Agreement.
"ACQUIRED BUSINESS" shall mean all of the stock of Tremco Incorporated,
an Ohio corporation, and certain of its Affiliates, but specifically excluding
Tremco S.A. (France).
"ACQUISITION" shall mean the acquisition by the Company of the Acquired
Business and all other transactions contemplated by the Acquisition Documents to
be consummated on or before the Closing Date.
<PAGE> 7
"ACQUISITION DOCUMENTS" shall mean the Stock Purchase Agreement, dated
October 21, 1996, as amended by Amendment No. 1 thereto dated as of February 1,
1997, between the Company and The B.F.Goodrich Company, including the exhibits
and schedules thereto, and all material agreements, documents and instruments
executed and delivered by or addressed to or specifically required by the
Company pursuant to or in connection with any of the foregoing.
"ADJUSTED CD RATE", for any CD Loans, shall mean for the Interest
Period for such Loans a rate per annum determined by the Administrative Agent
pursuant to the following formula:
[ CDBR ]
ACDR = ______________ + AR
[ 1.00 - DRP ]
ACDR = Adjusted CD Rate
CDBR = CD Base Rate for the Interest
Period for such Loans (rounded
upward, if necessary, to the
next higher 1/100 of 1%)
DRP = Domestic Reserve Percentage
AR = Assessment Rate
"AFFILIATE" shall mean, as to any Person, any other Person which
directly or indirectly controls, or is under common control with, or is
controlled by, such Person and, if such Person is an individual, any member of
the immediate family (including parents, siblings, spouse, children,
stepchildren, nephews, nieces and grandchildren) of such individual and any
trust whose principal beneficiary is such individual or one or more members of
such immediate family and any Person who is controlled by any such member or
trust. As used in this definition, "CONTROL" (including, with correlative
meanings, "CONTROLLED BY" and "UNDER COMMON CONTROL WITH") shall mean
possession, directly or indirectly, of power to direct or cause the direction of
management or policies (whether through ownership of securities or partnership
or other ownership interests, by contract or otherwise), provided that, in any
event, any Person which owns directly or indirectly more than 5% of the
securities having ordinary voting power for the election of directors or other
governing body of a corporation or more than 5% of the partnership or other
ownership interests of any other Person (other than as a limited partner of such
other Person) will be deemed to control such corporation or other Person.
"APPLICABLE LENDING OFFICE" shall mean, for each Lender and for each
Type of Loan, the Lending Office of such Lender (or of an affiliate of such
Lender) designated for such Type of Loan below its name on the signature pages
hereof or
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<PAGE> 8
such other office of such Lender (or of an affiliate of such Lender) as such
Lender may from time to time specify to the Administrative Agent and the Company
as the office by which its Loans of such Type are to be made and/or issued and
maintained.
"APPLICABLE MARGIN" shall mean, with respect to any Loan, the rate per
annum (calculated as a function of the Type of such Loan) determined in
accordance with the Pricing Schedule.
"ASSESSMENT RATE" shall mean, for any day, the annual assessment rate
in effect on such day which is payable by a member of the Bank Insurance Fund
classified as adequately capitalized and within supervisory subgroup "A" (or a
comparable successor assessment risk classification) within the meaning of 12
C.F.R. ss. 327.3(d) (or any successor provision) to the Federal Deposit
Insurance Corporation (or any successor) for such Corporation's (or such
successor's) insuring time deposits at offices of such institution in the United
States. The Adjusted CD Rate shall be adjusted automatically on and as of the
effective date of any change in the Assessment Rate.
"BANKRUPTCY CODE" shall mean the United States Bankruptcy Code, as now
or hereafter in effect, or any successor statute.
"BASE RATE" shall mean, with respect to any Base Rate Loan for any day,
the rate per annum equal to the higher as of such day of (i) the Federal Funds
Rate plus 1/2 of 1% or (ii) the Prime Rate.
"BASE RATE LOANS" shall mean Loans which bear interest at a rate based
upon the Base Rate.
"BASIC DOCUMENTS" shall mean this Agreement, the Notes and the
Acquisition Documents.
"BUSINESS DAY" shall mean any day other than a day on which commercial
banks are authorized or required to close in New York City and, where such term
is used in the definition of "Quarterly Date" in this Section 1.01 or if such
day relates to a borrowing of, a payment or prepayment of principal of or
interest on, a conversion of or into, or an Interest Period for, a Eurodollar
Loan or a notice by the Company with respect to any such borrowing, payment,
prepayment, conversion or Interest Period, which is also a day on which dealings
in Dollar deposits are carried out in the London interbank market.
"CAPITAL LEASE OBLIGATIONS" shall mean, as to any Person, the
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement
3
<PAGE> 9
conveying the right to use) real and/or personal property to the extent such
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under GAAP (including Statement of Financial
Accounting Standards No. 13 of the Financial Accounting Standards Board) and,
for purposes of this Agreement, the amount of such obligations shall be the
capitalized amount thereof, determined in accordance with GAAP (including such
Statement No. 13).
"CD BASE RATE" shall mean, with respect to any CD Loans, the arithmetic
mean, as calculated by the Administrative Agent, of the respective rates per
annum (rounded upwards, if necessary, to the nearest 1/20 of 1%) of the
Reference Lenders, in each such case determined by the Reference Lender to be
the average of the bid rates quoted to it at its principal office at
approximately 10:00 a.m. New York City time (or as soon thereafter as
practicable) on the first day of the Interest Period for such Loan by New York
certificate of deposit dealers of recognized standing selected by such Reference
Lender for the purchase at face value of certificates of deposit of such
Reference Lender with a term, and in an amount, comparable to such Interest
Period and the principal amount of the CD Loan which shall be made by such
Reference Lender and outstanding during such Interest Period; provided that, if
such quotations from such dealers are not available to such Reference Lender,
such Lender shall notify the Administrative Agent of a reasonably equivalent
rate determined by it on the basis of another source or sources selected by it.
"CD LOANS" shall mean Loans, the interest on which is determined on the
basis of rates referred to in the definition of "CD Base Rate" in Section 1.01.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended from time to time, and
regulations promulgated thereunder.
"CHASE" shall mean The Chase Manhattan Bank and its successors.
"CLASS" shall have the meaning assigned to such term in Section 1.03
hereof.
"CLOSING DATE" shall mean the date of the initial Loans hereunder.
"CODE" shall mean the Internal Revenue Code of 1986, as amended, or any
successor statute.
"COMMITMENT" shall mean, as to any Lender, the obligation of such
Lender to make Loans in an aggregate principal amount at any one time
outstanding up to
4
<PAGE> 10
but not exceeding the amount set forth opposite such Lender's name on the
signature pages hereof under the caption "Commitment" (as the same may be
reduced from time to time pursuant to Section 2.02 hereof).
"COMPETITIVE BID" shall mean an offer by a Lender to make a Competitive
Loan in accordance with Section 3.03 hereof.
"COMPETITIVE BID RATE" shall mean, with respect to any Competitive Bid,
the Competitive Margin or the Absolute Rate, as applicable, offered by the
Lender making such Competitive Bid.
"COMPETITIVE BID REQUEST" shall mean a request by the Company for
Competitive Bids in accordance with Section 3.03 hereof.
"COMPETITIVE LOAN" shall mean a loan made pursuant to Section 3.03
hereof.
"COMPETITIVE MARGIN" shall mean, with respect to any Eurodollar
Competitive Loan, the marginal rate of interest, if any, to be added to or
subtracted from the Eurodollar Rate to determine the rate of interest applicable
to such Loan, as specified by the Lender making such Loan in its related
Competitive Bid.
"CONTROLLED GROUP" shall mean all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Company, are treated as a single
employer under Section 414 of the Code.
"DEFAULT" shall mean an Event of Default or an event which with notice
or lapse of time or both would, unless cured or waived, become an Event of
Default.
"DISCLOSURE DOCUMENTS" shall mean the Company's annual report on Form
10-K for 1996 and quarterly reports on Form 10-Q for the quarterly periods ended
August 31, 1996 and November 30, 1996, in each case as filed with the Securities
and Exchange Commission pursuant to the Securities Exchange Act of 1934, and the
audited consolidated financial statements of Tremco Incorporated as of and for
the ten-month period ended October 31, 1996 delivered as one of the Acquisition
Documents.
"DOLLARS" and "$" shall mean lawful money of the United States of
America.
5
<PAGE> 11
"DOMESTIC RESERVE PERCENTAGE" shall mean, for any day, that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor), for
determining the maximum reserve requirement (including without limitation any
basic, supplemental or emergency reserves) for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars in
respect of new non-personal time deposits in dollars in New York City having a
maturity comparable to the Interest Period for which the Adjusted CD Rate is
being determined and in an amount of $100,000 or more. The Adjusted CD Rate
shall be adjusted automatically on and as of the effective date of any change in
the Domestic Reserve Percentage.
"EBIT" shall mean, for any period, determined on a consolidated basis
for the Company and its Subsidiaries, net operating income of the Company and
its Subsidiaries (calculated before provision for income taxes, interest
expense, extraordinary items and income attributable to equity in affiliates)
for such period.
"ENVIRONMENTAL LAWS" shall mean any and all applicable federal, state,
local and foreign statutes, laws, judicial decisions, regulations, ordinances,
rules, judgments, orders, decrees, codes, injunctions, permits, concessions,
grants, franchises, licenses, agreements and other governmental restrictions
relating to the environment or the effect of the environment on human health or
to emissions, discharges or release of pollutants, contaminants, Hazardous
Substances or wastes into the environment, including, without limitation,
ambient air, surface water, ground water, or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, Hazardous Substances or
wastes or the clean-up or other remediation thereof.
"ENVIRONMENTAL LIABILITIES" shall mean all liabilities in connection
with or relating to the business, assets, presently or previously owned or
leased property, activities (including, without limitation, off-site disposal)
or operations of the Company and each Subsidiary, whether vested or unvested,
contingent or fixed, actual or potential, known or unknown, which arise under or
relate to matters covered by Environmental Laws.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"EURODOLLAR BASE RATE" shall mean, with respect to any Eurodollar
Loans, the rate per annum appearing on Page 3750 of the Telerate Service (or on
any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on
6
<PAGE> 12
such page of such Service, as determined by the Administrative Agent from time
to time for purposes of providing quotations of interest rates applicable to
dollar deposits in the London interbank market) at approximately 11:00 a.m.,
London time, two Business Days prior to the first day of the Interest Period for
such Eurodollar Loans, as the rate for Dollar deposits for a period comparable
to such Interest Period. In the event that such rate is not available at such
time for any reason, then the "Eurodollar Base Rate" with respect to such
Eurodollar Loans for such Interest Period shall be the arithmetic mean, as
calculated by the Administrative Agent, of the respective rates per annum
(rounded upwards, if necessary, to the nearest 1/16 of 1%) quoted by the
Reference Lenders at approximately 11:00 a.m. London time by the principal
London branch of each of the Reference Lenders on the day two Business Days
prior to the first day of the Interest Period for such Loans for the offering to
leading banks in the London interbank market of Dollar deposits in immediately
available funds, for a period, and in an amount, comparable to such Interest
Period and the principal amount of the Eurodollar Loan which shall be made by
such Reference Lender and outstanding during such Interest Period. If any
Reference Lender is not participating in any Eurodollar Loans during the
Interest Period therefor (pursuant to Section 3.03 or 6.04 hereof or for any
other reason), the Eurodollar Base Rate for such Loans for such Interest Period
shall be determined by reference to the amount of the Loan which such Reference
Lender would have made had such Loans been Revolving Loans in which it was
participating. If any Reference Lender does not furnish a timely quotation, the
Administrative Agent shall determine the relevant interest rate on the basis of
the quotation or quotations furnished by the remaining Reference Lender or
Lenders or, if none of such quotations is available on a timely basis, the
provisions of Section 6.02 shall apply.
"EURODOLLAR LOANS" shall mean Loans the interest on which is determined
on the basis of rates referred to in the definition of "Eurodollar Base Rate" in
this Section 1.01.
"EURODOLLAR RATE" shall mean, for any Eurodollar Loans, a rate per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) determined by
the Administrative Agent to be equal to (i) the Eurodollar Base Rate for such
Loans for the Interest Period for such Loans divided by (ii) 1 minus the
Eurodollar Reserve Requirement for such Loans for such Interest Period.
"EURODOLLAR RESERVE REQUIREMENT" shall mean, for any Eurodollar Loans
for any Interest Period therefor, the average maximum rate at which reserves
(including any marginal, supplemental or emergency reserves) are required to be
maintained during such Interest Period under Regulation D by member banks of the
Federal Reserve System in New York City with deposits exceeding one billion
Dollars against "Eurocurrency liabilities" (as such term is used in Regulation
D).
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Without limiting the effect of the foregoing, the Eurodollar Reserve Requirement
shall reflect any other reserves required to be maintained by such member banks
by reason of any Regulatory Change against (i) any category of liabilities which
includes deposits by reference to which the Eurodollar Rate is to be determined
as provided in the definition of "Eurodollar Base Rate" in this Section 1.01 or
(ii) any category of extensions of credit or other assets which include
Eurodollar Loans.
"EVENT OF DEFAULT" shall have the meaning assigned to such term in
Section 10.01 hereof.
"FEDERAL FUNDS RATE" shall mean, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100th of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day, provided that (a) if such day is not a Business Day,
the Federal Funds Rate for such day shall be such rate on such transactions on
the next preceding Business Day as so published on the next succeeding Business
Day, and (b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate charged to
Chase on such day on such transactions as determined by the Administrative
Agent.
"FIXED RATE LOANS" shall mean CD Loans or Eurodollar Revolving Loans or
both, as the context may require, and for purposes of Section 6 hereof only,
shall also mean Eurodollar Competitive Loans.
"GAAP" shall mean generally accepted accounting principles as in effect
from time to time in the United States consistently applied.
"GUARANTY" by any Person shall mean any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Indebtedness
of any other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness (whether arising by virtue of partnership arrangements, by
agreement to keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions or otherwise, other
than agreements to purchase goods at an arm's length price in the ordinary
course of business) or (ii) entered into for the purpose of assuring in any
other manner the holder of such Indebtedness of the payment thereof or to
protect such holder against loss in respect thereof (in whole or in part),
provided that the term Guaranty shall not include endorsements for collection or
deposit in the ordinary course of business. The term "Guarantee" used as a verb
has a corresponding meaning.
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"HAZARDOUS SUBSTANCES" shall mean any toxic, radioactive, caustic or
otherwise hazardous substance, including petroleum, its derivatives, by-products
and other hydrocarbons, or any substance having constituent elements displaying
any of the foregoing characteristics, regulated under Environmental Laws.
"INDEBTEDNESS" shall mean, as to any Person (determined without
duplication): (i) indebtedness of such Person for borrowed money (whether by
loan or the issuance and sale of debt securities) or for the deferred purchase
or acquisition price of property or services, other than accounts payable (other
than for borrowed money) incurred in the ordinary course of business; (ii)
obligations of such Person in respect of letters of credit or similar
instruments issued or accepted by banks and other financial institutions for the
account of such Person (whether or not such obligations are contingent); (iii)
Capital Lease Obligations of such Person; (iv) obligations of such Person to
redeem or otherwise retire shares of capital stock of such Person; (v)
indebtedness of others of the type described in clause (i), (ii), (iii) or (iv)
above secured by a Lien on the property of such Person, whether or not the
respective obligation so secured has been assumed by such Person; and (vi)
indebtedness of others of the type described in clause (i), (ii), (iii) or (iv)
above Guaranteed by such Person.
"INTEREST EXPENSE" shall mean, for any period, the sum (determined
without duplication) of the aggregate amount of interest accruing during such
period on Indebtedness of the Company and its Subsidiaries (on a consolidated
basis), including the interest portion of payments under Capital Lease
Obligations and any capitalized interest, and excluding amortization of debt
discount and expense.
"INTEREST PERIOD" shall mean,
(1) with respect to any Eurodollar Loans, the period commencing on the
date such Loans are made or converted from other types of Loans or the last day
of the next preceding Interest Period with respect to such Loans and ending on
the numerically corresponding day in the first, second (subject to the
availability of deposits of the corresponding maturity to each of the Lenders in
the London interbank market), third or sixth calendar month thereafter, as the
Company may select as provided in Section 5.05 hereof, except that each such
Interest Period which commences on the last Business Day of a calendar month (or
on any day for which there is no numerically corresponding day in the
appropriate subsequent calendar month) shall end on the last Business Day of the
appropriate subsequent calendar month;
(2) with respect to any CD Loans, the period commencing on the date
such Loans are made or converted from other Types of Loans or the last day of
the next preceding Interest Period with respect to such Loans and ending on the
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day 30, 60, 90 or 180 days thereafter, as the Company may select as provided in
Section 5.05 hereof; and
(3) with respect to any Absolute Rate Competitive Loans, the period
(which shall not be less than seven days or more than 360 days) commencing on
the date such Loans are made and ending on the date specified in the applicable
Competitive Bid Request.
Notwithstanding the foregoing: (i) each Interest Period which would
otherwise end on a day which is not a Business Day shall end on the next
succeeding Business Day (or, in the case of an Interest Period for Eurodollar
Loans, if such next succeeding Business Day falls in the next succeeding
calendar month, on the next preceding Business Day); and (ii) no Interest Period
for any Fixed Rate Loans shall have a duration of less than one month (in the
case of Eurodollar Loans) or 30 days (in the case of CD Loans) and, if the
Interest Period for any Fixed Rate Loan would otherwise be a shorter period,
such Loans shall not be available hereunder.
"INVESTMENTS" shall have the meaning assigned to such term in Section
9.12 hereof.
"LIEN" shall mean, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset. For the purposes of this Agreement, the Company and each of its
Subsidiaries shall be deemed to own subject to a Lien any asset which it has
acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
relating to such asset.
"LIQUID INVESTMENTS" shall mean (i) certificates of deposit maturing
within 90 days of the acquisition thereof denominated in Dollars and issued by
(X) a Lender or (Y) a bank or trust company having combined capital and surplus
of at least $500,000,000 and which has (or which is a Subsidiary of a bank
holding company which has) publicly traded debt securities rated A- or higher by
Standard & Poor's Corporation or A-3 or higher by Moody's Investors Service,
Inc.; (ii) obligations issued or guaranteed by the United States of America,
with maturities not more than one year after the date of issue; and (iii)
commercial paper with maturities of not more than 90 days and a published rating
of not less than A-1 from Standard & Poor's Corporation or P-1 from Moody's
Investors Service, Inc.
"LOANS" shall mean the loans made by the Lenders to the Company
pursuant to this Agreement.
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"MAJORITY LENDERS" shall mean, at any time while no Revolving Loans are
outstanding, Lenders having at least 51% of the aggregate amount of the
Commitments and, at any time while Revolving Loans are outstanding, Lenders
holding at least 51% of the outstanding aggregate principal amount of the
Revolving Loans; provided that for purposes of declaring the Loans to be due and
payable pursuant to Section 10.01 and for all purposes after the Loans become
due and payable pursuant to Section 10.01 hereof or the Commitments terminate,
the outstanding principal amount of the Competitive Loans shall be added to the
outstanding principal amount of the Revolving Loans in determining the Majority
Lenders.
"MATERIAL ADVERSE EFFECT" means (i) a material adverse effect on the
condition (financial or otherwise), results of operations, properties, assets,
liabilities (including, without limitation, tax and ERISA liabilities and
Environmental Liabilities), business, operations, capitalization, shareholders'
equity, franchises or prospects of the Company and its Subsidiaries, taken as a
whole; or (ii) a material adverse effect on the ability of the Company to
perform its obligations under the Credit Agreement or the Notes.
"MULTIEMPLOYER PLAN" shall mean at any time an employee pension benefit
plan within the meaning of Section 4001(a)(3) of ERISA to which the Company or
any member of the Controlled Group is then making or accruing an obligation to
make contributions or has within the preceding five plan years made
contributions, including for these purposes any Person which ceased to be a
member of the Controlled Group during such five year period.
"NOTES" shall have the meaning assigned to such term in Section 2.06
hereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"PERSON" shall mean an individual, a corporation, a company, a
voluntary association, a partnership, a trust, an unincorporated organization or
a government or any agency, instrumentality or political subdivision thereof.
"PLAN" shall mean an employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Code and either (i) is
maintained or contributed to, by the Company or any member of the Controlled
Group for employees of the Company or any member of the Controlled Group or (ii)
has at any time within the preceding five years been maintained, or contributed
to, by the Company or any Person which was at such time a member of the
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Controlled Group for employees of any Person which was at such time a member of
the Controlled Group.
"POST-DEFAULT RATE" shall mean, in respect of any principal of any Loan
or any other amount payable by the Company under this Agreement, a rate per
annum equal to the sum of 2% plus the higher of (i) the Base Rate as in effect
from time to time PLUS the Applicable Margin for Base Rate Loans and (ii) in the
case of any Loan, the rate of interest (if any) otherwise applicable to such
Loan.
"PRICING SCHEDULE" shall mean the Pricing Schedule attached hereto.
"PRIME RATE" shall mean the rate of interest from time to time
announced by Chase at the Principal Office as its prime commercial lending rate.
Each change in the interest rate provided for herein resulting from a change in
the Prime Rate shall take effect at the time of such change in the Prime Rate.
"PRINCIPAL OFFICE" shall mean the principal office of Chase, presently
located at 1 Chase Manhattan Plaza, New York, New York 10081.
"QUARTERLY DATES" shall mean the last Business Day of each March, June,
September and December.
"REFERENCE LENDERS" shall mean each of National City Bank, The First
National Bank of Chicago and Chase.
"REGULATION D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System as the same may be amended or supplemented from time to
time.
"REGULATORY CHANGE" shall mean, with respect to any Lender, any change
on or after the date of this Agreement in United States federal, state or
foreign laws or regulations (including Regulation D) or the adoption or making
on or after such date of any interpretations, directives or requests applying to
a class of lenders including such Lender of or under any United States federal
or state, or any foreign, laws or regulations (whether or not having the force
of law) by any court or governmental or monetary authority charged with the
interpretation or administration thereof.
"RELEASE" shall mean any discharge, emission or release, including a
"Release" as defined in CERCLA at 42 U.S.C. Section 9601(22). The term
"Released" shall have a corresponding meaning.
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"REVOLVING CREDIT PERIOD" shall mean the period from and including the
date hereof to but not including February 3, 2002.
"REVOLVING LOAN" shall mean a Loan made pursuant to Section 2.01(a)
hereof.
"SENIOR OFFICER" shall mean the chief executive officer, president,
chief financial officer or vice president-finance and treasurer of the Company.
"SIGNIFICANT SUBSIDIARY" shall mean at any time any Subsidiary of the
Company, except Subsidiaries of the Company which, if aggregated and considered
as a single Subsidiary at the time of occurrence with respect to such
Subsidiaries of any event or condition of the kind described in clause (e), (f)
or (g) of Section 10.01, would not meet the definition of a "significant
subsidiary" contained as of the date hereof in Regulation S-X of the Securities
and Exchange Commission.
"SUBSIDIARY" shall mean, with respect to any Person, any corporation of
which at least a majority of the outstanding shares of stock having by the terms
thereof ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether or not at the time stock of any other
class or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time directly or
indirectly owned or controlled by such Person or one or more of the Subsidiaries
of such Person or by such Person and one or more of the Subsidiaries of such
Person.
"TYPE" shall have the meaning assigned to such term in Section 1.03
hereof.
"UNFUNDED LIABILITIES" shall mean, with respect to any Plan, at any
time, the amount (if any) by which (i) the value of all benefits liabilities
under such Plan, determined on a plan termination basis using the assumptions
prescribed by the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the
fair market value of all Plan assets allocable to such benefits under Title IV
of ERISA (excluding any accrued but unpaid contributions), all determined as of
the then most recent valuation date for such Plan, but only to the extent that
such excess represents a potential liability of the Company or any member of the
Controlled Group to the PBGC or any other Person under Title IV of ERISA.
1.02 Accounting Terms and Determinations. Unless otherwise specified
herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all financial statements and certificates and reports as to financial matters
required to be
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delivered hereunder shall be prepared, in accordance with GAAP; provided that if
any change in GAAP in itself materially affects the calculation of any financial
covenant in Section 9, the Company may by notice to the Administrative Agent, or
the Administrative Agent (at the request of the Majority Lenders) may by notice
to the Company, require that such covenant thereafter be calculated in
accordance with GAAP as in effect, and applied by the Company, immediately
before such change in GAAP occurs. If such notice is given, the compliance
certificates delivered pursuant to Section 9.01 after such change occurs shall
be accompanied by reconciliations of the difference between the calculation set
forth therein and a calculation made in accordance with GAAP as in effect from
time to time after such change occurs. To enable the ready determination of
compliance with the covenants set forth in Section 9 hereof, the Company will
not change from May 31 in each year the date on which its fiscal year ends, nor
from August 31, November 30 and February 28 the dates on which the first three
fiscal quarters in each fiscal year end.
1.03 Class and Types of Loans. Loans hereunder are distinguished by
"Class" and "Type". The "Class" of a Loan refers to whether such Loan is a
Revolving Loan or a Competitive Loan. The "Type" of a Loan refers to whether
such Loan is a Eurodollar Loan, a CD Loan or a Base Rate Loan or, in the case of
a Competitive Loan, a Eurodollar Loan or an Absolute Rate Loan. Thus, for
example, a "Eurodollar Competitive Loan" is a Competitive Loan which is also a
Eurodollar Loan.
SECTION 2. Commitments.
2.01 Loans.
(a) Revolving Loans. Each Lender severally agrees, on the terms and
subject to the conditions of this Agreement, to make Revolving Loans from time
to time during the Revolving Credit Period to the Company in an aggregate
principal amount at any one time outstanding which shall not (i) exceed its
Commitment, as reduced from time to time pursuant to Section 2.02 hereof or (ii)
result in the aggregate principal amount of Loans exceeding the aggregate amount
of the Commitments, as so reduced from time to time.
(b) Competitive Loans. In addition to Revolving Loans, the Company may
from time to time during the Revolving Credit Period request the Lenders to make
offers to make Competitive Loans to the Company as set forth in Section 3.03.
The Lenders may, but shall have no obligation to, make such offers and the
Company may, but shall have no obligation to, accept any such offers; provided
that the aggregate principal amount of all Loans shall not at any time exceed
the
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aggregate amount of the Commitments, as reduced from time to time pursuant to
Section 2.02 hereof.
2.02 Reductions of Commitments.
(a) Mandatory. The Commitments shall terminate on the last day of the
Revolving Credit Period; provided, that if the Closing Date shall not have
occurred by March 31, 1997, the Commitments shall terminate on such date.
(b) Optional. The Company shall have the right to terminate or reduce
the Commitments at any time or from time to time, provided that: (i) the Company
shall give notice of each such termination or reduction to the Administrative
Agent as provided in Section 5.05 hereof and (ii) each partial reduction shall
be in an aggregate amount equal to $10,000,000 or any greater multiple of
$5,000,000.
(c) No Reinstatement. Commitments once terminated or reduced may not
be reinstated.
2.03 Fees.
(a) Facility Fees. The Company shall pay to the Administrative Agent
for the account of each Lender facility fees on the daily average amount of such
Lender's Commitment (whether used or unused), for the period from the Closing
Date to but excluding the earlier of the date the Commitments are terminated or
the last day of the Revolving Credit Period, at a facility fee rate per annum
determined in accordance with the Pricing Schedule; provided that, if such
Lender continues to have any Revolving Loans outstanding after its Commitment
terminates, then such facility fee shall continue to accrue on the daily
outstanding principal amount of such Lender's Revolving Loans from and including
the date on which its Commitment terminates to but excluding the date on which
such Lender ceases to have any Revolving Loans outstanding. Accrued facility
fees shall be payable on the Quarterly Dates and on the earlier of the date the
Commitments are terminated or the last day of the Revolving Credit Period;
provided that any facility fees accruing after the date on which the Commitments
terminate shall be payable on demand.
(b) Other Fees. The Company shall pay to the Administrative Agent on
the Closing Date other fees in the amounts heretofore mutually agreed. The
Company shall pay to the Administrative Agent on the Closing Date and on each
anniversary thereof, so long as any of the Commitments are in effect and until
payment in full of all Loans hereunder, all interest thereon and all other
amounts payable hereunder, an annual administrative agency fee in the amount
heretofore mutually agreed.
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2.04 Lending Offices. The Loans of each Type made by each Lender shall
be made and maintained at such Lender's Applicable Lending Office for Loans of
such Type.
2.05 Several Obligations. The failure of any Lender to make any Loan to
be made by it on the date specified therefor shall not relieve any other Lender
of its obligation to make its Loan on such date, but neither the Administrative
Agent nor any Lender shall be responsible for the failure of any other Lender to
make a Loan to be made by such other Lender.
2.06 Notes. The Loans made by each Lender shall be evidenced by a
single Note of the Company (each a "NOTE") in substantially the form of Exhibit
A hereto, dated the Closing Date, payable to the order of such Lender in an
amount equal to the aggregate unpaid principal amount of such Lender's Loans and
otherwise duly completed. Each Lender may, by notice to the Company and the
Administrative Agent, request that its Loans of a particular Class or Type be
evidenced by a separate Note in an amount equal to the aggregate unpaid
principal amount of such Loans. Each such Note shall be in substantially the
form of Exhibit A hereto with appropriate modifications to reflect the fact that
it evidences solely Loans of the relevant Class or Type. Each reference in this
Agreement to the "Note" of such Lender shall be deemed to refer to and include
any or all of such Notes, as the context may require. Each Lender is hereby
authorized by the Company to endorse on the schedule (or a continuation thereof)
attached to each Note of such Lender, to the extent applicable, the date, amount
and Class or Type of and the Interest Period (if any) for each Loan made by such
Lender to the Company hereunder, and the date and amount of each payment or
prepayment of principal of such Loan received by such Lender, provided that any
failure by such Lender to make any such endorsement or any error in such
endorsement shall not affect the obligations of the Company under such Note or
hereunder in respect of such Loan.
2.07 Use of Proceeds. The proceeds of the Loans shall be used by the
Company to refinance certain existing indebtedness, to finance the consummation
of the Acquisition and for working capital and other general corporate purposes.
None of such proceeds shall be used, directly or indirectly, for the purpose,
whether immediate, incidental or ultimate, of buying or carrying any margin
stock (within the meaning of Regulation U or X of the Board of Governors of the
Federal Reserve System).
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SECTION 3. Borrowings, Conversions and Prepayments.
3.01 Borrowings.
(a) Revolving Loans. The Company shall give the Administrative Agent
notice of each borrowing of Revolving Loans to be made hereunder as provided in
Section 5.05 hereof. Not later than 11:00 a.m. (or, in the case of Base Rate
Loans, 1:00 p.m.) New York time on the date specified for each such borrowing
hereunder, each Lender shall make available the amount of the Revolving Loan to
be made by it on such date to the Administrative Agent, at the Principal Office,
in immediately available funds, for the account of the Company. The amount so
received by the Administrative Agent shall, subject to the terms and conditions
of this Agreement, be made available to the Company by depositing the same, in
immediately available funds, in an account designated by the Company maintained
with the Administrative Agent at the Principal Office.
(b) Competitive Loans. Requests by the Company of offers to make
Competitive Loans shall be made as provided in Section 3.03.
3.02 Prepayments and Conversions.
(a) Optional Prepayments and Conversions. The Company shall have the
right to prepay Revolving Loans or to convert Revolving Loans of one Type into
Revolving Loans of another Type, at any time or from time to time, provided
that: (i) the Company shall give the Administrative Agent notice of each such
prepayment or conversion as provided in Section 5.05 hereof, and (ii) except to
the extent required pursuant to Section 6.04 hereof, Fixed Rate Loans may be
prepaid or converted only on the last day of an Interest Period for such Loans.
The Company may not prepay Competitive Loans or convert Competitive Loans from
one Type to a different Type, except that the Company may prepay Competitive
Loans to the extent required pursuant to Section 3.02(b).
(b) Mandatory Prepayments. On the date of each reduction of Commitments
pursuant to Section 2.02(b), the Company shall prepay Loans, together with
accrued interest on the principal amount prepaid, to the extent (if any)
required so that the aggregate principal amount of Loans outstanding immediately
after such prepayment will not exceed the aggregate amount of the Commitments
after giving effect to such reduction. Any prepayment pursuant to this
subsection (b) shall be applied, FIRST, to Revolving Loans and SECOND, to
Competitive Loans, pro rata.
3.03 Competitive Bid Procedure. (a) Subject to the terms and conditions
set forth herein, from time to time during the Revolving Credit Period
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the Company may request Competitive Bids and may (but shall not have any
obligation to) accept Competitive Bids and borrow Competitive Loans; provided
that the aggregate principal amount of outstanding Loans at any time shall not
exceed the total Commitments. To request Competitive Bids, the Company shall
notify the Administrative Agent of such request by telephone, in the case of a
Eurodollar borrowing, not later than 11:00 a.m., New York City time, four
Business Days before the date of the proposed borrowing, and, in the case of an
Absolute Rate borrowing, not later than 10:00 a.m., New York City time, one
Business Day before the date of the proposed borrowing; provided that the
Company may submit up to (but not more than) three Competitive Bid Requests on
the same day, but a Competitive Bid Request shall not be made within five
Business Days after the date of any previous Competitive Bid Request, unless any
and all such previous Competitive Bid Requests shall have been withdrawn or all
Competitive Bids received in response thereto rejected. Each such telephonic
Competitive Bid Request shall be confirmed promptly by hand delivery or telecopy
to the Administrative Agent of a written Competitive Bid Request in a form
approved by the Administrative Agent and signed by the Company. Each such
telephonic and written Competitive Bid Request shall specify the following
information:
(i) the aggregate amount of the requested borrowing;
(ii) the date of such borrowing, which shall be a Business
Day;
(iii) whether such borrowing is to be a Eurodollar borrowing
or a Absolute Rate borrowing; and
(iv) the Interest Period to be applicable to such borrowing,
which shall be a period contemplated by the definition of the term
"Interest Period".
Promptly following receipt of a Competitive Bid Request in accordance
with this Section, the Administrative Agent shall notify the Lenders of the
details thereof by telecopy, inviting the Lenders to submit Competitive Bids.
(b) Each Lender may (but shall not have any obligation to) make one or
more Competitive Bids to the Company in response to a Competitive Bid Request.
Each Competitive Bid by a Lender must be in a form approved by the
Administrative Agent and must be received by the Administrative Agent by
telecopy, in the case of a Eurodollar borrowing, not later than 10:00 a.m., New
York City time, three Business Days before the proposed date of such borrowing,
and in the case of an Absolute Rate borrowing, not later than 10:00 a.m., New
York City time, on the proposed date of such borrowing. Competitive Bids that
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do not conform substantially to the form approved by the Administrative Agent
may be rejected by the Administrative Agent, and the Administrative Agent shall
notify the applicable Lender as promptly as practicable. Each Competitive Bid
shall specify (i) the principal amount (which shall be a minimum of $5,000,000
and an integral multiple of $1,000,000 and which may equal the entire principal
amount of the borrowing requested by the Company) of the Competitive Loan or
Loans that the Lender is willing to make, (ii) the Competitive Bid Rate or Rates
at which the Lender is prepared to make such Loan or Loans (expressed as a
percentage rate per annum in the form of a decimal to no more than four decimal
places) and (iii) the Interest Period applicable to each such Loan and the last
day thereof.
(c) The Administrative Agent shall promptly notify the Company by
telecopy of the Competitive Bid Rate and the principal amount specified in each
Competitive Bid and the identity of the Lender that shall have made such
Competitive Bid.
(d) Subject only to the provisions of this paragraph, the Company may
accept or reject any Competitive Bid. The Company shall notify the
Administrative Agent by telephone, confirmed by telecopy in a form approved by
the Administrative Agent, whether and to what extent it has decided to accept or
reject each Competitive Bid, in the case of a Eurodollar borrowing, not later
than 11:00 a.m., New York City time, three Business Days before the date of the
proposed Borrowing, and in the case of an Absolute Rate borrowing, not later
than 11:00 a.m., New York City time, on the proposed date of the borrowing;
provided that (i) the failure of the Company to give such notice shall be deemed
to be a rejection of each Competitive Bid, (ii) the Company shall not accept a
Competitive Bid made at a particular Competitive Bid Rate if the Company rejects
a Competitive Bid made at a lower Competitive Bid Rate, (iii) the aggregate
amount of the Competitive Bids accepted by the Company shall not exceed the
aggregate amount of the requested Competitive borrowing specified in the related
Competitive Bid Request, (iv) to the extent necessary to comply with clause
(iii) above, the Company may accept Competitive Bids at the same Competitive Bid
Rate in part, which acceptance, in the case of multiple Competitive Bids at such
Competitive Bid Rate, shall be made pro rata in accordance with the amount of
each such Competitive Bid, and (v) except pursuant to clause (iv) above, no
Competitive Bid shall be accepted for a Competitive Loan unless such Competitive
Loan is in a minimum principal amount of $5,000,000 and an integral multiple of
$1,000,000; provided further that if a Competitive Loan must be in an amount
less than $5,000,000 because of the provisions of clause (iv) above, such
Competitive Loan may be for a minimum of $1,000,000 or any integral multiple
thereof, and in calculating the pro rata allocation of acceptances of portions
of multiple Competitive Bids at a particular Competitive Bid Rate pursuant to
clause (iv) the amounts shall be rounded to integral multiples of $1,000,000 in
a manner
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determined by the Company. A notice given by the Company pursuant to this
paragraph shall be irrevocable.
(e) The Administrative Agent shall promptly notify each bidding Lender
by telephone (to be followed by telecopy) whether or not its Competitive Bid has
been accepted (and, if so, the amount and Competitive Bid Rate so accepted), and
each successful bidder will thereupon become bound, subject to the terms and
conditions hereof, to make the Competitive Loan in respect of which its
Competitive Bid has been accepted.
(f) If the Administrative Agent shall elect to submit a Competitive Bid
in its capacity as a Lender, it shall submit such Competitive Bid directly to
the Company at least one quarter of an hour earlier than the time by which the
other Lenders are required to submit their Competitive Bids to the
Administrative Agent pursuant to subsection (b) of this Section.
SECTION 4. Payments of Principal and Interest.
4.01 Repayment of Loans. (a) The Revolving Loans shall mature on the
last day of the Revolving Credit Period.
(b) Each Competitive Loan shall mature on the last day of the Interest
Period applicable thereto.
4.02 Interest. The Company will pay to the Administrative Agent for the
account of each Lender interest on the unpaid principal amount of each Loan made
by such Lender for the period commencing on the date of such Loan to but
excluding the date such Loan shall be paid in full, at the following rates per
annum:
(a) if such Loan is a Base Rate Loan, the Base Rate PLUS the Applicable
Margin;
(b) if such Loan is a Eurodollar Revolving Loan, the Eurodollar Rate
PLUS the Applicable Margin;
(c) if such Loan is a CD Loan, the Adjusted CD Rate PLUS the Applicable
Margin;
(d) if such Loan is a Eurodollar Competitive Loan, the Eurodollar Rate
PLUS (or MINUS) the Competitive Margin quoted by the Lender making such Loan in
accordance with Section 3.03 hereof; and
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(e) if such Loan is an Absolute Rate Loan, the Absolute Rate for such
Loan for the Interest Period therefor quoted by the Lender making such Loan in
accordance with Section 3.03 hereof.
Notwithstanding any of the foregoing, the Company will pay to the
Administrative Agent for the account of each Lender interest at the applicable
Post-Default Rate on the principal of any Loan made by such Lender and on any
other amount payable by the Company hereunder to or for the account of such
Lender (but, if such amount is interest, only to the extent legally
enforceable), which shall not be paid in full when due (whether at stated
maturity, by acceleration or otherwise) for the period commencing on the due
date thereof until the same is paid in full.
Accrued interest on each Loan shall be payable (i) if such Loan is a
Base Rate Loan, on each Quarterly Date, (ii) if such Loan is a Fixed Rate Loan
or Competitive Loan, on the last day of the Interest Period for such Loan (and,
if such Interest Period exceeds 90 days' (in the case of a CD Loan or Absolute
Rate Loan) or three months' (in the case of a Eurodollar Loan) duration,
quarterly, commencing on the first quarterly anniversary of the first day of
such Interest Period), and (iii) in any event, upon the payment, prepayment or
conversion thereof, but only on the principal so paid or prepaid or converted;
provided that interest payable at the Post-Default Rate shall be payable from
time to time on demand of the Administrative Agent or the Majority Lenders.
Promptly after the determination of any interest rate provided for herein or any
change therein, the Administrative Agent shall notify the Lenders and the
Company thereof.
Notwithstanding the foregoing provisions of this Section 4.02, if at
any time the rate of interest set forth above on any Loan of or other obligation
payable to any Lender (the "STATED RATE") exceeds the maximum non-usurious
interest rate permissible for such Lender to charge commercial borrowers under
applicable law (the "MAXIMUM RATE" for such Lender), the rate of interest
charged on such Loan of or other obligation payable to such Lender hereunder
shall be limited to the Maximum Rate for such Lender.
If the Stated Rate for any Loan of a Lender that has theretofore been
subject to the preceding paragraph at any time is less than the Maximum Rate for
such Lender, the principal amount of such Loan shall bear interest at the
Maximum Rate for such Lender until the total amount of interest paid to such
Lender or accrued on its Loans hereunder equals the amount of interest which
would have been paid to such Lender or accrued on such Lender's Loans hereunder
if the Stated Rate had at all times been in effect.
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If, upon payment in full of all amounts payable hereunder, the total
amount of interest paid to any Lender or accrued on such Lender's Loans under
the terms of this Agreement is less than the total amount of interest which
would have been paid to such Lender or accrued on such Lender's Loans if the
Stated Rate had, at all times, been in effect, then the Company shall, to the
extent permitted by applicable law, pay to the Administrative Agent for the
account of such Lender an amount equal to the difference between (a) the lesser
of (i) the amount of interest which would have accrued on such Lender's Loans if
the Maximum Rate for such Lender had at all times been in effect or (ii) the
amount of interest which would have accrued on such Lender's Loans if the Stated
Rate had at all times been in effect and (b) the amount of interest actually
paid to such Lender or accrued on its Loans under this Agreement.
If any Lender ever receives, collects or applies as interest any sum in
excess of the Maximum Rate for such Lender, such excess amount shall be applied
to the reduction of the principal balance of its Loans or to other amounts
(other than interest) payable hereunder, and if no such principal is then
outstanding, such excess or part thereof remaining shall be paid to the Company.
SECTION 5. Payments; Pro Rata Treatment; Computations; Etc.
5.01 Payments. Except to the extent otherwise provided herein, all
payments of principal, interest and other amounts to be made by the Company
hereunder and under the Notes shall be made in Dollars, in immediately available
funds, to the Administrative Agent at the Principal Office, not later than 11:00
a.m. New York time on the date on which such payment shall become due (each such
payment made after such time on such due date to be deemed to have been made on
the next succeeding Business Day). The Administrative Agent, or any Lender for
whose account any such payment is made, may (but shall not be obligated to)
debit the amount of any such payment which is not made by such time to any
ordinary deposit account of the Company with the Administrative Agent or such
Lender, as the case may be. The Company shall, at the time of making each
payment hereunder or under any Note, specify to the Administrative Agent the
Loans or other amounts payable by the Company hereunder to which such payment is
to be applied (and in the event that it fails to so specify, or if an Event of
Default has occurred and is continuing, the Administrative Agent may apply such
payment as it may elect in its sole discretion to amounts then due, but subject
to the other terms and conditions of this Agreement, including, without
limitation, Section 5.02 hereof). Each payment received by the Administrative
Agent hereunder or under any Note for the account of a Lender shall be paid
promptly to such Lender, in immediately available funds, for the account of such
Lender's Applicable Lending Office. If the due date of any payment hereunder or
under any Note would otherwise fall on a day which is not a Business Day such
date shall be
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extended to the next succeeding Business Day and interest shall be payable for
any principal so extended for the period of such extension.
5.02 Pro Rata Treatment. Except to the extent otherwise provided
herein: (a) each borrowing from the Lenders under Section 2.01(a) hereof shall
be made from the Lenders, each payment of facility fees under Section 2.03
hereof shall be made for the account of the Lenders, and each termination or
reduction of the Commitments under Section 2.02 hereof shall be applied to the
Commitments of the Lenders, pro rata according to the Lenders' respective
percentages of the Commitments; (b) each payment by the Company of principal of
or interest on Revolving Loans of a particular Type (other than payments in
respect of Revolving Loans of individual Lenders provided for by Section 6
hereof) shall be made to the Administrative Agent for the account of the Lenders
pro rata in accordance with the respective unpaid principal amounts of such
Revolving Loans held by the Lenders; and (c) each conversion of Revolving Loans
of a particular Type (other than conversions of Revolving Loans of individual
Lenders pursuant to Section 6.04 hereof) shall be made pro rata among the
Lenders in accordance with the respective principal amounts of such Revolving
Loans held by the Lenders.
5.03 Computations. Interest and fees shall be computed on the basis of
a year of 360 days and actual days elapsed, except that interest on Base Rate
Loans when the Base Rate is based on the Prime Rate shall be computed on the
basis of a year of 365 or 366 days and actual days elapsed (in each case,
including the first day but excluding the last day), in the period for which
payable.
5.04 Minimum and Maximum Amounts; Types. Each borrowing, conversion and
prepayment of principal of Revolving Loans shall be in an aggregate principal
amount equal to (a) in the case of Eurodollar Loans, $5,000,000 or any larger
multiple of $1,000,000, (b) in the case of CD Loans, $10,000,000 or any larger
multiple of $1,000,000, and (c) in the case of Base Rate Loans, at least
$5,000,000, except that any borrowing of Revolving Loans may be in the aggregate
amount of the unused portion of the Commitments (borrowings, conversions or
prepayments of Revolving Loans of different Types or, in the case of Fixed Rate
Loans, having different Interest Periods, at the same time hereunder to be
deemed separate borrowings, conversions and prepayments for purposes of the
foregoing, one for each Type or Interest Period). Notwithstanding anything to
the contrary contained in this Agreement there shall not be, at any one time,
more than six Interest Periods in effect with respect to Fixed Rate Loans.
5.05 Certain Notices. Except as specified in Section 3.03 with respect
to Competitive Loans, notices to the Administrative Agent of terminations or
reductions of Commitments, of borrowings, conversions and prepayments of Loans
and of the duration of Interest Periods shall be irrevocable and shall be
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<PAGE> 29
effective only if received by the Administrative Agent not later than 12:00 noon
(or, in the case of borrowings or prepayments of Base Rate Loans, 10:30 a.m.)
New York time on the number of Business Days prior to the date of the relevant
termination, reduction, borrowing, conversion and/or prepayment specified below:
Number of
Business
NOTICE DAYS PRIOR
------ ----------
Termination or reduction of Commitments 3
Borrowing or prepayment of Base Rate
Loans 0
Borrowing or prepayment of, conversion of
or into, or duration of Interest Period
for, Fixed Rate Loans 3
Each notice of termination or reduction shall specify the amount of the
Commitments to be terminated or reduced. Each notice of borrowing, conversion or
prepayment shall specify the amount and Type of the Loans to be borrowed,
converted or prepaid (subject to Sections 3.02 and 5.04 hereof), the date of
borrowing, conversion or prepayment (which shall be a Business Day) and, in the
case of Fixed Rate Loans, the duration of the Interest Period therefor (subject
to the definition of Interest Period). Each such notice of duration of an
Interest Period shall specify the Loans to which such Interest Period is to
relate. The Administrative Agent shall promptly notify the affected Lenders of
the contents of each such notice. In the event that the Company fails to select
the duration of any Interest Period for any Fixed Rate Loans within the time
period and otherwise as provided in this Section 5.05, such Loans (if
outstanding as Fixed Rate Loans) will be automatically converted into Base Rate
Loans on the last day of the then current Interest Period for such Loans or (if
outstanding as Base Rate Loans) will remain as, or (if not then outstanding)
will be made as, Base Rate Loans.
5.06 Non-Receipt of Funds by the Administrative Agent. Unless the
Administrative Agent shall have been notified by a Lender or the Company (the
"PAYOR") prior to the date on (or, in the case of Base Rate Loans, prior to the
time by) which such Lender is to make payment to the Administrative Agent of the
proceeds of a Loan to be made by it hereunder or the Company is to make a
payment to the Administrative Agent for the account of one or more of the
Lenders, as the case may be (such payment being herein called the "REQUIRED
PAYMENT"), which notice shall be effective upon receipt, that the Payor does not
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<PAGE> 30
intend to make the Required Payment to the Administrative Agent, the
Administrative Agent may assume that the Required Payment has been made and may,
in reliance upon such assumption (but shall not be required to), make the amount
thereof available to the intended recipient on such date (or at such time) and,
if the Payor has not in fact made the Required Payment to the Administrative
Agent, the recipient of such payment shall, on demand, pay to the Administrative
Agent the amount made available to it together with interest thereon in respect
of the period commencing on the date such amount was so made available by the
Administrative Agent until the date the Administrative Agent receives such
amount at a rate per annum equal to the Federal Funds Rate for such period.
5.07 Sharing of Payments, Etc. The Company agrees that, in addition to
(and without limitation of) any right of set-off, bankers' lien or counterclaim
a Lender may otherwise have, each Lender shall be entitled, at its option, to
offset balances held by it for the account of the Company at any of its offices,
in Dollars or in any other currency, against any principal of or interest on any
of such Lender's Loans to the Company hereunder which is not paid when due
(regardless of whether such balances are then due to the Company), in which case
it shall promptly notify the Company and the Administrative Agent thereof,
provided that such Lender's failure to give such notice shall not affect the
validity thereof. If a Lender shall obtain payment of any principal of or
interest on any Revolving Loan made by it under this Agreement, through the
exercise of any right of set-off, banker's lien, counterclaim or similar right,
or otherwise, it shall promptly purchase from the other Lenders participations
in the Revolving Loans made by the other Lenders in such amounts, and make such
other adjustments from time to time as shall be equitable, to the end that all
the Lenders shall share the benefit of such payment (net of any expenses which
may be incurred by such Lender in obtaining or preserving such benefit) pro rata
in accordance with the unpaid principal and interest on the Revolving Loans then
due to each of them. To such end all the Lenders shall make appropriate
adjustments among themselves (by the resale of participations sold or otherwise)
if such payment is rescinded or must otherwise be restored. The Company agrees,
to the fullest extent it may effectively do so under applicable law, that any
Person purchasing a participation in the Loans made by another Person, whether
or not acquired pursuant to the foregoing arrangements, may exercise all rights
of set-off, bankers' lien, counterclaim or similar rights with respect to such
participation as fully as if such Lender were a direct holder of Loans or other
obligations in the amount of such participation. Nothing contained herein shall
require any Lender to exercise any such right or shall affect the right of any
Lender to exercise, and retain the benefits of exercising, any such right with
respect to any other indebtedness or obligation of the Company.
5.08 Taxes. (a) Any and all payments by the Company hereunder shall be
made, in accordance with Section 5.01, free and clear of and without deduction
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for any and all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding, in the case
of each Lender and the Administrative Agent, taxes imposed on its income, and
franchise taxes imposed on it, by the jurisdiction under the laws of which such
Lender or the Administrative Agent (as the case may be) is organized or any
political subdivision thereof and, in the case of each Lender, taxes imposed on
its income, and franchise taxes imposed on it, by the jurisdiction of such
Lender's Applicable Lending Office or any political subdivision thereof (all
such non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "TAXES"). If the Company shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder to any Lender or the Administrative Agent, (i) except as provided in
subsection (g) below, the sum payable shall be increased as may be necessary so
that after making all required deductions (including deductions applicable to
additional sums payable under this Section 5.08), such Lender or the
Administrative Agent (as the case may be) receives an amount equal to the sum it
would have received had no such deductions been made, (ii) the Company shall
make such deductions and (iii) the Company shall pay the full amount deducted to
the relevant taxation authority or other authority in accordance with applicable
law.
(b) In addition, the Company agrees to pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges or similar
levies that arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement, the
Notes or any other document referred to herein or therein (hereinafter referred
to as "OTHER TAXES").
(c) The Company will indemnify each Lender and the Administrative Agent
for the full amount of Taxes or Other Taxes (including related penalties,
interest and expenses) imposed by any jurisdiction on amounts payable under this
Section 5.08 paid by such Lender or the Administrative Agent (as the case may
be) and any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto, whether or not such Taxes or Other Taxes were
correctly or legally asserted. This indemnification shall be made within 30 days
from the date such Lender or the Administrative Agent (as the case may be) makes
written demand therefor. It is understood that Taxes do not include any
withholdings or other obligations imposed on a Lender with respect to payments
by such Lender to a participant in such Lender's Loans.
(d) Within 30 days after the date of any payment of Taxes, the Company
or a Lender, in the case of any Taxes paid by such Lender, will furnish to the
Administrative Agent, at its address referred to in Section 12.02, the original
or a certified copy of a receipt evidencing payment thereof.
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<PAGE> 32
(e) At the reasonable request of the Company, a Lender or the
Administrative Agent shall apply at the Company's expense for a refund in
respect of Taxes or Other Taxes previously paid by the Company pursuant to this
Section 5.08 if in the opinion of such Lender or Administrative Agent there is a
reasonable basis for such refund. Notwithstanding the foregoing, none of the
Lenders or the Administrative Agent shall be obligated to pursue such refund if,
in its sole good faith judgment, such action would be disadvantageous to it. If
any Lender subsequently receives from a taxing authority a refund of any Tax
previously paid by the Company and for which the Company has indemnified the
Lender pursuant to this Section 5.08, such Lender shall within 30 days after
receipt of such refund, and to the extent permitted by applicable law, pay to
the Company the net amount of any such recovery after deducting taxes and
expenses attributable thereto.
(f) Not later than the Closing Date or, in the case of any bank or
financial institution that becomes a Lender after the Closing Date pursuant to
Section 12.06, the date of the instrument of assignment pursuant to which such
bank or financial institution became a Lender, and annually thereafter or at
such other times as the Administrative Agent or the Company may request, each
Lender organized under the laws of a jurisdiction outside the United States
shall provide the Administrative Agent and the Company with duly completed
copies of Form 1001 or Form 4224 or any successor form prescribed by the
Internal Revenue Service of the United States certifying that such Lender is
exempt from United States withholding taxes with respect to all payments to be
made to such Lender hereunder or other documents satisfactory to the Company and
the Administrative Agent indicating that all payments to be made to such Lender
hereunder are not subject to such taxes (an "EXEMPTION CERTIFICATE"). In the
case of payments to or for any Lender organized under the laws of a jurisdiction
outside the United States, unless the Administrative Agent and the Company have
received an Exemption Certificate from such Lender, the Company, or the
Administrative Agent if the Company has not withheld, may withhold taxes from
such payments at the applicable statutory rate; provided that if the Company has
withheld it shall so notify the Administrative Agent. If the Company is required
to pay additional amounts to any Lender pursuant to this Section 5.08, such
Lender shall use reasonable efforts to designate a different Applicable Lending
Office if such designation will thereafter avoid the need for any additional
payments under this Section 5.08 and will not, in the sole judgment of such
Lender, be otherwise disadvantageous to such Lender. A Lender which ceases to be
exempt from United States withholding taxes shall notify the Administrative
Agent and the Company promptly thereof.
(g) If a Lender organized under the laws of a jurisdiction outside the
United States fails to comply with the provisions of subsection (f) above, then
the Company shall not have any obligation to increase the sum payable to such
Lender
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<PAGE> 33
pursuant to Section 5.08(a) or to indemnify such Lender pursuant to Section
5.08(c) for Taxes (including related penalties, interest and expenses) imposed
by the United States or any political subdivision thereof.
SECTION 6. Yield Protection and Illegality.
6.01 Additional Costs.
(a) The Company shall pay to the Administrative Agent for the account
of each Lender from time to time such amounts as such Lender may determine to be
necessary to compensate it for any costs incurred by such Lender which such
Lender determines are attributable to its making or maintaining of any Fixed
Rate Loans hereunder or its obligation to make any of such Loans hereunder, or
any reduction in any amount receivable by such Lender hereunder in respect of
any of such Loans or such obligation (such increases in costs and reductions in
amounts receivable being herein called "ADDITIONAL COSTS"), in each case
resulting from any Regulatory Change which:
(i) changes the basis of taxation of any amounts payable to
such Lender under this Agreement or its Notes in respect of any of such
Loans (other than changes which affect taxes measured by or imposed on
the overall net income of such Lender or of its Applicable Lending
Office for any of such Loans by the jurisdiction in which such Lender
has its principal office or such Applicable Lending Office); or
(ii) imposes or modifies any reserve, special deposit,
insurance assessment or similar requirements relating to any extensions
of credit or other assets of, or any deposits with or other liabilities
of, such Lender (including any of such Loans or any deposits referred
to in the definitions of "CD Base Rate" or "Eurodollar Base Rate" in
Section 1.01 hereof but excluding, with respect to any such Fixed Rate
Loan, any such requirements included in the applicable Domestic Reserve
Requirement or Eurodollar Reserve Requirement); or
(iii) imposes any other condition affecting this Agreement (or
any of such extensions of credit or liabilities).
Each Lender will notify the Company through the Administrative Agent of
any event occurring after the date of this Agreement which will entitle such
Lender to compensation pursuant to this Section 6.01(a) as promptly as
practicable after it obtains knowledge thereof and determines to request such
compensation, and (if so requested by the Company through the Administrative
Agent) will designate a different Applicable Lending Office for the relevant
Type of Fixed Rate Loans of
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<PAGE> 34
such Lender if such designation will avoid the need for, or reduce the amount
of, such compensation and will not, in the sole opinion of such Lender, be
disadvantageous to such Lender (provided that such Lender shall have no
obligation to so designate an Applicable Lending Office located in the United
States of America). Each Lender will furnish the Company with a statement
setting forth the basis and amount of each request by such Lender for
compensation under this Section 6.01(a). If any Lender requests compensation
from the Company under this Section 6.01(a), the Company may, by notice to such
Lender through the Administrative Agent, suspend the obligation of such Lender
to make additional Fixed Rate Loans of the relevant Type to the Company until
the Regulatory Change giving rise to such request ceases to be in effect (in
which case the provisions of Section 6.04 hereof shall be applicable).
(b) Without limiting the effect of the foregoing provisions of this
Section 6.01, if, by reason of any Regulatory Change, any Lender either (i)
incurs Additional Costs based on or measured by the excess above a specified
level of the amount of a category of deposits or other liabilities of such
Lender which includes deposits by reference to which the interest rate on any
Type of Fixed Rate Loans is determined as provided in this Agreement or a
category of extensions of credit or other assets of such Lender which includes
any Type of Fixed Rate Loans or (ii) becomes subject to restrictions on the
amount of such a category of liabilities or assets which it may hold, then, if
such Lender so elects by notice to the Company (with a copy to the
Administrative Agent), the obligation of such Lender to make Fixed Rate Loans of
the relevant Type hereunder shall be suspended until the date such Regulatory
Change ceases to be in effect (in which case the provisions of Section 6.04
hereof shall be applicable).
(c) Determinations and allocations by any Lender for purposes of this
Section 6.01 of the effect of any Regulatory Change on its costs of maintaining
its obligations to make Loans or of making or maintaining Loans or on amounts
receivable by it in respect of Loans, and of the additional amounts required to
compensate such Lender in respect of any Additional Costs, shall be presumed
correct absent manifest error.
(d) Notwithstanding the foregoing, the Company shall not be required to
compensate any Lender for any Additional Costs incurred more than one year prior
to the date that such Lender notifies the Company thereof, unless such
Additional Costs were caused by the retroactive application of a Regulatory
Change to a date more than one year prior to the date of such notice.
6.02 Limitation on Types of Loans. Anything herein to the contrary
notwithstanding, if, with respect to any Fixed Rate Loans:
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<PAGE> 35
(a) the Administrative Agent determines (which determination
shall be conclusive) that quotations of interest rates for the relevant
deposits referred to in the definition of "CD Base Rate" or "Eurodollar
Base Rate", as the case may be, in Section 1.01 hereof are not being
provided by the Reference Lenders in the relevant amounts or for the
relevant maturities for purposes of determining the rate of interest
for such Loans for Interest Periods therefor as provided in this
Agreement; or
(b) the Majority Lenders determine (which determination shall
be conclusive) and notify the Administrative Agent that the relevant
rates of interest referred to in the definition of "CD Base Rate" or
"Eurodollar Base Rate", as the case may be, in Section 1.01 hereof upon
the basis of which the rates of interest for such Loans are to be
determined do not accurately reflect the cost to such Lenders of making
or maintaining such Loans for Interest Periods therefor;
then the Administrative Agent shall promptly notify the Company and each Lender
thereof, and so long as such condition remains in effect, the Lenders shall be
under no obligation to make Fixed Rate Loans of the relevant Type or to convert
Base Rate Loans into Fixed Rate Loans of the relevant Type and the Company
shall, on the last day(s) of the then current Interest Period(s) for the
outstanding Fixed Rate Loans of the relevant Type, either prepay such Loans or
convert such Loans into Base Rate Loans in accordance with Section 3.02 hereof.
6.03 Illegality. Notwithstanding any other provision of this Agreement
to the contrary, in the event that it becomes unlawful for any Lender or its
Applicable Lending Office to (a) honor its obligation to make Fixed Rate Loans
of any Type hereunder, or (b) maintain Fixed Rate Loans of any Type hereunder,
then such Lender shall promptly notify the Company thereof through the
Administrative Agent and such Lender's obligation to make Fixed Rate Loans of
such Type hereunder shall be suspended until such time as such Lender may again
make and maintain Fixed Rate Loans of such Type (in which case the provisions of
Section 6.04 hereof shall be applicable).
6.04 Substitute Base Rate Loans. If the obligation of any Lender to
make Fixed Rate Loans of any Type shall be suspended pursuant to Section 6.01,
6.02 or 6.03 hereof, all Loans which would otherwise be made by such Lender as
Fixed Rate Loans of such Type shall be made instead as Base Rate Loans (and, if
an event referred to in Section 6.01(b) or 6.03 hereof has occurred and such
Lender so requests by notice to the Company with a copy to the Administrative
Agent, each Fixed Rate Loan of such Type of such Lender then outstanding shall
be automatically converted into a Base Rate Loan on the date specified by such
Lender in such notice) and, to the extent that Fixed Rate Loans of such Type are
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<PAGE> 36
so made as (or converted into) Base Rate Loans, all payments of principal which
would otherwise be applied to such Fixed Rate Loans of such Type shall be
applied instead to such Base Rate Loans.
6.05 Compensation. The Company shall pay to the Administrative Agent
for the account of each Lender, upon the request of such Lender through the
Administrative Agent, such amount or amounts as shall be sufficient (in the
reasonable opinion of such Lender) to compensate it for any loss, cost or
expense incurred by it as a result of:
(a) any payment, prepayment or conversion of a Fixed Rate Loan
made by such Lender on a date other than the last day of an Interest
Period for such Loan; or
(b) any failure by the Company to borrow a Fixed Rate Loan to
be made by such Lender on the date for such borrowing specified in the
relevant notice of borrowing under Section 5.05 hereof or Section 3.03
hereof.
Notwithstanding the foregoing, the Company shall not be required to
compensate any Lender for any such loss, cost or expense incurred more than one
year prior to the date that such Lender notifies the Company thereof.
6.06 Capital Adequacy. If any Lender shall determine that the adoption
or implementation of any applicable law, rule, regulation or treaty regarding
capital adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Lender (or its Applicable Lending Office) with any request or directive
issued after the date hereof regarding capital adequacy (whether or not having
the force of law) of any such authority, central bank or comparable agency, has
or would have the effect of reducing the rate of return on capital of such
Lender or any Person controlling such Lender (a "PARENT") as a consequence of
its obligations hereunder to a level below that which such Lender (or its
Parent) could have achieved but for such adoption, change or compliance (taking
into consideration its policies with respect to capital adequacy) by an amount
deemed by such Lender to be material, then from time to time, within 15 days
after demand by such Lender (with a copy to the Administrative Agent), the
Company shall pay to such Lender such additional amount or amounts as will
compensate such Lender for such reduction. A statement of any Lender claiming
compensation under this Section and setting forth the additional amount or
amounts to be paid to it hereunder shall be presumed correct absent manifest
error. In determining such amount, such Lender may use any reasonable averaging
and attribution methods.
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6.07 Substitution of Lender. If (i) the Company is required to withhold
with respect to any Lender pursuant to Section 5.08, (ii) any Lender has
demanded compensation under Section 6.01(a) or Section 6.06 or (iii) the
obligation of any Lender to make Fixed Rate Loans has been suspended pursuant to
Section 6.01(b)(ii) or Section 6.03, and so long as no Default shall have
occurred and be continuing, the Company shall have the right to request one or
more substitute banks, financial institutions or funds (which may be one or more
of the Lenders) reasonably satisfactory to the Administrative Agent to purchase
such Lender's Note and assume such Lender's Commitment hereunder by paying to
such Lender an amount equal to all of the obligations of the Company to such
Lender hereunder including, without limitation, principal and accrued interest
and fees. Any costs or expenses incurred by the Administrative Agent in
connection with assisting the Company pursuant hereto shall be paid upon demand
by the Company. The Administrative Agent shall respond promptly to any request
by the Company for its consent to a substitute for a Lender.
SECTION 7. Conditions Precedent.
7.01 Initial Loans. The obligation of each Lender to make the initial
Loans to be made by it hereunder is subject to the following conditions
precedent, each of which shall have been fulfilled to the satisfaction of the
Administrative Agent:
(a) Corporate Action. The Administrative Agent shall have
received certified copies of the Articles of Incorporation and Code of
Regulations of the Company and of all corporate action taken by the
Company authorizing the execution, delivery and performance of this
Agreement and the Notes (including, without limitation, a certificate
of the Company setting forth the resolutions authorizing the
transactions contemplated thereby).
(b) Incumbency. The Company shall have delivered to the
Administrative Agent a certificate in respect of the name and signature
of each of the officers (i) who is authorized to sign on its behalf
this Agreement and the Notes and (ii) who will, until replaced by
another officer or officers duly authorized for that purpose, act as
its representative for the purposes of signing documents and giving
notices and other communications in connection with this Agreement and
the Notes. The Administrative Agent and each Lender may conclusively
rely on such certificates until it receives notice in writing from the
Company to the contrary.
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(c) Notes. The Administrative Agent shall have received a
Note for each Lender, duly completed and executed.
(d) Acquisition. All of the conditions to the consummation of
the Acquisition (other than the initial borrowing hereunder) shall have
been duly satisfied in accordance with the Acquisition Documents
(subject to waivers and other modifications thereof which, in the
aggregate, are not material), and the Administrative Agent shall have
received (or arrangements satisfactory to the Administrative Agent
shall have been made for it to receive) a copy of each Acquisition
Document (including, without limitation, each certificate, opinion of
counsel or other material writing delivered in connection with the
consummation of the Acquisition) and a certificate of the Company to
the effect set forth in the first clause of this Section 7.01(d).
(e) Fees and Expenses. The Company shall have paid to the
Administrative Agent for its account fees in the amount previously
agreed upon by the Company.
(f) Opinion of Counsel to the Company. The Administrative
Agent shall have received an opinion of Calfee, Halter & Griswold LLP,
counsel to the Company, and the General Counsel of the Company,
substantially in the form of Exhibit B-1 and B-2 hereto, respectively.
(g) Opinion of Special Counsel to the Administrative Agent.
The Administrative Agent shall have received an opinion of Davis Polk &
Wardwell, special counsel to the Administrative Agent, substantially in
the form of Exhibit C hereto.
(h) Counterparts. The Administrative Agent shall have received
counterparts of this Agreement executed and delivered by or on behalf
of each of the parties hereto (or, in the case of any Lender as to
which the Administrative Agent shall not have received such a
counterpart, the Administrative Agent shall have received evidence
satisfactory to it of the execution and delivery by such Lender of a
counterpart hereof).
(i) Existing Credit Agreement. The Administrative Agent shall
have received evidence that, after giving effect to the application of
the proceeds of the initial Loans to be made hereunder, all amounts
outstanding under the $250,000,000 Amended and Restated Credit
Agreement dated as of July 19, 1996 among the Company, the lenders
listed on the signature pages thereof and Chase, as administrative
agent,
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shall have been paid in full and all commitments thereunder shall have
been terminated.
(j) Other Documents. The Administrative Agent shall have
received such other documents relating to the transactions contemplated
hereby as the Administrative Agent may reasonably request.
7.02 Initial and Subsequent Loans. The obligation of each Lender to
make any Loan to be made by it hereunder is subject to the conditions precedent
that, as of the date of such Loan, and before and after giving effect thereto:
(a) no Default shall have occurred and be continuing; and
(b) the representations and warranties made by the Company in
this Agreement shall be true on and as of the date of the making of
such Loan, with the same force and effect as if made on and as of such
date.
Each notice of borrowing by the Company hereunder or Competitive Bid
Request shall constitute a certification by the Company to the effect set forth
in the preceding sentence (both as of the date of such notice or Competitive Bid
Request and as of the date of such borrowing).
SECTION 8. Representations and Warranties. The Company represents and
warrants to the Lenders and the Administrative Agent as follows (including, in
the case of any representation or warranty made as of the Closing Date, both
before and immediately after giving effect to the Acquisition):
8.01 Corporate Existence. Each of the Company and its Subsidiaries: (a)
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation; (b) has all requisite corporate
power, and has all governmental licenses, authorizations, consents and approvals
necessary to own its assets and carry on its business as now being or as
proposed to be conducted, except in the case of such licenses, authorizations,
consents and approvals, where the failure to obtain them would not have a
Material Adverse Effect; and (c) is qualified to do business in all
jurisdictions in which the nature of the business conducted by it makes such
qualification necessary and where failure so to qualify would have a Material
Adverse Effect.
8.02 Information. (a) All information heretofore furnished by the
Company to the Administrative Agent or any Lender for purposes of or in
connection with this Agreement or any transaction contemplated hereby did not as
of the date thereof and will not as of the Closing Date contain any untrue
statement of a material fact or assumption or omit to state a material fact or
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assumption necessary in order to make the statements contained therein not
misleading; provided that (i) the Company makes no representation as to any
materials prepared by or on behalf of Tremco Incorporated in connection with the
offer for sale of Tremco Incorporated and (ii) although the management of the
Company believes that the projections presented in the pro forma consolidated
balance sheet of the Company and its Subsidiaries as of May 31, 1997 are
reasonable, they were not prepared in accordance with GAAP and the Company makes
no representation as to their attainability.
(b) Without limiting the generality of paragraph (a):
(i) The audited consolidated balance sheet of the Company and
its Subsidiaries as of May 31, 1996 and the audited consolidated
statements of income, shareholders' equity and cash flows for the
fiscal year ended May 31, 1996 (collectively, the "FINANCIAL
STATEMENTS") have been prepared in accordance with generally accepted
accounting principles consistently applied. The Financial Statements
fairly present the financial position of the Company and its
Subsidiaries as of May 31, 1996 and the results of their operations and
their cash flows for the fiscal year ended May 31, 1996 in conformity
with generally accepted accounting principles.
(ii) The unaudited consolidated balance sheet of the Company
and its Subsidiaries as of November 30, 1996 and the unaudited
consolidated statements of income, shareholders' equity and cash flows
for the six months then ended have been prepared in accordance with
generally accepted accounting principles consistently applied, and
fairly present the financial position of the Company and its
Subsidiaries as of November 30, 1996 and the results of their
operations and their cash flows for the six months then ended in
conformity with generally accepted accounting principles (subject to
normal year-end adjustments).
(iii) The Company and its Subsidiaries did not on the date of
the balance sheet referred to in clause (ii) above, and will not on the
Closing Date, have any material contingent liabilities, material
liabilities for taxes, unusual and material forward or long-term
commitments or material unrealized or anticipated losses from any
unfavorable commitments, except as referred to or reflected or provided
for in said balance sheet.
(c) The Company has disclosed to the Lenders in writing any and all
facts (other than general economic and industry conditions) which have or may
have a Material Adverse Effect.
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(d) Since November 30, 1996 no event has occurred and no condition has
come into existence which has had, or is reasonably likely to have, a Material
Adverse Effect.
8.03 Litigation. Except as disclosed in the Disclosure Documents, there
are no legal or arbitral proceedings or any proceedings by or before any
governmental or regulatory authority or agency, now pending or, to the knowledge
of the Company, threatened against or affecting the Company or any of its
Subsidiaries which could reasonably be expected to have a Material Adverse
Effect or which in any manner draw into question the validity of the Credit
Agreement or the Notes. The disclosure of litigation to the Lenders pursuant to
this Section does not necessarily mean that such litigation is of the type
described in this Section or that the Company believes that such litigation has
any merit whatsoever.
8.04 No Breach. None of the execution and delivery of the Basic
Documents, the consummation of the Acquisition or the transactions therein
contemplated or compliance with the terms and provisions thereof will conflict
with or result in a breach of, or require any consent under, the Articles of
Incorporation or Codes of Regulation or comparable instruments of the Company or
any of its Subsidiaries, or any applicable law or regulation, or any order,
writ, injunction or decree of any court or governmental authority or agency, or
any Basic Document or other material agreement or instrument to which the
Company or any of its Subsidiaries is a party or by which it is bound or to
which it is subject, or constitute a default under any such material agreement
or instrument, or result in the creation or imposition of any Lien upon any of
the revenues or assets of the Company or any of its Subsidiaries pursuant to the
terms of any such agreement or instrument.
8.05 Corporate Action. The Company has all necessary corporate power
and authority to consummate the Acquisition and to execute, deliver and perform
its obligations under the Basic Documents to which it is a party; the
consummation of the Acquisition and the execution, delivery and performance by
the Company of the Basic Documents to which it is a party have been duly
authorized by all necessary corporate action; and this Agreement has been duly
and validly executed and delivered by the Company and constitutes the legal,
valid and binding obligation of the Company and, on the Closing Date, each of
the other Basic Documents to which the Company is to be a party will constitute
its legal, valid and binding obligation, in each case enforceable in accordance
with its terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization or moratorium or other similar laws
relating to the enforcement of creditors' rights generally and by general
equitable principles.
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8.06 Approvals. Each of the Company and its Subsidiaries has obtained
all authorizations, approvals and consents of, and has made all filings and
registrations with, any governmental or regulatory authority or agency and any
third party necessary for the consummation of the Acquisition and the execution,
delivery or performance by it of any Basic Document to which it is a party, or
for the validity or enforceability thereof.
8.07 Regulations U and X. Neither the Company nor any of its
Subsidiaries is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulation U or X of the Board of Governors
of the Federal Reserve System) and no part of the proceeds of any Loan hereunder
will be used to purchase or carry any such margin stock.
8.08 ERISA. The Company and each member of the Controlled Group have
fulfilled their obligations under the minimum funding standards of ERISA and the
Code with respect to each Plan and are in compliance in all material respects
with the presently applicable provisions of ERISA and the Code with respect to
each Plan. No such Person has (i) sought a waiver of the minimum funding
standard under Section 412 of the Code in respect of any Plan, (ii) failed to
make any contribution or payment to any Plan or Multiemployer Plan, or made any
amendment to any Plan, which has resulted or could result in the imposition of a
Lien or the posting of a bond or other security under ERISA or the Code or (iii)
incurred any liability under Title IV of ERISA (other than a liability to the
PBGC for premiums under Section 4007 of ERISA).
8.09 Taxes. Each of the Company and its Subsidiaries has filed all
United States Federal income tax returns and all other material tax returns
which are required to be filed by it and has paid all taxes due pursuant to such
returns or pursuant to any assessment received by it, except to the extent the
same may be contested as permitted by Section 9.02 hereof. There are no material
tax disputes or contests pending as of the Closing Date. The charges, accruals
and reserves on the books of the Company and its Subsidiaries in respect of
taxes and other governmental charges are, in the opinion of the Company,
adequate.
8.10 Subsidiaries. Schedule I hereto is a complete and correct list, as
of the date of this Agreement, of all Subsidiaries of the Company and of all
Investments held by the Company or any of its Subsidiaries in any material joint
venture or other similar Person. The Company owns, free and clear of Liens, all
outstanding shares of its Subsidiaries and all such shares are validly issued,
fully paid and non-assessable and the Company (or the respective Subsidiary of
the Company) also owns, free and clear of Liens, all such Investments.
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8.11 Investment Company Act. Neither the Company nor any of its
Subsidiaries is an investment company within the meaning of the Investment
Company Act of 1940, as amended, or, directly or indirectly, controlled by or
acting on behalf of any Person which is an investment company, within the
meaning of said Act.
8.12 Public Utility Holding Company Act. Neither the Company nor any of
its Subsidiaries is a "holding company", or an "affiliate" of a "holding
company" or a "subsidiary company" of a "holding company", within the meaning of
the Public Utility Holding Company Act of 1935, as amended.
8.13 Ownership and Use of Properties. Each of the Company and its
Subsidiaries will have on the Closing Date and at all times thereafter, legal
title or ownership of, or the right to use pursuant to enforceable and valid
agreements or arrangements, all tangible property, both real and personal, and
all franchises, licenses, copyrights, patents and know-how which is material to
the operation of its business as proposed to be conducted.
8.14 Environmental Matters. Except as disclosed in the Disclosure
Documents, neither the Company nor any of its Subsidiaries has (i) failed to
obtain any permits, certificates, licenses, approvals, registrations and other
authorizations which are required under any applicable Environmental Law where
failure to have any such permit, certificate, license, approval, registration or
authorization would have a Material Adverse Effect; (ii) failed to comply with
the terms and conditions of all such permits, certificates, licenses, approvals,
registrations and authorizations, and are also in compliance with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in any applicable Environmental
Law or in any notice or demand letter from any regulatory authority issued,
entered, promulgated or approved thereunder where failure to comply would have a
Material Adverse Effect; or (iii) failed to conduct its business so as to comply
in all respects with applicable Environmental Laws where failure to so comply
would have a Material Adverse Effect. The disclosure of any failure or alleged
failure to the Lenders pursuant to this Section does not necessarily mean that
such failure is of the type described in this Section or that any such
allegation has any merit whatsoever.
SECTION 9. Covenants. The Company agrees that, so long as any of the
Commitments are in effect and until payment in full of all Loans hereunder, all
interest thereon and all other amounts payable hereunder, unless the Majority
Lenders shall agree otherwise as contemplated by Section 12.05 hereof:
9.01 Information. The Company shall deliver to each of the Lenders:
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(a) as soon as available and in any event within 90 days after the end
of each fiscal year of the Company, consolidated statements of income,
shareholders' equity and cash flows of the Company and its Subsidiaries for such
year and the related consolidated balance sheet as at the end of such year,
setting forth in each case in comparative form the corresponding figures for the
preceding fiscal year, and accompanied by an opinion thereon of Ciulla, Smith &
Dale LLP or other independent certified public accountants of recognized
national standing, which opinion shall state that said consolidated financial
statements fairly present in all material respects the consolidated financial
condition and results of operations of the Company and its Subsidiaries as at
the end of, and for, such fiscal year;
(b) as soon as available and in any event within 60 days after the end
of each fiscal quarter of the Company other than the last fiscal quarter in each
fiscal year, consolidated statements of income, shareholders' equity and cash
flows of the Company and its Subsidiaries for such fiscal quarter and for the
portion of the fiscal year ended at the end of such fiscal quarter, and the
related consolidated balance sheet as at the end of such fiscal quarter,
accompanied, in each case, by a certificate of a Senior Officer, which
certificate shall state that said consolidated financial statements fairly
present in all material respects the consolidated financial condition and
results of operations of the Company in accordance with GAAP (except for
footnotes of the type required by the Securities and Exchange Commission to be
included in quarterly reports on Form 10-Q), consistently applied, as at the end
of, and for, such period (subject to normal year-end audit adjustments);
(c) promptly upon the mailing thereof to the shareholders of the
Company generally, copies of all financial statements, reports and proxy
statements so mailed;
(d) promptly upon the filing thereof, copies of all registration
statements (other than any registration statements on Form S-8 or its
equivalent) and any reports which the Company shall have filed with the
Securities and Exchange Commission;
(e) if and when the Company or any member of the Controlled Group (i)
gives or is required to give notice to the PBGC of any "reportable event" (as
defined in Section 4043 of ERISA) with respect to any Plan which might
constitute grounds for a termination of such Plan under Title IV of ERISA, or
knows that the plan administrator of any Plan has given or is required to give
notice of any such reportable event, a copy of the notice of such reportable
event given or required to be given to the PBGC, (ii) receives notice of
complete or partial withdrawal liability under Title IV of ERISA or notice that
any Multiemployer Plan is in reorganization, is insolvent or has been
terminated, a
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copy of such notice; (iii) receives notice from the PBGC under Title IV of ERISA
of an intent to terminate or appoint a trustee to administer any Plan, a copy of
such notice; (iv) applies for a waiver of the minimum funding standard under
Section 412 of the Code, a copy of such application; (v) gives notice of intent
to terminate any Plan under Section 4041(c) of ERISA, a copy of such notice and
other information filed with the PBGC; (vi) gives notice of withdrawal from any
Plan pursuant to Section 4063 of ERISA, a copy of such notice; or (vii) fails to
make any payment or contribution to any Plan or Multiemployer Plan or makes any
amendment to any Plan which has resulted or could result in the imposition of a
Lien or the posting of a bond or other security, a certificate of a Senior
Officer setting forth details as to such occurrence and action, if any, which
the Company or member of the Controlled Group is required or proposes to take;
(f) promptly after management of the Company knows that any Default has
occurred and is continuing, a notice of such Default, describing the same in
reasonable detail; and
(g) from time to time such other information regarding the financial
condition, operations, prospects or business of the Company as the
Administrative Agent or any Lender through the Administrative Agent may
reasonably request.
The Company will furnish to each Lender, at the time it furnishes each
set of financial statements pursuant to paragraph (a) or (b) above, a
certificate of a Senior Officer (i) to the effect that, to the best of his
knowledge after due inquiry, no Default has occurred and is continuing (or, if
any Default has occurred and is continuing, describing the same in reasonable
detail) and (ii) setting forth in reasonable detail the computations necessary
to determine whether it was in compliance with Sections 9.08 to 9.12, inclusive,
and 9.16 hereof as of the end of the respective fiscal quarter or fiscal year.
9.02 Taxes and Claims. The Company will pay and discharge, and will
cause each of its Subsidiaries to pay and discharge, all material taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits, or upon any property belonging to it, prior to the date on
which penalties attach thereto, and all lawful claims which, if unpaid, might
become a Lien upon the property of the Company or such Subsidiary, provided that
neither the Company nor such Subsidiary shall be required to pay any such tax,
assessment, charge, levy or claim the payment of which is being contested in
good faith and by proper proceedings if it maintains adequate reserves with
respect thereto and if such contest, proceedings and reserves have been
described in a certificate of a Senior Officer delivered to the Lenders.
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9.03 Insurance. The Company will maintain, and will cause each of its
Subsidiaries to maintain, insurance with responsible companies in such amounts
and against such risks as is usually carried by companies of established repute
engaged in the same or similar businesses, owning similar properties, and
located in the same general areas as the Company and its Subsidiaries.
9.04 Maintenance of Existence; Conduct of Business. The Company will
preserve and maintain, and will cause each of its Subsidiaries to preserve and
maintain, its corporate existence and all of its rights, privileges and
franchises necessary or desirable in the normal conduct of its business, and
will conduct its business in a regular manner; provided that nothing herein
shall prevent (i) the merger and dissolution of any Subsidiary of the Company
into the Company so long as the Company is the surviving corporation, (ii) the
merger of any Subsidiary of the Company into any other Subsidiary of the
Company, or (iii) the sale of any Subsidiary of the Company other than the
following Subsidiaries and their successors: Dryvit Systems, Inc., a Rhode
Island corporation, Stonhard, Inc., a Delaware corporation, Carboline Company, a
Delaware corporation, William Zinsser & Co., Incorporated, a New Jersey
corporation, Rust-Oleum Corporation, an Illinois corporation, and Tremco
Incorporated, an Ohio corporation. It is understood that the preservation and
maintenance of rights, privileges and franchises shall not prevent the Company
and its Subsidiaries from disposing of assets in any transaction not otherwise
prohibited pursuant to this Section 9.04 or Section 9.10 hereof.
9.05 Maintenance of and Access to Properties. The Company will keep,
and will cause each of its Subsidiaries to keep, all of its properties necessary
in its business in good working order and condition (having regard to the
condition of such properties at the time such properties were acquired by the
Company or such Subsidiary), ordinary wear and tear excepted, and proper books
of record and account in which full, true and correct entries in conformity with
GAAP shall be made of all dealings and transactions in relation to its business
activities, and will permit representatives of the Lenders to inspect such
properties and, upon reasonable notice and at reasonable times, to examine and
make extracts and copies from the books and records of the Company and any such
Subsidiary.
9.06 Compliance with Applicable Laws. The Company will comply, and will
cause each of its Subsidiaries to comply, with the requirements of all
applicable laws, rules, regulations and orders of any governmental body or
regulatory authority (including, without limitation, all Environmental Laws), a
breach of which would have a Material Adverse Effect, except where contested in
good faith and by proper proceedings.
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9.07 Litigation. The Company will promptly give to the Administrative
Agent (which shall promptly notify each Lender) notice in writing of all
litigation and of all proceedings of which it is aware before any courts,
arbitrators or governmental or regulatory agencies affecting the Company or any
of its Subsidiaries which could reasonably be expected to have a Material
Adverse Effect.
9.08 Leverage Ratio. The Company will not permit Indebtedness of the
Company and its Subsidiaries, determined on a consolidated basis, on any date to
exceed 65% of the sum of such Indebtedness and consolidated shareholders' equity
of the Company and its Subsidiaries on such date.
9.09 Interest Coverage Ratio. The Company will not permit the ratio,
calculated as at the end of each fiscal quarter ending after the Closing Date
for the four fiscal quarters then ended, of EBIT for such period to Interest
Expense for such period to be less than 3:1.
9.10 Mergers, Asset Dispositions, Etc. The Company will not (i)
consolidate or merge with or into any other Person or (ii) sell, lease or
otherwise transfer, directly or indirectly, in one transaction or a series of
related transactions, all or substantially all of its business or assets;
provided that the Company may merge with another Person if (A) the Company is
the corporation surviving such merger and (B) immediately after giving effect to
such merger, no Default shall have occurred and be continuing.
9.11 Liens. The Company will not, and will not permit any of its
Subsidiaries to, create or suffer to exist any Lien upon any property or assets,
now owned or hereafter acquired, securing any Indebtedness or other obligation,
except:
(i) Liens existing on the Closing Date and securing
Indebtedness in an aggregate principal amount not exceeding $6,000,000;
(ii) Liens existing on other assets at the date of acquisition
thereof or which attach to such assets concurrently with or within 90
days after the acquisition thereof, securing Indebtedness incurred to
finance the acquisition thereof in an aggregate principal amount at any
time outstanding not exceeding $10,000,000;
(iii) any Lien existing on any asset of any corporation at the
time such corporation becomes a Subsidiary of the Company or is merged
or consolidated with or into the Company or one of its Subsidiaries and
not created in contemplation of such event;
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(iv) any Lien arising out of the refinancing, extension,
renewal or refunding of any Indebtedness secured by any Lien permitted
by any of the foregoing clauses of this Section 9.11, provided that
such Indebtedness is not increased and is not secured by any additional
assets;
(v) other Liens arising in the ordinary course of the business
of the Company or such Subsidiary which are not incurred in connection
with the borrowing of money or the obtaining of advances or credit, do
not secure any obligation in an amount exceeding $10,000,000 and do not
materially detract from the value of its property or assets or
materially impair the use thereof in the operation of its business; and
(vi) Liens not otherwise permitted by the foregoing clauses of
this Section 9.11 securing Indebtedness in an aggregate principal or
face amount at any date not to exceed $10,000,000.
9.12 Investments. The Company will not, and will not permit any of its
Subsidiaries to, make or permit to remain outstanding any advances, loans or
other extensions of credit or capital contributions (other than prepaid expenses
in the ordinary course of business) to (by means of transfers of property or
assets or otherwise), or purchase or own any stocks, bonds, notes, debentures or
other securities of, any Person (all such transactions being herein called
"INVESTMENTS"), except: (i) operating deposit accounts; (ii) Liquid Investments;
(iii) subject to Section 9.13 hereof, Investments in accounts and notes
receivable acquired in the ordinary course of business as presently conducted;
(iv) Investments existing on the Closing Date in Subsidiaries or joint ventures,
and Investments after the Closing Date by First Colonial Insurance Company, a
wholly-owned Subsidiary of the Company, in the ordinary course of its business;
(v) Investments not otherwise permitted by the foregoing clauses of this Section
9.12 in Subsidiaries of the Company and in Persons which become Subsidiaries of
the Company as the result of such Investments; (vi) Investments not otherwise
permitted by the foregoing clauses of this Section 9.12 in joint ventures in an
aggregate amount not to exceed $25,000,000; and (vii) Investments not otherwise
permitted by the foregoing clauses of this Section 9.12 in an aggregate amount
not to exceed $5,000,000.
9.13 Transactions with Affiliates. Except as expressly permitted by
this Agreement the Company will not, and will not permit any of its Subsidiaries
to, directly or indirectly: (i) make any Investment in an Affiliate of the
Company (other than a Subsidiary of the Company); (ii) transfer, sell, lease,
assign or otherwise dispose of any assets to an Affiliate of the Company (other
than a Subsidiary of the Company); (iii) merge into or consolidate with or
purchase or acquire assets from an Affiliate of the Company (other than a
Subsidiary of the Company); or (iv) enter into any other transaction directly or
indirectly with or for
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the benefit of an Affiliate of the Company (other than a Subsidiary of the
Company) (including, without limitation, Guaranties and assumptions of
obligations of an Affiliate of the Company (other than a Subsidiary of the
Company)); provided that (a) any Affiliate of the Company who is an individual
may serve as a director, officer or employee of the Company and receive
reasonable compensation or indemnification in connection with his or her
services in such capacity; and (b) any transaction entered into by the Company
or a Subsidiary of the Company with an Affiliate of the Company which is not a
Subsidiary of the Company providing for the leasing of property, the rendering
or receipt of services or the purchase or sale of inventory and other assets in
the ordinary course of business must be for a monetary or business consideration
which would be substantially as advantageous to the Company or such Subsidiary
as the monetary or business consideration which would obtain in a comparable
arm's length transaction with a Person not an Affiliate of the Company.
9.14 Lines of Business. The Company and its Subsidiaries, taken as a
whole, shall not engage to any substantial extent in any line or lines of
business activity other than present or related product lines.
9.15 Environmental Matters. The Company will promptly give to the
Lenders notice in writing of any complaint, order, citation, notice or other
written communication from any Person with respect to, or if the Company becomes
aware after due inquiry of, (i) the existence or alleged existence of a
violation of any applicable Environmental Law or Environmental Liability at,
upon, under or within any property now or previously owned, leased, operated or
used by the Company or any of its Subsidiaries or any part thereof, or due to
the operations or activities of the Company, any Subsidiary on or in connection
with such property or any part thereof (including receipt by the Company or any
Subsidiary of any notice of the happening of any event involving the Release of
a reportable quantity under any applicable Environmental Law or cleanup of any
Hazardous Substance), (ii) any Release on such property or any part thereof in a
quantity that is reportable under any applicable Environmental Law, (iii) the
commencement of any cleanup pursuant to or in accordance with any applicable
Environmental Law of any Hazardous Substances on or about such property or any
part thereof and (iv) any pending or threatened proceeding for the termination,
suspension or non-renewal of any permit required under any applicable
Environmental Law, in each case which individually or in the aggregate could
reasonably be expected to have a Material Adverse Effect.
9.16 Lease Payments. Neither the Company nor any of its Subsidiaries
will incur or assume (whether pursuant to a Guaranty or otherwise) any liability
for rental payments under a lease with a lease term (as defined in Financial
Accounting Standards No. 13 of the Financial Accounting Standards Board, as in
effect on the
44
<PAGE> 50
date hereof) if (i) such lease is of an asset previously owned by the Company or
any of its Subsidiaries and (ii) after giving effect thereto, the aggregate
amount of minimum lease payments that the Company and its Subsidiaries have so
incurred or assumed (excluding payments in respect of a lease (whether now or
hereafter existing) of Rust-Oleum Corporation's corporate headquarters located
in Vernon Hills, Illinois) will exceed, on a consolidated basis, $5,000,000 for
any calendar year under all such leases.
SECTION 10. Defaults.
10.01 Events of Default. If one or more of the following events (herein
called "EVENTS OF DEFAULT") shall occur and be continuing:
(a) default in the payment of (i) any principal of any Loan
when due or of (ii) any interest on any Loan or other amount payable
hereunder within five Business Days after the due date thereof; or
(b) the Company or any of its Subsidiaries shall default in
the payment when due of any principal of or interest on Indebtedness
having an aggregate outstanding principal amount of at least
$20,000,000 (other than the Loans); or any event or condition shall
occur which results in the acceleration of the maturity of any such
Indebtedness or enables (or, with the giving of notice or lapse of time
or both, would enable) the holder of any such Indebtedness or any
Person acting on such holder's behalf to accelerate the maturity
thereof; or
(c) any representation or warranty made or deemed made by the
Company or any Subsidiary herein or in any certificate furnished to any
Lender or the Administrative Agent pursuant to the provisions hereof,
shall prove to have been false or misleading in any material respect as
of the time made or furnished; or
(d) (i) the Company shall default in the performance of any of
its obligations under Section 2.07 or Sections 9.08 through 9.13 and
9.16 hereof; or (ii) the Company or any Subsidiary shall default in the
performance of any of its other obligations hereunder, and such default
described in this subclause (ii) shall continue unremedied for a period
of 30 days after notice thereof to the Company by the Administrative
Agent or any Lender (through the Administrative Agent); or
(e) the Company or any of its Significant Subsidiaries shall
admit in writing its inability to, or be generally unable to, pay its
debts as such debts become due; or
45
<PAGE> 51
(f) the Company or any of its Significant Subsidiaries shall
(i) apply for or consent to the appointment of, or the taking of
possession by, a receiver, custodian, trustee or liquidator of itself
or of all or a substantial part of its property, (ii) make a general
assignment for the benefit of its creditors, (iii) commence a voluntary
case under the Bankruptcy Code, (iv) file a petition seeking to take
advantage of any other law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or readjustment of debts,
(v) fail to controvert in a timely and appropriate manner, or acquiesce
in writing to, any petition filed against it in an involuntary case
under the Bankruptcy Code, or (vi) take any corporate or partnership
action for the purpose of effecting any of the foregoing; or
(g) a proceeding or case shall be commenced, without the
application or consent of the Company or any of its Significant
Subsidiaries in any court of competent jurisdiction, seeking (i) its
liquidation, reorganization, dissolution or winding-up, or the
composition or readjustment of its debts, (ii) the appointment of a
trustee, receiver, custodian, liquidator or the like of such Person or
of all or any substantial part of its assets, or (iii) similar relief
in respect of such Person under any law relating to bankruptcy,
insolvency, reorganization, winding-up, or composition or adjustment of
debts, and such proceeding or case shall continue undismissed, or an
order, judgment or decree approving or ordering any of the foregoing
shall be entered and continue unstayed and in effect, for a period of
90 days; or an order for relief against such Person shall be entered in
an involuntary case under the Bankruptcy Code; or
(h) a final judgment or judgments for the payment of money
shall be rendered by a court or courts against the Company or any of
its Subsidiaries in excess of $35,000,000 in the aggregate (excluding
any amount of such judgment as to which an Acceptable Insurer has
acknowledged liability), and the same shall not be discharged (or
provision shall not be made for such discharge), or a stay of execution
thereof shall not be procured, within 10 days from the date of entry
thereof, or the Company or such Subsidiary shall not, within said
period of 10 days, or such longer period during which execution of the
same shall have been stayed, appeal therefrom and cause the execution
thereof to be stayed during such appeal; or
(i) the Company or any member of the Controlled Group shall
fail to pay when due an amount or amounts aggregating in excess of
$20,000,000 for which it shall have become liable under Title IV of
ERISA; or notice of intent to terminate a Plan or Plans having
aggregate Unfunded Liabilities in excess of $20,000,000 shall be filed
under Title IV
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<PAGE> 52
of ERISA by the Company or any member of the Controlled Group, any plan
administrator or any combination of the foregoing; or the PBGC shall
institute proceedings under Title IV of ERISA to terminate, to impose
liability (other than for premiums under Section 4007 of ERISA) in
respect of, or to cause a trustee to be appointed to administer, any
Plan or Plans having aggregate Unfunded Liabilities in excess of
$20,000,000; or a condition shall exist by reason of which the PBGC
would be entitled to obtain a decree adjudicating that any Plan or
Plans having aggregate Unfunded Liabilities in excess of $20,000,000
must be terminated; or there shall occur a complete or partial
withdrawal from, or a default, within the meaning of Section 4219(c)(5)
of ERISA, with respect to, one or more Multiemployer Plans which could
cause the Company or one or more members of the Controlled Group to
incur a current payment obligation in excess of $20,000,000; or
(j) (i) as a result of one or more transactions after the date
of this Agreement, any "person" or "group" of persons shall have
"beneficial ownership" (within the meaning of Section 13(d) or 14(d) of
the Securities Exchange Act of 1934, as amended, and the applicable
rules and regulations thereunder) of 30% or more of the outstanding
common stock of the Company; or (ii) without limiting the generality of
the foregoing, during any period of 12 consecutive months, commencing
after the date of this Agreement, individuals who at the beginning of
such 12-month period were directors of the Company shall cease for any
reason to constitute a majority of the board of directors of the
Company;
THEREUPON: the Administrative Agent may (and, if directed by the Majority
Lenders, shall) by notice to the Company (a) declare the Commitments terminated
(whereupon the Commitments shall be terminated) and/or (b) declare the principal
amount then outstanding of and the accrued interest on the Loans and commitment
fees and all other amounts payable hereunder and under the Notes to be forthwith
due and payable, whereupon such amounts shall be and become immediately due and
payable, without other notice, presentment, demand, protest or other formalities
of any kind (all of which are hereby expressly waived by the Company); provided
that in the case of the occurrence of an Event of Default with respect to the
Company referred to in clause (f) or (g) of this Section 10.01, the Commitments
shall be automatically terminated and the principal amount then outstanding of
and the accrued interest on the Loans and commitment fees and all other amounts
payable hereunder and under the Notes shall be and become automatically and
immediately due and payable, without notice (including, without limitation,
notice of intent to accelerate), presentment, demand, protest or other
formalities of any kind, all of which are hereby expressly waived by the
Company. Each Lender hereby agrees that, unless so requested by the
Administrative Agent
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<PAGE> 53
with the consent of the Majority Lenders, it shall not take or cause to be taken
any action to declare the Commitments terminated or to declare payable or
collect the amounts referred to above that is independent from any action taken
or to be taken by the Administrative Agent, unless such action is taken in
connection with an Event of Default described in clause (a), (e), (f) or (g) of
this Section 10.01.
SECTION 11. The Administrative Agent.
11.01 Appointment, Powers and Immunities. Each Lender hereby
irrevocably appoints and authorizes the Administrative Agent to act as its agent
hereunder and under the Notes with such powers as are specifically delegated to
the Administrative Agent by the terms hereof and thereof, together with such
other powers as are reasonably incidental thereto. The Administrative Agent
(which term as used in this Section 11 shall include reference to its affiliates
and its and its affiliates' officers, directors, employees and agents): (a)
shall have no duties or responsibilities except those expressly set forth in
this Agreement and the Notes, and shall not by reason of this Agreement or any
Note be a trustee for any Lender; (b) shall not be responsible to the Lenders
for any recitals, statements, representations or warranties contained in this
Agreement or the Notes, or in any certificate or other document referred to or
provided for in, or received by any of them under, this Agreement or any the
Notes, or for the value, validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any Note or any other document referred to or
provided for herein or therein or for any failure by the Company or any of its
Subsidiaries or any other Person to perform any of its obligations hereunder or
thereunder; (c) shall not be required to initiate or conduct any litigation or
collection proceedings hereunder or under any Note except to the extent
requested by the Majority Lenders, and (d) shall not be responsible for any
action taken or omitted to be taken by it hereunder or under any Note or any
other document or instrument referred to or provided for herein or therein or in
connection herewith or therewith, except for its own gross negligence or willful
misconduct. The Administrative Agent may employ agents and attorneys-in-fact and
shall not be responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care.
11.02 Reliance by Administrative Agent. The Administrative Agent shall
be entitled to rely upon any certification, notice or other communication
(including any thereof by telephone, telex, telegram or cable) believed by it to
be genuine and correct and to have been signed or sent by or on behalf of the
proper Person or Persons, and upon advice and statements of legal counsel,
independent accountants and other experts selected by the Administrative Agent.
As to any matters not expressly provided for by this Agreement or the Notes, the
Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, hereunder and thereunder in accordance with instructions
signed by the Majority Lenders and
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<PAGE> 54
such instructions of the Majority Lenders and any action taken or failure to act
pursuant thereto shall be binding on all of the Lenders.
11.03 Defaults. The Administrative Agent shall not be deemed to have
knowledge of the occurrence of a Default (other than the non-payment of
principal of or interest on Loans or facility fees) unless the Administrative
Agent has received notice from a Lender or the Company specifying such Default
and stating that such notice is a "Notice of Default". In the event that the
Administrative Agent receives such a notice of the occurrence of a Default, the
Administrative Agent shall give prompt notice thereof to the Lenders (and shall
give each Lender prompt notice of each such non-payment). The Administrative
Agent shall (subject to Section 11.07 hereof) take such action with respect to
such Default as shall be directed by the Majority Lenders, provided that, unless
and until the Administrative Agent shall have received such directions, the
Administrative Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default as it shall deem
advisable in the best interests of the Lenders.
11.04 Rights as a Lender. With respect to its Commitment and the Loans
made by it, Chase in its capacity as a Lender hereunder shall have the same
rights and powers hereunder as any other Lender and may exercise the same as
though it were not acting as the Administrative Agent, and the term "Lender" or
"Lenders" shall, unless the context otherwise indicates, include the
Administrative Agent in its individual capacity. The Administrative Agent may
(without having to account therefor to any Lender) accept deposits from, lend
money to and generally engage in any kind of banking, trust or other business
with the Company (and any of its Affiliates) as if it were not acting as the
Administrative Agent and the Administrative Agent may accept fees and other
consideration from the Company (in addition to the agency fees and arrangement
fees heretofore agreed to between the Company, the Administrative Agent) for
services in connection with this Agreement or otherwise without having to
account for the same to the Lenders.
11.05 Indemnification. The Lenders agree to indemnify the
Administrative Agent (to the extent not reimbursed under Section 12.03 or 12.04
hereof, but without limiting the obligations of the Company under said Sections
12.03 and 12.04), ratably in accordance with their respective Commitments, for
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind and nature
whatsoever which may be imposed on, incurred by or asserted against the
Administrative Agent in any way relating to or arising out of this Agreement or
any other Basic Document or any other documents contemplated by or referred to
herein or therein or the transactions contemplated hereby or thereby (including,
without limitation, the costs and expenses which the Company is obligated to pay
under Sections 12.03
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<PAGE> 55
and 12.04 hereof but excluding, unless a Default has occurred and is continuing,
normal administrative costs and expenses incident to the performance of its
agency duties hereunder) or the enforcement of any of the terms hereof or
thereof or of any such other documents, provided that no Lender shall be liable
for any of the foregoing to the extent they arise from the gross negligence or
willful misconduct of the party to be indemnified.
11.06 Non-Reliance on Administrative Agent and Other Lenders. Each
Lender agrees that it has, independently and without reliance on the
Administrative Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own credit analysis of the
Company and decision to enter into this Agreement and that it will,
independently and without reliance upon the Administrative Agent or any other
Lender, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own analysis and decisions in taking or not
taking action under this Agreement or its Note or Notes. The Administrative
Agent shall not be required to keep itself informed as to the performance or
observance by the Company or any other Person of this Agreement or any of the
other Basic Documents or any other document referred to or provided for herein
or therein or to inspect the properties or books of the Company or any other
Person. Except for notices, reports and other documents and information
expressly required to be furnished to the Lenders by the Administrative Agent
hereunder or under the Notes, the Administrative Agent shall not have any duty
or responsibility to provide any Lender with any credit or other information
concerning the affairs, financial condition or business of the Company or any
other Person (or any of their affiliates) which may come into the possession of
the Administrative Agent.
11.07 Failure to Act. Except for action expressly required of the
Administrative Agent hereunder and under any Note, the Administrative Agent
shall in all cases be fully justified in failing or refusing to act hereunder
and thereunder unless it shall receive further assurances to its satisfaction by
the Lenders of their indemnification obligations under Section 11.05 hereof
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action.
11.08 Resignation or Removal of Administrative Agent. Subject to the
appointment and acceptance of a successor Administrative Agent as provided
below, the Administrative Agent may resign at any time by giving notice thereof
to the Lenders and the Company and the Administrative Agent may be removed at
any time with or without cause by the Majority Lenders. Upon any such
resignation or removal, the Majority Lenders shall have the right to appoint a
successor Administrative Agent reasonably acceptable to the Company. If no
successor Administrative Agent shall have been so appointed by the Majority
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<PAGE> 56
Lenders and shall have accepted such appointment within 30 days after the
retiring Administrative Agent's giving of notice of resignation or the Majority
Lenders' removal of the retiring Administrative Agent (the "NOTICE DATE"), then
the retiring Administrative Agent may, on behalf of the Lenders, appoint a
successor Administrative Agent reasonably acceptable to the Company. Any
successor Administrative Agent shall be (i) a Lender or (ii) if no Lender has
accepted such appointment within 40 days after the Notice Date, a bank which has
an office in New York, New York with a combined capital and surplus of at least
$250,000,000. Upon the acceptance of any appointment as Administrative Agent
hereunder by a successor Administrative Agent, such successor Administrative
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder. After any retiring Administrative Agent's resignation or removal
hereunder as Administrative Agent, the provisions of this Section 11 shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was acting as the Administrative Agent.
11.09 Documentation Agent. National City Bank shall not have any
responsibility, obligation or liability under this Agreement in its capacity as
Documentation Agent.
SECTION 12. Miscellaneous.
12.01 Waiver. No failure on the part of the Administrative Agent or any
Lender to exercise and no delay in exercising, and no course of dealing with
respect to, any right, power or privilege under this Agreement or the Notes
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power or privilege thereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The remedies
provided in this Agreement and the Notes are cumulative and not exclusive of any
remedies provided by law.
12.02 Notices. All notices and other communications provided for herein
(including, without limitation, any modifications of, or waivers or consents
under, this Agreement) shall be given or made by telex, telegraph, telecopy,
cable or other writing and telexed, telecopied, telegraphed, cabled, mailed or
delivered to the intended recipient at the "Address for Notices" specified below
its name on the signature pages hereof; or, as to any party, at such other
address as shall be designated by such party in a notice to the Company and the
Administrative Agent given in accordance with this Section 12.02. Except as
otherwise provided in this Agreement, all such communications shall be deemed to
have been duly given when transmitted by telex or telecopier, delivered to the
telegraph or cable office
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or personally delivered or, in the case of a mailed notice, upon receipt, in
each case given or addressed as aforesaid.
12.03 Expenses, Etc. If an Event of Default occurs, the Company agrees
to pay or reimburse each of the Lenders and the Administrative Agent for paying
all costs and expenses of each of the Lenders and the Administrative Agent
(including counsels' fees) incurred as a result of such Event of Default and
collection, enforcement, bankruptcy, insolvency and other proceedings resulting
therefrom.
12.04 Indemnification. The Company shall indemnify the Administrative
Agent, the Lenders and each affiliate thereof and their respective directors,
officers, employees, attorneys and agents from, and hold each of them harmless
against, any and all losses, liabilities, claims or damages to which any of them
may become subject, insofar as such losses, liabilities, claims or damages arise
out of or result from (i) any actual or proposed use by the Company of the
proceeds of any extension of credit by any Lender hereunder or breach by the
Company of this Agreement or any other Basic Document, (ii) any Environmental
Liabilities or (iii) any investigation, litigation or other proceeding
(including any threatened investigation or proceeding) relating to the
foregoing, whether or not the indemnified Person is a party thereto, and the
Company shall reimburse the Administrative Agent and each Lender, and each
affiliate thereof and their respective directors, officers, employees and
agents, upon demand for any expenses (including legal fees and fees of
engineers, environmental consultants and similar technical personnel) incurred
in connection with any such investigation or proceeding; but excluding any such
losses, liabilities, claims, damages or expenses incurred by reason of the gross
negligence or willful misconduct of the Person to be indemnified.
12.05 Amendments, Etc. No amendment or waiver of any provision of this
Agreement or the Notes, nor any consent to any departure by the Company
therefrom, shall in any event be effective unless the same shall be agreed or
consented to by the Majority Lenders and the Company, and each such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, that no amendment, waiver or consent shall
(i) increase any Commitment of any Lender or subject any Lender to any
additional obligations, without the written consent of such Lender; (ii) reduce
the principal of, or interest on, any Loan, or any fees hereunder, without the
written consent of each Lender affected thereby; (iii) postpone any date fixed
for any payment of principal of, or interest on, any Loan, or any fee hereunder
pursuant to Sections 2.03, 4.01 or 4.02 hereof, without the written consent of
each Lender affected thereby; (iv) change the percentage of any of the
Commitments or of the aggregate unpaid principal amount of any of the Loans, or
the number of Lenders, which
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shall be required for the Lenders or any of them to take any action under this
Agreement, without the written consent of each Lender; or (v) change any
provision contained in Sections 2.07, 6, 12.03 or 12.04 hereof or this Section
12.05 or Section 12.08 hereof. Notwithstanding anything in this Section 12.05 to
the contrary, no amendment, waiver or consent shall be made with respect to
Section 11 without the consent of the Administrative Agent.
12.06 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns except that the Company may not assign its rights or obligations
hereunder or under the Notes without the prior written consent of all of the
Lenders. Each Lender may assign any Loan or Loans or all or any part of its
Commitment (i) to any affiliate thereof, (ii) to any other Lender, or (iii) with
the consent of the Company and the Administrative Agent, which consents shall
not be unreasonably withheld, to any other bank or financial institution or
fund; provided that (x) any assignment shall not be less than $10,000,000 or, if
less, shall constitute an assignment of all of such Lender's Commitment and
Loans and (y) the Company shall be deemed to be reasonable in withholding
consent if the assignee is not exempt from United States withholding taxes. Upon
execution by the assignor and the assignee of an instrument pursuant to which
the assignee assumes such rights and obligations, payment by such assignee to
such assignor of an amount equal to the purchase price agreed between such
assignor and such assignee and delivery to the Administrative Agent and the
Company of an executed copy of such instrument together with payment by such
assignee to the Administrative Agent of a processing fee of $2,500, such
assignee shall have, to the extent of such assignment (unless otherwise provided
therein), the same rights and benefits as it would have if it were a Lender
hereunder and the assignor shall be, to the extent of such assignment (unless
otherwise provided therein) released from its obligations under this Agreement.
Upon the consummation of such assignment, the Company shall make appropriate
arrangements so that, if required, new Notes are issued to the assignor and the
assignee. If such assignee is not incorporated under the laws of the United
States of America or a state thereof, it shall, prior to the effectiveness of
the applicable instrument of assumption, deliver to the Company and the
Administrative Agent certification as to exemption from deduction or withholding
of any United States federal income taxes in accordance with Section 5.08(f).
Each Lender may (without the consent of any other party to this Agreement) sell
participations in all or any part of any Loan or Loans made by it to another
bank or other entity, in which event the participant shall not have any rights
under this Agreement (except as provided in the next succeeding sentence
hereof), or in the case of a Loan, such Lender's Note (the participant's rights
against such Lender in respect of such participation to be those set forth in
the agreement executed by such Lender in favor of the participant relating
thereto, which agreement shall not give the participant the right to consent to
any
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<PAGE> 59
modification, amendment or waiver other than one described in clause (i), (ii)
or (iii) of Section 12.05 hereof). The Company agrees that each participant
shall be entitled to the benefits of Sections 5.07 and 6 with respect to its
participation; provided that no participant shall be entitled to receive any
greater amount pursuant to such Sections than the transferor Lender would have
been entitled to receive in respect of the amount of the participation
transferred by such transferor Lender to such participant had no such transfer
occurred. Each Lender may furnish any information concerning the Company and its
Subsidiaries in the possession of such Lender from time to time to assignees and
participants (including prospective assignees and participants) which have
agreed in writing to be bound by the provisions of Section 12.07 hereof. The
Administrative Agent and the Company may, for all purposes of this Agreement,
treat any Lender as the holder of any Note drawn to its order (and owner of the
Loans evidenced thereby) until written notice of assignment or other transfer
shall have been received by them from such Lender. Notwithstanding anything to
the contrary, any Lender may at any time assign all or any portion of its rights
under this Agreement and its Notes to a Federal Reserve Bank. No such assignment
shall release the transferor Lender from its obligations hereunder.
12.07 Confidentiality. Each Lender agrees to keep confidential any
information delivered or made available by the Company to it prior to the end of
the term of this Agreement which is clearly indicated to be confidential
information; provided that nothing herein shall prevent any Lender from
disclosing such information (i) to any other Lender, (ii) to its officers,
directors, employees, affiliates, agents, attorneys and accountants who have a
need to know such information in accordance with customary banking practices and
who receive such information having been made aware of the restrictions set
forth in this Section, (iii) upon the order of any court or administrative
agency, (iv) upon the request or demand of any regulatory agency or authority
having jurisdiction over such Lender, (v) which has been publicly disclosed,
(vi) to the extent reasonably required in connection with any litigation to
which the Administrative Agent, any Lender, the Company or their respective
affiliates may be a party, (vii) to the extent reasonably required in connection
with the exercise of any remedy hereunder, (viii) to such Lender's legal counsel
and independent auditors, and (ix) to any actual or proposed participant or
assignee of all or part of its rights hereunder which has agreed in writing to
be bound by the provisions of this Section 12.07.
12.08 Survival. The obligations of the Company under Sections 5.08,
6.01, 6.05, 12.03 and 12.04 hereof and the obligations of the Lenders under
Sections 11.05 and 12.07 shall survive the repayment of the Loans and the
termination of the Commitments.
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12.09 Captions. The table of contents and the captions and section
headings appearing herein are included solely for convenience of reference and
are not intended to affect the interpretation of any provision of this
Agreement.
12.10 Counterparts; Integration. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument, and any of the parties hereto may execute this Agreement by
signing any such counterpart. This Agreement constitutes the entire agreement
and understanding among the parties hereto and supersedes any and all prior
agreements and understandings, oral and written, relating to the subject matter
hereof (except to the extent specific reference is made to any such agreement in
Section 2.03 hereof).
12.11 GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.
THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAW OF THE STATE OF NEW YORK. THE COMPANY HEREBY SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY
FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. THE COMPANY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN
SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH OF THE COMPANY, THE ADMINISTRATIVE
AGENT AND THE LENDERS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
RPM, INC.
By
--------------------------------
Title:
Address for Notices:
2628 Pearl Road
P.O. Box 777
Medina, Ohio 44258
Attention: Frank C. Sullivan,
Executive Vice President -
Chief Financial Officer
Telephone Number: 330-273-5090 or
330-273-8808
Telecopy Number: 330-225-8743
56
<PAGE> 62
Commitment: THE CHASE MANHATTAN BANK
$70,000,000.00
By
---------------------------------
Title:
Address for Notices:
The Chase Manhattan Bank
1 Chase Manhattan Plaza
New York, New York 10081
Attention: Scott S. Ward
Telecopy Number: (212) 552-5795
Lending Offices for
all Loans:
The Chase Manhattan Bank
1 Chase Manhattan Plaza, 8th Floor
New York, New York 10081
Attention: Loan and Agency Services
Telecopy Number: (212) 552-5777
57
<PAGE> 63
Commitment: NATIONAL CITY BANK
$60,000,000.00
By
------------------------
Title:
Address for Notices:
National City Bank
P.O. Box 5756
Cleveland, Ohio 44101
LOC #2104
Attention: Terri L. Cable
Telecopy Number: (216) 575-9396
Lending Offices for all Loans:
National City Bank
P.O. Box 5756
Cleveland, Ohio 44101
LOC #2104
Attention: Connie Djukic
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Commitment: CREDIT LYONNAIS CHICAGO
BRANCH
$55,000,000.00
By
---------------------------
Title:
Address for Notices:
Credit Lyonnais Chicago Branch
227 W. Monroe Street - Suite 3800
Chicago, Illinois 60606
Attention: Eric Tobin/
Julie Kanak
Telecopy Number: (312) 641-0527
Lending Office for all Loans
Credit Lyonnais Chicago Branch
227 W. Monroe Street - Suite 3800
Chicago, Illinois 60606
Attention: Rosette Liptak
Telecopy Number: (312) 641-5834
59
<PAGE> 65
Commitment: THE FIRST NATIONAL BANK
OF CHICAGO
$55,000,000.00
By
-----------------------------
Title:
Address for Notices:
First Chicago Capital Markets
Corporate Banking-Midwest
Attn: Marguerite Canestraro
611 Woodward Avenue
Suite 8074
Detroit, MI 48226
Telecopy Number: (313) 225-3269
Lending Office for all Loans:
The First National Bank of Chicago
One First National Plaza
Suite 0318/1-19
Chicago, Illinois 60670
Attention: Ernest Misiora
Telecopy Number: (312) 732-1158
60
<PAGE> 66
Commitment: KEYBANK NATIONAL ASSOCATION
$55,000,000.00
By
---------------------------
Title:
Address for Notices:
KeyBank National Association
127 Public Square
Cleveland, Ohio 44113
Attention: Helen France
Telecopy Number: (216) 689-4981
Lending Office for all Loans:
KeyBank National Association
127 Public Square
Cleveland, Ohio 44113
Attention: Helen France
Telecopy Number: (216) 689-4981
61
<PAGE> 67
Commitment: PNC BANK, NATIONAL ASSOCIATION
$55,000,000.00
By
----------------------------
Title:
Address for Notices:
PNC Bank, National Association
1 PNC Plaza
249 Fifth Avenue, Second Floor
Pittsburgh, Pennsylvania 15222-2707
Attention: C.J. Richardson
Telecopy Number: (412) 762-6484
Lending Office for all Loans:
PNC Bank, National Association
1 PNC Plaza
249 Fifth Avenue, Second Floor
Pittsburgh, Pennsylvania 15222-2707
Attention: Denise Simeone
Telecopy Number: (412) 762-6484
62
<PAGE> 68
Commitment: NATIONSBANK, N.A.
$40,000,000.00
By
---------------------------
Title:
Address for Notices:
NationsBank, N.A.
100 North Tryon
Corporate Center
8th Floor
Charlotte, NC 28255
Attention: Phil Durand
Telecopy Number: (704) 388-0960
Lending Office for all Loans:
NationsBank, N.A.
101 North Tryon
15th Floor
Charlotte, NC 28255
Attention: Robert Woodbury
Telecopy Number: (704) 386-8694
63
<PAGE> 69
Commitment: HARRIS TRUST AND SAVINGS BANK
$40,000,000.00
By
--------------------------
Title:
Address for Notices:
Harris Trust and Savings Bank
111 West Monroe Street
P.O. Box 755
Chicago, Illinois 60690-0755
Attention: William A. McDonnell
Telecopy Number: (312) 461-2591
Lending Office for all Loans:
Harris Trust and Savings Bank
111 West Monroe Street
P.O. Box 755
Chicago, Illinois 60690-0755
Attention: Arlett Hall
Telecopy Number: (312) 461-2591
64
<PAGE> 70
Commitment: WACHOVIA BANK OF GEORGIA, N.A.
$40,000,000.00
By
---------------------------
Title:
Address for Notices:
Wachovia Bank of Georgia, N.A.
191 Peachtree Street, 28th Floor
Atlanta, Georgia 30303
Attention: Katherine Glista
Telecopy Number: (404) 332-6898
Lending Office for all Loans:
Wachovia Bank of Georgia, N.A.
191 Peachtree Street, 28th Floor
Atlanta, Georgia 30303
Attention: Heidi McLaughlin
Telecopy Number: (404) 332-1118
65
<PAGE> 71
Commitment: MELLON BANK
$30,000,000.00
By
---------------------------
Title:
Address for Notices:
Mellon Bank
One Mellon Bank Center
Room 151-4401
Pittsburgh, PA 15258
Attention: George B. Davis
Telecopy Number: (412) 234-8888
Lending Office for all Loans:
Mellon Bank
One Mellon Bank Center
Room 151-4401
Pittsburgh, PA 15258
Attention: George B. Davis
Telecopy Number: (412) 234-8888
TOTAL COMMITMENTS
$500,000,000.00
66
<PAGE> 72
THE CHASE MANHATTAN BANK,
as Administrative Agent
By
----------------------------
Title:
Address for Notices:
The Chase Manhattan Bank
1 Chase Manhattan Plaza, 8th Floor
New York, New York 10081
Attention: Loan and Agency Services
Telecopy Number: (212) 552-5777
Copy to:
The Chase Manhattan Bank
1 Chase Manhattan Plaza
New York, New York 10081
Attention: Scott S. Ward
Telecopy Number:(212) 552-5795
67
<PAGE> 73
PRICING SCHEDULE
The facility fee rate and "Applicable Margin" for each Type of
Revolving Loan for any day are the respective percentages set forth below in the
applicable row under the column corresponding to the Status that exists on such
day:
<TABLE>
<CAPTION>
===================================================================================================================
Level Level Level Level Level Level
Status I II III IV V VI
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Facility Fee Rate .075% .10% .125% .175% .225% .35%
- -------------------------------------------------------------------------------------------------------------------
Euro-Dollar Revolving Loans .175% .20% .25% .275% .375% .525%
- -------------------------------------------------------------------------------------------------------------------
CD Loans .30% .325% .375% .40% .50% .65%
- -------------------------------------------------------------------------------------------------------------------
Base Rate Loans 0% 0% 0% 0% 0% 0%
===================================================================================================================
</TABLE>
For purposes of this Schedule, the following terms have the following
meanings:
"Applicable Indebtedness" means senior unsecured long-term debt of the
Company.
"Level I Status" exists at any date if, at such date, the Applicable
Indebtedness is rated A- or higher by S&P and A3 or higher by Moody's.
"Level II Status" exists at any date if, at such date, (i) the
Applicable Indebtedness is rated BBB+ or higher by S&P and Baa1 or higher by
Moody's and (ii) Level I Status does not exist.
"Level III Status" exists at any date if, at such date, (i) the
Applicable Indebtedness is rated BBB or higher by S&P and Baa2 or higher by
Moody's and (ii) neither Level I Status nor Level II Status exists.
"Level IV Status" exists at any date if, at such date, (i) the
Applicable Indebtedness is rated BBB- or higher by S&P and Baa3 or higher by
Moody's and (ii) none of Level I Status, Level II Status or Level III Status
exists.
<PAGE> 74
"Level V Status" exists at any date if, at such date, (i) the
Applicable Indebtedness is rated BB+ or higher by S&P and Ba1 or higher by
Moody's and (ii) none of Level I Status, Level II Status, Level III Status or
Level IV Status exists.
"Level VI Status" exists at any date if, at such date, no other Status
exists.
"Moody's" means Moody's Investors Service, Inc.
"S&P" means Standard & Poor's Ratings Services, a division of the
McGraw-Hill Companies, Inc.
"Status" refers to the determination of which of Level I Status, Level
II Status, Level III Status, Level IV Status, Level V Status or Level VI Status
exists at any date.
The credit ratings to be utilized for purposes of this Schedule are
those assigned to senior unsecured long-term debt securities without third-party
credit enhancement, and any rating assigned to any other debt security shall be
disregarded. The rating in effect at any date is that in effect at the close of
business on such date.
2
<PAGE> 75
SCHEDULE I
The following is a list of the direct and indirect operating subsidiaries of and
joint ventures and similar persons invested in by RPM, Inc. as of February 1,
1997.
<TABLE>
SUBSIDIARIES
<CAPTION>
Percentage of
Securities
Jurisdiction of Owned
NAME Incorporation BY RPM, INC.(1, 2, 3, 22, 23)
- ---- ------------- -----------
<S> <C> <C>
Bondex International, Inc. Ohio 100%
Consolidated Coatings Corporation Ohio 100%(4)
Day-Glo Color Corp. Ohio 100%
Kop-Coat, Inc. Ohio 100%(5)
Mameco International, Inc. Ohio 100%(6)
Republic Powdered Metals, Inc. Ohio 100%(7)
RPM of North Carolina, Inc. Ohio 100%(7)
Bondo/Mar-Hyde Corporation Ohio 100%
Euchem, Inc. Ohio 100%(8)
Westgate Advertising, Inc. Ohio 100%
BSP Systems, Inc. Delaware 100%(7)
Carboline Company Delaware 100%(9)
Carboline International Corporation Delaware 100%(9)
RPM World Trade, Ltd. Virgin Islands 100%(10)
Stonhard, Inc. Delaware 100%(11)
Wisconsin Protective Coatings Corp. Delaware 100%(12)
American Emulsions Co., Inc. Georgia 100%(14)
Lubraspin Corporation Georgia 100%(14)
Select Dye & Chemical, Inc. Georgia 100%(14)
</TABLE>
<PAGE> 76
<TABLE>
<CAPTION>
<S> <C> <C>
Design/Craft Fabric Corporation Illinois 100%
Chemical Specialties Maryland 100%
Manufacturing Corporation
RPM of Mass, Inc. Massachusetts 100%(15)
Haartz-Mason, Inc. Massachusetts 100%(15)
Westfield Coatings Corporation Massachusetts 100%(15)
Craft House Corporation Michigan 100%(16)
William Zinsser & Co., New Jersey 100%(13)
Incorporated
Alox Corporation New York 100%(5)
Floquil-Polly S Color Corp. New York 100%
Mohawk Finishing Products, Inc. New York 100%(17)
Richard E. Thibaut, Inc. New York 100%(13)
Chemical Coatings, Inc. North Carolina 100%
Paramount Technical Products, Inc. South Dakota 100%(6)
Briner Paint Mfg. Co. Texas 100%(12)
Sentry Polymers, Inc. Texas 100%
First Colonial Insurance Company Vermont 100%
Bondex International (Canada) Ltd. Canada 100%
Stonhard (Canada) Ltd. Canada 100%(11)
Stonhard France SARL France 100%(22)
Stonhard GbmH Germany 100%(11)
Stonhard S.A. de C.V. Mexico Mexico 100%(11)
Composite Structures International, Inc. Delaware 100%(18)
Dryvit Systems, Inc. Rhode Island 100%(19)
First Colonial Insurance Company Vermont 100%
Rust-Oleum Corporation Illinois 100%(20)
Simian Company, Inc. Delaware 100%
Star Finishing Products, Inc. Illinois 100%
</TABLE>
2
<PAGE> 77
<TABLE>
<CAPTION>
<S> <C> <C>
TCI, Inc. Georgia 100%
The Testor Corporation Ohio 100%(21)
RPM/Europe B.V. Netherlands 100%(22)
RPM/Belgium N.V. Belgium 96%(23)
RPM/Luxembourg S.A. Luxembourg 88%(23)
Espan Corporation Pte Ltd. Singapore 100%(24)
RPM Asia Pte Ltd. Singapore 100%(24)
<FN>
- -------------------------------------------------------------------------------------------------------------------
(1) The ownership of Directors' qualifying shares by persons other than
RPM, Inc. is not reflected in the stated percentage ownership.
(2) Included in the Company's consolidated financial statements.
(3) In addition, RPM, Inc. owns 100% of the outstanding shares of
Cal-O-Cam, Inc., a Michigan corporation, FOPECO, Inc., a New York
corporation, and RPM France N.V., a Netherlands Antilles corporation,
all of which are non-operating subsidiaries. The outstanding shares of
Alox International Sales Corp., a New York corporation which is a
non-operating subsidiary, are owned by Alox Corporation, a wholly-owned
subsidiary of Kop-Coat, Inc. a wholly owned subsidiary of RPM, Inc.
(4) Consolidated Coatings Corporation owns 100% of the outstanding shares
of Consolidated Inter-Continental Corporation, an Ohio corporation as
well s 100% of the outstanding shares of Consolidated Protective
Coatings, Ltd., a Canadian corporation.
(5) Kop-Coat, Inc. owns 100% of the outstanding shares of Alox Corporation,
a New York corporation.
(6) Mameco International, Inc. owns 100% of the outstanding shares of
Paramount Technical Products, Inc., a South Dakota corporation, and of
L.D. Wracm, Inc., an Ohio corporation.
(7) Republic Powdered Metals, Inc. owns 100% of the outstanding shares of
BSP Systems, Inc., a Delaware corporation. BSP Systems, Inc. and RPM of
North Carolina, Inc. each own 50% of AGR Company, an Ohio general
partnership.
(8) Euchem, Inc. owns 50% of The Euclid Chemical Company, an Ohio general
partnership, which, in turn, owns 100% of the outstanding shares of
Euclid Chemical Canada, Ltd. and
</TABLE>
3
<PAGE> 78
two Ohio corporations, Redwood Transport, Inc. and Euclid Chemical
International Sales Corporation, a non-operating subsidiary.
(9) Carboline Company owns 100% of the outstanding shares of Map II, Inc.,
and Carboline International Corporation. Through Carboline
International Corporation. Carboline owns 100% of Carboline Dubai
Corporation, a Missouri corporation, and 100% of Carboline Marine,
Ltd., a Delaware corporation. Carboline International Corporation also
owns 54% of Chemrite Coatings, Limited, a South African corporation,
and less than 50% interests in corporations in Korea, Norway, Japan,
India and Australia.
(10) FSC Corporation.
(11) Stonhard, Inc. owns 100% of the outstanding shares of Stonhard Canada
Limited, a Canadian federal corporation. Stonhard GmbH, a German
corporation, Stonhard Luxembourg, S.A., and Stonhard S.A. de C.V.
Mexico, a Mexican corporation.
(12) Wisconsin Protective Coatings, Corp. owns 100% of the outstanding
shares of Briner Paint Mfg. Co., a Texas corporation
(13) William Zinsser & Co. Incorporated owns 100% of the outstanding shares
of Richard E. Thibaut, Inc., a New York corporation, and
Mantrose-Haeuser Co., Inc., a Massachusetts corporation.
(14) American Emulsions Co., Inc. owns 100% of the outstanding shares of
each of the following Georgia corporations: Lubraspin Corporation and
Select Dye & Chemicals, Inc.
(15) RPM of Mass, Inc. owns 100% of the outstanding shares of each of the
following Massachusetts corporations: Haartz-Mason, Inc. and Westfield
Coatings Corporation.
(16) Craft-House Corporation owns 75% of DXIM GmbH, a German corporation.
(17) Mohawk Finishing Products, Inc. owns 100% of the outstanding shares of
H. Behlen & Bro., Inc., a New York corporation.
(18) Composite Structures International, Inc. owns 100% of the outstanding
shares of Fibergrate Corporation, a Texas corporation; Chemgrate
Corporation, a Washington corporation; Chem-Grate Corporation, a
Tennessee corporation; Chemgrate (Asia) Inc., a Washington corporation;
and Chemgrate (PRC), Inc., a Washington corporation.
(19) Dryvit Systems, Inc. owns 100% of the outstanding shares of Dryvit
Systems, Canada, Ltd. and Tech 21 Panel Systems, Inc., a Rhode Island
corporation.
4
<PAGE> 79
(20) Rust-Oleum Corporation owns 100% of the outstanding shares of
Rust-Oleum Concrete Protection Systems, Inc., an Oklahoma corporation;
Rust-Oleum Sales Company, Inc., an Ohio corporation, ROC Sales, Inc. an
Illinois corporation; and Rust-Oleum International Corporation, a
Delaware corporation.
(21) The Testor Corporation owns 100% of the outstanding shares of Testor
Australia Pty, Ltd. an Australia corporation.
(22) RPM, Inc. owns 100% of the outstanding shares of RPM/Europe B.V., a
Netherlands holding company which owns 100% of the outstanding shares
of the following companies; Rust-Oleum/Netherlands, B.V., a Netherlands
corporation; Radiant Color N.V., a Belgian corporation (which owns 100%
of the outstanding shares of Martin Mathys, N.V., a Belgian
corporation); and RPM/Praha spol.n.r.o., a Czech Republic corporation.
RPM/Europe B.V. also owns 100% of the outstanding shares of RPOW UK
Limited, a U.K. holding company which owns 100% of the outstanding
shares of the following U.K. companies; Chemspec Europe Limited;
Rust-Oleum U.K. Limited; Stonhard U.K. Limited; and Mantrose UK Limited
(which owns 100% of the outstanding shares of Agricoat Industries,
Limited, also a U.K. corporation).
RPM/Europe B.V. also owns 100% of the outstanding shares of RPOW
(France) S.A., a French holding company which owns 100% of the
outstanding shares of Rust-Oleum (France) S.A. and Stonhard S.A.R.L., a
French corporation.
(23) RPM, Inc. also owns 96% of the outstanding shares of RPM (Belgium)
N.V., a Belgian corporation (which owns 100% of the outstanding shares
of Monile France S.A., a French corporation); and 88% of the
outstanding shares of RPM (Luxembourg) S.A., a Luxembourg corporation.
RPM, Inc. also owns 100% of the outstanding shares of RPM Asia Pte Ltd.
a Singapore corporation which owns 100% of the outstanding shares of
RPM China Pte Ltd. and Espan Corporation Pte Ltd (which owns 100% of
the outstanding shares of Espan Building Industries Pte Ltd.), all
Singapore corporations.
JOINT VENTURES AND OTHER SIMILAR PERSONS
----------------------------------------
RPM China Pte Ltd., a wholly-owned subsidiary of RPM Asia Pte Ltd., is
a 30% joint venture partner in Managro Industries Pte Ltd., a Singapore
company.
RPM/Europe B.V. and Dryvit Systems, Inc. are 51% joint venture partners
in Midwest Traders International, a Polish company.
5
<PAGE> 80
EXHIBIT A
[Form of Note]
PROMISSORY NOTE
____________, 199_
New York, New York
FOR VALUE RECEIVED, RPM, Inc., an Ohio corporation (the "COMPANY"),
hereby promises to pay to ___________________ (the "LENDER"), or order, at the
principal office of The Chase Manhattan Bank at 1 Chase Manhattan Plaza, New
York, New York 10081, the aggregate unpaid principal amount of the Loans made by
the Lender to the Company under the Credit Agreement referred to below, in
lawful money of the United States of America and in immediately available funds,
on the dates and in the principal amounts provided in the Credit Agreement, and
to pay interest on the unpaid principal amount of each such Loan, at such
office, in like money and funds, for the period commencing on the date of such
Loan until such Loan shall be paid in full, at the rates per annum and on the
dates provided in the Credit Agreement.
The Lender is hereby authorized by the Company to endorse on the
schedule (or a continuation thereof) attached to this Note, the date, amount,
Class and Type of and Interest Period (if any) for each Loan made by the Lender
to the Company under the Credit Agreement, and the date and amount of each
payment or prepayment of principal of such Loan received by the Lender, provided
that any failure by the Lender to make any such endorsement shall not affect the
obligations of the Company under the Credit Agreement or under this Note in
respect of such Loans.
This Note is one of the Notes referred to in the Credit Agreement (as
modified and supplemented and in effect from time to time, the "CREDIT
AGREEMENT") dated as of February __, 1997 among the Company, the lenders named
therein (including the Lender), and The Chase Manhattan Bank, as Administrative
Agent, and evidences Loans made by the Lender thereunder. Capitalized terms used
in this Note have the respective meanings assigned to them in the Credit
Agreement.
<PAGE> 81
The Credit Agreement provides for the acceleration of the maturity of
this Note upon the occurrence of certain events and for prepayments of Loans
upon the terms and conditions specified therein.
This Note shall be governed by and construed in accordance with the
laws of the State of New York.
RPM, INC.
By
---------------------------
Title:
2
<PAGE> 82
SCHEDULE
This Note evidences Loans made under the within-described Credit
Agreement to the Company, on the dates, in the principal amounts, of the classes
and types and maturing on the dates set forth below, subject to the payments and
prepayments of principal set forth below:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Principal Date of Amount
Amount of Class of Type of Interest Payment or Paid or Balance
Date Made Loan Loan Loan Period Prepayment Prepaid Outstanding
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 83
EXHIBIT B-1
OPINION OF
COUNSEL FOR THE COMPANY
[Letterhead of CALFEE, HALTER & GRISWOLD LLP]
February __, 1997
To the Lenders and the Administrative
Agent referred to below
c/o The Chase Manhattan Bank,
as Administrative Agent
1 Chase Manhattan Plaza
New York, New York 10081
Ladies and Gentlemen:
We have acted as counsel to RPM, Inc., an Ohio corporation (the
"Company"), in connection with the Credit Agreement, dated as of February __,
1997 (the "Credit Agreement"), among the Company, the financial institutions
referred to therein (the "Lenders") and The Chase Manhattan Bank, as
administrative agent (in such capacity, the "Administrative Agent"). Capitalized
terms used but not defined herein shall have the meanings assigned to such terms
in the Credit Agreement. This opinion letter is being furnished to you at the
request of the Company pursuant to Section 7.01(f) of the Credit Agreement.
In rendering this opinion, we have examined executed originals or
counterparts of the Credit Agreement and the Notes. We have also examined
originals, or copies certified or otherwise authenticated to our satisfaction,
of the following documents and corporate records:
(a) A copy of Resolutions adopted by the Board of Directors of
the Company on October 18, 1996 and the Executive Committee of the
Board of Directors of the Company by unanimous written consent, dated
January __, 1997, authorizing, inter alia, the execution and delivery
of the Credit Agreement and the Notes, certified as true and correct as
of the date hereof by an officer of the Company;
<PAGE> 84
(b) A certificate from the Secretary of State of Ohio, dated
January __, 1997, with respect to the status of Company as a
corporation in good standing under the laws of the State of Ohio as of
such date;
(c) A certificate from the Secretary of State of each of the
states set forth on Schedule I, dated as of the dates set forth on
Schedule I, with respect to the status of each of Carboline Company, a
Delaware corporation, William Zinsser & Co., Incorporated, a New Jersey
corporation, Stonhard, Inc., a Delaware corporation, Dryvit Systems,
Inc., a Rhode Island corporation, and Rust-Oleum Corporation, an
Illinois corporation (hereinafter collectively, the "Significant
Subsidiaries") as a corporation in good standing under the laws of such
states as of such dates;
(d) A certificate from the Secretary of State of Ohio, dated
January __, 1997, with respect to the Articles of Incorporation of the
Company, and all amendments thereto, as of such date;
(e) A certificate from the Secretary of State of each of the
states set forth on Schedule I, dated as of the dates set forth on
Schedule I, with respect to the existing Articles of Incorporation or
Certificates of Incorporation, as the case may be, and all amendments
thereto, of each of the Significant Subsidiaries as of such dates;
(f) A copy of the Articles of Incorporation and Code of
Regulations of Company certified as true, correct and complete as of
the date hereof by an officer of the Company;
(g) A copy of the Articles of Incorporation or Certificate of
Incorporation and the By-Laws or Code of Regulations of each of the
Significant Subsidiaries, each certified as true, correct and complete
by an officer of each of the Subsidiaries as of the date hereof,
respectively;
(h) A certificate of an officer of the Company, a copy of
which certificate is attached hereto as Exhibit A-1 (the "Company
Officer's Certificate");
(i) A certificate of certain officers of each of the
Significant Subsidiaries, a copy of which certificate is attached
hereto as Exhibit A-2 (the "Subsidiary Officers' Certificate" and,
together with the Company Officer's Certificate, the "Officers
Certificates"), and
(j) Such other corporate documents and records of the Company
and the Significant Subsidiaries, such other certifications or
2
<PAGE> 85
representations as to factual matters of public officials and officers
of the Company and the Significant Subsidiaries, and such other
documents as we have deemed necessary or appropriate for the purpose of
rendering this opinion.
In rendering our opinion, we have relied upon the
above-referenced certificates of good standing, certified Certificates
of Incorporation and certified Articles of Incorporation, as the case
may be, from the Secretaries of State of Delaware, Rhode Island, Ohio
and New Jersey. Any opinion hereinafter set forth relative to valid
existence or good standing of the Company under the laws of the State
of Ohio is based solely upon the above-referenced certificate of good
standing. Any opinion hereinafter set forth relative to the
incorporation, valid existence or good standing of the Significant
Subsidiaries under the laws of the applicable states is based solely
upon the above-referenced certificates of good standing and certified
Articles of Incorporation or Certificates of Incorporation with respect
to such Significant Subsidiaries. We have not conducted an independent
review or investigation of the matters set forth in any such
certificate of good standing or certified Articles of Incorporation or
Certificates of Incorporation.
In rendering our opinion we have not conducted any detailed
investigation into the types of businesses and activities in which the Company
engages or the manner in which the Company engages in such businesses and
activities. Accordingly, our opinions with respect to the laws of the State of
Ohio and the federal laws of the United States are expressly limited to laws or
governmental regulations of general applicability to business corporations and
we are not expressing any opinion concerning laws of particular applicability,
including, without limitation, statutes, administrative decisions, rules or
regulations of any county, municipality or special political subdivision thereof
or applicable municipal or quasi-municipal licenses, permits or approvals.
Our review as to the contractual obligations to which the Company and
the Significant Subsidiaries are bound was limited to a review of those
contractual obligations ("Material Agreements") identified to us on the
Officer's Certificates as being Material Agreements (as defined in the Officer's
Certificate).
In rendering our opinions, we have assumed, without independent
investigation, that:
(i) all records and documents examined by us in connection with the
preparation of this opinion letter are authentic and, to the extent material to
any
3
<PAGE> 86
opinion hereinafter expressed, accurate and complete, and, to the extent
represented by photostatic or certified copies, conform to the respective
originals;
(ii) all signatures contained in such records and documents (other than
signatures of officers of the Company executing the Credit Agreement and the
Notes on behalf of the Company) are genuine signatures of the parties purporting
to have signed the same;
(iii) all natural persons signing said documents and records (other
than the natural persons signing the Credit Agreement and the Notes on behalf of
the Company) had, at the time of such signing, full legal capacity to sign and
deliver said documents and records;
(iv) the Credit Agreement and the Notes are the legal, valid and
binding obligations of all parties thereto other than the Company, enforceable
against such parties in accordance with their terms;
(v) no action has been taken which amends or revokes or terminates any
of the documents and records which we have reviewed; and
(vi) each of the Administrative Agent and the Lenders has complied with
all legal requirements pertaining to its status as such status relates to its
rights to enforce the Credit Agreement and the Notes against the Company.
Although we have not conducted an independent investigation of the
accuracy or reasonableness of any of these assumptions, nothing has come to our
attention leading us to question the accuracy of said assumptions.
Based upon and subject to the foregoing, and upon such further
investigation of law as we have deemed necessary, and subject to the
qualifications, exceptions and further assumptions set forth below, we are of
the opinion that:
1. The Company is duly incorporated, validly existing and in good
standing under the laws of the State of Ohio, and has all requisite corporate
power and authority to conduct its business in the manner now conducted.
2. The Company has all requisite corporate power and authority to
execute, deliver and perform the Credit Agreement and the Notes. The Company has
taken all necessary corporate action to authorize the execution, delivery and
performance of the Credit Agreement and the Notes.
4
<PAGE> 87
3. Assuming that the Credit Agreement and the Notes were to be governed
by the laws of the State of Ohio, each of the Credit Agreement and the Notes
constitutes a valid and binding obligation of the Company enforceable against
the Company in accordance with its terms.
4. The execution, delivery and performance by the Company of the Credit
Agreement and the Notes do not: (i) contravene or constitute a default under any
provision of law applicable to the Company or any provision of the Articles of
Incorporation of the Company or the Code of Regulations of the Company or (ii)
require any action by or in respect of, or filing with, any governmental body,
agency or official.
5. The execution, delivery and performance by the Company of the Credit
Agreement and the Notes do not contravene or constitute a default under any
provision of any Material Agreement binding upon the Company or its Significant
Subsidiaries or result in the creation or imposition of any Lien on any asset of
the Company pursuant to the terms of any Material Agreement.
6. Each of the Significant Subsidiaries is incorporated, validly
existing and in good standing under the laws of its state of incorporation. Each
of the Significant Subsidiaries has all requisite corporate power and authority
to own and operate its properties and to conduct its business in the manner now
conducted.
7. To our knowledge, after due inquiry, neither the Company nor any of
its Subsidiaries is an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended, 15 U.S.C. sec. 80a-1 et seq.
8. To our knowledge, after due inquiry, neither the Company nor any of
its Subsidiaries is a "holding company" or an "affiliate" of a "holding company"
or a "subsidiary company" of a "holding company" within the meaning of the
Public Utility Holding Company Act of 1935, as amended, 15 U.S.C.
sec. 79 et seq.
9. Assuming that the proceeds of the Loans are used for the purposes
set forth in the Credit Agreement, the making of the Loans will not violate
Regulation G, T, U or X of the Board of Governors of the Federal Reserve System
of the United States.
The foregoing opinions are subject to the following additional
assumptions, limitations and qualifications:
(a) Our opinions are subject to and affected by applicable bankruptcy,
insolvency, avoidance, reorganization, moratorium or similar laws affecting the
5
<PAGE> 88
rights of creditors generally including, without limitation, statutory and other
laws regarding fraudulent transfers. Our opinion as to the enforceability of the
Credit Agreement and the Notes is also subject to and affected by general
principles of equity (regardless of whether considered in a proceeding in equity
or at law). Moreover, the exercise of the rights and remedies under the Credit
Agreement and the Notes could be subject to limitation if (A) the enforcement of
such rights and remedies by any of the Lenders or the Administrative Agent is
found not to be commercially reasonable, (B) the enforcement of the rights and
remedies violates the obligations of any of the Lenders or the Administrative
Agent to act in good faith or (C) the defaults or events of default under the
Credit Agreement or the Notes are deemed by a court not to be material.
Furthermore, no opinion is expressed as to whether any provisions in the Credit
Agreement or the Notes are enforceable by means of specific enforcement.
(b) We express no opinion as to (i) the enforceability of any provision
contained in the Credit Agreement and the Notes that purports to establish (or
may be construed to establish) evidentiary standards, (ii) the enforceability of
any provision contained in the Credit Agreement or the Notes that constitutes a
waiver that is prohibited or otherwise unenforceable under applicable Ohio law
and (iii) the enforceability of any forum selection clause. We also express no
opinion as to the enforceability of any provision contained in the Credit
Agreement or the Notes which (A) purports to obligate the Company to pay for any
documentary, stamp or other taxes unless at the time such charges are required
to be paid it is lawful for such party to pay the same, (B) provides that a
waiver must be in writing or (C) purports to exculpate the Administrative Agent
or any of the Lenders from their own negligent acts and otherwise limit such
parties from certain liabilities.
(c) Our opinion in Paragraph 4(ii) relating to action by or in respect
of, or filing with, any governmental body, agency or official relates only to
actions by or in respect of, or filing with, any governmental body, agency or
official that, in our experience, without our having made any special
investigation with respect thereto, are generally applicable to business
corporations entering into commercial financing transactions of the type
contemplated by the Credit Agreement.
(d) Any provision in the Credit Agreement or the Notes purporting to
allow the collection of attorneys' fees incurred in connection with any
collection or enforcement action by any of the Lenders or the Administrative
Agent may not be valid, binding or enforceable under the laws of the State of
Ohio.
(e) We have made no investigation into the activities or nature of the
Administrative Agent or any of the Lenders. Accordingly, our opinion set forth
in paragraph 3 relating to the enforceability of the Credit Agreement and the
Notes is qualified to the extent that, in order to exercise rights and remedies
under the
6
<PAGE> 89
Credit Agreement and the Notes in courts of the State of Ohio, the
Administrative Agent or a Lender, as the case may be, may have to qualify to
transact business as a foreign corporation in the State of Ohio unless the
Administrative Agent or such Lender constitutes a "bank" under Section 1703.02
of the Ohio Revised Code, which excepts "banks" from the requirement of being
licensed to transact business as a foreign corporation in the State of Ohio.
(f) In addition, our opinion set forth in paragraph 4(ii) concerning
actions by or in respect of, or filing with, any governmental body, agency or
official expresses no opinion as to, and our opinions are qualified by and
subject to the effect of (i) any taxation to which the Lenders may be subject
under the laws of the State of Ohio or United States federal law or (ii)
compliance or noncompliance by the Company, the Administrative Agent or any of
the Lenders with any actions by or in respect of, or filing with, any
governmental body, agency or official which may be applicable to the
Administrative Agent or any of the Lenders in connection with such state or
federal taxation.
(g) Section 1343.01 of the Ohio Revised Code permits interest not
exceeding eight percent (8%) per annum "except as authorized in ... this
section". The authorized exceptions include, inter alia, indebtedness exceeding
one hundred thousand dollars and business loans to business associations or
partnerships (Sections 1341.01(B)(1)and (B)(6)(a)). We call to your attention to
the criminal statutes of the State of Ohio as set forth in Section 2905.21(H)
and Section 2905.22 of the Ohio Revised Code relating to criminal usury which
prohibit, inter alia, knowingly charging interest "at a rate exceeding
twenty-five percent per annum or the equivalent rate for a longer or shorter
period, unless ... the rate of interest is otherwise authorized by law". To date
there have not been any Ohio judicial decisions holding that the provisions of
said Section 2905.21(H) or 2905.22 are in any way applicable to a commercial
financing transaction with a corporation, a commercial finance transaction
similar to those contemplated by the Credit Agreement and the Notes, or a
transaction governed by the laws of a state other than the State of Ohio.
(h) Our opinion in paragraph 4 that the performance by the Company of
the Credit Agreement and the Notes will not violate laws applicable to the
Company assumes, with your consent, that the course of any discretionary conduct
of the Company in connection with such performance does not itself, due to the
manner in which such performance is carried out, violate any such laws.
Except as hereinafter specified, the opinions expressed herein are
limited to the laws of the State of Ohio and to United States federal law.
Except to the extent hereinafter specified, we express no opinion as to the
effect or applicability of the laws of any other jurisdiction. We note that the
Credit Agreement and the
7
<PAGE> 90
Notes are stated to be governed by the laws of the State of New York. We express
no opinion as to the enforceability of any provision which purports to subject
the Credit Agreement or the Notes to, and make the Credit Agreement or the Notes
governed by, the law of any state other than the State of Ohio except to the
extent hereinafter addressed. For purposes of rendering our opinions set forth
in paragraph 6, we have examined to the extent relevant the laws and reported
decisions of the State of Delaware and the Delaware General Corporation Law, the
New Jersey Business Corporation Act, Rhode Island Business Corporation Act and
the Illinois Business Corporation Act.
You have asked whether a court of the State of Ohio or a federal court
applying the law of the State of Ohio would apply the conflict of law principles
adopted under the law of the State of Ohio so as to give effect to the choice of
law provision set forth in the Credit Agreement and the Notes. After a review of
reported and published decisions applying the law of the State of Ohio, we are
unaware of any reported and published decision by any court of the State of Ohio
or federal court applying the law of the State of Ohio which gives effect to a
choice of law provision set forth in commercial loan documentation such as a
loan agreement, a security or guarantee agreement or a note (other than
decisions concerning notes which relate to usury issues and were rendered prior
to the adoption by the State of Ohio of the Uniform Commercial Code (hereafter,
as so adopted, the "Ohio UCC") and a recent district court decision concerning a
security agreement provision providing for the collection of attorneys' fees).
Accordingly, the opinion hereinafter set forth is based fundamentally on a
review of analogous case law.
Section 1301.05 of the Ohio Revised Code provides, in relevant part,
that parties to a transaction which bears a reasonable relation to the State of
Ohio and to another state may agree that the laws of the State of Ohio or the
laws of such other state shall govern the rights and duties of said parties.
This provision of the law of the State of Ohio has not yet been applied to a
credit agreement, a note or a guarantee agreement. However, courts of other
states and federal courts interpreting state law of other states have applied
Section 1-105 of the Uniform Commercial Code to uphold a choice of law provision
set forth in notes or loan agreements in cases involving conflicting state usury
laws. See, e.g., Woods - Tucker Leasing Corp. of Georgia v. Hutcheson-Ingram
Development Co., 642 F.2d 744 (5th Cir. 1981), Hammel v. Ziegler Financing
Corp., 113 Wis.2d 73, 334 N.W.2d 913 (Wis. Ct. App. 1983). Ohio courts generally
defer to decisions by other state courts regarding the interpretation of
identical UCC provisions. Mack Financial Corporation v. Kenworth of Cincinnati,
Inc., No. C-790740, slip op. at 3 (Ohio Ct., App. June 3, 1981). Since the
adoption of the Ohio UCC, the only reported and published Ohio decision
addressing a choice of law provision in commercial loan documents concerns a
provision for the collection of attorneys'
8
<PAGE> 91
fees contained in a security agreement. In Clarklift of Northwest Ohio, Inc. v.
Clark Equipment Company, 869 F.Supp. 533 (N.D. Ohio 1994), the court refused to
honor the parties' choice of Michigan law to govern the enforceability of a
provision providing for the recovery of attorneys' fees. Each of the two
security agreements between the parties stated that the agreements were to be
"construed in accordance with and governed by the laws of the State of
Michigan." The court cited Schulke Radio Prod. v. Midwestern Broadcast, 6 Ohio
St.3d 436, 453 N.E.2d 683 (Ohio 1983), for the proposition that under Ohio law
the laws of the state chosen by the parties to a security agreement would be
applied unless: (i) the chosen state has no substantial relationship to the
parties or the transaction and there is no other reasonable basis for the
parties' choice or (ii) application of the law of the chosen state would be
contrary to a fundamental policy of a state having a materially greater interest
in the issue than the chosen state and such state would be the state of the
applicable law in the absence of a choice by the parties.
In Clarklift, the court concluded that the choice of Michigan law
should not be upheld because: (i) the secured party, in relying entirely upon
Ohio law in its foreclosure proceedings, effectively waived its contractual
right to have Michigan law applied and (ii) the recovery of attorney fees is
repugnant to Ohio public policy and, under the facts of Clarklift, the State of
Ohio had a greater material interest in the choice of law issue than the State
of Michigan. The court's rationale for finding the State of Ohio to have a
materially greater interest in Clarklift appears to have been premised upon: (a)
the borrower's only place of business being in the State of Ohio; (b) all of the
assets of the borrower being located in the State of Ohio; (c) the secured
party's filing documents in the State of Ohio to record its security interest in
the borrower's assets and (d) the secured party's doing business in the State of
Ohio. The court's determination was not altered by the fact that one of the
parties was incorporated in the State of Michigan or that the security
agreements were deemed to be entered into in the State of Michigan.
Other than Clarklift, the only reported and published Ohio decisions
addressing choice of law provisions in commercial loan documents concern choice
of law issues relating to usury issues in connection with promissory notes and
were decided prior to the adoption of the Ohio UCC. Although ultimately
upholding the choice of law provisions of each subject note, such decisions did
not establish a clearly defined rationale or precedent for doing so. In Kilgore
v. Dempsey, 25 Ohio St. 610 (Ohio 1874), the Supreme Court of Ohio upheld a
choice of Ohio law as to the interest rate of a note payable by a maker who was
a resident of the State of Ohio although the interest rate set forth in such
note would have been usurious under Pennsylvania law. The holder of the note was
a resident of Pennsylvania and the note was to be paid in Pennsylvania. The
Court held that the parties to the note had a legal right to contract "in good
faith" with reference to
9
<PAGE> 92
the laws of either the State of Ohio or Commonwealth of Pennsylvania. In Scott
v.Perlee, 39 Ohio St. 63 (Ohio 1883), the Supreme Court of Ohio upheld a choice
of Illinois law as to the interest rate of a note payable by a maker who was an
Illinois resident to a holder who was a resident of the State of Ohio although
the interest rate would have been usurious under the law of the State of Ohio.
The Court stated that:
... it is undoubtedly the law of this state, and indeed it is
now well established almost universally, that where a contract
is entered into in one state, to be performed in another,
between citizens of each, and the rate of interest is
different in the two, the parties may, IN GOOD FAITH,
stipulate for the rate of either, and thus expressly determine
with reference to the law of which place that part of the
contract shall be decided. [emphasis added]
Based on our review, we are unaware of any controlling and published
authority under the laws of the State of Ohio applying Section 187(2) of the
Restatement (Second) of Conflict of Laws (1971) to the enforceability of a
choice of law provision in a credit agreement, note or guarantee agreement.
Further, Clarklift is the only published authority under the laws of the State
of Ohio applying Section 187(2) to the enforceability of a choice of law
provision in a security agreement. Although of limited value as a precedent by
reason of its unpublished nature, we have found one relevant unpublished
decision, Michigan Bank - Midsouth v. James R. Strohl, 1986 WL 11425 (Ohio
App.). Therein, in upholding the parties' choice of Michigan law, the court
applied Section 187(2) of the Restatement (Second) of Conflict of Laws (1971) to
a promissory note. The case is unclear concerning whether the note contained an
express choice of Michigan law. In discussing Section 187(2), however, the court
states that a reasonable basis for the parties' choice of law exists where a
borrower chooses the law of the state where the bank advancing the funds is
located. Despite the absence of controlling precedent, we note that in cases
relating to commercial contracts other than commercial loan documents and notes,
the Supreme Court of Ohio has adopted the tests set forth in Section 187(2) of
the Restatement (Second) of Conflict of Laws (1971).
Although the matter is not free from doubt by reason of the absence of
direct and published precedent, if a case were properly presented and argued, we
believe that a court of the State of Ohio or a federal court applying the law of
the State of Ohio would adopt the tests set forth in Section 187(2) of the
Restatement (Second) of Conflict of Laws (1971), under which the law of a state
chosen by the parties in a credit agreement or note (such as the Credit
Agreement and the Notes) would be applied unless:
10
<PAGE> 93
(a) the chosen state has no substantial relationship to the parties or
the transaction and there is no other reasonable basis for the parties' choice
of governing law, or
(b) application of the law of the chosen state would be contrary to a
fundamental policy of a state which has a materially greater interest than the
chosen state in the determination of the particular issue and which would be the
state of the applicable law in the absence of an effective choice of law by the
parties.
See Clarklift of Northwest Ohio, Inc. v. Clark Equipment Company; Schulke
Radio Prod. v. Midwestern Broadcast, 6 Ohio St. 3d 436, 453 N.E.2d 683 (Ohio
1983), and Jarvis v. Ashland Oil, Inc., 17 Ohio St. 3d 189, 478 N.E.2d 786 (Ohio
1985).
In applying such Restatement tests, the Supreme Court of Ohio in Jarvis
v. Ashland Oil, Inc. stated that, even where the law of the chosen state is
concededly repugnant to and in violation of the public policy of the State of
Ohio, the law of the State of Ohio will "only be applied when it can be shown
that the state has a materially greater interest than the chosen state".
In Sekeres v. Arbaugh, 31 Ohio St. 3d 24, 508 N.E.2d 941 (Ohio 1987),
the Supreme Court of Ohio upheld an award of attorneys' fees based on a
provision in a commodity futures trading agreement providing that New York law
would govern the agreement. As a result of its finding that the State of Ohio
did not have a materially greater interest than New York, the Court found it
unnecessary to decide whether the contract's provision for the collection of
attorneys' fees would violate Ohio public policy. Determining that the State of
Ohio did not have a materially greater interest, the Court noted that: (i) the
performance of the contract was not located principally in either New York or
the State of Ohio, (ii) the transaction was approved in New York and one of the
parties was incorporated in New York, and (iii) neither the Ohio residence of
the other party to the contract nor the execution of the contract in Ohio was
determinative.
Other than Clarklift, there is no reported decision applying the law of
the State of Ohio which suggests in respect of commercial loan documentation (i)
whether the tests of Section 1301.05 of the Ohio Revised Code or Section 187(2)
of the Restatement as adopted by the Supreme Court of Ohio would supersede or
otherwise alter the earlier Ohio cases referenced above regarding "good faith"
enforceability of choice of law provisions in notes as related to usury or any
other particular issue or (ii) whether a choice of law provision as it relates
to usury, attorney's fees in connection with collections, or waivers of
equitable or legal
11
<PAGE> 94
defenses are matters of fundamental public policy of the State of Ohio or are
otherwise concededly repugnant to and in violation of the public policy of the
State of Ohio.
In the present transaction, it is our understanding that (i)
negotiations of the Credit Agreement and the Notes have occurred in New York and
telephonically between representatives located in New York and the State of
Ohio, (ii) the Company is an Ohio corporation with its principal place of
business and chief executive office in the State of Ohio, (iii) each of the
Administrative Agent and The Chase Manhattan Bank has its principal place of
business in New York, (iv) the initial funding of Loans, the funding of all
subsequent Loans, and the payment of the Administrative Agent and The Chase
Manhattan Bank will each occur in New York, (vi) the counterparts of the Credit
Agreement and the Notes executed by the Company will be delivered in New York,
(vii) the Notes will be delivered to the Administrative Agent on behalf of the
Lenders in New York, (viii) the Credit Agreement permits each Lender, in certain
circumstances, to enforce severally its remedies for nonpayment and (ix) two (2)
of the Lenders have principal offices located in the State of Ohio and two (2)
of the other Lenders have permanent offices in the State of Ohio.
In rendering this opinion, we have made no independent investigation of
the foregoing factual understandings and, with respect to such facts, we have:
(i) relied, for the purpose of rendering our opinions, exclusively upon the
facts provided to us by the parties and representatives of the Lenders and the
Administrative Agent and upon the facts evidenced by the Credit Documents and
(ii) assumed that the facts referred to in this opinion letter are now and will
at all times be correct.
Although the matter is not free from doubt because (i) there is no
controlling published authority in the State of Ohio with regard to a credit
agreement or a note (other than in connection with the collection of attorneys'
fees), (ii) other than Clarklift, there is no controlling published authority in
the State of Ohio with regard to the effect of the adoption of either Section
1301.05 of the Ohio Revised Code or Section 187(2) of the Restatement with
regard to a credit agreement or a note, (iii) the application of facts to
controlling legal principles will be determined ultimately by a trier-of-fact
based on its view of the facts, and (iv) the split decision in Sekeres and the
decision in Clarklift demonstrate the potential for contradictory analysis and
emphasis of facts related to choice of law issues, we are of the opinion, based
on the understood facts set forth above and a reasoned analysis of analogous
case law, that if the case were properly presented and argued, a court of the
State of Ohio or a federal court applying the law of the State of Ohio should
give effect to the choice of New York law as the governing law of the Credit
Agreement and the Notes.
12
<PAGE> 95
The foregoing reasoned opinion is premised on the assumption that a
court would in respect of the Credit Agreement and the Notes view the location
of the principal office of the Administrative Agent and several of the Lenders
in New York, and the Administrative Agent's acceptance and receipt of the Credit
Agreement and the Notes as determinative of (x) the location of the
Administrative Agent and the Lenders and (y) the place of the making of the
Credit Agreement and the Notes in spite of the actual location of the individual
Lenders or their funding offices and the actual place of execution of the Credit
Agreement and the Notes by such Lenders. The foregoing reasoned opinion does not
express any opinion (i) with respect to the enforceability of the choice of law
provision in the context of any particular Lender's exercise of its several
right to exercise individual remedies and (ii) whether under Clarklift, the
State of Ohio could be found to have a "materially greater interest" whenever
application of the law of another jurisdiction would be "contrary to a
fundamental policy" of the State of Ohio..
This opinion is limited to the matters expressly stated herein. No
implied opinion may be inferred to extend this opinion beyond the matters
expressly stated herein. The opinions expressed herein are expressed solely to
you and, without the express written consent of the undersigned, may not be
filed publicly or relied upon by any other persons (except assignees,
transferees or participants of the Lenders to the extent comprised of financial
institutions) for any reason. William A. Papenbrock, a partner of this firm, is
a member of the Board of Directors and an Assistant Secretary of the Company.
Very truly yours,
CALFEE, HALTER & GRISWOLD LLP
13
<PAGE> 96
SCHEDULE I
TO
OPINION LETTER
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
DATE OF GOOD
SIGNIFICANT STATE OF STANDING DATE OF CERTIFIED
SUBSIDIARY INCORPORATION CERTIFICATE ARTICLES/CERTIFICATE
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Stonhard, Inc. Delaware January 14, 1997 January 14, 1997
- ----------------------------------------------------------------------------------------------------
Carboline Company Delaware January 13, 1997 January 13, 1997
- ----------------------------------------------------------------------------------------------------
Dryvit Systems, Inc. Rhode Island January 14, 1997 January 15, 1997
- ----------------------------------------------------------------------------------------------------
Rust-Oleum Illinois January 13, 1997 January 13, 1997
Corporation
- ----------------------------------------------------------------------------------------------------
William Zinsser & Co., New Jersey January 14, 1997 January 17, 1997
Incorporated
- ----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 97
EXHIBIT A-1
TO
OPINION LETTER
COMPANY OFFICER'S CERTIFICATE
To: Calfee, Halter & Griswold LLP
The undersigned being the duly elected and acting Vice President,
Secretary and General Counsel of RPM, Inc. (the "Company") does hereby certify
as of the date hereof, in his capacity as an officer of the Company and on
behalf of the Company, that:
1. Set forth on Schedule I hereto is a true, correct and complete list
of each agreement or other instrument to which the Company is a party which, in
the event of a default by the Company thereunder, could reasonably be expected
to result in a material adverse effect on the condition (financial or
otherwise), business, or operations, of the Company (all of such agreements and
instruments being collectively referred to herein as the "Material Agreements").
2. Attached hereto as Exhibit 1 are true, complete and correct copies
of the Code of Regulations and Articles of Incorporation of the Company. Such
Code of Regulations and Articles of Incorporation are still in full force and
effect and have not in any manner whatsoever been amended or modified.
3. Attached hereto as Exhibit 2 is a true, complete and correct copy of
resolutions duly adopted by the Executive Committee of the Board of Directors of
the Company by unanimous written consent dated January 27, 1997.
Such resolutions are still in full force and effect and have not in any
manner whatsoever been amended or modified.
All capitalized terms not otherwise defined or referenced in this
certificate are used herein as defined in the Opinion of Calfee, Halter &
Griswold LLP to which this certificate is attached.
The undersigned acknowledges and agrees that Calfee, Halter & Griswold
LLP intends to, and may, rely on this Certificate and the matters contained
herein, in rendering opinions in connection with the transactions contemplated
by the Credit Agreement, dated as of February __, 1997 among The Chase Manhattan
Bank, as Administrative Agent, the Lenders named therein and the Company.
<PAGE> 98
IN WITNESS WHEREOF, I have executed this Certificate as of this _____
day of February, 1997.
RPM, INC.
-----------------------
By: Paul A. Granzier
Title: Vice President, Secretary and
General Counsel
2
<PAGE> 99
SCHEDULE I
TO
COMPANY OFFICER'S CERTIFICATE
MATERIAL AGREEMENTS
1. Liquid Yield Option (TM) Notes Due 2012, $400,000,000 Principal Amount
(Zero Coupon subordinated), and the Indenture, dated as of September
15, 1992, between RPM, Inc. and The First National Bank of Chicago, as
Trustee, with respect thereto (TM)Trademark of Merrill Lynch & Co.,
Inc.
2. Multicurrency Credit Agreement, dated as of December 14, 1993, among
RPM, Inc., RPOW (France) S.A., RPM Europe B.V., Radiant Color, N.V.,
Credit Lyonnais Chicago Branch, Credit Lyonnais Cayman Island Branch
and Credit Lyonnais Belgium
3. Stock Purchase Agreement, dated October 21, 1996, as amended by
Amendment No.1 thereto, dated as of February 1,1997, between the
Company and The B.F.Goodrich Company
4. Indenture, dated as of June 1, 1995, between RPM, Inc. and The First
National Bank of Chicago, as Trustee, with respect to 7.0% Senior Notes
due 2005
<PAGE> 100
EXHIBIT A-2
TO
OPINION LETTER
SUBSIDIARY OFFICER'S CERTIFICATE
To: Calfee, Halter & Griswold LLP
The undersigned, being the duly elected and acting SECRETARY of each of
(i) Stonhard, Inc., a Delaware corporation ("Stonhard"), (ii) Carboline Company,
a Delaware corporation ("Carboline"), (iii) Dryvit Systems, Inc., a Rhode Island
corporation ("Dryvit"), (iv) Rust-Oleum Corporation, an Illinois corporation
("Rust-Oleum") and (vii) William Zinsser & Co., Incorporated, a New Jersey
corporation ("Zinsser", and, together with Stonhard, Carboline, Dryvit and
Rust-Oleum, the "Significant Subsidiaries"), does hereby certify as of the date
hereof, in his capacity as an officer of each of the Significant Subsidiaries
and on behalf of such Significant Subsidiaries, that:
1. Set forth on Schedule I hereto is a true, correct and complete list
of each agreement or other instrument to which a Significant Subsidiary is a
party which, in the event of a default by such Significant Subsidiary
thereunder, could reasonably be expected to result in a material adverse effect
on the condition (financial or otherwise), business, or operations, of such
Significant Subsidiary (all of such agreements and instruments being
collectively referred to herein as the "Material Agreements").
2. Attached hereto as Exhibits 1-A through 1-E hereto are true,
complete and correct copies of the Code of Regulations or By-Laws, as the case
may be, of the Significant Subsidiaries. Each such Code of Regulations or
By-Laws is still in full force and effect and has not in any manner whatsoever
been amended or modified.
3. Attached hereto as Exhibits 2-A through 2-E hereto are true,
complete and correct copies of the Articles of Incorporation or Certificate of
Incorporation, as the case may be, of each of the Significant Subsidiaries. Each
such Articles of Incorporation or Certificate of Incorporation is still in full
force and effect and has not in any manner whatsoever been amended or modified.
<PAGE> 101
All capitalized terms not otherwise defined or referenced in this
certificate are used herein as defined in the Opinion of Calfee, Halter &
Griswold LLP to which this certificate is attached.
The undersigned acknowledges and agrees that Calfee, Halter & Griswold
to which this Certificate and the matters contained herein, in rendering
opinions in connection with the transactions contemplated by the Credit
Agreement, dated as of February __, 1997 among The Chase Manhattan Bank, as
Administrative Agent, the Lenders named therein and the Company.
IN WITNESS WHEREOF, I have executed this Certificate as of this ___ day
of February, 1997.
STONHARD, INC. WILLIAM ZINSSER & CO.,
INCORPORATED
- ----------------------- ------------------------
By: By:
-------------------- ---------------------
Title: Title:
----------------- -----------------
CARBOLINE COMPANY RUST-OLEUM CORPORATION
- ----------------------- ------------------------
By: By:
-------------------- ---------------------
Title: Title:
----------------- -----------------
DRYVIT SYSTEMS, INC.
- -----------------------
By:
--------------------
Title:
-----------------
2
<PAGE> 102
SCHEDULE I
TO
SUBSIDIARY OFFICER'S CERTIFICATE
MATERIAL AGREEMENTS
-------------------
As to Stonhard: none
As to Carboline: none
As to Dryvit: none
As to Rust-Oleum: none
As to Zinsser: none
<PAGE> 103
EXHIBIT B-2
OPINION OF
GENERAL COUNSEL OF THE COMPANY
[Dated the Closing Date]
To the Lenders and the Administrative
Agent referred to below
c/o The Chase Manhattan Bank (National
Association), as Administrative Agent
1 Chase Manhattan Plaza
New York, New York 10081
Ladies and Gentlemen:
I am the Vice President and General Counsel of RPM, Inc., an Ohio
corporation (the "Company"), and have acted in the capacity of General Counsel
in connection with the Credit Agreement, dated as of February __, 1997 (the
"Credit Agreement"), among the Company, the financial institutions referred to
therein (the "Lenders") and The Chase Manhattan Bank, as administrative agent
(in such capacity, the "Administrative Agent"). Capitalized terms used but not
defined herein shall have the meanings assigned to such terms in the Credit
Agreement. This opinion letter is being furnished to you at the request of the
Company pursuant to Section 7.01(f) of the Credit Agreement.
In connection with this opinion, I have examined originals or copies,
certified or otherwise identified to my satisfaction, of the Credit Agreement
and the Notes.
Based upon the foregoing, and subject to the assumptions, limitations
and qualifications set forth herein, I am of the opinion that:
1. The execution, delivery and performance by the Company of the Credit
Agreement and the Notes do not contravene, or constitute a default under, any
provision of any judgment, injunction, order or decree binding upon the Company
or any of its Significant Subsidiaries (as defined in the opinion letter of
<PAGE> 104
Calfee, Halter & Griswold LLP of even date herewith addressed to the
Administrative Agent and the Lenders).
2. Except as set forth in Section 8.03 of the Credit Agreement, there
is no action, suit or proceeding against, or to the best of my knowledge
threatened against or affecting, the Company or any of its Significant
Subsidiaries before any court or arbitrator or any governmental body, agency or
official, in which there is a reasonable possibility of an adverse decision
which could have a Material Adverse Effect or which in any manner draws into
question the validity of the Credit Agreement or the Notes.
This opinion is limited to the matters expressly stated herein. No
implied opinion may be inferred to extend this opinion beyond the matters
expressly stated herein. The opinions expressed herein are expressed solely to
you and, without the express written consent of the undersigned, may not be
filed publicly or relied upon by any other persons (except assignees,
transferees or participants of the Lenders to the extent comprised of financial
institutions) for any reason.
Very truly yours,
Paul A. Granzier
Vice President and General Counsel
2
<PAGE> 105
EXHIBIT C
FORM OF OPINION OF SPECIAL NEW YORK
COUNSEL TO THE ADMINISTRATIVE AGENT
[Dated the Closing Date]
To the Lenders
and the Administrative Agent
Referred to Below
c/o The Chase Manhattan Bank
1 Chase Manhattan Plaza
New York, New York 10081
Dear Sirs:
We have participated in the preparation of the Credit Agreement (the
"Credit Agreement") dated as of February __, 1997 among RPM, Inc., an Ohio
corporation (the "Company"), the Lenders referred to therein (the "Lenders") and
The Chase Manhattan Bank, as Administrative Agent (the "Administrative Agent"),
and have acted as special counsel for the Administrative Agent for the purpose
of rendering this opinion pursuant to Section 7.01(g) of the Credit Agreement.
Terms defined in the Credit Agreement are used herein as therein defined.
We have examined originals or copies, certified or otherwise identified
to our satisfaction, of such documents, corporate records, certificates of
public officials and other instruments and have conducted such other
investigations of fact and law as we have deemed necessary or advisable for
purposes of this opinion.
Upon the basis of the foregoing, we are of the opinion that, assuming
that the execution, delivery and performance by the Company of the Credit
Agreement and the Notes delivered on the date hereof are within the Company's
corporate powers and have been duly authorized by all necessary corporate
action, the Credit Agreement constitutes a valid and binding agreement of the
Company and such Notes constitute valid and binding obligations of the Company.
In giving the foregoing opinion, we express no opinion as to (1) the
effect (if any) of any law of any jurisdiction (except the State of New York) in
which any
<PAGE> 106
Lender is located which limits the rate of interest that such Lender may charge
or collect; or (2) whether a holder of any Note may, under certain
circumstances, be called upon to prove the outstanding amount of the Loans
evidenced thereby.
We are members of the bar of the State of New York and we do not herein
express any opinion as to any matters governed by any laws other than the laws
of the State of New York.
This opinion is rendered to you solely in connection with the above
matter, and may not be relied upon by you for any other purpose or relied upon
or furnished to any other person without our written consent.
Very truly yours,
2
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the use of our report dated January 22, 1997, with respect to the
combined statement of assets to be acquired and liabilities to be assumed of
Tremco Incorporated as of October 31, 1996, and the related combined statements
of revenues and expenses and of cash flows for the ten-month period then ended,
included in the Current Report (Form 8-K) of RPM, Inc. dated February 1, 1997.
We also consent to the incorporation by reference of our report dated January
22, 1997, with respect to the combined financial statements of Tremco
Incorporated included in this Current Report (Form 8-K) of RPM, Inc., in the
following Registration Statements and in the related Prospectuses filed with
the Securities and Exchange Commission:
Registration
Number Description of Registration Statement
- ------------ ----------------------------------------------
2-65508 RPM, Inc. 1979 Stock Option Plan - Form S-8
33-32794 RPM, Inc. 1989 Stock Option Plan - Form S-8
33-50868 RPM, Inc. Liquid Yield Option Notes - Form S-3
33-61513 RPM, Inc. Common Stock (Dryvit Systems, Inc.
acquisition) - Form S-3
333-08209 RPM, Inc. Common Stock (TCI, Inc. acquisition)-
Form S-3
333-19305 RPM, Inc. Common Stock (Marson Automotive
Division acquisition) - Form S-3
ERNST & YOUNG LLP
Cleveland, Ohio
February 13, 1997
