SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 for the quarterly period
ended September 28, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 for the transition period
from to
Commission File No. 1-4663
Crompton & Knowles Corporation
(exact name of registrant as specified in its charter)
Massachusetts 04-1218720
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Station Place, Metro Center
Stamford, Connecticut 06902
(address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203)353-5400
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
Class Outstanding at October 16, 1996
Common Stock, $.10 par value 72,755,490 shares
CROMPTON & KNOWLES CORPORATION
FORM 10-Q
FOR QUARTER ENDED SEPTEMBER 28, 1996
INDEX
PART I. FINANCIAL INFORMATION:
Item 1. Condensed Financial Statements and
Accompanying Notes
. Consolidated Statements of Operations
(unaudited) - Quarters and nine months
ended September 28, 1996 and September 30, 1995
. Consolidated Balance Sheets - September 28, 1996
(unaudited) and Year end 1995
. Consolidated Statements of Cash Flows
(unaudited) - Nine months ended
September 28, 1996 and September 30, 1995
. Notes to the Consolidated Financial
Statements - Quarter ended September 28, 1996
(unaudited)
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II. OTHER INFORMATION:
Item 4. Submission of Matter to a Vote of Security Holders
Item 6. Exhibits and Reports on Form 8-K
Signatures
Exhibit 11 Statement Re Computation of Per Share Earnings
*Exhibit 27 Financial Data Schedule
* A copy of this Exhibit is annexed to this report on Form 10-Q
provided to the Securities and Exchange Commission and the New
York Stock Exchange.
UNAUDITED
CROMPTON & KNOWLES CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
Quarters and nine months ended September 28, 1996 and September 30, 1995
(In thousands, except per share data)
Quarters ended Nine months ended
Sept.28, Sept.30, Sept.28, Sept.30,
1996 1995 1996 1995
Net sales $ 468,391 $ 453,819 $ 1,398,492 $ 1,370,555
Cost of products sold 303,834 296,930 894,041 873,932
Selling, general and admin. 72,524 74,007 212,241 209,383
Depreciation and amortization 21,129 21,144 63,477 61,122
Research and development 14,043 14,424 40,116 38,818
Merger and related costs 85,000 - 85,000 -
Special environmental provision 30,000 - 30,000 -
Operating profit (loss) (58,139) 47,314 73,617 187,300
Interest 28,792 28,203 86,818 89,182
Other expense(income) (483) 572 (762) (4,024)
Earnings(loss) before income
taxes and extraordinary loss (86,448) 18,539 (12,439) 102,142
Provision(benefit)
for income taxes (16,876) 6,727 11,603 (41,154)
Earnings(loss) before
extraordinary charge (69,572) 11,812 (24,042) 143,296
Extraordinary loss on early
extinguishment of debt - - (441) (8,279)
Net earnings(loss) $ (69,572) $ 11,812 $ (24,483) $ 135,017
Per common share:
Earnings(loss) before
extraordinary charge $ (.97) $ .16 $ (.34) $ 2.08
Extraordinary loss - - - (.12)
Net earnings (loss) $ (.97) $ .16 $ (.34) $ 1.96
Dividends per common share $ - $ .135 $ .27 $ .39
Average shares outstanding 72,140 72,256 71,747 68,945
See accompanying notes to consolidated financial statements.
September 28, 1996 UNAUDITED
CROMPTON & KNOWLES CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
September 28, 1996 and Year End 1995
(In thousands of dollars)
September 28, Year End
1996 1995
ASSETS
CURRENT ASSETS
Cash $ 16,833 $ 30,437
Accounts receivable 294,608 271,989
Inventories 344,803 332,493
Other current assets 79,631 62,110
Total current assets 735,875 697,029
NON-CURRENT ASSETS
Property, plant and equipment 504,937 524,463
Cost in excess of acquired net assets 189,604 185,648
Other assets 238,723 248,705
$ 1,669,139 $ 1,655,845
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current installments of long-term debt $ 11,568 $ 11,434
Notes payable 12,297 93,744
Accounts payable 143,818 144,241
Accrued expenses 169,689 125,064
Income taxes payable 31,844 32,897
Other current liabilities 18,766 13,274
Total current liabilities 387,982 420,654
NON-CURRENT LIABILITIES
Long-term debt 1,036,228 974,156
Accrued postretirement liability 186,311 187,972
Other liabilities 155,680 132,248
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock 7,708 7,708
Additional paid-in capital 229,529 227,401
Accumulated deficit (259,165) (213,347)
Accumulated translation adjustment (21,485) (12,168)
Treasury stock at cost (48,196) (62,972)
Deferred compensation (1,740) (2,190)
Pension liability adjustment (3,713) (3,617)
Total stockholders' deficit (97,062) (59,185)
$ 1,669,139 $ 1,655,845
See accompanying notes to consolidated financial statements.
UNAUDITED
CROMPTON & KNOWLES CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Nine months ended September 28, 1996 and September 30, 1995
(In thousands of dollars)
Sept. 28, Sept. 30,
Increase (decrease) to cash 1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings (loss) $ (24,483) $ 135,017
Adjustments to reconcile net earnings
to net cash provided by operations:
Depreciation and amortization 63,477 61,122
Noncash interest 12,515 13,344
Deferred taxes (10,598) (70,894)
Other 4,764 1,315
Changes in assets and liabilities, net 47,679 (31,861)
Net cash provided by operations 93,354 108,043
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions (15,713) (84,279)
Capital expenditures (29,107) (75,222)
Other investing activities (3,429) (6,382)
Net cash used by investing activities (48,249) (165,883)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of common stock, net 14,150 146,626
Proceeds (payments) on long-term borrowings, net 47,748 (135,992)
Proceeds (payments) on short-term borrowings, net (96,889) 52,670
Dividends paid (12,967) (18,733)
Other financing activities 2,122 (8,167)
Net cash provided (used) by financing activities (45,836) 36,404
CASH
Effect of exchange rates on cash 603 (982)
Change in cash (128) (22,418)
Fiscal year end cash adjustment (13,476) (68,326)
Cash at beginning of period 30,437 123,176
Cash at end of period $ 16,833 $ 32,432
See accompanying notes to consolidated financial statements.
CROMPTON & KNOWLES CORPORATION AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
Quarter Ended September 28, 1996
(In thousands of dollars)
PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS
On August 21, 1996, the Company merged with Uniroyal Chemical
Corporation ("Uniroyal") in a common stock transaction that was
accounted for on a pooling-of-interests basis. A total of
23,715,181 shares of the Company's common stock were exchanged
for all of Uniroyal's outstanding common and preferred shares.
The accompanying consolidated financial statements include the
accounts of both companies and all information has been restated
to reflect the combined operations of both companies. The results
of operations previously reported by the Company and Uniroyal for
the six months ended through June, 1996 are as follows:
Net Sales Net Earnings
Company $332,410 $19,180
Uniroyal 597,691 25,909
$930,101 $45,089
Because of differing fiscal year ends, the balance sheet for
year-end 1995 includes the Company as of December 30, 1995 and
Uniroyal as of October 1, 1995. The consolidated statements of
operations and cash flows reflect the combined results of both
companies for the actual three-month and nine-month periods
indicated in such statements. Accordingly, Uniroyal's net loss
for its first fiscal quarter ended December 31, 1995 of $8,368
has been charged to shareholders' equity and Uniroyal's change in
cash for such quarter and the comparable quarter of 1994 have
been reflected as fiscal year-end cash adjustments in the
consolidated statements of cash flows.
The information included in the foregoing consolidated financial
statements is unaudited but reflects all adjustments (consisting
only of normal recurring adjustments) which are, in the opinion
of management, necessary for a fair statement of the results for
the interim periods presented.
Included in accounts receivable are allowances for doubtful
accounts of $6,567 in 1996 and $6,142 at year end 1995.
Accumulated depreciation amounted to $349,223 in 1996 and
$311,082 at year end 1995.
Accumulated amortization of cost in excess of acquired net assets
amounted to $35,413 in 1996 and $29,562 at year end 1995.
Cash payments during the nine months ended September 28, 1996 and
September 30, 1995 include interest of $68,872 and $71,119 and
income taxes of $18,805 and $26,434, respectively.
It is suggested that the interim consolidated financial
statements be read in conjunction with the consolidated financial
statements and notes included in the Company's and Uniroyal's
1995 Annual Reports on Form 10-K.
CAPITAL STOCK
As of September 28, 1996, there are 77,076,253 common shares
issued at $.10 par value, of which 4,321,763 shares were held in
the treasury.
INVENTORIES
Components of inventories are as follows:
Sept. 28, Year end,
1996 1995
Finished goods $222,276 $218,440
Work in process 45,415 37,753
Raw materials and supplies 77,112 76,300
$344,803 $332,493
EARNINGS (LOSS) PER COMMON SHARE
The computation of loss per common share for the quarter and nine
months ended September 28, 1996 is based on the weighted average
number of common shares outstanding. Common stock equivalents
have been excluded because they are antidilutive for such
periods. The computation of earnings per common share for the
quarter and nine months ended September 30, 1995 is based on the
weighted average number of common shares outstanding and common
stock equivalents. A dual presentation of earnings (loss) per
common share has not been made since there is no significant
difference in earnings per share calculated on a primary or fully
diluted basis.
DEBT
In August 1996, the Company entered into a revolving credit
agreement in the amount of $600,000 of which $300,000 is
available to the Company and $300,000 to Uniroyal. The agreement
extends through August, 2001 and is secured in the case of
Uniroyal's borrowings by a security interest in Uniroyal's
accounts receivable and inventory. The agreement calls for
interest based upon various options including a spread over LIBOR
that varies according to certain debt ratios for the trailing
four fiscal quarters and is currently at .875% over LIBOR.
Borrowings under the revolving credit agreement amounted to
$150,600 at September 28, 1996 and have an interest rate of 6.3%.
MERGER AND RELATED COSTS
Merger and related costs included in the consolidated statement
of operations comprise principally severance and other personnel
costs of $37,600, investment banking fees of $12,500, legal fees
of $9,700, debt related fees of $8,300, facility consolidation
costs of $6,400 and other costs of $10,500.
PROVISION FOR ENVIRONMENTAL COSTS
In the quarter ended September 28, 1996, the Company recorded a
special provision for environmental costs in the amount of
$30,000. The provision reflects the Company's evaluation, based
on current information, of its obligation for environmental
remediation activities. At September 28, 1996, the Company's
reserves for such environmental liabilities amounted to $95,000.
BUSINESS SEGMENT DATA
Quarter Ended
Sept. 28, Sept. 30,
1996 1995
SALES
Specialty Chemicals $ 395,684 $ 387,240
Specialty Equipment and Controls 72,707 66,579
Total net sales $ 468,391 $ 453,819
OPERATING PROFIT (LOSS)
Specialty Chemicals $ 57,939 $ 43,372
Specialty Equipment and Controls 4,605 9,697
Merger and related costs ( 85,000) -
Special environmental provision ( 30,000) -
General corporate expense ( 5,683) ( 5,755)
Total operating profit (loss) $( 58,139) $ 47,314
Nine Months Ended
Sept. 28, Sept. 30,
1996 1995
SALES
Specialty Chemicals $1,186,393 $1,163,937
Specialty Equipment and Controls 212,099 206,618
Total net sales $1,398,492 $1,370,555
OPERATING PROFIT
Specialty Chemicals $ 187,354 $ 173,647
Specialty Equipment and Controls 18,106 30,797
Merger and related costs (85,000) -
Special environmental provision (30,000) -
General corporate expense (16,843) ( 17,144)
Total operating profit $ 73,617 $ 187,300
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THIRD QUARTER RESULTS
Overview
In August 1996, the Company merged with Uniroyal Chemical
Corporation ("Uniroyal") in a common stock transaction that was
accounted for on a pooling-of-interests basis. Accordingly, the
consolidated financial information for all periods presented
includes the combined accounts and results of operations of both
the Company and Uniroyal.
Consolidated net sales of $468.4 million for the third quarter
of 1996 increased 3% from the comparable 1995 period due
principally to the impact of acquisitions, primarily the German
machinery business of Klockner ER-WE-PA GmbH acquired in January, 1996.
International sales, including U.S. exports, increased as a
percentage of total sales to 42% from 37% in the third quarter
of 1995.
The net loss of $69.6 million, or $.97 per common share, for the
third quarter of 1996 compares to from net earnings of $11.8
million, or $.16 per common share, reported for the third
quarter of 1995. The 1996 results include merger and related
costs of $85.0 million ($68.1 million after-tax) and a special
environmental provision of $30.0 million ($18.5 million after-tax).
The 1995 results include a charge of $5.0 million ($3.3
million after-tax) relating to a cost reduction program.
Adjusting for these items in both periods, earnings for the
third quarter of 1996 would be $17.0 million, or $.24 per common
share, compared to $15.1 million, or $.21 per common share, for
the third quarter of 1995.
Gross margin as a percentage of net sales increased to 35.1%
from 34.6% in the third quarter of 1995 as a result of improved
margins in all of the major business lines within the specialty
chemicals segment except dyes. Consolidated operating profit,
before merger and related costs of $85.0 million and a special
environmental provision of $30.0 million, increased 9% to $56.9
million from $52.3 million in the prior year after adjustment
for a charge of $5.0 million relating to a cost reduction
program in 1995. All of the increase in consolidated operating
profit is attributable to the specialty chemicals segment.
Specialty Chemicals
The Company's specialty chemicals segment reported sales of
$395.7 million representing a 2% increase from the third quarter
of 1995, primarily as a result of increased unit volume. An
analysis of sales by major product class within the specialty
chemicals segment follows.
Chemicals and polymers sales of $124.1 million rose 2% from the
1995 third quarter attributable in part to higher selling prices
for rubber chemicals implemented earlier in the year. In
addition, increased volume in nitrile rubber contributed to the
sales increase and more than offset lower EPDM sales
attributable to lower pricing.
Crop protection sales of $102.2 million were 1% lower versus the
third quarter of 1995 primarily attributable to lower unit
volume of insecticide sales resulting from low cotton
infestation levels in the United States. International and seed
treatment sales continued strong in the quarter.
Specialty sales of $77.3 million increased 11% from the 1995
third quarter primarily due to improved market share, strong
demand for lubricant additives and continued growth in the
international markets for urethane prepolymers.
Dyes sales of $65.6 million declined 1% from the comparable 1995
quarter due primarily to lower selling prices of approximately
3% offset in part by higher unit volume.
Specialty ingredients sales of $26.5 million rose 2% primarily
as a result of increased unit volume.
Operating profit of $57.9 million in the third quarter of 1996
increased 20% versus $48.4 million in the prior year before a
charge of $5.0 million relating to a cost reduction program in
1995. The improvement in operating profit resulted from an
increase in unit volume, lower operating costs and improved
product mix.
Specialty Process Equipment and Controls
The Company's specialty process equipment and controls segment
reported sales of $72.7 million, representing a 9% increase from
the third quarter of 1995. Approximately 19% was attributable to
the incremental impact of acquisitions, primarily ER-WE-PA in
Germany, offset partially by 4% from lower selling prices and 6%
from lower unit volume reflecting primarily reduced domestic
demand for extrusion systems.
Operating profit for the third quarter of 1996 declined 53% to
$4.6 million primarily attributable to lower selling prices and
lower unit volume in the higher margin domestic business. The
order backlog for extruders and related equipment at the end of
the third quarter of 1996 amounted to $95 million (including
ER-WE-PA backlog of $16 million) compared to $72 million at
December 30, 1995.
Other
Selling, general and administrative expenses of $72.5 million
decreased 2% due primarily to the cost reduction program charge
of $5.0 million included in the third quarter of 1995, plus the
benefits of that program in 1996, offset in part by the impact
of acquisitions and inflation. Depreciation and amortization of
$21.1 million approximated the 1995 third quarter. Research and
development cost of $14.0 million decreased slightly from the
third quarter of 1995.
Merger and related costs of $85.0 million comprise principally
severance and other personnel costs of $37.6 million, investment
banking fees of $12.5 million, legal fees of $9.7 million, debt
related fees of $8.3 million, facility consolidation costs of
$6.4 million and other costs of $10.5 million.
The special environmental provision of $30.0 million reflects
the Company's evaluation, based on current information, of its
obligation for environmental remediation activities. At
September 28, 1996, the Company's reserves for such
environmental liabilities totaled $95.0 million.
Interest expense of $28.8 million was slightly higher than the
comparable 1995 period. Other income of $483 thousand compares
to $572 thousand of other expense in the third quarter of 1995.
The effective tax rate excluding the tax impact of merger and
related costs ($16.9 million) and the special environmental
provision ($11.5 million) was 40.2% versus 36.3% in the
comparable 1995 period.
YEAR-TO-DATE RESULTS
Overview
Consolidated net sales of $1.4 billion for the first nine months
of 1996 increased 2% from the comparable period in 1995. The
increase is primarily attributable to the impact from
acquisitions of 4% offset in part primarily by unit volume. The
acquisitions include primarily the worldwide crop protection
business of Solvay Duphar B.V. acquired in March of 1995 and the
German extrusion machinery business of ER-WE-PA acquired
in January of 1996. International sales, including U.S.
exports, increased as a percentage of total sales to 41% from
36% for the nine months of 1995.
The net loss of $24.5 million, or $.34 per common share, for the
first nine months of 1996 compares to net earnings of $135.0
million, or $1.96 per common share, for the comparable 1995
period. The 1996 results include merger and related costs of
$85.0 million ($68.1 million after-tax), a special environmental
provision of $30.0 million ($18.5 million after-tax) and an
extraordinary charge of $.5 million. The 1995 results include
special tax credits of $78.9 million, an extraordinary charge of
$8.3 million and other special income, net of $7.4 million ($4.4
million after-tax). Adjusting for these items in both periods,
earnings for the nine months of 1996 would be $62.6 million, or
$.87 per common share, compared to $60.0 million, or $.87 per
common share, for the nine months of 1995.
Gross margin as a percentage of net sales of 36.1% declined
slightly from the 36.2% in the comparable period in 1995.
Consolidated operating profit, before merger and related costs
of $85.0 million and a special charge for environmental costs of
$30.0 million, increased 3% to $188.6 million from $182.4
million in the prior year after adjustment for certain special
income, net of $4.9 million in 1995. All of the increase in the
consolidated operating profit is attributable to the specialty
chemicals segment.
Specialty Chemicals
The Company's specialty chemicals segment reported sales of $1.2
billion representing a 2% increase from the comparable 1995
period. The increase is primarily attributable equally to the
impact of acquisitions and improved pricing. An analysis of
sales by major product class within the specialty chemicals
segment follows.
Chemicals and polymers sales of $374.1 million increased 2% from
the first nine months of 1995 primarily attributable to improved
selling prices in rubber chemicals and increased unit volume for
nitrile rubber, partially offset by lower unit volume and
pricing in the EPDM business.
Crop protection sales of $304.5 million increased 5% from the
comparable 1995 period due primarily to the acquisition of the
crop protection business of Solvay Duphar B.V. in March of 1995.
Lower insecticide sales due to lower infestation levels in the
U.S. were offset primarily by increases in international sales
and sales of seed treatment products.
Specialties sales of $222.6 million increased 5% from the nine
month period of 1995 primarily attributable to higher unit
volume of urethane prepolymers and lubricant additives.
Dyes sales of $206.2 million declined 6% from the first nine
months of 1995 attributable primarily to lower selling prices of
approximately 4% and lower unit volume.
Specialty ingredients sales of $79.0 million increased 4% from
the first nine months of 1995 primarily attributable to
increased unit volume.
Operating profit of $187.4 million for the first nine months of
1996 increased 11% versus $168.7 million in the prior year
before certain special income, net, of $4.9 million in 1995.
The improvement in operating profit resulted from an increase in
unit volume, lower operating costs and improved product mix.
Specialty Process Equipment and Controls
The Company's specialty process equipment and controls segment
reported sales of $212.1 million representing a 3% increase from
the 1995 nine month period. Approximately 21% was attributable
to the incremental impact of acquisitions, primarily ER-WE-PA in
Germany, offset partially by 16% from lower unit volume
reflecting primarily reduced domestic demand for extrusion
systems and 2% from lower selling prices.
Operating profit of $18.1 million decreased 41% versus the
comparable 1995 period due primarily to lower selling prices and
lower unit volume in the domestic business.
Other
Selling, general and administrative expenses of $212.2 million
increased 1% versus the comparable period in 1995 due primarily
to the impact of acquisitions and inflation offset in part by
the cost reduction program charge of $5.0 million in 1995 and
the benefits of that program in 1996. Depreciation and
amortization of $63.5 million increased 4% versus the 1995
period primarily as a result of a higher fixed asset base
including acquisitions. Research and development cost of $40.1
million increased 3% from the comparable period in 1995
primarily as a result of the impact of acquisitions and
inflation.
Interest expense of $86.8 million decreased 3% from 1995
primarily due to lower levels of indebtedness. Other income of
$762 thousand decreased $3.3 million versus 1995 primarily due
to lower interest income in 1996 and special licensing income
reported in the prior year. The effective tax rate, excluding
the tax impact of merger and related costs ($16.9 million) and a
special charge for environmental costs ($11.5 million), was
39.0% versus 36.9% in the comparable 1995 period after
adjustment for special tax credits of $78.9 million in 1995.
LIQUIDITY AND CAPITAL RESOURCES
The September 28, 1996 working capital balance of $347.9 million
increased $71.5 million from $276.4 million at year end 1995.
The current ratio increased to 1.9 from 1.7 at the end of 1995
primarily attributable to the decrease in notes payable. Days
sales in receivables averaged 54 days for the first nine months
of 1996 versus 55 days for all of 1995. Inventory turnover
averaged 3.4 for the first nine months of 1996 versus 3.3 for
all of 1995.
Net cash provided by operations of $93.4 million decreased $14.7
million from the first nine months of 1995 primarily as a result
of lower net earnings due to special charges. Net cash provided
by operations and proceeds from the sale of common stock were
used principally to finance acquisitions, fund capital
expenditures, reduce indebtedness and pay cash dividends. The
current dividend payout has been reduced to $.05 per share
payable annually in May. The Company's debt to total capital
percentage increased to 110% from 106% at year end 1995.
Capital expenditures are expected to approximate $40 million in
1996 primarily for replacement needs and improvement of domestic
and foreign facilities. The Company's long-term liquidity needs
including such items as capital expenditures and debt repayments
are ultimately expected to be financed from future operations.
In August 1996, the Company entered into a revolving credit
agreement in the amount of $600 million of which $300 million is
available to the Company and $300 million to Uniroyal. The
agreement extends through August, 2001 and is secured in the
case of Uniroyal's borrowings by a security interest in
Uniroyal's accounts receivable and inventory. The agreement
calls for interest based upon various options including a spread
over LIBOR that varies according to certain debt ratios for the
trailing four fiscal quarters and is currently at .875% over
LIBOR. Borrowings under the revolving credit agreement amounted
to $151 million at September 28, 1996 and bore an interest rate
of 6.3%.
ENVIRONMENTAL MATTERS
The Company is involved in claims, litigation, administrative
proceedings and investigations of various types in several
jurisdictions. A number of such matters involve claims for a
material amount of damages and relate to or allege environmental
liabilities, including clean-up costs associated with hazardous
waste disposal sites, natural resource damages, property damage
and personal injury. The Company and some of its subsidiaries
have been identified by federal, state or local governmental
agencies, and by other potentially responsible parties (each a
"PRP") under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, or
comparable state statutes, as a PRP with respect to costs
associated with waste disposal sites at various locations in the
United States. In addition, the Company is involved with
environmental remediation and compliance activities at some of
its current and former sites in the United States and abroad.
Each quarter, the Company evaluates and reviews estimates for
future remediation and other costs to determine appropriate
environmental reserve amounts. For each site a determination is
made of the specific measures that are believed to be required
to remediate the site, the estimated total cost to carry out the
remediation plan, the portion of the total remediation costs to
be borne by the Company and the anticipated time frame over
which payments toward the remediation plan will occur. As a
result of current information and analysis, the Company recorded
a special provision in the amount of $30.0 million during the
third quarter of 1996 for environmental remediation activities.
As of September 28, 1996, the Company's reserves for such
environmental liabilities totaled $95.0 million. These
estimates may subsequently change should additional sites be
identified, further remediation measures be required or
undertaken, the interpretation of current laws and regulations
be modified or additional environmental laws and regulations be
enacted.
The Company intends to assert all meritorious legal defenses and
all other equitable factors which are available to it with
respect to the above matters. The Company believes that the
resolution of these environmental matters will not have a
material adverse effect on the consolidated financial position
of the Company. While the Company believes it is unlikely, the
resolution of these environmental matters could have a material
adverse effect on the Company's consolidated results of
operation in any given year if a significant number of these
matters are resolved unfavorably.
PART II. OTHER INFORMATION:
Item 4. Submission of Matters to a Vote of Security Holders
(a) A Special Meeting of the Crompton & Knowles
Stockholders was held on August 21, 1996.
(b) Proxies for the Special Meeting were solicited pursuant
to Regulation 14A under the Securities Exchange Act of
1934.
(c) A brief description of the matter submitted to a vote
at the Special Meeting, and the results of voting, are
as follows:
Approval and adoption of the Agreement and Plan of
Merger, dated as of April 30, 1996 (the "Merger
Agreement"), by and among the Company, Uniroyal Chemical
Corporation, a Delaware corporation("Uniroyal"), and
Tiger Merger Corp., a Delaware corporation and a
wholly owned subsidiary of the Company, and the
transactions contemplated thereby, which will also
constitute approval of an amendment to Crompton's 1988
Long Term Incentive Plan to increase the number of
shares of Crompton common stock, par value $0.10
per share, reserved for issuance thereunder by 6,000,000
shares, as fully described in the Joint Proxy
Statement/Prospectus relating thereto.
Abstained/
For Against Withheld
32,176,169 Shares 1,567,754 Shares 275,528
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Number Description
(4)* Credit Agreement dated as of August 21, 1996,
among the Registrant and four subsidiaries as
borrowers, 15 initial lenders, 2 initial
issuing banks, Citicorp Securities, Inc. as
Arranger and Citicorp USA, Inc. as Agent and
The Chase Manhattan Bank as Managing Agent.
(11) Statement Re Computation of Per Share Earnings
(27)* Financial Data Schedule
(b) A report on Form 8K was filed by Crompton & Knowles
Corporation on August 21, 1996.
* A copy of this Exhibit is annexed to this report on
Form 10Q provided to the Securities and Exchange
Commission and the New York Stock Exchange.
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 thereunto duly authorized.
CROMPTON & KNOWLES CORPORATION
(Registrant)
November 12, 1996 By: /s/Charles J. Marsden
Charles J. Marsden
Senior Vice President - Finance
(Principal Financial Officer)
November 12, 1996 By: /s/John T. Ferguson II
Vice President,
General Counsel and Secretary
EXHIBIT 4
$600,000,000
CREDIT AGREEMENT
Dated as of August 21, 1996
Among
CROMPTON & KNOWLES CORPORATION,
CROMPTON & KNOWLES COLORS INCORPORATED,
DAVIS-STANDARD CORPORATION,
INGREDIENT TECHNOLOGY CORPORATION,
and
UNIROYAL CHEMICAL COMPANY, INC.
as Borrowers
and
THE INITIAL LENDERS, INITIAL ISSUING BANKS AND
SWING LINE BANK NAMED HEREIN
as Initial Lenders, Initial Issuing Banks and Swing Line
Bank
and
CITICORP SECURITIES, INC.
as Arranger
and
CITICORP USA, INC.
as Agent
and
THE CHASE MANHATTAN BANK
as Managing Agent
TABLE OF CONTENTS
Section
Page
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.01. Certain Defined Terms 2
1.02. Computation of Time Periods 31
1.03. Accounting Terms 31
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
AND THE LETTERS OF CREDIT
2.01. The Advances 32
2.02. Making the Advances 35
2.03. Issuance of and Drawings and Reimbursement Under
Letters of Credit 38
2.04. Repayment of Advances 40
2.05. Termination or Reduction of the Commitments 42
2.06. Prepayments 43
2.07. Interest 44
2.08. Fees 45
2.09. Conversion of Advances 46
2.10. Increased Costs, Etc. 47
2.11. Payments and Computations 48
2.12. Taxes 50
2.13. Sharing of Payments, Etc. 53
2.14. Use of Proceeds 53
2.15. Defaulting Lenders 54
ARTICLE III
CONDITIONS OF LENDING
3.01. Conditions Precedent to Initial Extension of Credit 56
3.02. Conditions Precedent to Each Borrowing and Issuance 64
3.03. Determinations Under Section 3.01 65
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.01. Representations and Warranties of the Borrowers 65
ARTICLE V
COVENANTS OF THE BORROWERS
5.01. Affirmative Covenants 71
5.02. Negative Covenants 77
5.03. Reporting Requirements 87
5.04. Financial Covenants 90
ARTICLE VI
EVENTS OF DEFAULT
6.01. Events of Default 92
6.02. Actions in Respect of the Letters of Credit upon
Default 96
6.03. Actions in Respect of Working Capital B-1 Commitments
Reserved Pursuant to Section 2.01(g) 96
ARTICLE VII
THE AGENT
7.01. Authorization and Action 97
7.02. Agent's Reliance, Etc. 97
7.03. Citicorp and Affiliates 98
7.04. Lender Party Credit Decision 98
7.05. Indemnification 98
7.06. Successor Agents 99
ARTICLE VIII
MISCELLANEOUS
8.01. Amendments, Etc. 101
8.02. Notices, Etc. 102
8.03. No Waiver; Remedies 102
8.04. Costs and Expenses 102
8.05. Right of Set-off 104
8.06. Binding Effect 105
8.07. Assignments and Participations 105
8.08. Execution in Counterparts 108
8.09. No Liability of the Issuing Banks 108
8.10. Release of Collateral 109
8.11. Confidentiality 109
8.12. Jurisdiction, Etc. 110
8.13. Governing Law 110
8.14. Waiver of Jury Trial 111
SCHEDULES
Schedule I- Commitments and Applicable Lending Offices
Schedule II-Subsidiary Guarantors
Schedule III-Minor Subsidiaries
Schedule 2.03(e)-Existing Letters of Credit
Schedule 3.01(d)-Surviving Debt
Schedule 3.01(f)-Disclosed Litigation
Schedule 3.01(k)(xx)-Local Counsel
Schedule 4.01(b)-Subsidiaries
Schedule 4.01(d)-Authorizations, Approvals, Actions, Notices and
Filings
Schedule 4.01(o)-Environmental Disclosure
Schedule 4.01(t)-Existing Debt
Schedule 4.01(w)-Material Subsidiaries
Schedule 5.02(a)-Existing Liens
Schedule 5.02(f)-Investments
EXHIBITS
Exhibit A-1-Form of Working Capital A Note
Exhibit A-2-Form of Working Capital B-1 Note
Exhibit A-3-Form of Working Capital B-2 Note
Exhibit B-Form of Notice of Borrowing
Exhibit C-Form of Assignment and Acceptance
Exhibit D-1-Form of Crompton Security Agreement
Exhibit D-2-Form of Uniroyal Security Agreement
Exhibit D-3-Form of Louisiana Undertaking
Exhibit E-1-Form of Parent Guaranty
Exhibit E-2-Form of Subsidiary Guaranty
Exhibit F-1-Form of Opinion of Counsel for the Loan Parties
Exhibit F-2-Form of Opinion of General Counsel to Crompton Corp.
and its Subsidiaries
Exhibit F-3-Form of Opinion of General Counsel to Crompton Corp.
and its Subsidiaries
Exhibit G-Form of Solvency Certificate
CREDIT AGREEMENT
CREDIT AGREEMENT dated as of August 21, 1996 among CROMPTON
& KNOWLES CORPORATION, a Massachusetts corporation ("Crompton
Corp."), CROMPTON & KNOWLES COLORS INCORPORATED, a Delaware
corporation ("Crompton Colors"), DAVIS-STANDARD CORPORATION, a
Delaware corporation ("Davis-Standard"), INGREDIENT TECHNOLOGY
CORPORATION, a Delaware corporation ("ITC" and, together with
Crompton Corp., Crompton Colors and Davis-Standard, the "Crompton
Borrowers"), UNIROYAL CHEMICAL COMPANY, INC., a New Jersey
corporation ("Uniroyal" or the "Uniroyal Borrower" and, together
with the Crompton Borrowers, the "Borrowers"), the banks,
financial institutions and other institutional lenders listed on
the signature pages hereof as the Initial Lenders (the "Initial
Lenders"), the Initial Issuing Banks (the "Initial Issuing
Banks") and the Swing Line Bank (as hereinafter defined),
CITICORP SECURITIES, INC., as Arranger (the "Arranger"), CITICORP
USA, INC. ("Citicorp"), as agent (together with any successor
appointed pursuant to Article VII, the "Agent") for the Lender
Parties (as hereinafter defined), and THE CHASE MANHATTAN BANK,
as Managing Agent.
PRELIMINARY STATEMENTS:
(1) Each of Crompton Colors, Davis-Standard and ITC is a
wholly owned Subsidiary (as hereinafter defined) of Crompton
Corp.
(2) Pursuant to the Agreement and Plan of Merger dated as
of April 30, 1996 (as amended, supplemented or otherwise modified
in accordance with its terms, to the extent permitted in
accordance with the Loan Documents (as hereinafter defined), the
"Merger Agreement") between Crompton Corp. and Uniroyal Chemical
Corporation, a Delaware corporation ("Uniroyal Corp."), Crompton
Corp. has agreed to consummate a merger (the "Merger") with
Uniroyal Corp. through Tiger Merger Corp., a Delaware corporation
and a wholly owned Subsidiary of Crompton Corp. in which Uniroyal
Corp. will be the surviving corporation.
(3) The Borrowers have requested that, immediately upon the
consummation of the Merger, the Lender Parties lend to the
Borrowers up to $600,000,000 to pay transaction fees and expenses
incurred in connection with the Merger and that, from time to
time, the Lender Parties lend to the Borrowers and issue Letters
of Credit for the account of the Borrowers to redeem or
repurchase public Debt (as hereinafter defined) of Uniroyal and
Uniroyal Corp. and for other general corporate purposes,
including, without limitation, to finance permitted acquisitions
and Capital Expenditures (as hereinafter defined) and to provide
working capital for the Borrowers and their respective
Subsidiaries. The Lender Parties have indicated their
willingness to agree to lend such amounts on the terms and
conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements contained herein, the parties
hereto hereby agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms. As used in this Agreement,
the following terms shall have the following meanings (such
meanings to be equally applicable to both the singular and plural
forms of the terms defined):
"Advance" means a Working Capital Advance, a Swing Line Advance
or a Letter of Credit Advance.
"Affiliate" means, as to any Person, any other Person that,
directly or indirectly, controls, is controlled by or is under
common control with such Person or is a director or officer of
such Person. For purposes of this definition, the term "control"
(including the terms "controlling," "controlled by" and "under
common control with") of a Person means the possession, direct or
indirect, of the power to vote 10% or more of the Voting Stock of
such Person or to direct or cause the direction of the management
and policies of such Person, whether through the ownership of
Voting Stock, by contract or otherwise.
"Agent" has the meaning specified in the recital of parties to
this Agreement.
"Agent's Account" means the account of the Agent maintained by
the Agent with Citibank at its office at 399 Park Avenue,
New York, New York 10043, Account No. 3885-8061,
Attention: Alexandra Lozovsky.
"Applicable Lending Office" means, with respect to each Lender
Party, such Lender Party's Domestic Lending Office in the case of
a Base Rate Advance and such Lender Party's Eurodollar Lending
Office in the case of a Eurodollar Rate Advance.
"Applicable Margin" means (a) from the date hereof until December
31, 1996, 0.0% per annum for Base Rate Advances and 0.875% per
annum for Eurodollar Rate Advances and (b) thereafter, a
percentage per annum determined by reference to the Total
Debt/EBITDA Ratio as set forth below:
Total Debt/EBITDA Ratio Base Rate Advances Eurodollar
Rate Advances
Level I
less than or equal to
2.0:1.0 0.0% 0.375%
Level II
greater than 2.0:1.0,
but less than or
equal to 2.5:1.0 0.0% 0.500%
Level III
greater than 2.5:1.0,
but less than or
equal to 3.0:1.0 0.0%
0.625%
Level IV
greater than 3.0:1.0,
but less than or
equal to 3.5:1.0 0.0%
0.750%
Level V
greater than 3.5:1.0,
but less than or
equal to 4.0:1.0 0.0%
0.875%
Level VI
greater than 4.0:1.0 0.0%
1.000%
The Applicable Margin for each Advance shall be determined by
reference to the Total Debt/EBITDA Ratio in effect from time to
time; provided, however, that, at any date of determination of
the Applicable Margin, if the relevant Financial Statements shall
not have been delivered to the Agent and the Lender Parties by
such date and Crompton Corp. shall have delivered to the Agent a
certificate setting forth Crompton Corp.'s good faith estimate of
the Total Debt/EBITDA Ratio for the immediately preceding Rolling
Period, the Applicable Margin shall be determined by reference to
such good faith estimate of the Total Debt/EBITDA Ratio, provided
further that if, upon delivery by Crompton Corp. of such
Financial Statements, such Financial Statements indicate that
such estimate of the Total Debt/EBITDA Ratio was incorrect and,
as a result thereof, the Applicable Margin was too low at such
date of determination, such Applicable Margin shall be increased,
as appropriate, with retroactive effect to the beginning of the
Rolling Period during which such date of determination occurred,
and the applicable Borrower shall immediately pay to the Agent
for the account of the Lender Parties all additional interest due
by reason of such increased Applicable Margin.
"Applicable Percentage" means (a) from the date hereof until
December 31, 1996, 0.25% per annum for commitment fees, 0.625%
per annum for Trade Letter of Credit fees and 0.875% per annum
for Standby Letter of Credit fees and (b) thereafter, a
percentage per annum determined by reference to the Total
Debt/EBITDA Ratio as set forth below:
Total Debt/EBITDA Ratio Commitment Trade Letter Standby Letter
Fees of Credit Fees of Credit Fees
Level I
less than or equal to 2.0:1.0 0.125% 0.125% 0.375%
Level II
greater than 2.0:1.0,
but less than or
equal to 2.5:1.0 0.150% 0.250% 0.500%
Level III
greater than 2.5:1.0,
but less than or
equal to 3.0:1.0 0.175% 0.375% 0.625%
Level IV
greater than 3.0:1.0,
but less than or
equal to 3.5:1.0 0.250% 0.500% 0.750%
Level V
greater than 3.5:1.0,
but less than or
equal to 4.0:1.0 0.250% 0.625% 0.875%
Level VI
greater than 4.0:1.0 0.375% 0.750% 1.000%
The Applicable Percentage shall be determined by reference to the
Total Debt/EBITDA Ratio in effect from time to time; provided,
however, that, at any date of determination of the Applicable
Percentage, if the relevant Financial Statements shall not have
been delivered to the Agent and the Lender Parties by such date
and Crompton Corp. shall have delivered to the Agent a
certificate setting forth Crompton Corp.'s good faith estimate of
the Total Debt/EBITDA Ratio for the immediately preceding Rolling
Period, the Applicable Percentage shall be determined by
reference to such good faith estimate of the Total Debt/EBITDA
Ratio, provided further that if, upon delivery by Crompton Corp.
of such Financial Statements, such Financial Statements indicate
that such estimate of the Total Debt/EBITDA Ratio was incorrect
and, as a result thereof, the Applicable Percentage was too low
at such date of determination, such Applicable Percentage shall
be increased, as appropriate, with retroactive effect to the
beginning of the Rolling Period during which such date of
determination occurred, and the applicable Borrower shall
immediately pay to the Agent for the account of the Lender
Parties all additional fees due by reason of such increased
Applicable Percentage.
"Appropriate Lender" means, at any time, with respect to (a) any
of the Working Capital Facilities, a Lender that has a Commitment
with respect to such Facility at such time, (b) either of the
Letter of Credit Facilities, (i) any Issuing Bank that has a
Commitment with respect to such Facility at such time and (ii) if
other Working Capital Lenders have made Letter of Credit Advances
pursuant to Section 2.03(c) that are outstanding at such time,
each such other Working Capital Lender and (c) either of the
Swing Line Facilities, (i) the Swing Line Bank and (ii) if other
Working Capital Lenders have made Swing Line Advances pursuant to
Section 2.02(b) that are outstanding at such time, each such
other Working Capital Lender.
"Arranger" has the meaning specified in the recital of parties to
this Agreement.
"Assignment and Acceptance" means an assignment and acceptance
entered into by a Lender Party and an Eligible Assignee, and
accepted by the Agent, in accordance with Section 8.07 and in
substantially the form of Exhibit C hereto.
"Available Amount" of any Letter of Credit means, at any time,
the maximum amount available to be drawn under such Letter of
Credit at such time (assuming compliance at such time with all
conditions to drawing).
"Available Cash Flow" means, for any Fiscal Year, an amount equal
to the sum of (a) Operating Cash Flow for the previous Fiscal
Year, (b) the amount of Capital Expenditures permitted to be made
in the previous Fiscal Year pursuant to Section 5.02(n) less the
amount of Capital Expenditures actually made during the previous
Fiscal Year, (c) the amount of dividends permitted to be paid by
Crompton Corp. in the previous Fiscal Year pursuant to Section
5.02(g) less the amount of such dividends actually paid during
the previous Fiscal Year, (d) the aggregate amount of Net Cash
Proceeds from the sale or other disposition of assets pursuant to
clause (iii) or (vi) (to the extent not used permanently to
prepay Debt or to make Capital Expenditures) of Section 5.02(e)
during the previous Fiscal Year and (e) $100,000,000.
"Bank Hedge Agreement" means any Hedge Agreement required or
permitted under Article V that is entered into by and between any
Borrower and any Hedge Bank.
"Base Rate" means a fluctuating interest rate per annum in effect
from time to time, which rate per annum shall at all times be
equal to the highest of:
(a) the rate of interest announced publicly by Citibank in
New York, New York, from time to time, as Citibank's base rate;
(b) the sum (adjusted to the nearest 1/4 of 1% or, if there is no
nearest 1/4 of 1%, to the next higher 1/4 of 1%) of (i) 1/2 of 1%
per annum, plus (ii) the rate obtained by dividing (A) the latest
three-week moving average of secondary market morning offering
rates in the United States for three-month certificates of
deposit of major United States money market banks, such
three-week moving average (adjusted to the basis of a year of 360
days) being determined weekly on each Monday (or, if such day is
not a Business Day, on the next succeeding Business Day) for the
three-week period ending on the previous Friday by Citibank on
the basis of such rates reported by certificate of deposit
dealers to and published by the Federal Reserve Bank of New York
or, if such publication shall be suspended or terminated, on the
basis of quotations for such rates received by Citibank from
three New York certificate of deposit dealers of recognized
standing selected by Citibank, by (B) a percentage equal to 100%
minus the average of the daily percentages specified during such
three-week period by the Board of Governors of the Federal
Reserve System (or any successor) for determining the maximum
reserve requirement (including, but not limited to, any
emergency, supplemental or other marginal reserve requirement)
for Citibank with respect to liabilities consisting of or
including (among other liabilities) three-month U.S. dollar
non-personal time deposits in the United States, plus (iii) the
average during such three-week period of the annual assessment
rates estimated by Citibank for determining the then current
annual assessment payable by Citibank to the Federal Deposit
Insurance Corporation (or any successor) for insuring U.S. dollar
deposits of Citibank in the United States; and
(c) 1/2 of one percent per annum above the Federal Funds Rate.
"Base Rate Advance" means an Advance that bears interest as
provided in Section2.07(a)(i).
"Borrower's Account" means, with respect to any Borrower, the
account of such Borrower maintained by such Borrower with
Citibank at its office at 399 Park Avenue, NewYork, NewYork
10043, which account is, in the case of Crompton Color, Account
No. 4070-6438, in the case of Crompton Corp., Account No. 4070-6411,
in the case of Davis-Standard, Account No. 4070-6462, in
the case of ITC, Account No. 4070-6446, and in the case of
Uniroyal, Account No. 4049-8376.
"Borrowers" has the meaning specified in the recital of parties
to this Agreement.
"Borrowing" means a Working Capital Borrowing or a Swing Line
Borrowing.
"Business Day" means a day of the year on which banks are not
required or authorized by law to close in New York City and, if
the applicable Business Day relates to any Eurodollar Rate
Advances, on which dealings are carried on in the London
interbank market.
"Capital Expenditures" means, for any Person for any period and
without duplication, the sum of (a) all expenditures (including,
without limitation, expenditures for environmental remediation)
made, directly or indirectly, by such Person during such period
for equipment, fixed or capital assets, real property or
improvements, or for replacements or substitutions therefor or
additions thereto, that have been or should be, in accordance
with GAAP, reflected as additions to property, plant or equipment
on a Consolidated balance sheet of such Person plus (b) the
aggregate principal amount of all Debt (including Obligations
under Capitalized Leases) assumed or incurred in connection with
any such expenditures but excluding (x) expenditures made in
connection with the replacement or restoration of assets, to the
extent such replacement or restoration is financed out of
insurance proceeds paid on account of the loss of or damage to
the assets so replaced or restored and (y) interest capitalized
during construction; provided, however, that notwithstanding
anything contained herein, Capital Expenditures shall not include
any Investments.
"Capitalized Leases" means all leases that have been or should
be, in accordance with GAAP, recorded as capitalized leases.
"Cash Equivalents" means any of the following, to the extent
owned by any Borrower or any of its Subsidiaries free and clear
of all Liens and having a maturity of not greater than 90 days
from the date of acquisition thereof: (a) readily marketable
direct obligations of the Government of the United States or any
agency or instrumentality thereof or obligations unconditionally
guaranteed by the full faith and credit of the Government of the
United States, (b) insured certificates of deposit of or time
deposits with any commercial bank that is a Lender Party or a
member of the Federal Reserve System, issues (or the parent of
which issues) commercial paper rated as described in clause(c),
is organized under the laws of the United States or any State
thereof and has combined capital and surplus of at least $1
billion or (c)commercial paper in an aggregate amount of no more
than $5,000,000 per issuer outstanding at any time, issued by any
corporation organized under the laws of any State of the United
States and rated at least "Prime-1" (or the then equivalent
grade) by Moody's or "A-1" (or the then equivalent grade) by S&P.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended from time to
time.
"CERCLIS" means the Comprehensive Environmental Response,
Compensation and Liability Information System maintained by the
U.S. Environmental Protection Agency.
"Citibank" means Citibank, N.A.
"Citibank Seoul" means Citibank, N.A., Seoul Branch.
"Citicorp" has the meaning specified in the recital of parties to
this Agreement.
"Collateral" means all "Collateral" referred to in the Collateral
Documents and all other property that is or is intended to be
subject to any Lien in favor of the Agent for the benefit of the
Secured Parties.
"Collateral Documents" means the Security Agreement, the
Louisiana Undertaking, the Blocked Account Letters (as defined in
the Uniroyal Security Agreement) and any other agreement that
creates or purports to create a Lien in favor of the Agent for
the benefit of the Secured Parties.
"Collateral Release Date" means the earliest of (a) the latest of
(i) the Termination Date, (ii) the payment in full of the
Obligations of the Loan Parties under the Loan Documents (other
than any indemnities) and (iii) the termination or expiration of
all Bank Hedge Agreements, (b) the date on which the Agent
receives evidence satisfactory to it that a Debt Rating of
(i) BBB- or above from S&P and Ba1 or above from Moody's or (ii)
Baa3 or above from Moody's and BB+ or above from S&P, in either
case shall have been in effect continuously for three months and
is then in effect, provided that Crompton Corp. shall not have
been placed on "credit watch" with negative implications (or any
like designation by S&P or Moody's from time to time) by either
S&P or Moody's during such three-month period, and (c) the date
on which the Agent receives evidence satisfactory to it that the
Total Debt/EBITDA Ratio for the two Rolling Periods then most
recently ended shall be less than or equal to 3.0:1.0 and the
Interest Coverage Ratio for the two Rolling Periods then most
recently ended shall be greater than or equal to 3.0:1.0,
provided that in any event no Default shall have occurred and
shall be continuing on such date.
"Commitment" means a Working Capital A Commitment, a Working
Capital B-1 Commitment, a Working Capital B-2 Commitment or a
Letter of Credit Commitment.
"Confidential Information" means information that any Borrower
furnishes to the Agent or any Lender Party in a writing
designated as confidential but does not include any such
information that is or becomes generally available to the public
other than as a result of a breach by the Agent or any Lender
Party of its obligations hereunder or that is or becomes
available to the Agent or such Lender Party from a source other
than a Borrower that is not, to the best of the Agent's or such
Lender Party's knowledge, acting in violation of a
confidentiality agreement with any Borrower.
"Consolidated" refers to the consolidation of accounts in
accordance with GAAP.
"Conversion", "Convert" and "Converted" each refer to a
conversion of Advances of one Type into Advances of the other
Type pursuant to Section 2.09 or 2.10.
"Crompton Borrowers" has the meaning specified in the recital of
parties to this Agreement.
"Crompton Colors" has the meaning specified in the recital of
parties to this Agreement.
"Crompton Corp." has the meaning specified in the recital of
parties to this Agreement.
"Crompton Guarantors" means the Subsidiaries of Crompton Corp.
listed on Part I of Schedule II hereto and each other Subsidiary
of Crompton Corp. (other than, in any event, Uniroyal Corp. and
its Subsidiaries) that shall be required to execute and deliver a
guaranty pursuant to Section 5.01(k) or 5.01(l)(v).
"Crompton Security Agreement" has the meaning specified in
Section 3.01(k)(vii).
"Davis-Standard" has the meaning specified in the recital of
parties to this Agreement.
"Daylight Overdraft Bank" means Citibank.
"Daylight Overdraft Documents" means those documents and
agreements entered into from time to time by the Daylight
Overdraft Bank and any Loan Party, evidencing or relating to the
Debt referred to in Section 5.02(b)(iii)(F).
"Debt" of any Person means, without duplication, (a)all
indebtedness of such person for borrowed money, (b)all
Obligations of such Person for the deferred purchase price of
property or services (other than trade payables not overdue by
more than 60 days (unless the subject of a bona fide dispute)
incurred in the ordinary course of such Person's business),
(c)all Obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (d)all Obligations of
such Person created or arising under any conditional sale or
other title retention agreement with respect to property acquired
by such Person (even though the rights and remedies of the seller
or lender under such agreement in the event of default are
limited to repossession or sale of such property), (e)all
Obligations of such Person as lessee under Capitalized Leases,
(f)all Obligations, contingent or otherwise, of such Person under
acceptance, letter of credit or similar facilities, (g)all
Obligations of such Person to purchase, redeem, retire, defease
or otherwise make any payment in respect of any capital stock of
or other ownership or profit interest in such Person or any other
Person or any warrants, rights or options to acquire such capital
stock, valued, in the case of redeemable preferred stock, at the
greater of its voluntary or involuntary liquidation preference
plus accrued and unpaid dividends, (h)all Obligations of such
Person in respect of Hedge Agreements, (i)all Debt of others
referred to in clauses(a) through (h) above or clause (j) below
guaranteed directly or indirectly in any manner by such Person,
or in effect guaranteed directly or indirectly by such Person
through an agreement (i)to pay or purchase such Debt or to
advance or supply funds for the payment or purchase of such Debt,
(ii)to purchase, sell or lease (as lessee or lessor) property, or
to purchase or sell services, primarily for the purpose of
enabling the debtor to make payment of such Debt or to assure the
holder of such Debt against loss, (iii)to supply funds to or in
any other manner invest in the debtor (including any agreement to
pay for property or services irrespective of whether such
property is received or such services are rendered) or
(iv)otherwise to assure a creditor against loss, and (j)all Debt
referred to in clauses(a) through (i) above of another Person
secured by (or for which the holder of such Debt has an existing
right, contingent or otherwise, to be secured by) any Lien on
property (including, without limitation, accounts and contract
rights) owned by such Person, even though such Person has not
assumed or become liable for the payment of such Debt.
"Debt Rating" means, as of any date, the lowest rating that has
been most recently announced by either S&P or Moody's, as the
case may be, for any class of non-credit enhanced long-term
senior unsecured debt issued by Crompton Corp. or, if applicable,
the rating assigned in writing by either S&P or Moody's, as the
case may be, as the "implied rating" of Crompton Corp.'s non-credit enhanced
long-term senior unsecured Debt, provided that
for purposes of the foregoing, if S&P or Moody's shall change the
basis on which ratings are established, each reference to the
Debt Rating announced by S&P or Moody's, as the case may be,
shall refer to the then equivalent rating by S&P or Moody's, as
the case may be.
"Default" means any Event of Default or any event that would
constitute an Event of Default but for the requirement that
notice be given or time elapse or both.
"Defaulted Advance" means, with respect to any Lender Party at
any time, the portion of any Advance required to be made by such
Lender Party to any Borrower pursuant to Section2.01 or 2.02 at
or prior to such time which has not been made by such Lender
Party or the Agent for the account of such Lender Party pursuant
to Section 2.02(e) as of such time. In the event that a portion
of a Defaulted Advance shall be deemed made pursuant to
Section2.15(a), the remaining portion of such Defaulted Advance
shall be considered a Defaulted Advance originally required to be
made pursuant to Section 2.01 on the same date as the Defaulted
Advance so deemed made in part.
"Defaulted Amount" means, with respect to any Lender Party at any
time, any amount required to be paid by such Lender Party to the
Agent or any other Lender Party hereunder or under any other Loan
Document at or prior to such time which has not been so paid as
of such time, including, without limitation, any amount required
to be paid by such Lender Party to (a) the Swing Line Bank
pursuant to Section 2.02(b) to purchase a portion of a Swing Line
Advance made by the Swing Line Bank, (b) any Issuing Bank
pursuant to Section 2.03(c) to purchase a portion of a Letter of
Credit Advance made by such Issuing Bank, (c) the Agent pursuant
to Section 2.02(e) to reimburse the Agent for the amount of any
Advance made by the Agent for the account of such Lender Party,
(d)any other Lender Party pursuant to Section 2.13 to purchase
any participation in Advances owing to such other Lender Party
and (e)the Agent or any Issuing Bank pursuant to Section 7.05 to
reimburse the Agent or such Issuing Bank for such Lender Party's
ratable share of any amount required to be paid by the Lender
Parties to the Agent or such Issuing Bank as provided therein.
In the event that a portion of a Defaulted Amount shall be deemed
paid pursuant to Section 2.15(b), the remaining portion of such
Defaulted Amount shall be considered a Defaulted Amount
originally required to be paid hereunder or under any other Loan
Document on the same date as the Defaulted Amount so deemed paid
in part.
"Defaulting Lender" means, at any time, any Lender Party that, at
such time, (a)owes a Defaulted Advance or a Defaulted Amount or
(b)shall take any action or be the subject of any action or
proceeding of a type described in Section 6.01(f).
"Disclosed Litigation" has the meaning specified in
Section 3.01(f).
"Domestic Lending Office" means, with respect to any Lender
Party, the office of such Lender Party specified as its "Domestic
Lending Office" opposite its name on Schedule I hereto or in the
Assignment and Acceptance pursuant to which it became a Lender
Party, as the case may be, or such other office of such Lender
Party as such Lender Party may from time to time specify to
Crompton Corp. and the Agent.
"Domestic Subsidiary" of Crompton Corp. means any Subsidiary of
Crompton Corp. other than a Foreign Subsidiary.
"EBITDA" means, for any period, net income (or net loss)
calculated before the cumulative effect of accounting changes
plus the sum of (a) interest expense, (b) income tax expense, (c)
extraordinary losses included in net income, (d)depreciation
expense, (e)amortization expense, (f)all foreign currency losses
less foreign currency gains (but only to the extent such foreign
currency gains do not exceed such foreign currency losses), (g)
non-recurring expenses incurred in connection with the Merger in
an amount not to exceed $70,000,000 in the aggregate and (h)
non-recurring restructuring charges in an amount not to exceed
$20,000,000 in any Fiscal Year or $50,000,000 in the aggregate
after the Effective Date less extraordinary gains included in net
income, determined on a Consolidated basis in accordance with
GAAP for such period.
"Effective Date" means the first date on which the conditions set
forth in Article III are satisfied.
"Eligible Assignee" means (a) with respect to any Facility (other
than the Letter of Credit Facilities), (i)a Lender; (ii) an
Affiliate of a Lender; and (iii)any other Person approved by the
Agent and Crompton Corp., such approval not to be unreasonably
withheld or delayed, and (b)with respect to the Letter of Credit
Facilities, any Person approved by the Agent and Crompton Corp.,
such approval not to be unreasonably withheld or delayed;
provided, however, that neither any Loan Party nor any Affiliate
of a Loan Party shall qualify as an Eligible Assignee under this
definition.
"Environmental Action" means any action, suit, demand, demand
letter, claim, notice of non-compliance or violation, notice of
liability or potential liability, investigation, proceeding,
consent order or consent agreement relating in any way to any
Environmental Law, any Environmental Permit or Hazardous Material
or arising from alleged injury or threat to health, safety or the
environment, including, without limitation, (a)by any
governmental or regulatory authority for enforcement, cleanup,
removal, response, remedial or other actions or damages and (b)by
any governmental or regulatory authority or third party for
damages, contribution, indemnification, cost recovery,
compensation or injunctive relief.
"Environmental Law" means any federal, state, local or foreign
statute, law, ordinance, rule, regulation, code, order, writ,
judgment, injunction, decree or judicial or agency
interpretation, policy or guidance relating to pollution or
protection of the environment, health, safety or natural
resources, including, without limitation, those relating to the
use, handling, transportation, treatment, storage, disposal,
release or discharge of Hazardous Materials.
"Environmental Permit" means any permit, approval, identification
number, license or other authorization required under any
Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations
promulgated and rulings issued thereunder.
"ERISA Affiliate" means any Person that for purposes of Title IV
of ERISA is a member of the controlled group of any Loan Party,
or under common control with any Loan Party, within the meaning
of Section 414 of the Internal Revenue Code.
"ERISA Event" means (a) (i)the occurrence of a reportable event,
within the meaning of Section 4043 of ERISA, with respect to any
Plan unless the 30-day notice requirement with respect to such
event has been waived by the PBGC, or (ii) the requirements of
subsection (1) of Section 4043(b) of ERISA (without regard to
subsection (2) of such Section) are met with respect to a
contributing sponsor, as defined in Section 4001(a)(13) of ERISA,
of a Plan, and an event described in paragraph (9), (10), (11),
(12) or (13) of Section 4043(c) of ERISA is reasonably expected
to occur with respect to such Plan within the following 30 days;
(b) the application for a minimum funding waiver with respect to
a Plan; (c)the provision by the administrator of any Plan of a
notice of intent to terminate such Plan, pursuant to Section
4041(a)(2) of ERISA (including any such notice with respect to a
plan amendment referred to in Section 4041(e) of ERISA); (d) the
cessation of operations at a facility of any Loan Party or any
ERISA Affiliate in the circumstances described in Section 4062(e)
of ERISA; (e)the withdrawal by any Loan Party or any ERISA
Affiliate from a Multiple Employer Plan during a plan year for
which it was a substantial employer, as defined in Section
4001(a)(2) of ERISA; (f)the conditions for imposition of a lien
under Section 302(f) of ERISA shall have been met with respect to
any Plan; (g)the adoption of an amendment to a Plan requiring the
provision of security to such Plan pursuant to Section 307 of
ERISA; or (h)the institution by the PBGC of proceedings to
terminate a Plan pursuant to Section 4042 of ERISA, or the
occurrence of any event or condition described in Section 4042 of
ERISA that constitutes grounds for the termination of, or the
appointment of a trustee to administer, such Plan.
"Eurocurrency Liabilities" has the meaning specified in
Regulation D of the Board of Governors of the Federal Reserve
System, as in effect from time to time.
"Eurodollar Lending Office" means, with respect to any Lender
Party, the Office of such Lender Party specified as its
"Eurodollar Lending Office" opposite its name on Schedule I
hereto or in the Assignment and Acceptance pursuant to which it
became a Lender Party (or, if no such office is specified, its
Domestic Lending Office), or such other office of such Lender
Party as such Lender Party may from time to time specify to
Crompton Corp. and the Agent.
"Eurodollar Rate" means, for any Interest Period for all
Eurodollar Rate Advances comprising part of the same Borrowing,
an interest rate per annum equal to the rate per annum obtained
by dividing (a)the rate per annum at which deposits in U.S.
dollars are offered by the principal office of Citibank in
London, England to prime banks in the London interbank market at
11:00 A.M. (London time) two Business Days before the first day
of such Interest Period in an amount substantially equal to
Citibank's Eurodollar Rate Advance comprising part of such
Borrowing to be outstanding during such Interest Period (or, if
Citibank shall not have such a Eurodollar Rate Advance,
$1,000,000) and for a period equal to such Interest Period by
(b)a percentage equal to 100% minus the Eurodollar Rate Reserve
Percentage for such Interest Period.
"Eurodollar Rate Advance" means an Advance that bears interest as
provided in Section2.07(a)(ii).
"Eurodollar Rate Reserve Percentage" for any Interest Period for
all Eurodollar Rate Advances comprising part of the same
Borrowing means the reserve percentage applicable two Business
Days before the first day of such Interest Period under
regulations issued from time to time by the Board of Governors of
the Federal Reserve System (or any successor) for determining the
maximum reserve requirement (including, without limitation, any
emergency, supplemental or other marginal reserve requirement)
for a member bank of the Federal Reserve System in New York City
with respect to liabilities or assets consisting of or including
Eurocurrency Liabilities (or with respect to any other category
of liabilities that includes deposits by reference to which the
interest rate on Eurodollar Rate Advances is determined) having a
term equal to such Interest Period.
"Events of Default" has the meaning specified in Section 6.01.
"Existing Debt" means Debt of the Borrowers and their respective
Subsidiaries outstanding immediately before giving effect to the
Merger.
"Existing Letters of Credit" has the meaning specified in Section
2.03(e).
"Facility" means any of any Working Capital Facility, either
Swing Line Facility or either Letter of Credit Facility.
"Federal Funds Rate" means, for any period, a fluctuating
interest rate per annum equal for each day during such period to
the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not
so published for any day that is a Business Day, the average of
the quotations for such day for such transactions received by the
Agent from three Federal funds brokers of recognized standing
selected by it.
"Financial Statements" means, at any time, the most recent
financial statements furnished or required to be furnished by
Crompton Corp. to the Agent and the Lender Parties pursuant to
Section 5.03(b) or (c), as the case may be.
"Fiscal Year" means a fiscal year of Crompton Corp. and its
Consolidated Subsidiaries ending on or about December 31 in any
calendar year.
"Foreign Exchange Agreements" means currency swap agreements,
currency future or option contracts and other similar agreements
other than contracts or agreements under which neither any Loan
Party nor any of its Subsidiaries has any obligation that may
require payment in the future.
"Foreign Subsidiary" of Crompton Corp. means (a) solely for
purposes of Section 5.02(a), (b), (d), (e) and (f), Uniroyal
Chemical International Company, Gustafson International Company
and Uniroyal Chemical Company Limited and (b) in all instances,
any Subsidiary of Crompton Corp. (i) which is not incorporated in
the United States and (ii)(A) substantially all of whose assets
and properties are located, or substantially all of whose
business is carried on, outside of the United States or (B)
substantially all of whose assets consist of Subsidiaries that
are Foreign Subsidiaries as defined in clauses (i) and (ii)(A) of
this definition.
"GAAP" has the meaning specified in Section 1.03.
"Guaranties" means the Parent Guaranty, the Subsidiary Guaranty
and any other guaranty delivered pursuant to Section 5.01(k) or
5.01(l)(v).
"Guarantors" means Crompton Corp. and the Subsidiary Guarantors.
"Hazardous Materials" means (a)petroleum or petroleum products,
by-products or breakdown products, radioactive materials,
asbestos-containing materials, polychlorinated biphenyls and
radon gas and (b)any other chemicals, materials or substances
designated, classified or regulated as hazardous or toxic or as a
pollutant or contaminant under any Environmental Law.
"Hedge Agreements" means, collectively, Interest Rate Swap
Agreements, Foreign Exchange Agreements and agreements designed
to manage the total cost of publicly traded Debt obligations of
the Borrowers.
"Hedge Bank" means any Lender Party or any of its Affiliates in
its capacity as a party to a Bank Hedge Agreement.
"Indemnified Party" has the meaning specified in Section 8.04(b).
"Information Memorandum" means the information memorandum dated
June 1996 used by the Arranger in connection with the syndication
of the Commitments.
"Initial Extension of Credit" means the earlier to occur of the
initial Borrowing and the initial issuance of a Letter of Credit
hereunder.
"Initial Issuing Banks" has the meaning specified in the recital
of parties to this Agreement.
"Initial Lenders" has the meaning specified in the recital of
parties to this Agreement.
"Insufficiency" means, with respect to any Plan, the amount, if
any, of its unfunded benefit liabilities, as defined in Section
4001(a)(18) of ERISA.
"Interest Coverage Ratio" means, at any date of determination,
the ratio of Consolidated EBITDA to interest payable on, and
amortization of debt discount in respect of, all Debt (including,
without limitation, the interest component of Capitalized
Leases), in each case of Crompton Corp. and its Subsidiaries for
the immediately preceding Rolling Period.
"Interest Period" means, for each Eurodollar Rate Advance
comprising part of the same Borrowing, the period commencing on
the date of such Eurodollar Rate Advance or the date of the
Conversion of any Base Rate Advance into such Eurodollar Rate
Advance, and ending on the last day of the period selected by the
Borrower requesting such Borrowing or Conversion pursuant to the
provisions below and, thereafter, each subsequent period
commencing on the last day of the immediately preceding Interest
Period and ending on the last day of the period selected by such
Borrower pursuant to the provisions below. The duration of each
such Interest Period shall be one, two, three or six months, as
such Borrower may, upon notice received by the Agent not later
than 11:00 A.M. (New York City time) on the third Business Day
prior to the first day of such Interest Period, select; provided,
however, that:
(a)such Borrower may not select any Interest Period with respect
to any Eurodollar Rate Advance under a Facility that ends after
any principal repayment installment date for such Facility
unless, after giving effect to such selection, the aggregate
principal amount of Base Rate Advances and of Eurodollar Rate
Advances having Interest Periods that end on or prior to such
principal repayment installment date for such Facility shall be
at least equal to the aggregate principal amount of Advances
under such Facility due and payable on or prior to such date;
(b)Interest Periods commencing on the same date for Eurodollar
Rate Advances comprising part of the same Borrowing shall be of
the same duration;
(c)whenever the last day of any Interest Period would otherwise
occur on a day other than a Business Day, the last day of such
Interest Period shall be extended to occur on the next succeeding
Business Day, provided, however, that, if such extension would
cause the last day of such Interest Period to occur in the next
following calendar month, the last day of such Interest Period
shall occur on the next preceding Business Day; and
(d)whenever the first day of any Interest Period occurs on a day
of an initial calendar month for which there is no numerically
corresponding day in the calendar month that succeeds such
initial calendar month by the number of months equal to the
number of months in such Interest Period, such Interest Period
shall end on the last Business Day of such succeeding calendar
month.
"Interest Rate Swap Agreements" means interest rate swap, cap or
collar agreements, interest rate future or option contracts and
other similar agreements other than contracts or agreements under
which neither any Loan Party nor any of its Subsidiaries has any
obligation that may require payment in the future.
"Internal Revenue Code" means the Internal Revenue Code of 1986,
as amended from time to time, and the regulations promulgated and
rulings issued thereunder.
"Inventory" has the meaning specified in Section 1 of the
Uniroyal Security Agreement.
"Investment" in any Person means any loan or advance to such
Person, any purchase or other acquisition of all or substantially
all of the assets of any business of such Person or any capital
stock or other ownership or profit interest, warrants, rights,
options, obligations or other securities of such Person, any
capital contribution to such Person or any other investment in
such Person, including, without limitation, any arrangement
pursuant to which the investor incurs Debt of the types referred
to in clause (i) or (j) of the definition of "Debt" in respect of
such Person.
"Issuing Banks" means (a) with respect to the Letter of Credit A
Facility, each Initial Issuing Bank that has a Letter of Credit A
Commitment set forth opposite its name on Schedule I hereto and
any other Working Capital A Lender approved as an Issuing Bank by
the Agent and, so long as no Default shall have occurred and be
continuing, by Crompton Corp. (such approval not to be
unreasonably withheld or delayed) and each Eligible Assignee to
which a Letter of Credit A Commitment hereunder has been assigned
pursuant to Section 8.07 and (b) with respect to the Letter of
Credit B-1 Facility, each Initial Issuing Bank that has a Letter
of Credit B-1 Commitment set forth opposite its name on Schedule
I hereto and any other Working Capital B-1 Lender approved as an
Issuing Bank by the Agent and, so long as no Default shall have
occurred and be continuing, by Crompton Corp. (such approval not
to be unreasonably withheld or delayed) and each Eligible
Assignee to which a Letter of Credit B-1 Commitment hereunder has
been assigned pursuant to Section 8.07 so long as, in each case,
each such Lender or Eligible Assignee expressly agrees to perform
in accordance with their terms all of the obligations that by the
terms of this Agreement are required to be performed by it as an
Issuing Bank and notifies the Agent of its Applicable Lending
Office and the amount of its Letter of Credit Commitment (which
information shall be recorded by the Agent in the Register).
"ITC" has the meaning specified in the recital of parties to this
Agreement.
"L/C Cash Collateral Account" has the meaning specified in the
Security Agreement.
"L/C Related Documents" has the meaning specified in
Section 2.04(e)(ii).
"Lender Party" means any Lender, any Issuing Bank or the Swing
Line Bank.
"Lenders" means the Initial Lenders and each Person that shall
become a Lender hereunder pursuant to Section 8.07.
"Letter of Credit" has the meaning specified in Section 2.01(f).
"Letter of Credit A Commitment" means, with respect to any
Issuing Bank at any time, the amount set forth opposite such
Issuing Bank's name on Schedule I hereto under the caption
"Letter of Credit A Commitment" or, if such Issuing Bank has
entered into one or more Assignments and Acceptances, set forth
for such Issuing Bank in the Register maintained by the Agent
pursuant to Section 8.07(d) as such Issuing Bank's "Letter of
Credit A Commitment", as such amount may be reduced at or prior
to such time pursuant to Section 2.05.
"Letter of Credit A Facility" means, at any time, an amount equal
to the lesser of (a) the aggregate amount of the Issuing Banks'
Letter of Credit A Commitments at such time and (b) $50,000,000,
as such amount may be reduced at or prior to such time pursuant
to Section 2.05.
"Letter of Credit Advance" means an advance made by any Issuing
Bank or any Appropriate Lender pursuant to Section 2.03(c).
"Letter of Credit Agreement" has the meaning specified in Section
2.03(a).
"Letter of Credit B-1 Commitment" means, with respect to any
Issuing Bank at any time, the amount set forth opposite such
Issuing Bank's name on Schedule I hereto under the caption
"Letter of Credit B-1 Commitment" or, if such Issuing Bank has
entered into one or more Assignments and Acceptances, set forth
for such Issuing Bank in the Register maintained by the Agent
pursuant to Section 8.07(d) as such Issuing Bank's "Letter of
Credit B-1 Commitment", as such amount may be reduced at or prior
to such time pursuant to Section 2.05.
"Letter of Credit B-1 Facility" means, at any time, an amount
equal to the lesser of (a) the aggregate amount of the Issuing
Banks' Letter of Credit B-1 Commitments at such time and (b)
$20,000,000, as such amount may be reduced at or prior to such
time pursuant to Section 2.05.
"Letter of Credit Commitment" means a Letter of Credit A
Commitment or a Letter of Credit B-1 Commitment.
"Letter of Credit Facility" means the Letter of Credit A Facility
or the Letter of Credit B-1 Facility.
"Lien" means any lien, security interest or other charge or
encumbrance of any kind, or any other type of preferential
arrangement, including, without limitation, the lien or retained
security title of a conditional vendor and any easement, right of
way or other encumbrance on title to real property.
"Loan Documents" means (a) for purposes of this Agreement and the
Notes and any amendment, supplement or modification hereof or
thereof and for all other purposes other than for purposes of the
Guaranties and the Collateral Documents, (i) this Agreement, (ii)
the Notes, (iii) the Guaranties, (iv) the Collateral Documents
and (v) each Letter of Credit Agreement and (b) for purposes of
the Guaranties and the Collateral Documents, (i) this Agreement,
(ii) the Notes, (iii) the Guaranties, (iv) the Collateral
Documents, (v) each Letter of Credit Agreement, (vi) each Bank
Hedge Agreement and (vii) the Daylight Overdraft Documents, in
each case as amended, supplemented or otherwise modified from
time to time.
"Loan Parties" means the Borrowers and the Guarantors.
"Louisiana Undertaking" has the meaning specified in Section
3.01(k)(xiv).
"Margin Stock" has the meaning specified in Regulation U.
"Material Adverse Change" means any material adverse change in
the business, condition (financial or otherwise), operations,
performance, properties or prospects of (a) Crompton Corp. and
its Subsidiaries, taken as a whole, (b) Crompton Corp. and its
Subsidiaries (other than Uniroyal Corp. and its Subsidiaries),
taken as a whole, or (c) Uniroyal and its Subsidiaries, taken as
a whole.
"Material Adverse Effect" means a material adverse effect on
(a)the business, condition (financial or otherwise), operations,
performance, properties or prospects of (i) Crompton Corp. and
its Subsidiaries, taken as a whole, (ii) Crompton Corp. and its
Subsidiaries (other than Uniroyal Corp. and its Subsidiaries),
taken as a whole, or (iii) Uniroyal and its Subsidiaries, taken
as a whole, (b)the rights and remedies of the Agent or any Lender
Party under any Loan Document or Related Document or (c)the
ability of any Loan Party to perform its Obligations under any
Loan Document or Related Document to which it is or is to be a
party.
"Material Subsidiary" means, at any time, a Subsidiary of
Crompton Corp. having at least $10,000,000 in assets on a
Consolidated basis (determined as of the last day of the most
recent fiscal quarter of Crompton Corp.) or at least $20,000,000
in revenues, on a Consolidated basis, for the 12-month period
ending on the last day of the most recent fiscal quarter of
Crompton Corp.; provided, however, that any Subsidiary formed or
acquired after the last day of the most recent fiscal quarter of
Crompton Corp. that would have been a Material Subsidiary if it
had been formed or acquired on or prior to the last day of such
fiscal quarter shall be a Material Subsidiary for purposes hereof
from and after the date of its formation or acquisition.
"Merger" has the meaning specified in the Preliminary Statements.
"Merger Agreement" has the meaning specified in the Preliminary
Statements.
"Minor Subsidiaries" means those Subsidiaries of Crompton Corp.
listed on Schedule III hereto.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, to which any Loan Party or any ERISA
Affiliate is making or accruing an obligation to make
contributions, or has within any of the preceding five plan years
made or accrued an obligation to make contributions.
"Multiple Employer Plan" means a single employer plan, as defined
in Section 4001(a)(15) of ERISA, that (a)is maintained for
employees of any Loan Party or any ERISA Affiliate and at least
one Person other than the Loan Parties and the ERISA Affiliates
or (b) was so maintained and in respect of which any Loan Party
or any ERISA Affiliate could have liability under Section 4064 or
4069 of ERISA in the event such plan has been or were to be
terminated.
"Naugatuck" means Naugatuck Treatment Company, a Connecticut
corporation.
"Net Cash Proceeds" means, with respect to any sale, lease,
transfer or other disposition of any asset or the sale or
issuance of any Debt or capital stock or other ownership or
profit interest, any securities convertible into or exchangeable
for capital stock or other ownership or profit interest or any
warrants, rights, options or other securities to acquire capital
stock or other ownership or profit interest by any Person, the
aggregate amount of cash received from time to time (whether as
initial consideration or through payment or disposition of
deferred consideration) by or on behalf of such Person in
connection with such transaction after deducting therefrom only
(without duplication) (a)reasonable and customary brokerage
commissions, underwriting fees and discounts, legal fees,
finder's fees and other similar fees and commissions and (b)the
amount of taxes payable in connection with or as a result of such
transaction, in each case to the extent, but only to the extent,
that the amounts so deducted are, at the time of receipt of such
cash, actually paid to a Person that is not an Affiliate of such
Person or any Loan Party or any Affiliate of any Loan Party and
are properly attributable to such transaction or to the asset
that is the subject thereof; provided, however, that in the case
of taxes that are deductible under clause (b) but for the fact
that at the time of receipt of such cash, such taxes have not
been actually paid or are not then payable, such Person may
deduct an amount equal to the amount reserved in accordance with
GAAP for such Person's reasonable estimate of such taxes, other
than taxes for which such Person is indemnified; provided
further, however, that if the amount deducted pursuant to clause
(b) above is greater than the amount actually so paid, the amount
of such excess shall constitute Net Cash Proceeds.
"Note" means a Working Capital A Note, a Working Capital B-1 Note
or a Working Capital B-2 Note.
"Notice of Borrowing" has the meaning specified in Section
2.02(a).
"Notice of Issuance" has the meaning specified in
Section 2.03(a).
"Notice of Swing Line Borrowing" has the meaning specified in
Section 2.02(b).
"NPL" means the National Priorities List under CERCLA.
"Obligation" means, with respect to any Person, any payment,
performance or other obligation of such Person of any kind,
including, without limitation, any liability of such Person on
any claim, whether or not the right of any creditor to payment in
respect of such claim is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, disputed, undisputed,
legal, equitable, secured or unsecured, and whether or not such
claim is discharged, stayed or otherwise affected by any
proceeding referred to in Section6.01(f). Without limiting the
generality of the foregoing, the Obligations of each Loan Party
under the Loan Documents include (a)the obligation to pay
principal, interest, Letter of Credit commissions, charges,
expenses, fees, attorneys' fees and disbursements, indemnities
and other amounts payable by such Loan Party under any Loan
Document and (b)the obligation of such Loan Party to reimburse
any amount in respect of any of the foregoing that any Lender
Party, in its sole discretion, may elect to pay or advance on
behalf of such Loan Party.
"OECD" means the Organization for Economic Cooperation and
Development.
"Operating Cash Flow" means, for any Fiscal Year, an amount equal
to "cash flow from operations" for such Fiscal Year as set forth
on the statement of cash flows furnished for such Fiscal Year
pursuant to Section 5.03(c) less scheduled principal amounts of
Debt paid or to be paid (other than in connection with the
refinancing or replacement of any Surviving Debt) by Crompton
Corp. and its Subsidiaries during such Fiscal Year.
"Other Taxes" has the meaning specified in Section 2.12(b).
"Parent Guaranty" has the meaning specified in Section
3.01(k)(ix).
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor agency or entity performing substantially the same
functions.
"Permitted Liens" has the meaning specified in Section
5.02(a)(ii).
"Person" means an individual, partnership, corporation (including
a business trust), limited liability company, joint stock
company, trust, unincorporated association, joint venture or
other entity, or a government or any political subdivision or
agency thereof.
"Plan" means a Single Employer Plan or a Multiple Employer Plan.
"Pledged Debt" has the meaning specified in the Security
Agreement.
"Pro Rata Share" of any amount means (a) with respect to any
Working Capital A Lender at any time, the product of such amount
times a fraction the numerator of which is the amount of such
Lender's Working Capital A Commitment at such time and the
denominator of which is the Working Capital A Facility at such
time, (b) with respect to any Working Capital B-1 Lender at any
time, the product of such amount times a fraction the numerator
of which is the amount of such Lender's Working Capital B-1
Commitment at such time and the denominator of which is the
Working Capital B-1 Facility and (c) with respect to any Working
Capital B-2 Lender at any time, the product of such amount times
a fraction the numerator of which is the amount of such Lender's
Working Capital B-2 Commitment at such time and the denominator
of which is the Working Capital B-2 Facility.
"Receivables" has the meaning specified in Section 1 of the
Uniroyal Security Agreement.
"Receivables Securitization" has the meaning specified in Section
5.02(e).
"Register" has the meaning specified in Section 8.07(d).
"Regulation U" means Regulation U of the Board of Governors of
the Federal Reserve System, as in effect from time to time.
"Related Documents" means the Merger Agreement, the Uniroyal
Indentures, the Uniroyal Senior Notes, the Uniroyal Corp. Senior
Notes, the Uniroyal Corp. Senior Subordinated Notes and the
Uniroyal Corp. Subordinated Discount Notes and the Tax Agreement.
"Required Lenders" means at any time Lenders owed or holding at
least 51% of the sum of the aggregate Working Capital A
Commitments, Working Capital B-1 Commitments and Working Capital
B-2 Commitments at such time, or, if the Working Capital A
Commitments, Working Capital B-1 Commitments and Working Capital
B-2 Commitments have been terminated, 51% of the sum of the
aggregate outstanding Working Capital A Advances, Working Capital
B-1 Advances and Working Capital B-2 Advances at such time;
provided, however, that if any Lender shall be a Defaulting
Lender at such time, there shall be excluded from the
determination of Required Lenders at such time the aggregate
amount of the Working Capital A Commitment, Working Capital B-1
Commitment and Working Capital B-2 Commitment of such Lender at
such time.
"Responsible Officer" means any officer of any Loan Party or any
of its Subsidiaries.
"Rolling Period" means, with respect to any fiscal quarter of
Crompton Corp. and its Subsidiaries, such fiscal quarter and the
three consecutive immediately preceding fiscal quarters.
"S&P" means Standard & Poor's Rating Group, a division of The
McGraw-Hill Companies.
"Secured Parties" means the Agent, the Lender Parties, the Hedge
Banks and the Daylight Overdraft Bank.
"Security Agreement" has the meaning specified in Section
3.01(k)(viii).
"Seoul Guaranty" means the guaranty made by the Uniroyal Borrower
in favor of Citibank Seoul, which has issued bank guaranties of
the obligations of Unikor Chemical Inc. (Korea), a joint venture
50% owned by the Uniroyal Borrower, to certain banks organized
and located in Korea.
"Seoul Guaranty Amount" means a fluctuating dollar amount equal
to the amount of the Uniroyal Borrower's obligations under the
Seoul Guaranty, not to exceed $2,000,000 or such other amount
(not to exceed, in any event, $5,000,000) as agreed from time to
time by Citibank, the Uniroyal Borrower and the Agent.
"Single Employer Plan" means a single employer plan, as defined
in Section 4001(a)(15) of ERISA, that (a) is maintained for
employees of any Loan Party or any ERISA Affiliate and no Person
other than the Loan Parties and the ERISA Affiliates or (b)was so
maintained and in respect of which any Loan Party or any ERISA
Affiliate could have liability under Section 4069 of ERISA in the
event such plan has been or were to be terminated.
"Solvent" and "Solvency" mean, with respect to any Person on a
particular date, that on such date (a)the fair value of the
property of such Person is greater than the total amount of
liabilities, including, without limitation, contingent
liabilities, of such Person, (b)the present fair salable value of
the assets of such Person is not less than the amount that will
be required to pay the probable liability of such Person on its
debts as they become absolute and matured, (c)such Person does
not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay such debts and
liabilities as they mature and (d)such Person is not engaged in
business or a transaction, and is not about to engage in business
or a transaction, for which such Person's property would
constitute an unreasonably small capital. The amount of
contingent liabilities at any time shall be computed as the
amount that, in the light of all the facts and circumstances
existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability.
"Specified Amount" means the aggregate amount of the Working
Capital B-2 Commitments on the "Change of Control Purchase Date"
(as defined in the Uniroyal Indentures), after giving effect to
any reduction of such Commitments on or prior to such date
pursuant to Section 2.05(a).
"Standby Letter of Credit" means any Letter of Credit issued
under either Letter of Credit Facility, other than a Trade Letter
of Credit.
"Subsidiary" of any Person means any corporation, partnership,
joint venture, limited liability company, trust or estate of
which (or in which) more than 50% of (a)the issued and
outstanding capital stock having ordinary voting power to elect a
majority of the Board of Directors of such corporation
(irrespective of whether at the time capital stock of any other
class or classes of such corporation shall or might have voting
power upon the occurrence of any contingency), (b)the interest in
the capital or profits of such partnership, joint venture or
limited liability company or (c)the beneficial interest in such
trust or estate is at the time directly or indirectly owned or
controlled by such Person, by such Person and one or more of its
other Subsidiaries or by one or more of such Person's other
Subsidiaries.
"Subsidiary Guarantors" means the Crompton Guarantors and the
Uniroyal Guarantors.
"Subsidiary Guaranty" has the meaning specified in Section
3.01(k)(x).
"Surviving Debt" has the meaning specified in Section 3.01(d).
"Swing Line A Advance" means an advance made by (a) the Swing
Line Bank pursuant to Section 2.01(d) or (b)any Working Capital A
Lender pursuant to Section 2.02(b).
"Swing Line A Borrowing" means a borrowing consisting of a Swing
Line A Advance made by the Swing Line Bank.
"Swing Line A Facility" has the meaning specified in
Section 2.01(d).
"Swing Line Advance" means a Swing Line A Advance or a Swing Line
B-1 Advance.
"Swing Line B-1 Advance" means an advance made by (a) the Swing
Line Bank pursuant to Section 2.01(e) or (b)any Working Capital
B-1 Lender pursuant to Section .02(b).
"Swing Line B-1 Borrowing" means a borrowing consisting of a
Swing Line B-1 Advance made by the Swing Line Bank.
"Swing Line B-1 Facility" has the meaning specified in Section
2.01(e).
"Swing Line Bank" means Citicorp.
"Swing Line Borrowing" means a Swing Line A Borrowing or a Swing
Line B-1 Borrowing.
"Swing Line Facility" means the Swing Line A Facility or the
Swing Line B-1 Facility.
"Tax Agreement" means the Tax Agreement to be entered into by
Crompton Corp. and some or all of its Subsidiaries.
"Taxes" has the meaning specified in Section 2.12(a).
"Termination Date" means the earlier of August 21, 2001 and the
date of termination in whole of the Working Capital A
Commitments, the Working Capital
B-1 Commitments, the Working Capital B-2 Commitments and the
Letter of Credit Commitments pursuant to Section 2.05 or 6.01.
"Total Debt" of any Person means all Debt of such Person of the
types referred to in clauses (a) though (e) of the definition of
"Debt".
"Total Debt/EBITDA Ratio" means, at any date of determination,
the ratio of Consolidated Total Debt of Crompton Corp. and its
Subsidiaries as at the end of the immediately preceding Rolling
Period to Consolidated EBITDA of Crompton Corp. and its
Subsidiaries for such immediately preceding Rolling Period.
"Trade Letter of Credit" means any Letter of Credit that is
issued under either Letter of Credit Facility for the benefit of
a supplier of Inventory to any Borrower or any of its
Subsidiaries to effect payment for such Inventory, the conditions
to drawing under which include the presentation to the Issuing
Bank that issued such Letter of Credit of negotiable bills of
lading, invoices and related documents.
"Type" refers to the distinction between Advances bearing
interest at the Base Rate and Advances bearing interest at the
Eurodollar Rate.
"Uniroyal" has the meaning specified in the recital of parties to
this Agreement.
"Uniroyal Borrower" has the meaning specified in the recital of
parties to this Agreement.
"Uniroyal Corp." has the meaning specified in the Preliminary
Statements.
"Uniroyal Corp. Senior Notes" means the 10-1/2% Senior Notes due
2002 in an aggregate principal amount of $300,000,000, issued by
Uniroyal Corp. pursuant to an Indenture dated as of February 8,
1993 between Uniroyal Corp. and State Street Bank and Trust
Company, as Trustee, as amended, supplemented or otherwise
modified from time to time.
"Uniroyal Corp. Senior Subordinated Notes" means the 11% Senior
Subordinated Notes due 2003 in an aggregate principal amount of
$325,000,000, issued by Uniroyal Corp. pursuant to an Indenture
dated as of February 8, 1993 between Uniroyal Corp. and United
States Trust Company of New York, as Trustee, as amended,
supplemented or otherwise modified from time to time.
"Uniroyal Corp. Subordinated Discount Notes" means the 12%
Subordinated Discount Notes due 2005 in an aggregate principal
amount of $229,952,000, issued by Uniroyal Corp. pursuant to an
Indenture dated as of February 8, 1993 between Uniroyal Corp. and
Shawmut Bank Connecticut, National Association, as Trustee, as
amended, supplemented or otherwise modified from time to time.
"Uniroyal Guarantors" means Uniroyal Corp., the Subsidiaries of
Uniroyal Corp. listed on Part II of Schedule II hereto and each
other Subsidiary of Uniroyal Corp. that shall be required to
execute and deliver a guaranty pursuant to Section 5.01(k).
"Uniroyal Indentures" means the Indenture dated as of February 8,
1993 between Uniroyal Corp. and State Street Bank and Trust
Company, as Trustee, pursuant to which the Uniroyal Corp. Senior
Notes were issued, the Indenture dated as of February 8, 1993
between Uniroyal Corp. and United States Trust Company of New
York, as Trustee, pursuant to which the Uniroyal Corp. Senior
Subordinated Notes were issued, the Indenture dated as of
February 8, 1993 between Uniroyal Corp. and Shawmut Bank
Connecticut, National Association, as Trustee, pursuant to which
the Uniroyal Corp. Subordinated Discount Notes were issued, and
the Indenture dated as of September 1, 1993 between Uniroyal and
State Street Bank and Trust Company, as Trustee, pursuant to
which the Uniroyal Senior Notes were issued, in each case as
amended, supplemented or otherwise modified or refinanced or
refunded from time to time in accordance with its terms, to the
extent permitted in accordance with the Loan Documents.
"Uniroyal Security Agreement" has the meaning specified in
Section 3.01(k)(viii).
"Uniroyal Senior Notes" means the 9% Senior Notes issued by
Uniroyal pursuant to an Indenture dated as of September 1, 1993
between Uniroyal and State Street Bank and Trust Company, as
Trustee, as amended, supplemented or otherwise modified from time
to time.
"Unused Working Capital Commitment" means, with respect to any
Working Capital Facility and any Working Capital Lender at any
time, (a)such Lender's Working Capital Commitment under such
Working Capital Facility at such time minus (b)the sum of (i)the
aggregate principal amount of all Working Capital Advances, Swing
Line Advances and Letter of Credit Advances made under such
Working Capital Facility by such Lender (in its capacity as a
Lender) and outstanding at such time, plus (ii)such Lender's Pro
Rata Share of (A)the aggregate Available Amount of all Letters of
Credit outstanding under such Working Capital Facility at such
time, (B)the aggregate principal amount of all Letter of Credit
Advances made under such Working Capital Facility by the Issuing
Banks pursuant to Section 2.03(c) and outstanding at such time,
(C)the aggregate principal amount of all Swing Line Advances made
under such Working Capital Facility by the Swing Line Bank
pursuant to Section 2.01(d) or (e), as the case may be, and
outstanding at such time and (D) in the case of the Working
Capital B-1 Facilities, the amount of the Working Capital B-1
Commitments then reserved pursuant to Section 2.01(g).
"Voting Stock" means capital stock issued by a corporation, or
equivalent interests in any other Person, the holders of which
are ordinarily, in the absence of contingencies, entitled to vote
for the election of directors (or persons performing similar
functions) of such Person, even if the right so to vote has been
suspended by the happening of such a contingency.
"Welfare Plan" means a welfare plan, as defined in Section 3(1)
of ERISA, that is maintained for employees of any Loan Party or
in respect of which any Loan Party could have liability.
"Withdrawal Liability" has the meaning specified in Part I of
Subtitle E of Title IV of ERISA.
"Working Capital A Advance" has the meaning specified in Section
2.01(a).
"Working Capital A Borrowing" means a borrowing consisting of
simultaneous Working Capital A Advances of the same Type made by
the Working Capital A Lenders.
"Working Capital A Commitment" means, with respect to any Working
Capital A Lender at any time, the amount set forth opposite such
Lender's name on Schedule I hereto under the caption "Working
Capital A Commitment" or, if such Lender has entered into one or
more Assignments and Acceptances, set forth for such Lender in
the Register maintained by the Agent pursuant to Section8.07(d)
as such Lender's "Working Capital A Commitment", as such amount
may be reduced at or prior to such time pursuant to Section2.05.
"Working Capital A Facility" means, at any time, the aggregate
amount of the Working Capital A Lenders' Working Capital A
Commitments at such time.
"Working Capital A Lender" means any Lender that has a Working
Capital A Commitment.
"Working Capital A Note" means a promissory note of any Crompton
Borrower payable to the order of any Working Capital A Lender, in
substantially the form of Exhibit A-1 hereto, evidencing the
aggregate indebtedness of such Borrower to such Lender resulting
from the Working Capital A Advances made by such Lender.
"Working Capital Advance" means a Working Capital A Advance, a
Working Capital B-1 Advance or a Working Capital B-2 Advance.
"Working Capital B-1 Advance" has the meaning specified in
Section 2.01(b).
"Working Capital B-1 Borrowing" means a borrowing consisting of
simultaneous Working Capital B-1 Advances of the same Type made
by the Working Capital B-1 Lenders.
"Working Capital B-1 Commitment" means, with respect to any
Working Capital B-1 Lender at any time, the amount set forth
opposite such Lender's name on Schedule I hereto under the
caption "Working Capital B-1 Commitment" or, if such Lender has
entered into one or more Assignments and Acceptances, set forth
for such Lender in the Register maintained by the Agent pursuant
to Section 8.07(d) as such Lender's "Working Capital B-1
Commitment", as such amount may be reduced at or prior to such
time pursuant to Section 2.05.
"Working Capital B-1 Facility" means, at any time, the aggregate
amount of the Working Capital B-1 Lenders' Working Capital B-1
Commitments at such time.
"Working Capital B-1 Lender" means any Lender that has a Working
Capital B-1 Commitment.
"Working Capital B-1 Note" means a promissory note of the
Uniroyal Borrower payable to the order of any Working Capital B-1
Lender, in substantially the form of Exhibit A-2 hereto,
evidencing the aggregate indebtedness of the Uniroyal Borrower to
such Lender resulting from the Working Capital B-1 Advances made
by such Lender.
"Working Capital B-2 Advance" has the meaning specified in
Section 2.01(c).
"Working Capital B-2 Borrowing" means a borrowing consisting of
simultaneous Working Capital B-2 Advances of the same Type made
by the Working Capital B-2 Lenders.
"Working Capital B-2 Commitment" means, with respect to any
Working Capital B-2 Lender at any time, the amount set forth
opposite such Lender's name on Schedule I hereto under the
caption "Working Capital B-2 Commitment" or, if such Lender has
entered into one or more Assignments and Acceptances, set forth
for such Lender in the Register maintained by the Agent pursuant
to Section 8.07(d) as such Lender's "Working Capital B-2
Commitment", as such amount may be reduced at or prior to such
time pursuant to Section 2.05.
"Working Capital B-2 Facility" means, at any time, the aggregate
amount of the Working Capital B-2 Lenders' Working Capital B-2
Commitments at such time.
"Working Capital B-2 Lender" means any Lender that has a Working
Capital B-2 Commitment.
"Working Capital B-2 Note" means a promissory note of the
Uniroyal Borrower payable to the order of any Working Capital B-2
Lender, in substantially the form of Exhibit A-3 hereto,
evidencing the aggregate indebtedness of the Uniroyal Borrower to
such Lender resulting from the Working Capital B-2 Advances made
by such Lender.
"Working Capital Borrowing" means a Working Capital A Borrowing,
a Working Capital B-1 Borrowing or a Working Capital B-2
Borrowing.
"Working Capital Facility" means a Working Capital A Facility, a
Working Capital B-1 Facility or a Working Capital B-2 Facility.
"Working Capital Lender" means a Working Capital A Lender, a
Working Capital B-1 Lender or a Working Capital B-2 Lender.
SECTION 1.02. Computation of Time Periods. In this Agreement in
the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and including"
and the words "to" and "until" each mean "to but excluding".
SECTION 1.03. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with
generally accepted accounting principles consistent with those
applied in the preparation of the financial statements referred
to in Section 4.01(f), in the case of Crompton Corp. and its
Subsidiaries (other than Uniroyal Corp. and its Subsidiaries),
and Section 4.01(g), in the case of Uniroyal Corp. and its
Subsidiaries ("GAAP").
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
AND THE LETTERS OF CREDIT
SECTION 2.01. The Advances. (a) The Working Capital A
Advances. Each Working Capital A Lender severally agrees, on the
terms and conditions hereinafter set forth, to make advances
(each a "Working Capital A Advance") to any Crompton Borrower
from time to time on any Business Day during the period from the
date hereof until the Termination Date in an amount for each such
Advance not to exceed such Lender's Unused Working Capital
Commitment under the Working Capital A Facility at such time.
Each Working Capital A Borrowing shall be in an aggregate amount
of $5,000,000 (or, if the Swing Line Bank shall, in its sole
discretion, decline to make a Swing Line A Advance on such
Business Day after a request therefor by such Crompton Borrower
pursuant to Section 2.01(d), $1,000,000) or an integral multiple
of $1,000,000 in excess thereof and shall consist of Working
Capital A Advances made simultaneously by the Working Capital A
Lenders ratably according to their Working Capital A Commitments.
Within the limits of each Working Capital A Lender's Unused
Working Capital Commitment under the Working Capital A Facility
in effect from time to time, the Crompton Borrowers may borrow
under this Section 2.01(a), prepay pursuant to Section 2.06(a)
and reborrow under this Section 2.01(a).
(b)The Working Capital B-1 Advances. Each Working Capital B-1
Lender severally agrees, on the terms and conditions hereinafter
set forth, to make advances (each a "Working Capital B-1
Advance") to the Uniroyal Borrower from time to time on any
Business Day during the period from the date hereof until the
Termination Date in an amount for each such Advance not to exceed
such Lender's Unused Working Capital Commitment under the Working
Capital B-1 Facility at such time. Each Working Capital B-1
Borrowing shall be in an aggregate amount of $5,000,000 (or, if
the Swing Line Bank shall, in its sole discretion, decline to
make a Swing Line B-1 Advance on such Business Day after a
request therefor by the Uniroyal Borrower pursuant to Section
2.01(e), $1,000,000) or an integral multiple of $1,000,000 in
excess thereof and shall consist of Working Capital B-1 Advances
made simultaneously by the Working Capital B-1 Lenders ratably
according to their Working Capital B-1 Commitments. Within the
limits of each Working Capital B-1 Lender's Unused Working
Capital Commitment under the Working Capital B-1 Facility in
effect from time to time, the Uniroyal Borrower may borrow under
this Section 2.01(b), prepay pursuant to Section 2.06(a) and
reborrow under this Section 2.01(b).
(c)The Working Capital B-2 Advances. Each Working Capital B-2
Lender severally agrees, on the terms and conditions hereinafter
set forth, to make advances (each a "Working Capital B-2
Advance") to the Uniroyal Borrower from time to time on any
Business Day during the period from the date hereof until the
Termination Date in an amount for each such Advance not to exceed
such Lender's Unused Working Capital Commitment under the Working
Capital B-2 Facility at such time. Each Working Capital B-2
Borrowing shall be in an aggregate amount of $5,000,000 or an
integral multiple of $1,000,000 in excess thereof and shall
consist of Working Capital B-2 Advances made simultaneously by
the Working Capital B-2 Lenders ratably according to their
Working Capital B-2 Commitments. Within the limits of each
Working Capital B-2 Lender's Unused Working Capital Commitment
under the Working Capital B-2 Facility in effect from time to
time, the Uniroyal Borrower may borrow under this
Section 2.01(c), prepay pursuant to Section 2.06(a) and reborrow
under this Section 2.01(c).
(d)The Swing Line A Advances. Any Crompton Borrower may request
the Swing Line Bank to make, and the Swing Line Bank may, if in
its sole discretion it elects to do so, make, on the terms and
conditions hereinafter set forth, Swing Line A Advances to such
Crompton Borrower from time to time on any Business Day during
the period from the date hereof until the Termination Date (i) in
an aggregate amount not to exceed at any time outstanding
$10,000,000 (the "Swing Line A Facility") and (ii) in an amount
for each such Swing Line A Borrowing not to exceed the aggregate
of the Unused Working Capital Commitments under the Working
Capital A Facility of the Working Capital A Lenders at such time.
No Swing Line A Advance shall be used for the purpose of funding
the payment of principal of any other Swing Line A Advance. Each
Swing Line A Borrowing shall be in an amount of $500,000 or an
integral multiple of $100,000 in excess thereof and shall be made
as a Base Rate Advance. Within the limits of the Swing Line A
Facility and within the limits referred to in clause (ii) above,
so long as the Swing Line Bank, in its sole discretion, elects to
make Swing Line A Advances, the Crompton Borrowers may borrow
under this Section 2.01(d), repay pursuant to Section 2.04(d) or
prepay pursuant to Section 2.06(a) and reborrow under this
Section 2.01(d).
(e)The Swing Line B-1 Advances. The Uniroyal Borrower may
request the Swing Line Bank to make, and the Swing Line Bank may,
if in its sole discretion it elects to do so, make, on the terms
and conditions hereinafter set forth, Swing Line B-1 Advances to
the Uniroyal Borrower from time to time on any Business Day
during the period from the date hereof until the Termination Date
(i) in an aggregate amount not to exceed at any time outstanding
$10,000,000 (the "Swing Line B-1 Facility") and (ii) in an amount
for each such Swing Line Borrowing not to exceed the aggregate of
the Unused Working Capital Commitments under the Working Capital
B-1 Facility of the Working Capital B-1 Lenders at such time. No
Swing Line B-1 Advance shall be used for the purpose of funding
the payment of principal of any other Swing Line B-1 Advance.
Each Swing Line B-1 Borrowing shall be in an amount of $500,000
or an integral multiple of $100,000 in excess thereof and shall
be made as a Base Rate Advance. Within the limits of the Swing
Line B-1 Facility and within the limits referred to in
clause (ii) above, so long as the Swing Line Bank, in its sole
discretion, elects to make Swing Line B-1 Advances, the Uniroyal
Borrower may borrow under this Section 2.01(e), repay pursuant to
Section 2.04(d) or prepay pursuant to Section 2.06(a) and
reborrow under this Section 2.01(e).
(f)Letters of Credit. Each Issuing Bank severally agrees, on the
terms and conditions hereinafter set forth, to issue letters of
credit (together with the Existing Letters of Credit referred to
in Section 2.03(e), the "Letters of Credit") for the account of
any Borrower from time to time on any Business Day during the
period from the date hereof until 30 days before the Termination
Date (i) in an aggregate Available Amount for all Letters of
Credit issued by such Issuing Bank not to exceed at any time such
Issuing Bank's Letter of Credit Commitment at such time under the
Facility which the applicable Notice of Issuance specifies as the
Facility under which such Letter of Credit is to be issued,
(ii) in an Available Amount for each such Letter of Credit to be
issued under the Letter of Credit A Facility not to exceed the
lesser of (x) the Letter of Credit A Facility at such time and
(y) the Unused Working Capital Commitments of the Working Capital
A Lenders under the Working Capital A Facility at such time and
(iii) in an Available Amount for each such Letter of Credit to be
issued under the Letter of Credit B-1 Facility not to exceed the
lesser of (x) the Letter of Credit B-1 Facility at such time and
(y) the Unused Working Capital Commitments of the Working Capital
B-1 Lenders under the Working Capital B-1 Facility at such time.
Letters of Credit issued under the Letter of Credit A Facility
shall be issued for the account of any Crompton Borrower and
Letters of Credit issued under the Letter of Credit B-1 Facility
shall be issued for the account of the Uniroyal Borrower. No
Letter of Credit shall have an expiration date (including all
rights of the applicable Borrower or the beneficiary to require
renewal) later than the earlier of 30 days before the Termination
Date and (A) in the case of a Standby Letter of Credit, one year
after the date of issuance thereof and (B) in the case of a Trade
Letter of Credit, 90 days after the date of issuance thereof.
Within the limits of the Letter of Credit A Facility or the
Letter of Credit B-1 Facility, as the case may be, and subject to
the limits referred to above, the Crompton Borrowers or the
Uniroyal Borrower, as the case may be, may request the issuance
of Letters of Credit under this Section 2.01(f), repay any Letter
of Credit Advances resulting from drawings thereunder pursuant to
Section 2.03(c) and request the issuance of additional Letters of
Credit under this Section 2.01(f).
(g)Set Aside of Working Capital B-1 Commitments in Respect of the
Seoul Guaranty. Each Working Capital B-1 Lender's Pro Rata Share
of an aggregate amount of Working Capital B-1 Commitments equal
to the Seoul Guaranty Amount shall be reserved to ensure that
sufficient funds may be made available to the Uniroyal Borrower
for payment to Citibank Seoul of the Seoul Guaranty Amount as the
same becomes due and payable. The amount of Working Capital B-1
Commitments reserved under this Section 2.01(g) shall equal the
Seoul Guaranty Amount from time to time.
SECTION 2.02. Making the Advances. (a) Except as otherwise
provided in Section 2.02(b) or 2.03, each Borrowing shall be made
on notice, given not later than 11:00 A.M. (New York City time)
on (x) the third Business Day prior to the date of the proposed
Borrowing in the case of a Borrowing consisting of Eurodollar
Rate Advances, or (y) the first Business Day prior to the date of
the proposed Borrowing (or, if the Swing Line Bank shall, in its
sole discretion, decline to make a Swing Line Advance on the date
of the proposed Borrowing after a request therefor by a Borrower
pursuant to Section 2.01(d) or (e), the date of the proposed
Borrowing) in the case of a Borrowing consisting of Base Rate
Advances, by any Borrower to the Agent, which shall give to each
Appropriate Lender prompt notice thereof by telex or telecopier.
Each such notice of a Borrowing (a "Notice of Borrowing") shall
be by telephone, confirmed immediately in writing, or telex or
telecopier, in substantially the form of Exhibit B hereto,
specifying therein the requested (i) date of such Borrowing,
(ii) Facility under which such Borrowing is to be made,
(iii) Type of Advances comprising such Borrowing, (iv) aggregate
amount of such Borrowing and (v) in the case of a Borrowing
consisting of Eurodollar Rate Advances, initial Interest Period
for each such Advance. Each Appropriate Lender shall, before
11:00 A.M. (New York City time) on the date of such Borrowing,
make available for the account of its Applicable Lending Office
to the Agent at the Agent's Account, in same day funds, such
Lender's ratable portion of such Borrowing in accordance with the
respective Commitments under the applicable Facility of such
Lender and the other Appropriate Lenders. After the Agent's
receipt of such funds and upon fulfillment of the applicable
conditions set forth in Article III, the Agent will make such
funds available to the relevant Borrower by crediting the
relevant Borrower's Account.
(b)Each Swing Line Borrowing shall be made on notice, given not
later than 11:00 A.M. (New York City time) on the date of the
proposed Swing Line Borrowing, by any Borrower to the Swing Line
Bank and the Agent. Each such notice of a Swing Line Borrowing
(a "Notice of Swing Line Borrowing") shall be by telephone,
confirmed immediately in writing, or telex or telecopier,
specifying therein the requested (i) date of such Borrowing,
(ii) amount of such Borrowing and (iii) maturity of such
Borrowing (which maturity shall be no later than the seventh day
after the requested date of such Borrowing). If, in its sole
discretion, it elects to make the requested Swing Line Advance,
the Swing Line Bank will make the amount thereof available to the
Agent at the Agent's Account, in same day funds. After the
Agent's receipt of such funds and upon fulfillment of the
applicable conditions set forth in Article III, the Agent will
make such funds available to the relevant Borrower by crediting
the relevant Borrower's Account. Upon written demand by the
Swing Line Bank with an outstanding Swing Line A Advance or Swing
Line B-1 Advance, as the case may be, with a copy of such demand
to the Agent, each other Working Capital A Lender or Working
Capital B-1 Lender, as the case may be, shall purchase from the
Swing Line Bank, and the Swing Line Bank shall sell and assign to
each such other Working Capital A Lender or Working Capital B-1
Lender, as the case may be, such other Lender's Pro Rata Share of
such outstanding Swing Line A Advance or Swing Line B-1 Advance,
as the case may be, as of the date of such demand, by making
available for the account of its Applicable Lending Office to the
Agent for the account of the Swing Line Bank, by deposit to the
Agent's Account, in same day funds, an amount equal to the
portion of the outstanding principal amount of such Swing Line A
Advance or Swing Line B-1 Advance, as the case may be, to be
purchased by such Lender. Each Borrower hereby agrees to each
such sale and assignment. Each Working Capital A Lender agrees
to purchase its Pro Rata Share of an outstanding Swing Line A
Advance and each Working Capital B-1 Lender agrees to purchase
its Pro Rata Share of an outstanding Swing Line B-1 Advance on
(i) the Business Day on which demand therefor is made by the
Swing Line Bank, provided that notice of such demand is given not
later than 11:00 A.M. (New York City time) on such Business Day
or (ii) the first Business Day next succeeding such demand if
notice of such demand is given after such time. Upon any such
assignment by the Swing Line Bank to any other Working Capital
Lender of a portion of a Swing Line Advance, the Swing Line Bank
represents and warrants to such other Lender that the Swing Line
Bank is the legal and beneficial owner of such interest being
assigned by it, but makes no other representation or warranty and
assumes no responsibility with respect to such Swing Line
Advance, the Loan Documents or any Loan Party. If and to the
extent that any Working Capital A Lender or Working Capital B-1
Lender, as the case may be, shall not have so made the amount of
such Swing Line A Advance or Swing Line B-1 Advance, as the case
may be, available to the Agent, such Lender agrees to pay to the
Agent forthwith on demand such amount together with interest
thereon, for each day from the date of demand by the Swing Line
Bank until the date such amount is paid to the Agent, at the
Federal Funds Rate. If such Lender shall pay to the Agent such
amount for the account of the Swing Line Bank on any Business
Day, such amount so paid in respect of principal shall constitute
a Swing Line Advance made by such Lender on such Business Day for
purposes of this Agreement, and the outstanding principal amount
of the Swing Line Advance made by the Swing Line Bank shall be
reduced by such amount on such Business Day.
(c)Anything in subsection (a) above to the contrary
notwithstanding, (i) the Borrowers may not select Eurodollar Rate
Advances for any Borrowing if the aggregate amount of such
Borrowing is less than $5,000,000 or if the obligation of the
Appropriate Lenders to make Eurodollar Rate Advances shall then
be suspended pursuant to Section 2.09 or Section 2.10 and
(ii) the Working Capital Advances may not be outstanding as part
of more than 12 separate Borrowings.
(d)Each Notice of Borrowing and Notice of Swing Line Borrowing
shall be irrevocable and binding on the Borrower giving such
notice. In the case of any Borrowing that the related Notice of
Borrowing specifies is to be comprised of Eurodollar Rate
Advances, the Borrower giving such notice shall indemnify each
Appropriate Lender against any loss, cost or expense incurred by
such Lender as a result of any failure to fulfill on or before
the date specified in such Notice of Borrowing for such Borrowing
the applicable conditions set forth in Article III, including,
without limitation, any loss (including loss of anticipated
profits), cost or expense incurred by reason of the liquidation
or reemployment of deposits or other funds acquired by such
Lender to fund the Advance to be made by such Lender as part of
such Borrowing when such Advance, as a result of such failure, is
not made on such date.
(e)Unless the Agent shall have received notice from an
Appropriate Lender prior to the date of any Borrowing under a
Facility under which such Lender has a Commitment that such
Lender will not make available to the Agent such Lender's ratable
portion of such Borrowing, the Agent may assume that such Lender
has made such portion available to the Agent on the date of such
Borrowing in accordance with subsection (a) or (b) of this
Section 2.02 and the Agent may, in reliance upon such assumption,
make available to the relevant Borrower on such date a
corresponding amount. If and to the extent that such Lender
shall not have so made such ratable portion available to the
Agent, such Lender and the relevant Borrower severally agree to
repay or pay to the Agent forthwith on demand such corresponding
amount and to pay interest thereon, for each day from the date
such amount is made available to such Borrower until the date
such amount is repaid or paid to the Agent, at (i) in the case of
the Borrowers, the interest rate applicable at such time under
Section 2.07 to Advances comprising such Borrowing and (ii) in
the case of such Lender, the Federal Funds Rate. If such Lender
shall pay to the Agent such corresponding amount, such amount so
paid shall constitute such Lender's Advance as part of such
Borrowing for all purposes.
(f)The failure of any Lender to make the Advance to be made by it
as part of any Borrowing shall not relieve any other Lender of
its obligation, if any, hereunder to make its Advance on the date
of such Borrowing, but no Lender shall be responsible for the
failure of any other Lender to make the Advance to be made by
such other Lender on the date of any Borrowing.
(g)The Uniroyal Borrower hereby irrevocably authorizes and
appoints Citibank as its attorney-in-fact to execute and deliver
a Notice of Borrowing in accordance with Section 2.02(a) or a
Notice of Swing Line Borrowing in accordance with Section
2.02(b), on behalf of and in the name of the Uniroyal Borrower,
for a Working Capital B-1 Borrowing or Swing Line B-1 Borrowing,
as the case may be, in an aggregate amount not to exceed the
Seoul Guaranty Amount. The Uniroyal Borrower hereby authorizes
each of Citibank and Citibank Seoul, in its discretion, to hold
the proceeds of such Borrowing as collateral for, and/or then or
at any time thereafter to apply such proceeds in whole or in part
against the Obligations of the Uniroyal Borrower under the Seoul
Guaranty. Each Working Capital B-1 Lender severally agrees,
notwithstanding any other term or condition of this Agreement
(including, without limitation, any non-fulfillment of any of the
conditions specified in Article III), to make an Advance to or
for the account of the Uniroyal Borrower for the purposes
specified in the proviso to the first sentence of Section 2.14
hereof, on any Business Day during the period from the date
hereof until the Termination Date, in an aggregate amount not to
exceed such Lender's Pro Rata Share of the amount of Working
Capital B-1 Commitments then reserved pursuant to Section
2.01(g); provided that, after giving effect to the Advances made
pursuant to this Section 2.02(g), the sum of the aggregate
principal amount of Working Capital B-1 Advances, Swing Line B-1
Advances and Letter of Credit B-1 Advances then outstanding plus
the Available Amount of all Letters of Credit issued under the
Letter of Credit B-1 Facility and then outstanding shall not
exceed the aggregate Working Capital B-1 Commitments.
SECTION 2.03. Issuance of and Drawings and Reimbursement Under
Letters of Credit. (a) Request for Issuance. Each Letter of
Credit shall be issued upon notice, given not later than
11:00 A.M. (New York City time) on the second Business Day prior
to the date of the proposed issuance of such Letter of Credit, by
any Crompton Borrower to any Issuing Bank under the Letter of
Credit A Facility or by the Uniroyal Borrower to any Issuing Bank
under the Letter of Credit B-1 Facility, which shall give to the
Agent and each Appropriate Lender prompt notice thereof by telex
or telecopier. Each such notice of issuance of a Letter of
Credit (a "Notice of Issuance") shall be by telephone, confirmed
immediately in writing, or telex or telecopier, specifying
therein the requested (A) date of such issuance (which shall be a
Business Day), (B) Available Amount of such Letter of Credit,
(C) expiration date of such Letter of Credit, (D) name and
address of the beneficiary of such Letter of Credit, (E) Facility
under which such Letter of Credit is to be issued and (F) form of
such Letter of Credit, and shall be accompanied by such
application and agreement for letter of credit as such Issuing
Bank may specify to the relevant Borrower for use in connection
with such requested Letter of Credit (a "Letter of Credit
Agreement"). If (x) the requested form of such Letter of Credit
is acceptable to such Issuing Bank in its sole discretion and (y)
it has not received notice of objection to such issuance from
Appropriate Lenders holding at least 51% of the Working Capital A
Commitments or Working Capital B-1 Commitments, as the case may
be, such Issuing Bank will, upon fulfillment of the applicable
conditions set forth in Article III, make such Letter of Credit
available to the Borrower requesting the issuance of such Letter
of Credit at its office referred to in Section 8.02 or as
otherwise agreed with such Borrower in connection with such
issuance. In the event and to the extent that the provisions of
any Letter of Credit Agreement shall conflict with this
Agreement, the provisions of this Agreement shall govern.
(b)Letter of Credit Reports. Each Issuing Bank shall furnish
(A) to the Agent on the first Business Day of each week a written
report summarizing issuance and expiration dates of Letters of
Credit issued by such Issuing Bank during the previous week and
drawings during such week under all Letters of Credit issued by
such Issuing Bank, (B) to each Appropriate Lender on the first
Business Day of each month a written report summarizing issuance
and expiration dates of Letters of Credit issued by such Issuing
Bank during the preceding month and drawings during such month
under all Letters of Credit issued by such Issuing Bank and
(C) to the Agent and each Appropriate Lender on the first
Business Day of each calendar quarter a written report setting
forth the average daily aggregate Available Amount during the
preceding calendar quarter of all Letters of Credit issued by
such Issuing Bank.
(c)Drawing and Reimbursement. The payment by any Issuing Bank of
a draft drawn under any Letter of Credit shall constitute for all
purposes of this Agreement the making by such Issuing Bank of a
Letter of Credit Advance, which shall be a Base Rate Advance, in
the amount of such draft. Upon payment by any Issuing Bank of a
draft drawn under any Letter of Credit, such Issuing Bank shall
give prompt notice thereof to the applicable Borrower and the
Agent. Upon written demand by any Issuing Bank with an
outstanding Letter of Credit Advance, with a copy of such demand
to the Agent, each Appropriate Lender shall purchase from such
Issuing Bank, and such Issuing Bank shall sell and assign to each
such Appropriate Lender, such Lender's Pro Rata Share of such
outstanding Letter of Credit Advance as of the date of such
purchase, by making available for the account of its Applicable
Lending Office to the Agent for the account of such Issuing Bank,
by deposit to the Agent's Account, in same day funds, an amount
equal to the portion of the outstanding principal amount of such
Letter of Credit Advance to be purchased by such Lender.
Promptly after receipt thereof, the Agent shall transfer such
funds to such Issuing Bank. Each Borrower hereby agrees to each
such sale and assignment. Each Appropriate Lender agrees to
purchase its Pro Rata Share of an outstanding Letter of Credit
Advance on (i) the Business Day on which demand therefor is made
by the Issuing Bank which made such Advance, provided notice of
such demand is given not later than 11:00 A.M. (New York City
time) on such Business Day or (ii) the first Business Day next
succeeding such demand if notice of such demand is given after
such time. Upon any such assignment by an Issuing Bank to any
Appropriate Lender of a portion of a Letter of Credit Advance,
such Issuing Bank represents and warrants to such Appropriate
Lender that such Issuing Bank is the legal and beneficial owner
of such interest being assigned by it, free and clear of any
liens, but makes no other representation or warranty and assumes
no responsibility with respect to such Letter of Credit Advance,
the Loan Documents or any Loan Party. If and to the extent that
any Appropriate Lender shall not have so made the amount of such
Letter of Credit Advance available to the Agent, such Appropriate
Lender agrees to pay to the Agent forthwith on demand such amount
together with interest thereon, for each day from the date of
demand by such Issuing Bank until the date such amount is paid to
the Agent, at the Federal Funds Rate for its account or the
account of such Issuing Bank, as applicable. If such Lender
shall pay to the Agent such amount for the account of such
Issuing Bank on any Business Day, such amount so paid in respect
of principal shall constitute a Letter of Credit Advance made by
such Lender on such Business Day for purposes of this Agreement,
and the outstanding principal amount of the Letter of Credit
Advance made by such Issuing Bank shall be reduced by such amount
on such Business Day.
(d)Failure to Make Letter of Credit Advances. The failure of any
Lender to make the Letter of Credit Advance to be made by it on
the date specified in Section 2.03(c) shall not relieve any other
Lender of its obligation hereunder to make its Letter of Credit
Advance on such date, but no Lender shall be responsible for the
failure of any other Lender to make the Letter of Credit Advance
to be made by such other Lender on such date.
(e)Existing Letters of Credit. Pursuant to the Credit Agreement
dated as of December 21, 1995 (the "1995 Credit Agreement") among
the Uniroyal Borrower, the lender parties party thereto and
Citicorp as agent for the lender parties thereunder, the "Issuing
Bank" thereunder issued "Letters of Credit" (such Letters of
Credit as are outstanding under the 1995 Credit Agreement on the
Effective Date and set forth on Schedule 2.03(e) hereto being the
"Existing Letters of Credit") for the account of the Uniroyal
Borrower. Effective as of the Effective Date: (i) the "Issuing
Bank" under the 1995 Credit Agreement will be deemed to have sold
and transferred, and each Working Capital B-1 Lender hereunder
will be deemed to have purchased and received, without further
action on the part of any party, an undivided interest and
participation in such Existing Letters of Credit, based on such
Working Capital B-1 Lender's Pro Rata Share of the Working
Capital B-1 Facility; and (ii) the Existing Letters of Credit
will be deemed to be Letters of Credit hereunder.
SECTION 2.04. Repayment of Advances. (a) Working Capital A
Advances. Each Crompton Borrower shall repay to the Agent for
the ratable account of the Working Capital A Lenders on the
Termination Date the aggregate principal amount of the Working
Capital A Advances made to such Crompton Borrower and then
outstanding.
(b)Working Capital B-1 Advances. The Uniroyal Borrower shall
repay to the Agent for the ratable account of the Working Capital
B-1 Lenders on the Termination Date the aggregate principal
amount of the Working Capital B-1 Advances then outstanding.
(c)Working Capital B-2 Advances. The Uniroyal Borrower shall
repay to the Agent for the ratable account of the Working Capital
B-2 Lenders on the Termination Date the aggregate outstanding
principal amount of the Working Capital B-2 Advances then
outstanding.
(d)Swing Line Advances. Each Borrower shall repay to the Agent
for the account of the Swing Line Bank and each other Working
Capital Lender that has made a Swing Line Advance the outstanding
principal amount of each Swing Line Advance made by each of them
and owing by such Borrower on the earlier of the maturity date
specified in the applicable Notice of Swing Line Borrowing (which
maturity shall be no later than the seventh day after the
requested date of such Borrowing) and the Termination Date.
(e)Letter of Credit Advances. (i) Each Borrower shall repay to
the Agent for the account of each Issuing Bank and each other
Working Capital Lender that has made a Letter of Credit Advance
on the earlier of the second Business Day following the date on
which such Letter of Credit is drawn and the Termination Date the
outstanding principal amount of each Letter of Credit Advance
made by each of them.
(ii)The Obligations of each Borrower under this Agreement, any
Letter of Credit Agreement and any other agreement or instrument
relating to any Letter of Credit shall be unconditional and
irrevocable, and shall be paid strictly in accordance with the
terms of this Agreement, such Letter of Credit Agreement and such
other agreement or instrument under all circumstances, including,
without limitation, the following circumstances:
(A)any lack of validity or enforceability of any Loan Document,
any Letter of Credit Agreement, any Letter of Credit or any other
agreement or instrument relating thereto (all of the foregoing
being, collectively, the "L/C Related Documents");
(B)any change in the time, manner or place of payment of, or in
any other term of, all or any of the Obligations of any Borrower
in respect of any L/C Related Document or any other amendment or
waiver of or any consent to departure from all or any of the L/C
Related Documents;
(C)the existence of any claim, set-off, defense or other right
that any Borrower may have at any time against any beneficiary or
any transferee of a Letter of Credit (or any Persons for whom any
such beneficiary or any such transferee may be acting), any
Issuing Bank or any other Person, whether in connection with the
transactions contemplated by the L/C Related Documents or any
unrelated transaction;
(D)any statement or any other document presented under a Letter
of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue
or inaccurate in any respect;
(E)payment by any Issuing Bank under a Letter of Credit against
presentation of a draft or certificate that does not strictly
comply with the terms of such Letter of Credit;
(F)any exchange, release or non-perfection of any Collateral or
other collateral, or any release or amendment or waiver of or
consent to departure from any Guaranty or any other guarantee,
for all or any of the Obligations of any Borrower in respect of
the L/C Related Documents; or
(G)any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing, including, without limitation,
any other circumstance that might otherwise constitute a defense
available to, or a discharge of, any Borrower, any Guarantor or
any other guarantor.
SECTION 2.05. Termination or Reduction of the Commitments.
(a) Optional. Crompton Corp. may, on its own behalf and on
behalf of the other Borrowers, upon at least two Business Days'
notice to the Agent, terminate in whole or reduce in part the
unused portion of either Letter of Credit Facility, either Swing
Line Facility or the Unused Working Capital Commitments under any
Working Capital Facility; provided, however, that each partial
reduction of a Facility (i) shall be in an aggregate amount of
$10,000,000 or an integral multiple of $5,000,000 in excess
thereof and (ii) shall be made ratably among the Appropriate
Lenders in accordance with their Commitments with respect to such
Facility.
(b)Mandatory. (i) The aggregate Working Capital B-2 Commitments
of the Working Capital B-2 Lenders shall be automatically and
permanently reduced, on a pro rata basis, on the following dates
in the amounts indicated:
Date Amount
December 31, 1997 5% of the Specified Amount
December 31, 1998 10% of the Specified Amount
December 31, 1999 15% of the Specified Amount
(ii) The Letter of Credit A Facility or Letter of Credit B-1
Facility, as the case may be, shall be permanently reduced from
time to time on the date of each reduction in the Working Capital
A Facility or Working Capital B-1 Facility, as the case may be,
by the amount, if any, by which the amount of the Letter of
Credit A Facility or Letter of Credit B-1 Facility, as the case
may be, exceeds the Working Capital A Facility or Working Capital
B-1 Facility, as the case may be, after giving effect to such
reduction of such Working Capital Facility.
(iii) The Swing Line A Facility or Swing Line B-1 Facility, as
the case may be, shall be permanently reduced from time to time
on the date of each reduction in the Working Capital A Facility
or Working Capital B-1 Facility, as the case may be, by the
amount, if any, by which the amount of the Swing Line A Facility
or Swing Line B-1 Facility, as the case may be, exceeds the
Working Capital A Facility or Working Capital B-1 Facility, as
the case may be, after giving effect to such reduction of such
Working Capital Facility.
(iv) Upon the date of receipt by Crompton Corp. or any of its
Subsidiaries of the Net Cash Proceeds from the sale or other
disposition of assets pursuant to clause (vii) of Section
5.02(e), the Working Capital Facilities shall be automatically
and permanently reduced, on a pro rata basis, by the amount of
such Net Cash Proceeds to the extent required under such clause
(vii).
SECTION 2.06. Prepayments. (a) Optional. Each Borrower may,
upon at least one Business Day's notice in the case of Base Rate
Advances and three Business Days' notice in the case of
Eurodollar Rate Advances, in each case to the Agent stating the
proposed date and aggregate principal amount of the prepayment,
and if such notice is given such Borrower shall, prepay the
outstanding aggregate principal amount of the Advances comprising
part of the same Borrowing in whole or ratably in part, together
with accrued interest to the date of such prepayment on the
aggregate principal amount prepaid; provided, however, that
(x) each partial prepayment shall be in an aggregate principal
amount of $5,000,000 or an integral multiple of $1,000,000 in
excess thereof and (y) if any prepayment of a Eurodollar Rate
Advance is made on a date other than the last day of an Interest
Period for such Advance, such Borrower shall also pay any amounts
owing pursuant to Section 8.04(c).
(b)Mandatory. (i) The Crompton Borrowers shall, on each
Business Day, prepay an aggregate principal amount of the Working
Capital A Advances comprising part of the same Borrowings, the
Letter of Credit A Advances and the Swing Line A Advances equal
to the amount by which (A) the sum of the aggregate principal
amount of (x) the Working Capital A Advances, (y) the Letter of
Credit A Advances and (z) the Swing Line A Advances then
outstanding plus the aggregate Available Amount of all Letters of
Credit then outstanding under the Working Capital A Facility
exceeds (B) the Working Capital A Facility on such Business Day.
(ii)The Uniroyal Borrower shall, on each Business Day, prepay an
aggregate principal amount of the Working Capital B-1 Advances
comprising part of the same Borrowings, the Letter of Credit B-1
Advances and the Swing Line B-1 Advances equal to the amount by
which (A) the sum of the aggregate principal amount of (x) the
Working Capital B-1 Advances, (y) the Letter of Credit B-1
Advances and (z) the Swing Line B-1 Advances then outstanding
plus the aggregate Available Amount of all Letters of Credit then
outstanding under the Working Capital B-1 Facility exceeds
(B) the Working Capital B-1 Facility on such Business Day.
(iii)The Uniroyal Borrower shall, on each Business Day, prepay an
aggregate principal amount of the Working Capital B-2 Advances
comprising part of the same Borrowings equal to the amount by
which the aggregate principal amount of the Working Capital B-2
Advances then outstanding exceeds the Working Capital B-2
Facility on such Business Day.
(iv)The Crompton Borrowers shall, on each Business Day, pay to
the Agent for deposit in the relevant L/C Cash Collateral Account
an amount sufficient to cause the aggregate amount on deposit in
such Account to equal the amount by which the aggregate Available
Amount of all Letters of Credit then outstanding under the
Working Capital A Facility exceeds the Letter of Credit A
Facility on such Business Day.
(v)The Uniroyal Borrower shall, on each Business Day, pay to the
Agent for deposit in the relevant L/C Cash Collateral Account an
amount sufficient to cause the aggregate amount on deposit in
such Account to equal the amount by which the aggregate Available
Amount of all Letters of Credit then outstanding under the Letter
of Credit B-1 Facility exceeds the Letter of Credit B-1 Facility
on such Business Day.
(vi)Prepayments of the Working Capital A Facility or Working
Capital B-1 Facility made pursuant to clause (i) or (ii) above
shall be first applied to prepay Letter of Credit Advances then
outstanding under such Facility until such Advances are paid in
full, second applied to prepay Swing Line Advances then
outstanding under such Facility until such Advances are paid in
full, third applied to prepay Working Capital Advances then
outstanding under such Facility comprising part of the same
Borrowings until such Advances are paid in full and fourth
deposited in the relevant L/C Cash Collateral Account to cash
collateralize 100% of the Available Amount of the Letters of
Credit then outstanding under such Facility.
(vii)All prepayments under this subsection (b) shall be made
together with accrued interest to the date of such prepayment on
the principal amount prepaid.
SECTION 2.07. Interest. (a) Scheduled Interest. Each Borrower
shall pay interest on the unpaid principal amount of each Advance
made to such Borrower and owing to each Lender from the date of
such Advance until such principal amount shall be paid in full,
at the following rates per annum:
(i)Base Rate Advances. During such periods as such Advance is a
Base Rate Advance, a rate per annum equal at all times to the sum
of (A) the Base Rate in effect from time to time plus (B) the
Applicable Margin in effect from time to time, payable in arrears
quarterly on the first day of each October, January, April and
July during such periods and on the date such Base Rate Advance
shall be Converted or paid in full.
(ii)Eurodollar Rate Advances. During such periods as such
Advance is a Eurodollar Rate Advance, a rate per annum equal at
all times during each Interest Period for such Advance to the sum
of (A) the Eurodollar Rate for such Interest Period for such
Advance plus (B) the Applicable Margin in effect from time to
time, payable in arrears on the last day of such Interest Period
and, if such Interest Period has a duration of more than three
months, on each day that occurs during such Interest Period every
three months from the first day of such Interest Period and on
the date such Eurodollar Rate Advance shall be Converted or paid
in full.
(b)Default Interest. Upon the occurrence and during the
continuance of an Event of Default, each Borrower shall pay
interest on (i) the unpaid principal amount of each Advance made
to such Borrower and owing to each Lender, payable in arrears on
the dates referred to in clause (a)(i) or (a)(ii) above and on
demand, at a rate per annum equal at all times to 2% per annum
above the rate per annum required to be paid on such Advance
pursuant to clause (a)(i) or (a)(ii) above and (ii) to the
fullest extent permitted by law, the amount of any interest, fee
or other amount payable hereunder that is not paid when due, from
the date such amount shall be due until such amount shall be paid
in full, payable in arrears on the date such amount shall be paid
in full and on demand, at a rate per annum equal at all times to
2% per annum above the rate per annum required to be paid, in the
case of interest, on the Type of Advance on which such interest
has accrued pursuant to clause (a)(i) or (a)(ii) above, and, in
all other cases, on Base Rate Advances pursuant to clause (a)(i)
above.
(c)Notice of Interest Rate. Promptly after receipt of a Notice
of Borrowing pursuant to Section 2.02(a), the Agent shall give
notice to the relevant Borrower and each Appropriate Lender of
the applicable interest rate determined by the Agent for purposes
of clause (a)(i) or (ii).
SECTION 2.08. Fees. (a) Commitment Fee. The Borrowers jointly
and severally agree to pay to the Agent for the account of the
Lenders a commitment fee, from August 15, 1996 in the case of
each Initial Lender and from the effective date specified in the
Assignment and Acceptance pursuant to which it became a Lender in
the case of each other Lender until the Termination Date, payable
in arrears on the date of the initial Borrowing hereunder,
thereafter quarterly on the first Business Day of each quarter,
commencing August 1, 1996, and on the Termination Date, at a rate
per annum equal to the Applicable Percentage in effect from time
to time on the average daily Unused Working Capital Commitments
of such Lender (without giving effect to clause (b)(ii)(D) of the
definition of "Unused Working Capital Commitment"); provided,
however, that any commitment fee accrued with respect to any of
the Commitments of a Defaulting Lender during the period prior to
the time such Lender became a Defaulting Lender and unpaid at
such time shall not be payable by the Borrowers so long as such
Lender shall be a Defaulting Lender except to the extent that
such commitment fee shall otherwise have been due and payable by
the Borrowers prior to such time; and provided further that no
commitment fee shall accrue on any of the Commitments of a
Defaulting Lender so long as such Lender shall be a Defaulting
Lender.
(b)Letter of Credit Fees, Etc. (i) The Borrowers jointly and
severally agree to pay to the Agent for the account of each
Working Capital A Lender and each Working Capital B-1 Lender a
commission, payable quarterly in arrears on the first Business
Day of each January, April, July and October, commencing October
1, 1996, and on the earliest to occur of the full drawing,
expiration, termination or cancellation of any Letter of Credit
and on the Termination Date, on such Lender's Pro Rata Share of
the average daily aggregate Available Amount during such quarter
of all Letters of Credit issued under the Working Capital A
Facility and Working Capital B-1 Facility, respectively, and
outstanding from time to time at the rate per annum equal to the
Applicable Percentage in effect from time to time.
(ii)Any Borrower giving a Notice of Issuance shall pay to each
Issuing Bank, for its own account, such commissions, issuance
fees, fronting fees, transfer fees and other fees and charges in
connection with the issuance or administration of the requested
Letter of Credit as such Borrower and such Issuing Bank shall
agree.
(c)Agent's Fees. The Borrowers jointly and severally agree to
pay to the Agent for its own account such fees as may from time
to time be agreed between the Borrowers and the Agent.
SECTION 2.09. Conversion of Advances. (a) Optional. Any
Borrower may on any Business Day, upon notice given to the Agent
not later than 11:00 A.M. (New York City time) on the third
Business Day prior to the date of the proposed Conversion and
subject to the provisions of Sections 2.07 and 2.10, Convert all
or any portion of the Advances of one Type made to such Borrower
comprising the same Borrowing into Advances of the other Type;
provided, however, that any Conversion of Eurodollar Rate
Advances into Base Rate Advances shall be made only on the last
day of an Interest Period for such Eurodollar Rate Advances, any
Conversion of Base Rate Advances into Eurodollar Rate Advances
shall be in an amount not less than the minimum amount specified
in Section 2.02(c), no Conversion of any Advances shall result in
more separate Borrowings than permitted under Section 2.02(c) and
each Conversion of Advances comprising part of the same Borrowing
under any Facility shall be made ratably among the Appropriate
Lenders in accordance with their Commitments under such Facility.
Each such notice of Conversion shall, within the restrictions
specified above, specify (i) the date of such Conversion,
(ii) the Advances to be Converted and (iii) if such Conversion is
into Eurodollar Rate Advances, the duration of the initial
Interest Period for such Advances. Each notice of Conversion
shall be irrevocable and binding on the Borrower giving such
notice.
(b)Mandatory. (i) On the date on which the aggregate unpaid
principal amount of Eurodollar Rate Advances comprising any
Borrowing shall be reduced, by payment or prepayment or
otherwise, to less than $5,000,000, such Advances shall
automatically Convert into Base Rate Advances.
(ii)If any Borrower shall fail to select the duration of any
Interest Period for any Eurodollar Rate Advances made to such
Borrower in accordance with the provisions contained in the
definition of "Interest Period" in Section 1.01, the Agent will
forthwith so notify such Borrower and the Appropriate Lenders,
whereupon each such Eurodollar Rate Advance will automatically,
on the last day of the then existing Interest Period therefor,
Convert into a Base Rate Advance.
(iii)Upon the occurrence and during the continuance of any Event
of Default, (x) each Eurodollar Rate Advance will automatically,
on the last day of the then existing Interest Period therefor,
Convert into a Base Rate Advance and (y) the obligation of the
Lenders to make, or to Convert Advances into, Eurodollar Rate
Advances shall be suspended.
SECTION 2.10. Increased Costs, Etc. (a) If, due to either
(i) the introduction of or any change in or in the interpretation
of any law or regulation or (ii) the compliance with any
guideline or request from any central bank or other governmental
authority (whether or not having the force of law), there shall
be any increase in the cost to any Lender Party of agreeing to
make or of making, funding or maintaining Eurodollar Rate
Advances or of agreeing to issue or of issuing or maintaining
Letters of Credit or of agreeing to make or of making or
maintaining Letter of Credit Advances (excluding for purposes of
this Section 2.10 any such increased costs resulting from (i)
Taxes or Other Taxes (as to which Section 2.12 shall govern) and
(ii) changes in the basis of taxation of overall net income or
overall gross income by the United States or by the foreign
jurisdiction or state under the laws of which such Lender Party
is organized or has its Applicable Lending Office or any
political subdivision thereof), then the Borrowers jointly and
severally agree to pay from time to time, upon demand by such
Lender Party (with a copy of such demand to the Agent), to the
Agent for the account of such Lender Party additional amounts
sufficient to compensate such Lender Party for such increased
cost; provided, however, that, before making any such demand,
each Lender Party agrees to use reasonable efforts (consistent
with its internal policy and legal and regulatory restrictions)
to designate a different Applicable Lending Office if the making
of such a designation would avoid the need for, or reduce the
amount of, such increased cost and would not, in the reasonable
judgment of such Lender Party, be otherwise disadvantageous to
such Lender Party. A certificate as to the amount of such
increased cost, submitted to the Borrowers by such Lender Party,
shall be conclusive and binding for all purposes, absent manifest
error.
(b)If any Lender Party determines that either (i) the enactment
of or any change in or in the interpretation of any law or
regulation or (ii) the compliance with any law or regulation or
any guideline or request from any central bank or other
governmental authority (whether or not having the force of law)
affects or would affect the amount of capital required or
expected to be maintained by such Lender Party or any corporation
controlling such Lender Party and that the amount of such capital
is increased by or based upon the existence of such Lender
Party's commitment to lend or to issue Letters of Credit
hereunder and other commitments of such type or the issuance or
maintenance of the Letters of Credit (or similar contingent
obligations), then, upon demand by such Lender Party (with a copy
of such demand to the Agent), the Borrowers jointly and severally
agree to pay to the Agent for the account of such Lender Party,
from time to time as specified by such Lender Party, additional
amounts sufficient to compensate such Lender Party in the light
of such circumstances, to the extent that such Lender Party
reasonably determines such increase in capital to be allocable to
the existence of such Lender Party's commitment to lend or to
issue Letters of Credit hereunder or to the issuance or
maintenance of any Letters of Credit; provided, however, that,
before making any such demand, each Lender Party agrees to use
reasonable efforts (consistent with its internal policy and legal
and regulatory restrictions) to designate a different Applicable
Lending Office if the making of such a designation would avoid
the need for, or reduce the amount of, such additional amounts
payable under this subsection (b) and would not, in the
reasonable judgment of such Lender Party, be otherwise
disadvantageous to such Lender Party. A certificate as to such
amounts submitted to the Borrowers by such Lender Party shall be
conclusive and binding for all purposes, absent manifest error.
(c)If, with respect to any Eurodollar Rate Advances made or to be
made under any Facility, Appropriate Lenders holding at least 51%
of the Commitments under such Facility notify the Agent that the
Eurodollar Rate for any Interest Period for such Advances will
not adequately reflect the cost to such Lenders of making,
funding or maintaining their Eurodollar Rate Advances for such
Interest Period, the Agent shall forthwith so notify the
Borrowers and the Appropriate Lenders, whereupon (i) each such
Eurodollar Rate Advance under such Facility will automatically,
on the last day of the then existing Interest Period therefor,
Convert into a Base Rate Advance and (ii) the obligation of the
Appropriate Lenders to make, or to Convert Advances into,
Eurodollar Rate Advances shall be suspended until the Agent shall
notify the Borrowers that such Lenders have determined that the
circumstances causing such suspension no longer exist.
(d)Notwithstanding any other provision of this Agreement, if the
introduction of or any change in or in the interpretation of any
law or regulation shall make it unlawful, or any central bank or
other governmental authority shall assert that it is unlawful,
for any Lender or its Eurodollar Lending Office to perform its
obligations hereunder to make Eurodollar Rate Advances or to
continue to fund or maintain Eurodollar Rate Advances hereunder,
then, on notice thereof and demand therefor by such Lender to the
Borrowers through the Agent, (i) each Eurodollar Rate Advance
under each Facility under which such Lender has a Commitment will
automatically, upon such demand, Convert into a Base Rate Advance
and (ii) the obligation of the Appropriate Lenders to make, or to
Convert Advances into, Eurodollar Rate Advances shall be
suspended until the Agent shall notify the Borrowers that such
Lender has determined that the circumstances causing such
suspension no longer exist.
SECTION 2.11. Payments and Computations. (a) Each Borrower
shall make each payment hereunder and under the Notes,
irrespective of any right of counterclaim or set-off (except as
otherwise provided in Section 2.15), not later than 11:00 A.M.
(New York City time) on the day when due in U.S. dollars to the
Agent at the Agent's Account in same day funds. The Agent will
promptly thereafter cause like funds to be distributed (i) if
such payment by such Borrower is in respect of principal,
interest, commitment fees or any other Obligation then payable
hereunder and under the Notes to more than one Lender Party, to
such Lender Parties for the account of their respective
Applicable Lending Offices ratably in accordance with the amounts
of such respective Obligations then payable to such Lender
Parties and (ii) if such payment by such Borrower is in respect
of any Obligation then payable hereunder to one Lender Party, to
such Lender Party for the account of its Applicable Lending
Office, in each case to be applied in accordance with the terms
of this Agreement. Upon its acceptance of an Assignment and
Acceptance and recording of the information contained therein in
the Register pursuant to Section 8.07(d), from and after the
effective date of such Assignment and Acceptance, the Agent shall
make all payments hereunder and under the Notes in respect of the
interest assigned thereby to the Lender Party assignee
thereunder, and the parties to such Assignment and Acceptance
shall make all appropriate adjustments in such payments for
periods prior to such effective date directly between themselves.
(b)If the Agent receives funds for application to the Obligations
under the Loan Documents under circumstances for which the Loan
Documents do not specify the Advances or the Facility to which,
or the manner in which, such funds are to be applied, the Agent
may, but shall not be obligated to, elect to distribute such
funds to each Lender Party ratably in accordance with such Lender
Party's proportionate share of the principal amount of all
outstanding Advances and the Available Amount of all Letters of
Credit then outstanding, in repayment or prepayment of such of
the outstanding Advances or other Obligations owed to such Lender
Party, and for application to such principal installments, as the
Agent shall direct.
(c)Each Borrower hereby authorizes each Lender Party, if and to
the extent payment owed to such Lender Party is not made when due
hereunder or, in the case of a Lender, under the Note held by
such Lender, to charge from time to time against any or all of
such Borrower's accounts with such Lender Party any amount so
due.
(d)All computations of interest based on the Base Rate shall be
made by the Agent on the basis of a year of 365 or 366 days, as
the case may be, and all computations of interest based on the
Eurodollar Rate or the Federal Funds Rate and of fees and Letter
of Credit commissions shall be made by the Agent on the basis of
a year of 360 days, in each case for the actual number of days
(including the first day but excluding the last day) occurring in
the period for which such interest, fees or commissions are
payable. Each determination by the Agent of an interest rate,
fee or commission hereunder shall be conclusive and binding for
all purposes, absent manifest error.
(e)Whenever any payment hereunder or under the Notes shall be
stated to be due on a day other than a Business Day, such payment
shall be made on the next succeeding Business Day, and such
extension of time shall in such case be included in the
computation of payment of interest or commitment fee, as the case
may be; provided, however, that, if such extension would cause
payment of interest on or principal of Eurodollar Rate Advances
to be made in the next following calendar month, such payment
shall be made on the next preceding Business Day.
(f)Unless the Agent shall have received notice from a Borrower
prior to the date on which any payment is due to any Lender Party
hereunder that such Borrower will not make such payment in full,
the Agent may assume that such Borrower has made such payment in
full to the Agent on such date and the Agent may, in reliance
upon such assumption, cause to be distributed to each such Lender
Party on such due date an amount equal to the amount then due
such Lender Party. If and to the extent any Borrower shall not
have so made such payment in full to the Agent, each such Lender
Party shall repay to the Agent forthwith on demand such amount
distributed to such Lender Party together with interest thereon,
for each day from the date such amount is distributed to such
Lender Party until the date such Lender Party repays such amount
to the Agent, at the Federal Funds Rate.
SECTION 2.12. Taxes. (a) Any and all payments by any Borrower
hereunder or under the Notes shall be made, in accordance with
Section 2.11, free and clear of and without deduction for any and
all present or future taxes, levies, imposts, deductions, charges
or withholdings, and all liabilities with respect thereto,
excluding, (i) in the case of each Lender Party and the Agent,
respectively, taxes that are imposed on its overall net income or
the overall net income of its branch by the United States and
taxes that are imposed on its overall net income or the overall
net income of its branch (and franchise taxes imposed in lieu
thereof) by the state or foreign jurisdiction under the laws of
which such Lender Party or the Agent, respectively, is organized
or any political subdivision thereof, (ii) in the case of each
Lender Party, taxes that are imposed on its overall net income
(and franchise taxes imposed in lieu thereof) by the state or
foreign jurisdiction in which the principal office or such Lender
Party's Applicable Lending Office is located or any political
subdivision thereof and (iii) in the case of the Agent, taxes
that are imposed on its overall net income (and franchise taxes
imposed in lieu thereof) by the jurisdiction in which the office
through which the Agent performs its activities hereunder is
located (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities in respect of
payments hereunder or under the Notes being hereinafter referred
to as "Taxes"). If any Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder
or under any Note to any Lender Party or the Agent, (i) the sum
payable shall be increased as may be necessary so that after
making all required deductions (including deductions applicable
to additional sums payable under this Section 2.12) such Lender
Party or the Agent (as the case may be) receives an amount equal
to the sum it would have received had no such deductions been
made, (ii) such Borrower shall make such deductions and
(iii) such Borrower shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with
applicable law.
(b)In addition, the Borrowers jointly and severally agree to pay
any present or future stamp, documentary, excise, property or
similar taxes, charges or levies that arise from any payment made
hereunder or under the Notes or from the execution, delivery or
registration of, performing under, or otherwise with respect to,
this Agreement or the Notes (hereinafter referred to as "Other
Taxes").
(c)The Borrowers jointly and severally agree to indemnify each
Lender Party and the Agent for and hold them harmless against the
full amount of Taxes and Other Taxes, and for the full amount of
taxes of any kind imposed by any jurisdiction on amounts payable
under this Section 2.12, imposed on or paid by such Lender Party
or the Agent (as the case may be) and any liability (including
penalties, additions to tax, interest and expenses) arising
therefrom or with respect thereto. This indemnification shall be
made within 30 days from the date such Lender Party or the Agent
(as the case may be) makes written demand therefor.
(d)Within 30 days after the date of any payment of Taxes, the
Borrowers shall furnish to the Agent, at its address referred to
in Section 8.02, the original or a certified copy of a receipt
evidencing such payment. In the case of any payment hereunder or
under the Notes by or on behalf of any Borrower through an
account or branch outside the United States or by or on behalf of
any Borrower by a payor that is not a United States person, if
such Borrower determines that no Taxes are payable in respect
thereof, such Borrower shall furnish, or shall cause such payor
to furnish, to the Agent, at such address, an opinion of counsel
acceptable to the Agent stating that such payment is exempt from
Taxes. For purposes of this subsection (d) and subsection (e),
the terms "United States" and "United States person" shall have
the meanings specified in Section 7701 of the Internal Revenue
Code.
(e)Each Lender Party organized under the laws of a jurisdiction
outside the United States shall, on or prior to the date of its
execution and delivery of this Agreement in the case of each
Initial Lender or Initial Issuing Bank, as the case may be, and
on the date of the Assignment and Acceptance pursuant to which it
becomes a Lender Party in the case of each other Lender Party,
and from time to time thereafter as requested in writing by the
Borrowers (but only so long thereafter as such Lender Party
remains lawfully able to do so), provide each of the Agent and
the Borrowers with two accurate and complete original signed
Internal Revenue Service forms 1001 or 4224 or (in the case of a
Lender Party that is claiming exemption from United States
withholding tax under Section 871(h) or 881(c) of the Internal
Revenue Code with respect to payments of "portfolio interest")
two accurate and complete signed original Forms W-8 (and, if such
Lender Party delivers Forms W-8, two signed certificates
certifying that such Lender Party is not (i) a "bank" for
purposes of Section 881(c) of the Internal Revenue Code, (ii) is
not a 10-percent shareholder (within the meaning of Section
871(h)(3)(B) of the Internal Revenue Code) of the Borrower, (iii)
is not a controlled foreign corporation related to the Borrower
(within the meaning of Section 864(d)(4) of the Internal Revenue
Code) and (iv) is not a conduit entity participating in a conduit
financing arrangement (as defined in Treasury Regulation Section
1.881-3), as appropriate, or any successor or other form
prescribed by the Internal Revenue Service, certifying that such
Lender Party is exempt from or entitled to a reduced rate of
United States withholding tax on payments pursuant to this
Agreement or the Notes. If the accurate and complete forms
provided by a Lender Party at the time such Lender Party first
becomes a party to this Agreement indicate a United States
interest withholding tax rate in excess of zero, withholding tax
at such rate shall be considered excluded from Taxes unless and
until such Lender Party provides the appropriate form certifying
that a lesser rate applies, whereupon withholding tax at such
lesser rate only shall be considered excluded from Taxes for
periods governed by such form; provided, however, that, if at the
date of the Assignment and Acceptance pursuant to which a Lender
Party becomes a party to this Agreement, the Lender Party
assignor was entitled to payments under subsection (a) in respect
of United States withholding tax with respect to interest paid at
such date, then, to such extent, the term Taxes shall include (in
addition to withholding taxes that may be imposed in the future
or other amounts otherwise includible in Taxes) United States
withholding tax, if any, applicable with respect to the Lender
Party assignee on such date.
(f)For any period with respect to which a Lender Party has failed
to provide the Borrowers with the appropriate form described in
subsection (e) above (other than if such failure is due to a
change in law occurring after the date on which a form originally
was required to be provided or if such form otherwise is not
required under subsection (e) above), such Lender Party shall not
be entitled to indemnification under subsection (a) or (c) with
respect to Taxes imposed by the United States by reason of such
failure; provided, however, that should a Lender Party become
subject to Taxes because of its failure to deliver a form
required hereunder, the Borrowers shall take such steps, at such
Lender Party's sole expense, as such Lender Party shall
reasonably request to assist such Lender Party to recover such
Taxes.
(g)Any Lender Party claiming any additional amounts payable
pursuant to this Section 2.12 shall use reasonable efforts
(consistent with its internal policy and legal and regulatory
restrictions) to change the jurisdiction of its Applicable
Lending Office if the making of such a change would avoid the
need for, or reduce the amount of, any such additional amount
which may thereafter accrue and would not, in the reasonable
judgment of such Lender Party, be otherwise disadvantageous to
such Lender Party.
(h)If the Agent or any Lender Party, in its sole opinion,
determines that it has finally and irrevocably received or been
granted a refund in respect of any Taxes or Other Taxes as to
which indemnification has been paid by Crompton Corp. pursuant to
Section 2.12(a) or (c), it shall promptly remit such refund
(including any interest) to Crompton Corp., net of all out-of-pocket
expenses of the Agent or such Lender Party; provided,
however, that Crompton Corp., upon the request of the Agent or
such Lender Party, agrees promptly to return such refund (plus
any interest) to such party in the event such party is required
to repay such refund to the relevant taxing authority. The Agent
or such Lender Party shall provide Crompton Corp. with a copy of
any notice or assessment from the relevant taxing authority
(deleting any confidential information contained therein)
requiring repayment of such refund. Nothing contained herein
shall impose an obligation on the Agent or any Lender Party to
apply for any refund.
SECTION 2.13. Sharing of Payments, Etc. If any Lender Party
shall obtain at any time any payment (whether voluntary,
involuntary, through the exercise of any right of set-off, or
otherwise) (a) on account of Obligations due and payable to such
Lender Party hereunder and under the Notes at such time in excess
of its ratable share (according to the proportion of (i) the
amount of such Obligations due and payable to such Lender Party
at such time to (ii) the aggregate amount of the Obligations due
and payable to all Lender Parties hereunder and under the Notes
at such time) of payments on account of the Obligations due and
payable to all Lender Parties hereunder and under the Notes at
such time obtained by all the Lender Parties at such time or
(b) on account of Obligations owing (but not due and payable) to
such Lender Party hereunder and under the Notes at such time in
excess of its ratable share (according to the proportion of
(i) the amount of such Obligations owing to such Lender Party at
such time to (ii) the aggregate amount of the Obligations owing
(but not due and payable) to all Lender Parties hereunder and
under the Notes at such time) of payments on account of the
Obligations owing (but not due and payable) to all Lender Parties
hereunder and under the Notes at such time obtained by all of the
Lender Parties at such time, such Lender Party shall forthwith
purchase from the other Lender Parties such participations in the
Obligations due and payable or owing to them, as the case may be,
as shall be necessary to cause such purchasing Lender Party to
share the excess payment ratably with each of them; provided,
however, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Lender Party, such
purchase from each other Lender Party shall be rescinded and such
other Lender Party shall repay to the purchasing Lender Party the
purchase price to the extent of such Lender Party's ratable share
(according to the proportion of (i) the purchase price paid to
such Lender Party to (ii) the aggregate purchase price paid to
all Lender Parties) of such recovery together with an amount
equal to such Lender Party's ratable share (according to the
proportion of (i) the amount of such other Lender Party's
required repayment to (ii) the total amount so recovered from the
purchasing Lender Party) of any interest or other amount paid or
payable by the purchasing Lender Party in respect of the total
amount so recovered. Each Borrower agrees that any Lender Party
so purchasing a participation from another Lender Party pursuant
to this Section 2.13 may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of set-off)
with respect to such participation as fully as if such
Lender Party were the direct creditor of such Borrower in the
amount of such participation.
SECTION 2.14. Use of Proceeds. The proceeds of the Advances and
issuances of Letters of Credit under the Working Capital A
Facility and the Working Capital B-1 Facility shall be available
(and each Borrower agrees that it shall use such proceeds and
Letters of Credit) solely to pay transaction fees and expenses
incurred in connection with the Merger, redeem or repurchase
certain public Existing Debt of Uniroyal Corp. and Uniroyal, and
for other general corporate purposes, including, without
limitation, to finance permitted acquisitions and Capital
Expenditures and provide working capital for the Borrowers and
their respective Subsidiaries; provided that Advances made
pursuant to Section 2.02(g) shall be used by the Uniroyal
Borrower solely for the purpose of satisfying its obligations
under the Seoul Guaranty. The proceeds of the Advances under the
Working Capital B-2 Facility shall be available (and the Uniroyal
Borrower agrees that it shall use such proceeds) solely to
redeem, repurchase or defease, in full or in part, the Uniroyal
Senior Notes, the Uniroyal Corp. Senior Notes, the Uniroyal Corp.
Senior Subordinated Notes and the Uniroyal Corp. Subordinated
Discount Notes.
SECTION 2.15. Defaulting Lenders. (a) In the event that, at
any one time, (i) any Lender Party shall be a Defaulting Lender,
(ii) such Defaulting Lender shall owe a Defaulted Advance to any
Borrower and (iii) such Borrower shall be required to make any
payment hereunder or under any other Loan Document to or for the
account of such Defaulting Lender, then such Borrower may, so
long as no Default shall occur or be continuing at such time and
to the fullest extent permitted by applicable law, set off and
otherwise apply the Obligation of such Borrower to make such
payment to or for the account of such Defaulting Lender against
the obligation of such Defaulting Lender to make such Defaulted
Advance. In the event that, on any date, such Borrower shall so
set off and otherwise apply its Obligation to make any such
payment against the obligation of such Defaulting Lender to make
any such Defaulted Advance on or prior to such date, the amount
so set off and otherwise applied by such Borrower shall
constitute for all purposes of this Agreement and the other Loan
Documents an Advance by such Defaulting Lender made on the date
under the Facility pursuant to which such Defaulted Advance was
originally required to have been made pursuant to Section 2.01.
Such Advance shall be a Base Rate Advance and shall be
considered, for all purposes of this Agreement, to comprise part
of the Borrowing in connection with which such Defaulted Advance
was originally required to have been made pursuant to
Section 2.01, even if the other Advances comprising such
Borrowing shall be Eurodollar Rate Advances on the date such
Advance is deemed to be made pursuant to this subsection (a).
Each Borrower shall notify the Agent at any time such Borrower
exercises its right of set-off pursuant to this subsection (a)
and shall set forth in such notice (A) the name of the Defaulting
Lender and the Defaulted Advance required to be made by such
Defaulting Lender and (B) the amount set off and otherwise
applied in respect of such Defaulted Advance pursuant to this
subsection (a). Any portion of such payment otherwise required
to be made by any Borrower to or for the account of such
Defaulting Lender which is paid by such Borrower, after giving
effect to the amount set off and otherwise applied by such
Borrower pursuant to this subsection (a), shall be applied by the
Agent as specified in subsection (b) or (c) of this Section 2.15.
(b)In the event that, at any one time, (i) any Lender Party shall
be a Defaulting Lender, (ii) such Defaulting Lender shall owe a
Defaulted Amount to the Agent or any of the other Lender Parties
and (iii) any Borrower shall make any payment hereunder or under
any other Loan Document to the Agent for the account of such
Defaulting Lender, then the Agent may, on its behalf or on behalf
of such other Lender Parties and to the fullest extent permitted
by applicable law, apply at such time the amount so paid by such
Borrower to or for the account of such Defaulting Lender to the
payment of each such Defaulted Amount to the extent required to
pay such Defaulted Amount. In the event that the Agent shall so
apply any such amount to the payment of any such Defaulted Amount
on any date, the amount so applied by the Agent shall constitute
for all purposes of this Agreement and the other Loan Documents
payment, to such extent, of such Defaulted Amount on such date.
Any such amount so applied by the Agent shall be retained by the
Agent or distributed by the Agent to such other Lender Parties,
ratably in accordance with the respective portions of such
Defaulted Amounts payable at such time to the Agent and such
other Lender Parties and, if the amount of such payment made by
any Borrower shall at such time be insufficient to pay all
Defaulted Amounts owing at such time to the Agent and the other
Lender Parties, in the following order of priority:
(i)first, to the Agent for any Defaulted Amount then owing to the
Agent; and
(ii)second, to any other Lender Parties for any Defaulted Amounts
then owing to such other Lender Parties, ratably in accordance
with such respective Defaulted Amounts then owing to such other
Lender Parties.
Any portion of such amount paid by any Borrower for the account
of such Defaulting Lender remaining, after giving effect to the
amount applied by the Agent pursuant to this subsection (b),
shall be applied by the Agent as specified in subsection (c) of
this Section 2.15.
(c)In the event that, at any one time, (i) any Lender Party shall
be a Defaulting Lender, (ii) such Defaulting Lender shall not owe
a Defaulted Advance or a Defaulted Amount and (iii) any Borrower,
the Agent or any other Lender Party shall be required to pay or
distribute any amount hereunder or under any other Loan Document
to or for the account of such Defaulting Lender, then such
Borrower or such other Lender Party shall pay such amount to the
Agent to be held by the Agent, to the fullest extent permitted by
applicable law, in escrow or the Agent shall, to the fullest
extent permitted by applicable law, hold in escrow such amount
otherwise held by it. Any funds held by the Agent in escrow
under this subsection (c) shall be deposited by the Agent in an
account with Citibank, in the name and under the control of the
Agent, but subject to the provisions of this subsection (c). The
terms applicable to such account, including the rate of interest
payable with respect to the credit balance of such account from
time to time, shall be Citibank's standard terms applicable to
escrow accounts maintained with it. Any interest credited to
such account from time to time shall be held by the Agent in
escrow under, and applied by the Agent from time to time in
accordance with the provisions of, this subsection (c). The
Agent shall, to the fullest extent permitted by applicable law,
apply all funds so held in escrow from time to time to the extent
necessary to make any Advances required to be made by such
Defaulting Lender and to pay any amount payable by such
Defaulting Lender hereunder and under the other Loan Documents to
the Agent or any other Lender Party, as and when such Advances or
amounts are required to be made or paid and, if the amount so
held in escrow shall at any time be insufficient to make and pay
all such Advances and amounts required to be made or paid at such
time, in the following order of priority:
(i)first, to the Agent for any amount then due and payable by
such Defaulting Lender to the Agent hereunder;
(ii)second, to any other Lender Parties for any amount then due
and payable by such Defaulting Lender to such other Lender
Parties hereunder, ratably in accordance with such respective
amounts then due and payable to such other Lender Parties; and
(iii)third, to such Borrower for any Advance then required to be
made by such Defaulting Lender pursuant to a Commitment of such
Defaulting Lender.
In the event that any Lender Party that is a Defaulting Lender
shall, at any time, cease to be a Defaulting Lender, any funds
held by the Agent in escrow at such time with respect to such
Lender Party shall be distributed by the Agent to such Lender
Party and applied by such Lender Party to the Obligations owing
to such Lender Party at such time under this Agreement and the
other Loan Documents ratably in accordance with the respective
amounts of such Obligations outstanding at such time.
(d)The rights and remedies against a Defaulting Lender under this
Section 2.15 are in addition to other rights and remedies that
the Borrowers may have against such Defaulting Lender with
respect to any Defaulted Advance and that the Agent or any Lender
Party may have against such Defaulting Lender with respect to any
Defaulted Amount.
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Conditions Precedent to Initial Extension of
Credit. The obligation of each Lender to make an Advance or of
any Issuing Bank to issue a Letter of Credit on the occasion of
the Initial Extension of Credit hereunder is subject to the
satisfaction of the following conditions precedent before or
concurrently with the Initial Extension of Credit:
(a)The Merger shall have been consummated substantially in
accordance with the terms of the Merger Agreement, without any
waiver or amendment not consented to by the Lender Parties of any
material term, provision or condition set forth therein, and in
material compliance with all applicable laws.
(b)The Merger Agreement shall be in full force and effect.
(c)The Lender Parties shall be satisfied with the corporate and
legal structure and capitalization of each Loan Party and each of
its Subsidiaries, including the terms and conditions of the
charter, bylaws and each class of capital stock of each Loan
Party and each such Subsidiary and of each agreement or
instrument relating to such structure or capitalization.
(d)The Lender Parties shall be satisfied that all Existing Debt,
other than the Debt identified on Schedule 3.01(d) (the
"Surviving Debt"), has been prepaid, redeemed or defeased in full
or otherwise satisfied and extinguished.
(e)There shall have occurred no material adverse change in the
business, condition (financial or otherwise), operations,
performance, properties or prospects of (i) before and after
giving effect to the Merger and the other transactions
contemplated by this Agreement, Crompton Corp. and its
Subsidiaries, taken as a whole, since December 31, 1995, (ii)
after giving effect to the Merger and the other transactions
contemplated by this Agreement, Crompton Corp. and its
Subsidiaries (other than Uniroyal Corp. and its Subsidiaries),
taken as a whole, since December 31, 1995 or (iii) before and
after giving effect to the Merger and the other transactions
contemplated by this Agreement, Uniroyal and its Subsidiaries,
taken as a whole, since September 30, 1995.
(f)There shall exist no action, suit, investigation, litigation
or proceeding affecting any Loan Party or any of its Subsidiaries
pending or threatened before any court, governmental agency or
arbitrator that (i) would be reasonably likely to have a Material
Adverse Effect other than the matters described on
Schedule 3.01(f) (the "Disclosed Litigation") or (ii) purports to
affect the legality, validity or enforceability of the Merger,
this Agreement, any Note, any other Loan Document, any Related
Document or the consummation of the transactions contemplated
hereby, and there shall have been no material adverse change in
the status, or financial effect on any Loan Party or any of its
Subsidiaries, of the Disclosed Litigation from that described on
Schedule 3.01(f).
(g)The Lender Parties shall have completed a due diligence
investigation of the Borrowers and their respective Subsidiaries
in scope, and with results, satisfactory to the Lender Parties,
and nothing shall have come to the attention of the Lender
Parties during the course of such due diligence investigation to
lead them to believe (i) that the Information Memorandum was or
has become misleading, incorrect or incomplete in any material
respect, (ii) that, following the consummation of the Merger,
Crompton Corp. and its Subsidiaries would not have good and
marketable title to all material assets of Uniroyal Corp. and its
Subsidiaries reflected in the Information Memorandum and
(iii) that the Merger will have a Material Adverse Effect;
without limiting the generality of the foregoing, the Lender
Parties shall have been given such access to the management,
records, books of account, contracts and properties of the
Borrowers and their respective Subsidiaries as they shall have
requested.
(h)All stock of the Borrowers (other than Crompton Corp.) and the
Borrowers' Subsidiaries, to the extent owned by the Borrowers and
their Subsidiaries, shall be owned by the Borrowers or one or
more of the Borrowers' Subsidiaries, in each case free and clear
of any lien, charge or encumbrance; the Agent shall have a valid
and perfected first priority lien on and security interest in the
Collateral (other than as to matters of perfection and priority
of the security interest in the Pledged Accounts (as defined in
the Uniroyal Security Agreement) and the Other Accounts (as
defined in the Uniroyal Security Agreement)) for the benefit of
the Secured Parties; all filings, recordations and searches
necessary or desirable in connection with such liens and security
interests shall have been duly made; and all filing and recording
fees and taxes shall have been duly paid.
(i)All governmental and third party consents and approvals
(including, without limitation, any consents or approvals
required under the documents relating to the Uniroyal Corp.
Senior Notes and the Uniroyal Corp. Senior Subordinated Notes)
necessary in connection with Loan Documents and the transactions
contemplated thereby (including, without limitation, the Merger)
shall have been obtained (without the imposition of any
conditions that are not reasonably acceptable to the Lender
Parties) and shall remain in effect other than such governmental
or third party consents and approvals the failure to obtain which
shall not (x) be materially adverse to any of the Borrowers, in
each case together with its respective Subsidiaries, taken as a
whole, (y) affect the enforceability, validity or binding effect
of any of the Loan Documents required to be executed and
delivered prior to or on the Effective Date or (z) expose the
Agent or the Lender Parties to personal liability; all applicable
waiting periods shall have expired without any action being taken
by any competent authority; and no law or regulation shall be
applicable in the judgment of the Lender Parties that restrains,
prevents or imposes materially adverse conditions upon the Loan
Documents or the transactions contemplated thereby (including,
without limitation, the Merger).
(j)The Borrowers shall have paid all accrued fees and expenses of
the Agent and the Lender Parties (including the accrued fees and
expenses of counsel to the Agent and local counsel to the Lender
Parties).
(k)The Agent shall have received on or before the day of the
Initial Extension of Credit the following, each dated such day
(unless otherwise specified), in form and substance satisfactory
to the Agent (unless otherwise specified) and (except for the
Notes) in sufficient copies for each Lender Party:
(i)The Notes payable to the order of the Lenders.
(ii)Certified copies of the resolutions of the Board of Directors
of each Borrower, and each other Loan Party approving the Merger,
this Agreement, the Notes, each other Loan Document and each
Related Document to which it is or is to be a party, and of all
documents evidencing other necessary corporate action and
governmental and other third party approvals and consents, if
any, with respect to the Merger, this Agreement, the Notes, each
other Loan Document and each Related Document.
(iii)A copy of a certificate of the Secretary of State of the
jurisdiction of its incorporation, dated reasonably near the date
of the Initial Extension of Credit, listing the charter of each
Borrower and each other Loan Party and each amendment thereto on
file in his office and certifying that (A) such amendments are
the only amendments to such Borrower's or such other Loan Party's
charter on file in his office, (B) each Borrower and each other
Loan Party have paid all franchise taxes to the date of such
certificate and (C) each Borrower and each other Loan Party are
duly incorporated and in good standing under the laws of the
State of the jurisdiction of its incorporation.
(iv)Certified copies of a certificate of merger or other
confirmation from the Secretary of State of the State of Delaware
satisfactory to the Lender Parties of the consummation of the
Merger.
(v)A certificate of each Borrower and each other Loan Party,
signed on behalf of such Borrower or such other Loan Party, as
the case may be, by its President or a Vice President and its
Secretary or any Assistant Secretary, dated the date of the
Initial Extension of Credit (the statements made in which
certificate shall be true on and as of the date of the Initial
Extension of Credit), certifying as to (A) the absence of any
amendments to the charter of such Borrower or such other Loan
Party since the date of the Secretary of State's certificate
referred to in Section 3.01(k)(iii), (B) a true and correct copy
of the bylaws of such Borrower or such other Loan Party as in
effect on the date of the Initial Extension of Credit, (C) the
due incorporation and good standing of such Borrower or such
other Loan Party organized under the laws of the State of its
incorporation, and the absence of any proceeding for the
dissolution or liquidation of such Borrower or such other Loan
Party, (D) the truth of the representations and warranties
contained in the Loan Documents as though made on and as of the
date of the Initial Extension of Credit and (E) the absence of
any event occurring and continuing, or resulting from the Initial
Extension of Credit, that constitutes a Default.
(vi)A certificate of the Secretary or an Assistant Secretary of
each Borrower and each other Loan Party certifying the names and
true signatures of the officers of such Borrower or such other
Loan Party authorized to sign this Agreement, the Notes, each
other Loan Document and each Related Document to which they are
or are to be parties and the other documents to be delivered
hereunder and thereunder.
(vii)A security agreement in substantially the form of Exhibit D-1
(as amended, supplemented or otherwise modified from time to
time in accordance with its terms, the "Crompton Security
Agreement"), duly executed by each Crompton Borrower and each
Crompton Guarantor, together with:
(A)certificates representing the Pledged Shares referred to
therein accompanied by undated stock powers executed in blank,
and instruments evidencing the Pledged Debt (except as otherwise
provided in Sections 5.02(b)(i)(D) and 5.02(b)(ii)) referred to
therein indorsed in blank,
(B)duly executed proper financing statements, to be filed under
the Uniform Commercial Code of all jurisdictions that the Agent
may deem necessary or desirable in order to perfect and protect
the first priority liens and security interests created under the
Crompton Security Agreement, covering the Collateral described in
the Crompton Security Agreement,
(C)completed requests for information, dated on or before the
date of the Initial Extension of Credit, listing all effective
financing statements filed in the jurisdictions referred to in
clause (B) above that name any Crompton Borrower or any Crompton
Guarantor as debtor, together with copies of such other financing
statements,
(D)evidence of the completion of all other recordings and filings
of or with respect to the Crompton Security Agreement that the
Agent may deem necessary or desirable in order to perfect and
protect the Liens created thereby, and
(E)evidence that all other action that the Agent may deem
necessary or desirable in order to perfect and protect the first
priority liens and security interests created under the Crompton
Security Agreement has been taken.
(viii)A security agreement in substantially the form of
Exhibit D-2 (as amended, supplemented or otherwise modified from
time to time in accordance with its terms, the "Uniroyal Security
Agreement" and, together with the Crompton Security Agreement and
each security agreement delivered pursuant to Section 5.01(k), in
each case as amended, supplemented or otherwise modified from
time to time in accordance with its terms, the "Security
Agreement"), duly executed by the Uniroyal Borrower and each
Uniroyal Guarantor, together with:
(A)duly executed proper financing statements, to be filed on or
before the day of the Initial Extension of Credit under the
Uniform Commercial Code of all jurisdictions that the Agent may
deem necessary or desirable in order to perfect and protect the
first priority liens and security interests created under the
Uniroyal Security Agreement, covering the Collateral described in
the Uniroyal Security Agreement,
(B)completed requests for information, dated on or before the
date of the Initial Extension of Credit, listing all effective
financing statements filed in the jurisdictions referred to in
clause (A) above that name the Uniroyal Borrower or any Uniroyal
Guarantor as debtor, together with copies of such other financing
statements,
(C)evidence of the completion of all other recordings and filings
of or with respect to the Uniroyal Security Agreement that the
Agent may deem necessary or desirable in order to perfect and
protect the Liens created thereby,
(D)evidence of the insurance required by the terms of the
Security Agreement,
(E)instruments evidencing the Pledged Debt (except as otherwise
provided in Sections 5.02(b)(i)(D) and 5.02(b)(ii)) referred to
therein endorsed in blank, and
(F)evidence that all other action that the Agent may deem
necessary or desirable in order to perfect and protect the first
priority liens and security interests created under the Uniroyal
Security Agreement has been taken.
(ix)A guaranty in substantially the form of Exhibit E-1 (as
amended, supplemented or otherwise modified from time to time in
accordance with its terms, the "Parent Guaranty"), duly executed
by Crompton Corp.
(x)A guaranty in substantially the form of Exhibit E-2 (together
with each other guaranty delivered pursuant to Section 5.01(k),
in each case as amended, supplemented or otherwise modified from
time to time in accordance with its terms, the "Subsidiary
Guaranty"), duly executed by each Subsidiary Guarantor.
(xi)Certified copies of each of the Related Documents, duly
executed by the parties thereto and in form and substance
satisfactory to the Lender Parties, together with all agreements,
instruments and other documents delivered in connection
therewith.
(xii)Such financial, business and other information regarding
each Loan Party and its Subsidiaries as the Lender Parties shall
have requested, including, without limitation, information as to
possible contingent liabilities, tax matters, environmental
matters, obligations under Plans, Multiemployer Plans and Welfare
Plans, collective bargaining agreements and other arrangements
with employees, audited annual financial statements of Crompton
Corp. and its Subsidiaries (other than Uniroyal Corp. and its
Subsidiaries) dated December 30, 1995, audited annual financial
statements of Uniroyal Corp. and its Subsidiaries dated
October 1, 1995, interim financial statements dated the end of
the most recent fiscal quarter for which financial statements are
available, pro forma financial statements as to Crompton Corp.
and its Subsidiaries after giving effect to the Merger and the
other transactions, on a Consolidated basis, of balance sheets,
income statements and cash flow statements for the one-year
period ended on or about March 31, 1996 and forecasts prepared by
management of the Borrowers, in form and substance satisfactory
to the Lender Parties, on a Consolidated basis and, to the extent
otherwise available, on a Consolidating basis, of balance sheets,
income statements and cash flow statements for the first year
following January 1, 1996 and on an annual basis for each year
thereafter until the Termination Date.
(xiii)Certificates, in substantially the form of Exhibit G,
attesting to the Solvency of each Loan Party after giving effect
to the Merger and the other transactions contemplated hereby,
from its chief financial officer.
(xiv) A supplement to the Uniroyal Security Agreement in respect
of Collateral located in the State of Louisiana in substantially
the form of Exhibit D-3 (as amended, supplemented or otherwise
modified from time to time in accordance with its terms, the
"Louisiana Undertaking"), duly executed by the Uniroyal Borrower
and the Uniroyal Guarantors.
(xv)An environmental assessment report, in form and substance
satisfactory to the Lender Parties, from Environmental Safety and
Designs, Inc., as to any hazards, costs or liabilities under
Environmental Laws to which any Loan Party or any of its
Subsidiaries may be subject, the amount and nature of which and
the Borrowers' plans with respect to which shall be acceptable to
the Lender Parties, together with evidence, in form and substance
satisfactory to the Lender Parties, that all Environmental Laws
applicable to the consummation of the Merger shall have been
materially complied with.
(xvi)A letter, in form and substance satisfactory to the Agent,
from Crompton Corp. to KPMG Peat Marwick LLP, its independent
certified public accountants, advising such accountants that the
Agent and the Lender Parties have been authorized to exercise all
rights of the Borrowers to require such accountants to disclose
any and all financial statements and any other information of any
kind that they may have with respect to the Borrowers and their
respective Subsidiaries and directing such accountants to comply
with any reasonable request of the Agent or any Lender Party for
such information; provided that all requests for such information
shall be provided through Crompton Corp.
(xvii)A favorable opinion of Wachtell, Lipton, Rosen & Katz,
special counsel for the Loan Parties, in substantially the form
of Exhibit F-1 hereto and as to such other matters as any Lender
Party through the Agent may reasonably request.
(xviii)A favorable opinion of John T. Ferguson, II, Esq., General
Counsel and Corporate Secretary of Crompton Corp. and its
Subsidiaries, in substantially the form of Exhibit F-2 hereto and
as to such other matters as any Lender Party through the Agent
may reasonably request.
(xix)A favorable opinion of John T. Ferguson, II, Esq., General
Counsel and Corporate Secretary of Crompton Corp. and its
Subsidiaries, in substantially the form of Exhibit F-3 hereto and
as to such other matters as any Lender Party through the Agent
may reasonably request.
(xx)A favorable opinion of local counsel to the Loan Parties or
Lender Parties, as the case may be, listed on Schedule
3.01(k)(xx) in the jurisdictions listed on Schedule 3.01(k)(xx)
in form and substance satisfactory to the Agent and as to such
other matters as any Lender Party through the Agent may
reasonably request.
(xxi)A favorable opinion of Shearman & Sterling, counsel for the
Agent, in form and substance satisfactory to the Agent.
SECTION 3.02. Conditions Precedent to Each Borrowing and
Issuance. The right of the Borrowers to request and the
obligation of each Appropriate Lender to make an Advance (other
than a Letter of Credit Advance made by an Issuing Bank or a
Working Capital Lender pursuant to Section 2.03(c) and a Swing
Line Advance made by a Working Capital Lender pursuant to
Section 2.02(b)) on the occasion of each Borrowing (including the
Initial Extension of Credit), and the right of the Borrowers to
request and the obligation of each Issuing Bank to issue a Letter
of Credit (including the initial issuance) and the right of the
Borrowers to request a Swing Line Borrowing, shall be subject to
the further conditions precedent that on the date of such
Borrowing or issuance (a) the following statements shall be true
(and each of the giving of the applicable Notice of Borrowing,
Notice of Swing Line Borrowing or Notice of Issuance and the
acceptance by the relevant Borrower of the proceeds of such
Borrowing or of such Letter of Credit shall constitute a
representation and warranty by such Borrower that both on the
date of such notice and on the date of such Borrowing or issuance
such statements are true):
(i)the representations and warranties contained in each Loan
Document are correct on and as of such date, before and after
giving effect to such Borrowing or issuance and to the
application of the proceeds therefrom, as though made on and as
of such date other than any such representations or warranties
that, by their terms, refer to a specific date other than the
date of such Borrowing or issuance, in which case as of such
specific date; and
(ii)no event has occurred and is continuing, or would result from
such Borrowing or issuance or from the application of the
proceeds therefrom, that constitutes a Default;
and (b) the Agent shall have received such other approvals,
opinions or documents as any Appropriate Lender through the Agent
may reasonably request.
SECTION 3.03. Determinations Under Section 3.01. For purposes
of determining compliance with the conditions specified in
Section 3.01, each Lender Party shall be deemed to have consented
to, approved or accepted or to be satisfied with each document or
other matter required thereunder to be consented to or approved
by or acceptable or satisfactory to the Lender Parties unless an
officer of the Agent responsible for the transactions
contemplated by the Loan Documents shall have received notice
from such Lender Party prior to the Initial Extension of Credit
specifying its objection thereto and, if the Initial Extension of
Credit consists of a Borrowing, such Lender Party shall not have
made available to the Agent such Lender Party's ratable portion
of such Borrowing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Borrowers.
Each Borrower represents and warrants as follows:
(a)Each Loan Party (i) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction
of its incorporation, (ii) is duly qualified and in good standing
as a foreign corporation in each other jurisdiction in which it
owns or leases property or in which the conduct of its business
requires it to so qualify or be licensed except where the failure
to so qualify or be licensed would not have a Material Adverse
Effect and (iii) has all requisite corporate power and authority
(including, without limitation, all governmental licenses,
permits and other approvals) to own or lease and operate its
properties and to carry on its business as now conducted and as
proposed to be conducted. All of the outstanding capital stock
of the Borrowers has been validly issued and is fully paid and
non-assessable.
(b)Set forth on Schedule 4.01(b) hereto is a complete and
accurate list of all Subsidiaries of each Loan Party as of the
date hereof, showing as of the date hereof (as to each such
Subsidiary) the jurisdiction of its incorporation, the number of
shares of each class of capital stock authorized, and the number
outstanding, on the date hereof and the percentage of the
outstanding shares of each such class owned (directly or
indirectly) by such Loan Party and the number of shares covered
by all outstanding options, warrants, rights of conversion or
purchase and similar rights at the date hereof. All of the
outstanding capital stock of all of such Subsidiaries to the
extent owned by the Borrowers and their Subsidiaries has been
validly issued, is fully paid and non-assessable and is owned by
such Loan Party or one or more of its Subsidiaries free and clear
of all Liens, except those created under the Loan Documents.
Each such Subsidiary (i) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction
of its incorporation, (ii) is duly qualified and in good standing
as a foreign corporation in each other jurisdiction in which it
owns or leases property or in which the conduct of its business
requires it to so qualify or be licensed except where the failure
to so qualify or be licensed would not have a Material Adverse
Effect and (iii) has all requisite corporate power and authority
(including, without limitation, all governmental licenses,
permits and other approvals) to own or lease and operate its
properties and to carry on its business as now conducted and as
proposed to be conducted.
(c)The execution, delivery and performance by each Loan Party of
this Agreement, the Notes, each other Loan Document and each
Related Document to which it is or is to be a party, and the
consummation of the Merger and the other transactions
contemplated hereby, are within such Loan Party's corporate
powers, have been duly authorized by all necessary corporate
action, and do not (i) contravene such Loan Party's charter or
bylaws, (ii) violate any law, rule, regulation (including,
without limitation, Regulation X of the Board of Governors of the
Federal Reserve System), order, writ, judgment, injunction,
decree, determination or award, (iii) conflict with or result in
the breach of, or constitute a default under, any loan agreement,
indenture, mortgage, deed of trust or other instrument or
material contract or material lease binding on or affecting any
Loan Party, any of its Subsidiaries or any of their properties or
(iv) except for the Liens created under the Loan Documents,
result in or require the creation or imposition of any Lien upon
or with respect to any of the properties of any Loan Party or any
of its Subsidiaries. No Loan Party or any of its Subsidiaries is
in violation of any such law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award or in breach
of any such loan agreement, indenture, mortgage, deed of trust or
other instrument or material contract or material lease, the
violation or breach of which would have a Material Adverse
Effect.
(d)No authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body
or any other third party is required for (i) the due execution,
delivery, recordation, filing or performance by any Loan Party of
this Agreement, the Notes, any other Loan Document or any Related
Document to which it is or is to be a party, or for the
consummation of the Merger or the other transactions contemplated
hereby, (ii) the grant by any Loan Party of the Liens granted by
it pursuant to the Collateral Documents, (iii) the perfection or
maintenance of the Liens created by the Collateral Documents
(including the first priority nature thereof) or (iv) the
exercise by the Agent or any Lender Party of its rights under the
Loan Documents or the remedies in respect of the Collateral
pursuant to the Collateral Documents, except for the
authorizations, approvals, actions, notices and filings listed on
Schedule 4.01(d), all of which have been duly obtained, taken,
given or made and are in full force and effect. All applicable
waiting periods in connection with the Merger and the other
transactions contemplated hereby have expired without any action
having been taken by any competent authority restraining,
preventing or imposing materially adverse conditions upon the
Merger or the rights of the Loan Parties or their Subsidiaries
freely to transfer or otherwise dispose of, or to create any Lien
on, any properties now owned or hereafter acquired by any of
them.
(e)This Agreement has been, and each of the Notes, each other
Loan Document and each Related Document when delivered hereunder
will have been, duly executed and delivered by each Loan Party
party thereto. This Agreement is, and each of the Notes, each
other Loan Document and each Related Document when delivered
hereunder will be, the legal, valid and binding obligation of
each Loan Party party thereto, enforceable against such Loan
Party in accordance with its terms.
(f)The Consolidated balance sheet of Crompton Corp. and its
Subsidiaries as at December 30, 1995, and the related
Consolidated statement of income and Consolidated statement of
cash flows of Crompton Corp. and its Subsidiaries for the fiscal
year then ended, accompanied by an opinion of KPMG Peat Marwick
LLP, independent public accountants, and the Consolidated balance
sheet of Crompton Corp. and its Subsidiaries as at March 30,
1996, and the related Consolidated statement of income and
Consolidated statement of cash flows of Crompton Corp. and its
Subsidiaries for the three months then ended, duly certified by
the chief financial officer of Crompton Corp., copies of which
have been furnished to each Lender Party, fairly present,
subject, in the case of said balance sheet as at March 30, 1996,
and said statements of income and cash flows for the three months
then ended, to year-end audit adjustments, the Consolidated
financial condition of Crompton Corp. and its Subsidiaries as at
such dates and the Consolidated results of operations of Crompton
Corp. and its Subsidiaries for the periods ended on such dates,
all in accordance with generally accepted accounting principles
applied on a consistent basis, and since December 30, 1995, there
has been no Material Adverse Change.
(g)The Consolidated balance sheet of Uniroyal Corp. and its
Subsidiaries as at October 1, 1995, and the related Consolidated
statement of income and Consolidated statement of cash flows of
Uniroyal Corp. and its Subsidiaries for the fiscal year then
ended, accompanied by an opinion of Deloitte & Touche LLP,
independent public accountants, and the Consolidated balance
sheet of Uniroyal Corp. and its Subsidiaries as at March 31,
1996, and the related Consolidated statement of income and
Consolidated statement of cash flows of Uniroyal Corp. and its
Subsidiaries for the six months then ended, duly certified by the
chief financial officer of Uniroyal Corp., copies of which have
been furnished to each Lender Party, fairly present, subject, in
the case of said balance sheet as at March 31, 1996, and said
statements of income and cash flows for the six months then
ended, to year-end audit adjustments, the Consolidated financial
condition of Uniroyal Corp. and its Subsidiaries as at such date
and the Consolidated results of operations of Uniroyal Corp. and
its Subsidiaries for the period ended on such dates, all in
accordance with generally accepted accounting principles applied
on a consistent basis, and since October 1, 1995, there has been
no Material Adverse Change.
(h)The Consolidated pro forma balance sheet of Crompton Corp. and
its Subsidiaries and the related Consolidated pro forma
statements of income and cash flows of Crompton Corp. and its
Subsidiaries, in each case contained in the Proxy Statement dated
July 23, 1996, copies of which have been furnished to each Lender
Party, fairly present the Consolidated pro forma financial
condition of Crompton Corp. and its Subsidiaries as at such date
and the Consolidated pro forma results of operations of Crompton
Corp. and its Subsidiaries for the period ended on such date, in
each case giving effect to the Merger and the other transactions
contemplated hereby.
(i)The Consolidated and consolidating forecasted balance sheets,
income statements and cash flows statements of Crompton Corp. and
its Subsidiaries delivered to the Lender Parties pursuant to
Section 3.01(k)(xii) or 5.03 were prepared in good faith on the
basis of the assumptions stated therein, which assumptions were
fair in the light of conditions existing at the time of delivery
of such forecasts, and represented, at the time of delivery,
Crompton Corp.'s good faith estimate of its future financial
performance.
(j)Neither the Information Memorandum nor any other information,
exhibit or report furnished by any Loan Party to the Agent or any
Lender Party in connection with the negotiation of the Loan
Documents or pursuant to the terms of the Loan Documents
contained any untrue statement of a material fact or omitted to
state a material fact necessary to make the statements made
therein not misleading.
(k)There is no action, suit, investigation, litigation or
proceeding affecting any Loan Party or any of its Subsidiaries,
including any Environmental Action, pending or threatened before
any court, governmental agency or arbitrator that (i) would be
reasonably likely to have a Material Adverse Effect (other than
the Disclosed Litigation) or (ii) purports to affect the
legality, validity or enforceability of the Merger, this
Agreement, any Note, any other Loan Document or any Related
Document or the consummation of the transactions contemplated
hereby, and there has been no material adverse change in the
status, or financial effect on any Loan Party or any of its
Subsidiaries, of the Disclosed Litigation from that described on
Schedule 3.01(f).
(l)No proceeds of any Advance or drawings under any Letter of
Credit will be used to acquire any equity security of a class
that is registered pursuant to Section 12 of the Securities
Exchange Act of 1934.
(m)No Borrower is engaged in the business of extending credit for
the purpose of purchasing or carrying Margin Stock, and no
proceeds of any Advance or drawings under any Letter of Credit
will be used to purchase or carry any Margin Stock or to extend
credit to others for the purpose of purchasing or carrying any
Margin Stock.
(n)(i) No ERISA Event has occurred or is reasonably expected to
occur with respect to any Plan that has had or is reasonably
expected to have a Material Adverse Effect.
(ii)Schedule B (Actuarial Information) to the most recent annual
report (Form 5500 Series) for each Plan, copies of which have
been filed with the Internal Revenue Service and furnished to the
Lender Parties, is complete and accurate and fairly presents the
funding status of such Plan, and since the date of such Schedule
B there has been no material adverse change in such funding
status.
(iii)Neither any Loan Party nor any ERISA Affiliate has incurred
or is reasonably expected to incur any Withdrawal Liability to
any Multiemployer Plan that has had or is reasonably expected to
have a Material Adverse Effect.
(iv)Neither any Loan Party nor any ERISA Affiliate has been
notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plan is in reorganization or has been terminated,
within the meaning of Title IV of ERISA, and no such
Multiemployer Plan is reasonably expected to be in reorganization
or to be terminated, within the meaning of Title IV of ERISA
which, in either event, has had or is reasonably expected to have
a Material Adverse Effect.
(o)(i) Except as disclosed in Part I of Schedule 4.01(o) hereto,
the operations and properties of each Loan Party and each of its
Subsidiaries comply in all material respects with all applicable
Environmental Laws and Environmental Permits, all past non-compliance
with such Environmental Laws and Environmental Permits
has been resolved without material ongoing obligations or costs,
and no circumstances exist that would be reasonably likely to
(i) form the basis of an Environmental Action against any Loan
Party or any of its Subsidiaries or any of their properties that
could have a Material Adverse Effect or (ii) cause any such
property to be subject to any material restrictions on ownership,
occupancy, use or transferability under any Environmental Law in
effect on the date hereof.
(ii)Except as disclosed in Part II of Schedule 4.01(o) hereto or
as would not, individually or in the aggregate, result in a
Material Adverse Effect, none of the properties currently or
formerly owned or operated by any Loan Party or any of its
Subsidiaries is listed or, to the best knowledge of any Loan
Party, proposed for listing on the NPL or on the CERCLIS or any
analogous foreign, state or local list or is adjacent to any such
property; there are no and never have been any underground or
aboveground storage tanks or any surface impoundments, septic
tanks, pits, sumps or lagoons in which Hazardous Materials are
being or have been treated, stored or disposed on any property
currently owned or operated by any Loan Party or any of its
Subsidiaries or, to the best of its knowledge, on any property
formerly owned or operated by any Loan Party or any of its
Subsidiaries; there is no asbestos or asbestos-containing
material on any property currently owned or operated by any Loan
Party or any of its Subsidiaries; and Hazardous Materials have
not been released, discharged or disposed of on any property
currently or formerly owned or operated by any Loan Party or any
of its Subsidiaries.
(iii)Except as disclosed in Part III of Schedule 4.01(o) hereto,
neither any Loan Party nor any of its Subsidiaries is
undertaking, and has not completed, either individually or
together with other potentially responsible parties, any
investigation or assessment or remedial or response action
relating to any actual or threatened release, discharge or
disposal of Hazardous Materials at any site, location or
operation, either voluntarily or pursuant to the order of any
governmental or regulatory authority or the requirements of any
Environmental Law; and all Hazardous Materials generated, used,
treated, handled or stored at, or transported to or from, any
property currently or formerly owned or operated by any Loan
Party or any of its Subsidiaries have been disposed of in a
manner not reasonably expected to result in material liability to
any Loan Party or any of its Subsidiaries.
(p)The Collateral Documents create a valid and, upon the making
of the filings referred to in Section 5.01(l), perfected first
priority interest in the Collateral (other than as to matters of
perfection and priority of the security interest in the Pledged
Accounts (as defined in the Uniroyal Security Agreement) and the
Other Accounts (as defined in the Uniroyal Security Agreement)),
securing the payment of the Secured Obligations (as defined in
the Collateral Documents), and all filings and other actions
necessary or desirable to perfect and protect such security
interest have been duly taken except, during the period
immediately following the Effective Date specified in Section
5.01(l) the filings and other actions referred to in Section
5.01(l). The Loan Parties are the legal and beneficial owners of
the Collateral free and clear of any Lien, except for the liens
and security interests created or permitted under the Loan
Documents.
(q)The Merger will not be taxable to any Loan Party or any of its
Subsidiaries or Affiliates.
(r)Neither any Loan Party nor any of its Subsidiaries is an
"investment company," or an "affiliated person" of, or "promoter"
or "principal underwriter" for, an "investment company," as such
terms are defined in the Investment Company Act of 1940, as
amended. Neither the making of any Advances, nor the issuance of
any Letters of Credit, nor the application of the proceeds or
repayment thereof by any Borrower, nor the consummation of the
other transactions contemplated hereby, will violate any
provision of such Act or any rule, regulation or order of the
Securities and Exchange Commission thereunder.
(s)Each Loan Party is, individually and together with its
Subsidiaries, Solvent.
(t)Set forth on Schedule 4.01(t) hereto is a complete and
accurate list of all Existing Debt (other than Surviving Debt),
showing as of the date hereof the principal amount outstanding
thereunder.
(u)Set forth on Schedule 3.01(d) hereto is a complete and
accurate list of all Surviving Debt, showing as of the date
hereof the principal amount outstanding thereunder.
(v)The aggregate revenues of the Minor Subsidiaries (other than
Crompton and Knowles I.P.R. Corporation), on a Consolidated
basis, do not exceed $250,000 for the twelve-month period ending
on the last day of the most recent fiscal quarter of Crompton
Corp., and the aggregate book value of the assets of the Minor
Subsidiaries (other than Crompton and Knowles I.P.R.
Corporation), on a Consolidated basis, as at the end of the most
recent fiscal quarter of Crompton Corp. does not exceed $250,000.
(w)Set forth on Schedule 4.01(w) hereto is a complete and
accurate list of all Material Subsidiaries existing as of the
date hereof.
(x)Crompton and Knowles I.P.R. Corporation does not conduct any
business or engage in any activity and has no material assets
other than an intercompany receivable in an amount that does not
exceed $33,000,000.
ARTICLE V
COVENANTS OF THE BORROWERS
SECTION 5.01. Affirmative Covenants. So long as any Advance
shall remain unpaid, any Letter of Credit shall be outstanding or
any Lender Party shall have any Commitment hereunder, each
Borrower will:
(a)Compliance with Laws, Etc. Comply, and cause each of its
Subsidiaries to comply, in all material respects, with all
applicable laws, rules, regulations and orders, such compliance
to include, without limitation, compliance with ERISA and the
Racketeer Influenced and Corrupt Organizations Chapter of the
Organized Crime Control Act of 1970, except, in any case, where
the failure so to comply, either individually or in the
aggregate, could not be reasonably expected to have a Material
Adverse Effect and would not be reasonably likely to subject any
Loan Party or any of its Subsidiaries to any criminal penalties
or any Lender Party to any civil or criminal penalties.
(b)Payment of Taxes, Etc. Pay and discharge, and cause each of
its Subsidiaries to pay and discharge, before the same shall
become delinquent, (i) all federal income and other material
taxes, assessments and governmental charges or levies imposed
upon it or upon its property and (ii) all lawful claims that, if
unpaid, might by law become a Lien upon its property; provided,
however, that neither any Borrower nor any of its Subsidiaries
shall be required to pay or discharge any such tax, assessment,
charge or claim (x) that is being contested in good faith and by
proper proceedings and as to which appropriate reserves are being
maintained or (y) in respect of which the Lien resulting
therefrom, if any, attaches to its property and becomes
enforceable against its other creditors, to the extent that the
aggregate amount of all such taxes, assessments, charges or
claims does not exceed $3,000,000.
(c)Maintenance of Insurance. Maintain (or maintain on behalf of
each of its Subsidiaries), and cause each of its Subsidiaries to
maintain, insurance with responsible and reputable insurance
companies or associations in such amounts and covering such risks
as is usually carried by companies engaged in similar businesses
and owning similar properties in the same general areas in which
such Borrower or such Subsidiary operates; it being understood
and agreed that Crompton Corp. and its Subsidiaries may self-insure to
the extent consistent with prudent business practice.
(d)Preservation of Corporate Existence, Etc. Preserve and
maintain, and cause each of its Subsidiaries (other than any
Minor Subsidiary) to preserve and maintain, its existence, legal
structure, legal name, rights (charter and statutory), permits,
licenses, approvals, privileges and franchises; provided,
however, that such Borrower and its Subsidiaries may consummate
the Merger and any other merger or consolidation permitted under
Section 5.02(d); provided further that neither any Borrower nor
any of its Subsidiaries shall be required to preserve any legal
structure, legal name, right, permit, license, approval,
privilege or franchise if such Borrower or such Subsidiary shall
determine that the preservation thereof is no longer desirable in
the conduct of the business of such Borrower or such Subsidiary,
as the case may be, and that the loss thereof is not
disadvantageous in any material respect to such Borrower, such
Subsidiary or the Lender Parties or, with respect to permits,
licenses, approvals, privileges and franchises, that the loss
thereof could not be reasonably expected to have a Material
Adverse Effect; provided still further that, prior to the
Collateral Release Date, if any Borrower or any of its
Subsidiaries shall determine not to preserve any legal structure
or legal name (to the extent permitted under the immediately
preceding proviso), the Borrowers and their Subsidiaries shall
take such action (within such time as may be required under the
Collateral Documents or under the Uniform Commercial Code (as
defined in the Security Agreement)) as the Agent may deem
necessary or desirable to perfect and protect the Liens created
under the Collateral Documents.
(e)Visitation Rights. At any reasonable time and from time to
time, during regular business hours and upon reasonable prior
notice, permit the Agent or any of the Lender Parties or any
agents or representatives thereof, to examine and make copies of
and abstracts from the records (other than (i) records subject to
attorney-client privilege or confidentiality agreements and (ii)
records relating to trade secrets) and books of account of, and
visit the properties of, any Borrower and any of its
Subsidiaries, and to discuss the affairs, finances and accounts
of any Borrower and any of its Subsidiaries with any of their
respective officers or directors and with their independent
certified public accountants and authorize and direct such
accountants to disclose to the Agent or any of the Lender Parties
any and all financial statements and other information of any
kind that they may have with respect to any Borrower and any of
its Subsidiaries.
(f)Keeping of Books. Keep, and cause each of its Subsidiaries to
keep, proper books of record and account, in which full and
correct entries shall be made of all financial transactions and
the assets and business of such Borrower and each such Subsidiary
in accordance with generally accepted accounting principles in
effect from time to time.
(g)Maintenance of Properties, Etc. Maintain and preserve, and
cause each of its Subsidiaries to maintain and preserve, all of
its properties that are used or useful in the conduct of its
business in good working order and condition, ordinary wear and
tear excepted, except where the failure to do so, either
individually or in the aggregate, could not be reasonably
expected to have a Material Adverse Effect.
(h)Compliance with Terms of Leaseholds. Make all payments and
otherwise perform all obligations in respect of all leases of
real property to which such Borrower or any of its Subsidiaries
is a party, keep such leases in full force and effect and not
allow such leases to lapse or be terminated or any rights to
renew such leases to be forfeited or cancelled, notify the Agent
of any default by any party with respect to such leases and
cooperate with the Agent in all respects to cure any such
default, and cause each of its Subsidiaries to do so, except, in
any case, where the failure to do so, either individually or in
the aggregate, would not be reasonably likely to have a Material
Adverse Effect.
(i)Performance of Related Documents. Perform and observe all of
the terms and provisions of each Related Document to be performed
or observed by it, maintain each such Related Document in full
force and effect, enforce such Related Document in accordance
with its terms, take all such action to such end as may be from
time to time requested by the Agent and, upon request of the
Agent, make to each other party to each such Related Document
such demands and requests for information and reports or for
action as such Borrower is entitled to make under such Related
Document, and cause each of its Subsidiaries to do so, except, in
any case, where the failure to do so, either individually or in
the aggregate, could not be reasonably expected to have a
Material Adverse Effect.
(j)Transactions with Affiliates. Conduct, and cause each of its
Subsidiaries to conduct, all transactions otherwise permitted
under the Loan Documents with any of their Affiliates other than
wholly owned Subsidiaries (except the Minor Subsidiaries) of
Crompton Corp. on terms which have been determined by the
applicable Borrower's board of directors or such Subsidiary's
board of directors, board of trustees or managing partners, as
the case may be, to be at least as favorable to the Borrowers as
would be obtainable on an arm's length basis at the time of such
transaction for a comparable transaction with a Person who is not
an Affiliate; provided, however, the foregoing restriction shall
not apply to (i) the execution by Crompton Corp. and certain of
its Subsidiaries of, and payments by Crompton Corp. and any of
its Subsidiaries pursuant to, the Tax Agreement, (ii) the payment
of reasonable and customary fees to members of the board of
directors of Crompton Corp. or any of its Subsidiaries who are
not employees of Crompton Corp. or any of its Subsidiaries,
(iii) loans and advances to officers, directors and employees of
Crompton Corp. or any of its Subsidiaries for travel,
entertainment, moving and other relocation expenses made in the
ordinary course of business to the extent otherwise permitted
hereunder, (iv) subject to the provisions of this Agreement, any
transaction between or among Crompton Corp. and any of its wholly
owned Subsidiaries or between Uniroyal and Premier Chemical
Company, Ltd. (so long as Premier Chemical Company, Ltd. remains
at least 80% owned, directly or indirectly, by Crompton Corp.),
(v) payment by Crompton Corp. and its Subsidiaries of ordinary
and customary compensation to their respective employees in the
ordinary course of business, (vi) any dividends or other
distributions permitted by Section 5.02(g), (vii) transactions
with Monochem, Inc. and Rubicon Inc. on terms that are customary
in the ordinary course of business of Uniroyal and its
Subsidiaries as currently practiced, (viii) a Receivables
Securitization and (ix) transactions in addition to those
permitted by the foregoing clauses of this subsection (j) which
in the aggregate involve amounts not in excess of $500,000 per
year.
(k) Covenant to Guarantee Obligations and Give Security. (i) At
such time as any new direct or indirect Material Subsidiaries of
any Loan Party are formed or acquired by such Loan Party or at
such time as any Minor Subsidiary shall have revenues which
exceed $250,000 for the twelve-month period ending on the last
day of the most recent fiscal quarter of Crompton Corp. or the
aggregate book value of the assets of such Minor Subsidiary, as
at the end of the most recent fiscal quarter of Crompton Corp.
exceeds $250,000, in each case to the extent not prohibited by
the terms of the Uniroyal Indentures then in effect and at the
expense of the Borrowers, within 30 days after such formation or
acquisition, cause each such Material Subsidiary (other than any
Foreign Subsidiary) or each such Minor Subsidiary, as the case
may be, and cause each direct and indirect parent (other than the
Borrowers and any Foreign Subsidiary) of such Material Subsidiary
or each such Minor Subsidiary, as the case may be, (if it has not
already done so), to duly execute and deliver to the Agent a
guaranty, in form and substance satisfactory to the Agent,
guaranteeing the other Loan Parties' Obligations under the Loan
Documents;
(ii) At any time prior to the Collateral Release Date, at such
time as any new direct or indirect Material Subsidiaries of any
Loan Party are formed or acquired by such Loan Party or at such
time as any Minor Subsidiary shall have revenues which exceed
$250,000 for the twelve-month period ending on the last day of
the most recent fiscal quarter of Crompton Corp. or the aggregate
book value of the assets of such Minor Subsidiary, as at the end
of the most recent fiscal quarter of Crompton Corp. exceeds
$250,000, in each case to the extent not prohibited by the terms
of the Uniroyal Indentures then in effect and at the expense of
the Borrowers, within 30 days after such formation or
acquisition, duly execute and deliver, and cause each such
Material Subsidiary (other than any Foreign Subsidiary) or each
such Minor Subsidiary, as the case may be, and each direct and
indirect parent of such Material Subsidiary or each such Minor
Subsidiary, as the case may be, (other than any Foreign
Subsidiary except to the extent provided in the proviso below),
if it has not already done so, to duly execute and deliver, to
the Agent, in the case of Crompton Corp. or any of its
Subsidiaries (other than Uniroyal Corp. and its Subsidiaries),
pledge agreements (pledging the capital stock of its
Subsidiaries, except to the extent provided in the proviso below)
and, in the case of any direct or indirect Subsidiary of Uniroyal
Corp., security agreements (granting a security interest in
Inventory and Receivables), as specified by and in form and
substance satisfactory to the Agent, securing payment of all the
Obligations of such Borrower, such Subsidiary or such parent, as
the case may be, under the Loan Documents and constituting Liens
on all such properties; provided that with respect to the pledge
of the capital stock of any Foreign Subsidiary, such pledge shall
cover not more than 66% of the outstanding capital stock of such
Foreign Subsidiary if it is directly owned by a Loan Party and
not cover any of the outstanding capital stock of such Foreign
Subsidiary if it is directly or indirectly owned by another
Foreign Subsidiary;
(iii) At any time prior to the Collateral Release Date, upon the
request of the Agent following the occurrence and during the
continuance of an Event of Default, in each case to the extent
not prohibited by the terms of the Uniroyal Indentures then in
effect and at the expense of the Borrowers:
(A)within 30 days after such request, duly execute and deliver,
and cause each of its Subsidiaries (other than any Foreign
Subsidiary) and each direct and indirect parent of such
Subsidiary (if it has not already done so) (other than any
Foreign Subsidiary except to the extent required in the proviso
below) to duly execute and deliver, to the Agent mortgages,
pledges, assignments and other security agreements, as specified
by and in form and substance satisfactory to the Agent, securing
payment of all the Obligations of such Borrower, such Subsidiary
or such parent, as the case may be, under the Loan Documents and
constituting Liens on all such properties; provided that with
respect to the pledge of the capital stock of any Foreign
Subsidiary, such pledge shall cover not more than 66% of the
outstanding capital stock of such Foreign Subsidiary if it is
directly owned by a Loan Party and not cover any of the
outstanding capital stock of such Foreign Subsidiary if it is
directly or indirectly owned by another Foreign Subsidiary; and
(B)within 30 days after such request, take, and cause such
Subsidiary (other than any Foreign Subsidiary) or such parent
(other than any Foreign Subsidiary) to take, whatever action
(including, without limitation, the recording of mortgages, the
filing of Uniform Commercial Code financing statements, the
giving of notices and the endorsement of notices on title
documents) may be necessary or advisable in the opinion of the
Agent to vest in the Agent (or in any representative of the Agent
designated by it) valid and subsisting Liens on the properties
purported to be subject to the mortgages, pledges, assignments
and security agreements delivered pursuant to this
Section 5.01(k), enforceable against all third parties in
accordance with their terms;
(iv)Within 60 days after such formation, acquisition or request,
deliver to the Agent, upon the request of the Agent in its sole
discretion, a signed copy of a favorable opinion, addressed to
the Agent and the other Secured Parties, of counsel for the Loan
Parties acceptable to the Agent as to the guaranties, mortgages,
pledges, assignments and security agreements referred to in
clauses (i), (ii) and (iii) above being the legal, valid and
binding obligations of each Loan Party party thereto enforceable
in accordance with their terms and as to such other matters as
the Agent may reasonably request; and
(v)At any time and from time to time, promptly execute and
deliver any and all further instruments and documents and take
all such other action as the Agent may deem necessary or
desirable in obtaining the full benefits of, or in perfecting and
preserving the Liens of, the guaranties, mortgages, pledges,
assignments and security agreements referred to in clauses (i),
(ii) and (iii) above.
(l)Conditions Subsequent. Deliver to the Agent, in form and
substance satisfactory to the Agent and in sufficient copies for
each Lender Party, as soon as possible and in any event within 60
days after the Initial Extension of Credit (or such later date as
may be agreed by Crompton Corp. and the Agent or such later date
otherwise provided below):
(i)acknowledgment copies of proper financing statements, duly
filed under the Uniform Commercial Code of all jurisdictions that
the Collateral Agent may deem necessary or desirable in order to
perfect and protect the first priority liens and security
interests created under the Security Agreement, covering the
Collateral described in the Security Agreement,
(ii)completed requests for information, listing the financing
statements referred to in clause (i) above and all other
effective financing statements filed in the jurisdictions
referred to in clause (i) above that name any Loan Party as
debtor, together with copies of such financing statements,
(iii)(A) evidence that such action as the Agent may deem
necessary or desirable in order to perfect and protect the Liens
created under the Crompton Security Agreement on the capital
stock held by any Crompton Borrower or Crompton Guarantor in any
of its Foreign Subsidiaries that are Material Subsidiaries has
been taken, and (B) at the sole discretion of the Agent, evidence
that such actions as the Agent may deem necessary or desirable in
order to perfect and protect the Liens created under the Crompton
Security Agreement on the capital stock held by any Crompton
Borrower or Crompton Guarantor in any of its Foreign Subsidiaries
that are not Material Subsidiaries; provided that in any event
such Liens shall cover not more than 66% of the outstanding
capital stock of Foreign Subsidiaries directly owned by such Loan
Party and shall not cover any capital stock of any Foreign
Subsidiary directly or indirectly owned by a Foreign Subsidiary,
(iv)evidence that all other action as the Agent may deem
necessary or desirable in order to perfect and protect the first
priority liens and security interests created under the
Collateral Documents has been taken, and
(v)within 90 days after the date hereof, (A) cause (1) Crompton &
Knowles I.P.R. Corporation (if it has not already done so) to
duly execute and deliver to the Agent a guaranty, in form and
substance satisfactory to the Agent, guaranteeing the other Loan
Parties' Obligations under the Loan Documents, (2) Crompton &
Knowles I.P.R. Corporation (if it has not already done so) to
duly execute and deliver to the Agent, a pledge agreement,
pledging the intercompany Debt owed to Crompton & Knowles I.P.R.
Corporation, in form and substance satisfactory to the Agent,
securing payment of its Obligations under the Loan Documents and
constituting Liens on all such properties and (3) each direct and
indirect parent of Crompton & Knowles I.P.R. Corporation to duly
execute and deliver to the Agent, a pledge agreement, pledging
the capital stock of Crompton & Knowles I.P.R. Corporation, in
form and substance satisfactory to the Agent, securing payment of
its Obligations under the Loan Documents and constituting Liens
on all such properties or (B) fully dissolve and liquidate the
assets of Crompton & Knowles I.P.R. Corporation (if it has not
already done so).
SECTION 5.02. Negative Covenants. So long as any Advance shall
remain unpaid, any Letter of Credit shall be outstanding or any
Lender Party shall have any Commitment hereunder, no Borrower
will, at any time:
(a)Liens, Etc. Create, incur, assume or suffer to exist, or
permit any of its Subsidiaries to create, incur, assume or suffer
to exist, any Lien on or with respect to any of its properties of
any character (including, without limitation, accounts) whether
now owned or hereafter acquired, or sign or file or suffer to
exist, or permit any of its Subsidiaries to sign or file or
suffer to exist, under the Uniform Commercial Code of any
jurisdiction, a financing statement that names any Borrower or
any of its Subsidiaries as debtor, or sign or suffer to exist, or
permit any of its Subsidiaries to sign or suffer to exist, any
security agreement authorizing any secured party thereunder to
file such financing statement, or assign, or permit any of its
Subsidiaries to assign, any accounts or other right to receive
income, excluding, however, from the operation of the foregoing
restrictions the following:
(i)Liens created under the Loan Documents;
(ii)with respect to any Person, all of the following
(collectively, the "Permitted Liens"):
(A)pledges or deposits by such Person under workers' compensation
laws, unemployment insurance laws or similar legislation or good
faith deposits in connection with bids, tenders, contracts (other
than for the payment of Debt) or leases to which such Person is a
party, or deposits to secure public or statutory obligations of
such Person or deposits of cash or United States Government bonds
to secure surety or appeal bonds to which such Person is a party,
or deposits as security for contested taxes or for charges
relating thereto (including, without limitation, interest,
penalties and certain other similar charges) or import duties or
for the payment of rent;
(B)(x) liens imposed by law, such as carriers', warehousemen's
and mechanics' liens or (y) other liens arising out of judgments
or awards against such Person with respect to which such Person
shall then be prosecuting an appeal or other proceedings for
review or otherwise arising out of judicial proceedings to the
extent such liens do not constitute an Event of Default;
(C)liens for taxes, assessments or governmental charges or
levies to the extent not required to be paid by Section 5.01(b);
and
(D)minor survey exceptions, minor encumbrances, easements or
reservations of, or rights of others for, rights of way, sewers,
electric lines, telegraph and telephone lines and other similar
purposes, or zoning or other restrictions as to the use of real
properties or liens incidental to the conduct of the business of
such Person or to the ownership of its properties which were not
incurred in connection with Debt or other extensions of credit
and which do not in the aggregate materially adversely affect the
value of said properties or materially impair their use in the
operation of the business of such Person.
(iii)Liens existing on the date hereof and described on
Schedule 5.02(a) hereto;
(iv)purchase money Liens upon or in real property or personal
property (other than Inventory of Uniroyal Corp. and its
Subsidiaries) acquired or held by any Borrower or any of its
Subsidiaries in the ordinary course of business to secure the
purchase price of such property or to secure Debt incurred solely
for the purpose of financing the acquisition, construction or
improvement of any such property to be subject to such Liens, or
Liens existing on any such property at the time of acquisition
(other than any such Liens created in contemplation of such
acquisition that do not secure the purchase price); provided,
however, that no such Lien shall extend to or cover any property
other than the property being acquired, constructed or improved,
and no such extension, renewal or replacement shall extend to or
cover any property not theretofore subject to the Lien being
extended, renewed or replaced; and provided further that the
aggregate principal amount of the Debt secured by Liens permitted
by this clause (iv) shall not exceed the amount permitted under
Section 5.02(b)(iii)(B) at any time outstanding and that any such
Debt shall not otherwise be prohibited by the terms of the Loan
Documents;
(v)Liens arising in connection with Capitalized Leases permitted
under Section 5.02(b)(iii)(C); provided that no such Lien shall
extend to or cover any Collateral or assets other than the assets
subject to such Capitalized Leases;
(vi)Liens on property of a Person existing at the time such
Person is merged into or consolidated with any Borrower or any
Subsidiary of such Borrower or becomes a Subsidiary of such
Borrower; provided that such Liens were not created in
contemplation of such merger, consolidation or investment and do
not extend to any assets other than those of the Person merged
into or consolidated with such Borrower or such Subsidiary or
acquired by such Borrower or such Subsidiary;
(vii)Liens arising in connection with any lease permitted under
Section 5.02(c), provided that no such Lien shall extend to or
cover any assets other than the assets subject to such lease;
(viii)Liens securing Debt incurred by Foreign Subsidiaries
pursuant to Section 5.02(b)(iii)(G) and (H);
(ix)Liens on accounts receivable (and in property securing or
otherwise supporting such accounts receivable together with
proceeds thereof) of Crompton Corp. and its Subsidiaries (other
than Uniroyal Corp. and its Subsidiaries) in connection with a
Receivables Securitization;
(x)Liens securing Obligations of Crompton Corp. or any of its
Subsidiaries in an aggregate amount not to exceed $5,000,000 at
any time outstanding;
(xi)filings for information purposes only under the Uniform
Commercial Code, as amended, of any state in connection with a
lease of property (other than Capitalized Leases); and
(xii)Liens to secure any extension, renewal or replacement (or
successive extensions, renewals or replacements) as a whole, or
in part, of any Debt secured by any Lien referred to in the
foregoing clauses (iii) through (vii), provided that (i) such
extended, renewed or replacement Lien shall be limited to all or
part of the same type of property that secured the Lien extended,
renewed or replaced (plus improvements on such property) and (ii)
the Debt secured by such Lien at such time is not increased to an
amount in excess of the original principal amount of the Debt
secured by such Lien.
(b)Debt. Create, incur, assume or suffer to exist, or permit any
of its Subsidiaries to create, incur, assume or suffer to exist,
any Debt other than:
(i)in the case of the Borrowers,
(A)Debt of the Uniroyal Borrower in respect of the Seoul
Guaranty, provided that the U.S. dollar equivalent of the amount
of such Debt shall not exceed U.S.$5,000,000,
(B)Debt in respect of Interest Rate Swap Agreements designed to
hedge against fluctuations in interest rates incurred in the
ordinary course of business and consistent with prudent business
practice in an aggregate notional amount not to exceed
$400,000,000 at any time outstanding,
(C)Debt in respect of Foreign Exchange Agreements designed to
hedge against fluctuations in foreign exchange rates incurred in
the ordinary course of business and consistent with prudent
business practice in an aggregate notional amount not to exceed
$100,000,000 at any time outstanding, and
(D)Debt owed to Crompton Corp. or to a wholly owned Subsidiary of
Crompton Corp, provided that, solely with respect to any
Borrower, Guarantor and Uniroyal Chemical Ltd., such Debt (x)
shall, to the extent not prohibited by the terms of the Uniroyal
Indentures then in effect, constitute Pledged Debt (as defined in
the Security Agreement) other than any such Debt owing to any
Minor Subsidiary and (y) shall, to the extent not prohibited by
the terms of the Uniroyal Indentures then in effect, be evidenced
by promissory notes in form and substance satisfactory to the
Agent and such promissory notes shall be pledged as security for
the Obligations under the Loan Documents of the holder thereof
and delivered to the Agent pursuant to the terms of the Security
Agreement,
(ii)in the case of any of such Borrower's Subsidiaries (other
than any Minor Subsidiary), Debt owed to any Borrower or to a
wholly owned Subsidiary of any Borrower, provided that, solely
with respect to any Borrower, Guarantor and Uniroyal Chemical
Ltd., such Debt (A) shall, to the extent not prohibited by the
terms of the Uniroyal Indentures then in effect, constitute
Pledged Debt (as defined in the Security Agreement) other than
any such Debt owing to any Minor Subsidiary and (B) shall be
evidenced by promissory notes in form and substance satisfactory
to the Agent and such promissory notes shall be pledged as
security for the Obligations under the Loan Documents of the
holder thereof and delivered to the Agent pursuant to the terms
of the Security Agreement, and
(iii)in the case of the Borrowers and their respective
Subsidiaries (other than any Minor Subsidiary except as provided
below),
(A)Debt under the Loan Documents,
(B)Debt secured by Liens permitted by Section 5.02(a)(iv) not to
exceed in the aggregate, together with Debt referred to in clause
(C) below, $100,000,000 at any time outstanding,
(C)(i) Capitalized Leases not to exceed in the aggregate,
together with Debt referred to in clause (B) above, $100,000,000
at any time outstanding and (ii) in the case of Capitalized
Leases to which any Subsidiary of any Borrower is a party, Debt
of such Borrower of the type described in clause (i) of the
definition of "Debt" guaranteeing the Obligations of such
Subsidiary under such Capitalized Leases,
(D)the Surviving Debt listed on Part I of Schedule 3.01(d)
hereto, and any Debt extending the maturity of, or refunding or
refinancing, in whole or in part, any Surviving Debt, provided
that the terms of any such extending, refunding or refinancing
Debt, and of any agreement entered into and of any instrument
issued in connection therewith, are otherwise permitted by the
Loan Documents; provided further that the terms relating to
principal amount, amortization, maturity, collateral (if any) and
subordination (if any), and other material terms taken as a
whole, of any such extending, refunding or refinancing Debt, and
of any agreement entered into and of any instrument issued in
connection therewith, are no less favorable in any material
respect to the Loan Parties or the Lender Parties than the terms
of any agreement or instrument governing the Surviving Debt being
extended, refunded or refinanced and the interest rate applicable
to any such extending, refunding or refinancing Debt does not
exceed the then market interest rate for companies having a
credit standing similar to that of Crompton Corp. at such time,
provided still further that the principal amount of such
Surviving Debt shall not be increased above the principal amount
thereof outstanding immediately prior to such extension,
refunding or refinancing plus the amount of any redemption
premium stipulated in the indenture relating to such Surviving
Debt or other reasonable premium paid in connection with any
redemption of, or tender offer or exchange offer for, or open
market purchase of, such Surviving Debt, and the direct and
contingent obligors therefor shall not be changed, as a result of
or in connection with such extension, refunding or refinancing,
provided still further that any Debt refinancing the Surviving
Debt with respect to the Receivables Securitization listed on
Part I of Schedule 3.01(d) may be incurred up to 6 months after
the termination of such Receivables Securitization,
(E)Debt of any Person that becomes a Subsidiary of any Borrower
after the date hereof in accordance with the terms of Section
5.02(f) which Debt is existing at the time such Person becomes a
Subsidiary of such Borrower (other than Debt incurred solely in
contemplation of such Person becoming a Subsidiary of such
Borrower),
(F)Debt owing to the Daylight Overdraft Bank in respect of any
daylight overdraft facility or in connection with any automated
clearing house transfers of funds in an aggregate amount
outstanding at any time not to exceed $10,000,000 in the case of
the Crompton Borrowers and $10,000,000 in the case of the
Uniroyal Borrower,
(G)(i)Debt of any Foreign Subsidiary or any of its Subsidiaries
incurred for business purposes, provided that the aggregate Debt
described in this clause (G) for all such Persons at any one time
outstanding shall not exceed the sum of (A) 60% of the book value
of Inventory of Foreign Subsidiaries plus (B) 90% of the book
value of Receivables of Foreign Subsidiaries plus (C)
$100,000,000 and (ii) Debt of any Borrower of the type described
in clause (i) of the definition of "Debt" guaranteeing up to 40%
of the Obligations of Foreign Subsidiaries outstanding under
clause (i) above,
(H)Debt of Foreign Subsidiaries relating to sales of accounts
receivable pursuant to Section 5.02(e)(v),
(I)Debt, if any, of Crompton Corp. and its Subsidiaries (other
than Uniroyal Corp. and its Subsidiaries and the Minor
Subsidiaries), incurred in connection with a Receivables
Securitization,
(J)short term, unsecured Debt in an aggregate amount not to
exceed $75,000,000 at any time outstanding, provided, however,
that the aggregate amount of Debt issued or incurred pursuant to
this clause (J) and clause (K) shall not exceed in the aggregate
$125,000,000 at any time outstanding,
(K)other Debt in an aggregate amount not to exceed $75,000,000 at
any time outstanding, provided, however, that the aggregate
amount of Debt issued or incurred pursuant to clause (J) and this
clause (K) shall not exceed in the aggregate $125,000,000 at any
time outstanding,
(L)endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of
business,
(M)unsecured Debt of Naugatuck in an aggregate amount not to
exceed $1,000,000 at any time outstanding, and
(N)intercompany Debt owing to Crompton & Knowles I.P.R.
Corporation in an amount not to exceed $33,000,000 at any time
outstanding subject, however, to the provisions of Section
5.01(l)(v).
(c)Lease Obligations. Create, incur, assume or suffer to exist,
or permit any of its Subsidiaries to create, incur, assume or
suffer to exist, any obligations as lessee for the rental or hire
of real or personal property of any kind under leases or
agreements to lease (including Capitalized Leases) having an
original term of one year or more that would cause the direct and
contingent liabilities of Crompton Corp. and its Subsidiaries, on
a Consolidated basis, in respect of all such obligations to
exceed $50,000,000 payable in any period of 12 consecutive
months; provided, however, that no Minor Subsidiary (other than
Naugatuck) shall create, incur, assume or suffer to exist any
obligations as lessee for the rental or hire of real or personal
property of any kind under leases or agreements to lease
(including Capitalized Leases).
(d)Mergers, Etc. Merge into or consolidate with any Person or
permit any Person to merge into it, or permit any of its
Subsidiaries to do so, except that (i) the Borrowers and their
Subsidiaries may consummate the Merger, (ii) Uniroyal Corp. may
merge into or consolidate with Crompton Corp., (iii) any Foreign
Subsidiary may merge into or consolidate with any other Foreign
Subsidiary; (iv) any Foreign Subsidiary may merge into or
consolidate with any Domestic Subsidiary, provided that such
Domestic Subsidiary shall survive such merger, (v) any Domestic
Subsidiary of Crompton Corp. (other than the Borrowers and
Uniroyal Corp. and its Subsidiaries) may merge into or
consolidate with any other Domestic Subsidiary of Crompton Corp.
(other than the Borrowers and Uniroyal Corp. and its
Subsidiaries) so long as if any Loan Party is party to such
merger or consolidaton, such Loan Party shall survive such merger
or consolidation, (vi) any Domestic Subsidiary of Uniroyal Corp.
may merge into or consolidate with any other Domestic Subsidiary
of Uniroyal Corp. so long as if any Loan Party is party to such
merger or consolidation, such Loan Party shall survive such
merger or consolidation, (vii) after the Collateral Release Date,
any Subsidiary of Crompton Corp. (other than the other Borrowers)
may merge into or consolidate with any Borrower or any other
Subsidiary of Crompton Corp. so long as if any Borrower is party
to such merger or consolidation, such Borrower shall survive such
merger or consolidation, (viii) in connection with any
acquisition permitted under Section 5.02(f), any Subsidiary of
Crompton Corp. may merge into or consolidate with any other
Person or permit any other Person to merge into or consolidate
with it; provided that the Person surviving such merger shall be
a wholly owned Subsidiary of Crompton Corp. and (ix) in
connection with any sale or other disposition permitted under
Section 5.02(e) (other than clause (ii) thereof), any Subsidiary
of Crompton Corp. may merge into or consolidate with any other
Person or permit any other Person to merge into or consolidate
with it; provided, however, that in each case, immediately after
giving effect thereto, no event shall occur and be continuing
that constitutes a Default and, in the case of any such merger to
which Crompton Corp. is a party, Crompton Corp. is the surviving
corporation.
(e)Sales, Etc. of Assets. Sell, lease, transfer or otherwise
dispose of, or permit any of its Subsidiaries to sell, lease,
transfer or otherwise dispose of, any assets, or grant any option
or other right to purchase, lease or otherwise acquire any assets
other than Inventory to be sold in the ordinary course of its
business, except:
(i)sales of Inventory in the ordinary course of its business,
(ii)in a transaction authorized by Section 5.02(d) (other than
clause (ix) thereof),
(iii)sales of assets and for fair value in an aggregate amount
not to exceed $50,000,000 in any Fiscal Year,
(iv)the sale or other disposition of damaged, worn out or
obsolete property that is no longer necessary for the proper
conduct of the business of Crompton Corp. and its Subsidiaries in
the ordinary course of business,
(v)sales of accounts receivable of Foreign Subsidiaries on a
basis which is non-recourse to Crompton Corp. and its
Subsidiaries (other than any Minor Subsidiary) (which accounts
receivable shall at no time exceed 25% of the aggregate accounts
receivable of Crompton Corp. and its Consolidated Subsidiaries),
(vi)sales of assets after the Effective Date having an aggregate
fair market value of not more than the greater of (A)
$100,000,000 and (B) an amount equal to 5% of Consolidated sales
of Crompton Corp. and its Subsidiaries since the Effective Date,
provided that the Net Cash Proceeds of such asset sales are
applied to purchase substantially similar assets (whether by
means of an acquisition of stock or assets or otherwise)
constituting Investments permitted under Section 5.02(f) or
Capital Expenditures permitted under Section 5.02(n) or to prepay
permanently Debt of Crompton Corp. or any of its Subsidiaries,
(vii)sales of accounts receivable of Crompton Corp. and its
Subsidiaries (other than Uniroyal Corp. and its Subsidiaries and
the Minor Subsidiaries) in connection with agreements for limited
recourse or non-recourse sales by Crompton Corp. or any of its
Subsidiaries (other than Uniroyal Corp. and its Subsidiaries and
the Minor Subsidiaries) for cash, provided that (A) any such
agreement is of a type and on terms customary for comparable
transactions in the good faith judgment of the Board of Directors
of Crompton Corp., (B) such agreement does not create any
interest in any asset other than accounts receivable (and
property securing or otherwise supporting accounts receivable)
and proceeds of the foregoing and (C) the Net Cash Proceeds
thereof in excess of $25,000,000 shall be applied to the
permanent reduction of the Facilities in accordance with Section
2.05(b)(iv) (a "Receivables Securitization"),
(viii)the sale of assets listed in a letter dated the Effective
Date from Crompton Corp. addressed and delivered to the Lender
Parties on or prior to the Effective Date, and
(ix)the transfer of assets among Loan Parties to the extent
permitted under Section 5.02(f)(vii).
(f)Investments in Other Persons. Make or hold, or permit any of
its Subsidiaries to make or hold, any Investment in any Person
other than:
(i)equity Investments by the Borrowers and their Subsidiaries in
their Subsidiaries outstanding on the date hereof and additional
equity investments in wholly owned Subsidiaries (other than any
Minor Subsidiary), which Subsidiaries were in existence on the
date hereof;
(ii)loans and advances to employees in the ordinary course of the
business of the Borrowers and their Subsidiaries (other than any
Minor Subsidiary) as presently conducted in an aggregate
principal amount not to exceed $5,000,000 at any time
outstanding;
(iii)Investments by the Borrowers and their Subsidiaries in Cash
Equivalents;
(iv)Investments by the Borrowers in Hedge Agreements permitted
under Sections 5.02(b)(i)(B) and (C);
(v)Investments consisting of intercompany Debt permitted under
Section 5.02(b)(i)(D) or (ii);
(vi)Investments existing on the date hereof and described on Part
I of Schedule 5.02(f) hereto;
(vii)Investments consisting of the contribution of assets of (A)
any Loan Party to any other Loan Party in an aggregate amount not
to exceed $50,000,000 in any Fiscal Year or $100,000,000 in the
aggregate after the Effective Date, (B) any Domestic Subsidiary
to any Foreign Subsidiary in an aggregate amount not to exceed
$25,000,000 in any Fiscal Year or $50,000,000 in the aggregate
after the Effective Date, (C) any Foreign Subsidiary to any other
Foreign Subsidiary, (D) any Foreign Subsidiary to any Domestic
Subsidiary (other than any Minor Subsidiary) and (E) Uniroyal to
Uniroyal Chemical Leasing Company, Inc. in an amount not to
exceed $100,000,000 in the aggregate after the Effective Date;
(viii) Investments by Crompton Corp. and its Subsidiaries in (A)
the joint ventures listed on Part II of Schedule 5.02(f) and
other joint ventures and non-wholly owned Subsidiaries in an
aggregate amount invested (including, without limitation,
assumption of debt, noncompetition arrangements, "earn-outs" and
other deferred payment arrangements) not to exceed $50,000,000
and (B) Monochem, Inc. and Rubicon, Inc.; provided that with
respect to Investments made under this clause (viii): (1)
immediately before and after giving effect thereto, no Default
shall have occurred and be continuing or would result therefrom;
(2) any business acquired or invested in pursuant to this clause
(viii) shall be in the same general line of business or
substantially related lines of business as the business of
Crompton Corp. or such Subsidiary; and (3) immediately after
giving effect to the acquisition of a company or business
pursuant to this clause (viii), Crompton Corp. shall be in pro
forma compliance with the covenants contained in Section 5.04,
calculated based on the relevant Financial Statements, as though
such acquisition had occurred at the beginning of the 12-month
period covered thereby, as evidenced by a certificate of the
chief financial officer or treasurer of Crompton Corp. furnished
to the Lender Parties, demonstrating such compliance;
(ix)other Investments (other than Investments in Minor
Subsidiaries) in an aggregate amount invested not to exceed the
sum of (A) an amount equal to the aggregate Net Cash Proceeds of
any equity issued by Crompton Corp. after the Effective Date and
(B) in any Fiscal Year, an amount equal to Available Cash Flow
for such Fiscal Year; provided that with respect to Investments
made under this clause (ix): (1) any newly acquired or created
Subsidiary of any Borrower or any of its Subsidiaries shall be a
wholly owned Subsidiary thereof; (2) immediately before and after
giving effect thereto, no Default shall have occurred and be
continuing or would result therefrom; (3) any business acquired
or invested in pursuant to this clause (ix) shall be in the same
general line of business or substantially related lines of
business as the business of such Borrower or any of its
Subsidiaries; and (4) immediately after giving effect to the
acquisition of a company or business pursuant to this clause
(ix), Crompton Corp. shall be in pro forma compliance with the
covenants contained in Section 5.04, calculated based on the
relevant Financial Statements, as though such acquisition had
occurred at the beginning of the 12-month period covered thereby,
as evidenced by a certificate of the chief financial officer or
treasurer of Crompton Corp. furnished to the Lender Parties,
demonstrating such compliance; and
(x)additional equity Investments in Naugatuck and intercompany
Debt incurred by Naugatuck not to exceed $5,000,000 in the
aggregate from the date hereof.
(g)Dividends, Etc. Declare or pay any dividends, purchase,
redeem, retire, defease or otherwise acquire for value any of its
capital stock or any warrants, rights or options to acquire such
capital stock, now or hereafter outstanding, return any capital
to its stockholders as such, make any distribution of assets,
capital stock, warrants, rights, options, obligations or
securities to its stockholders as such or issue or sell any
capital stock or any warrants, rights or options to acquire such
capital stock, or permit any of its Subsidiaries to do any of the
foregoing or permit any of its Subsidiaries to purchase, redeem,
retire, defease or otherwise acquire for value any capital stock
of any Borrower or any warrants, rights or options to acquire
such capital stock or to issue or sell any capital stock or any
warrants, rights or options to acquire such capital stock, except
that, so long as no Default shall have occurred and be continuing
at the time of any action described in clauses (i) and (ii) below
or would result therefrom, (i) Crompton Corp. may (A) declare and
pay dividends and distributions payable only in common stock of
Crompton Corp., (B) issue and sell shares of its capital stock,
(C) purchase, redeem, retire, defease or otherwise acquire shares
of its capital stock with the proceeds received from the issue of
new shares of its capital stock with equal or inferior voting
powers, designations, preferences and rights and (D) declare and
pay cash dividends to its stockholders and purchase, redeem,
retire or otherwise acquire shares of its own outstanding capital
stock for cash in an amount not to exceed in the Fiscal Year
ending on or about December 31, 1996, $15,000,000, and in any
Fiscal Year thereafter the greater of (I) $15,000,000 and (II)
50% of Consolidated net income of Crompton Corp. and its
Subsidiaries for the immediately preceding Fiscal Year computed
in accordance with GAAP, and (ii) any Subsidiary of Crompton
Corp. may (A) declare and pay cash dividends to any Borrower
(including, without limitation, the declaration and payment of
cash dividends by Uniroyal to Uniroyal Corp.) and (B) declare and
pay cash dividends to any other wholly owned Subsidiary of any
Borrower of which it is a Subsidiary.
(h)Change in Nature of Business. Make, or permit any of its
Subsidiaries to make, any material change in the nature of its
business as carried on at the date hereof.
(i)Charter Amendments. Amend, or permit any of its Subsidiaries
to amend, its certificate of incorporation or bylaws in any
material respect.
(j)Accounting Changes. Make or permit, or permit any of its
Subsidiaries to make or permit, any change in (i) accounting
policies or reporting practices, except as required or permitted
by generally accepted accounting principles or (ii) Fiscal Year,
except in each case, as necessary to make such Fiscal Year the
same with respect to Uniroyal Corp. and Crompton Corp.
(k)Amendment, Etc. of Related Documents. Cancel or terminate any
Related Document or consent to or accept any cancellation or
termination thereof, amend, modify or change in any manner any
term or condition of any Related Document or give any consent,
waiver or approval thereunder, waive any default under or any
breach of any term or condition of any Related Document, agree in
any manner to any other amendment, modification or change of any
term or condition of any Related Document or take any other
action in connection with any Related Document, in each case that
would impair in any material respect the value of the interest or
rights of any Borrower thereunder or that would impair the rights
or interests of the Agent or any Lender Party, or permit any of
its Subsidiaries to do any of the foregoing.
(l)Negative Pledge. Enter into or suffer to exist, or permit any
of its Subsidiaries to enter into or suffer to exist, any
agreement prohibiting or conditioning the creation or assumption
of any Lien upon any of its property or assets other than (i) in
favor of the Secured Parties, (ii) in connection with any
Surviving Debt, any Debt extending the maturity of, or refunding
or refinancing, in whole or in part, any Surviving Debt in
accordance with Section 5.02(b)(iii)(D) (to the extent the
agreement or instrument evidencing such Surviving Debt contained
such a provision or agreement) and any Debt outstanding on the
date such Subsidiary first becomes a Subsidiary (so long as such
agreement was not entered into solely in contemplation of such
Subsidiary becoming a Subsidiary) or (iii) in connection with any
lease permitted under Section 5.02(c) solely to the extent that
such lease prohibits a Lien on the lease or the property subject
to such lease.
(m)Partnerships, Etc. Become a general partner in any general or
limited partnership or joint venture, or permit any of its
Subsidiaries to do so, other than any Subsidiary the sole assets
of which consist of its interest in such partnership or joint
venture.
(n)Capital Expenditures. Make, or permit any of its Subsidiaries
to make, any Capital Expenditures that would cause the aggregate
of all such Capital Expenditures made by Crompton Corp. and its
Subsidiaries in any period set forth below to exceed the amount
set forth below for such period.
Fiscal Year Ending On or About Amount
December 31, 1996 $100,000,000
December 31, 1997 $100,000,000
December 31, 1998 $110,000,000
December 31, 1999 $110,000,000
December 31, 2000 $110,000,000
December 31, 2001
and thereafter $110,000,000
plus, for each Fiscal Year set forth above, an amount equal to
(i) the excess, if any, of the amount set opposite the
immediately preceding Fiscal Year over the aggregate amount of
such Capital Expenditures actually made during such Fiscal Year
(other than pursuant to clause (ii) below), provided that any
Capital Expenditures made in any Fiscal Year shall be applied
first against any amount permitted to be carried over from the
immediately preceding Fiscal Year and (ii) the amount of any Net
Cash Proceeds received with respect to the sale, lease, transfer
or other disposition of assets pursuant to Section 5.02(e)(vi),
solely to the extent such Net Cash Proceeds are not used to make
Investments permitted under Section 5.02(f) or to prepay
permanently Debt of Crompton Corp. or any of its Subsidiaries,
provided that such amount of Net Cash Proceeds shall not be
carried over to any subsequent Fiscal Year pursuant to clause (i)
above.
(o) Minor Subsidiaries. Permit any Minor Subsidiary (other than
Naugatuck Treatment Company) to enter into or conduct any
business or engage in any activity (including, without
limitation, any action or transaction that is required or
restricted with respect to any Borrower and its Subsidiaries
under Section 5.01 and this Section 5.02).
SECTION 5.03. Reporting Requirements. So long as any
Advance shall remain unpaid, any Letter of Credit shall be
outstanding or any Lender Party shall have any Commitment
hereunder, Crompton Corp. will furnish to the Agent and the
Lender Parties:
(a) Default Notice. As soon as possible and in any event
within five days after any Responsible Officer of any Borrower
becomes aware of the occurrence of each Default or any event,
development or occurrence reasonably likely to have a Material
Adverse Effect continuing on the date of such statement, a
statement of the chief financial officer, treasurer or chief
accounting officer of such Borrower setting forth details of such
Default and the action that such Borrower has taken and proposes
to take with respect thereto.
(b) Quarterly Financials. As soon as available and in any
event within 50 days after the end of each of the first three
quarters of each Fiscal Year, Consolidated and, to the extent
otherwise available, consolidating balance sheets of Crompton
Corp. and its Subsidiaries and Consolidated balance sheets of
Uniroyal Corp. and its Subsidiaries, in each case, as of the end
of such quarter and Consolidated and, to the extent otherwise
available, consolidating statements of income and a Consolidated
statement of cash flows of Crompton Corp. and its Subsidiaries
and Consolidated statements of income and of cash flows of
Uniroyal Corp. and its Subsidiaries, in each case, for the period
commencing at the end of the previous fiscal quarter and ending
with the end of such fiscal quarter and Consolidated and, to the
extent otherwise available, consolidating statements of income
and a Consolidated statement of cash flows of Crompton Corp. and
its Subsidiaries and Consolidated statements of income and of
cash flows of Uniroyal Corp. and its Subsidiaries, in each case,
for the period commencing at the end of the previous Fiscal Year
and ending with the end of such quarter, setting forth in each
case in comparative form the corresponding figures for the
corresponding period of the preceding Fiscal Year, all in
reasonable detail and duly certified (subject to year-end audit
adjustments) by the chief financial officer or treasurer of such
Borrower as having been prepared in accordance with GAAP,
together with (i) a certificate of said officer stating that no
Default has occurred and is continuing or, if a Default has
occurred and is continuing, a statement as to the nature thereof
and the action that such Borrower has taken and proposes to take
with respect thereto and (ii) a schedule in form satisfactory to
the Agent of the computations used by Crompton Corp. in
determining compliance with the covenants contained in Sections
5.04(a) and (b), provided that in the event of any change in GAAP
used in the preparation of such financial statements, Crompton
Corp. shall also provide, if necessary for the determination of
compliance with Section 5.04, a statement of reconciliation
conforming such financial statements to GAAP.
(c) Annual Financials. As soon as available and in any event
within 95 days after the end of each Fiscal Year, a copy of the
annual report for such year for Crompton Corp. and its
Subsidiaries, including therein a Consolidated balance sheet of
Crompton Corp. and its Subsidiaries as of the end of such Fiscal
Year and a Consolidated statement of income and a Consolidated
statement of cash flows of Crompton Corp. and its Subsidiaries
for such Fiscal Year, in each case accompanied by an opinion
acceptable to the Required Lenders of KPMG Peat Marwick LLP or
other independent public accountants of recognized standing
acceptable to the Required Lenders, and a Consolidated and, to
the extent otherwise available, consolidating balance sheets of
Crompton Corp. and Uniroyal Corp. and their respective
Subsidiaries as of the end of such Fiscal Year and Consolidated
and, to the extent otherwise available, consolidating statements
of income and a Consolidated statement of cash flows of Crompton
Corp. and Uniroyal Corp. and their respective Subsidiaries for
such Fiscal Year, all in reasonable detail and duly certified by
the chief financial officer or treasurer of such Borrower as
having been prepared in accordance with GAAP, together with (i) a
certificate of such accounting firm to the Lender Parties stating
that in the course of the regular audit of the business of
Crompton Corp. and its Subsidiaries, which audit was conducted by
such accounting firm in accordance with generally accepted
auditing standards, such accounting firm has obtained no
knowledge that a Default has occurred and is continuing, or if,
in the opinion of such accounting firm, a Default has occurred
and is continuing, a statement as to the nature thereof, (ii) a
schedule in form satisfactory to the Agent of the computations
used by such accountants in determining, as of the end of such
Fiscal Year, compliance with the covenants contained in
Sections 5.04(a) and (b), provided that in the event of any
change in GAAP used in the preparation of such financial
statements, Crompton Corp. shall also provide, if necessary for
the determination of compliance with Section 5.04, a statement of
reconciliation conforming such financial statements to GAAP and
(iii) a certificate of the chief financial officer or treasurer
of each Borrower stating that no Default has occurred and is
continuing or, if a default has occurred and is continuing, a
statement as to the nature thereof and the action that such
Borrower has taken and proposes to take with respect thereto.
(d) Annual Forecasts. As soon as available and in any event no
later than 30 days after the end of each Fiscal Year, forecasts
prepared by management of Crompton Corp. and Uniroyal Corp., in
form satisfactory to the Agent, of balance sheets, income
statements and cash flow statements for Crompton Corp. and its
Subsidiaries, Uniroyal Corp. and its Subsidiaries and Crompton
Corp. and its Subsidiaries (other than Uniroyal Corp. and its
Subsidiaries) on an annual basis for the Fiscal Year following
such Fiscal Year then ended and for each Fiscal Year thereafter
until the Termination Date.
(e) Annual Budget. As soon as available and in any event
within 30 days after the end of each Fiscal Year, an annual
budget for Crompton Corp. and its Subsidiaries, Uniroyal Corp.
and its Subsidiaries and Crompton Corp. and its Subsidiaries
(other than Uniroyal Corp. and its Subsidiaries), prepared by
management of Crompton Corp. and Uniroyal Corp. consisting of
balance sheets, income statements and cash flow statements on a
quarterly basis for the Fiscal Year following such Fiscal Year
then ended in form and substance satisfactory to the Agent.
(f) ERISA Events and ERISA Reports. (i) Promptly and in any
event within 15 days after any Loan Party or any ERISA Affiliate
knows or has reason to know that any ERISA Event has occurred, a
statement of the chief financial officer or treasurer of Crompton
Corp. describing such ERISA Event and the action, if any, that
such Loan Party or such ERISA Affiliate has taken and proposes to
take with respect thereto and (ii) promptly and in any event
within two days after the date any records, documents or other
information must be furnished to the PBGC with respect to any
Plan pursuant to Section 4010 of ERISA, a copy of such records,
documents and information.
(g) Plan Terminations. Promptly and in any event within three
Business Days after receipt thereof by any Loan Party or any
ERISA Affiliate, copies of each notice from the PBGC stating its
intention to terminate any Plan or to have a trustee appointed to
administer any Plan.
(h) Plan Annual Reports. Promptly and in any event within 30
days after the filing thereof with the Internal Revenue Service,
copies of each Schedule B (Actuarial Information) to the annual
report (Form 5500 Series) with respect to each Plan.
(i) Multiemployer Plan Notices. Promptly and in any event
within five Business Days after receipt thereof by any Loan Party
or any ERISA Affiliate from the sponsor of a Multiemployer Plan,
copies of each notice concerning (i) the imposition of Withdrawal
Liability by any such Multiemployer Plan, (ii) the reorganization
or termination, within the meaning of Title IV of ERISA, of any
such Multiemployer Plan or (iii) the amount of liability
incurred, or that may be incurred, by such Loan Party or any
ERISA Affiliate in connection with any event described in
clause (i) or (ii).
(j) Litigation. Promptly after the commencement thereof,
notice of all actions, suits, investigations, litigation and
proceedings before any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or
foreign, affecting any Loan Party or any of its Subsidiaries of
the type described in Section 4.01(k), and promptly after the
occurrence thereof, notice of any adverse change in the status or
the financial effect on any Loan Party or any of its Subsidiaries
of the Disclosed Litigation from that described on
Schedule 3.01(f).
(k) Securities Reports. Promptly after the sending or filing
thereof, copies of all proxy statements, financial statements and
reports that any Loan Party or any of its Subsidiaries sends to
its outside stockholders, and copies of all regular, periodic and
special reports, and all registration statements, that any Loan
Party or any of its Subsidiaries files with the Securities and
Exchange Commission or any governmental authority that may be
substituted therefor, or with any national securities exchange.
(l) Creditor Reports. Promptly after the furnishing
thereof, copies of any statement or report furnished to any other
holder of the securities of any Loan Party or of any of its
Subsidiaries pursuant to the terms of any indenture, loan or
credit or similar agreement and not otherwise required to be
furnished to the Lender Parties pursuant to any other clause of
this Section 5.03.
(m) Agreement Notices. Promptly upon receipt thereof, copies
of all notices of any default or breach and all other material
requests and other documents received by any Loan Party or any of
its Subsidiaries under or pursuant to any Related Document or
indenture, loan or credit or similar agreement and, from time to
time upon request by the Agent, such information and reports
regarding the Related Documents as the Agent may reasonably
request.
(n) Revenue Agent Reports. Within 10 days after receipt, copies
of all Revenue Agent Reports (Internal Revenue Service Form 886),
or other written proposals of the Internal Revenue Service, that
propose, determine or otherwise set forth positive adjustments to
the Federal income tax liability of the affiliated group (within
the meaning of Section 1504(a)(1) of the Internal Revenue Code)
of which Crompton Corp. is a member aggregating $3,000,000 or
more.
(o) Environmental Conditions. Promptly after the assertion or
occurrence thereof, notice of any Environmental Action against or
of any noncompliance by any Loan Party or any of its Subsidiaries
with any Environmental Law or Environmental Permit that could
reasonably be expected to have a Material Adverse Effect.
(p) Other Information. Such other information respecting the
business, condition (financial or otherwise), operations,
performance, properties or prospects of any Loan Party or any of
its Subsidiaries as any Lender Party (through the Agent) may from
time to time reasonably request.
SECTION 5.04. Financial Covenants. So long as any Advance
shall remain unpaid, any Letter of Credit shall be outstanding or
any Lender Party shall have any Commitment hereunder, Crompton
Corp. will:
(a) Leverage Ratio. Maintain at the end of each fiscal quarter
of Crompton Corp. a Total Debt/EBITDA Ratio of not more than the
amount set forth below for each Rolling Period set forth below:
Rolling Period Ending On or About Ratio
September 30, 1996 4.00:1.0
December 31, 1996 4.00:1.0
March 31, 1997 4.00:1.0
June 30, 1997 4.00:1.0
September 30, 1997 3.75:1.0
December 31, 1997 3.75:1.0
March 31, 1998 3.75:1.0
June 30, 1998 3.50:1.0
September 30, 1998 3.50:1.0
December 31, 1998 3.50:1.0
March 31, 1999 3.25:1.0
June 30, 1999 3.00:1.0
September 30, 1999 3.00:1.0
December 31, 1999 3.00:1.0
March 31, 2000 3.00:1.0
June 30, 2000 3.00:1.0
September 30, 2000 3.00:1.0
December 31, 2000 3.00:1.0
March 31, 2001 3.00:1.0
June 30, 2001
thereafter 3.00:1.0
(b)Interest Coverage Ratio. Maintain at the end of each fiscal
quarter of Crompton Corp. an Interest Coverage Ratio of not less
than the amount set forth below for each Rolling Period set forth
below:
Rolling Period Ending On or About Ratio
September 30, 1996 2.50:1.0
December 31, 1996 2.50:1.0
March 31, 1997 2.50:1.0
June 30, 1997 2.50:1.0
September 30, 1997 2.75:1.0
December 31, 1997 2.75:1.0
March 31, 1998 2.75:1.0
June 30, 1998 2.75:1.0
September 30, 1998 2.75:1.0
December 31, 1998 3.00:1.0
March 31, 1999 3.00:1.0
June 30, 1999 3.00:1.0
September 30, 1999 3.25:1.0
December 31, 1999 3.25:1.0
March 31, 2000 3.50:1.0
June 30, 2000 3.50:1.0
September 30, 2000 3.50:1.0
December 31, 2000 3.50:1.0
March 31, 2001 3.50:1.0
June 30, 2001
and thereafter 3.50:1.0
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default. If any of the following events
("Events of Default") shall occur and be continuing:
(a) (i) any Borrower shall fail to pay any principal of any
Advance when the same shall become due and payable or (ii) any
Borrower shall fail to pay any interest on any Advance, or any
Loan Party shall fail to make any other payment under any Loan
Document, in each case under this clause (ii) within five days
after the same becomes due and payable; or
(b) any representation or warranty made by any Loan Party (or
any of its officers) under or in connection with any Loan
Document shall prove to have been incorrect in any material
respect when made; or
(c) any Borrower shall fail to perform or observe any term,
covenant or agreement contained in Section 2.14, 5.01(d), (e),
(k) or (l), 5.02, 5.03(a) or 5.04; or
(d) any Loan Party shall fail to perform or observe any other
term, covenant or agreement contained in any Loan Document on its
part to be performed or observed if such failure shall remain
unremedied for 15 days after the earlier of the date on which (A)
a Responsible Officer becomes aware of such failure or (B)
written notice thereof shall have been given to Crompton Corp. by
the Agent or any Lender Party; or
(e) any Loan Party or any of its Subsidiaries shall fail to pay
any principal of, premium or interest on or any other amount
payable in respect of any Debt that is outstanding in a principal
or notional amount of at least $10,000,000 either individually or
in the aggregate (but excluding Debt outstanding hereunder) of
such Loan Party or such Subsidiary (as the case may be), when the
same becomes due and payable (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise), and such
failure shall continue after the applicable grace period, if any,
specified in the agreement or instrument relating to such Debt;
or any other event shall occur or condition shall exist under any
agreement or instrument relating to any such Debt and shall
continue after the applicable grace period, if any, specified in
such agreement or instrument, if the effect of such event or
condition is to accelerate, or to permit the acceleration of, the
maturity of such Debt or otherwise to cause, or to permit the
holder thereof to cause, such Debt to mature; or any such Debt
shall be declared to be due and payable or required to be prepaid
or redeemed (other than by a regularly scheduled required
prepayment or redemption), purchased or defeased, or an offer to
prepay, redeem, purchase or defease such Debt shall be required
to be made, in each case prior to the stated maturity thereof; or
(f) any Loan Party or any of its Material Subsidiaries shall
generally not pay its debts as such debts become due, or shall
admit in writing its inability to pay its debts generally, or
shall make a general assignment for the benefit of creditors; or
any proceeding shall be instituted by or against any Loan Party
or any of its Material Subsidiaries seeking to adjudicate it a
bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or
composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a
receiver, trustee, or other similar official for it or for any
substantial part of its property and, in the case of any such
proceeding instituted against it (but not instituted by it) that
is being diligently contested by it in good faith, either such
proceeding shall remain undismissed or unstayed for a period of
60 days or any of the actions sought in such proceeding
(including, without limitation, the entry of an order for relief
against, or the appointment of a receiver, trustee, custodian or
other similar official for, it or any substantial part of its
property) shall occur; or any Loan Party or any of its Material
Subsidiaries shall take any corporate action to authorize any of
the actions set forth above in this subsection (f); or
(g)any judgment or order for the payment of money in excess of
$10,000,000 shall be rendered against any Loan Party or any of
its Material Subsidiaries and either (i) enforcement proceedings
shall have been commenced by any creditor upon such judgment or
order or (ii) there shall be any period of 10 consecutive days
during which a stay of enforcement of such judgment or order, by
reason of a pending appeal or otherwise, shall not be in effect;
provided, however, that any such judgment or order shall not be
an Event of Default under this Section 6.01(g) if and to the
extent that the amount of such judgment or order is covered by a
valid and binding policy of insurance between the defendant and
the insurer covering payment thereof so long as such insurer,
which shall be rated at least "A" by A.M. Best Company, has been
notified of, and has not disputed the claim made for payment of,
the amount of such judgment or order; or
(h)any non-monetary judgment or order shall be rendered against
any Loan Party or any of its Material Subsidiaries that is
reasonably likely to have a Material Adverse Effect, and there
shall be any period of 10 consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect; or
(i)any provision of any Loan Document after delivery thereof
pursuant to Section 3.01 or 5.01(k) shall for any reason cease to
be valid and binding on or enforceable against any Loan Party
party to it, or any such Loan Party shall so state in writing; or
(j)any Collateral Document after delivery thereof pursuant to
Section 3.01 or 5.01(k) shall for any reason (other than pursuant
to the terms thereof or as a result of action taken or failure to
take action by the Agent or any Lender Party) cease to create a
valid and perfected first priority lien on and security interest
in the Collateral purported to be covered thereby; or
(k)(i) any Person or two or more Persons acting in concert shall
have acquired beneficial ownership (within the meaning of
Rule 13d-3 of the Securities and Exchange Commission under the
Securities Exchange Act of 1934), directly or indirectly, of
Voting Stock of Crompton Corp. (or other securities convertible
into such Voting Stock) representing 20% or more of the combined
voting power of all Voting Stock of Crompton Corp.; or
(ii) during any period of up to 24 consecutive months, commencing
before or after the date of this Agreement, individuals who at
the beginning of such 24-month period were directors of Crompton
Corp. shall cease for any reason to constitute a majority of the
board of directors of Crompton Corp. (except to the extent that
individuals who at the beginning of such 24-month period were
replaced by individuals (x) elected by 66-2/3% of the remaining
members of the board of directors of Crompton Corp. or
(y) nominated for election by a majority of the remaining members
of the board of directors of Crompton Corp. and thereafter
elected as directors by the shareholders of Crompton Corp.); or
(iii) Crompton Corp. shall at any time for any reason cease to be
the record and beneficial owner of 100% of the capital stock of
the other Borrowers; or
(l)(i) any ERISA Event shall have occurred with respect to a
Plan; (ii) the sum (determined as of the date of occurrence of
such ERISA Event) of the Insufficiency of such Plan and the
Insufficiency of any and all other Plans with respect to which an
ERISA Event shall have occurred and then exist exceeds
$10,000,000; and (iii) such ERISA Events (considered in the
aggregate) are reasonably likely to result in obligations on the
part of the Loan Parties to make payments in the aggregate in
excess of $10,000,000 in any given calendar year; or
(m)any Loan Party or any ERISA Affiliate shall have been notified
by the sponsor of a Multiemployer Plan that it has incurred
Withdrawal Liability to such Multiemployer Plan in an amount
that, when aggregated with all other amounts required to be paid
to Multiemployer Plans by the Loan Parties and the ERISA
Affiliates as Withdrawal Liability (determined as of the date of
such notification), requires payments exceeding $10,000,000 in
any given calendar year; or
(n)any Loan Party or any ERISA Affiliate shall have been notified
by the sponsor of a Multiemployer Plan that such Multiemployer
Plan is in reorganization or is being terminated, within the
meaning of Title IV of ERISA, and as a result of such
reorganization or termination the aggregate annual contributions
of the Loan Parties and the ERISA Affiliates to all Multiemployer
Plans that are then in reorganization or being terminated have
been or will be increased over the amounts contributed to such
Multiemployer Plans for the plan years of such Multiemployer
Plans immediately preceding the plan year in which such
reorganization or termination occurs by an amount exceeding
$10,000,000;
then, and in any such event, the Agent (i) shall at the request,
or may with the consent, of the Required Lenders, by notice to
the Borrowers, declare the Commitment of each Lender Party and
the obligation of each Appropriate Lender to make Advances (other
than Letter of Credit Advances by an Issuing Bank or a Working
Capital Lender pursuant to Section 2.03(c) and Swing Line
Advances by a Working Capital Lender pursuant to Section 2.02(b))
and of each Issuing Bank to issue Letters of Credit to be
terminated, whereupon the same shall forthwith terminate, and
(ii) shall at the request, or may with the consent, of the
Required Lenders, by notice to the Borrowers, declare the Notes,
all interest thereon and all other amounts payable under this
Agreement and the other Loan Documents to be forthwith due and
payable, whereupon the Notes, all such interest and all such
amounts shall become and be forthwith due and payable, without
presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived by each Borrower; provided,
however, that in the event of an actual or deemed entry of an
order for relief with respect to any Loan Party or any of its
Subsidiaries under the Federal Bankruptcy Code, (x) the
Commitment of each Lender Party and the obligation of each Lender
to make Advances (other than Letter of Credit Advances by an
Issuing Bank or a Working Capital Lender pursuant to Section
2.03(c) and Swing Line Advances by a Working Capital Lender
pursuant to Section 2.02(b)) and of each Issuing Bank to issue
Letters of Credit shall automatically be terminated and (y) the
Notes, all such interest and all such amounts shall automatically
become and be due and payable, without presentment, demand,
protest or any notice of any kind, all of which are hereby
expressly waived by each Borrower.
SECTION 6.02. Actions in Respect of the Letters of Credit upon
Default. If any Event of Default shall have occurred and be
continuing, the Agent shall at the request, or may with the
consent, of the Required Lenders, irrespective of whether it is
taking any of the actions described in Section 6.01 or otherwise,
make demand upon the Borrowers to, and forthwith upon such demand
the Borrowers jointly and severally agree to, pay to the Agent on
behalf of the Lender Parties in same day funds at the Agent's
office designated in such demand, for deposit in the relevant L/C
Cash Collateral Account, an amount equal to the aggregate
Available Amount of all Letters of Credit then outstanding. If
at any time the Agent determines that any funds held in such L/C
Cash Collateral Account are subject to any right or claim of any
Person other than the Agent and the Lender Parties or that the
total amount of such funds is less than the aggregate Available
Amount of all Letters of Credit, the Borrowers jointly and
severally agree to, forthwith upon demand by the Agent, pay to
the Agent, as additional funds to be deposited and held in such
L/C Cash Collateral Account, an amount equal to the excess of
(a) such aggregate Available Amount over (b) the total amount of
funds, if any, then held in such L/C Cash Collateral Account that
the Agent determines to be free and clear of any such right and
claim.
SECTION 6.03. Actions in Respect of Working Capital B-1
Commitments Reserved Pursuant to Section 2.01(g). If, at any
time and from time to time, any Working Capital B-1 Commitments
are reserved pursuant to Section 2.01(g) and either (i) an Event
of Default shall have occurred and be continuing or (ii) the
Termination Date shall have occurred, then, upon the occurrence
of any of the events described in clause (i) or (ii) above,
Citibank may, whether in addition to the taking by the Agent of
any of the actions described in Section 6.01 or 6.02 or
otherwise, make demand upon the Uniroyal Borrower to, and
forthwith upon such demand the Uniroyal Borrower will, pay to
Citibank in same day funds at Citibank's office designated in
such demand, for deposit in a special cash collateral account to
be maintained in the name of Citibank Seoul and under the sole
dominion and control of Citibank at such place as shall be
designated by Citibank, an amount equal to the Seoul Guaranty
Amount on the date of such demand.
ARTICLE VII
THE AGENT
SECTION 7.01. Authorization and Action. Each Lender Party (in
its capacities as a Lender, a Swing Line Bank (if applicable), an
Issuing Bank (if applicable) and, on behalf of itself and its
Affiliates, a potential Hedge Bank) hereby appoints and
authorizes the Agent to take such action as agent on its behalf
and to exercise such powers and discretion under this Agreement
and the other Loan Documents as are delegated to the Agent by the
terms hereof and thereof, together with such powers and
discretion as are reasonably incidental thereto. As to any
matters not expressly provided for by the Loan Documents
(including, without limitation, enforcement or collection of the
Notes), the Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Required
Lenders, and such instructions shall be binding upon all Lender
Parties and all holders of Notes; provided, however, that the
Agent shall not be required to take any action that exposes the
Agent to personal liability or that is contrary to this Agreement
or applicable law. The Agent agrees to give to each Lender Party
prompt notice of each notice given to it by any Borrower pursuant
to the terms of this Agreement.
SECTION 7.02. Agent's Reliance, Etc. Neither the Agent nor any
of its directors, officers, agents or employees shall be liable
for any action taken or omitted to be taken by it or them under
or in connection with the Loan Documents, except for its or their
own gross negligence or willful misconduct. Without limitation
of the generality of the foregoing, the Agent: (a) may treat the
payee of any Note as the holder thereof until the Agent receives
and accepts an Assignment and Acceptance entered into by the
Lender that is the payee of such Note, as assignor, and an
Eligible Assignee, as assignee, as provided in Section 8.07;
(b) may consult with legal counsel (including counsel for any
Loan Party), independent public accountants and other experts
selected by it and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants or experts; (c) makes no
warranty or representation to any Lender Party and shall not be
responsible to any Lender Party for any statements, warranties or
representations (whether written or oral) made in or in
connection with the Loan Documents; (d) shall not have any duty
to ascertain or to inquire as to the performance or observance of
any of the terms, covenants or conditions of any Loan Document on
the part of any Loan Party or to inspect the property (including
the books and records) of any Loan Party; (e) shall not be
responsible to any Lender Party for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of,
or the perfection or priority of any lien or security interest
created or purported to be created under or in connection with,
any Loan Document or any other instrument or document furnished
pursuant thereto; and (f) shall incur no liability under or in
respect of any Loan Document by acting upon any notice, consent,
certificate or other instrument or writing (which may be by
telegram, telecopy or telex) believed by it to be genuine and
signed or sent by the proper party or parties.
SECTION 7.03. Citicorp and Affiliates. With respect to its
Commitments, the Advances made by it and the Notes issued to it,
Citicorp shall have the same rights and powers under the Loan
Documents as any other Lender Party and may exercise the same as
though it were not the Agent; and the term "Lender Party" or
"Lender Parties" shall, unless otherwise expressly indicated,
include Citicorp in its individual capacity. Citicorp and its
affiliates may accept deposits from, lend money to, act as
trustee under indentures of, accept investment banking
engagements from and generally engage in any kind of business
with, any Loan Party, any of its Subsidiaries and any Person who
may do business with or own securities of any Loan Party or any
such Subsidiary, all as if Citicorp were not the Agent and
without any duty to account therefor to the Lender Parties.
SECTION 7.04. Lender Party Credit Decision. Each Lender Party
acknowledges that it has, independently and without reliance upon
the Agent or any other Lender Party and based on the financial
statements referred to in Section 4.01 and such other documents
and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender
Party also acknowledges that it will, independently and without
reliance upon the Agent or any other Lender Party and based on
such documents and information as it shall deem appropriate at
the time, continue to make its own credit decisions in taking or
not taking action under this Agreement.
SECTION 7.05. Indemnification. (a) Each Lender Party severally
agrees to indemnify the Agent (to the extent not promptly
reimbursed by the Borrowers) from and against such Lender Party's
ratable share (determined as provided below) of any and all
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever that may be imposed on, incurred by, or
asserted against the Agent in any way relating to or arising out
of the Loan Documents or any action taken or omitted by the Agent
under the Loan Documents; provided, however, that no Lender Party
shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Agent's gross
negligence or willful misconduct. Without limitation of the
foregoing, each Lender Party agrees to reimburse the Agent
promptly upon demand for its ratable share of any costs and
expenses (including, without limitation, fees and expenses of
counsel) payable by the Borrowers under Section 8.04, to the
extent that the Agent is not promptly reimbursed for such costs
and expenses by the Borrowers. For purposes of this
Section 7.05(a), the Lender Parties' respective ratable shares of
any amount shall be determined, at any time, according to their
respective Working Capital Commitments at such time. In the
event that any Defaulted Advance shall be owing by any Defaulting
Lender at any time, such Lender Party's Commitment with respect
to the Facility under which such Defaulted Advance was required
to have been made shall be considered to be unused for purposes
of this Section 7.05(a) to the extent of the amount of such
Defaulted Advance. The failure of any Lender Party to reimburse
the Agent promptly upon demand for its ratable share of any
amount required to be paid by the Lender Party to the Agent as
provided herein shall not relieve any other Lender Party of its
obligation hereunder to reimburse the Agent for its ratable share
of such amount, but no Lender Party shall be responsible for the
failure of any other Lender Party to reimburse the Agent for such
other Lender Party's ratable share of such amount.
(b)Each Lender Party severally agrees to indemnify each Issuing
Bank (to the extent not promptly reimbursed by the Borrowers)
from and against such Lender Party's ratable share (determined as
provided below) of any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever that may be
imposed on, incurred by, or asserted against such Issuing Bank in
any way relating to or arising out of the Loan Documents or any
action taken or omitted by such Issuing Bank under the Loan
Documents; provided, however, that no Lender Party shall be
liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from such Issuing Bank's gross negligence
or willful misconduct. Without limitation of the foregoing, each
Lender Party agrees to reimburse such Issuing Bank promptly upon
demand for its ratable share of any costs and expenses
(including, without limitation, fees and expenses of counsel)
payable by the Borrowers under Section 8.04, to the extent that
such Issuing Bank is not promptly reimbursed for such costs and
expenses by the Borrowers. For purposes of this Section 7.05(b),
the Lender Parties' respective ratable shares of any amount shall
be determined, at any time, according to their respective Working
Capital Commitments at such time. In the event that any
Defaulted Advance shall be owing by any Defaulting Lender at any
time, such Lender Party's Commitment with respect to the Facility
under which such Defaulted Advance was required to have been made
shall be considered to be unused for purposes of this
Section 7.05(b) to the extent of the amount of such Defaulted
Advance. The failure of any Lender Party to reimburse such
Issuing Bank promptly upon demand for its ratable share of any
amount required to be paid by the Lender Parties to such Issuing
Bank as provided herein shall not relieve any other Lender Party
of its obligation hereunder to reimburse such Issuing Bank for
its ratable share of such amount, but no Lender Party shall be
responsible for the failure of any other Lender Party to
reimburse such Issuing Bank for such other Lender Party's ratable
share of such amount.
(c)Without prejudice to the survival of any other agreement of
any Lender Party hereunder, the agreement and obligations of each
Lender Party contained in this Section 7.05 shall survive the
payment in full of principal, interest and all other amounts
payable hereunder and under the other Loan Documents.
SECTION 7.06. Successor Agents. The Agent may resign as to any
or all of the Facilities at any time by giving written notice
thereof to the Lender Parties and the Borrowers and may be
removed as to all of the Facilities at any time with or without
cause by the Required Lenders. Upon any such resignation or
removal, the Required Lenders shall have the right to appoint a
successor Agent as to such of the Facilities as to which the
Agent has resigned or been removed, subject, so long as no
Default shall have occurred and be continuing, to the consent of
Crompton Corp., such consent not to be unreasonably withheld or
delayed. If no successor Agent shall have been so appointed by
the Required Lenders, and shall have accepted such appointment,
within 30 days after the retiring Agent's giving of notice of
resignation or the Required Lenders' removal of the retiring
Agent, then the retiring Agent may, on behalf of the Lender
Parties, appoint a successor Agent, subject, so long as no
Default shall have occurred and be continuing, to the consent of
Crompton Corp., such consent not to be unreasonably withheld or
delayed, which shall be a commercial bank organized under the
laws of the United States or of any State thereof and having a
combined capital and surplus of at least $250,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor
Agent as to all of the Facilities and upon the execution and
filing or recording of such financing statements, or amendments
thereto, and such other instruments or notices, as may be
necessary or desirable, or as the Required Lenders may request,
in order to continue the perfection of the Liens granted or
purported to be granted by the Collateral Documents, such
successor Agent shall succeed to and become vested with all the
rights, powers, discretion, privileges and duties of the retiring
Agent, and the retiring Agent shall be discharged from its duties
and obligations under the Loan Documents. Upon the acceptance of
any appointment as Agent hereunder by a successor Agent as to
less than all of the Facilities and upon the execution and filing
or recording of such financing statements, or amendments thereto,
and such other instruments or notices, as may be necessary or
desirable, or as the Required Lenders may request, in order to
continue the perfection of the Liens granted or purported to be
granted by the Collateral Documents, such successor Agent shall
succeed to and become vested with all the rights, powers,
discretion, privileges and duties of the retiring Agent as to
such Facilities, other than with respect to funds transfers and
other similar aspects of the administration of Borrowings under
such Facilities, issuances of Letters of Credit (notwithstanding
any resignation as Agent with respect to the Letter of Credit
Facility) and payments by the Borrowers in respect of such
Facilities, and the retiring Agent shall be discharged from its
duties and obligations under this Agreement as to such
Facilities, other than as aforesaid. After any retiring Agent's
resignation or removal hereunder as Agent as to all of the
Facilities, the provisions of this Article VII shall inure to its
benefit as to any actions taken or omitted to be taken by it
while it was Agent as to any Facilities under this Agreement.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement or the Notes or any other Loan
Document, nor consent to any departure by any Borrower therefrom,
shall in any event be effective unless the same shall be in
writing and signed (or, in the case of the Collateral Documents,
consented to) by the Required Lenders, and then such waiver or
consent shall be effective only in the specific instance and for
the specific purpose for which given; provided, however, that
(a) no amendment, waiver or consent shall, unless in writing and
signed by all of the Lenders, do any of the following at any
time: (i) waive any of the conditions specified in Section 3.01
or, in the case of the Initial Extension of Credit, Section 3.02,
(ii) change the number of Lenders or the percentage of (x) the
Commitments, (y) the aggregate unpaid principal amount of the
Advances or (z) the aggregate Available Amount of outstanding
Letters of Credit that, in each case, shall be required for the
Lenders or any of them to take any action hereunder, (iii) reduce
or limit the obligations of any Guarantor under Section 1 of the
Guaranty to which it is a party or otherwise limit such
Guarantor's liability with respect to the Obligations owing to
the Agent and the Lender Parties, (iv) release all or
substantially all of the Collateral in any transaction or series
of related transactions or permit the creation, incurrence,
assumption or existence of any Lien on all or substantially all
of the Collateral in any transaction or series of related
transactions to secure any Obligations other than Obligations
owing to the Secured Parties under the Loan Documents and other
than Debt owing to any other Person, provided that, in the case
of any Lien on all or substantially all of the Collateral to
secure Debt owing to any other Person, (A) such Lien shall be
subordinated to the Liens created under the Loan Documents on
terms acceptable to the Required Lenders and (B) the Required
Lenders shall otherwise permit the creation, incurrence,
assumption or existence of such Lien and, to the extent not
otherwise permitted under Section 5.02(b), of such Debt,
(v) amend this Section 8.01, or (vi) limit the liability of any
Loan Party under any of the Loan Documents and (b) no amendment,
waiver or consent shall, unless in writing and signed by the
Required Lenders and each Lender that has a Commitment under any
Working Capital Facility if affected by such amendment, waiver or
consent, (i) increase the Commitments of such Lender or subject
such Lender to any additional obligations, (ii) reduce the
principal of, or interest on, the Notes held by such Lender or
any fees or other amounts payable hereunder to such Lender,
(iii) postpone any date fixed for any payment or prepayment of
principal of, or interest on, the Notes held by such Lender or
any fees or other amounts payable hereunder to such Lender or
(iv) change the order of application of any prepayment set forth
in Section 2.06 in any manner that materially affects such
Lender; provided further that no amendment, waiver or consent
shall, unless in writing and signed by the Swing Line Bank or
each Issuing Bank, as the case may be, in addition to the Lenders
required above to take such action, affect the rights or
obligations of the Swing Line Bank or of the Issuing Banks, as
the case may be, under this Agreement; and provided further that
no amendment, waiver or consent shall, unless in writing and
signed by the Agent in addition to the Lenders required above to
take such action, affect the rights or duties of the Agent under
this Agreement.
SECTION 8.02. Notices, Etc. All notices and other
communications provided for hereunder shall be in writing
(including telegraphic, telecopy or telex communication) and
mailed, telegraphed, telecopied, telexed or delivered, if to the
Borrowers, addressed both c/o Crompton Corp. at its address at
One Station Place, Metro Center, Stamford, CT 06902, Attention:
Chief Financial Officer and c/o Uniroyal Corp. at its address at
World Headquarters, Benson Road, Middlebury, CT 06749,
Attention: Chief Financial Officer; if to any Initial Lender or
any Initial Issuing Bank, at its Domestic Lending Office
specified opposite its name on Schedule I hereto; if to any other
Lender Party, at its Domestic Lending Office specified in the
Assignment and Acceptance pursuant to which it became a Lender
Party; and if to the Agent, at its address at 399 Park Avenue,
New York, New York 10043, Attention: Robert Kosian; or, as to
the Borrowers or the Agent, at such other address as shall be
designated by such party in a written notice to the other parties
and, as to each other party, at such other address as shall be
designated by such party in a written notice to the Borrowers and
the Agent. All such notices and communications shall (a) when
mailed, be effective three Business Days after the same is
deposited in the mails, (b) when mailed for next day delivery by
a reputable freight company or reputable overnight courier
service, be effective one Business Day thereafter, and (c) when
sent by telegraph, telecopier or telex, be effective when the
same is confirmed by telephone, telecopier confirmation or return
telecopy or telex answerback, respectively, except that notices
and communications to the Agent pursuant to Article II, III or
VII shall not be effective until received by the Agent. Delivery
by telecopier of an executed counterpart of any amendment or
waiver of any provision of this Agreement or the Notes or of any
Exhibit hereto to be executed and delivered hereunder shall be
effective as delivery of a manually executed counterpart thereof.
Delivery of a notice from any Borrower pursuant to Section
5.03(a) shall be deemed, solely with respect to such Section,
notice from all Borrowers.
SECTION 8.03. No Waiver; Remedies. No failure on the part of
any Lender Party or the Agent to exercise, and no delay in
exercising, any right hereunder or under any Note shall operate
as a waiver thereof; nor shall any single or partial exercise of
any such right preclude any other or further exercise thereof or
the exercise of any other right. The remedies herein provided
are cumulative and not exclusive of any remedies provided by law.
SECTION 8.04. Costs and Expenses. (a) The Borrowers jointly
and severally agree to pay on demand (i) all costs and expenses
of the Agent in connection with the preparation, execution,
delivery, administration, modification and amendment of the Loan
Documents (including, without limitation, (A) all due diligence,
collateral review, syndication, transportation, computer,
duplication, appraisal, audit, insurance, consultant, search,
filing and recording fees and expenses and (B) the reasonable
fees and expenses of counsel for the Agent with respect thereto,
with respect to advising the Agent as to its rights and
responsibilities, or the perfection, protection or preservation
of rights or interests, under the Loan Documents, with respect to
negotiations with any Loan Party or with other creditors of any
Loan Party or any of its Subsidiaries arising out of any Default
or any events or circumstances that may give rise to a Default
and with respect to presenting claims in or otherwise
participating in or monitoring any bankruptcy, insolvency or
other similar proceeding involving creditors' rights generally
and any proceeding ancillary thereto) and (ii) all costs and
expenses of the Agent and the Lender Parties in connection with
the enforcement of the Loan Documents, whether in any action,
suit or litigation, any bankruptcy, insolvency or other similar
proceeding affecting creditors' rights generally (including,
without limitation, the reasonable fees and expenses of counsel
for the Agent and each Lender Party with respect thereto).
(b)The Borrowers jointly and severally agree to indemnify and
hold harmless the Agent, each Lender Party and each of their
Affiliates and their officers, directors, employees, agents and
advisors (each, an "Indemnified Party") from and against any and
all claims, damages, losses, liabilities and expenses (including,
without limitation, reasonable fees and expenses of counsel) that
may be incurred by or asserted or awarded against any Indemnified
Party, in each case arising out of or in connection with or by
reason of, or in connection with the preparation for a defense
of, any investigation, litigation or proceeding arising out of,
related to or in connection with (i) the Facilities, the actual
or proposed use of the proceeds of the Advances or the Letters of
Credit, the Loan Documents or any of the transactions
contemplated thereby, including, without limitation, any
acquisition or proposed acquisition (including, without
limitation, the Merger and any of the other transactions
contemplated hereby) by Crompton Corp. or any of its Subsidiaries
or Affiliates of all or any portion of the stock or substantially
all the assets of Uniroyal Corp. or any of its Subsidiaries or
(ii) the actual or alleged presence of Hazardous Materials on any
property of any Loan Party or any of its Subsidiaries or any
Environmental Action relating in any way to any Loan Party or any
of its Subsidiaries, except to the extent such claim, damage,
loss, liability or expense is found in a final, non-appealable
judgment by a court of competent jurisdiction to have resulted
from such Indemnified Party's gross negligence or willful
misconduct. In the case of any investigation, litigation or
other proceeding to which the indemnity in this Section 8.04(b)
applies, such indemnity shall be effective whether or not such
investigation, litigation or proceeding is brought by any Loan
Party, its directors, shareholders or creditors or an Indemnified
Party or any Indemnified Party is otherwise a party thereto and
whether or not the transactions contemplated hereby are
consummated. The Borrowers also jointly and severally agree not
to assert any claim against the Agent, any Lender Party or any of
their Affiliates, or any of their respective officers, directors,
employees, attorneys and agents, on any theory of liability, for
special, indirect, consequential or punitive damages arising out
of or otherwise relating to the Facilities, the actual or
proposed use of the proceeds of the Advances or the Letters of
Credit, the Loan Documents or any of the transactions
contemplated thereby.
(c)If any payment of principal of, or Conversion of, any
Eurodollar Rate Advance is made by any Borrower to or for the
account of a Lender Party other than on the last day of the
Interest Period for such Advance, as a result of a payment or
Conversion pursuant to Section 2.09(b)(i) or 2.10(d),
acceleration of the maturity of the Notes pursuant to
Section 6.01 or for any other reason, or by an Eligible Assignee
to a Lender Party other than on the last day of the Interest
Period for such Advance upon an assignment of rights and
obligations under this Agreement pursuant to Section 8.07 as a
result of a demand by Crompton Corp. pursuant to Section 8.07(a),
such Borrower shall, upon demand by such Lender Party (with a
copy of such demand to the Agent), pay to the Agent for the
account of such Lender Party any amounts required to compensate
such Lender Party for any additional losses, costs or expenses
that it may reasonably incur as a result of such payment,
including, without limitation, any loss (including loss of
anticipated profits), cost or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired
by any Lender Party to fund or maintain such Advance.
(d)If any Loan Party fails to pay when due any costs, expenses or
other amounts payable by it under any Loan Document, including,
without limitation, fees and expenses of counsel and indemnities,
such amount may be paid on behalf of such Loan Party by the Agent
or any Lender Party, in its sole discretion, and will result in
an increase in the amount owing by such Loan Party to the Agent
or such Lender Party.
(e)Without prejudice to the survival of any other agreement of
any Loan Party hereunder or under any other Loan Document, the
agreements and obligations of the Borrowers contained in
Sections 2.10 and 2.12 and this Section 8.04 shall survive the
payment in full of principal, interest and all other amounts
payable hereunder and under any of the other Loan Documents.
SECTION 8.05. Right of Set-off. Upon (a) the occurrence and
during the continuance of any Event of Default and (b) the making
of the request or the granting of the consent specified by
Section 6.01 to authorize the Agent to declare the Notes due and
payable pursuant to the provisions of Section 6.01, each Lender
Party and each of its respective Affiliates is hereby authorized
at any time and from time to time, to the fullest extent
permitted by law, to set off and otherwise apply any and all
deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing
by such Lender Party or such Affiliate to or for the credit or
the account of any Borrower against any and all of the
Obligations of such Borrower now or hereafter existing under this
Agreement and the Note or Notes (if any) held by such Lender
Party, irrespective of whether such Lender Party shall have made
any demand under this Agreement or such Note or Notes and
although such obligations may be unmatured. Each Lender Party
agrees promptly to notify any Borrower after any such set-off and
application; provided, however, that the failure to give such
notice shall not affect the validity of such set-off and
application. The rights of each Lender Party and its respective
Affiliates under this Section 8.05 are in addition to other
rights and remedies (including, without limitation, other rights
of set-off) that such Lender Party and its respective Affiliates
may have.
SECTION 8.06. Binding Effect. This Agreement shall become
effective when it shall have been executed by each Borrower and
the Agent and when the Agent shall have been notified by each
Initial Lender and each Initial Issuing Bank that such Initial
Lender and such Initial Issuing Bank has executed it and
thereafter shall be binding upon and inure to the benefit of each
Borrower, the Agent and each Lender Party and their respective
successors and assigns, except that no Borrower shall have the
right to assign its rights hereunder or any interest herein
without the prior written consent of the Lender Parties.
SECTION 8.07. Assignments and Participations. (a) Each Lender
may (and, so long as no Default shall have occurred and be
continuing, if demanded by Crompton Corp. (following a demand by
such Lender pursuant to Section 2.10 or 2.12 or if such Lender
shall be a Defaulting Lender) assign to one or more Eligible
Assignees all or a portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion
of its Commitment or Commitments, the Advances owing to it and
the Note or Notes held by it); provided, however, that (i) each
such assignment shall be of a uniform, and not a varying,
percentage of all rights and obligations under and in respect of
all of the Facilities, (ii) except in the case of an assignment
to a Person that, immediately prior to such assignment, was a
Lender or an assignment of all of a Lender's rights and
obligations under this Agreement, the amount of the Commitment of
the assigning Lender being assigned pursuant to each such
assignment (determined as of the date of the Assignment and
Acceptance with respect to such assignment) shall in no event be
less than $20,000,000 or, if the aggregate amount of the
Commitment of such assigning Lender is less than 20,000,000, all
of such Lender's Commitment, (iii) each such assignment shall be
to an Eligible Assignee, (iv) each such assignment made as a
result of a demand by Crompton Corp. pursuant to this
Section 8.07(a) shall be arranged by Crompton Corp. after
consultation with the Administrative Agent and shall be either an
assignment of all of the rights and obligations of the assigning
Lender under this Agreement and the other Loan Documents or an
assignment of a portion of such rights and obligations made
concurrently with another such assignment or other such
assignments that together cover all of the rights and obligations
of the assigning Lender under this Agreement and the other Loan
Documents, (v) no Lender shall be obligated to make any such
assignment as a result of a demand by Crompton Corp. pursuant to
this Section 8.07(a) unless and until such Lender shall have
received one or more payments from either the applicable
Borrowers or one or more Eligible Assignees in an aggregate
amount at least equal to the aggregate outstanding principal
amount of the Advances owing to such Lender, together with
accrued interest thereon to the date of payment of such principal
amount and all other amounts payable to such Lender under this
Agreement, (vi) no such assignments shall be permitted without
the consent of the Agent until the Agent shall have notified the
Lender Parties that syndication of the Commitments hereunder has
been completed, and (vii) the parties to each such assignment
shall execute and deliver to the Agent, for its acceptance and
recording in the Register, an Assignment and Acceptance, together
with any Note or Notes subject to such assignment and a
processing and recordation fee of $3,500.
(b)Upon such execution, delivery, acceptance and recording, from
and after the effective date specified in such Assignment and
Acceptance, (x) the assignee thereunder shall be a party hereto
and, to the extent that rights and obligations hereunder have
been assigned to it pursuant to such Assignment and Acceptance,
have the rights and obligations of a Lender or Issuing Bank, as
the case may be, hereunder and (y) the Lender or Issuing Bank
assignor thereunder shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and be released
from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion
of an assigning Lender's or Issuing Bank's rights and obligations
under this Agreement, such Lender or Issuing Bank shall cease to
be a party hereto).
(c)By executing and delivering an Assignment and Acceptance, the
Lender Party assignor thereunder and the assignee thereunder
confirm to and agree with each other and the other parties hereto
as follows: (i) other than as provided in such Assignment and
Acceptance, such assigning Lender Party makes no representation
or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in
connection with this Agreement or any other Loan Document or the
execution, legality, validity, enforceability, genuineness,
sufficiency or value of, or the perfection or priority of any
lien or security interest created or purported to be created
under or in connection with, this Agreement or any other Loan
Document or any other instrument or document furnished pursuant
hereto or thereto; (ii) such assigning Lender Party makes no
representation or warranty and assumes no responsibility with
respect to the financial condition of any Borrower or any other
Loan Party or the performance or observance by any Loan Party of
any of its obligations under any Loan Document or any other
instrument or document furnished pursuant thereto; (iii) such
assignee confirms that it has received a copy of this Agreement,
together with copies of the financial statements referred to in
Section 4.01 and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision
to enter into such Assignment and Acceptance; (iv) such assignee
will, independently and without reliance upon the Agent, such
assigning Lender Party or any other Lender Party and based on
such documents and information as it shall deem appropriate at
the time, continue to make its own credit decisions in taking or
not taking action under this Agreement; (v) such assignee
confirms that it is an Eligible Assignee; (vi) such assignee
appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers and discretion under the
Loan Documents as are delegated to the Agent by the terms
thereof, together with such powers and discretion as are
reasonably incidental thereto; and (vii) such assignee agrees
that it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement are required to
be performed by it as a Lender or Issuing Bank, as the case may
be.
(d)The Agent shall maintain at its address referred to in
Section 8.02 a copy of each Assignment and Acceptance delivered
to and accepted by it and a register for the recordation of the
names and addresses of the Lender Parties and the Commitment
under each Facility of, and principal amount of the Advances
owing under each Facility to, each Lender Party from time to time
(the "Register"). The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error,
and the Borrowers, the Agent and the Lender Parties shall treat
each Person whose name is recorded in the Register as a Lender
Party hereunder for all purposes of this Agreement. The Register
shall be available for inspection by any Borrower or any Lender
Party at any reasonable time and from time to time upon
reasonable prior notice.
(e)Upon its receipt of an Assignment and Acceptance executed by
an assigning Lender Party and an assignee, together with any Note
or Notes subject to such assignment, the Agent shall, if such
Assignment and Acceptance has been completed and is in
substantially the form of Exhibit C hereto, (i) accept such
Assignment and Acceptance, (ii) record the information contained
therein in the Register and (iii) give prompt notice thereof to
the Borrowers. In the case of any assignment by a Lender, within
five Business Days after its receipt of such notice, each
Borrower, at its own expense, shall execute and deliver to the
Agent in exchange for the surrendered Note or Notes a new Note to
the order of such Eligible Assignee in an amount equal to the
Commitment assumed by it under a Facility pursuant to such
Assignment and Acceptance and, if the assigning Lender has
retained a Commitment hereunder under such Facility, a new Note
to the order of the assigning Lender in an amount equal to the
Commitment retained by it hereunder. Such new Note or Notes
shall be in an aggregate principal amount equal to the aggregate
principal amount of such surrendered Note or Notes, shall be
dated the effective date of such Assignment and Acceptance and
shall otherwise be in substantially the form of Exhibit A-1, A-2
or A-3 hereto, as the case may be.
f)Each Issuing Bank may assign to one or more Eligible Assignees
all or a portion of its rights and obligations under the undrawn
portion of its Letter of Credit Commitment at any time; provided,
however, that (i) except in the case of an assignment to a Person
that immediately prior to such assignment was an Issuing Bank or
an assignment of all of an Issuing Bank's rights and obligations
under this Agreement, the amount of the Letter of Credit
Commitment of the assigning Issuing Bank being assigned pursuant
to each such assignment (determined as of the date of the
Assignment and Acceptance with respect to such assignment) shall
in no event be less than $10,000,000 and shall be in an integral
multiple of $1,000,000 in excess thereof, (ii) each such
assignment shall be to an Eligible Assignee and (iii) the parties
to each such assignment shall execute and deliver to the Agent,
for its acceptance and recording in the Register, an Assignment
and Acceptance, together with a processing and recordation fee of
$3,500.
(g)Each Lender Party may sell participations to one or more
Persons (other than any Loan Party or any of its Affiliates) in
or to all or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of its
Commitments, the Advances owing to it and the Note or Notes (if
any) held by it); provided, however, that (i) such Lender Party's
obligations under this Agreement (including, without limitation,
its Commitments) shall remain unchanged, (ii) such Lender Party
shall remain solely responsible to the other parties hereto for
the performance of such obligations, (iii) such Lender Party
shall remain the holder of any such Note for all purposes of this
Agreement, (iv) the Borrowers, the Agent and the other Lender
Parties shall continue to deal solely and directly with such
Lender Party in connection with such Lender Party's rights and
obligations under this Agreement and (v) no participant under any
such participation shall have any right to approve any amendment
or waiver of any provision of any Loan Document, or any consent
to any departure by any Loan Party therefrom, except to the
extent that such amendment, waiver or consent would reduce the
principal of, or interest on, the Notes or any fees or other
amounts payable hereunder, in each case to the extent subject to
such participation, postpone any date fixed for any payment of
principal of, or interest on, the Notes or any fees or other
amounts payable hereunder, in each case to the extent subject to
such participation, or release all or substantially all of the
Collateral.
(h)Any Lender Party may, in connection with any assignment or
participation or proposed assignment or participation pursuant to
this Section 8.07, disclose to the assignee or participant or
proposed assignee or participant, any information relating to the
Borrowers furnished to such Lender Party by or on behalf of the
Borrowers; provided, however, that, prior to any such disclosure,
the assignee or participant or proposed assignee or participant
shall agree to preserve the confidentiality of any Confidential
Information received by it from such Lender Party.
(i)Notwithstanding any other provision set forth in this
Agreement, any Lender Party may at any time create a security
interest in all or any portion of its rights under this Agreement
(including, without limitation, the Advances owing to it and the
Note or Notes held by it) in favor of any Federal Reserve Bank in
accordance with Regulation A of the Board of Governors of the
Federal Reserve System.
SECTION 8.08. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together
shall constitute one and the same agreement. Delivery of an
executed counterpart of a signature page to this Agreement by
telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 8.09. No Liability of the Issuing Banks. Each Borrower
assumes all risks of the acts or omissions of any beneficiary or
transferee of any Letter of Credit with respect to its use of
such Letter of Credit. Neither any Issuing Bank nor any of its
officers or directors shall be liable or responsible for:
(a) the use that may be made of any Letter of Credit or any acts
or omissions of any beneficiary or transferee in connection
therewith; (b) the validity, sufficiency or genuineness of
documents, or of any endorsement thereon, even if such documents
should prove to be in any or all respects invalid, insufficient,
fraudulent or forged; (c) payment by such Issuing Bank against
presentation of documents that do not comply with the terms of a
Letter of Credit, including failure of any documents to bear any
reference or adequate reference to the Letter of Credit; or
(d) any other circumstances whatsoever in making or failing to
make payment under any Letter of Credit, except that the relevant
Borrower shall have a claim against such Issuing Bank, and such
Issuing Bank shall be liable to such Borrower, to the extent of
any direct, but not consequential, damages suffered by such
Borrower that such Borrower proves were caused by (i) such
Issuing Bank's willful misconduct or gross negligence in
determining whether documents presented under any Letter of
Credit comply with the terms of the Letter of Credit or (ii) such
Issuing Bank's willful failure to make lawful payment under a
Letter of Credit after the presentation to it of a draft and
certificates strictly complying with the terms and conditions of
the Letter of Credit. In furtherance and not in limitation of
the foregoing, such Issuing Bank may accept documents that appear
on their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the
contrary.
SECTION 8.10. Release of Collateral. As soon as practicable
after the Collateral Release Date, the Agent shall, at the
expense of the Borrowers, execute and deliver to Crompton Corp.
such documents as Crompton Corp. shall reasonably request to
evidence the release of the Collateral from the liens and
security interest created under the Collateral Documents.
SECTION 8.11. Confidentiality. Neither the Agent nor any Lender
Party shall disclose any Confidential Information to any Person
without the consent of Crompton Corp., other than (a) to the
Agent's or such Lender Party's Affiliates and their officers,
directors, partners, employees, agents and advisors and to actual
or prospective Eligible Assignees and participants, and then only
on a confidential basis, (b) as required by any law, rule or
regulation or judicial process, provided that, other than with
respect to Confidential Information otherwise permitted to be
disclosed pursuant to clause (d) below, the Agent or such Lender
Party shall, unless prohibited by applicable law or regulation or
court order, give notice to Crompton Corp. of any such
requirement to disclose such Confidential Information, and, if
practicable, such notice shall be given prior to such disclosure,
provided, however, that the failure to give such notice shall not
prohibit such disclosure, (c) to any rating agency when required
by it, provided that, prior to any such disclosure, such rating
agency shall undertake to preserve the confidentiality of any
Confidential Information relating to the Borrowers received by it
from such Lender Party and (d) as requested or required by any
state, federal or foreign authority or examiner or the National
Association of Insurance Commissioners or any state or federal
authority regulating such Lender Party.
SECTION 8.12. Jurisdiction, Etc. (a) Each of the parties
hereto hereby irrevocably and unconditionally submits, for itself
and its property, to the nonexclusive jurisdiction of any New
York State court or federal court of the United States of America
sitting in New York City, and any appellate court from any
thereof, in any action or proceeding arising out of or relating
to this Agreement or any of the other Loan Documents to which it
is a party, or for recognition or enforcement of any judgment,
and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such
action or proceeding may be heard and determined in any such New
York State court or, to the extent permitted by law, in such
federal court. Each of the parties hereto agrees that a final
judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement
shall affect any right that any party may otherwise have to bring
any action or proceeding relating to this Agreement or any of the
other Loan Documents in the courts of any jurisdiction.
(b)Each of the parties hereto irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do
so, any objection that it may now or hereafter have to the laying
of venue of any suit, action or proceeding arising out of or
relating to this Agreement or any of the other Loan Documents to
which it is a party in any New York State or federal court. Each
of the parties hereto hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to
the maintenance of such action or proceeding in any such court.
SECTION 8.13. Governing Law. This Agreement and the Notes shall
be governed by, and construed in accordance with, the laws of the
State of New York.
<PAGE>
SECTION 8.14. Waiver of Jury Trial. Each of the Borrowers, the
Agent and the Lender Parties irrevocably waives all right to
trial by jury in any action, proceeding or counterclaim (whether
based on contract, tort or otherwise) arising out of or relating
to any of the Loan Documents, the Advances or the actions of the
Agent or any Lender Party in the negotiation, administration,
performance or enforcement thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
CROMPTON & KNOWLES
CORPORATION
By /s/Peter Barna/Charles J. Marsden
Title:
CROMPTON & KNOWLES COLORS
INCORPORATED
By /s/Peter Barna
Title:
DAVIS-STANDARD CORPORATION
By /s/Peter Barna
Title:
INGREDIENT TECHNOLOGY
CORPORATION
By /s/Peter Barna
Title:
UNIROYAL CHEMICAL COMPANY,
INC.
By /s/Frank Manganella
Title: Treasurer
CITICORP SECURITIES, INC.,
as Arranger
By /s/Robin F. Lenna
Title:
CITICORP USA, INC., as Agent
By /s/Keith R. Karoko
Title:
THE CHASE MANHATTAN BANK,
as Managing Agent
By /s/Robert Sacks
Title:
Initial Lenders
CITICORP USA, INC.
By /s/Keith R. Karoko
Title:
THE CHASE MANHATTAN BANK
By /s/Robert Sacks
Title:
ABN AMRO BANK, N.V., NEW YORK
BRANCH
By /s/Nancy W. Lanzoni
Title: Nancy W. Lanzoni, Group VP
By /s/David W. Stack
Title: David W. Stack, Assistant VP
BANCA COMMERCIALE ITALIANA -
NEW YORK BRANCH
By /s/Charles Dougherty
Title: Vice President
By /s/Brian Carlson
Title: Assistant Vice President
BANK OF AMERICA ILLINOIS
By /s/Wendy L. Loring
Title: Wendy L. Loring, Vice President
THE BANK OF NEW YORK
By /s/David P. Judge
Title: Vice President
BANK OF BOSTON CONNECTICUT
By /s/Joann Keller
Title: Senior Vice President
BHF - BANK AKTIENGESELLSCHAFT
By /s/Linda Pace
Title: AVP
CIBC, INC.
By /s/Judy Domowski
Title:
CORESTATES BANK, N.A.
By /s/Brian M. Haley
Title: Vice President
CREDIT LYONNAIS NEW YORK BRANCH
By /s/John Oberle
Title: Vice President
FIRST UNION NATIONAL BANK
By /s/Robert Waters
Title: Vice President
FLEET NATIONAL BANK
By /s/Robert C. Rubino
Title: Vice President
SOCIETE GENERALE
By /s/Salvatore Galatiota
Title: First Vice President
TORONTO DOMINION (NEW YORK), INC.
By /s/Jorge Garcia
Title: Vice President
Initial Issuing Banks
CITIBANK, N.A.
By /s/Robin F. Lenna
Title:
BANK OF BOSTON CONNECTICUT
By /s/Joanne Keller
Title: Senior Vice President
SCHEDULE I
COMMITMENTS AND APPLICABLE LENDING OFFICES
Name of Letter
Initial Working Working Working of Credit Domestic Eurodollar
Lender/ Capital A Capital B-1 Capital B-2 Committment Lending/ Lending
Initial Committment Committment Committment Facility Issuing Office
Issuing Office
Bank
ABN AMRO $20,000,000 $10,000,000 $10,000,000 500 Park Ave 500 Park Ave
Bank N.V., NY, NY 10022 NY, NY 10022
New York Attn:M.Jeter Attn:M.Jeter
Branch TEL212446-4224 TEL212446-4224
FAX212832-7468 FAX212832-7468
Banca $12,500,000 $6,250,000 $6,250,000 One William St One William St
Commerciale NY,NY 10004 NY, NY 10004
Italiana Attn:B.Carlson Attn:B.Carlson
New York TEL212607-3886 TEL212607-3886
Branch FAX212809-2124 FAX212809-2124
Bankof $20,000,000 $10,000,000$10,000,000 200W.JacksonBlvd 200W.JacksonBlvd
America Chicago,IL 60697 Chicago, IL 60697
Illinois Attn:R. DiMatteo Attn:R. DiMatteo
TEL:312828-1988 TEL:312828-1988
FAX:312974-9626 FAX:312974-9626
Bank of $20,000,000 $10,000,000 $10,000,000 $25,000,000 (A)
Boston $10,000,000 (B-1)
Connecticut 31 Pratt Street 31 Pratt Street
Hartford, CT 06103 Hartford, CT 06103
Attn:J. Edwards Attn:J. Edwards
TEL:203973-1940 TEL:203973-1940
FAX:203967-8169 FAX:203967-8169
Bank of $20,000,000 $10,000,000 $10,000,000 1 Wall St 1 Wall St
New York 22nd Floor 22nd Floor
NY, NY 10286 NY, NY 10286
Attn:D. Judge Attn:D. Judge
TEL:212635-6861 TEL:212635-6861
FAX:212635-6999 FAX:212635-6999
BHF-Bank $20,000,000 $10,000,000 $10,000,000590 Madison Ave590 Madison Ave
Aktiengesellschaft NY, NY 10022 NY, NY 10022
Attn:Linda Pace Attn:Linda Pace
TEL:212756-5915 TEL:212756-5915
FAX:212756-5536 FAX:212756-5536
CIBC, Inc.$20,000,000 $10,000,000$10,000,000
2727PacesFerryRd 2727PacesFerryRoad
Suite 1200 Suite 1200
Atlanta, GA 30339 Atlanta, GA 30339
Attn:S. Hogan Attn:S. Hogan
TEL:(770) 319-4820 TEL:(770) 319-4820
FAX:770319-4950 FAX:770319-4950
CoreStates $20,000,000 $10,000,000 $10,000,000
1345Chestnut St 1345Chestnut St
Bank, N.A. PO Box 7618 PO Box 7618
Philadelphia, PA 19101 Philadelphia, PA 19101
Attn: Brian M. Haley Attn: Brian M. Haley
TEL: (215) 973-2372 TEL: (215) 973-2372
FAX: (215) 973-7820 FAX: (215) 973-7820
Credit $20,000,000 $10,000,000 $10,000,000 1301 Ave of the 1301 Ave of the
Lyonnais Americas Americas
New York New York, NY 10019 New York, NY 10019
Branch Attn:John C. Oberle Attn: John C. Oberle
TEL: (212) 261-7344 TEL: (212) 261-7344
FAX: (212) 459-3179 FAX: (212) 459-3179
First Union $20,000,000 $10,000,000 $10,000,000 550 Broad St, 550 Broad St,
National Bank NJ1535 NJ1535
Newark, NJ 07102 Newark, NJ 07102
Attn: Mary Tenore Attn: Mary Tenore
TEL:201565-3607 TEL:201565-3607
FAX:(201) 565-3978 FAX:201 565-3978
Fleet $20,000,000 $10,000,000 $10,000,000 1 Landmark Sq 1 Landmark Sq
National 12th Floor 12th Floor
Bank Stamford, CT 06904 Stamford, CT 06904
Attn:Jenny Rockwood Attn:Jenny Rockwood
TEL:(203) 358-6146 TEL: (203) 358-6146
FAX: (203) 358-6111 FAX: (203) 358-6111
Societe $12,500,000 $6,250,000 $6,250,000 1221 Ave of the 1221 Ave of the
Generle Americas Americas
NY, NY 10020 NY, NY 10020
Attn:Maggie O'Donnell Attn:Maggie O'Donnell
TEL:(212) 278-6853 TEL: (212) 278-6853
FAX: (212) 278-7490 FAX: (212) 278-7490
The Chase $25,000,000 $12,500,000 $12,500,000 270 Park Ave 270 Park Ave
Manhattan NY, NY 10017 NY, NY 10017
Bank Attn:R. T. Sacks Attn:R.T. Sacks
TEL:(212) 552-2331 TEL:(212) 552-2331
FAX:(212) 552-7175 FAX:(212) 552-7175
Toronto $20,000,000 $10,000,000 $10,000,000 909 Fanin, 909 Fanin
,Dominion Suite 1700 Suite 1700
(New York), Inc. Houston, TX 77010 Houston, TX 77010
Attn:Jorge Garcia Attn:Jorge Garcia
TEL:(713) 653-8242 TEL:(713) 653-8242
FAX:(713) 951-9921 FAX:(713) 951-9921
Citibank, N.A. $25,000,000(A) 399 Park Avenue
$10,000,000(B-1) New York, NY 10043
Attn: Rob Johnson
TEL: (212) 559-3974
FAX: (212) 793-1290
Citicorp USA, $30,000,000 $15,000,000 $15,000,000
Inc. 399 Park Ave 399 Park Ave
NY, NY 10043 NY,NY 10043
Attn: R. Johnson Attn: R. Johnson
TEL:212559-3974 TEL:212 559-3974
FAX:212793-1290 FAX:212793-1290
Total
Commitments: $300,000,000 $150,000,000 $150,000,000 $50,000,000(A)
$20,000,000(B-1)
SCHEDULE II
DELAWARE LOAN PARTIES
CK Holding Corporation
Crompton & Knowles Overseas Corporation
Davis-Standard Corporation
Crompton & Knowles Colors Incorporated
Ingredient Technology Corporation
Uniroyal Chemical Corporation
Uniroyal Chemical Brazil Holding, Inc.
Lokar Enterprises, Inc.
Uniroyal Chemical Export Limited
SCHEDULE III
AUTHORIZATIONS, APPROVALS, ACTIONS, NOTICES AND FILINGS
Schedule 4.01(d) to the Credit
Agreement is hereby incorporated
by reference.
SCHEDULE 2.03(e)
EXISTING LETTERS OF CREDIT
Beneficiary Amount ($000s)
National Union Fire Insurance $2,411
National Union Fire Insurance 964
Premier/Bayou Sorrel Trust 229
Nuclear Regulatory Commission 150
Bankers Trust/O.P.I.C. 676
Kredietbank/Chemical Forwarders 150
Kredietbank/Chemical Forwarders 175
Fregata S.A. (Customs Office) 100
L. Marquez 10
SCHEDULE 3.01(d)
SURVIVING DEBT
( $ OOO'S ) *
OUT- UN-
STAND- USED
ING COM-
TOTAL BORROW- MIT-
I. LOAN FACILITIES DESCRIPTION LINE(S) INGS MENTS
CROMPTON & KNOWLES CORPORATION
INDUSTRIAL REV. BONDS INDUSTRIAL REVENUE BONDS 4,000 4,000 0
BANK OF NEW YORK UNSECURED SHORT-TERM DEBT 10,000 0 10,000
NEW ENGLAND LIFE INS.CO. LIFE INSURANCE POLICY LOAN 6,986 6,986 0
CROMPTON & KNOWLES COLORS, INC.,
DAVIS STANDARD CORP. &
INGREDIENT TECHNOLOGY CORP.
CHASE MANHATTAN BANK UNSECURED SHORT-TERM DEBT 5,000 0 5,000
CROMPTON & KNOWLES EUROPE S.A.
CREDIT LYONNAIS NOTES PAYABLE & OVERDRAFT 19,084 3,858 15,226
BANK BRUSSELS LAMBERT NOTES PAYABLE & OVERDRAFT 2,544 0 2,544
GENERALE DE BANQUE NOTES PAYABLE & OVERDRAFT 954 0 954
ER-WA-PA DAVIS STANDARD GmbH
COMMERZBANK NOTES PAYABLE & OVERDRAFT 4,902 0 4,902
WESTDEUTSCHE LANDESBANK NOTES PAYABLE & OVERDRAFT 4,902 0 4,902
UNIROYAL CHEMICAL COMPANY, INC. (USA)
VARIOUS BONDHOLDERS 9% SR. SECURED NOTES 252,800 252,800 0
CREDIT SUISSE A/R SECURED LOAN FACILITY 15,000 5,306 9,694
UNIROYAL CHIMICA S.p.A. (ITALY)
BANCO DI NAPOLI OVERDRAFT & CURRENCY LOANS 2,610 670 1,940
MONTE DEI PASCHI DI SIENA " 4,890 1,599 3,291
BANCA COMMERCIALE ITALIANA " 3,260 0 3,260
BANCA DI ROMA " 3,260 471 2,789
CREDITO ROMAGNOLO " 1,304 0 1,304
ISTITUIO BANCARIO
S. PAOLO DI TORINO " 4,623 256 4,367
BANCA NAZIONALE DEL LAVORO " 3,384 924 2,460
BANCA ITALO ROMENA " 1,630 0 1,630
CREDITO ITALIANO " 196 0 196
BANCA NAZIONALE DEL LAVORO LONG-TERM DEBT 835 85 0
BANCA NAZIONALE DEL LAVORO " 1,089 239 0
BANCA NAZIONALE DEL LAVORO " 730 561 0
BANCA NAZIONALE DEL LAVORO " 126 126 0
BANCA NAZIONALE DEL LAVORO " 3,651 1,956 0
CITIBANK " 47,100 29,666 0
CITIBANK - STANDBY " 12,560 5,216 7,344
UNIROYAL CHEMICAL, LIMITED (U.K.)
NATIONAL WESTMINSTER OVERDRAFT FACILITY 775 500 275
UNIROYAL CHEMICAL, LTD. (CANADA)
ROYAL BANK OF CANADA REVOLVER 11,100 0 11,100
PREMIER CHEMICAL COMPANY, LTD. (TAIWAN)
ROYAL BANK OF CANADA MULTI-PURPOSE 2,000 543 1,457
HONG KONG BANK " 545 0 545
UNIROYAL CHEMICAL PTY. LTD. (AUSTRALIA)
NATIONAL AUSTRALIA BANK OVERDRAFT 789 0 789
HANNAFORD SEEDMASTER SERVICES
PTY. LTD (AUSTRALIA)
WESTPAC OVERDRAFT 1,066 0 1,066
" " EQUIPMENT FINANCE 395 0 395
" " REMITTANCE L/C 8 0 8
" " BANKERS' UNDERTAKING 8 0 8
" " FORWARD EXCHANGE CONTRACT 494 42 452
" " TAPE NEGOTIATION AUTHORIT 40 0 40
UNIROYAL CHEMICAL COMPANY, LTD. (BAHAMAS)
BANKERS TRUST CO. OPIC GUARANTEED LOAN 10,800 1,906 0
UNIROYAL QUIMICA S.A. (BRAZIL)
ITAU SHORT-TERM DEBT 200 0 200
UNIROYAL CHEMICAL EXPORT, LTD.
CREDIT SUISSE A/R SECURED LOAN FACILITY 15,000 0 15,000
(CO-BORROWER WITH UCCI)
(1) included in Uniroyal Chemical Co., Inc. amount
UNIROYAL CHEMICAL B.V.
ABN-AMRO UNSECURED OVERDRAFT FACIL 1,500 0 1,500
II. LETTERS OF CREDIT AMOUNT OF L/C
CROMPTON & KNOWLES CORPORATION
PENNSYLVANIA DEPT. OF EPA 6,000
FIRST UNION BANK, AS TRUSTEE 4,123
NEW JERSEY DEPT. OF EPA 3,558
PENNSYLVANIA DEPT. OF EPA 3,772
ENVIRONMENTAL PROTECTION AGENCY 196
CONTINENTAL CASUALTY COMPANY 3,471
INSURANCE CO. OF NORTH AMERICA 130
INSURANCE CO. OF NORTH AMERICA 100
HARTFORD INSURANCE COMPANY 20
BANCO NATIONAL DE MEXICO S.A. 35
CHINA NATIONAL OVERSEAS TRADING 358
INDIAN ALUMINUM COMPANY, LTD 471
WIHURI OY WIPAK 455
HUBEI JIANGYU PLASTICS INDUSTRY DEV. CO., LTD. 228
SUN A ENTERPRISE CO., LTD 280
PKL - VARPACKUNGSSYTEME GmbH 4,438
THE PAPER PRODUCTS, LTD 20
DAELIM ENGINEERING CO., LTD 9
BARCLAY'S BANK, LTD 27
AT & T NETWORK SYSTEMS IRELAND LTD 311
J.K. INDUSTRIES, LTD. 18
KLERK'S PLASTICS RECYCLING N.V. 111
BANK HAPOALIM B.M. 27
DALIAN VASTONE COMMUNICATION CABLE CORP. 37
GIZA CABLE TELEPHONE CO. 32
ANZ GRINDLAYS BANK PLC 37
DALIAN TIENCHENG PACKING MATERIAL 208
RATHI DYE CHEM PVT. LTD 409
DIVIYA CHEMICALS LTD 211
UNIROYAL CHEMICAL COMPANY, INC. (USA) AMOUNT OF L/C
NATIONAL UNION FIRE INS. 2,411
NATIONAL UNION FIRE INS. 964
PREMIER/BAYOU SORREL TRUST 229
NUCLEAR REGULATORY COMMISSION 150
BANKERS TRUST/O.P.I.C. 676
KREDIETBANK/CHEMICAL FORWARDERS 150
KREDIETBANK/CHEMICAL FORWARDERS 175
FREGATA S.A. (CUSTOMS OFFICE) 100
L. MARQUEZ 10
PREMIER CHEMICAL COMPANY LTD. (TAIWAN)
ROYAL BANK OF CANADA USANCE 381
UNIROYAL QUIMICA, S.A. (BRAZIL)
BANCO ITAU S/A 61
BANCO DE BOSTON 46
III LETTERS OF GUARANTY AMOUNT OF GUARANTY
CROMPTON & KNOWLES CORPORATION
CHASE MANHATTAN BANK UNSECURED S-T SUB LOANS 5,000
CROMPTON & KNOWLES COLORS, INC.,
DAVIS STANDARD CORP. &
INGREDIENT TECHNOLOGY CORP.
CHASE MANHATTAN BANK L/C'S ISSUED FOR CROMPTON & KNOWLES 10,891
UNIROYAL CHEMICAL COMPANY, INC. (USA)
OVERSEAS PRIVATE INVESTMENT CBAHAMAS LOAN 10,800
ICI (RUBICON/RCRA) LA. EPA OBLIGATIONS 2,780
CITIBANK UNIKOR LOCAL LINES OF CREDIT 1,800
SIAM COMMERCIAL BANK THAILAND J.V. - OVERDRAFT & SHORT TERM LOAN 490
SIAM COMMERCIAL BANK THAILAND J.V. - OVERDRAFT 98
SIAM COMMERCIAL BANK THAILAND J.V. - SHORT-TERM LOAN 588
SIAM COMMERCIAL BANK THAILAND J.V. - L/C & TRUST RECEIPT 392
SIAM COMMERCIAL BANK THAILAND J.V. - OFFSHORE LOAN 2,940
SIAM COMMERCIAL BANK THAILAND J.V. - LEGAL GUARANTY 98
CREDIT SUISSE EUROPEAN RECEIVABLES 15,000
UNIROYAL CHIMICA S.p.A. (ITALY)
BANCA NAZIONALE DEL LAVORO METAN GAS USAGE 59
BANCA NAZIONALE DEL LAVORO CUSTOM DUTY VAT - ANTWERP 46
ISTITUTO BANCARIO
S. PAOLO DI TORINO CUSTOM DUTY VAT - ROME 98
" CUSTOM DUTY VAT - APRILIA 196
" WASTE DISPOSAL (LOCAL GOVERNMEN 130
" GOVERNMENT RAILWAYS 6
BANCO DI NAPOLI TELEX EXPENSES COVERAGE IN FAVO 2
POST & TELECOMMUNICATIONS IND.
UNIROYAL CHEMICAL, LTD. (U.K.)
MINISTRY OF AGRICULTURE - EGYPT 4
PISCO ESTABLISHMENT 137
PISCO ESTABLISHMENT 43
PISCO ESTABLISHMENT 35
H.M. CUSTOMS & EXCISE 465
* MOST FOREIGN SUBSIDIARY LINES ARE IN LOCAL CURRENCY, AND
FOR PURPOSES OF THIS EXHIBIT HAVE BEEN CONVERTED TO U.S. $
AT THE EXCHANGE RATES IN EFFECT ON 6/30/96.
SCHEDULE 3.01(f)
DISCLOSED LITIGATION
None, except as disclosed in the (i) Annual Report on
Form 10K of Crompton & Knowles Corporation for the fiscal year
ended December 30, 1995, and the Quarterly Reports on Form 10Q
of such company for the quarters ended March 30, 1996 and
June 29, 1996, (ii) Annual Report on Form 10K of Uniroyal
Chemical Corporation and Uniroyal Chemical Company, Inc. for
the fiscal year ended October 1, 1995, and the Quarterly
Reports on Form 10Q of the same companies for the quarters
ended December 31, 1995, March 31, 1996, and June 30, 1996,
(iii) the report of Beveridge and Diamond, P.C. dated March 9,
1995, (iv) any report issued pursuant to Section 3.01(k)(xv) of
this Credit Agreement and (v) Schedule 4.01(o) to this Credit
Agreement.
SCHEDULE 3.01(K)(xx)
LOCAL COUNSEL
FIRMSTATE
BASS, BERRY & SIMS TENNESSEE
GERALD & BRAND, LPPC MISSISSIPPI
HAYNES AND BOONE, L.L.P. TEXAS
JONES, DAY, REAVIS & POGUE ILLINOIS
OHIO
KEAN, MILLER, HAWTHORNE, D'ARMOND
MCCOWAN & JARMAN LOUISIANA
LINDQUIST & VENNUM MINNESOTA
THE MCCALL FIRM NORTH CAROLINA
SAIBER SCHLESINGER SATZ & GOLDSTEIN NEW JERSEY
SCHRECK, JONES, BERHARD, WOLOSON & GODFREY NEVADA
SHEARMAN & STERLING CALIFORNIA
SUTHERLAND, ASBILL & BRENNAN GEORGIA
TYLER, COOPER & ALCORN CONNECTICUT
Schedule 4.01(b)
1. Name/Place of Incorporation
2. Number of Shares/Class Authorized
3. Shares of Issued and Outstanding Capital Stock
4. Percentage of Securities Owned by its Immediate Parent
1. Uniroyal Chemical Corporation/Delaware
2. 205,000,000 shares of Common Stock
3. 24,308,403
4. 0%
1. 50,000,000 shares of Preferred Stock authorized
2. (a) 12,000 shares of Series B Preferred Stock
(b) 29,721 shares of Series A Cumulative Redeemable
Preferred Stock
(c) 2,050,000 shares of Series C Junior Participating
Preferred Stock
3. (a) 12,000
(b) 29,721
(c) 0
4. (a) 0%
(b) 0%
(c) 0%
Purchase Rights - 718,216
Warrants - 111,930
Options - 1,821,798
Domestic Subsidiaries
1. Uniroyal Chemical Company, Inc./New Jersey(A)
2. 2,500 shares of Common Stock
3. 100 shares of Common Stock
4. 100%
1. Uniroyal Chemical Leasing Company, Inc./Delaware(B)
2. 1,000 shares of Common Stock
3. 100 shares of Common Stock
4. 100%
1. Naugatuck Treatment Company/Connecticut(B)
2. 100 shares of Common Stock
3. 100 shares of Common Stock
4. 100%
1. Interbel Trading, Inc./Florida
2. 50 shares of Common Stock
3. 50 shares of Common Stock
4. 100%
1. Gustafson, Inc./Minnesota (B)
2. 150,000 shares of Common Stock
3. 116,310 shares of Common Stock
4. 100%
1. Uniroyal Chemical Brazil Holding, Inc./Delaware(B)
2. 1,000 shares of Common Stock
3. 100 shares of Common Stock
4. 100%
1. Uniroyal Chemical Brazil Holding, Inc./Delaware(B)
2. 1,000 shares of Preferred Stock
3. -0-
4. 0%
1. Uniroyal Chemical International Company/Texas(C)
2. 1,000 shares of Common Stock
3. 150 shares of Common Stock
4. 100%
1. Uniroyal Chemical International Company/Texas(C)
2. 1,000 shares of Preferred Stock
3. -0-
4. 0%
1. Gustafson International Company/Texas(B)
2. 100 shares of Common Stock
3. 100 shares of Common Stock
4. 100%
1. Uniroyal Chemical Asia, Ltd./Delaware(B)
2. 3,000 of Common Stock
3. 100 shares of Common Stock
4. 100%
1. Lokar Enterprises, Inc./ Delaware(A)
2. 3,000 shares of Common Stock
3. 100 shares of Common Stock
4. 100%
1. Trace Chemicals, Inc./Nevada (B)
2. 1,000 shares of Common Stock
3. 80 shares of Common Stock
4. 100%
1. Uniroyal Chemical Export Limited/Delaware(B)
2. 1,000 shares of Common Stock
3. 100 shares of Common Stock
4. 100%
Foreign Subsidiaries
1. Novaquim Holdings S.A. de C.V./Mexico(B)
2. 50,000 shares of Series B Capital Stock
3. 50,000 shares of Series B Capital Stock
4. 100%
1. Novaquim S.A. de C.V./Mexico(D)
2. 5,150,750 shares of Series B Capital Stock
3. 5,150,750 shares of Series B Capital Stock
4. 100%
1. Novaquim S.A. de C.V./Mexico(D)
2. 683,255,080 shares of Sub-S Series B Capital Stock
3. 683,255,080 shares of Sub-S Series B Capital Stock
4. 100%
1. Unicorb Limited/England(B)
2. 636,945 shares of Common Stock
3. 636,945 shares of Common Stock
4. 100%
1. Uniroyal Quimica S.A.C.I./Argentina(B)
2. 3,000 shares of Common Stock
3. 3,000 shares of Common Stock
4. 100%
1. Uniroyal Chemical Investments Ltd./Canada(B)
2. 1,000,000 shares of Common Stock
3. 1,000,000 shares of Common Stock
4. 100%
1. Uniroyal Chemical Ltd./Canada(E)
2. 4,000,000 shares of Common Stock
3. 440,000 shares of Common Stock
4. 100%
1. Uniroyal Chemical Participacoes Ltda./Brazil(F)
2. 2,700,996,670 Quotas
3. 2,700,996,670 Quotas
4. 100%
1. Uniroyal Quimica S.A./Brazil(G)
2. 2,798,781,305 shares of Common Stock
3. 2,798,781,305 shares of Common Stock
4. 100%
1. Premier Chemical Company Ltd./Taiwan(B)
2. 3,970,740 shares of Common Stock
3. 3,970,740 shares of Common Stock
4. 80%
1. Uniroyal Chemical Holdings B.V./The Netherlands(H)
2. 250,000 shares of Common Stock
3. 50,000 shares of Common Stock
4. 100%
1. Uniroyal Chimica S.p.A./Italy (I)
2. 10,000 shares of Common Stock
3. 10,000 shares of Common Stock
4. 100%
1. Uniroyal Chemical B.V./The Netherlands(J)
2. 500 shares of Common Stock
3. 500 shares of Common Stock
4. 100%
1. Uniroyal Chemical Technology B.V./The Netherlands(B)
2. 2,000 shares of Capital Stock
3. 400 shares of Capital Stock
4. 100%
1. Uniroyal Chemical (Proprietary) Limited/South Africa(B)
2. 25,000 shares of Common Stock
3. 25,000 shares of Common Stock
4. 100%
1. Uniroyal Chemical S.A.R.L./Switzerland(B)
2. 20 Quota Units
3. 20 Quota Units
4. 100%
1. Uniroyal Chemical S.A./Spain(B)
2. 10,000 shares of Common Stock
3. 10,000 shares of Common Stock
4. 100%
1. Uniroyal Chemical Pty. Ltd./Australia(B)
2. 1,000,000 shares of Common Stock
3. 500,000 shares of Common Stock
4. 100%
1. Hannaford Seedmaster Services (Australia) Pty.
Ltd./Australia(K)
2. 10,000 shares of Common Stock
3. 10,000 shares of Common Stock
4. 100%
1. Industrias Gustafson S.A. de C.V./Mexico(L)
2. 50 shares of Common Stock
3. 50 shares of Common Stock
4. 100%
1. Uniroyal Chemical International Sales Corporation/Barbados(M)
2. Unlimited no. of Common Shares
3. 1,000 shares of Common Stock
4. 100%
1. Uniroyal Chemical Limited/Scotland(B)
2. 5,000,000 shares of Common Stock
3. 1,697,372 shares of Common Stock
4. 100%
1. Uniroyal Chemical Company Limited/Bahamas/Delaware(B)
2. 100,000 shares of Capital Stock
3. 4,000 shares of Capital Stock
4. 100%
1. Hancock Tire Company Limited/Canada(F)
2. 400 shares of Common Stock
3. 3 shares of Common Stock
4. 100%
1. Hancock Tire Company Limited/Canada(F)
2. 15 shares of Preferred Stock
3. -0-
4. 0%
Domestic Affiliates
1. Monochem, Inc./Louisiana(B)
2. 500 shares of Class A Common Stock
3. 500 shares of Class A Common Stock
4. 100%(*)
1. Monochem, Inc./Louisiana(B)
2. 500 shares of Class B Common Stock
3. 500 shares of Class B Common Stock
4. 0%
1. Monochem, Inc./Louisiana(B)
2. 1,500,000 shares of Class C Common Stock
3. 501,020 shares of Class C Common Stock
4. 33.1%
1. Rubicon Inc./Louisiana(B)
2. 5,000,000 shares of Class A Common Stock
3. 400,000 shares of Class A Common Stock
4. 100%(*)
1. Rubicon Inc./Louisiana(B)
2. 5,000,000 shares of Class B Common Stock
3. 400,000 shares of Class B Common Stock
4. 0%
1. NPC Services, Inc./Louisiana(B)
2. 100 shares of Common Stock
3. 100 shares of Common Stock
4. 12.75%
Foreign Affiliates
1. TOA UNI Chemical Manufacturing Ltd./Thailand(B)
2. 490,000 Group A Shares
3. 490,000 Group A Shares
4. 100%(*)
1. TOA UNI Chemical Manufacturing Ltd./Thailand(B)
2. 510,000 Group B Shares
3. 510,000 Group B Shares
4. 0%
1. TOA UNI Chemicals Ltd./Thailand(B)
2. 14,700 Group A Shares
3. 14,700 Group A Shares
4. 100%(*)
1. TOA UNI Chemicals Ltd./Thailand(B)
2. 15,300 Group B Shares
3. 15,300 Group B Shares
4. 0%
1. Orchem (Proprietary) Limited/South Africa(B)
2. 1,050,000 shares of Class A Common Stock
3. 1,050,000 shares of Class A Common Stock
4. 0%
1. Orchem (Proprietary) Limited/South Africa(B)
2. 450,000 shares of Class B Common Stock
3. 450,000 shares of Class B Common Stock
4. 100%(*)
1. Herdillia Unimers Limited/India(F)
2. 35,000,000 Equity Shares
3. 33,000,000 Equity Shares
4. 10.0%
1. Unikor Chemical Inc./Korea(B)
2. 408,000 shares of Common Stock
3. 408,000 shares of Common Stock
4. 50%
(A) Owned by Uniroyal Chemical Corporation
(B) Owned by Uniroyal Chemical Company, Inc.
(C) 66-2/3% owned by Uniroyal Chemical Company, Inc. and 33-1/3%
owned by Uniroyal Chemical Brazil Holding, Inc.
(D) Owned by Novaquim Holdings, S.A. de C.V.
(E) Owned by Uniroyal Chemical International Company
(F) Owned by Uniroyal Chemical Ltd.
(G) Owned by Uniroyal Chemical Participacoes Ltda.
(H) Owned by Gustafson International Company
(I) Owned by Uniroyal Chemical Holdings B.V.
(J) Owned by Uniroyal Chimica S.p.A.
(K) Owned by Uniroyal Chemical Pty. Ltd.
(L) Owned by Gustafson, Inc.
(M) Owned by Uniroyal Chemical Export Limited
(*) Uniroyal Chemical Company, Inc. holds the following combined
voting power of the entities indicated:
Monochem, Inc. - 50%
Rubicon Inc. - 50%
TOA UNI Chemical Manufacturing Ltd. - 48.9%
TOA UNI Chemicals Ltd. - 49%
Orchem (Proprietary) Ltd. - 30%
8/08/96
Subsidiaries
Place of & Owned
Name Organization Authorized Issued Owner By Owner
CK Holding DE 1,000 750 Crompton &
Corporation Knowles Corp 100%
CNK Disposition Corp. FL Crompton & 100%
Knowles Corp
CNK Specialities Netherlands KEM Manufact. 100%
Holding B.V. Corp.
Crompton & Knowles
Overseas Corporation DE 2,000 100 Crompton & 100%
Knowles Corp.
Crompton & Knowles
Canada Limited Canada Unlimited 104.4 Crompton & 69.6
Knowles Corp
45.6 Crompton &
Knowles Overseas
Corp. 30.4
Crompton & Knowles Chemical Realty Pennsylvania
Crompton & Knowles
Europe S.A. Belgium 60,000 59,999 Crompton &
Knowles Overseas
Corporation 99.98
1 Crompton &
Knowles Corp. .02
Crompton & Knowles
(France) S.A. France 1,021,470 1,021,464 Crompton &
Knowles Europe S.A.99%
1 V. Calarco Less than 1%
1 C. Marsden Less than 1%
1 G.Fickenscher Less than 1%
1 E. Mortier Less than 1%
1 A. Caste (in process to be
changed to P. Boury)Less than 1%
1 J. Ferguson Less than 1%
Crompton & Knowles
(Hong Kong) Ltd. Hong Kong 1 1 Crompton &
Knowles Europe S.A. 100%
Crompton & Knowles Korea 20,000 10,000 Crompton & Knowles
(Korea) Ltd. Europe S.A. 100%
Davis-Standard
Corporation Delaware 1,000 500 CK Holding Corp. 100%
Davis-Standard
(Deutschland) GmbH Germany Davis-Standard Corp.
Davis-Standard
(France) SARL France 7,326 2,400 Crompton & Knowles
Corporation 32.76
4,926 Grandma Food
Products Ltd. 67.24
Crompton & Knowles Colors
Incorporated
Delaware 1,000 500 CK Holding Corp. 100%
ER-WE-PA Davis-
Standard GmbH Germany 10,000,000 9,999,999 Davis-Standard
(Deutschland) 99%
1 ER-We-PA D-S Beteiligungs
GmbH Less than 1%
Ingredient Technology
Corporation Delaware 1,000 10 CK Holding Corp. 100%
Grandma Food Products
, Ltd. Quebec, Unlimited 251 Ingredient Technology 100%
Canada Common Corporation
Unlimited 1,000 100%
Preferred "A"
Killion Extruders,
Inc. New
Jersey 14,997,240 3,006,700 Davis-Standard Corp. 100%
Common
1,400 1,050 100%
Preferred "A"
1,360 1,360 100%
Preferred "B"
KEM International
Corporation Delaware 2,000 250 KEM Manufacturing
Corporation 100%
KEM Manufacturing
Corporation Georgia Crompton & Knowles
Corporation 100%
Orlex Chemicals Corporation New Jersey 100%
Crompton & Knowles
I.P.R. Delaware 3,000 250 Crompton & Knowles Corp. 100%
Corporation
Crompton & Knowles
Acceptance
Corporation MA 7,500 100 Crompton & Knowles Corp.100%
C&K Services S.A. Brussels, 149,000 149,000 Crompton & Knowles
Belgium Europe S.A.99%+
1 Crompton & Knowles Corp Less than 1%
Crompton & Knowles
(Nederland) B.V. Tilburg, 100 100 Crompton & Knowles
Netherlands Europe S.A. 100%
Crompton & Knowles
(Deutschland)
GmbH Dusseldorf, 50 50 Crompton & Knowles
Germany Europe S.A. 100%
Crompton & Knowles
(U.K.) Ltd. Manchester, 800,000 799,999 Crompton & Knowles
U.K. Europe S.A. 99%
1 Crompton & Knowles
(Nederland)B.V. Less than 1%
Crompton & Knowles
(Italia) SRL Milan, 20,000 14,000 Crompton & Knowles
Italy Europe S.A. 70%
6,000 Crompton & Knowles
(Nederland) B.V. 30%
Crompton & Knowles
(Portugal) LDA Lisbon, 5,000,000 3,500,000 Crompton & Knowles
Portugal Europe S.A. 70%
1,500,000 Crompton & Knowles
(Nederland) B.V. 30%
Crompton & Knowles
(Espana) SL Barcelone, 2,300,000 2,188,000 Crompton & Knowles
Spain Europe S.A. 95%
112,000 Crompton & Knowles
(Nederland) B.V. 5%
Crompton & Knowles
(Luxembourg) S.A. Luxembourg 1,250 1,250 Crompton & Knowles
Europe S.A. 100%
C&K Services
(Luxembourg) S.A. Luxembourg 1,250 125 Crompton & Knowles
Europe S.A. 100%
Ifatex Chemische
Produkte GmbH Dusseldorf, 4 4 Crompton & Knowles
Germany (Deutschland GmbH) 100%
Crompton & Knowles LaMadeline 20 20 Overseas Corp. 100%
International) SARL France
Crompton & Knowles
International Inc. Virgin Islands
Superior Chemical Corporation
CNK One B.V.
CNK Two B.V.
CNK S.R.L.
Italiana S.R.L.
SCHEDULE 4.01(d)
AUTHORIZATIONS, APPROVALS, ACTIONS,
NOTICES AND FILINGS
1. Authorization of the Merger and the transactions contem-
plated by the Merger Agreement by stockholders of Crompton
& Knowles Corporation.
2. Authorization for inclusion of the shares of Crompton &
Knowles Corporation common stock to be issued in the
Merger and the transactions contemplated by the Merger
Agreement on the NYSE, subject to official notice of issu-
ance.
3. Actions required by the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and
regulations promulgated thereunder.
4. Registrations or other actions required under federal and
state securities laws as are contemplated by the Merger
Agreement.
5. Authorization of the Merger and the transactions contem-
plated by the Merger Agreement by stockholders of Uniroyal
Chemical Corporation.
6. As may be required under the following instruments:
a. $125 Million Revolving Credit Facility of Crompton &
Knowles Corporation
b. Indenture, dated as of February 8, 1993, among
Uniroyal Chemical Corporation and State Street Bank
and Trust Company, as Trustee, relating to the 10 %
Senior Notes due 2002.
c. Indenture, dated as of February 8, 1993, among
Uniroyal Chemical Corporation and United States Trust
Company of New York, as Trustee, relating to the 11%
Senior Subordinated Notes due 2003.
d. Indenture, dated as of February 8, 1993, among
Uniroyal Chemical Corporation and The Shawmut Bank
Connecticut, N.A., as Trustee, relating to the 12%
Subordinated Discount Notes due 2005.
e. Indenture, dated as of September 1, 1993, among
Uniroyal Chemical Company, Inc. and State Street Bank
and Trust Company, as Trustee, relating to the 9%
Senior Notes due 2000.
f. Amended and Restated $150 Million Credit Agreement,
dated as of December 21, 1995, among Uniroyal
Chemical Company, Inc., as borrower, various lenders
and Citibank USA, Inc., as Agent (and related
documents).
g. Warrant Agreement, dated as of October 30, 1989,
between Uniroyal Chemical Corporation and Avery, Inc.
h. Loan Agreement, dated as of March 16, 1995, among
Uniroyal Chimica S.p.A., Citibank N.A., as Agent, and
the Banks party thereto.
i. Finance Agreement, dated as of May 15, 1992, between
Uniroyal Chemical Company Limited, Borrower, and
Overseas Private Investment Corporation, Loan
Guarantor (and related documents).
7. Receipt of legal opinions, accountant letters, officers'
certificates and "affiliate" letters as prescribed by the
Merger Agreement.
8. Execution of employment agreements with certain officers
of Uniroyal Chemical Corporation as prescribed by the
Merger Agreement.
9. Filing of Uniform Commercial Code financing statements as
contemplated by the Uniroyal Security Agreement, to be
filed on or about the Effective Date.
10. Delivery of the instruments evidencing the Pledged Debt as
contemplated by the Security Agreement.
11. Delivery of the certificates evidencing the Pledged Shares
as contemplated by the Crompton Security Agreement.
12. Delivery of the Blocked Account Letters as contemplated by
the Uniroyal Security Agreement.
Disclosure Schedules
1. Schedule 4.01(o) - Part I
(a) See the environmental report of Beveridge & Diamond
dated March 9, 1995 ("B & D Report") and the public filings of
Uniroyal Chemical Corporation including but not limited to its
Annual Report on Form 10-K for the fiscal year ended October
1,
1995, its Quarterly Reports on Form 10-Q for the periods ended
December 31, 1995, March 31, 1996 and June 30, 1996 and its
Prospectus used in connection with its initial public offering
of Common Stock dated March 16, 1995 (collectively, its
"Public
Filings").
(b) Uniroyal Chemical Company's Painesville, Lake County,
Ohio Plant (the "Painesville Plant") manufactures nitrile
rubber. The Painesville Plant pretreats and discharges its
process wastewater to the Lake County sewer system for
treatment at Lake County's Greater Mentor Wastewater
Treatment
Plant ("GMWTP"). In June 1993, Lake County submitted to Ohio
EPA a proposed Local Limit aimed at regulating the amount of
substances, which absorb at 230 nanometers, that are
discharged
in wastewater to the GMWTP. Ohio EPA approved the Local
Limit
in March 1994.
One of the principal ingredients in the Painesville
Plant's nitrile rubber manufacturing process, which is known
as
Tamol, absorbs at 230 nanometers. As a result, the
Painesville
Plant appealed Ohio EPA's approval of the Local Limit to the
Ohio Environmental Board of Review (the "EBR"). The EBR
plans
to hold an evidentiary hearing on the Painesville Plant's
appeal in December 1996. If the EBR's decision is adverse to
the Painesville Plant, it may appeal the decision to the Ohio
courts.
If the Painesville Plant loses its appeal and the
Local Limit becomes final, the Plant would be required to
modify its nitrile rubber recipes to remove or reduce the
amount of Tamol used and/or install some form of additional
pretreatment.
(c) Crompton Corp. has been designated along with others
as a potentially responsible party under CERCLA or comparable
state statutes, at the Industrial Solvent & Chemical Company
solvent reprocessing facility in York County, Pennsylvania,
and
the Spectron waste site in Elkton Maryland. CNK Disposition
Corp. has been designated along with others as a potentially
responsible party under CERCLA or comparable state statutes,
at
the Taylor Road Landfill and the Bay Drums drum recycling sites
located in Hillsborough County, Florida.
(d) In CPS Chemical Co., Inc. v. Evor Phillips Leasing
Co., Inc., et al., (C.A. 94-4107, D.C.N.J.), the plaintiffs
allege that hazardous substances migrated from the Evor
Phillips Site to the adjoining property of CPS Chemical
Company, Inc. ("CPS Site"), contaminating the CPS Site and the
groundwater beneath it. The plaintiffs were required by a 1988
consent order to perform remediation in connection with
contamination at the CPS Site.
In Adhesives Research v. American Inks & Coatings,
(C.A. 1:CV-95-1975, M.D. Pa.), the plaintiffs seek to recover
cleanup and other response costs and to obtain contribution
from Crompton Corp. and the other defendants in connection
with
the Industrial Solvent & Chemical Company solvents
reprocessing
facility located in York County, Pennsylvania.
(e) KEM Manufacturing Corporation ("KEM"), a wholly-owned
subsidiary of Crompton Corp. acquired in 1976, was named along
with others, a potentially responsible party under the New
Jersey Spill Compensation and Control Act by the New Jersey
Department of Environmental Protection and Energy with respect
to the Evor Phillips waste disposal site located in central New
Jersey ("Evor Phillips Site"). It appears that KEM held title
to the site between 1970 and 1974, prior to the acquisition of
KEM by Crompton Corp., but that KEM did not own or operate any
facility at the site. On September.28, 1995, KEM was released
by the State of New Jersey as a potentially responsible party
with respect to the Evor Phillips Site upon payment to the
state of $175,000.
2. Schedule 4.01(o) - Part II
(a) With respect to Uniroyal Chemical Corporation and its
Subsidiaries, none, except as disclosed or reflected in the
B & D Report and the Public Filings including the reserves for
environmental contingencies reflected in the financial
statements contained in the Public Filings.
(b) Crompton Corp. has been designated along with others
as a potentially responsible party under CERCLA or comparable
state statutes, at the Industrial Solvent & Chemical Company
solvent reprocessing facility in York County, Pennsylvania,
and
the Spectron waste site in Elkton Maryland. CNK Disposition
Corp. has been designated along with others as a potentially
responsible party under CERCLA or comparable state statutes,
at
the Taylor Road Landfill and the Bay Drums drum recycling
sites
located in Hillsborough County, Florida.
(c) In CPS Chemical Co., Inc. v. Evor Phillips Leasing
Co., Inc., et al., (C.A. 94-4107, D.C.N.J.), the plaintiffs
allege that hazardous substances migrated from the Evor
Phillips Site to the adjoining property of CPS Chemical
Company, Inc. ("CPS Site"), contaminating the CPS Site and the
groundwater beneath it. The plaintiffs were required by a
1988
consent order to perform remediation in connection with
contamination at the CPS Site.
In Adhesives Research v. American Inks & Coatings,
(C.A. 1:CV-95-1975, M.D. Pa.), the plaintiffs seek to recover
cleanup and other response costs and to obtain contribution
from Crompton Corp. and the other defendants in connection with
the Industrial Solvent & Chemical Company solvents reprocessing
facility located in York County, Pennsylvania.
(d) KEM Manufacturing Corporation ("KEM"), a wholly-owned
subsidiary of Crompton Corp. acquired in 1976, was named along
with others, a potentially responsible party under the New
Jersey Spill Compensation and Control Act by the New Jersey
Department of Environmental Protection and Energy with respect
to the Evor Phillips waste disposal site located in central New
Jersey ("Evor Phillips Site"). It appears that KEM held title
to the site between 1970 and 1974, prior to the acquisition of
KEM by Crompton Corp., but that KEM did not own or operate any
facility at the site. On September.28, 1995, KEM was released
by the State of New Jersey as a potentially responsible party
with respect to the Evor Phillips Site upon payment to the
state of $175,000.
3. Schedule 4.01(o) - Part III
(a) The matters described or referred to in Schedule
4.01(o) - Part II are hereby incorporated by reference.
(b) Uniroyal Chemical Company has received a notice from
the State of Ohio regarding the Painesville Plant alleging
water and soil contamination of the facility and inviting
Uniroyal Chemical Company to negotiate a Consent Order
governing performance of on-site studies. Uniroyal Chemical
Company intends to attempt to negotiate such an Order which
would also encompass the adjoining property owned by Dartron
Corporation which at one time was owned and operated by
Uniroyal Chemical Company. The Dartron property has been thus
far included by Ohio as part of the much larger Diamond
Shamrock site study area rather than as part of the Painesville
Plant study area.
(c) Compton Colors is conducting remediation at its
Nutley, New Jersey dyes manufacturing plant under the New
Jersey Industrial Site Recovery Act ("ISRA") in connection with
its purchase of the facility in 1990 from Atlantic Industries,
Inc. CNK Disposition Corporation is conducting remediation at
its former manufacturing facility in Tampa, Florida pursuant to
a consent order with the State of Florida. KEM Manufacturing
Corporation is conducting remediation at its former warehouse
and formulation site in East Brunswick, New Jersey under ISRA.
(d) Crompton Corp. has been designated along with others
as a potentially responsible party under CERCLA or comparable
state statutes, at the Industrial Solvent & Chemical Company
solvent reprocessing facility in York County, Pennsylvania, and
the Spectron waste site in Elkton Maryland. CNK Disposition
Corp. has been designated along with others as a potentially
responsible party under CERCLA or comparable state statutes, at
the Taylor Road Landfill and the Bay Drums drum recycling sites
located in Hillsborough County, Florida.
SCHEDULE 4.01(t)
EXISTING DEBT
( @ 6/30/96 )
( $ OOO'S ) *
OUT- UN-
STAND- USED
ING COM-
TOTAL BORROW- MIT-
I. LOAN FACILITIES DESCRIPTION LINE(S) INGS MENTS
CROMPTON & KNOWLES CORPORATION
BANKERS TRUST COMPANY REVOLVING CREDIT AGREE. 125,000 75,000 50,000
FLEET BANK UNSECURED SHORT-TERM DEBT 27,200 27,200 0
FIRST UNION BANK UNSECURED SHORT-TERM DEBT 20,000 20,000 0
BANK OF NEW YORK UNSECURED SHORT-TERM DEBT 9,300 9,300 0
CHASE MANHATTAN BANK UNSECURED SHORT-TERM DEBT 15,000 15,000 0
INDUSTRIAL REV. BONDS INDUSTRIAL REVENUE BONDS 4,000 4,000 0
BANK OF NEW YORK UNSECURED SHORT-TERM DEBT 10,000 0 10,000
NEW ENGLAND LIFE INS. LIFE INSURANCE POLICY LOAN 6,986 6,986 0
CROMPTON & KNOWLES COLORS, INC.,
DAVIS STANDARD CORP. &
INGREDIENT TECHNOLOGY CORP.
CHASE MANHATTAN BANK UNSECURED SHORT-TERM DEBT 5,000 0 5,000
CROMPTON & KNOWLES EUROPE S.A.
CREDIT LYONNAIS NOTES PAYABLE & OVERDRAFT 19,084 3,858 15,226
BANK BRUSSELS LAMBERT NOTES PAYABLE & OVERDRAFT 2,544 0 2,544
GENERALE DE BANQUE NOTES PAYABLE & OVERDRAFT 954 0 954
ER-WA-PA DAVIS STANDARD GmbH
COMMERZBANK NOTES PAYABLE & OVERDRAFT 4,902 0 4,902
WESTDEUTSCHE
LANDESBANNOTES PAYABLE & OVERDRAFT 4,902 0 4,902
UNIROYAL CHEMICAL COMPANY, INC. (USA)
VARIOUS BONDHOLDERS 9% SR. SECURED NOTES 252,800 252,800 0
CREDIT SUISSE A/R SECURED LOAN FACILITY 15,000 5,306 9,694
CITIBANK, N.A. REVOLVER 150,000 31,419 100,216
UNIROYAL CHIMICA S.p.A. (ITALY)
BANCO DI NAPOLI OVERDRAFT & CURRENCY 2,610 670 1,940
LOANS EXPORT
MONTE DEI PASCHI DI SIENA " 4,890 1,599 3,291
BANCA COMMERCIALE ITALIANA " 3,260 0 3,260
BANCA DI ROMA " 3,260 471 2,789
CREDITO ROMAGNOLO " 1,304 0 1,304
ISTITUIO BANCARIO
S. PAOLO DI TORINO " 4,623 256 4,367
BANCA NAZIONALE DEL LAVORO " 3,384 924 2,460
BANCA ITALO ROMENA " 1,630 0 1,630
CREDITO ITALIANO " 196 0 196
BANCA NAZIONALE DEL LAVORO LONG-TERM DEBT 835 85 0
BANCA NAZIONALE DEL LAVORO " 1,089 239 0
BANCA NAZIONALE DEL LAVORO " 730 561 0
BANCA NAZIONALE DEL LAVORO " 126 126 0
BANCA NAZIONALE DEL LAVORO " 3,651 1,956 0
CITIBANK " 47,100 29,666 0
CITIBANK - STANDBY " 12,560 5,216 7,344
UNIROYAL CHEMICAL, LIMITED (U.K.)
NATIONAL WESTMINSTER OVERDRAFT FACILITY 775 500 275
UNIROYAL CHEMICAL, LTD. (CANADA)
ROYAL BANK OF CANADA REVOLVER 11,100 0 11,100
PREMIER CHEMICAL COMPANY, LTD. (TAIWAN)
ROYAL BANK OF CANADA MULTI-PURPOSE 2,000 543 1,457
HONG KONG BANK " 545 0 545
UNIROYAL CHEMICAL PTY. LTD. (AUSTRALIA)
NATIONAL AUSTRALIA BANOVERDRAFT 789 0 789
HANNAFORD SEEDMASTER SERVICES
PTY. LTD (AUSTRALIA)
WESTPAC OVERDRAFT 1,066 0 1,066
" " EQUIPMENT FINANCE 395 0 395
" " REMITTANCE L/C 8 0 8
" " BANKERS' UNDERTAKING 8 0 8
" " FORWARD EXCHANGE CONTRACT 494 42 452
" " TAPE NEGOTIATION AUTHORITY 40 0 40
UNIROYAL CHEMICAL COMPANY, LTD. (BAHAMAS)
BANKERS TRUST CO. OPIC GUARANTEED LOAN 10,800 1,906 0
UNIROYAL QUIMICA S.A. (BRAZIL)
ITAU SHORT-TERM DEBT 200 0 200
UNIROYAL CHEMICAL EXPORT, LTD.
CREDIT SUISSE A/R SECURED LOAN FACILITY 15,000 0 15,000
(CO-BORROWER WITH UCCI)
(1) included in Uniroyal Chemical Co., Inc. amount
UNIROYAL CHEMICAL B.V.
ABN-AMRO UNSECURED OVERDRAFT FACIL 1,500 0 1,500
II. LETTERS OF CREDIT AMOUNT OF L/C
CROMPTON & KNOWLES CORPORATION
PENNSYLVANIA DEPT. OF EPA 6,000
FIRST UNION BANK, AS TRUSTEE 4,123
NEW JERSEY DEPT. OF EPA 3,558
PENNSYLVANIA DEPT. OF EPA 3,772
ENVIRONMENTAL PROTECTION AGENCY 196
CONTINENTAL CASUALTY COMPANY 3,471
INSURANCE CO. OF NORTH AMERICA 130
INSURANCE CO. OF NORTH AMERICA 100
HARTFORD INSURANCE COMPANY 20
BANCO NATIONAL DE MEXICO S.A. 35
CHINA NATIONAL OVERSEAS TRADING 358
INDIAN ALUMINUM COMPANY, LTD 471
WIHURI OY WIPAK 455
HUBEI JIANGYU PLASTICS INDUSTRY DEV. CO., LTD. 228
SUN A ENTERPRISE CO., LTD 280
PKL - VARPACKUNGSSYTEME GmbH 4,438
THE PAPER PRODUCTS, LTD 20
DAELIM ENGINEERING CO., LTD 9
BARCLAY'S BANK, LTD 27
AT & T NETWORK SYSTEMS IRELAND LTD 311
J.K. INDUSTRIES, LTD. 18
KLERK'S PLASTICS RECYCLING N.V. 111
BANK HAPOALIM B.M. 27
DALIAN VASTONE COMMUNICATION CABLE CORP. 37
GIZA CABLE TELEPHONE CO. 32
ANZ GRINDLAYS BANK PLC 37
DALIAN TIENCHENG PACKING MATERIAL 208
RATHI DYE CHEM PVT. LTD 409
DIVIYA CHEMICALS LTD 211
UNIROYAL CHEMICAL COMPANY, INC. (USA) AMOUNT OF L/C
NATIONAL UNION FIRE INS. 2,411
NATIONAL UNION FIRE INS. 964
PREMIER/BAYOU SORREL TRUST 229
NUCLEAR REGULATORY COMMISSION 150
BANKERS TRUST/O.P.I.C. 676
KREDIETBANK/CHEMICAL FORWARDERS 150
KREDIETBANK/CHEMICAL FORWARDERS 175
FREGATA S.A. (CUSTOMS OFFICE) 100
L. MARQUEZ 10
PREMIER CHEMICAL COMPANY LTD. (TAIWAN)
ROYAL BANK OF CANADA USANCE 381
UNIROYAL QUIMICA, S.A. (BRAZIL)
BANCO ITAU S/A 61
BANCO DE BOSTON 46
III LETTERS OF GUARANTY AMOUNT OF GUARANTY
CROMPTON & KNOWLES CORPORATION
CHASE MANHATTAN BANK UNSECURED S-T SUB LOANS 5,000
CROMPTON & KNOWLES COLORS, INC.,
DAVIS STANDARD CORP. &
INGREDIENT TECHNOLOGY CORP.
CHASE MANHATTAN BANK L/C'S ISSUED FOR CROMPTON & KNOWKES 10,891
UNIROYAL CHEMICAL COMPANY, INC. (USA)
OVERSEAS PRIVATE INVESTMENTBAHAMAS LOAN 10,800
ICI (RUBICON/RCRA) LA. EPA OBLIGATIONS 2,780
CITIBANK UNIKOR LOCAL LINES OF CREDIT 1,800
SIAM COMMERCIAL BANK THAILAND J.V.-OVERDRAFT & SHORT-TERM LOAN 490
SIAM COMMERCIAL BANK THAILAND J.V. - OVERDRAFT 98
SIAM COMMERCIAL BANK THAILAND J.V. - SHORT-TERM LOAN 588
SIAM COMMERCIAL BANK THAILAND J.V. - L/C & TRUST RECEIPT 392
SIAM COMMERCIAL BANK THAILAND J.V. - OFFSHORE LOAN 2,940
SIAM COMMERCIAL BANK THAILAND J.V. - LEGAL GUARANTY 98
CREDIT SUISSE EUROPEAN RECEIVABLES 15,000
UNIROYAL CHIMICA S.p.A. (ITALY)
BANCA NAZIONALE DEL LAVORO METAN GAS USAGE 59
BANCA NAZIONALE DEL LAVORO CUSTOM DUTY VAT - ANTWERP 46
ISTITUTO BANCARIO
S. PAOLO DI TORINO CUSTOM DUTY VAT - ROME 98
" CUSTOM DUTY VAT - APRILIA 196
" WASTE DISPOSAL (LOCAL GOVERNMENT 130
" GOVERNMENT RAILWAYS 6
BANCO DI NAPOLI TELEX EXPENSES COVERAGE IN FAVOR 2
POST & TELECOMMUNICATIONS IND.
UNIROYAL CHEMICAL, LTD. (U.K.)
MINISTRY OF AGRICULTURE - EGYPT 4
PISCO ESTABLISHMENT 137
PISCO ESTABLISHMENT 43
PISCO ESTABLISHMENT 35
H.M. CUSTOMS & EXCISE 465
* MOST FOREIGN SUBSIDIARY LINES ARE IN LOCAL CURRENCY, AND
FOR PURPOSES OF THIS EXHIBIT HAVE BEEN CONVERTED TO U.S. $
AT THE EXCHANGE RATES IN EFFECT ON 6/30/96.
SCHEDULE 4.01(w)
MATERIAL SUBSIDIARIES
CK Holding Corporation
Crompton & Knowles Overseas Corporation
Crompton & Knowles Europe S.A.
Crompton & Knowles (France) S.A.
Davis-Standard Corporation
Davis-Standard (Deutschland) GmbH
Davis-Standard (France) SARL
Crompton & Knowles Colors Incorporated
ER-WE-PA Davis-Standard GmbH
Ingredient Technology Corporation
Grandma Food Products, Ltd.
KEM Manufacturing Corporation
C&K Services S.A.
C&K Services (Luxembourg) S.A.
Uniroyal Chemical Corporation
Uniroyal Chemical Company, Inc.
Premier Chemical Company Ltd.
Uniroyal Chemical Export Limited
Uniroyal Chemical Leasing Company, Inc.
Uniroyal Chemical Limited
Novaquim Holdings S.A. de C.V.
Novaquim S.A. de C.V.
Gustafson International Company
Uniroyal Chemical Holdings B.V.
Uniroyal Chimica S.p.A.
Uniroyal Chemical B.V.
Gustafson, Inc.
Uniroyal Chemical International Company
Uniroyal Chemical LTD/LTEE
Uniroyal Chemical Participacoes Ltda.
Uniroyal Quimica S.A.
Uniroyal Chemical Brazil Holding, Inc.
Uniroyal Chemical Pty. Ltd.
Uniroyal Chemical Company Limited
Uniroyal Chemical Investments Ltd.
Trace Chemicals Inc.
Schedule 5.02(a)
Debtor: Crompton & Knowles Colors Incorporated
Index Filing Filing
Jurisdiction Date Date Number Secured Party Collateral
NC - Sec. of State 9/27/95 1267402 Bankers Leasing Specified
Assoc., Inc. Assets
Debtor: Crompton & Knowles Corporation
CT - Sec. of State 4/9/96 5/19/93 1011971 Datronic Equip. Specified
Income Fund Equipment
XVII, L.P.
CT - Sec. of State 4/9/96 5/24/93 1013330 Caterpillar Fin. Specified
Services Corp. Equipment
CT - Sec. of State 4/9/96 8/26/93 1025926 Caterpillar Fin. Specified
Services Corp.- Equipment
Amendment
CT - Sec. of State 4/9/96 1/18/94 1042994 Citicorp Dealer Specified
Fin. Equipment
CT - Sec. of State 4/9/96 3/14/94 1049268 Caterpillar Fin. Specified
Services Corp. Equipment
CT - Sec. of State 4/9/96 6/22/94 1062559 Caterpillar Fin. Specified
Services Corp. Equipment
CT - Sec. of State 4/9/96 8/10/94 1068586 Caterpillar Fin. Specified
Services Corp. Equipment
CT - Sec. of State 4/9/96 2/23/95 1607933 Toyota Motor Specified
Credit Corp. Equipment
CT - Sec. of State 4/9/96 6/5/95 1627933 Assignment from Specified
Toyota Motor Equipment
Credit Corp. to
Citicorp Dealer
Finance
CT - Sec. of State 4/9/96 9/27/95 1646673 Caterpillar Fin. Specified
Services Equipment
NC - Mecklenburg 8/9/96 7/10/90 346-323 Cyclone Roofing Mechanic
County Company Lien Claim
$15,962.00
NC - Mecklenburg 8/9/96 10/5/95 013981 McRae Graphics, Specified
County Inc. Equipment
Debtor: Gustafson, Inc.
IL - Sec of State 7/19/96 6/24/88 2443312 First Specified
Illinois Assets
Bk. of Evanston,
N.A.
IL - Sec of State 7/19/96 5/10/93 3119568 First Specified
Illinois Bank Assets
of Evanston,
N.A.-
Continuation
IL - Sec of State 7/19/96 5/23/94 3260710 Tri-Cities Sales Specified
Co., Inc. Assets
MN - Hennepin County 6/7/96 12/23/87 87-23337 Larue, Nancy A. Judgement
et al. $1,308.00
Texas - Sec. of State 7/16/96 9/18/91 91-181848 The Baker Co. Specified
Equipment
Texas - Sec. of State 7/16/96 11/2/94 94-214318 The Baker Co. Specified
Equipment
WI - Sec. of State 7/15/96 11/14/90 1164353 The First Nat'l Specified
Bank of Park Assets
Falls
WI - Sec. of State 7/15/96 9/26/95 1536213 The First Nat'l Specified
Bank of Park Assets
Falls -
Continuation
WI - Sec. of State 7/15/96 7/8/91 1215851 U.S. Small Bus. Specified
Administration Assets
WI - Sec. of State 7/15/96 5/17/96 1587438 U.S. Small Bus. Specified
Administration Assets
- Continuation
WI - Sec. of State 7/15/96 8/8/91 1221927 City of Park Specified
Falls Equipment
WI - Sec. of State 7/15/96 4/15/94 1422601 Advance Accept. Specified
Corporation Equipment
Debtor: Ingredient Technology Corporation
New Jersey - Bergen 8/7/96 8/29/95 003881 CMO Specified
County Enterprises, Equipment
Inc.
Debtor: Uniroyal Chemical Company, Inc.
CT - Sec. of State 4/9/96 8/29/91 936838 Citicorp Specified
Leasing, Inc. Equipment
CT - Sec. of State 4/9/96 10/28/91 943524 Citicorp Specified
Leasing, Inc. Equipment
CT - Sec. of State 4/9/96 11/26/91 947114 The Manifest Specified
Group Equipment
CT - Sec. of State 4/9/96 12/27/91 950397 Graphics Specified
Leasing Corp. Equipment
CT - Sec. of State 4/9/96 1/6/92 951382 Graphics Specified
Leasing Corp.- Equipment
Amends
Collateral
Description
CT - Sec. of State 4/9/96 1/6/92 951383 Execulease Cred.Specified
Corporation Equipment
CT - Sec. of State 4/9/96 1/21/92 952965 Graphics Specified
Leasing Corp. Equipment
CT - Sec. of State 4/9/96 1/21/92 952966 American Lease Specified
Funding Corp. Equipment
CT - Sec. of State 4/9/96 1/21/92 952967 Amer. Network Specified
Leasing Corp. Equipment
CT - Sec. of State 4/9/96 1/2/92 950884 Citicorp Specified
Leasing, Equipment
Inc.
CT - Sec. of State 4/9/96 1/2/92 950885 Citicorp Specified
Leasing, Equipment
Inc.
CT - Sec. of State 4/9/96 1/8/92 951554 Citicorp Specified
Leasing, Inc. Equipment
CT - Sec. of State 4/9/96 6/2/92 968252 Citicorp Specified
Leasing, Equipment
Inc.
CT - Sec. of State 4/9/96 6/22/92 970769 Graphics Specified
Leasing Corp. Equipment
CT - Sec. of State 4/9/96 10/2/92 982921 Dana Comm'l Specified
Credit Corp. Equipment
CT - Sec. of State 4/9/96 7/31/92 975992 IBM Credit Specified
Corporation Equipment
CT - Sec. of State 4/9/96 3/26/93 1003101 Citicorp Specified
Leasing, Inc. Equipment
CT - Sec. of State 4/9/96 12/30/93 1040909 Citicorp Specified
Leasing, Inc. Equipment
CT - Sec. of State 4/9/96 3/30/94 1051458 Citicorp Specified
Leasing, Inc. Equipment
CT - Sec. of State 4/9/96 4/14/94 1053429 Citicorp Specified
Leasing, Inc. Equipment
CT - Sec. of State 4/9/96 4/25/94 1054813 Citicorp Specified
Leasing, Inc. Equipment
CT - Sec. of State 4/9/96 5/2/94 1055817 Sanwa Leasing Specified
Corp. Equipment
CT - Sec. of State 4/9/96 6/3/94 1060126 Citicorp Specified
Leasing, Inc. Equipment
CT - Sec. of State 4/9/96 6/27/94 1063035 Citicorp Specified
Leasing, Inc. Equipment
CT - Sec. of State 4/9/96 8/24/94 1070311 Pepsi Cola Specified
Equipment
CT - Sec. of State 4/9/96 3/8/95 1608471 Citicorp Specified
Leasing, Inc. Equipment
CT - Sec. of State 4/9/96 4/26/96 1691461 Sanwa Leasing Specified
Corp. N/A Equipment
NC - Gaston County 7/30/96 7/23/90 90-1818 Citibank N.A. Specified
Assets
NC - Gaston County 7/30/96 2/11/91 90-1818 Citibank N.A. - Specified
Amendment Assets
NC - Gaston County 7/30/96 5/24/95 95-936 Citibank N.A. - Specified
Continuation Assets
Ohio - Sec. of State 7/15/96 11/15/93 AK59118 Clarklift of Specified
Cleveland Inc. Equipment
Ohio - Lake County 7/17/96 11/16/93 93173308 Clarklift of Specified
Cleveland Inc. Equipment
PA - Crawford County 7/24/96 7/23/90 71055 Citibank N.A. Specified
Vol36 Assets
PA - Crawford County 7/24/96 2/7/91 71056 Citibank N.A. - Specified
Vol36 Amendment Assets
PA - Crawford County 7/24/96 5/24/95 71055 Citibank N.A. - Specified
Vol36 Continuation Assets
Debtor: Uniroyal Chemical Co. Accumulation Plan
NY - Sec. of State 7/24/96 5/14/91 099755 Internal Federal
Revenue Service Tax Lien -
$2,471.19
SCHEDULE 5.02(f)
INVESTMENTS
(@ 6/30/96)
UNIROYAL CHEMICAL COMPANY, INC.
INVESTEE AMOUNT ($000'S)
RUBICON 21,181
MONOCHEM 3,762
NAUGATUCK TREATMENT CO. 2
RAPID, INC. 14
ORCHEM 498
HERDILLIA 1,374
TOA UNI, TLD. 69
TOA UNI MFG. 1,910
UNIKOR 805
TOTAL 29,615
EXHIBIT A-1
FORM OF WORKING CAPITAL A PROMISSORY NOTE
$ Dated:
FOR VALUE RECEIVED, the undersigned, [CROMPTON & KNOWLES
CORPORATION] [CROMPTON & KNOWLES COLORS INCORPORATED] [DAVIS-STANDARD
CORPORATION] [INGREDIENT TECHNOLOGY CORPORATION], a
[Massachusetts] [Delaware] corporation (the "Borrower"), HEREBY
PROMISES TO PAY to the order of (the "Lender")
for the account of its Applicable Lending Office (as defined in
the Credit Agreement referred to below) the aggregate principal
amount of the Working Capital A Advances (as defined below) owing
to the Lender by the Borrower pursuant to the Credit Agreement
dated as of August 21, 1996 (as amended, supplemented or
otherwise modified from time to time, the "Credit Agreement";
terms defined therein being used herein as therein defined) among
the Borrower, [Crompton & Knowles Corporation, a Massachusetts
corporation,] [Crompton & Knowles Colors Incorporated, a Delaware
corporation,] [Davis-Standard Corporation, a Delaware
corporation,] [Ingredient Technology Corporation, a Delaware
corporation,] Uniroyal Chemical Company, Inc., a New Jersey
corporation, the Lender and certain other lender parties party
thereto, Citicorp Securities, Inc., as Arranger, Citicorp USA,
Inc., as Agent for the Lender and such other lender parties, and
The Chase Manhattan Bank, as Managing Agent, on the Termination
Date.
The Borrower promises to pay interest on the unpaid principal
amount of each Working Capital A Advance from the date of such
Working Capital A Advance until such principal amount is paid in
full, at such interest rates, and payable at such times, as are
specified in the Credit Agreement.
Both principal and interest are payable in lawful money of the
United States of America to Citicorp USA, Inc., as Agent, at 399
Park Avenue, New York, New York 10043 in same day funds. Each
Working Capital A Advance owing to the Lender by the Borrower and
the maturity thereof, and all payments made on account of
principal thereof, shall be recorded by the Lender and, prior to
any transfer hereof, endorsed on the grid attached hereto, which
is part of this Promissory Note.
This Promissory Note is one of the Notes referred to in, and is
entitled to the benefits of, the Credit Agreement. The Credit
Agreement, among other things, (i)provides for the making of
advances (the "Working Capital A Advances") by the Lender to the
Borrower from time to time in an aggregate amount not to exceed
at any time outstanding the U.S. dollar amount first above
mentioned, the indebtedness of the Borrower resulting from each
such Working Capital A Advance being evidenced by this Promissory
Note, and (ii)contains provisions for acceleration of the
maturity hereof upon the happening of certain stated events and
also for prepayments on account of principal hereof prior to the
maturity hereof upon the terms and conditions therein specified.
The Obligations of the Borrower under this Promissory Note, and
the Obligations of the other Loan Parties under the Loan
Documents, are secured by the Collateral as provided in the Loan
Documents.
[CROMPTON & KNOWLES CORPORATION] [CROMPTON & KNOWLES COLORS
INCORPORATED] [DAVIS-STANDARD CORPORATION] [INGREDIENT TECHNOLOGY
CORPORATION]
By
Title:
ADVANCES AND PAYMENTS OF PRINCIPAL
Date Amount of
Working Amount of Unpaid
Capital A Principal Paid Principal Notation
Advance Or Prepaid Balance Made By
EXHIBIT A-2
FORM OF WORKING CAPITAL B-1 PROMISSORY NOTE
$ Dated:
FOR VALUE RECEIVED, the undersigned, UNIROYAL CHEMICAL COMPANY,
INC., a New Jersey corporation (the "Borrower"), HEREBY PROMISES
TO PAY to the order of (the "Lender") for the
account of its Applicable Lending Office (as defined in the
Credit Agreement referred to below) the aggregate principal
amount of the Working Capital B-1 Advances (as defined below)
owing to the Lender by the Borrower pursuant to the Credit
Agreement dated as of August 21, 1996 (as amended, supplemented
or otherwise modified from time to time, the "Credit Agreement";
terms defined therein being used herein as therein defined) among
the Borrower, Crompton & Knowles Corporation, a Massachusetts
corporation, Crompton & Knowles Colors Incorporated, a Delaware
corporation, Davis-Standard Corporation, a Delaware corporation,
Ingredient Technology Corporation, a Delaware corporation, the
Lender and certain other lender parties party thereto, Citicorp
Securities, Inc., as Arranger, Citicorp USA, Inc., as Agent for
the Lender and such other lender parties, and The Chase Manhattan
Bank, as Managing Agent, on the Termination Date.
The Borrower promises to pay interest on the unpaid principal
amount of each Working Capital B-1 Advance from the date of such
Working Capital B-1 Advance until such principal amount is paid
in full, at such interest rates, and payable at such times, as
are specified in the Credit Agreement.
Both principal and interest are payable in lawful money of the
United States of America to Citicorp USA, Inc., as Agent, at 399
Park Avenue, New York, New York 10043 in same day funds. Each
Working Capital B-1 Advance owing to the Lender by the Borrower
and the maturity thereof, and all payments made on account of
principal thereof, shall be recorded by the Lender and, prior to
any transfer hereof, endorsed on the grid attached hereto, which
is part of this Promissory Note.
This Promissory Note is one of the Notes referred to in, and is
entitled to the benefits of, the Credit Agreement. The Credit
Agreement, among other things, (i)provides for the making of
advances (the "Working Capital B-1 Advances") by the Lender to
the Borrower from time to time in an aggregate amount not to
exceed at any time outstanding the U.S. dollar amount first above
mentioned, the indebtedness of the Borrower resulting from each
such Working Capital B-1 Advance being evidenced by this
Promissory Note, and (ii)contains provisions for acceleration of
the maturity hereof upon the happening of certain stated events
and also for prepayments on account of principal hereof prior to
the maturity hereof upon the terms and conditions therein
specified. The Obligations of the Borrower under this Promissory
Note, and the Obligations of the other Loan Parties under the
Loan Documents, are secured by the Collateral as provided in the
Loan Documents.
UNIROYAL CHEMICAL
COMPANY, INC.
By
Title:
ADVANCES AND PAYMENTS OF PRINCIPAL
Date Amount of
Working Amount of Unpaid
Capital B-1 Principal Paid Principal Notation
Advance Or Prepaid Balance Made By
EXHIBIT A-3
FORM OF WORKING CAPITAL B-2 PROMISSORY NOTE
$ Dated:
FOR VALUE RECEIVED, the undersigned, UNIROYAL CHEMICAL COMPANY,
INC., a New Jersey corporation (the "Borrower"), HEREBY PROMISES
TO PAY to the order of (the "Lender") for the
account of its Applicable Lending Office (as defined in the
Credit Agreement referred to below) the aggregate principal
amount of the Working Capital B-2 Advances (as defined below)
owing to the Lender by the Borrower pursuant to the Credit
Agreement dated as of August 21, 1996 (as amended, supplemented
or otherwise modified from time to time, the "Credit Agreement";
terms defined therein being used herein as therein defined) among
the Borrower, Crompton & Knowles Corporation, a Massachusetts
corporation, Crompton & Knowles Colors Incorporated, a Delaware
corporation, Davis-Standard Corporation, a Delaware corporation,
Ingredient Technology Corporation, a Delaware corporation, the
Lender and certain other lender parties party thereto, Citicorp
Securities, Inc., as Arranger, Citicorp USA, Inc., as Agent for
the Lender and such other lender parties, and The Chase Manhattan
Bank, as Managing Agent, on the dates and in the amounts
specified in the Credit Agreement.
The Borrower promises to pay interest on the unpaid principal
amount of each Working Capital B-2 Advance from the date of such
Working Capital B-2 Advance until such principal amount is paid
in full, at such interest rates, and payable at such times, as
are specified in the Credit Agreement.
Both principal and interest are payable in lawful money of the
United States of America to Citicorp USA, Inc., as Agent, at 399
Park Avenue, New York, New York 10043 in same day funds. Each
Working Capital B-2 Advance owing to the Lender by the Borrower
and the maturity thereof, and all payments made on account of
principal thereof, shall be recorded by the Lender and, prior to
any transfer hereof, endorsed on the grid attached hereto, which
is part of this Promissory Note.
This Promissory Note is one of the Notes referred to in, and is
entitled to the benefits of, the Credit Agreement. The Credit
Agreement, among other things, (i)provides for the making of
advances (the "Working Capital B-2 Advances") by the Lender to
the Borrower from time to time in an aggregate amount not to
exceed at any time outstanding the U.S. dollar amount first above
mentioned, the indebtedness of the Borrower resulting from each
such Working Capital B-2 Advance being evidenced by this
Promissory Note, and (ii)contains provisions for acceleration of
the maturity hereof upon the happening of certain stated events
and also for prepayments on account of principal hereof prior to
the maturity hereof upon the terms and conditions therein
specified. The Obligations of the Borrower under this Promissory
Note, and the Obligations of the other Loan Parties under the
Loan Documents, are secured by the Collateral as provided in the
Loan Documents.
UNIROYAL CHEMICAL
COMPANY, INC.
By
Title:
ADVANCES AND PAYMENTS OF PRINCIPAL
Date Amount of
Working Amount of Unpaid
Capital B-2 Principal Paid Principal Notation
Advance Or Prepaid Balance Made By
EXHIBIT B
FORM OF NOTICE OF BORROWING
Citicorp USA, Inc., as Agent
under the Credit Agreement
referred to below
399 Park Avenue
New York, New York 10043 Date
Attention: Robert Kosian
Ladies and Gentlemen:
The undersigned, [Crompton & Knowles Corporation] [Crompton &
Knowles Colors Incorporated] [Davis-Standard Corporation]
[Ingredient Technology Corporation] [Uniroyal Chemical Company,
Inc.], refers to the Credit Agreement dated as of August 21, 1996
(as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement", the terms defined therein being
used herein as therein defined), among the undersigned, [Crompton
& Knowles Corporation,] [Crompton & Knowles Colors Incorporated,]
[Davis-Standard Corporation,] [Ingredient Technology
Corporation,] [Uniroyal Chemical Company, Inc.,] certain Lender
Parties party thereto, Citicorp Securities, Inc., as Arranger,
Citicorp USA, Inc., as Agent for said Lender Parties, and The
Chase Manhattan Bank, as Managing Agent, and hereby gives you
notice, irrevocably, pursuant to Section 2.02 of the Credit
Agreement that the undersigned hereby requests a Borrowing under
the Credit Agreement, and in that connection sets forth below the
information relating to such Borrowing (the "Proposed Borrowing")
as required by Section 2.02(a) of the Credit Agreement:
(i)The Business Day of the Proposed Borrowing is
.
(ii)The Facility under which the Proposed Borrowing is requested
is the Facility.
(iii)The Type of Advances comprising the Proposed Borrowing is
[Base Rate Advances] [Eurodollar Rate Advances].
(iv)The aggregate amount of the Proposed Borrowing is $ .
[(v)The initial Interest Period for each Eurodollar Rate Advance
made as part of the Proposed Borrowing is month[s].]
The undersigned hereby certifies that the following statements
are true on the date hereof, and will be true on the date of the
Proposed Borrowing:
(A)the representations and warranties contained in each Loan
Document are correct on and as of the date of the Proposed
Borrowing, before and after giving effect to the Proposed
Borrowing and to the application of the proceeds therefrom, as
though made on and as of such date other than any such
representations or warranties that, by their terms, refer to a
specific date other than the date of the Proposed Borrowing, in
which case, as of such specific date; and
(B)no event has occurred and is continuing, or would result from
such Proposed Borrowing or from the application of the proceeds
therefrom, that constitutes a Default.
Very truly yours,
[CROMPTON & KNOWLES CORPORATION] [CROMPTON & KNOWLES COLORS
INCORPORATED] [DAVIS-STANDARD CORPORATION] [INGREDIENT TECHNOLOGY
CORPORATION] [UNIROYAL CHEMICAL COMPANY, INC.]
By
Title:
EXHIBIT C
FORM OF ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement dated as of August 21,
1996 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement") among Crompton & Knowles
Corporation, a Massachusetts corporation ("Crompton Corp."),
Crompton & Knowles Colors Incorporated, a Delaware corporation
("Crompton Colors"), Davis-Standard Corporation, a Delaware
corporation ("Davis-Standard"), Ingredient Technology
Corporation, a Delaware corporation ("ITC"), Uniroyal Chemical
Company, Inc., a New Jersey corporation (together with Crompton
Corp., Crompton Colors, Davis-Standard and ITC, the "Borrowers"),
the Lender Parties (as defined in the Credit Agreement), Citicorp
Securities, Inc., as Arranger, Citicorp USA, Inc., as agent for
the Lender Parties (the "Agent"), and The Chase Manhattan Bank,
as Managing Agent. Terms defined in the Credit Agreement are
used herein with the same meaning.
The "Assignor" and the "Assignee" referred to on Schedule 1
hereto agree as follows:
1.The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, an
interest in and to the Assignor's rights and obligations under
the Credit Agreement as of the date hereof equal to the
percentage interest specified on Schedule 1 hereto of all
outstanding rights and obligations under the Credit Agreement
Facility or Facilities specified on Schedule 1 hereto. After
giving effect to such sale and assignment, the Assignee's
Commitments and the amount of the Advances owing to the Assignee
will be as set forth on Schedule 1 hereto.
2.The Assignor (i)represents and warrants that it is the legal
and beneficial owner of the interest being assigned by it
hereunder and that such interest is free and clear of any adverse
claim; (ii)makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with the Loan Documents
or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of, or the perfection or
priority of any lien or security interest created or purported to
be created under or in connection with, the Loan Documents or any
other instrument or document furnished pursuant thereto; and
(iii)makes no representation or warranty and assumes no
responsibility with respect to the financial condition of any
Loan Party or the performance or observance by any Loan Party of
any of its obligations under any Loan Document or any other
instrument or document furnished pursuant thereto; and
(iv)attaches the Note or Notes held by the Assignor and requests
that the Agent exchange such Note or Notes for a new Note or
Notes payable to the order of the Assignee in an amount equal to
the Commitments assumed by the Assignee pursuant hereto or new
Notes payable to the order of the Assignee in an amount equal to
the Commitments assumed by the Assignee pursuant hereto and the
Assignor in an amount equal to the Commitments retained by the
Assignor under the Credit Agreement, respectively, as specified
on Schedule 1 hereto.
3.The Assignee (i)confirms that it has received a copy of the
Credit Agreement, together with copies of the financial
statements referred to in Section 4.01 thereof and such other
documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into this
Assignment and Acceptance; (ii)agrees that it will, independently
and without reliance upon the Agent, the Assignor or any other
Lender Party and based on such documents and information as it
shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Credit
Agreement; (iii)confirms that it is an Eligible Assignee;
(iv)appoints and authorizes the Agent to take such action as
agent on its behalf and to exercise such powers and discretion
under the Loan Documents as are delegated to the Agent by the
terms thereof, together with such powers and discretion as are
reasonably incidental thereto; (v)agrees that it will perform in
accordance with their terms all of the obligations that by the
terms of the Credit Agreement are required to be performed by it
as a Lender or Issuing Bank, as the case may be; and (vi)attaches
any U.S. Internal Revenue Service forms required under
Section2.12 of the Credit Agreement.
4.Following the execution of this Assignment and Acceptance, it
will be delivered to the Agent for acceptance and recording by
the Agent. The effective date for this Assignment and Acceptance
(the "Effective Date") shall be the date of acceptance hereof by
the Agent, unless otherwise specified on Schedule 1 hereto.
5.Upon such acceptance and recording by the Agent, as of the
Effective Date, (i)the Assignee shall be a party to the Credit
Agreement and, to the extent provided in this Assignment and
Acceptance, have the rights and obligations of a Lender Party
thereunder and (ii)the Assignor shall, to the extent provided in
this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement.
6.Upon such acceptance and recording by the Agent, from and after
the Effective Date, the Agent shall make all payments under the
Credit Agreement and the Notes in respect of the interest
assigned hereby (including, without limitation, all payments of
principal, interest and commitment fees with respect thereto) to
the Assignee. The Assignor and Assignee shall make all
appropriate adjustments in payments under the Credit Agreement
and the Notes for periods prior to the Effective Date directly
between themselves.
7.This Assignment and Acceptance shall be governed by, and
construed in accordance with, the laws of the State of New York.
8.This Assignment and Acceptance may be executed in any number of
counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to
be an original and all of which taken together shall constitute
one and the same agreement. Delivery of an executed counterpart
of Schedule 1 to this Assignment and Acceptance by telecopier
shall be effective as delivery of a manually executed counterpart
of this Assignment and Acceptance.
IN WITNESS WHEREOF, the Assignor and the Assignee have caused
Schedule 1 to this Assignment and Acceptance to be executed by
their officers thereunto duly authorized as of the date specified
thereon.
SCHEDULE 1
to
ASSIGNMENT AND ACCEPTANCE
As to the _____Facility in respect of which an interest is being
assigned:
Percentage interest assigned:__________%
Assignee's Commitment:$__________
Aggregate outstanding principal amount of Advances
assigned:$__________
Principal amount of Note payable to Assignee:$__________
Principal amount of Note payable to Assignor:$__________
Effective Date (if other than date of acceptance by Agent):
1__________,____
[NAME OF ASSIGNOR], as Assignor
By
Title:
Dated: ___________, ____
[NAME OF ASSIGNEE], as Assignee
By
Title:
Dated: ___________, ____
Domestic Lending Office:
Eurodollar Lending Office:<PAGE>
Accepted 1[and Approved] this ____
day of ___________, ____
[NAME OF AGENT]
By
Title:
2[Approved this ____ day
of _____________, ____
CROMPTON & KNOWLES CORPORATION
By
Title:]
EXHIBIT D-1
FORM OF CROMPTON SECURITY AGREEMENT
CROMPTON SECURITY AGREEMENT
Dated August 21, 1996
from
THE PERSONS LISTED ON THE SIGNATURE PAGES
HEREOF
as Pledgors
to
CITICORP USA, INC.
as Agent
TABLE OF CONTENTS
Section Page
1. Grant of Security 2
2. Security for Obligations 3
3. Pledgors Remain Liable 4
4. Delivery of Security Collateral and Account Collateral 4
5. Maintaining the L/C Cash Collateral Accounts 4
6. Investing of Amounts in the L/C Cash Collateral Accounts 5
7. Release of Amounts 5
8. Representations and Warranties 6
9. Further Assurances 7
10. Voting Rights; Dividends; Etc. 8
11. Transfers and Other Liens; Additional Shares 9
12. Agent Appointed Attorney-in-Fact 10
13. Agent May Perform 10
14. The Agent's Duties 10
15. Remedies 11
16. Registration Rights 12
17. Indemnity and Expenses 13
18. Amendments; Waivers; Etc. 13
19. Addresses for Notices 14
20. Continuing Security Interest; Assignments 14
21. Release and Termination 15
22. Security Interest Absolute 15
23. Execution in Counterparts 15
24. Governing Law; Terms 16
Schedule I-Initial Pledged Shares and Initial Pledged Debt
Schedule II-Trade Names
Schedule III-Chief Executive Offices of Pledgors
Exhibit A-Form of Crompton Security Agreement Supplement
CROMPTON SECURITY AGREEMENT
CROMPTON SECURITY AGREEMENT dated August 21, 1996 made by the
Persons listed on the signature pages hereof and the Additional
Pledgors (as defined in Section 18(b)) (such Persons so listed
and the Additional Pledgors being, collectively, the "Pledgors")
to CITICORP USA, INC. ("Citicorp"), as agent (in such capacity,
the "Agent") for the Secured Parties (as defined in the Credit
Agreement referred to below).
PRELIMINARY STATEMENTS.
(1) Crompton & Knowles Corporation ("Crompton Corp."), Crompton &
Knowles Colors Incorporated ("Crompton Colors"), Davis-Standard
Corporation ("Davis-Standard") and Ingredient Technology
Corporation ("ITC" and, together with Crompton Corp., Crompton
Colors and Davis-Standard, the "Crompton Borrowers") have entered
into a Credit Agreement dated as of August 21, 1996 (said
Agreement, as it may hereafter be amended, supplemented or
otherwise modified from time to time, being the "Credit
Agreement"; capitalized terms used herein and not otherwise
defined herein are used herein as therein defined) with Uniroyal
Chemical Company, Inc., the lender parties party thereto (the
"Lender Parties"), Citicorp Securities, Inc., as Arranger,
Citicorp USA, Inc., as Agent and The Chase Manhattan Bank, as
Managing Agent.
(2)Each Pledgor is the owner of the shares of stock set forth
opposite such Pledgor's name in Part I of Schedule I hereto and
issued by the corporations indicated therein and of the
indebtedness set forth opposite such Pledgor's name in Part II of
Schedule I hereto and issued by the obligors indicated therein.
(3)Each of the Crompton Borrowers have opened a non-interest
bearing (but subject to investment pursuant to Section 6) cash
collateral account (each, an "L/C Cash Collateral Account") with
Citibank at its office at 399 Park Avenue, New York, New York
10043, which account is, in the case of Crompton Colors, Account
No. 4070-5777 in the case of Crompton Corp., Account No. 4070-5785,
in the case of Davis-Standard, Account No. 4070-5769, and
in the case of ITC, Account No. 4070-5793, each such L/C Cash
Collateral Account being in the name of such Crompton Borrower
but under the sole control and dominion of the Agent and subject
to the terms of this Agreement.
(4)Each Pledgor will derive substantial direct and indirect
benefit from the transactions contemplated by the Credit
Agreement.
(5)It is a condition precedent to the making of Advances and the
issuance of Letters of Credit by the Lender Parties under the
Credit Agreement and the entry by the Hedge Banks into Bank Hedge
Agreements with the Borrowers from time to time that each Pledgor
shall have granted the assignment and security interest and made
the pledge and assignment contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Lender Parties to make Advances and to issue Letters
of Credit under the Credit Agreement and to induce the Hedge
Banks to enter into Bank Hedge Agreements with the Borrowers from
time to time, each Pledgor hereby agrees with the Agent for the
ratable benefit of the Secured Parties as follows:
SECTION 1. Grant of Security. Each Pledgor hereby assigns and
pledges to the Agent for the ratable benefit of the Secured
Parties, and hereby grants to the Agent for the ratable benefit
of the Secured Parties a security interest in, the following, in
each case, as to each type of property described below, whether
now owned or hereafter acquired by such Pledgor, wherever located
and whether now or hereafter existing (collectively, the
"Collateral"):
(a)All of the following (the "Security Collateral"):
(i)the shares of stock set forth opposite such Pledgor's name in
Part I of Schedule I hereto and issued by the corporations
indicated therein (collectively referred to herein as the
"Initial Pledged Shares", and together with the shares referred
to in clause (iii) below, the "Pledged Shares"), together with
the certificates representing such Initial Pledged Shares and all
dividends, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in
exchange for any or all of such Initial Pledged Shares;
(ii)the indebtedness (whether or not evidenced by instruments)
set forth opposite such Pledgor's name in Part II of Schedule I
hereto and issued by the obligors indicated therein (collectively
referred to herein as the "Initial Pledged Debt", and together
with the indebtedness referred to in clause (iv) below, the
"Pledged Debt") and the instruments (if any) evidencing such
Initial Pledged Debt, all security therefor and all interest,
cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange
for any or all of such Initial Pledged Debt;
(iii)all additional shares of stock of any issuer of any Initial
Pledged Shares or of any other Loan Party or any Subsidiary of
any Loan Party or of any other Person from time to time acquired
by such Pledgor in any manner, and all additional shares of stock
of each other Subsidiary of such Pledgor to the extent required
pursuant to Section 5.01(k) of the Credit Agreement, together
with the certificates representing such additional shares and all
dividends, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in
exchange for any or all of such shares; and
(iv)all additional indebtedness from time to time owed to such
Pledgor by any obligor of the Initial Pledged Debt (whether or
not evidenced by instruments) and the instruments evidencing such
indebtedness (if any), and all additional indebtedness owed to
such Pledgor by any other obligor to the extent required pursuant
to Section 5.01(k) of the Credit Agreement, all security therefor
and all interest, cash, instruments and other property from time
to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of such indebtedness;
provided, however, that the Pledged Shares shall not include more
than 66 2/3% of the issued and outstanding shares of stock of any
Foreign Subsidiary;
(b)All of such Pledgor's right, title and interest in and to the
following (collectively, the "Account Collateral"):
(i)each L/C Cash Collateral Account, all funds held therein and
all certificates and instruments, if any, from time to time
representing or evidencing such L/C Cash Collateral Account;
(ii)all Collateral Investments (as hereinafter defined) from time
to time and all certificates and instruments, if any, from time
to time representing or evidencing the Collateral Investments;
(iii)all notes, certificates of deposit, deposit accounts, checks
and other instruments from time to time hereafter delivered to or
otherwise possessed by the Agent for or on behalf of such Pledgor
in substitution for or in addition to any or all of the then
existing Account Collateral; and
(iv)all interest, dividends, cash, instruments and other property
from time to time received, receivable or otherwise distributed
in respect of or in exchange for any or all of the then existing
Account Collateral; and
(c)All proceeds of any and all of the foregoing Collateral
(including, without limitation, proceeds that constitute property
of the types described in clauses (a) and (b) of this Section 1)
and, to the extent not otherwise included, all (i) payments under
insurance (whether or not the Agent is the loss payee thereof),
or any indemnity, warranty or guaranty, payable by reason of loss
or damage to or otherwise with respect to any of the foregoing
Collateral, and (ii) cash.
SECTION 2. Security for Obligations. This Agreement secures, in
the case of each Pledgor, the payment of all Obligations of such
Pledgor now or hereafter existing under the Loan Documents,
whether direct or indirect, absolute or contingent, including any
extensions, modifications, substitutions, amendments and renewals
thereof, whether for principal (including reimbursement for
amounts drawn under Letters of Credit), interest, premiums,
penalties, fees, indemnifications, contract causes of action,
costs, expenses or otherwise (all such Obligations being the
"Secured Obligations"). Without limiting the generality of the
foregoing, this Agreement secures, as to each Pledgor, the
payment of all amounts that constitute part of the Secured
Obligations of such Pledgor and that would be owed by such
Pledgor to the Secured Parties under the Loan Documents but for
the fact that they are unenforceable or not allowable due to the
existence of a bankruptcy, reorganization or similar proceeding
involving such Pledgor.
SECTION 3. Pledgors Remain Liable. Anything herein to the
contrary notwithstanding, (a) each Pledgor shall remain liable
under the contracts and agreements included in the Collateral to
the extent set forth therein to perform all of its duties and
obligations thereunder to the same extent as if this Agreement
had not been executed, (b) the exercise by the Agent of any of
its rights hereunder shall not release any Pledgor from any of
its duties or obligations under the contracts and agreements
included in the Collateral, and (c) no Secured Party shall have
any obligation or liability under the contracts and agreements
included in the Collateral by reason of this Agreement or any
other Loan Document, nor shall any Secured Party be obligated to
perform any of the obligations or duties of any Pledgor
thereunder or to take any action to collect or enforce any claim
for payment assigned hereunder.
SECTION 4. Delivery of Security Collateral and Account
Collateral. All certificates or instruments representing or
evidencing any Security Collateral or Account Collateral shall be
delivered to and held by or on behalf of the Agent pursuant
hereto and shall be in suitable form for transfer by delivery, or
shall be accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance reasonably
satisfactory to the Agent. If any Event of Default shall have
occurred and be continuing, the Agent shall have the right to
transfer to or to register in the name of the Agent or any of its
nominees any or all of the Security Collateral and Account
Collateral, subject only to the revocable rights specified in
Section 10(a). In addition, the Agent shall have the right at
any time to exchange certificates or instruments representing or
evidencing the Security Collateral or Account Collateral for
certificates or instruments of smaller or larger denominations.
SECTION 5. Maintaining the L/C Cash Collateral Accounts. So
long as any Advance shall remain unpaid, any Letter of Credit or
Bank Hedge Agreement shall be outstanding or any Lender Party
shall have any Commitment under the Credit Agreement:
(a)The Crompton Borrowers will maintain the L/C Cash Collateral
Accounts with Citibank.
(b)It shall be a term and condition of each the L/C Cash
Collateral Accounts, notwithstanding any term or condition to the
contrary in any other agreement relating to such L/C Cash
Collateral Account, as the case may be, and except as otherwise
provided by the provisions of Section 7 and Section 15, that no
amount (including interest on Collateral Investments) shall be
paid or released to or for the account of, or withdrawn by or for
the account of, any Crompton Borrower or any other Person from
the L/C Cash Collateral Accounts, as the case may be.
The L/C Cash Collateral Accounts shall be subject to such
applicable laws, and such applicable regulations of the Board of
Governors of the Federal Reserve System and of any other
appropriate banking or governmental authority, as may now or
hereafter be in effect.
SECTION 6. Investing of Amounts in the L/C Cash Collateral
Accounts. If requested by any Crompton Borrower and until the
Crompton Borrower in any way amends such request, the Agent will
direct Citibank to, subject to the provisions of Sections 7 and
15, from time to time (a) invest amounts on deposit in such
Crompton Borrower's L/C Cash Collateral Account in such Cash
Equivalents in the name of the Agent or as to which all action
required by Section 9 shall have been taken as such Crompton
Borrower may select and the Agent may approve and (b) invest
interest paid on the Cash Equivalents referred to in clause (a)
above, and reinvest other proceeds of any such Cash Equivalents
that may mature or be sold, in each case in such Cash Equivalents
in the name of the Agent or as to which all action required by
Section 9 shall have been taken as such Crompton Borrower may
select and the Agent may approve (the Cash Equivalents referred
to in clauses (a) and (b) above being collectively "Collateral
Investments"). Interest and proceeds that are not invested or
reinvested in Collateral Investments as provided above shall be
deposited and held in such L/C Cash Collateral Account, as the
case may be.
SECTION 7. Release of Amounts. So long as no Event of Default
shall have occurred and be continuing, the Agent will direct
Citibank to pay and release to each Crompton Borrower or at its
order or, at the request of such Crompton Borrower, apply to the
Obligations of such Crompton Borrower under the Loan Documents,
such amounts on deposit in its L/C Cash Collateral Accounts at
the times and in the amounts specified in the Credit Agreement,
or, if such times or amounts are not specified in the Credit
Agreement, such amount on deposit shall be released at such
Crompton Borrower's direction.
SECTION 8. Representations and Warranties. Each Pledgor
represents and warrants as follows:
(a)Such Pledgor is the legal and beneficial owner of the
Collateral of such Pledgor free and clear of any Lien, claim,
option or rights of others, except for the liens and security
interests created under this Agreement or permitted under the
Credit Agreement. No effective financing statement or other
instrument similar in effect covering all or any part of such
Collateral (including, without limitation, general intangibles
relating to the Collateral) or listing such Pledgor or any of its
Subsidiaries or any trade names of such Pledgor or any of its
Subsidiaries as debtor is on file in any recording office, except
such as may have been filed in favor of the Agent relating to
this Agreement or such as may have been filed in connection with
other Liens permitted under the Credit Agreement.
(b)The Pledged Shares owned by such Pledgor have been duly
authorized and validly issued and are fully paid and non-assessable.
The Pledged Debt held by such Pledgor has been duly
authorized, authenticated or issued and delivered, is the legal,
valid and binding obligation of the issuers thereof, is evidenced
by one or more promissory notes (except as otherwise provided in
Section 5.02(b)(i)(D) and Section 5.02(b)(ii) of the Credit
Agreement) (which notes have been delivered to the Agent) and is
not in default.
(c)The Initial Pledged Shares owned by such Pledgor constitute
the percentage of the issued and outstanding shares of stock of
the issuers thereof indicated on Schedule I hereto. The Initial
Pledged Debt constitutes all of the outstanding indebtedness owed
to such Pledgor by the issuers thereof.
(d)The principal place of business and the chief executive office
of such Pledgor are located at the address specified opposite the
name of such Pledgor on Schedule III.
(e)This Agreement, the pledge of the Security Collateral pursuant
hereto and the pledge and assignment of the Account Collateral
pursuant hereto create in favor of the Agent for the benefit of
the Secured Parties a valid and perfected first priority security
interest in the Collateral of such Pledgor, securing the payment
of the Secured Obligations of such Pledgor, and all filings and
other actions necessary or desirable to perfect and protect such
security interest have been duly taken.
(f)Such Pledgor has no trade names except as set forth on
Schedule II hereto; such trade names were adopted in good faith;
and, to the best of such Pledgor's knowledge, there exist no
adverse claims against such trade names as of the Effective Date.
(g)No consent of any other Person and no authorization, approval
or other action by, and no notice to or filing with, any
governmental authority or regulatory body or other third party is
required (i) for the grant by such Pledgor of the assignment and
security interest granted hereunder, for the pledge by such
Pledgor of any Security Collateral pursuant hereto or for the
execution, delivery or performance of this Agreement by such
Pledgor, (ii) for the perfection or maintenance of the pledge,
assignment and security interest created hereunder (including the
first priority nature of such pledge, assignment and security
interest), except for the filing of financing and continuation
statements under the Uniform Commercial Code, which financing
statements shall have been duly filed within 60 days after the
Initial Extension of Credit (or such later date as may be agreed
by the Borrowers and the Agent), or (iii) for the exercise by the
Agent of its voting or other rights provided for in this
Agreement or the remedies in respect of the Collateral pursuant
to this Agreement, except as may be required in connection with
the disposition of any portion of the Security Collateral by laws
affecting the offering and sale of securities generally.
(h)There are no conditions precedent to the effectiveness of this
Agreement that have not been satisfied or waived.
SECTION 9. Further Assurances. (a) Each Pledgor agrees that
from time to time, at the expense of such Pledgor, such Pledgor
will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or
desirable, or that the Agent may request, in order to perfect and
protect any pledge, assignment or security interest granted or
purported to be granted hereby or to enable the Agent to exercise
and enforce its rights and remedies hereunder with respect to any
Collateral. Without limiting the generality of the foregoing,
each Pledgor will: (i) if any Collateral shall be evidenced by a
promissory note or other instrument, deliver and pledge to the
Agent for the benefit of the Secured Parties hereunder such note
or instrument duly indorsed and accompanied by duly executed
instruments of transfer or assignment, all in form and substance
satisfactory to the Agent, (ii) deliver and pledge to the Agent
for the benefit of the Secured Parties hereunder certificates
representing the Pledged Shares accompanied by undated stock
powers executed in blank and evidence that all other action that
the Agent may deem necessary or desirable in order to perfect and
protect the liens and security interests created under this
Agreement has been taken and (iii) execute and file such
financing or continuation statements, or amendments thereto, and
such other instruments or notices, as may be necessary or
desirable, or as the Agent may reasonably request, in order to
perfect and preserve the pledge, assignment and security
interests granted or purported to be granted hereunder.
(b)Each Pledgor hereby authorizes the Agent to file one or more
financing or continuation statements, and amendments thereto,
relating to all or any part of the Collateral without the
signature of such Pledgor where permitted by law, provided that
the Agent shall give reasonably prompt notice of any such filing
to such Pledgor. A photocopy or other reproduction of this
Agreement or any financing statement covering the Collateral or
any part thereof shall be sufficient as a financing statement
where permitted by law.
(c)Each Pledgor will furnish to the Agent from time to time
statements and schedules further identifying and describing the
Collateral and such other reports in connection with the
Collateral as the Agent may reasonably request, all in reasonable
detail.
(d)Each Pledgor shall keep its chief place of business and chief
executive office and the office where it keeps its records
concerning the Collateral, at the location therefor specified
opposite the name of such Pledgor on the signature pages hereof
or, upon 20 days' prior written notice to the Agent, at such
other locations in a jurisdiction where all actions required by
this Section 9 shall have been taken with respect to the
Collateral. Each Pledgor will hold and preserve such records and
will permit representatives of the Agent at any reasonable time
and from time to time during regular business hours and upon
reasonable prior notice to inspect and make abstracts from such
records.
SECTION 10. Voting Rights; Dividends; Etc. (a) So long as no
Default under Section 6.01(a) or (f) of the Credit Agreement or
Event of Default shall have occurred and be continuing:
(i)Each Pledgor shall be entitled to exercise any and all voting
and other consensual rights pertaining to the Security Collateral
of such Pledgor or any part thereof for any purpose not
inconsistent with the terms of this Agreement or the other Loan
Documents; provided, however, that no Pledgor shall exercise or
refrain from exercising any such right if, in the Agent's
judgment, such action would have a material adverse effect on the
value of the Security Collateral or any part thereof.
(ii)Each Pledgor shall be entitled to receive and retain any and
all dividends and interest paid in respect of the Security
Collateral of such Pledgor if and to the extent that the payment
thereof is not otherwise prohibited by the terms of the Loan
Documents; provided, however, that any and all
(A)dividends and interest paid or payable other than in cash in
respect of, and instruments and other property received,
receivable or otherwise distributed in respect of, or in exchange
for, any Security Collateral,
(B)dividends and other distributions paid or payable in cash in
respect of any Security Collateral in connection with a partial
or total liquidation or dissolution or in connection with a
reduction of capital, capital surplus or paid-in-surplus, and
(C)cash paid, payable or otherwise distributed in respect of
principal of, or in redemption of, or in exchange for, any
Security Collateral,
shall be, and shall be forthwith delivered to the Agent to hold
as, Security Collateral and shall, if received by any Pledgor, be
received in trust for the benefit of the Agent, be segregated
from the other property or funds of such Pledgor and be forthwith
delivered to the Agent as Security Collateral in the same form as
so received (with any necessary indorsement).
(iii)The Agent shall execute and deliver (or cause to be executed
and delivered) to each Pledgor all such proxies and other
instruments as such Pledgor may reasonably request for the
purpose of enabling such Pledgor to exercise the voting and other
rights that it is entitled to exercise pursuant to paragraph (i)
above and to receive the dividends or interest payments that it
is authorized to receive and retain pursuant to paragraph (ii)
above.
(b)Upon the occurrence and during the continuance of any Default
under Section 6.01(a) or (f) of the Credit Agreement or any Event
of Default:
(i)All rights of each Pledgor (A) to exercise or refrain from
exercising the voting and other consensual rights that it would
otherwise be entitled to exercise pursuant to Section 10(a)(i)
shall, upon notice to such Pledgor by the Agent, cease, and
(B) to receive the dividends and interest payments that it would
otherwise be authorized to receive and retain pursuant to
Section 10(a)(ii) shall automatically cease, and all such rights
shall thereupon become vested in the Agent, which shall thereupon
have the sole right to exercise or refrain from exercising such
voting and other consensual rights and to receive and hold as
Security Collateral such dividends and interest payments.
(ii)All dividends and interest payments that are received by any
Pledgor contrary to the provisions of paragraph (i) of this
Section 10(b) shall be received in trust for the benefit of the
Agent, shall be segregated from other funds of such Pledgor and
shall be forthwith paid over to the Agent as Security Collateral
in the same form as so received (with any necessary indorsement).
SECTION 11. Transfers and Other Liens; Additional Shares.
(a) Each Pledgor agrees that it shall not (i) sell, assign (by
operation of law or otherwise) or otherwise dispose of, or grant
any option with respect to, any of the Collateral of such Pledgor
(other than sales, assignments, options and other dispositions
permitted under the terms of the Credit Agreement) or (ii) create
or suffer to exist any Lien upon or with respect to any of the
Collateral of such Pledgor, except for the Liens created under
the Collateral Documents and any other Liens permitted under the
Credit Agreement.
(b)Each Pledgor agrees that it shall (i) cause each issuer of the
Pledged Shares owned by such Pledgor not to issue any stock or
other securities in addition to or in substitution for the
Pledged Shares issued by such issuer, except to such Pledgor, and
(ii) pledge hereunder, immediately upon its acquisition (directly
or indirectly) thereof, any and all additional shares of stock or
other securities of each issuer of any Pledged Shares.
SECTION 12. Agent Appointed Attorney-in-Fact. Each Pledgor
hereby irrevocably appoints the Agent such Pledgor's attorney-in-fact,
with full authority in the place and stead of such Pledgor
and in the name of such Pledgor or otherwise, from time to time
after the occurrence and during the continuance of an Event of
Default in the Agent's discretion, to take any action and to
execute any instrument that the Agent may deem necessary or
advisable to accomplish the purposes of this Agreement,
including, without limitation:
(a)to ask for, demand, collect, sue for, recover, compromise,
receive and give acquittance and receipts for moneys due and to
become due under or in respect of any of the Collateral,
(b)to receive, indorse and collect any drafts or other
instruments and documents in connection with clause (a) above,
and
(c)to file any claims or take any action or institute any
proceedings that the Agent may deem necessary or desirable for
the collection of any of the Collateral or otherwise to enforce
compliance with the terms and conditions of any Assigned
Agreement or the rights of the Agent with respect to any of the
Collateral.
SECTION 13. Agent May Perform. If any Pledgor fails to perform
any agreement contained herein, the Agent may, but without any
obligation to do so and without further notice, itself perform,
or cause performance of, such agreement, and the expenses of the
Agent incurred in connection therewith shall be payable by such
Pledgor under Section 17. The Agent agrees to notify the
Crompton Borrowers of any such performance; provided, however,
that the failure to give such notice shall not affect the Agent's
right to perform or the validity of such performance.
SECTION 14. The Agent's Duties. The powers conferred on the
Agent hereunder are solely to protect its interest in the
Collateral and shall not impose any duty upon it to exercise any
such powers. Except for the safe custody of any Collateral in
its possession and the accounting for moneys actually received by
it hereunder, the Agent shall have no duty as to any Collateral,
as to ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters
relative to any Security Collateral, whether or not the Agent or
any other Secured Party has or is deemed to have knowledge of
such matters, or as to the taking of any necessary steps to
preserve rights against any parties or any other rights
pertaining to any Collateral. The Agent shall be deemed to have
exercised reasonable care in the custody and preservation of any
Collateral in its possession if such Collateral is accorded
treatment substantially equal to that which it accords its own
property.
SECTION 15. Remedies. If any Event of Default shall have
occurred and be continuing:
(a)The Agent may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a
secured party upon default under the Uniform Commercial Code in
effect in the State of New York at such time (the "Uniform
Commercial Code"), whether or not the Uniform Commercial Code
applies to the affected Collateral, and also may without notice
except as specified below, sell the Collateral or any part
thereof in one or more parcels at public or private sale, at any
of the Agent's offices or elsewhere, for cash, on credit or for
future delivery, and upon such other terms as the Agent may deem
commercially reasonable. Each Pledgor agrees that, to the extent
notice of sale shall be required by law, at least ten days'
notice to such Pledgor of the time and place of any public sale
or the time after which any private sale is to be made shall
constitute reasonable notification. The Agent shall not be
obligated to make any sale of Collateral regardless of notice of
sale having been given. The Agent may adjourn any public or
private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned.
(b)Any cash held by the Agent as Collateral and all cash proceeds
received by the Agent in respect of any sale of, collection from,
or other realization upon all or any part of the Collateral may,
in the discretion of the Agent, be held by the Agent as
collateral for, and/or then or at any time thereafter applied
(after payment of any amounts payable to the Agent pursuant to
Section 17) in whole or in part by the Agent for the ratable
benefit of the Secured Parties against, all or any part of the
Secured Obligations in such order as the Agent shall elect. In
determining the amount of any such cash to be applied against the
Secured Obligations owing to the Hedge Banks other than Secured
Obligations theretofore accrued and unpaid, the Agent shall be
fully protected in relying on the Agreement Values of the Bank
Hedge Agreements. "Agreement Value" means, for any Bank Hedge
Agreement on any date of determination, the amount, if any, that
would be payable to the Hedge Bank in respect of "agreement
value" as though such Bank Hedge Agreement were terminated on
such date, calculated as provided in the International Swap
Dealers Association Inc. Code of Standard Wording, Assumptions
and Provisions for Swaps, 1992 Edition; each determination of
Agreement Value shall be made by the Agent in good faith and in
reliance on any information, including information provided by
such Hedge Bank, that it believes accurate, but without any
obligation to verify such information. Any surplus of such cash
or cash proceeds held by the Agent and remaining after payment in
full of all the Secured Obligations shall be paid over to the
Pledgor or to whomsoever may be lawfully entitled to receive such
surplus.
(c)The Agent may exercise any and all rights and remedies of the
Pledgors in respect of the Collateral.
(d)All payments received by any Pledgor in respect of the
Collateral shall be received in trust for the benefit of the
Agent and the other Secured Parties, shall be segregated from
other funds of such Pledgor and shall be forthwith paid over to
the Agent in the same form as so received (with any necessary
indorsement).
(e)The Agent may, without notice to any Crompton Borrower except
as required by law and at any time or from time to time, charge,
set-off and otherwise apply all or any part of the Secured
Obligations against such Crompton Borrower's L/C Cash Collateral
Account or any part thereof.
SECTION 16. Registration Rights. If the Agent shall determine
to exercise its right to sell all or any of the Security
Collateral pursuant to Section 15, each Pledgor agrees that, upon
request of the Agent, such Pledgor will, at its own expense:
(a)execute and deliver, and cause each issuer of the Security
Collateral contemplated to be sold and the directors and officers
thereof to execute and deliver, all such instruments and
documents, and do or cause to be done all such other acts and
things, as may be necessary or, in the opinion of the Agent,
advisable to register such Security Collateral under the
provisions of the Securities Act of 1933 (as amended from time to
time, the "Securities Act"), to cause the registration statement
relating thereto to become effective and to remain effective for
such period as prospectuses are required by law to be furnished
and to make all amendments and supplements thereto and to the
related prospectus that, in the opinion of the Agent, are
necessary or advisable, all in conformity with the requirements
of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto;
(b)use its best efforts to qualify the Security Collateral under
the state securities or "Blue Sky" laws and to obtain all
necessary governmental approvals for the sale of the Security
Collateral, as requested by the Agent;
(c)cause each such issuer to make available to its security
holders, as soon as practicable, an earnings statement that will
satisfy the provisions of Section 11(a) of the Securities Act;
(d)provide the Agent with such other information and projections
as may be necessary or, in the opinion of the Agent, advisable to
enable the Agent to effect the sale of such Security Collateral;
and
(e)do or cause to be done all such other acts and things as may
be necessary to make such sale of the Security Collateral or any
part thereof valid and binding and in compliance with applicable
law.
The Agent is authorized, in connection with any sale of the
Security Collateral pursuant to Section 15, to deliver or
otherwise disclose to any prospective purchaser of the Security
Collateral (i) any registration statement or prospectus, and all
supplements and amendments thereto, prepared pursuant to clause
(a) above, (ii) any information and projections provided to it
pursuant to clause (d) above and (iii) any other information in
its possession relating to the Security Collateral.
SECTION 17. Indemnity and Expenses. (a) Each Pledgor agrees to
defend, protect, indemnify and hold harmless each Secured Party
from and against any and all claims, losses and liabilities
growing out of or resulting from this Agreement (including,
without limitation, enforcement of this Agreement), except
claims, losses or liabilities resulting from the Agent's or any
such other Secured Party's gross negligence or willful misconduct
as determined by a final judgment of a court of competent
jurisdiction.
(b)Each Pledgor will upon demand pay to the Agent the amount of
any and all reasonable expenses, including the reasonable fees
and expenses of its counsel and of any experts and agents, that
the Agent may incur in connection with (i) the administration of
this Agreement, (ii) the custody, preservation, use or operation
of, or the sale of, collection from or other realization upon,
any of the Collateral of such Pledgor, (iii) the exercise or
enforcement of any of the rights of the Agent or any other
Secured Party against such Pledgor, or (iv) the failure by such
Pledgor to perform or observe any of the provisions hereof.
(c)Without prejudice to the survival of any other agreement of
any Loan Party hereunder or under any other Loan Document, the
agreements and obligations of the Pledgors contained in this
Section 17 shall survive the payment in full of principal,
interest and all other amounts payable hereunder and under any of
the other Loan Documents.
SECTION 18. Amendments; Waivers; Etc. (a) No amendment or
waiver of any provision of this Agreement, and no consent to any
departure by any Pledgor herefrom, shall in any event be
effective unless the same shall be in writing and signed by the
Agent, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which
given. No failure on the part of the Agent to exercise, and no
delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any
such right preclude any other or further exercise thereof or the
exercise of any other right.
(b)Upon the execution and delivery by any Person of a security
agreement supplement in substantially the form of Exhibit A
hereto (each a "Crompton Security Agreement Supplement"),
(i) such Person shall be referred to as an "Additional Pledgor"
and shall be and become a Pledgor and each reference in this
Agreement to "Pledgor" shall also mean and be a reference to such
Additional Pledgor, and (ii) the annexes attached to each
Crompton Security Agreement Supplement shall be incorporated into
and become a part of and supplement Schedules I and II hereto,
and the Collateral Agent may attach such annexes as supplements
to such Schedules; and each reference to such Schedules shall
mean and be a reference to such Schedules as supplemented by such
Crompton Security Agreement Supplement.
SECTION 19. Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing
(including telecopier, telegraphic or telex communication) and,
if to any Pledgor, mailed, telecopied, telegraphed, telexed or
delivered to it, addressed to it c/o Crompton Corp. at its
address at One Station Place, Metro Center, Stamford, CT 06902,
Attention: Chief Financial Officer, and if to the Agent, mailed,
telecopied, telegraphed, telexed or delivered to it, addressed to
it at the address of the Agent specified in the Credit Agreement,
or as to any party at such other address as shall be designated
by such party in a written notice to each other party complying
as to delivery with the terms of this Section 19. All such
notices and other communications shall (a) when mailed, be
effective three Business Days after the same is deposited in the
mails, (b) when mailed for next day delivery by a reputable
freight company or reputable overnight courier service, be
effective one Business Day thereafter, and (c) when sent by
telegraph, telecopier or telex, be effective when the same is
confirmed by telephone, telecopier confirmation or return
telecopy or telex answerback, respectively.
SECTION 20. Continuing Security Interest; Assignments. This
Agreement shall create a continuing security interest in the
Collateral and shall (a) remain in full force and effect until
the Collateral Release Date, (b) be binding upon each Pledgor,
its successors and assigns and (c) inure, together with the
rights and remedies of the Agent hereunder, to the benefit of the
Secured Parties and their respective successors, transferees and
assigns. Without limiting the generality of the foregoing
clause (c), any Lender Party may assign or otherwise transfer all
or any portion of its rights and obligations under the Credit
Agreement (including, without limitation, all or any portion of
its Commitments, the Advances owing to it and the Note or Notes
held by it) to any other Person and such other Person shall
thereupon become vested with all the benefits in respect thereof
granted to such Lender Party herein or otherwise, in each case as
provided in Section 8.07 of the Credit Agreement. No Pledgor
shall have the right to assign its rights hereunder or any
interest herein without the prior written consent of the Secured
Parties.
SECTION 21. Release and Termination. (a) Upon any sale, lease,
transfer or other disposition of any item of Collateral of any
Pledgor, in accordance with the terms of the Loan Documents, the
Agent will, at such Pledgor's expense, execute and deliver to
such Pledgor such documents as such Pledgor shall reasonably
request to evidence the release of such item of Collateral from
the assignment and security interest granted hereby; provided,
however, that (i) at the time of such request and such release no
Event of Default shall have occurred and be continuing and
(ii) Crompton Corp. shall have delivered to the Agent, at least
ten Business Days prior to the date of the proposed release, a
written request for release describing the item of Collateral and
the terms of the sale, lease, transfer or other disposition in
reasonable detail, including the price thereof and any expenses
in connection therewith, together with a form of release for
execution by the Agent and a certification by Crompton Corp. to
the effect that the transaction is in compliance with the Loan
Documents and as to such other matters as the Agent may request.
(b)Upon the Collateral Release Date, the pledge, assignment and
security interest granted hereby shall terminate and all rights
to the Collateral shall revert to the respective Pledgor. Upon
any such termination or release, the Agent will, at such
Pledgor's expense, execute and deliver to such Pledgor such
documents as such Pledgor shall reasonably request to evidence
such termination.
SECTION 22. Security Interest Absolute. The Obligations of each
Pledgor hereunder are independent of the Obligations of any other
Loan Party under the Loan Documents, and a separate action or
actions may be brought or prosecuted against each Pledgor whether
action is brought against any other Loan Party or whether any
other Loan Party is joined in any such action or actions. All
rights of the Collateral Agent and security interests hereunder,
and all obligations of each Pledgor hereunder, shall be absolute
and unconditional, irrespective of, and each Pledgor hereby
irrevocably waives any defenses it may now or hereafter have in
any way relating to, any or all of the circumstances described in
the Guaranties or any other circumstance that might constitute a
discharge available to, or a discharge of, any Borrower or any
Guarantor.
This Agreement shall continue to be effective or be reinstated,
as the case may be, if at any time any payment of any of the
Secured Obligations is rescinded or must otherwise be returned by
any Secured Party or by any other Person upon the insolvency,
bankruptcy or reorganization of any Loan Party or otherwise, all
as though such payment had not been made.
SECTION 23. Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which when so
executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Delivery
of an executed counterpart of a signature page to this Agreement
by telecopier shall be effective as delivery of a manually
executed counterpart of this Agreement.
SECTION 24. Governing Law; Terms. This Agreement shall be
governed by and construed in accordance with the laws of the
State of New York, except to the extent that the validity or
perfection of the security interest hereunder, or remedies
hereunder, in respect of any particular Collateral are governed
by the laws of a jurisdiction other than the State of New York.
Unless otherwise defined herein or in the Credit Agreement, terms
used in Article 8 or Article 9 of the Uniform Commercial Code are
used herein as therein defined.
<PAGE>
IN WITNESS WHEREOF, each Pledgor has caused this Agreement to be
duly executed and delivered by its officer thereunto duly
authorized as of the date first above written.
CK HOLDING CORPORATION
By
Title:
CNK DISPOSITION CORP.
By
Title:
CROMPTON & KNOWLES COLORS
INCORPORATED
By
Title:
CROMPTON & KNOWLES
CORPORATION
By
Title:
CROMPTON & KNOWLES OVERSEAS
CORPORATION
By
Title:
DAVIS-STANDARD CORPORATION
By
Title:
INGREDIENT TECHNOLOGY CORPORATION
By
Title:
KEM MANUFACTURING CORPORATION
By
Title:
SCHEDULE I
TO THE CROMPTON SECURITY AGREEMENT
INITIAL PLEDGED SHARES AND INITIAL PLEDGED DEBT
PART I
Initial Pledged Shares
Name of Pledgor Name of Issuer Number of Shares
Crompton & Knowles
Corporation CK Holding Corporation 750
Crompton & Knowles Crompton & Knowles Overseas
Corporation Corporation 100
Crompton & Knowles KEM Manufacturing 5,000
Corporation Corporation (formerly known
as CNK Corporation)
CK Holding Corporation Davis-Standard Corporation 500
CK Holding Corporation Crompton & Knowles Colors 500
Incorporated (formerly known
as Dyes & Chemicals Corporation)
PART II
Initial Pledged Debt
Debt of the Crompton Borrowers and the Crompton Guarantors
evidenced by the intercompany promissory note dated August 21,
1996 made by CK Holding Corporation, CNK Disposition Corp.,
Crompton & Knowles Colors Incorporated, Crompton & Knowles
Corporation, Crompton & Knowles Overseas Corporation, Davis-Standard
Corporation, Ingredient Technology Corporation, Kem
Manufacturing Corporation, Gustafson, Inc., Gustafson
International Company, Lokar Enterprises, Inc., Trace Chemicals,
Inc., Uniroyal Chemical Brazil Holding, Inc., Uniroyal Chemical
Company, Inc., Uniroyal Chemical Corporation, Uniroyal Chemical
Export Limited, Uniroyal Chemical International Company, Uniroyal
Chemical Leasing Company Inc. and Uniroyal Chemical Ltd.
SCHEDULE II
TO THE CROMPTON SECURITY AGREEMENT
TRADE NAMES
John Brown
John Brown Plastics Machinery
Trafalgar House
Egan
Bone Markham
Bone Cravens
Bone Brothers
Western Polymer
Johnson Plastics Machine
Magna Graphics
DATM
Spartan
Titan
Flex lip
CMR-1000
CMR-2000
CMR-3000
CRM-Plus
Flexistrictor
Powerflight
SCHEDULE III
TO THE CROMPTON SECURITY AGREEMENT
CHIEF EXECUTIVE OFFICES OF PLEDGORS
CK Holding Corporation
One Station Place - Metro Center
Stamford, CT 06902
Fed Tax ID #: 06-1413342
Crompton & Knowles Overseas Corporation
One Station Place - Metro Center
Stamford, CT 06902
Fed Tax ID #: 04-2463110
Davis-Standard Corporation
One Extrusion Drive
Pawcatuck, CT 06379
Fed Tax ID #: 06-1413340
Crompton & Knowles Colors Incorporated
3001 N. Graham Street
Charlotte, NC 28206
Fed Tax ID #: 06-1413341
Ingredient Technology Corporation
1595 MacArthur Blvd.
Mahwah, NJ 07430
Fed Tax ID #: 13-4923610
Kem Manufacturing Corporation
One Station Place - Metro Center
Stamford, CT 06902
Fed Tax ID #: 58-0620603
Crompton & Knowles Corporation
One Station Place - Metro Center
Stamford, CT 06902
Fed Tax ID #: 04-1218720
CNK Disposition Corp.
5414 North 56th Street
Tampa, FL 33610
Fed Tax ID #: 59-0614068
EXHIBIT A
TO THE CROMPTON SECURITY AGREEMENT
FORM OF CROMPTON SECURITY AGREEMENT SUPPLEMENT
Citicorp USA, Inc., as Agent
under the Credit Agreement
referred to below
399 Park Avenue
New York, New York 10043 [Date]
Attention: Robert Kosian
Crompton Security Agreement dated as of August 21, 1996 made by
the Pledgors party thereto to Citicorp USA, Inc., as Agent
Ladies and Gentlemen:
Reference is made to the above-captioned Crompton Security
Agreement (such Crompton Security Agreement, as in effect on the
date hereof and as it may hereafter be amended, modified or
otherwise supplemented from time to time, being the "Crompton
Security Agreement"). The terms defined in the Crompton Security
Agreement (or in the Credit Agreement referred to therein) and
not otherwise defined herein are used herein as therein defined.
The undersigned hereby agrees, as of the date first above
written, to become a Pledgor under the Crompton Security
Agreement as if it were an original party thereto and agrees that
each reference in the Crompton Security Agreement to "Pledgor"
shall also mean and be a reference to the undersigned.
The undersigned hereby assigns and pledges to the Agent for the
ratable benefit of the Secured Parties, and hereby grants to the
Agent for the ratable benefit of the Secured Parties as security
for the Secured Obligations a lien on and security interest in,
all of the right, title and interest of the undersigned, whether
now owned or hereafter acquired, in and to the Collateral owned
by the undersigned, including, but not limited to, the property
listed on Annex I hereto. Schedules I and II to the Crompton
Security Agreement are hereby supplemented by Annexes I and II
hereto, respectively. The undersigned hereby certifies that such
Annexes have been prepared by the undersigned in substantially
the form of Schedules I and II to the Crompton Security Agreement
and are accurate and complete as of the date hereof.
The undersigned hereby makes each representation and warranty set
forth in Section 8 of the Crompton Security Agreement (as
supplemented by the attached Annexes) to the same extent as each
other Pledgor and hereby agrees to be bound as a Pledgor by all
of the terms and provisions of the Crompton Security Agreement to
the same extent as each other Pledgor.
This Crompton Security Agreement Supplement shall be governed by,
and construed in accordance with, the laws of the State of New
York.
Very truly yours,
[NAME OF ADDITIONAL
PLEDGOR]
By
Title:
Address of Chief Executive
Office and for Notices:
[Address]
EXHIBIT D-2
FORM OF UNIROYAL SECURITY AGREEMENT
UNIROYAL SECURITY AGREEMENT
Dated August 21, 1996
From
THE PERSONS LISTED ON THE SIGNATURE PAGES
HEREOF
as Pledgors
to
CITICORP USA, INC.,
as Agent
T A B L E O F C O N T E N T S
Section Page
1. Grant of Security 2
2. Security for Obligations 4
3. Pledgors Remain Liable 4
4. Delivery of Security Collateral and Account Collateral 5
5. Maintaining the Collection Account, the Cash
Concentration Account and the L/C Cash Collateral Account 5
6. As to Account Collateral 6
7. Investing of Amounts in the Cash Concentration Account
and the L/C Cash Collateral Account 7
8. Release of Amounts 7
9. Representations and Warranties 7
10. Further Assurances 9
11. As to Inventory 10
12. Insurance 10
13. Place of Perfection; Records; Collection of Receivables11
14. Transfers and Other Liens 12
15. Agent Appointed Attorney-in-Fact 12
16. Agent May Perform 12
17. The Agent's Duties 13
18. Remedies 13
19. Indemnity and Expenses 14
20. Amendments; Waivers; Etc 15
21. Addresses for Notices 15
22. Continuing Security Interest; Assignments 16
23. Release and Termination 16
24. Security Interest Absolute 17
25. Execution in Counterparts 17
26. Governing Law; Terms 18
Schedule I-Trade Names
Schedule II-Locations of Inventory
Schedule III-Pledged Debt
Schedule IV-Chief Executive Offices of Pledgors
Exhibit A-Form of Uniroyal Security Agreement Supplement
UNIROYAL SECURITY AGREEMENT
UNIROYAL SECURITY AGREEMENT dated August 21, 1996 made by the
Persons listed on the signature pages hereof and the Additional
Pledgors (as defined in Section 20(b)) (such Persons so listed
and the Additional Pledgors being, collectively, the "Pledgors")
to CITICORP USA, INC. as agent (in such capacity, the "Agent")
for the Secured Parties (as defined in the Credit Agreement
referred to below).
PRELIMINARY STATEMENTS.
(1)Uniroyal Chemical Company, Inc. (the "Uniroyal Borrower") has
entered into a Credit Agreement dated as of August 21, 1996 (said
Agreement, as it may hereafter be amended, supplemented or
otherwise modified from time to time, being the "Credit
Agreement"; capitalized terms used herein and not otherwise
defined herein are used herein as therein defined) with Crompton
& Knowles Corporation, Crompton & Knowles Colors Incorporated,
Davis-Standard Corporation, Ingredient Technology Corporation,
the lender parties party thereto (the "Lender Parties"), Citicorp
Securities, Inc., as Arranger, Citicorp USA, Inc., as Agent and
The Chase Manhattan Bank, as Managing Agent.
(2)The Uniroyal Borrower maintains a non-interest bearing cash
collection account (the "Collection Account") with Citibank, N.A.
("Citibank") at its office at 399 Park Avenue, New York, New York
10043, Account No. 4055-5094, in the name of the Uniroyal
Borrower but under the sole control and dominion of the Agent and
subject to the terms of this Agreement.
(3)The Uniroyal Borrower maintains a non-interest bearing cash
concentration account (the "Cash Concentration Account") with
Citibank at its office at 399 Park Avenue, New York, New York
10043, Account No. 4049-8376, in the name of the Uniroyal
Borrower and subject to the terms of this Agreement.
(4)The Uniroyal Borrower has opened a non-interest (but subject
to investment pursuant to Section 6) cash collateral account (an
"L/C Cash Collateral Account") with Citibank at its office at 399
Park Avenue, New York, New York 10043, Account No. 4070-5742, in
the name of the Uniroyal Borrower and subject to the terms of
this Agreement.
(5)Each Pledgor will derive substantial direct and indirect
benefit from the transactions contemplated by the Credit
Agreement.
(6)It is a condition precedent to the making of Advances and the
issuance of Letters of Credit by the Lender Parties under the
Credit Agreement and the entry by the Hedge Banks into Bank Hedge
Agreements with the Borrowers from time to time that each Pledgor
shall have granted the assignment and security interest and made
the pledge and assignment contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Lender Parties to make Advances and to issue Letters
of Credit under the Credit Agreement and to induce the Hedge
Banks to enter into Bank Hedge Agreements with the Borrowers from
time to time, each Pledgor hereby agrees with the Agent for the
ratable benefit of the Secured Parties as follows:
SECTION 1. Grant of Security. Each Pledgor hereby assigns and
pledges to the Agent for the ratable benefit of the Secured
Parties, and hereby grants to the Agent for the ratable benefit
of the Secured Parties a security interest in, the following, in
each case, as to each type of property described below, whether
now owned or hereafter acquired by such Pledgor, wherever located
and whether now or hereafter existing (collectively, the
"Collateral"):
(a)all of such Pledgor's right, title and interest, whether now
owned or hereafter acquired, in and to all inventory in all of
its forms, wherever located, now or hereafter existing
(including, but not limited to, (i) all herbicides, agricides,
insecticides, foliar nutrients, plant growth regulants,
fungicides, seed treatment chemicals and equipment, chemicals and
polymers and specialty chemicals and raw materials and work in
process therefor, finished goods thereof and materials used or
consumed in the manufacture or production thereof, (ii) inventory
in which such Pledgor has an interest in mass or a joint or other
interest or right of any kind (including, without limitation,
goods in which such Pledgor has an interest or right as
consignee) and (iii) inventory that is returned to or repossessed
by such Pledgor), and all accessions thereto and products thereof
and documents therefor (any and all such inventory, accessions,
products and documents being the "Inventory");
(b)all of such Pledgor's (i) right, title and interest, whether
now owned or hereafter acquired, in and to all accounts, contract
rights, chattel paper, instruments, deposit accounts, general
intangibles and other obligations of any kind, now or hereafter
existing, but only to the extent the foregoing arise out of or in
connection with, and constitute a right of payment of money or
other property for, the sale or lease of goods or the rendering
of services other than intercompany royalty payments, licensing
fees, technology transfer payments and other similar intercompany
payments (to the extent not referred to in clause (c) below, the
"Receivables") and (ii) rights now or hereafter existing in and
to all security agreements, leases and other contracts securing
or otherwise relating to the Receivables (the "Related
Contracts");
(c)all of such Pledgor's right, title and interest in and to the
following (collectively, the "Account Collateral"):
(i)the Cash Concentration Account, all funds held therein and all
certificates and instruments, if any, from time to time
representing or evidencing the Cash Concentration Account;
(ii)the Collection Account, all funds held therein and all
certificates and instruments, if any, from time to time
representing or evidencing the Collection Account;
(iii)the L/C Cash Collateral Account, all funds held therein and
all certificates and instruments, if any, from time to time
representing or evidencing such L/C Cash Collateral Account;
(iv)all Pledged Accounts (as hereinafter defined), all funds held
therein and all certificates and instruments, if any, from time
to time representing or evidencing the Pledged Accounts;
(v)all Other Accounts (as hereinafter defined), all funds held
therein and all certificates and instruments, if any, from time
to time representing or evidencing such accounts;
(vi)all notes, certificates of deposit, deposit accounts, checks
and other instruments from time to time hereafter delivered to or
otherwise possessed by the Agent for or on behalf of such Pledgor
in substitution for or in addition to any or all of the then
existing Account Collateral; and
(vii)all interest, dividends, cash, instruments and other
property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the
then existing Account Collateral; and
(d)All of the following (the "Security Collateral"):
(i)the indebtedness (whether or not evidenced by instruments) set
forth opposite such Pledgor's name on Schedule III hereto and
issued by the obligors indicated therein (collectively referred
to herein as the "Initial Pledged Debt", and together with the
indebtedness referred to in clause (ii) below, the "Pledged
Debt") and the instruments (if any) evidencing such Initial
Pledged Debt, all security therefor and all interest, cash,
instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange
for any or all of such Initial Pledged Debt; and
(ii)all additional indebtedness from time to time owed to such
Pledgor by any obligor of the Initial Pledged Debt (whether or
not evidenced by instruments) and the instruments evidencing such
indebtedness (if any), and all additional indebtedness owed to
such Pledgor by any other obligor to the extent required pursuant
to Section 5.01(k) of the Credit Agreement, all security therefor
and all interest, cash, instruments and other property from time
to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of such indebtedness;
(e)all proceeds of any and all of the foregoing Collateral
(including, without limitation, proceeds that constitute property
of the types described in clauses (a), (b), (c) and (d) of this
Section 1) and, to the extent not otherwise included, all
(i) payments under insurance (whether or not the Agent is the
loss payee thereof), or any indemnity, warranty or guaranty,
payable by reason of loss or damage to or otherwise with respect
to any of the foregoing Collateral, and (ii) cash.
SECTION 2. Security for Obligations. This Agreement secures,
in the case of each Pledgor, the payment of all Obligations of
such Pledgor now or hereafter existing under the Loan Documents,
which shall not exceed, so long as any Uniroyal Indenture remains
in effect, the maximum amount of Debt permitted to be incurred by
such Pledgor under such Uniroyal Indenture, whether direct or
indirect, absolute or contingent, including any extensions,
modifications, substitutions, amendments and renewals thereof,
whether for principal (including reimbursement for amounts drawn
under Letters of Credit), interest, premiums, penalties, fees,
indemnifications, contract causes of action, costs, expenses or
otherwise (all such Obligations being the "Secured Obligations").
Without limiting the generality of the foregoing, this Agreement
secures, as to each Pledgor, the payment of all amounts that
constitute part of the Secured Obligations of such Pledgor and
that would be owed by such Pledgor to the Secured Parties under
the Loan Documents but for the fact that they are unenforceable
or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving such Pledgor.
SECTION 3. Pledgors Remain Liable. Anything herein to the
contrary notwithstanding, (a) each Pledgor shall remain liable
under the contracts and agreements included in the Collateral to
the extent set forth therein to perform all of its duties and
obligations thereunder to the same extent as if this Agreement
had not been executed, (b) the exercise by the Agent of any of
its rights hereunder shall not release any Pledgor from any of
its duties or obligations under the contracts and agreements
included in the Collateral and (c) no Secured Party shall have
any obligation or liability under the contracts and agreements
included in the Collateral by reason of this Agreement or any
other Loan Document, nor shall any Secured Party be obligated to
perform any of the obligations or duties of any Pledgor
thereunder or to take any action to collect or enforce any claim
for payment assigned hereunder.
SECTION 4. Delivery of Security Collateral and Account
Collateral. All certificates or instruments representing or
evidencing any Security Collateral or Account Collateral have
been or shall be delivered to and held by or on behalf of the
Agent pursuant hereto and shall be in suitable form for transfer
by delivery, or shall be accompanied by duly executed instruments
of transfer or assignment in blank, all in form and substance
reasonably satisfactory to the Agent. If any Event of Default
shall have occurred and be continuing, the Agent shall have the
right to transfer to or to register in the name of the Agent or
any of its nominees any or all of the Security Collateral and
Account Collateral. In addition, the Agent shall have the right
at any time to exchange certificates or instruments representing
or evidencing Account Collateral for certificates or instruments
of smaller or larger denominations.
SECTION 5. Maintaining the Collection Account, the Cash
Concentration Account and the L/C Cash Collateral Account. So
long as any Advance shall remain unpaid, any Letter of Credit or
Bank Hedge Agreement shall be outstanding or any Lender Party
shall have any Commitment under the Credit Agreement:
(a)The Pledgor will maintain the Collection Account and the Cash
Concentration Account with Citibank.
(b)It shall be a term and condition of the Collection Account and
the L/C Cash Collateral Account, notwithstanding any term or
condition to the contrary in any other agreement relating to such
Collection Account or such L/C Cash Collateral Account, as the
case may be, and except as otherwise provided by the provisions
of Section 8 and Section 18, that no amount (including interest
on Collateral Investments) shall be paid or released to or for
the account of, or withdrawn by or for the account of, the
Pledgor or any other Person from such Collection Account or L/C
Cash Collateral Account, as the case may be.
The Collection Account, the Cash Concentration Account and the
L/C Cash Collateral Account shall be subject to such applicable
laws, and such applicable regulations of the Board of Governors
of the Federal Reserve System and of any other appropriate
banking or governmental authority, as may now or hereafter be in
effect.
SECTION 6. As to Account Collateral. So long as any Advance
shall remain unpaid, any Letter of Credit shall be outstanding,
any Bank Hedge Agreement shall be in effect or any Lender Party
shall have any Commitment under the Credit Agreement:
(a)Each Pledgor shall comply with its current cash management
policies and practices, and shall not make any material change to
such policies and practices which could adversely affect the
interests of the Secured Parties without the prior written
consent of the Agent.
(b)Each Pledgor shall instruct each Person obligated at any time
to make any payment to such Pledgor for any reason (an "Obligor")
to make such payment to a Pledged Account (as defined in Section
9(d)) or to the Collection Account and shall pay to the Agent for
deposit in the Collection Account, at the end of each Business
Day, all proceeds of Collateral.
(c)Each Pledgor shall not make any deposit in any deposit account
other than a deposit in the Cash Concentration Account or an
Other Account (as defined in Section 9(d)) or an Excepted Account
(as defined in Section 9(d)) in accordance with its then current
cash management policies and practices in accordance with Section
6(a), provided that in the case of deposits in the Excepted
Accounts, no amount deposited therein shall constitute proceeds
of Collateral, other than amounts transferred directly from the
Cash Concentration Account.
(d)Upon the occurrence and during the continuance of an Event of
Default, at the Agent's request, within 15 Business Days of such
request (or such later time as the Agent and Crompton Corp. shall
agree), (i) each Pledgor shall give written notice to the Agent
of (A) the name and address of each bank with which each Pledged
Account or Other Account is maintained by such Pledgor, (B) the
account number of each such Pledged Account or Other Account and
(C) the full name under which such Pledged Account or Other
Account is maintained, (ii) each Pledgor shall enter into letter
agreements (the "Pledged Account Letters") in form and substance
satisfactory to the Agent among such Pledgor, the Agent and each
bank with which such Pledgor maintains a Pledged Account or, at
the option of such Pledgor, shall close such account, (iii) each
Pledgor shall enter into letter agreements (the "Other Account
Letters", and together with the Pledged Account Letters, the
"Blocked Account Letters") in form and substance satisfactory to
the Agent among such Pledgor, the Agent and each bank with which
such Pledgor maintains an Other Account or, at the option of such
Pledgor, shall close such account, (iv) upon any termination of
any Pledged Account Letter or other agreement with respect to the
maintenance of a Pledged Account, such Pledgor shall promptly
notify all Obligors that were making payments to such Pledged
Account to make all future payments to another Pledged Account or
to the Collection Account, and (v) each Pledgor agrees to close
any or all Pledged Accounts and terminate any or all Pledged
Account Letters at the request of the Agent upon five Business
Days' notice thereof.
SECTION 7. Investing of Amounts in the Cash Concentration
Account and the L/C Cash Collateral Account. If requested by the
Uniroyal Borrower and until the Uniroyal Borrower in any way
amends such request, the Agent will direct Citibank to, subject
to the provisions of Section 8 and Section 18, from time to time
(a) invest amounts on deposit in the Cash Concentration Account
and the L/C Cash Collateral Account in such Cash Equivalents in
the name of the Agent or as to which all action required by
Section 10 shall have been taken as the Uniroyal Borrower may
select and the Agent may approve and (b) invest interest paid on
the Cash Equivalents referred to in clause (a) above, and
reinvest other proceeds of any such Cash Equivalents that may
mature or be sold, in each case in such Cash Equivalents in the
name of the Agent or as to which all action required by Section
10 shall have been taken as such Uniroyal Borrower may select and
the Agent may approve (the Cash Equivalents referred to in
clauses (a) and (b) above being collectively "Collateral
Investments"). Interest and proceeds that are not invested or
reinvested in Collateral Investments as provided above shall be
deposited and held in the Cash Concentration Account or the L/C
Cash Collateral Account, as the case may be.
SECTION 8. Release of Amounts. So long as no Event of Default
shall have occurred and be continuing, the Agent will direct
Citibank to pay and release to the Uniroyal Borrower or at its
order or, at the request of the Uniroyal Borrower, apply to the
Obligations of the Uniroyal Borrower under the Loan Documents,
such amounts on deposit in the Collection Account, the Cash
Concentration Account and the L/C Cash Collateral Account at the
times and in the amounts specified in the Credit Agreement, or,
if such times or amounts are not specified in the Credit
Agreement, such amounts on deposit shall be released at the
Uniroyal Borrower's direction.
SECTION 9. Representations and Warranties. Each Pledgor
represents and warrants as follows:
(a)As of the Effective Date, all of the Inventory is located at
the places specified in Schedule II hereto. The chief place of
business and chief executive office of such Pledgor and the
office where such Pledgor keeps its records concerning the
Receivables and all originals of all chattel paper that evidence
Receivables, are located at the address specified opposite the
name of such Pledgor on Schedule IV. None of the Receivables is
evidenced by a promissory note or other instrument which has not
been pledged to the Agent for the ratable benefit of the Secured
Parties and delivered to the Agent pursuant to the terms of this
Agreement.
(b)Such Pledgor is the legal and beneficial owner of the
Collateral of such Pledgor free and clear of any Lien, claim,
option or rights of others except for the liens and security
interests created under this Agreement or permitted under the
Credit Agreement. No effective financing statement or other
instrument similar in effect covering all or any part of such
Collateral (including, without limitation, general intangibles
relating to the Collateral) or listing such Pledgor or any of its
Subsidiaries or any trade names of such Pledgor or any of its
Subsidiaries as debtor is on file in any recording office, except
such as may have been filed in favor of the Agent relating to
this Agreement or such as may have been filed in connection with
other Liens permitted under the Credit Agreement.
(c)Such Pledgor has exclusive possession and control of the
Inventory, except the Inventory locations marked by an asterisk
in Schedule II.
(d)Such Pledgor has no lockbox accounts, deposit accounts,
disbursement accounts or other accounts other than (i) the
deposit accounts into which an Obligor deposits proceeds received
in respect of Inventory Receivables or Related Contracts owing to
such Pledgor (each a "Pledged Account"), (ii) the other accounts
into which such Pledgor deposits proceeds received in respect of
Inventory Receivables or Related Contracts owing to such Pledgor
(each an "Other Account") and (iii) such other accounts into
which no proceeds of Collateral are deposited (each an "Excepted
Account").
(e)The Initial Pledged Debt constitutes all of the outstanding
indebtedness owed to such Pledgor by the issuers thereof.
(f)The principal place of business and chief executive office of
such Pledgor are located at the address specified opposite the
name of such Pledgor on Schedule IV.
(g)Such Pledgor has no trade names except as set forth on
Schedule I hereto; such trade names were adopted in good faith;
and, to the best of such Pledgor's knowledge, there exist no
adverse claims against such trade names as of the Effective Date.
(h)This Agreement and the pledge of the Collateral pursuant
hereto create in favor of the Agent for the benefit of the
Secured Parties a valid and perfected first priority security
interest in the Collateral (other than as to matters of
perfection and priority of the security interest in the Pledged
Accounts and the Other Accounts) of such Pledgor, securing the
payment of the Secured Obligations of such Pledgor, and all
filings and other actions necessary or desirable to perfect and
protect such security interest have been duly taken. Such
Pledgor has not granted any security interest in the Collateral
to any other Person.
(i)No consent of any other Person and no authorization, approval
or other action by, and no notice to or filing with, any
governmental authority or regulatory body or other third party is
required (i) for the grant by such Pledgor of the assignment and
security interest granted hereunder, for the pledge by such
Pledgor of the Collateral pursuant hereto or for the execution,
delivery or performance of this Agreement by such Pledgor, (ii)
for the perfection or maintenance of the pledge, assignment and
security interest created hereunder (including the first priority
nature of such pledge, assignment or security interest), except
for the filing of financing and continuation statements under the
Uniform Commercial Code, which financing statements shall have
been duly filed within 60 days after the Initial Extension of
Credit (or such later date as may be agreed by the Borrowers and
the Agent), or (iii) for the exercise by the Agent of its rights
provided for in this Agreement or the remedies in respect of the
Collateral pursuant to this Agreement.
(j)The Inventory that has been produced by such Pledgor has been
produced in compliance with all requirements of the Fair Labor
Standards Act.
(k)There are no conditions precedent to the effectiveness of this
Agreement that have not been satisfied or waived.
SECTION 10. Further Assurances. (a) Each Pledgor agrees that
from time to time, at the expense of such Pledgor, such Pledgor
will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or
desirable, or that the Agent may reasonably request, in order to
perfect and protect any pledge, assignment or security interest
granted or purported to be granted hereby or to enable the Agent
to exercise and enforce its rights and remedies hereunder with
respect to any Collateral. Without limiting the generality of
the foregoing, each Pledgor will: (i) at the request of the
Agent, mark conspicuously each document included in the Inventory
of such Pledgor and each chattel paper included in the
Receivables of such Pledgor with a legend, in form and substance
satisfactory to the Agent, indicating that such document or
chattel paper is subject to the security interest granted hereby;
(ii) if any Collateral shall be evidenced by a promissory note or
other instrument or chattel paper, at the request of the Agent,
deliver and pledge to the Agent hereunder such note or instrument
or chattel paper duly endorsed and accompanied by duly executed
instruments of transfer or assignment, all in form and substance
satisfactory to the Agent; and (iii) execute and file such
financing or continuation statements, or amendments thereto, and
such other instruments or notices, as may be necessary or
desirable, or as the Agent may reasonably request, in order to
perfect and preserve the pledge, assignment and security
interests granted or purported to be granted hereunder.
(b)Each Pledgor hereby authorizes the Agent to file one or more
financing or continuation statements, and amendments thereto,
relating to all or any part of the Collateral without the
signature of such Pledgor where permitted by law, provided that
the Agent shall give reasonably prompt notice of any such filing
to such Pledgor. A photocopy or other reproduction of this
Agreement or any financing statement covering the Collateral or
any part thereof shall be sufficient as a financing statement
where permitted by law.
(c)Each Pledgor will furnish to the Agent from time to time
statements and schedules further identifying and describing the
Collateral and such other reports in connection with the
Collateral as the Agent may reasonably request, all in reasonable
detail.
SECTION 11. As to Inventory. (a) Each Pledgor shall keep the
Inventory (other than Inventory sold in the ordinary course of
business) at any of the places therefor specified in Section 9(a)
or, upon 20 days' prior written notice to the Agent, at such
other places in a jurisdiction where all action required by
Section 10 shall have been taken with respect to the Inventory.
(b)Each Pledgor shall pay promptly when due all property and
other taxes, assessments and governmental charges or levies
imposed upon, and all claims (including claims for labor,
materials and supplies) against, the Inventory, except to the
extent not required pursuant to Section 5.01(b) of the Credit
Agreement. In producing the Inventory, each Pledgor shall comply
with all requirements of the Fair Labor Standards Act.
SECTION 12. Insurance. (a) Each Pledgor shall, at its own
expense, maintain insurance with respect to the Inventory in such
amounts, against such risks, in such form and with such insurers,
as shall be satisfactory to the Agent from time to time. Each
policy for property damage insurance with respect to Inventory
shall provide for all losses (except for losses of less than
$250,000 per occurrence) to be paid directly to the Agent. Each
such policy shall in addition (i) name the Agent as loss payee,
(ii) provide that there shall be no recourse against the Agent
for payment of premiums or other amounts with respect thereto and
(iii) provide that at least 10 days' prior written notice of
cancellation or of lapse shall be given to the Agent by the
insurer. Each Pledgor shall, if so requested by the Agent upon
an Event of Default, deliver to the Agent duplicate policies of
such insurance and, as often as the Agent may reasonably request,
a report of a reputable insurance broker with respect to such
insurance. Further, each Pledgor shall, at the request of the
Agent, duly execute and deliver instruments of assignment of such
insurance policies to comply with the requirements of Section 10
and use its best efforts to cause the insurers to acknowledge
notice of such assignment.
(b)Reimbursement under any liability insurance maintained by the
Uniroyal Borrower pursuant to this Section 12 may be paid
directly to the Person who shall have incurred liability covered
by such insurance. In case of any loss involving damage to
Inventory when subsection (c) of this Section 12 is not
applicable, the Uniroyal Borrower shall make or cause to be made
the necessary repairs to such Inventory or replacements of any
Inventory, and any proceeds of insurance maintained by the
Uniroyal Borrower pursuant to this Section 12 shall be paid to
the Uniroyal Borrower as reimbursement for the costs of such
repairs or replacements.
(c)Upon the occurrence and during the continuance of any Event of
Default or the actual or constructive total loss (in excess of
$250,000 per occurrence) of any Inventory, all insurance payments
in respect of such Inventory shall be paid to and applied by the
Agent as specified in Section 18(b).
SECTION 13. Place of Perfection; Records; Collection of
Receivables. (a) Each Pledgor shall keep its chief place of
business and chief executive office and the office where it keeps
its records concerning the Collateral, and all originals of all
chattel paper that evidence Receivables, at the location therefor
specified in Section 9(a) or, upon 20 days' prior written notice
to the Agent, at such other locations in a jurisdiction where all
actions required by Section 10 shall have been taken with respect
to the Collateral. Each Pledgor will hold and preserve such
records and chattel paper and will permit representatives of the
Agent at any reasonable time and from time to time during regular
business hours and upon reasonable prior notice to inspect and
make abstracts from such records and chattel paper.
(b) Except as otherwise provided in this subsection (b), each
Pledgor shall continue to collect in the ordinary course of its
business in a manner consistent with past practices, at its own
expense, all amounts due or to become due to such Pledgor under
the Receivables. The Agent shall have the right at any time,
upon the occurrence and during the continuance of an Event of
Default and upon written notice to the Pledgor of its intention
to do so, to notify the Obligors under any Receivables of the
assignment of such Receivables to the Agent and to direct such
Obligors to make payment of all amounts due or to become due to
such Pledgor thereunder directly to the Agent and, upon such
notification and at the expense of such Pledgor, to enforce
collection of any such Receivables, and to adjust, settle or
compromise the amount or payment thereof, in the same manner and
to the same extent as such Pledgor might have done. After
receipt by such Pledgor of the notice from the Agent referred to
in the preceding sentence and so long as such Event of Default is
continuing, (i) all amounts and proceeds (including instruments)
received by such Pledgor in respect of the Receivables shall be
received in trust for the benefit of the Agent hereunder, shall
be segregated from other funds of such Pledgor and shall be
forthwith paid over to the Agent in the same form as so received
(with any necessary endorsement) to be deposited in the
Collection Account and either (A) released to the Uniroyal
Borrower on the terms set forth in Section 8 so long as no Event
of Default shall have occurred and be continuing or (B) if an
Event of Default shall have occurred and be continuing, applied
as provided by Section 18(b) and (ii) such Pledgor shall not
adjust, settle or compromise the amount or payment of any
Receivable, release wholly or partly any Obligor thereof, or
allow any credit or discount thereon.
SECTION 14. Transfers and Other Liens. Each Pledgor agrees that
it shall not (i) sell, assign (by operation of law or otherwise)
or otherwise dispose of, or grant any option with respect to, any
of the Collateral of such Pledgor (other than sales, assignments,
options and other dispositions permitted under the terms of the
Credit Agreement) or (ii) create or suffer to exist any Lien upon
or with respect to any of the Collateral of such Pledgor, except
for the Liens created under the Collateral Documents and any
other Liens permitted under the Credit Agreement.
SECTION 15. Agent Appointed Attorney-in-Fact. Each Pledgor
hereby irrevocably appoints the Agent such Pledgor's
attorney-in-fact, with full authority in the place and stead of
such Pledgor and in the name of such Pledgor or otherwise, from
time to time after the occurrence and during the continuance of
an Event of Default in the Agent's discretion, to take any action
and to execute any instrument that the Agent may deem necessary
or advisable to accomplish the purposes of this Agreement,
including, without limitation:
(a)to obtain and adjust insurance required to be paid to the
Agent pursuant to Section 12,
(b)to ask for, demand, collect, sue for, recover, compromise,
receive and give acquittance and receipts for moneys due and to
become due under or in respect of any of the Collateral,
(c)to receive, indorse and collect any drafts or other
instruments, documents and chattel paper, in connection with
clause (a) or (b) above, and
(d)to file any claims or take any action or institute any
proceedings that the Agent may deem necessary or desirable for
the collection of any of the Collateral or otherwise to enforce
compliance with the rights of the Agent with respect to any of
the Collateral.
SECTION 16. Agent May Perform. If any Pledgor fails to perform
any agreement contained herein, the Agent may, but without any
obligation to do so and without further notice, itself perform,
or cause performance of, such agreement, and the expenses of the
Agent incurred in connection therewith shall be payable by such
Pledgor under Section 19(b). The Agent agrees to notify the
Uniroyal Borrower of any such performance; provided, however,
that the failure to give such notice shall not affect the Agent's
right to perform or the validity of such performance.
SECTION 17. The Agent's Duties. The powers conferred on the
Agent hereunder are solely to protect its interest in the
Collateral and shall not impose any duty upon it to exercise any
such powers. Except for the safe custody of any Collateral in
its possession and the accounting for moneys actually received by
it hereunder, the Agent shall have no duty as to any Collateral,
as to ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters
relative to any Collateral, whether or not the Agent or any other
Secured Party has or is deemed to have knowledge of such matters,
or as to the taking of any necessary steps to preserve rights
against any parties or any other rights pertaining to any
Collateral. The Agent shall be deemed to have exercised
reasonable care in the custody and preservation of any Collateral
in its possession if such Collateral is accorded treatment
substantially equal to that which the Agent accords its own
property.
SECTION 18. Remedies. If any Event of Default shall have
occurred and be continuing:
(a)The Agent may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a
secured party upon default under the Uniform Commercial Code in
effect in the State of New York at such time (the "Uniform
Commercial Code") (whether or not the Uniform Commercial Code
applies to the affected Collateral) and also may (i) require any
Pledgor to, and each Pledgor hereby agrees that it will at its
expense and upon request of the Agent forthwith, assemble all or
part of the Collateral pledged by it (other than the Receivables
and the Account Collateral) as directed by the Agent and make it
available to the Agent at a place and time to be designated by
the Agent that is reasonably convenient to both parties and (ii)
without notice except as specified below, sell the Collateral or
any part thereof in one or more parcels at public or private
sale, at any of the Agent's offices or elsewhere, for cash, on
credit or for future delivery, and upon such other terms as the
Agent may deem commercially reasonable. Each Pledgor agrees
that, to the extent notice of sale shall be required by law, at
least ten days' notice to such Pledgor of the time and place of
any public sale or the time after which any private sale is to be
made shall constitute reasonable notification. The Agent shall
not be obligated to make any sale of Collateral regardless of
notice of sale having been given. The Agent may adjourn any
public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further
notice, be made at the time and place to which it was so
adjourned.
(b)Any cash held by the Agent as Collateral and all cash proceeds
received by the Agent in respect of any sale of, collection from,
or other realization upon all or any part of the Collateral may
in the discretion of the Agent, be held by the Agent as
collateral for, and/or then or at any time thereafter applied
(after payment of any amounts payable to the Agent pursuant to
Section 19) in whole or in part by the Agent for the ratable
benefit of the Secured Parties, against all or any part of the
Secured Obligations in such order as the Agent shall elect. In
determining the amount of any such cash to be applied against the
Secured Obligations owing to the Hedge Banks other than Secured
Obligations theretofore accrued and unpaid, the Agent shall be
fully protected in relying on the Agreement Values of the Bank
Hedge Agreements. "Agreement Value" means, for any Bank Hedge
Agreement on any date of determination, the amount, if any, that
would be payable to the Hedge Bank in respect of "agreement
value" as though such Bank Hedge Agreement were terminated on
such date, calculated as provided in the International Swap
Dealers Association Inc. Code of Standard Wording, Assumptions
and Provisions for Swaps, 1992 Edition; each determination of
Agreement Value shall be made by the Agent in good faith and in
reliance on any information, including information provided by
such Hedge Bank, that it believes accurate, but without any
obligation to verify such information. Any surplus of such cash
or cash proceeds held by the Agent and remaining after payment in
full of all the Secured Obligations shall be paid over to the
Pledgors or to whomsoever may be lawfully entitled to receive
such surplus.
(c)The Agent may exercise any and all rights and remedies of the
Pledgors in respect of the Collateral.
(d)All payments received by each Pledgor in respect of the
Collateral shall be received in trust for the benefit of the
Agent, shall be segregated from other funds of such Pledgor and
shall be forthwith paid over to the Agent in the same form as so
received (with any necessary endorsement).
(e)The Agent may, without notice to the Uniroyal Borrower except
as required by law and at any time or from time to time, charge,
set-off and otherwise apply all or any part of the Secured
Obligations against the Uniroyal Borrower's Collection Account,
the Cash Concentration Account and the L/C Cash Collateral
Account or any part thereof.
SECTION 19. Indemnity and Expenses. (a) Each Pledgor agrees
to defend, protect, indemnify and hold harmless each Secured
Party from and against any and all claims, losses and liabilities
growing out of or resulting from this Agreement (including,
without limitation, enforcement of this Agreement), except
claims, losses or liabilities resulting from the Agent's or such
other Secured Party's gross negligence or willful misconduct as
determined by a final judgment of a court of competent
jurisdiction.
(b)Each Pledgor will upon demand, pay to the Agent the amount of
any and all reasonable expenses, including the reasonable fees
and expenses of its counsel and of any experts and agents, that
the Agent may incur in connection with (i) the administration of
this Agreement, (ii) the custody, preservation, use or operation
of, or the sale of, collection from or other realization upon,
any of the Collateral of such Pledgor, (iii) the exercise or
enforcement of any of the rights of the Agent or any other
Secured Party against such Pledgor, or (iv) the failure by such
Pledgor to perform or observe any of the provisions hereof.
(c)Without prejudice to the survival of any other agreement of
any Loan Party hereunder or under any other Loan Document, the
agreements and obligations of the Pledgors contained in this
Section 19 shall survive the payment in full of principal,
interest and all other amounts payable hereunder and under any of
the other Loan Documents.
SECTION 20. Amendments; Waivers; Etc. (a) No amendment or
waiver of any provision of this Agreement, and no consent to any
departure by any Pledgor herefrom, shall in any event be
effective unless the same shall be in writing and signed by the
Agent, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which
given. No failure on the part of the Agent to exercise, and no
delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any
such right preclude any other or further exercise thereof or the
exercise of any other right.
(b)Upon the execution and delivery by any Person of a security
agreement supplement in substantially the form of Exhibit A
hereto (each a "Uniroyal Security Agreement Supplement"),
(i) such Person shall be referred to as an "Additional Pledgor"
and shall be and become a Pledgor and each reference in this
Agreement to "Pledgor" shall also mean and be a reference to such
Additional Pledgor, and (ii) the annexes attached to each
Uniroyal Security Agreement Supplement shall be incorporated into
and become a part of and supplement Schedules I, II and III
hereto, and the Collateral Agent may attach such annexes as
supplements to such Schedules; and each reference to such
Schedules shall mean and be a reference to such Schedules as
supplemented pursuant hereto.
SECTION 21. Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing
(including telecopier, telegraphic or telex communication) and,
if to any Pledgor, mailed, telecopied, telegraphed, telexed or
delivered to it, addressed to it c/o Uniroyal Corp. at its
address at World Headquarters, Benson Road, Middlebury, CT
06749, Attention: Chief Financial Officer, and if to the Agent,
mailed, telecopied, telegraphed, telexed or delivered to it,
addressed to it at the address of the Agent specified in the
Credit Agreement, or as to any party, at such other address as
shall be designated by such party in a written notice to each
other party complying as to delivery with the terms of this
Section. All such notices and other communications shall (a)
when mailed, be effective three Business Days after the same is
deposited in the mails, (b) when mailed for next day delivery by
a reputable freight company or reputable overnight courier
service, be effective one Business Day thereafter, and (c) when
sent by telegraph, telecopier or telex, be effective when the
same is confirmed by telephone, telecopier confirmation or return
telecopy or telex answerback, respectively.
SECTION 22. Continuing Security Interest; Assignments. This
Agreement shall create a continuing security interest in the
Collateral and shall (a) remain in full force and effect until
the Collateral Release Date, (b) be binding upon each Pledgor,
its successors and assigns and (c) inure, together with the
rights and remedies of the Agent hereunder, to the benefit of the
Secured Parties and their respective successors, transferees and
assigns. Without limiting the generality of the foregoing clause
(c), any Lender Party may assign or otherwise transfer all or any
portion of its rights and obligations under the Credit Agreement
(including, without limitation, all or any portion of its
Commitments, the Advances owing to it and the Note or Notes held
by it) to any other Person, and such other Person shall thereupon
become vested with all the benefits in respect thereof granted to
such Lender Party herein or otherwise, in each case as provided
in Section 8.07 of the Credit Agreement. No Pledgor shall have
the right to assign its rights hereunder or any interest herein
without the prior written consent of the Secured Parties.
SECTION 23. Release and Termination. (a) Upon any sale, lease,
transfer or other disposition of any item of Collateral of any
Pledgor, in accordance with the terms of the Loan Documents, the
Agent will, at such Pledgor's expense, execute and deliver to
such Pledgor such documents as such Pledgor shall reasonably
request to evidence the release of such item of Collateral from
the assignment and security interest granted hereby; provided,
however, that (i) at the time of such request and such release no
Event of Default shall have occurred and be continuing and
(ii) the Uniroyal Borrower shall have delivered to the Agent, at
least ten Business Days prior to the date of the proposed
release, a written request for release describing the item of
Collateral and the terms of the sale, lease, transfer or other
disposition in reasonable detail, including the price thereof and
any expenses in connection therewith, together with a form of
release for execution by the Agent and a certification by the
Uniroyal Borrower to the effect that the transaction is in
compliance with the Loan Documents and as to such other matters
as the Agent may request.
(b)Upon the Collateral Release Date, the pledge, assignment and
security interest granted hereby shall terminate and all rights
to the Collateral shall revert to the respective Pledgor. Upon
any such termination or release, the Agent will, at such
Pledgor's expense, execute and deliver to such Pledgor such
documents as such Pledgor shall reasonably request to evidence
such termination.
SECTION 24. Security Interest Absolute. The Obligations of each
Pledgor hereunder are independent of the Obligations of any other
Loan Party under the Loan Documents, and a separate action or
actions may be brought or prosecuted against each Pledgor whether
action is brought against any other Loan Party or whether any
other Loan Party is joined in any such action or actions. All
rights of the Collateral Agent and security interests hereunder,
and all obligations of each Pledgor hereunder, shall be absolute
and unconditional, irrespective of, and each Pledgor hereby
irrevocably waives any defenses it may now or hereafter have in
any way relating to, any or all of the circumstances described in
the Guaranties or any other circumstance that might constitute a
discharge available to, or a discharge of, any Borrower or any
Guarantor.
This Agreement shall continue to be effective or be reinstated,
as the case may be, if at any time any payment of any of the
Secured Obligations is rescinded or must otherwise be returned by
any Secured Party or by any other Person upon the insolvency,
bankruptcy or reorganization of any Loan Party or otherwise, all
as though such payment had not been made.
SECTION 25. Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which when so
executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Delivery
of an executed counterpart of a signature page to this Agreement
by telecopier shall be effective as delivery of a manually
executed counterpart of this Agreement.
<PAGE>
SECTION 26. Governing Law; Terms. This Agreement shall be
governed by and construed in accordance with the laws of the
State of New York, except to the extent that the validity or
perfection of the security interest hereunder, or remedies
hereunder, in respect of any particular Collateral are governed
by the laws of a jurisdiction other than the State of New York.
Unless otherwise defined herein or in the Credit Agreement, terms
used in Article 9 of the Uniform Commercial Code are used herein
as therein defined.
IN WITNESS WHEREOF, each Pledgor has caused this Agreement to be
duly executed and delivered by its officer thereunto duly
authorized as of the date first above written.
GUSTAFSON, INC.
By
Title:
GUSTAFSON INTERNATIONAL COMPANY
By
Title:
LOKAR ENTERPRISES, INC.
By
Title:
TRACE CHEMICALS, INC.
By
Title:
UNIROYAL CHEMICAL BRAZIL HOLDING, INC.
By
Title:
UNIROYAL CHEMICAL COMPANY,
INC.
By
Title:
UNIROYAL CHEMICAL CORPORATION
By
Title:
UNIROYAL CHEMICAL EXPORT
LIMITED
By
Title:
UNIROYAL CHEMICAL INTERNATIONAL
COMPANY
By
Title:
UNIROYAL CHEMICAL LEASING
COMPANY, INC.
By
Title:
SCHEDULE I
TO THE UNIROYAL SECURITY AGREEMENT
TRADE NAMES
Uniroyal Chemical Company, Inc. only sells as Uniroyal Chemical
Company, Inc.
SCHEDULE II
TO THE UNIROYAL SECURITY AGREEMENT
LOCATIONS OF INVENTORY
SCHEDULE III
TO THE UNIROYAL SECURITY AGREEMENT
PLEDGED DEBT
Debt of the Uniroyal Borrower and the Uniroyal Guarantors
evidenced by the intercompany promissory note dated
August 21, 1996 made by CK Holding Corporation, CNK
Disposition Corp., Crompton & Knowles Colors Incorporated,
Crompton & Knowles Corporation, Crompton & Knowles Overseas
Corporation, Davis-Standard Corporation, Ingredient Technology
Corporation, Kem Manufacturing Corporation, Gustafson, Inc.,
Gustafson International Company, Lokar Enterprises, Inc., Trace
Chemicals, Inc., Uniroyal Chemical Brazil Holding, Inc., Uniroyal
Chemical Company, Inc., Uniroyal Chemical Corporation, Uniroyal
Chemical Export Limited, Uniroyal Chemical International Company,
Uniroyal Chemical Leasing Company Inc. and Uniroyal Chemical Ltd.
SCHEDULE IV
TO THE UNIROYAL SECURITY AGREEMENT
CHIEF EXECUTIVE OFFICES OF PLEDGORS
Uniroyal Chemical Corporation Lokar Enterprises, Inc.
c/o Uniroyal Chemical Company, c/o Uniroyal Chemical
Inc. Company, Inc.
Benson Road Benson Road
Middlebury, CT 06749 Middlebury, CT 06749
Fed. Tax ID #: 06-1258925
Gustafson International Company Uniroyal Chemical Company, Inc.
c/o Gustafson, Inc. Benson Road
1400 Preston Road Middlebury, CT 06749
Suite 400 Fed. Tax ID #: 06-1148490
Plano, TX 75093
Fed. Tax ID #: 75-2295890 Gustafson, Inc.
1400 Preston Road, Suite 400
Uniroyal Chemical Brazil Holding, Inc. Plano, TX 75093
c/o Uniroyal Chemical Company, Inc. Fed. Tax ID #: 41-0795292
Benson Road
Middlebury, CT 06749 Trace Chemicals, Inc.
06-1237209 839 Brinkman Drive
Fed. Tax ID #: 06-1237209 Pekin, IL 61554
Fed. Tax ID #: 37-1032576
Uniroyal Chemical Export Limited
c/o Uniroyal Chemical Company, Inc.
Benson Road
Middlebury, CT 06749
Fed. Tax ID #: 06-1431523
Uniroyal Chemical International Company
c/o Gustafson, Inc.
1400 Preston Road
Suite 400
Plano, TX 75093
Fed. Tax ID #: 75-2270460
Uniroyal Chemical Leasing Company, Inc.
c/o Uniroyal Chemical Company, Inc.
Benson Road
Middlebury, CT 06749
EXHIBIT A TO THE UNIROYAL SECURITY AGREEMENT
FORM OF UNIROYAL SECURITY AGREEMENT SUPPLEMENT
Citicorp USA, Inc., as Agent
under the Credit Agreement
referred to below
399 Park Avenue
New York, New York 10043 [Date]
Attention: Robert Kosian
Uniroyal Security Agreement dated as of August 21, 1996
made by Uniroyal Chemical Company, Inc. and the other
Pledgors to Citicorp USA, Inc., as Agent
Ladies and Gentlemen:
Reference is made to the above-captioned Uniroyal Security
Agreement (such Uniroyal Security Agreement, as in effect on the
date hereof and as it may hereafter be amended, modified or
otherwise supplemented from time to time, being the "Uniroyal
Security Agreement"). The terms defined in the Uniroyal
Security Agreement (or in the Credit Agreement referred to
therein) and not otherwise defined herein are used herein as
therein defined.
The undersigned hereby agrees, as of the date first above
written, to become a Pledgor under the Uniroyal Security
Agreement as if it were an original party thereto and agrees
that each reference in the Uniroyal Security Agreement to
"Pledgor" shall also mean and be a reference to the undersigned.
The undersigned hereby assigns and pledges to the Agent for the
ratable benefit of the Secured Parties, and hereby grants to the
Agent for the ratable benefit of the Secured Parties as security
for the Secured Obligations a lien on and security interest in,
all of the right, title and interest of the undersigned, whether
now owned or hereafter acquired, in and to the Collateral owned
by the undersigned, including, but not limited to, the property
listed on Annex I hereto. Schedules I, II and III to the
Uniroyal Security Agreement are hereby supplemented by Annexes
I, II and III hereto, respectively. The undersigned hereby
certifies that such Annexes have been prepared by the
undersigned in substantially the form of Schedules I, II and III
to the Uniroyal Security Agreement and are accurate and complete
as of the date hereof.
The undersigned hereby makes each representation and warranty
set forth in Section 9 of the Uniroyal Security Agreement (as
supplemented by the attached Annexes) to the same extent as each
other Pledgor and hereby agrees to be bound as a Pledgor by all
of the terms and provisions of the Uniroyal Security Agreement
to the same extent as each other Pledgor.
This Uniroyal Security Agreement Supplement shall be governed
by, and construed in accordance with, the laws of the State of
New York.
Very truly yours,
[NAME OF ADDITIONAL
PLEDGOR]
By
Title:
Address of Chief Executive
Office and for Notices:
[Address]
EXHIBIT D-3
FORM OF LOUISIANA UNDERTAKING
LOUISIANA UNDERTAKING
Dated as of August 21, 1996
To the Lender Parties party to the
Credit Agreement referred
to below and to Citicorp USA, Inc.,
as Agent for such Lender Parties
Ladies and Gentlemen:
We refer to the Uniroyal Security Agreement dated as of August
21, 1996 (as amended, supplemented or otherwise modified from
time to time, the "Security Agreement"), made and executed by the
Pledgors party thereto in favor of Citicorp, USA, Inc., as Agent
(in such capacity, the "Agent") for the Secured Parties referred
to in the Credit Agreement dated as of August 21, 1996 (as
amended, supplemented or otherwise modified from time to time,
the "Credit Agreement") among Uniroyal Chemical Company, Inc.
("Uniroyal"), Crompton & Knowles Corporation, Crompton & Knowles
Colors Incorporated, Davis-Standard Corporation, Ingredient
Technology Corporation, the Lender Parties party thereto,
Citicorp Securities, Inc., as Arranger, Citicorp USA, Inc., as
Agent and The Chase Manhattan Bank, as Managing Agent. Unless
otherwise defined herein, the terms defined in the Credit
Agreement or the Security Agreement shall be used herein as
therein defined.
Each Pledgor hereby agrees, with respect to any and all
Collateral located in the State of Louisiana (the "Louisiana
Collateral") that the Security Agreement is hereby supplemented,
effective as of the date first above written, as follows:
(a)In the event the Louisiana Collateral or any part thereof is
seized as an incident to an action for the recognition or
enforcement of the security interest granted under the Security
Agreement by executory process, ordinary process, sequestration,
writ of fieri facias, or otherwise, each Pledgor hereby agrees
that any court issuing any such order shall, if petitioned for by
the Agent, direct the sheriff or the United States Marshal, as
applicable, to appoint as a keeper of the Louisiana Collateral,
the Agent, or any agent designated by the Agent, or any person
named by the Agent at the time such seizure is effected. This
designation is made pursuant to LSA-R.S. 9:5136 through 5140.2,
inclusive, as the same may be amended from time to time, and the
Agent shall be entitled to all the rights and benefits afforded
thereunder including reasonable compensation.
(b) The Agent may exercise in respect of the Louisiana
Collateral, in addition to all other rights and remedies provided
for herein or in the Security Agreement or otherwise available to
it, all of the rights and remedies of a secured party upon
default under the Uniform Commercial Code in effect in the State
of Louisiana at such time, whether or not the Uniform Commercial
Code of the State of Louisiana applies to the affected Louisiana
Collateral.
(c)Each Pledgor hereby confesses judgment in the amount of the
Secured Obligations for purposes of executory process in favor of
the Agent or of any future holder, bona fide purchaser, or
assignee of the Secured Obligations of such Pledgor under the
Security Agreement, and it shall be lawful for the Agent, without
making demand and without notice or putting into default, the
same being hereby expressly waived, to cause all and singular the
Louisiana Collateral to be seized and sold under executory or
ordinary process by any court of competent jurisdiction or to
proceed with enforcement of its security interests in any other
manner provided by law, to be sold with or without appraisement,
to the highest bidder for cash or on such other terms as the
plaintiff in such proceedings may direct. To the extent
otherwise applicable at all, each Pledgor hereby expressly waives
all of the following: (i) the benefit of appraisement, as
provided in Articles 2332, 2336, 2723, and 2724 of the Louisiana
Code of Civil Procedure (the "Louisiana Code"), and all other
laws conferring the same; (ii) the demand and three (3) days
delay accorded by Articles 2639 and 2721 of the Louisiana Code,
(iii) the notice of seizure required by Article 2293 of the
Louisiana Code, and conferring the same; (iv) the three (3) days
delay provided by Articles 2331 and 2722 of the Louisiana Code,
and the other provisions of Articles 2331, 2722, and 2723 of the
Louisiana Code, and (v) all other Articles of the Louisiana Code
not specifically mentioned above, in each case, as amended from
time to time; and each Pledgor expressly agrees to the immediate
seizure of the Louisiana Collateral in the event of suit thereon.
This Undertaking shall not operate as a waiver of any right,
power or remedy of the Agent under the Security Agreement nor
constitute a waiver of any provision of the Credit Agreement or
any other Loan Document.
Without duplication of any amount payable under Section 8.04 of
the Credit Agreement, Uniroyal agrees: (a) to indemnify the Agent
from and against any and all claims, losses and liabilities
growing out of or resulting from this Undertaking (including,
without limitation, enforcement of this Undertaking), except
claims, losses or liabilities resulting from the Agent's gross
negligence or willful misconduct as determined by a final
judgment of a court of competent jurisdiction; and (b) upon
demand, to pay to the Agent the amount of any and all reasonable
expenses, including the reasonable fees and expenses of its
counsel and of any experts and agents, that the Agent may incur
in connection with (i) the administration of this Undertaking,
(ii) the custody, preservation, use or operation of, or the sale
of, collection from or other realization upon, any of the
Louisiana Collateral, (iii) the exercise or enforcement of any of
the rights of the Agent or the Lender Parties hereunder or (iv)
the failure by any Pledgor to perform or observe any of the
provisions hereof.
This Undertaking may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all
of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature
page to this Undertaking by telecopier shall be effective as
delivery of a manually executed counterpart of this Undertaking.
This Undertaking shall be governed by, and construed in
accordance with, the laws of the State of Louisiana.
Very truly yours,
GUSTAFSON, INC.
By
Title:
GUSTAFSON INTERNATIONAL COMPANY
By
Title:
LOKAR ENTERPRISES, INC.
By
Title:
TRACE CHEMICALS, INC.
By
Title:
UNIROYAL CHEMICAL BRAZIL HOLDING, INC.
By
Title:
UNIROYAL CHEMICAL COMPANY,
INC.
By
Title:
UNIROYAL CHEMICAL CORPORATION
By
Title:
UNIROYAL CHEMICAL EXPORT
LIMITED
By
Title:
UNIROYAL CHEMICAL INTERNATIONAL
COMPANY
By
Title:
UNIROYAL CHEMICAL LEASING
COMPANY, INC.
By
Title:
WITNESSES:
Acknowledged this 21st
day of August, 1996
CITICORP USA, INC.
as Agent for the Secured Parties
By
Title:
EXHIBIT E-1
FORM OF PARENT GUARANTY
PARENT GUARANTY
Dated August 21, 1996
From
CROMPTON & KNOWLES CORPORATION
as Guarantor
in favor of
THE SECURED PARTIES REFERRED TO IN
THE CREDIT AGREEMENT REFERRED TO HEREIN
T A B L E O F C O N T E N T S
Section Page
1.Guaranty 1
2.Guaranty Absolute 2
3.Waivers and Acknowledgments 3
4.Subrogation 4
5.Payments Free and Clear of Taxes, Etc. 4
6.Representations and Warranties 7
7.Amendments, Etc. 8
8.Notices, Etc. 8
9.No Waiver; Remedies 8
10.Right of Set-off 8
11.Indemnification 9
12.Continuing Guaranty; Assignments under the Credit
Agreement 9
13.Governing Law; Jurisdiction; Waiver of Jury Trial, Etc. 9
PARENT GUARANTY
PARENT GUARANTY dated August 21, 1996 made by CROMPTON & KNOWLES
CORPORATION, a Massachusetts corporation (the "Guarantor"), in
favor of the Secured Parties (as defined in the Credit Agreement
referred to below).
PRELIMINARY STATEMENT. The Guarantor has entered into a Credit
Agreement dated as of August 21, 1996 (said Agreement, as it may
hereafter be amended, supplemented or otherwise modified from
time to time, the "Credit Agreement"; terms used herein and not
otherwise defined are used herein as therein defined) with
Crompton & Knowles Colors Incorporated ("Crompton Colors"),
Davis-Standard Corporation ("Davis-Standard"), Ingredient
Technology Corporation ("ITC" and, together with the Guarantor,
Crompton Colors and Davis-Standard, the "Crompton Borrowers") and
Uniroyal Chemical Company, Inc. (together with the Crompton
Borrowers, the "Borrowers") the lender parties party thereto (the
"Lender Parties"), Citicorp Securities, Inc., as Arranger,
Citicorp USA, Inc., as Agent and The Chase Manhattan Bank, as
Managing Agent. The Guarantor may receive a portion of the
proceeds of the Advances under the Credit Agreement and will
derive substantial direct and indirect benefit from the
transactions contemplated by the Credit Agreement. It is a
condition precedent to the making of Advances and the issuance of
Letters of Credit by the Lender Parties under the Credit
Agreement and the entry by the Hedge Banks into Bank Hedge
Agreements with the Borrowers from time to time that the
Guarantor, as direct or indirect owner of 100% of the outstanding
shares of stock of each Borrower, shall have executed and
delivered this Guaranty.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Lender Parties to make Advances and to issue Letters
of Credit under the Credit Agreement and the Hedge Banks to enter
into Bank Hedge Agreements with the Borrowers from time to time,
the Guarantor hereby agrees as follows:
Section 1. Guaranty. The Guarantor hereby absolutely,
unconditionally and irrevocably guarantees the punctual payment
when due, whether at stated maturity, by acceleration or
otherwise, of all Obligations of each other Loan Party now or
hereafter existing under the Loan Documents, whether for
principal (including reimbursement for amounts drawn under
Letters of Credit), interest, premiums, penalties, fees,
indemnifications, contract causes of action, costs, expenses or
otherwise (such Obligations being the "Guaranteed Obligations"),
and agrees to pay any and all expenses (including reasonable
counsel fees and expenses) incurred by the Agent or any other
Secured Party in enforcing any rights under this Guaranty and the
other Loan Documents. Without limiting the generality of the
foregoing, the Guarantor's liability shall extend to all amounts
that constitute part of the Guaranteed Obligations and would be
owed by any other Loan Party to the Agent or any other Secured
Party under the Loan Documents but for the fact that they are
unenforceable or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding involving such
Loan Party.
Section 2. Guaranty Absolute. The Guarantor guarantees that the
Guaranteed Obligations will be paid strictly in accordance with
the terms of the Loan Documents, regardless of any law,
regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of the
Agent or any other Secured Party with respect thereto. The
Obligations of the Guarantor under this Guaranty are independent
of the Guaranteed Obligations or any other Obligations of any
other Loan Party under the Loan Documents, and a separate action
or actions may be brought and prosecuted against the Guarantor to
enforce this Guaranty, irrespective of whether any action is
brought against any Borrower or any other Loan Party or whether
such Borrower or any other Loan Party is joined in any such
action or actions. The liability of the Guarantor under this
Guaranty shall be irrevocable, absolute and unconditional
irrespective of, and the Guarantor hereby irrevocably waives any
defenses it may now or hereafter have in any way relating to, any
or all of the following:
(a)any lack of validity or enforceability of any Loan Document or
any agreement or instrument relating thereto;
(b)any change in the time, manner or place of payment of, or in
any other term of, all or any of the Guaranteed Obligations or
any other Obligations of any other Loan Party under the Loan
Documents, or any other amendment or waiver of or any consent to
departure from any Loan Document, including, without limitation,
any increase in the Guaranteed Obligations resulting from the
extension of additional credit to any Borrower or any of its
Subsidiaries or otherwise;
(c)any taking, exchange, release or non-perfection of any
Collateral, or any taking, release or amendment or waiver of or
consent to departure from any other guaranty, for all or any of
the Guaranteed Obligations;
(d)any manner of application of Collateral, or proceeds thereof,
to all or any of the Guaranteed Obligations, or any manner of
sale or other disposition of any Collateral for all or any of the
Guaranteed Obligations or any other Obligations of any other Loan
Party under the Loan Documents or any other assets of any Loan
Party or any of its Subsidiaries;
(e)any change, restructuring or termination of the corporate
structure or existence of any Loan Party or any of its
Subsidiaries;
(f)any failure of any Secured Party to disclose to any Borrower
or the Guarantor any information relating to the financial
condition, operations, properties or prospects of any other Loan
Party now or in the future known to any Secured Party (the
Guarantor waiving any duty on the part of the Secured Parties to
disclose such information);
(g)the failure of any other person to execute any other guaranty
or agreement or the release or reduction of liability of any
guarantor or other surety with respect to the Guaranteed
Obligations; or
(h)any other circumstance (including, without limitation, any
statute of limitations) or any existence of or reliance on any
representation by the Agent or any other Secured Party that might
otherwise constitute a defense available to, or a discharge of,
each Borrower, the Guarantor or any other guarantor or surety.
This Guaranty shall continue to be effective or be reinstated, as
the case may be, if at any time any payment of any of the
Guaranteed Obligations is rescinded or must otherwise be returned
by any Secured Party or any other Person upon the insolvency,
bankruptcy or reorganization of any Borrower or any other Loan
Party or otherwise, all as though such payment had not been made.
Section 3. Waivers and Acknowledgments. (a) The Guarantor
hereby waives promptness, diligence, notice of acceptance,
presentment, demand for performance, protest, notice of
nonperformance, default, acceleration, protest or dishonor and
any other notice with respect to any of the Guaranteed
Obligations and this Guaranty or the rights of the Secured
Parties under this Guaranty and any requirement that the Agent or
any other Secured Party protect, secure, perfect or insure any
Lien or any property subject thereto or exhaust any right or take
any action against any Loan Party or any other Person or any
Collateral.
(b)The Guarantor hereby waives any right to revoke this Guaranty,
and acknowledges that this Guaranty is continuing in nature and
applies to all Guaranteed Obligations, whether existing now or in
the future.
(c) The Guarantor acknowledges that it will receive substantial
direct and indirect benefits from the financing arrangements
contemplated by the Loan Documents and that the waivers set forth
in Section 2 and this Section 3 are knowingly made in
contemplation of such benefits.
Section 4. Subrogation. The Guarantor will not exercise any
rights that it may now or hereafter acquire against any Borrower
or any other insider guarantor that arise from the existence,
payment, performance or enforcement of the Guarantor's
Obligations under this Guaranty or any other Loan Document,
including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution or indemnification and
any right to participate in any claim or remedy of any Secured
Party against any Borrower or any other insider guarantor or any
Collateral, whether or not such claim, remedy or right arises in
equity or under contract, statute or common law, including,
without limitation, the right to take or receive from any
Borrower or any other insider guarantor, directly or indirectly,
in cash or other property or by set-off or in any other manner,
payment or security on account of such claim, remedy or right,
unless and until all of the Obligations and all other amounts
payable under this Guaranty shall have been paid in full in cash,
all Bank Hedge Agreements shall have expired or terminated and
the Commitments shall have expired or terminated. If any amount
shall be paid to the Guarantor in violation of the preceding
sentence at any time prior to the later of the payment in full in
cash of the Guaranteed Obligations and all other amounts payable
under this Guaranty and the later of (i) the Termination Date and
(ii) the expiration or termination of all Bank Hedge Agreements,
such amount shall be held in trust for the benefit of the Secured
Parties and shall forthwith be paid to the Agent to be credited
and applied to the Guaranteed Obligations and all other amounts
payable under this Guaranty, whether matured or unmatured, in
accordance with the terms of the Loan Documents, or to be held as
Collateral for any Guaranteed Obligations or other amounts
payable under this Guaranty thereafter arising. If (i) the
Guarantor shall make payment to the Agent or any other Secured
Party of all or any part of the Guaranteed Obligations, (ii) all
of the Guaranteed Obligations and all other amounts payable under
this Guaranty shall be paid in full in cash and (iii) the
Termination Date shall have occurred and all Bank Hedge
Agreements shall have expired or terminated, the Agent and the
other Secured Parties will, at the Guarantor's request and
expense, execute and deliver to the Guarantor appropriate
documents, without recourse and without representation or
warranty, necessary to evidence the transfer by subrogation to
the Guarantor of an interest in the Guaranteed Obligations
resulting from such payment by the Guarantor.
Section 5. Payments Free and Clear of Taxes, Etc. (a) Any and
all payments made by the Guarantor hereunder shall be made, in
accordance with Section 2.11 of the Credit Agreement, free and
clear of and without deduction for any and all present or future
Taxes. If the Guarantor shall be required by law to deduct any
Taxes from or in respect of any sum payable hereunder to the
Agent or any other Secured Party, (i) the sum payable shall be
increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums
payable under this Section) the Agent or such other Secured Party
(as the case may be) receives an amount equal to the sum it would
have received had no such deductions been made, (ii) the
Guarantor shall make such deductions and (iii) the Guarantor
shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law.
(b)In addition, the Guarantor agrees to pay any present or future
Other Taxes.
(c)The Guarantor agrees to indemnify the Agent and each other
Secured Party for and hold them harmless against the full amount
of Taxes and Other Taxes, and for the full amount of taxes of any
kind imposed by any jurisdiction on amounts payable under this
Section 5, imposed on or paid by the Agent or such other Secured
Party (as the case may be) and any liability (including
penalties, additions to tax, interest and expenses) arising
therefrom or with respect thereto. This indemnification shall be
made within 30 days from the date the Agent or such other Secured
Party (as the case may be) makes written demand therefor.
(d)Within 30 days after the date of any payment of Taxes by or on
behalf of the Guarantor, the Guarantor will furnish to the Agent,
at its address referred to in the Credit Agreement, the original
or a certified copy of a receipt evidencing such payment. In the
case of any payment hereunder by or on behalf of the Guarantor
through an account or branch outside the United States or by or
on behalf of the Guarantor by a payor that is not a United States
person, if the Guarantor determines that no Taxes are payable in
respect thereof, the Guarantor shall furnish, or shall cause such
payor to furnish, to the Agent, at such address, an opinion of
counsel acceptable to the Agent stating that such payment is
exempt from Taxes. For purposes of this subsection (d) and
subsection (e), the terms "United States" and "United States
person" shall have the meanings specified in Section 7701 of the
Internal Revenue Code.
(e)Upon the reasonable request in writing of the Guarantor, each
Secured Party organized under the laws of a jurisdiction outside
the United States shall, on or prior to the date of its execution
and delivery of the Credit Agreement in the case of each Initial
Lender or Initial Issuing Bank, as the case may be, and on the
date of the Assignment and Acceptance or other agreement pursuant
to which it becomes a Secured Party in the case of each other
Secured Party, and from time to time thereafter upon the
reasonable request in writing by the Guarantor (but only so long
thereafter as such Secured Party remains lawfully able to do so),
provide the Agent and the Guarantor with Internal Revenue Service
Forms 1001 or 4224 or (in the case of a Secured Party that is
claiming exemption from United States withholding tax under
Section 871(h) or 881(c) of the Internal Revenue Code with
respect to payments of "portfolio interest") two accurate and
complete signed original Forms W-8 (and, if such Secured Party
delivers Forms W-8, two signed certificates certifying that such
Secured Party (i) is not a "bank" for purposes of Section 881(c)
of the Internal Revenue Code, (ii) is not a 10-percent
shareholder (within the meaning of Section 871(h)(3)(B) of the
Internal Revenue Code) of the Borrower, (iii) is not a controlled
foreign corporation related to the Borrower (within the meaning
of Section 864(d)(4) of the Internal Revenue Code) and (iv) is
not a conduit entity participating in a conduit financing
arrangement (as defined in Treasury Regulation Section 1.881-3),
as appropriate, or any successor or other form prescribed by the
Internal Revenue Service, certifying that such Secured Party is
exempt from or entitled to a reduced rate of United States
withholding tax on payments pursuant to the Credit Agreement. If
the accurate and complete forms provided by a Secured Party at
the time such Secured Party first becomes a party to the Credit
Agreement indicate a United States interest withholding tax rate
in excess of zero, withholding tax at such rate shall be
considered excluded from Taxes unless and until such Secured
Party provides the appropriate form certifying that a lesser rate
applies, whereupon withholding tax at such lesser rate only shall
be considered excluded from Taxes for periods governed by such
form; provided, however, that, if at the date of the Assignment
and Acceptance pursuant to which a Secured Party assignee becomes
a party to the Credit Agreement, the Secured Party assignor was
entitled to payments under subsection (a) in respect of United
States withholding tax with respect to interest paid at such
date, then, to such extent, the term Taxes shall include (in
addition to withholding taxes that may be imposed in the future
or other amounts otherwise includable in Taxes) United States
withholding tax, if any, applicable with respect to the Secured
Party assignee on such date.
(f)For any period with respect to which a Secured Party has
failed to provide the Guarantor following the Guarantor's request
therefor pursuant to subsection (e) above with the appropriate
form described in subsection (e) above (other than if such
failure is due to a change in law occurring after the date on
which a form originally was required to be provided or if such
form otherwise is not required under subsection (e) above), such
Secured Party shall not be entitled to indemnification under
subsection (a) or (c) with respect to Taxes imposed by the United
States by reason of such failure; provided, however, that should
a Secured Party become subject to Taxes because of its failure to
deliver a form required hereunder, the Guarantor shall take such
steps, at such Lender Party's sole expense, as such Secured Party
shall reasonably request to assist such Secured Party to recover
such Taxes.
(g)Any Secured Party claiming any additional amounts payable
pursuant to this Section 5 agrees to use reasonable efforts
(consistent with its internal policy and legal and regulatory
restrictions) to change the jurisdiction of its Applicable
Lending Office if the making of such a change would avoid the
need for, or reduce the amount of, any such additional amounts
that may thereafter accrue and would not, in the reasonable
judgment of such Secured Party, be otherwise disadvantageous to
such Secured Party.
(h)If any Secured Party, in its sole opinion, determines that it
has finally and irrevocably received or been granted a refund in
respect of any Taxes or Other Taxes as to which indemnification
has been paid by Crompton Corp. pursuant to Section 5(a) or (b),
it shall promptly remit such refund (including any interest) to
Crompton Corp., net of all out-of-pocket expenses of such Secured
Party; provided, however, that Crompton Corp., upon the request
of such Secured Party, agrees promptly to return such refund
(plus any interest) to such party in the event such party is
required to repay such refund to the relevant taxing authority.
Such Secured Party shall provide Crompton Corp. with a copy of
any notice or assessment from the relevant taxing authority
(deleting any confidential information contained therein)
requiring repayment of such refund. Nothing contained herein
shall impose an obligation on any Secured Party to apply for any
refund.
(i)Without prejudice to the survival of any other agreement of
the Guarantor hereunder or under any other Loan Document, the
agreements and obligations of the Guarantor contained in this
Section 5 and in Section 11 shall survive the payment in full of
the Guaranteed Obligations and all other amounts payable under
this Guaranty.
Section 6. Representations and Warranties. The Guarantor hereby
represents and warrants as follows:
(a)The Guarantor (i) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction
of its incorporation, (ii) is duly qualified and in good standing
as a foreign corporation in each other jurisdiction in which it
owns or leases property or in which the conduct of its business
requires it to so qualify or be licensed except where the failure
to so qualify or be licensed would not have a Material Adverse
Effect and (iii) has all requisite corporate power and authority
(including, without limitation, all governmental licenses,
permits and other approvals) to own or lease and operate its
properties and to carry on its business as now conducted and as
proposed to be conducted. All of the outstanding capital stock
of the Guarantor has been validly issued and is fully paid and
non-assessable.
(b)The execution, delivery and performance by the Guarantor of
this Guaranty and each other Loan Document and each Related
Document to which it is or is to be a party, and the consummation
of the Merger and the other transactions contemplated hereby, are
within the Guarantor's corporate powers, have been duly
authorized by all necessary corporate action, and do not
(i) contravene the Guarantor's charter or bylaws, (ii) violate
any law, rule, regulation (including, without limitation,
Regulation X of the Board of Governors of the Federal Reserve
System), order, writ, judgment, injunction, decree, determination
or award, (iii) conflict with or result in the breach of, or
constitute a default under, any loan agreement, indenture,
mortgage, deed of trust or other instrument or material contract
or material lease binding on or affecting the Guarantor, any of
its Subsidiaries or any of their properties or (iv) except for
the Liens created under the Loan Documents, result in or require
the creation or imposition of any Lien upon or with respect to
any of the properties of the Guarantor or any of its
Subsidiaries. Neither the Guarantor nor any of its Subsidiaries
is in violation of any the law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award or in breach
of any the contract, loan agreement, indenture, mortgage, deed of
trust, lease or other instrument, the violation or breach of
which would have a Material Adverse Effect.
(c)No authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body
or any other third party is required for (i) the due execution,
delivery, recordation, filing or performance by the Guarantor of
this Guaranty, any other Loan Document or any Related Document to
which it is or is to be a party, or for the consummation of the
Merger or the other transactions contemplated hereby, (ii) the
grant by the Guarantor of the Liens granted by it pursuant to the
Collateral Documents, (iii) the perfection or maintenance of the
Liens created by the Collateral Documents (including the first
priority nature thereof) or (iv) the exercise by the Agent or any
Lender Party of its rights under the Loan Documents or the
remedies in respect of the Collateral pursuant to the Collateral
Documents, except for the authorizations, approvals, actions,
notices and filings listed on Schedule 4.01(d) to the Credit
Agreement, all of which have been duly obtained, taken, given or
made and are in full force and effect. All applicable waiting
periods in connection with the Merger and the other transactions
contemplated hereby and by the Credit Agreement have expired
without any action having been taken by any competent authority
restraining, preventing or imposing materially adverse conditions
upon the Merger or the rights of the Guarantor or its
Subsidiaries freely to transfer or otherwise dispose of, or to
create any Lien on, any properties now owned or hereafter
acquired by any of them.
(d)This Guaranty has been, and each other Loan Document and each
Related Document to which the Guarantor will be a party when
delivered pursuant to the Credit Agreement will have been, duly
executed and delivered by the Guarantor. This Guaranty is, and
each other Loan Document and each Related Document to which it
will be a party when delivered pursuant to the Credit Agreement
will be, the legal, valid and binding obligation of the
Guarantor, enforceable against the Guarantor in accordance with
its terms.
(e)There is no action, suit, investigation, litigation or
proceeding affecting the Guarantor or any of its Subsidiaries,
including any Environmental Action, pending or threatened before
any court, governmental agency or arbitrator that (i) would be
reasonably likely to have a Material Adverse Effect (other than
the Disclosed Litigation) or (ii) purports to affect the
legality, validity or enforceability of the Merger, this
Guaranty, any other Loan Document or any Related Document or the
consummation of the transactions contemplated by the Loan
Documents, and there has been no material adverse change in the
status, or financial effect on the Guarantor or any of its
Subsidiaries, of the Disclosed Litigation from that described on
Schedule 3.01(f) of the Credit Agreement.
(f)There are no conditions precedent to the effectiveness of this
Guaranty that have not been satisfied or waived.
(g)The Guarantor has, independently and without reliance upon the
Agent or any other Secured Party and based on such documents and
information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Guaranty, and the
Guarantor has established adequate means of obtaining from any
other Loan Parties on a continuing basis information pertaining
to, and is now and on a continuing basis will be completely
familiar with, the financial condition, operations, properties
and prospects of such other Loan Parties.
Section 7. Amendments, Etc. No amendment or waiver of any
provision of this Guaranty and no consent to any departure by the
Guarantor therefrom shall in any event be effective unless the
same shall be in writing and signed by the Agent and the Required
Lenders, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which
given; provided, however, that no amendment, waiver or consent
shall, unless in writing and signed by all of the Secured Parties
(other than any Lender Party that is, at such time, a Defaulting
Lender), (a) reduce or limit the liability of the Guarantor
hereunder or release the Guarantor, (b) postpone any date fixed
for payment hereunder or (c) change the number of Secured Parties
required to take any action hereunder.
Section 8. Notices, Etc. All notices and other communications
provided for hereunder shall be in writing (including
telegraphic, telecopy or telex communication) and mailed,
telegraphed, telecopied, telexed or delivered to it, if to the
Guarantor, addressed to it at One Station Place, Metro Center,
Stamford, CT 06902, Attention: Chief Financial Officer, if to
the Agent or any Lender Party, at its address specified in the
Credit Agreement, if to any Hedge Bank, at its address specified
in the Bank Hedge Agreement to which it is a party, or as to any
party at such other address as shall be designated by such party
in a written notice to each other party. All such notices and
other communications shall (a) when mailed, be effective three
Business Days after the same is deposited in the mails, (b) when
mailed for next day delivery by a reputable freight company or
reputable overnight courier service, be effective one Business
Day thereafter, and (c) when sent by telegraph, telecopier or
telex, be effective when the same is confirmed by telephone,
telecopier confirmation or return telecopy or telex answerback,
respectively.
Section 9. No Waiver; Remedies. No failure on the part of the
Agent or any other Secured Party to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right
hereunder preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
Section 10. Right of Set-off. Upon (a) the occurrence and
during the continuance of any Event of Default and (b) the making
of the request or the granting of the consent specified by
Section 6.01 of the Credit Agreement to authorize the Agent to
declare the Notes due and payable pursuant to the provisions of
said Section 6.01, each Lender Party and each of its respective
Affiliates is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at
any time owing by such Lender Party or such Affiliate to or for
the credit or the account of the Guarantor against any and all of
the Obligations of the Guarantor now or hereafter existing under
this Guaranty, whether or not such Lender Party shall have made
any demand under this Guaranty and although such Obligations may
be unmatured. Each Lender Party agrees promptly to notify the
Guarantor after any such set-off and application; provided,
however, that the failure to give such notice shall not affect
the validity of such set-off and application. The rights of each
Lender Party and its respective Affiliates under this Section are
in addition to other rights and remedies (including, without
limitation, other rights of set-off) that such Lender Party and
its respective Affiliates may have.
Section 11. Indemnification. Without limitation on any other
Obligations of the Guarantor or remedies of the Secured Parties
under this Guaranty, the Guarantor shall, to the fullest extent
permitted by law, indemnify, defend and save and hold harmless
each Secured Party from and against, and shall pay on demand, any
and all losses, liabilities, damages, costs, expenses and charges
(including the fees and disbursements of such Secured Party's
legal counsel) suffered or incurred by such Secured Party as a
result of any failure of any Guaranteed Obligations to be the
legal, valid and binding obligations of any Loan Party
enforceable against such Loan Party in accordance with their
terms, except to the extent such loss, liability, damages, cost,
expense or charge is found in a final, non-appealable judgment by
a court of competent jurisdiction to have resulted from such
Secured Party's gross negligence or willful misconduct.
Section 12. Continuing Guaranty; Assignments under the Credit
Agreement. This Guaranty is a continuing guaranty and shall
(a) remain in full force and effect until the later of the
payment in full in cash of the Guaranteed Obligations and all
other amounts payable under this Guaranty and the later of (i)
the Termination Date and (ii) the expiration or termination of
all Bank Hedge Agreements, (b) be binding upon the Guarantor, its
successors and assigns and (c) inure to the benefit of and be
enforceable by the Agent and the other Secured Parties and their
successors, transferees and assigns. Without limiting the
generality of the foregoing clause (c), any Secured Party may
assign or otherwise transfer all or any portion of its rights and
obligations under the Credit Agreement (including, without
limitation, all or any portion of its Commitments, the Advances
owing to it and the Note or Notes held by it) to any other
Person, and such other Person shall thereupon become vested with
all the benefits in respect thereof granted to such Secured Party
herein or otherwise, in each case as and to the extent provided
in Section 8.07 of the Credit Agreement. The Guarantor shall not
have the right to assign its rights hereunder or any interest
herein without the prior written consent of the Secured Parties.
Section 13. Governing Law; Jurisdiction; Waiver of Jury Trial,
Etc. (a) This Guaranty shall be governed by, and construed in
accordance with, the laws of the State of New York.
(b)The Guarantor hereby irrevocably and unconditionally submits,
for itself and its property, to the nonexclusive jurisdiction of
any New York State court or federal court of the United States of
America sitting in New York City, and any appellate court from
any thereof, in any action or proceeding arising out of or
relating to this Guaranty or any of the other Loan Documents to
which it is or is to be a party, or for recognition or
enforcement of any judgment, and the Guarantor hereby irrevocably
and unconditionally agrees that all claims in respect of any such
action or proceeding may be heard and determined in any such New
York State court or, to the extent permitted by law, in such
federal court. The Guarantor agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced
in other jurisdictions by suit on the judgment or in any other
manner provided by law. Nothing in this Guaranty shall affect
any right that any party may otherwise have to bring any action
or proceeding relating to this Guaranty or any of the other Loan
Documents to which it is or is to be a party in the courts of any
jurisdiction.
(c)The Guarantor irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have to the laying of
venue of any suit, action or proceeding arising out of or
relating to this Guaranty or any of the other Loan Documents to
which it is or is to be a party in any New York State or federal
court. The Guarantor hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to
the maintenance of such action or proceeding in any such court.
(d)The Guarantor hereby irrevocably waives all right to trial by
jury in any action, proceeding or counterclaim (whether based on
contract, tort or otherwise) arising out of or relating to any of
the Loan Documents, the transactions contemplated thereby or the
actions of the Agent or any other Secured Party in the
negotiation, administration, performance or enforcement thereof.
(e)Delivery of an executed counterpart of a signature page to
this Guaranty by telecopier shall be effective as delivery of a
manually executed counterpart of this Guaranty.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be
duly executed and delivered by its officer thereunto duly
authorized as of the date first above written.
CROMPTON & KNOWLES CORPORATION
By
Title:
EXHIBIT E-2
FORM OF SUBSIDIARY GUARANTY
SUBSIDIARY GUARANTY
Dated August 21, 1996
From
THE GUARANTORS NAMED HEREIN
as Guarantors
in favor of
THE SECURED PARTIES REFERRED TO IN
THE CREDIT AGREEMENT REFERRED TO HEREIN
<PAGE>
T A B L E O F C O N T E N T S
Section Page
1. Guaranty; Limitation of Liability 1
2. Guaranty Absolute 3
3. Waivers and Acknowledgments 4
4. Subrogation 5
5. Payments Free and Clear of Taxes, Etc 6
6. Representations and Warranties 8
7. Covenants 10
8. Amendments, Etc. 11
9. Notices, Etc. 11
10. No Waiver; Remedies 11
11. Right of Set-off 11
12. Indemnification 12
13. Continuing Guaranty; Assignments under the
Credit Agreement 12
14. Execution in Counterparts 13
15. Governing Law; Jurisdiction; Waiver of Jury
Trial, Etc. 13
SCHEDULE I-Uniroyal Guarantors and Crompton Guarantors
SUBSIDIARY GUARANTY
SUBSIDIARY GUARANTY dated August 21, 1996 made by the Persons
listed on the signature pages hereof (each, a "Guarantor", and
collectively the "Guarantors"), in favor of the Secured Parties
(as defined in the Credit Agreement referred to below).
PRELIMINARY STATEMENT. Crompton & Knowles Corporation ("Crompton
Corp."), Crompton & Knowles Colors Incorporated ("Crompton
Colors"), Davis-Standard Corporation ("Davis-Standard") and
Ingredient Technology Corporation ("ITC" and, together with
Crompton Corp., Crompton Colors and Davis-Standard, the "Crompton
Borrowers") and Uniroyal Chemical Company, Inc. (together with
the Crompton Borrowers, the "Borrowers") have entered into a
Credit Agreement dated as of August 21, 1996 (said Agreement, as
it may hereafter be amended, supplemented or otherwise modified
from time to time, the "Credit Agreement"; terms used herein and
not otherwise defined are used herein as therein defined) with
the lender parties party thereto (the "Lender Parties"), Citicorp
Securities, Inc., as Arranger, Citicorp USA, Inc., as Agent and
The Chase Manhattan Bank, as Managing Agent. Each Guarantor may
receive a portion of the proceeds of the Advances under the
Credit Agreement and will derive substantial direct and indirect
benefit from the transactions contemplated by the Credit
Agreement. It is a condition precedent to the making of Advances
and the issuance of Letters of Credit by the Lender Parties under
the Credit Agreement and the entry by the Hedge Banks into Bank
Hedge Agreements with the Borrowers from time to time that each
Guarantor shall have executed and delivered this Guaranty.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Lender Parties to make Advances and to issue Letters
of Credit under the Credit Agreement and the Hedge Banks to enter
into Bank Hedge Agreements with the Borrowers from time to time,
each Guarantor, jointly and severally with each other Guarantor,
hereby agrees as follows:
Section 1. Guaranty; Limitation of Liability. (a) Each
Guarantor hereby absolutely, unconditionally and irrevocably
guarantees the punctual payment when due, whether at stated
maturity, by acceleration or otherwise, of all Obligations of
each other Loan Party now or hereafter existing under the Loan
Documents, whether for principal (including reimbursement for
amounts drawn under Letters of Credit), interest, premiums,
penalties, fees, indemnifications, contract causes of action,
costs, expenses or otherwise (such Obligations being the
"Guaranteed Obligations"), and agrees to pay any and all expenses
(including reasonable counsel fees and expenses) incurred by the
Agent or any other Secured Party in enforcing any rights under
this Guaranty and the other Loan Documents. Without limiting the
generality of the foregoing, each Guarantor's liability shall
extend to all amounts that constitute part of the Guaranteed
Obligations and would be owed by any Loan Party to the Agent or
any other Secured Party under the Loan Documents but for the fact
that they are unenforceable or not allowable due to the existence
of a bankruptcy, reorganization or similar proceeding involving
such Loan Party.
(b)(i)Uniroyal Guarantors. Each Guarantor listed on Part A of
Schedule I hereto (each, a "Uniroyal Guarantor" and collectively,
the "Uniroyal Guarantors"), and by its acceptance of this
Guaranty, the Agent and each other Secured Party, hereby confirms
that it is the intention of all such parties that this Guaranty
not constitute a fraudulent transfer or conveyance for purposes
of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the
Uniform Fraudulent Transfer Act or any similar federal or state
law to the extent applicable to this Guaranty. To effectuate the
foregoing intention, the Agent, the other Secured Parties and the
Guarantors hereby irrevocably agree that the Obligations of each
Uniroyal Guarantor under this Guaranty shall not exceed the
lesser of (A) so long as any Uniroyal Indenture remains in
effect, the maximum amount of Debt permitted to be incurred under
such Uniroyal Indenture and (B) the maximum amount as will, after
giving effect to such maximum amount (including, without
limitation, the net benefit realized by the Uniroyal Guarantors
from the proceeds of the Advances made from time to time by the
Borrowers to the Uniroyal Guarantors or any Subsidiary of any
Uniroyal Guarantor) and all other contingent and fixed
liabilities of such Uniroyal Guarantor that are relevant under
such laws, and after giving effect to any collections from,
rights to receive contribution from or payments made by or on
behalf of any other Guarantor in respect of the Obligations of
such other Guarantor under this Guaranty, result in the
Obligations of such Uniroyal Guarantor under this Guaranty not
constituting a fraudulent transfer or conveyance. For purposes
hereof, "Bankruptcy Law" means Title 11, U.S. Code, or any
similar Federal or state law for the relief of debtors.
(ii)Crompton Guarantors. The liability of each Guarantor listed
on Part B of Schedule I hereto (each a "Crompton Guarantor")
under this Guaranty with respect to the Obligations of each other
Loan Party (other than any Loan Party that is a Subsidiary of
such Crompton Guarantor) guaranteed hereunder shall not exceed
the maximum amount as will, after giving effect to such maximum
amount (including, without limitation, the net benefit realized
by the Crompton Guarantors from the proceeds of the Advances made
from time to time by the Borrowers to the Crompton Guarantors or
any Subsidiary of any Crompton Guarantor) and all other
contingent and fixed liabilities of such Crompton Guarantor that
are relevant under such laws, and after giving effect to any
collections from, rights to receive contribution from or payments
made by or on behalf of any other Guarantor in respect of the
Obligations of such other Guarantor under this Guaranty, result
in the Obligations of such Crompton Guarantor under this Guaranty
not constituting a fraudulent transfer or conveyance.
(iii)Each Guarantor agrees that in the event any payment shall be
required to be made to the Secured Parties under this Guaranty or
the Parent Guaranty or any other guaranty, such Guarantor will
contribute, to the maximum extent permitted by law, such amounts
to each other Guarantor and Crompton Corp. and each other
guarantor so as to maximize the aggregate amount paid to the
Secured Parties under the Loan Documents.
Section 2. Guaranty Absolute. Each Guarantor guarantees that
the Guaranteed Obligations will be paid strictly in accordance
with the terms of the Loan Documents, regardless of any law,
regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of the
Agent or any other Secured Party with respect thereto. The
Obligations of each Guarantor under this Guaranty are independent
of the Guaranteed Obligations or any other Obligations of any
other Loan Party under the Loan Documents, and a separate action
or actions may be brought and prosecuted against each Guarantor
to enforce this Guaranty, irrespective of whether any action is
brought against any Borrower or any other Loan Party or whether
such Borrower or any other Loan Party is joined in any such
action or actions. The liability of each Guarantor under this
Guaranty shall be irrevocable, absolute and unconditional
irrespective of, and each Guarantor hereby irrevocably waives any
defenses it may now or hereafter have in any way relating to, any
or all of the following:
(a)any lack of validity or enforceability of any Loan Document or
any agreement or instrument relating thereto;
(b)any change in the time, manner or place of payment of, or in
any other term of, all or any of the Guaranteed Obligations or
any other Obligations of any other Loan Party under the Loan
Documents, or any other amendment or waiver of or any consent to
departure from any Loan Document, including, without limitation,
any increase in the Guaranteed Obligations resulting from the
extension of additional credit to any Borrower or any of its
Subsidiaries or otherwise;
(c)any taking, exchange, release or non-perfection of any
Collateral, or any taking, release or amendment or waiver of or
consent to departure from any other guaranty, for all or any of
the Guaranteed Obligations;
(d)any manner of application of Collateral, or proceeds thereof,
to all or any of the Guaranteed Obligations, or any manner of
sale or other disposition of any Collateral for all or any of the
Guaranteed Obligations or any other Obligations of any other Loan
Party under the Loan Documents or any other assets of any Loan
Party or any of its Subsidiaries;
(e)any change, restructuring or termination of the corporate
structure or existence of any Loan Party or any of its
Subsidiaries;
(f)any failure of any Secured Party to disclose to any Borrower
or any Guarantor any information relating to the financial
condition, operations, properties or prospects of any other Loan
Party now or in the future known to any Secured Party (each
Guarantor waiving any duty on the part of the Secured Parties to
disclose such information);
(g)the failure of any other person to execute any guaranty or
agreement or the release or reduction of liability of any
guarantor or other surety with respect to the Guaranteed
Obligations; or
(h)any other circumstance (including, without limitation, any
statute of limitations) or any existence of or reliance on any
representation by the Agent or any other Secured Party that might
otherwise constitute a defense available to, or a discharge of,
any Borrower, any Guarantor or any other guarantor or surety.
This Guaranty shall continue to be effective or be reinstated, as
the case may be, if at any time any payment of any of the
Guaranteed Obligations is rescinded or must otherwise be returned
by any Secured Party or any other Person upon the insolvency,
bankruptcy or reorganization of any Borrower or any other Loan
Party or otherwise, all as though such payment had not been made.
Section 3. Waivers and Acknowledgments. (a) Each Guarantor
hereby waives promptness, diligence, notice of acceptance,
presentment, demand for performance, protest, notice of
nonperformance, default, acceleration, protest or dishonor and
any other notice with respect to any of the Guaranteed
Obligations and this Guaranty or the rights of the Secured
Parties under this Guaranty and any requirement that the Agent or
any other Secured Party protect, secure, perfect or insure any
Lien or any property subject thereto or exhaust any right or take
any action against any Loan Party or any other Person or any
Collateral.
(b)Each Guarantor hereby waives any right to revoke this
Guaranty, and acknowledges that this Guaranty is continuing in
nature and applies to all Guaranteed Obligations, whether
existing now or in the future.
(c) Each Guarantor acknowledges that it will receive substantial
direct and indirect benefits from the financing arrangements
contemplated by the Loan Documents and that the waivers set forth
in Section 2 and this Section 3 are knowingly made in
contemplation of such benefits.
Section 4. Subrogation. No Guarantor will exercise any rights
that it may now or hereafter acquire against any Borrower or any
other insider guarantor that arise from the existence, payment,
performance or enforcement of such Guarantor's Obligations under
this Guaranty or any other Loan Document, including, without
limitation, any right of subrogation, reimbursement, exoneration,
contribution or indemnification and any right to participate in
any claim or remedy of any Secured Party against each Borrower or
any other insider guarantor or any Collateral, whether or not
such claim, remedy or right arises in equity or under contract,
statute or common law, including, without limitation, the right
to take or receive from each Borrower or any other insider
guarantor, directly or indirectly, in cash or other property or
by set-off or in any other manner, payment or security on account
of such claim, remedy or right, unless and until all of the
Obligations and all other amounts payable under this Guaranty
shall have been paid in full in cash, all Bank Hedge Agreements
shall have expired or terminated and the Commitments shall have
expired or terminated. If any amount shall be paid to any
Guarantor in violation of the preceding sentence at any time
prior to the later of the payment in full in cash of the
Guaranteed Obligations and all other amounts payable under this
Guaranty and the later of (i) the Termination Date and (ii) the
expiration or termination of all Bank Hedge Agreements, such
amount shall be held in trust for the benefit of the Agent and
the other Secured Parties and shall forthwith be paid to the
Agent to be credited and applied to the Guaranteed Obligations
and all other amounts payable under this Guaranty, whether
matured or unmatured, in accordance with the terms of the Loan
Documents, or to be held as Collateral for any Guaranteed
Obligations or other amounts payable under this Guaranty
thereafter arising. If (i) any Guarantor shall make payment to
the Agent or any other Secured Party of all or any part of the
Guaranteed Obligations, (ii) all of the Guaranteed Obligations
and all other amounts payable under this Guaranty shall be paid
in full in cash and (iii) the Termination Date shall have
occurred and all Bank Hedge Agreements shall have expired or
terminated, the Agent and the other Secured Parties will, at any
Guarantor's request and expense, execute and deliver to such
Guarantor appropriate documents, without recourse and without
representation or warranty, necessary to evidence the transfer by
subrogation to such Guarantor of an interest in the Guaranteed
Obligations resulting from such payment by such Guarantor.
Section 5. Payments Free and Clear of Taxes, Etc. (a) Any and
all payments made by any Guarantor hereunder shall be made, in
accordance with Section 2.11 of the Credit Agreement, free and
clear of and without deduction for any and all present or future
Taxes. If any Guarantor shall be required by law to deduct any
Taxes from or in respect of any sum payable hereunder to the
Agent or any other Secured Party, (i) the sum payable shall be
increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums
payable under this Section) the Agent or such other Secured Party
(as the case may be) receives an amount equal to the sum it would
have received had no such deductions been made, (ii) such
Guarantor shall make such deductions and (iii) such Guarantor
shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law.
(b)In addition, each Guarantor agrees to pay any present or
future Other Taxes.
(c)The Guarantors jointly and severally agree to indemnify the
Agent and each other Secured Party for and hold them harmless
against the full amount of Taxes and Other Taxes, and for the
full amount of taxes of any kind imposed by any jurisdiction on
amounts payable under this Section 5, imposed on or paid by the
Agent or such other Secured Party (as the case may be) and any
liability (including penalties, additions to tax, interest and
expenses) arising therefrom or with respect thereto. This
indemnification shall be made within 30 days from the date the
Agent or such other Secured Party (as the case may be) makes
written demand therefor.
(d)Within 30 days after the date of any payment of Taxes by or on
behalf of any Guarantor, such Guarantor will furnish to the
Agent, at its address referred to in the Credit Agreement, the
original or a certified copy of a receipt evidencing such
payment. In the case of any payment hereunder by or on behalf of
any Guarantor through an account or branch outside the United
States or by or on behalf of such Guarantor by a payor that is
not a United States person, if such Guarantor determines that no
Taxes are payable in respect thereof, such Guarantor shall
furnish, or shall cause such payor to furnish, to the Agent, at
such address, an opinion of counsel acceptable to the Agent
stating that such payment is exempt from Taxes. For purposes of
this subsection (d) and subsection (e), the terms "United States"
and "United States person" shall have the meanings specified in
Section 7701 of the Internal Revenue Code.
(e)Upon the reasonable request in writing of any Guarantor, each
Secured Party organized under the laws of a jurisdiction outside
the United States shall, on or prior to the date of its execution
and delivery of the Credit Agreement in the case of each Initial
Lender or Initial Issuing Bank, as the case may be, and on the
date of the Assignment and Acceptance or other agreement pursuant
to which it becomes a Secured Party in the case of each other
Secured Party, and from time to time thereafter upon the
reasonable request in writing by any Guarantor (but only so long
thereafter as such Secured Party remains lawfully able to do so),
provide the Agent and such Guarantor with Internal Revenue
Service forms 1001 or 4224 or (in the case of a Secured Party
that is claiming exemption from United States withholding tax
under Section 871(h) or 881(c) of the Internal Revenue Code with
respect to payments of "portfolio interest") two accurate and
complete signed original Forms W-8 (and, if such Secured Party
delivers Forms W-8, two signed certificates certifying that such
Secured Party (i) is not a "bank" for purposes of Section 881(c)
of the Internal Revenue Code, (ii) is not a 10-percent
shareholder (within the meaning of Section 871(h)(3)(B) of the
Internal Revenue Code) of the Borrower, (iii) is not a controlled
foreign corporation related to the Borrower (within the meaning
of Section 864(d)(4) of the Internal Revenue Code) and (iv) is
not a conduit entity participating in a conduit financing
arrangement (as defined in Treasury Regulation Section 1.881-3),
as appropriate, or any successor or other form prescribed by the
Internal Revenue Service, certifying that such Secured Party is
exempt from or entitled to a reduced rate of United States
withholding tax on payments pursuant to the Credit Agreement. If
the accurate and complete forms provided by a Secured Party at
the time such Secured Party first becomes a party to the Credit
Agreement indicate a United States interest withholding tax rate
in excess of zero, withholding tax at such rate shall be
considered excluded from Taxes unless and until such Secured
Party provides the appropriate form certifying that a lesser rate
applies, whereupon withholding tax at such lesser rate only shall
be considered excluded from Taxes for periods governed by such
form; provided, however, that, if at the date of the Assignment
and Acceptance pursuant to which a Secured Party assignee becomes
a party to the Credit Agreement, the Secured Party assignor was
entitled to payments under subsection (a) in respect of United
States withholding tax with respect to interest paid at such
date, then, to such extent, the term Taxes shall include (in
addition to withholding taxes that may be imposed in the future
or other amounts otherwise includable in Taxes) United States
withholding tax, if any, applicable with respect to the Secured
Party assignee on such date.
(f)For any period with respect to which a Secured Party has
failed to provide any Guarantor following such Guarantor's
request therefor pursuant to subsection (e) above with the
appropriate form described in subsection (e) above (other than if
such failure is due to a change in law occurring after the date
on which a form originally was required to be provided or if such
form otherwise is not required under subsection (e) above), such
Secured Party shall not be entitled to indemnification under
subsection (a) or (c) with respect to Taxes imposed by the United
States by reason of such failure; provided, however, that should
a Secured Party become subject to Taxes because of its failure to
deliver a form required hereunder, such Guarantor shall take such
steps, at such Lender Party's sole expense, as such Secured Party
shall reasonably request to assist such Secured Party to recover
such Taxes.
(g)Any Secured Party claiming any additional amounts payable
pursuant to this Section 5 agrees to use reasonable efforts
(consistent with its internal policy and legal and regulatory
restrictions) to change the jurisdiction of its Applicable
Lending Office if the making of such a change would avoid the
need for, or reduce the amount of, any such additional amounts
that may thereafter accrue and would not, in the reasonable
judgment of such Secured Party, be otherwise disadvantageous to
such Secured Party.
(h)If any Secured Party, in its sole opinion, determines that it
has finally and irrevocably received or been granted a refund in
respect of any Taxes or Other Taxes as to which indemnification
has been paid by Crompton Corp. pursuant to Section 5(a) or (b),
it shall promptly remit such refund (including any interest) to
Crompton Corp., net of all out-of-pocket expenses of such Secured
Party; provided, however, that Crompton Corp., upon the request
of such Secured Party, agrees promptly to return such refund
(plus any interest) to such party in the event such party is
required to repay such refund to the relevant taxing authority.
Such Secured Party shall provide Crompton Corp. with a copy of
any notice or assessment from the relevant taxing authority
(deleting any confidential information contained therein)
requiring repayment of such refund. Nothing contained herein
shall impose an obligation on any Secured Party to apply for any
refund.
(i)Without prejudice to the survival of any other agreement of
any Guarantor hereunder or under any other Loan Document, the
agreements and obligations of each Guarantor contained in this
Section 5 and in Section 12 shall survive the payment in full of
the Guaranteed Obligations and all other amounts payable under
this Guaranty.
Section 6. Representations and Warranties. Each Guarantor
hereby represents and warrants as follows:
(a)Such Guarantor (i) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction
of its incorporation, (ii) is duly qualified and in good standing
as a foreign corporation in each other jurisdiction in which it
owns or leases property or in which the conduct of its business
requires it to so qualify or be licensed except where the failure
to so qualify or be licensed would not have a Material Adverse
Effect and (iii) has all requisite corporate power and authority
(including, without limitation, all governmental licenses,
permits and other approvals) to own or lease and operate its
properties and to carry on its business as now conducted and as
proposed to be conducted. All of the outstanding capital stock
of such Guarantor has been validly issued and is fully paid and
non-assessable.
(b)The execution, delivery and performance by such Guarantor of
this Guaranty and each other Loan Document and each Related
Document to which it is or is to be a party, and the consummation
of the Merger and the other transactions contemplated hereby, are
within such Guarantor's corporate powers, have been duly
authorized by all necessary corporate action, and do not
(i) contravene such Guarantor's charter or bylaws, (ii) violate
any law, rule, regulation (including, without limitation,
Regulation X of the Board of Governors of the Federal Reserve
System), order, writ, judgment, injunction, decree, determination
or award, (iii) conflict with or result in the breach of, or
constitute a default under, any loan agreement, indenture,
mortgage, deed of trust or other instrument or material contract
or material lease binding on or affecting such Guarantor, any of
its Subsidiaries or any of their properties or (iv) except for
the Liens created under the Loan Documents, result in or require
the creation or imposition of any Lien upon or with respect to
any of the properties of such Guarantor or any of its
Subsidiaries. Neither such Guarantor nor any of its Subsidiaries
is in violation of any such law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award or in breach
of any such contract, loan agreement, indenture, mortgage, deed
of trust, lease or other instrument, the violation or breach of
which would have a Material Adverse Effect.
(c)No authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body
or any other third party is required for (i) the due execution,
delivery, recordation, filing or performance by such Guarantor of
this Guaranty, any other Loan Document or any Related Document to
which it is or is to be a party, or for the consummation of the
Merger or the other transactions contemplated hereby, (ii) the
grant by such Guarantor of the Liens granted by it pursuant to
the Collateral Documents, (iii) the perfection or maintenance of
the Liens created by the Collateral Documents (including the
first priority nature thereof) or (iv) the exercise by the Agent
or any Lender Party of its rights under the Loan Documents or the
remedies in respect of the Collateral pursuant to the Collateral
Documents, except for the authorizations, approvals, actions,
notices and filings listed on Schedule 4.01(d) to the Credit
Agreement, all of which have been duly obtained, taken, given or
made and are in full force and effect. All applicable waiting
periods in connection with the Merger and the other transactions
contemplated hereby and by the Credit Agreement have expired
without any action having been taken by any competent authority
restraining, preventing or imposing materially adverse conditions
upon the Merger or the rights of such Guarantor or its
Subsidiaries freely to transfer or otherwise dispose of, or to
create any Lien on, any properties now owned or hereafter
acquired by any of them.
(d)This Guaranty has been, and each other Loan Document and each
Related Document to which such Guarantor will be a party when
delivered pursuant to the Credit Agreement will have been, duly
executed and delivered by such Guarantor. This Guaranty is, and
each other Loan Document and each Related Document to which it
will be a party when delivered pursuant to the Credit Agreement
will be, the legal, valid and binding obligation of such
Guarantor, enforceable against such Guarantor in accordance with
its terms.
(e)There is no action, suit, investigation, litigation or
proceeding affecting such Guarantor or any of its Subsidiaries,
including any Environmental Action, pending or threatened before
any court, governmental agency or arbitrator that (i) would be
reasonably likely to have a Material Adverse Effect (other than
the Disclosed Litigation) or (ii) purports to affect the
legality, validity or enforceability of the Merger, this
Guaranty, any other Loan Document or any Related Document or the
consummation of the transactions contemplated by the Loan
Documents, and there has been no material adverse change in the
status, or financial effect on such Guarantor or any of its
Subsidiaries, of the Disclosed Litigation from that described on
Schedule 3.01(f) of the Credit Agreement.
(f)There are no conditions precedent to the effectiveness of this
Guaranty that have not been satisfied or waived.
(g)Such Guarantor has, independently and without reliance upon
the Agent or any other Secured Party and based on such documents
and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Guaranty, and such
Guarantor has established adequate means of obtaining from any
other Loan Parties on a continuing basis information pertaining
to, and is now and on a continuing basis will be completely
familiar with, the financial condition, operations, properties
and prospects of such other Loan Parties.
Section 7. Covenants. Each Guarantor covenants and agrees that,
so long as any part of the Guaranteed Obligations shall remain
unpaid, any Letter of Credit shall be outstanding, any Lender
Party shall have any Commitment or any Hedge Bank shall have any
obligation under any Bank Hedge Agreement, such Guarantor will,
unless the Required Lenders shall otherwise consent in writing,
perform or observe, and cause its Subsidiaries to perform or
observe, all of the terms, covenants and agreements that the Loan
Documents state that the Borrowers are to cause such Guarantor or
such Subsidiaries to perform or observe.
Section 8. Amendments, Etc. No amendment or waiver of any
provision of this Guaranty and no consent to any departure by any
Guarantor therefrom shall in any event be effective unless the
same shall be in writing and signed by the Agent and the Required
Lenders, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which
given; provided, however, that no amendment, waiver or consent
shall, unless in writing and signed by all of the Secured Parties
(other than any Lender Party that is, at such time, a Defaulting
Lender), (a) reduce or limit the liability of such Guarantor
hereunder or release such Guarantor, (b) postpone any date fixed
for payment hereunder or (c) change the number of Secured Parties
required to take any action hereunder.
Section 9. Notices, Etc. All notices and other communications
provided for hereunder shall be in writing (including
telegraphic, telecopy or telex communication) and mailed,
telegraphed, telecopied, telexed or delivered to it, if to any
Guarantor, addressed both c/o Crompton Corp. at its address at
One Station Place, Metro Center, Stamford, CT 06902, Attention:
Chief Financial Officer and c/o Uniroyal Corp. at its address at
World Headquarters, Benson Road, Middlebury, CT 06749,
Attention: Chief Financial Officer, if to the Agent or any Lender
Party, at its address specified in the Credit Agreement, if to
any Hedge Bank, at its address specified in the Bank Hedge
Agreement to which it is a party, or as to any party at such
other address as shall be designated by such party in a written
notice to each other party. All such notices and other
communications shall (a) when mailed, be effective three Business
Days after the same is deposited in the mails, (b) when mailed
for next day delivery by a reputable freight company or reputable
overnight courier service, be effective one Business Day
thereafter, and (c) when sent by telegraph, telecopier or telex,
be effective when the same is confirmed by telephone, telecopier
confirmation or return telecopy or telex answerback,
respectively. Delivery of a notice to any Guarantor at the above
addresses shall be deemed notice to all Guarantors.
Section 10. No Waiver; Remedies. No failure on the part of the
Agent or any other Secured Party to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right
hereunder preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
Section 11. Right of Set-off. Upon (a) the occurrence and
during the continuance of any Event of Default and (b) the making
of the request or the granting of the consent specified by
Section 6.01 of the Credit Agreement to authorize the Agent to
declare the Notes due and payable pursuant to the provisions of
said Section 6.01, each Lender Party and each of its respective
Affiliates is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at
any time owing by such Lender Party or such Affiliate to or for
the credit or the account of any Guarantor against any and all of
the Obligations of such Guarantor now or hereafter existing under
this Guaranty, whether or not such Lender Party shall have made
any demand under this Guaranty and although such Obligations may
be unmatured. Each Lender Party agrees promptly to notify such
Guarantor after any such set-off and application; provided,
however, that the failure to give such notice shall not affect
the validity of such set-off and application. The rights of each
Lender Party and its respective Affiliates under this Section are
in addition to other rights and remedies (including, without
limitation, other rights of set-off) that such Lender Party and
its respective Affiliates may have.
Section 12. Indemnification. Without limitation on any other
Obligations of any Guarantor or remedies of the Secured Parties
under this Guaranty, each Guarantor shall, to the fullest extent
permitted by law, indemnify, defend and save and hold harmless
each Secured Party from and against, and shall pay on demand, any
and all losses, liabilities, damages, costs, expenses and charges
(including the fees and disbursements of such Secured Party's
legal counsel) suffered or incurred by such Secured Party as a
result of any failure of any Guaranteed Obligations to be the
legal, valid and binding obligations of any Loan Party
enforceable against such Loan Party in accordance with their
terms, except to the extent such loss, liability, damages, cost,
expense or charge is found in a final, non-appealable judgment by
a court of competent jurisdiction to have resulted from such
Secured Party's gross negligence or willful misconduct.
Section 13. Continuing Guaranty; Assignments under the Credit
Agreement. This Guaranty is a continuing guaranty and shall
(a) remain in full force and effect until the later of the
payment in full in cash of the Guaranteed Obligations and all
other amounts payable under this Guaranty and the later of (i)
the Termination Date and (ii) the expiration or termination of
all Bank Hedge Agreements, (b) be binding upon each Guarantor,
its successors and assigns and (c) inure to the benefit of and be
enforceable by the Agent and the other Secured Parties and their
successors, transferees and assigns. Without limiting the
generality of the foregoing clause (c), any Secured Party may
assign or otherwise transfer all or any portion of its rights and
obligations under the Credit Agreement (including, without
limitation, all or any portion of its Commitments, the Advances
owing to it and the Note or Notes held by it) to any other
Person, and such other Person shall thereupon become vested with
all the benefits in respect thereof granted to such Secured Party
herein or otherwise, in each case as and to the extent provided
in Section 8.07 of the Credit Agreement. No Guarantor shall have
the right to assign its rights hereunder or any interest herein
without the prior written consent of the Secured Parties.
Section 14. Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which when so
executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Delivery
of an executed counterpart of a signature page to this Agreement
by telecopier shall be effective as delivery of a manually
executed counterpart of this Agreement.
Section 15. Governing Law; Jurisdiction; Waiver of Jury Trial,
Etc. (a) This Guaranty shall be governed by, and construed in
accordance with, the laws of the State of New York.
(b)Each Guarantor hereby irrevocably and unconditionally submits,
for itself and its property, to the nonexclusive jurisdiction of
any New York State court or federal court of the United States of
America sitting in New York City, and any appellate court from
any thereof, in any action or proceeding arising out of or
relating to this Guaranty or any of the other Loan Documents to
which it is or is to be a party, or for recognition or
enforcement of any judgment, and each Guarantor hereby
irrevocably and unconditionally agrees that all claims in respect
of any such action or proceeding may be heard and determined in
any such New York State court or, to the extent permitted by law,
in such federal court. Each Guarantor agrees that a final
judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Guaranty
shall affect any right that any party may otherwise have to bring
any action or proceeding relating to this Guaranty or any of the
other Loan Documents to which it is or is to be a party in the
courts of any jurisdiction.
(c)Each Guarantor irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have to the laying of
venue of any suit, action or proceeding arising out of or
relating to this Guaranty or any of the other Loan Documents to
which it is or is to be a party in any New York State or federal
court. Each Guarantor hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to
the maintenance of such action or proceeding in any such court.
(d)Each Guarantor hereby irrevocably waives all right to trial by
jury in any action, proceeding or counterclaim (whether based on
contract, tort or otherwise) arising out of or relating to any of
the Loan Documents, the transactions contemplated thereby or the
actions of the Agent or any other Secured Party in the
negotiation, administration, performance or enforcement thereof.
IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be
duly executed and delivered by its officer thereunto duly
authorized as of the date first above written.
CK HOLDING CORPORATION
By
Title:
CNK DISPOSITION CORP.
By
Title:
CROMPTON & KNOWLES COLORS
INCORPORATED
By
Title:
CROMPTON & KNOWLES OVERSEAS
CORPORATION
By
Title:
DAVIS-STANDARD CORPORATION
By
Title:
INGREDIENT TECHNOLOGY CORPORATION
By
Title:
GUSTAFSON, INC.
By
Title:
GUSTAFSON INTERNATIONAL COMPANY
By
Title:
KEM MANUFACTURING CORPORATION
By
Title:
LOKAR ENTERPRISES, INC.
By
Title:
TRACE CHEMICALS, INC.
By
Title:
UNIROYAL CHEMICAL BRAZIL HOLDING, INC.
By
Title:
UNIROYAL CHEMICAL COMPANY, INC.
By
Title:
UNIROYAL CHEMICAL CORPORATION
By
Title:
UNIROYAL CHEMICAL EXPORT LIMITED
By
Title:
UNIROYAL CHEMICAL INTERNATIONAL
COMPANY
By
Title:
UNIROYAL CHEMICAL LEASING
COMPANY, INC.
By
Title:
SCHEDULE I TO THE GUARANTY
PART A:
UNIROYAL GUARANTORS
Gustafson, Inc.
Gustafson International Company
Lokar Enterprises, Inc.
Trace Chemicals, Inc.
Uniroyal Chemical Brazil Holding, Inc.
Uniroyal Chemical Company, Inc.
Uniroyal Chemical Corporation
Uniroyal Chemical Export Limited
Uniroyal Chemical International Company
Uniroyal Chemical Leasing Company, Inc.
PART B:
CROMPTON GUARANTORS
CK Holding Corporation
CNK Disposition Corp.
Crompton & Knowles Colors Incorporated
Crompton & Knowles Overseas Corporation
Davis-Standard Corporation
Ingredient Technology Corporation
Kem Manufacturing Corporation
EXHIBIT F-1
August 21, 1996
To the Initial Lenders party to the
Credit Agreement referred to below
and to Citicorp Securities, Inc.,
as Arranger, Citicorp. USA, Inc.,
as Agent for the Lender Parties
and The Chase Manhattan Bank,
as Managing Agent
Re: Crompton & Knowles Corporation
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section
3.01(k)(xvii) of the Credit Agreement dated as of August 21,
1996 (the "Credit Agreement") among Crompton & Knowles
Corporation, Crompton & Knowles Colors Incorporated, Davis-
Standard Corporation, Ingredient Technology Corporation and
Uniroyal Chemical Company, Inc., (collectively, the
"Borrowers"), the Lender Parties party thereto, Citicorp
Securities, Inc., as Arranger, Citicorp USA, Inc., as Agent and
The Chase Manhattan Bank, as Managing Agent. Terms defined in
the Credit Agreement and in the Security Agreement referred to
therein are used herein as therein defined.
We have acted as special counsel to the Borrowers and
the other Loan Parties in the State of New York in connection
with the preparation, execution and delivery of the Credit
Agreement, the Notes, the other Loan Documents and the initial
Borrowing made under the Credit Agreement.
The opinions set forth in this letter are based upon
our review of counterparts of each of the Loan Documents,
executed by each of the parties thereto, and the other
documents furnished by the Borrower and the other Loan Parties
pursuant to Article III of the Credit Agreement.
The documents set forth on Schedule I are referred to
herein as the "Financing Statements". The Loan Parties set
forth on Schedule II are referred to herein as the "Delaware
Loan Parties".
We have also examined the originals, or copies certified to
our satisfaction, of the documents listed in a certificate of the
respective chief financial officers of Crompton & Knowles
Corporation and Uniroyal Chemical Company, Inc., dated the date
hereof (the "Certificate"), certifying that the documents listed
therein are all of the public indentures that affect or purport
to affect the obligations of such Loan Party or any of its
Subsidiaries under any Loan Document or any Related Document or
the right of such Loan Party or any of its Subsidiaries to borrow
money, to guarantee the obligations of other Persons, to create
Liens on its property or to consummate transactions such as the
Merger and the other transactions contemplated by the Subject
Documents (as defined below).
In addition, we have examined the originals, or copies
certified to our satisfaction, of such other corporate records of
the Loan Parties, certificates of public officials and of
officers of the Loan Parties and agreements, instruments and
other documents as we have deemed necessary as a basis for the
opinions expressed below. As to questions of fact material
to such opinions, we have, when relevant facts were not
independently established by us, relied upon certificates of
the Loan Parties or of their respective officers or of public
officials and on the representations and warranties of the Loan
Parties as to factual matters contained in any of the Loan
Documents.
In our examination of the documents referred to
above, we have assumed (i)(A) the valid authorization,
execution and delivery of each of the documents referred to
above by all parties thereto (other than the Delaware Loan
Parties) ("Subject Parties"), (B) each Subject Party (in the
case of parties which are not natural persons) has been duly
organized and is validly existing and in good standing in its
jurisdiction of organization, (C) each Subject Party has the
legal capacity, power and authority to perform its obligations
thereunder and (D) such documents to which each Subject Party
(other than the Loan Parties) is a party constitute the legal,
valid and binding obligation of such party, enforceable against
it in accordance with their respective terms, (ii) the
authenticity of all such documents submitted to us as originals
and (iii) the conformity to originals of all such documents
submitted to us as copies.
We are members of the Bar of the State of New York,
and we have not considered, and we express no opinion as to,
the laws of any jurisdiction other than the laws of the State
of New York, the General Corporation Law of the State of
Delaware and the laws of the United States of America, in each
case as in effect on the date hereof (the "Relevant Laws").
Based upon the foregoing and upon such investigation
as we have deemed necessary, and subject to the qualifications
set forth in this letter, it is our opinion that:
1. Each Delaware Loan Party is a corporation duly
incorporated, validly existing and in good standing
under the laws of the State of Delaware.
2. Each Delaware Loan Party has all necessary
corporate power and authority to execute and deliver,
and to perform its obligations under, each of the Loan
Documents and the Merger Agreement (collectively, the
"Subject Documents") to which it is a party and to own
or lease and operate its properties and to carry on
its business as now conducted and as proposed to be
conducted.
3. The execution, delivery and performance by each
Delaware Loan Party of each Subject Document to which it is
a party, and the consummation of the Merger and the other
transactions contemplated by the Subject Documents (to the
extent a Delaware Loan Party is contemplated to be a party
to such transaction), are within such Delaware Loan Party's
corporate powers, have been duly authorized by all necessary
corporate action of such Delaware Loan Party and will not
violate or conflict with any provision of the certificate of
incorporation or bylaws of such Delaware Loan Party.
4. The execution, delivery and performance by each
Loan Party of the Subject Documents to which it is a party
and the transactions contemplated thereby will not (i)
violate or conflict with any provision of the Delaware
General Corporation Law (in the case of the Delaware Loan
Parties only), or any United States federal or State of New
York statute, rule or regulation or any writ, injunction,
decree, order or judgment under the Relevant Laws known to us
to be applicable to any Loan Party or any of such Loan Party's
properties that could reasonably be expected (individually or
in the aggregate) to materially impair or prevent the
performance of such Loan Party's obligations under the Subject
Documents to which such Loan Party is a party, (ii) conflict with
or result in the breach of, or constitute a default under, any
agreement or instrument listed in the Certificate or (iii) except
for the Liens created by the Collateral Documents, result in or
require the creation or imposition of any Lien upon or with
respect to any of the properties of any Loan Party or any of its
Subsidiaries under any agreement or instrument listed in the
Certificate.
5. The Credit Agreement and each other Loan Document to be
delivered pursuant to the Credit Agreement on or prior to the
date hereof has been duly executed and delivered by each Delaware
Loan Party party thereto.
6. Each Subject Document constitutes the legal, valid and
binding obligations of each Loan Party party thereto, in each
case enforceable against such Loan Party in accordance with its
respective terms, except as may be limited by bankruptcy,
insolvency, moratorium, reorganization or other similar laws
affecting creditors' rights generally and by equitable principles
of general applicability (regardless of whether enforcement is
sought in a proceeding in equity or at law).
7. No authorization or approval or other action by,
and no notice to or filing with, any governmental authority or
regulatory body under the Relevant Laws, or any third party
that is party to any of the agreements and instruments listed
in the Certificate, is required for (a) the due execution,
delivery, recordation, filing or performance by any Loan Party
of the Subject Documents to which it is a party, or for the
consummation of the Merger or the other transactions
contemplated by the Subject Documents, (b) the grant by any
Loan Party of the Liens granted by it pursuant to the Security
Agreement, (c) the perfection or maintenance of the Liens
created by the Security Agreement, or (d) the exercise by the
Agent or any Lender Party of its rights under the Loan
Documents or the remedies in respect of the Collateral pursuant
to the Security Agreement, except for (i) in the case of clause
(a) above, the authorizations, approvals, actions, notices and
filings listed on Schedule III hereto, all of which have been
duly obtained, taken, given or made and are in full force and
effect, and except for those authorizations, approvals,actions,
notices and filings the failure to obtain, take, give or make
which, either individually or in the aggregate, could not be
reasonably expected to have a Material Adverse Effect,(ii) in the
case of the Security Collateral (as defined in the Security
Agreement), as may be required in connection with any disposition
of any portion of the Security Collateral by laws affecting the
offering and sale of securities generally, and (iii) the matters
referred to in paragraph 8 below. All applicable waiting periods
under the Relevant Laws in connection with the Merger and the
other transactions contemplated by the Credit Agreement have
expired without any action having been taken by any competent
authority restraining, preventing or imposing materially adverse
conditions upon the Merger or the rights of the Loan Parties or
their Subsidiaries freely to transfer or otherwise dispose of,
or to create any Lien on, any properties now owned or hereafter
acquired by any of them, except where, in the case of any such
waiting period other than any waiting period required under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, the failure of such waiting period to have expired
without any such action having been taken could not be
reasonably likely to have a Material Adverse Effect.
8. Each Security Agreement creates a valid security
interest in the Collateral referred to therein securing payment
of the Secured Obligations to the extent Article 9 of the
Uniform Commercial Code as in effect in State of New York (the
"UCC") is applicable thereto and as to which a security
interest may be perfected by filing a financing statement under
the UCC. The Agent's having possession of the certificates
representing the Pledged Shares and the instruments
representing the Pledged Debt delivered to the Agent today
results in the perfection of such security interest in such
Security Collateral.
Our opinion in this paragraph 8 is subject to the
following qualifications:
(i) in the case of instruments (as such term is
defined in Article 9 of the UCC) not constituting part of
chattel paper (as such term is defined in Article 9 of the
UCC), the security interest of the Agent therein cannot be
perfected by the filing of the Financing Statements but
will be perfected if possession thereof is obtained in
accordance with the provisions of Article 9 of the UCC;
(ii) in the case of the issuance or other
distribution in respect of the Pledged Shares or Pledged
Debt of additional instruments (as such term is defined in
Article 9 of the UCC), the security interest of the Agent
therein will be perfected only if possession thereof is
obtained in accordance with the provisions of Article 9 of
the UCC;
(iii) in the case of the issuance or other
distribution in respect of the Pledged Shares or Pledged
Debt of additional securities (as such term is defined in
Article 8 of the UCC), the security interest of the Agent
therein will be perfected only if possession thereof is
obtained in accordance with the provisions of the Security
Agreement or the transfer thereof otherwise occurs in a
manner provided for in Section 8-313(1) of the UCC;
(iv) in the case of proceeds, continuation of
perfection of the Agent's security interest therein is
limited to the extent set forth in Section 9-306 of the
UCC;
(v) in the case of all Collateral in which the
security interest of the Agent has been perfected by the
filing of Financing Statements, Article 9 of the UCC
requires the filing of continuation statements within the
period of six months prior to the expiration of five years
from the date of the original filings in order to maintain
the effectiveness of the filings referred to in this
paragraph; and
(vi) in the case of property that becomes Collateral
after the date hereof, Section 552 of the Federal
Bankruptcy Code limits the extent to which property
acquired by a debtor after the commencement of a case
under the Federal Bankruptcy Code may be subject to a
security interest arising from a security agreement
entered into by the debtor before the commencement of such
case.
We call to your attention that the perfection of the
above security interests will be terminated as to any
Collateral acquired by a Loan Party more than four months after
such Loan Party so changes its name, identity or corporate
structure as to make the Financing Statements seriously
misleading, unless new appropriate financing statements
indicating the new name, identity or corporate structure of
such Loan Party are properly filed before the expiration of
such four months.
9. Except as set forth on Schedule IV hereto, all
taxes and governmental fees and charges, the payment of which
is required in connection with the execution, delivery and
recording of the Loan Documents or the execution, delivery or
filing of the Financing Statements in the State of New York
have been paid.
10. Neither any Loan Party nor any of its
Subsidiaries is an "investment company," or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the
Investment Company Act of 1940, as amended.
The opinions set forth above are subject to the following
qualifications:
(a) We express no opinion as to the effect of the
law of any jurisdiction other than the State of New York
wherein any Lender may be located or wherein enforcement
of the Credit Agreement or the Notes may be sought that
limits the rates of interest legally chargeable or
collectible.
(b) Our opinions set forth in paragraph 8 above are
subject to the further qualifications that we express no
opinion as to:
(i) any Loan Party's rights in or title to any
Collateral; and
(ii) the validity or perfection of the security
interests referred to in paragraph 8 above as
they relate to any interest in or claim in or
under any policy of insurance, except a claim to
proceeds payable by reason of loss or damage
under insurance policies maintained by the Loan
Parties with respect to Inventory as required by
and in compliance with Section 12 of the
Uniroyal Security Agreement.
The opinions expressed herein are subject to the
following additional qualifications and comments:
(a) We express no opinion as to the
applicability of Section 548 of the Bankruptcy Code
or Article 10 of the New York Debtor and Creditor Law
relating to fraudulent transfers to any obligations
of any Subsidiary Guarantor under any of the Loan
Documents.
(b) The provisions of the Loan Documents that
permit any party thereto to take action or make
determinations, or to benefit from indemnities and
similar undertakings of any party to the Loan
Documents, may be subject to a requirement that such
action be taken or such determinations be made, and
any action or inaction by such party that may give
rise to a request for payment under such an
undertaking be taken or not taken, on a reasonable
basis and in good faith.
(c) We express no opinion as to (i) whether a
federal or state court outside New York would give
effect to the choice of New York law provided for in
the Loan Documents, (ii) provisions of the Loan
Documents that relate to the subject matter
jurisdiction of the federal or state courts of New
York to adjudicate any controversy related to any of
the Loan Documents or the transactions contemplated
thereby, (iii) the waiver of inconvenient forum set
forth in any of the Loan Documents, or (iv) the
waiver of jury trial found in any of the Loan
Documents.
(d) Our opinions above as to compliance with
laws are based upon a review of those statutes, rules
and regulations which, in our experience, are
normally applicable to transactions of the type
contemplated by the Subject Documents and statutes,
rules and regulations applicable to corporations
conducting businesses similar to those conducted by
the Loan Parties.
(e) Except as expressly set forth in paragraph
8 above, we express no opinion as to the creation,
validity, perfection or priority of any security
interest or lien purported to be created by any of
the Loan Documents.
(f) Certain remedial and exculpatory provisions
of the Security Agreement may be unenforceable in
whole or in part under the laws of the State of New
York, but in our opinion the inclusion of such
provisions does not affect the validity of the
pledges and the granting of liens or security
interests effected thereby and, in our opinion, the
Security Agreement and the laws of the State of New
York contain adequate remedial provisions for the
practical realization of the rights and benefits
purported to be afforded thereby.
A copy of this letter may be delivered by you to any
Eligible Assignee in accordance with the provisions of the
Credit Agreement, and such Eligible Assignee may rely on the
opinions expressed above as if this opinion letter were
addressed and delivered to such Eligible Assignee on the date
hereof.
Very truly yours,
RDF:bar
Att.
EXHIBIT F-2
August 21, 1996
To the Initial Lenders party to the Credit
Agreement referred to below and to
Citicorp Securities, Inc., as Arranger,
Citicorp USA, Inc., as Agent for the Lender Parties
and The Chase Manhattan Bank, as Managing
Agent
CROMPTON & KNOWLES CORPORATION
and
UNIROYAL CHEMICAL CORPORATION
Ladies and Gentlemen:
This opinion is being furnished to you pursuant to Sections
3.01(k)(xviii) and (xix) of the Credit Agreement dated as of
August 21, 1996 (the "Credit Agreement") among Crompton & Knowles
Corporation, a Massachusetts corporation ("Crompton"), Crompton &
Knowles Colors Incorporated, a Delaware corporation ("Crompton
Colors"), Davis-Standard Corporation, a Delaware corporation
("Davis-Standard"), Ingredient Technology Corporation, a Delaware
corporation ("ITC", and together with Crompton, Crompton Colors
and Davis-Standard, the "Crompton Borrowers") and Uniroyal
Chemical Company, Inc. ("Uniroyal"), the Lender Parties party
thereto, Citicorp Securities, Inc., as Arranger, Citicorp USA,
Inc., as Agent (the "Agent") and The Chase Manhattan Bank, as
Managing Agent. Terms defined in the Credit Agreement and in the
Crompton Security Agreement referred to therein, unless otherwise
defined herein, are used herein as therein defined.
I am the General Counsel of Crompton and have acted as
counsel to (i) Crompton, Crompton Colors, Davis-Standard, ITC and
the Subsidiaries of Crompton set forth on Schedule I hereto
(collectively, the "Crompton Guarantors" and, together with the
Crompton Borrowers, the "Crompton Parties") and (ii) Uniroyal
Chemical Corporation, a Delaware corporation ("Uniroyal Corp."),
Uniroyal and the Subsidiaries of Uniroyal Corp. set forth on
Schedule II hereto (collectively, the "Uniroyal Guarantors" and,
together with the Crompton Parties, the "Loan Parties") in
connection with (a) the Credit Agreement, (b) the Crompton
Security Agreement, dated as of the date hereof (the "Crompton
Security Agreement"), made by the Pledgers party thereto to the
Agent; (c) the Uniroyal Security Agreement, dated as of the date
hereof (the "Uniroyal Security Agreement") made by the Pledgers
party thereto to the Agent; (d) the Subsidiary Guaranty, dated
as of the date hereof (the "Subsidiary Guaranty"), made by the
Guarantors party thereto in favor of the Secured Parties, (e) the
Parent Guaranty, dated as of the date hereof (together with the
Credit Agreement, the Crompton Security Agreement, the Uniroyal
Security Agreement and the Subsidiary Guaranty, the
"Agreements") made by Crompton in favor of the Secured Parties
and (f) certain other instruments and documents related to the
Agreements.
In connection with this opinion, I have examined (i) the
Agreements and (ii) the certificates of incorporation and by-laws
of each of the Loan Parties. I have also examined such records
of the Loan Parties and such other documents, certificates and
records as I have deemed necessary or appropriate as a basis for
the opinions set forth herein.
In my examination of the documents referred to above, I have
assumed (i) the due execution and delivery, pursuant to due
authorization, of each of the documents referred to above by all
parties thereto other than the Loan Parties, (ii) the
authenticity of all documents submitted to me as originals and
(iii) the conformity to originals of all documents submitted to
me as copies.
I am qualified to practice law in the Commonwealth of
Pennsylvania and in rendering the opinions expressed herein I
express no opinion as to the laws of any jurisdiction other than
the laws of the Commonwealth of Pennsylvania.
Based upon the foregoing and upon such investigation as I have
deemed necessary, in my capacity as General Counsel, I am of the
opinion that:
1.None of the execution, delivery or performance by each of
the Loan Parties of the Agreements to which it is a party, nor
the consummation of the transactions contemplated thereby will
violate, or be in conflict with, or constitute a default under,
or permit the termination of, any agreement or instrument to
which such Loan Party is a party or by which such Loan Party (or
its properties) is bound which, individually or in the aggregate,
would have a material adverse effect on Crompton and its
Subsidiaries, taken as a whole.
2.To the best of my knowledge, except as disclosed in the
Credit Agreement or the Schedules thereto, there is no action,
proceeding or investigation pending or threatened against any of
the Loan Parties that (i) could reasonably be expected to result
in any material adverse effect on the business, operations or
financial condition of Crompton and its Subsidiaries taken as a
whole or (ii) purports to affect the legality, validity or
enforceability of any Loan Document or any Related Document to
which any Loan Party is a party or any of the transactions
contemplated by the Credit Agreement.
3.Each of Crompton, KEM Manufacturing Corporation ("KEM")
and CNK Disposition Corp. ("CNK") (a) is a corporation duly
organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and (b) has all
requisite corporate power and authority to own or lease and
operate its properties and to carry on its business as now
conducted and as proposed to be conducted.
4.The execution, delivery and performance by Crompton, KEM
and CNK of each Loan Document and each Related Document to which
it is a party, and the consummation of the other transactions
contemplated by the Credit Agreement are within each such party's
corporate powers, have been duly authorized by all necessary
corporate action, and do not contravene each such party's charter
or bylaws.
5.No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or
regulatory body is required for (a) the due execution, delivery,
recordation, filing or performance by Crompton, KEM or CNK of any
Loan Document or any Related Document to which it is a party, or
for the consummation of the other transactions contemplated
thereby or (b) the grant by Crompton, KEM or CNK of the Liens
granted by it pursuant to the Collateral Documents.
6.Each Loan Document and each Related Document to which any
of Crompton, KEM or CNK is a party has been duly executed and
delivered by such party.
This opinion is limited to the matters stated herein, and no
opinion is implied or may be inferred beyond the matters
expressly stated. This opinion is being furnished only to you
and is solely for your benefit and is not to be used, circulated,
quoted, relied upon or otherwise referred to by any other person
or for any other purpose without my prior written consent,
provided, a copy of this letter may be delivered by you to any
Eligible Assignee in accordance with the provisions of the Credit
Agreement, and such Eligible Assignee may rely on the opinions
expressed above as if this opinion letter were addressed and
delivered to such Eligible Assignee on the date hereof.
Very truly yours,
Schedule I
Crompton Guarantors
CK Holding Corporation
CNK Disposition Corp.
Crompton & Knowles Colors Incorporated
Crompton & Knowles Overseas Corporation
Davis-Standard Corporation
Ingredient Technology Corporation
Kem Manufacturing Corporation
Schedule II
Uniroyal Guarantors
Gustafson, Inc.
Gustafson International Company
Lokar Enterprises, Inc.
Trace Chemicals, Inc.
Uniroyal Chemical Brazil Holding, Inc.
Uniroyal Chemical Company, Inc.
Uniroyal Chemical Corporation
Uniroyal Chemical Export Limited
Uniroyal Chemical International Company
Uniroyal Chemical Leasing Company, Inc.
EXHIBIT F-3
FORM OF OPINION OF GENERAL COUNSEL OF
CROMPTON & KNOWLES CORPORATION
[See Exhibit F-2 to the Credit Agreement]
SOLVENCY CERTIFICATE OF
, a corporation (the "Company"), hereby certifies that the
person executing this Solvency Certificate, , is the chief
financial officer of the Company and that such officer is duly
authorized to execute this Solvency Certificate, which is hereby
delivered on behalf of the Company pursuant to Section
3.01(k)(xiii) of the Credit Agreement, dated as of August 21,
1996 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among Crompton & Knowles
Corporation ("Crompton Corp."), a Massachusetts corporation,
Crompton & Knowles Colors Incorporated, a Delaware corporation,
Davis-Standard Corporation, a Delaware corporation, Ingredient
Technology Corporation, a Delaware corporation, and Uniroyal
Chemical Company, Inc., a New Jersey corporation (collectively,
the "Borrowers"), certain Lender Parties party thereto, Citicorp
Securities, Inc., as Arranger, Citicorp USA, Inc., as Agent for
the Lender Parties, and The Chase Manhattan Bank, as Managing
Agent. Unless otherwise defined herein, terms defined in the
Credit Agreement are used herein as therein defined.
The Company further certifies that such officer is generally
familiar with the properties, businesses and assets of the
Company and its Subsidiaries and has carefully reviewed the Loan
Documents, the Related Documents and the contents of this
Solvency Certificate and, in connection herewith, has reviewed
such other documentation and information and has made such
investigation and inquiries as the Company and such officer deem
necessary and prudent therefor. The Company further certifies
that the financial information and assumptions that underlie and
form the basis for the representations made in this Solvency
Certificate were reasonable when made and were made in good faith
and continue to be reasonable as of the date hereof.
Immediately upon the consummation of the Merger, the Borrowers
intend to borrow up to $600,000,000 under the Credit Agreement to
pay transaction fees and expenses incurred in connection with the
Merger. In addition, from time to time, the Lender Parties have
agreed, on the terms and conditions set forth in the Credit
Agreement, to lend to the Borrowers and issue Letters of Credit
for the account of the Borrowers to redeem or repurchase certain
public Debt and for other general corporate purposes, including,
without limitation, to finance permitted acquisitions and Capital
Expenditures and to provide working capital for the Borrowers and
their respective Subsidiaries.
To secure, among other things, the payment of the Obligations of
the Loan Parties under the Loan Documents, the Loan Parties are
now granting a security interest in certain Collateral, now owned
or hereafter acquired, pursuant to the Collateral Documents,
substantially in the form, as applicable, of Exhibits D-1, D-2
and D-3 to the Credit Agreement and each of the Loan Parties is
issuing its guaranty, substantially in the form, as applicable,
of Exhibit E-1 or E-2 to the Credit Agreement.
The Company understands that the Agent, the Arranger, the
Managing Agent and the Lender Parties are relying on the truth
and accuracy of this Solvency Certificate in connection with the
transactions contemplated by the Loan Documents and the Related
Documents.
The Company hereby further certifies that:
1.The Company has reviewed the projected Consolidated financial
statements of the Crompton Corp. and its Consolidated
Subsidiaries prepared by its management, including projected
Consolidated balance sheets, income statements and cash flow
statements for the first year following January 1, 1996 and on an
annual basis for each year thereafter until the Termination Date
(collectively, the "Projected Financial Statements"), which were
prepared on the basis of the estimates and assumptions stated
therein, a copy of which Projected Financial Statements was
furnished to the Lender Parties. The Company believes that the
Projected Financial Statements were prepared in good faith and
represent the Company's best estimate of its future financial
performance and are reasonable in light of the business
conditions existing on the date hereof. On the date hereof,
after giving effect to the consummation of the Merger and the
other transactions contemplated by the Loan Documents and the
Related Documents, the fair value of the property of the Company
and the Company and its Consolidated Subsidiaries, taken as a
whole, is greater than the total amount of liabilities
(including, without limitation, contingent liabilities) of the
Company and the Company and its Consolidated Subsidiaries, taken
as a whole, respectively.
2.On the date hereof, after giving effect to the consummation of
the Merger and the other transactions contemplated by the Loan
Documents and the Related Documents, the present fair saleable
value of the assets of the Company and the Company and its
Consolidated Subsidiaries, taken as a whole, is not less than the
amount that will be required to pay the probable liabilities of
the Company and the Company and its Consolidated Subsidiaries,
taken as a whole, respectively, on its debts as they become
absolute and matured.
3.On the date hereof, after giving effect to the consummation of
the Merger and the other transactions contemplated by the Loan
Documents and the Related Documents, neither the Company nor the
Company and its Consolidated Subsidiaries, taken as a whole, is
engaged in business or a transaction, or is about to engage in
business or a transaction, for which its property would
constitute unreasonably small capital.
4.The Company does not intend to, and does not believe that it by
itself or together with its Consolidated Subsidiaries, taken as a
whole, will, incur debts or liabilities beyond its ability to pay
such debts and liabilities as they mature.
5.The Company does not intend, in consummating the transactions
contemplated by the Loan Documents and the Related Documents, to
hinder, delay or defraud either present or future creditors or
any other Person to which the Company is or will become, on or
after the date hereof, indebted.
6.In reaching the conclusions set forth in this Solvency
Certificate, the Company has considered, among other things:
(a)the cash and other current assets of the Company and its
Consolidated Subsidiaries, after giving effect to the Merger and
the other transactions, reflected in the unaudited Consolidated
pro forma balance sheet of the Company and its Consolidated
Subsidiaries for the one-year period ended on or about March 31,
1996;
(b)all contingent liabilities of the Company and its Consolidated
Subsidiaries, including without limitation, any claims arising
out of pending or, to the best knowledge of the undersigned,
threatened litigation against the Company or any of its
Consolidated Subsidiaries, and in so doing, the Company has
computed the amount of each such contingent liability as the
amount that, in light of all the facts and circumstances existing
on the date hereof, represents the amount that can reasonably be
expected to become an actual or matured liability;
(c)all obligations and liabilities of the Company and its
Consolidated Subsidiaries, whether matured or unmatured,
liquidated or unliquidated, disputed or undisputed, secured or
unsecured, subordinated, absolute, fixed or contingent,
including, among other things, claims arising out of pending, or
to the best knowledge of the undersigned, threatened litigation
against the Company and its Consolidated Subsidiaries;
(d)historical and anticipated growth in the sales volume of the
Company and its Consolidated Subsidiaries and in the income
stream generated by the Company and its Consolidated Subsidiaries
as reflected in, among other things, the cash flow statements
delivered as part of the Projected Financial Statements;
(e)the customary terms and trade payables of the Company and its
Consolidated Subsidiaries;
(f)the amount of the credit extended by and to customers of the
Company and its Consolidated Subsidiaries;
(g)the amortization requirements of the Credit Agreement and the
anticipated interest payable on the Advances under the Credit
Agreement;
(h)the level of capital customarily maintained by the Company and
its Consolidated Subsidiaries and other entities engaged in the
same or similar business as the businesses of the Company and its
Consolidated Subsidiaries; and
(i)the Projected Financial Statements.
Delivery of an executed counterpart of a signature page to this
Solvency Certificate by telecopier shall be effective as delivery
of a manually executed counterpart of this Solvency Certificate.
IN WITNESS WHEREOF, the chief financial officer of the Company
has executed this Solvency Certificate in his/her corporate
capacity and on behalf of the Company this 21st day of August,
1996.
By
Name:
Title: Chief Financial Officer
CROMPTON & KNOWLES CORPORATION AND SUBSIDIARIES
EXHIBIT 11 - STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
(In thousands, except per share data)
PRIMARY
Quarter Ended Nine Months Ended
Sept.28, Sept.30, Sept.28, Sept.30,
1996 1995 1996 1995
Earnings
Earnings(loss) before
extraordinary
charge $ (69,572) $ 11,812 $ (24,042) $ 143,296
Extraordinary
loss on early
extinguishment
of debt - - (441) (8,279)
Net earnings $ (69,572) $ 11,812 $ (24,483) $ 135,017
Shares
Weighted average shares
outstanding 72,140 71,445 71,747 67,995
Common stock
equivalents - 786 - 932
Average shares
outstanding 72,140 72,231 71,747 68,927
Per share
Earnings(loss) before
extraordinary
charge $ (0.97) $ 0.16 $ (0.34) $ 2.08
Extraordinary
loss on early
extinguishment
of debt - - - (0.12)
Net earnings $ (0.97) $ 0.16 $ (0.34) $ 1.96
FULLY DILUTED
Quarter Ended Nine Months Ended
Sept.28, Sept.30, Sept.28, Sept.30,
1996 1995 1996 1995
Earnings
Earnings(loss) before
extraordinary
charge $ (69,572) $ 11,812 $ (24,042) $ 143,296
Extraordinary
loss on early
extinguishment
of debt - - (441) (8,279)
Net earnings $ (69,572) $ 11,812 $ (24,483) $ 135,017
Shares
Weighted average shares
outstanding 72,140 71,445 71,747 67,995
Common stock
equivalents - 811 - 950
Average shares
outstanding 72,140 72,256 71,747 68,945
Per share
Earnings(loss) before
extraordinary
charge $ (0.97) $ 0.16 $ (0.34) $ 2.08
Extraordinary
loss on early
extinguishment
of debt - - - (0.12)
Net earnings $ (0.97) $ 0.16 $ (0.34) $ 1.96
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-END> SEP-28-1996
<CASH> 16,833
<SECURITIES> 0
<RECEIVABLES> 294,608
<ALLOWANCES> 6,567
<INVENTORY> 344,803
<CURRENT-ASSETS> 735,875
<PP&E> 504,937
<DEPRECIATION> 349,223
<TOTAL-ASSETS> 1,669,139
<CURRENT-LIABILITIES> 387,982
<BONDS> 0
0
0
<COMMON> 7,708
<OTHER-SE> (89,354)
<TOTAL-LIABILITY-AND-EQUITY> 1,669,139
<SALES> 1,398,492
<TOTAL-REVENUES> 1,398,492
<CGS> 894,041
<TOTAL-COSTS> 1,324,875
<OTHER-EXPENSES> (762)
<LOSS-PROVISION> (88)
<INTEREST-EXPENSE> 86,818
<INCOME-PRETAX> (12,439)
<INCOME-TAX> 11,603
<INCOME-CONTINUING> (24,042)
<DISCONTINUED> 0
<EXTRAORDINARY> (441)
<CHANGES> 0
<NET-INCOME> (24,483)
<EPS-PRIMARY> (0.34)
<EPS-DILUTED> (0.34)
</TABLE>
