SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 3, 1994
GROW GROUP, INC.
(Exact name of registrant as specified in its charter)
NEW YORK
(State or other jurisdiction of incorporation)
1-4596 11-1665588
(Commission File Number) (IRS Employer Identification No.)
200 Park Avenue, New York, New York 10166
(Address of principal executive offices) (Zip Code)
(212) 599-4400
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Exhibit Index is on page __
Page 1 of __ pages
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Item 2. Acquisition or Disposition of Assets.
On August 3, 1994, Grow Group, Inc. (the "Company"),
through its wholly-owned subsidiary, Sinclair Acquisition Corp.
(the "Buyer"), completed the acquisition of substantially all of
the assets of Sinclair Paint Company ("Sinclair"), a division of
Insilco Corporation ("Insilco"). The acquisition was effectuated
pursuant to an Asset Purchase Agreement (the "Asset Purchase
Agreement"), dated May 7, 1994 (a copy of which was attached as
Exhibit 10.1 to the Company's Current Report on Form 8-K, date of
earliest event reported: May 7, 1994), as amended by a First
Amendment to Asset Purchase Agreement, dated as of August 1, 1994
(a copy of which is attached hereto as Exhibit 2.1(b)). The
discussion of the Asset Purchase Agreement contained herein is
qualified in its entirety by reference to the Asset Purchase
Agreement, as amended.
Sinclair is engaged in the manufacture and sale of
architectural paints through 49 company-operated stores in four
Western states. Sinclair generated over $95 million in revenue
in calendar 1993. The Sinclair operation will augment the
Company's other architectural paint operations.
The purchase price, which was negotiated between the
parties, was $51 million (subject to post-closing adjustments).
In addition, the Buyer assumed certain obligations of Sinclair.
The purchase price was paid in full at the closing and was funded
through a combination of cash and borrowings.
To the best of the Company's knowledge, there were no
material relationships between Insilco and its affiliates and the
Company or any of the Company's affiliates, directors or officers
or any associate of any director or officer of the Company.
Item 5. Other Events.
In connection with the acquisition of the Sinclair
assets, the amount of the Company's credit facilities with
Chemical Bank New Jersey, N.A., Fleet Bank and PNC Bank,
Kentucky, Inc., (collectively, the "Banks") was increased from
$40 million to $60 million. The Credit Agreement (the "Credit
Agreement"), dated as of March 31, 1993, as amended on August 6,
1993, by and among the Company, Grow Group Insurance, Ltd., the
Banks and Chemical Bank, was further amended on August 3, 1994
to, among other things, waive certain provisions of the Credit
Agreement to the extent they would restrict the Buyer's
performance under the Asset Purchase Agreement and amend the
defined levels of leverage and capital expenditures.
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The Company's obligations under the Credit Agreement
are secured by the accounts receivable of the Company and Cello
Corp., Sinclair Acquisition Corp. and Zynolyte Products Company,
wholly-owned subsidiaries of the Company. Such subsidiaries also
guaranteed the Company's obligations under the Credit Agreement.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits
(a) Financial statements of business acquired:
The financial statements of Sinclair included herein
are prepared on a historical basis and include breakdowns between
a predecessor company and the current entity and "Fresh Start"
accounting adjustments due to the bankruptcy proceedings
described in Note (2) to the Sinclair financial statements. As a
result of these and other factors, the Sinclair financial
statements are not comparable nor are these financial statements
necessarily indicative of future results of operations or
financial position. The Company's acquisition decision was
affected by extensive reviews and examinations of detailed
financial and other information, both current and forecasted.
The following financial statements of Sinclair are
presented herein:
Independent Auditors' Report.
Statements of Assets and Liabilities - Years Ended
December 31, 1993 and 1992.
Statements of Operations - Nine Months Ended December
31, 1993, Three Months Ended March 31, 1993, Year Ended
December 31, 1992.
Statements of Cash Flows - Nine Months Ended December
31, 1993, Three Months Ended March 31, 1993, Year Ended
December 31, 1992.
Notes to Financial Statements.
An unaudited Statement of Assets and Liabilities of
Sinclair as at June 30, 1994, an unaudited Statement of
Operations for the Six Months Ended June 30, 1994 and an
unaudited Statement of Cash Flows for the Six Months Ended June
30, 1994 will be filed on or before October 17, 1994.
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INDEPENDENT AUDITORS' REPORT
The Board of Directors
Insilco Corporation:
We have audited the accompanying statements of assets and
liabilities of Sinclair Paint Company (a division of Insilco
Corporation) as of December 31, 1993 and 1992 and the related
statements of operations and cash flows for the nine months ended
December 31, 1993 (successor period), three months ended March
31, 1993 and year ended December 31, 1992 (predecessor periods).
These financial statements are the responsibility of the
Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Sinclair Paint Company as of December 31, 1993 and 1992 and
the results of its operations and its cash flows the nine-month
period ended December 31, 1993, the three-month period ended
March 31, 1993 and the year ended December 31, 1992 in conformity
with generally accepted accounting principles.
As discussed in notes 2 and 4 to the financial statements,
effective March 31, 1993, the Company emerged from bankruptcy and
applied fresh start accounting. As a result, the statement of
assets and liabilities at December 31, 1993 and the related
statements of operations and cash flows for the nine-month period
ended December 31, 1993 are presented on a different basis than
that for the periods before fresh start and, therefore, are not
comparable.
Los Angeles, California
June 17, 1994 KPMG Peat Marwick, LLP
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SINCLAIR PAINT COMPANY
(A Division of Insilco Corporation)
Statements of Assets and Liabilities
December 31, 1993 and 1992
(In thousands)
Predecessor
Assets 1993 1992
Current assets:
Cash $ 333
Accounts receivable, net of allowance
for doubtful accounts of $475 and $533,
respectively 7,093 6,936
Inventories, net 14,233 17,292
Prepaid expenses 958 1,538
Total current assets 22,617 25,766
Property, plant and equipment, at cost,
net of accumulated depreciation of
$1,357 and $12,095, respectively 17,219 34,313
Total assets $39,836 60,079
Liabilities
Current liabilities:
Accounts payable $ 5,633 3,164
Accrued expenses (note 4) 3,109 3,813
Total current liabilities 8,742 6,977
Divisional investment 31,094 53,102
Commitments and contingencies
(notes 6 and 8)
Total liabilities including
divisional investment $39,836 60,079
See accompanying notes to financial statements.
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SINCLAIR PAINT COMPANY
(A Division of Insilco Corporation)
Statements of Operations
(In thousands)
Predecessor
Nine months
ended Three months Year ended
December 31, ended December 31,
1993 March 31, 1993 1992
Net sales $ 77,565 20,651 96,837
Costs of goods
sold 42,471 12,141 56,769
Gross profit 35,094 8,510 40,068
Selling expenses 27,022 7,642 30,987
General and
administrative
expenses 7,063 1,933 9,137
Corporate charges 996 324 1,296
Operating
expenses 35,081 9,899 41,420
Operating
income (loss) 13 (1,389) (1,352)
Other income - - 210
Loss on sale of
assets (148) - (128)
Reorganization
expenses - (18,667) -
Divisional
loss $ (135) (20,056) (1,270)
See accompanying notes to financial statements.
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SINCLAIR PAINT COMPANY
(A Division of Insilco Corporation)
Statements of Cash Flows
(In thousands)
Predecessor
Nine months
ended Three months Year ended
December 31, ended December 31,
1993 March 31, 1993 1992
Cash flows from
operating
activities:
Divisional loss $ (135) (20,056) (1,270)
Adjustments to
reconcile change
in divisional loss
to net cash provided
by (used in)
operating activities:
Depreciation 1,366 784 3,127
Loss on sale of
fixed assets 148 - 128
Fresh Start Valuation
Adjustment - 18,667 -
Change in assets and
liabilities:
(Increase) decrease
in:
Accounts
receivable 647 (804) (71)
Inventories (1,268) 2,314 2,373
Prepaid
expenses 771 (513) (1,396)
Increase (decrease)
in:
Accounts
payable 1,623 846 (878)
Accrued
expenses (290) (414) (4,363)
Net cash
provided
by (used
in)
operating
activities 2,862 824 (2,350)
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Predecessor
Nine months
ended Three months Year ended
December 31, ended December 31,
1993 March 31, 1993 1992
Cash flows from
investing activities:
Capital expenditures (1,304) (440) (1,984)
Proceeds from sale
of fixed assets 208 - 46
Net cash used in
investing activities
(1,096) (440) (1,938)
Cash flows from financing
activities - divisional
investment (outflow) (1,433) (384) 4,180
Net increase
(decrease) in cash 333 - (108)
Cash at beginning of
period - - 108
Cash at end of
period $ 333 - -
See accompanying notes to financial statements.
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SINCLAIR PAINT COMPANY
(A Division of Insilco Corporation)
Notes to Financial Statements
December 31, 1993 and 1992
(1) Nature of Business
The Sinclair Paint Company (the Company) is a division of
Insilco Corporation (Parent) which manufactures paints and
sells a variety of paints and related products (ladders,
tape, spray equipment, and the like) through approximately
50 retail stores in California, Hawaii and Arizona.
The financial statements of Sinclair Paint have been
prepared from the historical books and records of the
Company and Parent, except that certain reserves established
and maintained at the Parent level have been excluded from
the financial statements. The Company has applied the
principles of fresh start accounting as a result of the
reorganization described in notes 2 and 4.
The divisional balances in the statements of assets and
liabilities represent the Parent's investment and advances
to the Company on a historical-cost basis adjusted for
equity in operations and intercompany transactions.
Expenses allocated to the Company not settled with the
Parent become a permanent component of the divisional
investment. The Parent believes that such expense
allocations are reasonable and proper. Cash generated by
the Company is transferred to the Parent on a daily basis
for cash management purposes. The cumulative amount of cash
transferred since the Company's acquisition represents a
reduction to the divisional investment account balance.
(2) Plan of Reorganization
On April 1, 1993, the Parent and certain of its subsidiaries
(collectively with the Parent, the Debtors) emerged from
Chapter 11 of the United States Bankruptcy Code (the Chapter
11 cases) pursuant to a plan of reorganization (the Plan of
Reorganization) which was confirmed by the United States
Bankruptcy Court (the Bankruptcy Court). For financial
reporting purposes, the effective date of the Plan of
Reorganization was March 31, 1993 (the Plan Effective Date).
For periods prior to the Plan Effective Date, the Company is
sometimes referred to herein as the Predecessor. The
Chapter 11 cases were commenced on January 13, 1991 (the
Petition Date) when the Debtors filed separate voluntary
petitions for reorganization.
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SINCLAIR PAINT COMPANY
(A Division of Insilco Corporation)
Notes to Financial Statements, Continued
(3) Asset Purchase Agreement
On May 7, 1994, Insilco entered into an Asset Purchase
Agreement (Agreement) with Grow Group Inc. (Grow). Under
the terms of the Agreement, Grow will acquire the majority
of the Company's assets and assume certain liabilities, as
defined in the Agreement.
(4) Summary of Significant Accounting Policies
Basis for Presentation - Fresh Start Accounting
The accompanying financial statements have been prepared in
accordance with the Statement of Position 90-7, "Financial
Reporting by Entities in Reorganization under the Bankruptcy
Code" (the Reorganization SOP), issued by the American
Institute of Certified Public Accountants. As of the Plan
Effective Date, the Company adopted the "fresh start"
accounting principles prescribed by the Reorganization SOP.
As a result of the application of the Reorganization SOP,
including the application of fresh start accounting as of
March 31, 1993, financial information for periods subsequent
to the Plan Effective Date is not comparable with financial
information for prior periods.
The following summarizes the Reorganization SOP's
significant fresh start accounting principles and the
significant assumptions utilized in the application thereof.
Valuation of Assets and Liabilities
Using a valuation of the Company performed by the Parent's
financial advisor as well as fair values of the Company's
identifiable intangible assets, inventories and fixed and
other tangible assets based on management's estimates, the
Parent determined the total reorganization value of all of
its assets to be approximately $40 million as of the Plan
Effective Date, or approximately $18 million less than the
historical carrying value of its tangible assets.
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SINCLAIR PAINT COMPANY
(A Division of Insilco Corporation)
Notes to Financial Statements, Continued
In preparing the valuation of the Company, the Parent's
financial advisor conducted extensive due diligence and
updated its due diligence examinations as it deemed
appropriate. The activities included, but were not
restricted to the following: (i) a review and analysis of
the historical financial and operating performance of the
Predecessor based on data and reports provided by the
Company, (ii) extensive discussions concerning the business,
operations, assets, present condition and future prospects
of the Company conducted with the Parent's senior management
and with selected operating management as deemed necessary,
(iii) a comparison of the Company's financial and operating
information with similar data available from public sources
for selected comparable companies and (iv) a review and
analysis of the Company's projected operating performance
based on business plans, which are revised periodically to
reflect actual and anticipated results of economic
developments.
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SINCLAIR PAINT COMPANY
(A Division of Insilco Corporation)
Notes to Financial Statements, Continued
As a result of the valuation of assets described above, the
Company adjusted assets by approximately $18 million to the
estimated reorganization value in the three months ended
March 31, 1993. The effect of the Plan of Reorganization
and fresh start accounting principles on the Company's March
31, 1993 statement of assets and liabilities follows:
Fresh Start Statement of Assets and Liabilities
March 31, 1993
(Unaudited)
(In thousands)
Adjustments
to record
consummation
of the Plan of
Reorganization Reorganized
Assets Predecessor Fresh Start Company
Current assets:
Cash and cash
equivalents $ - - -
Accounts receivable,
net 7,740 - 7,740
Inventories 14,978 (2,013) (1) 12,965
Prepaid expenses 2,051 (322) (1) 1,729
Total current assets 24,769 (2,335) 22,434
Property, plant and
equipment, net 33,969 (16,332) (1) 17,637
Total assets $ 58,738 (18,667) 40,071
Liabilities
Current liabilities:
Accounts payable $ 4,010 - 4,010
Accrued expenses
and other 3,399 - 3,399
Total current
liabilities 7,409 - 7,409
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Adjustments
to record
consummation
of the Plan of
Reorganization Reorganized
Predecessor Fresh Start Company
Divisional investment 51,329 (18,667) (1) 32,662
Total liabilities
including
divisional
investment $ 58,738 (18,667) 40,071
The notes to the unaudited balance sheet at March 31, 1993
presenting the effect of fresh start accounting as follows:
(1) To record the effects of fresh start accounting whereby the
Company's assets and liabilities are stated in accordance
with the Reorganization SOP.
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SINCLAIR PAINT COMPANY
(A Division of Insilco Corporation)
Notes to Financial Statements, Continued
Inventories
Inventories consisted of the following at December 31, 1993 and
1992 (in thousands):
Predecessor
1993 1992
Raw materials and supplies $ 2,975 2,386
Work in process 260 445
Finished goods 10,998 14,461
$ 14,233 17,292
Inventories are valued at the lower of cost (principally
determined utilizing the first-in, first-out) or market.
Property, Plant and Equipment
Predecessor
1993 1992
Land $ 4,954 9,642
Buildings 6,645 20,380
Machinery and equipment 6,977 16,386
Total property and equipment $ 18,576 46,408
Accumulated depreciation (1,357) (12,095)
Total property and equipment $ 17,219 34,313
Property, plant and equipment are carried at cost and are
depreciated over the estimated useful lives of the property
utilizing the straight-line method. The estimated useful lives
of the property range from 3 to 20 years. Expenditures for
maintenance and repairs are expensed as incurred, and
depreciation expense was $1,366, $784 and $3,127 for the periods
ended December 31, 1993, March 31, 1993 and the year ended
December 31, 1992, respectively.
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SINCLAIR PAINT COMPANY
(A Division of Insilco Corporation)
Notes to Financial Statements, Continued
Accrued Expenses
Accrued expenses consisted of the following as of December 31,
1993 and 1992 (in thousands):
Predecessor
1993 1992
Salaries, wages and related expenses $ 2,668 2,425
Other 441 1,388
$ 3,109 3,813
Income Taxes
The Company has been included in the Parent's consolidated
Federal income tax return for the periods ended December 31,
1993, March 31, 1993 and the year ended December 31, 1992. The
Company was not party to any formal tax sharing agreement, and
accordingly, no provision or benefit for income taxes has been
reflected in the accompanying statements of income. In addition,
no deferred income taxes have been reflected for temporary
differences in the recognition of revenues and expenses for tax
and financial reporting purposes.
(5) Transactions with Parent
The Parent provides various treasury functions for the
Company and maintains a cash management system under which
excess cash generated by the Company is transferred to the
Parent and working capital requirements of the company are
paid by the Parent. Incident to this system, the Parent
pays for certain expenses, such as insurance, payroll taxes,
and 401(k) contributions specifically related to the
Company. The Parent also provides certain services to the
group such as operations management, treasury, insurance and
benefits management, legal, accounting and tax, among
others. Costs charged to the Company for these services are
allocated based on management's estimates of the Company's
proportionate share of the total group's expenses.
Management believes that these expenses are reasonably
allocated. Expenses allocated to the Company by the Parent
for these services totaled approximately $1 million, $300
thousand and $1.3 million for the periods ended December 31,
1993, March 31, 1993 and the year ended December 31, 1992,
respectively. The Company is also allocated pension costs
by the Parent. See note 7 for a discussion of the Company's
retirement plans.
15
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SINCLAIR PAINT COMPANY
(A Division of Insilco Corporation)
Notes to Financial Statements, Continued
If net expenses charged to the Company for services provided
by the Parent are not settled with the Parent, they become a
permanent component of the divisional investment reflected
in the accompanying balance sheets. To the extent that
expenses paid by the Parent for the Company have not been
settled by the Parent at December 31, 1993, March 31, 1993
or December 31, 1992, respectively, the corresponding
liability allocated to the Company is included on the
statements of assets and liabilities within divisional
investment.
(6) Lease Commitments
The Company leases certain property, plant and equipment
under various leasing arrangements, most of which provide
that the Company pay taxes, maintenance, insurance and
certain other operating expenses associated with the asset.
These leases are being accounted for as operating leases.
Minimum future rental payments under all operating leases
are as follows (in thousands):
1994 $ 4,652
1995 3,802
1996 2,989
1997 2,367
1998 2,181
Thereafter 10,050
Total minimum lease payments $26,041
Rental expense for the periods ended December 31, 1993, March 31,
1993 and the year ended December 31, 1992 was approximately $2.3
million, $.8 million and $2.8 million, respectively.
(7) Pension Plans
Substantially all employees of the Company were covered
under various pension plans of the Parent during 1993 and
1992. The benefits under these plans are based primarily on
years of service and employees' compensation near
retirement. Plan assets consist principally of equity
investments, government obligations and noncallable
corporate debt securities. The Parent also contributes to
various multiemployer plans sponsored by bargaining units
for its union employees. The various plans' assets and
obligations remain with the Parent company after the closing
date of the agreement described in note 3.
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SINCLAIR PAINT COMPANY
(A Division of Insilco Corporation)
Notes to Financial Statements, Continued
The Parent allocated pension expense to the Company based on
its estimated share of the Parent's pension expense.
Pension expense allocated to the Company was $318, $91 and
$78 for the periods ended December 31, 1993, March 31, 1993
and the year ended December 31, 1992, respectively.
(8) Contingencies
There are various lawsuits and claims pending against the
Parent relative to the division, including those related to
commercial transactions and environmental matters. Such
matters have not been reserved for at the division level but
are instead reflected on the Parent's financial statements
as the related contingent liabilities, if any, will remain
with the Parent company subsequent to the closing of the
Asset Purchase Agreement described in note 3.
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(b) Pro forma financial information:
The pro forma financial information required to be
filed relative to the acquired business will be filed
on or before October 17, 1994.
(c) Exhibits:
The following Exhibits are filed with this Current
Report on Form 8-K:
Exhibit
Number Description
2.1(a) Asset Purchase Agreement, dated as of May 7,
1994, between Insilco Corporation and the
Company (Incorporated herein by reference
to Exhibit 10.1 to the Company's Current
Report on Form 8-K, date of earliest event
reported: May 7, 1994, File No. 1-4596).
2.1(b) First Amendment to Asset Purchase Agreement,
dated as of August 1, 1994, between Insilco
Corporation and the Company.
4.1(a) Credit Agreement (the "Credit Agreement"),
dated as of March 31, 1993, by and among the
Company, Grow Group Insurance, Ltd., Chemical
Bank New Jersey, N.A., Fleet Bank, PNC Bank,
Kentucky, Inc. and Chemical Bank.
(Incorporated herein by reference to Exhibit
4.1 to the Company's Current Report on Form
8-K, date of earliest event reported: March
31, 1993, File No. 1-4596).
4.1(b) Amendment No. 1, dated August 6, 1993, to the
Credit Agreement, by and among the Company,
Cello Corp., Ameritone Paint Corporation,
Zynolyte Products Company, Chemical Bank New
Jersey, N.A., Fleet Bank and PNC Bank,
Kentucky, Inc.
4.1(c) Waiver, Consent and Amendment No. 2, dated
August 3, 1994, to the Credit Agreement, by
and among the Company, Grow Group Insurance,
Ltd., Cello Corp., Sinclair Acquisition Corp.
(formerly known as Ameritone Paint
Corporation), Zynolyte Products Company,
Chemical Bank New Jersey, N.A., Fleet Bank
and PNC Bank, Kentucky, Inc.
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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.
GROW GROUP, INC.
Date: August 17, 1994 By: /s/ Frank V. Esser
Frank V. Esser
Treasurer and Chief
Financial Officer
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Exhibit Index
Exhibit
Number Description Page
2.1(a) Asset Purchase Agreement, dated as of
May 7, 1994, between Insilco Corporation
and the Company (Incorporated herein by
reference to Exhibit 10.1 to the Company's
Current Report on Form 8-K, date of earliest
event reported: May 7, 1994, File No. 1-4596).
2.1(b) First Amendment to Asset Purchase Agreement,
dated as of August 1, 1994, between Insilco
Corporation and the Company.
4.1(a) Credit Agreement (the "Credit Agreement"), dated
as of March 31, 1993, by and among the Company,
Grow Group Insurance, Ltd., Chemical Bank New
Jersey, N.A., Fleet Bank, PNC Bank, Kentucky, Inc.
and Chemical Bank. (Incorporated herein by
reference to Exhibit 4.1 to the Company's Current
Report on Form 8-K, date of earliest event
reported: March 31, 1993, File No. 1-4596).
4.1(b) Amendment No. 1, dated August 6, 1993, to the
Credit Agreement, by and among the Company, Cello
Corp., Ameritone Paint Corporation, Zynolyte
Products Company, Chemical Bank New Jersey, N.A.,
Fleet Bank and PNC Bank, Kentucky, Inc.
4.1(c) Waiver, Consent and Amendment No. 2, dated
August 3, 1994, to the Credit Agreement, by and
among the Company, Grow Group Insurance, Ltd.,
Cello Corp., Sinclair Acquisition Corp. (formerly
known as Ameritone Paint Corporation), Zynolyte
Products Company, Chemical Bank New Jersey, N.A.,
Fleet Bank and PNC Bank, Kentucky, Inc.
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Exhibit 2.1(b)
FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT
This First Amendment to Asset Purchase Agreement (this "First
Amendment") is entered into as of the 1st day of August, 1994,
WITNESSETH:
A. Insilco Corporation, a Delaware corporation ("Seller"), and Grow
Group, Inc., a New York corporation ("Grow") entered into an Asset Purchase
Agreement, dated as of May 7, 1994 (the "Asset Purchase Agreement"), for the
sale of substantially all of the assets of Seller's operating division known as
the Sinclair Paint Company (the "Division").
B. The Transferred Assets include the leases described on Exhibit A
(the "Leases"), in each of which Seller is the lessee and a third party is the
lessor. Pursuant to certain Assignment and Assumption and Lessor's Consents,
Seller has assigned the Leases to Purchaser.
C. Purchaser and Seller wish to amend the Asset Purchase Agreement.
D. Initial capitalized terms used but not defined herein are used as
defined in the Asset Purchase Agreement.
NOW, THEREFORE, in consideration of the recitals and of the respective
agreements herein contained as well as other good and valuable consideration,
the sufficiency of which is hereby acknowledged, the parties hereto covenant and
agree as follows:
1. Seller hereby agrees to indemnify and defend Purchaser against,
and to hold Purchaser harmless from, as an Offsite Environmental Loss pursuant
to Section 9.02(C)(i) of the Asset Purchase Agreement, any and all Losses
incurred by the Purchaser that (A) arise under or are based on an Environmental
Law and (B) result from the operation, use or closure prior to the Closing Date
by the Division (or the Seller on behalf of the Division) or the Predecessor of
underground storage tanks identified in the site assessment of the Division's
retail stores (Volume 1), dated July 1994, Summary of Recommendations, on the
premises covered by the Leases ("Premises") (but not including any Loss arising
under or based on requirements of Environmental Laws promulgated, enacted or
amended after the Closing Date to the extent such requirements impose greater
obligations (financial or otherwise) than those in effect as of the Closing
Date); provided, further, that if Purchaser purchases any such Premises or if an
investigation of the Premises is made in connection with an offer by Purchaser
or contract to purchase such Premises, or in reasonable contemplation thereof,
any Loss for which Seller is obligated to indemnify Purchaser pursuant to this
Paragraph 1 of this First Amendment will be treated as an Environmental Loss
pursuant to Section 9.02(B) of the Asset Purchase Agreement. Any claim by
Purchaser for reimbursement or indemnification under this First Amendment shall
be made pursuant to the provisions of Section 9.04 of the Asset Purchase
Agreement.
2. Purchaser shall pay and shall be solely liable for any costs of
any voluntary environmental assessment or investigation undertaken by Purchaser,
after the Closing Date, with respect to the environmental condition of the
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Premises, but not for any other Losses, which Losses are covered by Paragraph 1
of this First Amendment.
3. The parties agree to amend the second to the last sentence of
Section 14.02(B) of the Asset Purchase Agreement to read as follows: "As used
herein, "Fair Market Value" means the value of a Store as determined in its more
recent appraisal by the Appraiser, which appraisal shall be based on the
assumption that the Store is currently fully leased at market rent."
4. Except to the extent as amended herein, the Asset Purchase
Agreement remains in full force and effect.
5. This First Amendment will be governed by the laws of the State of
California.
6. This First Amendment may be signed in any number of counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
7. All notices and other communications hereunder will be in writing
and will be deemed given when delivered personally or when received if sent by
registered or certified mail, return receipt requested, or telecopy to the
parties at the following addresses (or at such other address as a party may
specify by like notice):
(A) If to Purchaser, to:
Grow Group, Inc.
200 Park Avenue
New York, New York 10166
Attention: Lloyd Frank, Secretary
Telecopy: (212) 986-8268
with a copy (which will not constitute effective notice pursuant
to this Section 5) to:
2
<PAGE>
Brobeck, Phleger & Harrison
550 South Hope Street
Los Angeles, California 90071-2604
Attention: Kenneth R. Bender, Esq.
Telecopy: (213) 745-3345
and (which will not constitute effective notice pursuant to this
Section 5) to:
Parker, Chapin, Flattau & Klimpl
1211 Avenue of the Americas
New York, New York 10036
Attention: Richard A. Rubin
Telecopy: (212) 704-6288
(B) If to the Seller, to:
Insilco Corporation
425 Metro Place North
Fifth Floor
Dublin, Ohio 43017
Attention: General Counsel
Telecopy: (614) 791-3195
with a copy (which will not constitute effective notice pursuant
to this Section 5) to:
Baker & Botts, L.L.P.
2001 Ross Avenue
Dallas, Texas 75201-2916
Attention: Karen Wolf
Telecopy: (214) 953-6503
8. If any term or other provision of this First Amendment is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this First Amendment will
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto will
negotiate in good faith to modify this First Amendment so as to effect the
original intent of the parties as closely as possible in an acceptable manner so
that the transactions contemplated hereby are fulfilled to the greatest extent
possible.
3
<PAGE>
9. The Seller and the Purchaser agree to deliver or cause to be
delivered to each other such additional instruments, to take such additional
action or to make any such filings on the Closing Date and at such other times
thereafter as any of them may reasonably request for the purpose of carrying out
this First Amendment.
IN WITNESS WHEREOF, the undersigned have executed this First
Amendment to Asset Purchase Agreement as of the date first above written.
GROW GROUP, INC.
By: /s/ R. Banks
Name: _____________________________
Title: ____________________________
INSILCO CORPORATION
By: /s/ Robert L. Smialek
Name: _____________________________
Title: ____________________________
4
<PAGE>
EXHIBIT A
Leases
STORE #/LOCATION
A. Store # 2 (Hollywood)
5600 Santa Monica Blvd.
Hollywood, CA
B. Store # 4 (Pico-Rimpau)
4635 West Pico Blvd.
Los Angeles, CA
C. Store # 13 (Fresno)
1461 Blackstone Avenue
Fresno, CA
D. Store # 14 (Westwood)
10561 W. Pico Blvd.
Westwood, CA
E. Store # 17 (Santa Ana)
301 East 17th Street
Santa Ana, CA
F. Store # 20 (Canoga Park)
22104 Sherman Way
Canoga Park, CA
G. Store # 32 (Escondido)
735 N. Escondido Blvd.
Escondido, CA
H. Store # 36 (Bakersfield)
1201 23rd Street
Bakersfield, CA
5 <PAGE>
Exhibit 4.1(b)
This AMENDMENT NO. 1 ("Amendment No. 1") dated August 6, 1993 to the
Credit Agreement and the other Loan Documents referred to herein, is made by and
among GROW GROUP, INC., a New York corporation (the "Borrower"), CELLO CORP., a
Maryland corporation, AMERITONE PAINT CORPORATION, a California corporation,
ZYNOLYTE PRODUCTS COMPANY, a California corporation ("Zynolyte"), and CHEMICAL
BANK NEW JERSEY, N.A., a national banking association ("Chemical" or the
"Agent"), FLEET BANK, a New York banking corporation ("Fleet"), and PNC BANK,
KENTUCKY, INC. a Kentucky banking corporation ("PNC"; Chemical, Fleet and PNC
sometimes herein each called a "Bank" and collectively, the "Banks").
W I T N E S S E T H:
Section 1. Recitals. This Amendment No. 1 is made in contemplation
of the following matters:
1.1. The Borrower, Grow Group Insurance, Ltd., a Bermuda corporation
and a wholly-owned indirect Subsidiary of the Borrower, the Banks and Chemical
Bank, a New York banking corporation, have entered into a Credit Agreement dated
as of March 31, 1993 (the "Agreement"). Terms defined in the Agreement are used
herein as therein defined unless otherwise defined herein.
1.2. The Borrower has acquired all the outstanding capital stock of
Zynolyte from Zynolyte Products Holding Company, a Delaware corporation,
pursuant to a Stock Purchase Agreement dated as of August 2, 1993 (the "Stock
Purchase Agreement").
1.3. The Banks have consented to, and waived any default under the
Agreement caused by, the acquisition by the Borrower of all the outstanding
capital stock of Zynolyte, pursuant to a Waiver and Consent dated July 30, 1993
(the "Waiver and Consent").
<PAGE>
1.4 The Waiver and Consent shall become void, and an Event of Default
shall occur under the Agreement, unless the Borrower, the Corporate Guarantors
and Zynolyte shall have executed and delivered this Amendment No. 1 to the Agent
and the Banks on or before the seventh day after the Closing Date (as defined in
the Stock Purchase Agreement).
Section 2. Amendments to Loan Documents.
2.1. Credit Agreement. The Agreement is amended as follows:
(a) The defined term "Corporate Guarantors" contained in Section 1.1
of the Agreement shall be, and it hereby is, amended in its entirety to read as
follows:
"Corporate Guarantors" shall mean Cello Corp., a Maryland
corporation, Ameritone Paint Corporation, a California corporation,
and Zynolyte Products Company, a California corporation.
(b) The defined term "Permitted Encumbrances" contained in Section
1.1 of the Agreement is amended by deleting the word "and" at the end of clause
(xi), deleting the period at the end of clause (xii) and inserting in lieu
thereof the word "and," and adding a new clause (xiii), to read in its entirety
as follows:
(xiii) other liens which are not described in clauses (i)-(xii),
and which (a) are not material, individually or in the aggregate, to
the financial position of the Borrower and Subsidiaries on a
Consolidated basis, (b) do not exceed $1,000,000 in the aggregate, (c)
do not attach to, relate to or in any way affect the Collateral or the
Pledged Stock, and (d) against which the Borrower or such Subsidiary
has established adequate reserves.
(c) Exhibit A to the Agreement is amended to read in its entirety in
the form of Exhibit 2.1(c) to this Amendment No. 1.
(d) Exhibit P to the Agreement is amended to read in its entirety in
the form of Exhibit 2.1(d) to this Amendment No. 1.
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<PAGE>
(e) Section 8.7(c) of the Agreement is amended to read in its
entirety as follows:
(c) As soon as available, and in any event within forty-five
(45) Business Days after the end of each of the first three (3) fiscal
quarters of each fiscal year, a copy of (i) the unaudited Consolidated
and Consolidating Balance Sheets of the Borrower and Subsidiaries as
of the end of such quarter, (ii) the related Consolidated and
Consolidating Statement of Income and Consolidated Statement of Cash
Flow of the Borrower and Subsidiaries for such quarter, all in
reasonable detail, prepared in accordance with GAAP throughout the
periods involved, provided, however that the foregoing unaudited
Consolidated and Consolidating financial statements shall be condensed
and shall omit footnotes, and shall be subject to year-end audit
adjustments, and (iii) a certificate of the Chief Financial Officer of
the Borrower in detail reasonably satisfactory to the Agent (A)
certifying that, to the best of his knowledge, there exists no Default
or Event of Default, or if any such Default or Event of Default did
occur, the nature and status thereof, and (B) performing calculations
which show compliance with the provisions of SECTIONS 8.9, 8.10, 8.11,
8.12 and 9.9;
(f) Section 9.1 of the Agreement is amended by deleting the word
"and" at the end of clause (h), deleting the period at the end of clause (i) and
inserting in lieu thereof the words "; and", and adding a new clause (j), to
read in its entirety as follows:
(j) Indebtedness of Zynolyte Products Company to Standard Brands
Paint Company, a Delaware corporation in an amount not to exceed
$1,831,549.
2.2. Corporate Guarantors' Security Agreement. The Corporate
Guarantors' Security Agreement is amended so that each occurrence of the defined
term "Grantor" shall mean and include Zynolyte Products Company, a California
corporation having its principal place of business at 2320 Dominguez Street,
Carson, California 90749, in addition to Ameritone Paint Corporation and Cello
Corp.
2.3. Pledge Agreement. The Pledge Agreement is amended by amending
Exhibit A thereto to read in its entirety in the form of Exhibit 2.3 to this
Amendment No. 1.
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<PAGE>
2.4 Subsidiaries' Guaranty. The Subsidiaries' Guaranty is amended as
follows:
(a) Each occurrence of the defined term "Guarantor" shall mean and
include Zynolyte Products Company, a California corporation having its principal
place of business at 2320 Dominguez Street, Carson, California 90749, in
addition to Ameritone Paint Corporation and Cello Corp.
(b) With respect to Zynolyte only, the defined term "Closing Date"
where it appears in subclause (ii)(A) of the definition of "Maximum Guaranteed
Amount" (paragraph (3) of the Preliminary Statement) shall mean the date hereof.
Section 3. Subsidiaries' Guaranty; Corporate Guarantors' Security
Agreement.
Each Corporate Guarantor hereby restates and reaffirms the provisions
of the Subsidiaries' Guaranty and the Corporate Guarantors' Security Agreement,
and expressly acknowledges that the execution of this Amendment No. 1 or any
actions taken by the Borrower, Zynolyte, the Corporate Guarantors or the Banks
in connection with the Waiver and Consent and this Amendment No. 1 shall not be
deemed a release or waiver of any of the Corporate Guarantors' obligations under
the Subsidiaries' Guaranty or the Corporate Guarantors' Security Agreement.
Section 4. General.
This Amendment No. 1 is made pursuant to Section 14.1 of the
Agreement, Section 12 of the Corporate Guarantors' Security Agreement, Section
18 of the Pledge Agreement, and Section 8 of the Subsidiaries' Guaranty, and the
Borrower, the Corporate Guarantors, Zynolyte and the Banks acknowledge that all
provisions of the Agreement and the Loan Documents, except as amended hereby and
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<PAGE>
waived in the Waiver and Consent, are and shall remain, in full force and
effect, and nothing herein contained shall be deemed a waiver of, or impair the
effectiveness or enforceability of, any other terms or conditions of the
Agreement or any of the other Loan Documents. From and after the date of this
Amendment No. 1, each reference in any of the Loan Documents to the Agreement or
any Loan Document shall mean the Agreement or such Loan Document as amended by
this Amendment No. 1.
Section 5. Effectiveness.
Anything in this Amendment No. 1 to the contrary notwithstanding, this
Amendment No. 1 shall become effective when, and only when: (i) it shall have
been signed and delivered on behalf of the Borrower, Zynolyte, the Corporate
Guarantors and the Banks; (ii) the Agent shall have received financing
statements on Form UCC-1, in form and substance satisfactory to the Agent,
executed by Zynolyte, to be filed in the jurisdictions specified in Schedule A
hereto; (iii) the Agent shall have received the certificate(s) representing the
Zynolyte stock owned by the Borrower, together with undated stock powers duly
executed in blank; and (iv) the Borrower shall have paid in full for the ratable
benefit of the Banks, the Amendment Fee of $5,000 to which the Agent and the
Borrower have agreed pursuant to Section 14.1(d) of the Agreement.
Section 6. Expenses of the Agent and the Banks.
Pursuant to Section 16.3 of the Agreement, the Borrower shall pay on
demand to the Agent and the Banks the reasonable out-of-pocket expenses of the
Agent and each Bank, including, but not limited to, the reasonable fees and
expenses of Special Counsel and counsel for each Bank, and all fees and charges
incurred by the Agent for environmental due diligence.
-5-
<PAGE>
Section 7. Counterparts.
This Amendment No. 1 may be executed in any number of counterparts,
each of which shall be an original and all of which shall constitute one
agreement. It shall not be necessary in making proof of this Amendment No. 1 or
of any document required to be executed and delivered in connection herewith or
therewith to produce or account for more than one counterpart.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No.
1 to be executed by their respective officers thereunto duly authorized, as of
the date first above written. GROW GROUP, INC.
By: ___________________________
Name:__________________________
Title:_________________________
CELLO CORP.
By:
Name:__________________________
Title:_________________________
AMERITONE PAINT CORPORATION
By:
Name:__________________________
Title:_________________________
ZYNOLYTE PRODUCTS COMPANY
By:
Name:__________________________
Title:_________________________
CHEMICAL BANK NEW JERSEY, N.A.
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<PAGE>
By: ___________________________
Name:__________________________
Title:_________________________
FLEET BANK
By: ___________________________
Name:__________________________
Title:_________________________
PNC BANK, KENTUCKY, INC.
By:
Name:__________________________
Title:_________________________
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FILE N:\DEPAOLKA\CHEMICAL\GROW\AMEND.003
EXHIBIT 2.1(c)
CREDIT AGREEMENT
Exhibit A
Active Subsidiaries
Cello Corp.
Ameritone Paint Corporation
Grow Group Holding Corp.
Grow Group Insurance Ltd.
(indirect subsidiary)
Zynolyte Products Company
Devoe Coatings B.V.
Grow A.G.
Grow Group, N.V.
Devoe Coatings Company(s) Pte. Ltd.
Grow Group Canada Ltd.
-8-
<PAGE>
EXHIBIT 2.1(d)
CREDIT AGREEMENT
Exhibit P
Issued and
Authorized Outstanding
Issuer: Shares Shares Ownership
Cello Corp. 100 shares of 100 shares Grow Group, Inc.
Class A Stock 100%
500 shares of 326-2/3 shs. Grow Group, Inc.
Class B Stock 100%
Ameritone 25,000 shs. of 500 shares Grow Group, Inc.
Paint Common Stock 100%
Corporation
Zynolyte 1,000 shs. of 1,000 shares Grow Group, Inc.
Products Common Stock 100%
Company
-9-
<PAGE>
EXHIBIT 2.3
PLEDGE AGREEMENT
Exhibit A
Issued and
Authorized Outstanding
Issuer: Shares Shares Ownership
Cello Corp. 100 shares of 100 shares Grow Group, Inc.
Class A Stock 100%
500 shares of 326-2/3 shs. Grow Group, Inc.
Class B Stock 100%
Ameritone 25,000 shs. of 500 shares Grow Group, Inc.
Paint Common Stock 100%
Corporation
Zynolyte 1,000 shs. of 1,000 shares Grow Group, Inc.
Products Common Stock 100%
Company
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<PAGE>
SCHEDULE A
Jurisdictions
California
Texax
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Exhibit 4.1(c)
This Waiver, Consent and Amendment No. 2 ("Amendment No. 2") dated August
, 1994 to the Credit Agreement dated as of March 1, 1993, as amended by
Amendment No. 1 thereto dated August 6, 1993, is made by and among GROW GROUP,
INC., a New York corporation (the "Borrower"), GROW GROUP INSURANCE, LTD., a
Bermuda corporation ("Grow Insurance"), CELLO CORP., a Maryland corporation
("Cello"), SINCLAIR ACQUISITION CORP., a California corporation (f/k/a AMERITONE
PAINT CORPORATION, and about to be known as SINCLAIR-AMERITONE PAINT
CORPORATION) ("Ameritone"), ZYNOLYTE PRODUCTS COMPANY, a California corporation
("Zynolyte"), CHEMICAL BANK NEW JERSEY, N.A., a national banking association
("Chemical" or the "Agent"), FLEET BANK, a New York banking corporation
("Fleet"), and PNC BANK, KENTUCKY, INC., a Kentucky banking corporation ("PNC";
Chemical, Fleet and PNC sometimes herein each called a "Bank" and collectively,
the "Banks").
W I T N E S S E T H:
Section 1. Recitals.
This Amendment No. 2 is made in contemplation of the following matters:
1.1. The Borrower, Grow Insurance, the Banks and Chemical Bank, a New
York banking corporation, have entered into a certain Credit Agreement dated as
of March 1, 1993. That original agreement was amended by Amendment No. 1
thereto dated August 6, 1993 (the original agreement, as amended by said
Amendment No. 1, being herein called the "Existing Credit Agreement"). Terms
defined in the Existing Credit Agreement are used herein as therein defined
unless otherwise defined herein.
<PAGE>
1.2. The Borrower has entered into a certain Asset Purchase Agreement
(the "Sinclair Asset Purchase Agreement") with Insilco Corporation with respect
to the acquisition of certain of the assets of Sinclair Paint Company, a
division of Insilco Corporation ("Sinclair"). The Borrower has assigned its
rights and obligations under the Sinclair Asset Purchase Agreement to Ameritone,
which will effect the acquisition pursuant to a certain Assignment and
Assumption Agreement dated as of August 1, 1994. Section 9.4(b) of the Existing
Credit Agreement prohibits the Borrower or any Subsidiary from acquiring
substantially all of the assets of any Person unless such acquisition is a
Permitted Acquisition. Section 9.9 of the Existing Credit Agreement prohibits
the Borrower or any Subsidiary from making or committing to make any expenditure
for fixed assets during any fiscal year, if, after giving effect thereto, the
aggregate amount of all expenditures for fixed assets incurred by the Borrower
and Subsidiaries during such fiscal year would exceed the amounts specified.
Section 9.10 of the Existing Credit Agreement prohibits the Borrower or any
Subsidiary from purchasing or otherwise acquiring any Person. Except to the
extent that the Banks consent in writing, the execution, delivery and
performance by the Borrower and/or Ameritone of the Sinclair Asset Purchase
Agreement may violate Sections 9.4(b), 9.9 and 9.10 of the Existing Credit
Agreement and may result in the occurrence of an Event of Default under the
Existing Credit Agreement. The Borrower has requested, and the Banks have
agreed, to waive the provisions of Sections 9.4(b), 9.9 and 9.10 of the Existing
Credit Agreement to the extent they would restrict the execution, delivery and
performance by the Borrower and/or Ameritone of the Sinclair Asset Purchase
Agreement and consent to the acquisition of Sinclair by Ameritone as more
specifically provided in Section 4 hereto.
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<PAGE>
1.3. The Borrower has requested, and the Banks have agreed, to increase
the amount of the Aggregate Revolving Credit Commitments from $40 million to $60
million, the proceeds of such increase to be loaned by the Borrower to Ameritone
to acquire Sinclair and for other legal and proper corporate purposes and to
amend the Existing Credit Agreement and the other Loan Documents to reflect such
increase. The Banks have agreed to increase such Aggregate Revolving Credit
Commitments on the terms provided herein and on the further condition that the
Borrower execute and deliver to the Banks Amended and Restated Revolving Credit
Notes, in the aggregate amount of the increased Aggregate Revolving Credit
Commitments, in the forms of Exhibits L-1, L-2 and L-3 hereto.
1.4. Section 8.11 of the Existing Credit Agreement requires the Borrower
and its Subsidiaries on a Consolidated basis to maintain a ratio of Consolidated
Total Liabilities (except Subordinated Indebtedness) to Consolidated Tangible
Capital Funds of not less than the ratio specified therein. The failure of the
Borrower and its Subsidiaries to maintain the specified ratio of Consolidated
Total Liabilities (except Subordinated Indebtedness) to Consolidated Tangible
Funds, except to the extent waived in writing by the Banks, may result in an
Event of Default under the Existing Credit Agreement. The Borrower has
requested, and the Banks have agreed, to amend Section 8.11 of the Existing
Credit Agreement as more specifically provided in Section 2.8 hereto.
1.5. Section 9.9 of the Existing Credit Agreement prohibits the Borrower
or any Subsidiary from making or committing to make any expenditure for fixed
assets during any fiscal year if, after giving effect thereto, the aggregate
amount of all expenditures for fixed assets incurred by the Borrower and
Subsidiaries during any fiscal year would exceed the amount specified therein.
The failure of the Borrower and its Subsidiaries to comply with Section 9.9 of
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<PAGE>
the Existing Credit Agreement, except to the extent waived in writing by the
Banks, may result in an Event of Default under the Existing Credit Agreement.
The Borrower has requested, and the Banks have agreed, to amend Section 9.9 of
the Existing Credit Agreement as more specifically provided in Section 2.9
hereto.
1.6. The Borrower and the Banks have agreed to amend Sections 2.8(b),
9.10 and 10.1(i) and (k) of the existing Credit Agreement in the manner set
forth herein.
1.7. It is a condition precedent to the Banks' agreement to amend the
Existing Credit Agreement on the terms provided herein and to enter into this
Amendment No. 2 that Ameritone pledge to the Banks certain collateral.
1.8. The Borrower has requested the Banks to enter into this Amendment
No. 2 and the Banks have agreed to enter into this Amendment No. 2 for the
foregoing purposes.
Section 2. Amendments.
2.1. Defined Terms. The defined terms "Aggregate Revolving Credit
Commitments" and "Corporate Guarantors" in Section 1.1 of the Existing Credit
Agreement shall be, and hereby are, amended in their entirety to read as
follows:
"Aggregate Revolving Credit Commitments" shall mean, at any
time, the amount by which Sixty Million Dollars $60,000,000 (or
such lesser amount which may be in effect after giving effect to
any voluntary or mandatory reduction pursuant to Section 2.8)
exceeds the amount of all outstanding Letters of Credit and
Existing Letters of Credit at such time."
"Corporate Guarantors" shall mean Cello Corp., a Maryland
corporation, Zynolyte Products Company, a California corporation
and Ameritone."
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<PAGE>
2.2. New Defined Terms. New defined terms "Amended and Restated
Revolving Credit Note", "Amended and Restated Revolving Credit Notes",
"Amendment No. 2" and "Ameritone" shall be, and hereby are, added to Section 1.1
of the Existing Credit Agreement to read as follows:
"Amended and Restated Revolving Credit
Note" and "Amended and Restated Revolving Credit Notes" shall have
the meanings set forth in Section 2.3.
"Amendment No. 2" shall mean that certain Waiver, Consent and
Amendment No. 2 dated August, 1, 1994, by and among the Borrower,
Grow Insurance, Cello Corp., Ameritone, Zynolyte Products Company
and the Banks."
"Ameritone" shall mean Sinclair Acquisition Corp., formerly
known as Ameritone Paint Corporation and about to be known as
Sinclair-Ameritone Paint Corporation, a California corporation."
2.3. Amended and Restated Revolving Credit Notes. The defined terms
"Revolving Credit Note" and "Revolving Credit Notes" in Section 1.1 of the
Existing Credit Agreement shall be, and hereby are, deleted and of no further
force and effect, and each and every reference to Revolving Credit Note and
Revolving Credit Notes in the Existing Credit Agreement and the other Loan
Documents shall be replaced with "Amended and Restated Revolving Credit Note"
and "Amended and Restated Revolving Credit Notes", respectively, except to the
extent that the context may otherwise require.
2.4. Section 2.3. Section 2.3 of the Existing Credit Agreement shall
be, and hereby is, amended by designating the text of Section 2.3 as paragraph
(a) of Section 2.3, and by adding a new paragraph (b) to Section 2.3, to read as
follows:
"(b) On the effective date of Amendment No. 2, subject to the
terms and conditions hereafter set forth, the Borrower will issue
to each Bank, and each Bank will accept, in substitution and
exchange for (but not in payment of) its original Revolving Credit
Note, an amended and restated revolving credit note (each an
"Amended and Restated Revolving Credit Note" and collectively, the
"Amended and Restated Revolving Credit Notes") in the principal
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<PAGE>
amount of each Bank's Commitment. The Amended and Restated
Revolving Credit Notes shall be substantially in the forms
attached to Amendment No. 2 as Exhibits L-1, L-2 and L-3. Each
Amended and Restated Revolving Credit Note shall be dated the date
of effectiveness of Amendment No. 2. Simultaneously, with the
execution and delivery by the Borrower to each Bank of its Amended
and Restated Revolving Credit Note dated the date of effectiveness
of Amendment No. 2, payable to such Bank's order, each Bank will
return to the Borrower its original Revolving Credit Note marked
"Superseded".
2.5. Section 2.8(b) of the Existing Credit Agreement shall be, and
hereby is, amended in its entirety to read as follows:
"(b) Mandatory Reduction. If any report of Government
Receivables furnished by the Borrower pursuant to SECTION
8.7(b)(ii) as of the last day of any fiscal quarter shows that the
aggregate amount of the Borrower's and the Corporate Guarantors'
Government Receivables equals or exceeds $8 million, then the
Aggregate Revolving Credit Agreement Commitments shall be
automatically reduced by the amount (if any) by which $68 million
exceeds the aggregate amount of the Receivables shown on the
summary schedule of accounts receivable delivered pursuant to
SECTION 8.7(b)(i) as of such last day. Such automatic reduction
shall become effective on the date the Borrower delivers its
report of Government Receivables to the Agent. Once automatically
so reduced, the Aggregate Revolving Credit Commitments shall be
reinstated on the date when the Borrower delivers a report of
Government Receivables to the Agent showing aggregate Government
Receivables of less than $8 million."
2.6. Article VIA. A new Article VIA shall be, and hereby is, added to
the Existing Credit Agreement to read as follows:
"ARTICLE VIA
CONDITIONS OF LENDING;
AMENDED AND RESTATED REVOLVING CREDIT NOTES
In addition to the requirements set forth in ARTICLE VII, the
obligation of the Banks to make the first Revolving Credit Loan
and the obligation
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<PAGE>
of the Issuing Bank to issue the first Letter of Credit or renew the
first Renewable Letter of Credit, in each case on or after the date of
effectiveness of Amendment No. 2, is subject to the fulfillment of the
following conditions precedent:
SECTION 6A.1 Evidence of Corporate Action. The Agent shall
have received a certificate, dated on or after the date of
Amendment No. 2, of the Secretary or an Assistant Secretary of the
Borrower and Ameritone (i) attaching a true and complete copy of
the resolutions of their respective Boards of Directors and of all
documents evidencing other necessary corporate action (in form and
substance satisfactory to the Banks) taken by the Borrower and
Ameritone, as applicable to authorize Amendment No. 2, the Amended
and Restated Revolving Credit Notes and the borrowing hereunder,
(ii) attaching a true and complete copy of the Certificate of
Incorporation and By-laws of the Borrower and Ameritone, in each
case certified by the Secretary of the respective entity, and
(iii) setting forth the incumbency of the officer or officers of
the Borrower and each Corporate Guarantor who signs Amendment No.
2, the Amended and Restated Revolving Credit Notes and related
documents, including therein a signature specimen of such officer
or officers, together with a certificate of good standing of the
Secretary of State of the state of incorporation of the Borrower,
together with such other documents as the Banks shall reasonably
require.
SECTION 6A.2 Amended and Restated Revolving Credit Notes.
The Banks shall have received the Amended and Restated Revolving
Credit Notes, dated the date of effectiveness of Amendment No. 2,
duly executed by the Borrower.
SECTION 6A.3 Opinions of Counsel. The Agent shall have
received opinions of (i) Baker & Botts, L.L.P., counsel for
Insilco Corporation, (ii) Latham & Watkins, California counsel for
Insilco Corporation, (iii) Parker, Chapin, Flattau & Klimpl,
counsel for the Borrower, and (iv) Brobeck, Phleger & Harrison,
counsel for the Borrower, addressed to the Banks, dated the date
of effectiveness of Amendment No. 2, in form and substance
satisfactory to the Banks.
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<PAGE>
SECTION 6A.4 Payment of Fees. The Agent shall have received, for
the ratable benefit of the Banks, payment of a non-refundable closing fee
in the aggregate amount of $75,000.
SECTION 6A.5 Insurance. The Agent shall have received a
certified list of the Borrower's and each Subsidiary's insurance
on all of their businesses and Property, including, without
limitation, flood, hazard and liability insurance, in the form
required by SECTION 8.3.
SECTION 6A.6 Financing Statements. The Agent shall have
received executed original financing statements, in proper form
for filing with the proper officers of each jurisdiction in which
it is necessary or desirable to file any such financing statements
to perfect or protect a first priority security interest in all
accounts of Sinclair Paint Company ("Sinclair") that are being
purchased by Ameritone, in favor of the Agent on behalf of the
Banks and the Issuing Bank.
SECTION 6A.7 Borrowing Request. The Agent shall have
received a Borrowing Request, duly executed by the Borrower.
SECTION 6A.8 Government Approvals. The Agent shall have
received evidence that all approvals and consents of Governmental
Bodies and all consents and approvals under any material contract,
lease or other instrument to which Sinclair is a party necessary
for the consummation of the transactions contemplated by a certain
Asset Purchase Agreement dated as of May 7, 1994, by and between
the Borrower and Insilco Corporation (the "Sinclair Asset Purchase
Agreement") shall have been obtained, shall not impose any
conditions or be subject to any limitations which could reasonably
be expected to materially and adversely affect the ability of the
Borrower or Ameritone to meet their respective obligations under
the Loan Documents, and shall be in full force and effect.
SECTION 6A.9 Compliance. After giving effect to Amendment
No. 2, (a) The Borrower and each Corporate Guarantor shall be in
compliance with all of the terms, covenants and conditions of the
Loan Documents, (b) there shall exist no Default or Event of
Default, and (c) the representations and warranties contained in
the Loan Documents shall be true and correct with the same effect
as though such representations and warranties had been made at the
time of such borrowing or conversion, as the case may be, except
such matters relating thereto as are permitted hereby.
SECTION 6A.10 Litigation. There shall be no litigation
pending or, to the best knowledge of the Borrower or Ameritone,
threatened against Sinclair which, individually, or in the
aggregate, could reasonably be expected to materially and
adversely affect the financial position of the Borrower and its
Subsidiaries on a Consolidated basis.
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SECTION 6A.11 Insolvency. The Agent shall have received
evidence satisfactory to the Banks that neither the Borrower nor
any Active Subsidiary (i) is insolvent or will be rendered
insolvent by the transactions contemplated by the Sinclair Asset
Purchase Agreement; (ii) has unreasonably small capital; and (iii)
has debts that are, or, after giving effect to the transactions
contemplated hereby and by the Sinclair Asset Purchase Agreement,
will be, beyond its ability to pay as such debts mature.
SECTION 6A.12 Documents. The Agent shall have received the
following:
(i) a Schedule of Assets to be acquired by Ameritone in
connection with the Sinclair Asset Purchase Agreement, the
contents of which schedule are reasonably satisfactory to the
Banks;
(ii) an executed copy of the Sinclair Asset Purchase
Agreement, satisfactory in form and content to the Banks, and
evidence that purchase of the scheduled assets of Sinclair has
occurred or will occur pursuant to the terms of the Sinclair Asset
Purchase Agreement;
(iii) a projected balance sheet for the date of closing under
the Sinclair Asset Purchase Agreement for the Borrower and its
Subsidiaries on a Consolidated basis, the contents of which
balance sheet are reasonably satisfactory to the Banks;
(iv) evidence satisfactory to the Banks (which may be a copy
of the certificate described in Section 6.01(B) of the Sinclair
Asset Purchase Agreement) that the representations and warranties
of Insilco Corporation set forth in the Sinclair Asset Purchase
Agreement are true and correct;
(v) the projected Consolidated balance sheet, and the
Consolidated projection of income and expense for the Borrower and
Subsidiaries (including Sinclair) for the year ending June 30,
1995 (collectively, the "FY1995 Projections"), provided, however;
that the FY1995 Projections shall be subject to the same
limitations, qualifications and conditions to which the "Financial
Projections" (as that term is defined in Section 5.16(b) of this
Agreement) are subject, as set forth in Section 5.16(b) of this
Agreement; and
(vi) such other financial and other information pertaining to
Sinclair furnished by Insilco Corporation to the Borrower as the
Banks may request.
SECTION 6A.13 Due Diligence Review. The Banks shall have
completed a due diligence review and other investigation of the
financial condition, business or assets, and the environmental
liabilities, if any, of Sinclair, the results of which due
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diligence review and other investigation are satisfactory to the
Banks."
2.7 Section 8.7(e). Section 8.7(e) of the Existing Credit Agreement
shall be, and hereby is, amended in its entirety to read as follows:
"(e) (i) Not later than November 1, 1994, projected
Consolidated balance sheets, and Consolidated projections of
income and expense for the Borrower and Subsidiaries (including
Sinclair) for the years ending June 30, 1996 and June 30, 1997
(collectively the "FY1996-97 Projections") provided, however; that
the FY1996-97 Projections shall be subject to the same
limitations, qualifications and conditions to which the "Financial
Projections" (as that term is defined in Section 5.16(b) of this
Agreement) are subject, as set forth in Section 5.16(b) of this
Agreement; and
(ii) As soon as available, and in any event within one
hundred twenty (120) Business Days after the end of each fiscal
year, projections prepared by the Chief Financial Officer of the
Borrower for the next fiscal year of the Borrower, together with a
schedule evidencing prospective compliance with all financial
covenants and the negative covenant concerning capital
expenditures set forth in this Agreement."
2.8. Section 8.11. Section 8.11 of the Existing Credit Agreement shall
be, and hereby is, amended in its entirety to read as follows:
"Section 8.11 Leverage. In the case of
the Borrower and the Subsidiaries on a Consolidated basis on the
last day of each fiscal quarter beginning March 31, 1993, have a
ratio of (A) Consolidated Total Liabilities (except Subordinated
Indebtedness) to (B) Consolidated Tangible Capital Funds which
does not exceed 1.6 to 1.0."
2.9. Section 9.9. Section 9.9 of the Existing Credit Agreement shall
be, and hereby is, amended in its entirety to read as follows:
"Section 9.9 Capital Expenditures.
Directly or indirectly (by way of the acquisition of the
securities of a Person or otherwise) make or commit to make any
expenditure for fixed assets during any fiscal year, if after
giving effect thereto, the aggregate amount of all expenditures
for fixed assets incurred by the Borrower and Subsidiaries during
such fiscal year would exceed the following amounts during the
following periods:
Period Amount
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From the Effective Date to
June 30, 1993 $5,000,000
From July 1, 1993 to
June 30, 1994 $12,000,000
From July 1, 1994 to
June 30, 1995 $20,000,000
From July 1, 1995 to
March 31, 1996 $15,000,000
provided, however; that the amount expended for the purchase by
Ameritone of the assets of Sinclair pursuant to the Sinclair Asset
Purchase Agreement shall be specifically excluded from the
limitations imposed by the provisions of this Section 9.9."
2.10. Section 9.10. Paragraph (f) of Section 9.10 of the Existing
Credit Agreement shall be, and hereby is, amended in its entirety to read as
follows:
"(f)(i) The Borrower or any Consolidated Subsidiary may make
and permit to be outstanding loans and advances and capital
contributions to, and purchase or otherwise acquire and own stock
and other securities of, (A) any Active Subsidiary, (B) any
corporation which simultaneously therewith becomes an Active
Subsidiary, or (C) Devoe Coatings B.V., unless, after giving
effect to any such loan, advance or capital contribution to Devoe
Coatings, B.V., the aggregate amount of all such loans, advances
and capital contributions to Devoe Coatings B.V. shall exceed $5
million, but excluding from such limitation, an aggregate amount
of approximately $3.5 million of loans, advances and capital
contributions made to Devoe Coatings B.V. by the Borrower or any
Subsidiary and outstanding on June 30, 1994, and (ii) any
Consolidated Subsidiary may make and permit to be outstanding
loans and advances to the Borrower;".
2.11. Sections 10.1 (i), (k). Sections 10.1(i) and (k) of the Existing
Credit Agreement shall be, and they hereby are, amended in their entirety to
read as follows:
(i) The Borrower or any Active Subsidiary shall (i) suspend
or discontinue its business, or (ii) make an assignment for the
benefit of creditors, or (iii) generally not be paying its debts
as such debts become due, or (iv) admit in writing its inability
to pay its debts as they become due, or (v) file a voluntary
petition in bankruptcy, or (vi) become insolvent (as that term is
used in the Federal Bankruptcy Code or any other federal or state
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law relating to debtors' rights and creditors' remedies), or (vii)
file any petition or answer seeking for itself any reorganization,
arrangement, composition, readjustment of debt, liquidation or
dissolution or similar relief under any present or future statute,
law or regulation of any jurisdiction, or (viii) petition or apply
to any tribunal for any receiver, custodian or any trustee for any
substantial part of its Property, or (ix) be the subject of any
such proceeding filed against it which remains undismissed for a
period of ninety (90) days, or (x) file any answer admitting or
not contesting the material allegations of any such petition filed
against it, or of any order, judgment or decree approving such
petition in any such proceeding, or (xi) seek, approve, consent
to, or acquiesce in any such proceeding, or in the appointment of
any trustee, receiver, custodian, liquidator, or fiscal agent for
it, or any substantial part of its Property, or an order is
entered appointing any such trustee, receiver, custodian,
liquidator or fiscal agent and such order remains in effect for
ninety (90) days, or (xii) take any formal action for the purpose
of effecting any of the foregoing or looking to the liquidation or
dissolution of the Borrower or any Active Subsidiary; or
* * *
"(k) Any final judgment or decree exceeding $250,000 against
the Borrower or any Subsidiary shall remain unstayed, unbonded or
undismissed for a period of thirty (30) days; provided, however,
that any such judgment or decree against a Subsidiary which is not
an Active Subsidiary shall not be deemed a Default or Event of
Default hereunder or under any other Loan Document unless the
Borrower, any Corporate Guarantor or any Active Subsidiary is
responsible or liable therefor; or".
2.12. Corporate Guarantors' Security Agreement.
(a) The Corporate Guarantors' Security Agreement shall be, and hereby
is, amended so that each and every reference to Ameritone Paint Corporation or
Ameritone shall mean and include, Sinclair Acquisition Corp., formerly known as
Ameritone Paint Corporation and about to be known as Sinclair-Ameritone Paint
Corporation.
(b) The Corporate Guarantors' Security Agreement shall be, and hereby
is, further amended to include as collateral granted thereunder (if and to the
extent not already covered thereby) existing accounts receivable (other than
Government Receivables) of Sinclair, having its principal place of business at
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6100 South Garfield Avenue, Los Angeles, California 90040, being acquired by
Ameritone pursuant to the Sinclair Asset Purchase Agreement as well as any such
accounts receivable hereafter arising in the Sinclair Paint business as operated
by Ameritone, as follows: (a) in Section 1(a), at the end of the eleventh line,
add ", including (without limitation) any of the foregoing acquired from
Sinclair pursuant to the Sinclair Asset Purchase Agreement or arising in the
Sinclair Paint business as thereafter operated by Ameritone or its successors
and assigns"; (b) for all purposes, "Collateral" and "Receivables" as defined
therein shall include such additional collateral; and (c) subsections (b), (c)
and (d) of Section 1 shall apply equally to such additional collateral.
2.13. Subsidiaries' Guaranty. The Subsidiaries' Guaranty shall be, and
hereby is, amended so that each and every reference to Ameritone Paint
Corporation shall mean and include, Sinclair Acquisition Corp., formerly known
as Ameritone Paint Corporation and about to be known as Sinclair-Ameritone Paint
Corporation and Section 9 of the Subsidiaries Guaranty shall be, and hereby is,
further amended to include the following:
"If to the Guarantors:
Zynolyte Products Company
2320 E. Dominguez Street
Long Beach, California 90810."
2.14. Section 1 of the Pledge Agreement shall be, and hereby is, amended
in its entirety to read as follows:
"Section 1. Defined Terms. Unless otherwise defined
herein, terms defined in the Agreement shall have such
defined meanings when used herein."
2.15. Exhibits; Schedules. Exhibit A to the Existing Credit Agreement
shall be, and hereby is, amended to read in its entirety in the form of Exhibit
A-1 hereto, Exhibit J to the Existing Credit Agreement shall be, and it hereby
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is, amended to read in its entirety in the form of Exhibit J-1 hereto, Exhibit L
to the Existing Credit Agreement, shall be, and hereby is, deleted and of no
further force and effect, and each and every reference to Exhibit L in the
Existing Credit Agreement shall be, and hereby is, replaced with Exhibits L-1,
L-2 and L-3 hereto, collectively and Exhibit O to the Existing Credit Agreement
shall be, and hereby is, amended to add those items set forth on Exhibit A
hereto. Schedule A to the Borrower Security Agreement shall be, and hereby is,
amended to read in its entirety in the form of Schedule A-1 hereto and Schedule
A to the Corporate Guarantors' Security Agreement shall be, and hereby is,
amended to read in its entirety in the form of Schedule A-I hereto.
Section 3. [Intentionally omitted]
Section 4. Waivers.
4.1 The Banks hereby waive each and every covenant contained in the
Existing Credit Agreement or in any other Loan Document which would prohibit or
restrict the execution, performance and delivery by the Borrower and/or
Ameritone of the Sinclair Asset Purchase Agreement, including but not limited
to, the covenants set forth in Sections 8.11, 9.4(b), 9.9 and 9.10 of the
Existing Credit Agreement, to the extent that such covenants would prohibit or
restrict the proposed acquisition, it being agreed that such waiver is only for
the purpose of permitting such acquisition, and further agree that any failure
by the Borrower or any Subsidiary to perform or observe the covenants set forth
in Sections 8.11, 9.4(b), 9.9 or 9.10 of the Existing Credit Agreement in
connection with the proposed acquisition shall not constitute a Default or an
Event of Default under the Existing Credit Agreement.
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4.2. The Banks hereby waive their right to payment of any Amendment Fee
to which they may be entitled pursuant to Section 14.1(d) of the Existing Credit
Agreement in connection with the execution and delivery of this Amendment No. 2.
Section 5. Representations and Warranties.
(a) Except as provided on Exhibit A hereto and except as to the
assets purchased under the Sinclair Asset Purchase Agreement, the Borrower
hereby represents and warrants that each representation and warranty by the
Borrower set forth in Article V of the Existing Credit Agreement is true and
correct on and as of the date of this Amendment No. 2 as though made by the
Borrower and on and as of such date.
(b) Except as to the assets purchased under the Sinclair Asset
Purchase Agreement, each Corporate Guarantor hereby represents and warrants that
each representation and warranty by the Corporate Guarantors set forth in
Section 5 of the Subsidiaries' Guaranty is true and correct on and as of the
date of this Amendment No. 2 and though made by such Corporate Guarantors on and
as of such date.
(c) The Borrower and Ameritone, jointly and severally, further
represent and warrant to the Banks that to the best of their knowledge (i) each
and every representation and warranty made by Insilco Corporation to the
Borrower in the Sinclair Asset Purchase Agreement is true and correct in all
material respects on and as of the date of this Amendment No. 2 as though made
by Insilco Corporation on and as of such date, and (ii) attached hereto is a
true, correct and complete copy of the certificate of an executive officer of
Insilco Corporation described in Section 6.01(B) of the Sinclair Asset Purchase
Agreement.
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Section 6. Reaffirmations.
(a) The Borrower and Grow Insurance each hereby restates and
reaffirms the provisions of the Credit Agreement (as heretofore and hereby
amended), confirms its absolute and unconditional obligations thereunder and
expressly acknowledges and agrees that its obligations thereunder continue in
full force and effect from and after the date hereof. The Borrower hereby
restates and reaffirms the provisions of the Parent Guaranty, the Pledge
Agreement and the Borrower Security Agreement (as heretofore and hereby
amended), confirms its absolute and unconditional guaranty and pledge (of the
stock of Cello, Ameritone and Zynolyte) and grant of security interests and
other obligations thereunder and expressly acknowledges and agrees that its
guaranty, pledge and grant of security interests and other obligations
thereunder continue in full force and effect from and after the date hereof.
Cello, Ameritone and Zynolyte each hereby restates and reaffirms the provisions
of the Subsidiaries' Guaranty and the Corporate Guarantors' Security Agreement
(as heretofore and hereby amended), confirms its absolute and unconditional
guaranty and grant of security interests and other obligations thereunder, and
expressly acknowledges and agrees that its guaranty and grant of security
interests and other obligations thereunder continue in full force and effect
from and after the date hereof.
(b) The Borrower hereby restates and reaffirms the provisions of the
Parent Guaranty, and expressly acknowledges that the execution of this Amendment
No. 2 or any actions taken by the Borrower, or the Banks in connection therewith
shall not be deemed a release or waiver of any of the Borrower's obligations
pursuant to such Parent Guaranty.
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(c) Each of the Corporate Guarantors hereby restates and reaffirms
the provisions of the Subsidiaries' Guaranty and expressly acknowledges that the
execution of this Amendment No. 2 or any actions taken by the Corporate
Guarantors or the Banks in connection therewith shall not be deemed a release or
waiver of any of the Corporate Guarantors' obligations pursuant to such
Subsidiaries' Guaranty. The Corporate Guarantors hereby further confirm that
the Obligations pursuant to the Subsidiaries' Guaranty shall expressly include
any amount by which the Aggregate Revolving Credit Commitments are increased by
this Amendment No. 2.
Section 7. General.
This Amendment No. 2 is made pursuant to Section 14.1 of the Existing
Credit Agreement and Section 8 of the Subsidiaries' Guaranty, and the Borrower,
Grow Insurance, the Corporate Guarantors, and the Banks acknowledge that all
provisions of the Existing Credit Agreement and the other Loan Documents, as
amended or waived hereby, are and shall remain, in full force and effect, and
nothing herein contained shall be deemed a waiver of, or impair the
effectiveness or enforceability of, any other terms or conditions of the
Existing Credit Agreement or any of the other Loan Documents except as expressly
stated herein. From and after the date of this Amendment No. 2, each and every
reference in any of the Loan Documents to the Credit Agreement or any other Loan
Document shall mean the Existing Credit Agreement or such other Loan Document as
heretofore amended and as amended by this Amendment No. 2. Nothing in Amendment
No. 1 or this Amendment No. 2 shall be deemed to constitute the Borrower, Grow
Insurance, Cello, Ameritone or Zynolyte a party to, or to make the respective
Person obligated under, or to require the consent or signature of the respective
Person for any amendment, supplement, consent or waiver with respect to, any of
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the Credit Agreement, Parent Guaranty, Pledge Agreement, Borrower Security
Agreement, Subsidiaries' Guaranty or Corporate Guarantors' Security Agreement,
unless the particular Person was a party to the particular Loan Document on the
Closing Date (or, as to Zynolyte, except for the Subsidiaries' Guaranty and
Corporate Guarantors' Security Agreement, as to which it is a guarantor, pledgor
and obligor as fully as though an original party thereto).
Section 8. Effectiveness.
Anything in this Amendment No. 2 to the contrary notwithstanding, this
Amendment No. 2 shall become effective when, and only when: (i) it shall have
been signed and delivered on behalf of all of the parties hereto; (ii) the Agent
shall have received, for the ratable benefit of the Banks, payment in full of a
non-refundable closing fee in the aggregate amount of $75,000; (iii) the Banks
shall have received the executed Amended and Restated Revolving Credit Notes in
the form of Exhibits L-1, L-2 and L-3 hereto; and (iv) the Sinclair Asset
Purchase Agreement, in the form of Exhibit B hereto, shall have been executed
and delivered as provided therein and all "Conditions to Closing" set forth in
Article VI of the Sinclair Asset Purchase Agreement shall have been satisfied or
waived with the consent of the Banks.
Section 9. Expenses of the Agent and the Banks. Pursuant to Section 16.3 of the
Existing Credit Agreement, the Borrower shall pay on demand to the Agent and the
Banks the reasonable out-of-pocket expenses of the Agent and each Bank,
including, but not limited to the reasonable fees and expenses of Special
Counsel and counsel for each Bank, and all fees and charges incurred by the
Agent for environmental due diligence.
Section 10. Counterparts.
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This Amendment No. 2 may be executed in any number of counterparts, each
of which shall be an original and all of which shall constitute one agreement.
It shall not be necessary in making proof of this Amendment No. 2 or of any
document required to be executed and delivered in connection herewith or
therewith to produce or account for more than one counterpart.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No.
2 to be executed by their respective officers thereunto duly authorized, as of
the date first above written.
GROW GROUP, INC.
By:
GROW GROUP INSURANCE, LTD.
By:
CELLO CORP.
By:
SINCLAIR ACQUISITION CORP., f/k/a/ Ameritone
Paint Corporation (about to be known as
Sinclair-Ameritone Paint Corporation)
By:
ZYNOLYTE PRODUCTS COMPANY
By:
CHEMICAL BANK NEW JERSEY, N.A.
By:
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FLEET BANK
By:
PNC BANK, KENTUCKY, INC.
By:
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Exhibit A-1
ACTIVE SUBSIDIARIES
Cello Corp.
Sinclair Acquisition Corp., f/k/a/ Ameritone Paint Corporation, about to be
known as Sinclair-Ameritone Paint Corporation
Grow Group Holding Corp.
Grow Group Insurance Ltd. (indirect subsidiary)
Zynolyte Products Company
Grow A.G.
Grow Group, N.V.
Devoe Belgium N.V.
Devoe Coatings Company(s) Pte. Ltd.
Grow Group Canada Ltd.
Devoe Norge A.S.
Devoe S.A.
Devoe Deutschland GMBH
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Exhibit J-1
SCHEDULE OF COMMITMENTS
Commitment Pro Rata
Bank Amount Share
Chemical $30,000,000 50%
Bank New
Jersey, NA
Fleet Bank $15,000,000 25%
PNC Bank, $15,000,000 25%
Kentucky, Inc.
Total $60,000,000 100%
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SCHEDULE A-1
BORROWER SECURITY AGREEMENT
Tradenames and other names business conducted under (other than product names or
lines and trademarks:
Consumer & Professional Products Group
Devoe Coatings Company
Devoe & Reynolds Co.
Automotive Division of Grow Group, Inc.
National Aerosol Products Co.
Zynolyte Products Company
Sinclair Paint Company
Ameritone Paint Company
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SCHEDULE A-I
CORPORATE GUARANTORS' SECURITY AGREEMENT
Cello Corp. also conducts its business under the name Grow Consumer Products
Ameritone also conducts its business under the names
Sinclair Paint Company and
Ameritone Paint Company
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EXHIBIT A
Additions to Exhibit O to Credit Agreement (Extraordinary Matters -
Section 5.17 of the Credit Agreement).
1. On June 25, 1993, the Borrower redeemed and/or converted the
outstanding $26,006,000 of its 8 1/2% Convertible Debentures.
2. On August 4, 1993, the Borrower acquired all of the outstanding
shares of the stock of Zynolyte Products Company for $16,300,000 in cash.
3. On September 23, 1993, the Borrower's Board of Directors' increased
the regular quarterly dividend from $.06 to $.07 per share.
4. On November 15, 1993, the dry cleaning division of the Borrower's
Automotive Division was ordered to pay a $1 million fine for an antitrust
violation involving price fixing on a dry cleaning solvent, which fine was paid.
5. On May 7, 1994, the Borrower entered into an Asset Purchase Agreement
with Insilco Corporation for the acquisition of certain assets and the
assumption of certain liabilities of Insilco's Sinclair Paint Company Division
for $51 million plus other consideration (subject to adjustment).
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ME5:289283.7
