<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO
SECTION 14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
AND
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
------------------------
PRATT & LAMBERT UNITED, INC.
(Name of Subject Company)
SWACQ, INC.
THE SHERWIN-WILLIAMS COMPANY
(Bidders)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of Class of Securities)
739732 10 5
(Cusip Number of Class of Securities)
------------------------
LOUIS E. STELLATO, ESQ.
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
THE SHERWIN-WILLIAMS COMPANY
101 PROSPECT AVENUE, N.W.
CLEVELAND, OHIO 44115-1075
(216) 566-2000
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Bidders)
------------------------
COPY TO:
JOHN A. HEALY, ESQ.
ROGERS & WELLS
200 PARK AVENUE
NEW YORK, NEW YORK 10166
(212) 878-8000
------------------------
CALCULATION OF FILING FEE
- --------------------------------------------------------------------------------
Transaction Valuation*: $399,319,410 Amount of Filing Fee**: $79,964
- --------------------------------------------------------------------------------
* For purposes of calculating the fee only. This amount assumes the purchase
of all of the 11,409,126 outstanding shares of common stock, par value
$.01 per share, together with the associated Common Stock Purchase Rights
(the "Shares") of the subject company for $35.00 cash per Share, based on
the number of Shares represented by the subject company in the Agreement
and Plan of Merger, dated as of November 4, 1995, as outstanding at
November 3, 1995.
** The amount of the filing fee, calculated in accordance with Rule 0-11(d)
under the Securities Exchange Act of 1934, as amended, equals 1/50th of
one percent of the aggregate of the cash offered by the bidders, plus
$100 in respect of the Schedule 13D filing.
/ / Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
Amount Previously Paid: Not Applicable Filing Party: Not Applicable
Form or Registration No.: Not Applicable Date Filed: Not Applicable
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Index to Exhibits Located at Page 8
Page 1 of Pages
<PAGE> 2
14D-1/13D
<TABLE>
<S> <C>
CUSIP No. 739732 10 5 Page 2
- -----------------------------------------------------------------------------------------------
1. Name of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Persons
SWACQ, INC.
- -----------------------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group
(a) / /
(b) / /
- -----------------------------------------------------------------------------------------------
3. SEC Use Only
- -----------------------------------------------------------------------------------------------
4. Sources of Funds
WC, AF
- -----------------------------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(e) or 2(f) / /
- -----------------------------------------------------------------------------------------------
6. Citizenship or Place of Organization
NEW YORK
- -----------------------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by Each Reporting Person
4,563,651*
- -----------------------------------------------------------------------------------------------
8. Check if the Aggregate Amount in Row 7 Excludes Certain Shares
/ /
- -----------------------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row 7
40%*
- -----------------------------------------------------------------------------------------------
10. Type of Reporting Person
CO
- -----------------------------------------------------------------------------------------------
</TABLE>
* On November 4, 1995, The Sherwin-Williams Company and SWACQ, Inc. entered into
a Stock Option, Pledge and Security Agreement (the "Shareholder Option
Agreement") with certain shareholders of the subject company (the "Option
Shareholders") covering 4,563,651 Shares (the "Option Shares") collectively
owned by the Option Shareholders (representing approximately 40% of the
outstanding Shares calculated on a fully diluted basis). Pursuant to the
Shareholder Option Agreement, each of the Option Shareholders has granted to
Sherwin-Williams and SWACQ, Inc. an irrevocable option to purchase such Option
Shareholder's Option Shares for $35.00 per Option Share in cash, which option
is exercisable by Sherwin-Williams or SWACQ, Inc. on or after January 2, 1996,
as well as an irrevocable proxy to vote such Option Shares. The Shareholder
Option Agreement is described more fully in Section 11 of the Offer to
Purchase attached hereto as Exhibit (a)(1).
2
<PAGE> 3
14D-1/13D
<TABLE>
<S> <C>
CUSIP No. 739732 10 5 Page 3
- -----------------------------------------------------------------------------------------------
1. Name of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Persons
THE SHERWIN-WILLIAMS COMPANY
- -----------------------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group
(a) / /
(b) / /
- -----------------------------------------------------------------------------------------------
3. SEC Use Only
- -----------------------------------------------------------------------------------------------
4. Sources of Funds
WC, BK
- -----------------------------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(e) or 2(f) / /
- -----------------------------------------------------------------------------------------------
6. Citizenship or Place of Organization
OHIO
- -----------------------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by Each Reporting Person
4,563,651*
- -----------------------------------------------------------------------------------------------
8. Check if the Aggregate Amount in Row 7 Excludes Certain Shares
/ /
- -----------------------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row 7
40%*
- -----------------------------------------------------------------------------------------------
10. Type of Reporting Person
CO
- -----------------------------------------------------------------------------------------------
</TABLE>
* On November 4, 1995, The Sherwin-Williams Company and SWACQ, Inc. entered into
a Stock Option, Pledge and Security Agreement (the "Shareholder Option
Agreement") with certain shareholders of the subject company (the "Option
Shareholders") covering 4,563,651 Shares (the "Option Shares") collectively
owned by the Option Shareholders (representing approximately 40% of the
outstanding Shares calculated on a fully diluted basis). Pursuant to the
Shareholder Option Agreement, each of the Option Shareholders has granted to
Sherwin-Williams and SWACQ, Inc. an irrevocable option to purchase such Option
Shareholder's Option Shares for $35.00 per Option Share in cash, which option
is exercisable by Sherwin-Williams or SWACQ, Inc. on or after January 2, 1996,
as well as an irrevocable proxy to vote such Option Shares. The Shareholder
Option Agreement is described more fully in Section 11 of the Offer to
Purchase attached hereto as Exhibit (a)(1).
3
<PAGE> 4
SCHEDULE 14D-1/13D
This Tender Offer Statement on Schedule 14D-1 also constitutes a Statement
on Schedule 13D with respect to the beneficial ownership of Shares resulting
from the Shareholder Option Agreement, a copy of which is attached as Exhibit
(c)(2) hereto. The item numbers and responses thereto below are in accordance
with the requirements of Schedule 14D-1.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Pratt & Lambert United, Inc., a New
York corporation (the "Company"). The address of the Company's principal
executive offices is 75 Tonawanda Street, Buffalo, New York 14207.
(b) This Statement relates to the offer by SWACQ, Inc. (the "Purchaser"), a
New York corporation and a wholly-owned subsidiary of The Sherwin-Williams
Company, an Ohio corporation ("Sherwin-Williams"), to purchase all of the
outstanding shares of common stock, par value $.01 per share (the "Common
Stock"), of the Company and the associated Common Stock Purchase Rights (the
"Rights," and together with the Common Stock, the "Shares") issued pursuant to
the Rights Agreement dated as of January 31, 1989, as amended (the "Rights
Agreement"), between the Company and Mellon Securities Trust Company, as Rights
Agent, at a purchase price of $35.00 per Share, net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions set forth
in the Offer to Purchase dated November 9, 1995 and in the related Letter of
Transmittal (which, together with any supplements or amendments, collectively
constitute the "Offer"), copies of which are attached as Exhibits (a)(1) and
(a)(2) hereto, respectively. The information set forth in the Offer to Purchase
under "Introduction" is incorporated herein by reference.
(c) The information set forth in the Offer to Purchase under "Introduction"
and in Section 6 ("Price Range of Shares; Dividends") is incorporated herein by
reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d), (g) This Statement is being filed by the Purchaser and
Sherwin-Williams. The information set forth in the Offer to Purchase under
"Introduction," in Section 8 ("Certain Information Concerning the Purchaser and
Sherwin-Williams") and in Schedule I to the Offer to Purchase is incorporated
herein by reference.
(e)-(f) During the last five years, neither the Purchaser, Sherwin-Williams
nor, to the best of their knowledge, any of the persons listed in Schedule I to
the Offer to Purchase (i) has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or (ii) was a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and as
a result of such proceeding was or is subject to a judgment, decree or final
order enjoining further violations of or prohibiting activities subject to
federal or state securities laws or finding any violation with respect to such
laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)-(b) The information set forth in the Offer to Purchase under
"Introduction," in Section 10 ("Background of the Offer; Contacts with the
Company") and in Section 11 ("Purpose of the Offer; Merger Agreement;
Shareholder Option Agreement; Plans for the Company") is incorporated herein by
reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth in the Offer to Purchase in Section 9
("Source and Amount of Funds") is incorporated herein by reference.
(c) Not applicable.
4
<PAGE> 5
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(c) The information set forth in the Offer to Purchase under
"Introduction," in Section 10 ("Background of the Offer; Contacts with the
Company") and in Section 11 ("Purpose of the Offer; Merger Agreement;
Shareholder Option Agreement; Plans for the Company") is incorporated herein by
reference.
(d) The information set forth in the Offer to Purchase in Section 10
("Background of the Offer; Contacts with the Company") and in Section 11
("Purpose of the Offer; Merger Agreement; Shareholder Option Agreement; Plans
for the Company") is incorporated herein by reference.
(e)-(g) The information set forth in the Offer to Purchase in Section 11
("Purpose of the Offer; Merger Agreement; Shareholder Option Agreement; Plans
for the Company") and in Section 13 ("Effect of the Offer on the Market for the
Shares, Stock Exchange Listing and Exchange Act Registration") is incorporated
herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) The information set forth in the Offer to Purchase under
"Introduction," in Section 8 ("Certain Information Concerning the Purchaser and
Sherwin-Williams"), in Section 10 ("Background of the Offer; Contacts with the
Company") and in Section 11 ("Purpose of the Offer; Merger Agreement;
Shareholder Option Agreement; Plans for the Company") is incorporated herein by
reference.
(b) Not applicable.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Offer to Purchase under "Introduction," in
Section 8 ("Certain Information Concerning the Purchaser and Sherwin-Williams"),
in Section 9 ("Source and Amount of Funds"), in Section 10 ("Background of the
Offer; Contacts with the Company") and in Section 11 ("Purpose of the Offer;
Merger Agreement; Shareholder Option Agreement; Plans for the Company") is
incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Offer to Purchase under "Introduction" and
in Section 16 ("Fees and Expenses") is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in the Offer to Purchase in Section 8 ("Certain
Information Concerning the Purchaser and Sherwin-Williams") is incorporated
herein by reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in the Offer to Purchase in Section 11
("Purpose of the Offer; Merger Agreement; Shareholder Option Agreement; Plans
for the Company") is incorporated herein by reference.
(b)-(e) The information set forth in the Offer to Purchase under
"Introduction," in Section 13 ("Effect of the Offer on the Market for the
Shares, Stock Exchange Listing and Exchange Act Registration") and in Section 15
("Certain Legal Matters and Regulatory Approvals") is incorporated herein by
reference.
(f) The information set forth in the Offer to Purchase and the related
Letter of Transmittal, copies of which are filed as Exhibits (a)(1) and (a)(2)
hereto, respectively, is incorporated herein by reference in its entirety.
5
<PAGE> 6
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<S> <C>
(a)(1) Offer to Purchase, dated November 9, 1995.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter from the Information Agent to Brokers, Dealers, Commercial Banks, Trust
Companies and Nominees.
(a)(5) Letter to clients for use by Brokers, Dealers, Commercial Banks, Trust
Companies and Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9.
(a)(7) Form of summary advertisement, dated November 9, 1995.
(a)(8) Text of press release issued by Sherwin-Williams on November 6, 1995.
(b)(1) 364-Day Revolving Credit Agreement, dated August 31, 1995, by and among
Sherwin-Williams and several banking institutions.
(b)(2) Five-Year Revolving Credit Agreement, dated August 31, 1995, by and among
Sherwin-Williams and several banking institutions.
(c)(1) Agreement and Plan of Merger, dated as of November 4, 1995, by and among the
Company, the Purchaser and Sherwin-Williams.
(c)(2) Stock Option, Pledge and Security Agreement, dated as of November 4, 1995, by
and among Sherwin-Williams, the Purchaser and certain shareholders of the
Company.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
(g)(1) Agreement of Joint Filing, dated November 9, 1995, between Sherwin-Williams and
the Purchaser.
</TABLE>
6
<PAGE> 7
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
SWACQ, INC.
By: /s/ C.G. IVY
C.G. Ivy
Vice President
THE SHERWIN-WILLIAMS COMPANY
By: /s/ C.G. IVY
C.G. Ivy
Vice President -- Corporate Planning
and Development
7
<PAGE> 8
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------------------------------------------------------------------------
<C> <S>
(a)(1) Offer to Purchase, dated November 9, 1995.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter from the Information Agent to Brokers, Dealers, Commercial Banks,
Trust Companies and Nominees.
(a)(5) Letter to clients for use by Brokers, Dealers, Commercial Banks, Trust
Companies and Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9.
(a)(7) Form of summary advertisement, dated November 9, 1995.
(a)(8) Text of press release issued by Sherwin-Williams on November 6, 1995.
(b)(1) 364-Day Revolving Credit Agreement, dated August 31, 1995, by and among
Sherwin-Williams and several banking institutions.
(b)(2) Five-Year Revolving Credit Agreement, dated August 31, 1995, by and among
Sherwin-Williams and several banking institutions.
(c)(1) Agreement and Plan of Merger, dated as of November 4, 1995, by and among the
Company, the Purchaser and Sherwin-Williams.
(c)(2) Stock Option, Pledge and Security Agreement, dated as of November 4, 1995, by
and among Sherwin-Williams, the Purchaser and certain shareholders of the
Company.
(g)(1) Agreement of Joint Filing, dated November 9, 1995, between Sherwin-Williams
and the Purchaser.
</TABLE>
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED COMMON STOCK PURCHASE RIGHTS)
OF
PRATT & LAMBERT UNITED, INC.
AT
$35.00 NET PER SHARE
BY
SWACQ, INC.
A WHOLLY-OWNED SUBSIDIARY OF
THE SHERWIN-WILLIAMS COMPANY
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, DECEMBER 8, 1995,
UNLESS THE OFFER IS EXTENDED.
THE BOARD OF DIRECTORS OF PRATT & LAMBERT UNITED, INC. (THE "COMPANY") HAS
DETERMINED THAT THE OFFER AND THE MERGER DESCRIBED HEREIN ARE FAIR AND IN THE
BEST INTEREST OF THE COMPANY'S SHAREHOLDERS AND RECOMMENDS THAT (I) ALL
SHAREHOLDERS WHO WISH TO RECEIVE CASH FOR THEIR SHARES DURING 1995 TENDER THEIR
SHARES PURSUANT TO THE OFFER, AND (II) ALL SHAREHOLDERS TENDER THEIR SHARES IN
THE EVENT THE OFFER IS EXTENDED BEYOND DECEMBER 31, 1995.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF
SHARES (AND THE ASSOCIATED COMMON STOCK PURCHASE RIGHTS) REPRESENTING AT LEAST
TWO-THIRDS OF THE OUTSTANDING SHARES OF THE COMPANY ON A FULLY DILUTED BASIS
(THE "MINIMUM CONDITION"). THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER TERMS AND
CONDITIONS. SEE SECTION 14.
THE SHERWIN-WILLIAMS COMPANY AND SWACQ, INC. HAVE ENTERED INTO A STOCK
OPTION, PLEDGE AND SECURITY AGREEMENT WITH CERTAIN SHAREHOLDERS OF THE COMPANY
PURSUANT TO WHICH, AMONG OTHER THINGS, SUCH SHAREHOLDERS HAVE GRANTED TO THE
SHERWIN-WILLIAMS COMPANY AND SWACQ, INC. OPTIONS TO PURCHASE CERTAIN SHARES
OWNED BY SUCH SHAREHOLDERS (REPRESENTING IN THE AGGREGATE APPROXIMATELY 40% OF
THE COMPANY'S OUTSTANDING SHARES ON A FULLY DILUTED BASIS) FOR $35.00 PER SHARE
IN CASH, WHICH OPTIONS ARE EXERCISABLE ON OR AFTER JANUARY 2, 1996. THOSE
SHAREHOLDERS ALSO HAVE AGREED TO TENDER SUCH SHARES INTO THE OFFER UNDER CERTAIN
CIRCUMSTANCES. SEE SECTION 11.
THE OFFER IS NOT CONDITIONED UPON THE SHERWIN-WILLIAMS COMPANY OR SWACQ,
INC. OBTAINING FINANCING.
------------------------------------
IMPORTANT
Any shareholder desiring to tender all or any portion of such shareholder's
Shares (including the associated Common Stock Purchase Rights) should either (i)
complete and sign the Letter of Transmittal (or a facsimile thereof) in
accordance with the instructions in the Letter of Transmittal and mail or
deliver the Letter of Transmittal (or such facsimile) together with the
certificate(s) evidencing the tendered Shares and any other required documents
to the Depositary, or tender such Shares pursuant to the procedures for
book-entry transfer set forth in Section 3, or (ii) request such shareholder's
broker, dealer, commercial bank, trust company or other nominee to effect the
transaction for such shareholder. A shareholder whose Shares are registered in
the name of a broker, dealer, commercial bank, trust company or other nominee
must contact such broker, dealer, commercial bank, trust company or other
nominee if such shareholder desires to tender Shares so registered.
A shareholder who desires to tender Shares and whose certificates
evidencing such Shares are not immediately available, or who cannot comply with
the procedures for book-entry transfer described in this Offer to Purchase on a
timely basis, may tender such Shares by following the procedures for guaranteed
delivery set forth in Section 3.
Questions and requests for assistance, or for additional copies of this
Offer to Purchase, the Letter of Transmittal or other offer materials, may be
directed to the Information Agent at its address and telephone numbers set forth
on the back cover of this Offer to Purchase. Shareholders may also contact
brokers, dealers, commercial banks or trust companies for assistance concerning
the Offer.
------------------------------------
The Information Agent for the Offer is:
BEACON HILL PARTNERS, INC.
November 9, 1995
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
INTRODUCTION........................................................................... 1
THE OFFER.............................................................................. 3
Section 1. Terms of the Offer; Expiration Date................................. 3
Section 2. Acceptance for Payment and Payment for Shares....................... 4
Section 3. Procedure for Tendering Shares...................................... 6
Section 4. Withdrawal Rights................................................... 8
Section 5. Certain U.S. Federal Income Tax Matters............................. 9
Section 6. Price Range of Shares; Dividends.................................... 10
Section 7. Certain Information Concerning the Company.......................... 10
Section 8. Certain Information Concerning the Purchaser and Sherwin-Williams... 14
Section 9. Source and Amount of Funds.......................................... 16
Section 10. Background of the Offer; Contacts with the Company.................. 17
Section 11. Purpose of the Offer; Merger Agreement; Shareholder Option
Agreement; Plans for the Company.................................... 18
Section 12. Dividends and Distributions......................................... 26
Section 13. Effect of the Offer on the Market for the Shares, Stock Exchange
Listing and Exchange Act Registration............................... 26
Section 14. Certain Conditions of the Offer..................................... 28
Section 15. Certain Legal Matters and Regulatory Approvals...................... 30
Section 16. Fees and Expenses................................................... 33
Section 17. Miscellaneous....................................................... 33
SCHEDULE I -- Information Concerning the Directors and Executive Officers of
Sherwin-Williams and the Purchaser................................ S-1
SCHEDULE II -- Certain Information Required to be Given to Shareholders
Pursuant to New York Law.......................................... S-5
</TABLE>
i
<PAGE> 3
TO: THE HOLDERS OF COMMON STOCK OF
PRATT & LAMBERT UNITED, INC.:
INTRODUCTION
SWACQ, Inc. (the "Purchaser"), a New York corporation and a wholly-owned
subsidiary of The Sherwin-Williams Company, an Ohio corporation
("Sherwin-Williams"), hereby offers to purchase all of the outstanding shares of
common stock, par value $0.01 per share (the "Common Stock"), of Pratt & Lambert
United, Inc., a New York corporation (the "Company"), and the associated Common
Stock Purchase Rights (the "Rights," and together with the Common Stock, the
"Shares") issued pursuant to the Rights Agreement dated as of January 31, 1989
(as amended, the "Rights Agreement"), between the Company and Mellon Securities
Trust Company, as Rights Agent (the "Rights Agent"), at a purchase price of
$35.00 per Share, net to the seller in cash, without interest thereon, upon the
terms and subject to the conditions set forth in this Offer to Purchase and in
the related Letter of Transmittal (which, together with any supplements or
amendments, collectively constitute the "Offer"). Unless the context requires
otherwise, all references in this Offer to Purchase to "Shares" shall be deemed
to refer also to the associated Rights, and all references to "Rights" shall be
deemed to include all benefits that may inure to the shareholders of the Company
or to holders of the Rights pursuant to the Rights Agreement. Based on
information provided by the Company, the Purchaser believes that one Right is
currently associated with each Share.
Tendering shareholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the transfer and sale of Shares pursuant to
the Offer. The Purchaser will pay all fees and expenses of First Chicago Trust
Company of New York, as Depositary (the "Depositary"), and Beacon Hill Partners,
Inc., as Information Agent (the "Information Agent"), incurred in connection
with the Offer. See Section 16.
The Offer is conditioned upon, among other things, there having been
validly tendered and not properly withdrawn prior to the expiration of the Offer
a number of Shares which constitutes at least two-thirds of the Shares
outstanding on a fully diluted basis (the "Minimum Condition"). The Company has
informed the Purchaser that as of November 3, 1995, there were 10,704,276 Shares
issued and outstanding and 704,850 shares of Common Stock reserved for issuance
upon exercise of the outstanding options granted under the Company's stock
option plans, and that no other voting stock of the Company is outstanding.
Based on this information, the Purchaser believes that the Minimum Condition
will be satisfied if the Purchaser acquires at least 7,606,084 Shares in the
Offer. Certain other conditions to the Offer are described in Section 14. The
Purchaser expressly reserves the right to waive any one or more of the
conditions to the Offer, including the Minimum Condition.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of November 4, 1995 (the "Merger Agreement"), by and among the Company,
Sherwin-Williams and the Purchaser. The Merger Agreement provides, among other
things, that as soon as practicable after the consummation of the Offer and
satisfaction or, to the extent permitted under the Merger Agreement, waiver of
all conditions to the Merger, the Purchaser will be merged with and into the
Company (the "Merger"). Following consummation of the Merger, the Company will
continue as the surviving corporation of the Merger and a wholly-owned
subsidiary of Sherwin-Williams. Thereupon, each outstanding Share (other than
treasury Shares, Shares held by Sherwin-Williams, the Purchaser or any other
subsidiary of Sherwin-Williams, and Shares held by shareholders, if any, who
properly exercise appraisal rights) will be converted into and represent the
right to receive $35.00 in cash, or any higher price that may be paid per Share
in the Offer, without interest. See Section 11.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD OF DIRECTORS" OR THE
"BOARD") HAS APPROVED EACH OF THE OFFER AND THE MERGER, HAS DETERMINED THAT EACH
OF THE OFFER AND THE MERGER IS FAIR AND IN THE BEST INTEREST OF THE COMPANY'S
SHAREHOLDERS, AND RECOMMENDS THAT (I) ALL SHAREHOLDERS WHO WISH TO RECEIVE CASH
FOR THEIR SHARES DURING 1995 TENDER THEIR SHARES PURSUANT TO THE OFFER, AND (II)
ALL SHAREHOLDERS TENDER THEIR SHARES IN THE EVENT THE OFFER IS EXTENDED BEYOND
DECEMBER 31, 1995.
The Company has advised Sherwin-Williams that Merrill Lynch & Co. ("Merrill
Lynch"), financial advisor to the Company, has delivered to the Board of
Directors its written opinion dated November 3, 1995 that, as of such date and
based upon its review and analysis and subject to the limitations set forth
therein, the $35.00 per Share cash consideration to be received by the holders
of Shares pursuant to the Offer and the
1
<PAGE> 4
Merger is fair to such holders from a financial point of view. A copy of the
opinion of Merrill Lynch, setting forth the assumptions made, factors considered
and scope of the review undertaken by Merrill Lynch, is contained in the
Company's Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule
14D-9"), which is being mailed to shareholders concurrently herewith.
Shareholders are urged to read the full text of that opinion.
The Merger Agreement provides that, commencing upon the purchase of Shares
pursuant to the Offer or the purchase of Option Shares pursuant to the
Shareholder Option Agreement (each as defined below), and from time to time
thereafter, Sherwin-Williams shall be entitled to designate on the Board of
Directors up to such number of directors, rounded up to the next whole number,
as will give Sherwin-Williams representation on the Board equal to the product
of the total number of directors on the Board multiplied by the percentage that
the aggregate number of Shares beneficially owned by Sherwin-Williams and the
Purchaser (including the Options Shares) bears to the total number of Shares
outstanding. In the Merger Agreement, the Company, subject to certain
limitations (see Section 11), has agreed to take all action necessary to cause
Sherwin-Williams' designees to be elected or appointed as directors of the
Company, including increasing the size of the Board or securing the resignation
of incumbent directors or both.
The consummation of the Merger is subject to the satisfaction or waiver of
certain conditions, including, if required by law, the approval and adoption of
the Merger Agreement by the requisite vote of the shareholders of the Company.
See Section 11 and Section 14. Under the Company's Restated Certificate of
Incorporation and the New York Business Corporation Law ("New York Law"), except
as otherwise described below, the affirmative vote of the holders of two-thirds
of the outstanding Shares is required to approve and adopt the Merger Agreement
and the Merger. Consequently, if the Purchaser acquires (pursuant to the Offer
or otherwise) at least two-thirds of the then outstanding Shares, the Purchaser
will have sufficient voting power to approve and adopt the Merger Agreement and
the Merger without the vote of any other shareholders.
Under New York Law, if the Purchaser acquires, pursuant to the Offer or
otherwise, at least 90% of the then outstanding Shares, the Purchaser will be
able to approve and adopt the Merger Agreement and the transactions contemplated
thereby, including the Merger, without a vote of the Company's shareholders. In
such event, Sherwin-Williams and the Purchaser intend to take all necessary and
appropriate action to cause the Merger to become effective as soon as
practicable after such acquisition, without a meeting of the Company's
shareholders. If, however, the Purchaser does not acquire at least 90% of the
then outstanding Shares pursuant to the Offer or otherwise, and a vote of the
Company's shareholders is required under New York Law, a longer period of time
will be required to effect the Merger. See Section 11.
Simultaneously with the execution and delivery of the Merger Agreement,
Raymond D. Stevens, Jr. and Jules F. Knapp, each of whom is a director of the
Company, and certain other shareholders (some of whom are also directors) of the
Company (collectively, the "Option Shareholders") each entered into a Stock
Option, Pledge and Security Agreement, dated as of November 4, 1995, with
Sherwin-Williams and the Purchaser (the "Shareholder Option Agreement"). The
Shareholder Option Agreement covers 4,563,651 Shares (the "Option Shares")
collectively owned by the Option Shareholders, representing approximately 40% of
the outstanding Shares calculated on a fully diluted basis. Pursuant to the
Shareholder Option Agreement, each of the Option Shareholders has granted to
Sherwin-Williams and the Purchaser an irrevocable option to purchase such Option
Shareholder's Option Shares for $35.00 per Option Share in cash, which option is
exercisable by Sherwin-Williams or the Purchaser on or after January 2, 1996, as
well as an irrevocable proxy to vote such Option Shares. In addition, the Option
Shareholders have agreed to tender the Option Shares into the Offer under
certain circumstances. Sherwin-Williams and the Purchaser do not know if any
Option Shares will be tendered in response to the Offer prior to January 2,
1996, although they have been advised that certain of the Option Shareholders
presently do not expect to tender their Shares until 1996. Sherwin-Williams and
the Purchaser have agreed in the Merger Agreement that the Purchaser will either
(i) accept for payment, not later than 5:00 p.m., New York time, on December 31,
1995, all Shares validly tendered and not withdrawn on or prior to such date, or
(ii) extend the Offer so as to expire not earlier than 5:00 p.m., New York time,
on January 5, 1996. See Section 11.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ CAREFULLY AND IN THEIR ENTIRETY BEFORE
ANY DECISION IS MADE WITH RESPECT TO THE OFFER.
2
<PAGE> 5
THE OFFER
SECTION 1. TERMS OF THE OFFER; EXPIRATION DATE. Upon the terms and subject
to the conditions of the Offer (including, if the Offer is extended or amended,
the terms and conditions of such extension or amendment), the Purchaser will
accept for payment and pay for all Shares validly tendered on or prior to the
Expiration Date and not properly withdrawn as permitted by Section 4 below. For
purposes of the Offer, the term "Expiration Date" means 12:00 Midnight, New York
City time, on Friday, December 8, 1995, unless and until the Purchaser, in its
sole discretion (subject to the terms of the Merger Agreement), shall have
extended the period of time during which the Offer is open, in which event the
term "Expiration Date" shall mean the latest time and date at which the Offer,
as so extended by the Purchaser, shall expire.
The Offer is conditioned upon, among other things, satisfaction of the
Minimum Condition and the expiration or termination of all waiting periods
imposed by the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
and the regulations thereunder (the "HSR Act"). The Offer is also subject to
certain other conditions set forth in Section 14 below. If these or any of the
other conditions referred to in Section 14 are not satisfied or any events
specified in Section 14 have occurred or are determined by the Purchaser to have
occurred prior to the Expiration Date, the Purchaser reserves the right (but is
not obligated) (i) to decline to purchase any of the Shares tendered in the
Offer, terminate the Offer and return all tendered Shares to the tendering
shareholders, (ii) to waive or amend any or all conditions to the Offer, to the
extent permitted by applicable law and the provisions of the Merger Agreement,
and, subject to complying with applicable rules and regulations of the
Securities and Exchange Commission (the "Commission"), purchase all Shares
validly tendered, (iii) to extend the Offer and, subject to the right of
shareholders to withdraw Shares until the Expiration Date, retain the Shares
which have been tendered during the period or periods for which the Offer is
extended or (iv) to delay acceptance for payment or payment for Shares, subject
to applicable law, until satisfaction or waiver of the conditions to the Offer.
In the event that the Purchaser waives any of the conditions set forth in
Section 14, the Commission may, if the waiver is deemed to constitute a material
change to the information previously provided to the shareholders, require that
the Offer remain open for an additional period of time and/or that the Purchaser
disseminate information concerning such waiver.
The Purchaser expressly reserves the right, in its sole discretion, at any
time and from time to time, to extend for any reason the period of time during
which the Offer is open, including the occurrence of any of the events specified
in Section 14, by giving oral or written notice of such extension to the
Depositary; provided, however, that except for one discretionary ten business
day extension, the Offer may not be extended beyond any scheduled Expiration
Date unless any of the conditions specified in Section 14 shall not have been
satisfied; and further provided that notwithstanding the foregoing, the Offer
may not be extended beyond January 31, 1996 unless (i) the FTC or the Antitrust
Division (each as defined below) shall have requested additional information
from Sherwin-Williams or the Company or any of their respective affiliates, in
which case the Offer may be extended as necessary to comply with such request up
to, but in no event later than, June 30, 1996, or (ii) at the time of extension
an Acquisition Proposal (as defined in Section 11) exists. During any such
extension, all Shares previously tendered and not withdrawn will remain subject
to the Offer, subject to the rights of a tendering shareholder to withdraw its
Shares. See Section 4.
The Merger Agreement provides that the Purchaser may modify the terms of
the Offer except that, without the consent of the Company, the Purchaser will
not decrease the purchase price paid in the Offer, decrease the number of Shares
sought in the Offer, change the form of consideration payable in the Offer, make
any other change which is materially adverse to the holders of Shares or modify
or add to the conditions set forth in Section 14.
Subject to the applicable regulations of the Commission, the Purchaser also
reserves the right, in its sole discretion, at any time and from time to time,
(i) to delay acceptance for payment of or, regardless of whether such Shares
were theretofore accepted for payment, payment for, any Shares pending receipt
of any regulatory approval specified in Section 15 below or in order to comply
in whole or in part with any other applicable law, (ii) to terminate the Offer
(whether or not any Shares have theretofore been accepted for payment) if any of
the conditions referred to in Section 14 has not been satisfied or upon the
occurrence of any of the events
3
<PAGE> 6
specified in Section 14 and (iii) to waive any condition or otherwise amend the
Offer in any respect, in each case by giving oral or written notice of such
delay, termination, waiver or amendment to the Depositary and by making a public
announcement thereof. The Purchaser acknowledges that (i) Rule 14e-1(c) under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), requires
the Purchaser to pay the consideration offered or return the Shares tendered
promptly after the termination or withdrawal of the Offer and (ii) the Purchaser
may not delay acceptance for payment of, or payment for (except as provided in
clause (i) of the preceding sentence), any Shares upon the occurrence of any of
the conditions specified in Section 14 without extending the period of time
during which the Offer is open.
Any such extension, delay, termination, waiver or amendment will be
followed as promptly as practicable by public announcement thereof, with such
announcement in the case of an extension to be made no later than 9:00 a.m., New
York City time, on the next business day after the previously scheduled
Expiration Date. Except as provided by applicable law (including Rules 14d-4(c),
14d-6(d) and 14e-1 under the Exchange Act, which require that material changes
be promptly disseminated to shareholders in a manner reasonably designed to
inform them of such changes) and without limiting the manner in which the
Purchaser may choose to make any public announcement, the Purchaser shall have
no obligation to publish, advertise or otherwise communicate any such public
announcement other than by issuing a press release to the Dow Jones News
Service.
If the Purchaser makes a material change in the terms of the Offer or if it
waives a material condition of the Offer, the Purchaser will extend the Offer to
the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange
Act. The minimum period during which an offer must remain open following
material changes in the terms of the offer, other than a change in price or a
change in the percentage of securities sought, will depend upon the facts and
circumstances, including the materiality, of the changes. With respect to a
change in price or, subject to certain limitations, a change in the percentage
of securities sought, a minimum ten business day period from the day of such
change is generally required to allow for adequate dissemination to
shareholders. Accordingly, if prior to the Expiration Date the Purchaser
decreases the number of Shares being sought or increases or decreases the
consideration offered pursuant to the Offer, and if the Offer is scheduled to
expire at any time earlier than the period ending on the tenth business day from
the date that notice of such increase or decrease is first published, sent or
given to shareholders, then the Offer will be extended at least until the
expiration of such ten business day period. For purposes of the Offer, a
"business day" means any day other than a Saturday, Sunday or a federal holiday
and consists of the time period from 12:01 a.m. through 12:00 Midnight, New York
City time.
The Company has provided the Purchaser with the Company's shareholder list
and security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase, the related Letter of Transmittal and
other relevant materials will be mailed to record holders of Shares whose names
appear on the Company's shareholder list and will be furnished, for subsequent
transmittal to beneficial owners of Shares, to brokers, dealers, commercial
banks, trust companies and similar persons whose names, or the names of whose
nominees, appear on the shareholder list or, if applicable, who are listed as
participants in a clearing agency's security position listing.
SECTION 2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES. Upon the terms
and subject to the conditions of the Offer (including, if the Offer is extended
or amended, the terms and conditions of any such extension or amendment), the
Purchaser will accept for payment and will pay for all Shares validly tendered
and not properly withdrawn on or prior to the Expiration Date promptly after the
later to occur of (i) the Expiration Date and (ii) the satisfaction or waiver of
the conditions of the Offer set forth in Section 14, including without
limitation the expiration or termination of the waiting period applicable to the
acquisition of Shares pursuant to the Offer under the HSR Act. In addition,
subject to applicable rules of the Commission, the Purchaser expressly reserves
the right to delay acceptance for payment of, or payment for, Shares pending
receipt of any other regulatory approvals specified in Section 15.
Sherwin-Williams intends to file on the date hereof with the Federal Trade
Commission (the "FTC") and the Antitrust Division of the Department of Justice
(the "Antitrust Division") a Premerger Notification and Report Form under the
HSR Act with respect to the Offer. Accordingly, the waiting period under the
4
<PAGE> 7
HSR Act applicable to the Offer would expire at 12:00 Midnight, New York City
time, on November 24, 1995, unless prior to the expiration or termination of the
waiting period the FTC or the Antitrust Division extends the waiting period by
requesting additional information or documentary material from Sherwin-Williams.
If such a request is made, the waiting period applicable to the Offer will
expire on the tenth calendar day after the date of substantial compliance by
Sherwin-Williams with such request. Thereafter, the waiting period may be
extended by court order or by consent of Sherwin-Williams. The waiting period
under the HSR Act may be terminated by the FTC and the Antitrust Division prior
to its expiration. See Section 15.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of (i) the
certificates evidencing such Shares (the "Share Certificates," which term shall
also include the related certificates for Rights (the "Rights Certificates"), if
any have been distributed to shareholders) or timely confirmation (a "Book-Entry
Confirmation") of a book-entry transfer of such Shares, if such procedure is
available, into the Depositary's account at The Depository Trust Company, the
Midwest Securities Trust Company or the Philadelphia Depository Trust Company
(each a "Book-Entry Transfer Facility" and, collectively, the "Book-Entry
Transfer Facilities") pursuant to the procedures set forth in Section 3, (ii)
the Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed with any required signature guarantees, or an Agent's Message (as
defined below) in connection with a book-entry transfer, and (iii) any other
documents required by the Letter of Transmittal.
The term "Agent's Message" means a message from a Book-Entry Transfer
Facility transmitted to, and received by, the Depositary forming a part of a
Book-Entry Confirmation, which states that (i) the Book-Entry Transfer Facility
has received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares that are the subject of the Book-Entry
Confirmation, (ii) the participant has received and agrees to be bound by the
terms of the Letter of Transmittal and (iii) the Purchaser may enforce such
agreement against the participant.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment (and thereby purchased) Shares validly tendered and not properly
withdrawn if, as and when the Purchaser gives oral or written notice to the
Depositary of the Purchaser's acceptance of such Shares for payment pursuant to
the Offer. Upon the terms and subject to the conditions of the Offer, payment
for Shares accepted for payment pursuant to the Offer will be made by deposit of
the purchase price therefor with the Depositary, which will act as agent for
tendering shareholders for the purpose of receiving payments from the Purchaser
and transmitting those payments to shareholders whose Shares have been accepted
for payment. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE FOR
SHARES BE PAID, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING
SUCH PAYMENT. If for any reason whatsoever acceptance for payment of or payment
for any Shares tendered pursuant to the Offer is delayed or the Purchaser is
unable to accept for payment or pay for Shares tendered pursuant to the Offer,
then, without prejudice to the Purchaser's rights set forth herein, the
Depositary may nevertheless, on behalf of the Purchaser, retain tendered Shares,
and those Shares may not be withdrawn except to the extent that the tendering
shareholder is entitled to exercise and duly exercises withdrawal rights as
described in Section 4, subject, however, to the Purchaser's obligation under
Rule 14e-1(c) under the Exchange Act to pay for Shares tendered or return those
Shares promptly after termination or withdrawal of the Offer.
If any tendered Shares are not accepted for payment for any reason or if
Share Certificates are submitted for more Shares than are tendered, Share
Certificates evidencing unpurchased or untendered Shares will be returned (or,
in the case of Shares tendered by book-entry transfer into the Depositary's
account at a Book-Entry Transfer Facility pursuant to the procedures set forth
in Section 3, such Shares will be credited to an account maintained at such
Book-Entry Transfer Facility), without expense to the tendering shareholder, as
promptly as practicable following the expiration, termination or withdrawal of
the Offer.
IF, PRIOR TO THE EXPIRATION DATE, THE PURCHASER INCREASES THE CONSIDERATION
OFFERED TO SHAREHOLDERS PURSUANT TO THE OFFER, SUCH INCREASED CONSIDERATION WILL
BE PAID TO ALL SHAREHOLDERS WHOSE SHARES ARE PURCHASED PURSUANT TO THE OFFER,
REGARDLESS OF WHETHER THOSE SHARES WERE TENDERED PRIOR TO THE INCREASE IN
CONSIDERATION.
The Purchaser reserves the right to transfer or assign, in whole at any
time or in part from time to time, to one or more of the Purchaser's affiliates,
the right to purchase all or any portion of the Shares tendered
5
<PAGE> 8
pursuant to the Offer, but any such transfer or assignment will not relieve the
Purchaser of its obligations under the Offer or prejudice the rights of
tendering shareholders to receive payment for Shares validly tendered and
accepted for payment pursuant to the Offer.
SECTION 3. PROCEDURE FOR TENDERING SHARES.
Valid Tender. Except as set forth below, in order for Shares to be validly
tendered pursuant to the Offer, (i) the Letter of Transmittal (or a facsimile
thereof), properly completed and duly executed with any required signature
guarantees, or an Agent's Message in connection with a book-entry delivery of
Shares, and any other documents required by the Letter of Transmittal, must be
received by the Depositary at one of its addresses set forth on the back cover
of this Offer to Purchase on or prior to the Expiration Date and (ii) either (a)
Share Certificates evidencing tendered Shares must be received by the Depositary
at such address, or the Shares must be tendered pursuant to the procedure for
book-entry transfer described below and a Book-Entry Confirmation must be
received by the Depositary, in each case on or prior to the Expiration Date, or
(b) the tendering shareholder must comply with the guaranteed delivery
procedures described below.
If Share Certificates are forwarded separately to the Depositary, a
properly completed and duly executed Letter of Transmittal (or a facsimile
thereof) must accompany each delivery.
Book-Entry Transfer. The Depositary will establish an account with respect
to the Shares at such Book-Entry Transfer Facility for purposes of the Offer
within two business days after the date of this Offer to Purchase. Any financial
institution that is a participant in the system of any Book-Entry Transfer
Facility may make book-entry delivery of Shares by causing the Book-Entry
Transfer Facility to transfer such Shares into the Depositary's account at the
Book-Entry Transfer Facility in accordance with such Book-Entry Transfer
Facility's transfer procedures. However, although delivery of Shares may be
effected through book-entry transfer at a Book-Entry Transfer Facility, a Letter
of Transmittal (or a facsimile thereof), properly completed and duly executed
with any required signature guarantees, or an Agent's Message in connection with
a book-entry transfer, and any other documents required by the Letter of
Transmittal, must in any case be received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase on or prior to
the Expiration Date, or the tendering shareholder must comply with the
guaranteed delivery procedures described below. DELIVERY OF DOCUMENTS TO A
BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH THE BOOK-ENTRY TRANSFER
FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
Signature Guarantees. Signatures on Letters of Transmittal must be
guaranteed by a firm which is a bank, broker, dealer, credit union, savings
association or other entity which is a member in good standing of a recognized
Medallion Signature Guarantee Program or by any other "eligible guarantor
institution," as defined in Rule 17A(b)-15 under the Exchange Act (each of the
foregoing, an "Eligible Institution"), unless the Shares tendered thereby are
tendered (i) by a registered holder of Shares who has not completed either the
box labeled "Special Payment Instructions" or the box labeled "Special Delivery
Instructions" on the Letter of Transmittal or (ii) for the account of an
Eligible Institution. See Instruction 1 of the Letter of Transmittal.
If a Share Certificate is registered in the name of a person other than the
person who signs the Letter of Transmittal, or if payment is to be made, or a
Share Certificate not accepted for payment or not tendered is to be returned, to
a person other than the registered holder(s), the Share Certificate must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered holder(s) appears on the Share
Certificate, with the signature(s) on such Share Certificate or stock powers
guaranteed as provided above. See Instructions 1 and 5 of the Letter of
Transmittal.
Guaranteed Delivery. If a shareholder desires to tender Shares pursuant to
the Offer and such shareholder's Share Certificates are not immediately
available, time will not permit all required documents to reach the Depositary
on or prior to the Expiration Date, or a shareholder cannot complete the
procedure for
6
<PAGE> 9
delivery by book-entry transfer on a timely basis, then such shareholder's
Shares may nevertheless be tendered, provided that all of the following
conditions are satisfied:
(i) the tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser herewith, is
received by the Depositary as provided below on or prior to the Expiration
Date; and
(iii) the Share Certificates evidencing all tendered Shares, in proper
form for transfer, or a Book-Entry Confirmation, together with the Letter
of Transmittal (or a facsimile thereof) properly completed and duly
executed with any required signature guarantees (or, in the case of a
book-entry transfer, an Agent's Message) and any other documents required
by the Letter of Transmittal, are received by the Depositary within five
New York Stock Exchange, Inc. ("NYSE") trading days after the date of
execution of the Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, facsimile transmission or mail to the Depositary and must include a
guarantee by an Eligible Institution and a representation that the shareholder
owns the Shares tendered within the meaning of, and that the tender of the
Shares effected thereby complies with, Rule 14e-4 under the Exchange Act, each
in the form set forth in the Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (i) Share Certificates evidencing such Shares or a
Book-Entry Confirmation of the delivery of such Shares (if available), (ii) a
properly completed and duly executed Letter of Transmittal (or a facsimile
thereof) or, in the case of a book-entry transfer, an Agent's Message, and (iii)
any other documents required by the Letter of Transmittal. Accordingly, payment
might not be made to all tendering shareholders at the same time and will depend
upon when Share Certificates are received by the Depositary or Book-Entry
Confirmations of tendered Shares are received into the Depositary's account at a
Book-Entry Transfer Facility.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION
AND RISK OF THE TENDERING SHAREHOLDER AND THE DELIVERY WILL BE DEEMED MADE ONLY
WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED
MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL
CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Shares pursuant to any of the procedures described above will be determined
by the Purchaser, in its sole discretion, which determination shall be final and
binding on all parties. The Purchaser reserves the absolute right to reject any
and all tenders determined by it not to be in proper form or the acceptance for
payment of which may, in the opinion of its counsel, be unlawful. The Purchaser
also reserves the absolute right to waive any of the conditions of the Offer or
any defect or irregularity in any tender of Shares of any particular
shareholder, whether or not similar defects or irregularities are waived in the
case of other shareholders. No tender of Shares will be deemed to have been
validly made until all defects and irregularities have been cured or waived.
None of the Purchaser, Sherwin-Williams, any of their affiliates or
assigns, the Depositary, the Information Agent or any other person will be under
any duty to give notification of any defects or irregularities in tenders or
incur any liability for failure to give any such notification. The Purchaser's
interpretation of the terms and conditions of the Offer (including the Letter of
Transmittal and the instructions thereto) will be final and binding.
Appointment as Proxy. By executing a Letter of Transmittal as set forth
above, a tendering shareholder irrevocably appoints the Purchaser, its officers
and its designees, and each of them, as the shareholder's attorneys-in-fact and
proxies, with full power of substitution, in the manner set forth in the Letter
of Transmittal, to the full extent of such shareholder's rights with respect to
the Shares tendered by such
7
<PAGE> 10
shareholder and accepted for payment by the Purchaser (and with respect to any
and all other Shares or other securities issued or issuable in respect of the
Shares on or after November 4, 1995). All such powers of attorney and proxies
shall be considered irrevocable and coupled with an interest in the tendered
Shares. Such appointment will be effective if, when and only to the extent that,
the Purchaser accepts such Shares for payment. Upon such acceptance for payment,
all prior powers of attorney and proxies given by the shareholder with respect
to the Shares (and such other Shares and securities) will, without further
action, be revoked, and no subsequent powers of attorney, proxies or written
consents may be given or executed (and if given or executed will not be deemed
effective). The Purchaser, its officers and its designees will, with respect to
the Shares (and such other Shares and securities) for which such appointment is
effective, be empowered to exercise all voting and other rights of the
shareholder as they in their sole discretion may deem proper at any annual or
special meeting of the Company's shareholders or any adjournment or postponement
thereof, by written consent in lieu of any such meeting or otherwise. The
Purchaser reserves the right to require that, in order for Shares to be deemed
validly tendered, immediately upon the Purchaser's payment for such Shares, the
Purchaser must be able to exercise full voting rights with respect to such
Shares.
Backup Federal Income Tax Withholding and Substitute Form W-9. Under the
"backup withholding" provisions of federal income tax law, the Depositary may be
required to withhold 31% of the amount of any payments of cash pursuant to the
Offer. In order to avoid backup withholding, each shareholder surrendering
Shares in the Offer must provide the payor of such cash with the shareholder's
correct taxpayer identification number ("TIN") on a Substitute Form W-9 and
certify under penalties of perjury that such TIN is correct and that the
shareholder is not subject to backup withholding. Certain shareholders
(including among others all corporations and certain foreign individuals and
entities) are not subject to backup withholding. If a shareholder does not
provide its correct TIN or fails to provide the certifications described above,
the Internal Revenue Service ("IRS") may impose a penalty on the shareholder and
payment of cash to the shareholder pursuant to the Offer may be subject to
backup withholding. All shareholders surrendering Shares pursuant to the Offer
should complete and sign the Substitute Form W-9 included in the Letter of
Transmittal to provide the information and certification necessary to avoid
backup withholding (unless an applicable exemption exists and is proved in a
manner satisfactory to the Depositary). Noncorporate foreign shareholders should
complete and sign a Form W-8, Certificate of Foreign Status (a copy of which may
be obtained from the Depositary), in order to avoid backup withholding. See
Instruction 9 of the Letter of Transmittal.
Other Requirements. The Purchaser's acceptance for payment of Shares
tendered pursuant to any of the procedures described above will constitute a
binding agreement between the tendering shareholder and the Purchaser upon the
terms and subject to the conditions of the Offer, including the tendering
shareholder's representation and warranty that such shareholder is the owner of
the Shares within the meaning of, and that the tender of the Shares complies
with, Rule 14e-4 under the Exchange Act.
SECTION 4. WITHDRAWAL RIGHTS. Tenders of Shares made pursuant to the Offer
are irrevocable, except that Shares tendered pursuant to the Offer may be
withdrawn at any time on or prior to the Expiration Date and, unless already
accepted for payment by the Purchaser pursuant to the Offer, may also be
withdrawn at any time after January 8, 1996. If the Purchaser extends the Offer,
is delayed in its acceptance for payment of Shares or is unable to purchase
Shares validly tendered pursuant to the Offer for any reason, then, without
prejudice to the Purchaser's rights under the Offer, tendered Shares may be
retained by the Depositary on behalf of the Purchaser, and may not be withdrawn
except to the extent that tendering shareholders are entitled to withdrawal
rights as set forth in this Section 4; subject, however, to the Purchaser's
obligation, pursuant to Rule 14e-1(c) under the Exchange Act, to pay for the
tendered Shares or return those Shares promptly after termination or withdrawal
of the Offer. Any such delay will be accompanied by an extension of the Offer to
the extent required by law.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase. Any
notice of withdrawal must specify the name of the person who tendered the Shares
to be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder, if different from that of the person who tendered such
Shares. If Share Certificates evidencing Shares to be withdrawn have been
8
<PAGE> 11
delivered or otherwise identified to the Depositary, then, prior to the physical
release of such Share Certificates, the serial numbers shown on such Share
Certificates must be submitted to the Depositary and the signature(s) on the
notice of withdrawal must be guaranteed by an Eligible Institution, unless such
Shares have been tendered for the account of an Eligible Institution. If Shares
have been tendered pursuant to the procedure for book-entry transfer as set
forth in Section 3, any notice of withdrawal must specify the name and number of
the account at the Book-Entry Transfer Facility to be credited with the
withdrawn Shares.
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination will be final and binding. None of the
Purchaser, Sherwin-Williams, any of their affiliates or assigns, the Depositary,
the Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in any notice of withdrawal or
incur any liability for failure to give any such notification.
Withdrawals of Shares may not be rescinded. Any Shares properly withdrawn
will thereafter be deemed not to have been validly tendered for purposes of the
Offer. However, withdrawn Shares may be re-tendered at any time prior to the
Expiration Date by following one of the procedures described in Section 3.
SECTION 5. CERTAIN U.S. FEDERAL INCOME TAX MATTERS. The summary of tax
consequences set forth below is for general information only and is based on the
law as currently in effect. The tax treatment of each shareholder will depend in
part upon such shareholder's particular situation. Special tax consequences not
described herein may be applicable to particular classes of taxpayers, such as
financial institutions, broker-dealers, persons who are not citizens or
residents of the United States, shareholders who acquired their Shares through
the exercise of an employee stock option or otherwise as compensation and
persons who received payments in respect of options to acquire Shares. ALL
SHAREHOLDERS SHOULD CONSULT WITH THEIR OWN TAX ADVISORS AS TO THE PARTICULAR TAX
CONSEQUENCES OF THE OFFER AND THE MERGER TO THEM, INCLUDING THE APPLICABILITY
AND EFFECT OF THE ALTERNATIVE MINIMUM TAX AND ANY STATE, LOCAL OR FOREIGN INCOME
AND OTHER TAX LAWS AND CHANGES IN SUCH TAX LAWS.
The receipt of cash pursuant to the Offer or the Merger will be a taxable
transaction for federal income tax purposes under the Internal Revenue Code of
1986, as amended, and may also be a taxable transaction under applicable state,
local, foreign income or other tax laws. Generally, a tendering shareholder will
recognize gain or loss in an amount equal to the difference between the cash
received by the shareholder pursuant to the Offer or the Merger and the
shareholder's adjusted tax basis in the Shares tendered and purchased pursuant
to the Offer or the Merger. Gain or loss is computed separately for each block
of Shares (Shares which were purchased at the same time and price) sold. For
federal income tax purposes, such gain or loss will be a capital gain or loss if
the Shares are a capital asset in the hands of the shareholder, and a long-term
capital gain or loss if the shareholder's holding period is more than one year
as of the date the Purchaser accepts such Shares for payment pursuant to the
Offer or the effective date of the Merger, as the case may be. There are
limitations on the deductibility of capital losses.
Under present law, long-term capital gains recognized in 1995 are taxable
at a maximum rate of 28% for individuals and 35% for corporations, whereas
ordinary income is taxable at a maximum rate of 39.6% for individuals and 35%
for corporations. Proposals have recently been introduced in the House of
Representatives and the Senate to reduce the effective tax rates applicable to
net long-term capital gains for individuals by 50%. In addition, the Senate
proposal and the House proposal would reduce the maximum corporate rates for
long-term capital gains to 28% and 25%, respectively. Additionally, the
proposals would further limit the deduction for long-term capital losses. The
House proposal would apply generally to transactions effected after December 31,
1994, whereas the Senate proposal would apply generally to transactions effected
after October 13, 1995. Therefore, if these proposals were enacted into law,
gains from sales of Shares pursuant to the Offer which constituted long-term
capital gains would generally be taxed at reduced effective tax rates. There can
be no assurance that these proposals will be enacted and, if they are enacted,
the effective dates of the proposals or the particular type of transactions or
assets to which the proposals apply or other aspects of the proposals could be
modified. If the proposals were enacted with an effective date subsequent to the
Expiration Date of the Offer, sales of Shares pursuant to the Offer which
constituted long-term capital gains would be taxed at the higher rates currently
in effect. Shareholders should consult their tax advisors about the impact of
this proposed legislation.
9
<PAGE> 12
To the extent that the Company or any of its subsidiaries own or lease real
property in New York State, New York City or other jurisdictions that impose
real property transfer or gains taxes, the New York State Real Property Transfer
Gains Tax, the New York State Real Estate Transfer Tax, the New York City Real
Property Transfer Tax or other real property transfer or gains taxes may apply
to the sale or exchange of Shares by a shareholder pursuant to the Offer and/or
the Merger. Although the Purchaser expects that any such taxes will be paid by
the Company on behalf of the shareholders, such payment may be treated as
additional consideration paid to each shareholder in proportion to the number of
Shares sold by such shareholder. In such case, the amount of such additional
consideration generally would be offset by treatment of the tax as additional
selling expenses incurred by the shareholder. Accordingly, the payment of such
taxes by the Purchaser should have no effect on the amount of gain or loss
recognized by a shareholder.
As noted in Section 3 above, under the "backup withholding" provisions of
federal income tax law, the Depositary may be required to withhold 31% of the
amount of any payments of cash pursuant to the Offer. In order to avoid backup
withholding, each shareholder surrendering Shares in the Offer must provide the
payor of such cash with the shareholder's correct TIN on a Substitute Form W-9
and certify under penalties of perjury that such TIN is correct and that the
shareholder is not subject to backup withholding.
SECTION 6. PRICE RANGE OF SHARES; DIVIDENDS. The Shares currently are
listed and principally traded on the NYSE, and prior to December 7, 1994, the
Shares were listed on the American Stock Exchange (the "ASE"). Based on
information provided by the Company, the following table sets forth, for the
quarters indicated, (i) the high and low sale prices per Share on the NYSE and
the ASE, as applicable, and (ii) the amounts of cash dividends paid per Share
for each quarter.
<TABLE>
<CAPTION>
HIGH LOW DIVIDENDS
---- ---- ---------
<S> <C> <C> <C>
Fiscal Year Ended December 31, 1993:
First Quarter........................................ $16 7/8 $14 5/8 $0.14
Second Quarter....................................... 16 7/8 15 1/4 0.14
Third Quarter........................................ 20 1/4 15 1/4 0.15
Fourth Quarter....................................... 20 3/8 16 3/4 0.15
Fiscal Year Ended December 31, 1994:
First Quarter........................................ 20 1/8 16 3/4 0.15
Second Quarter....................................... 18 3/8 15 0.15
Third Quarter........................................ 19 7/8 14 3/4 0.15
Fourth Quarter....................................... 20 3/8 17 5/8 0.15
Fiscal Year Ending December 31, 1995:
First Quarter........................................ 21 1/4 17 1/2 0.15
Second Quarter....................................... 23 15/16 19 3/4 0.15
Third Quarter........................................ 24 5/8 21 0.16
Fourth Quarter (through November 3).................. 24 1/4 20 3/4 --
</TABLE>
On November 3, 1995, the last full day of trading prior to the public
announcement of the execution of the Merger Agreement, the reported closing sale
price per Share on the NYSE was $20 3/4. On November 8, 1995, the last full day
of trading prior to commencement of the Offer, the reported closing sale price
per share on the NYSE was $34 3/4. The Offer represents a premium of
approximately 69% over the closing sale price of $20 3/4 on November 3, 1995. In
addition, on November 7, 1995, the Company declared a regular quarterly dividend
of $0.16 payable on January 2, 1996 to holders of record on November 16, 1995.
SHAREHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
SECTION 7. CERTAIN INFORMATION CONCERNING THE COMPANY. Unless otherwise
indicated, the information concerning the Company contained in this Offer to
Purchase, including financial information (except the information described
below under "Certain Company Projections"), has been taken from or based upon
publicly available documents and records on file with the Commission and other
public sources. Neither the Purchaser nor Sherwin-Williams assumes any
responsibility for the accuracy or completeness of the information concerning
the Company contained in such documents and records or for any failure by the
10
<PAGE> 13
Company to disclose events that may have occurred and may affect the
significance or accuracy of any such information but which are unknown to the
Purchaser or Sherwin-Williams.
General. The Company is a New York corporation and is the successor to
certain corporations, the first of which was organized in 1849. The Company's
principal executive offices are located at 75 Tonawanda Street, Buffalo, New
York 14207, and its telephone number at such offices is (716) 873-6000.
Based on information provided by the Company, the Company is principally
engaged in the development, production and sale of paint and specialty
chemicals, comprised of industrial coatings and adhesives. Ancillary to the
Company's distribution of paint, the Company manufactures and purchases for
resale a variety of sundry products, primarily brushes and rollers.
In August 1994, the Company merged (the "UCI Merger") with United Coatings,
Inc. ("UCI"), a leading producer of paint for the private label market. In that
merger, the Company purchased all of UCI's outstanding stock for 5,000,000
shares of the Company's Common Stock, approximately $17,000,000 in cash and the
assumption of UCI's debt.
Financial Information. Set forth below is certain selected consolidated
financial information for the Company's last three fiscal years, which has been
derived from the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994 (the "Company Form 10-K") and the Company's Quarterly Report
on Form 10-Q for the period ended June 30, 1995 (the "Company Form 10-Q"). More
comprehensive financial information (including management's discussion and
analysis of financial condition and results of operations) is included in the
Company Form 10-K and the Company Form 10-Q and other documents filed by the
Company with the Commission. The following financial information is qualified in
its entirety by reference to the Company Form 10-K and the Company Form 10-Q and
other documents, including the financial statements and related notes contained
therein. The Company Form 10-K and the Company Form 10-Q and other documents may
be examined and copies thereof may be obtained from the offices of the
Commission and the NYSE in the manner set forth under "Available Information"
below.
PRATT & LAMBERT UNITED, INC.
SELECTED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SIX MONTHS
FISCAL YEAR ENDED DECEMBER 31, ENDED JUNE 30,
------------------------------ -------------------
1994(1) 1993 1992 1995(1) 1994
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net Sales.................................... $328,901 $241,761 $235,628 $247,626 $126,034
Costs of Sales............................... 231,915 160,603 157,120 182,953 85,429
Gross Profit................................. 96,986 81,158 78,508 64,673 40,605
Selling, Administrative and General
Expenses................................... 84,571 69,993 68,285 47,975 35,126
Income From Operations....................... 12,415 11,165 10,223 16,698 5,479
Other Expense (Income)....................... 2,603 959 1,499 3,129 619
Income Before Taxes on Income................ 9,812 10,206 8,724 13,569 4,860
Net Income................................... 5,517 6,211 5,163 7,627 2,960
Net Income Per Share (primary)............... 0.71 1.10 0.92 0.71 0.52
Net Income Per Share (fully diluted)......... 0.70 1.09 0.92 0.70 0.52
</TABLE>
- ---------------
(1) Only the December 31, 1994 and June 30, 1995 results include the sales and
earnings of UCI, which merged with the Company on August 4, 1994.
11
<PAGE> 14
PRATT & LAMBERT UNITED, INC.
SELECTED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
AT DECEMBER 31, AT JUNE 30,
-------------------------------- --------------------
1994(1) 1993 1992 1995(1) 1994
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Current Assets........................... $138,329 $ 86,623 $ 78,159 $165,920 $ 95,551
Property, Plant and Equipment
(net of depreciation).................. 46,358 34,807 34,204 49,292 36,714
Other Assets............................. 106,856 6,848 7,089 108,125 7,220
Total Assets............................. 291,543 128,278 119,452 323,337 139,485
Current Liabilities...................... 73,199 43,893 36,958 101,142 52,859
Long-Term Debt........................... 71,103 20,069 21,363 71,124 21,329
Shareholder's Equity..................... 140,396 59,774 56,524 144,749 60,593
</TABLE>
- ---------------
(1) Reflects the effects of the UCI Merger.
In addition, on November 6, 1995, the Company issued a press release from
which the following information concerning the Company's interim operating
results for the nine months ending September 30, 1995 was derived:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30,
---------------------
1995(1) 1994
-------- --------
(UNAUDITED)
<S> <C> <C>
Net Sales.............................................................. $373,391 $228,667
Costs of Sales......................................................... 275,784 157,237
Gross Profit........................................................... 97,607 71,430
Selling, Administrative and General Expenses........................... 72,037 58,169
Income From Operations................................................. 25,570 13,261
Other Expense (Income)................................................. 4,719 1,176
Income Before Taxes on Income.......................................... 20,851 12,085
Net Income............................................................. 11,718 7,194
Net Income Per Share (primary)......................................... 1.08 1.06
Net Income Per Share (fully diluted)................................... 1.08 1.05
</TABLE>
- ---------------
(1) The 1995 results include the sales and earnings of UCI, which merged with
the Company on August 4, 1994. The 1994 results reported above reflect only
Pratt & Lambert, Inc.'s sales and earnings through the effective date of the
UCI Merger, and the sales and earnings of the combined companies from August
5, 1994 through the end of the period.
Available Information. The Shares are registered under the Exchange Act.
Accordingly, the Company is subject to the information and reporting
requirements of the Exchange Act and in accordance therewith is obligated to
file periodic reports, proxy statements and other information with the
Commission relating to its business, financial condition and other matters.
Information as of particular dates concerning the Company's directors and
officers, their remuneration, stock options granted to them, the principal
holders of the Company's securities and any material interest of such persons in
transactions with the Company is required to be disclosed in such proxy
statements and distributed to the Company's shareholders and filed with the
Commission. These reports, proxy statements and other information should be
available for inspection at the
12
<PAGE> 15
public reference facilities of the Commission located in Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, and should also be available for
inspection and copying at prescribed rates at the regional offices of the
Commission located at Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661, and Seven World Trade Center, Suite 1300, New York, New
York 10048. Copies of this material may also be obtained by mail, upon payment
of the Commission's customary fees, from the Commission's principal office at
450 Fifth Street, N.W., Washington, D.C. 20549. In addition, such material
should also be available for inspection at the library of the NYSE, 20 Broad
Street, New York, New York 10005.
Certain Company Projections. In the course of the discussions between
representatives of Sherwin-Williams and the Company (see Section 10), certain
projections of future operating performance were furnished to Sherwin-Williams'
representatives. Set forth below is a summary of those projections. The
projections should be read together with the financial statements of the Company
referred to herein.
PRATT & LAMBERT UNITED, INC.
PROJECTED FINANCIAL INFORMATION
(IN THOUSANDS)
<TABLE>
<CAPTION>
1995 1996 1997 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net Sales........................ $480,000 $521,278 $566,339 $615,549
Gross Profit..................... 127,500 140,713 155,143 169,237
Earnings Before Income Taxes,
Depreciation and
Amortization................... 40,800 48,298 56,472 61,466
Depreciation and Amortization.... (10,000) (10,220) (10,451) (10,694)
Earnings Before Income Taxes..... 30,800 38,078 46,021 50,772
Income Before Income Taxes....... 24,100 32,293 40,649 46,040
-------- -------- -------- --------
Net Income....................... $ 13,500 $ 18,431 $ 23,487 $ 26,748
======== ======== ======== ========
Depreciation and Amortization.... 10,000 10,220 10,451 10,694
Capital Expenditures............. (11,000) (11,000) (8,000) (8,500)
Change in Working Capital........ 1,475 (4,385) (4,768) (5,318)
-------- -------- -------- --------
Net Cash Flow.................... $ 13,975 $ 13,266 $ 21,170 $ 23,624
======== ======== ======== ========
</TABLE>
According to the Company, the primary assumptions used to prepare the
foregoing projections were as follows: (i) growth in gross domestic product in
the range of 2% to 3%; (ii) an inflation rate of approximately 3%; (iii) an
estimate by the Company's management, based on the Company's history and current
marketing programs, as to unit growth; (iv) realization of approximately
$13,000,000 in cost reductions specifically identified by the Company; (v)
continued margins at the 1995 levels, subject to modifications based on the
assumptions specified in (i) - (iv); (vi) an interest rate of 7%; (vii) modest
annual improvement in working capital turnover; and (viii) an increase in per
Share dividends of 5% per year.
The foregoing projections were not prepared with a view to public
disclosure or compliance with published guidelines of the Commission or the
guidelines established by the American Institute of Certified Public Accountants
regarding projections, and are included in this Offer to Purchase only because
they were provided to Sherwin-Williams. None of Sherwin-Williams, the Purchaser,
the Company or any of their respective financial advisors assumes any
responsibility for the accuracy of these projections. Although presented with
numerical specificity, these projections are based upon a variety of assumptions
relating to the businesses of the Company which may not be realized and are
subject to significant uncertainties and contingencies, many of which are beyond
the control of the Company. There can be no assurance that the projections will
be realized, and actual results may vary materially from those shown.
13
<PAGE> 16
SECTION 8. CERTAIN INFORMATION CONCERNING THE PURCHASER AND
SHERWIN-WILLIAMS. The Purchaser, a newly incorporated New York corporation and a
wholly-owned subsidiary of Sherwin-Williams, was organized in connection with
the Offer and has not carried on any activities to date other than in connection
with the Offer, the Merger Agreement and the Shareholder Option Agreement. The
principal executive offices of the Purchaser and Sherwin-Williams are located at
101 Prospect Avenue, N.W., Cleveland, Ohio 44115, and the telephone number at
such offices is (216) 566-2000.
Sherwin-Williams, which was first incorporated under the laws of the State
of Ohio eighteen years after its founding in 1866, is engaged in the
manufacture, distribution and sale of coatings and related products, including
paint, motor vehicle finish and refinish products, spray paint and paint
applicators, to professional, industrial, commercial and retail customers,
principally throughout North America. Sherwin-Williams' business is divided into
three segments: the Paint Stores Segment, which exclusively distributes Sherwin-
Williams(R) branded products and related items; the Coatings Segment, which
participates in the manufacture, distribution and/or sale of coatings and
related products; and the Other Segment, which is responsible for the
acquisition, development, leasing and management of properties for use by
Sherwin-Williams and others. Principal trademarks and trade names used by
Sherwin-Williams' Paint Stores and Coatings Segments include
Sherwin-Williams(R), Dutch Boy(R), Kem-Tone(R), Martin-Senour(R), Cuprinol(R),
Old Quaker, Acme(R), Standox(R), Krylon(R), Rubberset(R), Dupli-Color(R), White
Lightning(R), H&C(R) and Con-Lux(R).
Sherwin-Williams is subject to the information and reporting requirements
of the Exchange Act and in accordance therewith is obligated to file reports,
proxy statements and other information with the Commission relating to its
business, financial condition and other matters. Information as of particular
dates concerning Sherwin-Williams' directors and officers, their remuneration,
stock options granted to them, the principal holders of Sherwin-Williams'
securities and any material interests of such persons in transactions with
Sherwin-Williams is required to be disclosed in such proxy statements and
distributed to Sherwin-Williams' stockholders and filed with the Commission.
These reports, proxy statements and other information may be inspected and
copies may be obtained from the offices of the Commission and the NYSE in the
same manner as set forth with respect to information about the Company in
Section 7.
Set forth below is certain selected consolidated financial information
relating to Sherwin-Williams and its subsidiaries for Sherwin-Williams' last
three fiscal years, which has been derived from the financial statements
contained in Sherwin-Williams' Annual Report on Form 10-K for the fiscal year
ended December 31, 1994 filed by Sherwin-Williams with the Commission and from a
press release issued by Sherwin-Williams on October 16, 1995 reporting
Sherwin-Williams' interim results for the nine months ended September 30, 1995.
More comprehensive financial information (including management's discussion and
analysis of financial condition and results of operations) is included in the
reports and other documents filed by Sherwin-Williams with the Commission. The
following financial information is qualified in its entirety by reference to
such reports and other documents, including the financial statements and related
notes contained therein.
14
<PAGE> 17
THE SHERWIN-WILLIAMS COMPANY
SELECTED CONSOLIDATED FINANCIAL DATA
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED DECEMBER 31, ENDED SEPTEMBER 30,
---------------------------------- ---------------------
1994 1993 1992 1995 1994
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net Sales..................... $3,100.1 $2,949.3 $2,747.8 $2,532.9 $2,396.4
Income Before Income Taxes and
the Cumulative Effects of
Changes in Accounting
Methods(1).................. 298.5 264.4 226.0 264.9 249.4
Income Before the Cumulative
Effects of Changes in
Accounting Methods(1)....... 186.6 165.2 144.6 166.9 155.9
Net Income.................... 186.6 165.2 62.9 166.9 155.9
Income Per Share Before the
Cumulative Effects of
Changes in Accounting
Methods(1).................. 2.15 1.85 1.63 1.95 1.79
Net Income Per Share.......... 2.15 1.85 .71 1.95 1.79
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31, AT SEPTEMBER 30,
---------------------------------- ---------------------
1994 1993 1992 1995 1994
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash & Short-Term
Investments(2).............. $ 251.4 $ 269.8 $ 167.7 $ 216.3 $ 147.6
Total Current Assets.......... 1,188.6 1,151.1 988.2 1,282.9 1,149.5
Total Non-Current Assets...... 773.4 763.6 741.7 826.6 774.4
Total Assets.................. 1,962.0 1,914.7 1,729.9 2,109.5 1,923.9
Total Current Liabilities..... 597.0 553.6 490.1 618.1 559.2
Long-Term Debt................ 20.5 37.9 60.1 22.7 20.5
Other Long-Term Liabilities... 291.2 290.0 273.8 290.0 287.7
Total Liabilities............. 908.7 881.5 824.0 930.8 867.4
Shareholders' Equity.......... 1,053.3 1,033.2 905.9 1,178.7 1,056.5
</TABLE>
- ---------------
(1) The cumulative effects of changes in accounting methods resulted from the
adoption of new accounting standards for Postretirement Benefits and Income
Taxes effective January 1, 1992.
(2) Cash and short-term investments are typically lower at September 30 than
December 31 due to the seasonality of inventories and paint sales.
The name, citizenship, business address, principal occupation or employment
and five year employment history of each of the directors and executive officers
of the Purchaser and Sherwin-Williams are set forth in Schedule I to this Offer
to Purchase.
Except for the Option Shares, none of the Purchaser, Sherwin-Williams nor,
to the best knowledge of the Purchaser and Sherwin-Williams, any of the persons
listed on Schedule I or any associate or majority-owned subsidiary of the
Purchaser, Sherwin-Williams or any of the persons so listed, beneficially owns
or has a right
15
<PAGE> 18
to acquire directly or indirectly any Shares, and none of the Purchaser,
Sherwin-Williams nor, to the best knowledge of the Purchaser and
Sherwin-Williams, any of the persons or entities referred to above, or any of
the respective executive officers, directors or subsidiaries of any of the
foregoing, has effected any transactions in the Shares during the past 60 days.
Various divisions, subsidiaries and affiliates of Sherwin-Williams purchase
products from or sell products to various divisions and subsidiaries of the
Company, in all cases in amounts which are not material. Except as described in
this Offer to Purchase, none of the Purchaser, Sherwin-Williams or, to the best
knowledge of the Purchaser and Sherwin-Williams, any of the persons listed on
Schedule I, has any contract, arrangement, understanding or relationship with
any other person with respect to any securities of the Company, including but
not limited to contracts, arrangements, understandings or relationships
concerning the transfer or voting of such securities, joint ventures, loan or
option arrangements, puts or calls, guarantees of loans, guarantees against loss
or the giving or withholding of proxies. Except as set forth in this Offer to
Purchase, since January 1992, none of the Purchaser, Sherwin-Williams or, to the
best knowledge of the Purchaser and Sherwin-Williams, any of the persons listed
on Schedule I, has had any business relationships or transactions with the
Company or any of its executive officers, directors or affiliates that are
required to be reported under the rules and regulations of the Commission
applicable to the Offer. Except as set forth in this Offer to Purchase, since
January 1992 there have been no contacts, negotiations or transactions between
any of Sherwin-Williams, the Purchaser or, to the best knowledge of the
Purchaser and Sherwin-Williams, any of the persons listed on Schedule I, on the
one hand, and the Company or its affiliates, on the other hand, concerning a
merger, consolidation or acquisition, a tender offer or other acquisition of
securities, an election of directors, or a sale or other transfer of a material
amount of assets.
SECTION 9. SOURCE AND AMOUNT OF FUNDS. The total amount of funds required
by the Purchaser and Sherwin-Williams to consummate the Offer and the Merger
(including the cash out of stock options as described in Section 11) and to pay
related fees and expenses is estimated to be approximately $405 million. The
Company reported that at June 30, 1995, its total debt was $100,864, some or all
of which may be accelerated as a result of the Offer or the Merger. In the event
any such debt is accelerated, the Purchaser and Sherwin-Williams will require
additional funds to repay that debt.
The Purchaser will obtain all necessary funds through capital contributions
to be made by Sherwin-Williams. Sherwin-Williams has sufficient funds available
to it, from cash on hand and under its existing revolving credit facilities and
other sources, to fully fund all of its requirements and the Purchaser's
requirements in connection with the Offer and the Merger. Sherwin-Williams
anticipates, however, that it will fund those requirements principally with cash
on hand and drawings under two of its existing credit facilities ("Facilities"),
each by and among Sherwin-Williams, as borrower, and a syndicate of financial
institutions for which Bank of America National Trust and Savings Association
("BOA") acts as administration agent. Sherwin-Williams may borrow up to an
aggregate amount of $100 million under one of the Facilities and up to an
aggregate amount of $250 million under the other Facility, in each case for
working capital and other corporate purposes. Loans under the $100 million
Facility can be made, at Sherwin-Williams' election, either as revolving credit
loans or as "money market rate" loans. Loans under the $250 million Facility can
be made, at Sherwin-Williams' election, either as revolving credit loans or as
two-year term loans. As of November 9, 1995, Sherwin-Williams had no outstanding
borrowings under either of the Facilities.
Sherwin-Williams' ability to borrow under the Facilities is conditioned on
compliance with certain covenants and satisfaction of certain other
requirements. Sherwin-Williams believes that these conditions will be satisfied
and that funds will be available prior to the time that funds are required to
pay for Shares tendered in the Offer.
Revolving credit loans under each Facility bear interest, at
Sherwin-Williams' election, (i) at a rate equal to the higher of the rate
publicly announced from time to time by BOA as its reference rate (the
"Reference Rate") and the rate set forth in the weekly statistical release
designated H.15(519), or any successor publication, published by the Federal
Reserve Bank of New York (including any such successor) on the date published
plus 50 basis points (the "Federal Rate"); or (ii) at rates based on the London
interbank offered rate ("LIBOR") plus a margin based on Sherwin-Williams' senior
unsecured long-term debt ratings
16
<PAGE> 19
at the time of an advance, ranging from 13 to 25 basis points under the $250
million Facility or 15 to 26 basis points under the $100 million Facility. Term
loans under the $250 million Facility bear interest, at Sherwin-Williams'
election, (i) at a rate equal to the Reference Rate or the Federal Rate or (ii)
at rates based on LIBOR plus the applicable margin based on Sherwin-Williams'
senior unsecured non-credit long-term debt rating at the time of an advance,
ranging from 13 to 25 basis points.
Sherwin-Williams expects that it will repay any amounts borrowed under the
Facilities with cash flow from operations.
THE OFFER IS NOT CONDITIONED UPON THE PURCHASER OBTAINING FINANCING.
SECTION 10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY. In
mid-July 1995, Merrill Lynch, the Company's financial advisor, contacted
Sherwin-Williams on behalf of the Company and indicated that Merrill Lynch had
been retained by the Company to explore whether certain companies may be
interested in acquiring the Company at a substantial price. Merrill Lynch
indicated that, if based upon a review of publicly available information,
Sherwin-Williams would be interested in pursuing such an acquisition of the
Company, Merrill Lynch would arrange a meeting between the senior management of
the Company and the senior management of Sherwin-Williams. Over the course of
the next month, Sherwin-Williams reviewed publicly available information
concerning the Company and considered the feasibility and desirability of
undertaking an acquisition of the Company. In early August 1995,
Sherwin-Williams called Merrill Lynch and indicated that, based on its review of
publicly available information, Sherwin-Williams was interested in pursuing an
acquisition of the Company.
On August 14, 1995, Sherwin-Williams sent Merrill Lynch a written request
for certain non-public information relating to the Company for the purpose of
validating certain assumptions made by Sherwin-Williams in analyzing and
evaluating the Company. Also on August 14, 1995 and in connection with Sherwin-
Williams' request, Merrill Lynch sent Sherwin-Williams a confidentiality and
standstill agreement. Sherwin-Williams executed and delivered that agreement to
Merrill Lynch on August 22, 1995, prior to receiving any non-public information
from the Company or Merrill Lynch.
Over the course of the following month, the Company and Merrill Lynch
furnished Sherwin-Williams with various public and non-public information
concerning the Company and its business operations. On September 28, 1995,
representatives of the senior management of Sherwin-Williams met with
representatives of the senior management of the Company and Merrill Lynch in
Buffalo, New York. During such meeting, senior management of the Company made an
informational presentation of the Company's business and operations to
Sherwin-Williams' senior management. From September 28, 1995 through October 24,
1995, the Company and Merrill Lynch continued to provide Sherwin-Williams with
additional information concerning the Company, and Sherwin-Williams and Merrill
Lynch had a series of discussions concerning the due diligence process.
On October 25, 1995, Sherwin-Williams delivered a letter to the Company
proposing to acquire all of the outstanding Shares at a purchase price of $32.00
in cash per Share. Sherwin-Williams' letter stated that Sherwin-Williams would
require a break-up fee of $20 million and the reimbursement of expenses, as well
as agreements from certain of the Company's principal shareholders granting
options to Sherwin-Williams to purchase all Shares owned by such persons.
Sherwin-Williams also conditioned its interest in pursuing the transaction upon
Sherwin-Williams' review of certain due diligence items and the parties'
negotiation and execution of a definitive merger agreement. In addition,
Sherwin-Williams attached to the letter a copy of a proposed merger agreement
and a proposed stock option agreement. Sherwin-Williams requested a response
from the Company by 5:00 p.m. on October 27, 1995.
During the afternoon on October 26, 1995, Merrill Lynch, on behalf of the
Company, contacted Sherwin-Williams and informed Sherwin-Williams that neither
the Company's management nor its principal shareholders would be prepared to
recommend the $32.00 price offered by Sherwin-Williams. Merrill Lynch also
indicated that the Company believed the $20 million break-up fee requested by
Sherwin-Williams was excessive and that it did not know whether the principal
shareholders of the Company would enter into the requested tender and option
agreement. Later that afternoon, Sherwin-Williams sent a letter to Merrill Lynch
by facsimile transmission confirming its understanding that the Company had
rejected Sherwin-Williams' initial offer and making a new offer of $35.00 per
Share with a reduced break-up fee of $15 million. The other
17
<PAGE> 20
terms and conditions of the modified offer were the same as those proposed in
Sherwin-Williams' October 25 letter.
On October 27, 1995, Merrill Lynch indicated that the Company was willing
to continue discussions with Sherwin-Williams based upon Sherwin-Williams'
revised proposal set forth in its October 26 letter. On October 28 and October
29, 1995, representatives of the Company and representatives of Sherwin-Williams
met in Buffalo, New York to discuss and negotiate the terms of the Merger
Agreement. At those meetings,representatives of Sherwin-Williams reviewed
various due diligence materials provided by the Company. During the week of
October 30, 1995, representatives of Sherwin-Williams and the Company had
discussions regarding various due diligence matters and issues involving the
Merger Agreement.
On November 3, 1995, the Board of Directors of the Company met and approved
the Offer, the Merger Agreement and related matters. The Board of Directors also
approved Sherwin-Williams and the Purchaser entering into the Shareholder Option
Agreement with the Option Shareholders. On November 4 and November 5, 1995,
representatives of the Company and Sherwin-Williams completed their negotiations
of the definitive terms of the Merger Agreement and the Shareholder Option
Agreement. On November 5, 1995, Sherwin-Williams, the Purchaser and the Company
executed the Merger Agreement, and Sherwin-Williams, the Purchaser and the
Option Shareholders executed the Shareholder Option Agreement. On November 6,
1995, Sherwin-Williams and the Company jointly announced the transaction.
SECTION 11. PURPOSE OF THE OFFER; MERGER AGREEMENT; SHAREHOLDER OPTION
AGREEMENT; PLANS FOR THE COMPANY.
PURPOSE OF THE OFFER. The purpose of the Offer, the Merger, the Merger
Agreement and the Shareholder Option Agreement is to enable Sherwin-Williams to
acquire control of the entire equity interest of the Company. Upon consummation
of the Merger, the Company will become a wholly-owned subsidiary of
Sherwin-Williams. The Offer is being made pursuant to the Merger Agreement.
MERGER AGREEMENT. The following is a summary of certain provisions of the
Merger Agreement. The summary is qualified in its entirety by reference to the
Merger Agreement, which is incorporated herein by reference and a copy of which
has been filed with the Commission as an exhibit to Sherwin-Williams' Tender
Offer Statement on Schedule 14D-1 (the "Schedule 14D-1"). The Merger Agreement
may be examined and copies may be obtained at the place and in the manner set
forth in Section 7 of this Offer to Purchase.
The Offer. The Merger Agreement provides that the Purchaser will commence
the Offer and that, upon the terms and subject to the prior satisfaction or
waiver of the conditions of the Offer, the Purchaser will purchase all Shares
validly tendered pursuant to the Offer. The Merger Agreement provides that the
Purchaser may modify the terms of the Offer, including without limitation,
except as provided below, extending the Offer beyond any scheduled Expiration
Date, except that, without the written consent of the Company, the Purchaser
will not decrease the purchase price paid in the Offer, decrease the number of
Shares sought in the Offer, change the form of consideration payable in the
Offer, make any other change which is materially adverse to the holders of
Shares or modify or add to the conditions of the Offer specified in Section 14.
Notwithstanding the foregoing, except for one discretionary ten business day
extension, the Offer may not be extended beyond any scheduled Expiration Date
unless any of the conditions specified in Section 14 shall not have been
satisfied; provided, however, that the Offer may not be extended beyond January
31, 1996 unless (i) the FTC or the Antitrust Division shall have requested
additional information from Sherwin-Williams or the Company or any of their
respective affiliates, in which case the Offer may be extended as necessary to
comply with such request up to, but in no event later than, June 30, 1996, or
(ii) at the time of extension an Acquisition Proposal (as defined below) exists.
During any such extension, all Shares previously tendered and not withdrawn will
remain subject to the Offer, subject to the rights of a tendering shareholder to
withdraw its Shares. See Section 4.
The Merger. The Merger Agreement provides that, subject to the terms and
conditions thereof, and in accordance with New York Law, the Purchaser shall be
merged with and into the Company as soon as practicable after satisfaction or
waiver of the conditions set forth in the Merger Agreement (the "Effective
Time"). The Merger shall become effective upon the filing of a Certificate of
Merger with the Department of
18
<PAGE> 21
State of the State of New York (or such later date as is specified in the
Certificate of Merger). As a result of the Merger, the separate corporate
existence of the Purchaser will cease and the Company will continue as the
surviving corporation (the "Surviving Corporation"). In the Merger, each issued
and outstanding Share (other than Shares owned directly or indirectly by
Sherwin-Williams or any of its subsidiaries or by the Company as treasury stock,
and other than Shares owned by shareholders who have properly exercised rights
of appraisal under Sections 623 and 910 of New York Law) will be converted into
the right to receive $35.00 per Share, without interest, and each issued and
outstanding share of common stock of the Purchaser will be converted into one
fully paid and non-assessable share of common stock of the Surviving Corporation
(which will constitute the only issued and outstanding capital stock of the
Surviving Corporation).
The Merger Agreement provides that the certificate of incorporation and
by-laws of the Purchaser at the Effective Time will be the certificate of
incorporation and by-laws of the Surviving Corporation. The Merger Agreement
also provides that the directors of the Purchaser at the Effective Time will be
the directors of the Surviving Corporation, and the officers of the Purchaser at
the Effective Time will be the officers of the Surviving Corporation.
In anticipation of entering into the Merger Agreement, the Company and the
Rights Agent executed an amendment (the "Rights Amendment") to the Rights
Agreement (i) to render the Rights Agreement inapplicable with respect to the
Offer, the Merger and the entering into, and performance by, Sherwin-Williams
and the Purchaser of the Shareholder Option Agreement and the other transactions
contemplated by the Merger Agreement, (ii) to prevent the Merger Agreement, the
Shareholder Option Agreement or the consummation of any of the transactions
contemplated thereby, including without limitation, the Offer and the
consummation of the Offer and the Merger, from resulting in the occurrence of a
Distribution Date (as defined in the Rights Agreement) and (iii) to provide that
none of Sherwin-Williams, the Purchaser or any of their affiliates will be
deemed to be an Acquiring Person (as defined in the Rights Agreement) by reason
of the transactions provided for in the Merger Agreement and the Shareholder
Option Agreement. The Rights Amendment renders the Rights inoperative with
respect to any acquisition of Shares by Sherwin-Williams, the Purchaser or any
of their affiliates pursuant to the Offer, the Merger Agreement and/or the
Shareholder Option Agreement.
The Company's Board of Directors. The Merger Agreement provides that,
commencing upon the purchase of Shares pursuant to the Offer or the purchase of
Option Shares pursuant to the Shareholder Option Agreement, and from time to
time thereafter, Sherwin-Williams will be entitled to designate such number of
directors, rounded up to the next whole number, on the Board of Directors of the
Company as is equal to the product of the total number of directors on the Board
multiplied by the percentage that the aggregate number of Shares beneficially
owned by Sherwin-Williams and the Purchaser (including the Option Shares) bears
to the total number of Shares then outstanding, and the Company has agreed to
take all action necessary to cause the Sherwin-Williams' designees to be elected
or appointed to the Company's Board of Directors (including to cause directors
to resign). Notwithstanding the foregoing, until the Effective Time, the Company
has agreed to use reasonable efforts to retain as members of the Board of
Directors at least two directors who are directors of the Company on the date of
the Merger Agreement ("Company Designees"). In the event of the resignation of
any or all of the Company Designees, the remaining Company Designees (or, if no
other Company Designee shall remain on the Board, the last resigning Company
Designee) have the right to appoint a successor or successors to serve as
Company Designees. Sherwin-Williams and the Purchaser have agreed to cause each
such appointment to become effective. The Company's obligation to appoint the
Sherwin-Williams' designees to the Board of Directors is subject to Section
14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. The Merger
Agreement also provides that following the election or appointment of
Sherwin-Williams' designees to the Company's Board of Directors any amendment of
the Merger Agreement, any termination of the Merger Agreement by the Company,
any extension of time for performance of any of the obligations of the Purchaser
or Sherwin-Williams under the Merger Agreement, any waiver of any condition to
the obligations of the Company or any of the Company's rights under the Merger
Agreement or other action by the Company under the Merger Agreement may be
effected only by the action of a majority of the directors of the Company then
in office who are Company Designees; provided, that if there are no such
directors, such actions may be effected by majority vote of the entire Board of
Directors.
19
<PAGE> 22
Shareholders Meeting. Pursuant to the Merger Agreement, the Company will,
if required by applicable law in order to consummate the Merger, duly call and
hold a special meeting of its shareholders (the "Special Meeting") as soon as
practicable following the acceptance for payment and purchase of Shares by the
Purchaser pursuant to the Offer for the purpose of voting upon the Merger
Agreement and the Merger. The Merger Agreement provides that in connection with
the Special Meeting, the Company will (i) promptly after the consummation of the
Offer prepare and file with the Commission a proxy statement and other proxy
materials relating to the Merger and the Merger Agreement and (ii) use its best
efforts to obtain the necessary approvals of the Merger and the Merger Agreement
by its shareholders. In addition, if requested by Sherwin-Williams or the
Purchaser and in anticipation of (and prior to) the purchase of Shares by the
Purchaser pursuant to the Offer, the Company will (i) file with the Commission a
proxy statement and all other proxy materials, which materials will be prepared
by and reasonably acceptable to the Company, and (ii) call the Special Meeting.
If the Purchaser acquires at least two-thirds of the outstanding Shares (or if
the number of Shares acquired by the Purchaser together with the number of
Option Shares total at least two-thirds of the outstanding Shares), the
Purchaser will have sufficient voting power to approve the Merger, even if no
other shareholder votes in favor of the Merger. The Company has agreed, subject
to the limitations described below under the heading "No Solicitation," to
include in the proxy statement the recommendation of the Board of Directors that
shareholders of the Company vote in favor of the approval of the Merger and the
adoption of the Merger Agreement.
Interim Operations. In the Merger Agreement, the Company has agreed that,
except as expressly contemplated by the Merger Agreement or agreed to by
Sherwin-Williams, prior to the Effective Time the business of the Company and
its subsidiaries shall be conducted only in the usual, regular and ordinary
course, in substantially the same manner as previously conducted and in
substantial compliance with all applicable laws and regulations, and, to the
extent consistent therewith, the Company and each of its subsidiaries will use
its reasonable efforts to preserve intact its business organization, keep
available the services of its present officers and employees, and preserve its
relationships with customers, suppliers, licensors, licensees, distributors, and
others having business relationships with it. In addition, except as expressly
contemplated by the Merger Agreement or agreed to by Sherwin-Williams, without
the prior written consent of Sherwin-Williams each of the Company and its
subsidiaries will not: (i) declare, set aside or pay any dividends on or make
other distributions in respect of any of its capital stock, except that the
Company may continue the declaration and payment of regular quarterly cash
dividends on its Common Stock of not more than $0.16 per share of Common Stock;
(ii) split, combine or reclassify any of its capital stock or issue or authorize
or propose the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock; (iii) purchase, redeem or
otherwise acquire, any shares of its capital stock or any other securities
thereof or any rights, warrants or options to acquire, any such shares or other
securities; (iv) issue, grant, deliver or sell, or authorize or propose the
issuance, delivery or sale of, pledge or otherwise encumber any shares of its
capital stock of any class, any voting debt or any securities convertible into,
or any rights, warrants, calls, subscriptions or options to acquire any such
shares, voting debt or convertible securities other than to the Purchaser
pursuant to the Merger Agreement and the Offer (other than in connection with
the exercise of Company Stock Options outstanding on the date of the Merger
Agreement); (v) amend or propose to amend its Restated Certificate of
Incorporation or By-Laws or any other organizational or charter document; (vi)
directly or indirectly, (a) acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial equity interest in or a
substantial portion of the assets of, or by any other manner, any person, or (b)
acquire or agree to acquire any assets, in either case other than in the
ordinary course of business and consistent with past practices; (vii) except in
the ordinary course of business and consistent with past practices, sell, lease,
license, encumber or otherwise dispose of any of its assets, other than as may
be required by law or to consummate the transactions contemplated by the Merger
Agreement; (viii) incur any indebtedness for borrowed money under existing
credit facilities exceeding in the aggregate $135,000,000, or guarantee any such
indebtedness or issue or sell any debt securities or warrants or rights to
acquire any debt securities of such party or guarantee any debt securities of
others, other than the extension of trade credit in the ordinary course of
business and consistent with past practices; (ix) enter into, adopt, amend
(except as may be required by law or regulation) or terminate any Benefit Plan
(as defined in the Merger Agreement) or other employee benefit plan, or any
agreement, arrangement, plan or policy between the Company or any of its
20
<PAGE> 23
subsidiaries and one or more of its directors, officers or employees; (x) except
for normal compensation increases in the ordinary course of business and
consistent with past practices (a) increase in any manner the compensation or
fringe benefits of any director, officer or employee, (b) pay any benefit not
required by any plan and arrangement as in effect as of the date of the Merger
Agreement, (c) grant any options, stock appreciation rights, phantom stock or
performance units, or (d) enter into any contract, agreement, commitment or
arrangement to do any of the foregoing; (xi) make or agree to make any capital
expenditure in excess of $8,000,000; (xii) make any material tax election or
settle or compromise any material tax liability; or (xiii)willfully and/or
knowingly (a) take or agree or commit to take any action that would make any
representation and warranty of the Company contained in the Merger Agreement
inaccurate at, or as of any time prior to, the Effective Time, or (b) omit or
agree to omit to take any action necessary and prudent to prevent any such
representation or warranty from being inaccurate at any such time.
No Solicitation. In the Merger Agreement, the Company has agreed that none
of the Company, any of its subsidiaries or any of their respective officers,
directors, employees, financial advisors, investment bankers, attorneys, or
other advisors or representatives will, directly or indirectly, (i) take any
action to solicit, initiate or encourage any offer or proposal for, or any
indication of interest in, a merger, consolidation or other business combination
involving the Company or any of its subsidiaries or any proposal or offer to
acquire in any manner, directly or indirectly, 10% or more of any class of
voting securities of the Company or any of its subsidiaries or a substantial
portion of the assets of the Company or any of its subsidiaries, other than the
transactions contemplated by the Merger Agreement (an "Acquisition Proposal"),
or (ii) engage in negotiations or discussions regarding or disclose any
information relating to the Company or any of its subsidiaries or afford access
to the properties, books or records of the Company or any of its subsidiaries to
any person that may be considering making, or has made, an Acquisition Proposal.
In addition, the Merger Agreement prohibits the Board of Directors of the
Company (including any committee thereof) from withdrawing or modifying in a
manner adverse to Sherwin-Williams the approval and recommendation of the Offer,
the Merger Agreement, the Merger or the Shareholder Option Agreement or approve
or recommend any Acquisition Proposal. Notwithstanding the foregoing, the Merger
Agreement provides that (i) the Company may participate in discussions or
negotiations with or furnish information to any third party which makes a
written Acquisition Proposal which either (x) is not subject to a financing
contingency and involves the purchase for cash of 100% of the Company's Common
Stock at a price per share greater than the purchase price of the Offer or (y)
provides for the acquisition of 100% of the Company's Common Stock for
consideration, not consisting entirely of cash, which the Company's Board of
Directors determines, based on the advice of its financial advisor, is
financially superior to the purchase price of the Offer (in the case of either
(x) or (y), a "Superior Proposal"), and (ii) the Board of Directors or any
committee thereof may withdraw or modify in a manner adverse to Sherwin-Williams
the approval or recommendation of the Merger Agreement, the Offer, the Merger or
Shareholder Option Agreement and may approve or recommend any such Superior
Proposal, if, in the case of either (i) or (ii), the Board of Directors of the
Company determines (and is advised by its outside legal counsel) that the
failure to take such action would constitute a breach of its fiduciary duties.
The Company has agreed (i) to notify Sherwin-Williams promptly after receipt of
any Acquisition Proposal (or any indication that any person is considering
making an Acquisition Proposal) or any request for non-public information
relating to the Company or any of its subsidiaries or for access to the
properties, books or records of the Company or any of its subsidiaries by any
person that may be considering making, or has made, an Acquisition Proposal, and
(ii) to keep Sherwin-Williams fully informed of the status and details of any
such Acquisition Proposal, indication or request.
Directors' and Officers' Insurance; Indemnification. The Merger Agreement
provides that Sherwin-Williams shall maintain in effect, for a period of six
years after the Effective Time, the existing policies of directors' and
officers' liability insurance maintained by the Company and its subsidiaries,
covering those persons who were covered by such policies on the date of the
Merger Agreement, with respect to matters arising before the Effective Time;
provided that Sherwin-Williams may substitute therefor policies of at least the
same coverage and amounts containing terms and conditions which are no less
advantageous in any material respect to the parties covered by such policies.
The Merger Agreement provides that Sherwin-Williams shall not be required to pay
an annual premium for such insurance in excess of 150% of the last annual
premium paid by the Company prior to the date of the Merger Agreement, and if
the annual premium
21
<PAGE> 24
of such insurance coverage exceeds that amount, Sherwin-Williams shall purchase
as much coverage as possible for such amount.
The Merger Agreement also provides that from and after the Effective Time,
Sherwin-Williams and the Surviving Corporation shall indemnify, defend and hold
harmless each person who was an officer or director of the Company or any of its
subsidiaries on the date of the Merger Agreement or any time prior to the date
thereof ("Indemnified Parties") against all losses, claims, damages, costs,
expenses (including attorneys' fees and expenses), liabilities or judgments or
amounts that are paid in settlement with the approval of the indemnifying party
(which approval shall not be unreasonably withheld) of or in connection with any
threatened or actual claim, action, suit, proceeding or investigation based in
whole or in part on, or arising in whole or in part out of, the fact that such
person was a director, officer, employee or agent of the Company or any of its
subsidiaries (including service as a fiduciary of any employee benefit plan),
whether (i) pertaining to any matter existing or occurring at or prior to the
Effective Time, to the fullest extent permitted by New York Law, or (ii) based
in whole or in part on the Merger Agreement or the transactions contemplated by
the Merger Agreement.
Company Stock Options. Pursuant to the Merger Agreement, immediately prior
to the Effective Time, each of the then outstanding employee stock options to
purchase Common Stock (the "Company Stock Options") granted under any employee
stock option or compensation plan or arrangement of the Company (the "Company
Stock Plans"), whether or not then vested or exercisable, shall be cancelled,
and each holder of any such Company Stock Option shall be paid by the Company at
the Effective Time for each such Company Stock Option an amount in cash (subject
to any applicable withholding taxes) determined by multiplying (i) the excess,
if any, of the price per Share paid in the Offer over the applicable exercise
price of such Company Stock Option by (ii) the number of shares of Common Stock
such holder could have purchased (assuming full vesting of all Company Stock
Options) had such holder exercised such Company Stock Option in full immediately
prior to the Effective Time. In the event any holder of a Company Stock Option
who is an employee is terminated by the Company subsequent to the time a
majority of the members of the Company's Board of Directors consists of
designees of Sherwin-Williams and prior to the cancellation of the Company Stock
Options as described above, the Company shall provide such employee the same
payment described above, as if such employee had continued employment through
the Effective Time, unless a majority of the directors of the Company determines
that the employee was terminated as a result of being convicted of a felony
involving moral turpitude or theft of Company assets. Prior to the Effective
Time, the Company will use its best efforts to obtain any necessary consents and
make any amendments to the terms of the Company Stock Plans to the extent such
consents or amendments are necessary to give effect to the foregoing. Payment by
the Company may be withheld in respect of any Company Stock Option until
necessary consents are obtained.
Conditions to the Merger. The Merger Agreement provides that the
respective obligations of the Company, Sherwin-Williams and the Purchaser to
consummate the Merger are subject to the satisfaction of the following
conditions: (i) if required by New York Law, the Merger Agreement shall have
been adopted by the shareholders of the Company in accordance with New York Law;
(ii) any applicable waiting period under the HSR Act relating to the Merger
shall have expired or have been terminated; (iii) no provision of any applicable
law or regulation and no judgment, injunction, order or decree shall be issued
which would prohibit the consummation of the Merger; and (iv) Sherwin-Williams
or the Purchaser shall have purchased Shares pursuant to the Offer or the
Shareholder Option Agreement.
Representations and Warranties. In the Merger Agreement, the Company has
made customary representations and warranties to Sherwin-Williams and the
Purchaser with respect to, among other things, its organization, capitalization,
financial statements, public filings, labor relations, conduct of business,
employee benefit plans, insurance, compliance with laws, litigation,
environmental matters, tax matters, property, contracts and agreements, consents
and approvals, opinions of financial advisors, undisclosed liabilities and the
absence of certain changes with respect to the Company since December 31, 1994.
Termination; Fees. The Merger Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval by the
shareholders of the Company, (i) by the mutual consent of the
22
<PAGE> 25
Company and Sherwin-Williams; (ii) by the Company (A) if there has been a
material breach of any representation, warranty, covenant or agreement on the
part of Sherwin-Williams set forth in the Merger Agreement which breach has not
been cured, in the case of a representation or warranty, prior to the Effective
Time or, in the case of a covenant or agreement, within thirty days following
receipt by Sherwin-Williams of notice of such breach (provided that such right
to terminate shall expire on the date on which Sherwin-Williams or the Purchaser
beneficially owns a majority of the Shares (including the Option Shares) and
Sherwin-Williams' designees constitute the requisite percentage (but not less
than a majority) of the members of the Board of Directors of the Company
specified in the Merger Agreement), or (B) if there shall be any law or
regulation that makes consummation of the Merger illegal or if any judgment,
injunction or other order of a court or other authority having jurisdiction
preventing the consummation of the Merger shall have become final and
non-appealable; (iii) by Sherwin-Williams (A) if there has been a material
breach of any representation, warranty, covenant or agreement on the part of the
Company set forth in the Merger Agreement which breach has not been cured, in
the case of a representation or warranty, prior to the Effective Time or, in the
case of a covenant or agreement, within thirty days following receipt by the
Company of notice of such breach (provided that such right to terminate shall
expire on the date on which Sherwin-Williams or the Purchaser beneficially owns
a majority of the Shares (including the Option Shares) and Sherwin-Williams'
designees constitute the requisite percentage (but not less than a majority) of
the members of the Board of Directors of the Company specified in the Merger
Agreement), (B) if there shall be any law or regulation that makes consummation
of the Merger illegal or if any judgment, injunction or other order of a court
or other competent authority preventing the consummation of the Merger shall
have become final and non-appealable, or (C) if Jules F. Knapp, a director of
the Company, fails to execute and deliver to Sherwin-Williams a noncompetition
agreement within fifteen business days following the execution of the Merger
Agreement (which agreement has been executed and delivered as of the date of
this Offer to Purchase); (iv) by either the Company or Sherwin-Williams if the
Offer has not been consummated by January 31, 1996 (the "Outside Termination
Date"); provided that if an HSR Authority shall have requested additional
information from any of the parties hereto or any of their affiliates pursuant
to 15 U.S.C. Section 18a(e)(1) or the rules and regulations thereunder on or
prior to January 31, 1996, Sherwin-Williams may elect to change the Outside
Termination Date from time to time, to the extent necessary to satisfy the
requirements of the HSR Act provided that the Outside Termination Date will not
be later than June 30, 1996 and provided further that the Merger Agreement has
not been terminated by the Company pursuant to the terms of the Merger Agreement
prior to the date of such election; and further provided that notwithstanding
the preceding proviso to the contrary, if an Acquisition Proposal is made prior
to the consummation of the Offer, Sherwin-Williams may elect to extend the
Outside Termination Date in increments of not more than ten business days,
provided that an Acquisition Proposal continues to exist at the time of any such
election and the Agreement has not been terminated by the Company prior thereto;
(v) by Sherwin-Williams upon the occurrence of a "Trigger Event" (as defined
below); provided that such right to terminate shall expire on the date on which
Sherwin-Williams or the Purchaser beneficially owns a majority of the
outstanding Shares (including the Option Shares) and Sherwin-Williams' designees
constitute the requisite percentage (but not less than a majority) of the
members of the Board of Directors of the Company specified in the Merger
Agreement; (vi) by Sherwin-Williams, if Sherwin-Williams shall have received any
communication from an HSR Authority (which communication shall be confirmed to
the Company) that causes Sherwin-Williams reasonably to believe that any HSR
Authority has authorized the initiation of litigation or an administrative
proceeding challenging the transactions contemplated by the Merger Agreement
under U.S. antitrust laws, which litigation or administrative proceeding will
include a motion seeking an order or injunction prohibiting the consummation of
any of the transactions contemplated by the Merger Agreement; (vii) by the
Company, if Sherwin-Williams does not commence the Offer within five business
days following the public announcement of the terms of the Merger Agreement or
if the Offer expires by its terms and the Purchaser (or its assignee) shall not
have purchased any Shares pursuant to the Offer; and (viii) by Sherwin-Williams,
if (A) the Shareholder Option Agreement is breached by an Option Shareholder or
(B) if the Shareholder Option Agreement (or any material provisions thereof) is
terminated or held by a court to be unenforceable for any reason or if the
Company or any Option Shareholder asserts or states an intention to assert any
such enforceability and, in any such case, as a result thereof, Sherwin-Williams
concludes in its reasonable
23
<PAGE> 26
discretion that its ability to consummate the transactions contemplated by the
Merger Agreement has been materially impaired or such consummation will be
materially delayed or rendered materially more expensive.
If the Merger Agreement is terminated by Sherwin-Williams (a) pursuant to
its right described in clause (v) or (viii) of the preceding paragraph following
the occurrence of any Trigger Event, or (b) pursuant to its right described in
clause (iii)(A) of the preceding paragraph and within six months after such
termination a Trigger Event (other than an event described in clause (ii) of the
following paragraph) occurs with respect to any person with whom the Company or
any of its directors, officers, employees, financial advisors, investment
bankers, attorneys or other advisors engaged in negotiations, or discussions
regarding, or disclosed any information regarding, a possible Acquisition
Proposal since June 30, 1995, then, in either such case, the Company will be
obligated to pay Sherwin-Williams, in respect of Sherwin-Williams' expenses and
lost opportunity costs, an amount in immediately available funds equal to
$15,000,000.
As used herein, the term "Trigger Event" means each of the following
events: (i) the Company shall have entered into, or shall have publicly
announced its intention to enter into, an agreement or agreement in principle
with respect to any Acquisition Proposal or similar business combination or
transaction other than the transactions contemplated by the Merger Agreement;
(ii) the Board of Directors of the Company or any committee thereof shall have
withdrawn or materially and adversely modified its approval or recommendation of
the Offer or the Merger Agreement; (iii) the Board of Directors of the Company
or any committee thereof shall have made any recommendation with respect to an
Acquisition Proposal by any person (other than Sherwin-Williams) other than a
recommendation rejecting or against such Acquisition Proposal; (iv) the Company
receives any Acquisition Proposal by any person (other than Sherwin-Williams),
and the Company's Board of Directors takes a neutral position or makes no
recommendation with respect to such Acquisition Proposal after a reasonable
amount of time (and in no event more than five business days) has elapsed for
the Company's Board of Directors to review and make a recommendation with
respect to such Acquisition Proposal consistent with the Board's fiduciary
duties; or (v) any person or "group" (within the meaning of Section 13(d)(3) of
the Exchange Act) (other than Sherwin-Williams or any of its affiliates and the
Option Shareholders) shall have become the beneficial owner (determined pursuant
to Rule 13d-3 under the Exchange Act) of at least 20% of any class of shares of
capital stock of the Company (including the Shares) or shall have acquired,
directly or indirectly, at least 20% of the assets or earning power of the
Company, other than acquisitions of securities for bona fide arbitrage purposes
only.
The Merger Agreement provides that if the Merger Agreement is terminated by
Sherwin-Williams or by the Company, but Sherwin-Williams or the Purchaser
subsequently purchases Option Shares pursuant to the Shareholder Option
Agreement, then Sherwin-Williams and the Purchaser will, as soon as reasonably
practical following the purchase of such Option Shares, commence a cash tender
offer to purchase all of the Shares not owned by Sherwin-Williams or the
Purchaser at a price of $35.00 per Share. Sherwin-Williams and the Purchaser
have agreed to accept all Shares tendered into such offer, subject only to the
conditions set forth in paragraphs (a) and (b) of Section 14 of this Offer to
Purchase.
SHAREHOLDER OPTION AGREEMENT. The following is a summary of the material
terms of the Shareholder Option Agreement. This summary is qualified in its
entirety by reference to the Shareholder Option Agreement, which is incorporated
herein by reference and a copy of which has been filed with the Commission as an
exhibit to the Schedule 14D-1. The Shareholder Option Agreement may be examined
and copies may be obtained at the places and in the manner set forth in Section
7 of this Offer to Purchase.
Simultaneously with the execution of the Merger Agreement,
Sherwin-Williams, the Purchaser and the Option Shareholders entered into the
Shareholder Option Agreement. Pursuant to such Agreement, the Option
Shareholders have irrevocably granted to Sherwin-Williams and the Purchaser
options to purchase an aggregate of 4,563,651 Option Shares (representing
approximately 40% of the Shares outstanding as of the date of the Merger
Agreement on a fully diluted basis), which options are exercisable by
Sherwin-Williams or the Purchaser at any time on or after January 2, 1996. The
Shareholder Option Agreement provides that if the Offer is consummated on or
prior to December 31, 1995, either Sherwin-Williams or the Purchaser is required
to exercise the options not later than January 4, 1996. The Shareholder Option
Agreement also provides, however, that if the Expiration Date is extended to
5:00 p.m., New York City time, on January 5, 1996 or any later time, the Option
Shareholders are required to tender the Option Shares into the Offer not later
than
24
<PAGE> 27
January 3, 1996. The Shareholder Option Agreement generally does not prohibit an
Option Shareholder from tendering Option Shares into the Offer prior to any such
extension of the Expiration Date. However, the Option Shareholders have agreed
that if the purchase price of the Offer is for any reason increased, then (i)
the Option Shareholders will not tender their Option Shares into the Offer after
the first public announcement of such increase, and (ii) if any Option Shares
were tendered into the Offer prior to the first public announcement of such
increase, the tendering Option Shareholders will promptly withdraw their tenders
of such Option Shares. Sherwin-Williams and the Purchaser do not know if any
Option Shares will be tendered in response to the Offer prior to January 2,
1996, although they have been advised that certain of the Option Shareholders
presently do not expect to tender their Shares until 1996.
In connection with the Shareholder Option Agreement, the Option
Shareholders have made certain customary representations, warranties and
covenants, including with respect to (i) ownership of the Shares, (ii) the
Option Shareholders' authority to enter into and perform their obligations under
the Shareholder Option Agreement, (iii) the ability of the Option Shareholders
to enter into the Shareholder Option Agreement without violating other
agreements to which they are party, (iv) the absence of liens andencumbrances on
and in respect of the Option Shares and (v) restrictions on the transfer of the
Option Shares. In addition, the Option Shareholders have (i) granted to
Sherwin-Williams, its officers and certain other persons an irrevocable proxy to
exercise any and all voting and other rights with respect to the Option Shares;
(ii) irrevocably appointed each of the foregoing as the Option Shareholders'
attorney-in-fact, with irrevocable instructions (a) validly to tender the Option
Shares into the Offer if the Option Shareholders are so required under the
Shareholder Option Agreement, (b) properly to withdraw the Option Shares from
the Offer if the Option Shareholders are so required under the Shareholder
Option Agreement and (c) to execute any instrument of transfer and/or other
documents and do all such other acts and things as may in the opinion of such
persons be necessary or expedient for the purpose of, or in connection with,
tendering or withdrawing such Option Shares into or from the Offer, to the
extent required by the Shareholder Option Agreement; and (iii) agreed not to
exercise or attempt to exercise any rights pertaining to the Option Shares
without the prior consent of Sherwin-Williams. The Option Shareholders have also
irrevocably pledged the Option Shares to the Purchaser, and granted the
Purchaser security interests therein, to secure the due and prompt performance
of the Option Shareholders' obligations under the Shareholder Option Agreement.
The Purchaser and Sherwin-Williams have agreed to indemnify, defend and
hold harmless, for a period of not less than six years, each Option Shareholder
against all losses, claims, damages, costs, expenses (including attorneys' fees
and expenses), liabilities or judgments or amounts that are paid in settlement
or in connection with any threatened or actual claim, action, suit, proceeding
or investigation based in whole or in part on, or arising in whole or in part
out of, such Option Shareholder's execution or performance of, or the
consummation of the transactions contemplated by, the Shareholder Option
Agreement. However, neither the Purchaser nor Sherwin-Williams will indemnify
any Option Shareholder for any such losses based in whole or in part on, or
arising in whole or in part out of, (i) the breach of such Option Shareholder's
representation, warranty or covenant set forth in the Shareholder Option
Agreement, other than any challenges to the enforceability of the Shareholder
Option Agreement based on fiduciary duty arguments, (ii) any willful act which,
to the knowledge of such Option Shareholder, constituted a violation or breach
of any statute, rule, regulation, agreement or understanding which applies to
such Option Shareholder or to which such Option Shareholder is a party, or (iii)
fraud by such Option Shareholder.
PLANS FOR THE COMPANY. Sherwin-Williams intends, upon acquiring control of
the Company, to continue its review and evaluation of the Company and its
subsidiaries and their respective assets, businesses, corporate structure,
capitalization, operations, properties, policies, management and personnel.
Sherwin-Williams' current plans are to expand the Company's dealer business and
increase the Company's market position in the mass merchandiser and specialty
products markets. Sherwin-Williams does not plan to divest any of the Company's
business units. Sherwin-Williams also plans to evaluate certain of the Company's
specialized product lines and may consider dispositions of any such product
lines which Sherwin-Williams determines do not strategically fit with
Sherwin-Williams' existing products and business plans.
Generally, Sherwin-Williams intends to integrate the Company's business
with Sherwin-Williams' existing operations, with a view to achieving operating
efficiencies and cost savings while maintaining and
25
<PAGE> 28
enhancing customer service. Sherwin-Williams plans to identify the Company's
current cost savings opportunities resulting from the Company's merger with UCI
in August 1994, as well as additional cost savings opportunities that may result
from the Merger. A likely means to achieve these cost savings opportunities will
be the consolidation of certain of the Company's facilities and certain of
Sherwin-Williams' facilities, which will be determined after Sherwin-Williams
reviews each facility's mission, personnel and profitability. After
Sherwin-William conducts its review of the Company, it is possible that
Sherwin-Williams might modify some of its current plans. See Schedule II.
SECTION 12. DIVIDENDS AND DISTRIBUTIONS. As described above, the Merger
Agreement provides that, prior to the Effective Time, the Company and each of
its subsidiaries will not declare, pay, set aside or make any dividend or other
distribution or payment with respect to, or split, combine, reclassify,
purchase, redeem or otherwise acquire any shares of its capital stock, except
that the Company may continue the declaration and payment of regular quarterly
cash dividends on its Common Stock of not more than $0.16 per share of Common
Stock, in accordance with the Company's past practices.
If, on or after the date of the Merger Agreement, the Company should (a)
split, combine, redeem or reclassify any shares of its capital stock, (b)
purchase or acquire, or offer to purchase or acquire, any shares of its capital
stock or (c) (i) issue or sell any shares of its capital stock (other than in
connection with the exercise of the Company Stock Options outstanding on the
date of the Merger Agreement) or any of its other securities, (ii) issue any
securities convertible into, or rights, warrants or options to purchase or
subscribe to, any shares of its capital stock, (iii) enter into any arrangement
or contract with respect to the issuance or sale of any shares of its capital
stock or any of its other securities or (iv) make any other changes in its
capital structure, then, without prejudice to the Purchaser's rights under
Section 14 below, the Purchaser, in its sole discretion, may make such
adjustments to the purchase price and other terms of the Offer as it deems
appropriate, including, without limitation, the number or type of securities
offered to be purchased.
If, on or after the date of the Merger Agreement, the Company should
declare, pay, set aside or make any cash dividend (other than regular quarterly
cash dividends on its Common Stock of not more than $0.16 per share of Common
Stock, in accordance with the Company's past practices) or make other
distributions or payments with respect to any shares of its capital stock or
issue with respect to any shares of its capital stock any additional shares,
shares of any other class of capital stock, other securities or any securities
convertible into, or rights, warrants or options, conditional or otherwise, to
acquire, any of the foregoing, payable or distributable to shareholders of
record on a date prior to the transfer of the Shares purchased pursuant to the
Offer to the Purchaser on the Company's stock transfer records, then, without
prejudice to the Purchaser's rights under Section 14 below, (a) the purchase
price payable per Share by the Purchaser pursuant to the Offer will be reduced
by the amount of any such cash dividend or cash distribution and (b) the whole
of any such noncash dividend, distribution or issuance to be received by the
tendering shareholders will (i) be received and held by the tendering
shareholders for the account of the Purchaser and will be required to be
promptly remitted and transferred by each tendering shareholder to the
Depositary for the account of the Purchaser, accompanied by appropriate
documentation of transfer, or (ii) at the direction of the Purchaser, be
exercised for the benefit of the Purchaser, in which case the proceeds of each
exercise will promptly be remitted to the Purchaser. Pending such remittance and
subject to applicable law, the Purchaser will be entitled to all rights and
privileges as owner of any such noncash dividend, distribution, issuance or
proceeds and may withhold the entire purchase price or deduct from the purchase
price the amount or value thereof, as determined by the Purchaser in its sole
discretion.
Pursuant to the terms of the Merger Agreement, the Company is prohibited
from taking any of the actions described in the preceding paragraphs, and
nothing herein shall constitute a waiver by the Purchaser or Sherwin-Williams of
any of its rights under the Merger Agreement or a limitation of remedies
available to the Purchaser or Sherwin-Williams for any breach of the Merger
Agreement, including termination thereof.
SECTION 13. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES, STOCK
EXCHANGE LISTING AND EXCHANGE ACT REGISTRATION. The purchase of Shares pursuant
to the Offer will reduce the number of Shares that might otherwise trade
publicly and could reduce the number of holders of Shares. This could adversely
affect the
26
<PAGE> 29
liquidity and market value of the remaining Shares held by the public. The
Purchaser cannot predict whether the reduction in the number of Shares that
might otherwise trade publicly would have an adverse or beneficial effect on the
market price for or marketability of the Shares or whether such reduction would
cause future market prices to be greater or less than the Offer price.
Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the requirements for continued listing on the NYSE and
may therefore be delisted from the NYSE. According to the NYSE's published
guidelines, the NYSE would consider delisting the Shares if, among other things:
(i) the number of record holders of 100 or more Shares should fall below 1,200;
(ii) the number of publicly held Shares (exclusive of holdings of
Sherwin-Williams and the Purchaser, any other subsidiaries or affiliates of
Sherwin-Williams, officers or directors of the Company or their immediate
families and other concentrated holdings of 10% or more ("Excluded Holdings"))
should fall below 600,000; or (iii) the aggregate market value of such publicly
held Shares (exclusive of Excluded Holdings) should fall below $5,000,000.
Based on information provided by the Company, as of September 18, 1995
there were approximately 1,941 holders of record of Shares. If as a result of
the purchase of Shares pursuant to the Offer or otherwise the Shares no longer
meet the requirements of the NYSE for continued listing and the listing of the
Shares is discontinued, the market and prices for the Shares could be adversely
affected.
If the NYSE were to delist the Shares, it is possible that the Shares would
continue to trade on other securities exchanges or in the over-the-counter
market and that price quotations would be reported by such exchanges or through
the National Association of Securities Dealers Automated Quotation System
("NASDAQ") or other sources. However, the extent of the public market for the
Shares and the availability of such quotations would depend upon such factors as
the number of shareholders and/or the aggregate market value of the Shares
remaining at such time, the interest in maintaining a market in the Shares on
the part of securities firms, the possible termination of registration under the
Exchange Act (as described below) and other factors. The Purchaser cannot
predict whether the reduction in the number of Shares that might otherwise trade
publicly would have an adverse or beneficial effect on the market price for or
marketability of the Shares.
The Shares are currently "margin securities," as such term is defined under
the rules of the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board"), which has the effect, among other things, of allowing brokers
to extend credit on the collateral of the Shares for the purpose of buying,
carrying, or trading in securities ("purpose loans"). Depending upon factors
similar to those described above with respect to stock exchange listing and
market quotations, following the Offer it is possible that the Shares might no
longer constitute "margin securities" for the purposes of the margin regulations
of the Federal Reserve Board and, therefore, could no longer be used as
collateral for purpose loans made by brokers.
The Shares are currently registered under the Exchange Act. The purchase of
Shares pursuant to the Offer may result in the Shares becoming eligible for
deregistration under the Exchange Act. Registration of the Shares may be
terminated upon application of the Company to the Commission if the Shares are
not listed on a national securities exchange and there are fewer than 300 record
holders of the Shares. The termination of the registration of the Shares under
the Exchange Act would substantially reduce the information required to be
furnished by the Company to holders of the Shares and to the Commission and
would make certain provisions of the Exchange Act, such as the short-swing
profit recovery provisions of Section 16(b), the requirement of furnishing a
proxy statement in connection with shareholders' meetings pursuant to Section
14(a) and the requirements of Rule 13e-3 under the Exchange Act with respect to
"going private" transactions, no longer applicable to the Shares. Furthermore,
"affiliates" of the Company and persons holding "restricted securities" of the
Company could be deprived of the ability to dispose of such securities pursuant
to Rule 144 under the Securities Act of 1933. If registration of the Shares
under the Exchange Act were terminated, the Shares would no longer be "margin
securities" or eligible for NASDAQ reporting. The Purchaser presently intends to
cause the Company to apply to terminate the registration of the Shares as soon
after the consummation of the Offer or Merger as the requirements for
termination of registration are met.
27
<PAGE> 30
SECTION 14. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other
provisions of the Offer, and in addition to (and not in limitation of) the
Purchaser's rights to extend and amend the Offer at any time in its sole
discretion (subject to the provisions of the Merger Agreement), the Purchaser
shall not be required to accept for payment or, subject to any applicable rules
and regulations of the Commission, including Rule 14e-1(c) under the Exchange
Act (relating to the Purchaser's obligation to pay for or return tendered Shares
promptly after termination or withdrawal of the Offer), pay for, and may delay
the acceptance for payment of or, subject to the restriction referred to above,
to pay for, any tendered Shares, and may terminate the Offer if (i) any
applicable waiting period under the HSR Act has not expired or terminated prior
to the expiration of the Offer, (ii) the Minimum Condition has not been
satisfied, (iii) the Rights under the Rights Agreement shall have become
exercisable, or (iv) at any time on or after the date of the Merger Agreement
and at or before the time of payment for such Shares (whether or not any Shares
have theretofore been accepted for payment or paid for pursuant to the Offer)
pursuant to the Offer, any of the following conditions shall occur:
(a) (i) there shall be threatened, instituted or pending any action or
proceeding by any government or governmental authority or agency (A)
challenging or seeking to make illegal, impede, materially delay or
otherwise directly or indirectly restrain, prohibit or make materially more
costly the Offer or the Merger or seeking to obtain material damages
relating to the transactions contemplated under the Offer and the Merger,
(B) seeking to prohibit or materially limit the ownership or operation by
the Purchaser or Sherwin-Williams of all or any material portion of the
business or assets of the Company or any of its Subsidiaries taken as a
whole or to compel the Purchaser or Sherwin-Williams to dispose of or hold
separately all or any material portion of the business or assets of the
Purchaser or Sherwin-Williams or the Company or any of its subsidiaries
taken as a whole, or seeking to impose any material limitation on the
ability of the Purchaser or Sherwin-Williams to conduct its business or own
such assets, (C) seeking to impose material limitations on the ability of
the Purchaser or Sherwin-Williams effectively to exercise full rights of
ownership of the Shares, including, without limitation, the right to vote
any Shares acquired or owned by Sherwin-Williams or the Purchaser on all
matters properly presented to the Company's shareholders, (D) seeking to
require divestiture by the Purchaser or Sherwin-Williams of any Shares or
(E) otherwise materially adversely affecting the condition of the Company
and its Subsidiaries taken as a whole; or (ii) any court shall have entered
an order which is in effect and which (A) makes illegal, impedes,
materially delays or otherwise directly or indirectly restrains, prohibits
or makes materially more costly the Offer or the Merger, (B) prohibits or
materially limits the ownership or operation by the Purchaser or
Sherwin-Williams of all or any material portion of the business or assets
of the Company or any of its subsidiaries taken as a whole or compels the
Purchaser or Sherwin-Williams to dispose of or hold separately all or any
material portion of the business or assets of the Purchaser or
Sherwin-Williams or the Company or any of its subsidiaries taken as a
whole, or imposes any material limitation on the ability of the Purchaser
or Sherwin-Williams to conduct its business or own such assets, (C) imposes
material limitations on the ability of the Purchaser or Sherwin-Williams
effectively to exercise full rights of ownership of the Shares, including,
without limitation, the right to vote any Shares acquired or owned by
Sherwin-Williams or the Purchaser on all matters properly presented to the
Company's shareholders, (D) requires divestiture by the Purchaser or
Sherwin-Williams of any Shares or (E) otherwise materially adversely
affects the condition of the Company and its subsidiaries taken as a whole;
provided, however, that in the case of a preliminary injunction to the
effect described in this subparagraph (ii), the provisions of this
subparagraph (ii) shall not be deemed to have been triggered until the
earlier of (y) the date on which such injunction becomes final or (z) the
Company ceases its efforts to have such preliminary injunction dissolved;
(b) there shall be any action taken, or any statute, rule, regulation,
legislation, interpretation, judgment, order or injunction enacted,
enforced, promulgated, amended, issued or deemed applicable to (i) the
Purchaser, Sherwin-Williams, the Company or any subsidiary of the Company
or (ii) the Offer or the Merger, by any legislative body, court, government
or governmental, administrative or regulatory authority or agency, domestic
or foreign, other than the routine application of the waiting period
provisions of the HSR Act to the Offer or to the Merger, which could
reasonably be expected to directly or indirectly, result in any of the
consequences referred to in clauses (A) through (E) of paragraph (a)(i)
above;
28
<PAGE> 31
(c) any change shall have occurred (or any condition, event or
development shall have occurred involving a prospective change), that would
have a Material Adverse Effect (as defined below) with respect to the
Company;
(d) there shall have occurred any of the following which would
reasonably be expected to have a material effect with respect to the
Company: (i) any general suspension of trading in, or limitation on prices
for, securities on any national securities exchange or in the
over-the-counter market, (ii) any decline in either the Dow Jones
Industrial Average or the Standard & Poor's Index of 400 Industrial
Companies or in the New York Stock Exchange Composite Index in excess of
20% measured from the close of business on the trading day next preceding
the date of the Merger Agreement, (iii) any material change in United
States or any other currency exchange rates or a suspension of, or
limitation on, the markets therefor, (iv) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States, or (v) a commencement or escalation of a war or armed hostilities
or other national or international calamity directly or indirectly
involving the United States;
(e) the representations and warranties of the Company set forth in the
Merger Agreement shall not be true and correct as of the date of
consummation of the Offer as though made on or as of such date or the
Company shall have breached or failed to perform or comply with any
obligation, agreement or covenant, except in each case, (i) for changes
permitted by the Merger Agreement and (ii)(A) those representations and
warranties that address matters only as of a particular date which are true
and correct as of such date or (B) where the failure of such
representations and warranties to be true and correct, or the performance
or compliance with such obligations, agreements or covenants, individually
or in the aggregate, would not have a Material Adverse Effect with respect
to the Company or a material adverse effect on the ability of the Purchaser
to consummate the Offer or the Merger;
(f) all consents, registrations, approvals, permits, authorizations,
notices, reports or other filings required to be obtained or made by the
Company, the Purchaser or Sherwin-Williams with or from any governmental or
regulatory entity in conjunction with the execution, delivery and
performance of the Merger Agreement, the Offer and the consummation of the
transactions contemplated by the Merger Agreement shall not have been made
or obtained and such failure would reasonably be expected to have a
Material Adverse Effect with respect to the Company and its subsidiaries,
taken as a whole or would prevent or materially delay consummation of the
transactions contemplated by the Merger Agreement;
(g) the Merger Agreement shall have been terminated in accordance with
its terms;
(h) (i) any person, entity or "group" (within the meaning of Section
13(d)(3) of the Exchange Act), other than the Option Shareholders, shall
have become the beneficial owner (determined pursuant to Rule 13d-3
promulgated under the Exchange Act) of at least 20% of any class or series
of capital stock of the Company (including the Shares), or shall have
acquired, directly or indirectly, at least 20% of the assets or earning
power of the Company, other than acquisitions of securities for bona fide
arbitrage purposes only; or (ii) the Company shall have entered into, or
shall have publicly announced its intention to enter into, an agreement or
agreement in principle with respect to an Acquisition Proposal or similar
business combination other than the transactions contemplated in the Merger
Agreement and the Offer; or
(i) (i) the Company's Board of Directors or any Committee thereof
shall have withdrawn, or modified or changed in a manner adverse to the
Purchaser or Sherwin-Williams (including by amendment of the Schedule
14D-9) its recommendation of the Offer, the Merger Agreement, or the
Merger; (ii) the Company's Board of Directors or any Committee thereof
shall have made any recommendation with respect to any Acquisition Proposal
by any Person (other than the Purchaser or Sherwin-Williams) other than a
recommendation rejecting or against such Acquisition Proposal; or (iii) the
Company shall have received any Acquisition Proposal by any Person (other
than the Purchaser or Sherwin-Williams) and the Company's Board of
Directors is neutral or makes no recommendation with respect to such
Acquisition Proposal after a reasonable amount of time (and in no event
more than five business days) has elapsed for the Company's Board of
Directors to review and make a recommendation with respect to such
Acquisition Proposal consistent with its fiduciary duties;
29
<PAGE> 32
which in the reasonable judgment of the Purchaser or Sherwin-Williams, in any
such case and regardless of the circumstances giving rise to such condition,
makes it inadvisable to proceed with such acceptance for payment or payment. As
used in this Section 14, the term "Material Adverse Effect" means, with respect
to any entity, the result of one or more events, changes or effects which,
individually or in the aggregate, would have a materially adverse effect on the
business, operations, assets, condition (financial or otherwise) or prospects of
such entity and its subsidiaries, taken as a whole.
The foregoing conditions are for the sole benefit of Sherwin-Williams and
the Purchaser and may be waived by Sherwin-Williams in whole or in part at any
time and from time to time in the sole discretion of the Purchaser. The failure
by the Purchaser at any time to exercise any of the foregoing rights shall not
be deemed a waiver of any such right; the waiver of any such right with respect
to particular facts and other circumstances shall not be deemed a waiver with
respect to any other facts and circumstances; and each such right shall be
deemed an ongoing right that may be asserted at any time and from time to time.
Any determination by the Purchaser concerning the events described above will be
final and binding on all parties.
A public announcement will be made of a material change in, or waiver of,
such conditions to the extent required by Rules 14d-4(c) and 14d-6(d) under the
Exchange Act, and the Offer will be extended in connection with any such change
or waiver to the extent required by such rules.
SECTION 15. CERTAIN LEGAL MATTERS AND REGULATORY APPROVALS.
General. Except as otherwise disclosed herein, based upon an examination of
publicly available information filed by the Company with the Commission, neither
the Purchaser nor Sherwin-Williams is aware of (i) any license or other
regulatory permit that appears to be material to the business of the Company and
its subsidiaries, taken as a whole, that might be adversely affected by the
Purchaser's acquisition of Shares (and the indirect acquisition of the stock of
the Company's subsidiaries) pursuant to the Offer or the Merger or (ii) any
filings, approvals or other actions by or with any domestic (federal or state),
foreign or supranational governmental authority or administrative or regulatory
agency that would be required prior to the acquisition of Shares (or the
indirect acquisition of the stock of the Company's subsidiaries) by the
Purchaser as contemplated herein. Should any such approval or other action be
required, it is the Purchaser's present intention to seek such approval or
action. However, the Purchaser does not presently intend to delay the purchase
of Shares tendered pursuant to the Offer pending the receipt of any such
approval or the taking of any such action (subject to the Purchaser's right to
delay or decline to purchase Shares if any of the conditions in Section 14 shall
have occurred). There can be no assurance that any such approval or other
action, if needed, would be obtained without substantial conditions or that
adverse consequences might not result to the business of the Company,
Sherwin-Williams or the Purchaser or that certain parts of the businesses of the
Company, Sherwin-Williams or the Purchaser might not have to be disposed of or
held separate or other substantial conditions complied with in order to obtain
such approval or other action or, in the event that such approval was not
obtained or such other action was not taken, any of which could cause the
Purchaser to elect to terminate the Offer without the purchase of the Shares
thereunder. The Purchaser's obligation under the Offer to accept for payment and
pay for Shares is subject to certain conditions, including conditions relating
to the legal matters discussed in this Section 15. See Section 14.
State Takeover Laws. The Company is incorporated under the laws of the
State of New York. In general, Section 912 of New York Law (the "New York
Takeover Statute") prevents an "interested shareholder" (generally a person who
owns or has the right to acquire 20% or more of a corporation's outstanding
voting stock, or an affiliate or associate thereof) from engaging in a "business
combination" (defined to include mergers and certain other transactions) with a
New York corporation for a period of five years following the date such person
became an interested shareholder unless, among other things, prior to such date
the board of directors of the corporation approved either the business
combination or the transaction in which the interested shareholder became an
interested shareholder. On November 3, 1995, prior to the execution of the
Merger Agreement and the Shareholder Option Agreement, the Board of Directors of
the Company, by vote of all directors present at a meeting held on such date,
(i) approved and adopted the Merger Agreement and the transactions contemplated
thereby, (ii) approved the Shareholder Option Agreement and the transactions
contemplated thereby, as well as negotiations between Sherwin-Williams and
30
<PAGE> 33
the Purchaser and the Option Shareholders with respect thereto, (iii) determined
that the Merger Agreement and the transactions contemplated thereby, including
each of the Offer and the Merger, is fair to and in the best interests of, the
shareholders of the Company and (iv) recommended that the shareholders of the
Company accept the Offer and approve and adopt the Merger Agreement and the
transactions contemplated thereby. Accordingly, the Purchaser and
Sherwin-Williams believe that the New York Takeover Statute is inapplicable to
the Merger Agreement, the Shareholder Option Agreement, the Offer and the
Merger.
A number of other states have also adopted takeover laws and regulations
which purport to varying degrees to be applicable to attempts to acquire
securities of corporations which are incorporated in such states or which have
or whose business operations have substantial economic effects in such states,
or which have substantial assets, security holders, principal executive offices
or principal places of business therein. To the extent that certain provisions
of certain of these state takeover statutes purport to apply to the Offer, the
Purchaser believes that such laws conflict with federal law and constitute an
unconstitutional burden on interstate commerce. In 1982, the Supreme Court of
the United States, in Edgar v. MITE Corp., invalidated on constitutional grounds
the Illinois Business Takeovers Act, which, as a matter of state securities law,
made takeovers of corporations meeting certain requirements more difficult.
However, in 1987, in CTS Corp. v. Dynamics Corp. of America, the Supreme Court
of the United States held that the State of Indiana could, as a matter of
corporate law and in particular those aspects of corporate law concerning
corporate governance, constitutionally disqualify a potential acquiror from
voting on the affairs of a target corporation without the prior approval of the
remaining shareholders, provided that such laws were applicable only under
certain conditions. Subsequently, a number of federal courts have ruled that
various state takeover statutes were unconstitutional insofar as they apply to
corporations incorporated outside the state of enactment.
The Company, directly or through subsidiaries, conducts business in a
number of states throughout the United States, some of which have enacted
takeover laws. The Purchaser does not know whether any of these laws will, by
their terms, apply to the Offer or the Merger and has not taken any action to
comply with any such laws. Should any person seek to apply any state takeover
law, the Purchaser will take such action as then appears desirable, which may
include challenging the validity or applicability of any such statute in
appropriate court proceedings. In the event it is asserted that one or more
state takeover laws is applicable to the Offer or the Merger, and an appropriate
court does not determine that it is inapplicable or invalid as applied to the
Offer, the Purchaser might be required to file certain information with, or
receive approvals from, the relevant state authorities. In addition, if
enjoined, the Purchaser might be unable to accept for payment or pay for any
Shares tendered pursuant to the Offer or be delayed in continuing or
consummating the Offer and the Merger. In such case, the Purchaser may not be
obligated to accept for payment, or pay for, any Shares tendered. See Section
14.
Short-Form Merger. Section 905 of New York Law would permit the Merger to
occur without a vote of the Company's shareholders (a "short-form merger") if
the Purchaser were to acquire at least 90% of the outstanding Shares. If,
however, the Purchaser does not acquire at least 90% of the then outstanding
Shares pursuant to the Offer or otherwise, and a vote of the Company's
shareholders is required under New York Law, a longer period of time will be
required to effect the Merger.
Appraisal Rights. No appraisal rights are available in connection with the
Offer. However, if the Merger is consummated, shareholders of the Company would
have certain rights to dissent and demand appraisal of their Shares under
Sections 623 and 910 of New York Law. Dissenting shareholders who comply with
the requisite statutory procedures under New York Law would be entitled to a
judicial determination and payment of the "fair value" of their Shares as of the
close of business on the day prior to the date of shareholder authorization of
the Merger, together with interest thereon, at such rate as the court finds
equitable, from the date the Merger is consummated until the date of payment.
Under New York Law, in fixing the fair value of the Shares, a court would
consider the nature of the transaction giving rise to the shareholders' right to
receive payment for Shares and its effects on the Company and its shareholders,
the concepts and methods then customary in the relevant securities and financial
markets for determining fair value of shares of a corporation engaging in a
similar transaction under comparable circumstances, and all other relevant
factors.
31
<PAGE> 34
The foregoing summary of the rights of objecting shareholders does not
purport to be a complete statement of the procedures to be followed by
shareholders desiring to exercise any available dissenters' rights. The
preservation and exercise of dissenters' rights require strict adherence to the
applicable provisions of New York Law.
New York Security Takeover Disclosure Act. The New York Security Takeover
Disclosure Act (the "Disclosure Act") prohibits an offeror from making a
"takeover bid" unless certain registration, disclosure and other requirements
are met. The Disclosure Act defines a "takeover bid" as the acquisition or offer
to acquire by an offeror from an offeree, pursuant to a tender offer or request
or invitation for tenders, any equity security of a target company, if after
acquisition of the target company the offeror would, directly or indirectly, be
a beneficial owner of more than five percent of any class of the issued and
outstanding equity securities of the target company; and the Disclosure Act
defines the term "target company" as a corporation organized under the laws of
the State of New York and having its principal executive offices or significant
business operations located within the state. Pursuant to the Disclosure Act,
the Purchaser has filed a registration statement with the New York State
Attorney General and has disclosed certain additional information to
shareholders in Schedule II to this Offer to Purchase.
Antitrust. Under the HSR Act and the rules that have been promulgated
thereunder by the FTC, certain acquisition transactions may not be consummated
unless certain information has been furnished to the Antitrust Division and the
FTC and certain waiting period requirements have been satisfied. The acquisition
of Shares by the Purchaser pursuant to the Offer is subject to the HSR Act
requirements. See Section 2.
Under the provisions of the HSR Act applicable to the purchase of Shares
pursuant to the Offer, such purchase may not be made until the expiration of a
15-calendar day waiting period following the required filing of a Premerger
Notification and Report Form under the HSR Act by Sherwin-Williams, which
Sherwin-Williams intends to submit on the date hereof. Accordingly, the waiting
period under the HSR Act would expire at 11:59 p.m., New York City time, on
November 24, 1995, unless early termination of the waiting period were granted
or Sherwin-Williams received a request from the Antitrust Division or the FTC
for additional information of documentary material prior thereto. If such a
request were made, the waiting period applicable to the Offer will expire on the
tenth calendar day after the date of substantial compliance by Sherwin-Williams
with such request. Thereafter, the waiting period may be extended by court order
or by consent of Sherwin-Williams. Although the Company is required to file
certain information and documentary material with the Antitrust Division and the
FTC in connection with the Offer, neither the Company's failure to make such
filings nor a request to the Company from the Antitrust Division or the FTC for
additional information or documentary material will extend the waiting period.
The waiting period under the HSR Act may be terminated by the FTC and the
Antitrust Division prior to its expiration. Accordingly, pursuant to the HSR Act
each of Sherwin-Williams and the Company intend to request early termination of
the waiting period applicable to the Offer. There can be no assurance, however,
that the 15-day HSR Act waiting period will be terminated early. Shares will not
be accepted for payment or paid for pursuant to the Offer until the expiration
or earlier termination of the applicable waiting period under the HSR Act. See
Section 2. Subject to Section 4, any extension of the waiting period will not
give rise to any withdrawal rights not otherwise provided for by applicable law.
If the Purchaser's acquisition of Shares is delayed due to a request by the
Antitrust Division or the FTC for additional information or documentary material
pursuant to the HSR Act, the Offer may, but need not, be extended.
No separate HSR Act requirements with respect to the Merger, the Merger
Agreement or the Shareholder Option Agreement will apply if the 15-day waiting
period relating to the Offer (as described above) has expired or been
terminated. However, if the Offer is withdrawn or if the filing relating to the
Offer is withdrawn prior to the expiration or termination of the 15-day waiting
period relating to the Offer, the Merger may not be consummated until 30
calendar days after receipt by the Antitrust Division and the FTC of the
Premerger Notification and Report Forms of both Sherwin-Williams and the
Company, unless the 30-day period is earlier terminated by the Antitrust
Division and the FTC. Within such 30-day period, the Antitrust Division or the
FTC may request additional information or documentary materials from Sherwin-
Williams and/or the Company, in which event, the acquisition of Shares pursuant
to the Merger may not be
32
<PAGE> 35
consummated until 20 days after both Sherwin-Williams and the Company
substantially comply with such requests. Thereafter, the waiting periods may be
extended only by court order or by consent.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed acquisition of Shares by
the Purchaser pursuant to the Offer. At any time before or after the purchase by
the Purchaser of Shares pursuant to the Offer, either the FTC or the Antitrust
Division could take such action under the antitrust laws as it deems necessary
or desirable in the public interest, including seeking to enjoin the acquisition
of Shares pursuant to the Offer or seeking the divestiture of Shares purchased
by the Purchaser or the divestiture of substantial assets of Sherwin-Williams,
the Company or any of their respective subsidiaries. Private parties and state
attorneys general may also bring legal action under federal or state antitrust
laws under certain circumstances.
Based upon an examination of publicly available information relating to the
businesses in which Sherwin-Williams and its subsidiaries and the Company and
its subsidiaries are engaged, the Purchaser has determined that the Company and
Sherwin-Williams both produce and distribute similar product lines in certain
geographic areas. In particular, both the Company and Sherwin-Williams
manufacture, distribute and/or sell architectural, industrial and special
purpose paints and coatings, adhesives and sealants, wallcoverings and related
products. Although the Purchaser believes that the acquisition of Shares
pursuant to the Offer would not violate the antitrust laws, there can be no
assurance that a challenge to the Offer on antitrust grounds will not be made
or, if a challenge is made, what the outcome will be.
Foreign Approvals. Based on publicly available information, it appears
that the Company also owns property or conducts business in foreign countries
and jurisdictions. In connection with the acquisition of the Shares pursuant to
the Offer, the laws of certain of those foreign countries and jurisdictions may
require the filing of information with, or the obtaining of the approval of,
governmental authorities in such countries and jurisdictions. The governments in
such countries and jurisdictions might attempt to impose additional conditions
on the Company's operations conducted in such countries and jurisdictions as a
result of the acquisition of the Shares pursuant to the Offer. There can be no
assurance that the Purchaser will be able to cause the Company or its
subsidiaries to satisfy or comply with such laws or that compliance or non-
compliance will not have adverse consequences for the Company or any subsidiary
after purchase of the Shares pursuant to the Offer.
SECTION 16. FEES AND EXPENSES. Except as set forth below, neither
Sherwin-Williams nor the Purchaser will pay any fees or commissions to any
broker, dealer or other person in connection with the solicitation of tenders of
Shares pursuant to the Offer.
The Purchaser has retained Beacon Hill Partners, Inc. to act as the
Information Agent and First Chicago Trust Company of New York to act as the
Depositary in connection with the Offer. The Information Agent may contact
holders of Shares by mail, telephone, telegraph and personal interview and may
request brokers, dealers and other nominee shareholders to forward the Offer
materials to beneficial owners. The Information Agent and the Depositary will
receive reasonable and customary compensation for their services relating to the
Offer and will be reimbursed for certain out-of-pocket expenses. The Purchaser
and Sherwin-Williams have also agreed to indemnify the Information Agent and the
Depositary against certain liabilities and expenses in connection with the
Offer, including certain liabilities under the federal securities laws.
Brokers, dealers, commercial banks and trust companies will, upon request,
be reimbursed by the Purchaser for customary mailing and handling expenses
incurred by them in forwarding the Offer materials to their customers.
SECTION 17. MISCELLANEOUS. The Offer is being made solely by this Offer to
Purchase and the related Letter of Transmittal and is being made to all holders
of Shares. The Purchaser is not aware of any state where the making of the Offer
is prohibited by administrative or judicial action pursuant to any valid state
statute. If the Purchaser becomes aware of any valid state statute prohibiting
the making of the Offer or the acceptance of Shares pursuant thereto, the
Purchaser will make a good faith effort to comply with any such state statute or
seek to have such statute declared inapplicable to the Offer. If after such good
faith effort, the Purchaser cannot comply with such state statute, the Offer
will not be made to (nor will tenders be accepted from or on
33
<PAGE> 36
behalf of) the holders of Shares in such state. In any jurisdiction where the
securities, blue sky or other laws require the Offer to be made by a licensed
broker or dealer, the Offer shall be deemed to be made on behalf of the
Purchaser by one or more registered brokers or dealers that are licensed under
the laws of such jurisdiction.
The Purchaser and Sherwin-Williams have filed with the Commission a
Schedule 14D-1 (including exhibits) pursuant to Rule 14d-3 under the Exchange
Act, furnishing certain additional information with respect to the Offer. Such
statement and any amendments thereto, including exhibits, may be inspected and
copies may be obtained from the offices of the Commission (except that they will
not be available at the regional offices of the Commission) in the manner set
forth in Section 7 of this Offer to Purchase.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR SHERWIN-WILLIAMS NOT CONTAINED IN
THIS OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED.
SWACQ, INC.
November 9, 1995
34
<PAGE> 37
SCHEDULE I
INFORMATION REGARDING THE DIRECTORS AND EXECUTIVE OFFICERS OF
SHERWIN-WILLIAMS AND THE PURCHASER
1. DIRECTORS AND EXECUTIVE OFFICERS OF SHERWIN-WILLIAMS. Set forth in the
table below are the name and the present principal occupations or employment and
the name, principal business and address of any corporation or other
organization in which such occupation or employment is conducted, and the
five-year employment history of each of the directors and executive officers of
Sherwin-Williams. Sherwin-Williams directly owns 100% of the equity interest in
the Purchaser. Unless otherwise indicated, each person identified below is
employed by Sherwin-Williams. The principal business address of Sherwin-Williams
and, unless otherwise indicated, the business address of each person identified
below, is 101 Prospect Avenue, N.W., Cleveland, Ohio 44115-1075. Directors are
identified by an asterisk. All persons identified below are United States
citizens.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
- ---------------------------------------------------------------------------------------------
<S> <C>
John G. Breen* Mr. Breen has served as Chairman and Chief
Executive Officer since June 1986 and has served as
a Director since April 1979.
Thomas A. Commes* Mr. Commes has served as President and Chief
Operating Officer since June 1986 and has served as
a Director since April 1980.
James M. Biggar* Mr. Biggar has served as a Director of
Glencairn Corporation Sherwin-Williams since July 1987. He has served as
Lakepoint Office Park Chairman and Chief Executive Officer of Glencairn
3201 Enterprise Parkway Corporation (real estate development) since July
Beachwood, OH 44122 1991, prior to which he served as Chairman of
Nestle USA, Inc. (food products, restaurants,
hotels) commencing January 1991. From January 1984
to January 1991, Mr. Biggar served as Chairman and
Chief Executive Officer of Nestle Enterprises, Inc.
Leigh Carter* Mr. Carter has served as a Director of
Renaissance on Playhouse Square Sherwin-Williams since October 1985. Prior to his
Suite 1060 retirement in September 1990, he served as
1350 Euclid Avenue President and Chief Operating Officer of B.F.
Cleveland, OH 44115 Goodrich Company (diversified manufacturing) since
April 1986.
Daniel E. Evans* Mr. Evans has served as a Director of
Bob Evans Farms, Inc. Sherwin-Williams since April 1990. He has served as
3776 South High Street Chairman, Chief Executive Officer and Secretary of
Columbus, OH 43207 Bob Evans Farms, Inc. (food products and
restaurants) since 1971.
Robert W. Mahoney* Mr. Mahoney has served as a Director of
Diebold, Incorporated Sherwin-Williams since January 1995. He has served
5995 Mayfair Road as Chairman, Chief Executive Officer and President
North Canton, OH 44720 of Diebold, Incorporated (manufacturer of financial
self-service transaction systems and security
products) since July 1993 prior to which he served
as Chairman and Chief Executive Officer of Diebold,
Incorporated commencing April 1988.
</TABLE>
S-1
<PAGE> 38
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
- ---------------------------------------------------------------------------------------------
<S> <C>
William G. Mitchell* Mr. Mitchell has served as a Director of
1566 Gamon Road Sherwin-Williams since April 1979. Prior to his
Wheaton, IL 60187 retirement in May 1987, he served as Vice Chairman
of Centel Corporation (independent telephone and
electric properties) since May 1986.
A. Malachi Mixon, III* Mr. Mixon has served as a Director of
Invacare Corporation Sherwin-Williams since April 1993. He has served as
899 Cleveland Street Chairman, Chief Executive Officer and President of
Elyria, OH 44035 Invacare Corporation (manufacturer and distributor
of home health care products) since September 1983.
Helen O. Petrauskas* Ms. Petrauskas has served as a Director of Sherwin-
Ford Motor Company Williams since July 1993. She has served as Vice
The American Road President--Environmental and Safety Engineering of
12th Floor Ford Motor Company (automobile manufacturing) since
World Headquarters March 1983.
Dearborn, MI 48121
Richard K. Smucker* Mr. Smucker has served as a Director of
The J.M. Smucker Company Sherwin-Williams since September 1991. He has
Strawberry Lane served as President of The J.M. Smucker Company
Orville, OH 44667 (makers of food products) since January 1987.
John L. Ault Mr. Ault has served as Vice President--Corporate
Controller since January 1987.
Frank E. Butler Mr. Butler has served as President & General
Manager, Coatings Division since February 1992,
prior to which he served as President & General
Manager, Consumer Division commencing October 1984.
Christopher M. Connor Mr. Connor has served as President & General
Manager, Specialty Division since April 1994, prior
to which he served as Senior Vice
President--Marketing, Paint Stores Group commencing
September 1992. From June 1986 to September 1992,
Mr. Connor served as President & General Manager,
Western Division, Paint Stores Group.
Conway G. Ivy Mr. Ivy has served as Vice President--Corporate
Planning and Development since April 1992, prior to
which he served as Vice President and Treasurer
commencing January 1989.
T. Scott King Mr. King has served as President & General Manager,
Consumer Brands Division since February 1992, prior
to which he served as Vice President, Director of
Sales and Marketing, Consumer Division commencing
June 1987.
Thomas Kroeger Mr. Kroeger has served as Vice President--Human
Resources since October 1987.
</TABLE>
S-2
<PAGE> 39
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
- ---------------------------------------------------------------------------------------------
<S> <C>
John C. Macatee Mr. Macatee has served as President, Paint Stores
Group since September 1992, prior to which he
served as President & General Manager, South
Central Division, Paint Stores Group commencing
June 1986.
Larry J. Pitorak Mr. Pitorak has served as Senior Vice
President--Finance, Treasurer and Chief Financial
Officer since April 1992, prior to which he served
as Senior Vice President--Finance and Chief
Financial Officer commencing July 1991. From
February 1988 to July 1991, Mr. Pitorak served as
Vice President, General Counsel and Secretary.
Joseph M. Scaminace Mr. Scaminace has served as President & General
Manager, Automotive Division since April 1994,
prior to which he served as President & General
Manager, Specialty Division commencing September
1985.
Louis E. Stellato Mr. Stellato has served as Vice President, General
Counsel and Secretary since July 1991, prior to
which he served as Assistant Secretary and
Corporate Director of Taxes commencing December
1989.
</TABLE>
2. DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER. Set forth in the
table below are the name and the present principal occupations or employment and
the name, principal business and address of any corporation or other
organization in which such occupation or employment is conducted, and the
five-year employment history of each of the directors and executive officers of
the Purchaser. Each person identified below is employed by Sherwin-Williams. The
principal business address of the Purchaser and each person identified below, is
101 Prospect Avenue, N.W., Cleveland, Ohio 44115-1075. Directors are identified
by an asterisk. All persons identified below are United States citizens.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
- ---------------------------------------------------------------------------------------------
<S> <C>
John G. Breen Mr. Breen has served as President of the Purchaser
since its inception in October 1995. He has also
served as Chairman and Chief Executive Officer of
Sherwin-Williams since June 1986 and has served as
a Director of Sherwin-Williams since April 1979.
Thomas A. Commes* Mr. Commes has served as Vice President and
Director of the Purchaser since its inception in
October 1995. He has also served as President and
Chief Operating Officer of Sherwin-Williams since
June 1986 and has served as a Director since April
1980.
</TABLE>
S-3
<PAGE> 40
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
- ---------------------------------------------------------------------------------------------
<S> <C>
Larry J. Pitorak* Mr. Pitorak has served as Treasurer and Director of
the Purchaser since its inception in October 1995.
He has also served as Senior Vice
President--Finance, Treasurer and Chief Financial
Officer of Sherwin-Williams since April 1992, prior
to which he served as Senior Vice
President--Finance and Chief Financial Officer of
Sherwin- Williams commencing July 1991. From
February 1988 to July 1991, Mr. Pitorak served as
Vice President, General Counsel and Secretary of
Sherwin-Williams.
Conway G. Ivy* Mr. Ivy has served as Vice President and Director
of the Purchaser since its inception in October
1995. He has also served as Vice
President--Corporate Planning and Development of
Sherwin-Williams since April 1992, prior to which
he served as Vice President and Treasurer of
Sherwin-Williams commencing January 1989.
Louis E. Stellato Mr. Stellato has served as Secretary of the
Purchaser since its inception in October 1995. He
has also served as Vice President, General Counsel
and Secretary of Sherwin-Williams since July 1991,
prior to which he served as Assistant Secretary and
Corporate Director of Taxes of Sherwin-Williams
commencing December 1989.
James J. Sgambellone Mr. Sgambellone has served as Assistant Secretary
of the Purchaser since its inception in October
1995. He has also served as Assistant Secretary and
Corporate Director of Taxes of Sherwin-Williams
since July 1991, prior to which he served as Senior
Corporate Counsel of Sherwin-Williams commencing in
December 1989.
Richard A. Legenza Mr. Legenza has served as Assistant Secretary of
the Purchaser since its inception in October 1995.
He has also served as Senior Corporate Counsel of
Sherwin-Williams since July 1991, prior to which he
served as Corporate Counsel of Sherwin-Williams
commencing October 1987.
</TABLE>
S-4
<PAGE> 41
SCHEDULE II
CERTAIN INFORMATION REQUIRED
TO BE GIVEN TO SHAREHOLDERS PURSUANT
TO NEW YORK LAW
The Purchaser was incorporated on October 26, 1995 and has not engaged in
any business since its incorporation other than that incident to its
incorporation and in connection with the Offer. Accordingly, the Purchaser has
not engaged in any significant community activities nor has the Purchaser made
any significant charitable, cultural, educational and civic contributions.
Except for the directors and executive officers of the Purchaser set forth
in Schedule I, the Purchaser has no employees. Accordingly, the Purchaser has no
existing pension plans, profit-sharing plans, savings plans, has not provided
any educational opportunities or relocation adjustments to its employees, and
has had no labor or employment related claims or disputes.
As described in this Offer to Purchase, Sherwin-Williams intends to
integrate the Company's business with Sherwin-Williams' existing facilities,
with a view to achieving operating efficiencies and cost savings. A likely means
to achieve these cost savings opportunities will be the consolidation of certain
of the Company's facilities (which may include facilities and offices located in
the State of New York) and certain of Sherwin-Williams' facilities, which will
be determined after Sherwin-Williams reviews each facility's mission, personnel
and profitability. Sherwin-Williams intends to review the Company's policies
with respect to community activities, charitable, cultural, educational and
civic contributions and employment practices.
Sherwin-Williams was organized under the laws of the State of Ohio eighteen
years after its founding in 1866. Sherwin-Williams has 300,000,000 shares of
common stock and 30,000,000 shares of serial preferred stock authorized for
issuance. At December 31, 1994, 84,825,830 shares of common stock were issued
and outstanding, 15,544,073 shares were held by Sherwin-Williams in treasury,
and 5,663,772 shares were reserved for issuance upon conversion of convertible
subordinated debt and exercise of existing and future stock options.
Sherwin-Williams also has a shareholders' rights plan which designates 1,000,000
shares of the authorized serial preferred stock as cumulative redeemable serial
preferred stock which may be issued if Sherwin-Williams becomes the target of
coercive and unfair takeover tactics.
PENSIONS AND BENEFITS
Substantially all employees of Sherwin-Williams participate in either
defined benefit pension plans (which are noncontributory) or defined
contribution pension plans (which may be contributory or noncontributory). The
defined benefit plan covering salaried employees provides benefits that are
based primarily on years of service and employees' compensation. The defined
benefit plan covering hourly employees generally provides benefits of stated
amounts for each year of service. The defined benefit plan assets consist
primarily of cash, equity and fixed-income securities. The Company's funding
policy for its defined benefit pension plans is to fund at least the minimum
annual contribution required by applicable regulations. To the extent certain
groups of Sherwin-Williams' employees participate in multi-employer pension
plans, such plans are primarily defined benefit plans which provide benefits of
stated amounts for covered groups of union employees.
Under Sherwin-Williams' Employee Stock Purchase and Savings Plan, employees
may participate through regular payroll deductions. These payroll deductions may
be made on a pre-tax and/or an after-tax basis. Additionally, Sherwin-Williams
may make matching contributions on behalf of participating employees, which
contribution is subject to vesting conditions. As of December 31, 1994, 10,918
employees participated in the plan.
Sherwin-Williams' Salaried Employees' Revised Pension Investment Plan is a
defined contribution money purchase pension plan. Sherwin-Williams may make an
annual contribution to each participant's account, which contribution is subject
to vesting conditions.
In addition to providing pension benefits, Sherwin-Williams provides
certain health care, life insurance and other benefits under company-sponsored
plans for active employees and for certain salaried retired
S-5
<PAGE> 42
employees hired prior to January 1, 1993 who receive a pension from
Sherwin-Williams and have a minimum of ten years of service. The health care
plans are contributory and contain cost-sharing features such as deductibles and
coinsurance.
Sherwin-Williams' 1994 Stock Plan permits the granting of stock options,
stock appreciation rights and restricted stock to eligible employees.
Non-qualified and incentive stock options may be granted to certain officers and
key employees under the plan at prices not less than fair market value of the
shares, as defined by the plan, at the date of grant. The options generally
become exercisable to the extent of one-third of the options for each full year
of employment following the date of grant and generally expire ten years after
the date of grant.
Restricted stock grants may be awarded to certain officers and key
employees which generally require four years of continuous employment from the
date of grant before receiving the shares without the restriction. The number of
shares to be received without restriction is based on the performance of
Sherwin-Williams relative to a peer group of companies.
LABOR AND EMPLOYEE RELATIONS
Sherwin-Williams believes that its labor and employment relations with its
employees are generally good.
EDUCATION OPPORTUNITIES
Sherwin-Williams provides educational assistance to eligible employees who
pursue programs of study that are consistent with the employee's field of work
and Sherwin-Williams' business.
RELOCATION ADJUSTMENTS
Sherwin-Williams, in accordance with the terms of its corporate policy, may
reimburse certain job applicants, new employees and current employees for
certain travel and relocation expenses.
CHARITABLE AND CIVIC ACTIVITIES
Consistent with Sherwin-Williams' commitment to responsible community
involvement, Sherwin-Williams supports a variety of charitable foundations,
particularly in communities in which Sherwin-Williams operates facilities or has
offices. Additionally, Sherwin-Williams supports higher education by making
contributions and matching gifts to certain accredited institutions of higher
education, college associations and other educational organizations.
* * *
Except as set forth in this Schedule II, all information regarding
Sherwin-Williams, the Purchaser and the Offer required to be disclosed pursuant
to the Disclosure Act is set forth in this Offer to Purchase and is incorporated
by reference in the Registration Statement filed pursuant to the Disclosure Act.
S-6
<PAGE> 43
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal and any other required documents should be
sent or delivered by each shareholder or such shareholder's broker, dealer,
bank, trust company or other nominee to the Depositary at one of the addresses
or the facsimile number set forth below:
The Depositary for the Offer is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C>
By Mail: By Hand or Overnight Courier:
Tenders & Exchanges Tenders & Exchanges
P.O. Box 2559-PLU 14 Wall Street
Suite 4660 8th Floor, Suite 4680-PLU
Jersey City, NJ 07303-2559 New York, NY 10005
</TABLE>
Questions and requests for assistance or for additional copies of this
Offer to Purchase and the Letter of Transmittal may be directed to the
Information Agent at its telephone numbers and address listed below.
Shareholders may also contact their broker, dealer, bank, trust company or other
nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
BEACON HILL PARTNERS, INC.
90 Broad Street
20th Floor
New York, New York 10004
(800) 755-5001
(toll free)
Banks and Brokers Please Call:
(212) 843-8500
<PAGE> 1
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED COMMON STOCK PURCHASE RIGHTS)
OF
PRATT & LAMBERT UNITED, INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED NOVEMBER 9, 1995
BY
SWACQ, INC.
A WHOLLY-OWNED SUBSIDIARY OF
THE SHERWIN-WILLIAMS COMPANY
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, DECEMBER 8, 1995,
UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By Mail:
Tenders & Exchanges
P.O. Box 2559 -- PLU
Suite 4660
Jersey City, NJ 07303-2559
By Hand or Overnight Delivery:
Tenders & Exchanges
14 Wall Street
8th Floor, Suite 4680 -- PLU
New York, New York 10005
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by shareholders either if
certificates evidencing Shares (as defined below) are to be forwarded herewith
or, unless an Agent's Message (as defined in Section 2 of the Offer to Purchase)
is utilized, if tenders of Shares are to be made by book-entry transfer into the
account of First Chicago Trust Company of New York, as Depositary (the
"Depositary"), at The Depository Trust Company ("DTC"), the Midwest Securities
Trust Company ("MSTC") or the Philadelphia Depository Trust Company ("PDTC")
(each, a "Book-Entry Transfer Facility" and, collectively, the "Book-Entry
Transfer Facilities") pursuant to the procedures set forth in Section 3 of the
Offer to Purchase (as defined below). Shareholders who tender Shares by
book-entry transfer are referred to herein as "Book-Entry Shareholders."
Holders of Shares whose certificates evidencing such Shares (the "Share
Certificates") are not immediately available or who cannot deliver their Share
Certificates and all other required documents to the Depositary prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase), or who
cannot complete the procedure for book-entry transfer on a timely basis, must
tender their Shares according to the guaranteed delivery procedure set forth in
Section 3 of the Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO
A BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
<PAGE> 2
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- ------------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF SHARE CERTIFICATE(S) AND SHARE(S) TENDERED
REGISTERED HOLDER(S) (ATTACH ADDITIONAL SIGNED LIST IF NECESSARY)
(PLEASE FILL IN, IF BLANK,
EXACTLY AS NAME(S) APPEAR(S) ON
CERTIFICATE(S))
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TOTAL NUMBER OF
SHARES
SHARES CERTIFICATE REPRESENTED BY NUMBER OF SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
TOTAL SHARES..........................
</TABLE>
- --------------------------------------------------------------------------------
* Need not be completed by Book-Entry Shareholders.
** Unless otherwise indicated, all Shares represented by certificates
delivered to the Depositary will be deemed to have been tendered. See
Instruction 4.
- --------------------------------------------------------------------------------
/ / CHECK HERE IF SHARES ARE BEING TENDERED BY BOOK-ENTRY TRANSFER MADE TO AN
ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER FACILITY AND
COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN A BOOK-ENTRY TRANSFER FACILITY
MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution_______________________________________________
Check box of Book-Entry Transfer Facility (check one):
/ / The Depository Trust Company / / Midwest Securities Trust Company
/ / Philadelphia Depository Trust Company
Account Number_____________________ Transaction Code Number__________________
/ / CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Owner(s):_____________________________________________
Window Ticket Number (if any):______________________________________________
Date of Execution of Notice of Guaranteed Delivery:_________________________
Name of Institution that Guaranteed Delivery:_______________________________
If delivered by Book-Entry Transfer, check box of Book-Entry Transfer
Facility (check one):
/ / The Depository Trust Company / / Midwest Securities Trust Company
/ / Philadelphia Depository Trust Company
Account Number_____________________ Transaction Code Number__________________
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to SWACQ, Inc. (the "Purchaser"), a New York
corporation and a wholly-owned subsidiary of The Sherwin-Williams Company, an
Ohio corporation ("Sherwin-Williams"), the above-described shares of common
stock, par value $.01 per share (the "Common Stock"), of Pratt & Lambert
United, Inc., a New York corporation (the "Company"), together with the
associated Common Stock Purchase Rights (the "Rights," and together with the
Common Stock, the "Shares") issued pursuant to the Rights Agreement dated as
of January 31, 1989, as amended (the "Rights Agreement"), between the Company
and Mellon Securities Trust Company, as Rights Agent, at a purchase price of
$35.00 per Share, net to the seller in cash, without interest thereon, upon
the terms and subject to the conditions set forth in the
<PAGE> 3
Offer to Purchase dated November 9, 1995 (the "Offer to Purchase") and in this
Letter of Transmittal (which, together with any supplements and amendments,
collectively constitute the "Offer"), receipt of which is hereby acknowledged.
The undersigned understands that the Purchaser reserves the right to transfer or
assign, in whole or from time to time in part, to one or more of its affiliates,
the right to purchase all or any portion of the Shares tendered pursuant to the
Offer.
Upon the terms and conditions of the Offer, subject to, and effective upon,
acceptance for payment for the Shares tendered herewith in accordance with the
terms of the Offer, the undersigned hereby sells, assigns and transfers to, or
upon the order of, the Purchaser all right, title and interest in and to all of
the Shares that are being tendered hereby and any and all dividends,
distributions (including additional Shares) or rights declared, paid or issued
with respect to the tendered Shares on or after November 4, 1995 (other than the
regular quarterly dividend of $.16 per Share declared by the Company on November
7, 1995, which dividend is payable on January 2, 1996 to holders of record on
November 16, 1995) and payable or distributable to the undersigned on a date
prior to the transfer to the name of the Purchaser or nominee or transferee of
the Purchaser on the Company's stock transfer records of the Shares tendered
herewith (except that if the Rights are redeemed by the Company's Board of
Directors in accordance with the terms of the Rights Agreement, tendering
shareholders who are holders of record as of the applicable record date will be
entitled to receive and retain the redemption price of $.01 per Right in
accordance with the Rights Agreement) (collectively, a "Distribution"), and
appoints the Depositary the true and lawful agent and attorney-in-fact of the
undersigned with respect to such Shares (and any Distribution) with full power
of substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest) to (a) deliver such Share Certificates (as defined
herein) (and any Distribution) or transfer ownership of such Shares (and any
Distribution) on the account books maintained by a Book-Entry Transfer Facility,
together in either case with all accompanying evidences of transfer and
authenticity, to the Depositary for the account of the Purchaser, (b) present
such Shares (and any Distribution) for transfer on the books of the Company and
(c) receive all benefits and otherwise exercise all rights of beneficial
ownership of such Shares (and any Distribution), all in accordance with the
terms and subject to the conditions of the Offer.
The undersigned irrevocably appoints the Purchaser, its officers and its
designees, and each of them, the attorneys-in-fact and proxies of the
undersigned, with full power of substitution, to the full extent of such
shareholder's rights with respect to the Shares tendered by such shareholder and
accepted for payment by the Purchaser and with respect to any and all other
Shares or other securities issued or issuable in respect of such Shares on or
after November 4, 1995. This proxy and power of attorney is coupled with an
interest in the Shares and is irrevocable and is granted in consideration of,
and is effective upon, the acceptance for payment of such Shares (and any
Distributions) by the Purchaser in accordance with the terms of the Offer. Upon
such acceptance for payment, all prior proxies given by such shareholder with
respect to such Shares (and such other shares and securities) will be revoked
without further action, and no subsequent proxies may be given nor any
subsequent written consents executed (and, if given or executed, will not be
deemed effective). The Purchaser, its officers and its designees will, with
respect to the Shares (and such other securities) tendered, be empowered to
exercise all voting and other rights of such shareholder as they in their sole
discretion may deem proper at any annual or special meeting of the Company's
shareholders or any adjournment or postponement thereof, by written consent in
lieu of any such meeting or otherwise. The Purchaser reserves the right to
require that, in order for Shares to be deemed validly tendered, immediately
upon the Purchaser's payment for such Shares the Purchaser must be able to
exercise full voting rights with respect to such Shares and other securities,
including voting at any meeting of shareholders.
The undersigned hereby represents and warrants that (a) the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby (and any Distribution) and (b) when the Shares are accepted for
payment by the Purchaser, the Purchaser will acquire good, marketable and
unencumbered title to the Shares (and any Distribution), free and clear of all
liens, restrictions, charges and encumbrances, and the same will not be subject
to any adverse claim. The undersigned, upon request, will execute and deliver
any additional documents deemed by the Depositary or the Purchaser to be
necessary or desirable to complete the sale, assignment and transfer of the
Shares tendered hereby (and any Distribution). In addition, the undersigned
shall promptly remit and transfer to the Depositary for the account of the
Purchaser any and all
<PAGE> 4
Distributions in respect of the Shares tendered hereby, accompanied by
appropriate documentation of transfer; and pending such remittance or
appropriate assurance thereof, the Purchaser will be, subject to applicable law,
entitled to all rights and privileges as owner of any such Distribution and may
withhold the entire purchase price or deduct from the purchase price the amount
or value thereof, as determined by the Purchaser in its sole discretion.
All authority herein conferred or agreed to be conferred shall not be
affected by and shall survive the death or incapacity of the undersigned and any
obligation of the undersigned hereunder shall be binding upon the heirs,
personal representatives, successors and assigns of the undersigned.
Tenders of Shares made pursuant to the Offer are irrevocable, except that
Shares tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date (as defined in the Offer to Purchase) and, unless theretofore
accepted for payment by the Purchaser pursuant to the Offer, may also be
withdrawn at any time after January 8, 1996. See Section 4 of the Offer to
Purchase.
The undersigned understands that tenders of Shares pursuant to any of the
procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto and acceptance for payment of such Shares will constitute a
binding agreement between the undersigned and the Purchaser upon the terms and
subject to the conditions set forth in the Offer, including the undersigned's
representation that the undersigned owns the Shares being tendered.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or issue or return any
certificate(s) for Shares not tendered or not accepted for payment in the
name(s) of the registered holder(s) appearing under "Description of Shares
Tendered." Similarly, unless otherwise indicated herein under "Special Delivery
Instructions," please mail the check for the purchase price and/or any
certificate(s) for Shares not tendered or not accepted for payment (and
accompanying documents, as appropriate) to the address(es) of the registered
holder(s) appearing under "Description of Shares Tendered." In the event that
both the Special Delivery Instructions and the Special Payment Instructions are
completed, please issue the check for the purchase price and/or any
certificate(s) for Shares not tendered or accepted for payment in the name of,
and deliver such check and/or such certificates to, the person or persons so
indicated. The undersigned recognizes that the Purchaser has no obligation,
pursuant to the Special Payment Instructions, to transfer any Shares from the
name(s) of the registered holder(s) thereof if the Purchaser does not accept for
payment any of the Shares so tendered.
<PAGE> 5
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificate(s) for Shares not tendered or not accepted
for payment and/or the check for the purchase price of Shares accepted for
payment are to be issued in the name of someone other than the undersigned.
Issue: / / check / / certificates to:
Name: ..........................................................................
(Please Print)
Address: .......................................................................
................................................................................
(Include Zip Code)
................................................................................
(Tax Id. or Social Security No.)
(See Substitute Form W-9)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1 AND 7)
To be completed ONLY if certificate(s) for Shares not tendered or not accepted
for payment and/or the check for the purchase price of Shares accepted for
payment are to be sent to someone other than the undersigned or to the
undersigned at an address other than that shown above.
Mail: / / check / / certificates to:
Name: ..........................................................................
(Please Print)
Address: .......................................................................
................................................................................
(Include Zip Code)
................................................................................
SIGN SIGN HERE SIGN
HERE AND COMPLETE SUBSTITUTE FORM W-9 ON REVERSE HERE
................................................................................
................................................................................
(Signature of Holder(s))
Dated: .................................................................. , 1995
(Must be signed by the registered holder(s) exactly as name(s) appear(s) on
Share Certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and document
transmitted herewith. If signature is by trustees, executors, administrators,
guardians, attorneys-in-fact, officers of corporations or others acting in a
fiduciary or representative capacity, please provide the following information
and see Instruction 5.)
Name(s) ........................................................................
................................................................................
(Please Print)
Capacity (Full Title) ..........................................................
Address ........................................................................
................................................................................
(Include Zip Code)
Area Code and Telephone Number .................................................
Tax Identification or
Social Security No. ............................................................
COMPLETE SUBSTITUTE FORM W-9 ON REVERSE
Guarantee of Signature(s)
(See Instructions 1 and 5)
Authorized Signature ...........................................................
Name ...........................................................................
Name of Firm ...................................................................
(Please Print)
Address ........................................................................
(Include Zip Code)
Area Code and Telephone Number .................................................
Dated: ..................................................................., 1995
<PAGE> 6
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of this document, shall include
any participant in a Book-Entry Transfer Facility whose name appears on a
security position listing as the owner of Shares) of Shares tendered herewith,
unless such holder(s) has completed either the box entitled "Special Payment
Instructions" or the box entitled "Special Delivery Instructions" above, or (b)
if such Shares are tendered for the account of a firm which is a bank, broker,
dealer, credit union, savings association or other entity which is a member in
good standing of a recognized Medallion Signature Guarantee Program (each of the
foregoing being referred to as an "Eligible Institution"). In all other cases,
all signatures on this Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instruction 5 of this Letter of Transmittal.
2. REQUIREMENTS OF TENDER. This Letter of Transmittal is to be completed
by shareholders either if certificates are to be forwarded herewith or, unless
an Agent's Message is utilized, if tenders are to be made pursuant to the
procedure for tender by book-entry transfer set forth in Section 3 of the Offer
to Purchase. Share Certificates, or timely confirmation (a "Book-Entry
Confirmation") of a book-entry transfer of such Shares into the Depositary's
account at a Book-Entry Transfer Facility, as well as this Letter of Transmittal
(or a facsimile hereof), properly completed and duly executed with any required
signature guarantees, or an Agent's Message in connection with a book-entry
transfer, and any other documents required by this Letter of Transmittal, must
be received by the Depositary at one of its addresses set forth on the front
page of this Letter of Transmittal prior to the Expiration Date (as defined in
Section 1 of the Offer to Purchase). Shareholders whose Share Certificates are
not immediately available or who cannot deliver their Share Certificates and all
other required documents to the Depositary prior to the Expiration Date or who
cannot complete the procedure for delivery by book-entry transfer on a timely
basis may tender their Shares by properly completing and duly executing a Notice
of Guaranteed Delivery pursuant to the guaranteed delivery procedure set forth
in Section 3 of the Offer to Purchase. Pursuant to such procedure: (i) such
tender must be made by or through an Eligible Institution; (ii) a properly
completed and duly executed Notice of Guaranteed Delivery, substantially in the
form made available by the Purchaser, must be received by the Depositary prior
to the Expiration Date; and (iii) the Share Certificates (or a Book-Entry
Confirmation) representing all tendered Shares, in proper form for transfer, in
each case together with the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed with any required signature guarantees (or,
in the case of a book-entry delivery, an Agent's Message) and any other
documents required by this Letter of Transmittal, must be received by the
Depositary within five New York Stock Exchange, Inc. ("NYSE") trading days after
the date of execution of such Notice of Guaranteed Delivery. If Share
Certificates are forwarded separately to the Depositary, a properly completed
and duly executed Letter of Transmittal must accompany each such delivery.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT
THE OPTION AND RISK OF THE TENDERING SHAREHOLDER. DELIVERY WILL BE DEEMED MADE
ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted, and no
fractional Shares will be purchased (unless you are tendering all of the Shares
you own). All tendering shareholders, by execution of this Letter of Transmittal
(or a facsimile hereof), waive any right to receive any notice of the acceptance
of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares and any other required
information should be listed on a separate signed schedule attached hereto.
<PAGE> 7
4. PARTIAL TENDERS. (Not Applicable to Book-Entry Shareholders) If fewer
than all of the Shares evidenced by any Share Certificate delivered to the
Depositary are to be tendered, fill in the number of Shares which are to be
tendered in the box entitled "Number of Shares Tendered." In such a case, new
Share Certificates for the Shares that were evidenced by your old Share
Certificates, but were not tendered by you, will be sent to you (unless
otherwise provided in the appropriate box on this Letter of Transmittal) as soon
as practicable after the Expiration Date. All Shares represented by Share
Certificates delivered to the Depositary will be deemed to have been tendered
unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the certificate(s) without alteration, enlargement or any change
whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any of the tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of certificates.
If this Letter of Transmittal or any certificates or stock powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and proper evidence
satisfactory to the Purchaser of their authority so to act must be submitted.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares listed and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment is to be made to or
certificates for Shares not tendered or not purchased are to be issued in the
name of a person other than the registered holder(s). Signatures on such
certificates or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the certificate(s) listed, the certificate(s) must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered holder(s) appear on the certificate(s)
for such Shares. Signatures on such certificates or stock powers must be
guaranteed by an Eligible Institution.
6. STOCK TRANSFER TAXES. Except as otherwise provided in this Instruction
6, the Purchaser will pay or cause to be paid any stock transfer taxes with
respect to the transfer and sale of Shares to it or its order pursuant to the
Offer. If, however, payment of the purchase price is to be made to, or if
certificate(s) for Shares not tendered or accepted for payment are to be
registered in the name of, any person other than the registered holder(s), if a
transfer tax is imposed for any reason other than the sale or transfer of Shares
to Purchaser pursuant to the Offer, or if tendered certificate(s) are registered
in the name of any person other than the person(s) signing this Letter of
Transmittal, the amount of any stock transfer taxes (whether imposed on the
registered holder(s) or such person) payable on account of the transfer to such
person will be deducted from the purchase price unless satisfactory evidence of
the payment of such taxes or an exemption therefrom, is submitted.
Except as otherwise provided in this Instruction 6, it will not be
necessary for transfer tax stamps to be affixed to the certificate(s) listed in
this Letter of Transmittal.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If the check for the
purchase price of any Shares purchased is to be issued, or any Shares not
tendered or not purchased are to be returned, in the name of a person other than
the person(s) signing this Letter of Transmittal or if the check or any
certificates for Shares not tendered or not purchased are to be mailed to
someone other than the person(s) signing this Letter of Transmittal or to the
person(s) signing this Letter of Transmittal at an address other than that shown
above, the appropriate boxes on this Letter of Transmittal should be completed.
Shareholders tendering Shares by book-entry transfer may request that Shares not
purchased be credited to such account at any of the Book-
<PAGE> 8
Entry Transfer Facilities as such shareholder may designate under "Special
Payment Instructions." If no such instructions are given, any such Shares not
purchased will be returned by crediting the account at the Book-Entry Transfer
Facilities designated above.
8. WAIVER OF CONDITIONS. The conditions of the Offer may be waived by the
Purchaser in whole or in part at any time and from time to time in its sole
discretion.
9. 31% BACKUP WITHHOLDING; SUBSTITUTE FORM W-9. Each tendering shareholder
is required to provide the Depositary with a correct Taxpayer Identification
Number ("TIN"), generally the shareholder's social security or federal employer
identification number, on Substitute Form W-9 below. Failure to provide the
information on the form may subject the tendering shareholder to 31% federal
income tax withholding on the payment of the purchase price. The box in Part 3
of the form may be checked if the tendering shareholder has not been issued a
TIN and has applied for a number or intends to apply for a number in the near
future. If the box in Part 3 is checked and the Depositary is not provided with
a TIN within 60 days, the Depositary will withhold 31% of all payments of the
purchase price thereafter until a TIN is provided to the Depositary.
Under the federal income tax law, a shareholder whose tendered Shares are
accepted for purchase is required by law to provide the Depositary (as payer)
with such shareholder's correct TIN on Substitute Form W-9 below. If such
shareholder is an individual, the TIN is his or her social security number. If a
shareholder fails to provide a TIN to the Depositary, such shareholder may be
subject to a $50 penalty imposed by the Internal Revenue Service. In addition,
payments that are made to such shareholder with respect to Shares purchased
pursuant to the Offer may be subject to backup withholding of 31%.
Certain shareholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, the shareholder must submit a Form W-8, signed under penalties of
perjury, attesting to that individual's exempt status. A Form W-8 can be
obtained from the Depositary. See the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional
instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any such payments made to the shareholder or other payee. Backup withholding
is not an additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
The box in Part 3 of the Substitute Form W-9 may be checked if the
tendering shareholder has not been issued a TIN and has applied for a TIN or
intends to apply for a TIN in the near future. If the box in Part 3 is checked,
the shareholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% of all payments made prior to the time a properly certified TIN is
provided to the Depositary.
The shareholder is required to give the Depositary the social security
number or employer identification number of the record owner of the Shares or of
the last transferee appearing on the transfers attached to, or endorsed on, the
Shares. If the Shares are in more than one name or are not in the name of the
actual owner, consult the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional guidance on which
number to report.
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions or requests
for assistance may be directed to the Information Agent at its address and
telephone numbers set forth below. Additional copies of the Offer to Purchase,
this Letter of Transmittal and the Notice of Guaranteed Delivery may also be
obtained from the Information Agent or from brokers, dealers, commercial banks
or trust companies.
11. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate evidencing
Shares has been lost, destroyed or stolen, the shareholder should promptly
notify the Depositary. The shareholder will then be
<PAGE> 9
instructed as to the steps that must be taken in order to replace the
certificate. This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost or destroyed certificates have
been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE HEREOF), TOGETHER
WITH SHARE CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER OR THE NOTICE OF
GUARANTEED DELIVERY, AND ALL OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE
DEPOSITARY PRIOR TO THE EXPIRATION DATE.
PAYER'S NAME: FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------------------
PART 1--PLEASE PROVIDE YOUR TIN IN THE BOX
AT THE RIGHT AND CERTIFY BY SIGNING AND Social Security Number
DATE BELOW. or Employer Identification Number
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
PART 2--Certification--Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification
Number (or I am waiting for a number to be issued to me) and
(2) I am not subject to backup withholding because: (a) I am exempt
from backup withholding, or (b) I have not been notified by the
Internal Revenue Service (the "IRS") that I am subject to backup
withholding as a result of a failure to report all interest or
dividends, or (c) the IRS has notified me that I am no longer
subject to backup withholding.
Certification Instructions--You must cross out item (2) above if you
have been notified by the IRS that you are currently subject to backup
withholding because of under-reporting interest or dividends on your
tax return. However, if after being notified by the IRS that you were
subject to backup withholding you received another notification from
the IRS that you are no longer subject to backup withholding, do not
cross out such Item (2).
- ----------------------------
Signature PART 3 --
Date , 1995 Awaiting TIN / /
</TABLE>
- --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACK-UP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
SUBSTITUTE
FORM W-9
Department of the Treasury,
Internal Revenue Service
PAYER'S REQUEST FOR
TAXPAYER IDENTIFICATION
NUMBER ("TIN")
SIGN HERE 24
<PAGE> 10
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX
IN PART 3 OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER.
I certify under penalties of perjury that a Taxpayer Identification Number has
not been issued to me, and either (1) I have mailed or delivered an application
to receive a Taxpayer Identification Number to the appropriate Internal Revenue
Service Center or Social Security Administration Office, or (2) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a Taxpayer Identification Number by the time of payment, 31% of all
reportable payments made to me will be withheld.
Signature ____________________________ Date _____________________________ , 1995
The Information Agent for the Offer is:
BEACON HILL PARTNERS, INC.
90 Broad Street
20th Floor
New York, New York 10004
(800) 755-5001
(toll free)
Banks and Brokers Please Call
(212) 843-8500
November 9, 1995
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED COMMON STOCK PURCHASE RIGHTS)
OF
PRATT & LAMBERT UNITED, INC.
As set forth in Section 3 of the Offer to Purchase described below, this
instrument or one substantially equivalent hereto must be used to accept the
Offer (as defined below) if (i) certificates evidencing Shares of common stock,
par value $.01 per share (the "Common Stock"), or the associated Common Stock
Purchase Rights (the "Rights," and together with the Common Stock, the "Shares")
are not immediately available, (ii) the certificates evidencing Shares and all
other required documents cannot be delivered to the Depositary prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase), or (iii) the
procedure for delivery by book-entry transfer cannot be completed on a timely
basis. This instrument may be transmitted by facsimile transmission or delivered
by hand or mail to the Depositary.
THE DEPOSITARY FOR THE OFFER IS:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By Mail:
Tenders & Exchanges
P.O. Box 2559-PLU
Suite 4660
Jersey City, NJ 07303-2559
By Facsimile Transmission:
(for Eligible Institutions)
(201) 222-4720 or 4721
or
(201) 222-4721
To Confirm Receipt of
Notice of Guaranteed Delivery:
(201) 222-4707
By Hand or Overnight Courier:
Tenders & Exchanges
14 Wall Street
8th Floor, Suite 4680-PLU
New York, New York 10005
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an Eligible Institution
under the instructions thereto, the signature guarantee must appear in the
applicable space provided in the signature box in the Letter of Transmittal.
Ladies and Gentlemen:
The undersigned hereby tender(s) to SWACQ, Inc., a New York corporation and
a wholly-owned subsidiary of The Sherwin-Williams Company, an Ohio corporation,
upon the terms and subject to the conditions set forth in the Offer to Purchase
dated November 9, 1995 (the "Offer to Purchase") and in the related Letter of
Transmittal (which, together with any supplements and amendments, collectively
constitute the "Offer"), receipt of which is hereby acknowledged, the number of
Shares indicated below of Pratt & Lambert United, Inc., a New York corporation,
pursuant to the guaranteed delivery procedures set forth in Section 3 of the
Offer to Purchase.
<PAGE> 2
Signature(s)........................ Address(es).........................
.................................... ....................................
Name(s) of Record Holders........... ZIP CODE
.................................... Area Code and Tel. No.(s)...........
PLEASE TYPE OR PRINT Check one box if Shares will be
tendered by book-entry transfer
....................................
.................................... / / The Depository Trust
Number of Shares.................... Company
/ / Midwest Securities Trust
Certificate No.(s) (If Available) Company
/ / Philadelphia Depository
.................................... Trust Company
Account Number.......................
....................................
Dated........................ , 1995
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm that is a bank, broker, dealer, credit union,
savings association or other entity which is a member in good standing of the
Securities Transfer Agents Medallion Program, (a) represents that the above
named person(s) "own(s)" the Shares tendered hereby within the meaning of Rule
14e-4 under the Securities Exchange Act of 1934, as amended ("Rule 14e-4"), (b)
represents that the tender of those Shares complies with Rule 14e-4, (c)
guarantees to deliver to the Depositary either the certificates evidencing all
tendered Shares, in proper form for transfer, or to deliver Shares pursuant to
the procedure for book-entry transfer into the Depositary's account at The
Depository Trust Company, the Midwest Securities Trust Company or the
Philadelphia Depository Trust Company (each a "Book-Entry Transfer Facility"),
in either case together with the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed with any required signature guarantees, or
an Agent's Message (as defined in the Offer to Purchase) in the case of a
book-entry delivery, and any other required documents, all within five New York
Stock Exchange, Inc. ("NYSE") trading days after the date hereof.
.................................... .....................................
NAME OF FIRM AUTHORIZED SIGNATURE
Name.................................
.................................... PLEASE TYPE OR PRINT
ADDRESS Title................................
Date......................... , 1995
....................................
ZIP CODE
Area Code and Tel. No...............
NOTE: DO NOT SEND CERTIFICATES EVIDENCING SHARES WITH THIS NOTICE.
CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
<PAGE> 1
BEACON HILL PARTNERS, INC.
90 Broad Street
20th Floor
New York, New York 10004
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED COMMON STOCK PURCHASE RIGHTS)
OF
PRATT & LAMBERT UNITED, INC.
AT
$35.00 NET PER SHARE
BY
SWACQ, INC.
A WHOLLY-OWNED SUBSIDIARY OF
THE SHERWIN-WILLIAMS COMPANY
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, DECEMBER 8, 1995,
UNLESS THE OFFER IS EXTENDED.
November 9, 1995
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been engaged by SWACQ, Inc. (the "Purchaser"), a New York
corporation and a wholly-owned subsidiary of The Sherwin-Williams Company, an
Ohio corporation ("Sherwin-Williams"), to act as Information Agent in connection
with the Purchaser's offer to purchase for cash all of the outstanding shares of
common stock, par value $.01 per share (the "Common Stock"), of Pratt & Lambert
United, Inc., a New York corporation (the "Company"), together with the
associated Common Stock Purchase Rights (the "Rights," and together with the
Common Stock, the "Shares") issued pursuant to the Rights Agreement, dated as of
January 31, 1989, as amended, between the Company and Mellon Securities Trust
Company, as Rights Agent, at a purchase price of $35.00 per Share, net to the
seller in cash, without interest thereon, upon the terms and subject to the
conditions set forth in the Offer to Purchase and in the related Letter of
Transmittal (which, together with any supplements or amendments, collectively
constitute the "Offer") enclosed herewith. Holders of Shares whose certificates
evidencing such Shares (the "Shares Certificates") are not immediately available
or who cannot deliver their Share Certificates and all other required documents
to the Depositary (as defined below) prior to the Expiration Date (as defined in
the Offer to Purchase), or who cannot complete the procedures for book-entry
transfer on a timely basis, must tender their Shares according to the guaranteed
delivery procedures set forth in Section 3 of the Offer to Purchase.
Please furnish copies of the enclosed materials to those of your clients
for whose accounts you hold Shares registered in your name or in the name of
your nominee.
The Offer is subject to there being validly tendered and not properly
withdrawn prior to the expiration of the Offer a number of Shares which
constitutes at least two-thirds of the outstanding Shares of the Company
<PAGE> 2
on a fully diluted basis. The Offer is also subject to other terms and
conditions. See the Introduction and Section 14 of the Offer to Purchase.
Enclosed herewith for your information and forwarding to your clients are
copies of the following documents:
1. The Offer to Purchase, dated November 9, 1995.
2. The BLUE Letter of Transmittal to tender Shares for your use and
for the information of your clients. Facsimile copies of the Letter of
Transmittal may be used to tender Shares.
3. The PINK Notice of Guaranteed Delivery for Shares to be used to
accept the Offer if Share Certificates are not immediately available, if
such certificates and all other required documents cannot be delivered to
First Chicago Trust Company of New York (the "Depositary") by the
Expiration Date, or if the procedure for book-entry transfer cannot be
completed by the Expiration Date.
4. A YELLOW printed form of letter which may be sent to your clients
for whose accounts you hold Shares registered in your name or in the name
of your nominee, with space provided for obtaining your clients'
instructions with regard to the Offer.
5. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9 providing information
relating to backup federal income tax withholding.
6. A return envelope addressed to First Chicago Trust Company of New
York, the Depositary.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON DECEMBER 8, 1995, UNLESS THE OFFER IS
EXTENDED.
In order to take advantage of the Offer, (i) a duly executed and properly
completed Letter of Transmittal with any required signature guarantees, or an
Agent's Message (as defined in the Offer to Purchase) in connection with a
book-entry delivery of Shares, and any other required documents should be sent
to the Depositary, and (ii) Share Certificates representing the tendered Shares
should be delivered to the Depositary, or such Shares should be tendered by
book-entry transfer into the Depositary's account maintained at one of the
Book-Entry Transfer Facilities (as described in the Offer to Purchase), all in
accordance with the instructions set forth in the Letter of Transmittal and the
Offer to Purchase.
If holders of Shares wish to tender, but it is impracticable for them to
forward their Share Certificates or other required documents on or prior to the
Expiration Date or to comply with the book-entry transfer procedures on a timely
basis, a tender may be effected by following the guaranteed delivery procedures
specified in Section 3 of the Offer to Purchase.
The Purchaser will not pay any commissions or fees to any broker, dealer or
other person (other than the Depositary and the Information Agent) in connection
with the solicitation of tenders of Shares pursuant to the Offer. The Purchaser
will, however, upon request, reimburse you for customary clerical and mailing
expenses incurred by you in forwarding any of the enclosed materials to your
clients. The Purchaser will pay or cause to be paid any stock transfer taxes
payable on the transfer of Shares to it, except as otherwise provided in
Instruction 6 of the Letter of Transmittal.
Any inquiries you may have with respect to the Offer should be addressed to
Beacon Hill Partners, Inc., the Information Agent, at its address and telephone
numbers set forth on the back cover of the Offer to Purchase. Additional copies
of the enclosed materials may be obtained from Beacon Hill Partners, Inc. as
well.
Very truly yours,
Beacon Hill Partners, Inc.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF THE PURCHASER, SHERWIN-WILLIAMS, THE COMPANY,
THE DEPOSITARY OR THE INFORMATION AGENT, OR ANY AFFILIATE OF ANY OF THEM, OR
AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY DOCUMENT ON
BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED
DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED COMMON STOCK PURCHASE RIGHTS)
OF
PRATT & LAMBERT UNITED, INC.
AT
$35.00 NET PER SHARE
BY
SWACQ, INC.
A WHOLLY-OWNED SUBSIDIARY OF
THE SHERWIN-WILLIAMS COMPANY
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, DECEMBER 8, 1995,
UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration is an Offer to Purchase dated November 9,
1995 (the "Offer to Purchase") and the related Letter of Transmittal relating to
an offer by SWACQ, Inc. (the "Purchaser"), a New York corporation and a
wholly-owned subsidiary of The Sherwin-Williams Company, an Ohio corporation
("Sherwin-Williams"), to purchase all of the outstanding shares of common stock,
par value $.01 per share (the "Common Stock"), of Pratt & Lambert United, Inc.,
a New York corporation (the "Company"), together with the associated Common
Stock Purchase Rights (the "Rights," and together with the Common Stock, the
"Shares") issued pursuant to the Rights Agreement, dated as of January 31, 1989,
as amended, between the Company and Mellon Securities Trust Company, as Rights
Agent, at a purchase price of $35.00 per Share, net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions set forth
in the Offer to Purchase and in the related Letter of Transmittal (which,
together with any supplements or amendments, collectively constitute the
"Offer"). We are the holder of record of Shares held by us for your account. A
tender of such Shares can be made only by us as the holder of record and
pursuant to your instructions. The Letter of Transmittal is furnished to you for
your information only and cannot be used by you to tender Shares held by us for
your account.
We request instructions as to whether you wish to have us tender on your
behalf any or all of such Shares held by us for your account, pursuant to the
terms and subject to the conditions set forth in the Offer.
<PAGE> 2
Your attention is directed to the following:
1. The offer price is $35.00 per Share, net to the seller in cash,
without interest thereon.
2. The Offer is being made for all outstanding Shares.
3. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York City time, on Friday, December 8, 1995, unless the Offer is extended.
4. The Offer is conditioned upon, among other things, there being
validly tendered and not properly withdrawn prior to the Expiration Date
(as defined in the Offer to Purchase) a number of Shares which constitutes
at least two-thirds of the outstanding Shares of the Company on a fully
diluted basis. The Offer is also subject to other terms and conditions. See
the Introduction and Section 14 of the Offer to Purchase.
5. Tendering shareholders will not be obligated to pay brokerage fees
or commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares pursuant to the
Offer. However, federal income tax backup withholding at a rate of 31% may
be required, unless an exemption is provided or unless the required
taxpayer identification information is provided. See Instruction 9 of the
Letter of Transmittal.
The Offer is being made solely by the Offer to Purchase and the related
Letter of Transmittal and is being made to all holders of Shares. The Purchaser
is not aware of any state where the making of the Offer is prohibited by
administrative or judicial action pursuant to any valid state statute. If the
Purchaser becomes aware of any valid state statute prohibiting the making of the
Offer or the acceptance of Shares pursuant thereto, the Purchaser will make a
good faith effort to comply with any such state statute or seek to have such
statute declared inapplicable to the Offer. If after such good faith effort, the
Purchaser cannot comply with such state statute, the Offer will not be made to
(nor will tenders be accepted from or on behalf of) the holders of Shares in
such state. In any jurisdiction where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer shall be
deemed to be made on behalf of the Purchaser by one or more registered brokers
or dealers that are licensed under the laws of such jurisdiction.
If you wish to have us tender any or all of the Shares held by us for your
account, please instruct us by completing, executing and returning to us the
instruction form contained in this letter. An envelope to return your
instructions to us is enclosed. If you authorize a tender of your Shares, all
such Shares will be tendered unless otherwise specified in such instruction
form. Your instructions should be forwarded to us in ample time to permit us to
submit a tender on your behalf prior to the expiration of the Offer. Holders of
Shares whose Share Certificates (as defined in the Offer to Purchase) are not
immediately available or who cannot deliver their Certificates and all other
required documents to First Chicago Trust Company of New York, as depositary
(the "Depositary"), or complete the procedures for book-entry transfer prior to
the Expiration Date must tender their Shares according to the guaranteed
delivery procedures set forth in Section 3 of the Offer to Purchase.
Payment for Shares purchased pursuant to the Offer will in all cases be
made only after timely receipt by the Depositary of (a) Share Certificates or
timely confirmation of the book-entry transfer of such Shares into the account
maintained by the Depositary at The Depositary Trust Company, the Midwest
Securities Trust Company or the Philadelphia Depositary Trust Company
(collectively, the "Book-Entry Transfer Facilities"), pursuant to the procedure
set forth in Section 3 of the Offer to Purchase, (b) the Letter of Transmittal
(or a facsimile thereof), properly completed and duly executed with any required
signature guarantees, or an Agent's Message (as defined in the Offer to
Purchase) in connection with a book-entry delivery, and (c) any other documents
required by the Letter of Transmittal. Accordingly, payment may not be made to
all tendering shareholders at the same time depending upon when Share
Certificates for or confirmation of book-entry transfer of such Shares into the
Depositary's account at a Book-Entry Transfer Facility are actually received by
the Depositary.
<PAGE> 3
INSTRUCTIONS WITH RESPECT TO THE
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED COMMON STOCK PURCHASE RIGHTS)
OF
PRATT & LAMBERT UNITED, INC.
The undersigned acknowledge(s) receipt of your letter enclosing the Offer
to Purchase dated November 9, 1995 (the "Offer to Purchase") and the related
Letter of Transmittal pursuant to an offer by SWACQ, Inc., a New York
corporation and a wholly-owned subsidiary of The Sherwin-Williams Company, an
Ohio corporation, to purchase all outstanding shares of common stock, par value
$0.01 per share (the "Common Stock"), of Pratt & Lambert United, Inc., a New
York corporation, together with the associated Common Stock Purchase Rights (the
"Rights," and together with the Common Stock, the "Shares").
This will instruct you to tender the number of Shares indicated below (or,
if no number is indicated below, all Shares) which are held by you for the
account of the undersigned, upon the terms and subject to the conditions set
forth in the Offer to Purchase and in the related Letter of Transmittal
furnished to the undersigned.
Number of Shares to be Tendered:
Shares*
Dated , 1995
SIGN HERE
Signature(s)
Please type or print name(s)
Address
Area Code and Telephone Number
Tax Identification or Social Security Number
- ---------------
*Unless otherwise indicated, it will be assumed that all of your Shares held by
us for your account are to be tendered.
<PAGE> 1
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYOR--Social Security numbers have nine digits separated by two hyphens: i.e.,
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e., 000-000000. The table below will help determine the number to
give the Payor.
<TABLE>
<S> <C> <C> <C>
- ----------------------------------------------------------- -----------------------------------------------------------
GIVE THE GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF-- NUMBER OF--
- ----------------------------------------------------------- -----------------------------------------------------------
1. An individual's account The individual
2. Two or more individuals The actual owner
(joint account) of the account or,
if combined funds,
any one of the
individual's(1)
3. Husband and wife The actual owner
(joint account) of the account or,
if joint funds,
either person(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor The adult or,
(joint account) if the minor is the
only contributor,
the minor(1)
6. Account in the name of The ward, minor,
guardian or committee for or incompetent
a designated ward, minor, person(3)
or incompetent person
7. a. The usual revocable savings The grantor-
trust account (grantor is trustee(1)
also trustee)
b. So-called trust account that The actual owner(1)
is not a legal or valid trust
under State law
8. Sole proprietorship account The owner(4)
9. A valid trust, estate, Legal entity (Do not
or pension trust furnish the
identifying number
of the personal
representative or
trustee unless the
legal entity itself
is not designated in
the account
title.)(5)
10. Corporate account The Corporation
11. Religious, charitable, or The organization
educational organization account
12. Partnership account held in the The partnership
name of the business
13. Association, club or other The organization
tax-exempt organization
14. A broker or registered nominee The broker or
nominee
15. Account with the Department The public entity
of Agriculture in the name of a
public entity (such as a State or
local governmental school district
or prison) that receives
agricultural program payments
- ----------------------------------------------------------- -----------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate or pension trust.
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a), or an individual
retirement plan.
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
- An international organization or any agency, or instrumentality thereof.
- A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a).
- An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
- An entity registered at all times under the Investment Company Act of 1940.
- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid in
money.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Payments to interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals
NOTE: You may be subject to backup withholding if this interest is $600 or
more and is paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- Payments described in section 6049(b)(5) to nonresident aliens.
- Payments on tax-free covenants bonds under section 1451.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER, IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Beginning January 1, 1993, payers must generally
withhold 31% of taxable interest, dividend, and certain other payments to a
payee who does not furnish a taxpayer identification number to a payer. Certain
penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE.
<PAGE> 1
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is being made solely by the Offer to Purchase dated
November 9, 1995 and the related Letter of Transmittal and is being made to
all holders of Shares. The Purchaser is not aware of any state where the
making of the Offer is prohibited by administrative or judicial action
pursuant to any valid state statute. If the Purchaser becomes aware
of any valid state statute prohibiting the making of the Offer
or the acceptance of Shares pursuant thereto, the Purchaser
will make a good faith effort to comply with such state
statute or seek to have such statute declared inapplicable
to the Offer. If, after such good faith effort, the
Purchaser cannot comply with such state statute, the
Offer will not be made to (nor will tenders be accepted
from or on behalf of) the holders of Shares in such
state. In any jurisdiction where securities, blue sky
or other laws require the Offer to be made by a
licensed broker or dealer, the Offer shall be
deemed to be made on behalf of the Purchaser
by one or more registered brokers or
dealers licensed under the laws of
such jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(Including the Associated Common Stock Purchase Rights)
of
PRATT & LAMBERT UNITED, INC.
at
$35.00 NET PER SHARE
by
SWACQ, INC.
a wholly-owned subsidiary of
THE SHERWIN-WILLIAMS COMPANY
SWACQ, Inc. (the "Purchaser"), a New York corporation and a wholly-owned
subsidiary of The Sherwin-Williams Company, an Ohio corporation
("Sherwin-Williams"), hereby offers to purchase all of the outstanding shares of
common stock, par value $.01 per share (the "Common Stock"), of Pratt & Lambert
United, Inc., a New York corporation (the "Company"), and the associated Common
Stock Purchase Rights (the "Rights," and together with the Common Stock, the
"Shares"), at a purchase price of $35.00 per Share, net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions set forth
in the Offer to Purchase and in the related Letter of Transmittal (which,
together with any supplements or amendments, collectively constitute the
"Offer").
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, DECEMBER 8, 1995,
UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE HAVING BEEN
VALIDLY TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER
A NUMBER OF SHARES WHICH CONSTITUTES AT LEAST TWO-THIRDS OF THE SHARES
OUTSTANDING ON A FULLY DILUTED BASIS.
The Offer is being made pursuant to an Agreement and Plan of Merger,
dated as of November 4, 1995 (the "Merger Agreement"), by and among the Company,
Sherwin-Williams and the Purchaser. The Merger Agreement provides, among other
things, that as soon as practicable after the consummation of the Offer and
satisfaction or waiver of all conditions to the Merger, the Purchaser will be
merged with and into the Company (the "Merger"). At the effective time of the
Merger, each outstanding Share (other than treasury Shares, Shares held by
Sherwin-Williams, the Purchaser or any other subsidiary of Sherwin-Williams, and
Shares held by shareholders, if any, who properly exercise appraisal rights
under New York law) will be converted into the right to receive $35.00 in cash,
without interest.
Concurrently with the execution of the Merger Agreement, Sherwin-Williams
and the Purchaser entered into a Stock Option, Pledge and Security Agreement,
dated as of November 4, 1995 (the "Shareholder Option Agreement"), with certain
shareholders of the Company (the "Option Shareholders"). The Shareholder Option
Agreement covers 4,563,651 Shares (the "Option Shares") collectively owned by
the Option Shareholders, representing approximately 40% of the outstanding
Shares calculated on a fully diluted basis. Pursuant to the Shareholder Option
Agreement, each of the Option Shareholders has granted to Sherwin-Williams and
the Purchaser an irrevocable option to purchase such Option Shareholder's Option
Shares for $35.00 per Option Share in cash, which option is exercisable by
Sherwin-Williams or the Purchaser on or after January 2, 1996, as well as an
irrevocable proxy to vote such Option Shares.
THE BOARD OF DIRECTORS OF THE COMPANY HAS DETERMINED THAT EACH OF THE
OFFER AND THE MERGER IS FAIR TO, AND IN THE BEST INTEREST OF, THE SHAREHOLDERS
OF THE COMPANY, AND RECOMMENDS THAT SHAREHOLDERS ACCEPT THE OFFER AND TENDER
THEIR SHARES PURSUANT TO THE OFFER.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment (and thereby purchased) Shares validly tendered and not properly
withdrawn as, if and when the Purchaser gives oral or written notice to the
Depositary (as defined in the Offer to Purchase) of the Purchaser's acceptance
of such Shares for payment pursuant to the Offer. Upon the terms and subject to
the conditions of the Offer, payment for Shares accepted for payment pursuant to
the Offer will be made by deposit of the purchase price therefor with the
Depositary, which will act as agent for tendering shareholders for the purpose
of receiving payments from the Purchaser and transmitting such payments to
shareholders whose Shares have been accepted for payment. In all cases, payment
for Shares tendered and accepted for payment pursuant to the Offer will be made
only after timely receipt by the Depositary of (i) certificates evidencing such
Shares (or timely Book-Entry Confirmation (as defined in Section 2 of the Offer
to Purchase) with respect to such Shares), (ii) the Letter of Transmittal (or a
manually signed facsimile thereof), properly completed and duly executed with
any required signature guarantees (or an Agent's Message (as defined in Section
2 of the Offer to Purchase) in connection with a book-entry transfer), and (iii)
all other documents required by the Letter of Transmittal. Under no circumstance
will interest on the purchase price for Shares be paid, regardless of any delay
in making such payment.
The term "Expiration Date" means 12:00 Midnight, New York City time, on
Friday, December 8, 1995, unless and until the Purchaser, in accordance with the
terms of the Offer and the Merger Agreement, shall have extended the period of
time during which the Offer is open, in which event the term "Expiration Date"
shall mean the latest time and date at which the Offer, as so extended by the
Purchaser, shall expire. Subject to the terms of the Merger Agreement, the
Purchaser expressly reserves the right, at any time and from time to time, to
extend the period of time during which the Offer is open for any reason,
including the occurrence of any of the events specified in Section 14 of the
Offer to Purchase, by giving written notice of such extension to the Depositary.
Any such extension will be followed as promptly as practicable by public
announcement to be made no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date.
<PAGE> 2
Tenders of Shares made pursuant to the Offer are irrevocable, except that
Shares tendered pursuant to the Offer may be withdrawn at any time on or prior
to the Expiration Date and, unless theretofore accepted for payment by the
Purchaser pursuant to the Offer, may also be withdrawn at any time after January
8, 1996. For a withdrawal to be effective, a written telegraphic, telex or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth in the Offer to Purchase. Any such
notice of withdrawal must specify the name of the person who tendered the Shares
to be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder, if different from that of the person who tendered such
Shares. If certificates evidencing the Shares to be withdrawn have been
delivered or otherwise identified to the Depositary, then, prior to the physical
release of such certificates, the serial numbers shown on such certificates must
be submitted to the Depositary and the signature(s) on the notice of withdrawal
must be guaranteed by an Eligible Institution (as defined in Section 3 of the
Offer to Purchase), unless such Shares have been tendered for the account of an
Eligible Institution. If Shares have been tendered pursuant to the procedure for
book-entry transfer as set forth in Section 3 of the Offer to Purchase, any
notice of withdrawal must specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Shares. All
questions as to the form and validity (including time of receipt) of any notice
of withdrawal will be determined by the Purchaser, in its sole discretion, whose
determination will be final and binding. Any Shares properly withdrawn will be
deemed not validly tendered for purposes of the Offer, but may be re-tendered at
any subsequent time prior to the Expiration Date by following any of the
procedures described in Section 3 of the Offer to Purchase.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Offer to Purchase and is incorporated herein by
reference.
The Company has provided the Purchaser with the Company's shareholder
lists and security position listings for the purpose of disseminating the Offer
to holders of Shares. The Offer to Purchase, the Letter of Transmittal and other
relevant materials will be mailed to record holders of Shares whose names appear
on the Company's shareholder list and will be furnished to brokers, dealers,
commercial banks, trust companies and similar persons whose names, or the names
of whose nominees, appear on the shareholder list or, if applicable, who are
listed as participants in a clearing agency's security position listing, for
subsequent transmittal to beneficial owners of Shares.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ CAREFULLY AND IN THEIR ENTIRETY BEFORE
ANY DECISION IS MADE WITH RESPECT TO THE OFFER.
Questions and requests for assistance may be directed to the Information
Agent as set forth below. Requests for copies of the Offer to Purchase, the
related Letter of Transmittal and other tender offer materials also may be
directed to the Information Agent, and copies will be furnished promptly at the
Purchaser's expense. Neither Sherwin-Williams nor the Purchaser will pay any
fees or commissions to any broker or dealer or any other person (other than the
Information Agent and the Depositary) in connection with the solicitation of
tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
BEACON HILL PARTNERS, INC.
90 Broad Street
20th Floor
New York, New York 10004
(800) 755-5001
(toll free)
Banks and Brokers Please Call:
(212) 843-8500
November 9, 1995
<PAGE> 1
FOR IMMEDIATE RELEASE
Contact: Conway G. Ivy
[Sherwin-Williams LOGO] Vice President, Corporate
Planning and Development
NEWS: 216-566-2102
- -----------------------------------------------------------------------------
The Sherwin-Williams Company - 101 Prospect Avenue, N.W. -
Cleveland, Ohio 44115 - (216) 566-2140
CLEVELAND, Ohio, November 6, 1995 -- The Sherwin-Williams Company (NYSE; SHW)
and Pratt & Lambert United, Inc. (NYSE; PLU) of Buffalo, New York, today
jointly announced that they had signed a merger agreement providing for
Sherwin-Williams to acquire all of the outstanding shares of Pratt & Lambert
United for a cash price of $35.00 per share, or a total purchase price of
approximately $400 million. Sherwin-Williams also entered into an agreement
with holders of approximately 40 percent of Pratt & Lambert United's common
stock, who have granted an option to Sherwin-Williams to purchase their shares
for $35.00 per share.
Under the terms of the merger agreement, Sherwin-Williams will promptly
commence a cash tender offer for all outstanding common shares of Pratt &
Lambert United. Shares not purchased in the tender offer will be acquired in a
subsequent merger at $35.00 per share as soon as practicable after the
completion of the tender offer.
Pratt & Lambert United is principally engaged in the development,
production and sale of coatings and adhesives to the dealer, mass merchandiser,
home center and specialty markets. Pratt & Lambert merged with United Coatings
in August 1994, creating a company with approximately $500 million in annual
sales. The Company has nearly 2,000 employees.
In announcing the agreement, John G. Breen, Chairman and Chief
Executive Officer of Sherwin-Williams said, "We are pleased about the prospect
of Pratt & Lambert United joining The Sherwin-Williams Company. Pratt & Lambert
has been a great quality brand for independent dealers since 1849. United
Coatings has been an excellent supplier to the mass merchant market. The
combination of these two organizations into Sherwin-Williams will enhance our
dedication, abilities and commitment to serving consumers and customers
utilizing these distribution channels. Pratt & Lambert United's specialty
business should also provide new growth opportunities for us. Through the
merging of our efforts we expect this acquisition to add significant
shareholder value in years to come."
Joseph J. Castiglia, Pratt & Lambert United's president and chief
executive officer said, "This transaction will position Pratt & Lambert United
as an important contributor to the nation's most successful paint company."
The information agent for the tender offer will be Beacon Hill
Partners, Inc. (1-800-755-5001).
# # # #
<PAGE> 1
Exhibit (b)(1)
364-DAY REVOLVING CREDIT AGREEMENT
----------------------------------
This Agreement is made and entered into this 31st day of August, 1995
by and among The Sherwin-Williams Company ("Company") whose principal place
of business is located at 101 Prospect Avenue, N.W., Cleveland, Ohio
44115, Bank of America National Trust and Savings Association, as
Administrative Agent, and the financial institutions listed on Schedule A
hereto together with each of their successors and assigns (collectively
referred to as "Banks" and individually a "Bank").
W I T N E S S E T H:
-------------------
WHEREAS, the Company has requested the Banks to make certain unsecured
Loans to the Company for general corporate purposes including, but not
limited to, capital expenditures, general working capital, acquisitions of
assets, stock or other ownership interests and repurchases or redemptions
of securities; and
WHEREAS, the Banks have agreed to make such Loans (as such term is
defined herein) on the terms and subject to the conditions set forth in
this Agreement.
NOW, THEREFORE, in consideration of the mutual promises contained
herein the parties agree as follows:
ARTICLE I: DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
"ADMINISTRATIVE AGENT" shall mean Bank of America National Trust and Savings
Association or any successor Bank appointed by the Company and
approved by the holders of fifty-one percent (51%) by amount of the
Commitments.
"ALTERNATE BASE RATE" shall mean the higher of: (i) the rate of interest in
effect for any given day as publicly announced from time to time by the
Administrative Agent as its "reference rate" and (ii) the Federal Funds
Rate plus 50 basis points. Any change by the Administrative Agent of
its "reference rate" shall take effect at the opening of business on the
day specified in the public announcement of such change.
"ALTERNATE BASE RATE LOAN" shall mean those Loans bearing interest at the
Alternate Base Rate.
"BANKING DAY" shall mean a day, other than a Saturday or Sunday, on which
California and New York banks are open for the transaction of business.
"COMMITMENT" shall mean the obligation of each Bank to make Loans, under
Section 2.1A of this Agreement, up to the amount set opposite the name
of such Bank as set forth on such Bank's signature page hereto (or such
lesser amount as shall be determined pursuant to Section 2.5 hereof).
"COMMITMENT PERIOD" shall mean the period which commences on the Effective
Date and terminates on the Termination Date.
"CONSOLIDATED NET WORTH" shall mean the excess of the net book value of the
assets of the Company and its Consolidated Subsidiaries over all of
their liabilities (other than Subordinated Indebtedness), as determined
on a consolidated basis in accordance with
<PAGE> 2
generally accepted accounting principles as applied by the Company in
the calculation of such amount in the Company's then most recent
financial statements furnished to its stockholders, plus the aggregate
value of all treasury stock purchased after the Effective Date (at
cost) by the Company (to the extent that the aggregate value of such
treasury stock for purposes of this calculation does not exceed Two
Hundred Fifty Million Dollars ($250,000,000)). The calculation of
Consolidated Net Worth shall exclude any amounts which would otherwise
be required to be included therein as a result of the future adoption
by the Financial Accounting Standards Board of any policy, statement,
rule or regulation requiring the Company to record an accumulative
liability on its Financial Report(s).
"CONSOLIDATED SUBSIDIARY" shall mean, at any particular time, every
Subsidiary which is consolidated in the Company's financial statements
contained in its then most recent Financial Report.
"DEBT" shall mean, collectively, all indebtedness at any one time
outstanding hereunder and owed by the Company to the Banks pursuant to
this Agreement and includes the principal of and interest on all Notes
and each conversion, extension, renewal or refinancing thereof in whole
or in part, the Facility Fees and any prepayment premium due under
Section 2.1A(x). "DOLLARS" or "$" shall mean any lawful currency of
the United States of America.
"EUROCURRENCY" shall mean any freely transferrable and convertible currency
on deposit outside the country of issuance.
"EVENT OF DEFAULT" shall mean any of the events referred to in Article VII
hereof.
"EFFECTIVE DATE" shall mean August 31, 1995.
"FACILITY FEE" shall mean the sum to be paid by the Company to the
Administrative Agent on behalf of each Bank on the last Banking Day of
each calendar quarter during the Commitment Period calculated as the
product of each Bank's Commitment and the number of basis points set
forth in the following table for the highest of the then current
ratings assigned to the Company's senior unsecured long-term debt by
Moody's, S&P or Duff & Phelps on such date which is one (1) business
day prior to the date(s) payment of such fee shall be due:
MOODY'S, S&P OR DUFF & PHELPS BASIS POINTS
---------------------------------------------------------------------
AA-, Aa3 or higher 5.0
---------------------------------------------------------------------
A-, A3 6.0
---------------------------------------------------------------------
BBB, Baa2 9.0
---------------------------------------------------------------------
Lower than BBB or Baa2 12.0
"FEDERAL FUNDS RATE" shall mean, for any day, the rate set forth in the
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York
(including any such successor, "H.15(519)") on the preceding Banking
Day opposite the caption "Federal Funds (Effective)"; or, if for any
relevant day such rate is not so published on any such preceding
Banking
2
<PAGE> 3
Day, the rate for such day shall be the arithmetic mean, as determined
by the Administrative Agent, of the rates for the last transaction in
overnight Federal funds arranged prior to 9:00 a.m. (New York time) on
such day by each of three leading brokers of Federal funds transactions
in New York City selected by the Administrative Agent.
"FINANCIAL REPORT" shall mean the annual or periodic report prepared in
accordance with generally accepted accounting principles, except as
otherwise indicated therein, filed by the Company with the Securities
and Exchange Commission (or any governmental body or agency succeeding
to the functions of such Commission) on Form 10-K or 10-Q pursuant to
the Securities Exchange Act of 1934 ("Exchange Act"), as then in effect
(or any comparable forms under similar Federal statutes then in force),
and the most recent financial statements furnished by the Company to
its stockholders (which annual financial statement shall be certified
by the Company's independent certified public accountants).
"INTEREST ADJUSTMENT DATE" shall mean the last day of each LIBOR Interest
Period.
"LIBOR" shall mean the average (rounded upward to the nearest 1/16 of 1%) of
the per annum rates at which deposits in immediately available funds in
Dollars for the number of months in the relevant LIBOR Interest Period
and in the amount of the LIBOR Loan to be disbursed or to remain
outstanding during such LIBOR Interest Period, as the case may be, are
offered to the Administrative Agent by the Reference Banks in the
London Interbank Eurodollar market, determined as of 11:00 a.m. London
time, two (2) London Banking Days prior to the beginning of the
relevant LIBOR Interest Period pertaining to a LIBOR Loan hereunder, as
appropriately adjusted by dividing such average LIBOR rate by 1.00
minus the applicable Reserve Percentage then in effect.
"LIBOR INTEREST PERIOD" shall mean a period of one, two, three, six or, if
available to the Banks, twelve months (as selected by the Company)
commencing on the applicable borrowing date of each LIBOR Loan
hereunder; provided, however, that if any such period would be affected
by a reduction in Commitment as provided in Section 2.5 hereof,
prepayment as provided in Section 3.5 hereof or maturity of a LIBOR
Loan as provided in Section 2.1A hereof, such period shall end as
provided in such relevant Section provided further that no such LIBOR
Interest Period shall end after the Termination Date.
"LIBOR LOAN" shall mean a Loan bearing interest at LIBOR.
"LOAN" shall mean the indebtedness of the Company with respect to each
advance of funds by a Bank hereunder.
"LONDON BANKING DAY" shall mean a day, other than a Saturday or Sunday, on
which banks are open for business in London, England and San Francisco,
California, quoting deposit rates for Dollar deposits.
"MAJORITY BANKS" shall mean Banks with an aggregate of sixty-six and
two-thirds percent (66 2/3%) or more of the Commitments on the relevant
date.
"MARGIN" shall mean the number of basis points set forth in the following
table for the highest of the then current ratings assigned to the
Company's senior unsecured long-term debt by Moody's, S&P or Duff &
Phelps:
3
<PAGE> 4
MOODY'S, S&P OR DUFF & PHELPS BASIS POINTS
---------------------------------------------------------------------
AA-, Aa3 or higher 15.0
---------------------------------------------------------------------
A-, A3 17.0
---------------------------------------------------------------------
BBB, Baa2 21.0
---------------------------------------------------------------------
Lower than BBB or Baa2 26.0
"MATERIAL" shall mean the measure of a matter of significance which shall be
determined as being an amount equal to five percent (5%) or more of the
Company's Consolidated Net Worth.
"MONEY MARKET NOTE" shall mean a Note or Notes executed and delivered
pursuant to Section 2.1B hereof.
"MONEY MARKET RATE" shall mean, with respect to any period of days selected
by the Company commencing on the applicable borrowing date for a Money
Market Rate Loan, the rate of interest per annum quoted by any Bank to
the Company for such Money Market Rate Loans.
"MONEY MARKET RATE LOAN" shall mean a Loan with an interest rate equal to
the Money Market Rate and as otherwise defined in Section 2.1B hereof.
"NOTE" or "NOTES" shall mean a note or notes executed and delivered
pursuant to Section 2.1A or 2.1B hereof.
"OUTSTANDING MAJORITY BANKS" shall mean Banks with an aggregate of sixty-six
and two-thirds percent (66 2/3%) or more of the principal amount of
Loans hereunder on the relevant date.
"PERCENTAGE" shall mean, as to any Bank (as set forth on the Bank's
signature page hereof), the percentage of such Bank's share of the total
Commitments of all Banks; provided that if the Commitments are
terminated or reduced pursuant to Section 2.5 hereof, then "Percentage"
shall mean the percentage of such Bank's share of the total Commitments
of all Banks immediately after the termination or reduction of
Commitments.
"PLAN" shall mean any employee pension benefit plan within the meaning of
Section 3(2) of the Employee Retirement Income Security Act of 1974,
as amended from time to time ("ERISA") sponsored and maintained by the
Company, any Consolidated Subsidiary, or of any member of a controlled
group of corporations, as the term "controlled group of corporations"
is defined in Section 1563 of the Internal Revenue Code of 1986, as
amended, of which the Company or any Consolidated Subsidiary is a
part, for employees thereof.
"POSSIBLE DEFAULT" shall mean an event, condition or thing known to the
Company which constitutes, or which with the lapse of any applicable
grace period or the giving of notice or both would constitute, any
Event of Default and which has not been appropriately waived by the
Banks in writing or fully corrected prior to becoming an Event of
Default.
4
<PAGE> 5
"REFERENCE BANKS" shall mean Trust Company Bank and The Bank of Nova Scotia
or any successor Bank(s) appointed by the Company, and satisfactory to
the holders of fifty-one percent (51%) by amount of the Commitments,
at any time, upon thirty (30) days prior written notice to the Banks,
to act as Reference Banks pursuant to the terms of this Agreement.
"REGULATORY CHANGE" shall mean, as to any Bank, any change in United States
federal, state or foreign laws or regulations or the adoption or
making of any interpretations, directives, guidelines or requests of
or under any United States federal, state or foreign laws or
regulations enacted after the Effective Date (whether or not having
the force of law) by any court or governmental authority charged with
the interpretation or administration thereof.
"RELATED WRITING" shall mean any assignment, mortgage, security agreement,
subordination agreement, financial statement, audit report or other
writing furnished by the Company or any of its officers to the Banks
pursuant to or otherwise in connection with this Agreement.
"REPORTABLE EVENT" shall mean a reportable event as that term is defined in
Title IV of ERISA except actions of general applicability by the
Secretary of Labor under Section 110 of ERISA.
"RESERVE PERCENTAGE" shall mean, for any day, that percentage (expressed as
a decimal) which is in effect on such day, as prescribed by the Board of
Governors of the Federal Reserve System (or any successor) for
determining the reserve requirement (including but not limited to any
margin reserve requirement and taking into account any transitional
adjustments or other scheduled changes in reserve requirements) which
is imposed on (a) commercial time deposits having an original maturity
of one (1) year or less and which is applicable to the class of banks
of which the Administrative Agent is a member; or (b) a Bank with
respect to liabilities or assets consisting of or including
Eurocurrency funds or deposits, as the case may be.
"REVOLVING CREDIT LOAN" shall mean a Loan evidenced by a Revolving Credit
Note.
"REVOLVING CREDIT NOTE" shall mean a Note evidencing a Loan described in
Section 2.1A.
"SUBORDINATED INDEBTEDNESS" shall mean an indebtedness which has been
subordinated (by written terms or agreement being in form and substance
reasonably satisfactory to the holders of fifty-one percent (51%) by
amount, of the Commitments) in favor of the prior payment in full of
the Company's Debt to the Banks.
"SUBSIDIARY" shall mean an existing or future corporation(s), the majority
of the outstanding capital stock or voting power, or both, of which is
(or upon the exercise of all outstanding warrants, options and other
rights would be) owned at the time in question by the Company or by
another such corporation(s) or by any combination of the Company and
such corporation(s).
"TERMINATION DATE" shall mean 12:01 a.m. on such date which is three hundred
sixty-four (364) days from the Effective Date; provided, however, the
Company may within ninety (90) days prior to the Termination Date, by
notice to the Administrative Agent, make written requests to the Banks
to extend the scheduled Termination Date for an additional period
5
<PAGE> 6
of three hundred sixty-four (364) days. The Administrative Agent shall
give prompt written notice to each Bank of the receipt of such request.
Each Bank shall make a determination not more than sixty (60) nor less
than fifty-five (55) days prior to the Termination Date whether it will
extend the Termination Date as requested; provided, however, the
failure by any Bank to make a timely response to the Company's request
for an extension shall be deemed to constitute a refusal by such Bank
to extend the Termination Date. If, in response to a request for an
extension of the Termination Date one or more Banks fail to agree to
the requested extension ("Disapproving Banks"), then the Company may
elect to either (a) continue this Agreement at the same level of
Commitments by replacing each of the Disapproving Banks in accordance
with Section 2.5, or (b) provided the requested extension is approved
by at least fifty-one percent (51%) of the Banks with Commitments
hereunder (including for purposes hereof any replacement Bank(s) which
may replace a Disapproving Bank ("Approving Banks")), extend and
continue this Agreement at a lower aggregate amount equal to the
Commitments held by the Approving Banks. In any such case, (i) the
Termination Date relating to the Commitments held by the Disapproving
Banks shall remain as then in effect with repayment of any Notes held
by such Disapproving Banks being due on their due date and the
termination of their respective Commitments on the Termination Date,
and (ii) the Termination Date relating to the Commitments held by the
Approving Banks shall be extended by an additional period of three
hundred sixty-four (364) days.
"VOTING STOCK" shall mean stock of a corporation of a class or classes
having general voting power under ordinary circumstances to elect a
majority of the board of directors, managers or trustees of such
corporation (irrespective of whether or not the stock of any other
class or classes shall have or might have voting power by reason of the
happening of any contingency).
"WHOLLY-OWNED CONSOLIDATED SUBSIDIARY" shall mean each Consolidated
Subsidiary all of whose outstanding stock, other than directors'
qualifying shares, shall at the time be owned by the Company and/or by
one or more Wholly-Owned Consolidated Subsidiaries.
Any accounting term not specifically defined in this Article shall have the
meaning ascribed thereto by generally accepted accounting principles in
effect as of the date of the Company's then most recent Financial Reports
unless otherwise indicated.
The foregoing definitions shall be applicable to the singular and plural of
the foregoing defined terms.
ARTICLE II. AMOUNT AND TERMS OF CREDIT
SECTION 2.1. AMOUNT AND NATURE OF CREDIT. Subject to the terms and
conditions of this Agreement each Bank will participate to the extent
hereinafter provided in making Loans to the Company in such aggregate
amounts as the Company shall request; provided, however, that in no event
shall the aggregate principal amount of all Loans outstanding under this
Agreement during the Commitment Period be in excess of One Hundred Million
Dollars ($100,000,000).
A. REVOLVING CREDIT LOANS
----------------------
(i) BORROWING RIGHTS AND RESTRICTIONS: Subject to the terms
and conditions of this Agreement, during the Commitment Period
each Bank will make a Loan or Loans to the Company, pursuant
to this Section 2.1A, in such amount
6
<PAGE> 7
or amounts as the Company may request from time to time but
not exceeding in aggregate principal amount, at any one time
outstanding hereunder, the Commitment of such Bank. Subject
to the provisions of this Agreement, the Company shall be
entitled under this Paragraph A to borrow funds, repay the
same in whole or in part, and reborrow hereunder at any time
and from time to time during the Commitment Period. Each Loan
made under this Paragraph A shall be made pro rata according
to each Bank's respective Commitments.
(ii) LOAN AMOUNTS: The Company shall have the option, subject to
the terms and conditions set forth herein, to borrow under
this Section 2.1A up to the total of all the Commitments by
means of any combination of:
(a) Alternate Base Rate Loans which shall be payable on
its due date and shall be drawn down in aggregate
amounts of not less than Five Million Dollars
($5,000,000) or any greater amount evenly divisible by
One Million Dollars ($1,000,000); and
(b) LIBOR Loans, which shall be payable on the last day of
the relevant LIBOR Interest Period and shall be drawn
down in aggregate amounts of not less than Five
Million Dollars ($5,000,000) or any greater amount
evenly divisible by One Million Dollars ($1,000,000).
(iii) PROCEDURE FOR BORROWING: The procedure for borrowing under
this Section 2.1A shall be as follows:
(a) Each such borrowing shall be made upon the Company's
written notice ("Notice") to the Administrative Agent
(which Notice must be received by the Administrative
Agent prior to 11:00 a.m. New York time three (3)
London Banking Days prior to the requested borrowing
date in the event of a LIBOR Loan and by 11:00 a.m.
New York time on the same Banking Day of the proposed
date of such borrowing in the event of an Alternate
Base Rate Loan). The Notice shall specify:
(1) the amount of the borrowing;
(2) the requested borrowing date which shall be a
Banking Day;
(3) the type of Loan(s) comprising the borrowing;
and
(4) the duration of the LIBOR Interest Period for
any LIBOR Loan(s) and the maturity date of any
Alternate Base Rate Loan(s).
(b) The Administrative Agent shall promptly notify each
Bank of (i) its receipt of a Notice of borrowing, (ii)
the amount of each Bank's pro-rata share of such
borrowing; and (iii) the name of the Company's bank,
the Company's account number and American Banking
Association routing number of the bank at which the
Company's account is maintained and to which such
pro-rata shares shall be routed.
7
<PAGE> 8
(c) Each Bank's pro-rata share of each Revolving Credit
Loan shall be delivered by each such Bank to the
Company not later than 3:00 p.m. New York time on the
last day of the notice period set forth herein, time
being of the essence, in immediately available Dollars
by wire transfer to an account of the Company
designated by the Company, from time to time in
writing to the Administrative Agent, with the account
number and American Banking Association routing number
of the bank at which such account is maintained.
(iv) INTEREST RATES: The Company shall pay interest on Revolving
Credit Loans:
(a) at the Alternate Base Rate on the unpaid principal
amount of Alternate Base Rate Loans outstanding from
time to time from the date of receipt of funds by the
Company until paid, payable on the last business day
of each calendar quarter and on the maturity date,
computed on the basis of a 365 or 366 day year as the
case may be; and
(b) at LIBOR plus the applicable Margin (converted to
percentage points) on the unpaid principal amount of
LIBOR Loans outstanding from time to time from the
date on which funds are received by the Company until
paid, payable (a) on the last day of the LIBOR
Interest Period (computed on the basis of a year
having 360 days calculated on the basis of the actual
number of days elapsed) or (b) every three (3) months
or ninety (90) days in the event any such LIBOR
Interest Period exceeds three (3) months or ninety
(90) days.
(v) PAYMENTS ON REVOLVING CREDIT NOTES, ETC.: All payments of
principal and interest shall be made to the Administrative
Agent in immediately available funds for the account of the
Banks by no later than 3:00 p.m. (New York time) on the
applicable payment date. The Administrative Agent shall
promptly distribute to each Bank its ratable share of the
principal and interest received by it for the account of such
Bank. Each Bank shall endorse each Revolving Credit Note held
by it or otherwise make appropriate book entries evidencing
each payment of principal made thereon, it being understood,
however, that any Bank's failure to record appropriate
information on the grid(s) attached to any such Note shall in
no way affect the obligation of the Company under this
Agreement or under any such Note. Whenever any payment to be
made hereunder, including without limitation, any payment to
be made on any Note, shall be stated to be due on a day which
is not a Banking Day, such payment may be made on the next
Banking Day (but in any event not later than its maturity
date) and such extension of time shall in each case be
included in the computation of the interest payable on such
Note. Notwithstanding the previous sentence, in the case of
any LIBOR Loan, if the next Banking Day is in a month other
than the month the payment was originally due, such payment
may be made on the immediately preceding Banking Day and such
reduction of time shall in each case be considered in the
computation of the interest payable on such Note.
(vi) REVOLVING CREDIT NOTES: The obligation of the Company to
repay the Alternate Base Rate Loans and the LIBOR Loans made
by each Bank and to pay interest thereon shall be evidenced by
non-negotiable Revolving Credit Notes of the Company
substantially in the form of Schedule B hereto, with
appropriate
8
<PAGE> 9
insertions, dated the date of execution thereof by the Company
and payable to the order of such Bank on the maturity date of
such Loan, in the principal amount indicated thereon. The
principal amount of the Alternate Base Rate Loans and the
LIBOR Loans made by each Bank under this Section 2.1A and all
prepayments thereof and the applicable dates with respect
thereto shall be recorded by such Bank from time to time on
the grid(s) attached to such Note or by appropriate book
entry. The aggregate unpaid amount of Alternate Base Rate
Loans and LIBOR Loans set forth on the grid(s) attached to
each Revolving Credit Note shall be rebuttable presumptive
evidence of the principal amount owing and unpaid on such
Note, it being understood, however, that any Bank's failure to
so record appropriate information on the grid(s) attached to
its respective Revolving Credit Note shall in no way affect
the obligations of the Company under this Agreement or such
Note.
(vii) INTEREST ON LATE PAYMENTS: If any Revolving Credit Note shall
not be paid at maturity, whether such maturity occurs by
reason of lapse of time or by operation of any provision or
acceleration of maturity therein contained, the principal
thereof and the accrued and unpaid interest thereon shall bear
interest, until paid, at a rate per annum which shall be 1.1
times the Alternate Base Rate from time to time in effect.
(viii) LOAN REFINANCINGS: If any Revolving Credit Loan is not repaid
when due, unless otherwise directed by the Company, and
provided no Event of Default exists hereunder, the Banks shall
refinance LIBOR Loans with successive LIBOR Loans commencing
on the date immediately following the maturity date (unless
otherwise agreed to by the Company and the Banks) of such
prior Loan and with the same number of months for such Loan's
LIBOR Interest Period unless otherwise provided in this
Agreement. Such automatic Loans shall be deemed to have
repaid the principal in full of each prior Loan such that
no Event of Default would exist.
(ix) CONVERSION: At the Company's option, the Company may at any
time or from time to time, except if an Event of Default
exists, convert a LIBOR Loan or an Alternate Base Rate Loan to
any one of the other types of Loan. Such conversion shall not
be deemed to be a prepayment. The provisions of this
subsection shall apply with respect to voluntary conversions
or conversions required hereunder. The Company, through the
Administrative Agent, shall give written or telephonic notice
to the Banks of each conversion by 11:00 a.m., New York time
(a) on the date of such conversion if such conversion is
comprised of Alternate Base Rate Loans, and (b) at least two
(2) Banking Days prior to the date of such conversion if such
conversion is comprised of LIBOR Loans. Each such notice
shall be effective upon receipt by the relevant Bank and shall
specify the date and amount of such conversion, the type of
Loans to be converted and the type of Loans to be converted
into. Each conversion shall be in an aggregate amount of not
less than Five Million Dollars ($5,000,000) or any greater
amount evenly divisible by One Million Dollars ($1,000,000).
(x) PREPAYMENT.
(a) As to Alternate Base Rate Loans, the Company shall
have the right at any time or from time to time, upon
one (1) Banking Days' prior written notice to the
Administrative Agent, without the payment of any
premium or
9
<PAGE> 10
penalty to prepay on a pro rata basis, all or any part
of the principal amount of the Notes then outstanding
as designated by the Company plus interest accrued on
the amount so prepaid to the date of such prepayment.
(b) As to LIBOR Loans, the Company shall have the right at
any time or from time to time, upon four (4) London
Banking Days' prior written notice to the
Administrative Agent, to prepay on a pro rata basis,
all or any part of the principal amount of the Notes
then outstanding as designated by the Company, plus
interest accrued on the amount so prepaid to the date
of such prepayment. If LIBOR, as determined as of
11:00 a.m. London time two (2) London Banking Days
prior to the date of prepayment (hereinafter
"Prepayment LIBOR"), shall be lower than the last
LIBOR previously determined for the LIBOR Loan(s),
with respect to which prepayment is intended to be
made (hereinafter "Last LIBOR"), then the Company
shall promptly pay each of the Banks, in immediately
available funds, a prepayment premium measured by a
rate (the "Prepayment Premium Rate") which shall be
equal to the difference between the Last LIBOR and the
Prepayment LIBOR. In determining the Prepayment
LIBOR, the Company shall apply a rate equal to LIBOR
(for a deposit approximately equal to the amount of
such prepayment) which would be applicable to a LIBOR
Interest Period commencing on the date of such
prepayment and having a duration equal to the LIBOR
Interest Period described in Article I hereof with a
length closest to the remaining duration of the actual
LIBOR Interest Period during which such prepayment is
to be made. The Prepayment Premium Rate shall be
applied to all or such part of the principal amount of
the Notes as related to the LIBOR Loans to be prepaid,
and the prepayment premium shall be computed for the
period commencing with the date on which said
prepayment is to be made to that date which coincides
with the last day of the LIBOR Interest Period
previously established when the LIBOR Loans, which are
to be prepaid, were made. Each prepayment of a LIBOR
Loan shall be in the aggregate principal sum of not
less than One Million Dollars ($1,000,000). In the
event the Company fails to borrow or convert into a
proposed LIBOR Loan subsequent to the delivery to the
Banks of the notice of the proposed date, aggregate
amount and initial LIBOR Interest Period of such Loan,
but prior to the draw down of funds thereunder, such
failure to borrow or convert shall be treated as a
prepayment subject to such prepayment premium.
Notwithstanding the above, no prepayment premium shall
be due and owing by the Company if the Company makes
such payment on the Interest Adjustment Date
applicable to the Loan being paid.
B. MONEY MARKET RATE LOANS
-----------------------
(i) BORROWING RESTRICTIONS: Subject to the terms and conditions
of this Agreement, during the Commitment Period each Bank may
make (but is not obligated to make) a Money Market Rate Loan
to the Company in such amount or amounts as the Company may
from time to time request, not exceeding in aggregate
principal amount, at any one time outstanding hereunder, the
sum One Hundred Million Dollars ($100,000,000). Subject to
the provisions of this Agreement, the Company shall be
entitled under this Paragraph B to borrow funds, repay the
same in whole or in part and reborrow hereunder at any time
and from
10
<PAGE> 11
time to time from any Bank making Money Market Rate Loans to
the Company. The Administrative Agent shall not be involved,
in its capacity as such agent, in any borrowing(s) by the
Company under this Section 2.1B. The procedures for any such
Loan shall be as agreed upon by the Company and each Bank
making a Loan under this Paragraph B.
(ii) LOAN AMOUNTS: The Company shall have the option, subject to
the terms and conditions set forth herein, to borrow under
this Section 2.1B from any Bank an amount not to exceed the
total of all Commitments in amounts of not less than Five
Million Dollars ($5,000,000) or any greater amount evenly
divisible by One Million Dollars ($1,000,000).
(iii) INTEREST RATES: The Company shall pay interest on the unpaid
principal amount of any Money Market Rate Loan outstanding
from time to time from the date on which funds are received by
the Company until paid, at the Money Market Rate. Except as
may be otherwise agreed by the Company and the Bank making a
Money Market Rate Loan, interest shall be payable at the
maturity of such Loan and shall be computed on the basis of a
365 or 366 day year, as the case may be.
(iv) MONEY MARKET NOTES: The obligation of the Company to repay
Money Market Rate Loans and to pay interest thereon, shall be
evidenced by a Money Market Note substantially in the form of
Schedule C hereto, dated the date of execution thereof by the
Company and payable to the order of such Bank in accordance
with the terms and conditions of such Money Market Note.
(v) PAYMENT: All payments of principal and interest due on Money
Market Rate Loans shall be paid by the Company directly to any
Bank making a Money Market Rate Loan to the Company.
(vi) INTEREST ON LATE PAYMENTS: If any Money Market Note shall not
be paid at maturity, whether such maturity occurs by reason of
lapse of time or by operation of any provision of acceleration
of maturity therein contained, the principal thereof and the
unpaid interest thereon shall bear interest, until paid, at a
rate per annum which shall be 1.1 times the Alternate Base
Rate from time to time in effect.
SECTION 2.2. CONDITIONS TO CERTAIN LOANS OR CONVERSIONS. The obligation of
each Bank to make the Loans described in Section 2.1A hereunder is
conditioned, in the case of each borrowing or conversion hereunder, upon:
(i) the fact that no Possible Default or Event of Default shall
then exist or immediately after the Loan would exist; and
(ii) the fact that the representations and warranties contained in
Article IV hereof shall be true and correct in all material
respects with the same force and effect as if made on and as
of the date of such borrowing or conversion.
Each borrowing or conversion by the Company hereunder shall be deemed to be
a representation and warranty by the Company as of the date of such
borrowing as to the facts specified in Sections 2.2 (i) and (ii) above.
11
<PAGE> 12
SECTION 2.3. FACILITY FEE. The Company agrees to pay to each Bank an
annual Facility Fee, for the period from and including the date of this
Agreement to the earlier of (i) the Termination Date or (ii) the
termination of the Commitments pursuant to Section 2.5 hereof. The first
payment of the Facility Fee shall be made no later than October 5, 1995 for
the period August 31, 1995 to September 30, 1995. All payments of the
Facility Fee shall be made to the Administrative Agent in immediately
available funds for the account of the Banks by no later than 3:00 p.m.
(New York time) on the applicable payment date. The Administrative Agent
shall promptly distribute to each Bank its ratable share of the Facility
Fee received by it for the account of such Bank.
SECTION 2.4. COMPUTATION OF FACILITY FEES. Facility Fees shall be computed
for the actual number of days elapsed on the basis of a 360 day year.
SECTION 2.5. TERMINATION OF COMMITMENTS AND RIGHT OF SUBSTITUTION.
(i) The Company may at any time or from time to time terminate in
whole or ratably in part the Commitments of all of the Banks
to an amount not less than the aggregate principal amount of
the Loans then outstanding under this Agreement, by giving the
Banks and the Administrative Agent not less than two (2)
Banking Days' notice of the aggregate amount of such partial
termination (which shall not be less than Five Million Dollars
($5,000,000) or any greater amount evenly divisible by One
Million Dollars ($1,000,000)) and such Bank's proportionate
amount of such partial termination. If the Company terminates
in whole the Commitments of the Banks, on the effective date
of such termination (provided the Company has prepaid in full
the unpaid principal balance, if any, of the Notes outstanding
together with all accrued and unpaid interest, if any,
Facility Fees accrued and unpaid, and any applicable
prepayment premiums) all of the Notes outstanding shall be
delivered to the Company marked "Cancelled". Any partial
termination of the Commitments shall be irrevocable during the
remainder of the Commitment Period.
(ii) The Company may at any time or from time to time terminate or
reduce the Commitment of any Bank hereunder to an amount not
less than the aggregate principal amount of the Loans then
outstanding by such Bank under this Agreement:
(a) immediately if such Bank satisfies any of the
criteria for insolvency described in Section 7.5
hereof; or
(b) upon not less than two (2) Banking Days' notice to
such Bank and the Administrative Agent if the
Company, in its sole discretion, elects to terminate
the Commitment of such Bank for any reason including,
but not limited to, the default of such Bank under
the terms of this Agreement.
(iii) In the event the Commitment of any Bank is terminated by the
Company, the Company shall have the right to replace such Bank
with a successor bank or banks (including any bank or banks
which is a party to this Agreement with the consent of such
bank or banks) with a Commitment not to exceed the Commitment
of the terminated Bank(s); provided that such successor bank
shall, pursuant to a written instrument in form and substance
satisfactory to the Company, effectively agree to become a
party hereto and a "Bank" hereunder and be bound by the terms
hereof.
12
<PAGE> 13
(iv) In the event of a default of any Bank under the terms of this
Agreement, the Company's election to terminate the Commitment
of such Bank shall not act as a waiver of any other remedies
which the Company may have for such default.
(v) The termination of the Commitment of any Bank pursuant to
Section 2.5(ii) hereof shall not affect the Commitments or
the obligations of all remaining Banks under this Agreement.
(vi) After any termination or reduction of the Commitments as
described in this Section 2.5, the Facility Fees payable under
Section 2.3 shall be calculated upon the Commitments of the
Banks as so reduced.
ARTICLE III. ADDITIONAL PROVISIONS RELATING TO LIBOR LOANS
SECTION 3.1. RESERVES OR DEPOSIT REQUIREMENTS, ETC. If at any time after
the Effective Date any new law, treaty or regulation (including, without
limitation, Regulation D of the Board of Governors of the Federal Reserve
System) or the published interpretation thereof by any governmental
authority charged with the administration thereof or any central bank or
other fiscal, monetary or other authority shall impose (whether or not
having the force of law), modify or deem applicable any reserve and/or
special deposit requirement (other than reserves: (a) included in the
Reserve Percentage, the effect of which is reflected in the interest
rate(s) of the LIBOR Loan(s) in question or (b) attributable to
requirements imposed by the Board of Governors of the Federal Reserve
System on any Bank as a result of the failure of any such Bank to maintain
necessary current capitalization or financial conditions imposed thereby)
against assets held by, or deposits in or for the account of any Loans by
any Bank, and the result of the foregoing is to increase the cost to such
Bank of making or maintaining LIBOR Loans or reduce the amount of principal
or interest received by such Bank with respect to LIBOR Loans, then upon
demand by such Bank the Company shall pay to such Bank from time to time on
Interest Adjustment Dates with respect to such Loans, as additional
consideration hereunder, additional amounts sufficient to fully compensate
and indemnify such Bank for such increased cost or reduced amount, provided
that such additional cost or reduced amount were allocable to such
LIBOR Loans.
A certificate as to the increased cost or reduced amount (hereinafter in
this Section 3.1 collectively called "Increased Costs") as a result of any
event mentioned in this Section 3.1, setting forth the calculations
therefor, shall be promptly submitted by such Bank to the Company for its
review. The Company shall pay such Increased Costs for such period of time
prior to the date such certificate is received by the Company during which
such Regulatory Change, by its terms, applies retroactively to any period
of time prior to the date such Regulatory Change became effective. In
addition, the Company shall pay such Increased Costs incurred by a Bank on
and after the date such certificate is received by the Company unless the
Company, notwithstanding any other provision of this Agreement, promptly,
(i) upon at least three (3) Banking Days' prior written notice to
such Bank, prepays the affected LIBOR Loans in full or
converts all LIBOR Loans to Alternate Base Rate Loans
regardless of the interest period thereof, or
(ii) terminates the Commitment of such Bank pursuant to Section 2.5
hereof (provided that the Company shall pay such Increased
Costs on any LIBOR Loans from such Bank which remain
outstanding).
13
<PAGE> 14
Each Bank will notify the Company as promptly as practicable of the
existence of any event which will likely require the payment by the Company
of any such additional amount under this Section.
SECTION 3.2. CHANGES IN TAX LAWS. In the event that by reason of any new
law, regulation or requirement or any change in any existing law,
regulation or requirement or in the interpretation thereof by an official
authority, or the imposition of any requirement of any central bank whether
or not having the force of law, (i) any Bank shall, with respect to this
Agreement or any transaction under this Agreement, be subject to any tax,
levy, impost, charge, fee, duty, deduction or withholding of any kind
whatsoever (other than any tax imposed upon the total net income of such
Bank or imposed on or calculated with respect to the value of the assets of
such Bank) or (ii) any change shall occur in the taxation of any Bank with
respect to any LIBOR Loan and the interest payable thereon (other than any
change which affects, and to the extent that it affects, the taxation of
the total net income of such Bank or imposed on or calculated with respect
to the value of the assets of such Bank), and if any such measures or any
other similar measure shall result in an increase in the cost to such Bank
of making or maintaining any LIBOR Loan or in a reduction in the amount of
principal, interest or Facility Fee receivable by such Bank in respect
thereof, then such Bank shall promptly notify the Company stating the
reasons therefor.
A certificate as to any such increased cost or reduced amount (hereinafter
in this Section 3.2 collectively called "Increased Costs") as a result of
any event mentioned in this Section 3.2, setting forth the calculations
therefor, shall be submitted by such Bank to the Company for its review.
The Company shall pay such Increased Costs for such period of time prior to
the date such certificate is received by the Company during which such
Regulatory Change, by its terms, applies retroactively to any period of
time prior to the date such Regulatory Change became effective. In
addition, the Company shall pay such Increased Costs incurred by such Bank
on and after the date such certificate is received by the Company unless
the Company, notwithstanding any other provision of this Agreement,
promptly,
(i) upon at least three (3) Banking Days' prior written notice to
such Bank and the Administrative Agent, prepays the affected
LIBOR Loans in full or converts all LIBOR Loans to Alternate
Base Rate Loans regardless of the interest period thereof, or
(ii) terminates the Commitment of such Bank pursuant to Section 2.5
hereof (provided that the Company shall pay such Increased
Costs on any LIBOR Loans from such Bank which remain
outstanding).
If any Bank receives such additional consideration from the Company
pursuant to this Section 3.2 and thereafter obtains the benefits of any
refund, deduction or credit for any taxes or other amounts on account of
which such additional consideration has been paid, such Bank shall pay to
the Company its allocable share thereof and shall reimburse the Company to
the extent, but only to the extent, that such Bank shall have actually
received a refund of such taxes or other amounts together with any interest
thereon or an effective net reduction in taxes or other governmental
charges (including any taxes imposed on or measured by the total net income
of such Bank) of the United States or any state or subdivision thereof by
virtue of any such deduction or credit, after first giving effect to all
other deductions and credits otherwise available to such Bank. If, at the
time any audit of such Bank's income tax return by any taxing agency is
completed, such Bank determines, based on such audit, that it was not
entitled to the full amount of any refund reimbursed to the Company as
aforesaid or that its net income taxes are not reduced by a credit or
deduction for the full amount of taxes reimbursed to the Company as
aforesaid, the Company, upon demand of such Bank, will promptly pay to such
Bank the amount so refunded to which such
14
<PAGE> 15
Bank was not so entitled, or the amount by which the net income taxes of
such Bank were not so reduced, as the case may be. The provisions of this
Section 3.2 shall survive the termination of this Agreement.
SECTION 3.3. EURODOLLAR DEPOSITS UNAVAILABLE OR INTEREST RATE
UNASCERTAINABLE. In the event the Majority Banks shall have determined, in
good faith and reasonably, that Dollar deposits of the relevant amount for
the relevant LIBOR Interest Period for LIBOR Loans are not available to the
Banks in the London Interbank Eurodollar market or that, by reason of
circumstances affecting such market, adequate and reasonable means do not
exist for ascertaining LIBOR applicable to such determination to the
Company then (i) any notice of new LIBOR Loans (or conversion of existing
Loans to LIBOR Loans) previously given by the Company and not yet borrowed
(or converted, as the case may be) shall be deemed a notice to make
Alternate Base Rate Loans unless the Company notifies the Administrative
Agent to the contrary, and (ii) the Company shall be obligated either to
prepay or to convert any outstanding LIBOR Loans on the last day of the
then current LIBOR Interest Period or Periods with respect thereto.
SECTION 3.4. INDEMNITY. Without limitation of any other provisions of this
Article III, the Company hereby agrees to indemnify the Administrative
Agent and each Bank against any loss or expense (excluding consequential,
incidental or special damages) which the Administrative Agent or such Bank
may sustain or incur as a direct result of any default by the Company in
the payment when due of any amount due hereunder with respect to any LIBOR
Loan (including, but not limited to, any loss of profit, premium or penalty
incurred by such Bank as a result of such default with regard to funds
borrowed by it for the purpose of making or maintaining such LIBOR Loan, as
determined by such Bank in the exercise of its reasonable discretion). A
certificate as to any such loss or expense shall be promptly submitted by
such Bank to the Company for its review and to the Administrative Agent and
shall be paid by the Company in the absence of manifest error.
SECTION 3.5. CHANGES IN LAW RENDERING LIBOR LOANS UNLAWFUL. If at any time
any new law, treaty or regulation, or any change in any existing law,
treaty or regulation, or any published interpretation thereof by any
governmental or other regulatory authority charged with the administration
thereof, shall make it unlawful for any Bank to fund, refinance, continue
or convert into any LIBOR Loans which it is committed to make hereunder
with moneys obtained in the London Interbank Eurodollar market, the
Commitment of such Bank to fund, refinance, continue or convert into LIBOR
Loans shall, upon the happening of such event, be suspended for the
duration of such illegality and such Bank shall by written notice to the
Company and the Administrative Agent declare that its Commitment with
respect to such Loans has been so suspended and, if and when such
illegality ceases to exist, such suspension shall cease and such Bank shall
similarly notify the Company and the Administrative Agent. If any such
change shall make it unlawful for any Bank to continue in effect the
funding in the London Interbank Eurodollar market of any LIBOR Loan
previously made by it hereunder, such Bank shall, upon the happening of
such event, notify the Company and the other Banks thereof in writing
stating the reasons therefor and the Company shall, on the earlier of (i)
the last day of the then current LIBOR Interest Period or (ii) if required
by such law, regulation or interpretation, on such date as shall be
specified in such notice, either convert all LIBOR Loans to Alternate Base
Rate Loans or prepay all LIBOR Loans to the Banks in full. Any such
prepayment or conversion shall not be subject to the prepayment premiums
prescribed in Section 2.1A(x) hereof. Any requests for a LIBOR Loan not
funded pursuant to this Section shall be deemed to have been a request
for an Alternate Base Rate Loan.
15
<PAGE> 16
SECTION 3.6. FUNDING. Each Bank may, but shall not be required to, make
LIBOR Loans hereunder with funds obtained outside the United States.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Banks that:
SECTION 4.1. CORPORATE EXISTENCE. The Company is a corporation duly
organized and in good standing under the laws of the State of Ohio.
SECTION 4.2. AUTHORIZATION; NO CONFLICT. The execution, delivery, and
performance by the Company of this Agreement and the Notes are within the
Company's corporate powers, have been duly authorized by all necessary
corporate action, and do not and will not contravene or conflict with any
provision of applicable law in effect on the date hereof or of the Amended
Articles of Incorporation or Regulations of the Company or of any agreement
for borrowed money or other material agreement binding upon the Company.
The Company has duly executed and delivered this Agreement.
SECTION 4.3. VALIDITY AND BINDING NATURE. This Agreement is, and the Notes
when duly executed and delivered will be, legal, valid and binding
obligations of the Company enforceable against the Company in accordance
with their respective terms.
SECTION 4.4. LITIGATION AND LIENS. To the best of the Company's knowledge,
no litigation or proceeding is pending which would, if successful, have a
Material adverse impact on the financial condition of the Company and the
Consolidated Subsidiaries taken as a whole, which is not already reflected
in the Company's Financial Reports delivered to the Banks prior to the date
of this Agreement. The Internal Revenue Service has not alleged any
Material default by the Company in the payment of any tax or threatened to
make any Material assessment in respect thereof which would have or
reasonably could have a Material adverse impact on the financial condition
of the Company and the Consolidated Subsidiaries, taken as a whole.
SECTION 4.5. ERISA COMPLIANCE. Neither the Company nor any Consolidated
Subsidiary has incurred any Material accumulated funding deficiency within
the meaning of ERISA and the regulations thereunder. No Reportable Event
has occurred with respect to any Plan which would have a Material adverse
financial impact on the Company or any of its Consolidated Subsidiaries,
taken as a whole. The Pension Benefit Guaranty Corporation, established
under ERISA, has not asserted that the Company or any Consolidated
Subsidiary has incurred any Material liability in connection with any Plan.
No Material lien has been attached and no person has threatened to attach
such a lien on any property of the Company and any Consolidated Subsidiary
as a result of the Company's or any Consolidated Subsidiary's failure to
comply with ERISA.
SECTION 4.6. ENVIRONMENTAL MATTERS. To the best of the Company's
knowledge, the Company and each Subsidiary is in substantial compliance
with all applicable existing laws and regulations (other than laws and
regulations the validity or applicability of which are being contested by
the Company or a Subsidiary, as the case may be, in good faith by
appropriate proceedings diligently prosecuted) relating to environmental
control in all jurisdictions where the Company or any Subsidiary is
presently doing business and the Company and each Subsidiary (to the extent
applicable to its operations) is in substantial compliance with the
Occupational Safety and Health Act of 1970 and all rules, regulations and
applicable orders thereunder (other than rules, regulations and orders the
validity or applicability of which are being contested by the
16
<PAGE> 17
Company or a Subsidiary, as the case may be, in good faith by appropriate
proceedings diligently prosecuted).
SECTION 4.7. FINANCIAL REPORTS. The Financial Reports of the Company and
the Consolidated Subsidiaries, furnished to each Bank prior to the date of
this Agreement or from time to time pursuant to this Agreement shall be
true and complete, prepared in accordance with generally accepted
accounting principles, except as stated therein, and fairly present the
Company's and its Consolidated Subsidiaries' financial condition and the
results of their operations for the period encompassed by such Financial
Reports. Since the dates of the Company's most recent Financial Reports
until the date of this Agreement there has been no material adverse change
in the consolidated financial condition of the Company and the
Consolidated Subsidiaries taken as a whole.
SECTION 4.8. REGULATION U. Neither the Company nor any of its Consolidated
Subsidiaries is generally engaged in the business of purchasing or selling
margin stock or extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulation U issued by the Board of
Governors of the Federal Reserve System). Each of the Banks represents and
warrants to the Company that it is not relying on and will not rely on any
margin stock (as described above) in determining whether to extend or
maintain credit under this Agreement.
SECTION 4.9. GOVERNMENT REGULATION. Neither the Company nor any of its
Consolidated Subsidiaries is registered or is required to be registered as
a public utility under the Public Utility Holding Company Act of 1935 or as
an investment company under the Investment Company Act of 1940.
SECTION 4.10. TAXES. The Company and its Consolidated Subsidiaries have
filed all United States federal income tax returns and all other material
tax returns which are required to have been filed by them (subject to any
available extensions) and have paid all taxes indicated as due on such
returns except for any such taxes being contested by the Company or a
Subsidiary, as the case may be, in good faith by appropriate proceedings
diligently prosecuted (the Company has made adequate and reasonable
provision for all material taxes not yet due and payable), if any, and all
material assessments, if any.
SECTION 4.11. DEFAULTS. No Possible Default exists which would have or
reasonably could have a Material adverse impact on the financial condition
of the Company and the Consolidated Subsidiaries, taken as a whole.
ARTICLE V. OPENING COVENANTS
Prior to or concurrently with the execution and delivery of this
Agreement, the Company shall furnish to each Bank the following:
SECTION 5.1. RESOLUTIONS. Certified copies of the resolutions of the board
of directors of the Company evidencing approval of the execution of this
Agreement and the execution and delivery of the Notes as provided for
herein.
SECTION 5.2. LEGAL OPINION. A favorable opinion of counsel for the Company
as to the matters referred to in Sections 4.1, 4.2, 4.3, 4.4, 4.6 and 4.8
of this Agreement and such other matters as the Banks may reasonably
request.
17
<PAGE> 18
SECTION 5.3. CERTIFICATE OF INCUMBENCY. A certificate of the secretary or
assistant secretary of the Company certifying the names of the officers of
the Company authorized to sign this Agreement, and the Notes, together with
the true signatures of such officers.
SECTION 5.4. FINANCIAL REPORTS. The Financial Reports of the Company and
the Consolidated Subsidiaries, dated December 31, 1994, previously
furnished to each Bank, are true and complete, have been prepared in
accordance with generally accepted accounting principles applied on a basis
consistent with those used by the Company and the Consolidated Subsidiaries
during the Company's immediately preceding full fiscal year, except as
stated therein, and fairly present the Company's and the Consolidated
Subsidiaries' financial condition as of that date and the results of their
operations for the interim period then ending. Since that date there has
been no material adverse change in the Company's and the Consolidated
Subsidiaries' financial condition, properties or business taken as a
whole.
ARTICLE VI. COVENANTS
Until the later of (i) the expiration of the Commitments or (ii) all
obligations of the Company hereunder and under the Notes are satisfied and
paid in full, the Company agrees that, unless at any time the Majority
Banks shall otherwise expressly agree in writing:
SECTION 6.1. INSURANCE. The Company will (a) maintain insurance to such
extent and against such hazards and liabilities as is commonly maintained
by companies similarly situated, and (b) upon any Bank's written request,
furnish to such Bank such information about the Company's and its
Consolidated Subsidiaries' insurance as such Bank may from time to time
reasonably request, which information shall be prepared in form and detail
reasonably satisfactory to such Bank.
SECTION 6.2. FINANCIAL REPORTS. The Company will furnish to the
Administrative Agent and each Bank:
(i) within sixty (60) days after the end of each of the first
three quarter-annual periods of each of its fiscal years (and,
in any event, in each case as soon as available), the
quarterly Financial Report of the Company and the Consolidated
Subsidiaries as at the end of that period, prepared on a
consolidated basis;
(ii) within ninety (90) days after the end of each of its fiscal
years (and, in any event, in each case as soon as available),
the annual Financial Report of the Company and the
Consolidated Subsidiaries for that year prepared on a
consolidated basis;
(iii) within sixty (60) days after the end of each of its quarterly
accounting periods and within ninety (90) days after the end
of its annual accounting period, a statement signed by a
financial officer of the Company reflecting compliance with
Section 6.3 hereof and to the effect that no Event of Default
has occurred and is continuing or, if there is any such event,
describing it and the steps being taken, if any, to cure such
event;
18
<PAGE> 19
(iv) promptly after filing with the Securities and Exchange
Commission, any Form 8-K or Schedule 13D filings applicable to
the Company (or any successor forms or schedules promulgated
by the Securities and Exchange Commission from time to time
which encompass the matters currently addressed in Form 8-K
and Schedule 13D);
(v) written notice of any change in the rating assigned to the
Company's senior unsecured long-term debt by Moody's, S&P or
Duff & Phelps within thirty (30) days of such change; and
(vi) such other financial information regarding the Company as any
Bank may reasonably request.
SECTION 6.3. NET WORTH. The Company will not permit its Consolidated Net
Worth at any time to fall below Eight Hundred Million Dollars
($800,000,000).
SECTION 6.4. REGULATIONS U AND X. The Company will not nor will it permit
any Subsidiary to take any action that would result in any non-compliance
of the Loans made hereunder with Regulation U and X of the Board of
Governors of the Federal Reserve System. The Company's use of proceeds of
any borrowings under this Agreement will not cause a violation of
Regulation U or X.
SECTION 6.5. MERGER AND SALE OF ASSETS. The Company will not merge or
consolidate with nor permit any Consolidated Subsidiary to merge or
consolidate with any other corporation or sell, lease or transfer or
otherwise dispose of all or, during any twelve (12) month period, a
substantial part of its assets to any person or entity (except as otherwise
provided herein); provided, however, if no Possible Default shall then
exist or immediately thereafter will begin to exist:
(i) Any Consolidated Subsidiary may merge with (a) the Company
(provided that the Company shall be the continuing or
surviving corporation) or (b) any one or more other
Consolidated Subsidiaries provided that either the continuing
or surviving corporation shall be a Wholly-Owned Consolidated
Subsidiary, or after giving effect to any merger pursuant to
this sub-clause (b), the Company and/or one or more
Wholly-Owned Consolidated Subsidiaries shall own not less than
the same percentage of the outstanding Voting Stock of the
continuing or surviving corporation as the Company and/or one
or more Wholly-Owned Consolidated Subsidiaries owned of the
merged Consolidated Subsidiary immediately prior to such
merger,
(ii) Any Consolidated Subsidiary may sell, lease, transfer or
otherwise dispose of any of its assets to (a) the Company, (b)
any Wholly-Owned Consolidated Subsidiary or (c) any
Consolidated Subsidiary of which the Company and/or one or
more Wholly-Owned Consolidated Subsidiaries shall own not less
than the same percentage of Voting Stock as the Company and/or
one or more Wholly-Owned Consolidated Subsidiaries then own of
the Consolidated Subsidiary making such sale, lease, transfer
or other disposition,
(iii) The Company may sell the stock or assets of any Consolidated
Subsidiary if such sale or other disposition is determined by
the board of directors of the Company to be in the best
interests of the Company and such sale is for a consideration
19
<PAGE> 20
which represents the fair value (as determined in good faith
by the board of directors of the Company) thereof at the time
of such sale of such stock or assets,
(iv) The Company may merge with any other corporation, provided
that the Company shall be the surviving corporation,
(v) The Company or any Consolidated Subsidiary may sell all or any
part of the assets of any of its divisions or operations if
such sale or other disposition is determined by the board of
directors of the Company and/or such Consolidated Subsidiary,
as the case may be, to be in the best interests of the Company
and/or such Consolidated Subsidiary, as the case may be, and
such sale is for a consideration which represents the fair
value (as determined in good faith by the board of directors
of the Company) thereof at the time of such sale or other
disposition of such assets, or
(vi) The Company or any Subsidiary may sell or transfer all or any
part of the assets of any of its divisions or operations to
any Subsidiary.
In the event there occurs a Change of Control of the Company, the
Commitments of the Banks will immediately terminate. For purposes of this
paragraph, a "Change of Control" shall occur if:
(a) there shall be consummated (i) any consolidation or
merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which
shares of the Company's common stock would be converted into
cash, securities or other property, other than a merger of the
Company in which the holders of the Company's common stock
immediately prior to the merger have substantially the same
proportionate ownership of common stock of the surviving
corporation immediately after the merger, or (ii) any sale,
lease, exchange or transfer (in one transaction or a series of
related transactions) of fifty percent (50%) or more of the
assets or earning power of the Company;
(b) any "person" (as such term is used in Sections as
13(d) and 14(d)(2) of the Exchange Act, as amended, other than
the Company or any employee benefit or stock ownership plan
sponsored by the Company, or any person or entity organized,
appointed or established by the Company for or pursuant to the
terms of any such Plan, shall become the beneficial owner
(within the meaning of Rule 13d-3 under the Exchange Act) of
securities of the Company representing fifteen percent (15%)
or more of the combined voting power of the Company's then
outstanding securities ordinarily (and apart from rights
accruing in special circumstances) having the right to vote in
the election of directors, as a result of a tender or exchange
offer, open market purchases, privately negotiated purchases
or otherwise; or
(c) during any period of two (2) consecutive years,
individuals who at the beginning of such period constituted
the Board of Directors of the Company and any new director
whose election by such Board of Directors or nomination for
election by the Company's shareholders was approved by a vote
of at least two-thirds ( 2/3) of the directors then still in
office who either were directors at the beginning of the
period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a
majority thereof.
20
<PAGE> 21
Notwithstanding subparagraph (a) through (c) above,
with respect to the transactions set forth in subparagraphs
(a) and (b) above, a Change of Control shall not be deemed to
have occurred if any such transaction (i) is approved by a
vote of at least two-thirds ( 2/3) of the directors and (ii)
at the time of such vote, at least two-thirds ( 2/3) of the
directors then in office were members of the Board of
Directors of the Company immediately prior to such
transaction.
SECTION 6.6. NOTICE. Until the Termination Date, the Company will cause
its treasurer, or in his absence another representative of the Company
designated by the treasurer, to promptly notify the Banks and the
Administrative Agent whenever any Material Possible Default may occur or
any warranty made in Article IV hereof or elsewhere in this Agreement or in
any Related Writing may for any reason cease in any Material respect to be
true and complete.
SECTION 6.7. LIENS. The Company will not and will not permit any
Consolidated Subsidiary to create, assume or suffer to exist any lien upon
any of its property or assets (hereinafter "Properties") whether now owned
or hereafter acquired without effectively providing that any borrowings
under this Agreement shall be secured equally and ratably with all other
indebtedness thereby secured; provided that this Section shall not
apply to the following:
(i) liens for taxes not yet due or which are being actively
contested in good faith by appropriate proceedings,
(ii) other liens incidental to the conduct of its business or the
ownership of its Properties which were not incurred in
connection with the borrowing of money or the obtaining of
advances or credit, and which do not in the aggregate
materially detract from the value of its Properties or
materially impair the use thereof in the operation of its
business,
(iii) liens on Properties of a Consolidated Subsidiary to secure
obligations of such Consolidated Subsidiary to the Company or
another Consolidated Subsidiary,
(iv) liens on Properties of the Company and/or its Consolidated
Subsidiaries existing on the date hereof,
(v) any lien existing on any Properties of any corporation at the
time it becomes a Consolidated Subsidiary, existing prior to
the time of acquisition upon any Properties acquired by the
Company or any Consolidated Subsidiary through purchase,
merger, consolidation or otherwise, whether or not assumed by
the Company or such Consolidated Subsidiary,
(vi) any lien placed upon any asset other than real property
(hereinafter in this subparagraph (vi) "Asset") at the time of
acquisition by the Company or any Consolidated Subsidiary to
secure all or a portion of [or to secure indebtedness incurred
prior to, at the time of, or (in the case of any Asset
acquired with the intent to obtain subsequent financing
thereof secured by a lien) within one (1) year after the
acquisition of such Asset for the purpose of financing all or
a portion of] the purchase price thereof, provided that any
such lien shall not encumber any other Properties of the
Company or such Consolidated Subsidiary,
21
<PAGE> 22
(vii) any lien placed upon any real property now owned or hereafter
acquired by the Company or any of its Subsidiaries securing
indebtedness in an amount up to eighty percent (80%) of the
fair market value of such real property,
(viii) liens in favor of the United States of America or any
department or agency thereof, or in favor of any state
government or political subdivision thereof, or in favor of a
prime contractor under a government contract of the United
States, or of any state government or any political
subdivision thereof, and, in each case, resulting from
acceptance of partial, progress, advance or other payments in
the ordinary course of business under government contracts of
the United States, or of any state government or any political
subdivision thereof, or subcontracts thereunder,
(ix) liens created, assumed or existing in connection with a
tax-free financing,
(x) any lien renewing, extending or refunding any lien permitted
by clauses (iv), (v), (vi), (vii), (viii) and (ix) above,
provided that the principal amount secured is not materially
increased, and the lien is not extended to other Properties,
and
(xi) liens other than those permitted by clauses (i) through (x)
above, provided that the aggregate amount of all indebtedness
secured by liens permitted by this clause (xi) shall not at
any time exceed fifteen percent (15%) of Consolidated Net
Worth.
SECTION 6.8. ERISA COMPLIANCE. Neither the Company nor any Consolidated
Subsidiary will incur any Material accumulated funding deficiency within
the meaning of ERISA and the regulations thereunder, or any Material
liability to the Pension Benefit Guaranty Corporation or any successor
thereto in connection with any Plan. The Company will furnish to the Banks
as soon as possible and in any event within thirty (30) days after the
Company or such Consolidated Subsidiary knows or has reason to know that
any Material Reportable Event with respect to any Plan has occurred a
statement of the chief financial officer of the Company or such
Consolidated Subsidiary setting forth details as to such Reportable Event
and the action which the Company or such Consolidated Subsidiary proposes
to take with respect thereto, together with a copy of the notice of such
Reportable Event given to the Pension Benefit Guaranty Corporation if a
copy of such notice is available to the Company or such Consolidated
Subsidiary.
SECTION 6.9. NOTICE OF DEFAULT. The Company will, and will cause each
Consolidated Subsidiary to, give prompt notice in writing to each Bank and
the Administrative Agent of the occurrence of any Possible Default and of
any other development, financial or otherwise, with respect to which there
is a significant probability of a Material adverse impact on Consolidated
Net Worth or on the Company's ability to repay the Notes.
SECTION 6.10. CONDUCT OF BUSINESS. The Company will, and will cause each
Consolidated Subsidiary to, carry on and conduct its business in
substantially the same manner as it is presently conducted and to do all
things necessary to remain duly incorporated, validly existing and in good
standing as a corporation in its jurisdiction of incorporation and maintain
all requisite authority to conduct its business in each jurisdiction in
which its business is conducted.
SECTION 6.11. TAXES. The Company will, and will cause each Consolidated
Subsidiary to, pay when due all taxes, assessments and governmental charges
and levies upon it or its income, profits or property, except those which
are being contested in good faith by appropriate proceedings.
22
<PAGE> 23
SECTION 6.12. ENVIRONMENTAL. The Company will use its best good faith
efforts to comply and to cause each Subsidiary to comply with all such laws
and regulations (other than laws and regulations the validity or
applicability of which are being contested by the Company or a Subsidiary,
as the case may be, in good faith by appropriate proceedings diligently
prosecuted) which may be legally imposed in the future in jurisdictions in
which the Company or any Subsidiary may then be doing business.
ARTICLE VII. EVENTS OF DEFAULT
Each of the following shall constitute an Event of Default":
SECTION 7.1. NON-PAYMENT OF NOTES, INTEREST OR FACILITY FEE. If the
principal on any Note shall not be paid in full when due and payable and
shall remain unpaid for a period of three (3) consecutive business days
and/or any interest due on any Note or any Facility Fee shall not be paid
within five (5) business days after written notice thereof to the Company
from the Bank (or Administrative Agent) to whom such amount(s) are owed.
SECTION 7.2. COVENANTS. If the Company shall fail or omit to perform and
observe any agreement or other provision (other than those referenced in
Section 7.1 hereof) contained or referred to in this Agreement or in any
Related Writing that is on the Company's part to be complied with, and such
failure or omission, if not fully corrected within thirty (30) days after
the giving of written notice thereof to the Company by any Bank that such
failure or omission would have or reasonably could have a Material adverse
impact on the financial condition of the Company and the Consolidated
Subsidiaries, taken as a whole (provided, however, that the financial
covenant in Section 6.3 shall be applied without regard to any materiality
standard).
SECTION 7.3. WARRANTIES. If any representation, warranty or statement made
in or pursuant to this Agreement or any Related Writing or any other
information furnished by the Company to the Banks or any other holder of
any Note, shall be false or erroneous in any respect which would have or
reasonably could have a Material adverse impact on the financial condition
of the Company and the Consolidated Subsidiaries, taken as a whole.
SECTION 7.4. CROSS DEFAULT. If the Company or any of its Consolidated
Subsidiaries (i) default in the payment of principal or interest due and
owing upon any other Material obligation for borrowed money beyond any
period of grace provided with respect thereto or (ii) default in the
performance of any other agreement, term or condition contained in any
agreement under which such obligation is created, and any such default is
not waived by the holders of such agreement or instrument, and if the
effect of such unwaived default would (a) accelerate the maturity of such
indebtedness or permit the holder thereof to cause such indebtedness to
become due prior to its stated maturity and (b) have or reasonably could
have a Material adverse impact on the financial condition of the
Company and the Consolidated Subsidiaries, taken as a whole.
SECTION 7.5. TERMINATION OF OPERATIONS, BANKRUPTCY OR INSOLVENCY. If the
Company or a Consolidated Subsidiary representing in excess of ten percent
(10%) of total consolidated assets of the Company and the Consolidated
Subsidiaries shall (i) discontinue business (except as permitted under
Section 6.5 hereof) or (ii) generally not pay (or admit in writing its
inability to pay) its debts as such debts become due, or (iii) make a
general assignment for the benefit of creditors, or (iv) apply for or
consent to the appointment of a receiver, a custodian, a trustee, an
interim trustee or a liquidator of all or a substantial part of its assets,
or (v) be adjudicated an insolvent debtor or have entered against it
an order for relief under Title 11
23
<PAGE> 24
of the United States Code, as the same may be amended from to time to time,
or (vi) file a voluntary petition in bankruptcy or file a petition or an
answer seeking reorganization or an arrangement with creditors or seeking
to take advantage of any other law (whether federal or state) relating to
relief of debtors, or admit (by answer, by default or otherwise) the
substantive allegations of a petition filed against it in any bankruptcy,
reorganization, insolvency or other comparable proceeding (whether federal
or state) relating to relief of debtors, or (vii) suffer or permit to
continue unstayed and in effect for sixty (60) consecutive days any
judgment, decree or order entered by a court of competent jurisdiction,
which approves a petition seeking its reorganization or appoints a
receiver, custodian, trustee, interim trustee or liquidator of all or a
substantial part of its assets.
ARTICLE VIII. EFFECT OF DEFAULT
SECTION 8. EFFECT OF EVENT OF DEFAULT. If any Event of Default described
in Section 7.5 hereof shall occur, the Commitments (if they have not
already been terminated) shall immediately terminate and all Notes shall
automatically become immediately due and payable, without notice. If any
other Event of Default shall occur and shall not have been remedied within
an allowable time period referred to in this Agreement, then the Majority
Banks may terminate the Commitments (if they have not already been
terminated) and the Outstanding Majority Banks may declare that all Notes
shall become immediately due and payable. The Majority Banks and the
Outstanding Majority Banks shall promptly notify the Company in writing of
any such declaration. The effect as an Event of Default of any event
described in Section 7.1 or 7.5 hereof may be waived only by the written
concurrence of the holders of one hundred percent (100%) of the
Commitments, or in the event there are no Commitments, by one hundred
percent (100%) of the holders of outstanding Notes. The effect as an Event
of Default of any other event described in Sections 7.2, 7.3 or 7.4 may be
waived by the holders of fifty-one percent (51%) by amount of the
Commitments.
ARTICLE IX. THE ADMINISTRATIVE AGENT
The Banks hereby authorize Bank of America National Trust and Savings
Association ("BOA") and BOA hereby agrees to act as Administrative Agent
for the Banks in respect of this Agreement upon the terms and conditions
set forth elsewhere in this Agreement, and upon the following terms and
conditions:
SECTION 9.1. APPOINTMENT AND AUTHORIZATION. Each Bank hereby irrevocably
appoints and authorizes the Administrative Agent to exercise such powers
hereunder as are delegated to the Administrative Agent by the terms hereof,
together with such powers as are reasonably incidental thereto.
Notwithstanding anything in this Agreement to the contrary, or in a Related
Writing, the Administrative Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor shall the
Administrative Agent have or be deemed to have any fiduciary relationship
with any Bank. Neither the Administrative Agent nor any of its directors,
officers, attorneys or employees shall be liable for any action taken or
omitted to be taken by it or them hereunder or in connection herewith,
except for its or their own gross negligence or willful misconduct.
SECTION 9.2. NOTE HOLDERS. The Administrative Agent may treat the payee of
any Note as the holder thereof until written notice of transfer shall have
been filed with it signed by such payee and in form satisfactory to the
Administrative Agent.
24
<PAGE> 25
SECTION 9.3. CONSULTATION WITH COUNSEL. The Administrative Agent may
consult with legal counsel selected by it (including in-house counsel) and
shall not be liable for any reasonable action taken or suffered in good
faith by it in accordance with the written opinion of external counsel,
issued before such action is taken or suffered.
SECTION 9.4. DOCUMENTS. The Administrative Agent shall not be under a duty
to examine into or pass upon the validity, effectiveness, genuineness
or value of this Agreement, the Notes, any Related Writing furnished
pursuant hereto or in connection herewith or the value of any collateral
obtained hereunder, and the Administrative Agent shall be entitled to
assume that the same are valid, effective and genuine and what they purport
to be.
SECTION 9.5. ADMINISTRATIVE AGENT AND AFFILIATES. With respect to the
Loans made hereunder, the Administrative Agent shall have the same
rights and powers hereunder as any other Bank and may exercise the same as
though it were not the Administrative Agent, and the Administrative Agent
and its affiliates may accept deposits from, lend money to and generally
engage in any kind of business with the Company or any Subsidiary or
affiliate of the Company.
SECTION 9.6. KNOWLEDGE OF DEFAULT. It is expressly understood and agreed
that the Administrative Agent shall be entitled to assume that no
Possible Default has occurred and is continuing, unless the Administrative
Agent has actual knowledge of such fact or has been notified by a Bank that
such Bank considers that a Possible Default has occurred and is continuing
and specifying the nature thereof.
SECTION 9.7. ACTION BY ADMINISTRATIVE AGENT. So long as the Administrative
Agent shall be entitled, pursuant to Section 9.6 hereof, to assume that
no Possible Default shall have occurred and be continuing, the
Administrative Agent shall be entitled to use its discretion with respect
to exercising or refraining from exercising any rights which may be vested
in it by, or with respect to taking or refraining from taking any action or
actions which it may be able to take under or in respect of, this
Agreement. The Administrative Agent shall incur no liability under or in
respect of this Agreement by action upon any notice, certificate, warranty
or other paper or instrument reasonably believed by it to be genuine or
authentic or to be signed by the proper party or parties, or with respect
to anything which it may do or refrain from doing in the reasonable
exercise of its judgment, or which the Administrative Agent reasonably
believes to be necessary or desirable in the premises.
SECTION 9.8. INDEMNIFICATION. The Banks agree to indemnify the
Administrative Agent (to the extent not reimbursed by the Company),
ratably according to the respective principal amounts of their Commitments
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs (including reasonable external
counsel costs), expenses or disbursements of any kind or nature whatsoever
which may be imposed on, incurred by or asserted against the Administrative
Agent in any action taken or omitted by the Administrative Agent with
respect to this Agreement, provided that no Bank shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from
the Administrative Agent's gross negligence or willful misconduct or from
any action taken or omitted by the Administrative Agent in any capacity
other than as agent under this Agreement.
SECTION 9.9. SUCCESSOR. The Company may select a successor or alternate
Administrative Agent with the approval of the holders of fifty-one
percent (51%) by amount of the Commitments.
25
<PAGE> 26
ARTICLE X. MISCELLANEOUS
SECTION 10.1. BANKS' INDEPENDENT INVESTIGATION. Each Bank by its signature
to this Agreement acknowledges and agrees that it has made and shall
continue to make its own independent investigation of the creditworthiness,
financial condition and affairs of the Company and any Subsidiary in
connection with the extension of credit hereunder, and agrees that no other
Bank nor the Administrative Agent has any duty or responsibility, either
initially or on a continuing basis, to provide any Bank with any credit or
other information with respect thereto whether coming into its possession
before the making of the first Loans or at any time or times thereafter.
SECTION 10.2. NO WAIVER; CUMULATIVE REMEDIES. No omission or course of
dealing on the part of any Bank or the holder of any Note in exercising
any right, power or remedy hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any such right, power or remedy
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy hereunder. The remedies herein provided are
cumulative and in addition to any other rights, powers or privileges held
by operation of law, by contract or otherwise.
SECTION 10.3. AMENDMENTS. Except as otherwise specifically provided herein,
no amendment, modification, termination, or waiver of any provision of
this Agreement or of the Notes, nor consent to any variance therefrom,
shall be effective unless the same shall be in writing and signed by the
Company and the Majority Banks and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for
which given.
The unanimous consent of the Banks, shall be required with respect to
(i) the change of maturity of the Notes, or the payment date of interest
thereunder, (ii) any change in the rate of interest on such Notes, or in
the rate at which the Facility Fee referred to in Section 2.3 hereof shall
be calculated or in any amount of principal or interest due on any Note, or
in the manner of pro rata application of any payments made by the Company
to the Banks hereunder, (iii) any change in any percentage voting
requirement in this Agreement, (iv) any change in any date specified in
this Agreement for the payment of principal or interest on any Note or for
the payment of any Facility Fee hereunder, (v) any increase in any Bank's
Commitment or Percentage, except pursuant to Section 2.5(iii) hereof, or
any increase in the aggregate of all of the Banks' Commitments hereunder or
(vi) any change to this Section 10.3. No amendments to the duties or
responsibilities of the Administrative Agent may be made without the prior
written consent of the Administrative Agent except provided in Section 9.9
hereof.
Notice of amendments or consents ratified by the Banks hereunder shall
immediately be forwarded by the Company to all Banks. Each Bank or other
holder of a Note shall be bound by any amendment, waiver or consent
obtained as authorized by this Section, regardless of its failure to agree
thereto.
SECTION 10.4. CONFIDENTIALITY. Unless the Company otherwise agrees in
writing, each Bank hereby agrees to keep all Proprietary Information
(as defined below) confidential and not to disclose or reveal any
Proprietary Information to any person or entity other than the Bank's
directors, officers, employees, affiliates, and agents, and then only on a
confidential need-to-know basis; provided, however that a Bank may disclose
Proprietary Information (a) as required by law, rule, regulation, or
judicial process, (b) to its attorneys and accountants, (c) as requested or
required by a state, federal, or foreign authority or examiner regulating
banks or banking, or (d) to actual or potential assignees or participants
as permitted by Section 10.9 hereof who agree to be bound by the provisions
of this Section. For purposes of this Agreement, the term
26
<PAGE> 27
"Proprietary Information" shall include all information about the
Company, any Subsidiary, or any of their respective affiliates which has
been furnished by the Company, any Subsidiary, or any of their respective
affiliates, whether furnished before or after the date hereof, and
regardless of the manner furnished; provided, however, that Proprietary
Information shall not include information which (x) is or becomes generally
available to the public other than as a result of a disclosure by a Bank
not permitted by this Agreement, (y) was available to a Bank on a
nonconfidential basis prior to its disclosure to such Bank by the Company,
any Subsidiary, or any of their respective affiliates, or (z) becomes
available to a Bank on a nonconfidential basis from a person and/or entity
other than the Company, any Subsidiary, or any of their respective
affiliates who, to the best knowledge of such Bank, is not otherwise bound
by a confidentiality agreement with the Company, any Subsidiary, or any of
their respective affiliates, or, to the best knowledge of such Bank, is not
otherwise prohibited from transmitting the information to such Bank.
SECTION 10.5. NOTICES. All notices, requests, demands and other
communications provided for hereunder shall be in writing and, if to
the Company or a Subsidiary, mailed or delivered to it, addressed to it at
the address of the Company herein specified, and if to a Bank, mailed or
delivered to it, addressed to the address of such Bank specified on its
signature page to this Agreement. All notices, statements, requests,
demands and other communications provided for hereunder shall be deemed to
be given or made when received.
SECTION 10.6. COSTS AND EXPENSES. The Company agrees to pay on demand all
reasonable out-of-pocket costs and expenses (including reasonable legal
fees for outside counsel) of the Banks incurred directly as a result of the
enforcement of this Agreement, the Notes and the other instruments and
documents in connection herewith.
SECTION 10.7. OBLIGATIONS SEVERAL. The obligations of the Banks hereunder
are several and not joint. Nothing contained in this Agreement and no
action taken by the Banks pursuant hereto shall be deemed to constitute the
Banks as a partnership, association, joint venture or other entity. No
default by any Bank hereunder shall excuse the other Banks from any
obligation under this Agreement; but no Bank shall have or acquire any
additional obligation of any kind by reason of such default.
SECTION 10.8. 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 and delivered shall be deemed
to be an original and when taken together shall constitute one and the same
agreement.
SECTION 10.9. ASSIGNMENTS AND PARTICIPATIONS.
A. ASSIGNMENTS. Unless the Company otherwise consents in writing, which
consent shall not be unreasonably withheld, no payee or other party
in possession of any Note (including any Bank) shall assign or
transfer any Note or any interest therein to any other person or
entity, except as otherwise permitted under this Section, or negotiate
any Note, as such term is defined in Ohio Revised Code Chapter 1303.
Except as otherwise expressly agreed in writing by the Company, no
Bank shall, by reason of the assignment or transfer of any Note or
otherwise, be relieved of any of its obligations hereunder. Each
transferee of any Note shall take such Note subject to the provisions
of this Agreement and to any request made, waiver or consent given, or
other action taken hereunder, prior to such transfer, by each previous
holder of such Note; and the Company shall be entitled to conclusively
assume that the transferee shall thereafter be vested with all rights
and powers under this Agreement of the Bank named as the payee of the
Note which is the
27
<PAGE> 28
subject of such transfer. Nothing herein shall prohibit any Bank from
pledging or assigning any Note to any Federal Reserve Bank of the
United States pursuant to applicable law. No party in possession of a
Note shall be a "Holder" as such term is defined in Ohio Revised Code
Chapter 1303. Notwithstanding any provision of this Section 10.9 to
the contrary, the Company may not assign or transfer any of its rights
or obligations hereunder without the consent of the holders of one
hundred percent (100%) by amount of the Commitments.
B. PARTICIPATIONS. Any Bank may grant participations in or to all or any
part of any Loan or Loans then owing to such Bank hereunder and the
Notes held by such Bank without the consent of the Company which
consent shall not be unreasonably withheld. Except as otherwise
expressly agreed in writing by the Company, no grant of a
participation shall relieve any Bank of its obligations hereunder.
The Company shall be entitled to deal solely with the Banks (and their
respective assignees) for all purposes of this Agreement and the
Notes, and no holder of a participation in all or any part of the
Loans or the Notes shall have any rights under this Agreement and
shall not be a Holder of any Note, as such term is defined in Ohio
Revised Code Chapter 1303.
C. DISCLOSURE OF INFORMATION. The Company hereby consents to the
disclosure of any information obtained in connection herewith by any
Bank to any entity which is an assignee or potential assignee or a
participant or potential participant pursuant to Section 10.9A or
10.9B hereof, it being understood that such Bank shall advise any such
actual or potential assignee or participant of its obligation to keep
confidential any nonpublic information disclosed to it pursuant to
this Section 10.9 and, prior to the disclosure of such information,
shall cause each such actual or potential assignee or participant to
execute a confidentiality agreement containing the confidentiality
provisions set forth in Section 10.4 hereof.
D. SECURITIES LAWS. Each Bank represents that it is the present
intention of such Bank to acquire each Note drawn to its order for its
own account and not with a view to the distribution or sale thereof.
SECTION 10.10. TAX FORMS. With respect to each Bank which is organized under
the laws of a jurisdiction outside the United States, on the date of
any borrowing, (which claims, exemption from, or reduction of, United
States withholding tax under Sections 1441 or 1442 of the Internal Revenue
Code of 1986, as amended) and from time to time thereafter if requested by
the Company or the Administrative Agent, each such Bank shall provide the
Administrative Agent and the Company with the forms prescribed by the
Internal Revenue Service of the United States certifying as to such Bank's
status for purposes of determining exemption from United States withholding
taxes with respect to all payments to be made to such Bank hereunder or
other documents satisfactory to the Company and the Administrative Agent
indicating that all payments to be made to such Bank hereunder are subject
to such tax at a rate reduced by an applicable tax treaty. Unless the
Company and the Administrative Agent have received such forms and such
other documents reasonably requested by the Administrative Agent or the
Company indicating that payments hereunder are not subject to United States
withholding tax or are subject to such tax at a rate reduced by an
applicable tax treaty, the Company or the Administrative Agent shall
withhold taxes from such payments at the applicable statutory rate in the
case of payments to or for any Bank organized under the laws of a
jurisdiction outside the Unites States.
28
<PAGE> 29
SECTION 10.11. ENTIRE AGREEMENT. This Agreement supersedes any prior
agreement or understanding of the parties hereto, and contains the entire
agreement of the parties hereto, with respect to the matters covered
hereby.
SECTION 10.12. GOVERNING LAW. This Agreement, each of the Notes and any
Related Writing shall be governed by and construed in accordance with the
laws of the State of Ohio and the respective rights and obligations of the
Company and the Banks shall be governed by Ohio law.
SECTION 10.13. SEVERABILITY OF PROVISIONS; CAPTIONS. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction. The several captions to sections and subsections herein are
inserted for convenience only and shall be ignored in interpreting the
provisions of this Agreement.
SECTION 10.14. PRESS RELEASES. Neither the Administrative Agent nor any bank
shall issue any press release regarding this Agreement without the prior
written consent of the Company.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date indicated above.
THE SHERWIN-WILLIAMS COMPANY
By: /s/ Larry J. Pitorak
--------------------------------
LARRY J. PITORAK
Title: SENIOR VICE PRESIDENT-
FINANCE, TREASURER AND
CHIEF FINANCIAL OFFICER
By: /s/ James J. Sgambellone
--------------------------------
JAMES J. SGAMBELLONE
Title: ASSISTANT SECRETARY AND
CORPORATE DIRECTOR OF TAXES
29
<PAGE> 30
CONSENT TO SERVE AS ADMINISTRATIVE AGENT
The undersigned authorized representative of Bank of America National
Trust and Savings Association hereby consents on behalf of Bank of America
National Trust and Savings Association to serve as Administrative Agent under
that certain 364-Day Revolving Credit Agreement dated August 31, 1995 by and
among The Sherwin-Williams Company as Borrower, Bank of America National Trust
and Savings Association as Administrative Agent and the Banks named in such
Agreement.
BANK OF AMERICA NATIONAL TRUST
and SAVINGS ASSOCIATION
ADMINISTRATIVE AGENT
By: /s/ Doris V.G. Bergum
-----------------------------------
Title: DORIS V.G. BERGUM
VICE PRESIDENT
<PAGE> 31
Amount of Percentage of
Commitment Commitments
- ---------- -----------
$11,428,571.43 11.4286% Trust Company Bank
By: /s/ Ruth E. Whitner
---------------------------
Name: RUTH E. WHITNER
Title: ASSISTANT VICE PRESIDENT
By: /s/ Brian K. Peters
---------------------------
Name: BRIAN K. PETERS
Title: VICE PRESIDENT
Trust Company Bank
P.O. Box 4418, Center 128
Atlanta, Georgia 30302
Telephone: (404) 588-7915
---------------------
Facsimile: (404) 827-6270
---------------------
<PAGE> 32
Amount of Percentage of
Commitment Commitments
- ---------- -----------
$11,428,571.43 11.4286% Bank of America, Illinois
By: /s/ Lynn W. Stetson
--------------------------------
Name: LYNN W. STETSON
Title: VICE PRESIDENT
Bank of America, Illinois
231 S. LaSalle Street
Chicago, Illinois 60697
Telephone: (312) 828-6757
--------------------------
Facsimile: (312) 987-0303
--------------------------
<PAGE> 33
Amount of Percentage of
Commitment Commitments
- ---------- -----------
$10,000,000.00 10.0% National City Bank
By: /s/ Robert E. Little
-----------------------------------
Name: ROBERT E. LITTLE
Title: VICE PRESIDENT AND
SENIOR LENDING OFFICER
National City Bank
National City Center
Box 5756
Cleveland, Ohio 44101-0756
Telephone: (216) 575-3018
-----------------------------
Facsimile: (216) 575-9396
-----------------------------
<PAGE> 34
Amount of Percentage of
Commitment Commitments
- ---------- -----------
$10,000,000.00 10.0% Society National Bank
By: /s/ Marianne T. Meil
----------------------------------
Name: MARIANNE T. MEIL
Title: ASSISTANT VICE PRESIDENT
Society National Bank
127 Public Square
Cleveland, Ohio 44ll4
Telephone: (216) 689-3549
-----------------------------
Facsimile: (216) 689-4981
-----------------------------
<PAGE> 35
Amount of Percentage of
Commitment Commitments
- ---------- -----------
$7,142,857.14 7.1429% First National Bank of Chicago
By: /s/ Thomas M. Fast
----------------------------------
Name: THOMAS M. FAST
Title: AUTHORIZED AGENT
First National Bank of Chicago
1301 East Ninth Street
Suite 2150
Cleveland, Ohio 44114-1824
Telephone: (216) 574-9851
-----------------------------
Facsimile: (216) 574-9278
-----------------------------
<PAGE> 36
Amount of Percentage of
Commitment Commitments
- ---------- -----------
$7,142,857.14 7.1429% First Interstate Bank of California
By: /s/ Wendy V.C. Purcell
----------------------------------
Name: WENDY V.C. PURCELL
Title ASSISTANT VICE PRESIDENT
First Interstate Bank of California
222 W. Adams Street
Suite 2180
Chicago, Illinois 60606
Telephone: (312) 553-2353
-----------------------------
Facsimile: (312) 553-4783
-----------------------------
<PAGE> 37
Amount of Percentage of
Commitment Commitments
- ---------- -----------
$7,142,857.14 7.1429% The Bank of Nova Scotia
By: /s/ F.C.H. Ashby
----------------------------------
Name: F.C.H. ASHBY
Title: SENIOR MANAGER LOAN OPERATIONS
The Bank of Nova Scotia
600 Peachtree St., NE
Suite 2700
Atlanta, GA 30308
Telephone: (404) 877-1500
-----------------------------
Facsimile: (404) 888-8998
-----------------------------
<PAGE> 38
Amount of Percentage of
Commitment Commitments
- ---------- -----------
$7,142,857.14 7.1429% Chemical Bank
By: /s/ D. Marin
----------------------------------
Name: D. MARIN
Title ASSISTANT MANAGER
Chemical Bank
270 Park Avenue
New York, New York 10017
Telephone: (1) 212-270-3531
-----------------------------
Facsimile: (1) 212-270-4711
-----------------------------
<PAGE> 39
Amount of Percentage of
Commitment Commitments
- ---------- -----------
$5,714,285.71 5.7143% NationsBank, N.A. (Carolinas)
By: /s/ Michael D. Monte
--------------------------------
Name: MICHAEL D. MONTE
Title: VICE PRESIDENT
NationsBank, N.A. (Carolinas)
Corporate Bank
100 North Tryon Street
NC1-007-08-04
Charlotte, North Carolina 28255
Telephone: (704) 386-9015
-----------------------------
Facsimile: (704) 386-3271
-----------------------------
<PAGE> 40
Amount of Percentage of
Commitment Commitments
- ---------- -----------
$5,714,285.71 5.7143% Deutsche Bank AG
By: /s/ J. Tracy Mehr
----------------------------------
Name: J. TRACY MEHR
Title: VICE PRESIDENT
By: /s/ Jean Hannigan
----------------------------------
Name: JEAN HANNIGAN
Title: ASSISTANT VICE PRESIDENT
Deutsche Bank AG
New York Branch
31 West 52nd Street
New York, New York 10019
Telephone:_____________________________
Facsimile:_____________________________
<PAGE> 41
Amount of Percentage of
Commitment Commitments
- ---------- -----------
$5,714,285.72 5.7143% First Union National Bank of
North Carolina
By: /s/ Mark M. Harden
-------------------------------
Name: MARK M. HARDEN
Title: VICE PRESIDENT
First Union National Bank of
North Carolina
301 South College Street
TW-19 Floor
Charlotte, North Carolina 28288-0745
Telephone: (704) 374-2420
---------------------------
Laurie Hart
Facsimile: (704) 374-2802
----------------------------
<PAGE> 42
Amount of Percentage of
Commitment Commitments
- ---------- -----------
$5,714,285.72 5.7143% The Bank of New York
By: /s/ Robert J. Joyce
----------------------------------
Name: ROBERT J. JOYCE
Title: VICE PRESIDENT
The Bank of New York
One Wall Street
New York, New York 10286
Telephone: (212) 635-7919
-----------------------------
Facsimile: (212) 635-6434
-----------------------------
<PAGE> 43
Amount of Percentage of
Commitment Commitments
- ---------- -----------
$5,714,285.72 5.7143% ABN-AMRO Bank N.V.
By: /s/ Kathryn C. Toth
----------------------------------
Name K. C. TOTH
Title: VICE PRESIDENT
By: /s/ Gregory D. Amoposo
----------------------------------
Name GREGORY P. AMOPOSO
Title: VICE PRESIDENT
ABN-AMRO Bank N.V.
Pittsburgh Branch
One PPG Place
Suite 2950
Pittsburgh, Pennsylvania 15222-5400
Telephone: (412) 566-2269
--------------------------
Facsimile: (412) 566-2266
--------------------------
<PAGE> 1
Exhibit (b)(2)
FIVE-YEAR REVOLVING CREDIT AGREEMENT
------------------------------------
This Agreement is made and entered into this 31st day of August, 1995
by and among The Sherwin-Williams Company ("Company") whose principal place
of business is located at 101 Prospect Avenue, N.W., Cleveland, Ohio
44115, Bank of America National Trust and Savings Association, as
Administrative Agent, and the financial institutions listed on Schedule A
hereto together with each of their successors and assigns (collectively
referred to as "Banks" and individually a "Bank").
W I T N E S S E T H:
-------------------
WHEREAS, the Company has requested the Banks to make certain
unsecured Loans to the Company for general corporate purposes including,
but not limited to, capital expenditures, general working capital,
acquisitions of assets, stock or other ownership interests and repurchases
or redemptions of securities; and
WHEREAS, the Banks have agreed to make such Loans on the terms and
subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises contained
herein the parties agree as follows:
ARTICLE I: DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
"ADMINISTRATIVE AGENT" shall mean Bank of America National Trust and Savings
Association or any successor Bank appointed by the Company and
approved by the holders of fifty-one percent (51%) by amount of the
Commitments.
"ALTERNATE BASE RATE" shall mean the higher of: (i) the rate of
interest in effect for any given day as publicly announced from
time to time by the Administrative Agent as its "reference rate" and
(ii) the Federal Funds Rate plus 50 basis points. Any change by the
Administrative Agent of its "reference rate" shall take effect at the
opening of business on the day specified in the public announcement of
such change.
"ALTERNATE BASE RATE LOAN" shall mean those Loans bearing interest at the
Alternate Base Rate.
"BANKING DAY" shall mean a day, other than a Saturday or Sunday, on which
California and New York banks are open for the transaction of business.
"COMMITMENT" shall mean the obligation of each Bank to make loans, under
Section 2.1A or 2.1C of this Agreement, up to the amount set opposite
the name of such Bank as set forth on such Bank's signature page
hereto (or such lesser amount as shall be determined pursuant to
Section 2.5 hereof).
"COMMITMENT PERIOD" shall mean the period which commences on the Effective
Date and terminates on the Termination Date.
"CONSOLIDATED NET WORTH" shall mean the excess of the net book value of the
assets of the Company and its Consolidated Subsidiaries over all of
their liabilities (other than Subordinated Indebtedness), as
determined on a consolidated basis in accordance with
<PAGE> 2
generally accepted accounting principles as applied by the
Company in the calculation of such amount in the Company's then most
recent financial statements furnished to its stockholders, plus the
aggregate value of all treasury stock purchased after the Effective
Date (at cost) by the Company (to the extent that the aggregate value
of such treasury stock for purposes of this calculation does not exceed
Two Hundred Fifty Million Dollars ($250,000,000)). The calculation of
Consolidated Net Worth shall exclude any amounts which would otherwise
be required to be included therein as a result of the future adoption
by the Financial Accounting Standards Board of any policy, statement,
rule or regulation requiring the Company to record an accumulative
liability on its Financial Report(s).
"CONSOLIDATED SUBSIDIARY" shall mean, at any particular time, every
Subsidiary which is consolidated in the Company's financial statements
contained in its then most recent Financial Report.
"DEBT" shall mean, collectively, all indebtedness at any one time
outstanding hereunder and owed by the Company to the Banks pursuant to
this Agreement and includes the principal of and interest on all Notes
and each conversion, extension, renewal or refinancing thereof in
whole or in part, the Facility Fees and any prepayment premium due under
Section 2.1A(x).
"DOLLARS" or "$" shall mean any lawful currency of the United States of
America.
"EUROCURRENCY" shall mean any freely transferable and convertible currency
on deposit outside the country of issuance.
"EVENT OF DEFAULT" shall mean any of the events referred to in Article VII
hereof.
"EFFECTIVE DATE" shall mean August 31, 1995.
"FACILITY FEE" shall mean the sum to be paid by the Company to the
Administrative Agent on behalf of each Bank on the last Banking Day of
each calendar quarter during the Commitment Period calculated as the
product of each Bank's Commitment and the number of basis points set
forth in the following table for the highest of the then current
ratings assigned to the Company's senior unsecured long-term debt by
Moody's, S&P or Duff & Phelps on such date which is one (1) business
day prior to the date(s) payment of such fee shall be due:
MOODY'S, S&P OR DUFF & PHELPS BASIS POINTS
-----------------------------------------------------------------------
AA-, Aa3 or higher 7.0
-----------------------------------------------------------------------
A-, A3 9.0
-----------------------------------------------------------------------
BBB, Baa2 12.0
-----------------------------------------------------------------------
Lower than BBB or Baa2 15.0
"FEDERAL FUNDS RATE" shall mean, for any day, the rate set forth in the
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York
(including any such successor, "H.15(519)") on the preceding Banking
Day
2
<PAGE> 3
opposite the caption "Federal Funds (Effective)"; or, if for any
relevant day such rate is not so published on any such preceding
Banking Day, the rate for such day shall be the arithmetic mean,
as determined by the Administrative Agent, of the rates for the last
transaction in overnight Federal funds arranged prior to 9:00 a.m. (New
York time) on such day by each of three leading brokers of Federal
funds transactions in New York City selected by the Administrative
Agent.
"FINANCIAL REPORT" shall mean the annual or periodic report prepared in
accordance with generally accepted accounting principles, except as
otherwise indicated, filed by the Company with the Securities and
Exchange Commission (or any governmental body or agency succeeding to
the functions of such Commission) on Form 10-K or 10-Q pursuant to the
Securities Exchange Act of 1934 ("Exchange Act"), as then in effect
(or any comparable forms under similar Federal statutes then in
force), and the most recent financial statements furnished by the
Company to its stockholders (which annual financial statement shall be
certified by the Company's independent certified public accountants).
"INTEREST ADJUSTMENT DATE" shall mean the last day of each LIBOR Interest
Period.
"LIBOR" shall mean the average (rounded upward to the nearest 1/16 of 1%) of
the per annum rates at which deposits in immediately available funds
in Dollars for the number of months in the relevant LIBOR Interest
Period and in the amount of the LIBOR Loan to be disbursed or to
remain outstanding during such LIBOR Interest Period, as the case may
be, are offered to the Administrative Agent by the Reference Banks in
the London Interbank Eurodollar market, determined as of 11:00 a.m.
London time, two (2) London Banking Days prior to the beginning of the
relevant LIBOR Interest Period pertaining to a LIBOR Loan hereunder,
as appropriately adjusted by dividing such average LIBOR rate by 1.00
minus the applicable Reserve Percentage then in effect.
"LIBOR INTEREST PERIOD" shall mean a period of one, two, three, six or, if
available to the Banks, twelve months (as selected by the Company)
commencing on the applicable borrowing date of each LIBOR Loan
hereunder; provided, however, that if any such period would be
affected by a reduction in Commitment as provided in Section 2.5
hereof, prepayment as provided in Section 3.5 hereof or maturity of a
LIBOR Loan as provided in Section 2.1A or 2.1C hereof, such period
shall end on such date provided further that no such LIBOR Interest
Period shall end after the Termination Date. With respect only to
that portion of LIBOR Loans (as described in Section 2.1C hereof)
during the two (2) year Term Loan period which represents a mandatory
semi-annual installment of principal, the Company may not select a
LIBOR Interest Period the maturity of which would extend beyond the
due date of such installment payment without becoming subject to the
provisions of Section 2.1A(x) hereof.
"LIBOR LOAN" shall mean a Loan bearing interest at LIBOR.
"LOAN" shall mean the indebtedness of the Company with respect to each
advance of funds by a Bank hereunder.
"LONDON BANKING DAY" shall mean a day, other than a Saturday or Sunday, on
which banks are open for business in London, England and San
Francisco, California, quoting deposit rates for Dollar deposits.
"MAJORITY BANKS" shall mean Banks with an aggregate of sixty-six and
two-thirds percent (66 2/3%) or more of the Commitments on the
relevant date.
3
<PAGE> 4
"MARGIN" shall mean the number of basis points set forth in the following
table for the highest of the then current ratings assigned to the
Company's senior unsecured long-term debt by Moody's, S&P or
Duff & Phelps:
MOODY'S, S&P OR DUFF & PHELPS BASIS POINTS
------------------------------------------------------------------
AA-, Aa3 or higher 13.0
------------------------------------------------------------------
A-, A3 16.0
-----------------------------------------------------------------
BBB, Baa2 20.0
-----------------------------------------------------------------
Lower than BBB or Baa2 25.0
"MATERIAL" shall mean the measure of a matter of significance which shall be
determined as being an amount equal to five percent (5%) or more of
the Company's Consolidated Net Worth.
"MONEY MARKET NOTE" shall mean a Note or Notes executed and delivered
pursuant to Section 2.1B hereof.
"MONEY MARKET RATE" shall mean, with respect to any period of days
selected by the Company commencing on the applicable borrowing date
for a Money Market Rate Loan, the rate of interest per annum quoted by
any Bank to the Company for such Money Market Rate Loans.
"MONEY MARKET RATE LOAN" shall mean a Loan with an interest rate equal to
the Money Market Rate and as otherwise defined in Section 2.1B hereof.
"NOTE" or "NOTES" shall mean a note or notes executed and delivered
pursuant to Sections 2.1A, 2.1B or 2.1C hereof.
"OUTSTANDING MAJORITY BANKS" shall mean Banks with an aggregate of sixty-six
and two-thirds percent (66 2/3%) or more of the principal amount of
Loans hereunder on the relevant date.
"PERCENTAGE" shall mean, as to any Bank (as set forth on the Bank's
signature page hereof), the percentage of such Bank's share of the total
Commitments of all Banks; provided that if the Commitments are
terminated or reduced pursuant to Section 2.5 hereof, then
"Percentage" shall mean the percentage of such Bank's share of the
total Commitments of all Banks immediately after the termination or
reduction of Commitments.
"PLAN" shall mean any employee pension benefit plan within the meaning of
Section 3(2) of the Employee Retirement Income Security Act of 1974,
as amended from time to time ("ERISA") sponsored and maintained by the
Company, any Consolidated Subsidiary, or of any member of a controlled
group of corporations, as the term "controlled group of corporations"
is defined in Section 1563 of the Internal Revenue Code of 1986, as
amended, of which the Company or any Consolidated Subsidiary is a
part, for employees thereof.
"POSSIBLE DEFAULT" shall mean an event, condition or thing known to the
Company which constitutes, or which with the lapse of any applicable
grace period or the giving of notice
4
<PAGE> 5
or both would constitute, any Event of Default and which has
not been appropriately waived by the Banks in writing or fully
corrected prior to becoming an Event of Default.
"REFERENCE BANKS" shall mean Trust Company Bank and The Bank of Nova
Scotia or any successor Bank(s) appointed by the Company, and
satisfactory to the holders of fifty-one percent (51%) by amount of
the Commitments, at any time, upon thirty (30) days prior written
notice to the Banks, to act as Reference Banks pursuant to the terms of
this Agreement.
"REGULATORY CHANGE" shall mean, as to any Bank, any change in United
States federal, state or foreign laws or regulations or the adoption
or making of any interpretations, directives, guidelines or requests
of or under any United States federal, state or foreign laws or
regulations enacted after the Effective Date (whether or not having the
force of law) by any court or governmental authority charged with the
interpretation or administration thereof.
"RELATED WRITING" shall mean any assignment, mortgage, security agreement,
subordination agreement, financial statement, audit report or other
writing furnished by the Company or any of its officers to the Banks
pursuant to or otherwise in connection with this Agreement.
"REPORTABLE EVENT" shall mean a reportable event as that term is defined in
Title IV of ERISA except actions of general applicability by the
Secretary of Labor under Section 110 of ERISA.
"RESERVE PERCENTAGE" shall mean, for any day, that percentage (expressed
as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor)
for determining the reserve requirement (including but not limited to
any margin reserve requirement and taking into account any transitional
adjustments or other scheduled changes in reserve requirements) which
is imposed on (a) commercial time deposits having an original maturity
of one (1) year or less and which is applicable to the class of banks
of which the Administrative Agent is a member; or (b) a Bank with
respect to liabilities or assets consisting of or including
Eurocurrency funds or deposits, as the case may be.
"REVOLVING CREDIT LOAN" shall mean a Loan evidenced by a Revolving Credit
Note.
"REVOLVING CREDIT NOTE" shall mean a Note evidencing a Loan described in
Section 2.1A.
"SUBORDINATED INDEBTEDNESS" shall mean indebtedness which has been
subordinated (by written terms or agreement being in form and
substance reasonably satisfactory to the holders of fifty-one
percent (51%) by amount, of the Commitments) in favor of the prior
payment in full of the Company's Debt to the Banks.
"SUBSIDIARY" shall mean an existing or future corporation(s), the majority
of the outstanding capital stock or voting power, or both, of
which is (or upon the exercise of all outstanding warrants, options and
other rights would be) owned at the time in question by the Company or
by another such corporation(s) or by any combination of the Company and
such corporation(s).
5
<PAGE> 6
"TERM LOAN" shall mean a Loan evidenced by a Term Note.
"TERM NOTE" shall mean a Note executed and delivered pursuant to
Section 2.1C hereof.
"TERMINATION DATE" shall mean 12:01 a.m. on the fifth (5th) anniversary of
the Effective Date; provided, however, that commencing with the
first (1st) anniversary of the Effective Date, and each successive
anniversary thereafter, the Termination Date shall be extended
automatically by one (1) year periods with respect to any Bank which
fails to notify the Company, in writing, not less than forty-five (45)
days prior to such anniversary date that they wish to terminate their
Commitment four (4) years from the first anniversary date next
following the date written notice of termination was received.
"VOTING STOCK" shall mean stock of a corporation of a class or classes
having general voting power under ordinary circumstances to elect a
majority of the board of directors, managers or trustees of such
corporation (irrespective of whether or not the stock of any other
class or classes shall have or might have voting power by reason of the
happening of any contingency).
"WHOLLY-OWNED CONSOLIDATED SUBSIDIARY" shall mean each Consolidated
Subsidiary all of whose outstanding stock, other than directors'
qualifying shares, shall at the time be owned by the Company and/or by
one or more Wholly-Owned Consolidated Subsidiaries.
Any accounting term not specifically defined in this Article
shall have the meaning ascribed thereto by generally accepted
accounting principles in effect as of the date of the Company's then
most recent Financial Reports unless otherwise indicated.
The foregoing definitions shall be applicable to the singular
and plural of the foregoing defined terms.
ARTICLE II. AMOUNT AND TERMS OF CREDIT
SECTION 2.1. AMOUNT AND NATURE OF CREDIT. Subject to the terms and
conditions of this Agreement each Bank will participate to the
extent hereinafter provided in making Loans to the Company in such
aggregate amounts as the Company shall request; provided, however, that
in no event shall the aggregate principal amount of all Loans
outstanding under this Agreement during the Commitment Period be in
excess of Two Hundred Fifty Million Dollars ($250,000,000).
Each borrowing from, and reduction of Commitment of the Banks
under paragraphs A and C below, may be made as Revolving Credit Loans
and as Term Loans as follows:
A. REVOLVING CREDIT LOANS
----------------------
(i) BORROWING RIGHTS AND RESTRICTIONS: Subject to the
terms and conditions of this Agreement, during the
Commitment Period each Bank will make a Loan or Loans
to the Company, pursuant to this Section 2.1A, in
such amount or amounts as the Company may request
from time to time but not exceeding in aggregate
principal amount, at any one time outstanding
hereunder, the Commitment of such Bank. Subject to
the provisions of this Agreement, the Company shall
be entitled under this Paragraph A to borrow funds,
repay the same
6
<PAGE> 7
in whole or in part, and reborrow hereunder at
any time and from time to time during the Commitment
Period. Each Loan made under this Paragraph A shall be
made pro rata according to each Bank's respective
Commitments.
(ii) LOAN AMOUNTS: The Company shall have the option,
subject to the terms and conditions set forth herein,
to borrow under this Section 2.1A up to the total of
all the Commitments by means of any combination of:
(a) ALTERNATE BASE RATE LOANS which shall be
payable on its due date and shall be drawn
down in aggregate amounts of not less than
Five Million Dollars ($5,000,000) or any
greater amount evenly divisible by One
Million Dollars ($1,000,000); and
(b) LIBOR LOANS which shall be payable on the
last day of the relevant LIBOR Interest
Period and shall be drawn down in aggregate
amounts of not less than Five Million Dollars
($5,000,000) or any greater amount evenly
divisible by One Million Dollars
($1,000,000).
(iii) PROCEDURE FOR BORROWING: The procedure for borrowing
under this Section 2.1A shall be as follows:
(a) Each such borrowing shall be made upon the
Company's written notice ("Notice") to the
Administrative Agent (which Notice must be
received by the Administrative Agent prior
to 11:00 a.m. New York time three (3) London
Banking Days prior to the requested
borrowing date in the event of a LIBOR Loan
and by 11:00 a.m. New York time on the same
Banking Day of the proposed date of such
borrowing in the event of an Alternate Base
Rate Loan). The Notice shall specify:
(1) the amount of the borrowing;
(2) the requested borrowing date which
shall be a Banking Day;
(3) the type of Loan(s) comprising
the borrowing; and
(4) the duration of the LIBOR Interest
Period for any LIBOR Loan(s) and
the maturity date of any Alternate
Base Rate Loan(s).
(b) The Administrative Agent shall promptly
notify each Bank of (i) its receipt of a
Notice of borrowing, (ii) the amount of each
Bank's pro-rata share of such borrowing; and
(iii) the name of the Company's bank, the
Company's account number and American Banking
Association routing number of the bank at
which the Company's account is maintained and
to which such pro-rata shares shall be
routed.
(c) Each Bank's pro-rata share of each Revolving
Credit Loan shall be delivered by each such
Bank to the Company not later than 3:00 p.m.
New York time on the last day of the notice
period set forth herein, time being of the
essence, in immediately available Dollars by
wire transfer to an account of the Company
designated by the Company, from time to time
in writing to the Administrative Agent, with
the account number and
7
<PAGE> 8
American Banking Association routing
number of the bank at which such account is
maintained.
(iv) INTEREST RATES: The Company shall pay interest on
Revolving Credit Loans:
(a) at the Alternate Base Rate on the unpaid
principal amount of Alternate Base Rate Loans
outstanding from time to time from the date
of receipt of funds by the Company until
paid, payable on the last business day of
each calendar quarter and on the maturity
date, computed on the basis of a 365 or 366
day year as the case may be; and
(b) at LIBOR plus the applicable Margin
(converted to percentage points) on the unpaid
principal amount of LIBOR Loans outstanding
from time to time from the date on which
funds are received by the Company until paid,
payable (a) on the last day of the LIBOR
Interest Period (computed on the basis of a
year having 360 days calculated on the basis
of the actual number of days elapsed) or (b)
every three (3) months or ninety (90) days in
the event any such LIBOR Interest Period
exceeds three (3) months or ninety (90) days.
(v) PAYMENTS ON REVOLVING CREDIT NOTES, ETC.: All
payments of principal and interest shall be
made to the Administrative Agent in immediately
available funds for the account of the Banks by no
later than 3:00 p.m. (New York time) on the applicable
payment date. The Administrative Agent shall promptly
distribute to each Bank its ratable share of the
principal and interest received by it for the account
of such Bank. Each Bank shall endorse each Revolving
Credit Note held by it or otherwise make appropriate
book entries evidencing each payment of principal made
thereon, it being understood, however, that any Bank's
failure to record appropriate information on the
grid(s) attached to any such Note shall in no way
affect the obligation of the Company under this
Agreement or under any such Note. Whenever any
payment to be made hereunder, including without
limitation, any payment to be made on any Note, shall
be stated to be due on a day which is not a Banking
Day, such payment may be made on the next Banking Day
(but in any event not later than its maturity date)
and such extension of time shall in each case be
included in the computation of the interest payable on
such Note. Notwithstanding the previous sentence, in
the case of any LIBOR Loan, if the next Banking Day is
in a month other than the month the payment was
originally due, such payment may be made on the
immediately preceding Banking Day and such reduction
of time shall in each case be considered in the
computation of the interest payable on such Note.
(vi) REVOLVING CREDIT NOTES: The obligation of the Company
to repay the Alternate Base Rate Loans and the
LIBOR Loans made by each Bank and to pay interest
thereon shall be evidenced by non-negotiable Revolving
Credit Notes of the Company substantially in the form
of Schedule B hereto, with appropriate insertions,
dated the date of execution thereof by the Company and
payable to the order of such Bank on the maturity date
of such Loan, in the principal amount indicated
thereon. The principal amount of the Alternate Base
Rate Loans and the LIBOR Loans made by each Bank under
this Section 2.1A and all prepayments thereof and the
applicable dates with respect thereto shall be
recorded by such Bank from time to time on the grid(s)
attached to such Note or by appropriate book
8
<PAGE> 9
entry. The aggregate unpaid amount of Alternate Base
Rate Loans and LIBOR Loans set forth on the grid(s)
attached to each Revolving Credit Note shall be
rebuttable presumptive evidence of the principal
amount owing and unpaid on such Note, it being
understood, however, that any Bank's failure to so
record appropriate information on the grid(s) attached
to its respective Revolving Credit Note shall in no
way affect the obligations of the Company under this
Agreement or such Note.
(vii) INTEREST ON LATE PAYMENTS: If any Revolving Credit
Note shall not be paid at maturity, whether such
maturity occurs by reason of lapse of time or by
operation of any provision or acceleration of maturity
therein contained, the principal thereof and the
accrued and unpaid interest thereon shall bear
interest, until paid, at a rate per annum which shall
be 1.1 times the Alternate Base Rate from time to time
in effect.
(viii) LOAN REFINANCINGS: If any Revolving Credit
Loan is not repaid when due, unless otherwise
directed by the Company, and provided no Event
of Default exists hereunder, the Banks shall
refinance LIBOR Loans with successive LIBOR Loans
commencing on the date immediately following the
maturity date (unless otherwise agreed to by the
Company and the Banks) of such prior Loan and with the
same number of months for such Loan's LIBOR Interest
Period unless otherwise provided in this Agreement.
Such automatic Loans shall be deemed to have repaid
the principal in full of each prior Loan such that no
Event of Default would exist.
(ix) CONVERSION: At the Company's option, the Company may
at any time or from time to time, except if an
Event of Default exists, convert a LIBOR Loan or an
Alternate Base Rate Loan to any one of the other types
of Loan. Such conversion shall not be deemed to be a
prepayment. The provisions of this subsection shall
apply with respect to voluntary conversions or
conversions required hereunder. The Company, through
the Administrative Agent, shall give written or
telephonic notice to the Banks of each conversion by
11:00 a.m., New York time (a) on the date of such
conversion if such conversion is comprised of
Alternate Base Rate Loans, and (b) at least two (2)
Banking Days prior to the date of such conversion if
such conversion is comprised of LIBOR Loans. Each
such notice shall be effective upon receipt by the
relevant Bank and shall specify the date and amount of
such conversion, the type of Loans to be converted and
the type of Loans to be converted into. Each
conversion shall be in an aggregate amount of not less
than Five Million Dollars ($5,000,000) or any greater
amount evenly divisible by One Million Dollars
($1,000,000).
(x) PREPAYMENT.
(a) As to Alternate Base Rate Loans, the
Company shall have the right at any
time or from time to time, upon one (1)
Banking Days' prior written notice to the
Administrative Agent, without the payment of
any premium or penalty to prepay on a pro rata
basis, all or any part of the principal amount
of the Notes then outstanding as designated by
the Company plus interest accrued on the
amount so prepaid to the date of such
prepayment.
(b) As to LIBOR Loans, the Company shall have the
right at any time or from time to time, upon
four (4) London Banking Days' prior written
notice to
9
<PAGE> 10
the Administrative Agent, to prepay on
a pro rata basis, all or any part of the
principal amount of the Notes then outstanding
as designated by the Company, plus interest
accrued on the amount so prepaid to the date
of such prepayment. If LIBOR, as determined as
of 11:00 a.m. London time two (2) London
Banking Days prior to the date of prepayment
(hereinafter "Prepayment LIBOR"), shall be
lower than the last LIBOR previously
determined for the LIBOR Loan(s), with respect
to which prepayment is intended to be made
(hereinafter "Last LIBOR"), then the Company
shall promptly pay each of the Banks, in
immediately available funds, a prepayment
premium measured by a rate (the "Prepayment
Premium Rate") which shall be equal to the
difference between the Last LIBOR and the
Prepayment LIBOR. In determining the
Prepayment LIBOR, the Company shall apply a
rate equal to LIBOR (for a deposit
approximately equal to the amount of such
prepayment) which would be applicable to a
LIBOR Interest Period commencing on the date
of such prepayment and having a duration equal
to the LIBOR Interest Period described in
Article I hereof with a length closest to the
remaining duration of the actual LIBOR
Interest Period during which such prepayment
is to be made. The Prepayment Premium Rate
shall be applied to all or such part of the
principal amount of the Notes as related to
the LIBOR Loans to be prepaid, and the
prepayment premium shall be computed for the
period commencing with the date on which said
prepayment is to be made to that date which
coincides with the last day of the LIBOR
Interest Period previously established when
the LIBOR Loans, which are to be prepaid, were
made. Each prepayment of a LIBOR Loan shall
be in the aggregate principal sum of not less
than One Million Dollars ($1,000,000). In the
event the Company fails to borrow or convert
into a proposed LIBOR Loan subsequent to the
delivery to the Banks of the notice of the
proposed date, aggregate amount and initial
LIBOR Interest Period of such Loan, but prior
to the draw down of funds thereunder, such
failure to borrow or convert shall be treated
as a prepayment subject to such prepayment
premium. Notwithstanding the above, no
prepayment premium shall be due and owing by
the Company if the Company makes such payment
on the Interest Adjustment Date applicable to
the Loan being paid.
B. MONEY MARKET RATE LOANS
-----------------------
(i) BORROWING RESTRICTIONS: Subject to the terms and
conditions of this Agreement, during the
Commitment Period each Bank may make (but is not
obligated to make) a Money Market Rate Loan to the
Company in such amount or amounts as the Company may
from time to time request, not exceeding in aggregate
principal amount, at any one time outstanding
hereunder, the sum Two Hundred Fifty Million Dollars
($250,000,000). Subject to the provisions of this
Agreement, the Company shall be entitled under this
Paragraph B to borrow funds, repay the same in whole
or in part and reborrow hereunder at any time and from
time to time from any Bank making Money Market Rate
Loans to the Company. The Administrative Agent shall
not be involved, in its capacity as such agent, in any
borrowing(s) by the Company under this Section 2.1B.
The procedures for any such Loan shall be as agreed
upon by the Company and each Bank making a Loan under
Paragraph B.
10
<PAGE> 11
(ii) LOAN AMOUNTS: The Company shall have the option,
subject to the terms and conditions set forth herein,
to borrow under this Section 2.1B from any Bank
an amount not to exceed the total of all Commitments
in amounts of not less than Five Million Dollars
($5,000,000) or any greater amount evenly divisible by
One Million Dollars ($1,000,000).
(iii) INTEREST RATES: The Company shall pay interest on
the unpaid principal amount of any Money Market
Rate Loan outstanding from time to time from the date
on which funds are received by the Company until paid,
at the Money Market Rate. Except as may be otherwise
agreed by the Company and the Bank making a Money
Market Rate Loan, interest shall be payable at the
maturity of such Loan and shall be computed on the
basis of a 365 or 366 day year, as the case may be.
(iv) MONEY MARKET NOTES: The obligation of the Company to
repay Money Market Rate Loans and to pay interest
thereon, shall be evidenced by a Money Market
Note substantially in the form of Schedule C hereto,
dated the date of execution thereof by the Company and
payable to the order of such Bank in accordance with
the terms and conditions of such Money Market Note.
(v) INTEREST ON LATE PAYMENTS: If any Money Market Note
shall not be paid at maturity, whether such maturity
occurs by reason of lapse of time or by operation of
any provision of acceleration of maturity therein
contained, the principal thereof and the unpaid
interest thereon shall bear interest, until paid,
at a rate per annum which shall be 1.1 times the
Alternate Base Rate from time to time in effect.
(vi) PAYMENT: All payments of principal and interest due
on Money Market Rate Loans shall be paid by the
Company directly to any Bank making a Money Market
Rate Loan to the Company.
C. TERM LOAN
---------
(i) BORROWING RIGHTS AND RESTRICTIONS:
Subject to the terms and conditions of this Agreement,
at any time prior to the end of the Commitment Period,
each Bank will make a two (2) year Term Loan to the
Company in such amount, if any, as the Company may
request, but not exceeding the Commitment of such Bank
then in effect. In the event the Company makes
borrowings under this Section 2.1C, no further
borrowing shall be made under Section 2.1A hereof,
notwithstanding anything in this Agreement to the
contrary. If at any time a borrowing shall be made
under this Section 2.1C there shall be outstanding any
Revolving Credit Notes issued under Section 2.1A
hereof, then the proceeds of the Term Loans made under
this Section 2.1C shall be applied in full or to the
extent necessary, as the case may be, to the payment
in full of the principal of and interest on such Notes
even though the same shall not be due by their terms.
The preceding sentence shall constitute an
authorization and direction by the Company to each
Bank to so apply the proceeds of such Term Loan so
made by such Bank under this Section 2.1C to the
payment in full of the principal of and interest on
all Notes issued under Section 2.1A hereof which are
owned by such Bank. Any borrowing under this Section
2.1C and any application of proceeds to the payment of
Notes outstanding under Section 2.1A hereto shall be
deemed to be effected
11
<PAGE> 12
simultaneously so that, for the purpose of this
Agreement, Notes shall not be deemed to be outstanding
under Section 2.1A at the same time Notes are
outstanding under Section 2.1C hereof. Any prepayment
of the Notes outstanding under Section 2.1A shall be
subject to Section 2.1A(x) hereof. Subject to the
provisions of this Agreement, the Company shall be
entitled under this Section 2.1C to borrow funds,
repay the same and enter into new borrowings hereunder
at any time and from time to time during the
Commitment Period. The proceeds of each Term Loan
shall be delivered to the Company not later than 3:00
p.m. Cleveland, Ohio time on the last day of the
notice period set forth in Section 2.2(i), time being
of the essence, in immediately available Dollars by
wire transfer to an account of the Company designated
by the Company, from time to time in writing to the
Administrative Agent, with the account number and
American Banking Association routing number of the
bank at which such account is maintained.
(ii) LOAN AMOUNTS: Alternate Base Rate Loans and LIBOR
Loans shall be in aggregate amounts of not less than
Five Million Dollars ($5,000,000) or any
greater amount evenly divisible by One Million Dollars
($1,000,000), but either may be in lesser amounts with
respect to mandatory semi-annual installments of
principal or as a result of such semi-annual
installments of principal having been made.
(iii) PROCEDURES FOR BORROWING: The procedures for
borrowing under this Section 2.1C shall be as follows:
(a) Any such borrowing prior to the scheduled
Expiration Date shall be made pro-rata among
the Banks and shall be made upon the
Company's written notice to the Administrative
Agent (which notice must be received by the
Administrative Agent prior to 11:00 a.m. New
York time three (3) London Banking Days prior
to the requested borrowing date in the event
of a LIBOR Loan and by 11:00 a.m. New York
time on the same Banking Day of the proposed
date of such borrowing in the event of an
Alternate Base Rate Loan. Such notice shall
specify:
(1) the amount of the borrowing;
(2) the requested borrowing date which
shall be a Banking Day; and
(3) the type of Loan(s) comprising the
borrowing; and
(4) the duration of the LIBOR Interest
Period for any LIBOR Loan(s) and the
maturity date of any Alternate Base
Rate Loan(s).
(b) The Administrative Agent shall promptly notify
each Bank of (i) its receipt of each of the
Company's notice of borrowing, (ii) the
amount of each Bank's pro-rata share of such
borrowing; and (iii) the name of the Company's
bank, the Company's account number and
American Banking Association routing number of
the bank at which the Company's account is
maintained and to which such pro-rata shares
shall be routed.
(c) Each Bank's pro-rata share of each Term Loan
shall be delivered by each such Bank to the
Company not later than 3:00 p.m. New York
time on the
12
<PAGE> 13
last day of the notice period set forth herein,
time being of the essence, in immediately
available Dollars by wire transfer to an
account of the Company designated by the
Company, from time to time in writing to the
Administrative Agent, with the account number
and American Banking Association routing number
of the bank at which such account is
maintained.
Any borrowing under this Section 2.1C(iii) which is to be made
on or subsequent to the scheduled Expiration Date (during any
extension hereof) shall not be pro-rata among the Banks.
(iv) INTEREST RATES:
(a) If the Term Loans are Alternate Base Rate
Loans, the Company shall pay interest
(computed on the basis of a year having 365 or
366 days, as the case may be) on the unpaid
principal amount thereof outstanding from
time to time from the date of such Loan
until paid, payable quarterly in arrears,
during the term of such Loan and upon
prepayment and if not paid at maturity thereof
at the Alternate Base Rate plus one-quarter of
one percent (1/4%) per annum for the Term
Notes evidencing such Term Loans. Any change in
such rate resulting from a change in the
Alternate Base Rate shall be effective
immediately from and after such change in the
Alternate Base Rate.
(b) If the Term Loans are LIBOR Loans, the Company
shall pay interest (computed on the basis of a
year having 360 days and calculated on the
basis of the number of days elapsed) at a
fixed rate for each LIBOR Interest Period on
the unpaid principal amount of LIBOR Loans
outstanding from time to time from the date of
such Loan until paid, payable on each Interest
Adjustment Date with respect to a LIBOR
Interest Period (provided that if a LIBOR
Interest Period exceeds three (3) months, the
interest must be paid every three (3) months,
commencing three (3) months from the beginning
of such LIBOR Interest Period), at LIBOR plus
one-quarter of one percent (1/4%) per annum for
the Term Notes evidencing such Term Loans,
fixed in advance of each LIBOR Interest Period
as herein provided for each LIBOR Interest
Period.
(v) LOAN CONVERSIONS: All of the Term Loans outstanding at
any time must be either Alternate Base Rate Loans or
LIBOR Loans, but the Banks, at the request of
the Company, shall convert Alternate Base Rate Loans
to LIBOR Loans at any time, except if an Event of
Default exists, and shall convert LIBOR Loans or to
any other type of Loans permitted by this Paragraph C
on any Interest Adjustment Date, except if an Event of
Default exists, applicable to such LIBOR Loan but each
request for Loans under this Section 2.1C must either
be for Alternate Base Rate Loans or LIBOR Loans. In
the event of any conversion under this Section 2.1C,
the procedures set forth in Section 2.1A(ix) shall be
followed by the Company.
(vi) TERM LOAN NOTE: The obligation of the Company to
repay the Alternate Base Rate Loans and the LIBOR
Loans made by each Bank under this Section 2.1C and to
pay interest thereon shall be evidenced by a Term Note
of the Company substantially in the form of
Schedule D hereto, with appropriate insertions, dated
13
<PAGE> 14
the date of execution thereof by the Company
and payable to the order of such Bank in the principal
amount of its Commitment, or if less, the aggregate
unpaid principal amount of Term Loans made hereunder by
such Bank, in four (4) substantially equal
installments, commencing six (6) months from the date
thereof. The principal amount of the Alternate Base
Rate Loans and LIBOR Loans made by each Bank and all
prepayments thereof and the applicable dates with
respect thereto shall be recorded by such Bank from
time to time on the grid(s) attached to such Note or by
appropriate book entry. The aggregate unpaid amount of
Alternate Base Rate Loans and LIBOR Loans set forth on
the grid(s) attached to each Term Note shall be
rebuttable presumptive evidence of the principal amount
owing and unpaid on such Note, it being understood,
however, that any Bank's failure to so record
appropriate information on the grid(s) attached to its
respective Note shall in no way affect the obligations
of the Company under this Agreement or such Note.
(vii) INTEREST ON LATE PAYMENTS: If any Term Note shall not
be paid at maturity, whether such maturity occurs by
reason of lapse of time or by operation of any
provision of acceleration of maturity therein
contained, the principal thereof and the unpaid
interest thereon shall bear interest, until paid, at
a rate per annum which shall be 1.1 times the
Alternate Base Rate from time to time in effect.
SECTION 2.2. CONDITIONS TO CERTAIN LOANS OR CONVERSIONS. The obligation of
each Bank to make the Loans described in Section 2.1A or C hereunder is
conditioned, in the case of each borrowing or conversion hereunder, upon:
(i) the fact that no Possible Default or Event of Default
shall then exist or immediately after the Loan would
exist; and
(ii) the fact that the representations and warranties
contained in Article IV hereof shall be true and
correct in all material respects with the same force
and effect as if made on and as of the date of such
borrowing or conversion.
Each borrowing or conversion by the Company hereunder shall be deemed
to be a representation and warranty by the Company as of the date of such
borrowing as to the facts specified in Sections 2.2 (i) and (ii) above.
SECTION 2.3. FACILITY FEES. The Company agrees to pay to each Bank an
annual Facility Fee, for the period from and including the date of this
Agreement to the earlier of (i) the Termination Date or (ii) the
termination of the Commitments pursuant to Section 2.5 hereof. The first
payment of the Facility Fee shall be made no later than October 5, 1995 for
the period August 31, 1995 to September 30, 1995. All payments of the
Facility Fee shall be made to the Administrative Agent in immediately
available funds for the account of the Banks by no later than 3:00 p.m.
(New York time) on the applicable payment date. The Administrative Agent
shall promptly distribute to each Bank its ratable share of the Facility
Fee received by it for the account of such Bank.
SECTION 2.4. COMPUTATION OF FACILITY FEES. Facility Fees shall be computed
for the actual number of days elapsed on the basis of a 360-day year.
14
<PAGE> 15
SECTION 2.5. TERMINATION OF COMMITMENTS AND RIGHT OF SUBSTITUTION.
(i) The Company may at any time or from time to time
terminate in whole or ratably in part the Commitments
of all of the Banks to an amount not less than the
aggregate principal amount of the Loans then outstanding
under this Agreement, by giving the Banks and the
Administrative Agent not less than two (2) Banking Days'
notice of the aggregate amount of such partial
termination (which shall not be less than Five Million
Dollars ($5,000,000) or any greater amount evenly
divisible by One Million Dollars ($1,000,000) ) and such
Bank's proportionate amount of such partial termination.
If the Company terminates in whole the Commitments of the
Banks, on the effective date of such termination
(provided the Company has prepaid in full the unpaid
principal balance, if any, of the Notes outstanding
together with all accrued and unpaid interest, if any,
Facility Fees accrued and unpaid, and any applicable
prepayment premiums) all of the Notes outstanding shall
be delivered to the Company marked "Cancelled". Any
partial termination of the Commitments shall be
irrevocable during the remainder of the Commitment
Period.
(ii) The Company may at any time or from time to time
terminate or reduce the Commitment of any Bank
hereunder to an amount not less than the aggregate
principal amount of the Loans then outstanding by such
Bank under this Agreement:
(a) immediately if such Bank satisfies any of the
criteria for insolvency described in Section 7.5
hereof; or
(b) upon not less than two (2) Banking Days' notice
to such Bank and the Administrative Agent if the
Company, in its sole discretion, elects to
terminate the Commitment of such Bank for any
reason including, but not limited to, the default
of such Bank under the terms of this Agreement.
(iii) In the event the Commitment of any Bank is terminated
by the Company, the Company shall have the right to
replace such Bank with a successor bank or banks
(including any bank or banks which is a party to this
Agreement with the consent of such bank or banks) with a
Commitment not to exceed the Commitment of the
terminated Bank(s); provided that such successor bank
shall, pursuant to a written instrument in form and
substance satisfactory to the Company, effectively agree
to become a party hereto and a "Bank" hereunder and be
bound by the terms hereof.
(iv) In the event of a default of any Bank under the
terms of this Agreement, the Company's election to
terminate the Commitment of such Bank shall not act as a
waiver of any other remedies which the Company may have
for such default.
(v) The termination of the Commitment of any Bank
pursuant to Section 2.5(ii) hereof shall not affect the
Commitments or the obligations of all remaining Banks
under this Agreement.
(vi) After any termination or reduction of the Commitments
as described in this Section 2.5, the Facility Fees
payable hereunder shall be calculated upon the
Commitments of the Banks as so reduced.
15
<PAGE> 16
ARTICLE III. ADDITIONAL PROVISIONS RELATING TO LIBOR LOANS
SECTION 3.1. RESERVES OR DEPOSIT REQUIREMENTS, ETC. If at any time after
the Effective Date any new law, treaty or regulation (including,
without limitation, Regulation D of the Board of Governors of the
Federal Reserve System) or the published interpretation thereof by any
governmental authority charged with the administration thereof or any
central bank or other fiscal, monetary or other authority shall impose
(whether or not having the force of law), modify or deem applicable any
reserve and/or special deposit requirement (other than reserves: (a)
included in the Reserve Percentage, the effect of which is reflected in
the interest rate(s) of the LIBOR Loan(s) in question or (b)
attributable to requirements imposed by the Board of Governors of the
Federal Reserve System on any Bank as a result of the failure of any
such Bank to maintain necessary current capitalization or financial
conditions imposed thereby) against assets held by, or deposits in or
for the account of any Loans by any Bank, and the result of the
foregoing is to increase the cost to such Bank of making or maintaining
LIBOR Loans or reduce the amount of principal or interest received by
such Bank with respect to LIBOR Loans, then upon demand by such Bank
the Company shall pay to such Bank from time to time on Interest
Adjustment Dates with respect to such Loans, as additional
consideration hereunder, additional amounts sufficient to fully
compensate and indemnify such Bank for such increased cost or reduced
amount, provided that such additional cost or reduced amount were
allocable to such LIBOR Loans.
A certificate as to the increased cost or reduced amount (hereinafter
in this Section 3.1 collectively called "Increased Costs") as a result
of any event mentioned in this Section 3.1, setting forth the
calculations therefor, shall be promptly submitted by such Bank to the
Company for its review. The Company shall pay such Increased Costs for
such period of time prior to the date such certificate is received by
the Company during which such Regulatory Change, by its terms, applies
retroactively to any period of time prior to the date such Regulatory
Change became effective. In addition, the Company shall pay such
Increased Costs incurred by a Bank on and after the date such
certificate is received by the Company unless the Company,
notwithstanding any other provision of this Agreement, promptly,
(i) upon at least three (3) Banking Days' prior written notice to
such Bank, prepays the affected LIBOR Loans in full or
converts all LIBOR Loans to Alternate Base Rate Loans
regardless of the interest period thereof, or
(ii) terminates the Commitment of such Bank pursuant to Section 2.5
hereof (provided that the Company shall pay such Increased
Costs on any LIBOR Loans from such Bank which remain
outstanding).
Each Bank will notify the Company as promptly as practicable of the
existence of any event which will likely require the payment by the
Company of any such additional amount under this Section.
SECTION 3.2. CHANGES IN TAX LAWS. In the event that by reason of any new
law, regulation or requirement or any change in any existing law,
regulation or requirement or in the interpretation thereof by an
official authority, or the imposition of any requirement of any central
bank whether or not having the force of law, (i) any Bank shall, with
respect to this Agreement or any transaction under this Agreement, be
subject to any tax, levy, impost, charge, fee, duty, deduction or
withholding of any kind whatsoever (other than any tax imposed upon the
total net income of such Bank or imposed on or calculated with respect
16
<PAGE> 17
to the value of the assets of such Bank) or (ii) any change shall occur
in the taxation of any Bank with respect to any LIBOR Loan and the
interest payable thereon (other than any change which affects, and to
the extent that it affects, the taxation of the total net income of
such Bank or imposed on or calculated with respect to the value of the
assets of such Bank), and if any such measures or any other similar
measure shall result in an increase in the cost to such Bank of making
or maintaining any LIBOR Loan or in a reduction in the amount of
principal, interest or Facility Fee receivable by such Bank in respect
thereof, then such Bank shall promptly notify the Company stating the
reasons therefor.
A certificate as to any such increased cost or reduced amount
(hereinafter in this Section 3.2 collectively called "Increased Costs")
as a result of any event mentioned in this Section 3.2, setting forth
the calculations therefor, shall be submitted by such Bank to the
Company for its review. The Company shall pay such Increased Costs for
such period of time prior to the date such certificate is received by
the Company during which such Regulatory Change, by its terms, applies
retroactively to any period of time prior to the date such Regulatory
Change became effective. In addition, the Company shall pay such
Increased Costs incurred by such Bank on and after the date such
certificate is received by the Company unless the Company,
notwithstanding any other provision of this Agreement, promptly,
(i) upon at least three (3) Banking Days' prior written
notice to such Bank and the Administrative Agent,
prepays the affected LIBOR Loans in full or converts
all LIBOR Loans to Alternate Base Rate Loans
regardless of the interest period thereof, or
(ii) terminates the Commitment of such Bank pursuant to
Section 2.5 hereof (provided that the Company
shall pay such Increased Costs on any LIBOR Loans from
such Bank which remain outstanding).
If any Bank receives such additional consideration from the Company
pursuant to this Section 3.2 and thereafter obtains the benefits of any
refund, deduction or credit for any taxes or other amounts on account
of which such additional consideration has been paid, such Bank shall
pay to the Company its allocable share thereof and shall reimburse the
Company to the extent, but only to the extent, that such Bank shall
have actually received a refund of such taxes or other amounts together
with any interest thereon or an effective net reduction in taxes or
other governmental charges (including any taxes imposed on or measured
by the total net income of such Bank) of the United States or any state
or subdivision thereof by virtue of any such deduction or credit, after
first giving effect to all other deductions and credits otherwise
available to such Bank. If, at the time any audit of such Bank's
income tax return by any taxing agency is completed, such Bank
determines, based on such audit, that it was not entitled to the full
amount of any refund reimbursed to the Company as aforesaid or that its
net income taxes are not reduced by a credit or deduction for the full
amount of taxes reimbursed to the Company as aforesaid, the Company,
upon demand of such Bank, will promptly pay to such Bank the amount so
refunded to which such Bank was not so entitled, or the amount by which
the net income taxes of such Bank were not so reduced, as the case may
be. The provisions of this Section 3.2 shall survive the
termination of this Agreement.
SECTION 3.3. EURODOLLAR DEPOSITS UNAVAILABLE OR INTEREST RATE
UNASCERTAINABLE. In the event the Majority Banks shall have
determined, in good faith and reasonably, that Dollar deposits of the
relevant amount for the relevant LIBOR Interest Period for LIBOR Loans
are not available to the Banks in the London Interbank Eurodollar
market or that, by reason of circumstances affecting such market,
adequate and reasonable means do not exist for ascertaining LIBOR
applicable to such determination to the Company then (i) any notice of
new LIBOR Loans (or conversion of existing Loans to LIBOR Loans)
previously given by the Company and not yet borrowed (or converted, as
the case may be) shall be deemed a notice to make Alternate Base Rate
Loans unless the Company notifies the Administrative Agent to the
17
<PAGE> 18
contrary, and (ii) the Company shall be obligated either to prepay or
to convert any outstanding LIBOR Loans on the last day of the then
current LIBOR Interest Period or Periods with respect thereto.
SECTION 3.4. INDEMNITY. Without limitation of any other provisions of this
Article III, the Company hereby agrees to indemnify the Administrative
Agent and each Bank against any loss or expense (excluding
consequential, incidental or special damages) which the Administrative
Agent or such Bank may sustain or incur as a direct result of any
default by the Company in the payment when due of any amount due
hereunder with respect to any LIBOR Loan (including, but not limited
to, any loss of profit, premium or penalty incurred by such Bank as a
result of such default with regard to funds borrowed by it for the
purpose of making or maintaining such LIBOR Loan, as determined by such
Bank in the exercise of its reasonable discretion). A certificate as
to any such loss or expense shall be promptly submitted by such Bank to
the Company for its review and to the Administrative Agent and shall be
paid by the Company in the absence of manifest error.
SECTION 3.5. CHANGES IN LAW RENDERING LIBOR LOANS UNLAWFUL. If at any time
any new law, treaty or regulation, or any change in any existing law,
treaty or regulation, or any published interpretation thereof by any
governmental or other regulatory authority charged with the
administration thereof, shall make it unlawful for any Bank to fund,
refinance, continue or convert into any LIBOR Loans which it is
committed to make hereunder with moneys obtained in the London
Interbank Eurodollar market, the Commitment of such Bank to fund,
refinance, continue or convert into LIBOR Loans shall, upon the
happening of such event, be suspended for the duration of such
illegality and such Bank shall by written notice to the Company and the
Administrative Agent declare that its Commitment with respect to such
Loans has been so suspended and, if and when such illegality ceases to
exist, such suspension shall cease and such Bank shall similarly notify
the Company and the Administrative Agent. If any such change shall
make it unlawful for any Bank to continue in effect the funding in the
London Interbank Eurodollar market of any LIBOR Loan previously made by
it hereunder, such Bank shall, upon the happening of such event, notify
the Company and the other Banks thereof in writing stating the reasons
therefor and the Company shall, on the earlier of (i) the last day of
the then current LIBOR Interest Period or (ii) if required by such law,
regulation or interpretation, on such date as shall be specified in
such notice, either convert all LIBOR Loans to Alternate Base Rate
Loans or prepay all LIBOR Loans to the Banks in full. Any such
prepayment or conversion shall not be subject to the prepayment
premiums prescribed in Section 2.1A(x) hereof. Any requests for a
LIBOR Loan not funded pursuant to this Section shall be deemed to have
been a request for an Alternate Base Rate Loan.
SECTION 3.6. FUNDING. Each Bank may, but shall not be required to, make
LIBOR Loans hereunder with funds obtained outside the United States.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Banks that:
SECTION 4.1. CORPORATE EXISTENCE. The Company is a corporation duly
organized and in good standing under the laws of the State of Ohio.
SECTION 4.2. AUTHORIZATION; NO CONFLICT. The execution, delivery, and
performance by the Company of this Agreement and the Notes are within
the Company's corporate powers,
18
<PAGE> 19
have been duly authorized by all necessary corporate action, and do not
and will not contravene or conflict with any provision of applicable
law in effect on the date hereof or of the Amended Articles of
Incorporation or Regulations of the Company or of any agreement for
borrowed money or other material agreement binding upon the Company.
The Company has duly executed and delivered this Agreement.
SECTION 4.3. VALIDITY AND BINDING NATURE. This Agreement is, and the Notes
when duly executed and delivered will be, legal, valid and binding
obligations of the Company enforceable against the Company in
accordance with their respective terms.
SECTION 4.4. LITIGATION AND LIENS. To the best of the Company's knowledge,
no litigation or proceeding is pending which would, if successful, have
a Material adverse impact on the financial condition of the Company and
the Consolidated Subsidiaries taken as a whole, which is not already
reflected in the Company's Financial Reports delivered to the Banks
prior to the date of this Agreement. The Internal Revenue Service has
not alleged any Material default by the Company in the payment of any
tax or threatened to make any Material assessment in respect thereof
which would have or reasonably could have a Material adverse impact on
the financial condition of the Company and the Consolidated
Subsidiaries, taken as a whole.
SECTION 4.5. ERISA COMPLIANCE. Neither the Company nor any Consolidated
Subsidiary has incurred any Material accumulated funding deficiency
within the meaning of the ERISA and the regulations thereunder. No
Reportable Event has occurred with respect to any Plan which would have
a Material adverse financial impact on the Company or any of its
Consolidated Subsidiaries, taken as a whole. The Pension Benefit
Guaranty Corporation, established under ERISA, has not asserted that
the Company or any Consolidated Subsidiary has incurred any Material
liability in connection with any Plan. No Material lien has been
attached and no person has threatened to attach such a lien on any
property of the Company and any Consolidated Subsidiary as a result of
the Company's or any Consolidated Subsidiary's failure to comply
with ERISA.
SECTION 4.6. ENVIRONMENTAL MATTERS. To the best of the Company's
knowledge, the Company and each Subsidiary is in substantial compliance
with all applicable existing laws and regulations (other than laws and
regulations the validity or applicability of which are being contested
by the Company or a Subsidiary, as the case may be, in good faith by
appropriate proceedings diligently prosecuted) relating to
environmental control in all jurisdictions where the Company or any
Subsidiary is presently doing business and the Company and each
Subsidiary (to the extent applicable to its operations) is in
substantial compliance with the Occupational Safety and Health Act of
1970 and all rules, regulations and applicable orders thereunder (other
than rules, regulations and orders the validity or applicability of
which are being contested by the Company or a Subsidiary, as the case
may be, in good faith by appropriate proceedings diligently prosecuted).
SECTION 4.7. FINANCIAL REPORTS. The Financial Reports of the Company and
the Consolidated Subsidiaries, furnished to each Bank prior to the date
of this Agreement or from time to time pursuant to this Agreement shall
be true and complete, prepared in accordance with generally accepted
accounting principles, except as stated therein, and fairly present the
Company's and its Consolidated Subsidiaries' financial condition and
the results of their operations for the period encompassed by such
Financial Reports. Since the dates of the Company's most recent
Financial Reports until the date of this Agreement there has been no
material adverse change in the consolidated financial condition of the
Company and the Consolidated Subsidiaries taken as a whole.
19
<PAGE> 20
SECTION 4.8. REGULATION U. Neither the Company nor any of its Consolidated
Subsidiaries is generally engaged in the business of purchasing or
selling margin stock or extending credit for the purpose of purchasing
or carrying margin stock (within the meaning of Regulation U issued by
the Board of Governors of the Federal Reserve System). Each of the
Banks represents and warrants to the Company that it is not relying on
and will not rely on any margin stock (as described above) in
determining whether to extend or maintain credit under this Agreement.
SECTION 4.9. GOVERNMENT REGULATION. Neither the Company nor any of its
Consolidated Subsidiaries is registered or is required to be registered
as a public utility under the Public Utility Holding Company Act of
1935 or as an investment company under the Investment Company Act of
1940.
SECTION 4.10. TAXES. The Company and its Consolidated Subsidiaries have
filed all United States federal income tax returns and all other
material tax returns which are required to have been filed by them
(subject to any available extensions) and have paid all taxes indicated
as due on such returns except for any such taxes being contested by
the Company or a Subsidiary, as the case may be, in good faith by
appropriate proceedings diligently prosecuted (the Company has made
adequate and reasonable provision for all material taxes not yet due
and payable), if any, and all material assessments, if any.
SECTION 4.11. DEFAULTS. No Possible Default exists which would have or
reasonably could have a Material adverse impact on the financial
condition of the Company and the Consolidated Subsidiaries, taken as a
whole.
ARTICLE V. OPENING COVENANTS
Prior to or concurrently with the execution and delivery of this
Agreement, the Company shall furnish to each Bank the following:
SECTION 5.1. RESOLUTIONS. Certified copies of the resolutions of the board
of directors of the Company evidencing approval of the execution of this
Agreement and the execution and delivery of the Notes as provided for
herein.
SECTION 5.2. LEGAL OPINION. A favorable opinion of counsel for the Company
as to the matters referred to in Sections 4.1, 4.2, 4.3, 4.4, 4.6 and
4.8 of this Agreement and such other matters as the Banks may
reasonably request.
SECTION 5.3. CERTIFICATE OF INCUMBENCY. A certificate of the secretary or
assistant secretary of the Company certifying the names of the officers
of the Company authorized to sign this Agreement, and the Notes,
together with the true signatures of such officers.
SECTION 5.4. FINANCIAL REPORTS. The Financial Reports of the Company and
the Consolidated Subsidiaries, dated December 31, 1994, previously
furnished to each Bank, are true and complete, have been prepared in
accordance with generally accepted accounting principles applied on a
basis consistent with those used by the Company and the Consolidated
Subsidiaries during the Company's immediately preceding full fiscal
year, except as stated therein, and fairly present the Company's and
the Consolidated Subsidiaries' financial condition as of that date and
the results of their operations for the interim period then ending.
Since that date there has been no material adverse change in the
Company's and the Consolidated Subsidiaries' financial condition,
properties or business taken as a whole.
20
<PAGE> 21
ARTICLE VI. COVENANTS
Until the later of (i) the expiration of the Commitments or (ii) all
obligations of the Company hereunder and under the Notes are satisfied and
paid in full, the Company agrees that, unless at any time the Majority
Banks shall otherwise expressly agree in writing:
SECTION 6.1. INSURANCE. The Company will (a) maintain insurance to such
extent and against such hazards and liabilities as is commonly maintained
by companies similarly situated, and (b) upon any Bank's written request,
furnish to such Bank such information about the Company's and its
Consolidated Subsidiaries' insurance as such Bank may from time to time
reasonably request, which information shall be prepared in form and detail
reasonably satisfactory to such Bank.
SECTION 6.2. FINANCIAL REPORTS. The Company will furnish to the
Administrative Agent and each Bank:
(i) within sixty (60) days after the end of each of the first
three quarter-annual periods of each of its fiscal years (and,
in any event, in each case as soon as available), the
quarterly Financial Report of the Company and the Consolidated
Subsidiaries as at the end of that period, prepared on a
consolidated basis;
(ii) within ninety (90) days after the end of each of its fiscal
years (and, in any event, in each case as soon as available),
the annual Financial Report of the Company and the
Consolidated Subsidiaries for that year prepared on a
consolidated basis;
(iii) within sixty (60) days after the end of each of its quarterly
accounting periods and within ninety (90) days after the end
of its annual accounting period, a statement signed by a
financial officer of the Company reflecting compliance with
Section 6.3 hereof and to the effect that no Event of Default
has occurred and is continuing or, if there is any such event,
describing it and the steps being taken, if any, to cure such
event;
(iv) promptly after filing with the Securities and Exchange
Commission, any Form 8-K or Schedule 13D filings applicable to
the Company (or any successor forms or schedules promulgated
by the Securities and Exchange Commission from time to time
which encompass the matters currently addressed in Form 8-K
and Schedule 13D);
(v) written notice of any change in the rating assigned to the
Company's senior unsecured long-term debt by Moody's, S&P or
Duff & Phelps within thirty (30) days of such change; and
(vi) such other financial information regarding the Company as any
Bank may reasonably request.
SECTION 6.3. NET WORTH. The Company will not permit its Consolidated Net
Worth at any time to fall below Eight Hundred Million Dollars
($800,000,000).
SECTION 6.4. REGULATIONS U AND X. The Company will not nor will it permit
any Subsidiary to take any action that would result in any non-compliance
of the Loans made
21
<PAGE> 22
hereunder with Regulation U and X of the Board of Governors of the Federal
Reserve System. The Company's use of proceeds of any borrowings under this
Agreement will not cause a violation of Regulation U or X.
SECTION 6.5. MERGER AND SALE OF ASSETS. The Company will not merge or
consolidate with nor permit any Consolidated Subsidiary to merge or
consolidate with any other corporation or sell, lease or transfer or
otherwise dispose of all or, during any twelve (12) month period, a
substantial part of its assets to any person or entity (except as otherwise
provided herein); provided, however, if no Possible Default shall then
exist or immediately thereafter will begin to exist:
(i) Any Consolidated Subsidiary may merge with (a) the Company
(provided that the Company shall be the continuing or
surviving corporation) or (b) any one or more other
Consolidated Subsidiaries provided that either the continuing
or surviving corporation shall be a Wholly-Owned Consolidated
Subsidiary, or after giving effect to any merger pursuant to
this sub-clause (b), the Company and/or one or more
Wholly-Owned Consolidated Subsidiaries shall own not less than
the same percentage of the outstanding Voting Stock of the
continuing or surviving corporation as the Company and/or one
or more Wholly-Owned Consolidated Subsidiaries owned of the
merged Consolidated Subsidiary immediately prior to such
merger,
(ii) Any Consolidated Subsidiary may sell, lease, transfer or
otherwise dispose of any of its assets to (a) the Company, (b)
any Wholly-Owned Consolidated Subsidiary or (c) any
Consolidated Subsidiary of which the Company and/or one or
more Wholly-Owned Consolidated Subsidiaries shall own not less
than the same percentage of Voting Stock as the Company and/or
one or more Wholly-Owned Consolidated Subsidiaries then own of
the Consolidated Subsidiary making such sale, lease, transfer
or other disposition,
(iii) The Company may sell the stock or assets of any Consolidated
Subsidiary if such sale or other disposition is determined by
the board of directors of the Company to be in the best
interests of the Company and such sale is for a consideration
which represents the fair value (as determined in good faith
by the board of directors of the Company) thereof at the time
of such sale of such stock or assets,
(iv) The Company may merge with any other corporation, provided
that the Company shall be the surviving corporation,
(v) The Company or any Consolidated Subsidiary may sell all or any
part of the assets of any of its divisions or operations if
such sale or other disposition is determined by the board of
directors of the Company and/or such Consolidated Subsidiary,
as the case may be, to be in the best interests of the Company
and/or such Consolidated Subsidiary, as the case may be, and
such sale is for a consideration which represents the fair
value (as determined in good faith by the board of directors
of the Company) thereof at the time of such sale or other
disposition of such assets,
(vi) The Company or any Subsidiary may sell or transfer all or any
part of the assets of any of its divisions or operations to
any Subsidiary.
22
<PAGE> 23
In the event there occurs a Change in Control of the Company, the
Commitments of the Banks will immediately terminate. For purposes of this
paragraph, a "Change of Control" shall occur if:
(a) there shall be consummated (i) any consolidation or
merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which
shares of the Company's common stock would be converted into
cash, securities or other property, other than a merger of the
Company in which the holders of the Company's common stock
immediately prior to the merger have substantially the same
proportionate ownership of common stock of the surviving
corporation immediately after the merger, or (ii) any sale,
lease, exchange or transfer (in one transaction or a series of
related transactions) of fifty percent (50%) or more of the
assets or earning power of the Company;
(b) any "person" (as such term is used in Sections as
13(d) and 14(d)(2) of the Exchange Act, as amended, other than
the Company or any employee benefit or stock ownership plan
sponsored by the Company, or any person or entity organized,
appointed or established by the Company for or pursuant to the
terms of any such Plan, shall become the beneficial owner
(within the meaning of Rule 13d-3 under the Exchange Act) of
securities of the Company representing fifteen percent (15%)
or more of the combined voting power of the Company's then
outstanding securities ordinarily (and apart from rights
accruing in special circumstances) having the right to vote in
the election of directors, as a result of a tender or exchange
offer, open market purchases, privately negotiated purchases
or otherwise; or
(c) during any period of two (2) consecutive years,
individuals who at the beginning of such period constituted
the Board of Directors of the Company and any new director
whose election by such Board Directors or nomination for
election by the Company's shareholders was approved by a vote
of at least two-thirds (2/3) of the directors then still in
office who either were directors at the beginning of the
period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a
majority thereof.
Notwithstanding subparagraph (a) through (c) above,
with respect to the transactions set forth in subparagraphs
(a) and (b) above, a Change of Control shall not be deemed to
have occurred if any such transaction (i) is approved by a
vote of at least two-thirds (2/3) of the directors and (ii)
at the time of such vote, at least two-thirds (2/3) of the
directors then in office were members of the Board of
Directors of the Company immediately prior to such
transaction.
SECTION 6.6. NOTICE. Until the Termination Date, the Company will cause
its treasurer, or in his absence another representative of the Company
designated by the treasurer, to promptly notify the Banks and the
Administrative Agent whenever any Material Possible Default may occur or
any warranty made in Article IV hereof or elsewhere in this Agreement or in
any Related Writing may for any reason cease in any Material respect to be
true and complete.
SECTION 6.7. LIENS. The Company will not and will not permit any
Consolidated Subsidiary to create, assume or suffer to exist any lien upon
any of its property or assets (hereinafter "Properties") whether now owned
or hereafter acquired without effectively providing that any
23
<PAGE> 24
borrowings under this Agreement shall be secured equally and ratably with
all other indebtedness thereby secured; provided that this Section shall
not apply to the following:
(i) liens for taxes not yet due or which are being actively
contested in good faith by appropriate proceedings,
(ii) other liens incidental to the conduct of its business or the
ownership of its Properties which were not incurred in
connection with the borrowing of money or the obtaining of
advances or credit, and which do not in the aggregate
materially detract from the value of its Properties or
materially impair the use thereof in the operation of its
business,
(iii) liens on Properties of a Consolidated Subsidiary to secure
obligations of such Consolidated Subsidiary to the Company or
another Consolidated Subsidiary,
(iv) liens on Properties of the Company and/or its Consolidated
Subsidiaries existing on the date hereof,
(v) any lien existing on any Properties of any corporation at the
time it becomes a Consolidated Subsidiary, existing prior to
the time of acquisition upon any Properties acquired by the
Company or any Consolidated Subsidiary through purchase,
merger, consolidation or otherwise, whether or not assumed by
the Company or such Consolidated Subsidiary,
(vi) any lien placed upon any asset other than real property
(hereinafter in this subparagraph (vi) "Asset") at the time of
acquisition by the Company or any Consolidated Subsidiary to
secure all or a portion of [or to secure indebtedness incurred
prior to, at the time of, or (in the case of any Asset
acquired with the intent to obtain subsequent financing
thereof secured by a lien) within one (1) year after the
acquisition of such Asset for the purpose of financing all or
a portion of] the purchase price thereof, provided that any
such lien shall not encumber any other Properties of the
Company or such Consolidated Subsidiary,
(vii) any lien placed upon any real property now owned or hereafter
acquired by the Company or any of its Subsidiaries securing
indebtedness in an amount up to eighty percent (80%) of the
fair market value of such real property,
(viii) liens in favor of the United States of America or any
department or agency thereof, or in favor of any state
government or political subdivision thereof, or in favor of a
prime contractor under a government contract of the United
States, or of any state government or any political
subdivision thereof, and, in each case, resulting from
acceptance of partial, progress, advance or other payments in
the ordinary course of business under government contracts of
the United States, or of any state government or any political
subdivision thereof, or subcontracts thereunder,
(ix) liens created, assumed or existing in connection with a
tax-free financing,
(x) any lien renewing, extending or refunding any lien permitted
by clauses (iv), (v), (vi), (vii), (viii) and (ix) above,
provided that the principal amount secured is not materially
increased, and the lien is not extended to other Properties,
and
24
<PAGE> 25
(xi) liens other than those permitted by clauses (i) through (x)
above, provided that the aggregate amount of all indebtedness
secured by liens permitted by this clause (xi) shall not at
any time exceed fifteen percent (15%) of Consolidated Net
Worth.
SECTION 6.8. ERISA COMPLIANCE. Neither the Company nor any Consolidated
Subsidiary will incur any Material accumulated funding deficiency within
the meaning of the ERISA and the regulations thereunder, or any Material
liability to the Pension Benefit Guaranty Corporation or any successor
thereto in connection with any Plan. The Company will furnish to the
Banks as soon as possible and in any event within thirty (30) days after
the Company or such Consolidated Subsidiary knows or has reason to know
that any Material Reportable Event with respect to any Plan has occurred a
statement of the chief financial officer of the Company or such
Consolidated Subsidiary setting forth details as to such Reportable Event
and the action which the Company or such Consolidated Subsidiary proposes
to take with respect thereto, together with a copy of the notice of such
Reportable Event given to the Pension Benefit Guaranty Corporation if a
copy of such notice is available to the Company or such Consolidated
Subsidiary.
SECTION 6.9. NOTICE OF DEFAULT. The Company will, and will cause each
Consolidated Subsidiary to, give prompt notice in writing to each Bank and
the Administrative Agent of the occurrence of any Possible Default and of
any other development, financial or otherwise, with respect to which
there is a significant probability of a Material adverse impact on
Consolidated Net Worth or on the Company's ability to repay the Notes.
SECTION 6.10. CONDUCT OF BUSINESS. The Company will, and will cause each
Consolidated Subsidiary to, carry on and conduct its business in
substantially the same manner as it is presently conducted and to do all
things necessary to remain duly incorporated, validly existing and in good
standing as a corporation in its jurisdiction of incorporation and maintain
all requisite authority to conduct its business in each jurisdiction in
which its business is conducted.
SECTION 6.11. TAXES. The Company will, and will cause each Consolidated
Subsidiary to, pay when due all taxes, assessments and governmental charges
and levies upon it or its income, profits or property, except those which
are being contested in good faith by appropriate proceedings.
SECTION 6.12. ENVIRONMENTAL. The Company will use its best good faith
efforts to comply and to cause each Subsidiary to comply with all such laws
and regulations (other than laws and regulations the validity or
applicability of which are being contested by the Company or a Subsidiary,
as the case may be, in good faith by appropriate proceedings diligently
prosecuted) which may be legally imposed in the future in jurisdictions in
which the Company or any Subsidiary may then be doing business.
ARTICLE VII. EVENTS OF DEFAULT
Each of the following shall constitute an Event of Default:
SECTION 7.1. NON-PAYMENT OF NOTES, INTEREST OR FACILITY FEE. If the
principal on any Note shall not be paid in full when due and payable and
shall remain unpaid for a period of three (3) consecutive business days
and/or any interest due on any Note or any Facility Fee shall not be paid
within five (5) business days after written notice thereof to the Company
from the Bank (or Administrative Agent) to whom such amount(s) are owed.
25
<PAGE> 26
SECTION 7.2. COVENANTS. If the Company shall fail or omit to perform and
observe any agreement or other provision (other than those referenced in
Section 7.1 hereof) contained or referred to in this Agreement or in any
Related Writing that is on the Company's part to be complied with, and such
failure or omission, if not fully corrected within thirty (30) days after
the giving of written notice thereof to the Company by any Bank that such
failure or omission would have or reasonably could have a Material adverse
impact on the financial condition of the Company and the Consolidated
Subsidiaries, taken as a whole (provided, however, that the financial
covenant in Section 6.3 shall be applied without regard to any materiality
standard).
SECTION 7.3. WARRANTIES. If any representation, warranty or statement made
in or pursuant to this Agreement or any Related Writing or any other
information furnished by the Company to the Banks or any other holder of
any Note, shall be false or erroneous in any respect which would have or
reasonably could have a Material adverse impact on the financial condition
of the Company and the Consolidated Subsidiaries, taken as a whole.
SECTION 7.4. CROSS DEFAULT. If the Company or any of its Consolidated
Subsidiaries (i) default in the payment of principal or interest due and
owing upon any other Material obligation for borrowed money beyond any
period of grace provided with respect thereto or (ii) default in the
performance of any other agreement, term or condition contained in any
agreement under which such obligation is created, and any such default is
not waived by the holders of such agreement or instrument, and if the
effect of such unwaived default would (a) accelerate the maturity of such
indebtedness or permit the holder thereof to cause such indebtedness to
become due prior to its stated maturity and (b) have or reasonably could
have a Material adverse impact on the financial condition of the Company
and the Consolidated Subsidiaries, taken as a whole.
SECTION 7.5. TERMINATION OF OPERATIONS, BANKRUPTCY OR INSOLVENCY. If the
Company or a Consolidated Subsidiary representing in excess of ten percent
(10%) of total consolidated assets of the Company and the Consolidated
Subsidiaries shall (i) discontinue business (except as permitted under
Section 6.5 hereof) or (ii) generally not pay (or admit in writing its
inability to pay) its debts as such debts become due, or (iii) make a
general assignment for the benefit of creditors, or (iv) apply for or
consent to the appointment of a receiver, a custodian, a trustee, an
interim trustee or a liquidator of all or a substantial part of its assets,
or (v) be adjudicated an insolvent debtor or have entered against it an
order for relief under Title 11 of the United States Code, as the same may
be amended from to time to time, or (vi) file a voluntary petition in
bankruptcy or file a petition or an answer seeking reorganization or an
arrangement with creditors or seeking to take advantage of any other law
(whether federal or state) relating to relief of debtors, or admit (by
answer, by default or otherwise) the substantive allegations of a petition
filed against it in any bankruptcy, reorganization, insolvency or other
comparable proceeding (whether federal or state) relating to relief of
debtors, or (vii) suffer or permit to continue unstayed and in effect for
sixty (60) consecutive days any judgment, decree or order entered by a
court of competent jurisdiction, which approves a petition seeking its
reorganization or appoints a receiver, custodian, trustee, interim trustee
or liquidator of all or a substantial part of its assets.
ARTICLE VIII. EFFECT OF DEFAULT
SECTION 8. EFFECT OF EVENT OF DEFAULT. If any Event of Default
described in Section 7.5 hereof shall occur, the Commitments (if they have
not already been terminated) shall immediately terminate and all Notes
shall automatically become immediately due and payable, without notice. If
any other Event of Default shall occur and shall not have been remedied
within
26
<PAGE> 27
an allowable time period referred to in this Agreement, then the Majority
Banks may terminate the Commitments (if they have not already been
terminated) and the Outstanding Majority Banks may declare that all Notes
shall become immediately due and payable. The Majority Banks and the
Outstanding Majority Banks shall promptly notify the Company in writing
of any such declaration. The effect as an Event of Default of any event
described in Section 7.1 or 7.5 hereof may be waived only by the written
concurrence of the holders of one hundred percent (100%) of the aggregate
unpaid principal amount of the Notes. The effect as an Event of Default
of any other event described in Sections 7.2, 7.3 or 7.4 may be waived
by the holders of fifty-one percent (51%) by amount of the Commitments.
ARTICLE IX. THE ADMINISTRATIVE AGENT
The Banks hereby authorize Bank of America National Trust and Savings
Association ("BOA") and BOA hereby agrees to act as Administrative Agent
for the Banks in respect of this Agreement upon the terms and conditions
set forth elsewhere in this Agreement, and upon the following terms and
conditions:
SECTION 9.1. APPOINTMENT AND AUTHORIZATION. Each Bank hereby irrevocably
appoints and authorizes the Administrative Agent to exercise such powers
hereunder as are delegated to the Administrative Agent by the terms hereof,
together with such powers as are reasonably incidental thereto.
Notwithstanding anything in this Agreement to the contrary, or in a Related
Writing, the Administrative Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor shall the
Administrative Agent have or be deemed to have any fiduciary relationship
with any Bank. Neither the Administrative Agent nor any of its directors,
officers, attorneys or employees shall be liable for any action taken or
omitted to be taken by it or them hereunder or in connection herewith,
except for its or their own gross negligence or willful misconduct.
SECTION 9.2. NOTE HOLDERS. The Administrative Agent may treat the payee of
any Note as the holder thereof until written notice of transfer shall have
been filed with it signed by such payee and in form satisfactory to the
Administrative Agent.
SECTION 9.3. CONSULTATION WITH COUNSEL. The Administrative Agent may
consult with legal counsel selected by it (including in-house counsel) and
shall not be liable for any reasonable action taken or suffered in good
faith by it in accordance with the written opinion of external counsel,
issued before such action is taken or suffered.
SECTION 9.4. DOCUMENTS. The Administrative Agent shall not be under a duty
to examine into or pass upon the validity, effectiveness, genuineness or
value of this Agreement, the Notes, any Related Writing furnished pursuant
hereto or in connection herewith or the value of any collateral obtained
hereunder, and the Administrative Agent shall be entitled to assume that
the same are valid, effective and genuine and what they purport to be.
SECTION 9.5. ADMINISTRATIVE AGENT AND AFFILIATES. With respect to the
Loans made hereunder, the Administrative Agent shall have the same rights
and powers hereunder as any other Bank and may exercise the same as though
it were not the Administrative Agent, and the Administrative Agent and its
affiliates may accept deposits from, lend money to and generally engage in
any kind of business with the Company or any Subsidiary or affiliate of the
Company.
27
<PAGE> 28
SECTION 9.6. KNOWLEDGE OF DEFAULT. It is expressly understood and agreed
that the Administrative Agent shall be entitled to assume that no Possible
Default has occurred and is continuing, unless the Administrative Agent has
actual knowledge of such fact or has been notified by a Bank that such Bank
considers that a Possible Default has occurred and is continuing and
specifying the nature thereof.
SECTION 9.7. ACTION BY ADMINISTRATIVE AGENT. So long as the Administrative
Agent shall be entitled, pursuant to Section 9.6 hereof, to assume that no
Possible Default shall have occurred and be continuing, the Administrative
Agent shall be entitled to use its discretion with respect to exercising or
refraining from exercising any rights which may be vested in it by, or with
respect to taking or refraining from taking any action or actions which it
may be able to take under or in respect of, this Agreement. The
Administrative Agent shall incur no liability under or in respect of this
Agreement by action upon any notice, certificate, warranty or other paper
or instrument reasonably believed by it to be genuine or authentic or to be
signed by the proper party or parties, or with respect to anything which it
may do or refrain from doing in the reasonable exercise of its judgment, or
which the Administrative Agent reasonably believes to be necessary or
desirable in the premises.
SECTION 9.8. INDEMNIFICATION. The Banks agree to indemnify the
Administrative Agent (to the extent not reimbursed by the Company), ratably
according to the respective principal amounts of their Commitments from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs (including reasonable external counsel
costs), expenses or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by or asserted against the Administrative
Agent in any action taken or omitted by the Administrative Agent with
respect to this Agreement, provided that no Bank shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from
the Administrative Agent's gross negligence or willful misconduct or from
any action taken or omitted by the Administrative Agent in any capacity
other than as agent under this Agreement.
SECTION 9.9. SUCCESSOR. The Company may select a successor or alternate
Administrative Agent with the approval of the holders of fifty-one percent
(51%) by amount of the Commitments.
ARTICLE X. MISCELLANEOUS
SECTION 10.1. BANKS' INDEPENDENT INVESTIGATION. Each Bank by its signature
to this Agreement acknowledges and agrees that it has made and shall
continue to make its own independent investigation of the creditworthiness,
financial condition and affairs of the Company and any Subsidiary in
connection with the extension of credit hereunder, and agrees that no other
Bank nor the Administrative Agent has any duty or responsibility, either
initially or on a continuing basis, to provide any Bank with any credit or
other information with respect thereto whether coming into its possession
before the making of the first Loans or at any time or times thereafter.
SECTION 10.2. NO WAIVER; CUMULATIVE REMEDIES. No omission or course of
dealing on the part of any Bank or the holder of any Note in exercising any
right, power or remedy hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of
any other right, power or remedy hereunder. The remedies herein provided
are cumulative and in addition to any other rights, powers or privileges
held by operation of law, by contract or otherwise.
28
<PAGE> 29
SECTION 10.3. AMENDMENTS. Except as otherwise specifically provided herein,
no amendment, modification, termination, or waiver of any provision of
this Agreement or of the Notes, nor consent to any variance therefrom,
shall be effective unless the same shall be in writing and signed by the
Company and the Majority Banks and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for
which given.
The unanimous consent of the Banks, shall be required with respect to
(i) the change of maturity of the Notes, or the payment date of interest
thereunder, (ii) any change in the rate of interest on such Notes, or in
the rate at which the Facility Fee referred to in Section 2.3 hereof shall
be calculated or in any amount of principal or interest due on any Note, or
in the manner of pro rata application of any payments made by the Company
to the Banks hereunder, (iii) any change in any percentage voting
requirement in this Agreement, (iv) any change in any date specified in
this Agreement for the payment of principal or interest on any Note or for
the payment of any Facility Fee hereunder, (v) any increase in any Bank's
Commitment or Percentage, except pursuant to Section 2.5(iii) hereof, or
any increase in the aggregate of all of the Banks' Commitments hereunder or
(vi) any change to this Section 10.3. No amendments to the duties or
responsibilities of the Administrative Agent may be made without the prior
written consent of the Administrative Agent except provided in Section 9.9
hereof.
Notice of amendments or consents ratified by the Banks hereunder shall
immediately be forwarded by the Company to all Banks. Each Bank or other
holder of a Note shall be bound by any amendment, waiver or consent
obtained as authorized by this Section, regardless of its failure to agree
thereto.
SECTION 10.4. CONFIDENTIALITY. Unless the Company otherwise agrees in
writing, each Bank hereby agrees to keep all Proprietary Information
(as defined below) confidential and not to disclose or reveal any
Proprietary Information to any person or entity other than the Bank's
directors, officers, employees, affiliates, and agents, and then only on a
confidential need-to-know basis; provided, however that a Bank may disclose
Proprietary Information (a) as required by law, rule, regulation, or
judicial process, (b) to its attorneys and accountants, (c) as requested or
required by a state, federal, or foreign authority or examiner regulating
banks or banking, or (d) to actual or potential assignees or participants
as permitted by Section 10.9 hereof who agree to be bound by the provisions
of this Section. For purposes of this Agreement, the term "Proprietary
Information" shall include all information about the Company, any
Subsidiary, or any of their respective affiliates which has been furnished
by the Company, any Subsidiary, or any of their respective affiliates,
whether furnished before or after the date hereof, and regardless of the
manner furnished; provided, however, that Proprietary Information shall not
include information which (x) is or becomes generally available to the
public other than as a result of a disclosure by a Bank not permitted by
this Agreement, (y) was available to a Bank on a nonconfidential basis
prior to its disclosure to such Bank by the Company, any Subsidiary, or any
of their respective affiliates, or (z) becomes available to a Bank on a
nonconfidential basis from a person and/or entity other than the Company,
any Subsidiary, or any of their respective affiliates who, to the best
knowledge of such Bank, is not otherwise bound by a confidentiality
agreement with the Company, any Subsidiary, or any of their respective
affiliates, or, to the best knowledge of such Bank, is not otherwise
prohibited from transmitting the information to such Bank.
SECTION 10.5. NOTICES. All notices, requests, demands and other
communications provided for hereunder shall be in writing and, if to
the Company or a Subsidiary, mailed or delivered to it, addressed to it at
the address of the Company herein specified, and if to a Bank, mailed or
delivered to it, addressed to the address of such Bank specified on its
signature page to this
29
<PAGE> 30
Agreement. All notices, statements, requests, demands and other
communications provided for hereunder shall be deemed to be given or made
when received.
SECTION 10.6. COSTS AND EXPENSES. The Company agrees to pay on demand all
reasonable out-of-pocket costs and expenses (including reasonable legal
fees for outside counsel) of the Banks incurred directly as a result
of the enforcement of this Agreement, the Notes and the other instruments
and documents in connection herewith.
SECTION 10.7. OBLIGATIONS SEVERAL. The obligations of the Banks hereunder
are several and not joint. Nothing contained in this Agreement and no
action taken by the Banks pursuant hereto shall be deemed to constitute the
Banks as a partnership, association, joint venture or other entity. No
default by any Bank hereunder shall excuse the other Banks from any
obligation under this Agreement; but no Bank shall have or acquire any
additional obligation of any kind by reason of such default.
SECTION 10.8. 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 and delivered shall be deemed
to be an original and when taken together shall constitute one and the
same agreement.
SECTION 10.9. ASSIGNMENTS AND PARTICIPATIONS.
A. ASSIGNMENTS. Unless the Company otherwise consents in writing, which
consent shall not be unreasonably withheld, no payee or other party in
possession of any Note (including any Bank) shall assign or transfer
any Note or any interest therein to any other person or entity, except
as otherwise permitted under this Section, or negotiate any Note, as
such term is defined in Ohio Revised Code Chapter 1303. Except as
otherwise expressly agreed in writing by the Company, no Bank shall,
by reason of the assignment or transfer of any Note or otherwise, be
relieved of any of its obligations hereunder. Each transferee of any
Note shall take such Note subject to the provisions of this Agreement
and to any request made, waiver or consent given, or other action
taken hereunder, prior to such transfer, by each previous holder of
such Note; and the Company shall be entitled to conclusively assume
that the transferee shall thereafter be vested with all rights and
powers under this Agreement of the Bank named as the payee of the Note
which is the subject of such transfer. Nothing herein shall prohibit
any Bank from pledging or assigning any Note to any Federal Reserve
Bank of the United States pursuant to applicable law. No party in
possession of a Note shall be a "Holder" as such term is defined in
Ohio Revised Code Chapter 1303. Notwithstanding any provision of this
Section 10.9 to the contrary, the Company may not assign or transfer
any of its rights or obligations hereunder without the consent of the
holders of one hundred percent (100%) by amount of the Commitments.
B. PARTICIPATIONS. Any Bank may grant participations in or to all or any
part of any Loan or Loans then owing to such Bank hereunder and the
Notes held by such Bank without the consent of the Company which
consent shall not be unreasonably withheld. Except as otherwise
expressly agreed in writing by the Company, no grant of a
participation shall relieve any Bank of its obligations hereunder.
The Company shall be entitled to deal
30
<PAGE> 31
solely with the Banks (and their respective assignees) for all
purposes of this Agreement and the Notes, and no holder of a
participation in all or any part of the Loans or the Notes shall have
any rights under this Agreement and shall not be a Holder of any Note,
as such term is defined in Ohio Revised Code Chapter 1303.
C. DISCLOSURE OF INFORMATION. The Company hereby consents to the
disclosure of any information obtained in connection herewith by any
Bank to any entity which is an assignee or potential assignee or a
participant or potential participant pursuant to Section 10.9A or
10.9B hereof, it being understood that such Bank shall advise any such
actual or potential assignee or participant of its obligation to keep
confidential any nonpublic information disclosed to it pursuant to
this Section 10.9 and, prior to the disclosure of such information,
shall cause each such actual or potential assignee or participant to
execute a confidentiality agreement containing the confidentiality
provisions set forth in Section 10.4 hereof.
D. SECURITIES LAWS. Each Bank represents that it is the present
intention of such Bank to acquire each Note drawn to its order for its
own account and not with a view to the distribution or sale thereof.
SECTION 10.10. TAX FORMS. With respect to each Bank which is organized under
the laws of a jurisdiction outside the United States, on the date of any
borrowing, (which claims, exemption from, or reduction of, United States
withholding tax under Sections 1441 or 1442 of the Internal Revenue Code of
1986, as amended) and from time to time thereafter if requested by the
Company or the Administrative Agent, each such Bank shall provide the
Administrative Agent and the Company with the forms prescribed by the
Internal Revenue Service of the United States certifying as to such Bank's
status for purposes of determining exemption from United States withholding
taxes with respect to all payments to be made to such Bank hereunder or
other documents satisfactory to the Company and the Administrative Agent
indicating that all payments to be made to such Bank hereunder are subject
to such tax at a rate reduced by an applicable tax treaty. Unless the
Company and the Administrative Agent have received such forms and such
other documents reasonably requested by the Administrative Agent or the
Company indicating that payments hereunder are not subject to United States
withholding tax or are subject to such tax at a rate reduced by an
applicable tax treaty, the Company or the Administrative Agent shall
withhold taxes from such payments at the applicable statutory rate in the
case of payments to or for any Bank organized under the laws of a
jurisdiction outside the Unites States.
SECTION 10.11. ENTIRE AGREEMENT. This Agreement supersedes any prior
agreement or understanding of the parties hereto, and contains the entire
agreement of the parties hereto, with respect to the matters covered hereby.
SECTION 10.12. GOVERNING LAW. This Agreement, each of the Notes and any
Related Writing shall be governed by and construed in accordance with the
laws of the State of Ohio and the respective rights and obligations of the
Company and the Banks shall be governed by Ohio law.
SECTION 10.13. SEVERABILITY OF PROVISIONS; CAPTIONS. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction. The several captions to sections and subsections herein are
inserted for convenience only and shall be ignored in interpreting the
provisions of this Agreement.
31
<PAGE> 32
SECTION 10.14. PRESS RELEASES. Neither the Administrative Agent nor any Bank
shall issue any press release regarding this Agreement without the prior
written consent of the Company.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date indicated above.
THE SHERWIN-WILLIAMS COMPANY
By: /s/ Larry J. Pitorak
--------------------------------
LARRY J. PITORAK
Title: SENIOR VICE PRESIDENT-
FINANCE, TREASURER AND
CHIEF FINANCIAL OFFICER
By: /s/ James J. Sgambellone
--------------------------------
JAMES J. SGAMBELLONE
Title: ASSISTANT SECRETARY AND
CORPORATE DIRECTOR OF TAXES
32
<PAGE> 33
CONSENT TO SERVE AS ADMINISTRATIVE AGENT
The undersigned authorized representative of Bank of America National
Trust and Savings Association hereby consents on behalf of Bank of America
National Trust and Savings Association to serve as Administrative Agent under
that certain 5-Year Revolving Credit Agreement dated August 31, 1995 by and
among The Sherwin-Williams Company as Borrower, Bank of America National Trust
and Savings Association as Administrative Agent and the Banks named in such
Agreement.
BANK OF AMERICA NATIONAL TRUST
and SAVINGS ASSOCIATION
ADMINISTRATIVE AGENT
By: /s/ Doris V.G. Bergum
-----------------------------------
Title: DORIS V.G. BERGUM
VICE PRESIDENT
<PAGE> 34
Amount of Percentage of
Commitment Commitments
- ---------- -----------
$28,571,428.57 11.4286% Trust Company Bank
By: /s/ Ruth E. Whitner
---------------------------
Name: RUTH E. WHITNER
Title: ASSISTANT VICE PRESIDENT
By: /s/ Brian K. Peters
---------------------------
Name: BRIAN K. PETERS
Title: VICE PRESIDENT
Trust Company Bank
P.O. Box 4418, Center 128
Atlanta, Georgia 30302
Telephone: (404) 588-7915
---------------------
Facsimile: (404) 827-6270
---------------------
<PAGE> 35
Amount of Percentage of
Commitment Commitments
- ---------- -----------
$28,571,428.57 11.4286% Bank of America, Illinois
By: /s/ Lynn W. Stetson
--------------------------------
Name: LYNN W. STETSON
Title: VICE PRESIDENT
Bank of America, Illinois
231 S. LaSalle Street
Chicago, Illinois 60697
Telephone: 312 - 828-6757
-------------------------
Facsimile: 312 - 987-0303
--------------------------
<PAGE> 36
Amount of Percentage of
Commitment Commitments
- ---------- -----------
$25,000,000.00 10.0% National City Bank
By: /s/ Robert E. Little
-----------------------------------
Name: ROBERT E. LITTLE
Title: VICE PRESIDENT AND
SENIOR LENDING OFFICER
National City Bank
National City Center
Box 5756
Cleveland, Ohio 44101-0756
Telephone: (216) 575-3018
-----------------------------
Facsimile: (216) 575-9396
-----------------------------
<PAGE> 37
Amount of Percentage of
Commitment Commitments
- ---------- -----------
$25,000,000.00 10.0% Society National Bank
By: /s/ Marianne T. Meil
----------------------------------
Name: MARIANNE T. MEIL
Title: ASSISTANT VICE PRESIDENT
Society National Bank
127 Public Square
Cleveland, Ohio 44ll4
Telephone: (216) 689-3549
-----------------------------
Facsimile: (216) 689-4981
------------------------------
<PAGE> 38
Amount of Percentage of
Commitment Commitments
- ---------- -----------
$17,857,142.86 7.1429% First National Bank of Chicago
By: /s/ Thomas M. Fast
----------------------------------
Name: THOMAS M. FAST
Title: AUTHORIZED AGENT
First National Bank of Chicago
1301 East Ninth Street
Suite 2150
Cleveland, Ohio 44114-1824
Telephone: (216) 574-9851
-----------------------------
Facsimile: (216) 574-9278
-----------------------------
<PAGE> 39
Amount of Percentage of
Commitment Commitments
- ---------- -----------
$17,857,142.86 7.1429% First Interstate Bank of California
By: /s/ Wendy V.C. Purcell
----------------------------------
Name: WENDY V.C. PURCELL
Title ASSISTANT VICE PRESIDENT
First Interstate Bank of California
222 W. Adams Street
Suite 2180
Chicago, Illinois 60606
Telephone: (312) 553-2353
-----------------------------
Facsimile: (312) 553-4783
-----------------------------
<PAGE> 40
Amount of Percentage of
Commitment Commitments
- ---------- -----------
$17,857,142.86 7.1429% The Bank of Nova Scotia
By: /s/ F.C.H. Ashby
----------------------------------
Name: F.C.H. ASHBY
Title: SENIOR MANAGER LOAN OPERATIONS
The Bank of Nova Scotia
600 Peachtree St. NE
Suite 2700
Atlanta, GA 30308
Telephone: (404) 877-1500
-----------------------------
Facsimile: (404) 888-8998
-----------------------------
<PAGE> 41
Amount of Percentage of
Commitment Commitments
- ---------- -----------
$17,857,142.86 7.1429% Chemical Bank
By: /s/ D. Marin
----------------------------------
Name: D. MARIN
Title ASSISTANT MANAGER
Chemical Bank
270 Park Avenue
New York, New York 10017
Telephone: 1-212-270-3531
-----------------------------
Facsimile: 1-212-270-4711
-----------------------------
<PAGE> 42
Amount of Percentage of
Commitment Commitments
- ---------- -----------
$14,285,714.29 5.7143% NationsBank, N.A. (Carolinas)
By: /s/ Michael D. Monte
----------------------------------
Name: MICHAEL D. MONTE
Title: VICE PRESIDENT
NationsBank, N.A. (Carolinas)
Corporate Bank
100 North Tryon Street
NC1-007-08-04
Charlotte, North Carolina 28255
Telephone: (704) 386-9015
-----------------------------
Facsimile: (704) 386-3271
-----------------------------
<PAGE> 43
Amount of Percentage of
Commitment Commitments
- ---------- -----------
$14,285,714.29 5.7143% Deutsche Bank AG
By: /s/ J. Tracy Mehr
----------------------------------
Name: J. TRACY MEHR
Title: VICE PRESIDENT
By: /s/ Jean Hannigan
----------------------------------
Name: JEAN HANNIGAN
Title: ASSISTANT VICE PRESIDENT
Deutsche Bank AG
New York Branch
31 West 52nd Street
New York, New York 10019
Telephone:_____________________________
Facsimile:_____________________________
<PAGE> 44
Amount of Percentage of
Commitment Commitments
- ---------- -----------
$14,285,714.28 5.7143% First Union National Bank of
North Carolina
By: /s/ Mark M. Harden
----------------------------------
Name: MARK M. HARDEN
Title: VICE PRESIDENT
First Union National Bank of
North Carolina
301 South College Street
TW-19 Floor
Charlotte, North Carolina 28288-0745
Telephone: (704) 374-2420
---------------------------
Laurie Hart
Facsimile: (704) 374-2802
---------------------------
<PAGE> 45
Amount of Percentage of
Commitment Commitments
- ---------- -----------
$14,285,714.28 5.7143% The Bank of New York
By: /s/ Robert J. Joyce
----------------------------------
Name: ROBERT J. JOYCE
Title: VICE PRESIDENT
The Bank of New York
One Wall Street
New York, New York 10286
Telephone: (212) - 635-7919
-----------------------------
Facsimile: (212) - 635-6434
-----------------------------
<PAGE> 46
Amount of Percentage of
Commitment Commitments
- ---------- -----------
$14,285,714.28 5.7143% ABN-AMRO Bank N.V.
By: /s/ Kathryn C. Toth
----------------------------------
Name K.C. TOTH
Title: VICE PRESIDENT
By: /s/ Gregory D. Amoposo
----------------------------------
Name GREGORY D. AMOPOSO
Title: VICE PRESIDENT
ABN-AMRO Bank N.V.
Pittsburgh Branch
One PPG Place
Suite 2950
Pittsburgh, Pennsylvania 15222-5400
Telephone: (412) 566-2269
--------------------------
Facsimile: (412) 566-2266
--------------------------
<PAGE> 1
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of November 4, 1995
("Agreement") among Pratt & Lambert United, Inc., a New York corporation
("Company") which was formed under the name "Pratt & Lambert", The
Sherwin-Williams Company, an Ohio corporation ("Buyer"), and SWACQ, Inc., a New
York corporation and a wholly-owned subsidiary of Buyer ("Merger Subsidiary").
WHEREAS, the respective Boards of Directors of Buyer, Merger
Subsidiary and Company have each determined that it is in the best interests of
their respective shareholders for Buyer to acquire all of the outstanding
capital stock of Company upon the terms and subject to the conditions set forth
herein; and
WHEREAS, in furtherance of such acquisition, it is proposed that
Buyer, through Merger Subsidiary, shall make a cash tender offer ("Offer") to
acquire all of the issued and outstanding shares of the common stock, par value
$.01 per share, of Company ("Common Stock"), together with the Rights (as such
term is defined in Section 6.07) ("Share(s)") for $35.00 per Share, net to the
seller in cash, upon the terms and subject to the conditions of this Agreement
and the Offer; and
WHEREAS, the Board of Directors of Company has approved the making of
the Offer and resolved and agreed to recommend that holders of Shares tender
their Shares pursuant to the Offer; and
WHEREAS, also in furtherance of such acquisition, the Boards of
Directors of Buyer, Merger Subsidiary and Company have each approved the merger
of Merger Subsidiary with and into Company in accordance with the Business
Corporation Law of the State of New York ("New York Law") following the
consummation of the Offer and upon the terms and subject to the conditions set
forth herein; and
WHEREAS, (a) Buyer and Merger Subsidiary are unwilling to enter into
this Agreement unless, simultaneously with the execution and delivery of this
Agreement, certain shareholders of Company enter into a stock option, pledge
and security agreement ("Stock Option Agreement") among Buyer, Merger
Subsidiary and certain shareholders of Company providing for, among other
things, (i) the grant to Buyer and Merger Subsidiary of an irrevocable option
to purchase the Shares specified in the Stock Option Agreement and all Shares
acquired by those shareholders in the future prior to the Effective Time (as
such term is defined in Section 2.01(b)) ("Option Shares"), and (ii) the tender
by such shareholders, in response to the Offer, of all Option Shares, all upon
the terms and subject to the conditions set forth in the Stock Option
Agreement, and (b) the Board of Directors of Company has approved Buyer and
Merger Subsidiary entering into the Stock Option Agreement, which is to be
executed simultaneously with the execution hereof.
-1-
<PAGE> 2
NOW THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, Buyer, Merger Subsidiary and Company
hereby agree as follows:
ARTICLE I
THE OFFER
SECTION 1.01 The Offer. (a) Provided that nothing shall have
occurred that would result in a failure to satisfy any of the conditions set
forth in Annex I hereto, Buyer, through Merger Subsidiary, shall, as promptly as
practicable after the date hereof, but in no event later than five business days
following the public announcement of the terms of this Agreement, commence the
Offer to purchase all of the outstanding Shares at a price of $35.00 per Share
("Offer Price"), net to the seller in cash, subject to any amounts required to
be withheld under applicable federal, state, local or foreign income tax laws
and regulations. The consummation of the Offer shall be subject only to (i) the
condition that there shall be validly tendered and not withdrawn, in accordance
with the terms of the Offer and prior to the expiration date of the Offer, a
number of Shares which represents at least two-thirds of the Shares outstanding
on a fully diluted basis ("Minimum Condition"), and (ii) the other conditions
set forth in Annex I hereto. Buyer expressly reserves the right to waive the
Minimum Condition or any of the other conditions to the Offer and to make any
change in the terms or conditions of the Offer (other than extending the Offer
except as expressly provided below in this Section 1.01(a)); provided that no
change may be made which (i) changes the form of consideration to be paid or
decreases the Offer Price or the number of Shares sought in the Offer, (ii)
imposes conditions to the Offer in addition to those set forth in Annex I or
(iii) is materially adverse to the holders of the Shares. Notwithstanding the
foregoing, Buyer shall extend the Offer at any time up to the Outside
Termination Date (as such term is defined in Section 10.01(iv)) for one or more
periods of not more than ten business days, if at the initial expiration date of
the Offer, or any extension thereof, the condition to the Offer requiring the
expiration or termination of any applicable waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended ("HSR Act"), is
not satisfied. Except as set forth in the preceding sentence and the following
sentence or as otherwise may be required by law, Buyer shall either (i) accept
for payment, not later than 5:00 p.m. New York time on December 31, 1995 all
Shares validly tendered and not withdrawn on or prior to such date, or (ii)
cause the Offer to be extended so as to expire not earlier than 5:00 p.m. New
York time on January 5, 1996. In addition: (i) Buyer may extend the Offer, at
any time up to the Outside Termination Date for one or more periods of not more
than ten business days, if any condition of the Offer has not been satisfied;
(ii) Buyer shall have the right to extend the Offer at any time, for any reason,
for a period not to exceed ten business days provided such extension shall not
(y) extend beyond the Outside Termination Date or (z) be permitted if all
conditions to the Offer have been satisfied and at least 90% of the outstanding
Shares, on a fully diluted basis, have been validly tendered and not withdrawn;
and (iii) Buyer may extend the Offer for incremental periods of not more than
ten business days if at the time of any such extension
-2-
<PAGE> 3
an Acquisition Proposal (as such term is defined in Section 6.05) exists. In
addition, the Offer Price may be increased and the Offer may be extended to the
extent required by law in connection with such increase, in each case without
the consent of Company. Subject to the terms and conditions of the Offer,
Buyer shall pay, as promptly as practicable after expiration of the Offer, for
all Shares validly tendered and not withdrawn.
(b) As soon as practicable on the date of commencement of the Offer,
Buyer and Merger Subsidiary shall file (i) with the Securities and Exchange
Commission ("SEC"), a Tender Offer Statement on Schedule 14D-1 with respect to
the Offer which will contain the offer to purchase and form of the related
letter of transmittal and any other ancillary documents pursuant to which the
Offer shall be made (together with any supplements or amendments thereto,
collectively, the "SEC Offer Documents") and (ii) with the Attorney General of
the State of New York, a Registration Statement (together with any supplements
or amendments thereto, collectively, the "New York Disclosure Documents") in
accordance with Article 16 ("Security Takeover Disclosure Act") of the New York
Law. (The SEC Offer Documents and the New York Disclosure Documents are
collectively referred to herein as the "Offer Documents".) Buyer, Merger
Subsidiary and Company agree to correct promptly any information provided by
them for use in the Offer Documents if and to the extent that it shall have
become false or misleading in any material respect. Buyer and Merger
Subsidiary agree to take all steps necessary to cause the Offer Documents as so
amended and corrected to be filed with the SEC and the Attorney General for the
State of New York and to be disseminated to holders of Shares, in each case as
and to the extent required by applicable federal securities laws or the
Security Takeover Disclosure Act. Company and its counsel shall be given a
reasonable opportunity to review and comment on Schedule 14D-1 prior to it
being filed with the SEC and shall be promptly advised of any comments provided
or information requested by the staff of the SEC and afforded the opportunity
to comment on any related correspondence.
SECTION 1.02 Company Action. (a) Company hereby consents to the
Offer and the Merger and represents that its Board of Directors (at meetings
duly called and held ), has: (i) determined that this Agreement and the
transactions contemplated hereby, including the Offer and the Merger (as such
term is defined in Section 2.01), are fair to and in the best interest of
Company and its shareholders; (ii) approved, including by a majority of
Disinterested Directors (as such term is defined in Article Ninth of Company's
Restated Certificate of Incorporation), this Agreement and the transactions
contemplated hereby, including the Offer and the Merger, which approval
satisfies in full the requirements of the New York Law and the provisions of the
Restated Certificate of Incorporation of Company subject to requisite
shareholder approval; (iii) resolved to recommend acceptance of the Offer and
approval and adoption of this Agreement and the Merger by its shareholders; and
(iv) taken all other action necessary to render (x) Section 912 of the New York
Law and any other state takeover statutes and (y) the Rights Agreement dated as
of January 31, 1989 between Company and Mellon Securities Trust Company as
Rights Agent ("Rights Agreement") inapplicable to this Agreement, the Offer, the
Merger, the Stock Option
-3-
<PAGE> 4
Agreement and any purchase of Shares by Buyer or Merger Subsidiary pursuant to
the Stock Option Agreement and this Agreement.
(b) Company represents that its Board of Directors (i) has, in
accordance with the Shareholder Agreement among certain former shareholders of
United Coatings, Inc., Pratt & Lambert, Inc., and Raymond D. Stevens, Jr.,
Joseph J. Castiglia and James R. Boldt dated February 25, 1994 ("Shareholder
Agreement"), adopted a resolution approving the transactions contemplated in
this Agreement and the Stock Option Agreement, and (ii) approved Buyer's
commencement of negotiations with the parties to the Stock Option Agreement
with respect to the Stock Option Agreement and any subsequent purchase of
Option Shares pursuant to that agreement and this Agreement. Company further
represents that Merrill Lynch, Pierce, Fenner & Smith Incorporated, as
financial advisor to Company, has delivered to Company's Board of Directors its
oral opinion that, as of the date of such opinion, the cash consideration to be
received by the Shareholders of the Company pursuant to the Offer and the
Merger is fair to such shareholders from a financial point of view. In
connection with the Offer, Company will promptly furnish Buyer with a list of
Company's shareholders, mailing labels and any available listing or computer
file containing the names and addresses of all holders of record of Shares and
lists of securities positions of Shares held in stock depositories, and any
list of non-objecting beneficial holders of Shares maintained by Company, in
each case true and correct as of the most recent practicable date, and will
provide to Buyer such additional information (including, without limitation,
updated lists of shareholders, mailing labels and lists of securities
positions) and such other assistance as Buyer or Merger Subsidiary may
reasonably request in connection with the Offer.
(c) As soon as practicable on the day that the Offer is
commenced, Company will file with the SEC a Solicitation/Recommendation
Statement on Schedule 14D-9 ("Schedule 14D-9") which, subject to the fiduciary
duties of Company's Board of Directors, shall reflect that Company's Board of
Directors recommends acceptance of the Offer and approval and adoption of this
Agreement and the Merger by its shareholders. Company, Buyer and Merger
Subsidiary agree to correct promptly any information provided by them for use
in the Schedule 14D-9 if and to the extent that such information shall have
become false or misleading in any material respect. Company agrees to take all
steps necessary to cause the Schedule 14D-9 as so corrected to be filed with
the SEC and to be disseminated to holders of Shares, in each case as and to the
extent required by applicable federal securities laws. Buyer and its counsel
shall be given a reasonable opportunity to review and comment on the Schedule
14D-9 prior to its being filed with the SEC, and shall be promptly advised of
any comments provided or information requested by the staff of the SEC and
afforded the opportunity to comment on any related correspondence and
participate in any discussion with the staff of the SEC.
SECTION 1.03 Directors. (a) Commencing upon the purchase of Shares
pursuant to the Offer or the Stock Option Agreement and from time to time
thereafter, Buyer shall be entitled to designate the number of directors,
rounded up to the next whole number, on Company's Board of Directors that equals
the product of (i) the total number of directors on
-4-
<PAGE> 5
Company's Board of Directors (giving effect to the election of any additional
directors pursuant to this Section) and (ii) the percentage that (A) the sum of
(x) the number of Shares owned by Buyer and Merger Subsidiary (including Shares
accepted for payment in the Offer, provided funds therefor have been deposited
with the Depositary (as such term is defined in Section 2.03(a)) and (y) the
number of Option Shares, represents of (B) the total number of Shares
outstanding, and Company shall take all action necessary to cause Buyer's
designees to be elected or appointed to Company's Board of Directors including,
without limitation, increasing the number of directors and seeking and
accepting resignations of incumbent directors. At such times, Company will use
its best efforts to cause individuals designated by Buyer to constitute the
same percentage as such individuals represent on Company's Board of Directors
on each committee of the Board (other than any committee of the Board
established to take action under this Agreement), and each board of directors,
and each committee thereof, of each Subsidiary (as such term is defined in
Section 4.01).
(b) Company's obligations to appoint designees to the Board of
Directors shall be subject to Section 14(f) of the Securities Exchange Act of
1934 and the rules and regulations promulgated thereunder, as amended
("Exchange Act"), and Rule 14f-1 promulgated thereunder. Company shall
promptly take all actions required pursuant to Section 14(f) and Rule 14f-1 in
order to fulfill its obligations under this Section and shall include in the
Schedule 14D-9 such information with respect to Company and its officers and
directors as is required under Section 14(f) and Rule 14f-1 to fulfill its
obligations under this Section 1.03. Buyer will supply to Company in writing
and be solely responsible for any information with respect to itself and its
nominees, officers, directors and affiliates required by Section 14(f) and Rule
14f-1.
(c) From and after the time, if any, that any of Buyer's designees
are appointed to Company's Board of Directors pursuant to this Section 1.03,
any amendment of this Agreement, any termination of this Agreement by Company,
any extension of time for performance of any of the obligations of Buyer or
Merger Subsidiary hereunder, any waiver of any condition to the obligations of
Company or any of Company's rights hereunder or other action by Company
hereunder may be effected only by the action of a majority of the directors of
Company then in office who were directors of Company on the date hereof (or
their successors designated as set forth below), which action shall be deemed
to constitute the action of the full Board of Directors; provided, that if
there shall be no such directors, such actions may be effected by majority vote
of the entire Board of Directors of Company. Notwithstanding the foregoing,
until the Effective Time, Company shall use reasonable efforts to retain as
members of its Board of Directors at least two directors who are directors of
Company on the date hereof ("Company Designees"); in the event of the
resignation of any or all of Company Designees, the remaining Company Designees
(or, if no other Company Designee shall remain on the Board, the last resigning
Company Designee) shall have the right to appoint a successor or successors to
serve as Company Designees. Buyer and Merger Subsidiary shall cause each such
appointment to become effective. Nothing in
-5-
<PAGE> 6
this Section 1.03(c) shall prohibit, or be construed to prohibit, any of
Buyer's designees from voting on any matter described in Section 10.02(b).
ARTICLE II
THE MERGER
SECTION 2.01 The Merger. (a) Upon the terms and subject to the
conditions set forth in this Agreement, at the Effective Time, Merger Subsidiary
shall be merged ("Merger") with and into Company in accordance with the New York
Law, whereupon the separate existence of Merger Subsidiary shall cease, and
Company shall be the surviving corporation ("Surviving Corporation").
(b) As soon as practicable after satisfaction or, to the extent
permitted hereunder, waiver of all conditions to the Merger, Company and Merger
Subsidiary will file a certificate of merger with the Department of State of
the State of New York and make all other filings or recordings required by the
New York Law in connection with the Merger. The Merger shall become effective
on the date the certificate of merger is duly filed with the Department of
State of the State of New York or at such later date as is specified in the
certificate of merger ("Effective Time").
(c) From and after the Effective Time, Surviving Corporation shall
possess all the rights, privileges, powers and franchises and be subject to all
of the restrictions, disabilities, liabilities and duties of Company and Merger
Subsidiary, as provided in the New York Law.
SECTION 2.02 Conversion of Shares. At the Effective Time:
(i) each share of Company treasury stock and each Share
owned by Buyer, Merger Subsidiary or any other
subsidiary of Buyer immediately prior to the
Effective Time shall be cancelled, and no payment
shall be made with respect thereto;
(ii) each Share outstanding immediately prior to the
Effective Time shall, except as otherwise provided in
Section 2.02(i) or as provided in Section 2.04 with
respect to Shares as to which appraisal rights have
been exercised, be converted into the right to
receive $35.00 in cash or any higher price paid for
each Share in the Offer, without interest ("Merger
Consideration"); and
(iii) each share of common stock of Merger Subsidiary
outstanding immediately prior to the Effective Time
shall be converted into and become one share of
common stock of Surviving Corporation with the same
rights, powers and privileges as the shares so
converted and shall
-6-
<PAGE> 7
constitute the only outstanding shares of capital
stock of Surviving Corporation.
SECTION 2.03 Surrender and Payment. (a) Prior to the Effective Time,
Buyer shall appoint a depositary ("Depositary") for the purpose of exchanging
certificates representing Shares for the Merger Consideration. Depositary
shall at all times be a commercial bank having a combined capital and surplus of
at least $100,000,000. Buyer will pay to Depositary, immediately prior to the
Effective Time, the Merger Consideration to be paid in respect of the Shares.
For purposes of determining the Merger Consideration to be so paid, Buyer shall
assume that no holder of Shares will perfect his right to appraisal of his
Shares. Promptly after the Effective Time, Buyer will send, or will cause
Depositary to send, but in no event later than three business days after the
Effective Time, to each holder of Shares at the Effective Time a letter of
transmittal for use in such exchange (which shall specify that the delivery
shall be effected, and risk of loss and title shall pass, only upon proper
delivery of the certificates representing Shares to Depositary).
(b) Each holder of Shares that have been converted into a right to
receive the Merger Consideration, upon surrender to Depositary of a certificate
or certificates properly representing such Shares, together with a properly
completed letter of transmittal covering such Shares, will be entitled to
receive the Merger Consideration payable in respect of such Shares. Until so
surrendered, each such certificate shall, after the Effective Time, represent
for all purposes only the right to receive such Merger Consideration.
(c) If any portion of the Merger Consideration is to be paid to a
Person (as hereinafter defined) other than the registered holder of the Shares
represented by the certificate or certificates surrendered in exchange
therefor, it shall be a condition to such payment that the certificate or
certificates so surrendered shall be properly endorsed or otherwise be in
proper form for transfer and that the Person requesting such payment shall pay
to Depositary any transfer or other taxes required as a result of such payment
to a Person other than the registered holder of such Shares or establish to the
satisfaction of Depositary that such tax has been paid or is not payable. For
purposes of this Agreement, "Person" means an individual, a corporation, a
joint venture, a limited liability company, a partnership, an association, an
unincorporated organization, a group, a trust or any other entity or
organization, including a government or political subdivision or any agency or
instrumentality thereof.
(d) After the Effective Time, there shall be no further
registration of transfers of Shares. If, after the Effective Time,
certificates representing Shares are presented to Surviving Corporation, they
shall be canceled and exchanged for the consideration provided for, and in
accordance with the procedures set forth, in this Article II.
(e) Any portion of the Merger Consideration paid to Depositary
pursuant to Section 2.03(a) that remains unclaimed by the holders of Shares one
year after the Effective Time shall be returned to Surviving Corporation, upon
demand, and any such holder who has
-7-
<PAGE> 8
not exchanged his Shares for the Merger Consideration in accordance with this
Section prior to that time shall thereafter look only to Surviving Corporation
for payment of the Merger Consideration in respect of his Shares.
Notwithstanding the foregoing, Buyer, Merger Subsidiary and Surviving
Corporation shall not be liable to any holder of Shares for any amount paid to
a public official pursuant to applicable abandoned property laws. Any amounts
remaining unclaimed by holder of Shares on the day immediately prior to such
time as such amounts would otherwise escheat to or become property of any
governmental entity shall, to the extent permitted by applicable law, become
the property of Buyer, free and clear of any claims or interest of any Person
previously entitled thereto.
(f) Notwithstanding Section 2.03(e) to the contrary, any portion
of the Merger Consideration paid to Depositary pursuant to Section 2.03(a) in
respect of Shares for which appraisal rights have been perfected shall be
returned to Buyer upon demand.
SECTION 2.04 Dissenting Shares. Shares outstanding immediately prior
to the Effective Time and held by a holder who has not voted in favor of the
Merger or consented thereto in writing and who has demanded appraisal for such
Shares in accordance with the New York Law shall not be converted into the right
to receive the Merger Consideration, unless such holder fails to perfect or
withdraws or otherwise loses his right to appraisal. If after the Effective
Time such holder fails to perfect or withdraws or loses his right to appraisal,
such Shares shall be treated as if they had been converted as of the Effective
Time into the right to receive the Merger Consideration. Company shall give
Buyer prompt notice of any demands received by Company for appraisal of Shares,
and Buyer shall have the right to participate in all negotiations and
proceedings with respect to such demands. Company shall not, except with the
prior written consent of Buyer, make any payment with respect to, or settle or
offer to settle, any such demands.
SECTION 2.05 Stock Options. (a) Immediately prior to the Effective
Time, each outstanding employee stock option ("Option") to purchase Shares
granted under any employee stock option or compensation plan or arrangement of
Company shall be cancelled, and each holder of any such Option, whether or not
then vested or exercisable, shall be paid by Company at the Effective Time for
each such Option an amount (subject to applicable withholding taxes) determined
by multiplying (i) the excess, if any, of the price per Share paid in the Offer
over the applicable exercise price of such Option by (ii) the number of Shares
such holder could have purchased (assuming full vesting of all Options) had such
holder exercised such Option in full immediately prior to the Effective Time. In
the event any holder of an Option is terminated by Company subsequent to the
time a majority of Board of Directors of the Company consists of designees of
Buyer, Company shall provide to such employee the same payment specified above,
as if such employee had continued his employment through the Effective Time,
unless a majority of directors of the Company determines that such employee has
been terminated for Cause. For purposes of this Section 2.05(a), "Cause" shall
mean conviction of a felony involving moral turpitude or theft of Company
assets.
-8-
<PAGE> 9
(b) Prior to the Effective Time, Company shall (i) use its best
efforts to obtain any consents from holders of the Options and (ii) make any
amendments to the terms of such employee stock option or compensation plans or
arrangements, to the extent such consents or amendments are necessary to give
effect to the transactions contemplated by Section 2.05(a). Notwithstanding
any other provision of this Section 2.05 to the contrary, payment may be
withheld in respect of any Option until necessary consents are obtained.
SECTION 2.06 Merger Without Meeting of Shareholders. In the event
that Buyer, Merger Subsidiary or any other subsidiary of Buyer shall acquire at
least 90% of the outstanding Shares, pursuant to the Offer or otherwise, the
parties hereto agree to take all necessary and appropriate action to cause the
Merger to become effective as soon as practicable after such acquisition,
without a meeting of shareholders of Company, in accordance with Section 905 of
the New York Law.
ARTICLE III
THE SURVIVING CORPORATION
SECTION 3.01 Certificate of Incorporation. The certificate of
incorporation of Merger Subsidiary in effect at the Effective Time shall be the
certificate of incorporation of Surviving Corporation until amended in
accordance with applicable law, except that the name of Surviving Corporation
shall be "Pratt & Lambert United, Inc."
SECTION 3.02 Bylaws. The bylaws of Merger Subsidiary in effect at the
Effective Time shall be the bylaws of Surviving Corporation until amended in
accordance with applicable law.
SECTION 3.03 Directors and Officers. From and after the Effective
Time, until successors are duly elected or appointed and qualified in accordance
with applicable law, the directors of Merger Subsidiary at the Effective Time
shall be the directors of Surviving Corporation and the officers of Merger
Subsidiary at the Effective Time shall be the officers of Surviving Corporation.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF COMPANY
The Company represents and warrants to Buyer and Merger Subsidiary as
follows:
SECTION 4.01 Organization. Each of Company and the Subsidiaries is
a corporation duly organized, validly existing and in good standing under the
laws of the state of its incorporation and has all requisite power and
authority, corporate and other, and all
-9-
<PAGE> 10
necessary governmental approvals, licenses and permits to own, lease and
operate its properties and to carry on its business as now and heretofore being
conducted except where the failure to have any such approvals, licenses or
permits would have a Material Adverse Effect (as such term is defined below)
with respect to Company. Company and each Subsidiary are duly qualified or
licensed to do business and in good standing in each state in which the
property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification or licensing necessary, other than in
such states where the failure to so qualify would not have a Material Adverse
Effect with respect to Company. As used in this Agreement, a "Subsidiary(ies)"
shall mean (i) any "significant subsidiary" of Company as described in Rule
12b-1 of the Exchange Act and (ii) any corporation or other entity of which
securities or other ownership interests having ordinary voting power to elect
at least fifty percent of the board of directors or other persons performing
similar functions are directly or indirectly owned by Company. True and
complete copies of Company's Restated Certificate of Incorporation and By-Laws
are attached hereto as Schedule 4.01. As used in this Agreement, the term
"Material Adverse Effect" shall mean, with respect to any party, the result of
one or more events, changes or effects which, individually or in the aggregate,
would have a materially adverse effect on the business, operations, assets,
condition (financial or otherwise) or prospects of such party and its
Subsidiaries, taken as a whole.
SECTION 4.02 Capital Stock. The authorized capital stock of Company
consists of: (i) 100,000,000 shares of common stock, par value $.01 per share,
of which, at the date of this Agreement, 10,704,276 shares were issued and
outstanding (each of which is entitled to one vote) and 2,823,113 shares were
held in treasury; and (ii) 1,500,000 shares of preferred stock, par value $10.00
per share, of which none are issued and outstanding. At the date of this
Agreement, 1,038,100 shares of Company common stock were reserved for issuance
upon exercise of outstanding Options pursuant to Company's stock options plans
("Company Stock Plans") and 15,270,339 shares of common stock were reserved for
issuance in accordance with Company's Rights Agreement (as such term is defined
in Section 1.02(a)). At November 3, 1995, 704,850 Options were outstanding. All
outstanding Shares of Company's common stock are duly authorized, validly
issued, fully paid and non-assessable and free of any preemptive rights with
respect thereto. There are no bonds, debentures, notes or other indebtedness
having the right to vote (or convertible into securities having the right to
vote) on any matters on which shareholders of Company may vote ("Voting Debt")
issued or outstanding. Except for: the Shareholder Agreement; that certain
Registration Agreement made as of August 4, 1994 by and among the signing former
shareholders of United Coatings, Inc. and Company; that certain Right of First
Offer Agreement, between Jules F. Knapp and Company, dated August 4, 1994;
certain Affiliate Agreements made as of August 4, 1994 between Company and
certain former shareholders of United Coatings, Inc.; Sections 5.02(b) of the
1994 Merger Agreement (as such term is defined in Section 4.28); the outstanding
Options; certain former United Coatings, Inc. employee notes and stock pledge
agreements dated August 4, 1994; that certain agreement of the Company's Board
dated August 4, 1994 regarding transfers of Shares by certain United Coatings,
Inc. employees; and the Company's Rights Agreement, there are no existing
-10-
<PAGE> 11
options, warrants, calls, subscriptions or other rights or other agreements or
commitments of any character obligating Company or any Subsidiary to issue,
transfer or sell or cause to be issued, transferred or sold any shares of
capital stock or Voting Debt of, or other equity interests in, Company or any
Subsidiary or securities convertible into or exchangeable for such shares or
equity interests or obligating Company or any Subsidiary to grant, extend or
enter into any such option, warrant, call, subscription or other right,
agreement or commitment. Except as indicated on Schedule 4.02, Company has no
agreement, obligation or commitment to purchase or redeem Company common stock.
Except as set forth on Schedule 4.02, all Subsidiaries of Company are
wholly-owned by Company and none of the shares of capital stock of such
Subsidiaries are subject to a pledge. To the best of Company's knowledge and
except as set forth on Schedule 4.02, no shareholder beneficially owns more
than three percent of the Shares.
SECTION 4.03 Corporate Authority. Company has all requisite corporate
power and authority, corporate and other, to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution, delivery
and performance of this Agreement and the consummation of the Merger and of the
other transactions contemplated hereby have been duly and effectively authorized
by all necessary corporate action on the part of Company, and no other corporate
proceedings on the part of Company are necessary to authorize this Agreement or
to consummate the transactions contemplated hereby (other than the "Shareholder
Approval Requirement" as defined in Section 4.09). Assuming due execution and
delivery by other parties hereto, this Agreement constitutes the valid and
binding agreement of Company, enforceable against Company except that
enforcement may be subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws, now or hereafter in effect, affecting
creditor's rights generally.
SECTION 4.04 No Violation. (a) Except as described on Schedule 4.04
or as contemplated by Section 4.05, the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby will not result in
any violation of: (i) any provision of the Restated Certificate of
Incorporation, as amended, or By-Laws, as amended, of Company; or (ii) any
judgment, order or decree.
(b) Except as described on Schedule 4.04 or as contemplated by
Section 4.05, the execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby will not result in any violation of:
(i) any provision of any loan or credit agreement, note, mortgage, indenture,
lease, benefit plan or other agreement, obligation, instrument, permit,
concession, franchise or license applicable to Company or any Subsidiary; (ii)
any statute, law, ordinance, rule or regulation applicable to Company or any
Subsidiary, or their respective properties or assets; (iii) any other
restrictions of any kind or nature nor result in the creation of any lien,
mortgage, pledge, loan, charge or encumbrance on the Shares and/or any assets
of Company or any Subsidiary, nor the loss of any license or contractual right
with respect to Company's or any Subsidiary's business; or (iv) any
acceleration or termination provision of any loan, indenture, note or security
interest agreement to which Company or any Subsidiary is a party or to which
any of their respective
-11-
<PAGE> 12
assets are subject or bound, except where any such violation or loss would not
have a Material Adverse Effect with respect to Company.
SECTION 4.05 Government Authorization. No consent, approval, order or
authorization of, or registration, declaration or filing with, any governmental
entity or regulatory authority is required by or with respect to Company or any
Subsidiary in connection with the execution and delivery of this Agreement or
the consummation by Company of the transactions contemplated hereby, the failure
of which to obtain would have a Material Adverse Effect with respect to Company
or the transactions contemplated hereby, except for: (i) the filing of a
pre-merger notification report by Company under the HSR Act and the expiration
or termination of the applicable waiting period thereunder; (ii) the filing of
the Certificate of Merger with the Department of State of the State of New York
in accordance with the requirements of the New York Law and the filing of
appropriate documents with the relevant authorities of other states in which
Company is qualified to transact business; and (iii) compliance with any
applicable requirements of the Exchange Act or state securities laws.
SECTION 4.06 SEC Reports and Financial Statements. (a) Company has
filed with the SEC and has delivered or made available to Buyer true and
complete copies of all forms, reports, schedules, statements and other documents
required to be filed by it with the SEC since March 1, 1993 under the Exchange
Act or the Securities Act of 1933, as amended ("Securities Act"), including,
without limitation, the annual reports on Form 10-K for its fiscal years ended
December 31, 1992, 1993 and 1994, the quarterly reports on Form 10-Q for its
fiscal quarters ended March 31, June 30 and September 30, 1993, 1994 and 1995
(other than the Form 10-Q for its fiscal quarter ended September 30, 1995), and
the proxy or information statements relating to meetings of, or actions taken
without a meeting by, the shareholders of Company since March 1, 1993 (as such
documents have been amended since the time of their filing, collectively, the
"SEC Documents"). The financial statements of Company included in the SEC
Documents comply with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto, and such financial
statements have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved (except as
may be indicated in the notes thereto or, in the case of the unaudited
statements, as permitted by Form 10-Q) and fairly present (subject in the case
of the unaudited statements to normal, recurring audit adjustments) the
consolidated financial position of Company and its consolidated Subsidiaries,
taken as a whole, at the date thereof and the consolidated results of their
operations and cash flows (or changes in financial position prior to the
adoption of FASB 95) for the periods then ended. The books of account and other
financial records of Company have been maintained in accordance with sound
business practices.
(b) In addition, Company has delivered or made available to Buyer
true and complete copies of the audited balance sheets of the former United
Coatings, Inc. (which company was merged with and into Company effective
August 4, 1994, hereinafter "UCI") at December 31, 1990, December 31, 1991,
December 31, 1992 and December 31, 1993 and
-12-
<PAGE> 13
the related statements of earnings, shareholder's investment and changes in
financial position for the years then ended (including the notes thereto),
which present fairly the financial position of UCI as of such dates and the
results of its operations and changes in its financial position for such
periods, and have been prepared in conformity with generally accepted
accounting principles applied on a basis consistent with that of similar
periods for preceding years. The balance sheets and financial statements
identified in this Section 4.06(b) accurately reflect the basis for the
financial condition and results of operations of UCI set forth in such
financial statements.
SECTION 4.07 Absence of Certain Changes or Events. Except as
disclosed on Schedule 4.07 or as otherwise contemplated by this Agreement or
reflected in the SEC Documents, since December 31, 1994, Company and each
Subsidiary have operated only in the ordinary course of business and consistent
with past practices, and there have been no events, changes or circumstances
having, individually or in the aggregate, a Material Adverse Effect with respect
to Company. Specifically, and without limiting the generality of the foregoing,
since December 31, 1994 (except as set forth on Schedule 4.07 or as otherwise
contemplated by this Agreement or reflected in the SEC Documents), neither
Company nor any Subsidiary has: (i) declared, set aside or paid any dividend or
other distribution in respect of its capital stock, other than quarterly
dividends paid by Company on its common stock of not more than $0.16 per share;
(ii) made any payment (other than dividends) to any of its shareholders (in
their capacity as shareholders); (iii) issued or sold any shares of its capital
stock or any options, warrants or other rights to purchase any such shares or
any securities convertible into or exchangeable for such shares or taken any
action to reclassify or recapitalize or split up its capital stock, except for
Shares issued pursuant to the exercise of Options; (iv) mortgaged, pledged or
subjected to any lien, lease, security interest, encumbrance or other
restriction, any of its properties or assets except in the ordinary course of
business; (v) except for compromises of trade accounts receivable in the
ordinary course of business, forgiven or cancelled any debt or claim, waived any
right of material value; (vi) adopted or amended any plan or arrangement
described in Section 4.17 (other than amendments that were made to comply with
laws or regulations) for the benefit of any director, officer or employee, or
changed the compensation (including bonuses) to be paid to any director, officer
or employee, except for changes made in the ordinary course of business and
consistent with past practices, and which are consistent with Company's
corporate policies and procedures; (vii) suffered any damage, destruction or
loss (whether or not covered by insurance) which has a Material Adverse Effect
with respect to Company; (viii) sold, leased or otherwise transferred, or
contracted to sell, lease or otherwise transfer (except as contemplated in this
Agreement), any assets material to the operations or business of Company or any
Subsidiary which has not been replaced with a comparable substitute except for
the sale, lease or transfer of assets in the ordinary course of business; (ix)
sold, licensed, assigned or otherwise transferred exclusive rights to any
material patents, copyrights, trademarks, trade names or other similar
intangible assets; (x) agreed to guarantee, secure or act as a surety with
respect to any debt, liability or obligation of any third party which in the
aggregate does not exceed $ 500,000.00; or (xi) agreed to, permitted
-13-
<PAGE> 14
or suffered any of the acts, transactions or other things described in clauses
(i) through (x) of this Section 4.07.
SECTION 4.08 Taxes. (a)(i) All income and other material Tax (as such
term is defined in Section 4.08(b)) returns, statements, reports and forms
(including estimated Tax returns and reports and information returns and
reports) required to be filed with any taxing authority with respect to any
Pre-Closing Tax Period (as such term is defined in Section 4.08(b)) by or on
behalf of Company or any Subsidiary (including any predecessors of any of them
including, without limitation, UCI) (collectively, the "Return(s)") were filed
when due (including any applicable extension periods) in accordance with all
applicable laws; (ii) as of the time of filing, such Returns correctly reflected
in all material respects the facts regarding the income, business, assets,
operations, activities and status of Company, any Subsidiary and any other
information required to be shown therein; (iii) Company and each Subsidiary has
timely paid, or withheld and remitted to the appropriate taxing authority, all
Taxes (as such term is defined in Section 4.08(b)) shown as due and payable on
the Returns that have been filed; (iv) the charges, accruals and reserves for
Taxes with respect to Company and any Subsidiary for any Pre-Closing Tax Period
(including any Pre-Closing Tax Period for which no Return has yet been filed)
reflected in the financial statements of Company in the SEC Documents are
adequate; (v) since 1976 neither the Company nor any Subsidiary has been a
member of an affiliated group (as defined in Section 1504 of the Internal
Revenue Code of 1986, as amended ("Code")) other than one of which Company or a
Subsidiary was the common parent, or filed or been included in a combined,
consolidated or unitary Return other than one filed by Company or a Subsidiary;
(vi) Company is not and has not been within five years of the date hereof a
"United States real property holding corporation" as defined in Section 897 of
the Code; (vii) there is no claim, action, suit or proceeding now pending or
threatened in writing against or in respect of any Tax or Tax Asset (as such
term is defined in Section 4.08(b)) of Company or any Subsidiary the resolution
of which would as proposed, or audit or investigation now pending or threatened
in writing against or in respect of any Tax or Tax Asset of Company or any
Subsidiary the resolution of which Company believes would (taking into account
any changes, accruals and reserves referred to in clause (iv) above)
individually or in the aggregate, have a material adverse effect on the
financial position of Company and its Subsidiaries taken as a whole, and there
has not occurred any extension or waiver of any applicable statute of
limitations with respect to any Return.
(b) (i) As used in this Agreement, "Tax" or "Taxes" mean: (A)
federal, state, local and foreign income, franchise,
alternative or add-on minimum tax, gross receipts,
transfer, withholding on amounts paid to or by
Company or any Subsidiary, payroll, employment,
license, property, sales, use, excise and other
taxes, tariffs or governmental charges of any nature
whatsoever, together with any interest, penalty or
additional tax attributable to such taxes; (B) any
liability of Company or any Subsidiary for the
payment of any amounts of the type described in
clause (i) of this paragraph (b) as a result of being
a member of an affiliated, consolidated, combined or
unitary group, or being a party to
-14-
<PAGE> 15
any agreement or arrangement whereby liability of
Company or any Subsidiary for payments of such
amounts was determined or taken into account with
reference to the liability of any other person; and
(C) any liability of Company or any Subsidiary for
the payment of any amounts as a result of being party
to any tax sharing agreement or with respect to the
payment of any amounts of the type described in
clauses (A) or (B) of this paragraph as a result of
any express or implied obligation to indemnify any
other person.
(ii) As used in this Agreement, "Pre-Closing Tax Period"
means any Tax period (or portion thereof) ending on
or before the Effective Time.
(iii) As used in this Agreement, "Tax Asset" means any net
operating loss, net capital loss, investment tax
credit, foreign tax credit, charitable deduction or
any other credit or tax attribute which could reduce
Taxes.
SECTION 4.09 Vote Required. Unless the Merger is consummated in
accordance with the provisions of Section 905 of the New York Law, the
affirmative vote of the holders of two-thirds of all outstanding Shares at a
meeting at which there is a quorum approving this Agreement, the Merger and
other transactions contemplated hereby ("Shareholder Approval Requirement") is
the only vote of the holders of any class or series of capital stock necessary
to approve this Agreement, the transactions contemplated hereby and the Merger,
other than approvals already obtained.
SECTION 4.10 Finders' Fees. Except for Merrill Lynch, Pierce, Fenner
& Smith Incorporated, whose fees and expenses will be paid by Company, no person
acting on behalf of Company has claims to, or is entitled to, under any contract
or otherwise, any payment as a broker, finder or intermediary in connection with
the origin, negotiation, execution or consummation of the transactions provided
for in this Agreement.
SECTION 4.11 Transactions with Certain Persons. Except as disclosed
on Schedule 4.11 or in the SEC Documents, to Company's knowledge, no current or
former director, officer, employee or shareholder of Company or any Subsidiary,
or any of their affiliates or family members or trusts for the benefit of any
such person or persons, has any interest in any property, real or personal,
tangible or intangible, material to the business of Company or any Subsidiary,
and since December 31, 1994 there have been no material transactions between
Company or any Subsidiary and any director, officer or shareholder of Company or
any Subsidiary other than employment or compensation arrangements entered into
in the ordinary course of business.
SECTION 4.12 Litigation and Claims. Except as identified on Schedule
4.12 or in the SEC Documents, there is no pending or, to the knowledge of
Company, threatened action, suit, proceeding, claim, investigation or notice by
or against Company or any Subsidiary which, if adversely determined, would have
a Material Adverse Effect with
-15-
<PAGE> 16
respect to Company, whether or not covered by insurance, and there is no
outstanding order, notice, writ, injunction or decree of any court, government
or governmental agency against or, to the knowledge of Company, directly
affecting Company or any Subsidiary. To the best knowledge of Company and
except as identified on Schedule 4.12, there are no claims asserted against
Company or any Subsidiary (whether or not covered by insurance) and no
incidents or occurrences of any kind which Company or any Subsidiary believes
may give rise to any claims against Company or any Subsidiary, whether or not
covered by insurance, which will, in the aggregate, have a Material Adverse
Effect with respect to Company.
SECTION 4.13 Contracts; No Defaults; Major Customers. Except as
disclosed in the SEC Documents and except for the customer contracts described
in clauses (i) - (iv) below which are delivered to Buyer within ten business
days following the execution of this Agreement, Schedule 4.13 contains a
complete and accurate list of all written agreements, contracts and commitments
consisting of any guarantee by Company or any Subsidiary of any obligation(s)
of third parties, loans, mortgages and other financing arrangements under which
Company or any Subsidiary is indebted, as well as all licenses to Company of
proprietary information and/or rights which are related to a significant amount
of sales or significant in the operation of the business, customer contracts
(for each of: (i) the twenty largest customers for 1994 and for the nine month
period ending September 30, 1995 listed on Schedule 4.13, (ii) any customer with
purchases in excess of $750,000, during 1994 and for the nine month period
ending September 30, 1995, (iii) any such contracts with mass merchandisers and
home centers, and (iv) any such contract which provided for cooperative
advertising, merchandising aids and programs, rebates, stock lifts and other
similar incentives where the amount of which exceeded $100,000 in 1994 or is
expected to exceed $100,000 in 1995) and all other agreements, contracts and
commitments entered into by Company or any Subsidiary not usual or customary for
a company engaged in the type of businesses which Company or any Subsidiary
conducts. All such agreements, contracts and commitments are valid, binding and
in full force and effect and neither Company nor any Subsidiary is in material
default or alleged to be in material default thereunder and, to the best
knowledge of Company or any Subsidiary, no other party thereto is in default.
Nothing has occurred which, with or without the passage of time or giving of
notice or both, would constitute a material default by Company or any Subsidiary
or, to the knowledge of Company, any other party under any such agreement,
contract or commitment. Company has no knowledge that any such agreement,
contract or commitment will not be renewed and neither Company nor any
Subsidiary has received any notification that any such agreement, contract or
commitment is not likely to be renewed. Except as otherwise provided on
Schedule 4.13, the Merger contemplated by this Agreement will not create a
material default under or permit the termination of or otherwise adversely
affect any such agreement, contract or commitment in a manner that will have a
Material Adverse Effect with respect to Company. Except as described on
Schedule 4.13, neither Company nor any Subsidiary is required to give any notice
to any party to any such agreement, contract or commitment regarding this
Agreement or the transactions contemplated hereby . Schedule 4.13 includes a
complete and correct list of the twenty largest customers of Company and the
Subsidiaries, on a consolidated basis, in terms of revenue recognized in respect
of such customers during
-16-
<PAGE> 17
the fiscal period ended December 31, 1994 and for the nine month period ending
September 30, 1995, showing the amount of revenue recognized for each such
customer during such period. Except as described on Schedule 4.13, neither
Company nor any Subsidiary has been notified that any of the customers listed
on Schedule 4.13 will terminate or reduce in any material respect, or otherwise
materially and adversely change, the business or relationship between such
customer and Company or any Subsidiary.
SECTION 4.14 Proprietary Rights. Schedule 4.14 lists all significant
U.S. and foreign names, patents, patent applications, marks, symbols, trade
names, trademarks, service marks, copyrights, copyright applications and logos
used in the business of Company or any Subsidiary. Schedule 4.14 identifies
which of the foregoing are owned by either Company or any Subsidiary and which
are owned by any other Person. Except as provided on Schedule 4.14, since
December 31, 1994 neither Buyer nor any Subsidiary has sold or transferred any
exclusive rights to such proprietary rights to any third party.
SECTION 4.15 Title to and Condition of Real Estate. The real property
owned or leased by Company and each Subsidiary is identified on Schedule 4.15
("Real Estate"). With respect to owned Real Estate, either Company or a
Subsidiary owns title to such Real Estate in fee simple. The Real Estate leases
referred to on Schedule 4.15 constitute all of the leases under which Company
and any Subsidiary holds a leasehold interest in real estate and such leases are
valid, binding and in full force and effect. Neither Company, any Subsidiary
nor, to the best of Company's knowledge, any third party is in material breach
or material default of any payments due under such leases or any material term
of such leases. Schedule 4.15 identifies those real estate leases between
Company or any Subsidiary and any affiliated owner or affiliated owners.
SECTION 4.16 Environmental Compliance. Except as disclosed in
Schedule 4.16 and except where the failure to have any of the following would
result in a loss, liability or obligation to Company and the Subsidiaries, taken
as a whole, of less than Five Million and 00/100 Dollars ($5,000,000), in the
aggregate (a) Company and each Subsidiary has in full force and effect, and has
made all necessary filings in relation to, (i) all governmental permits,
licenses, authorizations or approvals necessary or required pursuant to the
Federal Comprehensive Environmental Response Compensation and Liability Act
(CERCLA), the Superfund Amendments and Reauthorization Act (SARA), the Federal
Water Pollution Control Act, the Federal Clean Air Act, the Federal Resource
Conservation and Recovery Act ("RCRA"), the Hazardous and Solid Waste Amendments
to RCRA (HSWA), the Federal Solid Waste Disposal Act, the Federal Toxic
Substances Control Act (TSCA), the Federal Insecticide, Fungicide and
Rodenticide Act (FIFRA), each as amended, and under all statutes enacted by any
state, local and/or foreign governments and authorities (including, but not
limited to, municipal sewage authorities) and under any and all rules,
regulations, ordinances or requirements promulgated thereunder and any other
federal, state, local or foreign laws (codified or common law), executive
orders, ordinances, rules and regulations relating to
-17-
<PAGE> 18
pollution, the preservation of the environment and/or the release of material
into the environment ("Environmental Laws") and (ii) all such permits,
licenses, authorization and approvals are in good standing and Company has made
timely application for renewal of such permits where necessary and (b) there
are no pending or, to the knowledge of Company, threatened proceedings to
revoke, suspend and/or limit any such permit, license, authorization or
approval.
(b) Except as consistent with applicable Environmental Laws and
except as identified on Schedule 4.16, to the best of Company's knowledge, no
Hazardous Substances (as hereinafter defined) are emitted, discharged or
released from the Real Estate, directly or indirectly, into the atmosphere,
soil, ground water or surface water, the effect of which would have a Material
Adverse Effect with respect to Company. Except for those matters identified on
Schedule 4.16, to the best of Company's knowledge, neither Company nor any
Subsidiary, nor any predecessor thereof nor any present or former owner or
operator of all or a portion of the Real Estate, has been determined to be
liable for cleanup or response costs with respect to the emission, discharge,
or release of any Hazardous Substance or for any other matter arising under the
Environmental Laws due to its ownership, lease, use or operation of all or a
portion of the Real Estate or any other premises or the generation, handling,
treatment, storage, transportation or disposal of any Hazardous Substance
which, in the aggregate, would have a Material Adverse Effect with respect to
Company. Any "underground storage tank" (as that term is defined in the
Environmental Laws) that is located in or at the Real Estate is identified on
Schedule 4.16 and, except as identified on such Schedule, all such tanks are in
compliance with the Environmental Laws. Any removal of underground storage
tanks by Company or any Subsidiary prior to the date of this Agreement has been
completed in accordance with applicable Environmental Laws. As used in this
Agreement "Hazardous Substances" shall mean any and all wastes, substances,
materials, pollutants, contaminants, chemical substances, smoke, gas or
particulate matter defined or regulated as hazardous, toxic or dangerous under
any Environmental Law.
(c) Except as set forth on Schedule 4.16, neither Company nor any
Subsidiary has been notified by any regulatory authority that Company or any
Subsidiary was, may be or is in violation of or has liability or potential
liability under the Environmental Laws. Except as set forth on Schedule 4.16,
neither Company nor any Subsidiary is in violation of or has potential
liability under the Environmental Laws which, individually or in the aggregate,
would have a Material Adverse Effect with respect to Company.
(d) Except as set forth on Schedule 4.16, there are no claims,
notices of potential responsibility or violations, demand letters, requests for
information, actions, litigation, proceedings or, to the knowledge of Company,
investigations (including, without limitation, any of such which have been
initiated by private parties), pending or, to the knowledge of Company,
threatened, administrative, governmental or judicial, arising out of, in
connection with or resulting from a violation or alleged violation of, or
related to, the Environmental Laws which, individually or in the aggregate,
would have a Material Adverse Effect with respect to Company.
-18-
<PAGE> 19
(e) (i) Company has not knowingly withheld from Buyer any
environmental investigation, study, audit, test, review or other analysis in
the possession of Company or any Subsidiary conducted in relation to the
business of Company or any Subsidiary or any property or facility now or
previously owned, operated or leased by Company or any Subsidiary; and (ii)
Company has not withheld from Buyer any consent decree, consent order or
similar document in force to which Company or any Subsidiary is a party or
relating to any property currently owned, leased or operated by the Company or
any Subsidiary.
4.17 Employee Benefit Matters. (a) For purposes of this Section
4.17, the following terms shall have the meanings set forth below:
(i) Benefit Arrangement: Any contract (other than the
Employee Agreements), arrangement or policy, or any
plan or arrangement (whether or not written)
providing for severance benefits, insurance coverage
(including any self-insured arrangement), workers'
compensation, disability benefits, supplemental
unemployment benefits, vacation benefits, retirement
benefits, deferred compensation, profit-sharing,
bonuses, stock options, stock appreciation rights or
other forms of incentive compensation or
post-retirement insurance compensation or benefits
that (A) is not an Employee Plan (as such term is
defined in Section 4.17(a)(iii)), (B) is entered into
or maintained, as the case may be, by Company or any
Subsidiary or affiliated entities and (C) covers any
employee or former employee of Company or any
Subsidiary or affiliated entities.
(ii) Employee Agreement: All written employment
agreements and severance agreements with employees of
Company or any Subsidiary or affiliated entities.
(iii) Employee Plan: Any "employee benefit plan" as
defined in Section 3(3) of ERISA that is (A) subject
to any provision of ERISA, (B) is maintained,
administered or contributed to by Company, any
Subsidiary or any of their ERISA Affiliates (as such
term is defined in Section 4.17(a)(v))for employees
or former employees of Company or any Subsidiary or
any of their ERISA Affiliates and (C) covers any
employee or former employee of Company, any
Subsidiary or any of their ERISA Affiliates.
(iv) ERISA: The Employee Retirement Income Security Act
of 1974, as amended, and any successor statute
thereto, and the rules and regulations promulgated
thereunder.
(v) ERISA Affiliate: Any entity which, together with
Company or any Subsidiary or affiliated entities,
would be treated as a single employer
-19-
<PAGE> 20
under Section 4001(b)(1) of ERISA or Section 414(b),
(c), (m) or (o) of the Code.
(vi) Multiemployer Plan: Each Employee Plan that is a
multiemployer plan, as defined in Section 3(37) of
ERISA.
(vii) Title IV Plan: An Employee Plan, other than any
Multiemployer Plan, subject to Title IV of ERISA.
(b) Subject to the last sentence of this paragraph (b), Schedule
4.17 identifies each Employee Plan. Except as permitted by the last sentence
of this paragraph (b), Company has furnished or made available to Buyer copies
of the Employee Plans (and, if applicable, related trust agreements) and all
amendments thereto and written interpretations thereof, together with (i) the
three most recent annual reports prepared in connection with any material
Employee Plan (Form 5500 including, if applicable, Schedule B thereto) and (ii)
the most recent actuarial valuation report prepared in connection with any
Employee Plan. No Employee Plan is, except as set forth on Schedule 4.17, (i)
a Multiemployer Plan, (ii) a Title IV Plan or (iii) maintained in connection
with any trust described in Section 501(c)(9) of the Code. Except as set forth
on Schedule 4.17, no Employee Plan is a plan described in Section 401(a)(1) of
ERISA. With respect to welfare benefit plans as defined in Section 3(1) of
ERISA, Company shall furnish or make available Employee Plan documentation and
annual reports as soon as reasonably possible, and to the extent such Employee
Plans are not listed on Schedule 4.17, a list of such omitted Employee Plans
shall be provided as soon as reasonably possible.
(c) With respect to each Employee Plan, except as disclosed on
Schedule 4.17: (i) no "prohibited transaction", as defined in Section 406 of
ERISA or Section 4975 of the Code, has occurred with respect to any Employee
Plan, (excluding transactions effected pursuant to a statutory or
administrative exemption); (ii) no disputes in the ordinary course, or outside
the ordinary course, of the operation of an Employee Plan, or obligations
imposed on the operation of an Employee Plan or any fiduciary of an Employee
Plan as a result of any governmental audit or action of any court, arbitrator
or other tribunal that might reasonably be expected to have a Material Adverse
Effect with respect to Company are pending or to the knowledge of Company or
any of its ERISA Affiliates threatened; (iii) all contributions required to be
made to each Employee Plan as of the date hereof (taking into account any
extensions permitted by the Code or the Internal Revenue Service) have been
made in full; (iv) all contributions, premiums or claim payments due or owing
with respect to each Employee Plan have been properly accrued and reflected in
Company's or its ERISA Affiliates' (as applicable) financial statements as of
the close of its most recent fiscal year; (v) subject to applicable collective
bargaining agreements, the Employee Plans may be amended or terminated by
Company or its ERISA Affiliates on or at any time after the Effective Time,
without liability to any person or entity; (vi) if the Employee Plan is a Title
IV Plan, it has not been subject to a "reportable event" (as defined in Section
4043(b) of ERISA), the reporting of which has not been waived by regulation;
(vii) if the Employee Plan is a Title IV Plan, all premiums due to the Pension
Benefit Guaranty Corporation for
-20-
<PAGE> 21
plan termination insurance have been paid in full on a timely basis; and (viii)
the funded status of each Employee Plan is not materially different from what
was reflected on the most recent financial statements of such Employee Plan.
(d) No material liability under Title IV of ERISA has been
incurred by Company or any ERISA Affiliate that has not been satisfied in full
and except as disclosed on Schedule 4.17, to the knowledge of Company and its
ERISA Affiliates, no condition exists that presents a material risk to Company
or its ERISA Affiliates of incurring any liability to the Pension Benefit
Guaranty Corporation, the Department of Labor or the plan participants. No
Employee Plan has incurred an accumulated funding deficiency, as defined in
Section 302 of ERISA or Section 312 of the Code, whether or not waived.
(e) Neither Company, any Subsidiary nor any ERISA Affiliate has
incurred, or expects to incur, either directly or indirectly, any withdrawal
liability within the meaning of Title IV of ERISA with respect to any
Multiemployer Plan.
(f) Except as disclosed on Schedule 4.17, each Employee Plan that
is intended to be qualified under Section 401(a) of the Code has been
determined by the Internal Revenue Service to be so qualified and no event has
occurred since the date of such determination that, to the knowledge of
Company, would adversely affect such qualification, and each trust created
under any such Employee Plan has been determined by the Internal Revenue
Service to be exempt from tax under Section 501(a) of the Code and no event has
occurred since the date of such determination that, to the knowledge of
Company, would adversely affect such exemption. Company has provided Buyer
with the most recent determination letter from the Internal Revenue Service
relating to each such Employee Plan. Each Employee Plan and each trust created
under an Employee Plan has been maintained in substantial compliance with its
terms and with the requirements prescribed by any and all applicable statutes,
orders, rules and regulations, including, but not limited to, ERISA and the
Code.
(g) Schedule 4.17 identifies each Benefit Arrangement that
represents a material obligation of the Company. Company has furnished or made
available to Buyer copies or descriptions of each such Benefit Arrangement that
represents a material obligation of the Company. Each such Benefit Arrangement
has been maintained in substantial compliance with its terms and with the
requirements prescribed by any and all applicable statutes, orders, rules and
regulations.
(h) Schedule 4.17 identifies by name all Employee Agreements in
effect or committed to be put in effect as of the Effective Time.
(i) Except as disclosed on Schedule 4.17, neither Company, any
Subsidiary nor any of its ERISA Affiliates has any current or projected
liability with respect to post-employment or post-retirement health or medical
or life insurance benefits for retired or former employees of Company, any
Subsidiary or ERISA Affiliates, except as required to avoid excise tax under
Section 4980B of the Code.
-21-
<PAGE> 22
(j) Except as disclosed on Schedule 4.17, there has been no
amendment or announcement by Company or any of its ERISA Affiliates relating
to, or change in, benefits, employee participation or coverage under, any
Employee Plan or Benefit Arrangement, that would materially increase the
expense of maintaining such Employee Plan or Benefit Arrangement above the
level of expense incurred with respect thereto for the fiscal year ended prior
to the date hereof.
(k) Except as disclosed on Schedule 4.17, Company is not aware of
any Employee Agreement or other contract, agreement, plan or arrangement
covering any employee or former employee of Company or any Subsidiary that,
individually or collectively, could give rise to the payment of any amount that
would not be deductible pursuant to the terms of Section 280G of the Code.
(l) Except as disclosed on Schedule 4.17, no excise tax of a
material amount under Section 4980B or other provision of the Code has been
incurred by Company or an ERISA Affiliate in respect of any Employee Plan.
SECTION 4.18 Liabilities. Except as reflected on Schedule 4.18 or in
the SEC Documents, neither Company nor any Subsidiary, has incurred or suffered
any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) which exist at the date of this Agreement and,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect with respect to Company.
SECTION 4.19 Compliance with Applicable Laws. Except as indicated on
Schedule 4.19 or in the SEC Documents, Company and each Subsidiary holds all
permits, licenses, variances, exemptions, orders and approvals of all
governmental entities which are necessary to the operation of its business
("Permits"), except where the failure to have such Permits would not have a
Material Adverse Effect with respect to Company. Company and each Subsidiary
are in compliance with the terms of the Permits. Except as disclosed on
Schedule 4.19, neither Company nor any Subsidiary is in violation of any law,
ordinance or regulation of any governmental entity to the extent any such
violation reasonably could have a Material Adverse Effect with respect to
Company.
SECTION 4.20 Insurance. Schedule 4.20 is a list of all policies of
property, fire, liability, life (including but not limited to life insurance
contracts within the meaning or intended to be within the meaning of Section
7702 of the Code), and other forms of insurance (including self-insurance), and
indemnity bonds, carried by Company or any Subsidiary (including any
predecessors of any of them including, without limitation, UCI) identifying the
nature of risks covered and the amount of coverage in each case, and specifying
any year or years since 1980 when any such insurance or other similar insurance
was not in effect. Schedule 4.20 shall designate which insurance is currently
in effect. All such policies designated as currently in effect on Schedule 4.20
are in full force and all premiums due and payable on such policies have been
paid or will be paid without causing a lapse of coverage. Company believes it
is adequately insured against the kind of risks usually insured against by
corporations engaged in the same or similar business. No
-22-
<PAGE> 23
insurance policy of Company has been terminated by the insurance carrier during
the past five years.
SECTION 4.21 Labor Matters. As of the date of this Agreement, there
are no union organizational drives or other major labor disputes at any
manufacturing or distribution facility pending or, to the best knowledge of
Company, threatened between Company or any Subsidiary and any of their
respective employees. Except as referred to on Schedule 4.21, neither Company
nor any Subsidiary is a party to any union, collective bargaining or other
similar agreements.
SECTION 4.22 Financial Advisor Advice. Company has received the
opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated to the effect
that, as of a date proximate to the date of this Agreement, the cash
consideration to be received by the shareholders of Company pursuant to the
Offer and the Merger is fair, from a financial point of view, to such
shareholders, and that opinion has not been modified or withdrawn.
SECTION 4.23 Investments. Except as disclosed on Schedule 4.23, (i)
neither Company nor any Subsidiary, directly or indirectly, owns any shares or
has any ownership interest in any other Person or is a partner with any other
Person and (ii) neither Company nor any Subsidiary has an obligation to purchase
any shares of stock, other securities or any other form of investment in any
other Person.
SECTION 4.24 Disclosure Documents. (a) The information with respect
to Company, any Subsidiary and any of their respective subsidiaries that Company
furnishes to Buyer in writing specifically for use in the Offer Documents will
not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in light
of the circumstances under which they were made, not misleading.
(b) Each document required to be filed by Company with the SEC in
connection with the transactions contemplated by this Agreement, including,
without limitation, the Schedule 14D-9 will, when filed, comply as to form in
all material respects with the applicable requirements of all applicable law,
including, without limitation, the Exchange Act.
SECTION 4.25 State Takeover Statutes. The Board of Directors of
Company has approved the Offer, the Merger, this Agreement and the entering
into, and performance, by Buyer and Merger Subsidiary of the Stock Option
Agreement, and such approval is sufficient to render the provisions of Section
912 of the New York Law inapplicable to this Agreement, the Offer, the Merger,
and the entering into, and performance, by Buyer and Merger Subsidiary of the
Stock Option Agreement and the other transactions contemplated by this
Agreement and the Stock Option Agreement.
SECTION 4.26 Rights Agreement. Company and its Board of Directors
have taken and will, until the termination, if any, of this Agreement pursuant
to Section 10.01, maintain
-23-
<PAGE> 24
in effect all necessary action (i) to render the Rights Agreement inapplicable
with respect to the Offer, the Merger, the entering into, and performance, by
Buyer and Merger Subsidiary of the Stock Option Agreement and the other
transactions contemplated by this Agreement and (ii) to ensure that (y) neither
Buyer nor Merger Subsidiary nor any of their Affiliates (as defined in the
Rights Agreement) or Associates (as defined in the Rights Agreement) is
considered to be an Acquiring Person (as defined in the Rights Agreement) and
(z) the provisions of the Rights Agreement, including the occurrence of a
Distribution Date (as defined in the Rights Agreement), are not and shall not
be triggered by reason of the announcement or consummation of the Offer, the
Merger, the Stock Option Agreement or the consummation of any of the other
transactions contemplated by this Agreement. Company has delivered to Buyer a
complete and correct copy of the Rights Agreement, as amended and supplemented
to the date of this Agreement.
SECTION 4.27 General Representation and Warranty. This Agreement, and
the Schedules taken together with the SEC Documents, do not contain any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements contained herein or therein not misleading.
SECTION 4.28 1994 Agreement and Plan of Merger. Schedule 4.28 sets
forth all notices, claims and demands ("Claim") for indemnification made by any
party pursuant to ARTICLE X: Survival and Indemnification of that certain
Agreement and Plan of Merger, dated as of February 25, 1994, by and among
Company, UCI and certain shareholders of UCI ("1994 Merger Agreement").
Specifically, Schedule 4.28 identifies: (i) the amount of the Claim; (ii) the
basis upon which such Claim was made (including the provision of the 1994 Merger
Agreement which was alleged to have been breached); (iii) the resolution of
such Claim; and (iv) the dates on which such Claim was made and resolved.
Schedule 4.28 also identifies the aggregate amount of damages which have been
applied against and are subject to the indemnification thresholds and ceiling
amounts described in Sections 10.01 (c) (i) and (ii) of the 1994 Merger
Agreement.
SECTION 4.29 Shareholders' Agreement. The Board of Directors of
Company has taken all action under the Shareholders' Agreement to approve the
Offer, the Merger , this Agreement and the Stock Option Agreement, and the
entering into and performance by Buyer and Merger Subsidiary of the same.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF BUYER AND MERGER SUBSIDIARY
Buyer and Merger Subsidiary represent and warrant to the Company that:
SECTION 5.01 Organization. Each of Buyer and Merger Subsidiary is a
corporation duly organized, validly existing and in good standing under the laws
of the state of its incorporation and has all requisite power and authority,
corporate and other, and all
-24-
<PAGE> 25
government approvals to own, lease, and operate its properties and carry on its
business as now and heretofore being conducted except where the failure to have
any such approval would not have a Material Adverse Effect with respect to Buyer
and Merger Subsidiary. The authorized capital stock of Merger Subsidiary
consists of 1,000 shares of common stock, par value $.01 per share, of which, at
the date of this Agreement, 1,000 shares were issued and outstanding, and each
such share is entitled to one vote.
SECTION 5.02 Corporate Authority. Buyer and Merger Subsidiary have all
requisite corporate power and authority, corporate and other, to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution, delivery and performance of this Agreement and the consummation
of the Merger and of the transactions contemplated hereby have been duly and
effectively authorized by all necessary corporate action on the part of Buyer
and Merger Subsidiary and no other corporate proceedings on the part of Buyer or
Merger Subsidiary are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. Assuming due execution and delivery by the
other parties hereto, this Agreement constitutes the valid and binding agreement
of each of Buyer and Merger Subsidiary, enforceable against each of them except
that enforcement may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws, now or hereafter in effect,
affecting creditors' rights generally.
SECTION 5.03 Government Authorization. No consent, approval, order or
authorization of, or registration, declaration or filing with, any governmental
entity or regulatory authority is required by or with respect to Buyer or Merger
Subsidiary in connection with the execution and delivery of this Agreement or
the consummation by Buyer and Merger Subsidiary of the transactions contemplated
hereby, the failure to obtain which would have a Material Adverse Effect with
respect to Buyer or the transactions contemplated hereby, except for: (i) the
filing of a pre-merger notification report by Buyer under the HSR Act and the
expiration or termination of the applicable waiting period thereunder; (ii) the
filing of the Certificate of Merger with the Department of State of the State of
New York in accordance with the requirements of the New York Law; (iii) the
filing of the New York Disclosure Documents; and (iv) compliance with any
applicable requirements of the Exchange Act.
SECTION 5.04 Non-Contravention. The execution, delivery and performance
by Buyer and Merger Subsidiary of this Agreement and the consummation by Buyer
and Merger Subsidiary of the transactions contemplated hereby do not and will
not: (i) contravene or conflict with the certificate of incorporation or bylaws
of Merger Subsidiary or similar documents of Buyer; (ii) assuming compliance
with the matters referred to in Section 5.03, contravene or conflict with any
provision of law, regulation, judgment, order or decree binding upon Buyer or
Merger Subsidiary; or (iii) constitute a default under or give rise to any right
of termination, cancellation or acceleration of any right or obligation of Buyer
or Merger Subsidiary or to a loss of any benefit to which Buyer or Merger
Subsidiary is entitled under any agreement, contract or other instrument binding
upon Buyer or Merger Subsidiary,
-25-
<PAGE> 26
except in the case of clauses (ii) and (iii) as would not materially impair the
ability of Buyer and Merger Subsidiary to consummate the Offer or the Merger.
SECTION 5.05 Disclosure Documents. (a) The information with respect to
Buyer and its subsidiaries and Merger Subsidiary that Buyer and Merger
Subsidiary furnish to Company in writing specifically for use in the Schedule
14D-9 or pursuant to Section 14(f) or Rule 14f-1 under the Exchange Act will not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.
(b) The SEC Offer Documents, when filed, will comply as to form in all
material respects with the applicable requirements of the Exchange Act and the
New York Disclosure Documents, when filed, will comply as to form in all
material respects with the applicable requirements of the New York Law. The
Offer Documents will not at the time of the filing thereof, at the time of any
distribution thereof or at the time of consummation of the Offer contain any
untrue statement of a material act or omit to state any material fact necessary
to make the statements made therein, in the light of the circumstances under
which they were made, not misleading; provided that this representation and
warranty will not apply to statements or omissions in the Offer Documents based
upon information furnished to Buyer or Merger Subsidiary in writing by Company
specifically for use therein.
SECTION 5.06 Finders' Fees. There is no investment banker, broker,
finder or other intermediary who might be entitled to any fee or commission from
the Buyer or Merger Subsidiary upon consummation of the transactions
contemplated by this Agreement.
SECTION 5.07 Financing. Buyer and Merger Subsidiary have or will have,
prior to the expiration of the Offer, sufficient funds available to purchase all
of the Shares outstanding on a fully diluted basis and to pay all related fees
and expenses pursuant to the Offer and this Agreement.
SECTION 5.08 Share Ownership. As of the date hereof, Buyer and Merger
Subsidiary do not beneficially own any Shares.
SECTION 5.09 Merger Subsidiary's Operations. Merger Subsidiary was
formed solely for the purpose of engaging in the transactions contemplated
hereby and has not engaged in any business activities or conducted any
operations other than in connection with the transactions contemplated hereby.
-26-
<PAGE> 27
ARTICLE VI
COVENANTS OF COMPANY
SECTION 6.01 Conduct of Business. During the period from the date of
this Agreement and continuing until the Effective Time, Company and each
Subsidiary shall carry on its business in the usual, regular and ordinary course
in substantially the same manner as heretofore conducted and in substantial
compliance with all applicable laws and regulations and, to the extent
consistent therewith, use all reasonable efforts to preserve intact its present
business organization, keep available the services of its present officers and
employees and preserve its relationships with customers, suppliers, licensors,
licensees, distributors and others having business dealings with it to the end
that its goodwill and ongoing business shall not be adversely impaired at the
Effective Time. Specifically, and without limiting the generality of the
foregoing, except as expressly permitted or contemplated by this Agreement or,
as of the date of this Agreement, set forth on Schedule 6.01, during the period
from the date of this Agreement and continuing to the Effective Time, neither
Company nor any Subsidiary shall, in each case without the prior written consent
of Buyer, which consent (except as regards (v) and (vi) below, which consent
shall not be unreasonably withheld by Buyer subsequent to January 31, 1996
provided any extension beyond January 31, 1996 is not a result of any act or
failure to act on the part of Company or any Subsidiary) may be granted or
withheld in the sole discretion of Buyer:
(i) (A) declare, set aside or pay any dividends on or make other
distributions in respect of any of its capital stock, except
that Company may continue the declaration and payment of
regular quarterly cash dividends on its common stock of not
more than $0.16 per share; (B) split, combine or reclassify any
of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or
in substitution for shares of its capital stock; or (C)
purchase, redeem or otherwise acquire any shares of capital
stock of Company or any Subsidiary or any other securities
thereof or any rights, warrants or options to acquire any such
shares or other securities;
(ii) issue, grant, deliver or sell, or authorize or propose the
issuance, delivery or sale of, pledge or otherwise encumber any
shares of its capital stock of any class, any Voting Debt or
any securities convertible into, or any rights, warrants,
calls, subscriptions or options to acquire, any such shares,
Voting Debt or convertible securities other than to Merger
Subsidiary pursuant to this Agreement and the Offer, except for
the issuance of shares of common stock upon the exercise of
Options which are outstanding on the date hereof pursuant to
the terms of such Options and the Company Stock Plans;
(iii) amend or propose to amend its Restated Certificate of
Incorporation, as amended, or By-Laws, as amended, or any other
organizational and/or charter documents;
-27-
<PAGE> 28
(iv) directly or indirectly, acquire or agree to acquire by merging
or consolidating with, or by purchasing a substantial equity
interest in or a substantial portion of the assets of, or by
any other manner, any Person or acquire or agree to acquire
any assets other than in the ordinary course of business and
consistent with past practices;
(v) except in the ordinary course of business and consistent with
past practices, neither Company nor any Subsidiary shall sell,
lease, license, encumber or otherwise dispose of any of their
assets, other than as may be required by law or to consummate
the transactions contemplated hereby;
(vi) incur any indebtedness for borrowed money under existing
credit facilities exceeding in the aggregate $135,000,000.00
or guarantee any such indebtedness or issue or sell any debt
securities or warrants or rights to acquire any debt
securities of such party or guarantee any debt securities of
others, other than the extension of trade credit in the
ordinary course of business and consistent with past
practices;
(vii) without the prior written consent of the Buyer, (A) enter
into, adopt, amend (except as may be required by law or
regulation) or terminate any Benefit Plan or other employee
benefit plan, or any agreement, arrangement, plan or policy
between Company or any Subsidiary and one or more of its
directors, officers or employees, or (B) except for normal
compensation increases in the ordinary course of business and
consistent with past practices (1) increase in any manner the
compensation or fringe benefits of any director, officer or
employee, (2) pay any benefit not required by any plan and
arrangement as in effect as of the date hereof, (3) grant any
options, stock appreciation rights, phantom stock or
performance units or (4) enter into any contract, agreement,
commitment or arrangement to do any of the foregoing;
(viii) make or agree to make any capital expenditure in excess of
$8,000,000.00;
(ix) make any material Tax election or settle or compromise any
material Tax liability; or
(x) willfully and or knowingly (A) take or agree or commit to take
any action that would make any representation and warranty of
Company herein inaccurate at, or as of any time prior to, the
Effective Time, or (B) omit or agree to omit to take any
action necessary and prudent to prevent any such
representations or warranty from being inaccurate at any such
time.
SECTION 6.02 Advice of Changes; Filings. Company shall, on a regular
and frequent basis, report to Buyer on operational matters and promptly advise
Buyer orally and in writing of any change or event having or which, insofar as
can reasonably be foreseen,
-28-
<PAGE> 29
would have a material adverse effect on Buyer or Merger Subsidiary. Company
shall promptly provide Buyer (or Buyer's counsel) with copies of all filings
made by Company with any state or federal governmental entity in connection with
this Agreement and the transactions contemplated hereby.
SECTION 6.03 Shareholder Meeting; Proxy Material. Company shall cause a
meeting of its shareholders ("Company Shareholder Meeting") to be duly called
and held as soon as reasonably practicable following the purchase of Shares
pursuant to the Offer for the purpose of voting on the approval and adoption of
this Agreement and the Merger unless a vote of shareholders of Company is not
required by the New York Law. The Board of Directors of Company shall recommend
approval and adoption of this Agreement and the Merger by Company's
shareholders. In connection with such meeting, Company will: (i) promptly after
the consummation of the Offer, prepare and file with the SEC, use its best
effort to have cleared by the SEC, and thereafter mail to its shareholders as
promptly as practicable, a proxy statement and all other proxy materials for
such meeting; (ii) use its best efforts to obtain the necessary approvals by its
shareholders of this Agreement and the transactions contemplated hereby; and
(iii) otherwise comply with all legal requirements. If requested by Buyer or
Merger Subsidiary, Company will file a proxy statement and all other proxy
materials with the SEC that are prepared by Buyer and reasonably acceptable to
Company and call a special meeting of shareholders, in anticipation of (and
prior to) the purchase of Shares in response to the Offer. The actions required
to be taken by Company and its Board of Directors pursuant to this Section 6.03
shall be subject to Company's Board of Director's fiduciary duties.
SECTION 6.04 Access to Information. Company and each Subsidiary: (i)
upon reasonable notice will give Buyer, its counsel, financial advisors,
auditors and other authorized representatives reasonable access during normal
business hours to the offices, properties, books and records of Company and each
Subsidiary; (ii) upon reasonable notice will furnish to Buyer, its counsel,
financial advisors, auditors and other authorized representatives such financial
and operating data and other information as such Persons may reasonably request;
and (iii) will instruct Company's and each Subsidiary's employees, counsel and
financial advisors to cooperate with Buyer in its investigation of the business
of Company and each Subsidiary; provided that no investigation pursuant to this
Section shall affect any representation or warranty given by Company to Buyer or
Merger Subsidiary hereunder and any information received by Buyer or its
representatives shall remain subject to the Confidentiality Agreement dated
August 22, 1995, between Buyer and Company (the "Confidentiality Agreement").
SECTION 6.05 Other Offers. (a) Neither Company, any Subsidiary, nor any
officer, director, employee, financial advisor, investment banker, attorney or
other advisor or representative of Company or any Subsidiary will, directly or
indirectly, (i) take any action to solicit, initiate or encourage any
Acquisition Proposal (as hereinafter defined) or (ii) engage in negotiations or
discussions regarding or disclose any information relating to Company or any
Subsidiary or afford access to the properties, books or records of Company
-29-
<PAGE> 30
or any Subsidiary to any Person that may be considering making, or has made, an
Acquisition Proposal. Company will promptly notify Buyer after receipt of any
Acquisition Proposal or any indication that any Person is considering making an
Acquisition Proposal or any request for nonpublic information relating to
Company or any Subsidiary or for access to the properties, books or records of
Company or any Subsidiary by any Person that may be considering making, or has
made, an Acquisition Proposal and will keep Buyer fully informed of the status
and details of any such Acquisition Proposal, indication or request. For
purposes of this Agreement, "Acquisition Proposal" means any offer or proposal
for, or any indication of interest in, a merger, consolidation or other business
combination involving Company or any Subsidiary or any proposal or offer to
acquire in any manner, directly or indirectly, 10% or more of any class of
voting securities of Company or any Subsidiary or a substantial portion of the
assets of Company or any Subsidiary, other than the transactions contemplated by
this Agreement. Company will immediately cease and cause to be terminated any
existing activities, discussions or negotiations by Company or any of its
directors, officers, employees, financial advisors, investment bankers,
attorneys or other advisors or representatives with any parties conducted
heretofore with respect to any of the foregoing, and Company shall immediately
demand that any such parties return to Company any confidential information
and/or materials such parties may have received from Company during the course
of any such activities, discussions or negotiations. Neither the Board of
Directors of Company nor any Committee thereof shall withdraw or modify in any
manner adverse to Buyer the approval and recommendation of this Agreement, the
Offer, the Merger, the Stock Option Agreement or any of the transactions
contemplated hereby and thereby, or approve or recommend any Acquisition
Proposal.
(b) Notwithstanding the foregoing provisions of Section 6.05(a), (i)
Company may participate in discussions or negotiations with or furnish
information to any third party which makes a written Acquisition Proposal that
either (x), is not subject to a financing contingency and involves the purchase
for cash of 100% of Company's common stock at a price per Share greater than the
Merger Consideration or (y) provides for the acquisition of 100% of Company's
common stock for consideration, not consisting entirely of cash, which Company's
Board of Directors, based on the advice of its financial advisor, determines is
financially superior to the Merger Consideration (in the case of either (x) or
(y), a "Superior Proposal"), and (ii) the Board of Directors of Company or any
Committee thereof may withdraw or modify in a manner adverse to Buyer the
approval or recommendation of this Agreement, the Offer, the Merger, the Stock
Option Agreement or any of the transactions contemplated hereby and thereby, and
may approve or recommend any such Superior Proposal, if, in the case of both (i)
and (ii), the Board of Directors of Company determines (and is advised by its
outside counsel) that failure to take such action would constitute a breach of
its fiduciary duties. Furthermore, nothing contained in Section 6.05(a) shall
prohibit Company or its Board of Directors from taking and disclosing to
Company's shareholders a position with respect to a tender offer or exchange
offer by a third party pursuant to Rules 14d-9 and 14e-2(a) promulgated under
the Exchange Act or from making such disclosure to Company's shareholders or
otherwise which, in the judgment of the Board of Directors with the advice of
independent legal counsel, may be required under applicable law or rules of any
stock exchange.
-30-
<PAGE> 31
SECTION 6.06 Notices of Certain Events. Company shall promptly notify
Buyer of:
(i) any notice or other communication from any Person
alleging that the consent of such Person is or may be
required in connection with the transactions
contemplated by this Agreement;
(ii) any notice or other communication from any
governmental or regulatory agency or authority in
connection with the transactions contemplated by this
Agreement;
(iii) any actions, suits, claims, investigations or
proceedings commenced or, to the best of its
knowledge, threatened against, relating to or
involving or otherwise affecting Company or any
Subsidiary which, if pending on the date of this
Agreement, would have been required to have been
disclosed pursuant to Section 4.12 or which relate to
the consummation of the transactions contemplated by
this Agreement; and
(iv) any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) which, if
existing on the date of this Agreement, would have
been required to be disclosed pursuant to Section
4.18.
SECTION 6.07 Amendment of Rights Agreement. Company agrees that upon
the reasonable request by Buyer or Merger Subsidiary, Company promptly: (i) will
take any and all further action requested by Buyer or Merger Subsidiary to
ensure that (y) neither Buyer nor Merger Subsidiary nor any of their Affiliates
(as defined in the Rights Agreement) or Associates (as defined in the Rights
Agreement) is considered to be an Acquiring Person (as defined in the Rights
Agreement) and (z) the provisions of the Rights Agreement, including the
occurrence of a Distribution Date (as defined in the Rights Agreement), are not
and shall not be triggered by reason of the announcement or consummation of the
Offer, the Merger, the Stock Option Agreement or the consummation of any of the
other transactions contemplated by this Agreement; and (ii) will redeem, in
accordance with the terms of the Rights Agreement, all outstanding rights issued
pursuant to the Rights Agreement ("Rights") at a redemption price of $.01 per
Right, or otherwise take such action as may be requested by Buyer in order to
render the Rights Agreement inapplicable to any of the transactions contemplated
by this Agreement, including the Offer and the Merger.
ARTICLE VII
COVENANTS OF BUYER
During the period from the date of this Agreement and continuing until
the Effective Time, Buyer agrees that:
-31-
<PAGE> 32
SECTION 7.01 Obligations of Merger Subsidiary. Buyer will take all
action necessary to cause Merger Subsidiary to perform its obligations under
this Agreement and to consummate the Merger on the terms and conditions set
forth in this Agreement.
SECTION 7.02 Voting of Shares. Buyer agrees to vote all Shares
beneficially owned by it or by its subsidiaries in favor of adoption of this
Agreement at the Company Shareholder Meeting.
SECTION 7.03 Notice of Certain Events. Buyer shall promptly notify
Company of:
(i) any notice or other communication from any Person
alleging that the consent of such Person is or may be
required in connection with the transactions
contemplated by this Agreement; and
(ii) any notice or other communication from any
governmental or regulatory agency or authority in
connection with the transactions contemplated by this
Agreement.
SECTION 7.04 Indemnification; Directors' and Officers' Insurance. (a)
From and after the Effective Time, Buyer and Surviving Corporation shall
indemnify, defend and hold harmless each person who is now, or has been at any
time prior to the date hereof, an officer or director of Company or any of its
Subsidiaries ("Indemnified Parties") against all losses, claims, damages, costs,
expenses (including attorneys' fees and expenses), liabilities or judgments or
amounts that are paid in settlement with the approval of the indemnifying party
(which approval shall not be unreasonably withheld) of or in connection with any
threatened or actual claim, action, suit, proceeding or investigation based in
whole or in part on, or arising in whole or in part out of, the fact that such
person is or was a director , officer, employee or agent of Company or any of
its Subsidiaries (including service as a fiduciary of any employee benefit plan)
whether pertaining to (i) any matter existing or occurring at or prior to the
Effective Time or (ii) based in whole or in part on, or arising in whole or in
part out of, or pertaining to this Agreement or the transactions contemplated
hereby, and whether asserted or claimed prior to, or at or after, the Effective
Time ("Indemnified Liabilities"), in the case of clause (i) above, to the full
extent a corporation is permitted under the New York Law to indemnify its own
directors or officers as the case may be (and Buyer and Surviving Corporation,
as the case may be, will pay expenses in advance of the final disposition of any
such action or proceeding to each Indemnified Party to the full extent permitted
by law). Without limiting the foregoing, in the event any such claim, action,
suit, proceeding or investigation is brought against any Indemnified Parties
(whether arising before or after the Effective Time), (A) the Indemnified
Parties may retain counsel satisfactory to them and Buyer and Surviving
Corporation and Buyer and Surviving Corporation shall pay all fees and expenses
of such counsel for the Indemnified Parties promptly as statements therefor are
received; and (B) Buyer and Surviving Corporation will use all reasonable
efforts to assist in the defense of any such matter, provided that neither Buyer
nor Surviving
-32-
<PAGE> 33
Corporation shall be liable for any settlement effected without its prior
written consent which consent shall not unreasonably be withheld. Any
Indemnified Party wishing to claim indemnification under this Section 7.04, upon
learning of any such claim, action, suit, proceeding or investigation, shall
notify Buyer and Surviving Corporation (but the failure so to notify shall not
relieve a party from any liability which it may have under this Section 7.04
except to the extent such failure prejudices such party), and shall deliver to
Buyer and Surviving Corporation the undertaking contemplated by Section 723(c)
of the New York Law. The Indemnified Parties as a group may retain only one law
firm to represent them with respect to each such matter unless there is, under
applicable standards of professional conduct, a conflict on any significant
issue between the positions of any two or more Indemnified Parties. Buyer and
Merger Subsidiary agree that all rights to indemnification, including provisions
relating to advances of expenses incurred in defense of any action or suit,
existing in favor of the Indemnified Parties with respect to matters occurring
through the Effective Time, shall survive the Merger and shall continue in full
force and effect for a period of not less than six years from the Effective
Time; provided, however, that all rights to indemnification in respect of any
Indemnified Liabilities asserted or made within such period shall continue until
the disposition of such Indemnified Liabilities.
(b) For a period of six years after the Effective Time, Buyer shall
cause to be maintained in effect the current policies of directors' and
officers' liability insurance maintained by Company and its Subsidiaries
(provided that Buyer may substitute therefor policies of at least the same
coverage and amounts containing terms and conditions which are no less
advantageous in any material respect to the Indemnified Parties) with respect to
matters arising before the Effective Time, provided that Buyer shall not be
required to pay an annual premium for such insurance in excess of 150% of the
last annual premium paid by Company prior to the date hereof, but in such case
shall purchase as much coverage as possible for such amount ("Maximum Premium").
Company represents to Buyer that the Maximum Premium is $202,944.00.
(c) The provisions of this Section 7.04 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party, his heirs and
his personal representatives and shall be binding on all successors of Buyer,
Merger Subsidiary, and Surviving Corporation.
SECTION 7.05 Availability of Funds. Buyer agrees to make available to
Merger Subsidiary sufficient funds to enable Merger Subsidiary to consummate the
transactions contemplated hereby.
SECTION 7.06. Notice of Breach. Buyer shall promptly notify Company of
a breach, known to Buyer, of any representation, warranty or covenant of Company
contained herein and permit Company to cure a breach of any representation or
warranty as soon as reasonably practicable from Company's receipt of notice of
such breach and permit Company to cure a breach of a covenant within five
business days from Company's receipt of such notice.
-33-
<PAGE> 34
ARTICLE VIII
COVENANTS OF BUYER AND COMPANY
The parties hereto agree that:
SECTION 8.01 Best Efforts. Subject to the terms and conditions of this
Agreement, each party will use its best efforts to take, or cause to be taken,
all actions and to do, or cause to be done, all things necessary, proper or
advisable to consummate the transactions contemplated by this Agreement;
provided that Buyer shall not be required to agree to any consent decree or
order in connection with any objections of the United States Department of
Justice or United States Federal Trade Commission (each an "HSR Authority") to
the transactions contemplated by this Agreement.
SECTION 8.02 Certain Filings. Company and Buyer shall, within five
business days from the date of this Agreement, file Notification and Report
Forms under the HSR Act with the Federal Trade Commission (the "FTC") and the
Antitrust Division of the Department of Justice (the "Antitrust Division") and
shall use their best efforts to respond as promptly as practicable to all
inquiries received from the FTC or the Antitrust Division for additional
information or documentation. In addition, Company and Buyer shall cooperate
with each other (i) in connection with the preparation of the Schedule 14D-9 and
the Offer Documents, (ii) in determining whether any action by or in respect of,
or filing with, any governmental body, agency or official, or authority is
required, or any actions, consents, approvals or waivers are required to be
obtained from parties to any material contracts in connection with the
consummation of the transactions contemplated by this Agreement and (iii) in
seeking any such actions, consents, approvals or waivers or making any such
filings, furnishing information required in connection with the preparation of
the Schedule 14D-9 and the Offer Documents and seeking to timely obtain any such
actions, consents, approvals or waivers.
SECTION 8.03 Public Announcements. Buyer and Company will consult with
each other before issuing any press release or making any public statement with
respect to this Agreement and the transactions contemplated hereby and, except
as may be required by applicable law or any listing agreement with any national
securities exchange or foreign securities exchange, will not issue any such
press release or make any such public statement prior to such consultation.
SECTION 8.04 Conveyance Taxes. Buyer and Company shall cooperate in the
preparation, execution and filing of all returns, questionnaires, applications,
or other documents regarding any real property transfer or gains, sales, use,
transfer, value added, stock transfer and stamp taxes, any transfer, recording,
registration and other fees, and any similar taxes which become payable in
connection with the transactions contemplated hereunder that are required or
permitted to be filed on or before the Effective Time.
-34-
<PAGE> 35
SECTION 8.05 Further Assurances. At and after the Effective Time, the
officers and directors of Surviving Corporation will be authorized to execute
and deliver, in the name and on behalf of Company or Merger Subsidiary, any
deeds, bills of sale, assignments or assurances and to take and do, in the name
and on behalf of Company or Merger Subsidiary, any other actions and things to
vest, perfect or confirm of record or otherwise in Surviving Corporation any and
all right, title and interest in, to and under any of the rights, properties or
assets of Company acquired or to be acquired by Surviving Corporation as a
result of, or in connection with, the Merger.
SECTION 8.06 Leases. Company shall cause the real estate leases
identified on Schedule 8.06 to continue to be in full force and effect at the
Effective Time, except that Company shall cause such leases to be amended to
include the substance of the provisions contained on Schedule 8.06, such
amendments to become effective on or before the Effective Time. Company shall
obtain from each owner and/or lessor of leased Real Estate set forth in Schedule
8.06, an estoppel certificate in form and substance reasonably acceptable to
Buyer.
SECTION 8.07 Employee Loans. Company shall not surrender any stock
certificates, which Company represents and warrants it has in its possession,
pledged by employees to secure the notes from employees identified on Schedule
8.07.
SECTION 8.08 Noncompetition Agreement. Within fifteen business days
following the execution of this Agreement, Jules F. Knapp shall enter into and
deliver the Noncompetition Agreement with Company, in the form attached hereto
as Schedule 8.08.
SECTION 8.09 Expenses. Except as set forth in Section 10.2, whether or
not the Merger is consummated, all costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such expense.
SECTION 8.10 Indemnification. Notwithstanding any provision in this
Agreement to the contrary, Company and Buyer agree that Company shall have the
right to terminate all of the indemnification rights and obligations set forth
in Article X of the 1994 Merger Agreement so long as any such termination is
effective to terminate all of the indemnity obligations for each party obligated
under such Article X.
ARTICLE IX
CONDITIONS TO THE MERGER
SECTION 9.01 Conditions to the Obligations of Each Party. The
obligations of Company, Buyer and Merger Subsidiary to consummate the Merger are
subject to the satisfaction of the following conditions:
-35-
<PAGE> 36
(i) if required by the New York Law, this Agreement shall have
been adopted by the shareholders of Company in accordance with
the New York Law;
(ii) any applicable waiting period under the HSR Act relating to
the Merger shall have expired or have been terminated;
(iii) no provision of any applicable law or regulation and no
judgment, injunction, order or decree shall be issued which
would prohibit the consummation of the Merger; and
(iv) Buyer or Merger Subsidiary shall have purchased Shares
pursuant to (a) the Offer or (b) the Stock Option Agreement.
ARTICLE X
TERMINATION AND AMENDMENT
SECTION 10.01 Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval of the matters
presented in connection with the Merger by the shareholders of Company:
(i) by the mutual consent of Company and Buyer;
(ii) by Company (A) if there has been a material breach of any
representation, warranty, covenant or agreement on the part of
the Buyer set forth in this Agreement which breach has not
been cured, in the case of a representation or warranty, prior
to the Effective Time or, in the case of a covenant or
agreement, within thirty days following receipt by Buyer of
notice of such breach (provided that the right to terminate
hereunder shall expire (x) on the date which Buyer or Merger
Subsidiary beneficially owns a majority of the Shares and (y)
Buyer's designees constitute the percentage required pursuant
to Section 1.03, but in no event less than a majority of the
members, of the Board of Directors of Company), or (B) if
there shall be any law or regulation that makes consummation
of the Merger illegal or if any judgment, injunction or other
order of a court or other authority having jurisdiction
preventing the consummation of the Merger shall have become
final and non-appealable;
(iii) by the Buyer (A) if there has been a material breach of any
representation, warranty, covenant or agreement on the part of
Company set forth in this Agreement which breach has not been
cured, in the case of a representation or warranty, prior to
the Effective Time or, in the case of a covenant or agreement,
within thirty days following receipt by Company of notice of
such breach (provided that the right to terminate hereunder
shall expire (x) on the date which Buyer or Merger Subsidiary
beneficially owns a majority of the
-36-
<PAGE> 37
Shares and (y) Buyer's designees constitute the percentage
required pursuant to Section 1.03, but in no event less than a
majority of the members, of the Board of Directors of
Company), (B) if there shall be any law or regulation that
makes consummation of the Merger illegal or if any judgment,
injunction or other order of a court or other competent
authority preventing the consummation of the Merger shall have
become final and non-appealable, or (C) if the covenant
contained in Section 8.08 has not been performed;
(iv) by either Company or the Buyer if the Offer has not been
consummated by January 31, 1996 ("Outside Termination Date");
provided, that if an HSR Authority shall have requested
additional information from any of the parties hereto or any
of their affiliates pursuant to 15 U.S.C. Section 18a(e)(1) or
the rules and regulations thereunder on or prior to January
31, 1996, Buyer may elect to change the Outside Termination
Date from time to time, to the extent necessary to satisfy the
requirements of the HSR Act, provided that (w) the Outside
Termination Date will not be later than June 30, 1996 and (x)
this Agreement has not been terminated by Company pursuant to
the terms of this Agreement prior to the date of such election
and; further provided that, notwithstanding the preceding
proviso to the contrary, if an Acquisition Proposal is made
prior to the consummation of the Offer, Buyer may elect to
extend the Outside Termination Date in increments of not more
than ten business days, provided that (y) at the time of any
such election an Acquisition Proposal continues to exist and
(z) this Agreement has not been terminated by Company pursuant
to the terms of this Agreement prior to the date of such
election;
(v) by Buyer, upon the occurrence of any Triggering Event (as such
term is defined in Section 10.02(b)) (provided that the right
to terminate hereunder shall expire (x) on the date which
Buyer or Merger Subsidiary beneficially owns a majority of
Shares and (y) Buyer's designees constitute the percentage
required pursuant to Section 1.03, but in no event less than a
majority of the members, of the Board of Directors of the
Company);
(vi) by Buyer, if Buyer shall have received any communication from
an HSR Authority (which communication shall be confirmed to
Company) that causes Buyer to reasonably believe that any HSR
Authority has authorized the initiation of litigation or an
administrative proceeding challenging the transactions
contemplated by this Agreement under U.S. antitrust laws,
which litigation or administrative proceeding will include a
motion seeking an order or injunction prohibiting the
consummation of any of the transactions contemplated by this
Agreement;
(vii) by Company, if Buyer does not commence the Offer within five
business days following the public announcement of the terms
of this Agreement or if the
-37-
<PAGE> 38
Offer expires by its terms and Buyer shall not have purchased
any Shares pursuant hereto; and
(viii) by Buyer, if (A) the Stock Option Agreement is breached by a
shareholder or (B) if the Stock Option Agreement (or any
material provisions thereof) is terminated or held by a court
to be unenforceable for any reason or if Company or any
shareholder asserts or states an intention to assert any such
enforceability and, in any such case, as a result thereof,
Buyer concludes in its reasonable discretion that its ability
to consummate the transactions contemplated by the Merger
Agreement has been materially impaired or such consummation
will be materially delayed or rendered materially more
expensive.
The party desiring to terminate this Agreement pursuant to clauses (ii), (iii),
(iv), (v), (vi), (vii) and (viii) shall give written notice of such termination
to the other party.
SECTION 10.02 Effect of Termination. (a) Except as set forth in Section
10.02(b) and 10.02(c), if this Agreement is terminated pursuant to Section
10.01, this Agreement shall become void and of no effect with no liability on
the part of any party hereto.
(b) If this Agreement is terminated pursuant to Section 10.01(iii)(A) ,
10.01(v) or 10.01(viii) following the occurrence of any of the following events
("Triggering Events") or if this Agreement is terminated pursuant to Section
10.01(iii)(A) and within six months thereafter a Triggering Event (other than an
event described in clause (ii)) with respect to any Person with whom Company or
any of its directors, officers, employees, financial advisors, investment
bankers, attorneys or other advisors engaged in negotiations, or discussions
regarding, or disclosed any information regarding, a possible Acquisition
Proposal, since June 30, 1995 occurs, then Company agrees to pay Buyer, not
later than two business days after the termination of this Agreement or, in the
case this Agreement is terminated pursuant to Section 10.01(iii)(A) and such
Triggering Event (other than an event described in clause (ii)) occurs within
six months thereafter, not later than two business days after the occurrence of
such Triggering Event, in respect of Buyer's expenses and lost opportunity
costs, an amount in immediately available funds equal to $ 15,000,000:
(i) Company shall have entered into, or shall have
publicly announced its intention to enter into, an
agreement or agreement in principle with respect to
any Acquisition Proposal or similar business
combination or transaction other than the
transactions contemplated hereby;
(ii) Company's Board of Directors or any Committee thereof
shall have withdrawn or materially and adversely
modified its approval or recommendation of the Offer
or this Agreement;
-38-
<PAGE> 39
(iii) Company's Board of Directors or any Committee thereof
shall have made any recommendation with respect to an
Acquisition Proposal by any Person (other than Buyer)
other than a recommendation rejecting or against such
Acquisition Proposal;
(iv) Company receives any Acquisition Proposal by any
Person (other than Buyer), and Company's Board of
Directors takes a neutral position or makes no
recommendation with respect to such Acquisition
Proposal after a reasonable amount of time (and in no
event more than five business days) has elapsed for
Company's Board of Directors to review and make a
recommendation with respect to such Acquisition
Proposal consistent with its fiduciary duties; or
(v) (A) any person or group (as defined in Section
13(d)(3) of the Exchange Act) (other than Buyer or any
of its affiliates) shall have become the beneficial
owner (as defined in Rule 13d-3 promulgated under the
Exchange Act) of at least 20% of any class or shares
of capital stock of Company (including the Shares), or
shall have acquired, directly or indirectly, at least
20% of the assets or earning power of Company other
than acquisitions of securities for bona fide
arbitrage purposes only and other than the signatories
to the Stock Option Agreement.
(c) In the event this Agreement is terminated and Buyer or Merger
Subsidiary subsequently purchases Shares pursuant to the Stock Option Agreement,
then, Buyer and Merger subsidiary agree to commence a cash tender offer, as soon
as reasonably practical following the purchase of such Shares, at $35.00 per
Share for all of the Shares not owned by Buyer or Merger Subsidiary, and Buyer
and Merger Subsidiary agree to accept all Shares tendered into such offer,
subject only to the conditions set forth in paragraphs (a) and (b) to the
conditions to the Offer attached as Annex I.
SECTION 10.03 Amendments. Any provision of this Agreement may be
amended or waived prior to the Effective Time if, and only if, such amendment or
waiver is in writing and signed, in the case of an amendment, by Company, Buyer
and Merger Subsidiary or in the case of a waiver, by the party against whom the
waiver is to be effective; provided that after the adoption of this Agreement by
the shareholders of Company, no such amendment or waiver shall, without the
further approval of such shareholders, alter or change (i) the amount or kind of
consideration to be received in exchange for any shares of capital stock of
Company or (ii) any of the terms or conditions of this Agreement if such
alteration or change could adversely affect the holders of any shares of capital
stock of Company.
SECTION 10.04 Extension; Waiver. (a) Company. At any time prior to the
Effective Time, Company, by action duly taken, may, to the extent legally
allowed: (i) extend the time for the performance of any of the obligations or
other acts of the other
-39-
<PAGE> 40
parties hereto; (ii) waive any inaccuracies in the representations and
warranties of the other parties hereto contained herein or in any document
delivered pursuant hereto; and (iii) waive compliance of the other parties
hereto with any of the agreements or conditions contained herein.
(b) Buyer. At any time prior to the Effective Time, Buyer, by action
duly taken, may, to the extent legally allowed: (i) extend the time for the
performance of any of the obligations or other acts of Company; (ii) waive any
inaccuracies of the representations and warranties of Company contained herein
or in any document delivered pursuant thereto; and (iii) waive compliance of
Company with respect to any of the agreements or conditions contained herein.
(c) Form of Waiver or Extension. (i) Any agreement on the part of
Company or Buyer hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party and no party
can assert a claim with respect to a matter so waived, (ii) no failure or delay
by any party in exercising any right, power or privilege hereunder shall operate
as a waiver thereof nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. The rights and remedies herein provided shall be cumulative and
not exclusive of any other rights or remedies provided by law.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed), delivered by overnight courier (which is
confirmed) or mailed by registered or certified mail (return receipt requested)
to the parties at the following address for a party or such other addresses as
shall be specified by like notice):
if to Company, to:
Pratt & Lambert United, Inc.
P.O. Box 22
Buffalo, New York 14340
Attention: J. J. Castiglia, President and
Chief Executive Officer
Telecopy No.: (716) 877-9646
-40-
<PAGE> 41
with a copy to:
Frederick G. Attea, Esq.
Phillips, Lytle, Hitchcock, Blaine & Huber
3400 Marine Midland Center
Buffalo, New York 14203
Telecopy No.: (716) 852-6100
and
Stephen Banker, Esq.
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Telecopy No.: (212) 735-2000
and
if to the Buyer or Merger Subsidiary, to:
The Sherwin-Williams Company
101 Prospect Avenue, N.W.
Cleveland, Ohio 44115
Attention: Vice President - Corporate Planning and Development
Telecopy No.: (216) 566-2947
with a copy to:
The Sherwin-Williams Company
101 Prospect Avenue, N.W.
Cleveland, Ohio 44115
Attention: Vice President, General Counsel and Secretary
Telecopy No.: (216) 566-1708
SECTION 11.02 Interpretation. When a reference is made in this
Agreement to Sections, such reference shall be to a Section of this Agreement
unless otherwise indicated. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement they shall be deemed to be followed by
the words "without limitation". Inclusion of or reference to any information or
item in a Schedule does not constitute an admission of what is material or the
materiality of such matter.
-41-
<PAGE> 42
SECTION 11.03 Counterparts. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed by
each of the parties and delivered to the other parties, it being understood that
all parties need not sign the same counterpart.
SECTION 11.04 Entire Agreement; No Third Party Beneficiaries;
Schedules. This Agreement (including the schedules, documents and the
instruments referred to herein) and the Confidentiality Agreement dated August
22, 1995: (a) together constitute the entire agreement and supersede all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof; and (b) are not intended to confer upon
any person other than the parties hereto any rights or remedies hereunder except
for the benefits conferred by Section 7.04.
SECTION 11.05 Governing Law. This Agreement shall be governed and
construed in accordance with the internal laws of the State of New York without
regard to any applicable conflicts of law.
SECTION 11.06 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned or delegated by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Any purported assignment or delegation in
violation of this Section 11.06 shall be null and void. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors.
SECTION 11.07 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other terms and provisions of this Agreement 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
materially adverse to any party hereto. Upon any 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 Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner, to the end that the transactions contemplated by this
Agreement are consummated to the extent possible.
-42-
<PAGE> 43
IN WITNESS WHEREOF, each of the parties hereto has duly executed this
Agreement as of the date first above written.
Pratt & Lambert United, Inc.
By: /s/ J. J. Castiglia
-------------------------------------
J. J. Castiglia
Title: President and Chief Executive Officer
The Sherwin-Williams Company
By: /s/ Conway G. Ivy
-------------------------------------
Conway G. Ivy
Title: Vice President - Corporate Planning
& Development
SWACQ, Inc.
By: /s/ Conway G. Ivy
-------------------------------------
Conway G. Ivy
Title: Vice President
-43-
<PAGE> 44
ANNEX I
CONDITIONS TO THE OFFER
Notwithstanding any other provisions of the Offer, and in addition to
(and not in limitation of) Buyer's rights to extend and amend the Offer at any
time in its sole discretion (subject to the provisions of the Merger Agreement),
Buyer shall not be required to accept for payment or, subject to any applicable
rules and regulations of the SEC, including Rule 14e-1(c) under the Exchange Act
(relating to the Buyer's obligation to pay for or return tendered Shares
promptly after termination or withdrawal of the Offer), pay for, and may delay
the acceptance for payment of or, subject to the restriction referred to above,
to pay for, any tendered Shares, and may terminate the Offer if (i) any
applicable waiting period under the HSR Act has not expired or terminated prior
to the expiration of the Offer, (ii) the Minimum Condition has not been
satisfied, (iii) the Rights under the Rights Agreement shall have become
exercisable, or (iv) at any time on or after the date of the Merger Agreement
and at or before the time of payment for such Shares (whether or not any Shares
have theretofore been accepted for payment or paid for pursuant to the Offer)
pursuant to the Offer, any of the following conditions shall occur:
(a) (i) there shall be threatened, instituted or pending any
action or proceeding by any government or governmental
authority or agency (A) challenging or seeking to make
illegal, impede, materially delay or otherwise directly or
indirectly restrain, prohibit or make materially more costly
the Offer or the Merger or seeking to obtain material damages
relating to the transactions contemplated under the Offer and
the Merger, (B) seeking to prohibit or materially limit the
ownership or operation by Buyer or Merger Subsidiary of all or
any material portion of the business or assets of Company or
any of its Subsidiaries taken as a whole or to compel Buyer or
Merger Subsidiary to dispose of or hold separately all or any
material portion of the business or assets of Buyer or Merger
Subsidiary or Company or any of its Subsidiaries taken as a
whole, or seeking to impose any material limitation on the
ability of Buyer or Merger Subsidiary to conduct its business
or own such assets, (C) seeking to impose material limitations
on the ability of Buyer or Merger Subsidiary effectively to
exercise full rights of ownership of the Shares, including,
without limitation, the right to vote any Shares acquired or
owned by Merger Subsidiary or Buyer on all matters properly
presented to Company's shareholders, (D) seeking to require
divestiture by Buyer or Merger Subsidiary of any Shares, or
(E) otherwise materially adversely affecting the condition of
Company and its Subsidiaries taken as a whole; or (ii) any
court shall have entered an order which is in effect and which
(A) makes illegal, impedes, materially delays or otherwise
directly or indirectly restrains, prohibits or makes
materially more costly the Offer or the Merger, (B) prohibits
or materially limits the ownership or operation by Buyer or
Merger Subsidiary of all or any material portion of the
business or assets of Company or any of its Subsidiaries taken
as a whole or compels Buyer or Merger Subsidiary to dispose of
or hold separately all or any material portion
-44-
<PAGE> 45
of the business or assets of Buyer or Merger Subsidiary or
Company or any of its Subsidiaries taken as a whole, or
imposes any material limitation on the ability of Buyer or
Merger Subsidiary to conduct its business or own such assets,
(C) imposes material limitations on the ability of Buyer or
Merger Subsidiary effectively to exercise full rights of
ownership of the Shares, including, without limitation, the
right to vote any Shares acquired or owned by Merger
Subsidiary or Buyer on all matters properly presented to
Company's shareholders, (D) requires divestiture by Buyer or
Merger Subsidiary of any Shares, or (E) otherwise materially
adversely affects the condition of the Company and its
Subsidiaries taken as a whole; provided, however, that in the
case of a preliminary injunction to the effect described in
this subparagraph (ii), the provisions of this subparagraph
(ii) shall not be deemed to have been triggered until the
earlier of (y) the date on which such injunction becomes final
or (z) Company ceases its efforts to have such preliminary
injunction dissolved;
(b) there shall be any action taken, or any statute, rule,
regulation, legislation, interpretation, judgment, order or
injunction enacted, enforced, promulgated, amended, issued or
deemed applicable to (i) Buyer, Merger Subsidiary, Company or
any Subsidiary or (ii) the Offer or the Merger, by any
legislative body, court, government or governmental,
administrative or regulatory authority or agency, domestic or
foreign, other than the routine application of the waiting
period provisions of the HSR Act to the Offer or to the
Merger, which could reasonably be expected to directly or
indirectly, result in any of the consequences referred to in
clauses (A) through (E) of paragraph (a) (i) above;
(c) any change shall have occurred (or any condition, event or
development shall have occurred involving a prospective
change), that would have a Material Adverse Effect with
respect to Company;
(d) there shall have occurred any of the following which would
reasonably be expected to have a Material Adverse Effect with
respect to Company (i) any general suspension of trading in,
or limitation on prices for, securities on any national
securities exchange or in the over-the-counter market, (ii)
any decline in either the Dow Jones Industrial Average or the
Standard & Poor's Index of 400 Industrial Companies or in the
New York Stock Exchange Composite Index in excess of 20%
measured from the close of business on the trading day next
preceding the date of the Merger Agreement, (iii) any material
change in United States or any other currency exchange rates
or a suspension of, or limitation on, the markets therefor,
(iv) a declaration of a banking moratorium or any suspension
of payments in respect of banks in the United States, or (v) a
commencement or escalation of a war or armed hostilities or
other national or international calamity directly or
indirectly involving the United States;
-45-
<PAGE> 46
(e) the representations and warranties of Company set forth in the
Merger Agreement shall not be true and correct as of the date
of consummation of the Offer as though made on or as of such
date or Company shall have breached or failed to perform or
comply with any obligation, agreement or covenant, except in
each case, (i) for changes permitted by the Merger Agreement
and (ii) (A) those representations and warranties that address
matters only as of a particular date which are true and
correct as of such date or (B) where the failure of such
representations and warranties to be true and correct, or the
performance or compliance with such obligations, agreements or
covenants, individually or in the aggregate, would not have a
material adverse effect with respect to Company or a Material
Adverse Effect on the ability of Buyer to consummate the Offer
or the Merger;
(f) all consents, registrations, approvals, permits,
authorizations, notices, reports or other filings required to
be obtained or made by Company, Buyer or Merger Subsidiary
with or from any governmental or regulatory entity in
conjunction with the execution, delivery and performance of
the Merger Agreement, the Offer and the consummation of the
transactions contemplated by the Merger Agreement shall not
have been made or obtained and such failure would reasonably
be expected to have a Material Adverse Effect with respect to
Company or would prevent or materially delay consummation of
the transactions contemplated by the Merger Agreement;
(g) the Merger Agreement shall have been terminated in accordance
with its terms;
(h) (i) any person, entity or "group" (as defined in Section
(d)(3) of the Exchange Act), shall have become the beneficial
owner (determined pursuant to Rule 13d-3 promulgated under the
Exchange Act) of at least 20% of any class or series of
capital stock of Company (including the Shares), or shall have
acquired, directly or indirectly, at least 20% of the assets
or earning power of Company other than the signatories to the
Stock Option Agreement, or (ii) Company shall have entered
into, or shall have publicly announced its intention to enter
into, an agreement or agreement in principle with respect to
an Acquisition Proposal or similar business combination other
than the transactions contemplated in the Merger Agreement and
the Offer; or
(i) (i) Company's Board of Directors or any Committee thereof
shall have withdrawn, or modified or changed in a manner
adverse to Buyer or Merger Subsidiary (including by amendment
of the Schedule 14D-9) its recommendation of the Offer, the
Merger Agreement, or the Merger; (ii) Company's Board of
Directors or any Committee thereof shall have made any
recommendation with respect to any Acquisition Proposal by any
Person (other than Buyer or Merger Subsidiary) other than a
recommendation rejecting or against such Acquisition Proposal;
or (iii) Company shall have received any Acquisition Proposal
by any Person (other than Buyer or Merger Subsidiary)
-46-
<PAGE> 47
and Company's Board of Directors is neutral or makes no
recommendation with respect to such Acquisition Proposal after
a reasonable amount time (and in no event more than five
business days) has elapsed for Company's Board of Directors to
review and make a recommendation with respect to such
Acquisition Proposal consistent with its fiduciary duties;
which in the reasonable judgment of Buyer or Merger Subsidiary, in any
such case and regardless of the circumstances giving rise to such
condition, makes it inadvisable to proceed with such acceptance for
payment or payment.
The foregoing conditions are for the sole benefit of Merger
Subsidiary and Buyer and may be waived by Merger Subsidiary in whole or
in part at any time and from time to time in the sole discretion of
Merger Subsidiary. The failure by Merger Subsidiary at any time to
exercise any of the foregoing rights shall not be deemed a waiver of
any such right; the waiver of any such right with respect to particular
facts and other circumstances shall not be deemed a waiver with respect
to any other facts and circumstances; and each such right shall be
deemed an ongoing right that may be asserted at any time and from time
to time. Any determination by Merger Subsidiary concerning the events
described above will be final and binding on all parties.
-47-
<PAGE> 1
STOCK OPTION, PLEDGE AND SECURITY AGREEMENT
AGREEMENT, dated as of November 4, 1995, among The Sherwin-Williams
Company, an Ohio corporation ("Parent"), SWACQ, Inc., a New York corporation and
a wholly-owned subsidiary of Parent ("Merger Subsidiary"), and the other parties
signatory hereto (each a "Shareholder," and collectively, the "Shareholders").
W I T N E S S E T H:
WHEREAS, Parent, Merger Subsidiary and Pratt & Lambert United, Inc.
("Company"), have simultaneously with the execution of this Agreement entered
into an Agreement and Plan of Merger dated as of November 4, 1995 (as such
agreement may hereafter be amended from time to time, the "Merger Agreement"),
pursuant to which Merger Subsidiary will be merged with and into Company
("Merger"); and
WHEREAS, in furtherance of the Merger, Parent, through Merger
Subsidiary, shall, subject to the terms and conditions in the Merger Agreement,
commence a cash tender offer ("Offer") to acquire all of the issued and
outstanding Shares (as such term is defined below), including all of the Option
Shares (as such term is defined below); and
WHEREAS, as a condition to its entering into the Merger Agreement,
Parent has required that the Shareholders agree, and each Shareholder hereby
agrees, to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein, Parent,
Merger Subsidiary and Shareholders hereby agree as follows:
Section 1. Definitions. For purposes of this Agreement:
(a) "Shares" shall mean the issued and outstanding shares of
common stock, par value $.01 per share, of Company, including the
associated Common Stock Purchase Rights issued pursuant to the Rights
Agreement dated as of January 1, 1989, between Company and Mellon
Securities Trust Company, as Rights Agent.
(b) "Option Shares" shall mean, with respect to each
Shareholder, the Shares specified on Exhibit A and all Shares acquired
by such Shareholder in the future prior to the Effective Time (as such
term is defined in the Merger Agreement) whether through the exercise
of options, warrants or rights, through the conversion of convertible
or exchangeable securities or by means of purchase, gift, dividend,
distribution or otherwise.
<PAGE> 2
(c) "Person" shall mean an individual, a corporation, a joint
venture, a limited liability company, a partnership, an association, an
unincorporated organization, a group trust or any other entity or
organization, including a governmental or political subdivision or any
agency or instrumentality thereof.
(d) All other capitalized terms used but not otherwise defined
herein shall have the respective meanings ascribed to them in the
Merger Agreement.
Section 2. Grant of Option.
(a) Each Shareholder hereby irrevocably grants to Parent and
Merger Subsidiary an exclusive option ("Option") to purchase all Option
Shares of such Shareholder at a price of $35.00 per Option Share, net
to Seller in cash, subject to any amounts required to be withheld under
applicable federal, state, local or foreign income tax laws and
regulations, and subject to adjustment under Section 2(d), which Option
shall be exercisable by Parent or Merger Subsidiary at any time on or
after January 2, 1996. In the event Merger Subsidiary accepts for
payment, on or prior to December 31, 1995, all shares validly tendered
and not withdrawn in the Offer, either Parent or Merger Subsidiary
shall exercise the Options within two business days following January
2, 1996. In the event that the Shareholders are not permitted to tender
(or are required to withdraw) their Option Shares pursuant to the
provisions of Section 3 of this Agreement, either Parent or Merger
Subsidiary shall exercise the Options within two business days
following the consummation of the Offer but in any event not earlier
than January 1, 1996.
(b) To exercise the Option, either Parent or Merger Subsidiary
shall send a written notice ("Exercise Notice") to each Shareholder
specifying the place and the time (which shall be not less than two
business days and not more than four business days after the date of
the Exercise Notice) for the closing of the purchase and sale of the
Option Shares in accordance with the provisions hereof. The closing of
the purchase of the Option Shares ("Closing") shall take place at the
places and at the times designated by Parent or Merger Subsidiary in
the Exercise Notice.
(c) At Closing, each Shareholder shall sell, assign, convey and
transfer to Parent or Merger Subsidiary, to the extent not already
delivered pursuant to Section 6, and its successors or permitted
assigns, each of such Shareholder's Option Shares, free and clear of
any and all liens, claims, security interests (other than the security
interest granted pursuant to Section 6), encumbrances, options or
adverse claims whatsoever, and each Shareholder shall deliver or cause
to be delivered to either Parent or Merger Subsidiary a certificate or
certificates representing the number of Option Shares to be delivered
by such Shareholder at the Closing, duly endorsed, or accompanied by
stock powers duly executed in blank, with all required transfer tax
stamps affixed thereto; and either Parent or Merger Subsidiary shall
deliver to each Shareholder (or the Shareholder's designee) by wire
transfer or certified or bank cashier's check or checks,
2
<PAGE> 3
an amount equal to (i) the product of (x) the number of such
Shareholder's Option Shares purchased at Closing multiplied by (y) the
Offer Price, less (ii) any amounts required to be withheld under
applicable federal, state, local or foreign income tax laws and
regulations.
(d) In the event of any change in Company's capital stock by
reason of any stock dividend, stock split, merger, consolidation,
recapitalization, combination, conversion, exchange of shares, or
dividend (other than the declaration and/or payment of regular
quarterly cash dividends in accordance with Company's past dividend
policy), or other change in the corporate or capital structure of
Company, which would have the effect of diluting or changing Parent's
or Merger Subsidiary's rights hereunder, the number and kind of shares
or securities subject to the Option and the Offer Price shall be
appropriately and equitably adjusted so that (i) Parent or Merger
Subsidiary shall receive, at the Closing, the number and class of
shares or other securities or property that Parent or Merger Subsidiary
would have received and (ii) the Shareholders shall receive, at the
Closing, the consideration they would have received in respect of the
Option Shares purchasable upon exercise of the Option if the Option had
been exercised immediately prior to such event.
Section 3. Tender and Withdrawal of Option Shares. If the Offer is
extended to a time on or after 5:00 p.m. New York time on January 5, 1996, each
Shareholder shall promptly (and in any event not later than January 3, 1996) and
validly tender all of such Shareholder's Option Shares pursuant to the Offer,
and shall not thereafter withdraw the tendered Shares, provided, however, that
if the Offer Price (as defined in the Merger Agreement) is for any reason
increased above $35.00, then each Shareholder hereby agrees that (i) such
Shareholder will not tender such Shareholder's Option Shares pursuant to the
Offer at any time on or after the date of the first public announcement of such
increase in the Offer Price, and (ii) if any of such Shareholder's Option Shares
have been tendered into the Offer prior to the date of the first public
announcement of such increase in the Offer Price, such Shareholder shall
promptly (and in any event not later than three business days after the first
public announcement of such increase) properly withdraw all such Option Shares.
The obligation of the Shareholders under this Section 3 shall be deemed
satisfied, with respect to all Option Shares delivered pursuant to Section 6, by
the appointment and grant pursuant to Section 5.
Section 4. Restriction on Transfer, Proxies and Non-Interference. Except
as otherwise specifically provided in this Agreement and so long as this
Agreement remains in effect, no Shareholder shall, directly or indirectly: (i)
offer for sale, sell, transfer, tender, pledge, encumber, assign or otherwise
dispose of, or enter into any contract, option or other arrangement or
understanding with respect to or otherwise consent to the offer for sale,
transfer, tender, pledge, encumbrance, assignment or other disposition of any or
all of such Shareholder's Option Shares or any interest therein; (ii) grant any
proxies or powers of attorney, deposit any
3
<PAGE> 4
Option Shares into a voting trust or enter into a voting agreement with respect
to any Option Shares; or (iii) vote any Option Shares in favor of a transaction
inconsistent with the Merger.
Section 5. Grant of Irrevocable Proxy; Appointment of Attorneys-in-Fact.
Each Shareholder hereby irrevocably grants to Parent and its officers, and John
A. Healy and Richard A. Legenza, or any of them (each a "Proxyholder"), each
with full power of substitution, a proxy to exercise all voting and other rights
with respect to all of such Shareholder's Option Shares, including without
limitation, with respect to the Merger and the other matters contemplated by the
Merger Agreement. Such proxy shall be considered coupled with an interest in the
Option Shares and supported by the pledge of Option Shares provided in this
Agreement and is irrevocable. All prior proxies and powers given by each
Shareholder with respect to such Shareholder's Option Shares are, without
further action, hereby revoked for so long as this Agreement is in effect, and
no subsequent proxies or powers may be given, and if given will not be
effective. Each Proxyholder will, with respect to the Option Shares, be
empowered to exercise all voting and other rights of the Shareholders with
respect to the Option Shares as such Proxyholder, in his or its sole discretion,
may deem proper at any meeting of the Company's shareholders, by written consent
or otherwise. The foregoing proxy may be exercised by any Proxyholder only to
the extent consistent with the terms of this Agreement and the Merger Agreement.
In addition to and without limiting the generality of the foregoing,
each Shareholder hereby irrevocably (a) appoints each Proxyholder as such
Shareholders' attorneys-in-fact, with an irrevocable instruction to the
Proxyholder (i) validly to tender such Shareholder's Option Shares into the
Offer if such Shareholder is so required by Section 3 of this Agreement, (ii)
properly to withdraw such Shareholder's Option Shares from the Offer if such
Shareholder is so required by Section 3 of this Agreement, and (iii) to execute
any instrument of transfer and/or other documents and do all such other acts and
things as may in the opinion of the Proxyholder be necessary or expedient for
the purpose of, or in connection with, tendering or withdrawing such Option
Shares into or from the Offer, to the extent required in Section 3; and (b)
agrees not to exercise or attempt to exercise any rights pertaining to the
Option Shares without the prior consent of Parent.
Section 6. Grant of Pledge and Security Interest. For the purpose of
securing the due and prompt performance of all the obligations of such
Shareholders under this Agreement, each Shareholder hereby irrevocably grants to
Merger Subsidiary a pledge and security interest in such Shareholder's Option
Shares, together with all proceeds thereof and dividends thereon.
Notwithstanding the provisions of the preceding sentence, unless and until any
Shareholder breaches the provisions of, or defaults in the performance of the
obligations under, this Agreement, Merger Subsidiary shall not have the right to
receive and/or retain any such proceeds and dividends. In order to perfect such
security interests, each Shareholder shall deliver to Merger Subsidiary, not
later than 5:00 p.m. New York time on the fifth business day following the date
of this Agreement, any and all stock certificates evidencing such Shareholder's
Option Shares. Parent shall have all the rights and remedies of a secured party
provided or permitted under the Uniform Commercial Code.
4
<PAGE> 5
Section 7. Other Covenants, Representations and Warranties. Each
Shareholder hereby represents and warrants to each of Parent and Merger
Subsidiary each of the following:
(a) Ownership of Option Shares. On the date hereof,
such Shareholder is the beneficial owner of the number of Option Shares
set forth opposite such Shareholder's name on Exhibit A. On the date
hereof, except as otherwise disclosed on Exhibit A, the number of
Option Shares set forth opposite such Shareholder's name on Exhibit A
constitutes all of the Shares owned by such Shareholder, except for any
Shares which (i) such shareholder intends to dispose of by gift to (x)
an immediate family member of such Shareholder, (y) a trust
substantially all of the beneficiaries of which are immediate family
members of such Shareholder, or (z) an organization described in
Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, or
(ii) are held by such Shareholder in a fiduciary capacity and with
respect to which such Shareholder does not have sole dispositive power.
Except as set forth on Exhibit A and any encumbrances and/or
restrictions identified in the Merger Agreement (none of which will be
violated by the transactions contemplated in this Agreement), such
Shareholder has the exclusive right to vote or dispose of (or exercise
the voting or disposition of) such Shareholder's Option Shares.
(b) Power, Binding Agreement. Each Shareholder and each
person executing this Agreement on behalf of a Shareholder has the
legal capacity, power and authority to enter into and perform all of
such Shareholder's obligations under this Agreement and the Merger
Agreement. The execution, delivery and performance of this Agreement by
such Shareholder or other signatory will not violate any other
agreement to which such Shareholder is a party including, but not
limited to, any voting agreement, Shareholders agreement or voting
trust. This Agreement has been duly and validly executed and delivered
by such Shareholder and constitutes a valid and binding agreement of
such Shareholder, enforceable against such Shareholder in accordance
with its terms. There is no beneficiary or holder of a voting trust
certificate or other interest of any trust of which such Shareholder is
a trustee whose consent is required for the execution and delivery of
this Agreement or the consummation by such Shareholder of the
transactions contemplated hereby. If such Shareholder is married and
such Shareholder's Option Shares constitute community property, this
Agreement has been duly authorized, executed and delivered by, and
constitutes a valid and binding agreement of, such Shareholder's
spouse, enforceable against such person in accordance with its terms.
Each of the Shareholders waives any rights he or she may have under
that certain Shareholders' Agreement, dated as of February 25, 1994, to
the extent the terms thereof are inconsistent with the provisions of
this Agreement, including, without limitation, any notice provisions.
(c) No Encumbrances. Except as applicable in connection
with the transactions contemplated in this Agreement and any
encumbrances and/or restrictions identified in the Merger Agreement or
on Exhibit A (none of which will be violated by the transactions
contemplated in this Agreement), such Shareholder's Option Shares and
5
<PAGE> 6
the certificates representing such shares are, and at all times during
the term hereof will be, free and clear of all liens, claims, security
interests, proxies, voting trusts and/or agreements, understandings or
arrangements and any other encumbrances whatsoever, except for any such
encumbrances or proxies arising hereunder.
Section 8. Shareholder Capacity. No person executing this Agreement who
is or becomes, during the term hereof, a director of Company makes any agreement
or understanding herein in his or her capacity as such director. Each
Shareholder signs solely in his or her capacity as the owner of, or the trustee
of a trust whose beneficiaries are the owners of, such Shareholder's Option
Shares.
Section 9. Indemnification. Subject to the limitations contained in this
Section 9, Parent and Merger Subsidiary shall indemnify, defend and hold
harmless each Shareholder against all losses, claims, damages, costs, expenses
(including attorney's fees and expenses), liabilities or judgments or amounts
that are paid in settlement or in connection with any threatened or actual
claim, action, suit, proceeding or investigation (collectively, "Losses") based
in whole or in part on, or arising in whole or in part out of, such
Shareholder's execution or performance of, or the consummation of the
transactions contemplated under, this Agreement. Notwithstanding any provision
of the preceding sentence to the contrary, neither Parent nor Merger Subsidiary
shall indemnify any Shareholder hereunder for any Losses based in whole or in
part on, or arising in whole or in part out of, (i) the breach of such
Shareholder's representation, warranty or covenant set forth in this Agreement,
other than any challenges to the enforceability of this Agreement based on
fiduciary duty arguments, (ii) any willful act which, to the knowledge of such
Shareholder, constituted a violation or breach of any statute, rule, regulation,
agreement or understanding which applies to such Shareholder or to which such
Shareholder is a party, or (iii) fraud by a Shareholder. Promptly upon any
Shareholder's receipt of written notice of any claim or the service of a summons
or other initial legal process for which indemnification is or could be claimed
hereunder, such Shareholder shall given written notice to Parent and shall
tender the defense of such claim to Parent. If Parent accepts the tender of
defense without a reservation of rights, then Parent shall control all aspects
of the defense and shall indemnify Shareholder in accordance with this Section
9, and shall not settle any such claim unless such settlement provides for a
full release of such Shareholder from such claim. In the event Parent does not
accept the tender of defense without a reservation of rights, then the
Shareholders may retain counsel satisfactory to them and Parent, and Parent
shall pay all reasonable fees and expenses of such counsel for the Shareholders
promptly as statements therefor are received, and Parent will use all reasonable
efforts to assist in the defense of any such matter; provided that Parent shall
not be liable for any settlement effected without its prior written consent,
which consent shall not unreasonably be withheld. The Shareholders as a group
may retain only one law firm to represent them with respect to each such matter
unless there is, under applicable standards of professional conduct, a conflict
which cannot reasonably be resolved on any significant issue between the
positions of any two or more Shareholders, in which event, additional counsel
may be retained to the extent required by such conflict. Parent agrees that all
rights to indemnification, including provisions relating to advances of expenses
incurred in defense of any action or suit, existing in favor of the Shareholders
hereunder shall continue in
6
<PAGE> 7
full force and effect for a period of not less than six years from the later of
the Closing or the termination hereof; provided, however, that all claims for
indemnification hereunder asserted or made within such period shall continue
until the resolution of such claims.
Section 10. Miscellaneous.
(a) Term. Except as otherwise expressly provided in
this Agreement this Agreement shall remain in effect until the first to
occur of (i) the later of (y) June 30, 1996 or (z) five business days
following the expiration or termination of the Offer in the event the
expiration date of the Offer is extended as a result of an Acquisition
Proposal, (ii) the acquisition by Parent, through Merger Subsidiary or
otherwise, of all the Option Shares, (iii) the termination of the
Merger Agreement pursuant to Section 10.01(iii) thereof due to a
material breach of any representation or warranty on the part of
Company set forth in the Merger Agreement or (iv) the termination of
the Merger Agreement pursuant to Sections 10.01(iv) or 10.01(vi)
thereof.
(b) Entire Agreement, No Third Party Beneficiaries;
Schedules. This Agreement constitutes the entire agreement between
the parties with respect to the subject matter hereof and supersedes
all other prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof; and is not
intended to confer upon any Person other than the parties hereto or
thereto any rights or remedies hereunder.
(c) Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned or
delegated by any of the parties hereto (by operation of law or
otherwise) without the prior written consent of the other parties,
provided that Parent may assign, in its sole discretion, its rights and
obligations hereunder to any direct or indirect wholly-owned subsidiary
of Parent, but no such assignment shall relieve Parent of its
obligations hereunder if such assignee does not perform such
obligations.
(d) Amendments, Waivers, Etc. This Agreement may not be
amended, changed, supplemented, waived or otherwise modified or
terminated with respect to any one or more Shareholders, except upon
the execution and delivery of a written agreement executed by the
relevant parties hereto.
(e) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly received if so given except, in the
case of mail, three days after being sent) by hand delivery, telegram,
telex or confirmed telecopy, or by mail (registered or certified mail,
postage prepaid, return receipt requested) or by any overnight courier,
providing proof of delivery. All communications hereunder shall be
delivered to the respective parties at the following addresses:
7
<PAGE> 8
If to a Shareholder: At such Shareholder's address set forth on
Exhibit A hereto
with a copy to: PHILLIPS, LYTLE, HITCHCOCK, BLAINE & HUBER
3400 Marine Midland Center
Buffalo, New York 14203
Attention: Frederick G. Attea
Telecopy No. (716) 852-6100
and SKADDEN, ARPS, SLATE, MEAGHER & FLOM
919 Third Avenue
New York, New York 10022
Attention: Stephen M. Banker
Telecopy No. (212) 735-2000
If to Parent: THE SHERWIN-WILLIAMS COMPANY
101 Prospect Avenue, N.W.
Cleveland, Ohio 44115
Attention: Vice President - Corporate Planning
and Development
Telecopy No. (216) 566-2947
with a copy to: THE SHERWIN-WILLIAMS COMPANY
101 Prospect Avenue, N.W.
Cleveland, Ohio 44115
Attention: Vice President, General Counsel
and Secretary
Telecopy No. (216) 566-1708
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth
above.
(f) Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by
any rule of law or public policy, all other terms and provisions of
this Agreement 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 materially adverse to
any party hereto. Upon any 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 Agreement so
as to effect the original intent of the parties as closely as possible
in an acceptable manner, to the end that the transactions contemplated
by this Agreement are consummated to the extent possible.
(g) Specific Performance. Each of the parties hereto
recognizes and acknowledges that a breach by such party of any
covenants or agreements contained in this Agreement will cause the
other party to sustain damages for which it would not have an adequate
remedy at law for money damages, and therefore, each of the parties
hereto agrees that in the event of any such breach the aggrieved party
shall be entitled to the
8
<PAGE> 9
remedy of specific performance of such covenants and agreements and
injunctive and other equitable relief in addition to any other remedy
to which it may be entitled at law or in equity.
(h) Remedies Cumulative. All rights, powers and
remedies provided under this Agreement or otherwise available in
respect hereof, whether at law or in equity, shall be cumulative and
not alternative, and the exercise of any thereof by any party shall not
preclude the simultaneous or later exercise of any other such right,
power or remedy by such party.
(i) No Waiver. The failure of any party hereto to
exercise any right, power or remedy provided under this Agreement or
otherwise available in respect hereof, whether at law or in equity, or
to insist upon compliance by any other party hereto with its
obligations hereunder, and any custom or practice of the parties at
variance with the terms hereof, shall not constitute a waiver by such
party of its right to exercise any such or other right, power or remedy
or to demand such compliance.
(j) Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York,
without regard to any applicable conflicts of law.
(k) Descriptive Headings. The descriptive headings used
herein are inserted for convenience of reference only and are not
intended to be part of or to affect the meaning or interpretation of
this Agreement.
(l) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all
of which, when taken together, shall constitute one and the same
Agreement.
(m) Expenses. Each party shall pay its own expenses incurred in
connection with this Agreement.
(n) Investment Intent. Merger Subsidiary represents and
warrants that it is acquiring the Option Shares for investment purposes
only and not with a view to resale or distribution thereof in violation
of the Securities Act of 1933, as amended, or the securities laws of
any state.
9
<PAGE> 10
IN WITNESS WHEREOF, Parent and Merger Subsidiary have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
and each Shareholder has executed this Agreement, all as of the date first above
written.
The Sherwin-Williams Company
By: /s/ Conway G. Ivy
-------------------------------------
Conway G. Ivy
Vice President - Corporate Planning
and Development
SWACQ, Inc.
By: /s/ Conway G. Ivy
-------------------------------------
Conway G. Ivy
Vice President
SHAREHOLDER
By: ____________________________________
Name:
10
<PAGE> 11
IN WITNESS WHEREOF, Parent and Merger Subsidiary have caused this
Agreement to be executed by their respective officers thereunto duly
authorized, and each Shareholder has executed this Agreement, all as of the
date first above written.
Parent
By: -------------------------------
Name:
Title:
Merger Subsidiary
By: -------------------------------
Name:
Title:
Marks Group
Edwin Marks
Nancy Marks
Carolyn Marks
Linda Marks
Constance Rubenfein
Marjorie M. Boas
Carol Boas
Mark Claster
Susan Claster
Richard Boas
Elisabeth Boas
Robert Davidoff
David Gruber
Robert Marks
Carl Marks Foundation, Inc.
By: /s/ Mark Claster
- ----------------------------- -------------------------------
Wilfred J. Larson Name: Mark Claster
Title: Attorney-in-Fact
/s/ Robert O. Swados
- ----------------------------- -----------------------------------
Robert O. Swados Jeffrey L. Kenner
IIIea /s/ Andrew Boas
W60832 -----------------------------------
Andrew Boas
<PAGE> 12
IN WITNESS WHEREOF, Parent and Merger Subsidiary have caused this
Agreement to be executed by their respective officers thereunto duly
authorized, and each Shareholder has executed this Agreement, all as of the
date first above written.
/s/ R.D. Stevens, Jr. 75,117
- ------------------------------ -------------------------------
Raymond D. Stevens, Jr. Frank P. Wilton
25,556
- 3,000
--------
/s/ Aline L. Stevens 22,556
- ------------------------------ -------------------------------
Aline L. Stevens Frank S. Wilton
(see attached) 30,044
- ------------------------------ -------------------------------
Raymond D. Stevens, III Annette P. Wilton
- ------------------------------ -------------------------------
Larkin E. Stevens Lucy P. Wilton
- ------------------------------ -------------------------------
Courtney S. Price Katherine P. Wilton
- ------------------------------ -------------------------------
Hunter H. Stevens Benjamin W. Wilton
- ------------------------------ R.D. Stevens, Jr. IRA 2,887
George E. Stevens
By /s/ R.D. Stevens, Jr.
- ------------------------------ -----------------------------
Jill W. Stevens
- ------------------------------ Annie E. Stevens Trust
George E. Stevens, Jr. No. 2.0.1 23,750
- ------------------------------
Scott W. Stevens By /s/ R.D. Stevens, Jr.
-----------------------------
Trustee
- ------------------------------ Annie E. Stevens Trust
John W. Stevens No. 3.0.2 42,840
By /s/ R.D. Stevens, Jr.
- ------------------------------ ----------------------------
Annette S. Wilton Trustee
<PAGE> 13
<TABLE>
<S> <C>
Annie E. Stevens Trust George E. Stevens Trust
No. 4.0.3 No. 3.3.BB 3,924
By By /s/ R.D. Stevens, Jr.
------------------------------ ---------------------------
Trustee Trustee
Annette Wells Stevens Trust George E. Stevens Trust
No. 2.0.4 9,116 No. 3.4.CC 3,924
By /s/ R.D. Stevens, Jr. By /s/ R.D. Stevens
------------------------------ ---------------------------
Trustee Trustee
Annette Wells Stevens Trust Annette Stevens Wilton Trust
No. 3.0.5 55,818 No. 4.2.A
By /s/ R.D. Stevens, Jr. By
------------------------------ ---------------------------
Trustee Trustee
Annette Wells Stevens Trust Annette Stevens Wilton Trust
No. 4.0.6 No. 4.3.B
By By
------------------------------ ---------------------------
Trustee Trustee
R.D. Stevens, Jr. Trust Annette Stevens Wilton Trust
No. 2.2.A 1,358 No. 4.4.C
By /s/ Aline L. Stevens By
------------------------------ ---------------------------
Trustee Trustee
R.D. Stevens, Jr. Trust Annette Stevens Wilton Trust
No. 2.3.B 1,358 No. 4.5.D
By /s/ Aline L. Stevens By
------------------------------ ---------------------------
Trustee Trustee
R.D. Stevens, Jr. Trust Annette Stevens Wilton Trust
No. 2.4.C 1,358 No. 4.6.F
By /s/ Aline L. Stevens By
------------------------------ ----------------------------
Trustee Trustee
George E. Stevens Trust Annette Wells Stevens Trust
No. 3.2.AA 3,924 No. 2.0.W 3,675
By /s/ R.D. Stevens, Jr. By /s/ R.D. Stevens, Jr.
------------------------------ ----------------------------
Trustee Trustee
</TABLE>
<PAGE> 14
Annette Wells Stevens Trust
No. 3.0.W 25,500
By /s/ R.D. Stevens, Jr.
------------------------------
Trustee
Annette Wells Stevens Trust
No. 2.5.W 10,975
By /s/ R.D. Stevens, Jr.
------------------------------
Trustee
<PAGE> 15
IN WITNESS WHEREOF, Parent and Merger Subsidiary have caused this
Agreement to be executed by their respective officers thereunto duly
authorized, and each Shareholder has executed this Agreement, all as of the
date first above written.
Parent
By: ---------------------------------
Name:
Title:
Merger Subsidiary
By: ---------------------------------
Name:
Title:
Marks Group
Edwin Marks
Nancy Marks
Carolyn Marks
Linda Marks
Constance Rubenfein
Marjorie M. Boas
Carol Boas
Mark Claster
Susan Claster
Richard Boas
Elisabeth Boas
Robert Davidoff
David Gruber
Robert Marks
Carl Marks Foundation, Inc.
/s/ Wilfred J. Larson By: /s/ Mark Claster
- --------------------------------- -----------------------------
Wilfred J. Larson Name: Mark Claster
Title: Attorney-in-Fact
- --------------------------------- ---------------------------------
Robert O. Swados Jeffrey L. Kenner
/s/ Andrew Boas
---------------------------------
Andrew Boas
<PAGE> 16
IN WITNESS WHEREOF, Parent and Merger Subsidiary have caused this
Agreement to be executed by their respective officers thereunto duly
authorized, and each Shareholder has executed this Agreement, all as of the
date first above written.
Parent
By: --------------------------------
Name:
Title:
Merger Subsidiary
By: --------------------------------
Name:
Title:
Marks Group
Edwin Marks
Nancy Marks
Carolyn Marks
Linda Marks
Constance Rubenfein
Marjorie M. Boas
Andrew Boas
Carol Boas
Mark Claster
Susan Claster
Richard Boas
Elizabeth Boas
Robert Davidoff
David Gruber
Robert Marks
Carl Marks Foundation, Inc.
By: --------------------------------
Name: Mark Claster
Title: Attorney-in-Fact
/s/ Jeffrey L. Kenner
------------------------------------
Jeffrey L. Kenner
<PAGE> 17
IN WITNESS WHEREOF, Parent and Merger Subsidiary have caused this
Agreement to be executed by their respective officers thereunto duly
authorized, and each Stockholder has executed this Agreement, all as of the
date first above written.
The JFK Annuity Trust II The Sherwin-Williams Company
By: /s/ Gwen Knapp By:
------------------------------- ------------------------------
Gwen Knapp, as trustee Name: Conway G. Ivy
Title: Vice President - Corporate
Planning & Development
The JFK Annuity Trust III
By: /s/ Gwen Knapp
-------------------------------
Gwen Knapp, as trustee
By:
------------------------------
Name:
The Jules F. Knapp Family Trust No. IV Title:
By: /s/ Jules Knapp
-------------------------------
Jules Knapp, as trustee The 1995 Martin R. Lewis
GRAT #2
/s/ Jules Knapp
- ----------------------------------- By:
Jules Knapp ------------------------------
Trustee
<PAGE> 18
IN WITNESS WHEREOF, Parent and Merger Subsidiary have caused this
Agreement to be executed by their respective officers thereunto duly
authorized, and each Stockholder has executed this Agreement, all as of the
date first above written.
The Sherwin-Williams Company
By:
------------------------------
Name: Conway G. Ivy
Title: Vice President - Corporate
Planning & Development
By:
------------------------------
Name:
Title:
The 1995 Martin R. Lewis
GRAT #2
By: /s/ Martin R. Lewis, TRUSTEE
-------------------------------
Trustee
/s/ TRUSTEE
-------------------------------
Trustee
<PAGE> 19
IN WITNESS WHEREOF, Parent and Merger Subsidiary have caused this
Agreement to be executed by their respective officers thereunto duly
authorized, and each Shareholder has executed this Agreement, all as of the
date first above written.
Parent
By:
---------------------------------
Name:
Title:
Merger Subsidiary
By:
---------------------------------
Name:
Title:
Marks Group
Edwin Marks
Nancy Marks
Carolyn Marks
Linda Marks
Constance Rubenfein
Marjorie M. Boas
Carol Boas
Mark Claster
Susan Claster
Richard Boas
Elisabeth Boas
Robert Davidoff
David Gruber
Robert Marks
Carl Marks Foundation, Inc.
By: /s/ Mark Claster
-----------------------------
Name: Mark Claster
Title: Attorney-in-Fact
---------------------------------
Jeffrey L. Kenner
IIICa /s/ Andrew Boas
W60832 ---------------------------------
Andrew Boas
<PAGE> 20
IN WITNESS WHEREOF, Parent and Merger Subsidiary have caused this
Agreement to be executed by their respective officers thereunto duly
authorized, and such Shareholder has executed this Agreement, all as of the
date first above written.
Parent
By:
--------------------------------
Name:
Title:
Merger Subsidiary
By:
-------------------------------
Name:
Title:
SHAREHOLDER
By: /s/ Raymond D. Stevens III
-------------------------------
Name:
<PAGE> 21
EXHIBIT A
---------
<TABLE>
<CAPTION>
<S> <C>
NAME AND ADDRESS SHARES
- ---------------- ------
JFK Annuity Trust II 254,438
JFK Annuity Trust III 320,788
Jules F. Knapp Family Trust No. IV 1,420,023
Jules F. Knapp 73,812
The address for all the above is: ---------
c/o United Coatings, Inc. 2,069,061
980 North Michigan Ave., Suite 1120
Chicago, ILL 60611
Attention: Jules F. Knapp
Edwin Marks 116,666
Nancy Marks 133,333
Carolyn Marks 116,666
Linda Marks 116,666
Constance Rubenfein 116,666
Marjorie Boas 18,066
Andrew Boas 109,766
Carol Boas 72,216
Mark Claster 60,233
Susan Claster 121,750
Richard Boas 108,750
Robert Davidoff 156,117
David Gruber 125,000
Robert Marks 125,000
Carl Marks Foundation 37,000
Elizabeth Boas 72,216
The address for all the above is: ---------
c/o Carl Marks & Co., Inc. 1,606,111
135 East 57th Street
New York, NY 10022
Attention: Mark Claster
Jeffrey L. Kenner, Kenner & Co., Inc., 437 Madison Ave. 475,000
Suite 2001, New York, NY 10022
The 1995 Martin R. Lewis, GRAT #2, c/o Martin R. Lewis, 89,305
Williamhouse-Regency, Inc., ---------
28 West 23rd St., New York, NY 10010 564,305
R.D. Stevens, Jr. 75,117
R.D. Stevens, Jr. IRA 2,887
Aline L. Stevens 22,556
R.D. Stevens, Jr. III 30,044
Annie E. Stevens Trust No. 2.0.1 23,750
Annie E. Stevens Trust No. 3.0.2 42,840
Annette Wells Stevens Trust No. 2.0.4 9,116
Annette Wells Stevens Trust No. 3.0.5 55,818
R.D. Stevens, Jr. Trust No. 2.2.A 1,358
R.D. Stevens, Jr. Trust No. 2.3.B 1,358
</TABLE>
<PAGE> 22
- 2 -
<TABLE>
<CAPTION>
NAME AND ADDRESS SHARES
- ---------------- ------
<S> <C>
R.D. Stevens, Jr. Trust No. 2.4.C 1,358
George E. Stevens Trust No. 3.2.AA 3,924
George E. Stevens Trust No. 3.3.BB 3,924
George E. Stevens Trust No. 3.4.CC 3,924
Annette Wells Stevens Trust No. 2.0.W 3,675
Annette Wells Stevens Trust No. 3.0.W 25,500
Annette Wells Stevens Trust No. 2.5.W 10,975
The address for all the above -------
(except R.D. Stevens III) is: 318,124
c/o Pratt & Lambert United Inc.
75 Tonawanda Street
Buffalo, New York 14207
Attention: R.D. Stevens, Jr.
The address for R.D. Stevens, III is:
748 Magnolia St., Denver, Co. 80220-6037.
Wilfred J. Larson, c/o Pratt & Lambert United Inc., 4,000
75 Tonawanda Street, Buffalo, New York 14207, Attention:
R.D. Stevens, Jr.
Robert O. Swados, Cohen, Swados, Wright, Hanifin, 2,050
Bradford & Brett, 70 Niagara Street, Buffalo, NY 14202
</TABLE>
Exceptions
- ----------
1. Mr. Davidoff owns a total of 475,000 shares
2. List does not include shares beneficially owned as a fiduciary of
employee benefit plans
3. The shares held by the Marks family, Boas family, Claster family,
Ms. Rubenfein, Mr. Davidoff, Mr. Gruber and the Carl Marks
Foundation are subject to a Voting Trust and Power of Attorney.
4. Does not include shares as to which any such person is a
co-trustee.
<PAGE> 1
AGREEMENT OF JOINT FILING
SWACQ, Inc. and The Sherwin-Williams Company agree that the Statement
on Schedule 13D to which this agreement is attached as an exhibit, and all
future amendments to the Statement, shall be filed on behalf of each of them.
This Agreement is intended to satisfy the requirements of Rule 13d-1(f)(1)(iii)
under the Securities Exchange Act of 1934, as amended.
Dated: November 9, 1995
SWACQ, Inc.
By: /s/ C.G. Ivy*
-------------------------------
C.G. Ivy
Vice President
THE SHERWIN-WILLIAMS COMPANY, INC.
By: /s/ C.G. Ivy*
-------------------------------
C.G. Ivy
Vice President--Corporate Planning
and Development
*By: Jeffrey P. Cohen
---------------------------------
Jeffrey P. Cohen
Attorney-in-Fact
