SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
_______________
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 28, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Transition period from _____ to _____
Commission File Numbers: 0-25586 and 33-66740
UNIROYAL CHEMICAL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 06-1258925
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
UNIROYAL CHEMICAL COMPANY, INC.
(Exact name of registrant as specified in its charter)
NEW JERSEY 06-114-8490
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
BENSON ROAD
MIDDLEBURY, CONNECTICUT 06749
(Address of principal executive offices) (Zip Code)
Registrants' telephone number, including area code - (203) 573-2000
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrants (1) have filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrants were required to
file such reports); and (2) have been subject to such filing
requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K [ ].
None of the voting stock of Uniroyal Chemical Corporation or
Uniroyal Chemical Company, Inc. is held by non-affiliates.
Indicate the number of shares outstanding of each of the issuers'
classes of common stock, as of December 15, 1996:
Uniroyal Chemical Corporation: 100 shares of Common Stock;
Uniroyal Chemical Company, Inc.: 100 Shares of No Class
Common Stock.
Documents incorporated by reference
None
Registrants meet the conditions set forth in General Instruction
(I)(1)(a) and (b) of Form 10-K and are therefore filing this Form
with the reduced disclosure format.
INDEX
Page
PART 1
Item 1. Business 1
(a) Businesses of Uniroyal Chemical Company, Inc
and Uniroyal Chemical Corporation 1
(b) Merger with Crompton & Knowles Corporation 1
Item 2. Properties 1
Item 3. Legal Proceedings 2
Item 4. Submission of Matters to a Vote of Security
Holders 5
PART II
Item 5. Market for Registrants' Common Equity and
Related Stockholder Matters 5
Item 6. Selected Financial Data 5
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 5
Item 8. Financial Statements and Supplementary Data 7
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 7
PART III
Item 10. Directors and Executive Officers of the
Registrants 7
Item 11. Executive Compensation 7
Item 12. Security Ownership of Certain Beneficial Owners
and Management 7
Item 13. Certain Relationships and Related Transactions 7
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K 8
The Registrants are not required by Section 13 or 15(d) of
the Securities Exchange Act of 1934 to file this Report, which is
being filed to comply with certain provisions of the indentures
applicable to three series of outstanding public debt of Uniroyal
Chemical Corporation and one series of such debt of Uniroyal
Chemical Company, Inc.
* * * * * * * * * * * * * * * * *
PART I
ITEM 1. BUSINESS
Businesses of Uniroyal Chemical Company, Inc. and Uniroyal
Chemical Corporation
Uniroyal Chemical Company, Inc. ("Uniroyal Chemical") is a
major multinational manufacturer of a wide variety of specialty
chemical products, including specialty elastomers, rubber
chemicals, crop protection chemicals and additives for the
plastics and lubricants industries. Uniroyal Chemical produces
high value added products which are currently marketed in
approximately 120 countries. Uniroyal Chemical's products serve
a wide variety of end use markets including agriculture,
petrochemical, automotive, tires, hoses, plastics, appliances,
lubricants, construction, recreation and mining. Uniroyal
Chemical's business has its origins in the chemical operations of
the U.S. Rubber Company, which date back over 90 years.
Uniroyal Chemical Corporation ("UCC") has no operations and
its sole material asset is the capital stock of Uniroyal
Chemical.
Merger with Crompton & Knowles Corporation
There is incorporated by reference herein Item 1 of the
Registrants' Current Report on Form 8-K dated August 21, 1996,
for information pertaining to an Agreement and Plan of Merger
dated as of April 30, 1996, as amended, by and among UCC,
Crompton & Knowles Corporation ("Crompton & Knowles") and Tiger
Merger Corp. ("Subcorp"), a wholly owned subsidiary of Crompton &
Knowles, whereby Subcorp was merged with and into UCC (the
"Merger") effective on August 21, 1996. As a result of the
Merger, UCC became a wholly owned subsidiary of Crompton &
Knowles. Uniroyal Chemical remained a wholly owned subsidiary of
UCC.
ITEM 2. PROPERTIES
Uniroyal Chemical and its subsidiaries (including Gustafson,
Inc.) ("Gustafson") operate 16 production facilities worldwide.
While most manufacturing plants produce a variety of products,
three are dedicated to individual products. The four most
significant production facilities are in Elmira, Ontario, Canada;
Geismar, Louisiana; Naugatuck, Connecticut and Latina, Italy.
Gustafson operates four facilities: an equipment manufacturing
plant in Eden Prairie, Minnesota and chemical formulation
facilities in Marsing, Idaho; Des Moines, Iowa and Pekin,
Illinois.
Uniroyal Chemical holds a 50% voting interest in Rubicon
Inc. which operates a chemical production facility located in
Geismar, Louisiana that in part is dedicated to producing certain
intermediates for Uniroyal Chemical.
Uniroyal Chemical conducts research and development in
facilities in Bethany, Middlebury and Naugatuck, Connecticut;
Guelph, Ontario, Canada and Evesham, England. In addition,
Gustafson conducts research and development at a facility in
Frisco, Texas. Uniroyal Chemical and Gustafson each also operate
field stations for crop protection research and development
activities.
Uniroyal Chemical and UCC maintain headquarters facilities
at Middlebury, Connecticut.
ITEM 3. LEGAL PROCEEDINGS
Uniroyal Chemical and its subsidiaries are involved in
claims, litigation, administrative proceedings and investigations
of various types in several jurisdictions. A number of such
matters involve claims for a material amount of damages relating
to or alleging environmental liabilities, including clean up
costs associated with hazardous waste disposal sites, property
damage and personal injuries.
Environmental Liabilities. In connection with establishing
appropriate reserves for environmental liabilities, Uniroyal
Chemical regularly updates its estimates of costs associated with
the restoration of identified off-site and on-site disposal sites
and other environmental requirements. Uniroyal Chemical believes
that the most likely future amount of its currently known
environmental liabilities is approximately $95.1 million which
was reserved as of September 29, 1996, for the costs associated
with liabilities for past off-site and on-site disposal of
hazardous materials based on Uniroyal Chemical's interpretation
of current environmental laws and regulations. These estimates
may change should additional sites be identified, additional
remediation measures be required to be undertaken, the
interpretation of current laws and regulations be modified or
additional environmental laws and regulations be enacted.
Uniroyal Chemical intends to assert all meritorious legal
defenses and all other equitable factors which are available to
it with respect to these matters.
Uniroyal Chemical generally assesses the possibility for
toxic tort claims. Such liabilities are dependent upon complex
factors. Five facilities have been identified where the
possibility for toxic tort claims may be significant, i.e. as
situations where chemicals are believed to have migrated
off-site, thus posing risk of exposure. There are no lawsuits
pending involving any of these five facilities. Virtually all,
if not all, of the off-site disposal sites to which Uniroyal
Chemical may have sent toxic materials pose a possibility for
toxic tort claims. There are currently pending five toxic tort
claims against Uniroyal Chemical and others arising from these
off-site disposal sites.
Uniroyal Chemical has been identified as a potentially
responsible party ("PRP") under the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA") and/or state
equivalents for cleanup costs associated with waste disposal
sites at various locations in the United States by the United
States Environmental Protection Agency ("EPA"), state or local
governmental agencies, and/or other PRPs. Because CERCLA has been
construed to authorize joint and several liability, the
government could seek to recover all cleanup costs at a waste
disposal site from any one of the PRPs for such site, including
Uniroyal Chemical, despite the involvement of other PRPs. In
many cases, Uniroyal Chemical is one of several hundred PRPs so
identified. In a few instances, Uniroyal Chemical is one of only
a handful of PRPs. In certain instances, a number of other
financially responsible PRPs are also involved, and Uniroyal
Chemical expects that any ultimate liability resulting from such
matters will be apportioned between Uniroyal Chemical and such
other parties. The more significant of these matters are
described below.
o Beacon Heights and Laurel Park - Uniroyal Chemical is a
member of the Beacon Heights Coalition, a group of entities
engaged in remedial work at the Beacon Heights site in the State
of Connecticut pursuant to a Consent Decree entered in 1987. The
actions required by this Consent Decree have been essentially
completed. There is a continuing requirement for operation and
maintenance at the site.
Over many years, Uniroyal Chemical has entered into and
performed activities pursuant to a series of Administrative
Orders with respect to the Laurel Park site located in the State
of Connecticut. The EPA, the State of Connecticut, and the
Laurel Park Coalition (consisting of Uniroyal Chemical and a
number of other parties) have entered into a Consent Decree
governing the design and implementation of the selected remedy.
Remedial construction began at the Laurel Park site in July 1996,
and is anticipated to be completed in 1998.
Consolidated litigation brought by the Beacon Heights and
Laurel Park Coalitions seeking contribution to the costs from the
owner/operators of the site and later from other identified
generator parties has resulted in substantial recoveries from a
number of parties. In November 1996, the United States Court of
Appeals for the Second Circuit reversed judgments granted to
other defendants in that litigation and the litigation will be
remanded for further proceedings.
o Cleve Reber - Uniroyal Chemical and three other
corporations named in an Administrative Order issued by the EPA
have complied with such Order which governs remediation of the
site located in the State of Louisiana. The cooperating parties
are negotiating a consent agreement with the EPA for operation
and maintenance of the site and to resolve all of the EPA's past
cost claims.
o Petro Processors - This matter relating to a site in the
State of Louisiana was initiated in 1981. Litigation was
instituted by the EPA against a number of parties, including
Uniroyal, Inc. (which Uniroyal Chemical has agreed to indemnify),
seeking cleanup of the Petro Processors site. A Consent Decree
was entered to settle the case in February 1984, which required
the defendants to clean up the site to the satisfaction of the
EPA under supervision of the court. A settlement among the ten
defendants, dated December 16, 1983, defines the percentage to be
borne by each defendant of the currently estimated future cost of
$100 million to complete remediation of the site. Although the
allocations are subject to a confidentiality order, Uniroyal
Chemical believes that the amount it will pay will not be
material to its financial condition or results of operations.
o Vertac - Uniroyal Chemical and its Canadian subsidiary,
Uniroyal Chemical Ltd., were joined with others as defendants in
consolidated civil actions brought in the United States District
Court, Eastern District of Arkansas, Western Division by the
United States of America, the State of Arkansas and Hercules
Incorporated ("Hercules") relating to a Vertac Chemical
Corporation site in Jacksonville, Arkansas allegedly contaminated
by dioxins. Uniroyal Chemical has been dismissed from the
litigation. On November 18, 1993, the liability phase of trial
in this matter, as to Uniroyal Chemical Ltd., concluded with the
issuance of a jury verdict holding that Uniroyal Chemical Ltd. is
liable under CERCLA Section 107 to the United States of America,
the State of Arkansas and Hercules; that there is a reasonable
basis for divisibility in this matter so that Uniroyal Chemical
Ltd.'s liability is not joint and several; that Uniroyal Chemical
Ltd. is not liable in contribution to Hercules; and that Hercules
is liable in contribution to Uniroyal Chemical Ltd. The Court
has received full briefs on the issues of which, if any, portions
of the jury verdict are binding and which are advisory only, but
has yet to rule on such issues or enter judgment in the matter.
If interlocutory appeals from judgment once entered are not
allowed, the allocation phase of the proceedings will begin. No
ultimate determination of the amount of Uniroyal Chemical Ltd.'s
liability, if any, is expected prior to the end of 1997. In
addition, a new case has been filed by several individuals
seeking natural resource damages. Uniroyal Chemical Ltd. has
filed a Motion to Dismiss but currently all proceedings are
stayed pending appeal of an order issued by the Court on November
2, 1996, which disqualified plaintiffs' counsel. Recently,
Uniroyal Chemical and Uniroyal Chemical Ltd. received a notice
from the U.S. Department of Interior of its intent to perform a
Natural Resource Damage Assessment at the site.
Other Environmental Matters
o Sundor Canada Inc. - On July 13, 1990, Sundor Canada Inc.
("Sundor") instituted suit against Uniroyal Chemical Ltd. and
others including the Ontario Ministry of the Environment and the
Regional Municipality of Waterloo in the Ontario Court of Justice
(General Division) at Toronto claiming that Uniroyal Chemical
Ltd. and others are responsible for losses resulting from
Sundor's recall of packaged juices and fruit due to Sundor's use
of the public water derived from Elmira groundwater which was
allegedly contaminated by Uniroyal Chemical Ltd. Uniroyal
Chemical Ltd. has asserted, inter alia, that such recall was
completely voluntary and in any event unnecessary to protect
health and was not caused or justified by any activities of
Uniroyal Chemical Ltd. Uniroyal Chemical Ltd. has instituted
third-party claims against its co-defendants in the action.
Co-defendants in the action have instituted third-party claims
against Uniroyal Chemical Ltd. Examinations for discovery,
restricted to the issue of damages suffered by the plaintiff,
were held in March 1995. The plaintiff has provided additional
information requested by defendants relating to plaintiff's
damages. A pre-trial/mediation has been scheduled for March and
April 1997.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No response to this item is required as Registrants meet the
conditions set forth in General Instruction (I)(1)(a) and (b) of
Form 10-K ("No Response Required").
PART II
ITEM 5. MARKET FOR REGISTRANTS' COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
There is no established market for the Common Stock of
Uniroyal Chemical, all of which is owned by UCC, or for the
Common Stock of UCC, all of which is owned by Crompton & Knowles.
See "BUSINESS - Merger with Crompton & Knowles Corporation" for
information about the Merger.
The operations of UCC are conducted through Uniroyal
Chemical and its subsidiaries and, therefore, UCC relies on
Uniroyal Chemical's cash flow to satisfy its debt obligations and
other cash needs. The debt agreements of Uniroyal Chemical
restrict its ability to provide funds to UCC. Likewise, the
provisions of the debt agreements of UCC restrict its ability to
pay dividends, and UCC has never paid cash dividends on shares of
its Common Stock. See Note 6 of Notes to Consolidated Financial
Statements of Uniroyal Chemical.
ITEM 6. SELECTED FINANCIAL DATA
No Response Required.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The response to this item has been limited to an analysis
of the results of operations for the 1996 fiscal year as compared
with fiscal 1995 as Registrants meet the conditions set forth in
General Instruction (I)(1)(a) and (b) of Form 10-K.
Operating Results - 1996 as Compared to 1995
Net Sales
Net sales for fiscal 1996 increased by 5% to $1,132.7
million from $1,079.3 million for fiscal 1995. Approximately
half of the increase was a result of the impact of acquisitions
made in fiscal 1995, with the remainder primarily attributable to
price increases.
Chemicals and Polymers sales were up $13.3 million, or 3%,
in fiscal 1996 compared to fiscal 1995, primarily attributable to
improved selling prices in rubber chemicals and increased unit
volume for nitrile rubber, partially offset by lower unit volume
and pricing in the EPDM business.
Sales of Crop Protection chemicals were up $26.9 million, or
8%, in fiscal 1996 as compared to the prior year due primarily to
the acquisition of the crop protection business of Solvay Duphar
in March of 1995. Lower insecticide sales due to lower
infestation levels in the U.S. were offset primarily by increases
in international sales and sales of seed treatment products.
Specialties sales of $282.2 million increased 5% in fiscal
1996 compared to fiscal 1995 attributable primarily to higher
unit volume of urethane prepolymers.
Operating Profit
Gross margin as a percentage of net sales of 38.1% increased
from the 37.3% in the 1995 fiscal year, after excluding the
impact of certain special income in 1995. Consolidated operating
profit, before merger and related costs of $52.6 million and a
special charge for environmental costs of $30.0 million,
increased 12% to $158.0 million from $140.9 million in the prior
year after adjustment for certain special income, net of $4.9
million in fiscal 1995. The improvement in operating profit
resulted primarily from the increase in volume due to
acquisitions and lower operating costs.
Other
Selling, general and administrative expenses of $166.7
million increased less than 1% versus fiscal 1995 and decreased
as a percentage of sales, as the impact of acquisitions, new
product promotions and inflation was offset by the cost reduction
program charge of $5.0 million in fiscal 1995 and the benefits of
that program in fiscal 1996. Depreciation and amortization of
$67.9 million increased 4% versus fiscal 1995 primarily as a
result of a higher fixed asset base including acquisitions.
Research and development costs of $39.0 million increased 7% from
the prior year and remained constant as a percentage of sales.
Merger and related costs of $52.6 million comprised
principally severance and other personnel costs of $27.3 million,
investment banking fees of $5.9 million, legal fees of $4.7
million, debt related fees of $6.4 million, facility
consolidation costs of $3.4 million and other costs of $4.9
million. A special environmental provision of $30.0 million
reflects UCC's evaluation, based on current information, of its
obligation for environmental remediation activities.
Interest expense for fiscal 1996 of $106.5 million decreased
7% from fiscal 1995 primarily due to lower levels of
indebtedness. Other income of $0.3 million decreased $2.3
million versus fiscal 1995 primarily due to lower interest income
in fiscal 1996 and special licensing income reported in the prior
year. The effective tax rate, excluding the tax impact of merger
and related costs ($8.3 million) and a special charge for
environmental costs ($11.5 million), was 40.1% versus 40.2% in
fiscal 1995 after adjustment for special credits of $78.9 million
in 1995.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
There is incorporated by reference herein the information
set forth on the Index to Financial Statements and Financial
Statement Schedules on Page F-1.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
There is incorporated by reference herein Items 4 and 7 of
the Registrants' Current Report on Form 8-K dated September 27,
1996, for information pertaining to the replacement of the
accounting firm of Deloitte & Touche LLP with KPMG Peat Marwick
LLP to serve as independent certifying public accountants for UCC
and its subsidiaries. KPMG Peat Marwick LLP is the independent
certifying public accountant for Crompton & Knowles and its
subsidiaries.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTS
No Response Required.
ITEM 11. EXECUTIVE COMPENSATION
No Response Required.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
No Response Required.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
No Response Required.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
(a) 1. Financial Statements
The financial statements, and the notes thereto, listed on
Page F-1 are filed herewith as part of this Report.
2. Financial Statement Schedules
The financial statement schedules listed on page F-1 are
filed herewith as part of this Report.
3. Exhibits
The exhibits listed in the accompanying Exhibit Index are
filed herewith as part of this Report.
(b) Reports on Form 8-K filed in fourth quarter 1996
During the fiscal fourth quarter of 1996, the Registrants
filed a Current Report on Form 8-K dated August 21, 1996,
reporting on Item 1, Changes In Control of Registrant. In
addition, on September 30, 1996, the Registrants filed a Current
Report on Form 8-K dated September 27, 1996, reporting on Item 4,
Changes In Registrants' Certifying Accountant and Item 8, Change
in Fiscal Year and including an exhibit pursuant to Item 7,
Financial Statements and Exhibits.
(c) Exhibits
See Exhibit Index.
(d) Financial Statement Schedules
See Index to Financial Statements and Financial Statement
Schedules on page F-1.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
UNIROYAL CHEMICAL CORPORATION
Date: January 9, 1997 By: /s/ Vincent A. Calarco
Vincent A. Calarco
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the Registrant and in the capacities indicated this
9th day of January, 1997.
Signature Title
/s/ Vincent A. Calarco Chairman of the Board,
Vincent A. Calarco President, Chief
Executive Officer and
Director
/s/ Charles J. Marsden Vice President and Chief
Charles J. Marsden Financial Officer and
Director (principal
financial officer)
/s/ John T. Ferguson II Vice President,
John T. Ferguson II General Counsel, Secretary
and Director
/s/ Michael F. Vagnini Controller (principal
Michael F. Vagnini accounting officer)
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
UNIROYAL CHEMICAL COMPANY, INC.
Date: January 9, 1997 By: /s/ Vincent A. Calarco
Vincent A. Calarco
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the Registrant and in the capacities indicated this
9th day of January, 1997.
Signature Title
/s/ Vincent A. Calarco President, Chief Executive
Vincent A. Calarco Officer and Director
/s/ Charles J. Marsden Vice President and Chief
Charles J. Marsden Financial Officer and
Director (principal
financial officer)
/s/ John T. Ferguson II Vice President, General
John T. Ferguson II Counsel Secretary and
Director
/s/ Michael F. Vagnini Controller (principal
Michael F. Vagnini accounting officer)
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
UNIROYAL CHEMICAL CORPORATION
UNIROYAL CHEMICAL COMPANY, INC.
FINANCIAL STATEMENTS PAGE
Independent Auditors' Report
KPMG Peat Marwick LLP F-2
Deloitte & Touche LLP F-3
Consolidated Statements of Operations for Fiscal Years
1996, 1995 and 1994 F-4
Consolidated Balance Sheets - September 28, 1996 and
October 1, 1995
Uniroyal Chemical Corporation F-5
Uniroyal Chemical Company, Inc. F-7
Consolidated Statements of Stockholders' Equity (Deficit)
for Fiscal Years 1996, 1995 and 1994
Uniroyal Chemical Corporation F-8
Uniroyal Chemical Company, Inc. F-10
Consolidated Statements of Cash Flows for Fiscal 1996,
1995 and 1994 F-11
Notes to Consolidated Financial Statements F-13
FINANCIAL STATEMENT SCHEDULES
Schedule I - Condensed Financial Information of
Registrant S-1
Schedule II - Valuation and Qualifying Accounts S-5
Certain schedules are omitted because they are not applicable or
the required information is provided in the Financial Statements
or related notes thereto.
INDEPENDENT AUDITORS' REPORT
Board of Directors
Uniroyal Chemical Corporation
Uniroyal Chemical Company, Inc.
We have audited the following 1996 consolidated financial
statements:
UNIROYAL CHEMICAL CORPORATION
Consolidated Balance Sheet - September 28, 1996
Consolidated Statements of Operations, Stockholders'
Equity (Deficit) and Cash Flows for fiscal year 1996
UNIROYAL CHEMICAL COMPANY, INC. (a wholly owned subsidiary)
and subsidiaries
Consolidated Balance Sheet - September 28, 1996
Consolidated Statements of Operations, Stockholders'
Equity (Deficit) and Cash Flows for fiscal year 1996
In connection with our audit of the 1996 consolidated financial
statements, we have also audited the financial statement
schedules for fiscal 1996 listed in the index on page F-1. These
consolidated financial statements and financial statement
schedules are the responsibility of the Companies' management.
Our responsibility is to express an opinion on these consolidated
financial statements and financial statement schedules based on
our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the consolidated financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the 1996 consolidated financial statements
present fairly, in all material respects, the financial position
of Uniroyal Chemical Corporation and Uniroyal Chemical Company,
Inc. and its subsidiaries as of September 28, 1996 and the
results of their operations and their cash flows for the year
then ended in conformity with generally accepted accounting
principles. Also in our opinion, the related financial statement
schedules, when considered in relation to the basic consolidated
financial statements taken as a whole, present fairly, in all
material respects, the information set forth therein.
KPMG PEAT MARWICK LLP
Stamford, Connecticut
October 23, 1996
INDEPENDENT AUDITORS' REPORT
Board of Directors
Uniroyal Chemical Corporation
Uniroyal Chemical Company, Inc.
We have audited the following consolidated financial statements:
UNIROYAL CHEMICAL CORPORATION
Consolidated Balance Sheet - October 1, 1995
Consolidated Statements of Operations, Stockholders'
Equity (Deficit) and Cash Flows for the years ended
October 1, 1995 and October 2, 1994
UNIROYAL CHEMICAL COMPANY, INC. (a wholly owned subsidiary)
and subsidiaries
Consolidated Balance Sheet - October 1, 1995
Consolidated Statements of Operations, Stockholders'
Equity (Deficit) and Cash Flows for the years ended
October 1, 1995 and October 2, 1994
Our audits also included the financial statement schedules listed
in the index on page F-1.
These consolidated financial statements and financial statement
schedules are the responsibility of the aforementioned Companies'
management. Our responsibility is to express an opinion on these
consolidated financial statements and financial statement
schedules based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the consolidated financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such consolidated financial statements present
fairly, in all material respects, the financial position of the
Companies at the dates indicated and the results of their
operations and their cash flows for the periods indicated in
conformity with generally accepted accounting principles. Also
in our opinion, such financial statement schedules, when
considered in relation to the basic consolidated financial
statements taken as a whole, present fairly, in all material
respects, the information set forth therein.
DELOITTE & TOUCHE LLP
Stamford, Connecticut
November 17, 1995
UNIROYAL CHEMICAL CORPORATION
UNIROYAL CHEMICAL COMPANY, INC.
Consolidated Statements of Operations
Fiscal Years ended September 28, 1996, October 1, 1995 and
October 2, 1994
(In thousands of dollars)
1996 1995 1994
---------- ---------- ----------
Net sales $1,132,746 $1,079,321 $946,454
Cost of products sold 701,104 665,980 580,688
Selling, general and
administrative 166,716 165,803 147,405
Depreciation and amortization 67,946 65,083 72,841
Research and development 39,014 36,622 34,197
Merger and related costs 52,579 - -
Special environmental provision 30,000 - -
Write-off of intangible assets - - 191,000
---------- ---------- ----------
Operating profit (loss) 75,387 145,833 (79,677)
Interest expense 106,456 114,034 128,567
Other income (308) (2,570) (3,319)
---------- ---------- ----------
Earnings (loss) before
income taxes and
extraordinary loss (30,761) 34,369 (204,925)
Provision (benefit) for
income taxes 951 (65,060) 8,918
---------- ---------- ----------
Earnings (loss) before
extraordinary loss (31,712) 99,429 (213,843)
Extraordinary loss on early
extinguishment of debt (441) (8,279) -
---------- ---------- ----------
Net earnings (loss) ($32,153) $91,150 ($213,843)
========== ========== ==========
See accompanying notes to consolidated financial statements
UNIROYAL CHEMICAL CORPORATION
Consolidated Balance Sheets
September 28, 1996 and October 1, 1995
(In thousands of dollars)
ASSETS 1996 1995
Current Assets ---------- ----------
Cash $15,615 $29,519
Accounts receivable 159,287 159,254
Inventories 180,414 177,647
Other current assets 49,641 39,114
---------- ----------
Total current assets 404,957 405,534
Non-Current Assets
Property, plant and equipment 371,689 394,472
Costs in excess of acquired
net assets 129,198 133,726
Other intangible assets 94,727 107,984
Deferred income taxes 73,211 63,890
Other assets 58,836 66,101
---------- ----------
$1,132,618 $1,171,707
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Current installments of long-term
debt $11,568 $11,434
Notes payable 9,187 33,305
Accounts payable 92,530 94,826
Accrued expenses 105,652 89,927
Income taxes payable 31,754 29,150
---------- ----------
Total current liabilities 250,691 258,642
---------- ----------
Non-Current Liabilities
Long-term debt 893,228 910,156
Postretirement healthcare liability 174,555 176,650
Other liabilities 149,154 125,488
Stockholders' Equity (Deficit)
Preferred stock, $0.01 par value;
50,000 shares authorized:
Series A cumulative redeemable
preferred stock, 29,721 shares
issued and outstanding in 1995,
stated at the total liquidation
preference - 2,972
Series B preferred stock, 12,000
shares issued and outstanding in
1995, stated at the total
liquidation preference - 1,200
Common stock, $0.01 par value: 1,000
shares authorized, 100 shares issued
and outstanding in 1996; 205,000,000
shares authorized, 25,289,831 shares
issued (including 1,139,873 treasury
shares) in 1995 - 253
Additional paid-in capital 172,822 176,799
Accumulated deficit (479,613) (447,460)
Accumulated translation adjustment (24,506) (18,488)
Pension liability adjustment (3,713) (3,617)
Treasury stock at cost - (10,888)
---------- ----------
Total stockholders' deficit (335,010) (299,229)
---------- ----------
$1,132,618 $1,171,707
========== ==========
See accompanying notes to consolidated financial statements
UNIROYAL CHEMICAL COMPANY, INC.
Consolidated Balance Sheets
September 28, 1996 and October 1, 1995
(In thousands of dollars)
ASSETS 1996 1995
Current Assets ---------- ----------
Cash $15,615 $29,519
Accounts receivable 159,287 159,254
Inventories 180,414 177,647
Other current assets 49,641 39,114
---------- ----------
Total current assets 404,957 405,534
Non-Current Assets
Property, plant and equipment 371,689 394,472
Costs in excess of acquired
net assets 129,198 133,726
Other intangible assets 94,727 107,984
Deferred income taxes 73,211 63,890
Other assets 58,836 66,101
---------- ----------
$1,132,618 $1,171,707
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Current installments of long-term
debt $11,568 $11,434
Notes payable 9,187 33,305
Accounts payable 92,530 94,826
Accrued expenses 105,652 89,927
Income taxes payable 31,754 29,150
---------- ----------
Total current liabilities 250,691 258,642
---------- ----------
Non-Current Liabilities
Long-term debt 893,228 910,156
Postretirement healthcare liability 174,555 176,650
Other liabilities 149,154 125,488
Stockholders' Equity (Deficit)
Common stock, no par value; 2,500
shares authorized, 100 shares
issued and outstanding 1 1
Additional paid-in capital 174,504 172,018
Accumulated deficit (481,296) (449,143)
Accumulated translation adjustment (24,506) (18,488)
Pension liability adjustment (3,713) (3,617)
---------- ----------
Total stockholders' deficit (335,010) (299,229)
---------- ----------
$1,132,618 $1,171,707
========== ==========
See accompanying notes to consolidated financial statements
UNIROYAL CHEMICAL CORPORATION
Consolidated Statements of Stockholders' Equity (Deficit)
Fiscal years ended September 28, 1996, October 1, 1995 and
October 2, 1994
(In thousands of dollars)
1996 1995 1994
--------- --------- ---------
PREFERRED STOCK
Balance at beginning of year $4,172 $4,172 $4,172
Reclassification due to Merger (4,172) - -
--------- --------- ---------
Balance at end of year - 4,172 4,172
--------- --------- ---------
COMMON STOCK
Balance at beginning of year 253 91 86
Stock options and other issuances 1 3 1
IPO proceeds, net - 134 -
Reclassification of redeemable
capital - 25 4
Reclassification due to Merger (254) - -
--------- --------- ---------
Balance at end of year - 253 91
--------- --------- ---------
ADDITIONAL PAID-IN CAPITAL
Balance at beginning of year 176,799 - 23
Stock options and other
issuances 557 294 99
IPO proceeds, net - 146,492 -
Reclassification and adjustment
of redeemable capital - 30,013 (122)
Reclassification due to Merger (4,534) - -
--------- --------- ---------
Balance at end of year 172,822 176,799 -
--------- --------- ---------
ACCUMULATED DEFICIT
Balance at beginning of year (447,460) (538,610) (324,320)
Net earnings (loss) (32,153) 91,150 (213,843)
Adjustment of redeemable
capital carrying value - - (447)
--------- --------- ---------
Balance at end of year (479,613) (447,460) (538,610)
--------- --------- ---------
ACCUMULATED TRANSLATION ADJUSTMENT
Balance at beginning of year (18,488) (9,964) (10,168)
Equity adjustment for
translation of foreign
currencies (6,018) (8,524) 204
--------- --------- ---------
Balance at end of year (24,506) (18,488) (9,964)
--------- --------- ---------
PENSION LIABILITY ADJUSTMENT
Balance at beginning of year (3,617) (1,903) (2,681)
Equity adjustment for pension
liability (96) (1,714) 778
--------- --------- ---------
Balance at end of year (3,713) (3,617) (1,903)
--------- --------- ---------
TREASURY STOCK
Balance at beginning of year (10,888) (5,945) (5,757)
Stock options and other
issuances 1,928 99 (188)
Reclassification of redeemable
capital - (5,042) -
Reclassification due to Merger 8,960 - -
--------- --------- ---------
Balance at end of year - (10,888) (5,945)
--------- --------- ---------
Total stockholders' deficit ($335,010) ($299,229) ($552,159)
========= ========= =========
See accompanying notes to consolidated financial statements
UNIROYAL CHEMICAL COMPANY, INC.
Consolidated Statements of Stockholders' Equity (Deficit)
Fiscal years ended September 28, 1996, October 1, 1995 and
October 2, 1994
(In thousands of dollars)
1996 1995 1994
--------- --------- ---------
COMMON STOCK
Balance at beginning and --------- --------- ---------
end of year $1 $1 $1
--------- --------- ---------
ADDITIONAL PAID-IN CAPITAL
Balance at beginning of year 172,018 - 23
Capital contribution 2,486 147,022 100
Adjustment of amount due
to parent - 24,996 (123)
--------- --------- ---------
Balance at end of year 174,504 172,018 -
--------- --------- ---------
ACCUMULATED DEFICIT
Balance at beginning of year (449,143) (540,293) (325,820)
Net earnings (loss) (32,153) 91,150 (213,843)
Adjustment of amount due parent - - (442)
Dividends - - (188)
--------- --------- ---------
Balance at end of year (481,296) (449,143) (540,293)
--------- --------- ---------
ACCUMULATED TRANSLATION ADJUSTMENT
Balance at beginning of year (18,488) (9,964) (10,168)
Equity adjustment for
translation of foreign
currencies (6,018) (8,524) 204
--------- --------- ---------
Balance at end of year (24,506) (18,488) (9,964)
--------- --------- ---------
PENSION LIABILITY ADJUSTMENT
Balance at beginning of year (3,617) (1,903) (2,681)
Equity adjustment for pension
liability (96) (1,714) 778
--------- --------- ---------
Balance at end of year (3,713) (3,617) (1,903)
--------- --------- ---------
Total stockholders' deficit ($335,010) ($299,229) ($552,159)
========= ========= =========
See accompanying notes to consolidated financial statements
UNIROYAL CHEMICAL CORPORATION
UNIROYAL CHEMICAL COMPANY, INC.
Consolidated Statements of Cash Flows
Fiscal years ended September 28, 1996, October 1, 1995 and
October 2, 1994
(In thousands of dollars)
1996 1995 1994
--------- --------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings (loss) ($32,153) $91,150 ($213,843)
Adjustments to reconcile
net earnings to net cash
provided by operations:
Depreciation and
amortization 67,946 65,083 72,841
Write-off of intangible assets - - 191,000
Noncash interest 16,267 18,781 37,782
Deferred income taxes (18,021) (79,340) (3,569)
Changes in assets and liabilities:
Accounts receivable (1,696) (26,565) (15,651)
Inventories (3,627) (8,425) (12,497)
Other current assets (2,277) 5,787 7,064
Other assets 1,826 6,552 (919)
Accounts payable and
accrued expenses 11,609 21,440 8,206
Income taxes payable 2,881 (1,136) 8,106
Other 27,246 (13,315) (6,751)
--------- --------- ---------
Net cash provided by
operations 70,001 80,012 71,769
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions - (98,497) (6,231)
Capital expenditures (28,574) (69,495) (30,380)
Proceeds from sale of assets - - 26,006
Other investing activities (2,228) (6,838) (5,411)
--------- --------- ---------
Net cash used by
investing activities (30,802) (174,830) (16,016)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on long-term
borrowings (30,256) (146,807) (2,960)
Increase (decrease) in
notes payable (24,464) 9,301 15,059
Proceeds from sale of
common stock, net - 146,626 -
Other financing activities 864 (4,886) (3,129)
--------- --------- ---------
Net cash provided (used) by
financing activities (53,856) 4,234 8,970
CASH
Effect of exchange rates
on cash 753 (1,241) 401
--------- --------- ---------
Change in cash (13,904) (91,825) 65,124
Cash at beginning of year 29,519 121,344 56,220
--------- --------- ---------
Cash at end of year $15,615 $29,519 $121,344
========= ========= =========
See accompanying notes to consolidated financial statements
UNIROYAL CHEMICAL CORPORATION
UNIROYAL CHEMICAL COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Basis of Presentation
Uniroyal Chemical Corporation ("UCC") was incorporated in
Delaware in December 1988 for the sole purpose of acquiring
Uniroyal Chemical Company, Inc. ("Uniroyal Chemical") in October
1989. During fiscal 1993, through a series of mergers, Uniroyal
Chemical became a direct wholly-owned subsidiary of UCC.
On August 21, 1996, Crompton and Knowles Corporation
("Crompton") acquired all of the issued and outstanding capital
stock of UCC at which time UCC became a wholly owned subsidiary
of Crompton. Uniroyal Chemical remained a direct wholly-owned
subsidiary of UCC. Herein, UCC and Uniroyal Chemical
collectively, are referred to as the "Companies."
UCC is dependent on cash flow from Uniroyal Chemical and its
subsidiaries to service its debt and meet its other cash needs.
Accordingly, the consolidated financial statements of Uniroyal
Chemical set forth herein are presented on a basis of accounting
which reflects all of the adjustments to account for the
acquisition of Uniroyal Chemical by UCC and substantially all of
the operations (primarily interest expense), assets and
liabilities of UCC.
Certain amounts in the accompanying consolidated financial
statements have been reclassified to conform with the current
year presentation.
Principles of Consolidation
The accompanying financial statements include the accounts of
UCC, Uniroyal Chemical and their majority owned subsidiaries.
Other companies in which Uniroyal Chemical has a 20% to 50%
ownership and exercises significant management influence are
accounted for in accordance with the equity method. All
significant intercompany accounts and transactions have been
eliminated in consolidation. The Companies reported on a 52 week
fiscal year ending on the last Saturday of September in 1996 and
the Sunday nearest September 30 in 1995 and 1994.
Translation of Foreign Currencies
Balance sheet accounts denominated in foreign currencies
are translated generally at the current rate of exchange as of
the balance sheet date, while revenues and expenses are
translated at average rates of exchange during the periods
presented. The cumulative foreign currency adjustments resulting
from such translation are reported as a component of
stockholders' equity (deficit). For foreign subsidiaries
operating in highly inflationary economies, principally the
Brazilian operations, monetary balance sheet accounts and related
revenues and expenses are translated at current rates of exchange
while non-monetary balance sheet accounts and related revenues
and expenses are translated at historical exchange rates. The
resulting translation gains and losses related to those countries
are reflected in operations and are not significant in any of the
years presented.
Cash and Cash Flows
The Companies consider cash in banks, certificates of deposit
and commercial paper maturing within 90 days of issuance as cash
for the purposes of reporting cash flows. Cash presented on the
balance sheet includes cash equivalents of $3.8 and $5.7 million
at September 28, 1996 and October 1, 1995, respectively.
Cash payments during the years ended 1996, 1995 and 1994
include interest payments of $90.8, $99.4 and $90.0 million and
income tax payments of $16.9, $8.7 and $4.9 million,
respectively.
Inventories
Inventories are stated at the lower of cost or market. Cost
is determined using the first-in, first-out (FIFO) basis.
Property, Plant and Equipment
Property, plant and equipment are carried at cost, less
accumulated depreciation. Depreciation expense ($46.2, 44.2 and
$44.4 million in 1996, 1995 and 1994, respectively) is computed
on the straight-line method over the estimated useful lives of
the assets which range from 2 to 39 years.
Renewals and improvements which extend the useful lives of the
assets are capitalized. Leasehold improvements are depreciated
over their useful lives or the remaining lease term, whichever is
shorter. Expenditures for maintenance and repairs are charged to
expense as incurred.
Intangible Assets
The excess of cost over the fair value of net assets of
businesses acquired is being amortized using the straight-line
basis over 20 to 40 years. Accumulated amortization was $25.5
and $21.3 million at September 28, 1996 and October 1, 1995,
respectively.
Other intangible assets include patents and unpatented
technology, trademarks and other intangibles, which are being
amortized on a straight-line basis over their estimated useful
lives ranging from 6 to 20 years. Accumulated amortization was
$102.9 and $ 87.8 million at September 28, 1996 and October 1,
1995, respectively.
Long-Lived Assets
In March 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets
to Be Disposed Of." This statement requires that long-lived
assets, certain identifiable intangible assets and goodwill
related to those assets to be held and used by an entity be
reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may
not be recoverable. The Companies adopted the new standard in
the first quarter of fiscal 1996. The effect of the adoption of
the new standard did not materially impact the Companies'
financial position or results of operations.
Each year the Companies evaluate the recoverability of the
carrying value of the intangible assets of each of their
businesses by assessing whether the projected earnings and cash
flows of each of its businesses is sufficient to recover the
existing unamortized cost of these assets. On this basis, if the
Companies determine that any assets have been permanently
impaired, the amount of the impaired asset is written-off against
earnings in the quarter in which the impairment is determined.
In connection with UCC's acquisition of Uniroyal Chemical in
1989, the $800 million purchase price resulted in the recognition
of identifiable intangible assets such as patented and unpatented
technology and trademarks and tradenames which are attributable
to specific businesses and the recognition of goodwill which was
allocated to the businesses based on their pro rata profitability
at the time of the acquisition. In fiscal 1994, due to prolonged
recessionary conditions in many of the industrialized regions of
the world and a pronounced acceleration in the downward pricing
pressure on rubber chemical products, management's projected
earnings and cash flow of the Chemicals and Polymer business
decreased significantly since the initial projection made in
1989. Consequently, the Companies wrote-off the $191.0 million
carrying value of such assets, including goodwill of $119.1
million, to reflect the Company's best estimates of future
operating results and cash flows.
Research and Development
Research and development costs are expensed as incurred.
Income Taxes
A provision has not been made for U.S. income taxes which
would be payable if undistributed earnings of foreign
subsidiaries of approximately $48.3 million at September 28,
1996, were distributed to the Companies in the form of dividends,
since corporate laws in foreign countries limit the extent of the
repatriation of annual earnings for certain of the Companies'
foreign subsidiaries while for others, the Companies' intention
is to permanently reinvest these foreign earnings. A change in
foreign corporate law and/or change in the Companies'
reinvestment policy could result in the recognition of a deferred
tax liability.
2. Merger
On August 21, 1996, UCC merged with Crompton in a common stock
transaction that was accounted for as a pooling of interests
("the Merger"). A total of 23,715,181 shares of Crompton's
common stock was exchanged for all of UCC's outstanding common
and preferred shares. In addition, all outstanding options,
warrants and rights to purchase UCC common stock were converted
into options, warrants and rights to purchase Crompton common
stock.
In connection with the Merger, the Companies incurred
approximately $52.6 million of merger and related costs. The
components of these costs included in the consolidated statement
of operations comprise principally severance and other personnel
costs of $27.3, investment banking fees of $5.9, legal fees of
$4.7, debt related fees of $6.4, facility consolidation costs of
$3.4 and other costs of $4.9 million.
3. Acquisitions
During fiscal 1995, Uniroyal Chemical acquired the worldwide
crop protection business of Solvay Duphar, B.V. (the "Duphar
Acquisition"), along with three smaller acquisitions, at an
aggregate cost of $98.5 million. The acquisitions have been
accounted for using the purchase method and, accordingly, the
acquired assets and liabilities have been recorded at their fair
values at the dates of acquisition. The excess cost of purchase
price over fair value of net assets acquired in the amount of
$16.1 million, is being amortized over 20 years. The operating
results of each acquisition are included in the consolidated
statement of operations from the dates of acquisition.
4. Accounts Receivable
Accounts receivable are stated net of allowances for doubtful
accounts amounting to $3.3 and $2.9 million at September 28, 1996
and October 1, 1995, respectively.
5. Inventories
A summary of inventory components at September 28, 1996 and
October 1, 1995 is as follows (in thousands):
1996 1995
---------- ----------
Finished goods $131,646 $129,263
Work in process 7,536 7,437
Raw materials and supplies 41,232 40,947
---------- ----------
$180,414 $177,647
========== ==========
6. Property, Plant and Equipment
Property, plant and equipment, at September 28, 1996 and
October 1, 1995, consisted of the following (in thousands):
1996 1995
---------- ----------
Land and improvements $20,623 $22,223
Buildings and improvements 87,813 71,268
Machinery and equipment 474,685 431,452
Furniture and fixtures 21,361 22,339
Construction in progress 19,875 58,980
---------- ----------
624,357 606,262
Less accumulated depreciation (252,668) (211,790)
---------- ----------
$371,689 $394,472
========== ==========
7. Accrued Expenses
Accrued expenses at September 28, 1996 and October 1, 1995
consisted of the following (in thousands):
1996 1995
---------- ----------
Accrued interest $25,374 $25,988
Accrued payroll 29,414 27,291
Current portion of environmental
liability 17,871 12,712
Other accruals 32,993 23,936
---------- ----------
$105,652 $89,927
========== ==========
8. Long-term Debt
A summary of long-term debt at September 28, 1996 and October
1, 1995 is as follows (in thousands):
1996 1995
---------- ----------
Long-term debt - UCC:
10.5% Senior Notes Due 2002 $283,078 $283,078
11% Senior Subordinated Notes
Due 2003 232,175 232,175
12% Subordinated Discount
Notes Due 2005 103,215 91,857
---------- ----------
Total long-term debt - UCC 618,468 607,110
---------- ----------
Long-term debt - Uniroyal Chemical:
9% Senior Notes Due 2000 250,583 270,000
Italian Financing 20,161 39,468
Credit Facility 11,556 -
Other 4,028 5,012
---------- ----------
Total long-term debt
- Uniroyal Chemical 286,328 314,480
---------- ----------
Less - Amounts due within
one year (11,568) (11,434)
---------- ----------
Total long-term debt $893,228 $910,156
========== ==========
UCC's Debt
10.5% Senior Notes
The 10.5% Senior Notes Due 2002 (the "10.5% Senior Notes") were
issued in February 1993 and are unsecured. Interest is payable
semi-annually on May 1 and November 1.
11% Senior Subordinated Notes
The 11% Senior Subordinated Notes Due 2003 (the "11% Senior
Subordinated Notes") were issued in February 1993 and are
unsecured. Interest is payable semi-annually on May 1 and
November 1. The 11% Senior Subordinated Notes are redeemable in
whole or in part, at the option of UCC at any time after May 1,
1998, at prices commencing at 105.5% of par of the then
outstanding principal amount, plus accrued and unpaid interest,
declining ratably to par by May 1, 2000.
12% Subordinated Discount Notes
The 12% Subordinated Discount Notes Due 2005 (the "12%
Subordinated Discount Notes") were issued in February 1993, have
a final accreted value of $126.6 million at May 1, 1998 and are
unsecured. Beginning May 1, 1998, cash interest will accrue on
these securities and will be payable semi-annually on May 1 and
November 1. The 12% Subordinated Discount Notes are redeemable
in whole or in part, at the option of UCC anytime after May 1,
1998, at 100% of their principal amount, plus accrued and unpaid
interest.
Upon a change in control (as defined in the related
indentures), UCC shall make an offer to purchase the 10.5% Senior
Notes, 11% Senior Subordinated Notes and 12% Subordinated
Discount Notes (collectively, the "UCC Notes") at a purchase
price equal to 101% of the principal amounts (or accreted value),
thereof, plus accrued and unpaid interest. In connection with
the Merger, waivers of this requirement were obtained from the
holders of a majority in principal amount (as required under the
indenture) of each of the UCC Notes for a total payment of $2.4
million.
Uniroyal Chemical Debt
9% Senior Notes
The 9% Senior Notes were issued in September 1993 and are
unsecured. Interest is payable semi-annually on March 1 and
September 1. The 9% Senior Notes are not redeemable prior to
maturity, except upon a change in control (as defined in the
related indenture) whereupon Uniroyal Chemical shall make an
offer to purchase the 9% Senior Notes then outstanding at a
purchase price equal to 101% of the principal amount thereof,
plus accrued and unpaid interest. In connection with the Merger,
such an offer was made, resulting in $2.2 million of principal
being redeemed. The 9% Senior Notes rank pari passu in right of
payment with all existing and future senior indebtedness of
Uniroyal Chemical.
Italian Financing
During the second quarter of fiscal 1995, Uniroyal Chemical's
subsidiary in Italy borrowed $56.7 million (the "Italian
Financing"), denominated in Italian lire and translated at the
current exchange rate at the time of the Italian Financing to
execute the Duphar Acquisition. The Italian Financing was
comprised of an initial long-term amount of $44.8 million (the
"Loan") and a revolving credit facility amount of $11.9 million
(the "Facility") which terminates on March 31, 2000. The Loan
requires ten semi-annual principal payments which began on
September 30, 1995 and end on March 31, 2000. The interest rate
on the Loan is based on the Italian interbank rate offered in
Rome ("RIBOR") or the interbank interest rate offered in London
("LIBOR"), as set forth in the Italian Financing loan agreement,
and resets at each semiannual principal payment date. The
interest rate on the Loan at September 28, 1996 was 10.81%. Cash
advances under the Facility may be taken with one, two, three or
six month maturities determined at the Company's request. The
interest rate on each cash advance under the Facility is
determined on the same basis as the Loan and must be repaid at
the maturity date. Outstanding borrowings under the Facility
were $1.2 and $6.2 million, at September 28, 1996 and October 1,
1995, respectively. The Italian Financing is secured by
mortgages on certain of the property, plant and equipment owned
by Uniroyal Chemical's Italian subsidiary.
Debt Repurchases
During fiscal 1996, Uniroyal Chemical repurchased $17.2
million of its long-term debt in the open market. As a result of
this repurchase, the Companies recognized an extraordinary charge
of $0.4 million comprised of redemption premiums and the
write-off of unamortized financing
fees, net of a related tax benefit
of $0.3 million.
During the second quarter of fiscal 1995, UCC completed an
initial public offering (the "Offering") and sold 13,350,000
shares of its common stock at $12.00 per share. The proceeds of
the Offering, after deducting underwriting discounts, other fees
and expenses were $146.6 million. The net proceeds along with
$45.7 million of available cash and borrowings under a bank
credit facility were used to (i) retire an aggregate of $181.7
million of the Company's 12% Subordinated Discount Notes, 11%
Senior Subordinated Notes, and 10.5% Senior Notes (collectively
the "Debt Repurchase") and (ii) pay related premiums and accrued
interest. As a result of the Debt Repurchase, the Companies
recognized an extraordinary charge of $8.3 million comprised of
redemption premiums and the write-off of unamortized financing
fees, net of related tax benefit of $4.5 million in fiscal 1995.
Credit Facilities
In connection with the Merger, Uniroyal Chemical, together
with Crompton, entered into a $600 million credit agreement (the
"Credit Facility") with a syndicate of banks which expires in
August 2001. Borrowings under the Credit Facility are divided
into three tranches. Tranche I provides a maximum of up to $300
million available to Crompton for working capital and general
corporate purposes. Tranche II provides a maximum of up to $150
million available to Uniroyal Chemical for working capital and
general corporate purposes. Tranche III initially provided up to
$150 million to Uniroyal Chemical to cover the redemption of the
9% Senior Notes that might be triggered by the change in control
as a result of the Merger. Upon expiration of the redemption
period, Tranche III was subsequently amended and reduced to allow
up to $80 million of borrowings to the European subsidiaries of
Crompton and Uniroyal Chemical. Borrowings may be denominated in
U.S. dollars or the subsidiary's local currency.
Borrowings under the Tranche II Credit Facility at September
28, 1996 were $11.6 million and are secured primarily by accounts
receivable and inventory of Uniroyal Chemical. The Credit
Facility calls for interest based upon various options including
spread over LIBOR that varies according to certain debt ratios
for the trailing four fiscal quarters. In addition, Uniroyal
Chemical must pay a commitment fee on the total unused portion of
the Credit Facility, which is also dependent upon certain debt
ratios for the trailing four fiscal quarters. At September 28,
1996 the interest rate was 6.3% and the commitment fee rate was
.25%.
Uniroyal Chemical also has lines of credit available to finance
foreign operations. Unused foreign lines of credit at September
28, 1996 aggregated $31.2 million. The weighted average interest
rate on those borrowings at September 28, 1996 and October 1,
1995 was 9.48% and 9.76%, respectively.
Debt Covenants
The Companies' various debt agreements contain covenants which
limit their ability to incur additional debt, pay cash dividends
or make certain other payments. The Credit Facility requires
Crompton to maintain certain financial ratios.
Payments from Uniroyal Chemical to UCC (with certain
exceptions) are generally limited to funds needed to service debt
and for certain other purposes. If UCC or any of its
subsidiaries is in default of payment or other provisions
permitting acceleration under any agreement governing debt with a
principal amount in excess of $5.0 million, Uniroyal Chemical
would be prohibited from transferring any funds to UCC.
Maturities
At September 28, 1996, the scheduled maturities of long-term
debt during the next five fiscal years and fiscal years
thereafter were: 1997 - $11.6 million; 1998 - $9.0 million; 1999
- - $1.2 million; 2000 - $250.7 million; 2001 - $11.7 million and
years thereafter - $620.6 million.
9. Leases
The future minimum rental payments under operating leases
having initial or remaining non-cancelable lease terms in excess
of one year (as of September 28,1996) total $29.7 million as
follows: $7.7 in 1997, $7.1 in 1998, $6.5 in 1999, $5.7 in 2000,
$2.0 in 2001 and $0.7 million in later years. Total rental
expense for all operating leases was $8.1 in 1996, $6.6 in 1995
and $6.2 million in 1994.
Real estate taxes, insurance and maintenance expenses
generally are obligations of the Companies and, accordingly, are
not included as part of rental payments. It is expected that, in
the normal course of business, leases that expire will be renewed
or replaced by leases on other properties.
10. Financial Instruments
At September 28, 1996, Uniroyal Chemical had an interest rate
swap contract ("the Swap") outstanding for a notional principal
amount of $270 million with a major financial institution. Net
receipts or payments on the Swap are accrued and recognized as
adjustments to interest expense. The Swap requires Uniroyal
Chemical to make semi-annual payments to its counterparty of an
amount equal to a six month LIBOR and requires the counterparty
to make semi-annual payments at a fixed rate of 5.24%. Uniroyal
Chemical's floating interest rate resets every six months in
arrears with the last payment due on December 10, 1999. Uniroyal
Chemical paid approximately $3.2 million under the Swap in fiscal
1996.
The Companies remain sensitive to changes in prevailing
interest rates because approximately $311 million of indebtedness
of the Companies at September 28, 1996 effectively bears interest
at a floating rate. Accordingly, a 1.0% change in prevailing
interest rates would result in a $3.1 million change in annual
interest expense.
The carrying amounts for cash, accounts receivable, notes
payable, accounts payable and other accrued liabilities
approximate fair value because of the short maturities of these
instruments. The market values of long-term debt (including
current installments) were $933.8 million and $935.1 million at
September 28, 1996 and October 1, 1995, respectively, and have
been determined based on quoted market prices. These securities
are not currently redeemable except upon a change in control (as
defined in the related indentures) or in the case of a public
stock offering.
11. Income Taxes
The components of earnings (loss) before income taxes and
extraordinary loss and the provision (benefit) for income taxes
are as follows (in thousands):
Fiscal Year Ended
---------------------------------------------
1996 1995 1994
---------- ---------- ----------
PRETAX EARNINGS (LOSS):
Domestic ($66,250) $17,269 ($215,925)
Foreign 35,489 17,100 11,000
---------- ---------- ----------
($30,761) $34,369 ($204,925)
========== ========== ==========
TAXES:
Domestic
Current taxes $2,261 $3,753 $5,615
Deferred taxes (13,612) (73,983) (1,145)
---------- ---------- ----------
(11,351) (70,230) 4,470
========== ========== ==========
Foreign
Current taxes 16,416 9,234 6,895
Deferred taxes (4,114) (4,064) (2,447)
---------- ---------- ----------
12,302 5,170 4,448
========== ========== ==========
Total
Current taxes 18,677 12,987 12,510
Deferred taxes (17,726) (78,047) (3,592)
---------- ---------- ----------
$951 ($65,060) $8,918
========== ========== ==========
The provision (benefit) for income taxes differs from the
Federal statutory rate for the following reasons:
Fiscal Year Ended
---------------------------------------------
1996 1995 1994
---------- ---------- ----------
Provision (benefit) at
statutory rate ($10,766) $12,029 ($71,724)
Nondeductible merger
and related costs 11,132 - -
Goodwill write-off - - 42,718
Impact of valuation
allowance (2,905) (78,880) 34,931
Foreign dividends and
withholding taxes,
net of federal
benefit 3,077 2,367 2,136
Foreign income tax
rate differential (362) (2,127) (1,786)
State income taxes,
net of federal
benefit (1,877) 555 (433)
Other, net 2,652 996 3,076
---------- ---------- ----------
Actual provision
(benefit) for
income taxes $951 ($65,060) $8,918
========== ========== ==========
Provisions have been made for deferred taxes based on
differences between financial statement and tax bases of assets
and liabilities using currently enacted tax rates and
regulations. The components of the net deferred tax assets and
liabilities are as follows (in thousands):
1996 1995
---------- ----------
Deferred tax assets:
Pension and other
postretirement benefits $84,962 $85,577
Accruals for environmental
restoration 29,865 22,905
Other accruals 29,315 18,597
AMT credit and NOL carryforwards 35,978 45,621
Inventories and other 9,581 6,987
Deferred tax liabilities:
Property, plant and equipment (54,300) (54,342)
Intangibles (15,002) (19,731)
Other (4,086) (4,417)
---------- ----------
Net deferred tax asset before
valuation allowance 116,313 101,197
Valuation allowance (16,081) (18,986)
---------- ----------
Net deferred tax asset after
valuation allowance $100,232 $82,211
========== ==========
Net deferred taxes (in thousands) include $28,756 and $20,378
in current assets, $73,211 and $63,890 in long-term assets,
$1,587 and $16 in current liabilities and $148 and $2,041 in
long-term liabilities at September 28, 1996 and October 1, 1995,
respectively.
At September 28, 1996, the Companies had NOL carryforwards of
$69 million, expiring in the year 2007, which can be used to
reduce future Federal taxable income, while certain of the
Companies' foreign subsidiaries had aggregate NOL carryforwards
of $25 million which can be used to reduce future taxable income
in those countries. As a result of the Offering and the Merger,
the Company has undergone an "ownership change" within the
meaning of Section 382 of the Internal Revenue Code of 1986, as
amended. Consequently, the Federal NOL carryforward is subject
to an annual limitation as prescribed thereunder.
12. Pensions
Uniroyal Chemical has several defined benefit and defined
contribution plans which cover substantially all associates in
the United States and Canada. Pension benefits for retired
associates of Uniroyal Chemical in other countries are covered by
government-sponsored plans. The defined benefit plans provide
retirement benefits based on the associates' years of service and
compensation during employment. Uniroyal Chemical will make
contributions to the defined benefit plans at least equal to the
minimum amounts required by law, while contributions to the
defined contribution plans are determined as a percentage of each
covered associates' salary.
Uniroyal Chemical's net periodic pension cost for the defined
benefit plans included the following components (in thousands):
Fiscal Year Ended
-------------------------------------------
1996 1995 1994
---------- ---------- ----------
Service cost-benefits
earned during the
period $5,765 $4,851 $4,157
Interest cost on
projected benefit
obligation 12,676 11,449 9,660
Actual return on plan
assets (8,327) (13,442) (2,732)
Net amortization and
deferral (1,020) 6,143 (4,465)
---------- ---------- ----------
Net periodic
pension cost $9,094 $9,001 $6,620
========== ========== ==========
The funded status and the (accrued) prepaid pension cost of
the defined benefit pension plans are as follows (in thousands):
1996 1995
------------------------ ------------------------
Accumulated Assets Accumulated Assets
Benefits Exceed Benefits Exceed
Exceed Accumulated Exceed Accumulated
Assets Benefits Assets Benefit
---------- ---------- ---------- ----------
Vested benefit
obligation ($131,830) ($15,968) ($122,139) ($15,128)
Non-vested
benefit
obligation (11,790) (99) (7,374) -
---------- ---------- ---------- ----------
Accumulated
benefit
obligation (143,620) (16,067) (129,513) (15,128)
Excess of
projected
benefit
obligation over
accumulated
benefit
obligation (22,219) (1,601) (13,045) (1,562)
---------- ---------- ---------- ----------
Projected
benefit
obligation (165,839) (17,668) (142,558) (16,690)
Plan assets at
fair value 113,469 19,824 89,931 18,909
---------- ---------- ---------- ----------
Funded status (52,370) 2,156 (52,627) 2,219
Unrecognized
prior service
cost 12,040 (406) 13,093 (691)
Unrecognized net
(gain) loss 3,675 45 1,046 370
Unrecognized net
transition asset (741) (430) - (542)
Equity adjustment to
recognize minimum
liability (3,713) - (3,617) -
---------- ---------- ---------- ----------
(Accrued)
prepaid
pension cost($41,109) $1,365 ($42,105) $1,356
========== ========== ========== ==========
The weighted-average discount rate used to calculate the
projected benefit obligation at September 28, 1996 and October 1,
1995 ranged from 6.25% - 8.00% and 6.50% - 8.00%, respectively.
The expected long-term rate of return on plan assets at September
28, 1996 ranged from 6.25% - 9.00% and from 6.75% - 8.00% at
October 1, 1995. The assumed rate of compensation increase
ranged from 2.00% - 6.00% at September 28, 1996 and 3.00% - 6.00%
at October 1, 1995.
Uniroyal Chemical's net periodic pension cost for defined
contribution plans was $3.5, $3.3 and $2.7 million for the fiscal
years 1996, 1995 and 1994, respectively.
13. Postretirement Healthcare Liability
Uniroyal Chemical provides certain health care and life
insurance benefits for substantially all retired associates and
their beneficiaries and covered dependents in the United States
and Canada. Postretirement benefits for retired associates of
Uniroyal Chemical in other countries are covered by
government-sponsored plans.
Uniroyal Chemical's net periodic postretirement healthcare
cost included the following components (in thousands):
1996 1995 1994
-------- -------- --------
Service cost-benefits earned
during the period $1,250 $1,315 $2,444
Interest cost on accumulated
postretirement benefit
obligation 9,738 9,899 11,303
Government contribution - - (1,414)
Actual return on plan assets 10 (677) (365)
Curtailment gain - - (448)
Net amortization and deferral (7,959) (5,751) (7,590)
-------- -------- --------
Net periodic postretirement
healthcare cost $3,039 $4,786 $3,930
======== ======== ========
Postretirement healthcare is generally not pre-funded, except
for certain plans funded by the United States government, and are
paid by Uniroyal Chemical as incurred. The funded status and
accrued postretirement benefit cost of the plans are as follows
(in thousands):
1996 1995
---------- ----------
Accumulated postretirement healthcare
liability:
Fully eligible and other active
plan participants ($40,658) ($39,059)
Retirees (96,851) (96,688)
---------- ----------
(137,509) (135,747)
Plan assets at fair value 5,601 7,639
---------- ----------
Funded status (131,908) (128,108)
Unrecognized reduction in prior
service cost (43,158) (48,679)
Unrecognized net gain 511 137
---------- ----------
Postretirement healthcare liability ($174,555) ($176,650)
========== ==========
The weighted-average discount rate used to calculate the
accumulated postretirement healthcare liability at September 28,
1996 and October 1, 1995 ranged from 7.50% - 8.00%. The expected
long-term rate of return on plan assets at September 28, 1996 and
October 1, 1995 was 3.46% and 3.60%, respectively.
The assumed health care cost trend rate used ranged from
12.5% - 9.70% in 1996, and decreases gradually to a range of
6.07% - 5.5% in year 2020 and thereafter. An increase in the
assumed health care trend rates of 1% in each year would increase
the aggregate of service and interest cost for 1996 by $0.7
million and would increase the September 28, 1996 accumulated
postretirement benefit obligation by $8.9 million.
14. Contingencies
The Companies are involved in claims, litigation,
administrative proceedings and investigations of various types in
several jurisdictions. A number of such matters involve claims
for a material amount of damages and relate to or allege
environmental liabilities, including clean-up costs associated
with hazardous waste disposal sites, natural resource damages,
property damage and personal injury. Uniroyal Chemical and some
of its subsidiaries have been identified by Federal, state or
local governmental agencies, and by other potentially responsible
parties (a "PRP") under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, or comparable
state statutes, as a PRP with respect to costs associated with
waste disposal sites at various locations in the United States.
In addition, Uniroyal Chemical is involved with environmental
remediation and compliance activities at some of its current and
former sites in the United States and abroad.
Each quarter, Uniroyal Chemical evaluates and reviews
estimates for future remediation and other costs to determine
appropriate environmental reserve amounts. For each site, a
determination is made of the specific measures that are believed
to be required to remediate the site, the estimated total cost to
carry out the remediation plan, the portion of the total
remediation costs to be borne by Uniroyal Chemical and the
anticipated time frame over which payments toward the remediation
plan will occur. As a result of current information and
analysis, Uniroyal Chemical recorded a special provision of $30
million during the fourth quarter of fiscal 1996 for
environmental remediation activities. The total amount accrued
for such environmental liabilities at September 28, 1996 was
$95.1 million. It is reasonably possible that Uniroyal
Chemical's estimates for environmental remediation liabilities
may subsequently change should additional sites be identified,
further remediation measures be required or undertaken, the
interpretation of current laws and regulations be modified or
additional environmental laws and regulations be enacted.
Uniroyal Chemical intends to assert all meritorious legal
defenses and all other equitable factors which are available to
it with respect to the above matters. Uniroyal Chemical believes
that the resolution of these environmental matters will not have
a material adverse effect on its consolidated financial position.
While Uniroyal Chemical believes it is unlikely, the resolution
of these environmental matters could have a material adverse
effect on its consolidated results of operations in any given
year if a significant number of these matters are resolved
unfavorably.
15. Geographic Data
The Company and its subsidiaries operate in one industry
segment, the manufacture and sale of specialty chemicals and
elastomers. Data by geographic area is as follows (in
thousands):
Fiscal Year Ended
-------------------------------------
1996 1995 1994
---------- ---------- ----------
Net sales and transfers between
geographic areas:
United States $978,081 $942,635 $820,256
Americas 201,913 181,926 169,353
Europe/Africa 181,268 135,805 97,015
Asia/Pacific 58,800 58,124 56,849
---------- ---------- ----------
1,420,062 1,318,490 1,143,473
========== ========== ==========
Less transfers between
geographic areas:
United States 150,863 141,063 123,386
Americas 61,253 51,821 48,074
Europe/Africa 74,386 45,285 22,892
Asia/Pacific 814 1,000 2,667
---------- ---------- ----------
287,316 239,169 197,019
========== ========== ==========
Net sales from geographic areas
to unaffiliated customers:
United States 827,218 801,572 696,870
Americas 140,660 130,105 121,279
Europe/Africa 106,882 90,520 74,123
Asia/Pacific 57,986 57,124 54,182
---------- ---------- ----------
$1,132,746 $1,079,321 $946,454
========== ========== ==========
Transfers between geographic areas are accounted for at market
prices or a negotiated price, with due consideration given to
import and tax regulations in effect in the country into which
the buying entity is importing the goods as well as the tax
regulations in the exporting country.
Export sales from the United States were as follows (in
thousands):
Americas $31,633 $30,300 $23,938
Europe/Africa 90,074 80,136 57,611
Asia/Pacific 60,911 51,380 38,610
-------- -------- --------
$182,618 $161,816 $120,159
======== ======== ========
Fiscal Year Ended
-------------------------------------
1996 1995 1994
---------- ---------- ----------
Operating Profit (Loss)
United States (a) $35,001 $116,887 ($102,879)
Americas (b) 17,420 19,036 15,689
Europe/Africa 25,453 12,522 8,975
Asia/Pacific (2,487) (2,612) (1,462)
--------- --------- ---------
$75,387 $145,833 ($79,677)
========= ========= =========
(a) Includes $52.6 million of merger and related costs and a
$19.1 million special environmental provision in fiscal 1996, and
a $191 million write-off of intangible assets in fiscal 1994.
(b) Includes a $10.9 million special environmental provision
in fiscal 1996.
Total assets by geographic areas are as follows (in thousands):
United States $893,912 $922,151
Americas 88,972 88,800
Europe/Africa 117,209 125,430
Asia/Pacific 32,525 35,326
---------- ----------
Total assets $1,132,618 $1,171,707
========== ==========
UNIROYAL CHEMICAL CORPORATION SCHEDULE 1
Condensed Financial Information of Registrant
Condensed Statements of Operations and Accumulated Deficit
(In thousands of dollars)
1996 1995 1994
--------- --------- ---------
Equity in income (losses) of
consolidated subsidiaries $15,429 $107,455 ($122,918)
Selling, general and
administrative 552 523 546
Interest expense 68,677 76,943 85,541
Other income (1) - (178)
--------- --------- ---------
Earnings (loss) before
income taxes and
extraordinary loss (53,799) 29,989 (208,827)
Provision (benefit) for
income taxes (21,646) (69,440) 5,016
--------- --------- ---------
Earnings (loss) before
extraordinary loss (32,153) 99,429 (213,843)
Extraordinary loss on early
extinguishment of debt - (8,279) -
--------- --------- ---------
Net earnings (loss) (32,153) 91,150 (213,843)
Adjustment of redeemable
capital stock - - (447)
Accumulated deficit,
beginning of year (447,460) (538,610) (324,320)
--------- --------- ---------
Accumulated deficit,
end of year ($479,613) ($447,460) ($538,610)
========= ========= =========
UNIROYAL CHEMICAL CORPORATION SCHEDULE 1
Condensed Financial Information of Registrant
Condensed Balance Sheets
(In thousands of dollars)
ASSETS 1996 1995
Current Assets --------- ---------
Cash $48 $70
Other current assets - 82
--------- ---------
Total current assets 48 152
Non-Current Assets
Investment in consolidated
subsidiaries 277,112 289,728
Deferred income taxes 11,823 21,448
Other assets 19,576 21,416
--------- ---------
$308,559 $332,744
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Accrued expenses 23,037 23,025
--------- ---------
Non-Current Liabilities
Long-term debt 618,468 607,110
Other liabilities 2,064 1,838
Stockholders' Equity (Deficit)
Preferred stock, $0.01 par value;
50,000 shares authorized:
Series A cumulative redeemable
preferred stock, 29,721 shares
issued and outstanding in 1995,
stated at the total liquidation
preference - 2,972
Series B preferred stock, 12,000
shares issued and outstanding in
1995, stated at the total
liquidation preference - 1,200
Common stock, $0.01 par value: 1,000
shares authorized, 100 shares issued
and outstanding in 1996; 205,000,000
shares authorized, 25,289,831 shares
issued (including 1,139,873 treasury
shares) in 1995 - 253
Additional paid-in capital 172,822 176,799
Accumulated deficit (479,613) (447,460)
Accumulated translation adjustment (24,506) (18,488)
Pension liability adjustment (3,713) (3,617)
Treasury stock at cost - (10,888)
--------- ---------
Total stockholders' deficit (335,010) (299,229)
--------- ---------
$308,559 $332,744
========= =========
UNIROYAL CHEMICAL CORPORATION SCHEDULE 1
Condensed Financial Information of Registrant
Condensed Statements of Cash Flows
(In thousands of dollars)
1996 1995 1994
-------- -------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings (loss) ($32,153) $91,150 ($213,843)
Adjustments to reconcile net
earnings to net cash used
by operations:
Equity in (income) losses
of consolidated subsidiaries (15,429) (107,455) 122,918
Amortization 315 323 323
Noncash interest 13,417 15,927 18,291
Allocation of current tax
provision (31,307) (34,787) (36,262)
Deferred income taxes 9,625 (36,665) 40,556
Change in assets and
liabilities, net 101 (2,983) 4
Dividends from consolidated
subsidiaries 52,887 63,527 70,276
Other 313 (180) 725
-------- -------- --------
Net cash used by operations (2,231) (11,143) 2,988
CASH FLOWS FROM INVESTING ACTIVITIES
Return of capital - 45,666 (27,592)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on long-term
borrowings - (187,595) -
Proceeds from sale of common
stock, net - 146,626 -
Purchase of treasury stock - (1,161) (3,001)
Other financing activities 2,209 7,499 562
-------- -------- --------
Net cash provided (used) by
financing activities 2,209 (34,631) (2,439)
Change in cash (22) (108) (27,043)
Cash at beginning of year 70 178 27,221
-------- -------- --------
Cash at end of year $48 $70 $178
======== ======== ========
SCHEDULE 2
UNIROYAL CHEMICAL CORPORATION
UNIROYAL CHEMICAL COMPANY, INC.
Valuation and Qualifying Accounts
(In thousands of dollars)
Additions
Balance Charged
at to Costs Balance
Beginning and Recurring Other at End
Description of Year Expenses (1) (2) of Year
- --------------- -------- -------- -------- -------- --------
Fiscal Year 1996:
Allowance for
doubtful
receivables $2,873 $1,568 ($1,108) - $3,333
======== ======== ======== ======== ========
Accumulated
amortization
of cost in
excess of
acquired net
assets $21,281 $3,887 $323 - $25,491
======== ======== ======== ======== ========
Accumulated
amortization
of other
intangible
assets $87,813 $15,622 ($497) - $102,938
======== ======== ======== ======== ========
Fiscal Year 1995:
Allowance for
doubtful
receivables $2,452 $708 ($287) - $2,873
======== ======== ======== ======== ========
Accumulated
amortization
of cost in
excess of
acquired net
assets $17,194 $3,953 $134 - $21,281
======== ======== ======== ======== ========
Accumulated
amortization
of other
intangible
assets $73,981 $14,647 ($815) - $87,813
======== ======== ======== ======== ========
Fiscal Year 1994:
Allowance for
doubtful
receivables $1,946 $1,120 ($614) - $2,452
======== ======== ======== ======== ========
Accumulated
amortization
of cost in
excess of
acquired net
assets $27,152 $5,173 ($25) ($15,106) $17,194
======== ======== ======== ======== ========
Accumulated
amortization
of other
intangible
assets $93,992 $19,835 ($432) ($39,414) $73,981
======== ======== ======== ======== ========
____
(1) Represents accounts written off as uncollectible, net of
recoveries (allowance for doubtful receivables only), and the
translation effect of accounts denominated in foreign currencies.
(2) Represents write-offs due to the 1994 intangible asset
revaluation and the sale of a business product line.
EXHIBIT INDEX
The exhibit numbers set forth below correspond to the
numbers assigned to such exhibits in the Exhibit Table to Item
601 of Regulation S-K.
Exhibit
Number Description
2 Agreement and Plan of Merger dated April 30, 1996, by
and among Crompton & Knowles Corporation, Tiger
Merger Corp. and UCC (incorporated by reference to
Exhibit 2 to the Quarterly Report on Form 10-Q for the
period ended March 31, 1996).
3.1 Certificate of Incorporation of UCC, effective as of
August 21, 1996 (filed herewith).
3.2 By-laws of UCC, effective as of August 21, 1996 (filed
herewith).
3.3 Certificate of Incorporation of Uniroyal Chemical
(incorporated by reference to Exhibit 3.3 to the
Registration Statement on Form S-1 of Uniroyal
Chemical, Registration No. 33-66740 ["Form S-1,
Registration No. 33-66740"]).
3.4 By-Laws of Uniroyal Chemical (incorporated by
reference to Exhibit 3.4 to Form S-1, Registration No.
33-66740).
4.1 Form of Indenture, dated as of February 8, 1993, among
UCC and State Street Bank and Trust Company, as
Trustee, relating to the 10 1/2% Notes, including form of
securities (incorporated by reference to Exhibit 4.1
to the Registration Statement on Form S-1 of UCC,
Registration No. 33-45296 and 33-45295 ["Form S-1,
Registration No. 33-45296/45295"]).
4.2 Form of Indenture, dated as of February 8, 1993, among
UCC and United States Trust Company of New York, as
Trustee, relating to the 11% Notes, including form of
securities (incorporated by reference to Exhibit
4.1(a) to Form S-1, Registration No. 33-45296/45295).
4.3 Form of Indenture, dated as of February 8, 1993, among
UCC and The Shawmut Bank Connecticut, N.A. as Trustee,
relating to the 12% Notes, including form of securities
(incorporated by reference to Exhibit 4.1(b) to Form
S-1, Registration No. 33-45296/45295).
4.4 Form of Indenture, dated as of September 1, 1993, among
Uniroyal Chemical and State Street Bank and Trust
Company, as Trustee, relating to $270 million of 9%
Notes, including the form of securities (incorporated
by reference to Exhibit 4.2 to Form S-1, Registration
No. 33-66740).
4.5 Form of Amended and Restated $100 million Credit
Agreement ("$100 Million Credit Agreement"), dated as
of August 26, 1993, among UCC and Gustafson, Inc. as
borrowers, various lenders and Citibank, N.A., as Agent
(incorporated by reference to Exhibit 4.3 to Form S-1,
Registration No. 33-66740).
4.6 Form of Amended and Restated Security Agreement, dated
as of August 26, 1993, from Uniroyal Chemical, as
Pledgor and Citibank, N.A. as Pledgee and Agent
(incorporated by reference to Exhibit 4.4 to Form S-1,
Registration No. 33-66740).
4.7 Form of Amended and Restated Guaranty, dated as of
August 26, 1993, from Uniroyal Chemical, as Guarantor,
various lenders and Citibank, N.A., as Agent
(incorporated by reference to Exhibit 4.5 to Form S-1,
Registration No. 33-66740).
4.8 Form of Amended and Restated Guaranty, dated as of August
26, 1993, from Gustafson, Inc., as Guarantor, various
lenders and Citibank, N.A., as Agent (incorporated by
reference to Exhibit 4.6 to Form S-1, Registration No.
33-66740).
4.9 Form of Amended and Restated Security Agreement, dated as
of August 26, 1993, from Gustafson, Inc., as Pledgor and
Citibank, N.A., as Pledgee and Agent (incorporated by
reference to Exhibit 4.7 to Form S-1, Registration No.
33-66740).
4.10 Form of Letter Amendment, dated September 22, 1993,
amending the $100 Million Credit Agreement (incorporated
by reference to Exhibit 4.10 to the Annual Report on Form
10-K for the fiscal year ended October 2, 1994 ["1994 Form
10-K"]).
4.11 Form of Second Letter Amendment, dated December 17, 1993,
amending the $100 Million Credit Agreement (incorporated
by reference to Exhibit 4.11 to the 1994 Form 10-K).
4.12 Form of Third Letter Amendment, dated February 3, 1994,
amending the $100 Million Credit Agreement (incorporated
by reference to Exhibit 4.12 to the l994 Form 10-K).
4.13 Form of Amendment, dated September 1, 1994, amending the
$100 Million Credit Agreement (incorporated by reference
to Exhibit 4.13 to the 1994 Form 10-K).
4.14 Form of Fifth Letter Amendment, dated October 26, 1994,
amending the $100 Million Credit Agreement (incorporated
by reference to Exhibit 4.14 to the 1994 Form 10-K).
4.15 Form of Sixth Letter Amendment, dated November 21, 1994,
amending the $100 Million Credit Agreement (incorporated
by reference to Exhibit 4.15 to the 1994 Form 10-K).
4.16 Form of Seventh Letter Amendment, dated February 28, 1995,
amending the $100 Million Credit Agreement (incorporated
by reference to Exhibit 4.16 to the Annual Report on Form
10-K for the fiscal year ended October 1, 1995 ["1995 Form
10-K"]).
4.17 Form of Eighth Letter Amendment, dated June 26, 1995,
amending the $100 Million Credit Agreement (incorporated
by reference to Exhibit 4.17 to the 1995 Form 10-K).
4.18 Form of Ninth Letter Amendment, dated September 13, 1995,
amending the $100 Million Credit Agreement (incorporated
by reference to Exhibit 4.18 to the 1995 Form 10-K).
4.19 $150 Million Credit Agreement dated as of December 21,
1995, by and among Uniroyal Chemical, as borrower, various
lenders and Citicorp USA, Inc., as Agent ("$150 Million
Credit Agreement") (incorporated by reference to Exhibit
10 to the Quarterly Report on Form 10-Q for the period
ended December 31, 1995 ["December 1995 10-Q"]).
4.20 Borrower Security Agreement dated as of December 21,
1995, by and between Uniroyal Chemical, as Pledgor to
Citicorp USA, Inc., as Agent, as Pledgee (incorporated
by reference to Exhibit 10D to the December 1995 10-Q).
4.21 Guaranty Agreement dated as of December 21, 1995, by and
among various Guarantors, as guarantors, in favor of the
Secured Parties, as Party to the $150 Million Credit
Agreement, and Citicorp USA, Inc. as Agent (incorporated
by reference to Exhibit 10E to the December 1995 10-Q).
4.22 Guarantor Security Agreement dated as of December 21,
1995, from Gustafson, Inc., Uniroyal Chemical Export
Limited and Trace Chemicals, Inc., as Pledgors to
Citicorp USA, Inc., as Agent, as Pledgee (incorporated
by reference to Exhibit 10F to the December 1995 10-Q).
4.23 Form of Louisiana Undertaking dated as of December 21,
1995, from Uniroyal Chemical to the Lenders party to the
$150 Million Credit Agreement (incorporated by reference
to Exhibit 10G to the December 1995 10-Q).
4.24 Form of $600 Million Credit Agreement dated as of August
21, 1996, by and among Crompton & Knowles Corporation,
Crompton & Knowles Colors Incorporated, Davis-Standard
Corporation, Ingredient Technology Corporation and
Uniroyal Chemical, as Borrowers, and various lenders,
and Citicorp Securities, Inc., as Arranger, and Citicorp
USA, Inc., as Agent and the Chase Manhattan Bank, as
Managing Agent ("$600 Million Credit Agreement") (filed
herewith).
4.25 Uniroyal Chemical Security Agreement dated as of August
21, 1996, by and among various Uniroyal Chemical
subsidiaries, as Pledgors, to Citicorp USA, Inc., as
Agent (filed herewith).
4.26 Louisiana Undertaking dated as of August 21, 1996, from
Uniroyal Chemical, UCC and various subsidiaries of
Uniroyal Chemical to the Lenders party to the $600
Million Credit Agreement and to Citicorp USA, Inc. as
Agent (filed herewith).
4.27 Subsidiary Guaranty dated as of August 21, 1996, from
various subsidiaries of Uniroyal Chemical and Crompton &
Knowles Corporation, as Guarantors, in favor of various
secured parties as referred to in the $600 Million Credit
Agreement (filed herewith).
10.1 Form of Assignment and Assumption of Raw Materials
Agreement, dated as of October 30, 1989, between UCC and
Avery (incorporated by reference to Exhibit 10.1 to Form
S-1, Registration No. 33-32770).
10.2 Warrant Agreement, dated as of October 30, 1989, between
UCC and Avery, Inc. (incorporated by reference to Exhibit
10.2 to Form S-1, Registration No. 33-32770).
10.3 Form of Employment Agreement, dated as of October 30,
1989, among Uniroyal Chemical and the Executive Officers
of Uniroyal Chemical (incorporated by reference to Exhibit
10.3 to Form S-1, Registration No. 33-32770).
10.4 Form of Supplemental Executive Retirement Agreement, dated
as of October 30, 1989, among Uniroyal Chemical and the
Executive Officers of Uniroyal Chemical (incorporated by
reference to Exhibit 10.4 to Form S-1, Registration No.
33-32770).
10.5 Form of Management Subscription Agreement, dated as of
October 19, 1989, between UCC and the Management Investors
(incorporated by reference to Exhibit 10.8 to Form S-1,
Registration No. 33-32770).
10.6 Form of Registration Rights Agreement, dated as of October
30, 1989, among Uniroyal Chemical Acquisition Corporation
("UCAC"), UCC and the purchasers named therein
(incorporated by reference to Exhibit 10.9 to Form S-1,
Registration No. 33-32770).
10.7 Amended and Restated Tax Indemnification Agreement, dated
as of October 26, 1989, among Avery, Inc., Uniroyal
Chemical Holding Company, UCAC, UCC and certain
subsidiaries of UCAC ("Tax Indemnification Agreement")
(incorporated by reference to Exhibit 10.13 to Form S-1,
Registration No. 33-32770).
10.8 Form of Amendment, dated as of December 14, 1990, to the
Tax Indemnification Agreement (incorporated by reference
to Exhibit 10.26 to Post Effective Amendment No. 3 to the
Registration Statement on Form S-1, of UCC and UCAC
Registration No. 33-32770, filed on January 15, 1991 ["1991
Form S-1, Registration No. 33-32770"]).
10.9 Uniroyal Chemical Company Long-Term Management Incentive
Plan (incorporated by reference to Exhibit 10.5 to the
Registration Statement on Form S-1 of UCC, Registration No.
33-45295, filed on January 27, 1992).
10.10 UCC Purchase Right Plan, as amended and restated as of
March 16, 1995 (incorporated by reference to Exhibit 10.1
to the Quarterly Report on Form 10-Q for the period ended
April 2, 1995 ["April 1995 Form 10-Q"]).
10.11 Loan Agreement, dated as of March 16, 1995, among Uniroyal
Chimica S.p.A., Citibank N.A., as Agent, and the Banks
party thereto (incorporated by reference to Exhibit 10.11
to the 1995 Form 10-K).
10.12 Finance Agreement, dated as of May 15, 1992, between
Uniroyal Chemical Company Limited, Borrower, and Overseas
Private Investment Corporation, Loan Guarantor
(incorporated by reference to Exhibit 10.32 to Amendment No.
3 to the Registration Statement on Form S-1, of UCC
Registration Nos. 33-45296 and 33-45295, filed on December
10, 1992 ["1992 Form S-1, Registration Nos.
33-45296/33-45295"]).
10.13 Sponsor Guaranty Agreement, dated as of May 15, 1992,
between Uniroyal Chemical, Guarantor, and Overseas Private
Investment Corporation (incorporated by reference to
Exhibit 10.33 to 1992 Form S-1, Registration Nos.
33-45296/33-45295).
10.14 Guaranty Agreement, dated as of May 15, 1992, between
Uniroyal Chemical Company Limited, Guarantor, and Bankers
Trust Company, Paying Agent (incorporated by reference to
Exhibit 10.34 to 1992 Form S-1, Registration Nos.
33-45296/33-45295).
10.15 Issuing and Paying Agency Agreement, dated as of May 15,
1992, among Uniroyal Chemical Company Limited, Overseas
Private Investment Corporation and Bankers Trust Company,
Paying Agent (incorporated by reference to Exhibit 10.35 to
1992 Form S-1, Registration Nos. 33-45296/33-45295).
10.16 Subordination Agreement, dated as of May 15, 1992, among
Uniroyal Chemical Company Limited, Obligor, Uniroyal
Chemical, Subordinated Creditor, and Overseas Private
Investment Corporation (incorporated by reference to
Exhibit 10.36 to 1992 Form S-1, Registration Nos.
33-45296/33-45295).
10.17 Form of Amendment, dated as of December 8, 1992, to the Tax
Indemnification Agreement (incorporated by reference to
Exhibit 10.30 to 1992 Form S-1, Registration Nos.
33-45296/33-45295).
10.18 Form of Amendment No. 1, dated as of February 2, 1993, to
the Management Subscription Agreements (incorporated by
reference to Exhibit 10.39 to Form S-1, Registration No.
33-66740).
10.19 Rights Agreement, dated April 29, 1993, between UCC and
Chemical Bank as Rights Agent (incorporated by reference to
Exhibit 4.1 to the Current Report on Form 8-K of UCC, filed
on April 30, 1993).
10.20 Form of Amendment No. 1 to the Rights Agreement, dated
October 31, 1995 between UCC and Chemical Bank, as Rights
Agent (incorporated by reference to Exhibit 4.2 to Form 8-K
filed on November 2, 1995).
10.21 UCC 1993 Stock Option Plan (incorporated by reference to
Exhibit 28.1 to UCC's Registration Statement on Form S-8,
Registration No. 33-62030, filed on May 4, 1993).
10.22 Form of Amendment No. 2 to the UCC 1993 Stock Option Plan
(incorporated by reference to Exhibit 10.2 to the April
1995 Form 10-Q).
10.23 Form of Amendment No. 2, dated as of November 15, 1993, to
the Management Subscription Agreements (incorporated by
reference to Exhibit 10.21 to the 1994 Form 10-K).
10.24 Form of Executive Stock Option Agreement, dated as of
November 15, 1993 (incorporated by reference to Exhibit
10.22 to the 1994 Form 10-K).
10.25 Form of Management Investor and Other Key Personnel Option
Agreement, dated as of December 15, 1993 (incorporated by
reference to Exhibit 10.23 to the 1994 Form 10-K).
10.26 Form of Non-Employee Director Stock Option Agreement, dated
as of September 13, 1994 (incorporated by reference to
Exhibit 10.24 to the 1994 Form 10-K).
10.27 Form of Non-Employee Director Stock Option Agreement, dated
as of March 5, 1996 (filed herewith).
10.28 Form of Employment Agreement, dated as of August 21, 1996,
between Uniroyal Chemical and four executive officers of
Uniroyal Chemical (filed herewith).
10.29 Form of Supplemental Retirement Agreement, dated as of
August 21, 1996, between Uniroyal Chemical and two
executive officers of Uniroyal Chemical (filed herewith).
10.30 Form of Supplemental Retirement Agreement, dated as of
August 21, 1996, between Uniroyal Chemical and two
executive officers of Uniroyal Chemical (filed herewith).
12 Computation of earnings to fixed charges ratio for the
fiscal years 1992, 1993, 1994, 1995 and 1996 (filed
herewith).
21 Subsidiaries of the Registrants (No Response Required).
27 Financial Data Schedules for Uniroyal Chemical and UCC
(filed herewith).
CERTIFICATE OF INCORPORATION
OF
UNIROYAL CHEMICAL CORPORATION
I, the undersigned, for the purpose of incorporating and
organizing a corporation under the General Corporation Law
of the State of Delaware, do hereby execute this Certificate of
Incorporation and do hereby certify as follows:
ARTICLE 1.
The name of the corporation (which is hereinafter referred to as
the "Corporation") is:
Uniroyal Chemical Corporation
ARTICLE 2.
The address of the Corporation's registered office in the State
of Delaware is The Corporation Trust Center, 1209 Orange Street
in the City of Wilmington, County of New Castle. The name of the
Corporation's registered agent at such address is The Corporation
Trust Company.
ARTICLE 3.
The purpose of the Corporation shall be to engage in any lawful
act or activity for which corporations may be organized and
incorporated under the General Corporation Law of the State of
Delaware.
ARTICLE 4.
Section a. The Corporation shall be authorized to issue 1,000
shares of capital stock, all of which 1,000 shares shall be
shares of Common Stock, $.01 par value ("Common Stock").
Section b. Except as otherwise provided by law, the Common Stock
shall have the exclusive right to vote for the election of
directors and for all other purposes. Each share of Common Stock
shall have one vote, and the Common Stock shall vote together as
a single class.
ARTICLE 5.
Any one or more directors may be removed, with or without cause,
by the vote or written consent of the holders of a majority of
the issued and outstanding shares of capital stock of the
Corporation entitled to be voted at an election of directors.
ARTICLE 6.
In furtherance and not in limitation of the powers conferred by
law, the Board of Directors of the Corporation (the "Board") is
expressly authorized and empowered to make, alter and repeal the
By-Laws of the Corporation.
ARTICLE 7.
Meetings of stockholders shall be held at such place, within or
without the State of Delaware, as may be designated by or in the
manner provided in the By-Laws, or, if not so designated, at the
registered office of the Corporation in the State of Delaware.
Elections of directors need not be by written ballot unless and
to the extent that the By-Laws so provide.
ARTICLE 8.
The Corporation reserves the right at any time from time to time
to amend, alter, change or repeal any provision contained in this
Certificate of Incorporation, and any other provisions authorized
by the laws of the State of Delaware at the time in force may be
added or inserted, in the manner now or hereafter prescribed by
law; and all rights, preferences and privileges of whatsoever
nature conferred upon stockholders, directors or any other
persons whomsoever by and pursuant to this Certificate of
Incorporation in its present form or as hereafter amended are
granted subject to the right reserved in this Article.
ARTICLE 9.
A director of the Corporation shall not be personally liable to
the Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director, except for liability (i)
for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the General
Corporation Law of the State of Delaware, or (iv) for any
transaction from which the director derived an improper personal
benefit.
ARTICLE 10.
The name and mailing address of the incorporator is Howard A.
Mergelkamp III, Esq., c/o Wachtell, Lipton, Rosen & Katz, 51 West
52nd Street, New York, New York 10019.
IN WITNESS WHEREOF, I, the undersigned, being the incorporator
hereinbefore named, do hereby further certify that the facts
hereinabove stated are truly set forth and, accordingly, I have
hereunto set my hand this 21st day of August, 1996.
Howard A. Mergelkamp III
Incorporator
BY-LAWS
of
Uniroyal Chemical Corporation
dated as of August 21, 1996
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE -- The registered office of Uniroyal
Chemical Corporation (the "Corporation") shall be established and
maintained at the office of The Corporation Trust Company at The
Corporation Trust Center, 1209 Orange Street in the City of
Wilmington, County of New Castle, State of Delaware, and said
Corporation Trust Company shall be the registered agent of the
Corporation in charge thereof.
SECTION 2. OTHER OFFICES -- The Corporation may have other
offices, either within or without the State of Delaware, at such
place or places as the Board of Directors may from time to time
select or the business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. ANNUAL MEETINGS -- Annual meetings of stockholders for
the election of directors, and for such other business as may be
stated in the notice of the meeting, shall be held at such place,
either within or without the State of Delaware, and at such time
and date as the Board of Directors, by resolution, shall
determine and as set forth in the notice of the meeting. If the
Board of Directors fails so to determine the time, date and place
of meeting, the annual meeting of stockholders shall be held at
the registered office of the Corporation on the first Tuesday in
April. If the date of the annual meeting shall fall upon a legal
holiday, the meeting shall be held on the next succeeding busi-
ness day. At each annual meeting, the stockholders entitled to
vote shall elect a Board of Directors and they may transact such
other corporate business as shall be stated in the notice of the
meeting.
SECTION 2. SPECIAL MEETINGS -- Special meetings of the
stockholders for any purpose or purposes may be called by the
Chairman of the Board, the President or the Secretary, or by
resolution of the Board of Directors.
SECTION 3. VOTING -- Each stockholder entitled to vote in
accordance with the terms of the Certificate of Incorporation of
the Corporation and these By-Laws may vote in person or by proxy,
but no proxy shall be voted after three years from its date
unless such proxy provides for a longer period. All elections
for directors shall be decided by plurality vote; all other
questions shall be decided by majority vote except as otherwise
provided by the Certificate of Incorporation or the laws of the
State of Delaware.
A complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, with the address of
each, and the number of shares held by each, shall be open to the
examination of any stockholder, for any purpose germane to the
meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city
where the meeting is to be held, which place shall be specified
in the notice of the meeting, or, if not so specified, at the
place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the
whole time thereof, and may be inspected by any stockholder who
is entitled to be present.
SECTION 4. QUORUM -- Except as otherwise required by law, by the
Certificate of Incorporation of the Corporation or by these By-Laws,
the presence, in person or by proxy, of stockholders
holding shares constituting a majority of the voting power of the
Corporation shall constitute a quorum at all meetings of the
stockholders. In case a quorum shall not be present at any
meeting, a majority in interest of the stockholders entitled to
vote thereat, present in person or by proxy, shall have the power
to adjourn the meeting from time to time, without notice other
than announcement at the meeting, until the requisite amount of
stock entitled to vote shall be present. At any such adjourned
meeting at which the requisite amount of stock entitled to vote
shall be represented, any business may be transacted that might
have been transacted at the meeting as originally noticed; but
only those stockholders entitled to vote at the meeting as origi-
nally noticed shall be entitled to vote at any adjournment or
adjournments thereof.
SECTION 5. NOTICE OF MEETINGS -- Written notice, stating the
place, date and time of the meeting, and the general nature of
the business to be considered, shall be given to each
stockholder entitled to vote thereat, at his or her address as it
appears on the records of the Corporation, not less than ten nor
more than sixty days before the date of the meeting. No business
other than that stated in the notice shall be transacted at any
meeting without the unanimous consent of all the stockholders
entitled to vote thereat.
SECTION 6. ACTION WITHOUT MEETING -- Unless otherwise provided by
the Certificate of Incorporation of the Corporation, any action
required or permitted to be taken at any annual or special
meeting of stockholders may be taken without a meeting, without
prior notice and without a vote, if a consent in writing, setting
forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of
votes that would be necessary to authorize or take such action at
a meeting at which all shares entitled to vote thereon were
present and voted. Prompt notice of the taking of the corporate
action without a meeting by less than unanimous written consent
shall be given to those stockholders who have not consented in
writing.
ARTICLE III
DIRECTORS
SECTION 1. NUMBER AND TERM -- The business and affairs of the
Corporation shall be managed under the direction of a Board of
Directors which shall consist of not less than one person. The
exact number of directors shall initially be one and may
thereafter be fixed from time to time by the Board of Directors.
Directors shall be elected at the annual meeting of stockholders
and each director shall be elected to serve until his or her
successor shall be elected and shall qualify. A director need
not be a stockholder.
SECTION 2. RESIGNATIONS -- Any director may resign at any time.
Such resignation shall be made in writing, and shall take effect
at the time specified therein, and if no time be specified, at
the time of its receipt by the Chairman of the Board, the
President or the Secretary. The acceptance of a resignation
shall not be necessary to make it effective.
SECTION 3. VACANCIES -- If the office of any director becomes
vacant, the remaining directors in the office, though less than a
quorum, by a majority vote, may appoint any qualified person to
fill such vacancy, who shall hold office for the unexpired term
and until his or her successor shall be duly chosen. If the
office of any director becomes vacant and there are no remaining
directors, the stockholders, by the affirmative vote of the
holders of shares constituting a majority of the voting power of
the Corporation, at a special meeting called for such purpose,
may appoint any qualified person to fill such vacancy.
SECTION 4. REMOVAL -- Except as hereinafter provided, any
director or directors may be removed either for or without cause
at any time by the affirmative vote of the holders of a majority
of the voting power entitled to vote for the election of
directors, at an annual meeting or a special meeting called for
the purpose, and the vacancy thus created may be filled, at such
meeting, by the affirmative vote of holders of shares
constituting a majority of the voting power of the Corporation.
SECTION 5. COMMITTEES -- The Board of Directors may, by
resolution or resolutions passed by a majority of the whole Board
of Directors, designate one or more committees, each committee to
consist of one or more directors of the Corporation.
Any such committee, to the extent provided in the resolution of
the Board of Directors, or in these By-Laws, shall have and may
exercise all the powers and authority of the Board of Directors
in the management of the business and affairs of the Corporation,
and may authorize the seal of the Corporation to be affixed to
all papers which may require it.
SECTION 6. MEETINGS -- The newly elected directors may hold their
first meeting for the purpose of organization and the transaction
of business, if a quorum be present, immediately after the annual
meeting of the stockholders; or the time and place of such
meeting may be fixed by consent of all the Directors.
Regular meetings of the Board of Directors may be held without
notice at such places and times as shall be determined from time
to time by resolution of the Board of Directors.
Special meetings of the Board of Directors may be called by the
Chairman of the Board or the President, or by the Secretary on
the written request of any director, on at least one day's notice
to each director (except that notice to any director may be
waived in writing by such director) and shall be held at such
place or places as may be determined by the Board of Directors,
or as shall be stated in the call of the meeting.
Unless otherwise restricted by the Certificate of Incorporation
of the Corporation or these By-Laws, members of the Board of
Directors, or any committee designated by the Board of Directors,
may participate in any meeting of the Board of Directors or any
committee thereof by means of a conference telephone or similar
communications equipment by means of which all persons
participating in the meeting can hear each other, and such
participation in a meeting shall constitute presence in person at
the meeting.
SECTION 7. QUORUM -- A majority of the Directors shall constitute
a quorum for the transaction of business. If at any meeting of
the Board of Directors there shall be less than a quorum present,
a majority of those present may adjourn the meeting from time to
time until a quorum is obtained, and no further notice thereof
need be given other than by announcement at the meeting which
shall be so adjourned. The vote of the majority of the Directors
present at a meeting at which a quorum is present shall be the
act of the Board of Directors unless the Certificate of
Incorporation of the Corporation or these By-Laws shall require
the vote of a greater number.
SECTION 8. COMPENSATION -- Directors shall not receive any stated
salary for their services as directors or as members of
committees, but by resolution of the Board of Directors a fixed
fee and expenses of attendance may be allowed for attendance at
each meeting. Nothing herein contained shall be construed to
preclude any director from serving the Corporation in any other
capacity as an officer, agent or otherwise, and receiving
compensation therefor.
SECTION 9. ACTION WITHOUT MEETING -- Any action required or
permitted to be taken at any meeting of the Board of Directors or
of any committee thereof may be taken without a meeting if a
written consent thereto is signed by all members of the Board of
Directors or of such committee, as the case may be, and such
written consent is filed with the minutes of proceedings of the
Board of Directors or such committee.
ARTICLE IV
OFFICERS
SECTION 1. OFFICERS -- The officers of the Corporation shall be a
Chairman of the Board, a President, one or more Vice Presidents,
a Treasurer and a Secretary, all of whom shall be elected by the
Board of Directors and shall hold office until their successors
are duly elected and qualified. In addition, the Board of
Directors may elect such Assistant Secretaries and Assistant
Treasurers as they may deem proper. The Board of Directors may
appoint such other officers and agents as it may deem advisable,
who shall hold their offices for such terms and shall exercise
such powers and perform such duties as shall be determined from
time to time by the Board of Directors.
SECTION 2. CHAIRMAN OF THE BOARD -- The Chairman of the Board
shall be the Chief Executive Officer of the Corporation. He or
she shall preside at all meetings of the Board of Directors and
shall have and perform such other duties as may be assigned to
him or her by the Board of Directors. The Chairman of the Board
shall have the power to execute bonds, mortgages and other
contracts on behalf of the Corporation, and to cause the seal of
the Corporation to be affixed to any instrument requiring it, and
when so affixed the seal shall be attested to by the signature of
the Secretary or the Treasurer or an Assistant Secretary or an
Assistant Treasurer.
SECTION 3. PRESIDENT -- The President shall be the Chief
Operating Officer of the Corporation. He or she shall have the
general powers and duties of supervision and management usually
vested in the office of President of a corporation. The Presi-
dent shall have the power to execute bonds, mortgages and other
contracts on behalf of the Corporation, and to cause the seal to
be affixed to any instrument requiring it, and when so affixed
the seal shall be attested to by the signature of the Secretary
or the Treasurer or an Assistant Secretary or an Assistant
Treasurer.
SECTION 4. VICE PRESIDENTS -- Each Vice President shall have such
powers and shall perform such duties as shall be assigned to him
or her by the Board of Directors.
SECTION 5. TREASURER -- The Treasurer shall be the Chief
Financial Officer of the Corporation. He or she shall have the
custody of the Corporate funds and securities and shall keep full
and accurate account of receipts and disbursements in books
belonging to the Corporation. He or she shall deposit all moneys
and other valuables in the name and to the credit of the
Corporation in such depositaries as may be designated by the
Board of Directors. He or she shall disburse the funds of the
Corporation as may be ordered by the Board of Directors, the
Chairman of the Board, or the President, taking proper vouchers
for such disbursements. He or she shall render to the Chairman
of the Board, the President and Board of Directors at the regular
meetings of the Board of Directors, or whenever they may request
it, an account of all his or her transactions as Treasurer and of
the financial condition of the Corporation. If required by the
Board of Directors, he or she shall give the Corporation a bond
for the faithful discharge of his or her duties in such amount
and with such surety as the Board of Directors shall prescribe.
SECTION 6. SECRETARY -- The Secretary shall give, or cause to be
given, notice of all meetings of stockholders and of the Board of
Directors and all other notices required by law or by these By-Laws,
and in case of his or her absence or refusal or neglect so
to do, any such notice may be given by any person thereunto di-
rected by the Chairman of the Board or the President, or by the
Board of Directors, upon whose request the meeting is called as
provided in these By-Laws. He or she shall record all the
proceedings of the meetings of the Board of Directors, any
committees thereof and the stockholders of the Corporation in a
book to be kept for that purpose, and shall perform such other
duties as may be assigned to him or her by the Board of
Directors, the Chairman of the Board or the President. He or she
shall have the custody of the seal of the Corporation and shall
affix the same to all instruments requiring it, when authorized
by the Board of Directors, the Chairman of the Board or the
President, and attest to the same.
SECTION 7. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES
- --Assistant Treasurers and Assistant Secretaries, if any, shall
be elected and shall have such powers and shall perform such
duties as shall be assigned to them, respectively, by the Board
of Directors.
ARTICLE V
MISCELLANEOUS
SECTION 1. CERTIFICATES OF STOCK -- A certificate of stock shall
be issued to each stockholder certifying the number of shares
owned by such stockholder in the Corporation. Certificates of
stock of the Corporation shall be of such form and device as the
Board of Directors may from time to time determine.
SECTION 2. LOST CERTIFICATES -- A new certificate of stock may be
issued in the place of any certificate theretofore issued by the
Corporation, alleged to have been lost or destroyed, and the
Board of Directors may, in its discretion, require the owner of
the lost or destroyed certificate, or such owner's legal
representatives, to give the Corporation a bond, in such sum as
they may direct, not exceeding double the value of the stock, to
indemnify the Corporation against any claim that may be made
against it on account of the alleged loss of any such
certificate, or the issuance of any such new certificate.
SECTION 3. TRANSFER OF SHARES -- The shares of stock of the
Corporation shall be transferable only upon its books by the
holders thereof in person or by their duly authorized attorneys
or legal representatives, and upon such transfer the old
certificates shall be surrendered to the Corporation by the
delivery thereof to the person in charge of the stock and
transfer books and ledgers, or to such other person as the Board
of Directors may designate, by whom they shall be cancelled, and
new certificates shall thereupon be issued. A record shall be
made of each transfer and whenever a transfer shall be made for
collateral security, and not absolutely, it shall be so expressed
in the entry of the transfer.
SECTION 4. STOCKHOLDERS RECORD DATE -- In order that the
Corporation may determine the stockholders entitled to notice of
or to vote at any meeting of stockholders or any adjournment
thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend
or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or
exchange of stock or for the purpose of any other lawful action,
the Board of Directors may fix a record date, which record date
shall not precede the date upon which the resolution fixing the
record date is adopted by the Board of Directors and which record
date: (1) in the case of determination of stockholders entitled
to vote at any meeting of stockholders or adjournment thereof,
shall, unless otherwise required by law, not be more than sixty
nor less than ten days before the date of such meeting; (2) in
the case of determination of stockholders entitled to express
consent to corporate action in writing without a meeting, shall
not be more than ten days from the date upon which the resolution
fixing the record date is adopted by the Board of Directors; and
(3) in the case of any other action, shall not be more than sixty
days prior to such other action. If no record date is fixed:
(1) the record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the
close of business on the day next preceding the day on which
notice is given, or, if notice is waived, at the close of
business on the day next preceding the day on which the meeting
is held; (2) the record date for determining stockholders
entitled to express consent to corporate action in writing
without a meeting when no prior action of the Board of Directors
is required by law, shall be the first day on which a signed
written consent setting forth the action taken or proposed to be
taken is delivered to the Corporation in accordance with
applicable law, or, if prior action by the Board of Directors is
required by law, shall be at the close of business on the day on
which the Board of Directors adopts the resolution taking such
prior action; and (3) the record date for determining
stockholders for any other purpose shall be at the close of
business on the day on which the Board of Directors adopts the
resolution relating thereto. A determination of stockholders of
record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new
record date for the adjourned meeting.
SECTION 5. DIVIDENDS -- Subject to the provisions of the
Certificate of Incorporation of the Corporation, the Board of
Directors may, out of funds legally available therefor at any
regular or special meeting, declare dividends upon stock of the
Corporation as and when they deem appropriate. Before declaring
any dividend there may be set apart out of any funds of the
Corporation available for dividends, such sum or sums as the
Board of Directors from time to time in their discretion deem
proper for working capital or as a reserve fund to meet
contingencies or for equalizing dividends or for such other
purposes as the Board of Directors shall deem conducive to the
interests of the Corporation.
SECTION 6. SEAL -- The corporate seal of the Corporation shall be
in such form as shall be determined by resolution of the Board of
Directors. Said seal may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced or otherwise
imprinted upon the subject document or paper.
SECTION 7. FISCAL YEAR -- The fiscal year of the Corporation
shall be determined by resolution of the Board of Directors.
SECTION 8. CHECKS -- All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued
in the name of the Corporation shall be signed by such officer or
officers, or agent or agents, of the Corporation, and in such
manner as shall be determined from time to time by resolution of
the Board of Directors.
SECTION 9. NOTICE AND WAIVER OF NOTICE -- Whenever any notice is
required to be given under these By-Laws, personal notice is not
required unless expressly so stated, and any notice so required
shall be deemed to be sufficient if given by depositing the same
in the United States mail, postage prepaid, addressed to the
person entitled thereto at his or her address as it appears on
the records of the Corporation, and such notice shall be deemed
to have been given on the day of such mailing. Stockholders not
entitled to vote shall not be entitled to receive notice of any
meetings except as otherwise provided by law. Whenever any
notice is required to be given under the provisions of any law,
or under the provisions of the Certificate of Incorporation of
the Corporation or of these By-Laws, a waiver thereof, in writing
and signed by the person or persons entitled to said notice,
whether before or after the time stated therein, shall be deemed
equivalent to such required notice.
ARTICLE VI
AMENDMENTS
These By-Laws may be altered, amended or repealed at any annual
meeting of the stockholders (or at any special meeting thereof if
notice of such proposed alteration, amendment or repeal to be
considered is contained in the notice of such special meeting) by
the affirmative vote of the holders of shares constituting a
majority of the voting power of the Corporation. Except as
otherwise provided in the Certificate of Incorporation of the
Corporation, the Board of Directors may by majority vote of those
present at any meeting at which a quorum is present alter, amend
or repeal these By-Laws, or enact such other By-Laws as in their
judgment may be advisable for the regulation and conduct of the
affairs of the Corporation.
EXHIBIT 4.24
$600,000,000
CREDIT AGREEMENT
Dated as of August 21, 1996
Among
CROMPTON & KNOWLES CORPORATION,
CROMPTON & KNOWLES COLORS INCORPORATED,
DAVIS-STANDARD CORPORATION,
INGREDIENT TECHNOLOGY CORPORATION,
and
UNIROYAL CHEMICAL COMPANY, INC.
as Borrowers
and
THE INITIAL LENDERS, INITIAL ISSUING BANKS AND
SWING LINE BANK NAMED HEREIN
as Initial Lenders, Initial Issuing Banks and Swing Line
Bank
and
CITICORP SECURITIES, INC.
as Arranger
and
CITICORP USA, INC.
as Agent
and
THE CHASE MANHATTAN BANK
as Managing Agent
TABLE OF CONTENTS
Section
Page
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.01. Certain Defined Terms 2
1.02. Computation of Time Periods 31
1.03. Accounting Terms 31
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
AND THE LETTERS OF CREDIT
2.01. The Advances 32
2.02. Making the Advances 35
2.03. Issuance of and Drawings and Reimbursement Under
Letters of Credit 38
2.04. Repayment of Advances 40
2.05. Termination or Reduction of the Commitments 42
2.06. Prepayments 43
2.07. Interest 44
2.08. Fees 45
2.09. Conversion of Advances 46
2.10. Increased Costs, Etc. 47
2.11. Payments and Computations 48
2.12. Taxes 50
2.13. Sharing of Payments, Etc. 53
2.14. Use of Proceeds 53
2.15. Defaulting Lenders 54
ARTICLE III
CONDITIONS OF LENDING
3.01. Conditions Precedent to Initial Extension of Credit 56
3.02. Conditions Precedent to Each Borrowing and Issuance 64
3.03. Determinations Under Section 3.01 65
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.01. Representations and Warranties of the Borrowers 65
ARTICLE V
COVENANTS OF THE BORROWERS
5.01. Affirmative Covenants 71
5.02. Negative Covenants 77
5.03. Reporting Requirements 87
5.04. Financial Covenants 90
ARTICLE VI
EVENTS OF DEFAULT
6.01. Events of Default 92
6.02. Actions in Respect of the Letters of Credit upon
Default 96
6.03. Actions in Respect of Working Capital B-1 Commitments
Reserved Pursuant to Section 2.01(g) 96
ARTICLE VII
THE AGENT
7.01. Authorization and Action 97
7.02. Agent's Reliance, Etc. 97
7.03. Citicorp and Affiliates 98
7.04. Lender Party Credit Decision 98
7.05. Indemnification 98
7.06. Successor Agents 99
ARTICLE VIII
MISCELLANEOUS
8.01. Amendments, Etc. 101
8.02. Notices, Etc. 102
8.03. No Waiver; Remedies 102
8.04. Costs and Expenses 102
8.05. Right of Set-off 104
8.06. Binding Effect 105
8.07. Assignments and Participations 105
8.08. Execution in Counterparts 108
8.09. No Liability of the Issuing Banks 108
8.10. Release of Collateral 109
8.11. Confidentiality 109
8.12. Jurisdiction, Etc. 110
8.13. Governing Law 110
8.14. Waiver of Jury Trial 111
SCHEDULES
Schedule I- Commitments and Applicable Lending Offices
Schedule II-Subsidiary Guarantors
Schedule III-Minor Subsidiaries
Schedule 2.03(e)-Existing Letters of Credit
Schedule 3.01(d)-Surviving Debt
Schedule 3.01(f)-Disclosed Litigation
Schedule 3.01(k)(xx)-Local Counsel
Schedule 4.01(b)-Subsidiaries
Schedule 4.01(d)-Authorizations, Approvals, Actions, Notices and
Filings
Schedule 4.01(o)-Environmental Disclosure
Schedule 4.01(t)-Existing Debt
Schedule 4.01(w)-Material Subsidiaries
Schedule 5.02(a)-Existing Liens
Schedule 5.02(f)-Investments
EXHIBITS
Exhibit A-1-Form of Working Capital A Note
Exhibit A-2-Form of Working Capital B-1 Note
Exhibit A-3-Form of Working Capital B-2 Note
Exhibit B-Form of Notice of Borrowing
Exhibit C-Form of Assignment and Acceptance
Exhibit D-1-Form of Crompton Security Agreement
Exhibit D-2-Form of Uniroyal Security Agreement
Exhibit D-3-Form of Louisiana Undertaking
Exhibit E-1-Form of Parent Guaranty
Exhibit E-2-Form of Subsidiary Guaranty
Exhibit F-1-Form of Opinion of Counsel for the Loan Parties
Exhibit F-2-Form of Opinion of General Counsel to Crompton Corp.
and its Subsidiaries
Exhibit F-3-Form of Opinion of General Counsel to Crompton Corp.
and its Subsidiaries
Exhibit G-Form of Solvency Certificate
CREDIT AGREEMENT
CREDIT AGREEMENT dated as of August 21, 1996 among CROMPTON
& KNOWLES CORPORATION, a Massachusetts corporation ("Crompton
Corp."), CROMPTON & KNOWLES COLORS INCORPORATED, a Delaware
corporation ("Crompton Colors"), DAVIS-STANDARD CORPORATION, a
Delaware corporation ("Davis-Standard"), INGREDIENT TECHNOLOGY
CORPORATION, a Delaware corporation ("ITC" and, together with
Crompton Corp., Crompton Colors and Davis-Standard, the "Crompton
Borrowers"), UNIROYAL CHEMICAL COMPANY, INC., a New Jersey
corporation ("Uniroyal" or the "Uniroyal Borrower" and, together
with the Crompton Borrowers, the "Borrowers"), the banks,
financial institutions and other institutional lenders listed on
the signature pages hereof as the Initial Lenders (the "Initial
Lenders"), the Initial Issuing Banks (the "Initial Issuing
Banks") and the Swing Line Bank (as hereinafter defined),
CITICORP SECURITIES, INC., as Arranger (the "Arranger"), CITICORP
USA, INC. ("Citicorp"), as agent (together with any successor
appointed pursuant to Article VII, the "Agent") for the Lender
Parties (as hereinafter defined), and THE CHASE MANHATTAN BANK,
as Managing Agent.
PRELIMINARY STATEMENTS:
(1) Each of Crompton Colors, Davis-Standard and ITC is a
wholly owned Subsidiary (as hereinafter defined) of Crompton
Corp.
(2) Pursuant to the Agreement and Plan of Merger dated as
of April 30, 1996 (as amended, supplemented or otherwise modified
in accordance with its terms, to the extent permitted in
accordance with the Loan Documents (as hereinafter defined), the
"Merger Agreement") between Crompton Corp. and Uniroyal Chemical
Corporation, a Delaware corporation ("Uniroyal Corp."), Crompton
Corp. has agreed to consummate a merger (the "Merger") with
Uniroyal Corp. through Tiger Merger Corp., a Delaware corporation
and a wholly owned Subsidiary of Crompton Corp. in which Uniroyal
Corp. will be the surviving corporation.
(3) The Borrowers have requested that, immediately upon the
consummation of the Merger, the Lender Parties lend to the
Borrowers up to $600,000,000 to pay transaction fees and expenses
incurred in connection with the Merger and that, from time to
time, the Lender Parties lend to the Borrowers and issue Letters
of Credit for the account of the Borrowers to redeem or
repurchase public Debt (as hereinafter defined) of Uniroyal and
Uniroyal Corp. and for other general corporate purposes,
including, without limitation, to finance permitted acquisitions
and Capital Expenditures (as hereinafter defined) and to provide
working capital for the Borrowers and their respective
Subsidiaries. The Lender Parties have indicated their
willingness to agree to lend such amounts on the terms and
conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements contained herein, the parties
hereto hereby agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms. As used in this Agreement,
the following terms shall have the following meanings (such
meanings to be equally applicable to both the singular and plural
forms of the terms defined):
"Advance" means a Working Capital Advance, a Swing Line Advance
or a Letter of Credit Advance.
"Affiliate" means, as to any Person, any other Person that,
directly or indirectly, controls, is controlled by or is under
common control with such Person or is a director or officer of
such Person. For purposes of this definition, the term "control"
(including the terms "controlling," "controlled by" and "under
common control with") of a Person means the possession, direct or
indirect, of the power to vote 10% or more of the Voting Stock of
such Person or to direct or cause the direction of the management
and policies of such Person, whether through the ownership of
Voting Stock, by contract or otherwise.
"Agent" has the meaning specified in the recital of parties to
this Agreement.
"Agent's Account" means the account of the Agent maintained by
the Agent with Citibank at its office at 399 Park Avenue,
New York, New York 10043, Account No. 3885-8061,
Attention: Alexandra Lozovsky.
"Applicable Lending Office" means, with respect to each Lender
Party, such Lender Party's Domestic Lending Office in the case of
a Base Rate Advance and such Lender Party's Eurodollar Lending
Office in the case of a Eurodollar Rate Advance.
"Applicable Margin" means (a) from the date hereof until December
31, 1996, 0.0% per annum for Base Rate Advances and 0.875% per
annum for Eurodollar Rate Advances and (b) thereafter, a
percentage per annum determined by reference to the Total
Debt/EBITDA Ratio as set forth below:
Total Debt/EBITDA Ratio Base Rate Advances Eurodollar
Rate Advances
Level I
less than or equal to
2.0:1.0 0.0% 0.375%
Level II
greater than 2.0:1.0,
but less than or
equal to 2.5:1.0 0.0% 0.500%
Level III
greater than 2.5:1.0,
but less than or
equal to 3.0:1.0 0.0%
0.625%
Level IV
greater than 3.0:1.0,
but less than or
equal to 3.5:1.0 0.0%
0.750%
Level V
greater than 3.5:1.0,
but less than or
equal to 4.0:1.0 0.0%
0.875%
Level VI
greater than 4.0:1.0 0.0%
1.000%
The Applicable Margin for each Advance shall be determined by
reference to the Total Debt/EBITDA Ratio in effect from time to
time; provided, however, that, at any date of determination of
the Applicable Margin, if the relevant Financial Statements shall
not have been delivered to the Agent and the Lender Parties by
such date and Crompton Corp. shall have delivered to the Agent a
certificate setting forth Crompton Corp.'s good faith estimate of
the Total Debt/EBITDA Ratio for the immediately preceding Rolling
Period, the Applicable Margin shall be determined by reference to
such good faith estimate of the Total Debt/EBITDA Ratio, provided
further that if, upon delivery by Crompton Corp. of such
Financial Statements, such Financial Statements indicate that
such estimate of the Total Debt/EBITDA Ratio was incorrect and,
as a result thereof, the Applicable Margin was too low at such
date of determination, such Applicable Margin shall be increased,
as appropriate, with retroactive effect to the beginning of the
Rolling Period during which such date of determination occurred,
and the applicable Borrower shall immediately pay to the Agent
for the account of the Lender Parties all additional interest due
by reason of such increased Applicable Margin.
"Applicable Percentage" means (a) from the date hereof until
December 31, 1996, 0.25% per annum for commitment fees, 0.625%
per annum for Trade Letter of Credit fees and 0.875% per annum
for Standby Letter of Credit fees and (b) thereafter, a
percentage per annum determined by reference to the Total
Debt/EBITDA Ratio as set forth below:
Total Debt/EBITDA Ratio Commitment Trade Letter Standby Letter
Fees of Credit Fees of Credit Fees
Level I
less than or equal to 2.0:1.0 0.125% 0.125% 0.375%
Level II
greater than 2.0:1.0,
but less than or
equal to 2.5:1.0 0.150% 0.250% 0.500%
Level III
greater than 2.5:1.0,
but less than or
equal to 3.0:1.0 0.175% 0.375% 0.625%
Level IV
greater than 3.0:1.0,
but less than or
equal to 3.5:1.0 0.250% 0.500% 0.750%
Level V
greater than 3.5:1.0,
but less than or
equal to 4.0:1.0 0.250% 0.625% 0.875%
Level VI
greater than 4.0:1.0 0.375% 0.750% 1.000%
The Applicable Percentage shall be determined by reference to the
Total Debt/EBITDA Ratio in effect from time to time; provided,
however, that, at any date of determination of the Applicable
Percentage, if the relevant Financial Statements shall not have
been delivered to the Agent and the Lender Parties by such date
and Crompton Corp. shall have delivered to the Agent a
certificate setting forth Crompton Corp.'s good faith estimate of
the Total Debt/EBITDA Ratio for the immediately preceding Rolling
Period, the Applicable Percentage shall be determined by
reference to such good faith estimate of the Total Debt/EBITDA
Ratio, provided further that if, upon delivery by Crompton Corp.
of such Financial Statements, such Financial Statements indicate
that such estimate of the Total Debt/EBITDA Ratio was incorrect
and, as a result thereof, the Applicable Percentage was too low
at such date of determination, such Applicable Percentage shall
be increased, as appropriate, with retroactive effect to the
beginning of the Rolling Period during which such date of
determination occurred, and the applicable Borrower shall
immediately pay to the Agent for the account of the Lender
Parties all additional fees due by reason of such increased
Applicable Percentage.
"Appropriate Lender" means, at any time, with respect to (a) any
of the Working Capital Facilities, a Lender that has a Commitment
with respect to such Facility at such time, (b) either of the
Letter of Credit Facilities, (i) any Issuing Bank that has a
Commitment with respect to such Facility at such time and (ii) if
other Working Capital Lenders have made Letter of Credit Advances
pursuant to Section 2.03(c) that are outstanding at such time,
each such other Working Capital Lender and (c) either of the
Swing Line Facilities, (i) the Swing Line Bank and (ii) if other
Working Capital Lenders have made Swing Line Advances pursuant to
Section 2.02(b) that are outstanding at such time, each such
other Working Capital Lender.
"Arranger" has the meaning specified in the recital of parties to
this Agreement.
"Assignment and Acceptance" means an assignment and acceptance
entered into by a Lender Party and an Eligible Assignee, and
accepted by the Agent, in accordance with Section 8.07 and in
substantially the form of Exhibit C hereto.
"Available Amount" of any Letter of Credit means, at any time,
the maximum amount available to be drawn under such Letter of
Credit at such time (assuming compliance at such time with all
conditions to drawing).
"Available Cash Flow" means, for any Fiscal Year, an amount equal
to the sum of (a) Operating Cash Flow for the previous Fiscal
Year, (b) the amount of Capital Expenditures permitted to be made
in the previous Fiscal Year pursuant to Section 5.02(n) less the
amount of Capital Expenditures actually made during the previous
Fiscal Year, (c) the amount of dividends permitted to be paid by
Crompton Corp. in the previous Fiscal Year pursuant to Section
5.02(g) less the amount of such dividends actually paid during
the previous Fiscal Year, (d) the aggregate amount of Net Cash
Proceeds from the sale or other disposition of assets pursuant to
clause (iii) or (vi) (to the extent not used permanently to
prepay Debt or to make Capital Expenditures) of Section 5.02(e)
during the previous Fiscal Year and (e) $100,000,000.
"Bank Hedge Agreement" means any Hedge Agreement required or
permitted under Article V that is entered into by and between any
Borrower and any Hedge Bank.
"Base Rate" means a fluctuating interest rate per annum in effect
from time to time, which rate per annum shall at all times be
equal to the highest of:
(a) the rate of interest announced publicly by Citibank in
New York, New York, from time to time, as Citibank's base rate;
(b) the sum (adjusted to the nearest 1/4 of 1% or, if there is no
nearest 1/4 of 1%, to the next higher 1/4 of 1%) of (i) 1/2 of 1%
per annum, plus (ii) the rate obtained by dividing (A) the latest
three-week moving average of secondary market morning offering
rates in the United States for three-month certificates of
deposit of major United States money market banks, such
three-week moving average (adjusted to the basis of a year of 360
days) being determined weekly on each Monday (or, if such day is
not a Business Day, on the next succeeding Business Day) for the
three-week period ending on the previous Friday by Citibank on
the basis of such rates reported by certificate of deposit
dealers to and published by the Federal Reserve Bank of New York
or, if such publication shall be suspended or terminated, on the
basis of quotations for such rates received by Citibank from
three New York certificate of deposit dealers of recognized
standing selected by Citibank, by (B) a percentage equal to 100%
minus the average of the daily percentages specified during such
three-week period by the Board of Governors of the Federal
Reserve System (or any successor) for determining the maximum
reserve requirement (including, but not limited to, any
emergency, supplemental or other marginal reserve requirement)
for Citibank with respect to liabilities consisting of or
including (among other liabilities) three-month U.S. dollar
non-personal time deposits in the United States, plus (iii) the
average during such three-week period of the annual assessment
rates estimated by Citibank for determining the then current
annual assessment payable by Citibank to the Federal Deposit
Insurance Corporation (or any successor) for insuring U.S. dollar
deposits of Citibank in the United States; and
(c) 1/2 of one percent per annum above the Federal Funds Rate.
"Base Rate Advance" means an Advance that bears interest as
provided in Section2.07(a)(i).
"Borrower's Account" means, with respect to any Borrower, the
account of such Borrower maintained by such Borrower with
Citibank at its office at 399 Park Avenue, NewYork, NewYork
10043, which account is, in the case of Crompton Color, Account
No. 4070-6438, in the case of Crompton Corp., Account No. 4070-6411,
in the case of Davis-Standard, Account No. 4070-6462, in
the case of ITC, Account No. 4070-6446, and in the case of
Uniroyal, Account No. 4049-8376.
"Borrowers" has the meaning specified in the recital of parties
to this Agreement.
"Borrowing" means a Working Capital Borrowing or a Swing Line
Borrowing.
"Business Day" means a day of the year on which banks are not
required or authorized by law to close in New York City and, if
the applicable Business Day relates to any Eurodollar Rate
Advances, on which dealings are carried on in the London
interbank market.
"Capital Expenditures" means, for any Person for any period and
without duplication, the sum of (a) all expenditures (including,
without limitation, expenditures for environmental remediation)
made, directly or indirectly, by such Person during such period
for equipment, fixed or capital assets, real property or
improvements, or for replacements or substitutions therefor or
additions thereto, that have been or should be, in accordance
with GAAP, reflected as additions to property, plant or equipment
on a Consolidated balance sheet of such Person plus (b) the
aggregate principal amount of all Debt (including Obligations
under Capitalized Leases) assumed or incurred in connection with
any such expenditures but excluding (x) expenditures made in
connection with the replacement or restoration of assets, to the
extent such replacement or restoration is financed out of
insurance proceeds paid on account of the loss of or damage to
the assets so replaced or restored and (y) interest capitalized
during construction; provided, however, that notwithstanding
anything contained herein, Capital Expenditures shall not include
any Investments.
"Capitalized Leases" means all leases that have been or should
be, in accordance with GAAP, recorded as capitalized leases.
"Cash Equivalents" means any of the following, to the extent
owned by any Borrower or any of its Subsidiaries free and clear
of all Liens and having a maturity of not greater than 90 days
from the date of acquisition thereof: (a) readily marketable
direct obligations of the Government of the United States or any
agency or instrumentality thereof or obligations unconditionally
guaranteed by the full faith and credit of the Government of the
United States, (b) insured certificates of deposit of or time
deposits with any commercial bank that is a Lender Party or a
member of the Federal Reserve System, issues (or the parent of
which issues) commercial paper rated as described in clause(c),
is organized under the laws of the United States or any State
thereof and has combined capital and surplus of at least $1
billion or (c)commercial paper in an aggregate amount of no more
than $5,000,000 per issuer outstanding at any time, issued by any
corporation organized under the laws of any State of the United
States and rated at least "Prime-1" (or the then equivalent
grade) by Moody's or "A-1" (or the then equivalent grade) by S&P.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended from time to
time.
"CERCLIS" means the Comprehensive Environmental Response,
Compensation and Liability Information System maintained by the
U.S. Environmental Protection Agency.
"Citibank" means Citibank, N.A.
"Citibank Seoul" means Citibank, N.A., Seoul Branch.
"Citicorp" has the meaning specified in the recital of parties to
this Agreement.
"Collateral" means all "Collateral" referred to in the Collateral
Documents and all other property that is or is intended to be
subject to any Lien in favor of the Agent for the benefit of the
Secured Parties.
"Collateral Documents" means the Security Agreement, the
Louisiana Undertaking, the Blocked Account Letters (as defined in
the Uniroyal Security Agreement) and any other agreement that
creates or purports to create a Lien in favor of the Agent for
the benefit of the Secured Parties.
"Collateral Release Date" means the earliest of (a) the latest of
(i) the Termination Date, (ii) the payment in full of the
Obligations of the Loan Parties under the Loan Documents (other
than any indemnities) and (iii) the termination or expiration of
all Bank Hedge Agreements, (b) the date on which the Agent
receives evidence satisfactory to it that a Debt Rating of
(i) BBB- or above from S&P and Ba1 or above from Moody's or (ii)
Baa3 or above from Moody's and BB+ or above from S&P, in either
case shall have been in effect continuously for three months and
is then in effect, provided that Crompton Corp. shall not have
been placed on "credit watch" with negative implications (or any
like designation by S&P or Moody's from time to time) by either
S&P or Moody's during such three-month period, and (c) the date
on which the Agent receives evidence satisfactory to it that the
Total Debt/EBITDA Ratio for the two Rolling Periods then most
recently ended shall be less than or equal to 3.0:1.0 and the
Interest Coverage Ratio for the two Rolling Periods then most
recently ended shall be greater than or equal to 3.0:1.0,
provided that in any event no Default shall have occurred and
shall be continuing on such date.
"Commitment" means a Working Capital A Commitment, a Working
Capital B-1 Commitment, a Working Capital B-2 Commitment or a
Letter of Credit Commitment.
"Confidential Information" means information that any Borrower
furnishes to the Agent or any Lender Party in a writing
designated as confidential but does not include any such
information that is or becomes generally available to the public
other than as a result of a breach by the Agent or any Lender
Party of its obligations hereunder or that is or becomes
available to the Agent or such Lender Party from a source other
than a Borrower that is not, to the best of the Agent's or such
Lender Party's knowledge, acting in violation of a
confidentiality agreement with any Borrower.
"Consolidated" refers to the consolidation of accounts in
accordance with GAAP.
"Conversion", "Convert" and "Converted" each refer to a
conversion of Advances of one Type into Advances of the other
Type pursuant to Section 2.09 or 2.10.
"Crompton Borrowers" has the meaning specified in the recital of
parties to this Agreement.
"Crompton Colors" has the meaning specified in the recital of
parties to this Agreement.
"Crompton Corp." has the meaning specified in the recital of
parties to this Agreement.
"Crompton Guarantors" means the Subsidiaries of Crompton Corp.
listed on Part I of Schedule II hereto and each other Subsidiary
of Crompton Corp. (other than, in any event, Uniroyal Corp. and
its Subsidiaries) that shall be required to execute and deliver a
guaranty pursuant to Section 5.01(k) or 5.01(l)(v).
"Crompton Security Agreement" has the meaning specified in
Section 3.01(k)(vii).
"Davis-Standard" has the meaning specified in the recital of
parties to this Agreement.
"Daylight Overdraft Bank" means Citibank.
"Daylight Overdraft Documents" means those documents and
agreements entered into from time to time by the Daylight
Overdraft Bank and any Loan Party, evidencing or relating to the
Debt referred to in Section 5.02(b)(iii)(F).
"Debt" of any Person means, without duplication, (a)all
indebtedness of such person for borrowed money, (b)all
Obligations of such Person for the deferred purchase price of
property or services (other than trade payables not overdue by
more than 60 days (unless the subject of a bona fide dispute)
incurred in the ordinary course of such Person's business),
(c)all Obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (d)all Obligations of
such Person created or arising under any conditional sale or
other title retention agreement with respect to property acquired
by such Person (even though the rights and remedies of the seller
or lender under such agreement in the event of default are
limited to repossession or sale of such property), (e)all
Obligations of such Person as lessee under Capitalized Leases,
(f)all Obligations, contingent or otherwise, of such Person under
acceptance, letter of credit or similar facilities, (g)all
Obligations of such Person to purchase, redeem, retire, defease
or otherwise make any payment in respect of any capital stock of
or other ownership or profit interest in such Person or any other
Person or any warrants, rights or options to acquire such capital
stock, valued, in the case of redeemable preferred stock, at the
greater of its voluntary or involuntary liquidation preference
plus accrued and unpaid dividends, (h)all Obligations of such
Person in respect of Hedge Agreements, (i)all Debt of others
referred to in clauses(a) through (h) above or clause (j) below
guaranteed directly or indirectly in any manner by such Person,
or in effect guaranteed directly or indirectly by such Person
through an agreement (i)to pay or purchase such Debt or to
advance or supply funds for the payment or purchase of such Debt,
(ii)to purchase, sell or lease (as lessee or lessor) property, or
to purchase or sell services, primarily for the purpose of
enabling the debtor to make payment of such Debt or to assure the
holder of such Debt against loss, (iii)to supply funds to or in
any other manner invest in the debtor (including any agreement to
pay for property or services irrespective of whether such
property is received or such services are rendered) or
(iv)otherwise to assure a creditor against loss, and (j)all Debt
referred to in clauses(a) through (i) above of another Person
secured by (or for which the holder of such Debt has an existing
right, contingent or otherwise, to be secured by) any Lien on
property (including, without limitation, accounts and contract
rights) owned by such Person, even though such Person has not
assumed or become liable for the payment of such Debt.
"Debt Rating" means, as of any date, the lowest rating that has
been most recently announced by either S&P or Moody's, as the
case may be, for any class of non-credit enhanced long-term
senior unsecured debt issued by Crompton Corp. or, if applicable,
the rating assigned in writing by either S&P or Moody's, as the
case may be, as the "implied rating" of Crompton Corp.'s non-credit
enhanced long-term senior unsecured Debt, provided that
for purposes of the foregoing, if S&P or Moody's shall change the
basis on which ratings are established, each reference to the
Debt Rating announced by S&P or Moody's, as the case may be,
shall refer to the then equivalent rating by S&P or Moody's, as
the case may be.
"Default" means any Event of Default or any event that would
constitute an Event of Default but for the requirement that
notice be given or time elapse or both.
"Defaulted Advance" means, with respect to any Lender Party at
any time, the portion of any Advance required to be made by such
Lender Party to any Borrower pursuant to Section2.01 or 2.02 at
or prior to such time which has not been made by such Lender
Party or the Agent for the account of such Lender Party pursuant
to Section 2.02(e) as of such time. In the event that a portion
of a Defaulted Advance shall be deemed made pursuant to
Section2.15(a), the remaining portion of such Defaulted Advance
shall be considered a Defaulted Advance originally required to be
made pursuant to Section 2.01 on the same date as the Defaulted
Advance so deemed made in part.
"Defaulted Amount" means, with respect to any Lender Party at any
time, any amount required to be paid by such Lender Party to the
Agent or any other Lender Party hereunder or under any other Loan
Document at or prior to such time which has not been so paid as
of such time, including, without limitation, any amount required
to be paid by such Lender Party to (a) the Swing Line Bank
pursuant to Section 2.02(b) to purchase a portion of a Swing Line
Advance made by the Swing Line Bank, (b) any Issuing Bank
pursuant to Section 2.03(c) to purchase a portion of a Letter of
Credit Advance made by such Issuing Bank, (c) the Agent pursuant
to Section 2.02(e) to reimburse the Agent for the amount of any
Advance made by the Agent for the account of such Lender Party,
(d)any other Lender Party pursuant to Section 2.13 to purchase
any participation in Advances owing to such other Lender Party
and (e)the Agent or any Issuing Bank pursuant to Section 7.05 to
reimburse the Agent or such Issuing Bank for such Lender Party's
ratable share of any amount required to be paid by the Lender
Parties to the Agent or such Issuing Bank as provided therein.
In the event that a portion of a Defaulted Amount shall be deemed
paid pursuant to Section 2.15(b), the remaining portion of such
Defaulted Amount shall be considered a Defaulted Amount
originally required to be paid hereunder or under any other Loan
Document on the same date as the Defaulted Amount so deemed paid
in part.
"Defaulting Lender" means, at any time, any Lender Party that, at
such time, (a)owes a Defaulted Advance or a Defaulted Amount or
(b)shall take any action or be the subject of any action or
proceeding of a type described in Section 6.01(f).
"Disclosed Litigation" has the meaning specified in
Section 3.01(f).
"Domestic Lending Office" means, with respect to any Lender
Party, the office of such Lender Party specified as its "Domestic
Lending Office" opposite its name on Schedule I hereto or in the
Assignment and Acceptance pursuant to which it became a Lender
Party, as the case may be, or such other office of such Lender
Party as such Lender Party may from time to time specify to
Crompton Corp. and the Agent.
"Domestic Subsidiary" of Crompton Corp. means any Subsidiary of
Crompton Corp. other than a Foreign Subsidiary.
"EBITDA" means, for any period, net income (or net loss)
calculated before the cumulative effect of accounting changes
plus the sum of (a) interest expense, (b) income tax expense, (c)
extraordinary losses included in net income, (d)depreciation
expense, (e)amortization expense, (f)all foreign currency losses
less foreign currency gains (but only to the extent such foreign
currency gains do not exceed such foreign currency losses), (g)
non-recurring expenses incurred in connection with the Merger in
an amount not to exceed $70,000,000 in the aggregate and (h) non-recurring
restructuring charges in an amount not to exceed
$20,000,000 in any Fiscal Year or $50,000,000 in the aggregate
after the Effective Date less extraordinary gains included in net
income, determined on a Consolidated basis in accordance with
GAAP for such period.
"Effective Date" means the first date on which the conditions set
forth in Article III are satisfied.
"Eligible Assignee" means (a) with respect to any Facility (other
than the Letter of Credit Facilities), (i)a Lender; (ii) an
Affiliate of a Lender; and (iii)any other Person approved by the
Agent and Crompton Corp., such approval not to be unreasonably
withheld or delayed, and (b)with respect to the Letter of Credit
Facilities, any Person approved by the Agent and Crompton Corp.,
such approval not to be unreasonably withheld or delayed;
provided, however, that neither any Loan Party nor any Affiliate
of a Loan Party shall qualify as an Eligible Assignee under this
definition.
"Environmental Action" means any action, suit, demand, demand
letter, claim, notice of non-compliance or violation, notice of
liability or potential liability, investigation, proceeding,
consent order or consent agreement relating in any way to any
Environmental Law, any Environmental Permit or Hazardous Material
or arising from alleged injury or threat to health, safety or the
environment, including, without limitation, (a)by any
governmental or regulatory authority for enforcement, cleanup,
removal, response, remedial or other actions or damages and (b)by
any governmental or regulatory authority or third party for
damages, contribution, indemnification, cost recovery,
compensation or injunctive relief.
"Environmental Law" means any federal, state, local or foreign
statute, law, ordinance, rule, regulation, code, order, writ,
judgment, injunction, decree or judicial or agency
interpretation, policy or guidance relating to pollution or
protection of the environment, health, safety or natural
resources, including, without limitation, those relating to the
use, handling, transportation, treatment, storage, disposal,
release or discharge of Hazardous Materials.
"Environmental Permit" means any permit, approval, identification
number, license or other authorization required under any
Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations
promulgated and rulings issued thereunder.
"ERISA Affiliate" means any Person that for purposes of Title IV
of ERISA is a member of the controlled group of any Loan Party,
or under common control with any Loan Party, within the meaning
of Section 414 of the Internal Revenue Code.
"ERISA Event" means (a) (i)the occurrence of a reportable event,
within the meaning of Section 4043 of ERISA, with respect to any
Plan unless the 30-day notice requirement with respect to such
event has been waived by the PBGC, or (ii) the requirements of
subsection (1) of Section 4043(b) of ERISA (without regard to
subsection (2) of such Section) are met with respect to a
contributing sponsor, as defined in Section 4001(a)(13) of ERISA,
of a Plan, and an event described in paragraph (9), (10), (11),
(12) or (13) of Section 4043(c) of ERISA is reasonably expected
to occur with respect to such Plan within the following 30 days;
(b) the application for a minimum funding waiver with respect to
a Plan; (c)the provision by the administrator of any Plan of a
notice of intent to terminate such Plan, pursuant to Section
4041(a)(2) of ERISA (including any such notice with respect to a
plan amendment referred to in Section 4041(e) of ERISA); (d) the
cessation of operations at a facility of any Loan Party or any
ERISA Affiliate in the circumstances described in Section 4062(e)
of ERISA; (e)the withdrawal by any Loan Party or any ERISA
Affiliate from a Multiple Employer Plan during a plan year for
which it was a substantial employer, as defined in Section
4001(a)(2) of ERISA; (f)the conditions for imposition of a lien
under Section 302(f) of ERISA shall have been met with respect to
any Plan; (g)the adoption of an amendment to a Plan requiring the
provision of security to such Plan pursuant to Section 307 of
ERISA; or (h)the institution by the PBGC of proceedings to
terminate a Plan pursuant to Section 4042 of ERISA, or the
occurrence of any event or condition described in Section 4042 of
ERISA that constitutes grounds for the termination of, or the
appointment of a trustee to administer, such Plan.
"Eurocurrency Liabilities" has the meaning specified in
Regulation D of the Board of Governors of the Federal Reserve
System, as in effect from time to time.
"Eurodollar Lending Office" means, with respect to any Lender
Party, the Office of such Lender Party specified as its
"Eurodollar Lending Office" opposite its name on Schedule I
hereto or in the Assignment and Acceptance pursuant to which it
became a Lender Party (or, if no such office is specified, its
Domestic Lending Office), or such other office of such Lender
Party as such Lender Party may from time to time specify to
Crompton Corp. and the Agent.
"Eurodollar Rate" means, for any Interest Period for all
Eurodollar Rate Advances comprising part of the same Borrowing,
an interest rate per annum equal to the rate per annum obtained
by dividing (a)the rate per annum at which deposits in U.S.
dollars are offered by the principal office of Citibank in
London, England to prime banks in the London interbank market at
11:00 A.M. (London time) two Business Days before the first day
of such Interest Period in an amount substantially equal to
Citibank's Eurodollar Rate Advance comprising part of such
Borrowing to be outstanding during such Interest Period (or, if
Citibank shall not have such a Eurodollar Rate Advance,
$1,000,000) and for a period equal to such Interest Period by
(b)a percentage equal to 100% minus the Eurodollar Rate Reserve
Percentage for such Interest Period.
"Eurodollar Rate Advance" means an Advance that bears interest as
provided in Section2.07(a)(ii).
"Eurodollar Rate Reserve Percentage" for any Interest Period for
all Eurodollar Rate Advances comprising part of the same
Borrowing means the reserve percentage applicable two Business
Days before the first day of such Interest Period under
regulations issued from time to time by the Board of Governors of
the Federal Reserve System (or any successor) for determining the
maximum reserve requirement (including, without limitation, any
emergency, supplemental or other marginal reserve requirement)
for a member bank of the Federal Reserve System in New York City
with respect to liabilities or assets consisting of or including
Eurocurrency Liabilities (or with respect to any other category
of liabilities that includes deposits by reference to which the
interest rate on Eurodollar Rate Advances is determined) having a
term equal to such Interest Period.
"Events of Default" has the meaning specified in Section 6.01.
"Existing Debt" means Debt of the Borrowers and their respective
Subsidiaries outstanding immediately before giving effect to the
Merger.
"Existing Letters of Credit" has the meaning specified in Section
2.03(e).
"Facility" means any of any Working Capital Facility, either
Swing Line Facility or either Letter of Credit Facility.
"Federal Funds Rate" means, for any period, a fluctuating
interest rate per annum equal for each day during such period to
the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not
so published for any day that is a Business Day, the average of
the quotations for such day for such transactions received by the
Agent from three Federal funds brokers of recognized standing
selected by it.
"Financial Statements" means, at any time, the most recent
financial statements furnished or required to be furnished by
Crompton Corp. to the Agent and the Lender Parties pursuant to
Section 5.03(b) or (c), as the case may be.
"Fiscal Year" means a fiscal year of Crompton Corp. and its
Consolidated Subsidiaries ending on or about December 31 in any
calendar year.
"Foreign Exchange Agreements" means currency swap agreements,
currency future or option contracts and other similar agreements
other than contracts or agreements under which neither any Loan
Party nor any of its Subsidiaries has any obligation that may
require payment in the future.
"Foreign Subsidiary" of Crompton Corp. means (a) solely for
purposes of Section 5.02(a), (b), (d), (e) and (f), Uniroyal
Chemical International Company, Gustafson International Company
and Uniroyal Chemical Company Limited and (b) in all instances,
any Subsidiary of Crompton Corp. (i) which is not incorporated in
the United States and (ii)(A) substantially all of whose assets
and properties are located, or substantially all of whose
business is carried on, outside of the United States or (B)
substantially all of whose assets consist of Subsidiaries that
are Foreign Subsidiaries as defined in clauses (i) and (ii)(A) of
this definition.
"GAAP" has the meaning specified in Section 1.03.
"Guaranties" means the Parent Guaranty, the Subsidiary Guaranty
and any other guaranty delivered pursuant to Section 5.01(k) or
5.01(l)(v).
"Guarantors" means Crompton Corp. and the Subsidiary Guarantors.
"Hazardous Materials" means (a)petroleum or petroleum products,
by-products or breakdown products, radioactive materials,
asbestos-containing materials, polychlorinated biphenyls and
radon gas and (b)any other chemicals, materials or substances
designated, classified or regulated as hazardous or toxic or as a
pollutant or contaminant under any Environmental Law.
"Hedge Agreements" means, collectively, Interest Rate Swap
Agreements, Foreign Exchange Agreements and agreements designed
to manage the total cost of publicly traded Debt obligations of
the Borrowers.
"Hedge Bank" means any Lender Party or any of its Affiliates in
its capacity as a party to a Bank Hedge Agreement.
"Indemnified Party" has the meaning specified in Section 8.04(b).
"Information Memorandum" means the information memorandum dated
June 1996 used by the Arranger in connection with the syndication
of the Commitments.
"Initial Extension of Credit" means the earlier to occur of the
initial Borrowing and the initial issuance of a Letter of Credit
hereunder.
"Initial Issuing Banks" has the meaning specified in the recital
of parties to this Agreement.
"Initial Lenders" has the meaning specified in the recital of
parties to this Agreement.
"Insufficiency" means, with respect to any Plan, the amount, if
any, of its unfunded benefit liabilities, as defined in Section
4001(a)(18) of ERISA.
"Interest Coverage Ratio" means, at any date of determination,
the ratio of Consolidated EBITDA to interest payable on, and
amortization of debt discount in respect of, all Debt (including,
without limitation, the interest component of Capitalized
Leases), in each case of Crompton Corp. and its Subsidiaries for
the immediately preceding Rolling Period.
"Interest Period" means, for each Eurodollar Rate Advance
comprising part of the same Borrowing, the period commencing on
the date of such Eurodollar Rate Advance or the date of the
Conversion of any Base Rate Advance into such Eurodollar Rate
Advance, and ending on the last day of the period selected by the
Borrower requesting such Borrowing or Conversion pursuant to the
provisions below and, thereafter, each subsequent period
commencing on the last day of the immediately preceding Interest
Period and ending on the last day of the period selected by such
Borrower pursuant to the provisions below. The duration of each
such Interest Period shall be one, two, three or six months, as
such Borrower may, upon notice received by the Agent not later
than 11:00 A.M. (New York City time) on the third Business Day
prior to the first day of such Interest Period, select; provided,
however, that:
(a)such Borrower may not select any Interest Period with respect
to any Eurodollar Rate Advance under a Facility that ends after
any principal repayment installment date for such Facility
unless, after giving effect to such selection, the aggregate
principal amount of Base Rate Advances and of Eurodollar Rate
Advances having Interest Periods that end on or prior to such
principal repayment installment date for such Facility shall be
at least equal to the aggregate principal amount of Advances
under such Facility due and payable on or prior to such date;
(b)Interest Periods commencing on the same date for Eurodollar
Rate Advances comprising part of the same Borrowing shall be of
the same duration;
(c)whenever the last day of any Interest Period would otherwise
occur on a day other than a Business Day, the last day of such
Interest Period shall be extended to occur on the next succeeding
Business Day, provided, however, that, if such extension would
cause the last day of such Interest Period to occur in the next
following calendar month, the last day of such Interest Period
shall occur on the next preceding Business Day; and
(d)whenever the first day of any Interest Period occurs on a day
of an initial calendar month for which there is no numerically
corresponding day in the calendar month that succeeds such
initial calendar month by the number of months equal to the
number of months in such Interest Period, such Interest Period
shall end on the last Business Day of such succeeding calendar
month.
"Interest Rate Swap Agreements" means interest rate swap, cap or
collar agreements, interest rate future or option contracts and
other similar agreements other than contracts or agreements under
which neither any Loan Party nor any of its Subsidiaries has any
obligation that may require payment in the future.
"Internal Revenue Code" means the Internal Revenue Code of 1986,
as amended from time to time, and the regulations promulgated and
rulings issued thereunder.
"Inventory" has the meaning specified in Section 1 of the
Uniroyal Security Agreement.
"Investment" in any Person means any loan or advance to such
Person, any purchase or other acquisition of all or substantially
all of the assets of any business of such Person or any capital
stock or other ownership or profit interest, warrants, rights,
options, obligations or other securities of such Person, any
capital contribution to such Person or any other investment in
such Person, including, without limitation, any arrangement
pursuant to which the investor incurs Debt of the types referred
to in clause (i) or (j) of the definition of "Debt" in respect of
such Person.
"Issuing Banks" means (a) with respect to the Letter of Credit A
Facility, each Initial Issuing Bank that has a Letter of Credit A
Commitment set forth opposite its name on Schedule I hereto and
any other Working Capital A Lender approved as an Issuing Bank by
the Agent and, so long as no Default shall have occurred and be
continuing, by Crompton Corp. (such approval not to be
unreasonably withheld or delayed) and each Eligible Assignee to
which a Letter of Credit A Commitment hereunder has been assigned
pursuant to Section 8.07 and (b) with respect to the Letter of
Credit B-1 Facility, each Initial Issuing Bank that has a Letter
of Credit B-1 Commitment set forth opposite its name on Schedule
I hereto and any other Working Capital B-1 Lender approved as an
Issuing Bank by the Agent and, so long as no Default shall have
occurred and be continuing, by Crompton Corp. (such approval not
to be unreasonably withheld or delayed) and each Eligible
Assignee to which a Letter of Credit B-1 Commitment hereunder has
been assigned pursuant to Section 8.07 so long as, in each case,
each such Lender or Eligible Assignee expressly agrees to perform
in accordance with their terms all of the obligations that by the
terms of this Agreement are required to be performed by it as an
Issuing Bank and notifies the Agent of its Applicable Lending
Office and the amount of its Letter of Credit Commitment (which
information shall be recorded by the Agent in the Register).
"ITC" has the meaning specified in the recital of parties to this
Agreement.
"L/C Cash Collateral Account" has the meaning specified in the
Security Agreement.
"L/C Related Documents" has the meaning specified in
Section 2.04(e)(ii).
"Lender Party" means any Lender, any Issuing Bank or the Swing
Line Bank.
"Lenders" means the Initial Lenders and each Person that shall
become a Lender hereunder pursuant to Section 8.07.
"Letter of Credit" has the meaning specified in Section 2.01(f).
"Letter of Credit A Commitment" means, with respect to any
Issuing Bank at any time, the amount set forth opposite such
Issuing Bank's name on Schedule I hereto under the caption
"Letter of Credit A Commitment" or, if such Issuing Bank has
entered into one or more Assignments and Acceptances, set forth
for such Issuing Bank in the Register maintained by the Agent
pursuant to Section 8.07(d) as such Issuing Bank's "Letter of
Credit A Commitment", as such amount may be reduced at or prior
to such time pursuant to Section 2.05.
"Letter of Credit A Facility" means, at any time, an amount equal
to the lesser of (a) the aggregate amount of the Issuing Banks'
Letter of Credit A Commitments at such time and (b) $50,000,000,
as such amount may be reduced at or prior to such time pursuant
to Section 2.05.
"Letter of Credit Advance" means an advance made by any Issuing
Bank or any Appropriate Lender pursuant to Section 2.03(c).
"Letter of Credit Agreement" has the meaning specified in Section
2.03(a).
"Letter of Credit B-1 Commitment" means, with respect to any
Issuing Bank at any time, the amount set forth opposite such
Issuing Bank's name on Schedule I hereto under the caption
"Letter of Credit B-1 Commitment" or, if such Issuing Bank has
entered into one or more Assignments and Acceptances, set forth
for such Issuing Bank in the Register maintained by the Agent
pursuant to Section 8.07(d) as such Issuing Bank's "Letter of
Credit B-1 Commitment", as such amount may be reduced at or prior
to such time pursuant to Section 2.05.
"Letter of Credit B-1 Facility" means, at any time, an amount
equal to the lesser of (a) the aggregate amount of the Issuing
Banks' Letter of Credit B-1 Commitments at such time and (b)
$20,000,000, as such amount may be reduced at or prior to such
time pursuant to Section 2.05.
"Letter of Credit Commitment" means a Letter of Credit A
Commitment or a Letter of Credit B-1 Commitment.
"Letter of Credit Facility" means the Letter of Credit A Facility
or the Letter of Credit B-1 Facility.
"Lien" means any lien, security interest or other charge or
encumbrance of any kind, or any other type of preferential
arrangement, including, without limitation, the lien or retained
security title of a conditional vendor and any easement, right of
way or other encumbrance on title to real property.
"Loan Documents" means (a) for purposes of this Agreement and the
Notes and any amendment, supplement or modification hereof or
thereof and for all other purposes other than for purposes of the
Guaranties and the Collateral Documents, (i) this Agreement, (ii)
the Notes, (iii) the Guaranties, (iv) the Collateral Documents
and (v) each Letter of Credit Agreement and (b) for purposes of
the Guaranties and the Collateral Documents, (i) this Agreement,
(ii) the Notes, (iii) the Guaranties, (iv) the Collateral
Documents, (v) each Letter of Credit Agreement, (vi) each Bank
Hedge Agreement and (vii) the Daylight Overdraft Documents, in
each case as amended, supplemented or otherwise modified from
time to time.
"Loan Parties" means the Borrowers and the Guarantors.
"Louisiana Undertaking" has the meaning specified in Section
3.01(k)(xiv).
"Margin Stock" has the meaning specified in Regulation U.
"Material Adverse Change" means any material adverse change in
the business, condition (financial or otherwise), operations,
performance, properties or prospects of (a) Crompton Corp. and
its Subsidiaries, taken as a whole, (b) Crompton Corp. and its
Subsidiaries (other than Uniroyal Corp. and its Subsidiaries),
taken as a whole, or (c) Uniroyal and its Subsidiaries, taken as
a whole.
"Material Adverse Effect" means a material adverse effect on
(a)the business, condition (financial or otherwise), operations,
performance, properties or prospects of (i) Crompton Corp. and
its Subsidiaries, taken as a whole, (ii) Crompton Corp. and its
Subsidiaries (other than Uniroyal Corp. and its Subsidiaries),
taken as a whole, or (iii) Uniroyal and its Subsidiaries, taken
as a whole, (b)the rights and remedies of the Agent or any Lender
Party under any Loan Document or Related Document or (c)the
ability of any Loan Party to perform its Obligations under any
Loan Document or Related Document to which it is or is to be a
party.
"Material Subsidiary" means, at any time, a Subsidiary of
Crompton Corp. having at least $10,000,000 in assets on a
Consolidated basis (determined as of the last day of the most
recent fiscal quarter of Crompton Corp.) or at least $20,000,000
in revenues, on a Consolidated basis, for the 12-month period
ending on the last day of the most recent fiscal quarter of
Crompton Corp.; provided, however, that any Subsidiary formed or
acquired after the last day of the most recent fiscal quarter of
Crompton Corp. that would have been a Material Subsidiary if it
had been formed or acquired on or prior to the last day of such
fiscal quarter shall be a Material Subsidiary for purposes hereof
from and after the date of its formation or acquisition.
"Merger" has the meaning specified in the Preliminary Statements.
"Merger Agreement" has the meaning specified in the Preliminary
Statements.
"Minor Subsidiaries" means those Subsidiaries of Crompton Corp.
listed on Schedule III hereto.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, to which any Loan Party or any ERISA
Affiliate is making or accruing an obligation to make
contributions, or has within any of the preceding five plan years
made or accrued an obligation to make contributions.
"Multiple Employer Plan" means a single employer plan, as defined
in Section 4001(a)(15) of ERISA, that (a)is maintained for
employees of any Loan Party or any ERISA Affiliate and at least
one Person other than the Loan Parties and the ERISA Affiliates
or (b) was so maintained and in respect of which any Loan Party
or any ERISA Affiliate could have liability under Section 4064 or
4069 of ERISA in the event such plan has been or were to be
terminated.
"Naugatuck" means Naugatuck Treatment Company, a Connecticut
corporation.
"Net Cash Proceeds" means, with respect to any sale, lease,
transfer or other disposition of any asset or the sale or
issuance of any Debt or capital stock or other ownership or
profit interest, any securities convertible into or exchangeable
for capital stock or other ownership or profit interest or any
warrants, rights, options or other securities to acquire capital
stock or other ownership or profit interest by any Person, the
aggregate amount of cash received from time to time (whether as
initial consideration or through payment or disposition of
deferred consideration) by or on behalf of such Person in
connection with such transaction after deducting therefrom only
(without duplication) (a)reasonable and customary brokerage
commissions, underwriting fees and discounts, legal fees,
finder's fees and other similar fees and commissions and (b)the
amount of taxes payable in connection with or as a result of such
transaction, in each case to the extent, but only to the extent,
that the amounts so deducted are, at the time of receipt of such
cash, actually paid to a Person that is not an Affiliate of such
Person or any Loan Party or any Affiliate of any Loan Party and
are properly attributable to such transaction or to the asset
that is the subject thereof; provided, however, that in the case
of taxes that are deductible under clause (b) but for the fact
that at the time of receipt of such cash, such taxes have not
been actually paid or are not then payable, such Person may
deduct an amount equal to the amount reserved in accordance with
GAAP for such Person's reasonable estimate of such taxes, other
than taxes for which such Person is indemnified; provided
further, however, that if the amount deducted pursuant to clause
(b) above is greater than the amount actually so paid, the amount
of such excess shall constitute Net Cash Proceeds.
"Note" means a Working Capital A Note, a Working Capital B-1 Note
or a Working Capital B-2 Note.
"Notice of Borrowing" has the meaning specified in Section
2.02(a).
"Notice of Issuance" has the meaning specified in
Section 2.03(a).
"Notice of Swing Line Borrowing" has the meaning specified in
Section 2.02(b).
"NPL" means the National Priorities List under CERCLA.
"Obligation" means, with respect to any Person, any payment,
performance or other obligation of such Person of any kind,
including, without limitation, any liability of such Person on
any claim, whether or not the right of any creditor to payment in
respect of such claim is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, disputed, undisputed,
legal, equitable, secured or unsecured, and whether or not such
claim is discharged, stayed or otherwise affected by any
proceeding referred to in Section6.01(f). Without limiting the
generality of the foregoing, the Obligations of each Loan Party
under the Loan Documents include (a)the obligation to pay
principal, interest, Letter of Credit commissions, charges,
expenses, fees, attorneys' fees and disbursements, indemnities
and other amounts payable by such Loan Party under any Loan
Document and (b)the obligation of such Loan Party to reimburse
any amount in respect of any of the foregoing that any Lender
Party, in its sole discretion, may elect to pay or advance on
behalf of such Loan Party.
"OECD" means the Organization for Economic Cooperation and
Development.
"Operating Cash Flow" means, for any Fiscal Year, an amount equal
to "cash flow from operations" for such Fiscal Year as set forth
on the statement of cash flows furnished for such Fiscal Year
pursuant to Section 5.03(c) less scheduled principal amounts of
Debt paid or to be paid (other than in connection with the
refinancing or replacement of any Surviving Debt) by Crompton
Corp. and its Subsidiaries during such Fiscal Year.
"Other Taxes" has the meaning specified in Section 2.12(b).
"Parent Guaranty" has the meaning specified in Section
3.01(k)(ix).
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor agency or entity performing substantially the same
functions.
"Permitted Liens" has the meaning specified in Section
5.02(a)(ii).
"Person" means an individual, partnership, corporation (including
a business trust), limited liability company, joint stock
company, trust, unincorporated association, joint venture or
other entity, or a government or any political subdivision or
agency thereof.
"Plan" means a Single Employer Plan or a Multiple Employer Plan.
"Pledged Debt" has the meaning specified in the Security
Agreement.
"Pro Rata Share" of any amount means (a) with respect to any
Working Capital A Lender at any time, the product of such amount
times a fraction the numerator of which is the amount of such
Lender's Working Capital A Commitment at such time and the
denominator of which is the Working Capital A Facility at such
time, (b) with respect to any Working Capital B-1 Lender at any
time, the product of such amount times a fraction the numerator
of which is the amount of such Lender's Working Capital B-1
Commitment at such time and the denominator of which is the
Working Capital B-1 Facility and (c) with respect to any Working
Capital B-2 Lender at any time, the product of such amount times
a fraction the numerator of which is the amount of such Lender's
Working Capital B-2 Commitment at such time and the denominator
of which is the Working Capital B-2 Facility.
"Receivables" has the meaning specified in Section 1 of the
Uniroyal Security Agreement.
"Receivables Securitization" has the meaning specified in Section
5.02(e).
"Register" has the meaning specified in Section 8.07(d).
"Regulation U" means Regulation U of the Board of Governors of
the Federal Reserve System, as in effect from time to time.
"Related Documents" means the Merger Agreement, the Uniroyal
Indentures, the Uniroyal Senior Notes, the Uniroyal Corp. Senior
Notes, the Uniroyal Corp. Senior Subordinated Notes and the
Uniroyal Corp. Subordinated Discount Notes and the Tax Agreement.
"Required Lenders" means at any time Lenders owed or holding at
least 51% of the sum of the aggregate Working Capital A
Commitments, Working Capital B-1 Commitments and Working Capital
B-2 Commitments at such time, or, if the Working Capital A
Commitments, Working Capital B-1 Commitments and Working Capital
B-2 Commitments have been terminated, 51% of the sum of the
aggregate outstanding Working Capital A Advances, Working Capital
B-1 Advances and Working Capital B-2 Advances at such time;
provided, however, that if any Lender shall be a Defaulting
Lender at such time, there shall be excluded from the
determination of Required Lenders at such time the aggregate
amount of the Working Capital A Commitment, Working Capital B-1
Commitment and Working Capital B-2 Commitment of such Lender at
such time.
"Responsible Officer" means any officer of any Loan Party or any
of its Subsidiaries.
"Rolling Period" means, with respect to any fiscal quarter of
Crompton Corp. and its Subsidiaries, such fiscal quarter and the
three consecutive immediately preceding fiscal quarters.
"S&P" means Standard & Poor's Rating Group, a division of The
McGraw-Hill Companies.
"Secured Parties" means the Agent, the Lender Parties, the Hedge
Banks and the Daylight Overdraft Bank.
"Security Agreement" has the meaning specified in Section
3.01(k)(viii).
"Seoul Guaranty" means the guaranty made by the Uniroyal Borrower
in favor of Citibank Seoul, which has issued bank guaranties of
the obligations of Unikor Chemical Inc. (Korea), a joint venture
50% owned by the Uniroyal Borrower, to certain banks organized
and located in Korea.
"Seoul Guaranty Amount" means a fluctuating dollar amount equal
to the amount of the Uniroyal Borrower's obligations under the
Seoul Guaranty, not to exceed $2,000,000 or such other amount
(not to exceed, in any event, $5,000,000) as agreed from time to
time by Citibank, the Uniroyal Borrower and the Agent.
"Single Employer Plan" means a single employer plan, as defined
in Section 4001(a)(15) of ERISA, that (a) is maintained for
employees of any Loan Party or any ERISA Affiliate and no Person
other than the Loan Parties and the ERISA Affiliates or (b)was so
maintained and in respect of which any Loan Party or any ERISA
Affiliate could have liability under Section 4069 of ERISA in the
event such plan has been or were to be terminated.
"Solvent" and "Solvency" mean, with respect to any Person on a
particular date, that on such date (a)the fair value of the
property of such Person is greater than the total amount of
liabilities, including, without limitation, contingent
liabilities, of such Person, (b)the present fair salable value of
the assets of such Person is not less than the amount that will
be required to pay the probable liability of such Person on its
debts as they become absolute and matured, (c)such Person does
not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay such debts and
liabilities as they mature and (d)such Person is not engaged in
business or a transaction, and is not about to engage in business
or a transaction, for which such Person's property would
constitute an unreasonably small capital. The amount of
contingent liabilities at any time shall be computed as the
amount that, in the light of all the facts and circumstances
existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability.
"Specified Amount" means the aggregate amount of the Working
Capital B-2 Commitments on the "Change of Control Purchase Date"
(as defined in the Uniroyal Indentures), after giving effect to
any reduction of such Commitments on or prior to such date
pursuant to Section 2.05(a).
"Standby Letter of Credit" means any Letter of Credit issued
under either Letter of Credit Facility, other than a Trade Letter
of Credit.
"Subsidiary" of any Person means any corporation, partnership,
joint venture, limited liability company, trust or estate of
which (or in which) more than 50% of (a)the issued and
outstanding capital stock having ordinary voting power to elect a
majority of the Board of Directors of such corporation
(irrespective of whether at the time capital stock of any other
class or classes of such corporation shall or might have voting
power upon the occurrence of any contingency), (b)the interest in
the capital or profits of such partnership, joint venture or
limited liability company or (c)the beneficial interest in such
trust or estate is at the time directly or indirectly owned or
controlled by such Person, by such Person and one or more of its
other Subsidiaries or by one or more of such Person's other
Subsidiaries.
"Subsidiary Guarantors" means the Crompton Guarantors and the
Uniroyal Guarantors.
"Subsidiary Guaranty" has the meaning specified in Section
3.01(k)(x).
"Surviving Debt" has the meaning specified in Section 3.01(d).
"Swing Line A Advance" means an advance made by (a) the Swing
Line Bank pursuant to Section 2.01(d) or (b)any Working Capital A
Lender pursuant to Section 2.02(b).
"Swing Line A Borrowing" means a borrowing consisting of a Swing
Line A Advance made by the Swing Line Bank.
"Swing Line A Facility" has the meaning specified in
Section 2.01(d).
"Swing Line Advance" means a Swing Line A Advance or a Swing Line
B-1 Advance.
"Swing Line B-1 Advance" means an advance made by (a) the Swing
Line Bank pursuant to Section 2.01(e) or (b)any Working Capital
B-1 Lender pursuant to Section .02(b).
"Swing Line B-1 Borrowing" means a borrowing consisting of a
Swing Line B-1 Advance made by the Swing Line Bank.
"Swing Line B-1 Facility" has the meaning specified in Section
2.01(e).
"Swing Line Bank" means Citicorp.
"Swing Line Borrowing" means a Swing Line A Borrowing or a Swing
Line B-1 Borrowing.
"Swing Line Facility" means the Swing Line A Facility or the
Swing Line B-1 Facility.
"Tax Agreement" means the Tax Agreement to be entered into by
Crompton Corp. and some or all of its Subsidiaries.
"Taxes" has the meaning specified in Section 2.12(a).
"Termination Date" means the earlier of August 21, 2001 and the
date of termination in whole of the Working Capital A
Commitments, the Working Capital
B-1 Commitments, the Working Capital B-2 Commitments and the
Letter of Credit Commitments pursuant to Section 2.05 or 6.01.
"Total Debt" of any Person means all Debt of such Person of the
types referred to in clauses (a) though (e) of the definition of
"Debt".
"Total Debt/EBITDA Ratio" means, at any date of determination,
the ratio of Consolidated Total Debt of Crompton Corp. and its
Subsidiaries as at the end of the immediately preceding Rolling
Period to Consolidated EBITDA of Crompton Corp. and its
Subsidiaries for such immediately preceding Rolling Period.
"Trade Letter of Credit" means any Letter of Credit that is
issued under either Letter of Credit Facility for the benefit of
a supplier of Inventory to any Borrower or any of its
Subsidiaries to effect payment for such Inventory, the conditions
to drawing under which include the presentation to the Issuing
Bank that issued such Letter of Credit of negotiable bills of
lading, invoices and related documents.
"Type" refers to the distinction between Advances bearing
interest at the Base Rate and Advances bearing interest at the
Eurodollar Rate.
"Uniroyal" has the meaning specified in the recital of parties to
this Agreement.
"Uniroyal Borrower" has the meaning specified in the recital of
parties to this Agreement.
"Uniroyal Corp." has the meaning specified in the Preliminary
Statements.
"Uniroyal Corp. Senior Notes" means the 10-1/2% Senior Notes due
2002 in an aggregate principal amount of $300,000,000, issued by
Uniroyal Corp. pursuant to an Indenture dated as of February 8,
1993 between Uniroyal Corp. and State Street Bank and Trust
Company, as Trustee, as amended, supplemented or otherwise
modified from time to time.
"Uniroyal Corp. Senior Subordinated Notes" means the 11% Senior
Subordinated Notes due 2003 in an aggregate principal amount of
$325,000,000, issued by Uniroyal Corp. pursuant to an Indenture
dated as of February 8, 1993 between Uniroyal Corp. and United
States Trust Company of New York, as Trustee, as amended,
supplemented or otherwise modified from time to time.
"Uniroyal Corp. Subordinated Discount Notes" means the 12%
Subordinated Discount Notes due 2005 in an aggregate principal
amount of $229,952,000, issued by Uniroyal Corp. pursuant to an
Indenture dated as of February 8, 1993 between Uniroyal Corp. and
Shawmut Bank Connecticut, National Association, as Trustee, as
amended, supplemented or otherwise modified from time to time.
"Uniroyal Guarantors" means Uniroyal Corp., the Subsidiaries of
Uniroyal Corp. listed on Part II of Schedule II hereto and each
other Subsidiary of Uniroyal Corp. that shall be required to
execute and deliver a guaranty pursuant to Section 5.01(k).
"Uniroyal Indentures" means the Indenture dated as of February 8,
1993 between Uniroyal Corp. and State Street Bank and Trust
Company, as Trustee, pursuant to which the Uniroyal Corp. Senior
Notes were issued, the Indenture dated as of February 8, 1993
between Uniroyal Corp. and United States Trust Company of New
York, as Trustee, pursuant to which the Uniroyal Corp. Senior
Subordinated Notes were issued, the Indenture dated as of
February 8, 1993 between Uniroyal Corp. and Shawmut Bank
Connecticut, National Association, as Trustee, pursuant to which
the Uniroyal Corp. Subordinated Discount Notes were issued, and
the Indenture dated as of September 1, 1993 between Uniroyal and
State Street Bank and Trust Company, as Trustee, pursuant to
which the Uniroyal Senior Notes were issued, in each case as
amended, supplemented or otherwise modified or refinanced or
refunded from time to time in accordance with its terms, to the
extent permitted in accordance with the Loan Documents.
"Uniroyal Security Agreement" has the meaning specified in
Section 3.01(k)(viii).
"Uniroyal Senior Notes" means the 9% Senior Notes issued by
Uniroyal pursuant to an Indenture dated as of September 1, 1993
between Uniroyal and State Street Bank and Trust Company, as
Trustee, as amended, supplemented or otherwise modified from time
to time.
"Unused Working Capital Commitment" means, with respect to any
Working Capital Facility and any Working Capital Lender at any
time, (a)such Lender's Working Capital Commitment under such
Working Capital Facility at such time minus (b)the sum of (i)the
aggregate principal amount of all Working Capital Advances, Swing
Line Advances and Letter of Credit Advances made under such
Working Capital Facility by such Lender (in its capacity as a
Lender) and outstanding at such time, plus (ii)such Lender's Pro
Rata Share of (A)the aggregate Available Amount of all Letters of
Credit outstanding under such Working Capital Facility at such
time, (B)the aggregate principal amount of all Letter of Credit
Advances made under such Working Capital Facility by the Issuing
Banks pursuant to Section 2.03(c) and outstanding at such time,
(C)the aggregate principal amount of all Swing Line Advances made
under such Working Capital Facility by the Swing Line Bank
pursuant to Section 2.01(d) or (e), as the case may be, and
outstanding at such time and (D) in the case of the Working
Capital B-1 Facilities, the amount of the Working Capital B-1
Commitments then reserved pursuant to Section 2.01(g).
"Voting Stock" means capital stock issued by a corporation, or
equivalent interests in any other Person, the holders of which
are ordinarily, in the absence of contingencies, entitled to vote
for the election of directors (or persons performing similar
functions) of such Person, even if the right so to vote has been
suspended by the happening of such a contingency.
"Welfare Plan" means a welfare plan, as defined in Section 3(1)
of ERISA, that is maintained for employees of any Loan Party or
in respect of which any Loan Party could have liability.
"Withdrawal Liability" has the meaning specified in Part I of
Subtitle E of Title IV of ERISA.
"Working Capital A Advance" has the meaning specified in Section
2.01(a).
"Working Capital A Borrowing" means a borrowing consisting of
simultaneous Working Capital A Advances of the same Type made by
the Working Capital A Lenders.
"Working Capital A Commitment" means, with respect to any Working
Capital A Lender at any time, the amount set forth opposite such
Lender's name on Schedule I hereto under the caption "Working
Capital A Commitment" or, if such Lender has entered into one or
more Assignments and Acceptances, set forth for such Lender in
the Register maintained by the Agent pursuant to Section8.07(d)
as such Lender's "Working Capital A Commitment", as such amount
may be reduced at or prior to such time pursuant to Section2.05.
"Working Capital A Facility" means, at any time, the aggregate
amount of the Working Capital A Lenders' Working Capital A
Commitments at such time.
"Working Capital A Lender" means any Lender that has a Working
Capital A Commitment.
"Working Capital A Note" means a promissory note of any Crompton
Borrower payable to the order of any Working Capital A Lender, in
substantially the form of Exhibit A-1 hereto, evidencing the
aggregate indebtedness of such Borrower to such Lender resulting
from the Working Capital A Advances made by such Lender.
"Working Capital Advance" means a Working Capital A Advance, a
Working Capital B-1 Advance or a Working Capital B-2 Advance.
"Working Capital B-1 Advance" has the meaning specified in
Section 2.01(b).
"Working Capital B-1 Borrowing" means a borrowing consisting of
simultaneous Working Capital B-1 Advances of the same Type made
by the Working Capital B-1 Lenders.
"Working Capital B-1 Commitment" means, with respect to any
Working Capital B-1 Lender at any time, the amount set forth
opposite such Lender's name on Schedule I hereto under the
caption "Working Capital B-1 Commitment" or, if such Lender has
entered into one or more Assignments and Acceptances, set forth
for such Lender in the Register maintained by the Agent pursuant
to Section 8.07(d) as such Lender's "Working Capital B-1
Commitment", as such amount may be reduced at or prior to such
time pursuant to Section 2.05.
"Working Capital B-1 Facility" means, at any time, the aggregate
amount of the Working Capital B-1 Lenders' Working Capital B-1
Commitments at such time.
"Working Capital B-1 Lender" means any Lender that has a Working
Capital B-1 Commitment.
"Working Capital B-1 Note" means a promissory note of the
Uniroyal Borrower payable to the order of any Working Capital B-1
Lender, in substantially the form of Exhibit A-2 hereto,
evidencing the aggregate indebtedness of the Uniroyal Borrower to
such Lender resulting from the Working Capital B-1 Advances made
by such Lender.
"Working Capital B-2 Advance" has the meaning specified in
Section 2.01(c).
"Working Capital B-2 Borrowing" means a borrowing consisting of
simultaneous Working Capital B-2 Advances of the same Type made
by the Working Capital B-2 Lenders.
"Working Capital B-2 Commitment" means, with respect to any
Working Capital B-2 Lender at any time, the amount set forth
opposite such Lender's name on Schedule I hereto under the
caption "Working Capital B-2 Commitment" or, if such Lender has
entered into one or more Assignments and Acceptances, set forth
for such Lender in the Register maintained by the Agent pursuant
to Section 8.07(d) as such Lender's "Working Capital B-2
Commitment", as such amount may be reduced at or prior to such
time pursuant to Section 2.05.
"Working Capital B-2 Facility" means, at any time, the aggregate
amount of the Working Capital B-2 Lenders' Working Capital B-2
Commitments at such time.
"Working Capital B-2 Lender" means any Lender that has a Working
Capital B-2 Commitment.
"Working Capital B-2 Note" means a promissory note of the
Uniroyal Borrower payable to the order of any Working Capital B-2
Lender, in substantially the form of Exhibit A-3 hereto,
evidencing the aggregate indebtedness of the Uniroyal Borrower to
such Lender resulting from the Working Capital B-2 Advances made
by such Lender.
"Working Capital Borrowing" means a Working Capital A Borrowing,
a Working Capital B-1 Borrowing or a Working Capital B-2
Borrowing.
"Working Capital Facility" means a Working Capital A Facility, a
Working Capital B-1 Facility or a Working Capital B-2 Facility.
"Working Capital Lender" means a Working Capital A Lender, a
Working Capital B-1 Lender or a Working Capital B-2 Lender.
SECTION 1.02. Computation of Time Periods. In this Agreement in
the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and including"
and the words "to" and "until" each mean "to but excluding".
SECTION 1.03. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with
generally accepted accounting principles consistent with those
applied in the preparation of the financial statements referred
to in Section 4.01(f), in the case of Crompton Corp. and its
Subsidiaries (other than Uniroyal Corp. and its Subsidiaries),
and Section 4.01(g), in the case of Uniroyal Corp. and its
Subsidiaries ("GAAP").
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
AND THE LETTERS OF CREDIT
SECTION 2.01. The Advances. (a) The Working Capital A
Advances. Each Working Capital A Lender severally agrees, on the
terms and conditions hereinafter set forth, to make advances
(each a "Working Capital A Advance") to any Crompton Borrower
from time to time on any Business Day during the period from the
date hereof until the Termination Date in an amount for each such
Advance not to exceed such Lender's Unused Working Capital
Commitment under the Working Capital A Facility at such time.
Each Working Capital A Borrowing shall be in an aggregate amount
of $5,000,000 (or, if the Swing Line Bank shall, in its sole
discretion, decline to make a Swing Line A Advance on such
Business Day after a request therefor by such Crompton Borrower
pursuant to Section 2.01(d), $1,000,000) or an integral multiple
of $1,000,000 in excess thereof and shall consist of Working
Capital A Advances made simultaneously by the Working Capital A
Lenders ratably according to their Working Capital A Commitments.
Within the limits of each Working Capital A Lender's Unused
Working Capital Commitment under the Working Capital A Facility
in effect from time to time, the Crompton Borrowers may borrow
under this Section 2.01(a), prepay pursuant to Section 2.06(a)
and reborrow under this Section 2.01(a).
(b)The Working Capital B-1 Advances. Each Working Capital B-1
Lender severally agrees, on the terms and conditions hereinafter
set forth, to make advances (each a "Working Capital B-1
Advance") to the Uniroyal Borrower from time to time on any
Business Day during the period from the date hereof until the
Termination Date in an amount for each such Advance not to exceed
such Lender's Unused Working Capital Commitment under the Working
Capital B-1 Facility at such time. Each Working Capital B-1
Borrowing shall be in an aggregate amount of $5,000,000 (or, if
the Swing Line Bank shall, in its sole discretion, decline to
make a Swing Line B-1 Advance on such Business Day after a
request therefor by the Uniroyal Borrower pursuant to Section
2.01(e), $1,000,000) or an integral multiple of $1,000,000 in
excess thereof and shall consist of Working Capital B-1 Advances
made simultaneously by the Working Capital B-1 Lenders ratably
according to their Working Capital B-1 Commitments. Within the
limits of each Working Capital B-1 Lender's Unused Working
Capital Commitment under the Working Capital B-1 Facility in
effect from time to time, the Uniroyal Borrower may borrow under
this Section 2.01(b), prepay pursuant to Section 2.06(a) and
reborrow under this Section 2.01(b).
(c)The Working Capital B-2 Advances. Each Working Capital B-2
Lender severally agrees, on the terms and conditions hereinafter
set forth, to make advances (each a "Working Capital B-2
Advance") to the Uniroyal Borrower from time to time on any
Business Day during the period from the date hereof until the
Termination Date in an amount for each such Advance not to exceed
such Lender's Unused Working Capital Commitment under the Working
Capital B-2 Facility at such time. Each Working Capital B-2
Borrowing shall be in an aggregate amount of $5,000,000 or an
integral multiple of $1,000,000 in excess thereof and shall
consist of Working Capital B-2 Advances made simultaneously by
the Working Capital B-2 Lenders ratably according to their
Working Capital B-2 Commitments. Within the limits of each
Working Capital B-2 Lender's Unused Working Capital Commitment
under the Working Capital B-2 Facility in effect from time to
time, the Uniroyal Borrower may borrow under this
Section 2.01(c), prepay pursuant to Section 2.06(a) and reborrow
under this Section 2.01(c).
(d)The Swing Line A Advances. Any Crompton Borrower may request
the Swing Line Bank to make, and the Swing Line Bank may, if in
its sole discretion it elects to do so, make, on the terms and
conditions hereinafter set forth, Swing Line A Advances to such
Crompton Borrower from time to time on any Business Day during
the period from the date hereof until the Termination Date (i) in
an aggregate amount not to exceed at any time outstanding
$10,000,000 (the "Swing Line A Facility") and (ii) in an amount
for each such Swing Line A Borrowing not to exceed the aggregate
of the Unused Working Capital Commitments under the Working
Capital A Facility of the Working Capital A Lenders at such time.
No Swing Line A Advance shall be used for the purpose of funding
the payment of principal of any other Swing Line A Advance. Each
Swing Line A Borrowing shall be in an amount of $500,000 or an
integral multiple of $100,000 in excess thereof and shall be made
as a Base Rate Advance. Within the limits of the Swing Line A
Facility and within the limits referred to in clause (ii) above,
so long as the Swing Line Bank, in its sole discretion, elects to
make Swing Line A Advances, the Crompton Borrowers may borrow
under this Section 2.01(d), repay pursuant to Section 2.04(d) or
prepay pursuant to Section 2.06(a) and reborrow under this
Section 2.01(d).
(e)The Swing Line B-1 Advances. The Uniroyal Borrower may
request the Swing Line Bank to make, and the Swing Line Bank may,
if in its sole discretion it elects to do so, make, on the terms
and conditions hereinafter set forth, Swing Line B-1 Advances to
the Uniroyal Borrower from time to time on any Business Day
during the period from the date hereof until the Termination Date
(i) in an aggregate amount not to exceed at any time outstanding
$10,000,000 (the "Swing Line B-1 Facility") and (ii) in an amount
for each such Swing Line Borrowing not to exceed the aggregate of
the Unused Working Capital Commitments under the Working Capital
B-1 Facility of the Working Capital B-1 Lenders at such time. No
Swing Line B-1 Advance shall be used for the purpose of funding
the payment of principal of any other Swing Line B-1 Advance.
Each Swing Line B-1 Borrowing shall be in an amount of $500,000
or an integral multiple of $100,000 in excess thereof and shall
be made as a Base Rate Advance. Within the limits of the Swing
Line B-1 Facility and within the limits referred to in
clause (ii) above, so long as the Swing Line Bank, in its sole
discretion, elects to make Swing Line B-1 Advances, the Uniroyal
Borrower may borrow under this Section 2.01(e), repay pursuant to
Section 2.04(d) or prepay pursuant to Section 2.06(a) and
reborrow under this Section 2.01(e).
(f)Letters of Credit. Each Issuing Bank severally agrees, on the
terms and conditions hereinafter set forth, to issue letters of
credit (together with the Existing Letters of Credit referred to
in Section 2.03(e), the "Letters of Credit") for the account of
any Borrower from time to time on any Business Day during the
period from the date hereof until 30 days before the Termination
Date (i) in an aggregate Available Amount for all Letters of
Credit issued by such Issuing Bank not to exceed at any time such
Issuing Bank's Letter of Credit Commitment at such time under the
Facility which the applicable Notice of Issuance specifies as the
Facility under which such Letter of Credit is to be issued,
(ii) in an Available Amount for each such Letter of Credit to be
issued under the Letter of Credit A Facility not to exceed the
lesser of (x) the Letter of Credit A Facility at such time and
(y) the Unused Working Capital Commitments of the Working Capital
A Lenders under the Working Capital A Facility at such time and
(iii) in an Available Amount for each such Letter of Credit to be
issued under the Letter of Credit B-1 Facility not to exceed the
lesser of (x) the Letter of Credit B-1 Facility at such time and
(y) the Unused Working Capital Commitments of the Working Capital
B-1 Lenders under the Working Capital B-1 Facility at such time.
Letters of Credit issued under the Letter of Credit A Facility
shall be issued for the account of any Crompton Borrower and
Letters of Credit issued under the Letter of Credit B-1 Facility
shall be issued for the account of the Uniroyal Borrower. No
Letter of Credit shall have an expiration date (including all
rights of the applicable Borrower or the beneficiary to require
renewal) later than the earlier of 30 days before the Termination
Date and (A) in the case of a Standby Letter of Credit, one year
after the date of issuance thereof and (B) in the case of a Trade
Letter of Credit, 90 days after the date of issuance thereof.
Within the limits of the Letter of Credit A Facility or the
Letter of Credit B-1 Facility, as the case may be, and subject to
the limits referred to above, the Crompton Borrowers or the
Uniroyal Borrower, as the case may be, may request the issuance
of Letters of Credit under this Section 2.01(f), repay any Letter
of Credit Advances resulting from drawings thereunder pursuant to
Section 2.03(c) and request the issuance of additional Letters of
Credit under this Section 2.01(f).
(g)Set Aside of Working Capital B-1 Commitments in Respect of the
Seoul Guaranty. Each Working Capital B-1 Lender's Pro Rata Share
of an aggregate amount of Working Capital B-1 Commitments equal
to the Seoul Guaranty Amount shall be reserved to ensure that
sufficient funds may be made available to the Uniroyal Borrower
for payment to Citibank Seoul of the Seoul Guaranty Amount as the
same becomes due and payable. The amount of Working Capital B-1
Commitments reserved under this Section 2.01(g) shall equal the
Seoul Guaranty Amount from time to time.
SECTION 2.02. Making the Advances. (a) Except as otherwise
provided in Section 2.02(b) or 2.03, each Borrowing shall be made
on notice, given not later than 11:00 A.M. (New York City time)
on (x) the third Business Day prior to the date of the proposed
Borrowing in the case of a Borrowing consisting of Eurodollar
Rate Advances, or (y) the first Business Day prior to the date of
the proposed Borrowing (or, if the Swing Line Bank shall, in its
sole discretion, decline to make a Swing Line Advance on the date
of the proposed Borrowing after a request therefor by a Borrower
pursuant to Section 2.01(d) or (e), the date of the proposed
Borrowing) in the case of a Borrowing consisting of Base Rate
Advances, by any Borrower to the Agent, which shall give to each
Appropriate Lender prompt notice thereof by telex or telecopier.
Each such notice of a Borrowing (a "Notice of Borrowing") shall
be by telephone, confirmed immediately in writing, or telex or
telecopier, in substantially the form of Exhibit B hereto,
specifying therein the requested (i) date of such Borrowing,
(ii) Facility under which such Borrowing is to be made,
(iii) Type of Advances comprising such Borrowing, (iv) aggregate
amount of such Borrowing and (v) in the case of a Borrowing
consisting of Eurodollar Rate Advances, initial Interest Period
for each such Advance. Each Appropriate Lender shall, before
11:00 A.M. (New York City time) on the date of such Borrowing,
make available for the account of its Applicable Lending Office
to the Agent at the Agent's Account, in same day funds, such
Lender's ratable portion of such Borrowing in accordance with the
respective Commitments under the applicable Facility of such
Lender and the other Appropriate Lenders. After the Agent's
receipt of such funds and upon fulfillment of the applicable
conditions set forth in Article III, the Agent will make such
funds available to the relevant Borrower by crediting the
relevant Borrower's Account.
(b)Each Swing Line Borrowing shall be made on notice, given not
later than 11:00 A.M. (New York City time) on the date of the
proposed Swing Line Borrowing, by any Borrower to the Swing Line
Bank and the Agent. Each such notice of a Swing Line Borrowing
(a "Notice of Swing Line Borrowing") shall be by telephone,
confirmed immediately in writing, or telex or telecopier,
specifying therein the requested (i) date of such Borrowing,
(ii) amount of such Borrowing and (iii) maturity of such
Borrowing (which maturity shall be no later than the seventh day
after the requested date of such Borrowing). If, in its sole
discretion, it elects to make the requested Swing Line Advance,
the Swing Line Bank will make the amount thereof available to the
Agent at the Agent's Account, in same day funds. After the
Agent's receipt of such funds and upon fulfillment of the
applicable conditions set forth in Article III, the Agent will
make such funds available to the relevant Borrower by crediting
the relevant Borrower's Account. Upon written demand by the
Swing Line Bank with an outstanding Swing Line A Advance or Swing
Line B-1 Advance, as the case may be, with a copy of such demand
to the Agent, each other Working Capital A Lender or Working
Capital B-1 Lender, as the case may be, shall purchase from the
Swing Line Bank, and the Swing Line Bank shall sell and assign to
each such other Working Capital A Lender or Working Capital B-1
Lender, as the case may be, such other Lender's Pro Rata Share of
such outstanding Swing Line A Advance or Swing Line B-1 Advance,
as the case may be, as of the date of such demand, by making
available for the account of its Applicable Lending Office to the
Agent for the account of the Swing Line Bank, by deposit to the
Agent's Account, in same day funds, an amount equal to the
portion of the outstanding principal amount of such Swing Line A
Advance or Swing Line B-1 Advance, as the case may be, to be
purchased by such Lender. Each Borrower hereby agrees to each
such sale and assignment. Each Working Capital A Lender agrees
to purchase its Pro Rata Share of an outstanding Swing Line A
Advance and each Working Capital B-1 Lender agrees to purchase
its Pro Rata Share of an outstanding Swing Line B-1 Advance on
(i) the Business Day on which demand therefor is made by the
Swing Line Bank, provided that notice of such demand is given not
later than 11:00 A.M. (New York City time) on such Business Day
or (ii) the first Business Day next succeeding such demand if
notice of such demand is given after such time. Upon any such
assignment by the Swing Line Bank to any other Working Capital
Lender of a portion of a Swing Line Advance, the Swing Line Bank
represents and warrants to such other Lender that the Swing Line
Bank is the legal and beneficial owner of such interest being
assigned by it, but makes no other representation or warranty and
assumes no responsibility with respect to such Swing Line
Advance, the Loan Documents or any Loan Party. If and to the
extent that any Working Capital A Lender or Working Capital B-1
Lender, as the case may be, shall not have so made the amount of
such Swing Line A Advance or Swing Line B-1 Advance, as the case
may be, available to the Agent, such Lender agrees to pay to the
Agent forthwith on demand such amount together with interest
thereon, for each day from the date of demand by the Swing Line
Bank until the date such amount is paid to the Agent, at the
Federal Funds Rate. If such Lender shall pay to the Agent such
amount for the account of the Swing Line Bank on any Business
Day, such amount so paid in respect of principal shall constitute
a Swing Line Advance made by such Lender on such Business Day for
purposes of this Agreement, and the outstanding principal amount
of the Swing Line Advance made by the Swing Line Bank shall be
reduced by such amount on such Business Day.
(c)Anything in subsection (a) above to the contrary
notwithstanding, (i) the Borrowers may not select Eurodollar Rate
Advances for any Borrowing if the aggregate amount of such
Borrowing is less than $5,000,000 or if the obligation of the
Appropriate Lenders to make Eurodollar Rate Advances shall then
be suspended pursuant to Section 2.09 or Section 2.10 and
(ii) the Working Capital Advances may not be outstanding as part
of more than 12 separate Borrowings.
(d)Each Notice of Borrowing and Notice of Swing Line Borrowing
shall be irrevocable and binding on the Borrower giving such
notice. In the case of any Borrowing that the related Notice of
Borrowing specifies is to be comprised of Eurodollar Rate
Advances, the Borrower giving such notice shall indemnify each
Appropriate Lender against any loss, cost or expense incurred by
such Lender as a result of any failure to fulfill on or before
the date specified in such Notice of Borrowing for such Borrowing
the applicable conditions set forth in Article III, including,
without limitation, any loss (including loss of anticipated
profits), cost or expense incurred by reason of the liquidation
or reemployment of deposits or other funds acquired by such
Lender to fund the Advance to be made by such Lender as part of
such Borrowing when such Advance, as a result of such failure, is
not made on such date.
(e)Unless the Agent shall have received notice from an
Appropriate Lender prior to the date of any Borrowing under a
Facility under which such Lender has a Commitment that such
Lender will not make available to the Agent such Lender's ratable
portion of such Borrowing, the Agent may assume that such Lender
has made such portion available to the Agent on the date of such
Borrowing in accordance with subsection (a) or (b) of this
Section 2.02 and the Agent may, in reliance upon such assumption,
make available to the relevant Borrower on such date a
corresponding amount. If and to the extent that such Lender
shall not have so made such ratable portion available to the
Agent, such Lender and the relevant Borrower severally agree to
repay or pay to the Agent forthwith on demand such corresponding
amount and to pay interest thereon, for each day from the date
such amount is made available to such Borrower until the date
such amount is repaid or paid to the Agent, at (i) in the case of
the Borrowers, the interest rate applicable at such time under
Section 2.07 to Advances comprising such Borrowing and (ii) in
the case of such Lender, the Federal Funds Rate. If such Lender
shall pay to the Agent such corresponding amount, such amount so
paid shall constitute such Lender's Advance as part of such
Borrowing for all purposes.
(f)The failure of any Lender to make the Advance to be made by it
as part of any Borrowing shall not relieve any other Lender of
its obligation, if any, hereunder to make its Advance on the date
of such Borrowing, but no Lender shall be responsible for the
failure of any other Lender to make the Advance to be made by
such other Lender on the date of any Borrowing.
(g)The Uniroyal Borrower hereby irrevocably authorizes and
appoints Citibank as its attorney-in-fact to execute and deliver
a Notice of Borrowing in accordance with Section 2.02(a) or a
Notice of Swing Line Borrowing in accordance with Section
2.02(b), on behalf of and in the name of the Uniroyal Borrower,
for a Working Capital B-1 Borrowing or Swing Line B-1 Borrowing,
as the case may be, in an aggregate amount not to exceed the
Seoul Guaranty Amount. The Uniroyal Borrower hereby authorizes
each of Citibank and Citibank Seoul, in its discretion, to hold
the proceeds of such Borrowing as collateral for, and/or then or
at any time thereafter to apply such proceeds in whole or in part
against the Obligations of the Uniroyal Borrower under the Seoul
Guaranty. Each Working Capital B-1 Lender severally agrees,
notwithstanding any other term or condition of this Agreement
(including, without limitation, any non-fulfillment of any of the
conditions specified in Article III), to make an Advance to or
for the account of the Uniroyal Borrower for the purposes
specified in the proviso to the first sentence of Section 2.14
hereof, on any Business Day during the period from the date
hereof until the Termination Date, in an aggregate amount not to
exceed such Lender's Pro Rata Share of the amount of Working
Capital B-1 Commitments then reserved pursuant to Section
2.01(g); provided that, after giving effect to the Advances made
pursuant to this Section 2.02(g), the sum of the aggregate
principal amount of Working Capital B-1 Advances, Swing Line B-1
Advances and Letter of Credit B-1 Advances then outstanding plus
the Available Amount of all Letters of Credit issued under the
Letter of Credit B-1 Facility and then outstanding shall not
exceed the aggregate Working Capital B-1 Commitments.
SECTION 2.03. Issuance of and Drawings and Reimbursement Under
Letters of Credit. (a) Request for Issuance. Each Letter of
Credit shall be issued upon notice, given not later than
11:00 A.M. (New York City time) on the second Business Day prior
to the date of the proposed issuance of such Letter of Credit, by
any Crompton Borrower to any Issuing Bank under the Letter of
Credit A Facility or by the Uniroyal Borrower to any Issuing Bank
under the Letter of Credit B-1 Facility, which shall give to the
Agent and each Appropriate Lender prompt notice thereof by telex
or telecopier. Each such notice of issuance of a Letter of
Credit (a "Notice of Issuance") shall be by telephone, confirmed
immediately in writing, or telex or telecopier, specifying
therein the requested (A) date of such issuance (which shall be a
Business Day), (B) Available Amount of such Letter of Credit,
(C) expiration date of such Letter of Credit, (D) name and
address of the beneficiary of such Letter of Credit, (E) Facility
under which such Letter of Credit is to be issued and (F) form of
such Letter of Credit, and shall be accompanied by such
application and agreement for letter of credit as such Issuing
Bank may specify to the relevant Borrower for use in connection
with such requested Letter of Credit (a "Letter of Credit
Agreement"). If (x) the requested form of such Letter of Credit
is acceptable to such Issuing Bank in its sole discretion and (y)
it has not received notice of objection to such issuance from
Appropriate Lenders holding at least 51% of the Working Capital A
Commitments or Working Capital B-1 Commitments, as the case may
be, such Issuing Bank will, upon fulfillment of the applicable
conditions set forth in Article III, make such Letter of Credit
available to the Borrower requesting the issuance of such Letter
of Credit at its office referred to in Section 8.02 or as
otherwise agreed with such Borrower in connection with such
issuance. In the event and to the extent that the provisions of
any Letter of Credit Agreement shall conflict with this
Agreement, the provisions of this Agreement shall govern.
(b)Letter of Credit Reports. Each Issuing Bank shall furnish
(A) to the Agent on the first Business Day of each week a written
report summarizing issuance and expiration dates of Letters of
Credit issued by such Issuing Bank during the previous week and
drawings during such week under all Letters of Credit issued by
such Issuing Bank, (B) to each Appropriate Lender on the first
Business Day of each month a written report summarizing issuance
and expiration dates of Letters of Credit issued by such Issuing
Bank during the preceding month and drawings during such month
under all Letters of Credit issued by such Issuing Bank and
(C) to the Agent and each Appropriate Lender on the first
Business Day of each calendar quarter a written report setting
forth the average daily aggregate Available Amount during the
preceding calendar quarter of all Letters of Credit issued by
such Issuing Bank.
(c)Drawing and Reimbursement. The payment by any Issuing Bank of
a draft drawn under any Letter of Credit shall constitute for all
purposes of this Agreement the making by such Issuing Bank of a
Letter of Credit Advance, which shall be a Base Rate Advance, in
the amount of such draft. Upon payment by any Issuing Bank of a
draft drawn under any Letter of Credit, such Issuing Bank shall
give prompt notice thereof to the applicable Borrower and the
Agent. Upon written demand by any Issuing Bank with an
outstanding Letter of Credit Advance, with a copy of such demand
to the Agent, each Appropriate Lender shall purchase from such
Issuing Bank, and such Issuing Bank shall sell and assign to each
such Appropriate Lender, such Lender's Pro Rata Share of such
outstanding Letter of Credit Advance as of the date of such
purchase, by making available for the account of its Applicable
Lending Office to the Agent for the account of such Issuing Bank,
by deposit to the Agent's Account, in same day funds, an amount
equal to the portion of the outstanding principal amount of such
Letter of Credit Advance to be purchased by such Lender.
Promptly after receipt thereof, the Agent shall transfer such
funds to such Issuing Bank. Each Borrower hereby agrees to each
such sale and assignment. Each Appropriate Lender agrees to
purchase its Pro Rata Share of an outstanding Letter of Credit
Advance on (i) the Business Day on which demand therefor is made
by the Issuing Bank which made such Advance, provided notice of
such demand is given not later than 11:00 A.M. (New York City
time) on such Business Day or (ii) the first Business Day next
succeeding such demand if notice of such demand is given after
such time. Upon any such assignment by an Issuing Bank to any
Appropriate Lender of a portion of a Letter of Credit Advance,
such Issuing Bank represents and warrants to such Appropriate
Lender that such Issuing Bank is the legal and beneficial owner
of such interest being assigned by it, free and clear of any
liens, but makes no other representation or warranty and assumes
no responsibility with respect to such Letter of Credit Advance,
the Loan Documents or any Loan Party. If and to the extent that
any Appropriate Lender shall not have so made the amount of such
Letter of Credit Advance available to the Agent, such Appropriate
Lender agrees to pay to the Agent forthwith on demand such amount
together with interest thereon, for each day from the date of
demand by such Issuing Bank until the date such amount is paid to
the Agent, at the Federal Funds Rate for its account or the
account of such Issuing Bank, as applicable. If such Lender
shall pay to the Agent such amount for the account of such
Issuing Bank on any Business Day, such amount so paid in respect
of principal shall constitute a Letter of Credit Advance made by
such Lender on such Business Day for purposes of this Agreement,
and the outstanding principal amount of the Letter of Credit
Advance made by such Issuing Bank shall be reduced by such amount
on such Business Day.
(d)Failure to Make Letter of Credit Advances. The failure of any
Lender to make the Letter of Credit Advance to be made by it on
the date specified in Section 2.03(c) shall not relieve any other
Lender of its obligation hereunder to make its Letter of Credit
Advance on such date, but no Lender shall be responsible for the
failure of any other Lender to make the Letter of Credit Advance
to be made by such other Lender on such date.
(e)Existing Letters of Credit. Pursuant to the Credit Agreement
dated as of December 21, 1995 (the "1995 Credit Agreement") among
the Uniroyal Borrower, the lender parties party thereto and
Citicorp as agent for the lender parties thereunder, the "Issuing
Bank" thereunder issued "Letters of Credit" (such Letters of
Credit as are outstanding under the 1995 Credit Agreement on the
Effective Date and set forth on Schedule 2.03(e) hereto being the
"Existing Letters of Credit") for the account of the Uniroyal
Borrower. Effective as of the Effective Date: (i) the "Issuing
Bank" under the 1995 Credit Agreement will be deemed to have sold
and transferred, and each Working Capital B-1 Lender hereunder
will be deemed to have purchased and received, without further
action on the part of any party, an undivided interest and
participation in such Existing Letters of Credit, based on such
Working Capital B-1 Lender's Pro Rata Share of the Working
Capital B-1 Facility; and (ii) the Existing Letters of Credit
will be deemed to be Letters of Credit hereunder.
SECTION 2.04. Repayment of Advances. (a) Working Capital A
Advances. Each Crompton Borrower shall repay to the Agent for
the ratable account of the Working Capital A Lenders on the
Termination Date the aggregate principal amount of the Working
Capital A Advances made to such Crompton Borrower and then
outstanding.
(b)Working Capital B-1 Advances. The Uniroyal Borrower shall
repay to the Agent for the ratable account of the Working Capital
B-1 Lenders on the Termination Date the aggregate principal
amount of the Working Capital B-1 Advances then outstanding.
(c)Working Capital B-2 Advances. The Uniroyal Borrower shall
repay to the Agent for the ratable account of the Working Capital
B-2 Lenders on the Termination Date the aggregate outstanding
principal amount of the Working Capital B-2 Advances then
outstanding.
(d)Swing Line Advances. Each Borrower shall repay to the Agent
for the account of the Swing Line Bank and each other Working
Capital Lender that has made a Swing Line Advance the outstanding
principal amount of each Swing Line Advance made by each of them
and owing by such Borrower on the earlier of the maturity date
specified in the applicable Notice of Swing Line Borrowing (which
maturity shall be no later than the seventh day after the
requested date of such Borrowing) and the Termination Date.
(e)Letter of Credit Advances. (i) Each Borrower shall repay to
the Agent for the account of each Issuing Bank and each other
Working Capital Lender that has made a Letter of Credit Advance
on the earlier of the second Business Day following the date on
which such Letter of Credit is drawn and the Termination Date the
outstanding principal amount of each Letter of Credit Advance
made by each of them.
(ii)The Obligations of each Borrower under this Agreement, any
Letter of Credit Agreement and any other agreement or instrument
relating to any Letter of Credit shall be unconditional and
irrevocable, and shall be paid strictly in accordance with the
terms of this Agreement, such Letter of Credit Agreement and such
other agreement or instrument under all circumstances, including,
without limitation, the following circumstances:
(A)any lack of validity or enforceability of any Loan Document,
any Letter of Credit Agreement, any Letter of Credit or any other
agreement or instrument relating thereto (all of the foregoing
being, collectively, the "L/C Related Documents");
(B)any change in the time, manner or place of payment of, or in
any other term of, all or any of the Obligations of any Borrower
in respect of any L/C Related Document or any other amendment or
waiver of or any consent to departure from all or any of the L/C
Related Documents;
(C)the existence of any claim, set-off, defense or other right
that any Borrower may have at any time against any beneficiary or
any transferee of a Letter of Credit (or any Persons for whom any
such beneficiary or any such transferee may be acting), any
Issuing Bank or any other Person, whether in connection with the
transactions contemplated by the L/C Related Documents or any
unrelated transaction;
(D)any statement or any other document presented under a Letter
of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue
or inaccurate in any respect;
(E)payment by any Issuing Bank under a Letter of Credit against
presentation of a draft or certificate that does not strictly
comply with the terms of such Letter of Credit;
(F)any exchange, release or non-perfection of any Collateral or
other collateral, or any release or amendment or waiver of or
consent to departure from any Guaranty or any other guarantee,
for all or any of the Obligations of any Borrower in respect of
the L/C Related Documents; or
(G)any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing, including, without limitation,
any other circumstance that might otherwise constitute a defense
available to, or a discharge of, any Borrower, any Guarantor or
any other guarantor.
SECTION 2.05. Termination or Reduction of the Commitments.
(a) Optional. Crompton Corp. may, on its own behalf and on
behalf of the other Borrowers, upon at least two Business Days'
notice to the Agent, terminate in whole or reduce in part the
unused portion of either Letter of Credit Facility, either Swing
Line Facility or the Unused Working Capital Commitments under any
Working Capital Facility; provided, however, that each partial
reduction of a Facility (i) shall be in an aggregate amount of
$10,000,000 or an integral multiple of $5,000,000 in excess
thereof and (ii) shall be made ratably among the Appropriate
Lenders in accordance with their Commitments with respect to such
Facility.
(b)Mandatory. (i) The aggregate Working Capital B-2 Commitments
of the Working Capital B-2 Lenders shall be automatically and
permanently reduced, on a pro rata basis, on the following dates
in the amounts indicated:
Date Amount
December 31, 1997 5% of the Specified Amount
December 31, 1998 10% of the Specified Amount
December 31, 1999 15% of the Specified Amount
(ii) The Letter of Credit A Facility or Letter of Credit B-1
Facility, as the case may be, shall be permanently reduced from
time to time on the date of each reduction in the Working Capital
A Facility or Working Capital B-1 Facility, as the case may be,
by the amount, if any, by which the amount of the Letter of
Credit A Facility or Letter of Credit B-1 Facility, as the case
may be, exceeds the Working Capital A Facility or Working Capital
B-1 Facility, as the case may be, after giving effect to such
reduction of such Working Capital Facility.
(iii) The Swing Line A Facility or Swing Line B-1 Facility, as
the case may be, shall be permanently reduced from time to time
on the date of each reduction in the Working Capital A Facility
or Working Capital B-1 Facility, as the case may be, by the
amount, if any, by which the amount of the Swing Line A Facility
or Swing Line B-1 Facility, as the case may be, exceeds the
Working Capital A Facility or Working Capital B-1 Facility, as
the case may be, after giving effect to such reduction of such
Working Capital Facility.
(iv) Upon the date of receipt by Crompton Corp. or any of its
Subsidiaries of the Net Cash Proceeds from the sale or other
disposition of assets pursuant to clause (vii) of Section
5.02(e), the Working Capital Facilities shall be automatically
and permanently reduced, on a pro rata basis, by the amount of
such Net Cash Proceeds to the extent required under such clause
(vii).
SECTION 2.06. Prepayments. (a) Optional. Each Borrower may,
upon at least one Business Day's notice in the case of Base Rate
Advances and three Business Days' notice in the case of
Eurodollar Rate Advances, in each case to the Agent stating the
proposed date and aggregate principal amount of the prepayment,
and if such notice is given such Borrower shall, prepay the
outstanding aggregate principal amount of the Advances comprising
part of the same Borrowing in whole or ratably in part, together
with accrued interest to the date of such prepayment on the
aggregate principal amount prepaid; provided, however, that
(x) each partial prepayment shall be in an aggregate principal
amount of $5,000,000 or an integral multiple of $1,000,000 in
excess thereof and (y) if any prepayment of a Eurodollar Rate
Advance is made on a date other than the last day of an Interest
Period for such Advance, such Borrower shall also pay any amounts
owing pursuant to Section 8.04(c).
(b)Mandatory. (i) The Crompton Borrowers shall, on each
Business Day, prepay an aggregate principal amount of the Working
Capital A Advances comprising part of the same Borrowings, the
Letter of Credit A Advances and the Swing Line A Advances equal
to the amount by which (A) the sum of the aggregate principal
amount of (x) the Working Capital A Advances, (y) the Letter of
Credit A Advances and (z) the Swing Line A Advances then
outstanding plus the aggregate Available Amount of all Letters of
Credit then outstanding under the Working Capital A Facility
exceeds (B) the Working Capital A Facility on such Business Day.
(ii)The Uniroyal Borrower shall, on each Business Day, prepay an
aggregate principal amount of the Working Capital B-1 Advances
comprising part of the same Borrowings, the Letter of Credit B-1
Advances and the Swing Line B-1 Advances equal to the amount by
which (A) the sum of the aggregate principal amount of (x) the
Working Capital B-1 Advances, (y) the Letter of Credit B-1
Advances and (z) the Swing Line B-1 Advances then outstanding
plus the aggregate Available Amount of all Letters of Credit then
outstanding under the Working Capital B-1 Facility exceeds
(B) the Working Capital B-1 Facility on such Business Day.
(iii)The Uniroyal Borrower shall, on each Business Day, prepay an
aggregate principal amount of the Working Capital B-2 Advances
comprising part of the same Borrowings equal to the amount by
which the aggregate principal amount of the Working Capital B-2
Advances then outstanding exceeds the Working Capital B-2
Facility on such Business Day.
(iv)The Crompton Borrowers shall, on each Business Day, pay to
the Agent for deposit in the relevant L/C Cash Collateral Account
an amount sufficient to cause the aggregate amount on deposit in
such Account to equal the amount by which the aggregate Available
Amount of all Letters of Credit then outstanding under the
Working Capital A Facility exceeds the Letter of Credit A
Facility on such Business Day.
(v)The Uniroyal Borrower shall, on each Business Day, pay to the
Agent for deposit in the relevant L/C Cash Collateral Account an
amount sufficient to cause the aggregate amount on deposit in
such Account to equal the amount by which the aggregate Available
Amount of all Letters of Credit then outstanding under the Letter
of Credit B-1 Facility exceeds the Letter of Credit B-1 Facility
on such Business Day.
(vi)Prepayments of the Working Capital A Facility or Working
Capital B-1 Facility made pursuant to clause (i) or (ii) above
shall be first applied to prepay Letter of Credit Advances then
outstanding under such Facility until such Advances are paid in
full, second applied to prepay Swing Line Advances then
outstanding under such Facility until such Advances are paid in
full, third applied to prepay Working Capital Advances then
outstanding under such Facility comprising part of the same
Borrowings until such Advances are paid in full and fourth
deposited in the relevant L/C Cash Collateral Account to cash
collateralize 100% of the Available Amount of the Letters of
Credit then outstanding under such Facility.
(vii)All prepayments under this subsection (b) shall be made
together with accrued interest to the date of such prepayment on
the principal amount prepaid.
SECTION 2.07. Interest. (a) Scheduled Interest. Each Borrower
shall pay interest on the unpaid principal amount of each Advance
made to such Borrower and owing to each Lender from the date of
such Advance until such principal amount shall be paid in full,
at the following rates per annum:
(i)Base Rate Advances. During such periods as such Advance is a
Base Rate Advance, a rate per annum equal at all times to the sum
of (A) the Base Rate in effect from time to time plus (B) the
Applicable Margin in effect from time to time, payable in arrears
quarterly on the first day of each October, January, April and
July during such periods and on the date such Base Rate Advance
shall be Converted or paid in full.
(ii)Eurodollar Rate Advances. During such periods as such
Advance is a Eurodollar Rate Advance, a rate per annum equal at
all times during each Interest Period for such Advance to the sum
of (A) the Eurodollar Rate for such Interest Period for such
Advance plus (B) the Applicable Margin in effect from time to
time, payable in arrears on the last day of such Interest Period
and, if such Interest Period has a duration of more than three
months, on each day that occurs during such Interest Period every
three months from the first day of such Interest Period and on
the date such Eurodollar Rate Advance shall be Converted or paid
in full.
(b)Default Interest. Upon the occurrence and during the
continuance of an Event of Default, each Borrower shall pay
interest on (i) the unpaid principal amount of each Advance made
to such Borrower and owing to each Lender, payable in arrears on
the dates referred to in clause (a)(i) or (a)(ii) above and on
demand, at a rate per annum equal at all times to 2% per annum
above the rate per annum required to be paid on such Advance
pursuant to clause (a)(i) or (a)(ii) above and (ii) to the
fullest extent permitted by law, the amount of any interest, fee
or other amount payable hereunder that is not paid when due, from
the date such amount shall be due until such amount shall be paid
in full, payable in arrears on the date such amount shall be paid
in full and on demand, at a rate per annum equal at all times to
2% per annum above the rate per annum required to be paid, in the
case of interest, on the Type of Advance on which such interest
has accrued pursuant to clause (a)(i) or (a)(ii) above, and, in
all other cases, on Base Rate Advances pursuant to clause (a)(i)
above.
(c)Notice of Interest Rate. Promptly after receipt of a Notice
of Borrowing pursuant to Section 2.02(a), the Agent shall give
notice to the relevant Borrower and each Appropriate Lender of
the applicable interest rate determined by the Agent for purposes
of clause (a)(i) or (ii).
SECTION 2.08. Fees. (a) Commitment Fee. The Borrowers jointly
and severally agree to pay to the Agent for the account of the
Lenders a commitment fee, from August 15, 1996 in the case of
each Initial Lender and from the effective date specified in the
Assignment and Acceptance pursuant to which it became a Lender in
the case of each other Lender until the Termination Date, payable
in arrears on the date of the initial Borrowing hereunder,
thereafter quarterly on the first Business Day of each quarter,
commencing August 1, 1996, and on the Termination Date, at a rate
per annum equal to the Applicable Percentage in effect from time
to time on the average daily Unused Working Capital Commitments
of such Lender (without giving effect to clause (b)(ii)(D) of the
definition of "Unused Working Capital Commitment"); provided,
however, that any commitment fee accrued with respect to any of
the Commitments of a Defaulting Lender during the period prior to
the time such Lender became a Defaulting Lender and unpaid at
such time shall not be payable by the Borrowers so long as such
Lender shall be a Defaulting Lender except to the extent that
such commitment fee shall otherwise have been due and payable by
the Borrowers prior to such time; and provided further that no
commitment fee shall accrue on any of the Commitments of a
Defaulting Lender so long as such Lender shall be a Defaulting
Lender.
(b)Letter of Credit Fees, Etc. (i) The Borrowers jointly and
severally agree to pay to the Agent for the account of each
Working Capital A Lender and each Working Capital B-1 Lender a
commission, payable quarterly in arrears on the first Business
Day of each January, April, July and October, commencing October
1, 1996, and on the earliest to occur of the full drawing,
expiration, termination or cancellation of any Letter of Credit
and on the Termination Date, on such Lender's Pro Rata Share of
the average daily aggregate Available Amount during such quarter
of all Letters of Credit issued under the Working Capital A
Facility and Working Capital B-1 Facility, respectively, and
outstanding from time to time at the rate per annum equal to the
Applicable Percentage in effect from time to time.
(ii)Any Borrower giving a Notice of Issuance shall pay to each
Issuing Bank, for its own account, such commissions, issuance
fees, fronting fees, transfer fees and other fees and charges in
connection with the issuance or administration of the requested
Letter of Credit as such Borrower and such Issuing Bank shall
agree.
(c)Agent's Fees. The Borrowers jointly and severally agree to
pay to the Agent for its own account such fees as may from time
to time be agreed between the Borrowers and the Agent.
SECTION 2.09. Conversion of Advances. (a) Optional. Any
Borrower may on any Business Day, upon notice given to the Agent
not later than 11:00 A.M. (New York City time) on the third
Business Day prior to the date of the proposed Conversion and
subject to the provisions of Sections 2.07 and 2.10, Convert all
or any portion of the Advances of one Type made to such Borrower
comprising the same Borrowing into Advances of the other Type;
provided, however, that any Conversion of Eurodollar Rate
Advances into Base Rate Advances shall be made only on the last
day of an Interest Period for such Eurodollar Rate Advances, any
Conversion of Base Rate Advances into Eurodollar Rate Advances
shall be in an amount not less than the minimum amount specified
in Section 2.02(c), no Conversion of any Advances shall result in
more separate Borrowings than permitted under Section 2.02(c) and
each Conversion of Advances comprising part of the same Borrowing
under any Facility shall be made ratably among the Appropriate
Lenders in accordance with their Commitments under such Facility.
Each such notice of Conversion shall, within the restrictions
specified above, specify (i) the date of such Conversion,
(ii) the Advances to be Converted and (iii) if such Conversion is
into Eurodollar Rate Advances, the duration of the initial
Interest Period for such Advances. Each notice of Conversion
shall be irrevocable and binding on the Borrower giving such
notice.
(b)Mandatory. (i) On the date on which the aggregate unpaid
principal amount of Eurodollar Rate Advances comprising any
Borrowing shall be reduced, by payment or prepayment or
otherwise, to less than $5,000,000, such Advances shall
automatically Convert into Base Rate Advances.
(ii)If any Borrower shall fail to select the duration of any
Interest Period for any Eurodollar Rate Advances made to such
Borrower in accordance with the provisions contained in the
definition of "Interest Period" in Section 1.01, the Agent will
forthwith so notify such Borrower and the Appropriate Lenders,
whereupon each such Eurodollar Rate Advance will automatically,
on the last day of the then existing Interest Period therefor,
Convert into a Base Rate Advance.
(iii)Upon the occurrence and during the continuance of any Event
of Default, (x) each Eurodollar Rate Advance will automatically,
on the last day of the then existing Interest Period therefor,
Convert into a Base Rate Advance and (y) the obligation of the
Lenders to make, or to Convert Advances into, Eurodollar Rate
Advances shall be suspended.
SECTION 2.10. Increased Costs, Etc. (a) If, due to either
(i) the introduction of or any change in or in the interpretation
of any law or regulation or (ii) the compliance with any
guideline or request from any central bank or other governmental
authority (whether or not having the force of law), there shall
be any increase in the cost to any Lender Party of agreeing to
make or of making, funding or maintaining Eurodollar Rate
Advances or of agreeing to issue or of issuing or maintaining
Letters of Credit or of agreeing to make or of making or
maintaining Letter of Credit Advances (excluding for purposes of
this Section 2.10 any such increased costs resulting from (i)
Taxes or Other Taxes (as to which Section 2.12 shall govern) and
(ii) changes in the basis of taxation of overall net income or
overall gross income by the United States or by the foreign
jurisdiction or state under the laws of which such Lender Party
is organized or has its Applicable Lending Office or any
political subdivision thereof), then the Borrowers jointly and
severally agree to pay from time to time, upon demand by such
Lender Party (with a copy of such demand to the Agent), to the
Agent for the account of such Lender Party additional amounts
sufficient to compensate such Lender Party for such increased
cost; provided, however, that, before making any such demand,
each Lender Party agrees to use reasonable efforts (consistent
with its internal policy and legal and regulatory restrictions)
to designate a different Applicable Lending Office if the making
of such a designation would avoid the need for, or reduce the
amount of, such increased cost and would not, in the reasonable
judgment of such Lender Party, be otherwise disadvantageous to
such Lender Party. A certificate as to the amount of such
increased cost, submitted to the Borrowers by such Lender Party,
shall be conclusive and binding for all purposes, absent manifest
error.
(b)If any Lender Party determines that either (i) the enactment
of or any change in or in the interpretation of any law or
regulation or (ii) the compliance with any law or regulation or
any guideline or request from any central bank or other
governmental authority (whether or not having the force of law)
affects or would affect the amount of capital required or
expected to be maintained by such Lender Party or any corporation
controlling such Lender Party and that the amount of such capital
is increased by or based upon the existence of such Lender
Party's commitment to lend or to issue Letters of Credit
hereunder and other commitments of such type or the issuance or
maintenance of the Letters of Credit (or similar contingent
obligations), then, upon demand by such Lender Party (with a copy
of such demand to the Agent), the Borrowers jointly and severally
agree to pay to the Agent for the account of such Lender Party,
from time to time as specified by such Lender Party, additional
amounts sufficient to compensate such Lender Party in the light
of such circumstances, to the extent that such Lender Party
reasonably determines such increase in capital to be allocable to
the existence of such Lender Party's commitment to lend or to
issue Letters of Credit hereunder or to the issuance or
maintenance of any Letters of Credit; provided, however, that,
before making any such demand, each Lender Party agrees to use
reasonable efforts (consistent with its internal policy and legal
and regulatory restrictions) to designate a different Applicable
Lending Office if the making of such a designation would avoid
the need for, or reduce the amount of, such additional amounts
payable under this subsection (b) and would not, in the
reasonable judgment of such Lender Party, be otherwise
disadvantageous to such Lender Party. A certificate as to such
amounts submitted to the Borrowers by such Lender Party shall be
conclusive and binding for all purposes, absent manifest error.
(c)If, with respect to any Eurodollar Rate Advances made or to be
made under any Facility, Appropriate Lenders holding at least 51%
of the Commitments under such Facility notify the Agent that the
Eurodollar Rate for any Interest Period for such Advances will
not adequately reflect the cost to such Lenders of making,
funding or maintaining their Eurodollar Rate Advances for such
Interest Period, the Agent shall forthwith so notify the
Borrowers and the Appropriate Lenders, whereupon (i) each such
Eurodollar Rate Advance under such Facility will automatically,
on the last day of the then existing Interest Period therefor,
Convert into a Base Rate Advance and (ii) the obligation of the
Appropriate Lenders to make, or to Convert Advances into,
Eurodollar Rate Advances shall be suspended until the Agent shall
notify the Borrowers that such Lenders have determined that the
circumstances causing such suspension no longer exist.
(d)Notwithstanding any other provision of this Agreement, if the
introduction of or any change in or in the interpretation of any
law or regulation shall make it unlawful, or any central bank or
other governmental authority shall assert that it is unlawful,
for any Lender or its Eurodollar Lending Office to perform its
obligations hereunder to make Eurodollar Rate Advances or to
continue to fund or maintain Eurodollar Rate Advances hereunder,
then, on notice thereof and demand therefor by such Lender to the
Borrowers through the Agent, (i) each Eurodollar Rate Advance
under each Facility under which such Lender has a Commitment will
automatically, upon such demand, Convert into a Base Rate Advance
and (ii) the obligation of the Appropriate Lenders to make, or to
Convert Advances into, Eurodollar Rate Advances shall be
suspended until the Agent shall notify the Borrowers that such
Lender has determined that the circumstances causing such
suspension no longer exist.
SECTION 2.11. Payments and Computations. (a) Each Borrower
shall make each payment hereunder and under the Notes,
irrespective of any right of counterclaim or set-off (except as
otherwise provided in Section 2.15), not later than 11:00 A.M.
(New York City time) on the day when due in U.S. dollars to the
Agent at the Agent's Account in same day funds. The Agent will
promptly thereafter cause like funds to be distributed (i) if
such payment by such Borrower is in respect of principal,
interest, commitment fees or any other Obligation then payable
hereunder and under the Notes to more than one Lender Party, to
such Lender Parties for the account of their respective
Applicable Lending Offices ratably in accordance with the amounts
of such respective Obligations then payable to such Lender
Parties and (ii) if such payment by such Borrower is in respect
of any Obligation then payable hereunder to one Lender Party, to
such Lender Party for the account of its Applicable Lending
Office, in each case to be applied in accordance with the terms
of this Agreement. Upon its acceptance of an Assignment and
Acceptance and recording of the information contained therein in
the Register pursuant to Section 8.07(d), from and after the
effective date of such Assignment and Acceptance, the Agent shall
make all payments hereunder and under the Notes in respect of the
interest assigned thereby to the Lender Party assignee
thereunder, and the parties to such Assignment and Acceptance
shall make all appropriate adjustments in such payments for
periods prior to such effective date directly between themselves.
(b)If the Agent receives funds for application to the Obligations
under the Loan Documents under circumstances for which the Loan
Documents do not specify the Advances or the Facility to which,
or the manner in which, such funds are to be applied, the Agent
may, but shall not be obligated to, elect to distribute such
funds to each Lender Party ratably in accordance with such Lender
Party's proportionate share of the principal amount of all
outstanding Advances and the Available Amount of all Letters of
Credit then outstanding, in repayment or prepayment of such of
the outstanding Advances or other Obligations owed to such Lender
Party, and for application to such principal installments, as the
Agent shall direct.
(c)Each Borrower hereby authorizes each Lender Party, if and to
the extent payment owed to such Lender Party is not made when due
hereunder or, in the case of a Lender, under the Note held by
such Lender, to charge from time to time against any or all of
such Borrower's accounts with such Lender Party any amount so
due.
(d)All computations of interest based on the Base Rate shall be
made by the Agent on the basis of a year of 365 or 366 days, as
the case may be, and all computations of interest based on the
Eurodollar Rate or the Federal Funds Rate and of fees and Letter
of Credit commissions shall be made by the Agent on the basis of
a year of 360 days, in each case for the actual number of days
(including the first day but excluding the last day) occurring in
the period for which such interest, fees or commissions are
payable. Each determination by the Agent of an interest rate,
fee or commission hereunder shall be conclusive and binding for
all purposes, absent manifest error.
(e)Whenever any payment hereunder or under the Notes shall be
stated to be due on a day other than a Business Day, such payment
shall be made on the next succeeding Business Day, and such
extension of time shall in such case be included in the
computation of payment of interest or commitment fee, as the case
may be; provided, however, that, if such extension would cause
payment of interest on or principal of Eurodollar Rate Advances
to be made in the next following calendar month, such payment
shall be made on the next preceding Business Day.
(f)Unless the Agent shall have received notice from a Borrower
prior to the date on which any payment is due to any Lender Party
hereunder that such Borrower will not make such payment in full,
the Agent may assume that such Borrower has made such payment in
full to the Agent on such date and the Agent may, in reliance
upon such assumption, cause to be distributed to each such Lender
Party on such due date an amount equal to the amount then due
such Lender Party. If and to the extent any Borrower shall not
have so made such payment in full to the Agent, each such Lender
Party shall repay to the Agent forthwith on demand such amount
distributed to such Lender Party together with interest thereon,
for each day from the date such amount is distributed to such
Lender Party until the date such Lender Party repays such amount
to the Agent, at the Federal Funds Rate.
SECTION 2.12. Taxes. (a) Any and all payments by any Borrower
hereunder or under the Notes shall be made, in accordance with
Section 2.11, free and clear of and without deduction for any and
all present or future taxes, levies, imposts, deductions, charges
or withholdings, and all liabilities with respect thereto,
excluding, (i) in the case of each Lender Party and the Agent,
respectively, taxes that are imposed on its overall net income or
the overall net income of its branch by the United States and
taxes that are imposed on its overall net income or the overall
net income of its branch (and franchise taxes imposed in lieu
thereof) by the state or foreign jurisdiction under the laws of
which such Lender Party or the Agent, respectively, is organized
or any political subdivision thereof, (ii) in the case of each
Lender Party, taxes that are imposed on its overall net income
(and franchise taxes imposed in lieu thereof) by the state or
foreign jurisdiction in which the principal office or such Lender
Party's Applicable Lending Office is located or any political
subdivision thereof and (iii) in the case of the Agent, taxes
that are imposed on its overall net income (and franchise taxes
imposed in lieu thereof) by the jurisdiction in which the office
through which the Agent performs its activities hereunder is
located (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities in respect of
payments hereunder or under the Notes being hereinafter referred
to as "Taxes"). If any Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder
or under any Note to any Lender Party or the Agent, (i) the sum
payable shall be increased as may be necessary so that after
making all required deductions (including deductions applicable
to additional sums payable under this Section 2.12) such Lender
Party or the Agent (as the case may be) receives an amount equal
to the sum it would have received had no such deductions been
made, (ii) such Borrower shall make such deductions and
(iii) such Borrower shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with
applicable law.
(b)In addition, the Borrowers jointly and severally agree to pay
any present or future stamp, documentary, excise, property or
similar taxes, charges or levies that arise from any payment made
hereunder or under the Notes or from the execution, delivery or
registration of, performing under, or otherwise with respect to,
this Agreement or the Notes (hereinafter referred to as "Other
Taxes").
(c)The Borrowers jointly and severally agree to indemnify each
Lender Party and the Agent for and hold them harmless against the
full amount of Taxes and Other Taxes, and for the full amount of
taxes of any kind imposed by any jurisdiction on amounts payable
under this Section 2.12, imposed on or paid by such Lender Party
or the Agent (as the case may be) and any liability (including
penalties, additions to tax, interest and expenses) arising
therefrom or with respect thereto. This indemnification shall be
made within 30 days from the date such Lender Party or the Agent
(as the case may be) makes written demand therefor.
(d)Within 30 days after the date of any payment of Taxes, the
Borrowers shall furnish to the Agent, at its address referred to
in Section 8.02, the original or a certified copy of a receipt
evidencing such payment. In the case of any payment hereunder or
under the Notes by or on behalf of any Borrower through an
account or branch outside the United States or by or on behalf of
any Borrower by a payor that is not a United States person, if
such Borrower determines that no Taxes are payable in respect
thereof, such Borrower shall furnish, or shall cause such payor
to furnish, to the Agent, at such address, an opinion of counsel
acceptable to the Agent stating that such payment is exempt from
Taxes. For purposes of this subsection (d) and subsection (e),
the terms "United States" and "United States person" shall have
the meanings specified in Section 7701 of the Internal Revenue
Code.
(e)Each Lender Party organized under the laws of a jurisdiction
outside the United States shall, on or prior to the date of its
execution and delivery of this Agreement in the case of each
Initial Lender or Initial Issuing Bank, as the case may be, and
on the date of the Assignment and Acceptance pursuant to which it
becomes a Lender Party in the case of each other Lender Party,
and from time to time thereafter as requested in writing by the
Borrowers (but only so long thereafter as such Lender Party
remains lawfully able to do so), provide each of the Agent and
the Borrowers with two accurate and complete original signed
Internal Revenue Service forms 1001 or 4224 or (in the case of a
Lender Party that is claiming exemption from United States
withholding tax under Section 871(h) or 881(c) of the Internal
Revenue Code with respect to payments of "portfolio interest")
two accurate and complete signed original Forms W-8 (and, if such
Lender Party delivers Forms W-8, two signed certificates
certifying that such Lender Party is not (i) a "bank" for
purposes of Section 881(c) of the Internal Revenue Code, (ii) is
not a 10-percent shareholder (within the meaning of Section
871(h)(3)(B) of the Internal Revenue Code) of the Borrower, (iii)
is not a controlled foreign corporation related to the Borrower
(within the meaning of Section 864(d)(4) of the Internal Revenue
Code) and (iv) is not a conduit entity participating in a conduit
financing arrangement (as defined in Treasury Regulation Section
1.881-3), as appropriate, or any successor or other form
prescribed by the Internal Revenue Service, certifying that such
Lender Party is exempt from or entitled to a reduced rate of
United States withholding tax on payments pursuant to this
Agreement or the Notes. If the accurate and complete forms
provided by a Lender Party at the time such Lender Party first
becomes a party to this Agreement indicate a United States
interest withholding tax rate in excess of zero, withholding tax
at such rate shall be considered excluded from Taxes unless and
until such Lender Party provides the appropriate form certifying
that a lesser rate applies, whereupon withholding tax at such
lesser rate only shall be considered excluded from Taxes for
periods governed by such form; provided, however, that, if at the
date of the Assignment and Acceptance pursuant to which a Lender
Party becomes a party to this Agreement, the Lender Party
assignor was entitled to payments under subsection (a) in respect
of United States withholding tax with respect to interest paid at
such date, then, to such extent, the term Taxes shall include (in
addition to withholding taxes that may be imposed in the future
or other amounts otherwise includible in Taxes) United States
withholding tax, if any, applicable with respect to the Lender
Party assignee on such date.
(f)For any period with respect to which a Lender Party has failed
to provide the Borrowers with the appropriate form described in
subsection (e) above (other than if such failure is due to a
change in law occurring after the date on which a form originally
was required to be provided or if such form otherwise is not
required under subsection (e) above), such Lender Party shall not
be entitled to indemnification under subsection (a) or (c) with
respect to Taxes imposed by the United States by reason of such
failure; provided, however, that should a Lender Party become
subject to Taxes because of its failure to deliver a form
required hereunder, the Borrowers shall take such steps, at such
Lender Party's sole expense, as such Lender Party shall
reasonably request to assist such Lender Party to recover such
Taxes.
(g)Any Lender Party claiming any additional amounts payable
pursuant to this Section 2.12 shall use reasonable efforts
(consistent with its internal policy and legal and regulatory
restrictions) to change the jurisdiction of its Applicable
Lending Office if the making of such a change would avoid the
need for, or reduce the amount of, any such additional amount
which may thereafter accrue and would not, in the reasonable
judgment of such Lender Party, be otherwise disadvantageous to
such Lender Party.
(h)If the Agent or any Lender Party, in its sole opinion,
determines that it has finally and irrevocably received or been
granted a refund in respect of any Taxes or Other Taxes as to
which indemnification has been paid by Crompton Corp. pursuant to
Section 2.12(a) or (c), it shall promptly remit such refund
(including any interest) to Crompton Corp., net of all out-of-pocket
expenses of the Agent or such Lender Party; provided,
however, that Crompton Corp., upon the request of the Agent or
such Lender Party, agrees promptly to return such refund (plus
any interest) to such party in the event such party is required
to repay such refund to the relevant taxing authority. The Agent
or such Lender Party shall provide Crompton Corp. with a copy of
any notice or assessment from the relevant taxing authority
(deleting any confidential information contained therein)
requiring repayment of such refund. Nothing contained herein
shall impose an obligation on the Agent or any Lender Party to
apply for any refund.
SECTION 2.13. Sharing of Payments, Etc. If any Lender Party
shall obtain at any time any payment (whether voluntary,
involuntary, through the exercise of any right of set-off, or
otherwise) (a) on account of Obligations due and payable to such
Lender Party hereunder and under the Notes at such time in excess
of its ratable share (according to the proportion of (i) the
amount of such Obligations due and payable to such Lender Party
at such time to (ii) the aggregate amount of the Obligations due
and payable to all Lender Parties hereunder and under the Notes
at such time) of payments on account of the Obligations due and
payable to all Lender Parties hereunder and under the Notes at
such time obtained by all the Lender Parties at such time or
(b) on account of Obligations owing (but not due and payable) to
such Lender Party hereunder and under the Notes at such time in
excess of its ratable share (according to the proportion of
(i) the amount of such Obligations owing to such Lender Party at
such time to (ii) the aggregate amount of the Obligations owing
(but not due and payable) to all Lender Parties hereunder and
under the Notes at such time) of payments on account of the
Obligations owing (but not due and payable) to all Lender Parties
hereunder and under the Notes at such time obtained by all of the
Lender Parties at such time, such Lender Party shall forthwith
purchase from the other Lender Parties such participations in the
Obligations due and payable or owing to them, as the case may be,
as shall be necessary to cause such purchasing Lender Party to
share the excess payment ratably with each of them; provided,
however, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Lender Party, such
purchase from each other Lender Party shall be rescinded and such
other Lender Party shall repay to the purchasing Lender Party the
purchase price to the extent of such Lender Party's ratable share
(according to the proportion of (i) the purchase price paid to
such Lender Party to (ii) the aggregate purchase price paid to
all Lender Parties) of such recovery together with an amount
equal to such Lender Party's ratable share (according to the
proportion of (i) the amount of such other Lender Party's
required repayment to (ii) the total amount so recovered from the
purchasing Lender Party) of any interest or other amount paid or
payable by the purchasing Lender Party in respect of the total
amount so recovered. Each Borrower agrees that any Lender Party
so purchasing a participation from another Lender Party pursuant
to this Section 2.13 may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of set-off)
with respect to such participation as fully as if such
Lender Party were the direct creditor of such Borrower in the
amount of such participation.
SECTION 2.14. Use of Proceeds. The proceeds of the Advances and
issuances of Letters of Credit under the Working Capital A
Facility and the Working Capital B-1 Facility shall be available
(and each Borrower agrees that it shall use such proceeds and
Letters of Credit) solely to pay transaction fees and expenses
incurred in connection with the Merger, redeem or repurchase
certain public Existing Debt of Uniroyal Corp. and Uniroyal, and
for other general corporate purposes, including, without
limitation, to finance permitted acquisitions and Capital
Expenditures and provide working capital for the Borrowers and
their respective Subsidiaries; provided that Advances made
pursuant to Section 2.02(g) shall be used by the Uniroyal
Borrower solely for the purpose of satisfying its obligations
under the Seoul Guaranty. The proceeds of the Advances under the
Working Capital B-2 Facility shall be available (and the Uniroyal
Borrower agrees that it shall use such proceeds) solely to
redeem, repurchase or defease, in full or in part, the Uniroyal
Senior Notes, the Uniroyal Corp. Senior Notes, the Uniroyal Corp.
Senior Subordinated Notes and the Uniroyal Corp. Subordinated
Discount Notes.
SECTION 2.15. Defaulting Lenders. (a) In the event that, at
any one time, (i) any Lender Party shall be a Defaulting Lender,
(ii) such Defaulting Lender shall owe a Defaulted Advance to any
Borrower and (iii) such Borrower shall be required to make any
payment hereunder or under any other Loan Document to or for the
account of such Defaulting Lender, then such Borrower may, so
long as no Default shall occur or be continuing at such time and
to the fullest extent permitted by applicable law, set off and
otherwise apply the Obligation of such Borrower to make such
payment to or for the account of such Defaulting Lender against
the obligation of such Defaulting Lender to make such Defaulted
Advance. In the event that, on any date, such Borrower shall so
set off and otherwise apply its Obligation to make any such
payment against the obligation of such Defaulting Lender to make
any such Defaulted Advance on or prior to such date, the amount
so set off and otherwise applied by such Borrower shall
constitute for all purposes of this Agreement and the other Loan
Documents an Advance by such Defaulting Lender made on the date
under the Facility pursuant to which such Defaulted Advance was
originally required to have been made pursuant to Section 2.01.
Such Advance shall be a Base Rate Advance and shall be
considered, for all purposes of this Agreement, to comprise part
of the Borrowing in connection with which such Defaulted Advance
was originally required to have been made pursuant to
Section 2.01, even if the other Advances comprising such
Borrowing shall be Eurodollar Rate Advances on the date such
Advance is deemed to be made pursuant to this subsection (a).
Each Borrower shall notify the Agent at any time such Borrower
exercises its right of set-off pursuant to this subsection (a)
and shall set forth in such notice (A) the name of the Defaulting
Lender and the Defaulted Advance required to be made by such
Defaulting Lender and (B) the amount set off and otherwise
applied in respect of such Defaulted Advance pursuant to this
subsection (a). Any portion of such payment otherwise required
to be made by any Borrower to or for the account of such
Defaulting Lender which is paid by such Borrower, after giving
effect to the amount set off and otherwise applied by such
Borrower pursuant to this subsection (a), shall be applied by the
Agent as specified in subsection (b) or (c) of this Section 2.15.
(b)In the event that, at any one time, (i) any Lender Party shall
be a Defaulting Lender, (ii) such Defaulting Lender shall owe a
Defaulted Amount to the Agent or any of the other Lender Parties
and (iii) any Borrower shall make any payment hereunder or under
any other Loan Document to the Agent for the account of such
Defaulting Lender, then the Agent may, on its behalf or on behalf
of such other Lender Parties and to the fullest extent permitted
by applicable law, apply at such time the amount so paid by such
Borrower to or for the account of such Defaulting Lender to the
payment of each such Defaulted Amount to the extent required to
pay such Defaulted Amount. In the event that the Agent shall so
apply any such amount to the payment of any such Defaulted Amount
on any date, the amount so applied by the Agent shall constitute
for all purposes of this Agreement and the other Loan Documents
payment, to such extent, of such Defaulted Amount on such date.
Any such amount so applied by the Agent shall be retained by the
Agent or distributed by the Agent to such other Lender Parties,
ratably in accordance with the respective portions of such
Defaulted Amounts payable at such time to the Agent and such
other Lender Parties and, if the amount of such payment made by
any Borrower shall at such time be insufficient to pay all
Defaulted Amounts owing at such time to the Agent and the other
Lender Parties, in the following order of priority:
(i)first, to the Agent for any Defaulted Amount then owing to the
Agent; and
(ii)second, to any other Lender Parties for any Defaulted Amounts
then owing to such other Lender Parties, ratably in accordance
with such respective Defaulted Amounts then owing to such other
Lender Parties.
Any portion of such amount paid by any Borrower for the account
of such Defaulting Lender remaining, after giving effect to the
amount applied by the Agent pursuant to this subsection (b),
shall be applied by the Agent as specified in subsection (c) of
this Section 2.15.
(c)In the event that, at any one time, (i) any Lender Party shall
be a Defaulting Lender, (ii) such Defaulting Lender shall not owe
a Defaulted Advance or a Defaulted Amount and (iii) any Borrower,
the Agent or any other Lender Party shall be required to pay or
distribute any amount hereunder or under any other Loan Document
to or for the account of such Defaulting Lender, then such
Borrower or such other Lender Party shall pay such amount to the
Agent to be held by the Agent, to the fullest extent permitted by
applicable law, in escrow or the Agent shall, to the fullest
extent permitted by applicable law, hold in escrow such amount
otherwise held by it. Any funds held by the Agent in escrow
under this subsection (c) shall be deposited by the Agent in an
account with Citibank, in the name and under the control of the
Agent, but subject to the provisions of this subsection (c). The
terms applicable to such account, including the rate of interest
payable with respect to the credit balance of such account from
time to time, shall be Citibank's standard terms applicable to
escrow accounts maintained with it. Any interest credited to
such account from time to time shall be held by the Agent in
escrow under, and applied by the Agent from time to time in
accordance with the provisions of, this subsection (c). The
Agent shall, to the fullest extent permitted by applicable law,
apply all funds so held in escrow from time to time to the extent
necessary to make any Advances required to be made by such
Defaulting Lender and to pay any amount payable by such
Defaulting Lender hereunder and under the other Loan Documents to
the Agent or any other Lender Party, as and when such Advances or
amounts are required to be made or paid and, if the amount so
held in escrow shall at any time be insufficient to make and pay
all such Advances and amounts required to be made or paid at such
time, in the following order of priority:
(i)first, to the Agent for any amount then due and payable by
such Defaulting Lender to the Agent hereunder;
(ii)second, to any other Lender Parties for any amount then due
and payable by such Defaulting Lender to such other Lender
Parties hereunder, ratably in accordance with such respective
amounts then due and payable to such other Lender Parties; and
(iii)third, to such Borrower for any Advance then required to be
made by such Defaulting Lender pursuant to a Commitment of such
Defaulting Lender.
In the event that any Lender Party that is a Defaulting Lender
shall, at any time, cease to be a Defaulting Lender, any funds
held by the Agent in escrow at such time with respect to such
Lender Party shall be distributed by the Agent to such Lender
Party and applied by such Lender Party to the Obligations owing
to such Lender Party at such time under this Agreement and the
other Loan Documents ratably in accordance with the respective
amounts of such Obligations outstanding at such time.
(d)The rights and remedies against a Defaulting Lender under this
Section 2.15 are in addition to other rights and remedies that
the Borrowers may have against such Defaulting Lender with
respect to any Defaulted Advance and that the Agent or any Lender
Party may have against such Defaulting Lender with respect to any
Defaulted Amount.
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Conditions Precedent to Initial Extension of
Credit. The obligation of each Lender to make an Advance or of
any Issuing Bank to issue a Letter of Credit on the occasion of
the Initial Extension of Credit hereunder is subject to the
satisfaction of the following conditions precedent before or
concurrently with the Initial Extension of Credit:
(a)The Merger shall have been consummated substantially in
accordance with the terms of the Merger Agreement, without any
waiver or amendment not consented to by the Lender Parties of any
material term, provision or condition set forth therein, and in
material compliance with all applicable laws.
(b)The Merger Agreement shall be in full force and effect.
(c)The Lender Parties shall be satisfied with the corporate and
legal structure and capitalization of each Loan Party and each of
its Subsidiaries, including the terms and conditions of the
charter, bylaws and each class of capital stock of each Loan
Party and each such Subsidiary and of each agreement or
instrument relating to such structure or capitalization.
(d)The Lender Parties shall be satisfied that all Existing Debt,
other than the Debt identified on Schedule 3.01(d) (the
"Surviving Debt"), has been prepaid, redeemed or defeased in full
or otherwise satisfied and extinguished.
(e)There shall have occurred no material adverse change in the
business, condition (financial or otherwise), operations,
performance, properties or prospects of (i) before and after
giving effect to the Merger and the other transactions
contemplated by this Agreement, Crompton Corp. and its
Subsidiaries, taken as a whole, since December 31, 1995, (ii)
after giving effect to the Merger and the other transactions
contemplated by this Agreement, Crompton Corp. and its
Subsidiaries (other than Uniroyal Corp. and its Subsidiaries),
taken as a whole, since December 31, 1995 or (iii) before and
after giving effect to the Merger and the other transactions
contemplated by this Agreement, Uniroyal and its Subsidiaries,
taken as a whole, since September 30, 1995.
(f)There shall exist no action, suit, investigation, litigation
or proceeding affecting any Loan Party or any of its Subsidiaries
pending or threatened before any court, governmental agency or
arbitrator that (i) would be reasonably likely to have a Material
Adverse Effect other than the matters described on
Schedule 3.01(f) (the "Disclosed Litigation") or (ii) purports to
affect the legality, validity or enforceability of the Merger,
this Agreement, any Note, any other Loan Document, any Related
Document or the consummation of the transactions contemplated
hereby, and there shall have been no material adverse change in
the status, or financial effect on any Loan Party or any of its
Subsidiaries, of the Disclosed Litigation from that described on
Schedule 3.01(f).
(g)The Lender Parties shall have completed a due diligence
investigation of the Borrowers and their respective Subsidiaries
in scope, and with results, satisfactory to the Lender Parties,
and nothing shall have come to the attention of the Lender
Parties during the course of such due diligence investigation to
lead them to believe (i) that the Information Memorandum was or
has become misleading, incorrect or incomplete in any material
respect, (ii) that, following the consummation of the Merger,
Crompton Corp. and its Subsidiaries would not have good and
marketable title to all material assets of Uniroyal Corp. and its
Subsidiaries reflected in the Information Memorandum and
(iii) that the Merger will have a Material Adverse Effect;
without limiting the generality of the foregoing, the Lender
Parties shall have been given such access to the management,
records, books of account, contracts and properties of the
Borrowers and their respective Subsidiaries as they shall have
requested.
(h)All stock of the Borrowers (other than Crompton Corp.) and the
Borrowers' Subsidiaries, to the extent owned by the Borrowers and
their Subsidiaries, shall be owned by the Borrowers or one or
more of the Borrowers' Subsidiaries, in each case free and clear
of any lien, charge or encumbrance; the Agent shall have a valid
and perfected first priority lien on and security interest in the
Collateral (other than as to matters of perfection and priority
of the security interest in the Pledged Accounts (as defined in
the Uniroyal Security Agreement) and the Other Accounts (as
defined in the Uniroyal Security Agreement)) for the benefit of
the Secured Parties; all filings, recordations and searches
necessary or desirable in connection with such liens and security
interests shall have been duly made; and all filing and recording
fees and taxes shall have been duly paid.
(i)All governmental and third party consents and approvals
(including, without limitation, any consents or approvals
required under the documents relating to the Uniroyal Corp.
Senior Notes and the Uniroyal Corp. Senior Subordinated Notes)
necessary in connection with Loan Documents and the transactions
contemplated thereby (including, without limitation, the Merger)
shall have been obtained (without the imposition of any
conditions that are not reasonably acceptable to the Lender
Parties) and shall remain in effect other than such governmental
or third party consents and approvals the failure to obtain which
shall not (x) be materially adverse to any of the Borrowers, in
each case together with its respective Subsidiaries, taken as a
whole, (y) affect the enforceability, validity or binding effect
of any of the Loan Documents required to be executed and
delivered prior to or on the Effective Date or (z) expose the
Agent or the Lender Parties to personal liability; all applicable
waiting periods shall have expired without any action being taken
by any competent authority; and no law or regulation shall be
applicable in the judgment of the Lender Parties that restrains,
prevents or imposes materially adverse conditions upon the Loan
Documents or the transactions contemplated thereby (including,
without limitation, the Merger).
(j)The Borrowers shall have paid all accrued fees and expenses of
the Agent and the Lender Parties (including the accrued fees and
expenses of counsel to the Agent and local counsel to the Lender
Parties).
(k)The Agent shall have received on or before the day of the
Initial Extension of Credit the following, each dated such day
(unless otherwise specified), in form and substance satisfactory
to the Agent (unless otherwise specified) and (except for the
Notes) in sufficient copies for each Lender Party:
(i)The Notes payable to the order of the Lenders.
(ii)Certified copies of the resolutions of the Board of Directors
of each Borrower, and each other Loan Party approving the Merger,
this Agreement, the Notes, each other Loan Document and each
Related Document to which it is or is to be a party, and of all
documents evidencing other necessary corporate action and
governmental and other third party approvals and consents, if
any, with respect to the Merger, this Agreement, the Notes, each
other Loan Document and each Related Document.
(iii)A copy of a certificate of the Secretary of State of the
jurisdiction of its incorporation, dated reasonably near the date
of the Initial Extension of Credit, listing the charter of each
Borrower and each other Loan Party and each amendment thereto on
file in his office and certifying that (A) such amendments are
the only amendments to such Borrower's or such other Loan Party's
charter on file in his office, (B) each Borrower and each other
Loan Party have paid all franchise taxes to the date of such
certificate and (C) each Borrower and each other Loan Party are
duly incorporated and in good standing under the laws of the
State of the jurisdiction of its incorporation.
(iv)Certified copies of a certificate of merger or other
confirmation from the Secretary of State of the State of Delaware
satisfactory to the Lender Parties of the consummation of the
Merger.
(v)A certificate of each Borrower and each other Loan Party,
signed on behalf of such Borrower or such other Loan Party, as
the case may be, by its President or a Vice President and its
Secretary or any Assistant Secretary, dated the date of the
Initial Extension of Credit (the statements made in which
certificate shall be true on and as of the date of the Initial
Extension of Credit), certifying as to (A) the absence of any
amendments to the charter of such Borrower or such other Loan
Party since the date of the Secretary of State's certificate
referred to in Section 3.01(k)(iii), (B) a true and correct copy
of the bylaws of such Borrower or such other Loan Party as in
effect on the date of the Initial Extension of Credit, (C) the
due incorporation and good standing of such Borrower or such
other Loan Party organized under the laws of the State of its
incorporation, and the absence of any proceeding for the
dissolution or liquidation of such Borrower or such other Loan
Party, (D) the truth of the representations and warranties
contained in the Loan Documents as though made on and as of the
date of the Initial Extension of Credit and (E) the absence of
any event occurring and continuing, or resulting from the Initial
Extension of Credit, that constitutes a Default.
(vi)A certificate of the Secretary or an Assistant Secretary of
each Borrower and each other Loan Party certifying the names and
true signatures of the officers of such Borrower or such other
Loan Party authorized to sign this Agreement, the Notes, each
other Loan Document and each Related Document to which they are
or are to be parties and the other documents to be delivered
hereunder and thereunder.
(vii)A security agreement in substantially the form of Exhibit D-1 (as
amended, supplemented or otherwise modified from time to
time in accordance with its terms, the "Crompton Security
Agreement"), duly executed by each Crompton Borrower and each
Crompton Guarantor, together with:
(A)certificates representing the Pledged Shares referred to
therein accompanied by undated stock powers executed in blank,
and instruments evidencing the Pledged Debt (except as otherwise
provided in Sections 5.02(b)(i)(D) and 5.02(b)(ii)) referred to
therein indorsed in blank,
(B)duly executed proper financing statements, to be filed under
the Uniform Commercial Code of all jurisdictions that the Agent
may deem necessary or desirable in order to perfect and protect
the first priority liens and security interests created under the
Crompton Security Agreement, covering the Collateral described in
the Crompton Security Agreement,
(C)completed requests for information, dated on or before the
date of the Initial Extension of Credit, listing all effective
financing statements filed in the jurisdictions referred to in
clause (B) above that name any Crompton Borrower or any Crompton
Guarantor as debtor, together with copies of such other financing
statements,
(D)evidence of the completion of all other recordings and filings
of or with respect to the Crompton Security Agreement that the
Agent may deem necessary or desirable in order to perfect and
protect the Liens created thereby, and
(E)evidence that all other action that the Agent may deem
necessary or desirable in order to perfect and protect the first
priority liens and security interests created under the Crompton
Security Agreement has been taken.
(viii)A security agreement in substantially the form of
Exhibit D-2 (as amended, supplemented or otherwise modified from
time to time in accordance with its terms, the "Uniroyal Security
Agreement" and, together with the Crompton Security Agreement and
each security agreement delivered pursuant to Section 5.01(k), in
each case as amended, supplemented or otherwise modified from
time to time in accordance with its terms, the "Security
Agreement"), duly executed by the Uniroyal Borrower and each
Uniroyal Guarantor, together with:
(A)duly executed proper financing statements, to be filed on or
before the day of the Initial Extension of Credit under the
Uniform Commercial Code of all jurisdictions that the Agent may
deem necessary or desirable in order to perfect and protect the
first priority liens and security interests created under the
Uniroyal Security Agreement, covering the Collateral described in
the Uniroyal Security Agreement,
(B)completed requests for information, dated on or before the
date of the Initial Extension of Credit, listing all effective
financing statements filed in the jurisdictions referred to in
clause (A) above that name the Uniroyal Borrower or any Uniroyal
Guarantor as debtor, together with copies of such other financing
statements,
(C)evidence of the completion of all other recordings and filings
of or with respect to the Uniroyal Security Agreement that the
Agent may deem necessary or desirable in order to perfect and
protect the Liens created thereby,
(D)evidence of the insurance required by the terms of the
Security Agreement,
(E)instruments evidencing the Pledged Debt (except as otherwise
provided in Sections 5.02(b)(i)(D) and 5.02(b)(ii)) referred to
therein endorsed in blank, and
(F)evidence that all other action that the Agent may deem
necessary or desirable in order to perfect and protect the first
priority liens and security interests created under the Uniroyal
Security Agreement has been taken.
(ix)A guaranty in substantially the form of Exhibit E-1 (as
amended, supplemented or otherwise modified from time to time in
accordance with its terms, the "Parent Guaranty"), duly executed
by Crompton Corp.
(x)A guaranty in substantially the form of Exhibit E-2 (together
with each other guaranty delivered pursuant to Section 5.01(k),
in each case as amended, supplemented or otherwise modified from
time to time in accordance with its terms, the "Subsidiary
Guaranty"), duly executed by each Subsidiary Guarantor.
(xi)Certified copies of each of the Related Documents, duly
executed by the parties thereto and in form and substance
satisfactory to the Lender Parties, together with all agreements,
instruments and other documents delivered in connection
therewith.
(xii)Such financial, business and other information regarding
each Loan Party and its Subsidiaries as the Lender Parties shall
have requested, including, without limitation, information as to
possible contingent liabilities, tax matters, environmental
matters, obligations under Plans, Multiemployer Plans and Welfare
Plans, collective bargaining agreements and other arrangements
with employees, audited annual financial statements of Crompton
Corp. and its Subsidiaries (other than Uniroyal Corp. and its
Subsidiaries) dated December 30, 1995, audited annual financial
statements of Uniroyal Corp. and its Subsidiaries dated
October 1, 1995, interim financial statements dated the end of
the most recent fiscal quarter for which financial statements are
available, pro forma financial statements as to Crompton Corp.
and its Subsidiaries after giving effect to the Merger and the
other transactions, on a Consolidated basis, of balance sheets,
income statements and cash flow statements for the one-year
period ended on or about March 31, 1996 and forecasts prepared by
management of the Borrowers, in form and substance satisfactory
to the Lender Parties, on a Consolidated basis and, to the extent
otherwise available, on a Consolidating basis, of balance sheets,
income statements and cash flow statements for the first year
following January 1, 1996 and on an annual basis for each year
thereafter until the Termination Date.
(xiii)Certificates, in substantially the form of Exhibit G,
attesting to the Solvency of each Loan Party after giving effect
to the Merger and the other transactions contemplated hereby,
from its chief financial officer.
(xiv) A supplement to the Uniroyal Security Agreement in respect
of Collateral located in the State of Louisiana in substantially
the form of Exhibit D-3 (as amended, supplemented or otherwise
modified from time to time in accordance with its terms, the
"Louisiana Undertaking"), duly executed by the Uniroyal Borrower
and the Uniroyal Guarantors.
(xv)An environmental assessment report, in form and substance
satisfactory to the Lender Parties, from Environmental Safety and
Designs, Inc., as to any hazards, costs or liabilities under
Environmental Laws to which any Loan Party or any of its
Subsidiaries may be subject, the amount and nature of which and
the Borrowers' plans with respect to which shall be acceptable to
the Lender Parties, together with evidence, in form and substance
satisfactory to the Lender Parties, that all Environmental Laws
applicable to the consummation of the Merger shall have been
materially complied with.
(xvi)A letter, in form and substance satisfactory to the Agent,
from Crompton Corp. to KPMG Peat Marwick LLP, its independent
certified public accountants, advising such accountants that the
Agent and the Lender Parties have been authorized to exercise all
rights of the Borrowers to require such accountants to disclose
any and all financial statements and any other information of any
kind that they may have with respect to the Borrowers and their
respective Subsidiaries and directing such accountants to comply
with any reasonable request of the Agent or any Lender Party for
such information; provided that all requests for such information
shall be provided through Crompton Corp.
(xvii)A favorable opinion of Wachtell, Lipton, Rosen & Katz,
special counsel for the Loan Parties, in substantially the form
of Exhibit F-1 hereto and as to such other matters as any Lender
Party through the Agent may reasonably request.
(xviii)A favorable opinion of John T. Ferguson, II, Esq., General
Counsel and Corporate Secretary of Crompton Corp. and its
Subsidiaries, in substantially the form of Exhibit F-2 hereto and
as to such other matters as any Lender Party through the Agent
may reasonably request.
(xix)A favorable opinion of John T. Ferguson, II, Esq., General
Counsel and Corporate Secretary of Crompton Corp. and its
Subsidiaries, in substantially the form of Exhibit F-3 hereto and
as to such other matters as any Lender Party through the Agent
may reasonably request.
(xx)A favorable opinion of local counsel to the Loan Parties or
Lender Parties, as the case may be, listed on Schedule
3.01(k)(xx) in the jurisdictions listed on Schedule 3.01(k)(xx)
in form and substance satisfactory to the Agent and as to such
other matters as any Lender Party through the Agent may
reasonably request.
(xxi)A favorable opinion of Shearman & Sterling, counsel for the
Agent, in form and substance satisfactory to the Agent.
SECTION 3.02. Conditions Precedent to Each Borrowing and
Issuance. The right of the Borrowers to request and the
obligation of each Appropriate Lender to make an Advance (other
than a Letter of Credit Advance made by an Issuing Bank or a
Working Capital Lender pursuant to Section 2.03(c) and a Swing
Line Advance made by a Working Capital Lender pursuant to
Section 2.02(b)) on the occasion of each Borrowing (including the
Initial Extension of Credit), and the right of the Borrowers to
request and the obligation of each Issuing Bank to issue a Letter
of Credit (including the initial issuance) and the right of the
Borrowers to request a Swing Line Borrowing, shall be subject to
the further conditions precedent that on the date of such
Borrowing or issuance (a) the following statements shall be true
(and each of the giving of the applicable Notice of Borrowing,
Notice of Swing Line Borrowing or Notice of Issuance and the
acceptance by the relevant Borrower of the proceeds of such
Borrowing or of such Letter of Credit shall constitute a
representation and warranty by such Borrower that both on the
date of such notice and on the date of such Borrowing or issuance
such statements are true):
(i)the representations and warranties contained in each Loan
Document are correct on and as of such date, before and after
giving effect to such Borrowing or issuance and to the
application of the proceeds therefrom, as though made on and as
of such date other than any such representations or warranties
that, by their terms, refer to a specific date other than the
date of such Borrowing or issuance, in which case as of such
specific date; and
(ii)no event has occurred and is continuing, or would result from
such Borrowing or issuance or from the application of the
proceeds therefrom, that constitutes a Default;
and (b) the Agent shall have received such other approvals,
opinions or documents as any Appropriate Lender through the Agent
may reasonably request.
SECTION 3.03. Determinations Under Section 3.01. For purposes
of determining compliance with the conditions specified in
Section 3.01, each Lender Party shall be deemed to have consented
to, approved or accepted or to be satisfied with each document or
other matter required thereunder to be consented to or approved
by or acceptable or satisfactory to the Lender Parties unless an
officer of the Agent responsible for the transactions
contemplated by the Loan Documents shall have received notice
from such Lender Party prior to the Initial Extension of Credit
specifying its objection thereto and, if the Initial Extension of
Credit consists of a Borrowing, such Lender Party shall not have
made available to the Agent such Lender Party's ratable portion
of such Borrowing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Borrowers.
Each Borrower represents and warrants as follows:
(a)Each Loan Party (i) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction
of its incorporation, (ii) is duly qualified and in good standing
as a foreign corporation in each other jurisdiction in which it
owns or leases property or in which the conduct of its business
requires it to so qualify or be licensed except where the failure
to so qualify or be licensed would not have a Material Adverse
Effect and (iii) has all requisite corporate power and authority
(including, without limitation, all governmental licenses,
permits and other approvals) to own or lease and operate its
properties and to carry on its business as now conducted and as
proposed to be conducted. All of the outstanding capital stock
of the Borrowers has been validly issued and is fully paid and
non-assessable.
(b)Set forth on Schedule 4.01(b) hereto is a complete and
accurate list of all Subsidiaries of each Loan Party as of the
date hereof, showing as of the date hereof (as to each such
Subsidiary) the jurisdiction of its incorporation, the number of
shares of each class of capital stock authorized, and the number
outstanding, on the date hereof and the percentage of the
outstanding shares of each such class owned (directly or
indirectly) by such Loan Party and the number of shares covered
by all outstanding options, warrants, rights of conversion or
purchase and similar rights at the date hereof. All of the
outstanding capital stock of all of such Subsidiaries to the
extent owned by the Borrowers and their Subsidiaries has been
validly issued, is fully paid and non-assessable and is owned by
such Loan Party or one or more of its Subsidiaries free and clear
of all Liens, except those created under the Loan Documents.
Each such Subsidiary (i) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction
of its incorporation, (ii) is duly qualified and in good standing
as a foreign corporation in each other jurisdiction in which it
owns or leases property or in which the conduct of its business
requires it to so qualify or be licensed except where the failure
to so qualify or be licensed would not have a Material Adverse
Effect and (iii) has all requisite corporate power and authority
(including, without limitation, all governmental licenses,
permits and other approvals) to own or lease and operate its
properties and to carry on its business as now conducted and as
proposed to be conducted.
(c)The execution, delivery and performance by each Loan Party of
this Agreement, the Notes, each other Loan Document and each
Related Document to which it is or is to be a party, and the
consummation of the Merger and the other transactions
contemplated hereby, are within such Loan Party's corporate
powers, have been duly authorized by all necessary corporate
action, and do not (i) contravene such Loan Party's charter or
bylaws, (ii) violate any law, rule, regulation (including,
without limitation, Regulation X of the Board of Governors of the
Federal Reserve System), order, writ, judgment, injunction,
decree, determination or award, (iii) conflict with or result in
the breach of, or constitute a default under, any loan agreement,
indenture, mortgage, deed of trust or other instrument or
material contract or material lease binding on or affecting any
Loan Party, any of its Subsidiaries or any of their properties or
(iv) except for the Liens created under the Loan Documents,
result in or require the creation or imposition of any Lien upon
or with respect to any of the properties of any Loan Party or any
of its Subsidiaries. No Loan Party or any of its Subsidiaries is
in violation of any such law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award or in breach
of any such loan agreement, indenture, mortgage, deed of trust or
other instrument or material contract or material lease, the
violation or breach of which would have a Material Adverse
Effect.
(d)No authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body
or any other third party is required for (i) the due execution,
delivery, recordation, filing or performance by any Loan Party of
this Agreement, the Notes, any other Loan Document or any Related
Document to which it is or is to be a party, or for the
consummation of the Merger or the other transactions contemplated
hereby, (ii) the grant by any Loan Party of the Liens granted by
it pursuant to the Collateral Documents, (iii) the perfection or
maintenance of the Liens created by the Collateral Documents
(including the first priority nature thereof) or (iv) the
exercise by the Agent or any Lender Party of its rights under the
Loan Documents or the remedies in respect of the Collateral
pursuant to the Collateral Documents, except for the
authorizations, approvals, actions, notices and filings listed on
Schedule 4.01(d), all of which have been duly obtained, taken,
given or made and are in full force and effect. All applicable
waiting periods in connection with the Merger and the other
transactions contemplated hereby have expired without any action
having been taken by any competent authority restraining,
preventing or imposing materially adverse conditions upon the
Merger or the rights of the Loan Parties or their Subsidiaries
freely to transfer or otherwise dispose of, or to create any Lien
on, any properties now owned or hereafter acquired by any of
them.
(e)This Agreement has been, and each of the Notes, each other
Loan Document and each Related Document when delivered hereunder
will have been, duly executed and delivered by each Loan Party
party thereto. This Agreement is, and each of the Notes, each
other Loan Document and each Related Document when delivered
hereunder will be, the legal, valid and binding obligation of
each Loan Party party thereto, enforceable against such Loan
Party in accordance with its terms.
(f)The Consolidated balance sheet of Crompton Corp. and its
Subsidiaries as at December 30, 1995, and the related
Consolidated statement of income and Consolidated statement of
cash flows of Crompton Corp. and its Subsidiaries for the fiscal
year then ended, accompanied by an opinion of KPMG Peat Marwick
LLP, independent public accountants, and the Consolidated balance
sheet of Crompton Corp. and its Subsidiaries as at March 30,
1996, and the related Consolidated statement of income and
Consolidated statement of cash flows of Crompton Corp. and its
Subsidiaries for the three months then ended, duly certified by
the chief financial officer of Crompton Corp., copies of which
have been furnished to each Lender Party, fairly present,
subject, in the case of said balance sheet as at March 30, 1996,
and said statements of income and cash flows for the three months
then ended, to year-end audit adjustments, the Consolidated
financial condition of Crompton Corp. and its Subsidiaries as at
such dates and the Consolidated results of operations of Crompton
Corp. and its Subsidiaries for the periods ended on such dates,
all in accordance with generally accepted accounting principles
applied on a consistent basis, and since December 30, 1995, there
has been no Material Adverse Change.
(g)The Consolidated balance sheet of Uniroyal Corp. and its
Subsidiaries as at October 1, 1995, and the related Consolidated
statement of income and Consolidated statement of cash flows of
Uniroyal Corp. and its Subsidiaries for the fiscal year then
ended, accompanied by an opinion of Deloitte & Touche LLP,
independent public accountants, and the Consolidated balance
sheet of Uniroyal Corp. and its Subsidiaries as at March 31,
1996, and the related Consolidated statement of income and
Consolidated statement of cash flows of Uniroyal Corp. and its
Subsidiaries for the six months then ended, duly certified by the
chief financial officer of Uniroyal Corp., copies of which have
been furnished to each Lender Party, fairly present, subject, in
the case of said balance sheet as at March 31, 1996, and said
statements of income and cash flows for the six months then
ended, to year-end audit adjustments, the Consolidated financial
condition of Uniroyal Corp. and its Subsidiaries as at such date
and the Consolidated results of operations of Uniroyal Corp. and
its Subsidiaries for the period ended on such dates, all in
accordance with generally accepted accounting principles applied
on a consistent basis, and since October 1, 1995, there has been
no Material Adverse Change.
(h)The Consolidated pro forma balance sheet of Crompton Corp. and
its Subsidiaries and the related Consolidated pro forma
statements of income and cash flows of Crompton Corp. and its
Subsidiaries, in each case contained in the Proxy Statement dated
July 23, 1996, copies of which have been furnished to each Lender
Party, fairly present the Consolidated pro forma financial
condition of Crompton Corp. and its Subsidiaries as at such date
and the Consolidated pro forma results of operations of Crompton
Corp. and its Subsidiaries for the period ended on such date, in
each case giving effect to the Merger and the other transactions
contemplated hereby.
(i)The Consolidated and consolidating forecasted balance sheets,
income statements and cash flows statements of Crompton Corp. and
its Subsidiaries delivered to the Lender Parties pursuant to
Section 3.01(k)(xii) or 5.03 were prepared in good faith on the
basis of the assumptions stated therein, which assumptions were
fair in the light of conditions existing at the time of delivery
of such forecasts, and represented, at the time of delivery,
Crompton Corp.'s good faith estimate of its future financial
performance.
(j)Neither the Information Memorandum nor any other information,
exhibit or report furnished by any Loan Party to the Agent or any
Lender Party in connection with the negotiation of the Loan
Documents or pursuant to the terms of the Loan Documents
contained any untrue statement of a material fact or omitted to
state a material fact necessary to make the statements made
therein not misleading.
(k)There is no action, suit, investigation, litigation or
proceeding affecting any Loan Party or any of its Subsidiaries,
including any Environmental Action, pending or threatened before
any court, governmental agency or arbitrator that (i) would be
reasonably likely to have a Material Adverse Effect (other than
the Disclosed Litigation) or (ii) purports to affect the
legality, validity or enforceability of the Merger, this
Agreement, any Note, any other Loan Document or any Related
Document or the consummation of the transactions contemplated
hereby, and there has been no material adverse change in the
status, or financial effect on any Loan Party or any of its
Subsidiaries, of the Disclosed Litigation from that described on
Schedule 3.01(f).
(l)No proceeds of any Advance or drawings under any Letter of
Credit will be used to acquire any equity security of a class
that is registered pursuant to Section 12 of the Securities
Exchange Act of 1934.
(m)No Borrower is engaged in the business of extending credit for
the purpose of purchasing or carrying Margin Stock, and no
proceeds of any Advance or drawings under any Letter of Credit
will be used to purchase or carry any Margin Stock or to extend
credit to others for the purpose of purchasing or carrying any
Margin Stock.
(n)(i) No ERISA Event has occurred or is reasonably expected to
occur with respect to any Plan that has had or is reasonably
expected to have a Material Adverse Effect.
(ii)Schedule B (Actuarial Information) to the most recent annual
report (Form 5500 Series) for each Plan, copies of which have
been filed with the Internal Revenue Service and furnished to the
Lender Parties, is complete and accurate and fairly presents the
funding status of such Plan, and since the date of such Schedule
B there has been no material adverse change in such funding
status.
(iii)Neither any Loan Party nor any ERISA Affiliate has incurred
or is reasonably expected to incur any Withdrawal Liability to
any Multiemployer Plan that has had or is reasonably expected to
have a Material Adverse Effect.
(iv)Neither any Loan Party nor any ERISA Affiliate has been
notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plan is in reorganization or has been terminated,
within the meaning of Title IV of ERISA, and no such
Multiemployer Plan is reasonably expected to be in reorganization
or to be terminated, within the meaning of Title IV of ERISA
which, in either event, has had or is reasonably expected to have
a Material Adverse Effect.
(o)(i) Except as disclosed in Part I of Schedule 4.01(o) hereto,
the operations and properties of each Loan Party and each of its
Subsidiaries comply in all material respects with all applicable
Environmental Laws and Environmental Permits, all past non-compliance
with such Environmental Laws and Environmental Permits
has been resolved without material ongoing obligations or costs,
and no circumstances exist that would be reasonably likely to
(i) form the basis of an Environmental Action against any Loan
Party or any of its Subsidiaries or any of their properties that
could have a Material Adverse Effect or (ii) cause any such
property to be subject to any material restrictions on ownership,
occupancy, use or transferability under any Environmental Law in
effect on the date hereof.
(ii)Except as disclosed in Part II of Schedule 4.01(o) hereto or
as would not, individually or in the aggregate, result in a
Material Adverse Effect, none of the properties currently or
formerly owned or operated by any Loan Party or any of its
Subsidiaries is listed or, to the best knowledge of any Loan
Party, proposed for listing on the NPL or on the CERCLIS or any
analogous foreign, state or local list or is adjacent to any such
property; there are no and never have been any underground or
aboveground storage tanks or any surface impoundments, septic
tanks, pits, sumps or lagoons in which Hazardous Materials are
being or have been treated, stored or disposed on any property
currently owned or operated by any Loan Party or any of its
Subsidiaries or, to the best of its knowledge, on any property
formerly owned or operated by any Loan Party or any of its
Subsidiaries; there is no asbestos or asbestos-containing
material on any property currently owned or operated by any Loan
Party or any of its Subsidiaries; and Hazardous Materials have
not been released, discharged or disposed of on any property
currently or formerly owned or operated by any Loan Party or any
of its Subsidiaries.
(iii)Except as disclosed in Part III of Schedule 4.01(o) hereto,
neither any Loan Party nor any of its Subsidiaries is
undertaking, and has not completed, either individually or
together with other potentially responsible parties, any
investigation or assessment or remedial or response action
relating to any actual or threatened release, discharge or
disposal of Hazardous Materials at any site, location or
operation, either voluntarily or pursuant to the order of any
governmental or regulatory authority or the requirements of any
Environmental Law; and all Hazardous Materials generated, used,
treated, handled or stored at, or transported to or from, any
property currently or formerly owned or operated by any Loan
Party or any of its Subsidiaries have been disposed of in a
manner not reasonably expected to result in material liability to
any Loan Party or any of its Subsidiaries.
(p)The Collateral Documents create a valid and, upon the making
of the filings referred to in Section 5.01(l), perfected first
priority interest in the Collateral (other than as to matters of
perfection and priority of the security interest in the Pledged
Accounts (as defined in the Uniroyal Security Agreement) and the
Other Accounts (as defined in the Uniroyal Security Agreement)),
securing the payment of the Secured Obligations (as defined in
the Collateral Documents), and all filings and other actions
necessary or desirable to perfect and protect such security
interest have been duly taken except, during the period
immediately following the Effective Date specified in Section
5.01(l) the filings and other actions referred to in Section
5.01(l). The Loan Parties are the legal and beneficial owners of
the Collateral free and clear of any Lien, except for the liens
and security interests created or permitted under the Loan
Documents.
(q)The Merger will not be taxable to any Loan Party or any of its
Subsidiaries or Affiliates.
(r)Neither any Loan Party nor any of its Subsidiaries is an
"investment company," or an "affiliated person" of, or "promoter"
or "principal underwriter" for, an "investment company," as such
terms are defined in the Investment Company Act of 1940, as
amended. Neither the making of any Advances, nor the issuance of
any Letters of Credit, nor the application of the proceeds or
repayment thereof by any Borrower, nor the consummation of the
other transactions contemplated hereby, will violate any
provision of such Act or any rule, regulation or order of the
Securities and Exchange Commission thereunder.
(s)Each Loan Party is, individually and together with its
Subsidiaries, Solvent.
(t)Set forth on Schedule 4.01(t) hereto is a complete and
accurate list of all Existing Debt (other than Surviving Debt),
showing as of the date hereof the principal amount outstanding
thereunder.
(u)Set forth on Schedule 3.01(d) hereto is a complete and
accurate list of all Surviving Debt, showing as of the date
hereof the principal amount outstanding thereunder.
(v)The aggregate revenues of the Minor Subsidiaries (other than
Crompton and Knowles I.P.R. Corporation), on a Consolidated
basis, do not exceed $250,000 for the twelve-month period ending
on the last day of the most recent fiscal quarter of Crompton
Corp., and the aggregate book value of the assets of the Minor
Subsidiaries (other than Crompton and Knowles I.P.R.
Corporation), on a Consolidated basis, as at the end of the most
recent fiscal quarter of Crompton Corp. does not exceed $250,000.
(w)Set forth on Schedule 4.01(w) hereto is a complete and
accurate list of all Material Subsidiaries existing as of the
date hereof.
(x)Crompton and Knowles I.P.R. Corporation does not conduct any
business or engage in any activity and has no material assets
other than an intercompany receivable in an amount that does not
exceed $33,000,000.
ARTICLE V
COVENANTS OF THE BORROWERS
SECTION 5.01. Affirmative Covenants. So long as any Advance
shall remain unpaid, any Letter of Credit shall be outstanding or
any Lender Party shall have any Commitment hereunder, each
Borrower will:
(a)Compliance with Laws, Etc. Comply, and cause each of its
Subsidiaries to comply, in all material respects, with all
applicable laws, rules, regulations and orders, such compliance
to include, without limitation, compliance with ERISA and the
Racketeer Influenced and Corrupt Organizations Chapter of the
Organized Crime Control Act of 1970, except, in any case, where
the failure so to comply, either individually or in the
aggregate, could not be reasonably expected to have a Material
Adverse Effect and would not be reasonably likely to subject any
Loan Party or any of its Subsidiaries to any criminal penalties
or any Lender Party to any civil or criminal penalties.
(b)Payment of Taxes, Etc. Pay and discharge, and cause each of
its Subsidiaries to pay and discharge, before the same shall
become delinquent, (i) all federal income and other material
taxes, assessments and governmental charges or levies imposed
upon it or upon its property and (ii) all lawful claims that, if
unpaid, might by law become a Lien upon its property; provided,
however, that neither any Borrower nor any of its Subsidiaries
shall be required to pay or discharge any such tax, assessment,
charge or claim (x) that is being contested in good faith and by
proper proceedings and as to which appropriate reserves are being
maintained or (y) in respect of which the Lien resulting
therefrom, if any, attaches to its property and becomes
enforceable against its other creditors, to the extent that the
aggregate amount of all such taxes, assessments, charges or
claims does not exceed $3,000,000.
(c)Maintenance of Insurance. Maintain (or maintain on behalf of
each of its Subsidiaries), and cause each of its Subsidiaries to
maintain, insurance with responsible and reputable insurance
companies or associations in such amounts and covering such risks
as is usually carried by companies engaged in similar businesses
and owning similar properties in the same general areas in which
such Borrower or such Subsidiary operates; it being understood
and agreed that Crompton Corp. and its Subsidiaries may self-insure to
the extent consistent with prudent business practice.
(d)Preservation of Corporate Existence, Etc. Preserve and
maintain, and cause each of its Subsidiaries (other than any
Minor Subsidiary) to preserve and maintain, its existence, legal
structure, legal name, rights (charter and statutory), permits,
licenses, approvals, privileges and franchises; provided,
however, that such Borrower and its Subsidiaries may consummate
the Merger and any other merger or consolidation permitted under
Section 5.02(d); provided further that neither any Borrower nor
any of its Subsidiaries shall be required to preserve any legal
structure, legal name, right, permit, license, approval,
privilege or franchise if such Borrower or such Subsidiary shall
determine that the preservation thereof is no longer desirable in
the conduct of the business of such Borrower or such Subsidiary,
as the case may be, and that the loss thereof is not
disadvantageous in any material respect to such Borrower, such
Subsidiary or the Lender Parties or, with respect to permits,
licenses, approvals, privileges and franchises, that the loss
thereof could not be reasonably expected to have a Material
Adverse Effect; provided still further that, prior to the
Collateral Release Date, if any Borrower or any of its
Subsidiaries shall determine not to preserve any legal structure
or legal name (to the extent permitted under the immediately
preceding proviso), the Borrowers and their Subsidiaries shall
take such action (within such time as may be required under the
Collateral Documents or under the Uniform Commercial Code (as
defined in the Security Agreement)) as the Agent may deem
necessary or desirable to perfect and protect the Liens created
under the Collateral Documents.
(e)Visitation Rights. At any reasonable time and from time to
time, during regular business hours and upon reasonable prior
notice, permit the Agent or any of the Lender Parties or any
agents or representatives thereof, to examine and make copies of
and abstracts from the records (other than (i) records subject to
attorney-client privilege or confidentiality agreements and (ii)
records relating to trade secrets) and books of account of, and
visit the properties of, any Borrower and any of its
Subsidiaries, and to discuss the affairs, finances and accounts
of any Borrower and any of its Subsidiaries with any of their
respective officers or directors and with their independent
certified public accountants and authorize and direct such
accountants to disclose to the Agent or any of the Lender Parties
any and all financial statements and other information of any
kind that they may have with respect to any Borrower and any of
its Subsidiaries.
(f)Keeping of Books. Keep, and cause each of its Subsidiaries to
keep, proper books of record and account, in which full and
correct entries shall be made of all financial transactions and
the assets and business of such Borrower and each such Subsidiary
in accordance with generally accepted accounting principles in
effect from time to time.
(g)Maintenance of Properties, Etc. Maintain and preserve, and
cause each of its Subsidiaries to maintain and preserve, all of
its properties that are used or useful in the conduct of its
business in good working order and condition, ordinary wear and
tear excepted, except where the failure to do so, either
individually or in the aggregate, could not be reasonably
expected to have a Material Adverse Effect.
(h)Compliance with Terms of Leaseholds. Make all payments and
otherwise perform all obligations in respect of all leases of
real property to which such Borrower or any of its Subsidiaries
is a party, keep such leases in full force and effect and not
allow such leases to lapse or be terminated or any rights to
renew such leases to be forfeited or cancelled, notify the Agent
of any default by any party with respect to such leases and
cooperate with the Agent in all respects to cure any such
default, and cause each of its Subsidiaries to do so, except, in
any case, where the failure to do so, either individually or in
the aggregate, would not be reasonably likely to have a Material
Adverse Effect.
(i)Performance of Related Documents. Perform and observe all of
the terms and provisions of each Related Document to be performed
or observed by it, maintain each such Related Document in full
force and effect, enforce such Related Document in accordance
with its terms, take all such action to such end as may be from
time to time requested by the Agent and, upon request of the
Agent, make to each other party to each such Related Document
such demands and requests for information and reports or for
action as such Borrower is entitled to make under such Related
Document, and cause each of its Subsidiaries to do so, except, in
any case, where the failure to do so, either individually or in
the aggregate, could not be reasonably expected to have a
Material Adverse Effect.
(j)Transactions with Affiliates. Conduct, and cause each of its
Subsidiaries to conduct, all transactions otherwise permitted
under the Loan Documents with any of their Affiliates other than
wholly owned Subsidiaries (except the Minor Subsidiaries) of
Crompton Corp. on terms which have been determined by the
applicable Borrower's board of directors or such Subsidiary's
board of directors, board of trustees or managing partners, as
the case may be, to be at least as favorable to the Borrowers as
would be obtainable on an arm's length basis at the time of such
transaction for a comparable transaction with a Person who is not
an Affiliate; provided, however, the foregoing restriction shall
not apply to (i) the execution by Crompton Corp. and certain of
its Subsidiaries of, and payments by Crompton Corp. and any of
its Subsidiaries pursuant to, the Tax Agreement, (ii) the payment
of reasonable and customary fees to members of the board of
directors of Crompton Corp. or any of its Subsidiaries who are
not employees of Crompton Corp. or any of its Subsidiaries,
(iii) loans and advances to officers, directors and employees of
Crompton Corp. or any of its Subsidiaries for travel,
entertainment, moving and other relocation expenses made in the
ordinary course of business to the extent otherwise permitted
hereunder, (iv) subject to the provisions of this Agreement, any
transaction between or among Crompton Corp. and any of its wholly
owned Subsidiaries or between Uniroyal and Premier Chemical
Company, Ltd. (so long as Premier Chemical Company, Ltd. remains
at least 80% owned, directly or indirectly, by Crompton Corp.),
(v) payment by Crompton Corp. and its Subsidiaries of ordinary
and customary compensation to their respective employees in the
ordinary course of business, (vi) any dividends or other
distributions permitted by Section 5.02(g), (vii) transactions
with Monochem, Inc. and Rubicon Inc. on terms that are customary
in the ordinary course of business of Uniroyal and its
Subsidiaries as currently practiced, (viii) a Receivables
Securitization and (ix) transactions in addition to those
permitted by the foregoing clauses of this subsection (j) which
in the aggregate involve amounts not in excess of $500,000 per
year.
(k) Covenant to Guarantee Obligations and Give Security. (i) At
such time as any new direct or indirect Material Subsidiaries of
any Loan Party are formed or acquired by such Loan Party or at
such time as any Minor Subsidiary shall have revenues which
exceed $250,000 for the twelve-month period ending on the last
day of the most recent fiscal quarter of Crompton Corp. or the
aggregate book value of the assets of such Minor Subsidiary, as
at the end of the most recent fiscal quarter of Crompton Corp.
exceeds $250,000, in each case to the extent not prohibited by
the terms of the Uniroyal Indentures then in effect and at the
expense of the Borrowers, within 30 days after such formation or
acquisition, cause each such Material Subsidiary (other than any
Foreign Subsidiary) or each such Minor Subsidiary, as the case
may be, and cause each direct and indirect parent (other than the
Borrowers and any Foreign Subsidiary) of such Material Subsidiary
or each such Minor Subsidiary, as the case may be, (if it has not
already done so), to duly execute and deliver to the Agent a
guaranty, in form and substance satisfactory to the Agent,
guaranteeing the other Loan Parties' Obligations under the Loan
Documents;
(ii) At any time prior to the Collateral Release Date, at such
time as any new direct or indirect Material Subsidiaries of any
Loan Party are formed or acquired by such Loan Party or at such
time as any Minor Subsidiary shall have revenues which exceed
$250,000 for the twelve-month period ending on the last day of
the most recent fiscal quarter of Crompton Corp. or the aggregate
book value of the assets of such Minor Subsidiary, as at the end
of the most recent fiscal quarter of Crompton Corp. exceeds
$250,000, in each case to the extent not prohibited by the terms
of the Uniroyal Indentures then in effect and at the expense of
the Borrowers, within 30 days after such formation or
acquisition, duly execute and deliver, and cause each such
Material Subsidiary (other than any Foreign Subsidiary) or each
such Minor Subsidiary, as the case may be, and each direct and
indirect parent of such Material Subsidiary or each such Minor
Subsidiary, as the case may be, (other than any Foreign
Subsidiary except to the extent provided in the proviso below),
if it has not already done so, to duly execute and deliver, to
the Agent, in the case of Crompton Corp. or any of its
Subsidiaries (other than Uniroyal Corp. and its Subsidiaries),
pledge agreements (pledging the capital stock of its
Subsidiaries, except to the extent provided in the proviso below)
and, in the case of any direct or indirect Subsidiary of Uniroyal
Corp., security agreements (granting a security interest in
Inventory and Receivables), as specified by and in form and
substance satisfactory to the Agent, securing payment of all the
Obligations of such Borrower, such Subsidiary or such parent, as
the case may be, under the Loan Documents and constituting Liens
on all such properties; provided that with respect to the pledge
of the capital stock of any Foreign Subsidiary, such pledge shall
cover not more than 66% of the outstanding capital stock of such
Foreign Subsidiary if it is directly owned by a Loan Party and
not cover any of the outstanding capital stock of such Foreign
Subsidiary if it is directly or indirectly owned by another
Foreign Subsidiary;
(iii) At any time prior to the Collateral Release Date, upon the
request of the Agent following the occurrence and during the
continuance of an Event of Default, in each case to the extent
not prohibited by the terms of the Uniroyal Indentures then in
effect and at the expense of the Borrowers:
(A)within 30 days after such request, duly execute and deliver,
and cause each of its Subsidiaries (other than any Foreign
Subsidiary) and each direct and indirect parent of such
Subsidiary (if it has not already done so) (other than any
Foreign Subsidiary except to the extent required in the proviso
below) to duly execute and deliver, to the Agent mortgages,
pledges, assignments and other security agreements, as specified
by and in form and substance satisfactory to the Agent, securing
payment of all the Obligations of such Borrower, such Subsidiary
or such parent, as the case may be, under the Loan Documents and
constituting Liens on all such properties; provided that with
respect to the pledge of the capital stock of any Foreign
Subsidiary, such pledge shall cover not more than 66% of the
outstanding capital stock of such Foreign Subsidiary if it is
directly owned by a Loan Party and not cover any of the
outstanding capital stock of such Foreign Subsidiary if it is
directly or indirectly owned by another Foreign Subsidiary; and
(B)within 30 days after such request, take, and cause such
Subsidiary (other than any Foreign Subsidiary) or such parent
(other than any Foreign Subsidiary) to take, whatever action
(including, without limitation, the recording of mortgages, the
filing of Uniform Commercial Code financing statements, the
giving of notices and the endorsement of notices on title
documents) may be necessary or advisable in the opinion of the
Agent to vest in the Agent (or in any representative of the Agent
designated by it) valid and subsisting Liens on the properties
purported to be subject to the mortgages, pledges, assignments
and security agreements delivered pursuant to this
Section 5.01(k), enforceable against all third parties in
accordance with their terms;
(iv)Within 60 days after such formation, acquisition or request,
deliver to the Agent, upon the request of the Agent in its sole
discretion, a signed copy of a favorable opinion, addressed to
the Agent and the other Secured Parties, of counsel for the Loan
Parties acceptable to the Agent as to the guaranties, mortgages,
pledges, assignments and security agreements referred to in
clauses (i), (ii) and (iii) above being the legal, valid and
binding obligations of each Loan Party party thereto enforceable
in accordance with their terms and as to such other matters as
the Agent may reasonably request; and
(v)At any time and from time to time, promptly execute and
deliver any and all further instruments and documents and take
all such other action as the Agent may deem necessary or
desirable in obtaining the full benefits of, or in perfecting and
preserving the Liens of, the guaranties, mortgages, pledges,
assignments and security agreements referred to in clauses (i),
(ii) and (iii) above.
(l)Conditions Subsequent. Deliver to the Agent, in form and
substance satisfactory to the Agent and in sufficient copies for
each Lender Party, as soon as possible and in any event within 60
days after the Initial Extension of Credit (or such later date as
may be agreed by Crompton Corp. and the Agent or such later date
otherwise provided below):
(i)acknowledgment copies of proper financing statements, duly
filed under the Uniform Commercial Code of all jurisdictions that
the Collateral Agent may deem necessary or desirable in order to
perfect and protect the first priority liens and security
interests created under the Security Agreement, covering the
Collateral described in the Security Agreement,
(ii)completed requests for information, listing the financing
statements referred to in clause (i) above and all other
effective financing statements filed in the jurisdictions
referred to in clause (i) above that name any Loan Party as
debtor, together with copies of such financing statements,
(iii)(A) evidence that such action as the Agent may deem
necessary or desirable in order to perfect and protect the Liens
created under the Crompton Security Agreement on the capital
stock held by any Crompton Borrower or Crompton Guarantor in any
of its Foreign Subsidiaries that are Material Subsidiaries has
been taken, and (B) at the sole discretion of the Agent, evidence
that such actions as the Agent may deem necessary or desirable in
order to perfect and protect the Liens created under the Crompton
Security Agreement on the capital stock held by any Crompton
Borrower or Crompton Guarantor in any of its Foreign Subsidiaries
that are not Material Subsidiaries; provided that in any event
such Liens shall cover not more than 66% of the outstanding
capital stock of Foreign Subsidiaries directly owned by such Loan
Party and shall not cover any capital stock of any Foreign
Subsidiary directly or indirectly owned by a Foreign Subsidiary,
(iv)evidence that all other action as the Agent may deem
necessary or desirable in order to perfect and protect the first
priority liens and security interests created under the
Collateral Documents has been taken, and
(v)within 90 days after the date hereof, (A) cause (1) Crompton &
Knowles I.P.R. Corporation (if it has not already done so) to
duly execute and deliver to the Agent a guaranty, in form and
substance satisfactory to the Agent, guaranteeing the other Loan
Parties' Obligations under the Loan Documents, (2) Crompton &
Knowles I.P.R. Corporation (if it has not already done so) to
duly execute and deliver to the Agent, a pledge agreement,
pledging the intercompany Debt owed to Crompton & Knowles I.P.R.
Corporation, in form and substance satisfactory to the Agent,
securing payment of its Obligations under the Loan Documents and
constituting Liens on all such properties and (3) each direct and
indirect parent of Crompton & Knowles I.P.R. Corporation to duly
execute and deliver to the Agent, a pledge agreement, pledging
the capital stock of Crompton & Knowles I.P.R. Corporation, in
form and substance satisfactory to the Agent, securing payment of
its Obligations under the Loan Documents and constituting Liens
on all such properties or (B) fully dissolve and liquidate the
assets of Crompton & Knowles I.P.R. Corporation (if it has not
already done so).
SECTION 5.02. Negative Covenants. So long as any Advance shall
remain unpaid, any Letter of Credit shall be outstanding or any
Lender Party shall have any Commitment hereunder, no Borrower
will, at any time:
(a)Liens, Etc. Create, incur, assume or suffer to exist, or
permit any of its Subsidiaries to create, incur, assume or suffer
to exist, any Lien on or with respect to any of its properties of
any character (including, without limitation, accounts) whether
now owned or hereafter acquired, or sign or file or suffer to
exist, or permit any of its Subsidiaries to sign or file or
suffer to exist, under the Uniform Commercial Code of any
jurisdiction, a financing statement that names any Borrower or
any of its Subsidiaries as debtor, or sign or suffer to exist, or
permit any of its Subsidiaries to sign or suffer to exist, any
security agreement authorizing any secured party thereunder to
file such financing statement, or assign, or permit any of its
Subsidiaries to assign, any accounts or other right to receive
income, excluding, however, from the operation of the foregoing
restrictions the following:
(i)Liens created under the Loan Documents;
(ii)with respect to any Person, all of the following
(collectively, the "Permitted Liens"):
(A)pledges or deposits by such Person under workers' compensation
laws, unemployment insurance laws or similar legislation or good
faith deposits in connection with bids, tenders, contracts (other
than for the payment of Debt) or leases to which such Person is a
party, or deposits to secure public or statutory obligations of
such Person or deposits of cash or United States Government bonds
to secure surety or appeal bonds to which such Person is a party,
or deposits as security for contested taxes or for charges
relating thereto (including, without limitation, interest,
penalties and certain other similar charges) or import duties or
for the payment of rent;
(B)(x) liens imposed by law, such as carriers', warehousemen's
and mechanics' liens or (y) other liens arising out of judgments
or awards against such Person with respect to which such Person
shall then be prosecuting an appeal or other proceedings for
review or otherwise arising out of judicial proceedings to the
extent such liens do not constitute an Event of Default;
(C)liens for taxes, assessments or governmental charges or
levies to the extent not required to be paid by Section 5.01(b);
and
(D)minor survey exceptions, minor encumbrances, easements or
reservations of, or rights of others for, rights of way, sewers,
electric lines, telegraph and telephone lines and other similar
purposes, or zoning or other restrictions as to the use of real
properties or liens incidental to the conduct of the business of
such Person or to the ownership of its properties which were not
incurred in connection with Debt or other extensions of credit
and which do not in the aggregate materially adversely affect the
value of said properties or materially impair their use in the
operation of the business of such Person.
(iii)Liens existing on the date hereof and described on
Schedule 5.02(a) hereto;
(iv)purchase money Liens upon or in real property or personal
property (other than Inventory of Uniroyal Corp. and its
Subsidiaries) acquired or held by any Borrower or any of its
Subsidiaries in the ordinary course of business to secure the
purchase price of such property or to secure Debt incurred solely
for the purpose of financing the acquisition, construction or
improvement of any such property to be subject to such Liens, or
Liens existing on any such property at the time of acquisition
(other than any such Liens created in contemplation of such
acquisition that do not secure the purchase price); provided,
however, that no such Lien shall extend to or cover any property
other than the property being acquired, constructed or improved,
and no such extension, renewal or replacement shall extend to or
cover any property not theretofore subject to the Lien being
extended, renewed or replaced; and provided further that the
aggregate principal amount of the Debt secured by Liens permitted
by this clause (iv) shall not exceed the amount permitted under
Section 5.02(b)(iii)(B) at any time outstanding and that any such
Debt shall not otherwise be prohibited by the terms of the Loan
Documents;
(v)Liens arising in connection with Capitalized Leases permitted
under Section 5.02(b)(iii)(C); provided that no such Lien shall
extend to or cover any Collateral or assets other than the assets
subject to such Capitalized Leases;
(vi)Liens on property of a Person existing at the time such
Person is merged into or consolidated with any Borrower or any
Subsidiary of such Borrower or becomes a Subsidiary of such
Borrower; provided that such Liens were not created in
contemplation of such merger, consolidation or investment and do
not extend to any assets other than those of the Person merged
into or consolidated with such Borrower or such Subsidiary or
acquired by such Borrower or such Subsidiary;
(vii)Liens arising in connection with any lease permitted under
Section 5.02(c), provided that no such Lien shall extend to or
cover any assets other than the assets subject to such lease;
(viii)Liens securing Debt incurred by Foreign Subsidiaries
pursuant to Section 5.02(b)(iii)(G) and (H);
(ix)Liens on accounts receivable (and in property securing or
otherwise supporting such accounts receivable together with
proceeds thereof) of Crompton Corp. and its Subsidiaries (other
than Uniroyal Corp. and its Subsidiaries) in connection with a
Receivables Securitization;
(x)Liens securing Obligations of Crompton Corp. or any of its
Subsidiaries in an aggregate amount not to exceed $5,000,000 at
any time outstanding;
(xi)filings for information purposes only under the Uniform
Commercial Code, as amended, of any state in connection with a
lease of property (other than Capitalized Leases); and
(xii)Liens to secure any extension, renewal or replacement (or
successive extensions, renewals or replacements) as a whole, or
in part, of any Debt secured by any Lien referred to in the
foregoing clauses (iii) through (vii), provided that (i) such
extended, renewed or replacement Lien shall be limited to all or
part of the same type of property that secured the Lien extended,
renewed or replaced (plus improvements on such property) and (ii)
the Debt secured by such Lien at such time is not increased to an
amount in excess of the original principal amount of the Debt
secured by such Lien.
(b)Debt. Create, incur, assume or suffer to exist, or permit any
of its Subsidiaries to create, incur, assume or suffer to exist,
any Debt other than:
(i)in the case of the Borrowers,
(A)Debt of the Uniroyal Borrower in respect of the Seoul
Guaranty, provided that the U.S. dollar equivalent of the amount
of such Debt shall not exceed U.S.$5,000,000,
(B)Debt in respect of Interest Rate Swap Agreements designed to
hedge against fluctuations in interest rates incurred in the
ordinary course of business and consistent with prudent business
practice in an aggregate notional amount not to exceed
$400,000,000 at any time outstanding,
(C)Debt in respect of Foreign Exchange Agreements designed to
hedge against fluctuations in foreign exchange rates incurred in
the ordinary course of business and consistent with prudent
business practice in an aggregate notional amount not to exceed
$100,000,000 at any time outstanding, and
(D)Debt owed to Crompton Corp. or to a wholly owned Subsidiary of
Crompton Corp, provided that, solely with respect to any
Borrower, Guarantor and Uniroyal Chemical Ltd., such Debt (x)
shall, to the extent not prohibited by the terms of the Uniroyal
Indentures then in effect, constitute Pledged Debt (as defined in
the Security Agreement) other than any such Debt owing to any
Minor Subsidiary and (y) shall, to the extent not prohibited by
the terms of the Uniroyal Indentures then in effect, be evidenced
by promissory notes in form and substance satisfactory to the
Agent and such promissory notes shall be pledged as security for
the Obligations under the Loan Documents of the holder thereof
and delivered to the Agent pursuant to the terms of the Security
Agreement,
(ii)in the case of any of such Borrower's Subsidiaries (other
than any Minor Subsidiary), Debt owed to any Borrower or to a
wholly owned Subsidiary of any Borrower, provided that, solely
with respect to any Borrower, Guarantor and Uniroyal Chemical
Ltd., such Debt (A) shall, to the extent not prohibited by the
terms of the Uniroyal Indentures then in effect, constitute
Pledged Debt (as defined in the Security Agreement) other than
any such Debt owing to any Minor Subsidiary and (B) shall be
evidenced by promissory notes in form and substance satisfactory
to the Agent and such promissory notes shall be pledged as
security for the Obligations under the Loan Documents of the
holder thereof and delivered to the Agent pursuant to the terms
of the Security Agreement, and
(iii)in the case of the Borrowers and their respective
Subsidiaries (other than any Minor Subsidiary except as provided
below),
(A)Debt under the Loan Documents,
(B)Debt secured by Liens permitted by Section 5.02(a)(iv) not to
exceed in the aggregate, together with Debt referred to in clause
(C) below, $100,000,000 at any time outstanding,
(C)(i) Capitalized Leases not to exceed in the aggregate,
together with Debt referred to in clause (B) above, $100,000,000
at any time outstanding and (ii) in the case of Capitalized
Leases to which any Subsidiary of any Borrower is a party, Debt
of such Borrower of the type described in clause (i) of the
definition of "Debt" guaranteeing the Obligations of such
Subsidiary under such Capitalized Leases,
(D)the Surviving Debt listed on Part I of Schedule 3.01(d)
hereto, and any Debt extending the maturity of, or refunding or
refinancing, in whole or in part, any Surviving Debt, provided
that the terms of any such extending, refunding or refinancing
Debt, and of any agreement entered into and of any instrument
issued in connection therewith, are otherwise permitted by the
Loan Documents; provided further that the terms relating to
principal amount, amortization, maturity, collateral (if any) and
subordination (if any), and other material terms taken as a
whole, of any such extending, refunding or refinancing Debt, and
of any agreement entered into and of any instrument issued in
connection therewith, are no less favorable in any material
respect to the Loan Parties or the Lender Parties than the terms
of any agreement or instrument governing the Surviving Debt being
extended, refunded or refinanced and the interest rate applicable
to any such extending, refunding or refinancing Debt does not
exceed the then market interest rate for companies having a
credit standing similar to that of Crompton Corp. at such time,
provided still further that the principal amount of such
Surviving Debt shall not be increased above the principal amount
thereof outstanding immediately prior to such extension,
refunding or refinancing plus the amount of any redemption
premium stipulated in the indenture relating to such Surviving
Debt or other reasonable premium paid in connection with any
redemption of, or tender offer or exchange offer for, or open
market purchase of, such Surviving Debt, and the direct and
contingent obligors therefor shall not be changed, as a result of
or in connection with such extension, refunding or refinancing,
provided still further that any Debt refinancing the Surviving
Debt with respect to the Receivables Securitization listed on
Part I of Schedule 3.01(d) may be incurred up to 6 months after
the termination of such Receivables Securitization,
(E)Debt of any Person that becomes a Subsidiary of any Borrower
after the date hereof in accordance with the terms of Section
5.02(f) which Debt is existing at the time such Person becomes a
Subsidiary of such Borrower (other than Debt incurred solely in
contemplation of such Person becoming a Subsidiary of such
Borrower),
(F)Debt owing to the Daylight Overdraft Bank in respect of any
daylight overdraft facility or in connection with any automated
clearing house transfers of funds in an aggregate amount
outstanding at any time not to exceed $10,000,000 in the case of
the Crompton Borrowers and $10,000,000 in the case of the
Uniroyal Borrower,
(G)(i)Debt of any Foreign Subsidiary or any of its Subsidiaries
incurred for business purposes, provided that the aggregate Debt
described in this clause (G) for all such Persons at any one time
outstanding shall not exceed the sum of (A) 60% of the book value
of Inventory of Foreign Subsidiaries plus (B) 90% of the book
value of Receivables of Foreign Subsidiaries plus (C)
$100,000,000 and (ii) Debt of any Borrower of the type described
in clause (i) of the definition of "Debt" guaranteeing up to 40%
of the Obligations of Foreign Subsidiaries outstanding under
clause (i) above,
(H)Debt of Foreign Subsidiaries relating to sales of accounts
receivable pursuant to Section 5.02(e)(v),
(I)Debt, if any, of Crompton Corp. and its Subsidiaries (other
than Uniroyal Corp. and its Subsidiaries and the Minor
Subsidiaries), incurred in connection with a Receivables
Securitization,
(J)short term, unsecured Debt in an aggregate amount not to
exceed $75,000,000 at any time outstanding, provided, however,
that the aggregate amount of Debt issued or incurred pursuant to
this clause (J) and clause (K) shall not exceed in the aggregate
$125,000,000 at any time outstanding,
(K)other Debt in an aggregate amount not to exceed $75,000,000 at
any time outstanding, provided, however, that the aggregate
amount of Debt issued or incurred pursuant to clause (J) and this
clause (K) shall not exceed in the aggregate $125,000,000 at any
time outstanding,
(L)endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of
business,
(M)unsecured Debt of Naugatuck in an aggregate amount not to
exceed $1,000,000 at any time outstanding, and
(N)intercompany Debt owing to Crompton & Knowles I.P.R.
Corporation in an amount not to exceed $33,000,000 at any time
outstanding subject, however, to the provisions of Section
5.01(l)(v).
(c)Lease Obligations. Create, incur, assume or suffer to exist,
or permit any of its Subsidiaries to create, incur, assume or
suffer to exist, any obligations as lessee for the rental or hire
of real or personal property of any kind under leases or
agreements to lease (including Capitalized Leases) having an
original term of one year or more that would cause the direct and
contingent liabilities of Crompton Corp. and its Subsidiaries, on
a Consolidated basis, in respect of all such obligations to
exceed $50,000,000 payable in any period of 12 consecutive
months; provided, however, that no Minor Subsidiary (other than
Naugatuck) shall create, incur, assume or suffer to exist any
obligations as lessee for the rental or hire of real or personal
property of any kind under leases or agreements to lease
(including Capitalized Leases).
(d)Mergers, Etc. Merge into or consolidate with any Person or
permit any Person to merge into it, or permit any of its
Subsidiaries to do so, except that (i) the Borrowers and their
Subsidiaries may consummate the Merger, (ii) Uniroyal Corp. may
merge into or consolidate with Crompton Corp., (iii) any Foreign
Subsidiary may merge into or consolidate with any other Foreign
Subsidiary; (iv) any Foreign Subsidiary may merge into or
consolidate with any Domestic Subsidiary, provided that such
Domestic Subsidiary shall survive such merger, (v) any Domestic
Subsidiary of Crompton Corp. (other than the Borrowers and
Uniroyal Corp. and its Subsidiaries) may merge into or
consolidate with any other Domestic Subsidiary of Crompton Corp.
(other than the Borrowers and Uniroyal Corp. and its
Subsidiaries) so long as if any Loan Party is party to such
merger or consolidaton, such Loan Party shall survive such merger
or consolidation, (vi) any Domestic Subsidiary of Uniroyal Corp.
may merge into or consolidate with any other Domestic Subsidiary
of Uniroyal Corp. so long as if any Loan Party is party to such
merger or consolidation, such Loan Party shall survive such
merger or consolidation, (vii) after the Collateral Release Date,
any Subsidiary of Crompton Corp. (other than the other Borrowers)
may merge into or consolidate with any Borrower or any other
Subsidiary of Crompton Corp. so long as if any Borrower is party
to such merger or consolidation, such Borrower shall survive such
merger or consolidation, (viii) in connection with any
acquisition permitted under Section 5.02(f), any Subsidiary of
Crompton Corp. may merge into or consolidate with any other
Person or permit any other Person to merge into or consolidate
with it; provided that the Person surviving such merger shall be
a wholly owned Subsidiary of Crompton Corp. and (ix) in
connection with any sale or other disposition permitted under
Section 5.02(e) (other than clause (ii) thereof), any Subsidiary
of Crompton Corp. may merge into or consolidate with any other
Person or permit any other Person to merge into or consolidate
with it; provided, however, that in each case, immediately after
giving effect thereto, no event shall occur and be continuing
that constitutes a Default and, in the case of any such merger to
which Crompton Corp. is a party, Crompton Corp. is the surviving
corporation.
(e)Sales, Etc. of Assets. Sell, lease, transfer or otherwise
dispose of, or permit any of its Subsidiaries to sell, lease,
transfer or otherwise dispose of, any assets, or grant any option
or other right to purchase, lease or otherwise acquire any assets
other than Inventory to be sold in the ordinary course of its
business, except:
(i)sales of Inventory in the ordinary course of its business,
(ii)in a transaction authorized by Section 5.02(d) (other than
clause (ix) thereof),
(iii)sales of assets and for fair value in an aggregate amount
not to exceed $50,000,000 in any Fiscal Year,
(iv)the sale or other disposition of damaged, worn out or
obsolete property that is no longer necessary for the proper
conduct of the business of Crompton Corp. and its Subsidiaries in
the ordinary course of business,
(v)sales of accounts receivable of Foreign Subsidiaries on a
basis which is non-recourse to Crompton Corp. and its
Subsidiaries (other than any Minor Subsidiary) (which accounts
receivable shall at no time exceed 25% of the aggregate accounts
receivable of Crompton Corp. and its Consolidated Subsidiaries),
(vi)sales of assets after the Effective Date having an aggregate
fair market value of not more than the greater of (A)
$100,000,000 and (B) an amount equal to 5% of Consolidated sales
of Crompton Corp. and its Subsidiaries since the Effective Date,
provided that the Net Cash Proceeds of such asset sales are
applied to purchase substantially similar assets (whether by
means of an acquisition of stock or assets or otherwise)
constituting Investments permitted under Section 5.02(f) or
Capital Expenditures permitted under Section 5.02(n) or to prepay
permanently Debt of Crompton Corp. or any of its Subsidiaries,
(vii)sales of accounts receivable of Crompton Corp. and its
Subsidiaries (other than Uniroyal Corp. and its Subsidiaries and
the Minor Subsidiaries) in connection with agreements for limited
recourse or non-recourse sales by Crompton Corp. or any of its
Subsidiaries (other than Uniroyal Corp. and its Subsidiaries and
the Minor Subsidiaries) for cash, provided that (A) any such
agreement is of a type and on terms customary for comparable
transactions in the good faith judgment of the Board of Directors
of Crompton Corp., (B) such agreement does not create any
interest in any asset other than accounts receivable (and
property securing or otherwise supporting accounts receivable)
and proceeds of the foregoing and (C) the Net Cash Proceeds
thereof in excess of $25,000,000 shall be applied to the
permanent reduction of the Facilities in accordance with Section
2.05(b)(iv) (a "Receivables Securitization"),
(viii)the sale of assets listed in a letter dated the Effective
Date from Crompton Corp. addressed and delivered to the Lender
Parties on or prior to the Effective Date, and
(ix)the transfer of assets among Loan Parties to the extent
permitted under Section 5.02(f)(vii).
(f)Investments in Other Persons. Make or hold, or permit any of
its Subsidiaries to make or hold, any Investment in any Person
other than:
(i)equity Investments by the Borrowers and their Subsidiaries in
their Subsidiaries outstanding on the date hereof and additional
equity investments in wholly owned Subsidiaries (other than any
Minor Subsidiary), which Subsidiaries were in existence on the
date hereof;
(ii)loans and advances to employees in the ordinary course of the
business of the Borrowers and their Subsidiaries (other than any
Minor Subsidiary) as presently conducted in an aggregate
principal amount not to exceed $5,000,000 at any time
outstanding;
(iii)Investments by the Borrowers and their Subsidiaries in Cash
Equivalents;
(iv)Investments by the Borrowers in Hedge Agreements permitted
under Sections 5.02(b)(i)(B) and (C);
(v)Investments consisting of intercompany Debt permitted under
Section 5.02(b)(i)(D) or (ii);
(vi)Investments existing on the date hereof and described on Part
I of Schedule 5.02(f) hereto;
(vii)Investments consisting of the contribution of assets of (A)
any Loan Party to any other Loan Party in an aggregate amount not
to exceed $50,000,000 in any Fiscal Year or $100,000,000 in the
aggregate after the Effective Date, (B) any Domestic Subsidiary
to any Foreign Subsidiary in an aggregate amount not to exceed
$25,000,000 in any Fiscal Year or $50,000,000 in the aggregate
after the Effective Date, (C) any Foreign Subsidiary to any other
Foreign Subsidiary, (D) any Foreign Subsidiary to any Domestic
Subsidiary (other than any Minor Subsidiary) and (E) Uniroyal to
Uniroyal Chemical Leasing Company, Inc. in an amount not to
exceed $100,000,000 in the aggregate after the Effective Date;
(viii) Investments by Crompton Corp. and its Subsidiaries in (A)
the joint ventures listed on Part II of Schedule 5.02(f) and
other joint ventures and non-wholly owned Subsidiaries in an
aggregate amount invested (including, without limitation,
assumption of debt, noncompetition arrangements, "earn-outs" and
other deferred payment arrangements) not to exceed $50,000,000
and (B) Monochem, Inc. and Rubicon, Inc.; provided that with
respect to Investments made under this clause (viii): (1)
immediately before and after giving effect thereto, no Default
shall have occurred and be continuing or would result therefrom;
(2) any business acquired or invested in pursuant to this clause
(viii) shall be in the same general line of business or
substantially related lines of business as the business of
Crompton Corp. or such Subsidiary; and (3) immediately after
giving effect to the acquisition of a company or business
pursuant to this clause (viii), Crompton Corp. shall be in pro
forma compliance with the covenants contained in Section 5.04,
calculated based on the relevant Financial Statements, as though
such acquisition had occurred at the beginning of the 12-month
period covered thereby, as evidenced by a certificate of the
chief financial officer or treasurer of Crompton Corp. furnished
to the Lender Parties, demonstrating such compliance;
(ix)other Investments (other than Investments in Minor
Subsidiaries) in an aggregate amount invested not to exceed the
sum of (A) an amount equal to the aggregate Net Cash Proceeds of
any equity issued by Crompton Corp. after the Effective Date and
(B) in any Fiscal Year, an amount equal to Available Cash Flow
for such Fiscal Year; provided that with respect to Investments
made under this clause (ix): (1) any newly acquired or created
Subsidiary of any Borrower or any of its Subsidiaries shall be a
wholly owned Subsidiary thereof; (2) immediately before and after
giving effect thereto, no Default shall have occurred and be
continuing or would result therefrom; (3) any business acquired
or invested in pursuant to this clause (ix) shall be in the same
general line of business or substantially related lines of
business as the business of such Borrower or any of its
Subsidiaries; and (4) immediately after giving effect to the
acquisition of a company or business pursuant to this clause
(ix), Crompton Corp. shall be in pro forma compliance with the
covenants contained in Section 5.04, calculated based on the
relevant Financial Statements, as though such acquisition had
occurred at the beginning of the 12-month period covered thereby,
as evidenced by a certificate of the chief financial officer or
treasurer of Crompton Corp. furnished to the Lender Parties,
demonstrating such compliance; and
(x)additional equity Investments in Naugatuck and intercompany
Debt incurred by Naugatuck not to exceed $5,000,000 in the
aggregate from the date hereof.
(g)Dividends, Etc. Declare or pay any dividends, purchase,
redeem, retire, defease or otherwise acquire for value any of its
capital stock or any warrants, rights or options to acquire such
capital stock, now or hereafter outstanding, return any capital
to its stockholders as such, make any distribution of assets,
capital stock, warrants, rights, options, obligations or
securities to its stockholders as such or issue or sell any
capital stock or any warrants, rights or options to acquire such
capital stock, or permit any of its Subsidiaries to do any of the
foregoing or permit any of its Subsidiaries to purchase, redeem,
retire, defease or otherwise acquire for value any capital stock
of any Borrower or any warrants, rights or options to acquire
such capital stock or to issue or sell any capital stock or any
warrants, rights or options to acquire such capital stock, except
that, so long as no Default shall have occurred and be continuing
at the time of any action described in clauses (i) and (ii) below
or would result therefrom, (i) Crompton Corp. may (A) declare and
pay dividends and distributions payable only in common stock of
Crompton Corp., (B) issue and sell shares of its capital stock,
(C) purchase, redeem, retire, defease or otherwise acquire shares
of its capital stock with the proceeds received from the issue of
new shares of its capital stock with equal or inferior voting
powers, designations, preferences and rights and (D) declare and
pay cash dividends to its stockholders and purchase, redeem,
retire or otherwise acquire shares of its own outstanding capital
stock for cash in an amount not to exceed in the Fiscal Year
ending on or about December 31, 1996, $15,000,000, and in any
Fiscal Year thereafter the greater of (I) $15,000,000 and (II)
50% of Consolidated net income of Crompton Corp. and its
Subsidiaries for the immediately preceding Fiscal Year computed
in accordance with GAAP, and (ii) any Subsidiary of Crompton
Corp. may (A) declare and pay cash dividends to any Borrower
(including, without limitation, the declaration and payment of
cash dividends by Uniroyal to Uniroyal Corp.) and (B) declare and
pay cash dividends to any other wholly owned Subsidiary of any
Borrower of which it is a Subsidiary.
(h)Change in Nature of Business. Make, or permit any of its
Subsidiaries to make, any material change in the nature of its
business as carried on at the date hereof.
(i)Charter Amendments. Amend, or permit any of its Subsidiaries
to amend, its certificate of incorporation or bylaws in any
material respect.
(j)Accounting Changes. Make or permit, or permit any of its
Subsidiaries to make or permit, any change in (i) accounting
policies or reporting practices, except as required or permitted
by generally accepted accounting principles or (ii) Fiscal Year,
except in each case, as necessary to make such Fiscal Year the
same with respect to Uniroyal Corp. and Crompton Corp.
(k)Amendment, Etc. of Related Documents. Cancel or terminate any
Related Document or consent to or accept any cancellation or
termination thereof, amend, modify or change in any manner any
term or condition of any Related Document or give any consent,
waiver or approval thereunder, waive any default under or any
breach of any term or condition of any Related Document, agree in
any manner to any other amendment, modification or change of any
term or condition of any Related Document or take any other
action in connection with any Related Document, in each case that
would impair in any material respect the value of the interest or
rights of any Borrower thereunder or that would impair the rights
or interests of the Agent or any Lender Party, or permit any of
its Subsidiaries to do any of the foregoing.
(l)Negative Pledge. Enter into or suffer to exist, or permit any
of its Subsidiaries to enter into or suffer to exist, any
agreement prohibiting or conditioning the creation or assumption
of any Lien upon any of its property or assets other than (i) in
favor of the Secured Parties, (ii) in connection with any
Surviving Debt, any Debt extending the maturity of, or refunding
or refinancing, in whole or in part, any Surviving Debt in
accordance with Section 5.02(b)(iii)(D) (to the extent the
agreement or instrument evidencing such Surviving Debt contained
such a provision or agreement) and any Debt outstanding on the
date such Subsidiary first becomes a Subsidiary (so long as such
agreement was not entered into solely in contemplation of such
Subsidiary becoming a Subsidiary) or (iii) in connection with any
lease permitted under Section 5.02(c) solely to the extent that
such lease prohibits a Lien on the lease or the property subject
to such lease.
(m)Partnerships, Etc. Become a general partner in any general or
limited partnership or joint venture, or permit any of its
Subsidiaries to do so, other than any Subsidiary the sole assets
of which consist of its interest in such partnership or joint
venture.
(n)Capital Expenditures. Make, or permit any of its Subsidiaries
to make, any Capital Expenditures that would cause the aggregate
of all such Capital Expenditures made by Crompton Corp. and its
Subsidiaries in any period set forth below to exceed the amount
set forth below for such period.
Fiscal Year Ending On or About Amount
December 31, 1996 $100,000,000
December 31, 1997 $100,000,000
December 31, 1998 $110,000,000
December 31, 1999 $110,000,000
December 31, 2000 $110,000,000
December 31, 2001
and thereafter $110,000,000
plus, for each Fiscal Year set forth above, an amount equal to
(i) the excess, if any, of the amount set opposite the
immediately preceding Fiscal Year over the aggregate amount of
such Capital Expenditures actually made during such Fiscal Year
(other than pursuant to clause (ii) below), provided that any
Capital Expenditures made in any Fiscal Year shall be applied
first against any amount permitted to be carried over from the
immediately preceding Fiscal Year and (ii) the amount of any Net
Cash Proceeds received with respect to the sale, lease, transfer
or other disposition of assets pursuant to Section 5.02(e)(vi),
solely to the extent such Net Cash Proceeds are not used to make
Investments permitted under Section 5.02(f) or to prepay
permanently Debt of Crompton Corp. or any of its Subsidiaries,
provided that such amount of Net Cash Proceeds shall not be
carried over to any subsequent Fiscal Year pursuant to clause (i)
above.
(o) Minor Subsidiaries. Permit any Minor Subsidiary (other than
Naugatuck Treatment Company) to enter into or conduct any
business or engage in any activity (including, without
limitation, any action or transaction that is required or
restricted with respect to any Borrower and its Subsidiaries
under Section 5.01 and this Section 5.02).
SECTION 5.03. Reporting Requirements. So long as any
Advance shall remain unpaid, any Letter of Credit shall be
outstanding or any Lender Party shall have any Commitment
hereunder, Crompton Corp. will furnish to the Agent and the
Lender Parties:
(a) Default Notice. As soon as possible and in any event
within five days after any Responsible Officer of any Borrower
becomes aware of the occurrence of each Default or any event,
development or occurrence reasonably likely to have a Material
Adverse Effect continuing on the date of such statement, a
statement of the chief financial officer, treasurer or chief
accounting officer of such Borrower setting forth details of such
Default and the action that such Borrower has taken and proposes
to take with respect thereto.
(b) Quarterly Financials. As soon as available and in any
event within 50 days after the end of each of the first three
quarters of each Fiscal Year, Consolidated and, to the extent
otherwise available, consolidating balance sheets of Crompton
Corp. and its Subsidiaries and Consolidated balance sheets of
Uniroyal Corp. and its Subsidiaries, in each case, as of the end
of such quarter and Consolidated and, to the extent otherwise
available, consolidating statements of income and a Consolidated
statement of cash flows of Crompton Corp. and its Subsidiaries
and Consolidated statements of income and of cash flows of
Uniroyal Corp. and its Subsidiaries, in each case, for the period
commencing at the end of the previous fiscal quarter and ending
with the end of such fiscal quarter and Consolidated and, to the
extent otherwise available, consolidating statements of income
and a Consolidated statement of cash flows of Crompton Corp. and
its Subsidiaries and Consolidated statements of income and of
cash flows of Uniroyal Corp. and its Subsidiaries, in each case,
for the period commencing at the end of the previous Fiscal Year
and ending with the end of such quarter, setting forth in each
case in comparative form the corresponding figures for the
corresponding period of the preceding Fiscal Year, all in
reasonable detail and duly certified (subject to year-end audit
adjustments) by the chief financial officer or treasurer of such
Borrower as having been prepared in accordance with GAAP,
together with (i) a certificate of said officer stating that no
Default has occurred and is continuing or, if a Default has
occurred and is continuing, a statement as to the nature thereof
and the action that such Borrower has taken and proposes to take
with respect thereto and (ii) a schedule in form satisfactory to
the Agent of the computations used by Crompton Corp. in
determining compliance with the covenants contained in Sections
5.04(a) and (b), provided that in the event of any change in GAAP
used in the preparation of such financial statements, Crompton
Corp. shall also provide, if necessary for the determination of
compliance with Section 5.04, a statement of reconciliation
conforming such financial statements to GAAP.
(c) Annual Financials. As soon as available and in any event
within 95 days after the end of each Fiscal Year, a copy of the
annual report for such year for Crompton Corp. and its
Subsidiaries, including therein a Consolidated balance sheet of
Crompton Corp. and its Subsidiaries as of the end of such Fiscal
Year and a Consolidated statement of income and a Consolidated
statement of cash flows of Crompton Corp. and its Subsidiaries
for such Fiscal Year, in each case accompanied by an opinion
acceptable to the Required Lenders of KPMG Peat Marwick LLP or
other independent public accountants of recognized standing
acceptable to the Required Lenders, and a Consolidated and, to
the extent otherwise available, consolidating balance sheets of
Crompton Corp. and Uniroyal Corp. and their respective
Subsidiaries as of the end of such Fiscal Year and Consolidated
and, to the extent otherwise available, consolidating statements
of income and a Consolidated statement of cash flows of Crompton
Corp. and Uniroyal Corp. and their respective Subsidiaries for
such Fiscal Year, all in reasonable detail and duly certified by
the chief financial officer or treasurer of such Borrower as
having been prepared in accordance with GAAP, together with (i) a
certificate of such accounting firm to the Lender Parties stating
that in the course of the regular audit of the business of
Crompton Corp. and its Subsidiaries, which audit was conducted by
such accounting firm in accordance with generally accepted
auditing standards, such accounting firm has obtained no
knowledge that a Default has occurred and is continuing, or if,
in the opinion of such accounting firm, a Default has occurred
and is continuing, a statement as to the nature thereof, (ii) a
schedule in form satisfactory to the Agent of the computations
used by such accountants in determining, as of the end of such
Fiscal Year, compliance with the covenants contained in
Sections 5.04(a) and (b), provided that in the event of any
change in GAAP used in the preparation of such financial
statements, Crompton Corp. shall also provide, if necessary for
the determination of compliance with Section 5.04, a statement of
reconciliation conforming such financial statements to GAAP and
(iii) a certificate of the chief financial officer or treasurer
of each Borrower stating that no Default has occurred and is
continuing or, if a default has occurred and is continuing, a
statement as to the nature thereof and the action that such
Borrower has taken and proposes to take with respect thereto.
(d) Annual Forecasts. As soon as available and in any event no
later than 30 days after the end of each Fiscal Year, forecasts
prepared by management of Crompton Corp. and Uniroyal Corp., in
form satisfactory to the Agent, of balance sheets, income
statements and cash flow statements for Crompton Corp. and its
Subsidiaries, Uniroyal Corp. and its Subsidiaries and Crompton
Corp. and its Subsidiaries (other than Uniroyal Corp. and its
Subsidiaries) on an annual basis for the Fiscal Year following
such Fiscal Year then ended and for each Fiscal Year thereafter
until the Termination Date.
(e) Annual Budget. As soon as available and in any event
within 30 days after the end of each Fiscal Year, an annual
budget for Crompton Corp. and its Subsidiaries, Uniroyal Corp.
and its Subsidiaries and Crompton Corp. and its Subsidiaries
(other than Uniroyal Corp. and its Subsidiaries), prepared by
management of Crompton Corp. and Uniroyal Corp. consisting of
balance sheets, income statements and cash flow statements on a
quarterly basis for the Fiscal Year following such Fiscal Year
then ended in form and substance satisfactory to the Agent.
(f) ERISA Events and ERISA Reports. (i) Promptly and in any
event within 15 days after any Loan Party or any ERISA Affiliate
knows or has reason to know that any ERISA Event has occurred, a
statement of the chief financial officer or treasurer of Crompton
Corp. describing such ERISA Event and the action, if any, that
such Loan Party or such ERISA Affiliate has taken and proposes to
take with respect thereto and (ii) promptly and in any event
within two days after the date any records, documents or other
information must be furnished to the PBGC with respect to any
Plan pursuant to Section 4010 of ERISA, a copy of such records,
documents and information.
(g) Plan Terminations. Promptly and in any event within three
Business Days after receipt thereof by any Loan Party or any
ERISA Affiliate, copies of each notice from the PBGC stating its
intention to terminate any Plan or to have a trustee appointed to
administer any Plan.
(h) Plan Annual Reports. Promptly and in any event within 30
days after the filing thereof with the Internal Revenue Service,
copies of each Schedule B (Actuarial Information) to the annual
report (Form 5500 Series) with respect to each Plan.
(i) Multiemployer Plan Notices. Promptly and in any event
within five Business Days after receipt thereof by any Loan Party
or any ERISA Affiliate from the sponsor of a Multiemployer Plan,
copies of each notice concerning (i) the imposition of Withdrawal
Liability by any such Multiemployer Plan, (ii) the reorganization
or termination, within the meaning of Title IV of ERISA, of any
such Multiemployer Plan or (iii) the amount of liability
incurred, or that may be incurred, by such Loan Party or any
ERISA Affiliate in connection with any event described in
clause (i) or (ii).
(j) Litigation. Promptly after the commencement thereof,
notice of all actions, suits, investigations, litigation and
proceedings before any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or
foreign, affecting any Loan Party or any of its Subsidiaries of
the type described in Section 4.01(k), and promptly after the
occurrence thereof, notice of any adverse change in the status or
the financial effect on any Loan Party or any of its Subsidiaries
of the Disclosed Litigation from that described on
Schedule 3.01(f).
(k) Securities Reports. Promptly after the sending or filing
thereof, copies of all proxy statements, financial statements and
reports that any Loan Party or any of its Subsidiaries sends to
its outside stockholders, and copies of all regular, periodic and
special reports, and all registration statements, that any Loan
Party or any of its Subsidiaries files with the Securities and
Exchange Commission or any governmental authority that may be
substituted therefor, or with any national securities exchange.
(l) Creditor Reports. Promptly after the furnishing
thereof, copies of any statement or report furnished to any other
holder of the securities of any Loan Party or of any of its
Subsidiaries pursuant to the terms of any indenture, loan or
credit or similar agreement and not otherwise required to be
furnished to the Lender Parties pursuant to any other clause of
this Section 5.03.
(m) Agreement Notices. Promptly upon receipt thereof, copies
of all notices of any default or breach and all other material
requests and other documents received by any Loan Party or any of
its Subsidiaries under or pursuant to any Related Document or
indenture, loan or credit or similar agreement and, from time to
time upon request by the Agent, such information and reports
regarding the Related Documents as the Agent may reasonably
request.
(n) Revenue Agent Reports. Within 10 days after receipt, copies
of all Revenue Agent Reports (Internal Revenue Service Form 886),
or other written proposals of the Internal Revenue Service, that
propose, determine or otherwise set forth positive adjustments to
the Federal income tax liability of the affiliated group (within
the meaning of Section 1504(a)(1) of the Internal Revenue Code)
of which Crompton Corp. is a member aggregating $3,000,000 or
more.
(o) Environmental Conditions. Promptly after the assertion or
occurrence thereof, notice of any Environmental Action against or
of any noncompliance by any Loan Party or any of its Subsidiaries
with any Environmental Law or Environmental Permit that could
reasonably be expected to have a Material Adverse Effect.
(p) Other Information. Such other information respecting the
business, condition (financial or otherwise), operations,
performance, properties or prospects of any Loan Party or any of
its Subsidiaries as any Lender Party (through the Agent) may from
time to time reasonably request.
SECTION 5.04. Financial Covenants. So long as any Advance
shall remain unpaid, any Letter of Credit shall be outstanding or
any Lender Party shall have any Commitment hereunder, Crompton
Corp. will:
(a) Leverage Ratio. Maintain at the end of each fiscal quarter
of Crompton Corp. a Total Debt/EBITDA Ratio of not more than the
amount set forth below for each Rolling Period set forth below:
Rolling Period Ending On or About Ratio
September 30, 1996 4.00:1.0
December 31, 1996 4.00:1.0
March 31, 1997 4.00:1.0
June 30, 1997 4.00:1.0
September 30, 1997 3.75:1.0
December 31, 1997 3.75:1.0
March 31, 1998 3.75:1.0
June 30, 1998 3.50:1.0
September 30, 1998 3.50:1.0
December 31, 1998 3.50:1.0
March 31, 1999 3.25:1.0
June 30, 1999 3.00:1.0
September 30, 1999 3.00:1.0
December 31, 1999 3.00:1.0
March 31, 2000 3.00:1.0
June 30, 2000 3.00:1.0
September 30, 2000 3.00:1.0
December 31, 2000 3.00:1.0
March 31, 2001 3.00:1.0
June 30, 2001
thereafter 3.00:1.0
(b)Interest Coverage Ratio. Maintain at the end of each fiscal
quarter of Crompton Corp. an Interest Coverage Ratio of not less
than the amount set forth below for each Rolling Period set forth
below:
Rolling Period Ending On or About Ratio
September 30, 1996 2.50:1.0
December 31, 1996 2.50:1.0
March 31, 1997 2.50:1.0
June 30, 1997 2.50:1.0
September 30, 1997 2.75:1.0
December 31, 1997 2.75:1.0
March 31, 1998 2.75:1.0
June 30, 1998 2.75:1.0
September 30, 1998 2.75:1.0
December 31, 1998 3.00:1.0
March 31, 1999 3.00:1.0
June 30, 1999 3.00:1.0
September 30, 1999 3.25:1.0
December 31, 1999 3.25:1.0
March 31, 2000 3.50:1.0
June 30, 2000 3.50:1.0
September 30, 2000 3.50:1.0
December 31, 2000 3.50:1.0
March 31, 2001 3.50:1.0
June 30, 2001
and thereafter 3.50:1.0
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default. If any of the following events
("Events of Default") shall occur and be continuing:
(a) (i) any Borrower shall fail to pay any principal of any
Advance when the same shall become due and payable or (ii) any
Borrower shall fail to pay any interest on any Advance, or any
Loan Party shall fail to make any other payment under any Loan
Document, in each case under this clause (ii) within five days
after the same becomes due and payable; or
(b) any representation or warranty made by any Loan Party (or
any of its officers) under or in connection with any Loan
Document shall prove to have been incorrect in any material
respect when made; or
(c) any Borrower shall fail to perform or observe any term,
covenant or agreement contained in Section 2.14, 5.01(d), (e),
(k) or (l), 5.02, 5.03(a) or 5.04; or
(d) any Loan Party shall fail to perform or observe any other
term, covenant or agreement contained in any Loan Document on its
part to be performed or observed if such failure shall remain
unremedied for 15 days after the earlier of the date on which (A)
a Responsible Officer becomes aware of such failure or (B)
written notice thereof shall have been given to Crompton Corp. by
the Agent or any Lender Party; or
(e) any Loan Party or any of its Subsidiaries shall fail to pay
any principal of, premium or interest on or any other amount
payable in respect of any Debt that is outstanding in a principal
or notional amount of at least $10,000,000 either individually or
in the aggregate (but excluding Debt outstanding hereunder) of
such Loan Party or such Subsidiary (as the case may be), when the
same becomes due and payable (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise), and such
failure shall continue after the applicable grace period, if any,
specified in the agreement or instrument relating to such Debt;
or any other event shall occur or condition shall exist under any
agreement or instrument relating to any such Debt and shall
continue after the applicable grace period, if any, specified in
such agreement or instrument, if the effect of such event or
condition is to accelerate, or to permit the acceleration of, the
maturity of such Debt or otherwise to cause, or to permit the
holder thereof to cause, such Debt to mature; or any such Debt
shall be declared to be due and payable or required to be prepaid
or redeemed (other than by a regularly scheduled required
prepayment or redemption), purchased or defeased, or an offer to
prepay, redeem, purchase or defease such Debt shall be required
to be made, in each case prior to the stated maturity thereof; or
(f) any Loan Party or any of its Material Subsidiaries shall
generally not pay its debts as such debts become due, or shall
admit in writing its inability to pay its debts generally, or
shall make a general assignment for the benefit of creditors; or
any proceeding shall be instituted by or against any Loan Party
or any of its Material Subsidiaries seeking to adjudicate it a
bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or
composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a
receiver, trustee, or other similar official for it or for any
substantial part of its property and, in the case of any such
proceeding instituted against it (but not instituted by it) that
is being diligently contested by it in good faith, either such
proceeding shall remain undismissed or unstayed for a period of
60 days or any of the actions sought in such proceeding
(including, without limitation, the entry of an order for relief
against, or the appointment of a receiver, trustee, custodian or
other similar official for, it or any substantial part of its
property) shall occur; or any Loan Party or any of its Material
Subsidiaries shall take any corporate action to authorize any of
the actions set forth above in this subsection (f); or
(g)any judgment or order for the payment of money in excess of
$10,000,000 shall be rendered against any Loan Party or any of
its Material Subsidiaries and either (i) enforcement proceedings
shall have been commenced by any creditor upon such judgment or
order or (ii) there shall be any period of 10 consecutive days
during which a stay of enforcement of such judgment or order, by
reason of a pending appeal or otherwise, shall not be in effect;
provided, however, that any such judgment or order shall not be
an Event of Default under this Section 6.01(g) if and to the
extent that the amount of such judgment or order is covered by a
valid and binding policy of insurance between the defendant and
the insurer covering payment thereof so long as such insurer,
which shall be rated at least "A" by A.M. Best Company, has been
notified of, and has not disputed the claim made for payment of,
the amount of such judgment or order; or
(h)any non-monetary judgment or order shall be rendered against
any Loan Party or any of its Material Subsidiaries that is
reasonably likely to have a Material Adverse Effect, and there
shall be any period of 10 consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect; or
(i)any provision of any Loan Document after delivery thereof
pursuant to Section 3.01 or 5.01(k) shall for any reason cease to
be valid and binding on or enforceable against any Loan Party
party to it, or any such Loan Party shall so state in writing; or
(j)any Collateral Document after delivery thereof pursuant to
Section 3.01 or 5.01(k) shall for any reason (other than pursuant
to the terms thereof or as a result of action taken or failure to
take action by the Agent or any Lender Party) cease to create a
valid and perfected first priority lien on and security interest
in the Collateral purported to be covered thereby; or
(k)(i) any Person or two or more Persons acting in concert shall
have acquired beneficial ownership (within the meaning of
Rule 13d-3 of the Securities and Exchange Commission under the
Securities Exchange Act of 1934), directly or indirectly, of
Voting Stock of Crompton Corp. (or other securities convertible
into such Voting Stock) representing 20% or more of the combined
voting power of all Voting Stock of Crompton Corp.; or
(ii) during any period of up to 24 consecutive months, commencing
before or after the date of this Agreement, individuals who at
the beginning of such 24-month period were directors of Crompton
Corp. shall cease for any reason to constitute a majority of the
board of directors of Crompton Corp. (except to the extent that
individuals who at the beginning of such 24-month period were
replaced by individuals (x) elected by 66-2/3% of the remaining
members of the board of directors of Crompton Corp. or
(y) nominated for election by a majority of the remaining members
of the board of directors of Crompton Corp. and thereafter
elected as directors by the shareholders of Crompton Corp.); or
(iii) Crompton Corp. shall at any time for any reason cease to be
the record and beneficial owner of 100% of the capital stock of
the other Borrowers; or
(l)(i) any ERISA Event shall have occurred with respect to a
Plan; (ii) the sum (determined as of the date of occurrence of
such ERISA Event) of the Insufficiency of such Plan and the
Insufficiency of any and all other Plans with respect to which an
ERISA Event shall have occurred and then exist exceeds
$10,000,000; and (iii) such ERISA Events (considered in the
aggregate) are reasonably likely to result in obligations on the
part of the Loan Parties to make payments in the aggregate in
excess of $10,000,000 in any given calendar year; or
(m)any Loan Party or any ERISA Affiliate shall have been notified
by the sponsor of a Multiemployer Plan that it has incurred
Withdrawal Liability to such Multiemployer Plan in an amount
that, when aggregated with all other amounts required to be paid
to Multiemployer Plans by the Loan Parties and the ERISA
Affiliates as Withdrawal Liability (determined as of the date of
such notification), requires payments exceeding $10,000,000 in
any given calendar year; or
(n)any Loan Party or any ERISA Affiliate shall have been notified
by the sponsor of a Multiemployer Plan that such Multiemployer
Plan is in reorganization or is being terminated, within the
meaning of Title IV of ERISA, and as a result of such
reorganization or termination the aggregate annual contributions
of the Loan Parties and the ERISA Affiliates to all Multiemployer
Plans that are then in reorganization or being terminated have
been or will be increased over the amounts contributed to such
Multiemployer Plans for the plan years of such Multiemployer
Plans immediately preceding the plan year in which such
reorganization or termination occurs by an amount exceeding
$10,000,000;
then, and in any such event, the Agent (i) shall at the request,
or may with the consent, of the Required Lenders, by notice to
the Borrowers, declare the Commitment of each Lender Party and
the obligation of each Appropriate Lender to make Advances (other
than Letter of Credit Advances by an Issuing Bank or a Working
Capital Lender pursuant to Section 2.03(c) and Swing Line
Advances by a Working Capital Lender pursuant to Section 2.02(b))
and of each Issuing Bank to issue Letters of Credit to be
terminated, whereupon the same shall forthwith terminate, and
(ii) shall at the request, or may with the consent, of the
Required Lenders, by notice to the Borrowers, declare the Notes,
all interest thereon and all other amounts payable under this
Agreement and the other Loan Documents to be forthwith due and
payable, whereupon the Notes, all such interest and all such
amounts shall become and be forthwith due and payable, without
presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived by each Borrower; provided,
however, that in the event of an actual or deemed entry of an
order for relief with respect to any Loan Party or any of its
Subsidiaries under the Federal Bankruptcy Code, (x) the
Commitment of each Lender Party and the obligation of each Lender
to make Advances (other than Letter of Credit Advances by an
Issuing Bank or a Working Capital Lender pursuant to Section
2.03(c) and Swing Line Advances by a Working Capital Lender
pursuant to Section 2.02(b)) and of each Issuing Bank to issue
Letters of Credit shall automatically be terminated and (y) the
Notes, all such interest and all such amounts shall automatically
become and be due and payable, without presentment, demand,
protest or any notice of any kind, all of which are hereby
expressly waived by each Borrower.
SECTION 6.02. Actions in Respect of the Letters of Credit upon
Default. If any Event of Default shall have occurred and be
continuing, the Agent shall at the request, or may with the
consent, of the Required Lenders, irrespective of whether it is
taking any of the actions described in Section 6.01 or otherwise,
make demand upon the Borrowers to, and forthwith upon such demand
the Borrowers jointly and severally agree to, pay to the Agent on
behalf of the Lender Parties in same day funds at the Agent's
office designated in such demand, for deposit in the relevant L/C
Cash Collateral Account, an amount equal to the aggregate
Available Amount of all Letters of Credit then outstanding. If
at any time the Agent determines that any funds held in such L/C
Cash Collateral Account are subject to any right or claim of any
Person other than the Agent and the Lender Parties or that the
total amount of such funds is less than the aggregate Available
Amount of all Letters of Credit, the Borrowers jointly and
severally agree to, forthwith upon demand by the Agent, pay to
the Agent, as additional funds to be deposited and held in such
L/C Cash Collateral Account, an amount equal to the excess of
(a) such aggregate Available Amount over (b) the total amount of
funds, if any, then held in such L/C Cash Collateral Account that
the Agent determines to be free and clear of any such right and
claim.
SECTION 6.03. Actions in Respect of Working Capital B-1
Commitments Reserved Pursuant to Section 2.01(g). If, at any
time and from time to time, any Working Capital B-1 Commitments
are reserved pursuant to Section 2.01(g) and either (i) an Event
of Default shall have occurred and be continuing or (ii) the
Termination Date shall have occurred, then, upon the occurrence
of any of the events described in clause (i) or (ii) above,
Citibank may, whether in addition to the taking by the Agent of
any of the actions described in Section 6.01 or 6.02 or
otherwise, make demand upon the Uniroyal Borrower to, and
forthwith upon such demand the Uniroyal Borrower will, pay to
Citibank in same day funds at Citibank's office designated in
such demand, for deposit in a special cash collateral account to
be maintained in the name of Citibank Seoul and under the sole
dominion and control of Citibank at such place as shall be
designated by Citibank, an amount equal to the Seoul Guaranty
Amount on the date of such demand.
ARTICLE VII
THE AGENT
SECTION 7.01. Authorization and Action. Each Lender Party (in
its capacities as a Lender, a Swing Line Bank (if applicable), an
Issuing Bank (if applicable) and, on behalf of itself and its
Affiliates, a potential Hedge Bank) hereby appoints and
authorizes the Agent to take such action as agent on its behalf
and to exercise such powers and discretion under this Agreement
and the other Loan Documents as are delegated to the Agent by the
terms hereof and thereof, together with such powers and
discretion as are reasonably incidental thereto. As to any
matters not expressly provided for by the Loan Documents
(including, without limitation, enforcement or collection of the
Notes), the Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Required
Lenders, and such instructions shall be binding upon all Lender
Parties and all holders of Notes; provided, however, that the
Agent shall not be required to take any action that exposes the
Agent to personal liability or that is contrary to this Agreement
or applicable law. The Agent agrees to give to each Lender Party
prompt notice of each notice given to it by any Borrower pursuant
to the terms of this Agreement.
SECTION 7.02. Agent's Reliance, Etc. Neither the Agent nor any
of its directors, officers, agents or employees shall be liable
for any action taken or omitted to be taken by it or them under
or in connection with the Loan Documents, except for its or their
own gross negligence or willful misconduct. Without limitation
of the generality of the foregoing, the Agent: (a) may treat the
payee of any Note as the holder thereof until the Agent receives
and accepts an Assignment and Acceptance entered into by the
Lender that is the payee of such Note, as assignor, and an
Eligible Assignee, as assignee, as provided in Section 8.07;
(b) may consult with legal counsel (including counsel for any
Loan Party), independent public accountants and other experts
selected by it and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants or experts; (c) makes no
warranty or representation to any Lender Party and shall not be
responsible to any Lender Party for any statements, warranties or
representations (whether written or oral) made in or in
connection with the Loan Documents; (d) shall not have any duty
to ascertain or to inquire as to the performance or observance of
any of the terms, covenants or conditions of any Loan Document on
the part of any Loan Party or to inspect the property (including
the books and records) of any Loan Party; (e) shall not be
responsible to any Lender Party for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of,
or the perfection or priority of any lien or security interest
created or purported to be created under or in connection with,
any Loan Document or any other instrument or document furnished
pursuant thereto; and (f) shall incur no liability under or in
respect of any Loan Document by acting upon any notice, consent,
certificate or other instrument or writing (which may be by
telegram, telecopy or telex) believed by it to be genuine and
signed or sent by the proper party or parties.
SECTION 7.03. Citicorp and Affiliates. With respect to its
Commitments, the Advances made by it and the Notes issued to it,
Citicorp shall have the same rights and powers under the Loan
Documents as any other Lender Party and may exercise the same as
though it were not the Agent; and the term "Lender Party" or
"Lender Parties" shall, unless otherwise expressly indicated,
include Citicorp in its individual capacity. Citicorp and its
affiliates may accept deposits from, lend money to, act as
trustee under indentures of, accept investment banking
engagements from and generally engage in any kind of business
with, any Loan Party, any of its Subsidiaries and any Person who
may do business with or own securities of any Loan Party or any
such Subsidiary, all as if Citicorp were not the Agent and
without any duty to account therefor to the Lender Parties.
SECTION 7.04. Lender Party Credit Decision. Each Lender Party
acknowledges that it has, independently and without reliance upon
the Agent or any other Lender Party and based on the financial
statements referred to in Section 4.01 and such other documents
and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender
Party also acknowledges that it will, independently and without
reliance upon the Agent or any other Lender Party and based on
such documents and information as it shall deem appropriate at
the time, continue to make its own credit decisions in taking or
not taking action under this Agreement.
SECTION 7.05. Indemnification. (a) Each Lender Party severally
agrees to indemnify the Agent (to the extent not promptly
reimbursed by the Borrowers) from and against such Lender Party's
ratable share (determined as provided below) of any and all
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever that may be imposed on, incurred by, or
asserted against the Agent in any way relating to or arising out
of the Loan Documents or any action taken or omitted by the Agent
under the Loan Documents; provided, however, that no Lender Party
shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Agent's gross
negligence or willful misconduct. Without limitation of the
foregoing, each Lender Party agrees to reimburse the Agent
promptly upon demand for its ratable share of any costs and
expenses (including, without limitation, fees and expenses of
counsel) payable by the Borrowers under Section 8.04, to the
extent that the Agent is not promptly reimbursed for such costs
and expenses by the Borrowers. For purposes of this
Section 7.05(a), the Lender Parties' respective ratable shares of
any amount shall be determined, at any time, according to their
respective Working Capital Commitments at such time. In the
event that any Defaulted Advance shall be owing by any Defaulting
Lender at any time, such Lender Party's Commitment with respect
to the Facility under which such Defaulted Advance was required
to have been made shall be considered to be unused for purposes
of this Section 7.05(a) to the extent of the amount of such
Defaulted Advance. The failure of any Lender Party to reimburse
the Agent promptly upon demand for its ratable share of any
amount required to be paid by the Lender Party to the Agent as
provided herein shall not relieve any other Lender Party of its
obligation hereunder to reimburse the Agent for its ratable share
of such amount, but no Lender Party shall be responsible for the
failure of any other Lender Party to reimburse the Agent for such
other Lender Party's ratable share of such amount.
(b)Each Lender Party severally agrees to indemnify each Issuing
Bank (to the extent not promptly reimbursed by the Borrowers)
from and against such Lender Party's ratable share (determined as
provided below) of any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever that may be
imposed on, incurred by, or asserted against such Issuing Bank in
any way relating to or arising out of the Loan Documents or any
action taken or omitted by such Issuing Bank under the Loan
Documents; provided, however, that no Lender Party shall be
liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from such Issuing Bank's gross negligence
or willful misconduct. Without limitation of the foregoing, each
Lender Party agrees to reimburse such Issuing Bank promptly upon
demand for its ratable share of any costs and expenses
(including, without limitation, fees and expenses of counsel)
payable by the Borrowers under Section 8.04, to the extent that
such Issuing Bank is not promptly reimbursed for such costs and
expenses by the Borrowers. For purposes of this Section 7.05(b),
the Lender Parties' respective ratable shares of any amount shall
be determined, at any time, according to their respective Working
Capital Commitments at such time. In the event that any
Defaulted Advance shall be owing by any Defaulting Lender at any
time, such Lender Party's Commitment with respect to the Facility
under which such Defaulted Advance was required to have been made
shall be considered to be unused for purposes of this
Section 7.05(b) to the extent of the amount of such Defaulted
Advance. The failure of any Lender Party to reimburse such
Issuing Bank promptly upon demand for its ratable share of any
amount required to be paid by the Lender Parties to such Issuing
Bank as provided herein shall not relieve any other Lender Party
of its obligation hereunder to reimburse such Issuing Bank for
its ratable share of such amount, but no Lender Party shall be
responsible for the failure of any other Lender Party to
reimburse such Issuing Bank for such other Lender Party's ratable
share of such amount.
(c)Without prejudice to the survival of any other agreement of
any Lender Party hereunder, the agreement and obligations of each
Lender Party contained in this Section 7.05 shall survive the
payment in full of principal, interest and all other amounts
payable hereunder and under the other Loan Documents.
SECTION 7.06. Successor Agents. The Agent may resign as to any
or all of the Facilities at any time by giving written notice
thereof to the Lender Parties and the Borrowers and may be
removed as to all of the Facilities at any time with or without
cause by the Required Lenders. Upon any such resignation or
removal, the Required Lenders shall have the right to appoint a
successor Agent as to such of the Facilities as to which the
Agent has resigned or been removed, subject, so long as no
Default shall have occurred and be continuing, to the consent of
Crompton Corp., such consent not to be unreasonably withheld or
delayed. If no successor Agent shall have been so appointed by
the Required Lenders, and shall have accepted such appointment,
within 30 days after the retiring Agent's giving of notice of
resignation or the Required Lenders' removal of the retiring
Agent, then the retiring Agent may, on behalf of the Lender
Parties, appoint a successor Agent, subject, so long as no
Default shall have occurred and be continuing, to the consent of
Crompton Corp., such consent not to be unreasonably withheld or
delayed, which shall be a commercial bank organized under the
laws of the United States or of any State thereof and having a
combined capital and surplus of at least $250,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor
Agent as to all of the Facilities and upon the execution and
filing or recording of such financing statements, or amendments
thereto, and such other instruments or notices, as may be
necessary or desirable, or as the Required Lenders may request,
in order to continue the perfection of the Liens granted or
purported to be granted by the Collateral Documents, such
successor Agent shall succeed to and become vested with all the
rights, powers, discretion, privileges and duties of the retiring
Agent, and the retiring Agent shall be discharged from its duties
and obligations under the Loan Documents. Upon the acceptance of
any appointment as Agent hereunder by a successor Agent as to
less than all of the Facilities and upon the execution and filing
or recording of such financing statements, or amendments thereto,
and such other instruments or notices, as may be necessary or
desirable, or as the Required Lenders may request, in order to
continue the perfection of the Liens granted or purported to be
granted by the Collateral Documents, such successor Agent shall
succeed to and become vested with all the rights, powers,
discretion, privileges and duties of the retiring Agent as to
such Facilities, other than with respect to funds transfers and
other similar aspects of the administration of Borrowings under
such Facilities, issuances of Letters of Credit (notwithstanding
any resignation as Agent with respect to the Letter of Credit
Facility) and payments by the Borrowers in respect of such
Facilities, and the retiring Agent shall be discharged from its
duties and obligations under this Agreement as to such
Facilities, other than as aforesaid. After any retiring Agent's
resignation or removal hereunder as Agent as to all of the
Facilities, the provisions of this Article VII shall inure to its
benefit as to any actions taken or omitted to be taken by it
while it was Agent as to any Facilities under this Agreement.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement or the Notes or any other Loan
Document, nor consent to any departure by any Borrower therefrom,
shall in any event be effective unless the same shall be in
writing and signed (or, in the case of the Collateral Documents,
consented to) by the Required Lenders, and then such waiver or
consent shall be effective only in the specific instance and for
the specific purpose for which given; provided, however, that
(a) no amendment, waiver or consent shall, unless in writing and
signed by all of the Lenders, do any of the following at any
time: (i) waive any of the conditions specified in Section 3.01
or, in the case of the Initial Extension of Credit, Section 3.02,
(ii) change the number of Lenders or the percentage of (x) the
Commitments, (y) the aggregate unpaid principal amount of the
Advances or (z) the aggregate Available Amount of outstanding
Letters of Credit that, in each case, shall be required for the
Lenders or any of them to take any action hereunder, (iii) reduce
or limit the obligations of any Guarantor under Section 1 of the
Guaranty to which it is a party or otherwise limit such
Guarantor's liability with respect to the Obligations owing to
the Agent and the Lender Parties, (iv) release all or
substantially all of the Collateral in any transaction or series
of related transactions or permit the creation, incurrence,
assumption or existence of any Lien on all or substantially all
of the Collateral in any transaction or series of related
transactions to secure any Obligations other than Obligations
owing to the Secured Parties under the Loan Documents and other
than Debt owing to any other Person, provided that, in the case
of any Lien on all or substantially all of the Collateral to
secure Debt owing to any other Person, (A) such Lien shall be
subordinated to the Liens created under the Loan Documents on
terms acceptable to the Required Lenders and (B) the Required
Lenders shall otherwise permit the creation, incurrence,
assumption or existence of such Lien and, to the extent not
otherwise permitted under Section 5.02(b), of such Debt,
(v) amend this Section 8.01, or (vi) limit the liability of any
Loan Party under any of the Loan Documents and (b) no amendment,
waiver or consent shall, unless in writing and signed by the
Required Lenders and each Lender that has a Commitment under any
Working Capital Facility if affected by such amendment, waiver or
consent, (i) increase the Commitments of such Lender or subject
such Lender to any additional obligations, (ii) reduce the
principal of, or interest on, the Notes held by such Lender or
any fees or other amounts payable hereunder to such Lender,
(iii) postpone any date fixed for any payment or prepayment of
principal of, or interest on, the Notes held by such Lender or
any fees or other amounts payable hereunder to such Lender or
(iv) change the order of application of any prepayment set forth
in Section 2.06 in any manner that materially affects such
Lender; provided further that no amendment, waiver or consent
shall, unless in writing and signed by the Swing Line Bank or
each Issuing Bank, as the case may be, in addition to the Lenders
required above to take such action, affect the rights or
obligations of the Swing Line Bank or of the Issuing Banks, as
the case may be, under this Agreement; and provided further that
no amendment, waiver or consent shall, unless in writing and
signed by the Agent in addition to the Lenders required above to
take such action, affect the rights or duties of the Agent under
this Agreement.
SECTION 8.02. Notices, Etc. All notices and other
communications provided for hereunder shall be in writing
(including telegraphic, telecopy or telex communication) and
mailed, telegraphed, telecopied, telexed or delivered, if to the
Borrowers, addressed both c/o Crompton Corp. at its address at
One Station Place, Metro Center, Stamford, CT 06902, Attention:
Chief Financial Officer and c/o Uniroyal Corp. at its address at
World Headquarters, Benson Road, Middlebury, CT 06749,
Attention: Chief Financial Officer; if to any Initial Lender or
any Initial Issuing Bank, at its Domestic Lending Office
specified opposite its name on Schedule I hereto; if to any other
Lender Party, at its Domestic Lending Office specified in the
Assignment and Acceptance pursuant to which it became a Lender
Party; and if to the Agent, at its address at 399 Park Avenue,
New York, New York 10043, Attention: Robert Kosian; or, as to
the Borrowers or the Agent, at such other address as shall be
designated by such party in a written notice to the other parties
and, as to each other party, at such other address as shall be
designated by such party in a written notice to the Borrowers and
the Agent. All such notices and communications shall (a) when
mailed, be effective three Business Days after the same is
deposited in the mails, (b) when mailed for next day delivery by
a reputable freight company or reputable overnight courier
service, be effective one Business Day thereafter, and (c) when
sent by telegraph, telecopier or telex, be effective when the
same is confirmed by telephone, telecopier confirmation or return
telecopy or telex answerback, respectively, except that notices
and communications to the Agent pursuant to Article II, III or
VII shall not be effective until received by the Agent. Delivery
by telecopier of an executed counterpart of any amendment or
waiver of any provision of this Agreement or the Notes or of any
Exhibit hereto to be executed and delivered hereunder shall be
effective as delivery of a manually executed counterpart thereof.
Delivery of a notice from any Borrower pursuant to Section
5.03(a) shall be deemed, solely with respect to such Section,
notice from all Borrowers.
SECTION 8.03. No Waiver; Remedies. No failure on the part of
any Lender Party or the Agent to exercise, and no delay in
exercising, any right hereunder or under any Note shall operate
as a waiver thereof; nor shall any single or partial exercise of
any such right preclude any other or further exercise thereof or
the exercise of any other right. The remedies herein provided
are cumulative and not exclusive of any remedies provided by law.
SECTION 8.04. Costs and Expenses. (a) The Borrowers jointly
and severally agree to pay on demand (i) all costs and expenses
of the Agent in connection with the preparation, execution,
delivery, administration, modification and amendment of the Loan
Documents (including, without limitation, (A) all due diligence,
collateral review, syndication, transportation, computer,
duplication, appraisal, audit, insurance, consultant, search,
filing and recording fees and expenses and (B) the reasonable
fees and expenses of counsel for the Agent with respect thereto,
with respect to advising the Agent as to its rights and
responsibilities, or the perfection, protection or preservation
of rights or interests, under the Loan Documents, with respect to
negotiations with any Loan Party or with other creditors of any
Loan Party or any of its Subsidiaries arising out of any Default
or any events or circumstances that may give rise to a Default
and with respect to presenting claims in or otherwise
participating in or monitoring any bankruptcy, insolvency or
other similar proceeding involving creditors' rights generally
and any proceeding ancillary thereto) and (ii) all costs and
expenses of the Agent and the Lender Parties in connection with
the enforcement of the Loan Documents, whether in any action,
suit or litigation, any bankruptcy, insolvency or other similar
proceeding affecting creditors' rights generally (including,
without limitation, the reasonable fees and expenses of counsel
for the Agent and each Lender Party with respect thereto).
(b)The Borrowers jointly and severally agree to indemnify and
hold harmless the Agent, each Lender Party and each of their
Affiliates and their officers, directors, employees, agents and
advisors (each, an "Indemnified Party") from and against any and
all claims, damages, losses, liabilities and expenses (including,
without limitation, reasonable fees and expenses of counsel) that
may be incurred by or asserted or awarded against any Indemnified
Party, in each case arising out of or in connection with or by
reason of, or in connection with the preparation for a defense
of, any investigation, litigation or proceeding arising out of,
related to or in connection with (i) the Facilities, the actual
or proposed use of the proceeds of the Advances or the Letters of
Credit, the Loan Documents or any of the transactions
contemplated thereby, including, without limitation, any
acquisition or proposed acquisition (including, without
limitation, the Merger and any of the other transactions
contemplated hereby) by Crompton Corp. or any of its Subsidiaries
or Affiliates of all or any portion of the stock or substantially
all the assets of Uniroyal Corp. or any of its Subsidiaries or
(ii) the actual or alleged presence of Hazardous Materials on any
property of any Loan Party or any of its Subsidiaries or any
Environmental Action relating in any way to any Loan Party or any
of its Subsidiaries, except to the extent such claim, damage,
loss, liability or expense is found in a final, non-appealable
judgment by a court of competent jurisdiction to have resulted
from such Indemnified Party's gross negligence or willful
misconduct. In the case of any investigation, litigation or
other proceeding to which the indemnity in this Section 8.04(b)
applies, such indemnity shall be effective whether or not such
investigation, litigation or proceeding is brought by any Loan
Party, its directors, shareholders or creditors or an Indemnified
Party or any Indemnified Party is otherwise a party thereto and
whether or not the transactions contemplated hereby are
consummated. The Borrowers also jointly and severally agree not
to assert any claim against the Agent, any Lender Party or any of
their Affiliates, or any of their respective officers, directors,
employees, attorneys and agents, on any theory of liability, for
special, indirect, consequential or punitive damages arising out
of or otherwise relating to the Facilities, the actual or
proposed use of the proceeds of the Advances or the Letters of
Credit, the Loan Documents or any of the transactions
contemplated thereby.
(c)If any payment of principal of, or Conversion of, any
Eurodollar Rate Advance is made by any Borrower to or for the
account of a Lender Party other than on the last day of the
Interest Period for such Advance, as a result of a payment or
Conversion pursuant to Section 2.09(b)(i) or 2.10(d),
acceleration of the maturity of the Notes pursuant to
Section 6.01 or for any other reason, or by an Eligible Assignee
to a Lender Party other than on the last day of the Interest
Period for such Advance upon an assignment of rights and
obligations under this Agreement pursuant to Section 8.07 as a
result of a demand by Crompton Corp. pursuant to Section 8.07(a),
such Borrower shall, upon demand by such Lender Party (with a
copy of such demand to the Agent), pay to the Agent for the
account of such Lender Party any amounts required to compensate
such Lender Party for any additional losses, costs or expenses
that it may reasonably incur as a result of such payment,
including, without limitation, any loss (including loss of
anticipated profits), cost or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired
by any Lender Party to fund or maintain such Advance.
(d)If any Loan Party fails to pay when due any costs, expenses or
other amounts payable by it under any Loan Document, including,
without limitation, fees and expenses of counsel and indemnities,
such amount may be paid on behalf of such Loan Party by the Agent
or any Lender Party, in its sole discretion, and will result in
an increase in the amount owing by such Loan Party to the Agent
or such Lender Party.
(e)Without prejudice to the survival of any other agreement of
any Loan Party hereunder or under any other Loan Document, the
agreements and obligations of the Borrowers contained in
Sections 2.10 and 2.12 and this Section 8.04 shall survive the
payment in full of principal, interest and all other amounts
payable hereunder and under any of the other Loan Documents.
SECTION 8.05. Right of Set-off. Upon (a) the occurrence and
during the continuance of any Event of Default and (b) the making
of the request or the granting of the consent specified by
Section 6.01 to authorize the Agent to declare the Notes due and
payable pursuant to the provisions of Section 6.01, each Lender
Party and each of its respective Affiliates is hereby authorized
at any time and from time to time, to the fullest extent
permitted by law, to set off and otherwise apply any and all
deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing
by such Lender Party or such Affiliate to or for the credit or
the account of any Borrower against any and all of the
Obligations of such Borrower now or hereafter existing under this
Agreement and the Note or Notes (if any) held by such Lender
Party, irrespective of whether such Lender Party shall have made
any demand under this Agreement or such Note or Notes and
although such obligations may be unmatured. Each Lender Party
agrees promptly to notify any Borrower after any such set-off and
application; provided, however, that the failure to give such
notice shall not affect the validity of such set-off and
application. The rights of each Lender Party and its respective
Affiliates under this Section 8.05 are in addition to other
rights and remedies (including, without limitation, other rights
of set-off) that such Lender Party and its respective Affiliates
may have.
SECTION 8.06. Binding Effect. This Agreement shall become
effective when it shall have been executed by each Borrower and
the Agent and when the Agent shall have been notified by each
Initial Lender and each Initial Issuing Bank that such Initial
Lender and such Initial Issuing Bank has executed it and
thereafter shall be binding upon and inure to the benefit of each
Borrower, the Agent and each Lender Party and their respective
successors and assigns, except that no Borrower shall have the
right to assign its rights hereunder or any interest herein
without the prior written consent of the Lender Parties.
SECTION 8.07. Assignments and Participations. (a) Each Lender
may (and, so long as no Default shall have occurred and be
continuing, if demanded by Crompton Corp. (following a demand by
such Lender pursuant to Section 2.10 or 2.12 or if such Lender
shall be a Defaulting Lender) assign to one or more Eligible
Assignees all or a portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion
of its Commitment or Commitments, the Advances owing to it and
the Note or Notes held by it); provided, however, that (i) each
such assignment shall be of a uniform, and not a varying,
percentage of all rights and obligations under and in respect of
all of the Facilities, (ii) except in the case of an assignment
to a Person that, immediately prior to such assignment, was a
Lender or an assignment of all of a Lender's rights and
obligations under this Agreement, the amount of the Commitment of
the assigning Lender being assigned pursuant to each such
assignment (determined as of the date of the Assignment and
Acceptance with respect to such assignment) shall in no event be
less than $20,000,000 or, if the aggregate amount of the
Commitment of such assigning Lender is less than 20,000,000, all
of such Lender's Commitment, (iii) each such assignment shall be
to an Eligible Assignee, (iv) each such assignment made as a
result of a demand by Crompton Corp. pursuant to this
Section 8.07(a) shall be arranged by Crompton Corp. after
consultation with the Administrative Agent and shall be either an
assignment of all of the rights and obligations of the assigning
Lender under this Agreement and the other Loan Documents or an
assignment of a portion of such rights and obligations made
concurrently with another such assignment or other such
assignments that together cover all of the rights and obligations
of the assigning Lender under this Agreement and the other Loan
Documents, (v) no Lender shall be obligated to make any such
assignment as a result of a demand by Crompton Corp. pursuant to
this Section 8.07(a) unless and until such Lender shall have
received one or more payments from either the applicable
Borrowers or one or more Eligible Assignees in an aggregate
amount at least equal to the aggregate outstanding principal
amount of the Advances owing to such Lender, together with
accrued interest thereon to the date of payment of such principal
amount and all other amounts payable to such Lender under this
Agreement, (vi) no such assignments shall be permitted without
the consent of the Agent until the Agent shall have notified the
Lender Parties that syndication of the Commitments hereunder has
been completed, and (vii) the parties to each such assignment
shall execute and deliver to the Agent, for its acceptance and
recording in the Register, an Assignment and Acceptance, together
with any Note or Notes subject to such assignment and a
processing and recordation fee of $3,500.
(b)Upon such execution, delivery, acceptance and recording, from
and after the effective date specified in such Assignment and
Acceptance, (x) the assignee thereunder shall be a party hereto
and, to the extent that rights and obligations hereunder have
been assigned to it pursuant to such Assignment and Acceptance,
have the rights and obligations of a Lender or Issuing Bank, as
the case may be, hereunder and (y) the Lender or Issuing Bank
assignor thereunder shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and be released
from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion
of an assigning Lender's or Issuing Bank's rights and obligations
under this Agreement, such Lender or Issuing Bank shall cease to
be a party hereto).
(c)By executing and delivering an Assignment and Acceptance, the
Lender Party assignor thereunder and the assignee thereunder
confirm to and agree with each other and the other parties hereto
as follows: (i) other than as provided in such Assignment and
Acceptance, such assigning Lender Party makes no representation
or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in
connection with this Agreement or any other Loan Document or the
execution, legality, validity, enforceability, genuineness,
sufficiency or value of, or the perfection or priority of any
lien or security interest created or purported to be created
under or in connection with, this Agreement or any other Loan
Document or any other instrument or document furnished pursuant
hereto or thereto; (ii) such assigning Lender Party makes no
representation or warranty and assumes no responsibility with
respect to the financial condition of any Borrower or any other
Loan Party or the performance or observance by any Loan Party of
any of its obligations under any Loan Document or any other
instrument or document furnished pursuant thereto; (iii) such
assignee confirms that it has received a copy of this Agreement,
together with copies of the financial statements referred to in
Section 4.01 and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision
to enter into such Assignment and Acceptance; (iv) such assignee
will, independently and without reliance upon the Agent, such
assigning Lender Party or any other Lender Party and based on
such documents and information as it shall deem appropriate at
the time, continue to make its own credit decisions in taking or
not taking action under this Agreement; (v) such assignee
confirms that it is an Eligible Assignee; (vi) such assignee
appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers and discretion under the
Loan Documents as are delegated to the Agent by the terms
thereof, together with such powers and discretion as are
reasonably incidental thereto; and (vii) such assignee agrees
that it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement are required to
be performed by it as a Lender or Issuing Bank, as the case may
be.
(d)The Agent shall maintain at its address referred to in
Section 8.02 a copy of each Assignment and Acceptance delivered
to and accepted by it and a register for the recordation of the
names and addresses of the Lender Parties and the Commitment
under each Facility of, and principal amount of the Advances
owing under each Facility to, each Lender Party from time to time
(the "Register"). The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error,
and the Borrowers, the Agent and the Lender Parties shall treat
each Person whose name is recorded in the Register as a Lender
Party hereunder for all purposes of this Agreement. The Register
shall be available for inspection by any Borrower or any Lender
Party at any reasonable time and from time to time upon
reasonable prior notice.
(e)Upon its receipt of an Assignment and Acceptance executed by
an assigning Lender Party and an assignee, together with any Note
or Notes subject to such assignment, the Agent shall, if such
Assignment and Acceptance has been completed and is in
substantially the form of Exhibit C hereto, (i) accept such
Assignment and Acceptance, (ii) record the information contained
therein in the Register and (iii) give prompt notice thereof to
the Borrowers. In the case of any assignment by a Lender, within
five Business Days after its receipt of such notice, each
Borrower, at its own expense, shall execute and deliver to the
Agent in exchange for the surrendered Note or Notes a new Note to
the order of such Eligible Assignee in an amount equal to the
Commitment assumed by it under a Facility pursuant to such
Assignment and Acceptance and, if the assigning Lender has
retained a Commitment hereunder under such Facility, a new Note
to the order of the assigning Lender in an amount equal to the
Commitment retained by it hereunder. Such new Note or Notes
shall be in an aggregate principal amount equal to the aggregate
principal amount of such surrendered Note or Notes, shall be
dated the effective date of such Assignment and Acceptance and
shall otherwise be in substantially the form of Exhibit A-1, A-2
or A-3 hereto, as the case may be.
f)Each Issuing Bank may assign to one or more Eligible Assignees
all or a portion of its rights and obligations under the undrawn
portion of its Letter of Credit Commitment at any time; provided,
however, that (i) except in the case of an assignment to a Person
that immediately prior to such assignment was an Issuing Bank or
an assignment of all of an Issuing Bank's rights and obligations
under this Agreement, the amount of the Letter of Credit
Commitment of the assigning Issuing Bank being assigned pursuant
to each such assignment (determined as of the date of the
Assignment and Acceptance with respect to such assignment) shall
in no event be less than $10,000,000 and shall be in an integral
multiple of $1,000,000 in excess thereof, (ii) each such
assignment shall be to an Eligible Assignee and (iii) the parties
to each such assignment shall execute and deliver to the Agent,
for its acceptance and recording in the Register, an Assignment
and Acceptance, together with a processing and recordation fee of
$3,500.
(g)Each Lender Party may sell participations to one or more
Persons (other than any Loan Party or any of its Affiliates) in
or to all or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of its
Commitments, the Advances owing to it and the Note or Notes (if
any) held by it); provided, however, that (i) such Lender Party's
obligations under this Agreement (including, without limitation,
its Commitments) shall remain unchanged, (ii) such Lender Party
shall remain solely responsible to the other parties hereto for
the performance of such obligations, (iii) such Lender Party
shall remain the holder of any such Note for all purposes of this
Agreement, (iv) the Borrowers, the Agent and the other Lender
Parties shall continue to deal solely and directly with such
Lender Party in connection with such Lender Party's rights and
obligations under this Agreement and (v) no participant under any
such participation shall have any right to approve any amendment
or waiver of any provision of any Loan Document, or any consent
to any departure by any Loan Party therefrom, except to the
extent that such amendment, waiver or consent would reduce the
principal of, or interest on, the Notes or any fees or other
amounts payable hereunder, in each case to the extent subject to
such participation, postpone any date fixed for any payment of
principal of, or interest on, the Notes or any fees or other
amounts payable hereunder, in each case to the extent subject to
such participation, or release all or substantially all of the
Collateral.
(h)Any Lender Party may, in connection with any assignment or
participation or proposed assignment or participation pursuant to
this Section 8.07, disclose to the assignee or participant or
proposed assignee or participant, any information relating to the
Borrowers furnished to such Lender Party by or on behalf of the
Borrowers; provided, however, that, prior to any such disclosure,
the assignee or participant or proposed assignee or participant
shall agree to preserve the confidentiality of any Confidential
Information received by it from such Lender Party.
(i)Notwithstanding any other provision set forth in this
Agreement, any Lender Party may at any time create a security
interest in all or any portion of its rights under this Agreement
(including, without limitation, the Advances owing to it and the
Note or Notes held by it) in favor of any Federal Reserve Bank in
accordance with Regulation A of the Board of Governors of the
Federal Reserve System.
SECTION 8.08. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together
shall constitute one and the same agreement. Delivery of an
executed counterpart of a signature page to this Agreement by
telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 8.09. No Liability of the Issuing Banks. Each Borrower
assumes all risks of the acts or omissions of any beneficiary or
transferee of any Letter of Credit with respect to its use of
such Letter of Credit. Neither any Issuing Bank nor any of its
officers or directors shall be liable or responsible for:
(a) the use that may be made of any Letter of Credit or any acts
or omissions of any beneficiary or transferee in connection
therewith; (b) the validity, sufficiency or genuineness of
documents, or of any endorsement thereon, even if such documents
should prove to be in any or all respects invalid, insufficient,
fraudulent or forged; (c) payment by such Issuing Bank against
presentation of documents that do not comply with the terms of a
Letter of Credit, including failure of any documents to bear any
reference or adequate reference to the Letter of Credit; or
(d) any other circumstances whatsoever in making or failing to
make payment under any Letter of Credit, except that the relevant
Borrower shall have a claim against such Issuing Bank, and such
Issuing Bank shall be liable to such Borrower, to the extent of
any direct, but not consequential, damages suffered by such
Borrower that such Borrower proves were caused by (i) such
Issuing Bank's willful misconduct or gross negligence in
determining whether documents presented under any Letter of
Credit comply with the terms of the Letter of Credit or (ii) such
Issuing Bank's willful failure to make lawful payment under a
Letter of Credit after the presentation to it of a draft and
certificates strictly complying with the terms and conditions of
the Letter of Credit. In furtherance and not in limitation of
the foregoing, such Issuing Bank may accept documents that appear
on their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the
contrary.
SECTION 8.10. Release of Collateral. As soon as practicable
after the Collateral Release Date, the Agent shall, at the
expense of the Borrowers, execute and deliver to Crompton Corp.
such documents as Crompton Corp. shall reasonably request to
evidence the release of the Collateral from the liens and
security interest created under the Collateral Documents.
SECTION 8.11. Confidentiality. Neither the Agent nor any Lender
Party shall disclose any Confidential Information to any Person
without the consent of Crompton Corp., other than (a) to the
Agent's or such Lender Party's Affiliates and their officers,
directors, partners, employees, agents and advisors and to actual
or prospective Eligible Assignees and participants, and then only
on a confidential basis, (b) as required by any law, rule or
regulation or judicial process, provided that, other than with
respect to Confidential Information otherwise permitted to be
disclosed pursuant to clause (d) below, the Agent or such Lender
Party shall, unless prohibited by applicable law or regulation or
court order, give notice to Crompton Corp. of any such
requirement to disclose such Confidential Information, and, if
practicable, such notice shall be given prior to such disclosure,
provided, however, that the failure to give such notice shall not
prohibit such disclosure, (c) to any rating agency when required
by it, provided that, prior to any such disclosure, such rating
agency shall undertake to preserve the confidentiality of any
Confidential Information relating to the Borrowers received by it
from such Lender Party and (d) as requested or required by any
state, federal or foreign authority or examiner or the National
Association of Insurance Commissioners or any state or federal
authority regulating such Lender Party.
SECTION 8.12. Jurisdiction, Etc. (a) Each of the parties
hereto hereby irrevocably and unconditionally submits, for itself
and its property, to the nonexclusive jurisdiction of any New
York State court or federal court of the United States of America
sitting in New York City, and any appellate court from any
thereof, in any action or proceeding arising out of or relating
to this Agreement or any of the other Loan Documents to which it
is a party, or for recognition or enforcement of any judgment,
and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such
action or proceeding may be heard and determined in any such New
York State court or, to the extent permitted by law, in such
federal court. Each of the parties hereto agrees that a final
judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement
shall affect any right that any party may otherwise have to bring
any action or proceeding relating to this Agreement or any of the
other Loan Documents in the courts of any jurisdiction.
(b)Each of the parties hereto irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do
so, any objection that it may now or hereafter have to the laying
of venue of any suit, action or proceeding arising out of or
relating to this Agreement or any of the other Loan Documents to
which it is a party in any New York State or federal court. Each
of the parties hereto hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to
the maintenance of such action or proceeding in any such court.
SECTION 8.13. Governing Law. This Agreement and the Notes shall
be governed by, and construed in accordance with, the laws of the
State of New York.
<PAGE>
SECTION 8.14. Waiver of Jury Trial. Each of the Borrowers, the
Agent and the Lender Parties irrevocably waives all right to
trial by jury in any action, proceeding or counterclaim (whether
based on contract, tort or otherwise) arising out of or relating
to any of the Loan Documents, the Advances or the actions of the
Agent or any Lender Party in the negotiation, administration,
performance or enforcement thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
CROMPTON & KNOWLES
CORPORATION
By /s/Peter Barna/Charles J. Marsden
Title:
CROMPTON & KNOWLES COLORS
INCORPORATED
By /s/Peter Barna
Title:
DAVIS-STANDARD CORPORATION
By /s/Peter Barna
Title:
INGREDIENT TECHNOLOGY
CORPORATION
By /s/Peter Barna
Title:
UNIROYAL CHEMICAL COMPANY,
INC.
By /s/Frank Manganella
Title: Treasurer
CITICORP SECURITIES, INC.,
as Arranger
By /s/Robin F. Lenna
Title:
CITICORP USA, INC., as Agent
By /s/Keith R. Karoko
Title:
THE CHASE MANHATTAN BANK,
as Managing Agent
By /s/Robert Sacks
Title:
Initial Lenders
CITICORP USA, INC.
By /s/Keith R. Karoko
Title:
THE CHASE MANHATTAN BANK
By /s/Robert Sacks
Title:
ABN AMRO BANK, N.V., NEW YORK
BRANCH
By /s/Nancy W. Lanzoni
Title: Nancy W. Lanzoni, Group VP
By /s/David W. Stack
Title: David W. Stack, Assistant VP
BANCA COMMERCIALE ITALIANA -
NEW YORK BRANCH
By /s/Charles Dougherty
Title: Vice President
By /s/Brian Carlson
Title: Assistant Vice President
BANK OF AMERICA ILLINOIS
By /s/Wendy L. Loring
Title: Wendy L. Loring, Vice President
THE BANK OF NEW YORK
By /s/David P. Judge
Title: Vice President
BANK OF BOSTON CONNECTICUT
By /s/Joann Keller
Title: Senior Vice President
BHF - BANK AKTIENGESELLSCHAFT
By /s/Linda Pace
Title: AVP
CIBC, INC.
By /s/Judy Domowski
Title:
CORESTATES BANK, N.A.
By /s/Brian M. Haley
Title: Vice President
CREDIT LYONNAIS NEW YORK BRANCH
By /s/John Oberle
Title: Vice President
FIRST UNION NATIONAL BANK
By /s/Robert Waters
Title: Vice President
FLEET NATIONAL BANK
By /s/Robert C. Rubino
Title: Vice President
SOCIETE GENERALE
By /s/Salvatore Galatiota
Title: First Vice President
TORONTO DOMINION (NEW YORK), INC.
By /s/Jorge Garcia
Title: Vice President
Initial Issuing Banks
CITIBANK, N.A.
By /s/Robin F. Lenna
Title:
BANK OF BOSTON CONNECTICUT
By /s/Joanne Keller
Title: Senior Vice President
FORM OF UNIROYAL SECURITY AGREEMENT
UNIROYAL SECURITY AGREEMENT
Dated August 21, 1996
From
THE PERSONS LISTED ON THE SIGNATURE PAGES
HEREOF
as Pledgors
to
CITICORP USA, INC.,
as Agent
T A B L E O F C O N T E N T S
Section Page
1. Grant of Security 2
2. Security for Obligations 4
3. Pledgors Remain Liable 4
4. Delivery of Security Collateral and Account Collateral 5
5. Maintaining the Collection Account, the Cash
Concentration Account and the L/C Cash Collateral Account 5
6. As to Account Collateral 6
7. Investing of Amounts in the Cash Concentration Account
and the L/C Cash Collateral Account 7
8. Release of Amounts 7
9. Representations and Warranties 7
10. Further Assurances 9
11. As to Inventory 10
12. Insurance 10
13. Place of Perfection; Records; Collection of Receivables 11
14. Transfers and Other Liens 12
15. Agent Appointed Attorney-in-Fact 12
16. Agent May Perform 12
17. The Agent's Duties 13
18. Remedies 13
19. Indemnity and Expenses 14
20. Amendments; Waivers; Etc 15
21. Addresses for Notices 15
22. Continuing Security Interest; Assignments 16
23. Release and Termination 16
24. Security Interest Absolute 17
25. Execution in Counterparts 17
26. Governing Law; Terms 18
Schedule I-Trade Names
Schedule II-Locations of Inventory
Schedule III-Pledged Debt
Schedule IV-Chief Executive Offices of Pledgors
Exhibit A-Form of Uniroyal Security Agreement Supplement
UNIROYAL SECURITY AGREEMENT
UNIROYAL SECURITY AGREEMENT dated August 21, 1996 made by the
Persons listed on the signature pages hereof and the Additional
Pledgors (as defined in Section 20(b)) (such Persons so listed
and the Additional Pledgors being, collectively, the "Pledgors")
to CITICORP USA, INC. as agent (in such capacity, the "Agent")
for the Secured Parties (as defined in the Credit Agreement
referred to below).
PRELIMINARY STATEMENTS.
(1)Uniroyal Chemical Company, Inc. (the "Uniroyal Borrower") has
entered into a Credit Agreement dated as of August 21, 1996 (said
Agreement, as it may hereafter be amended, supplemented or
otherwise modified from time to time, being the "Credit
Agreement"; capitalized terms used herein and not otherwise
defined herein are used herein as therein defined) with Crompton
& Knowles Corporation, Crompton & Knowles Colors Incorporated,
Davis-Standard Corporation, Ingredient Technology Corporation,
the lender parties party thereto (the "Lender Parties"), Citicorp
Securities, Inc., as Arranger, Citicorp USA, Inc., as Agent and
The Chase Manhattan Bank, as Managing Agent.
(2)The Uniroyal Borrower maintains a non-interest bearing cash
collection account (the "Collection Account") with Citibank, N.A.
("Citibank") at its office at 399 Park Avenue, New York, New York
10043, Account No. 4055-5094, in the name of the Uniroyal
Borrower but under the sole control and dominion of the Agent and
subject to the terms of this Agreement.
(3)The Uniroyal Borrower maintains a non-interest bearing cash
concentration account (the "Cash Concentration Account") with
Citibank at its office at 399 Park Avenue, New York, New York
10043, Account No. 4049-8376, in the name of the Uniroyal
Borrower and subject to the terms of this Agreement.
(4)The Uniroyal Borrower has opened a non-interest (but subject
to investment pursuant to Section 6) cash collateral account (an
"L/C Cash Collateral Account") with Citibank at its office at 399
Park Avenue, New York, New York 10043, Account No. 4070-5742, in
the name of the Uniroyal Borrower and subject to the terms of
this Agreement.
(5)Each Pledgor will derive substantial direct and indirect
benefit from the transactions contemplated by the Credit
Agreement.
(6)It is a condition precedent to the making of Advances and the
issuance of Letters of Credit by the Lender Parties under the
Credit Agreement and the entry by the Hedge Banks into Bank Hedge
Agreements with the Borrowers from time to time that each Pledgor
shall have granted the assignment and security interest and made
the pledge and assignment contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Lender Parties to make Advances and to issue Letters
of Credit under the Credit Agreement and to induce the Hedge
Banks to enter into Bank Hedge Agreements with the Borrowers from
time to time, each Pledgor hereby agrees with the Agent for the
ratable benefit of the Secured Parties as follows:
SECTION 1. Grant of Security. Each Pledgor hereby assigns and
pledges to the Agent for the ratable benefit of the Secured
Parties, and hereby grants to the Agent for the ratable benefit
of the Secured Parties a security interest in, the following, in
each case, as to each type of property described below, whether
now owned or hereafter acquired by such Pledgor, wherever located
and whether now or hereafter existing (collectively, the
"Collateral"):
(a)all of such Pledgor's right, title and interest, whether now
owned or hereafter acquired, in and to all inventory in all of
its forms, wherever located, now or hereafter existing
(including, but not limited to, (i) all herbicides, agricides,
insecticides, foliar nutrients, plant growth regulants,
fungicides, seed treatment chemicals and equipment, chemicals and
polymers and specialty chemicals and raw materials and work in
process therefor, finished goods thereof and materials used or
consumed in the manufacture or production thereof, (ii) inventory
in which such Pledgor has an interest in mass or a joint or other
interest or right of any kind (including, without limitation,
goods in which such Pledgor has an interest or right as
consignee) and (iii) inventory that is returned to or repossessed
by such Pledgor), and all accessions thereto and products thereof
and documents therefor (any and all such inventory, accessions,
products and documents being the "Inventory");
(b)all of such Pledgor's (i) right, title and interest, whether
now owned or hereafter acquired, in and to all accounts, contract
rights, chattel paper, instruments, deposit accounts, general
intangibles and other obligations of any kind, now or hereafter
existing, but only to the extent the foregoing arise out of or in
connection with, and constitute a right of payment of money or
other property for, the sale or lease of goods or the rendering
of services other than intercompany royalty payments, licensing
fees, technology transfer payments and other similar intercompany
payments (to the extent not referred to in clause (c) below, the
"Receivables") and (ii) rights now or hereafter existing in and
to all security agreements, leases and other contracts securing
or otherwise relating to the Receivables (the "Related
Contracts");
(c)all of such Pledgor's right, title and interest in and to the
following (collectively, the "Account Collateral"):
(i)the Cash Concentration Account, all funds held therein and all
certificates and instruments, if any, from time to time
representing or evidencing the Cash Concentration Account;
(ii)the Collection Account, all funds held therein and all
certificates and instruments, if any, from time to time
representing or evidencing the Collection Account;
(iii)the L/C Cash Collateral Account, all funds held therein and
all certificates and instruments, if any, from time to time
representing or evidencing such L/C Cash Collateral Account;
(iv)all Pledged Accounts (as hereinafter defined), all funds held
therein and all certificates and instruments, if any, from time
to time representing or evidencing the Pledged Accounts;
(v)all Other Accounts (as hereinafter defined), all funds held
therein and all certificates and instruments, if any, from time
to time representing or evidencing such accounts;
(vi)all notes, certificates of deposit, deposit accounts, checks
and other instruments from time to time hereafter delivered to or
otherwise possessed by the Agent for or on behalf of such Pledgor
in substitution for or in addition to any or all of the then
existing Account Collateral; and
(vii)all interest, dividends, cash, instruments and other
property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the
then existing Account Collateral; and
(d)All of the following (the "Security Collateral"):
(i)the indebtedness (whether or not evidenced by instruments) set
forth opposite such Pledgor's name on Schedule III hereto and
issued by the obligors indicated therein (collectively referred
to herein as the "Initial Pledged Debt", and together with the
indebtedness referred to in clause (ii) below, the "Pledged
Debt") and the instruments (if any) evidencing such Initial
Pledged Debt, all security therefor and all interest, cash,
instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange
for any or all of such Initial Pledged Debt; and
(ii)all additional indebtedness from time to time owed to such
Pledgor by any obligor of the Initial Pledged Debt (whether or
not evidenced by instruments) and the instruments evidencing such
indebtedness (if any), and all additional indebtedness owed to
such Pledgor by any other obligor to the extent required pursuant
to Section 5.01(k) of the Credit Agreement, all security therefor
and all interest, cash, instruments and other property from time
to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of such indebtedness;
(e)all proceeds of any and all of the foregoing Collateral
(including, without limitation, proceeds that constitute property
of the types described in clauses (a), (b), (c) and (d) of this
Section 1) and, to the extent not otherwise included, all
(i) payments under insurance (whether or not the Agent is the
loss payee thereof), or any indemnity, warranty or guaranty,
payable by reason of loss or damage to or otherwise with respect
to any of the foregoing Collateral, and (ii) cash.
SECTION 2. Security for Obligations. This Agreement secures,
in the case of each Pledgor, the payment of all Obligations of
such Pledgor now or hereafter existing under the Loan Documents,
which shall not exceed, so long as any Uniroyal Indenture remains
in effect, the maximum amount of Debt permitted to be incurred by
such Pledgor under such Uniroyal Indenture, whether direct or
indirect, absolute or contingent, including any extensions,
modifications, substitutions, amendments and renewals thereof,
whether for principal (including reimbursement for amounts drawn
under Letters of Credit), interest, premiums, penalties, fees,
indemnifications, contract causes of action, costs, expenses or
otherwise (all such Obligations being the "Secured Obligations").
Without limiting the generality of the foregoing, this Agreement
secures, as to each Pledgor, the payment of all amounts that
constitute part of the Secured Obligations of such Pledgor and
that would be owed by such Pledgor to the Secured Parties under
the Loan Documents but for the fact that they are unenforceable
or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving such Pledgor.
SECTION 3. Pledgors Remain Liable. Anything herein to the
contrary notwithstanding, (a) each Pledgor shall remain liable
under the contracts and agreements included in the Collateral to
the extent set forth therein to perform all of its duties and
obligations thereunder to the same extent as if this Agreement
had not been executed, (b) the exercise by the Agent of any of
its rights hereunder shall not release any Pledgor from any of
its duties or obligations under the contracts and agreements
included in the Collateral and (c) no Secured Party shall have
any obligation or liability under the contracts and agreements
included in the Collateral by reason of this Agreement or any
other Loan Document, nor shall any Secured Party be obligated to
perform any of the obligations or duties of any Pledgor
thereunder or to take any action to collect or enforce any claim
for payment assigned hereunder.
SECTION 4. Delivery of Security Collateral and Account
Collateral. All certificates or instruments representing or
evidencing any Security Collateral or Account Collateral have
been or shall be delivered to and held by or on behalf of the
Agent pursuant hereto and shall be in suitable form for transfer
by delivery, or shall be accompanied by duly executed instruments
of transfer or assignment in blank, all in form and substance
reasonably satisfactory to the Agent. If any Event of Default
shall have occurred and be continuing, the Agent shall have the
right to transfer to or to register in the name of the Agent or
any of its nominees any or all of the Security Collateral and
Account Collateral. In addition, the Agent shall have the right
at any time to exchange certificates or instruments representing
or evidencing Account Collateral for certificates or instruments
of smaller or larger denominations.
SECTION 5. Maintaining the Collection Account, the Cash
Concentration Account and the L/C Cash Collateral Account. So
long as any Advance shall remain unpaid, any Letter of Credit or
Bank Hedge Agreement shall be outstanding or any Lender Party
shall have any Commitment under the Credit Agreement:
(a)The Pledgor will maintain the Collection Account and the Cash
Concentration Account with Citibank.
(b)It shall be a term and condition of the Collection Account and
the L/C Cash Collateral Account, notwithstanding any term or
condition to the contrary in any other agreement relating to such
Collection Account or such L/C Cash Collateral Account, as the
case may be, and except as otherwise provided by the provisions
of Section 8 and Section 18, that no amount (including interest
on Collateral Investments) shall be paid or released to or for
the account of, or withdrawn by or for the account of, the
Pledgor or any other Person from such Collection Account or L/C
Cash Collateral Account, as the case may be.
The Collection Account, the Cash Concentration Account and the
L/C Cash Collateral Account shall be subject to such applicable
laws, and such applicable regulations of the Board of Governors
of the Federal Reserve System and of any other appropriate
banking or governmental authority, as may now or hereafter be in
effect.
SECTION 6. As to Account Collateral. So long as any Advance
shall remain unpaid, any Letter of Credit shall be outstanding,
any Bank Hedge Agreement shall be in effect or any Lender Party
shall have any Commitment under the Credit Agreement:
(a)Each Pledgor shall comply with its current cash management
policies and practices, and shall not make any material change to
such policies and practices which could adversely affect the
interests of the Secured Parties without the prior written
consent of the Agent.
(b)Each Pledgor shall instruct each Person obligated at any time
to make any payment to such Pledgor for any reason (an "Obligor")
to make such payment to a Pledged Account (as defined in Section
9(d)) or to the Collection Account and shall pay to the Agent for
deposit in the Collection Account, at the end of each Business
Day, all proceeds of Collateral.
(c)Each Pledgor shall not make any deposit in any deposit account
other than a deposit in the Cash Concentration Account or an
Other Account (as defined in Section 9(d)) or an Excepted Account
(as defined in Section 9(d)) in accordance with its then current
cash management policies and practices in accordance with Section
6(a), provided that in the case of deposits in the Excepted
Accounts, no amount deposited therein shall constitute proceeds
of Collateral, other than amounts transferred directly from the
Cash Concentration Account.
(d)Upon the occurrence and during the continuance of an Event of
Default, at the Agent's request, within 15 Business Days of such
request (or such later time as the Agent and Crompton Corp. shall
agree), (i) each Pledgor shall give written notice to the Agent
of (A) the name and address of each bank with which each Pledged
Account or Other Account is maintained by such Pledgor, (B) the
account number of each such Pledged Account or Other Account and
(C) the full name under which such Pledged Account or Other
Account is maintained, (ii) each Pledgor shall enter into letter
agreements (the "Pledged Account Letters") in form and substance
satisfactory to the Agent among such Pledgor, the Agent and each
bank with which such Pledgor maintains a Pledged Account or, at
the option of such Pledgor, shall close such account, (iii) each
Pledgor shall enter into letter agreements (the "Other Account
Letters", and together with the Pledged Account Letters, the
"Blocked Account Letters") in form and substance satisfactory to
the Agent among such Pledgor, the Agent and each bank with which
such Pledgor maintains an Other Account or, at the option of such
Pledgor, shall close such account, (iv) upon any termination of
any Pledged Account Letter or other agreement with respect to the
maintenance of a Pledged Account, such Pledgor shall promptly
notify all Obligors that were making payments to such Pledged
Account to make all future payments to another Pledged Account or
to the Collection Account, and (v) each Pledgor agrees to close
any or all Pledged Accounts and terminate any or all Pledged
Account Letters at the request of the Agent upon five Business
Days' notice thereof.
SECTION 7. Investing of Amounts in the Cash Concentration
Account and the L/C Cash Collateral Account. If requested by the
Uniroyal Borrower and until the Uniroyal Borrower in any way
amends such request, the Agent will direct Citibank to, subject
to the provisions of Section 8 and Section 18, from time to time
(a) invest amounts on deposit in the Cash Concentration Account
and the L/C Cash Collateral Account in such Cash Equivalents in
the name of the Agent or as to which all action required by
Section 10 shall have been taken as the Uniroyal Borrower may
select and the Agent may approve and (b) invest interest paid on
the Cash Equivalents referred to in clause (a) above, and
reinvest other proceeds of any such Cash Equivalents that may
mature or be sold, in each case in such Cash Equivalents in the
name of the Agent or as to which all action required by Section
10 shall have been taken as such Uniroyal Borrower may select and
the Agent may approve (the Cash Equivalents referred to in
clauses (a) and (b) above being collectively "Collateral
Investments"). Interest and proceeds that are not invested or
reinvested in Collateral Investments as provided above shall be
deposited and held in the Cash Concentration Account or the L/C
Cash Collateral Account, as the case may be.
SECTION 8. Release of Amounts. So long as no Event of Default
shall have occurred and be continuing, the Agent will direct
Citibank to pay and release to the Uniroyal Borrower or at its
order or, at the request of the Uniroyal Borrower, apply to the
Obligations of the Uniroyal Borrower under the Loan Documents,
such amounts on deposit in the Collection Account, the Cash
Concentration Account and the L/C Cash Collateral Account at the
times and in the amounts specified in the Credit Agreement, or,
if such times or amounts are not specified in the Credit
Agreement, such amounts on deposit shall be released at the
Uniroyal Borrower's direction.
SECTION 9. Representations and Warranties. Each Pledgor
represents and warrants as follows:
(a)As of the Effective Date, all of the Inventory is located at
the places specified in Schedule II hereto. The chief place of
business and chief executive office of such Pledgor and the
office where such Pledgor keeps its records concerning the
Receivables and all originals of all chattel paper that evidence
Receivables, are located at the address specified opposite the
name of such Pledgor on Schedule IV. None of the Receivables is
evidenced by a promissory note or other instrument which has not
been pledged to the Agent for the ratable benefit of the Secured
Parties and delivered to the Agent pursuant to the terms of this
Agreement.
(b)Such Pledgor is the legal and beneficial owner of the
Collateral of such Pledgor free and clear of any Lien, claim,
option or rights of others except for the liens and security
interests created under this Agreement or permitted under the
Credit Agreement. No effective financing statement or other
instrument similar in effect covering all or any part of such
Collateral (including, without limitation, general intangibles
relating to the Collateral) or listing such Pledgor or any of its
Subsidiaries or any trade names of such Pledgor or any of its
Subsidiaries as debtor is on file in any recording office, except
such as may have been filed in favor of the Agent relating to
this Agreement or such as may have been filed in connection with
other Liens permitted under the Credit Agreement.
(c)Such Pledgor has exclusive possession and control of the
Inventory, except the Inventory locations marked by an asterisk
in Schedule II.
(d)Such Pledgor has no lockbox accounts, deposit accounts,
disbursement accounts or other accounts other than (i) the
deposit accounts into which an Obligor deposits proceeds received
in respect of Inventory Receivables or Related Contracts owing to
such Pledgor (each a "Pledged Account"), (ii) the other accounts
into which such Pledgor deposits proceeds received in respect of
Inventory Receivables or Related Contracts owing to such Pledgor
(each an "Other Account") and (iii) such other accounts into
which no proceeds of Collateral are deposited (each an "Excepted
Account").
(e)The Initial Pledged Debt constitutes all of the outstanding
indebtedness owed to such Pledgor by the issuers thereof.
(f)The principal place of business and chief executive office of
such Pledgor are located at the address specified opposite the
name of such Pledgor on Schedule IV.
(g)Such Pledgor has no trade names except as set forth on
Schedule I hereto; such trade names were adopted in good faith;
and, to the best of such Pledgor's knowledge, there exist no
adverse claims against such trade names as of the Effective Date.
(h)This Agreement and the pledge of the Collateral pursuant
hereto create in favor of the Agent for the benefit of the
Secured Parties a valid and perfected first priority security
interest in the Collateral (other than as to matters of
perfection and priority of the security interest in the Pledged
Accounts and the Other Accounts) of such Pledgor, securing the
payment of the Secured Obligations of such Pledgor, and all
filings and other actions necessary or desirable to perfect and
protect such security interest have been duly taken. Such
Pledgor has not granted any security interest in the Collateral
to any other Person.
(i)No consent of any other Person and no authorization, approval
or other action by, and no notice to or filing with, any
governmental authority or regulatory body or other third party is
required (i) for the grant by such Pledgor of the assignment and
security interest granted hereunder, for the pledge by such
Pledgor of the Collateral pursuant hereto or for the execution,
delivery or performance of this Agreement by such Pledgor, (ii)
for the perfection or maintenance of the pledge, assignment and
security interest created hereunder (including the first priority
nature of such pledge, assignment or security interest), except
for the filing of financing and continuation statements under the
Uniform Commercial Code, which financing statements shall have
been duly filed within 60 days after the Initial Extension of
Credit (or such later date as may be agreed by the Borrowers and
the Agent), or (iii) for the exercise by the Agent of its rights
provided for in this Agreement or the remedies in respect of the
Collateral pursuant to this Agreement.
(j)The Inventory that has been produced by such Pledgor has been
produced in compliance with all requirements of the Fair Labor
Standards Act.
(k)There are no conditions precedent to the effectiveness of this
Agreement that have not been satisfied or waived.
SECTION 10. Further Assurances. (a) Each Pledgor agrees that
from time to time, at the expense of such Pledgor, such Pledgor
will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or
desirable, or that the Agent may reasonably request, in order to
perfect and protect any pledge, assignment or security interest
granted or purported to be granted hereby or to enable the Agent
to exercise and enforce its rights and remedies hereunder with
respect to any Collateral. Without limiting the generality of
the foregoing, each Pledgor will: (i) at the request of the
Agent, mark conspicuously each document included in the Inventory
of such Pledgor and each chattel paper included in the
Receivables of such Pledgor with a legend, in form and substance
satisfactory to the Agent, indicating that such document or
chattel paper is subject to the security interest granted hereby;
(ii) if any Collateral shall be evidenced by a promissory note or
other instrument or chattel paper, at the request of the Agent,
deliver and pledge to the Agent hereunder such note or instrument
or chattel paper duly endorsed and accompanied by duly executed
instruments of transfer or assignment, all in form and substance
satisfactory to the Agent; and (iii) execute and file such
financing or continuation statements, or amendments thereto, and
such other instruments or notices, as may be necessary or
desirable, or as the Agent may reasonably request, in order to
perfect and preserve the pledge, assignment and security
interests granted or purported to be granted hereunder.
(b)Each Pledgor hereby authorizes the Agent to file one or more
financing or continuation statements, and amendments thereto,
relating to all or any part of the Collateral without the
signature of such Pledgor where permitted by law, provided that
the Agent shall give reasonably prompt notice of any such filing
to such Pledgor. A photocopy or other reproduction of this
Agreement or any financing statement covering the Collateral or
any part thereof shall be sufficient as a financing statement
where permitted by law.
(c)Each Pledgor will furnish to the Agent from time to time
statements and schedules further identifying and describing the
Collateral and such other reports in connection with the
Collateral as the Agent may reasonably request, all in reasonable
detail.
SECTION 11. As to Inventory. (a) Each Pledgor shall keep the
Inventory (other than Inventory sold in the ordinary course of
business) at any of the places therefor specified in Section 9(a)
or, upon 20 days' prior written notice to the Agent, at such
other places in a jurisdiction where all action required by
Section 10 shall have been taken with respect to the Inventory.
(b)Each Pledgor shall pay promptly when due all property and
other taxes, assessments and governmental charges or levies
imposed upon, and all claims (including claims for labor,
materials and supplies) against, the Inventory, except to the
extent not required pursuant to Section 5.01(b) of the Credit
Agreement. In producing the Inventory, each Pledgor shall comply
with all requirements of the Fair Labor Standards Act.
SECTION 12. Insurance. (a) Each Pledgor shall, at its own
expense, maintain insurance with respect to the Inventory in such
amounts, against such risks, in such form and with such insurers,
as shall be satisfactory to the Agent from time to time. Each
policy for property damage insurance with respect to Inventory
shall provide for all losses (except for losses of less than
$250,000 per occurrence) to be paid directly to the Agent. Each
such policy shall in addition (i) name the Agent as loss payee,
(ii) provide that there shall be no recourse against the Agent
for payment of premiums or other amounts with respect thereto and
(iii) provide that at least 10 days' prior written notice of
cancellation or of lapse shall be given to the Agent by the
insurer. Each Pledgor shall, if so requested by the Agent upon
an Event of Default, deliver to the Agent duplicate policies of
such insurance and, as often as the Agent may reasonably request,
a report of a reputable insurance broker with respect to such
insurance. Further, each Pledgor shall, at the request of the
Agent, duly execute and deliver instruments of assignment of such
insurance policies to comply with the requirements of Section 10
and use its best efforts to cause the insurers to acknowledge
notice of such assignment.
(b)Reimbursement under any liability insurance maintained by the
Uniroyal Borrower pursuant to this Section 12 may be paid
directly to the Person who shall have incurred liability covered
by such insurance. In case of any loss involving damage to
Inventory when subsection (c) of this Section 12 is not
applicable, the Uniroyal Borrower shall make or cause to be made
the necessary repairs to such Inventory or replacements of any
Inventory, and any proceeds of insurance maintained by the
Uniroyal Borrower pursuant to this Section 12 shall be paid to
the Uniroyal Borrower as reimbursement for the costs of such
repairs or replacements.
(c)Upon the occurrence and during the continuance of any Event of
Default or the actual or constructive total loss (in excess of
$250,000 per occurrence) of any Inventory, all insurance payments
in respect of such Inventory shall be paid to and applied by the
Agent as specified in Section 18(b).
SECTION 13. Place of Perfection; Records; Collection of
Receivables. (a) Each Pledgor shall keep its chief place of
business and chief executive office and the office where it keeps
its records concerning the Collateral, and all originals of all
chattel paper that evidence Receivables, at the location therefor
specified in Section 9(a) or, upon 20 days' prior written notice
to the Agent, at such other locations in a jurisdiction where all
actions required by Section 10 shall have been taken with respect
to the Collateral. Each Pledgor will hold and preserve such
records and chattel paper and will permit representatives of the
Agent at any reasonable time and from time to time during regular
business hours and upon reasonable prior notice to inspect and
make abstracts from such records and chattel paper.
(b) Except as otherwise provided in this subsection (b), each
Pledgor shall continue to collect in the ordinary course of its
business in a manner consistent with past practices, at its own
expense, all amounts due or to become due to such Pledgor under
the Receivables. The Agent shall have the right at any time,
upon the occurrence and during the continuance of an Event of
Default and upon written notice to the Pledgor of its intention
to do so, to notify the Obligors under any Receivables of the
assignment of such Receivables to the Agent and to direct such
Obligors to make payment of all amounts due or to become due to
such Pledgor thereunder directly to the Agent and, upon such
notification and at the expense of such Pledgor, to enforce
collection of any such Receivables, and to adjust, settle or
compromise the amount or payment thereof, in the same manner and
to the same extent as such Pledgor might have done. After
receipt by such Pledgor of the notice from the Agent referred to
in the preceding sentence and so long as such Event of Default is
continuing, (i) all amounts and proceeds (including instruments)
received by such Pledgor in respect of the Receivables shall be
received in trust for the benefit of the Agent hereunder, shall
be segregated from other funds of such Pledgor and shall be
forthwith paid over to the Agent in the same form as so received
(with any necessary endorsement) to be deposited in the
Collection Account and either (A) released to the Uniroyal
Borrower on the terms set forth in Section 8 so long as no Event
of Default shall have occurred and be continuing or (B) if an
Event of Default shall have occurred and be continuing, applied
as provided by Section 18(b) and (ii) such Pledgor shall not
adjust, settle or compromise the amount or payment of any
Receivable, release wholly or partly any Obligor thereof, or
allow any credit or discount thereon.
SECTION 14. Transfers and Other Liens. Each Pledgor agrees that
it shall not (i) sell, assign (by operation of law or otherwise)
or otherwise dispose of, or grant any option with respect to, any
of the Collateral of such Pledgor (other than sales, assignments,
options and other dispositions permitted under the terms of the
Credit Agreement) or (ii) create or suffer to exist any Lien upon
or with respect to any of the Collateral of such Pledgor, except
for the Liens created under the Collateral Documents and any
other Liens permitted under the Credit Agreement.
SECTION 15. Agent Appointed Attorney-in-Fact. Each Pledgor
hereby irrevocably appoints the Agent such Pledgor's
attorney-in-fact, with full authority in the place and stead of
such Pledgor and in the name of such Pledgor or otherwise, from
time to time after the occurrence and during the continuance of
an Event of Default in the Agent's discretion, to take any action
and to execute any instrument that the Agent may deem necessary
or advisable to accomplish the purposes of this Agreement,
including, without limitation:
(a)to obtain and adjust insurance required to be paid to the
Agent pursuant to Section 12,
(b)to ask for, demand, collect, sue for, recover, compromise,
receive and give acquittance and receipts for moneys due and to
become due under or in respect of any of the Collateral,
(c)to receive, indorse and collect any drafts or other
instruments, documents and chattel paper, in connection with
clause (a) or (b) above, and
(d)to file any claims or take any action or institute any
proceedings that the Agent may deem necessary or desirable for
the collection of any of the Collateral or otherwise to enforce
compliance with the rights of the Agent with respect to any of
the Collateral.
SECTION 16. Agent May Perform. If any Pledgor fails to perform
any agreement contained herein, the Agent may, but without any
obligation to do so and without further notice, itself perform,
or cause performance of, such agreement, and the expenses of the
Agent incurred in connection therewith shall be payable by such
Pledgor under Section 19(b). The Agent agrees to notify the
Uniroyal Borrower of any such performance; provided, however,
that the failure to give such notice shall not affect the Agent's
right to perform or the validity of such performance.
SECTION 17. The Agent's Duties. The powers conferred on the
Agent hereunder are solely to protect its interest in the
Collateral and shall not impose any duty upon it to exercise any
such powers. Except for the safe custody of any Collateral in
its possession and the accounting for moneys actually received by
it hereunder, the Agent shall have no duty as to any Collateral,
as to ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters
relative to any Collateral, whether or not the Agent or any other
Secured Party has or is deemed to have knowledge of such matters,
or as to the taking of any necessary steps to preserve rights
against any parties or any other rights pertaining to any
Collateral. The Agent shall be deemed to have exercised
reasonable care in the custody and preservation of any Collateral
in its possession if such Collateral is accorded treatment
substantially equal to that which the Agent accords its own
property.
SECTION 18. Remedies. If any Event of Default shall have
occurred and be continuing:
(a)The Agent may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a
secured party upon default under the Uniform Commercial Code in
effect in the State of New York at such time (the "Uniform
Commercial Code") (whether or not the Uniform Commercial Code
applies to the affected Collateral) and also may (i) require any
Pledgor to, and each Pledgor hereby agrees that it will at its
expense and upon request of the Agent forthwith, assemble all or
part of the Collateral pledged by it (other than the Receivables
and the Account Collateral) as directed by the Agent and make it
available to the Agent at a place and time to be designated by
the Agent that is reasonably convenient to both parties and (ii)
without notice except as specified below, sell the Collateral or
any part thereof in one or more parcels at public or private
sale, at any of the Agent's offices or elsewhere, for cash, on
credit or for future delivery, and upon such other terms as the
Agent may deem commercially reasonable. Each Pledgor agrees
that, to the extent notice of sale shall be required by law, at
least ten days' notice to such Pledgor of the time and place of
any public sale or the time after which any private sale is to be
made shall constitute reasonable notification. The Agent shall
not be obligated to make any sale of Collateral regardless of
notice of sale having been given. The Agent may adjourn any
public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further
notice, be made at the time and place to which it was so
adjourned.
(b)Any cash held by the Agent as Collateral and all cash proceeds
received by the Agent in respect of any sale of, collection from,
or other realization upon all or any part of the Collateral may
in the discretion of the Agent, be held by the Agent as
collateral for, and/or then or at any time thereafter applied
(after payment of any amounts payable to the Agent pursuant to
Section 19) in whole or in part by the Agent for the ratable
benefit of the Secured Parties, against all or any part of the
Secured Obligations in such order as the Agent shall elect. In
determining the amount of any such cash to be applied against the
Secured Obligations owing to the Hedge Banks other than Secured
Obligations theretofore accrued and unpaid, the Agent shall be
fully protected in relying on the Agreement Values of the Bank
Hedge Agreements. "Agreement Value" means, for any Bank Hedge
Agreement on any date of determination, the amount, if any, that
would be payable to the Hedge Bank in respect of "agreement
value" as though such Bank Hedge Agreement were terminated on
such date, calculated as provided in the International Swap
Dealers Association Inc. Code of Standard Wording, Assumptions
and Provisions for Swaps, 1992 Edition; each determination of
Agreement Value shall be made by the Agent in good faith and in
reliance on any information, including information provided by
such Hedge Bank, that it believes accurate, but without any
obligation to verify such information. Any surplus of such cash
or cash proceeds held by the Agent and remaining after payment in
full of all the Secured Obligations shall be paid over to the
Pledgors or to whomsoever may be lawfully entitled to receive
such surplus.
(c)The Agent may exercise any and all rights and remedies of the
Pledgors in respect of the Collateral.
(d)All payments received by each Pledgor in respect of the
Collateral shall be received in trust for the benefit of the
Agent, shall be segregated from other funds of such Pledgor and
shall be forthwith paid over to the Agent in the same form as so
received (with any necessary endorsement).
(e)The Agent may, without notice to the Uniroyal Borrower except
as required by law and at any time or from time to time, charge,
set-off and otherwise apply all or any part of the Secured
Obligations against the Uniroyal Borrower's Collection Account,
the Cash Concentration Account and the L/C Cash Collateral
Account or any part thereof.
SECTION 19. Indemnity and Expenses. (a) Each Pledgor agrees
to defend, protect, indemnify and hold harmless each Secured
Party from and against any and all claims, losses and liabilities
growing out of or resulting from this Agreement (including,
without limitation, enforcement of this Agreement), except
claims, losses or liabilities resulting from the Agent's or such
other Secured Party's gross negligence or willful misconduct as
determined by a final judgment of a court of competent
jurisdiction.
(b)Each Pledgor will upon demand, pay to the Agent the amount of
any and all reasonable expenses, including the reasonable fees
and expenses of its counsel and of any experts and agents, that
the Agent may incur in connection with (i) the administration of
this Agreement, (ii) the custody, preservation, use or operation
of, or the sale of, collection from or other realization upon,
any of the Collateral of such Pledgor, (iii) the exercise or
enforcement of any of the rights of the Agent or any other
Secured Party against such Pledgor, or (iv) the failure by such
Pledgor to perform or observe any of the provisions hereof.
(c)Without prejudice to the survival of any other agreement of
any Loan Party hereunder or under any other Loan Document, the
agreements and obligations of the Pledgors contained in this
Section 19 shall survive the payment in full of principal,
interest and all other amounts payable hereunder and under any of
the other Loan Documents.
SECTION 20. Amendments; Waivers; Etc. (a) No amendment or
waiver of any provision of this Agreement, and no consent to any
departure by any Pledgor herefrom, shall in any event be
effective unless the same shall be in writing and signed by the
Agent, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which
given. No failure on the part of the Agent to exercise, and no
delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any
such right preclude any other or further exercise thereof or the
exercise of any other right.
(b)Upon the execution and delivery by any Person of a security
agreement supplement in substantially the form of Exhibit A
hereto (each a "Uniroyal Security Agreement Supplement"),
(i) such Person shall be referred to as an "Additional Pledgor"
and shall be and become a Pledgor and each reference in this
Agreement to "Pledgor" shall also mean and be a reference to such
Additional Pledgor, and (ii) the annexes attached to each
Uniroyal Security Agreement Supplement shall be incorporated into
and become a part of and supplement Schedules I, II and III
hereto, and the Collateral Agent may attach such annexes as
supplements to such Schedules; and each reference to such
Schedules shall mean and be a reference to such Schedules as
supplemented pursuant hereto.
SECTION 21. Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing
(including telecopier, telegraphic or telex communication) and,
if to any Pledgor, mailed, telecopied, telegraphed, telexed or
delivered to it, addressed to it c/o Uniroyal Corp. at its
address at World Headquarters, Benson Road, Middlebury, CT
06749, Attention: Chief Financial Officer, and if to the Agent,
mailed, telecopied, telegraphed, telexed or delivered to it,
addressed to it at the address of the Agent specified in the
Credit Agreement, or as to any party, at such other address as
shall be designated by such party in a written notice to each
other party complying as to delivery with the terms of this
Section. All such notices and other communications shall (a)
when mailed, be effective three Business Days after the same is
deposited in the mails, (b) when mailed for next day delivery by
a reputable freight company or reputable overnight courier
service, be effective one Business Day thereafter, and (c) when
sent by telegraph, telecopier or telex, be effective when the
same is confirmed by telephone, telecopier confirmation or return
telecopy or telex answerback, respectively.
SECTION 22. Continuing Security Interest; Assignments. This
Agreement shall create a continuing security interest in the
Collateral and shall (a) remain in full force and effect until
the Collateral Release Date, (b) be binding upon each Pledgor,
its successors and assigns and (c) inure, together with the
rights and remedies of the Agent hereunder, to the benefit of the
Secured Parties and their respective successors, transferees and
assigns. Without limiting the generality of the foregoing clause
(c), any Lender Party may assign or otherwise transfer all or any
portion of its rights and obligations under the Credit Agreement
(including, without limitation, all or any portion of its
Commitments, the Advances owing to it and the Note or Notes held
by it) to any other Person, and such other Person shall thereupon
become vested with all the benefits in respect thereof granted to
such Lender Party herein or otherwise, in each case as provided
in Section 8.07 of the Credit Agreement. No Pledgor shall have
the right to assign its rights hereunder or any interest herein
without the prior written consent of the Secured Parties.
SECTION 23. Release and Termination. (a) Upon any sale, lease,
transfer or other disposition of any item of Collateral of any
Pledgor, in accordance with the terms of the Loan Documents, the
Agent will, at such Pledgor's expense, execute and deliver to
such Pledgor such documents as such Pledgor shall reasonably
request to evidence the release of such item of Collateral from
the assignment and security interest granted hereby; provided,
however, that (i) at the time of such request and such release no
Event of Default shall have occurred and be continuing and
(ii) the Uniroyal Borrower shall have delivered to the Agent, at
least ten Business Days prior to the date of the proposed
release, a written request for release describing the item of
Collateral and the terms of the sale, lease, transfer or other
disposition in reasonable detail, including the price thereof and
any expenses in connection therewith, together with a form of
release for execution by the Agent and a certification by the
Uniroyal Borrower to the effect that the transaction is in
compliance with the Loan Documents and as to such other matters
as the Agent may request.
(b)Upon the Collateral Release Date, the pledge, assignment and
security interest granted hereby shall terminate and all rights
to the Collateral shall revert to the respective Pledgor. Upon
any such termination or release, the Agent will, at such
Pledgor's expense, execute and deliver to such Pledgor such
documents as such Pledgor shall reasonably request to evidence
such termination.
SECTION 24. Security Interest Absolute. The Obligations of each
Pledgor hereunder are independent of the Obligations of any other
Loan Party under the Loan Documents, and a separate action or
actions may be brought or prosecuted against each Pledgor whether
action is brought against any other Loan Party or whether any
other Loan Party is joined in any such action or actions. All
rights of the Collateral Agent and security interests hereunder,
and all obligations of each Pledgor hereunder, shall be absolute
and unconditional, irrespective of, and each Pledgor hereby
irrevocably waives any defenses it may now or hereafter have in
any way relating to, any or all of the circumstances described in
the Guaranties or any other circumstance that might constitute a
discharge available to, or a discharge of, any Borrower or any
Guarantor.
This Agreement shall continue to be effective or be reinstated,
as the case may be, if at any time any payment of any of the
Secured Obligations is rescinded or must otherwise be returned by
any Secured Party or by any other Person upon the insolvency,
bankruptcy or reorganization of any Loan Party or otherwise, all
as though such payment had not been made.
SECTION 25. Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which when so
executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Delivery
of an executed counterpart of a signature page to this Agreement
by telecopier shall be effective as delivery of a manually
executed counterpart of this Agreement.
<PAGE>
SECTION 26. Governing Law; Terms. This Agreement shall be
governed by and construed in accordance with the laws of the
State of New York, except to the extent that the validity or
perfection of the security interest hereunder, or remedies
hereunder, in respect of any particular Collateral are governed
by the laws of a jurisdiction other than the State of New York.
Unless otherwise defined herein or in the Credit Agreement, terms
used in Article 9 of the Uniform Commercial Code are used herein
as therein defined.
<PAGE>
IN WITNESS WHEREOF, each Pledgor has caused this Agreement to be
duly executed and delivered by its officer thereunto duly
authorized as of the date first above written.
GUSTAFSON, INC.
By
Title:
GUSTAFSON INTERNATIONAL COMPANY
By
Title:
LOKAR ENTERPRISES, INC.
By
Title:
TRACE CHEMICALS, INC.
By
Title:
UNIROYAL CHEMICAL BRAZIL HOLDING, INC.
By
Title:
UNIROYAL CHEMICAL COMPANY,
INC.
By
Title:
UNIROYAL CHEMICAL CORPORATION
By
Title:
UNIROYAL CHEMICAL EXPORT
LIMITED
By
Title:
UNIROYAL CHEMICAL INTERNATIONAL
COMPANY
By
Title:
UNIROYAL CHEMICAL LEASING
COMPANY, INC.
By
Title:
SCHEDULE I
TO THE UNIROYAL SECURITY AGREEMENT
TRADE NAMES
Uniroyal Chemical Company, Inc. only sells as Uniroyal Chemical
Company, Inc.
SCHEDULE II
TO THE UNIROYAL SECURITY AGREEMENT
LOCATIONS OF INVENTORY
SCHEDULE III
TO THE UNIROYAL SECURITY AGREEMENT
PLEDGED DEBT
Debt of the Uniroyal Borrower and the Uniroyal Guarantors
evidenced by the intercompany promissory note dated
August 21, 1996 made by CK Holding Corporation, CNK
Disposition Corp., Crompton & Knowles Colors Incorporated,
Crompton & Knowles Corporation, Crompton & Knowles Overseas
Corporation, Davis-Standard Corporation, Ingredient Technology
Corporation, Kem Manufacturing Corporation, Gustafson, Inc.,
Gustafson International Company, Lokar Enterprises, Inc., Trace
Chemicals, Inc., Uniroyal Chemical Brazil Holding, Inc., Uniroyal
Chemical Company, Inc., Uniroyal Chemical Corporation, Uniroyal
Chemical Export Limited, Uniroyal Chemical International Company,
Uniroyal Chemical Leasing Company Inc. and Uniroyal Chemical Ltd.
SCHEDULE IV
TO THE UNIROYAL SECURITY AGREEMENT
CHIEF EXECUTIVE OFFICES OF PLEDGORS
Uniroyal Chemical Corporation Lokar Enterprises, Inc.
c/o Uniroyal Chemical Company, c/o Uniroyal Chemical
Inc. Company, Inc.
Benson Road Benson Road
Middlebury, CT 06749 Middlebury, CT 06749
Fed. Tax ID #: 06-1258925
Gustafson International Company Uniroyal Chemical Company, Inc.
c/o Gustafson, Inc. Benson Road
1400 Preston Road Middlebury, CT 06749
Suite 400 Fed. Tax ID #: 06-1148490
Plano, TX 75093
Fed. Tax ID #: 75-2295890 Gustafson, Inc.
1400 Preston Road, Suite 400
Uniroyal Chemical Brazil Holding, Inc. Plano, TX 75093
c/o Uniroyal Chemical Company, Inc. Fed. Tax ID #: 41-0795292
Benson Road
Middlebury, CT 06749 Trace Chemicals, Inc.
06-1237209 839 Brinkman Drive
Fed. Tax ID #: 06-1237209 Pekin, IL 61554
Fed. Tax ID #: 37-1032576
Uniroyal Chemical Export Limited
c/o Uniroyal Chemical Company, Inc.
Benson Road
Middlebury, CT 06749
Fed. Tax ID #: 06-1431523
Uniroyal Chemical International Company
c/o Gustafson, Inc.
1400 Preston Road
Suite 400
Plano, TX 75093
Fed. Tax ID #: 75-2270460
Uniroyal Chemical Leasing Company, Inc.
c/o Uniroyal Chemical Company, Inc.
Benson Road
Middlebury, CT 06749
EXHIBIT A TO THE UNIROYAL SECURITY AGREEMENT
FORM OF UNIROYAL SECURITY AGREEMENT SUPPLEMENT
Citicorp USA, Inc., as Agent
under the Credit Agreement
referred to below
399 Park Avenue
New York, New York 10043 [Date]
Attention: Robert Kosian
Uniroyal Security Agreement dated as of August 21, 1996
made by Uniroyal Chemical Company, Inc. and the other
Pledgors to Citicorp USA, Inc., as Agent
Ladies and Gentlemen:
Reference is made to the above-captioned Uniroyal Security
Agreement (such Uniroyal Security Agreement, as in effect on the
date hereof and as it may hereafter be amended, modified or
otherwise supplemented from time to time, being the "Uniroyal
Security Agreement"). The terms defined in the Uniroyal
Security Agreement (or in the Credit Agreement referred to
therein) and not otherwise defined herein are used herein as
therein defined.
The undersigned hereby agrees, as of the date first above
written, to become a Pledgor under the Uniroyal Security
Agreement as if it were an original party thereto and agrees
that each reference in the Uniroyal Security Agreement to
"Pledgor" shall also mean and be a reference to the undersigned.
The undersigned hereby assigns and pledges to the Agent for the
ratable benefit of the Secured Parties, and hereby grants to the
Agent for the ratable benefit of the Secured Parties as security
for the Secured Obligations a lien on and security interest in,
all of the right, title and interest of the undersigned, whether
now owned or hereafter acquired, in and to the Collateral owned
by the undersigned, including, but not limited to, the property
listed on Annex I hereto. Schedules I, II and III to the
Uniroyal Security Agreement are hereby supplemented by Annexes
I, II and III hereto, respectively. The undersigned hereby
certifies that such Annexes have been prepared by the
undersigned in substantially the form of Schedules I, II and III
to the Uniroyal Security Agreement and are accurate and complete
as of the date hereof.
The undersigned hereby makes each representation and warranty
set forth in Section 9 of the Uniroyal Security Agreement (as
supplemented by the attached Annexes) to the same extent as each
other Pledgor and hereby agrees to be bound as a Pledgor by all
of the terms and provisions of the Uniroyal Security Agreement
to the same extent as each other Pledgor.
This Uniroyal Security Agreement Supplement shall be governed
by, and construed in accordance with, the laws of the State of
New York.
Very truly yours,
[NAME OF ADDITIONAL
PLEDGOR]
By
Title:
Address of Chief Executive
Office and for Notices:
[Address]
FORM OF LOUISIANA UNDERTAKING
LOUISIANA UNDERTAKING
Dated as of August 21, 1996
To the Lender Parties party to the
Credit Agreement referred
to below and to Citicorp USA, Inc.,
as Agent for such Lender Parties
Ladies and Gentlemen:
We refer to the Uniroyal Security Agreement dated as of August
21, 1996 (as amended, supplemented or otherwise modified from
time to time, the "Security Agreement"), made and executed by the
Pledgors party thereto in favor of Citicorp, USA, Inc., as Agent
(in such capacity, the "Agent") for the Secured Parties referred
to in the Credit Agreement dated as of August 21, 1996 (as
amended, supplemented or otherwise modified from time to time,
the "Credit Agreement") among Uniroyal Chemical Company, Inc.
("Uniroyal"), Crompton & Knowles Corporation, Crompton & Knowles
Colors Incorporated, Davis-Standard Corporation, Ingredient
Technology Corporation, the Lender Parties party thereto,
Citicorp Securities, Inc., as Arranger, Citicorp USA, Inc., as
Agent and The Chase Manhattan Bank, as Managing Agent. Unless
otherwise defined herein, the terms defined in the Credit
Agreement or the Security Agreement shall be used herein as
therein defined.
Each Pledgor hereby agrees, with respect to any and all
Collateral located in the State of Louisiana (the "Louisiana
Collateral") that the Security Agreement is hereby supplemented,
effective as of the date first above written, as follows:
(a)In the event the Louisiana Collateral or any part thereof is
seized as an incident to an action for the recognition or
enforcement of the security interest granted under the Security
Agreement by executory process, ordinary process, sequestration,
writ of fieri facias, or otherwise, each Pledgor hereby agrees
that any court issuing any such order shall, if petitioned for by
the Agent, direct the sheriff or the United States Marshal, as
applicable, to appoint as a keeper of the Louisiana Collateral,
the Agent, or any agent designated by the Agent, or any person
named by the Agent at the time such seizure is effected. This
designation is made pursuant to LSA-R.S. 9:5136 through 5140.2,
inclusive, as the same may be amended from time to time, and the
Agent shall be entitled to all the rights and benefits afforded
thereunder including reasonable compensation.
(b) The Agent may exercise in respect of the Louisiana
Collateral, in addition to all other rights and remedies provided
for herein or in the Security Agreement or otherwise available to
it, all of the rights and remedies of a secured party upon
default under the Uniform Commercial Code in effect in the State
of Louisiana at such time, whether or not the Uniform Commercial
Code of the State of Louisiana applies to the affected Louisiana
Collateral.
(c)Each Pledgor hereby confesses judgment in the amount of the
Secured Obligations for purposes of executory process in favor of
the Agent or of any future holder, bona fide purchaser, or
assignee of the Secured Obligations of such Pledgor under the
Security Agreement, and it shall be lawful for the Agent, without
making demand and without notice or putting into default, the
same being hereby expressly waived, to cause all and singular the
Louisiana Collateral to be seized and sold under executory or
ordinary process by any court of competent jurisdiction or to
proceed with enforcement of its security interests in any other
manner provided by law, to be sold with or without appraisement,
to the highest bidder for cash or on such other terms as the
plaintiff in such proceedings may direct. To the extent
otherwise applicable at all, each Pledgor hereby expressly waives
all of the following: (i) the benefit of appraisement, as
provided in Articles 2332, 2336, 2723, and 2724 of the Louisiana
Code of Civil Procedure (the "Louisiana Code"), and all other
laws conferring the same; (ii) the demand and three (3) days
delay accorded by Articles 2639 and 2721 of the Louisiana Code,
(iii) the notice of seizure required by Article 2293 of the
Louisiana Code, and conferring the same; (iv) the three (3) days
delay provided by Articles 2331 and 2722 of the Louisiana Code,
and the other provisions of Articles 2331, 2722, and 2723 of the
Louisiana Code, and (v) all other Articles of the Louisiana Code
not specifically mentioned above, in each case, as amended from
time to time; and each Pledgor expressly agrees to the immediate
seizure of the Louisiana Collateral in the event of suit thereon.
This Undertaking shall not operate as a waiver of any right,
power or remedy of the Agent under the Security Agreement nor
constitute a waiver of any provision of the Credit Agreement or
any other Loan Document.
Without duplication of any amount payable under Section 8.04 of
the Credit Agreement, Uniroyal agrees: (a) to indemnify the Agent
from and against any and all claims, losses and liabilities
growing out of or resulting from this Undertaking (including,
without limitation, enforcement of this Undertaking), except
claims, losses or liabilities resulting from the Agent's gross
negligence or willful misconduct as determined by a final
judgment of a court of competent jurisdiction; and (b) upon
demand, to pay to the Agent the amount of any and all reasonable
expenses, including the reasonable fees and expenses of its
counsel and of any experts and agents, that the Agent may incur
in connection with (i) the administration of this Undertaking,
(ii) the custody, preservation, use or operation of, or the sale
of, collection from or other realization upon, any of the
Louisiana Collateral, (iii) the exercise or enforcement of any of
the rights of the Agent or the Lender Parties hereunder or (iv)
the failure by any Pledgor to perform or observe any of the
provisions hereof.
This Undertaking may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all
of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature
page to this Undertaking by telecopier shall be effective as
delivery of a manually executed counterpart of this Undertaking.
This Undertaking shall be governed by, and construed in
accordance with, the laws of the State of Louisiana.
Very truly yours,
GUSTAFSON, INC.
By
Title:
GUSTAFSON INTERNATIONAL COMPANY
By
Title:
LOKAR ENTERPRISES, INC.
By
Title:
TRACE CHEMICALS, INC.
By
Title:
UNIROYAL CHEMICAL BRAZIL HOLDING, INC.
By
Title:
UNIROYAL CHEMICAL COMPANY,
INC.
By
Title:
UNIROYAL CHEMICAL CORPORATION
By
Title:
UNIROYAL CHEMICAL EXPORT
LIMITED
By
Title:
UNIROYAL CHEMICAL INTERNATIONAL
COMPANY
By
Title:
UNIROYAL CHEMICAL LEASING
COMPANY, INC.
By
Title:
WITNESSES:
<PAGE>
Acknowledged this 21st
day of August, 1996
CITICORP USA, INC.
as Agent for the Secured Parties
By
Title:
FORM OF SUBSIDIARY GUARANTY
SUBSIDIARY GUARANTY
Dated August 21, 1996
From
THE GUARANTORS NAMED HEREIN
as Guarantors
in favor of
THE SECURED PARTIES REFERRED TO IN
THE CREDIT AGREEMENT REFERRED TO HEREIN
T A B L E O F C O N T E N T S
Section Page
1. Guaranty; Limitation of Liability 1
2. Guaranty Absolute 3
3. Waivers and Acknowledgments 4
4. Subrogation 5
5. Payments Free and Clear of Taxes, Etc 6
6. Representations and Warranties 8
7. Covenants 10
8. Amendments, Etc. 11
9. Notices, Etc. 11
10. No Waiver; Remedies 11
11. Right of Set-off 11
12. Indemnification 12
13. Continuing Guaranty; Assignments under the
Credit Agreement 12
14. Execution in Counterparts 13
15. Governing Law; Jurisdiction; Waiver of Jury
Trial, Etc. 13
SCHEDULE I-Uniroyal Guarantors and Crompton Guarantors
SUBSIDIARY GUARANTY
SUBSIDIARY GUARANTY dated August 21, 1996 made by the Persons
listed on the signature pages hereof (each, a "Guarantor", and
collectively the "Guarantors"), in favor of the Secured Parties
(as defined in the Credit Agreement referred to below).
PRELIMINARY STATEMENT. Crompton & Knowles Corporation ("Crompton
Corp."), Crompton & Knowles Colors Incorporated ("Crompton
Colors"), Davis-Standard Corporation ("Davis-Standard") and
Ingredient Technology Corporation ("ITC" and, together with
Crompton Corp., Crompton Colors and Davis-Standard, the "Crompton
Borrowers") and Uniroyal Chemical Company, Inc. (together with
the Crompton Borrowers, the "Borrowers") have entered into a
Credit Agreement dated as of August 21, 1996 (said Agreement, as
it may hereafter be amended, supplemented or otherwise modified
from time to time, the "Credit Agreement"; terms used herein and
not otherwise defined are used herein as therein defined) with
the lender parties party thereto (the "Lender Parties"), Citicorp
Securities, Inc., as Arranger, Citicorp USA, Inc., as Agent and
The Chase Manhattan Bank, as Managing Agent. Each Guarantor may
receive a portion of the proceeds of the Advances under the
Credit Agreement and will derive substantial direct and indirect
benefit from the transactions contemplated by the Credit
Agreement. It is a condition precedent to the making of Advances
and the issuance of Letters of Credit by the Lender Parties under
the Credit Agreement and the entry by the Hedge Banks into Bank
Hedge Agreements with the Borrowers from time to time that each
Guarantor shall have executed and delivered this Guaranty.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Lender Parties to make Advances and to issue Letters
of Credit under the Credit Agreement and the Hedge Banks to enter
into Bank Hedge Agreements with the Borrowers from time to time,
each Guarantor, jointly and severally with each other Guarantor,
hereby agrees as follows:
Section 1. Guaranty; Limitation of Liability. (a) Each
Guarantor hereby absolutely, unconditionally and irrevocably
guarantees the punctual payment when due, whether at stated
maturity, by acceleration or otherwise, of all Obligations of
each other Loan Party now or hereafter existing under the Loan
Documents, whether for principal (including reimbursement for
amounts drawn under Letters of Credit), interest, premiums,
penalties, fees, indemnifications, contract causes of action,
costs, expenses or otherwise (such Obligations being the
"Guaranteed Obligations"), and agrees to pay any and all expenses
(including reasonable counsel fees and expenses) incurred by the
Agent or any other Secured Party in enforcing any rights under
this Guaranty and the other Loan Documents. Without limiting the
generality of the foregoing, each Guarantor's liability shall
extend to all amounts that constitute part of the Guaranteed
Obligations and would be owed by any Loan Party to the Agent or
any other Secured Party under the Loan Documents but for the fact
that they are unenforceable or not allowable due to the existence
of a bankruptcy, reorganization or similar proceeding involving
such Loan Party.
(b)(i)Uniroyal Guarantors. Each Guarantor listed on Part A of
Schedule I hereto (each, a "Uniroyal Guarantor" and collectively,
the "Uniroyal Guarantors"), and by its acceptance of this
Guaranty, the Agent and each other Secured Party, hereby confirms
that it is the intention of all such parties that this Guaranty
not constitute a fraudulent transfer or conveyance for purposes
of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the
Uniform Fraudulent Transfer Act or any similar federal or state
law to the extent applicable to this Guaranty. To effectuate the
foregoing intention, the Agent, the other Secured Parties and the
Guarantors hereby irrevocably agree that the Obligations of each
Uniroyal Guarantor under this Guaranty shall not exceed the
lesser of (A) so long as any Uniroyal Indenture remains in
effect, the maximum amount of Debt permitted to be incurred under
such Uniroyal Indenture and (B) the maximum amount as will, after
giving effect to such maximum amount (including, without
limitation, the net benefit realized by the Uniroyal Guarantors
from the proceeds of the Advances made from time to time by the
Borrowers to the Uniroyal Guarantors or any Subsidiary of any
Uniroyal Guarantor) and all other contingent and fixed
liabilities of such Uniroyal Guarantor that are relevant under
such laws, and after giving effect to any collections from,
rights to receive contribution from or payments made by or on
behalf of any other Guarantor in respect of the Obligations of
such other Guarantor under this Guaranty, result in the
Obligations of such Uniroyal Guarantor under this Guaranty not
constituting a fraudulent transfer or conveyance. For purposes
hereof, "Bankruptcy Law" means Title 11, U.S. Code, or any
similar Federal or state law for the relief of debtors.
(ii)Crompton Guarantors. The liability of each Guarantor listed
on Part B of Schedule I hereto (each a "Crompton Guarantor")
under this Guaranty with respect to the Obligations of each other
Loan Party (other than any Loan Party that is a Subsidiary of
such Crompton Guarantor) guaranteed hereunder shall not exceed
the maximum amount as will, after giving effect to such maximum
amount (including, without limitation, the net benefit realized
by the Crompton Guarantors from the proceeds of the Advances made
from time to time by the Borrowers to the Crompton Guarantors or
any Subsidiary of any Crompton Guarantor) and all other
contingent and fixed liabilities of such Crompton Guarantor that
are relevant under such laws, and after giving effect to any
collections from, rights to receive contribution from or payments
made by or on behalf of any other Guarantor in respect of the
Obligations of such other Guarantor under this Guaranty, result
in the Obligations of such Crompton Guarantor under this Guaranty
not constituting a fraudulent transfer or conveyance.
(iii)Each Guarantor agrees that in the event any payment shall be
required to be made to the Secured Parties under this Guaranty or
the Parent Guaranty or any other guaranty, such Guarantor will
contribute, to the maximum extent permitted by law, such amounts
to each other Guarantor and Crompton Corp. and each other
guarantor so as to maximize the aggregate amount paid to the
Secured Parties under the Loan Documents.
Section 2. Guaranty Absolute. Each Guarantor guarantees that
the Guaranteed Obligations will be paid strictly in accordance
with the terms of the Loan Documents, regardless of any law,
regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of the
Agent or any other Secured Party with respect thereto. The
Obligations of each Guarantor under this Guaranty are independent
of the Guaranteed Obligations or any other Obligations of any
other Loan Party under the Loan Documents, and a separate action
or actions may be brought and prosecuted against each Guarantor
to enforce this Guaranty, irrespective of whether any action is
brought against any Borrower or any other Loan Party or whether
such Borrower or any other Loan Party is joined in any such
action or actions. The liability of each Guarantor under this
Guaranty shall be irrevocable, absolute and unconditional
irrespective of, and each Guarantor hereby irrevocably waives any
defenses it may now or hereafter have in any way relating to, any
or all of the following:
(a)any lack of validity or enforceability of any Loan Document or
any agreement or instrument relating thereto;
(b)any change in the time, manner or place of payment of, or in
any other term of, all or any of the Guaranteed Obligations or
any other Obligations of any other Loan Party under the Loan
Documents, or any other amendment or waiver of or any consent to
departure from any Loan Document, including, without limitation,
any increase in the Guaranteed Obligations resulting from the
extension of additional credit to any Borrower or any of its
Subsidiaries or otherwise;
(c)any taking, exchange, release or non-perfection of any
Collateral, or any taking, release or amendment or waiver of or
consent to departure from any other guaranty, for all or any of
the Guaranteed Obligations;
(d)any manner of application of Collateral, or proceeds thereof,
to all or any of the Guaranteed Obligations, or any manner of
sale or other disposition of any Collateral for all or any of the
Guaranteed Obligations or any other Obligations of any other Loan
Party under the Loan Documents or any other assets of any Loan
Party or any of its Subsidiaries;
(e)any change, restructuring or termination of the corporate
structure or existence of any Loan Party or any of its
Subsidiaries;
(f)any failure of any Secured Party to disclose to any Borrower
or any Guarantor any information relating to the financial
condition, operations, properties or prospects of any other Loan
Party now or in the future known to any Secured Party (each
Guarantor waiving any duty on the part of the Secured Parties to
disclose such information);
(g)the failure of any other person to execute any guaranty or
agreement or the release or reduction of liability of any
guarantor or other surety with respect to the Guaranteed
Obligations; or
(h)any other circumstance (including, without limitation, any
statute of limitations) or any existence of or reliance on any
representation by the Agent or any other Secured Party that might
otherwise constitute a defense available to, or a discharge of,
any Borrower, any Guarantor or any other guarantor or surety.
This Guaranty shall continue to be effective or be reinstated, as
the case may be, if at any time any payment of any of the
Guaranteed Obligations is rescinded or must otherwise be returned
by any Secured Party or any other Person upon the insolvency,
bankruptcy or reorganization of any Borrower or any other Loan
Party or otherwise, all as though such payment had not been made.
Section 3. Waivers and Acknowledgments. (a) Each Guarantor
hereby waives promptness, diligence, notice of acceptance,
presentment, demand for performance, protest, notice of
nonperformance, default, acceleration, protest or dishonor and
any other notice with respect to any of the Guaranteed
Obligations and this Guaranty or the rights of the Secured
Parties under this Guaranty and any requirement that the Agent or
any other Secured Party protect, secure, perfect or insure any
Lien or any property subject thereto or exhaust any right or take
any action against any Loan Party or any other Person or any
Collateral.
(b)Each Guarantor hereby waives any right to revoke this
Guaranty, and acknowledges that this Guaranty is continuing in
nature and applies to all Guaranteed Obligations, whether
existing now or in the future.
(c) Each Guarantor acknowledges that it will receive substantial
direct and indirect benefits from the financing arrangements
contemplated by the Loan Documents and that the waivers set forth
in Section 2 and this Section 3 are knowingly made in
contemplation of such benefits.
Section 4. Subrogation. No Guarantor will exercise any rights
that it may now or hereafter acquire against any Borrower or any
other insider guarantor that arise from the existence, payment,
performance or enforcement of such Guarantor's Obligations under
this Guaranty or any other Loan Document, including, without
limitation, any right of subrogation, reimbursement, exoneration,
contribution or indemnification and any right to participate in
any claim or remedy of any Secured Party against each Borrower or
any other insider guarantor or any Collateral, whether or not
such claim, remedy or right arises in equity or under contract,
statute or common law, including, without limitation, the right
to take or receive from each Borrower or any other insider
guarantor, directly or indirectly, in cash or other property or
by set-off or in any other manner, payment or security on account
of such claim, remedy or right, unless and until all of the
Obligations and all other amounts payable under this Guaranty
shall have been paid in full in cash, all Bank Hedge Agreements
shall have expired or terminated and the Commitments shall have
expired or terminated. If any amount shall be paid to any
Guarantor in violation of the preceding sentence at any time
prior to the later of the payment in full in cash of the
Guaranteed Obligations and all other amounts payable under this
Guaranty and the later of (i) the Termination Date and (ii) the
expiration or termination of all Bank Hedge Agreements, such
amount shall be held in trust for the benefit of the Agent and
the other Secured Parties and shall forthwith be paid to the
Agent to be credited and applied to the Guaranteed Obligations
and all other amounts payable under this Guaranty, whether
matured or unmatured, in accordance with the terms of the Loan
Documents, or to be held as Collateral for any Guaranteed
Obligations or other amounts payable under this Guaranty
thereafter arising. If (i) any Guarantor shall make payment to
the Agent or any other Secured Party of all or any part of the
Guaranteed Obligations, (ii) all of the Guaranteed Obligations
and all other amounts payable under this Guaranty shall be paid
in full in cash and (iii) the Termination Date shall have
occurred and all Bank Hedge Agreements shall have expired or
terminated, the Agent and the other Secured Parties will, at any
Guarantor's request and expense, execute and deliver to such
Guarantor appropriate documents, without recourse and without
representation or warranty, necessary to evidence the transfer by
subrogation to such Guarantor of an interest in the Guaranteed
Obligations resulting from such payment by such Guarantor.
Section 5. Payments Free and Clear of Taxes, Etc. (a) Any and
all payments made by any Guarantor hereunder shall be made, in
accordance with Section 2.11 of the Credit Agreement, free and
clear of and without deduction for any and all present or future
Taxes. If any Guarantor shall be required by law to deduct any
Taxes from or in respect of any sum payable hereunder to the
Agent or any other Secured Party, (i) the sum payable shall be
increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums
payable under this Section) the Agent or such other Secured Party
(as the case may be) receives an amount equal to the sum it would
have received had no such deductions been made, (ii) such
Guarantor shall make such deductions and (iii) such Guarantor
shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law.
(b)In addition, each Guarantor agrees to pay any present or
future Other Taxes.
(c)The Guarantors jointly and severally agree to indemnify the
Agent and each other Secured Party for and hold them harmless
against the full amount of Taxes and Other Taxes, and for the
full amount of taxes of any kind imposed by any jurisdiction on
amounts payable under this Section 5, imposed on or paid by the
Agent or such other Secured Party (as the case may be) and any
liability (including penalties, additions to tax, interest and
expenses) arising therefrom or with respect thereto. This
indemnification shall be made within 30 days from the date the
Agent or such other Secured Party (as the case may be) makes
written demand therefor.
(d)Within 30 days after the date of any payment of Taxes by or on
behalf of any Guarantor, such Guarantor will furnish to the
Agent, at its address referred to in the Credit Agreement, the
original or a certified copy of a receipt evidencing such
payment. In the case of any payment hereunder by or on behalf of
any Guarantor through an account or branch outside the United
States or by or on behalf of such Guarantor by a payor that is
not a United States person, if such Guarantor determines that no
Taxes are payable in respect thereof, such Guarantor shall
furnish, or shall cause such payor to furnish, to the Agent, at
such address, an opinion of counsel acceptable to the Agent
stating that such payment is exempt from Taxes. For purposes of
this subsection (d) and subsection (e), the terms "United States"
and "United States person" shall have the meanings specified in
Section 7701 of the Internal Revenue Code.
(e)Upon the reasonable request in writing of any Guarantor, each
Secured Party organized under the laws of a jurisdiction outside
the United States shall, on or prior to the date of its execution
and delivery of the Credit Agreement in the case of each Initial
Lender or Initial Issuing Bank, as the case may be, and on the
date of the Assignment and Acceptance or other agreement pursuant
to which it becomes a Secured Party in the case of each other
Secured Party, and from time to time thereafter upon the
reasonable request in writing by any Guarantor (but only so long
thereafter as such Secured Party remains lawfully able to do so),
provide the Agent and such Guarantor with Internal Revenue
Service forms 1001 or 4224 or (in the case of a Secured Party
that is claiming exemption from United States withholding tax
under Section 871(h) or 881(c) of the Internal Revenue Code with
respect to payments of "portfolio interest") two accurate and
complete signed original Forms W-8 (and, if such Secured Party
delivers Forms W-8, two signed certificates certifying that such
Secured Party (i) is not a "bank" for purposes of Section 881(c)
of the Internal Revenue Code, (ii) is not a 10-percent
shareholder (within the meaning of Section 871(h)(3)(B) of the
Internal Revenue Code) of the Borrower, (iii) is not a controlled
foreign corporation related to the Borrower (within the meaning
of Section 864(d)(4) of the Internal Revenue Code) and (iv) is
not a conduit entity participating in a conduit financing
arrangement (as defined in Treasury Regulation Section 1.881-3),
as appropriate, or any successor or other form prescribed by the
Internal Revenue Service, certifying that such Secured Party is
exempt from or entitled to a reduced rate of United States
withholding tax on payments pursuant to the Credit Agreement. If
the accurate and complete forms provided by a Secured Party at
the time such Secured Party first becomes a party to the Credit
Agreement indicate a United States interest withholding tax rate
in excess of zero, withholding tax at such rate shall be
considered excluded from Taxes unless and until such Secured
Party provides the appropriate form certifying that a lesser rate
applies, whereupon withholding tax at such lesser rate only shall
be considered excluded from Taxes for periods governed by such
form; provided, however, that, if at the date of the Assignment
and Acceptance pursuant to which a Secured Party assignee becomes
a party to the Credit Agreement, the Secured Party assignor was
entitled to payments under subsection (a) in respect of United
States withholding tax with respect to interest paid at such
date, then, to such extent, the term Taxes shall include (in
addition to withholding taxes that may be imposed in the future
or other amounts otherwise includable in Taxes) United States
withholding tax, if any, applicable with respect to the Secured
Party assignee on such date.
(f)For any period with respect to which a Secured Party has
failed to provide any Guarantor following such Guarantor's
request therefor pursuant to subsection (e) above with the
appropriate form described in subsection (e) above (other than if
such failure is due to a change in law occurring after the date
on which a form originally was required to be provided or if such
form otherwise is not required under subsection (e) above), such
Secured Party shall not be entitled to indemnification under
subsection (a) or (c) with respect to Taxes imposed by the United
States by reason of such failure; provided, however, that should
a Secured Party become subject to Taxes because of its failure to
deliver a form required hereunder, such Guarantor shall take such
steps, at such Lender Party's sole expense, as such Secured Party
shall reasonably request to assist such Secured Party to recover
such Taxes.
(g)Any Secured Party claiming any additional amounts payable
pursuant to this Section 5 agrees to use reasonable efforts
(consistent with its internal policy and legal and regulatory
restrictions) to change the jurisdiction of its Applicable
Lending Office if the making of such a change would avoid the
need for, or reduce the amount of, any such additional amounts
that may thereafter accrue and would not, in the reasonable
judgment of such Secured Party, be otherwise disadvantageous to
such Secured Party.
(h)If any Secured Party, in its sole opinion, determines that it
has finally and irrevocably received or been granted a refund in
respect of any Taxes or Other Taxes as to which indemnification
has been paid by Crompton Corp. pursuant to Section 5(a) or (b),
it shall promptly remit such refund (including any interest) to
Crompton Corp., net of all out-of-pocket expenses of such Secured
Party; provided, however, that Crompton Corp., upon the request
of such Secured Party, agrees promptly to return such refund
(plus any interest) to such party in the event such party is
required to repay such refund to the relevant taxing authority.
Such Secured Party shall provide Crompton Corp. with a copy of
any notice or assessment from the relevant taxing authority
(deleting any confidential information contained therein)
requiring repayment of such refund. Nothing contained herein
shall impose an obligation on any Secured Party to apply for any
refund.
(i)Without prejudice to the survival of any other agreement of
any Guarantor hereunder or under any other Loan Document, the
agreements and obligations of each Guarantor contained in this
Section 5 and in Section 12 shall survive the payment in full of
the Guaranteed Obligations and all other amounts payable under
this Guaranty.
Section 6. Representations and Warranties. Each Guarantor
hereby represents and warrants as follows:
(a)Such Guarantor (i) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction
of its incorporation, (ii) is duly qualified and in good standing
as a foreign corporation in each other jurisdiction in which it
owns or leases property or in which the conduct of its business
requires it to so qualify or be licensed except where the failure
to so qualify or be licensed would not have a Material Adverse
Effect and (iii) has all requisite corporate power and authority
(including, without limitation, all governmental licenses,
permits and other approvals) to own or lease and operate its
properties and to carry on its business as now conducted and as
proposed to be conducted. All of the outstanding capital stock
of such Guarantor has been validly issued and is fully paid and
non-assessable.
(b)The execution, delivery and performance by such Guarantor of
this Guaranty and each other Loan Document and each Related
Document to which it is or is to be a party, and the consummation
of the Merger and the other transactions contemplated hereby, are
within such Guarantor's corporate powers, have been duly
authorized by all necessary corporate action, and do not
(i) contravene such Guarantor's charter or bylaws, (ii) violate
any law, rule, regulation (including, without limitation,
Regulation X of the Board of Governors of the Federal Reserve
System), order, writ, judgment, injunction, decree, determination
or award, (iii) conflict with or result in the breach of, or
constitute a default under, any loan agreement, indenture,
mortgage, deed of trust or other instrument or material contract
or material lease binding on or affecting such Guarantor, any of
its Subsidiaries or any of their properties or (iv) except for
the Liens created under the Loan Documents, result in or require
the creation or imposition of any Lien upon or with respect to
any of the properties of such Guarantor or any of its
Subsidiaries. Neither such Guarantor nor any of its Subsidiaries
is in violation of any such law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award or in breach
of any such contract, loan agreement, indenture, mortgage, deed
of trust, lease or other instrument, the violation or breach of
which would have a Material Adverse Effect.
(c)No authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body
or any other third party is required for (i) the due execution,
delivery, recordation, filing or performance by such Guarantor of
this Guaranty, any other Loan Document or any Related Document to
which it is or is to be a party, or for the consummation of the
Merger or the other transactions contemplated hereby, (ii) the
grant by such Guarantor of the Liens granted by it pursuant to
the Collateral Documents, (iii) the perfection or maintenance of
the Liens created by the Collateral Documents (including the
first priority nature thereof) or (iv) the exercise by the Agent
or any Lender Party of its rights under the Loan Documents or the
remedies in respect of the Collateral pursuant to the Collateral
Documents, except for the authorizations, approvals, actions,
notices and filings listed on Schedule 4.01(d) to the Credit
Agreement, all of which have been duly obtained, taken, given or
made and are in full force and effect. All applicable waiting
periods in connection with the Merger and the other transactions
contemplated hereby and by the Credit Agreement have expired
without any action having been taken by any competent authority
restraining, preventing or imposing materially adverse conditions
upon the Merger or the rights of such Guarantor or its
Subsidiaries freely to transfer or otherwise dispose of, or to
create any Lien on, any properties now owned or hereafter
acquired by any of them.
(d)This Guaranty has been, and each other Loan Document and each
Related Document to which such Guarantor will be a party when
delivered pursuant to the Credit Agreement will have been, duly
executed and delivered by such Guarantor. This Guaranty is, and
each other Loan Document and each Related Document to which it
will be a party when delivered pursuant to the Credit Agreement
will be, the legal, valid and binding obligation of such
Guarantor, enforceable against such Guarantor in accordance with
its terms.
(e)There is no action, suit, investigation, litigation or
proceeding affecting such Guarantor or any of its Subsidiaries,
including any Environmental Action, pending or threatened before
any court, governmental agency or arbitrator that (i) would be
reasonably likely to have a Material Adverse Effect (other than
the Disclosed Litigation) or (ii) purports to affect the
legality, validity or enforceability of the Merger, this
Guaranty, any other Loan Document or any Related Document or the
consummation of the transactions contemplated by the Loan
Documents, and there has been no material adverse change in the
status, or financial effect on such Guarantor or any of its
Subsidiaries, of the Disclosed Litigation from that described on
Schedule 3.01(f) of the Credit Agreement.
(f)There are no conditions precedent to the effectiveness of this
Guaranty that have not been satisfied or waived.
(g)Such Guarantor has, independently and without reliance upon
the Agent or any other Secured Party and based on such documents
and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Guaranty, and such
Guarantor has established adequate means of obtaining from any
other Loan Parties on a continuing basis information pertaining
to, and is now and on a continuing basis will be completely
familiar with, the financial condition, operations, properties
and prospects of such other Loan Parties.
Section 7. Covenants. Each Guarantor covenants and agrees that,
so long as any part of the Guaranteed Obligations shall remain
unpaid, any Letter of Credit shall be outstanding, any Lender
Party shall have any Commitment or any Hedge Bank shall have any
obligation under any Bank Hedge Agreement, such Guarantor will,
unless the Required Lenders shall otherwise consent in writing,
perform or observe, and cause its Subsidiaries to perform or
observe, all of the terms, covenants and agreements that the Loan
Documents state that the Borrowers are to cause such Guarantor or
such Subsidiaries to perform or observe.
Section 8. Amendments, Etc. No amendment or waiver of any
provision of this Guaranty and no consent to any departure by any
Guarantor therefrom shall in any event be effective unless the
same shall be in writing and signed by the Agent and the Required
Lenders, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which
given; provided, however, that no amendment, waiver or consent
shall, unless in writing and signed by all of the Secured Parties
(other than any Lender Party that is, at such time, a Defaulting
Lender), (a) reduce or limit the liability of such Guarantor
hereunder or release such Guarantor, (b) postpone any date fixed
for payment hereunder or (c) change the number of Secured Parties
required to take any action hereunder.
Section 9. Notices, Etc. All notices and other communications
provided for hereunder shall be in writing (including
telegraphic, telecopy or telex communication) and mailed,
telegraphed, telecopied, telexed or delivered to it, if to any
Guarantor, addressed both c/o Crompton Corp. at its address at
One Station Place, Metro Center, Stamford, CT 06902, Attention:
Chief Financial Officer and c/o Uniroyal Corp. at its address at
World Headquarters, Benson Road, Middlebury, CT 06749,
Attention: Chief Financial Officer, if to the Agent or any Lender
Party, at its address specified in the Credit Agreement, if to
any Hedge Bank, at its address specified in the Bank Hedge
Agreement to which it is a party, or as to any party at such
other address as shall be designated by such party in a written
notice to each other party. All such notices and other
communications shall (a) when mailed, be effective three Business
Days after the same is deposited in the mails, (b) when mailed
for next day delivery by a reputable freight company or reputable
overnight courier service, be effective one Business Day
thereafter, and (c) when sent by telegraph, telecopier or telex,
be effective when the same is confirmed by telephone, telecopier
confirmation or return telecopy or telex answerback,
respectively. Delivery of a notice to any Guarantor at the above
addresses shall be deemed notice to all Guarantors.
Section 10. No Waiver; Remedies. No failure on the part of the
Agent or any other Secured Party to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right
hereunder preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
Section 11. Right of Set-off. Upon (a) the occurrence and
during the continuance of any Event of Default and (b) the making
of the request or the granting of the consent specified by
Section 6.01 of the Credit Agreement to authorize the Agent to
declare the Notes due and payable pursuant to the provisions of
said Section 6.01, each Lender Party and each of its respective
Affiliates is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at
any time owing by such Lender Party or such Affiliate to or for
the credit or the account of any Guarantor against any and all of
the Obligations of such Guarantor now or hereafter existing under
this Guaranty, whether or not such Lender Party shall have made
any demand under this Guaranty and although such Obligations may
be unmatured. Each Lender Party agrees promptly to notify such
Guarantor after any such set-off and application; provided,
however, that the failure to give such notice shall not affect
the validity of such set-off and application. The rights of each
Lender Party and its respective Affiliates under this Section are
in addition to other rights and remedies (including, without
limitation, other rights of set-off) that such Lender Party and
its respective Affiliates may have.
Section 12. Indemnification. Without limitation on any other
Obligations of any Guarantor or remedies of the Secured Parties
under this Guaranty, each Guarantor shall, to the fullest extent
permitted by law, indemnify, defend and save and hold harmless
each Secured Party from and against, and shall pay on demand, any
and all losses, liabilities, damages, costs, expenses and charges
(including the fees and disbursements of such Secured Party's
legal counsel) suffered or incurred by such Secured Party as a
result of any failure of any Guaranteed Obligations to be the
legal, valid and binding obligations of any Loan Party
enforceable against such Loan Party in accordance with their
terms, except to the extent such loss, liability, damages, cost,
expense or charge is found in a final, non-appealable judgment by
a court of competent jurisdiction to have resulted from such
Secured Party's gross negligence or willful misconduct.
Section 13. Continuing Guaranty; Assignments under the Credit
Agreement. This Guaranty is a continuing guaranty and shall
(a) remain in full force and effect until the later of the
payment in full in cash of the Guaranteed Obligations and all
other amounts payable under this Guaranty and the later of (i)
the Termination Date and (ii) the expiration or termination of
all Bank Hedge Agreements, (b) be binding upon each Guarantor,
its successors and assigns and (c) inure to the benefit of and be
enforceable by the Agent and the other Secured Parties and their
successors, transferees and assigns. Without limiting the
generality of the foregoing clause (c), any Secured Party may
assign or otherwise transfer all or any portion of its rights and
obligations under the Credit Agreement (including, without
limitation, all or any portion of its Commitments, the Advances
owing to it and the Note or Notes held by it) to any other
Person, and such other Person shall thereupon become vested with
all the benefits in respect thereof granted to such Secured Party
herein or otherwise, in each case as and to the extent provided
in Section 8.07 of the Credit Agreement. No Guarantor shall have
the right to assign its rights hereunder or any interest herein
without the prior written consent of the Secured Parties.
Section 14. Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which when so
executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Delivery
of an executed counterpart of a signature page to this Agreement
by telecopier shall be effective as delivery of a manually
executed counterpart of this Agreement.
Section 15. Governing Law; Jurisdiction; Waiver of Jury Trial,
Etc. (a) This Guaranty shall be governed by, and construed in
accordance with, the laws of the State of New York.
(b)Each Guarantor hereby irrevocably and unconditionally submits,
for itself and its property, to the nonexclusive jurisdiction of
any New York State court or federal court of the United States of
America sitting in New York City, and any appellate court from
any thereof, in any action or proceeding arising out of or
relating to this Guaranty or any of the other Loan Documents to
which it is or is to be a party, or for recognition or
enforcement of any judgment, and each Guarantor hereby
irrevocably and unconditionally agrees that all claims in respect
of any such action or proceeding may be heard and determined in
any such New York State court or, to the extent permitted by law,
in such federal court. Each Guarantor agrees that a final
judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Guaranty
shall affect any right that any party may otherwise have to bring
any action or proceeding relating to this Guaranty or any of the
other Loan Documents to which it is or is to be a party in the
courts of any jurisdiction.
(c)Each Guarantor irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have to the laying of
venue of any suit, action or proceeding arising out of or
relating to this Guaranty or any of the other Loan Documents to
which it is or is to be a party in any New York State or federal
court. Each Guarantor hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to
the maintenance of such action or proceeding in any such court.
(d)Each Guarantor hereby irrevocably waives all right to trial by
jury in any action, proceeding or counterclaim (whether based on
contract, tort or otherwise) arising out of or relating to any of
the Loan Documents, the transactions contemplated thereby or the
actions of the Agent or any other Secured Party in the
negotiation, administration, performance or enforcement thereof.
IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be
duly executed and delivered by its officer thereunto duly
authorized as of the date first above written.
CK HOLDING CORPORATION
By
Title:
CNK DISPOSITION CORP.
By
Title:
CROMPTON & KNOWLES COLORS
INCORPORATED
By
Title:
CROMPTON & KNOWLES OVERSEAS
CORPORATION
By
Title:
DAVIS-STANDARD CORPORATION
By
Title:
INGREDIENT TECHNOLOGY CORPORATION
By
Title:
GUSTAFSON, INC.
By
Title:
GUSTAFSON INTERNATIONAL COMPANY
By
Title:
KEM MANUFACTURING CORPORATION
By
Title:
LOKAR ENTERPRISES, INC.
By
Title:
TRACE CHEMICALS, INC.
By
Title:
UNIROYAL CHEMICAL BRAZIL HOLDING, INC.
By
Title:
UNIROYAL CHEMICAL COMPANY, INC.
By
Title:
UNIROYAL CHEMICAL CORPORATION
By
Title:
UNIROYAL CHEMICAL EXPORT LIMITED
By
Title:
UNIROYAL CHEMICAL INTERNATIONAL
COMPANY
By
Title:
UNIROYAL CHEMICAL LEASING
COMPANY, INC.
By
Title:
SCHEDULE I TO THE GUARANTY
PART A:
UNIROYAL GUARANTORS
Gustafson, Inc.
Gustafson International Company
Lokar Enterprises, Inc.
Trace Chemicals, Inc.
Uniroyal Chemical Brazil Holding, Inc.
Uniroyal Chemical Company, Inc.
Uniroyal Chemical Corporation
Uniroyal Chemical Export Limited
Uniroyal Chemical International Company
Uniroyal Chemical Leasing Company, Inc.
PART B:
CROMPTON GUARANTORS
CK Holding Corporation
CNK Disposition Corp.
Crompton & Knowles Colors Incorporated
Crompton & Knowles Overseas Corporation
Davis-Standard Corporation
Ingredient Technology Corporation
Kem Manufacturing Corporation
FORM OF
NON-EMPLOYEE DIRECTOR
STOCK OPTION AGREEMENT
AGREEMENT made as of March 5, 1996, by and between Uniroyal
Chemical Corporation, a Delaware corporation (the "Company"), and
the non-employee director identified on the signature page hereto
(the "Optionee").
WHEREAS, the Company has adopted the Uniroyal Chemical Corporation 1993
Stock Option Plan (the "Plan"); and
WHEREAS, the Optionee currently serves as a non-employee director
of the Company; and
WHEREAS, pursuant to the terms of the Plan, the Company must
automatically grant to each non-employee director as of March 5,
1996, the date of the Company's annual meeting of stockholders
(the "Grant Date"), an option under the Plan to acquire an aggre-
gate of 3,000 Shares, on the terms set forth herein.
NOW, THEREFORE, the parties agree as follows:
1. Definitions. Capitalized terms not otherwise defined herein
shall have the meaning set forth in the Plan.
2. Grant of Option. The Optionee is hereby granted a
non-qualified stock option (the "Option") to purchase an aggregate of
3,000 Shares, pursuant to the terms of this Agreement and
the provisions of the Plan.
3. Option Price. The exercise price of the Option shall be $8.75
per Share issuable thereunder.
4. Conditions to Exercisability. (a) The Option shall become
exercisable as to 33-1/3 of the Shares covered thereby on the
date hereof and as to an additional 33-1/3 percent of such Shares
on each of the next two succeeding anniversaries of the date
hereof.
(b)The Option shall become exercisable upon the occurrence of a
Change in Control.
5. Period of Option. The Option shall expire upon the first to
occur of (i) the date ten years and one day from the Grant Date
or (ii) the date three years from the Optionee's cessation of
membership on the Board for any reason.
6. Exercise of Option. (a) The Option shall be exercised in the
following manner: the Optionee, or the person or persons having
the right to exercise the Option upon the death or Disability of
the Optionee, shall deliver to the Secretary of the Company
written notice, substantially in the form set forth as Exhibit A
hereto, specifying the number of Shares which he elects to
purchase. The Optionee (or such other person) must include with
such notice full payment of the exercise price for the Shares
being purchased pursuant to such notice. Payment of the exercise
price must be made in cash, by certified or cashier's check or by
personal check subject to collection; provided, however, that in
lieu of payment in cash or by check, upon the request of the
Optionee, the Company may, in its discretion, allow the Optionee
to exercise the Option or a portion thereof by (i) transferring
Shares (provided such Shares were owned by the Optionee for at
least six months prior to the exercise of the Option) having an
aggregate Fair Market Value on the date of exercise equal to such
exercise price or (ii) a cash- less exercise procedure (if such a
procedure has been established for the Plan).
(b)The Company may, in its discretion, require that the
Optionee pay to the Company, at the time of exercise of any
portion of the Option, any such additional amount as the Company
deems necessary to satisfy its liability to withhold federal,
state or local income tax or any other taxes incurred by reason
of the exercise or the transfer of Shares thereupon.
(c)If the Plan or any law, regulation or interpretation
requires the Company to take any action regarding the Shares
before the Company issues certificates for the Shares being
purchased, the Company may delay delivering the certificates for
the Shares for the period necessary to take such action;
provided, that the Company shall use its reasonable best efforts
to promptly take any such action. The certificate or
certificates representing the Shares acquired pursuant to the
Option may bear a legend restricting the transfer of such Shares,
and the Company may impose stop transfer instructions to
implement such restrictions, if applicable.
(d)The Optionee will not be deemed to be a holder of any Shares
pursuant to exercise of the Option until the date of the issuance
of a stock certificate to him for such Shares and until the
Shares are paid for in full.
7. Representations. (a)The Company represents and warrants that
this Agreement has been authorized by all necessary corporate
action of the Company and is a valid and binding agreement of the
Company enforceable against it in accordance with its terms.
(b) The Optionee represents and warrants that he is not a party
to any agreement or instrument which would prevent him from
entering into this Agreement.
8. Entire Agreement. This Agreement and the Plan contain all the
understandings between the parties hereto pertaining to the
matters referred to herein, and supersede all undertakings and
agreements, whether oral or in writing, previously entered into
by them with respect thereto. The Optionee represents that, in
executing this Agreement, he does not rely and has not relied
upon any representation or statement not set forth herein made by
the Company with regard to the subject matter, bases or effect of
this Agreement or otherwise.
9. Non-transferability. The Option shall not be transferable by
the Optionee to whom granted otherwise than by will or the laws
of descent and distribution, and the Option may be exercised
during the lifetime of such Optionee only by the Optionee or
Optionee's guardian or legal representative. The terms of the
Option shall be binding upon the beneficiaries, executors,
administrators, heirs and successors of the Optionee.
10. Amendment or Modification, Waiver. No provision of this
Agreement may be amended or waived unless such amendment or
waiver is agreed to in writing, signed by the Optionee and by a
duly authorized officer of the Company. No waiver by any party
hereto of any breach by another party hereto of any condition or
provision of this Agreement to be performed by such other party
shall be deemed a waiver of a similar or dissimilar condition or
provision at the same time, any prior time or any subsequent
time.
11. Notices. Any notice to be given hereunder shall be in
writing and shall be delivered personally, sent by courier or
telecopy (with confirmation of transmission) or registered or
certified mail (postage prepaid, return receipt requested)
addressed to the party concerned at the address indicated below
or to such other address as such party may subsequently give
notice of hereunder in writing.
UNIROYAL CHEMICAL CORPORATION
c/o Uniroyal Chemical Company, Inc.
Benson Road
Middlebury, CT 06749
Attn: General Counsel
Telecopier: (203) 573-4301
Any notice delivered personally or by courier under this Section
11 shall be deemed given on the date delivered and any notice
sent by telecopy (with confirmation of transmission) or
registered or certified mail (postage prepaid, return receipt
requested) shall be deemed given on the date telecopied or
mailed.
12. Severability. If any provision of this Agreement or the
application of any such provision to any party or circumstances
shall be determined by any court of competent jurisdiction to be
invalid and unenforceable to any extent, the remainder of this
Agreement or the application of such provision to such person or
circumstances, other than those to which it is so determined to
be invalid and unenforceable, shall not be affected thereby, and
each provision hereof shall be validated and shall be enforced to
the fullest extent permitted by law.
13. Survivorship. The respective rights and obligations of the
parties hereunder shall survive any termination of this Agreement
to the extent necessary to the intended preservation of such
rights and obligations.
14. Governing Law. This agreement will be governed by and
construed in accordance with the laws of the State of Delaware,
without regard to its conflicts of laws principles.
15. Headings. All descriptive headings of sections and
paragraphs in this Agreement are intended solely for convenience,
and no provision of this Agreement is to be construed by
reference to the heading of any section or paragraph.
16. Construction. This Agreement is made under and subject to
the provisions of the Plan, and all of the provisions of the Plan
are hereby incorporated herein as provisions of this Agreement.
If there is a conflict between the provisions of this Agreement
and the provisions of the Plan, the provisions of the Plan will
govern. By signing this Agreement, the Optionee confirms that he
has received a copy of the Plan and has had an opportunity to
review the contents thereof.
17. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
UNIROYAL CHEMICAL CORPORATION
By:
Name: Ira J. Krakower
Title: Vice President
OPTIONEE
EMPLOYMENT AGREEMENT
AGREEMENT made this day of August, 1996, between
UNIROYAL CHEMICAL COMPANY, INC., a New Jersey corporation with
offices at Middlebury, Connecticut (the "Company"), and
(the "Executive").
WHEREAS, the Company is engaged in the extremely competitive
business of developing, manufacturing and marketing crop
protection chemicals, rubber chemicals, plastic and petroleum
additives, elastomers and urethane prepolymers throughout the
United States, Canada, Western Europe and certain other areas of
the world; and
WHEREAS, the Executive, as a result of training, expertise
and personal application over the years, has acquired and will
continue to acquire considerable and unique expertise and
knowledge which are of considerable value to the Company in the
conduct, management and operation of its business; and
WHEREAS, by virtue of the Executive's considerable and
unique expertise and knowledge, and of the position in which the
Executive is employed and will be employed hereunder, the Company
considers the Executive a key management employee; and
WHEREAS, Uniroyal Chemical Corporation, a Delaware
corporation ("UCC") and a parent of the Company, has been
acquired (the "Acquisition") by Crompton & Knowles Corporation, a
Massachusetts corporation ("Crompton"); and
WHEREAS, Crompton and the Executive (and certain other
persons) have entered into a Supplemental Executive Retirement
Agreement, dated as of the date hereof (the "SERA"); and
WHEREAS, the Company desires to terminate the employment
contract pursuant to which the Executive is currently employed
and in consideration therefor agrees and desires to employ the
Executive on the terms and conditions set forth herein; and
WHEREAS, the Executive acknowledges that the Executive is a
key management employee and is willing to terminate the
employment contract pursuant to which the Executive is currently
employed and to waive any right or entitlement to any payments
under such contract resulting from the Acquisition and is
desirous and willing to continue employment on the terms and
conditions expressed herein; and
WHEREAS, the Company is willing to provide the Executive
with certain benefits in the event of the termination of the
Executive's employment with the Company, including in the event
of a Change in Control (as hereinafter defined);
NOW THEREFORE, in consideration of the continued employment
of the Executive by the Company and the benefits to be derived by
the Executive hereunder, and of the Executive's agreement to
continue employment by the Company as provided herein, the
parties mutually agree as follows:
1. Employment. The Company hereby agrees to continue to
employ the Executive, and the Executive hereby agrees to continue
to serve the Company, on the terms and conditions set forth
herein.
2. Term. This Agreement shall be effective until the
earlier to occur of (i) the second anniversary of the date hereof
or (ii) the Executive's normal retirement date under the SERA or
any successor retirement agreement ("Normal Retirement Date") ;
provided, however, that beginning on the date one year after the
date hereof, and on each annual anniversary of such date (each
such date being referred to as a "Renewal Date"), the term hereof
shall be automatically extended so as to terminate on the earlier
of (x) two years from such Renewal Date or (y) the Executive's
Normal Retirement Date, unless at least six months prior to a
Renewal Date the Company shall give notice that the term hereof
shall not be so extended.
3. Position, Duties and Place of Performance. The
Executive shall initially serve as and shall have
such responsibilities, duties and authority as he may have as of
the Closing Date (as hereinafter defined) or as may from time to
time be assigned to the Executive by the Board of Directors of
the Company (the "Board"). The Executive shall devote
substantially all his working time and efforts to the business
and affairs of the Company. In connection with the Executive's
employment by the Company, the Executive shall be based at the
principal executive offices of the Company in Middlebury,
Connecticut, or at such other location within a forty (40) mile
radius of Middlebury, Connecticut as may be determined by the
Board, except for required travel on the Company's business to
the extent consistent with the Company's practices.
4. Sign-on Incentive. In consideration of the
Executive's entering into this Agreement, the Company has paid to
the Executive in cash the sum of $ .
5. Compensation and Related Matters. As compensation and
consideration for the performance by the Executive of the
Executive's duties, responsibilities and covenants pursuant to
this Agreement, the Company will pay the Executive and the
Executive agrees to accept in full payment for such performance
the amounts and benefits set forth below.
(a) Salary. During the period of the Executive's
employment hereunder, the Company shall pay to the Executive an
annual base salary at a rate of $ commencing on the
closing date of the Acquisition (the "Closing Date") or such
higher rate as may from time to time be determined by the Board,
such salary to be paid in substantially equal installments no
less frequently than monthly. This salary may be increased from
time to time by the Company in its sole discretion and, if so
increased, shall not thereafter during the term of this Agreement
be decreased. Compensation of the Executive by salary payments
shall not be deemed exclusive and shall not prevent the Executive
from participating in any other compensation or benefit plan of
the Company. The salary payments (including any increased salary
payments) hereunder shall not in any way limit or reduce any
other obligation of the Company hereunder or under any other
compensation or benefit plan or agreement under which the
Executive is entitled to receive payment or other benefits from
the Company, and no other compensation, benefit or payment
hereunder or under any other compensation or benefit plan or
agreement under which the Executive is entitled to receive
payments or other benefits from the Company shall in any way
limit or reduce the obligation of the Company to pay the
Executive's salary hereunder.
(b) Bonus. During the term of the Executive's
employment hereunder:
(i) the Executive shall be eligible to receive a
cash bonus for the Company's fiscal year ending September 30,
1996, to be determined and paid by the Company in accordance with
the Uniroyal Chemical Company, Inc. Management Incentive Plan
("MIP") as in effect on the date hereof, provided, however, that
neither the costs associated with the consummation of the
Acquisition nor any extraordinary write-off taken by the Company
after the date of this Agreement shall be taken into account in
determining whether any such bonus is due the Executive, and, if
so, the amount thereof;
(ii) the Executive shall be eligible to receive a
cash bonus for the last three months of calendar year 1996 to be
determined and paid based on the Company's actual results of
operations for such three month period and on an extension and
proration of the MIP for the Company's 1996 fiscal year; and
(iii) commencing on January 1, 1997, the Executive
shall participate in any annual bonus plan made generally
available to executives of Crompton in positions comparable to
that of Executive (the "Bonus Plans") on a basis no less
favorable than similarly situated executives of Crompton.
Subject to this Agreement and to the rules and regulations
governing the Bonus Plans which are communicated in writing to
the Executive from time to time, the Executive agrees that the
actual award of any cash bonus pursuant to a Bonus Plan, may
pursuant to the terms of such plan, be subject to the achievement
of certain financial goals by the Company and/or Crompton and/or
certain personal performance goals established for the Executive
with respect to any period for which a cash bonus may be paid
pursuant to a Bonus Plan.
(c) Long Term Incentive Plan. During the term of the
Executive's employment hereunder, the Executive shall be entitled
to participate in any long term incentive plan made generally
available to executives of Crompton in positions comparable to
that of Executive on a basis no less favorable than similarly
situated executives of Crompton.
(d) Expenses. During the term of the Executive's
employment hereunder, the Executive shall be entitled to receive
prompt reimbursement for all reasonable and customary travel and
entertainment expenses or other out-of-pocket business expenses
incurred by the Executive in fulfilling the Executive's duties
and responsibilities hereunder, including all expenses of travel
and living expenses while away from home on business or at the
request of and in the service of the Company, provided that such
expenses are incurred and accounted for in accordance with the
policies and procedures established by the Company.
(e) Other Benefits. The Executive shall be entitled to
(i) participate in all of the employee benefit plans and
arrangements of the Company and enjoy all of the perquisites in
effect on the date hereof in which the Executive participates, or
(ii) participate in plans, arrangements or perquisites providing
the Executive with at least equivalent benefits to those referred
to in clause (i) of this sentence (including without limitation
each retirement, thrift and profit sharing plan, group life
insurance and accident plan, medical and dental insurance plans,
and disability plan), provided that the Company shall not make
any changes in such plans, arrangements or perquisites that would
adversely affect the Executive's rights or benefits thereunder;
provided, however, that such a change may be made to a plan in
which salaried employees of the Company participate, including
termination of any such plan, arrangement or perquisite, if (x)
it does not result in a proportionately greater reduction in the
rights of or benefits to the Executive as compared with any other
salaried employee of the Company or cause the benefits of the
Executive to be less favorable in the aggregate than those
available to similarly situated executives of Crompton or (y) it
is required by law or a technical change. The Executive shall be
entitled to participate in or receive benefits under any employee
benefit plan, arrangement or perquisite made available by the
Company in the future to its executive employees, subject to and
on a basis consistent with the terms, conditions and overall
administration of such plans, arrangements and perquisites.
Nothing paid to the Executive under any plan, arrangement or
perquisite presently in effect or made available in the future
shall be deemed to be in lieu of the salary payable to the
Executive pursuant to paragraph (a) of this Section 5. Any
payments or benefits payable to the Executive under this Section
5 in respect of any year during which the Executive is employed
by the Company for less than the entire such year shall, unless
otherwise provided in the applicable plan or arrangement, be
prorated in accordance with the number of days in such year
during which he is so employed.
(f) Vacations. The Executive shall be entitled to
paid vacation in each calendar year, determined in accordance
with the Company's vacation policy. The Executive shall also be
entitled to all paid holidays and personal days given by the
Company to its executive employees.
6. Termination. The Executive's employment hereunder
may be terminated under the following circumstances:
(a) Death. The Executive's employment hereunder shall
terminate upon his death.
(b) Disability. If, in the written opinion of a
qualified physician selected by the Company, the Executive shall
become unable to perform his duties hereunder due to physical or
mental illness, and in connection therewith, the Executive has
received and continues to receive benefit payments pursuant to
the Company's Long-Term Disability Plan or any successor plan
thereto, the Company may terminate the Executive's employment
hereunder.
(c) Cause. The Company may terminate the Executive's
employment hereunder for Cause. For purposes of this Agreement,
the Company shall have "Cause" to terminate the Executive's
employment hereunder upon:
(i) the willful and continuous neglect or refusal
to perform the Executive's duties or responsibilities, or the
willful taking of actions which materially impair the Executive's
ability to perform his duties or responsibilities which continues
after being brought to the attention of the Executive (other than
any such failure resulting from the Executive's incapacity due to
physical or mental illness or any such actual or anticipated
failure after the issuance of a Notice of Termination (as defined
in subsection (e) hereof) by the Executive for Good Reason (as
defined in subsection (d) hereof)); or
(ii) the willful act or failure to act by the
Executive in misconduct which is materially and manifestly
injurious to the Company and which is brought to the attention of
the Executive in writing not more than thirty days from the date
of its discovery by the Company or the Board (including (1)
intentional theft or embezzlement from the Company or its
divisions, affiliates, predecessors, successors, or direct or
indirect parents or subsidiaries (the "Group"), (2) intentional
provision of services in competition to the Group which would
have been prohibited under Section 8 hereof had it occurred after
the Termination Date and (3) intentional disclosure to a
competitor of the Group of any confidential proprietary
information of the Group which disclosure is prohibited by
Section 10 hereof; but, notwithstanding anything set forth in
this paragraph (ii), not including (w) neglect of duties, (x) bad
judgement or negligence, (y) any act or failure to act by the
Executive believed in good faith to have been in or not opposed
to the interests of the Group, or (z) any act or failure to act
by the Executive in respect of which a determination could
properly be made that the Executive met the applicable standard
of conduct prescribed for indemnification, reimbursement or
payment of expenses under the By-laws of the Company or the laws
of the State of New Jersey or the Directors' and Officers'
liability insurance of the Company, if any, in each case in
effect at the time of such act or failure to act).
For purposes of this subsection (c), no act, or failure
to act, on the Executive's part shall be considered "willful"
unless done, or omitted to be done, by him not in good faith or
without reasonable belief that his action or omission was in the
best interest of the Company. Notwithstanding the foregoing, the
Executive shall not be deemed to have been terminated for Cause
without (1) reasonable written notice to the Executive specifying
in detail the specific reasons for the Company's intention to
terminate for Cause, (2) an opportunity for the Executive,
together with his counsel, to be heard before the Board, and (3)
delivery to the Executive of a Notice of Termination, as defined
in subsection (e) hereof, approved by the affirmative vote of not
less than a majority of the entire membership of the Board
finding that in the good faith opinion of the Board, the
Executive was guilty of conduct set forth above in clause (i) or
(ii) hereof, and specifying the particulars thereof in detail.
(d) Convenience. The Company may terminate the
Executive's employment hereunder at any time for Convenience.
For purposes of this Agreement, a termination shall be deemed to
be for "Convenience" if it is for any reason other than Death,
Disability or Cause (which are provided for in subsections (a),
(b) and (c) of this Section 6) or for no reason.
(e) Good Reason.
(i) The Executive may terminate his employment
hereunder (A) for Good Reason or (B) otherwise upon written
notice to the Company.
(ii) For purposes of this Agreement, "Good Reason"
shall mean, without the Executive's express written consent, the
occurrence of any of the following circumstances unless, in the
case of clauses (A), (B), (C), (D) and (F) below, such
circumstances are fully corrected prior to the Date of
Termination (as defined in subsection (g) of this Section 6)
specified in the Notice of Termination (as defined in subsection
(f) of this Section 6) given in respect thereof: (A) a diminution
in the Executive's position, duties, responsibilities or
authority (except during periods when the Executive is unable to
perform all or substantially all of the Executive's duties and/or
responsibilities on account of the Executive's illness (either
physical or mental) or other incapacity), (B) a reduction in
either the Executive's annual rate of base salary or level of
participation in any bonus or incentive plan for which he is
eligible under Section 5(b) hereof, (C) an elimination or
reduction of the Executive's participation in any benefit plan
generally available to employees at the Executive's level, unless
the Company continues to offer the Executive benefits
substantially similar to those made available by such plan;
provided, however, that a change to a plan in which all salaried
employees of the Company generally participate, including
termination of any such plan, if it does not result in a
proportionately greater reduction in the rights of or benefits to
the Executive as compared with the other salaried employees of
the Company or is required by law or a technical change shall not
be deemed to be Good Reason, (D) failure to provide facilities or
services which are suitable as determined by the Board to the
Executive's position and adequate for the performance of the
Executive's duties and responsibilities, (E) failure of any
successor (whether direct or indirect, by purchase of stock or
assets, merger, consolidation or otherwise) to the Company to
assume the Company's obligations hereunder or failure by the
Company to remain liable to the Executive hereunder after an
assignment by the Company of this Agreement, in each case as
contemplated by Section 11 hereof, (F) any purported termination
by the Company of the Executive's employment which is not
effected pursuant to a Notice of Termination satisfying the
requirements of subsection (f) of this Section 6 (and for
purposes of this Agreement no such purported termination shall be
effective), or (G) a termination of employment by the Executive
within the thirty day period commencing on the 270th day
following the sale or other disposition to a person, entity or
group (as defined in Rule 13d-5 ("Rule 13d-5") under the
Securities Exchange Act of 1934, as amended) other than one or
more members of the Group of the division or Subsidiary (as
defined in subsection (h) of this Section 6) of the Company, as
the case may be, by which the Executive is employed, provided,
however, Good Reason shall not exist if (i) the Executive has
accepted employment with the successor or acquiring entity and
such successor or acquiring entity has assumed this Agreement, or
(ii) the Executive is offered a position with a member of the
Group in a position of comparable prestige, responsibility and
salary (and without relocation). The Executive's right to
terminate employment pursuant to this subsection shall not be
affected by the Executive's incapacity due to physical or mental
illness. The Executive's continued employment shall not
constitute consent to, or a waiver of rights with respect to, any
circumstances constituting Good Reason hereunder; provided,
however, that the Executive shall be deemed to have waived his
rights pursuant to circumstances constituting Good Reason
hereunder if he shall not have provided to the Company a Notice
of Termination within ninety (90) days following his knowledge of
the circumstances constituting Good Reason.
(f) Notice of Termination. Any termination of the
Executive's employment by the Company or by the Executive (other
than a termination pursuant to subsection (a) hereof) shall be
communicated by written Notice of Termination to the other party
hereto in accordance with Section 12. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which
shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so
indicated.
(g) "Date of Termination" shall mean (i) if the
Executive's employment is terminated pursuant to subsection (a)
above, the date of his death, (ii) if the Executive's employment
is terminated pursuant to subsection (b) above, thirty days after
Notice of Termination is given (provided that the Executive shall
not have returned to the full-time performance of the Executive's
duties during such thirty day period), (iii) if the Executive's
employment is terminated pursuant to subsection (c) or (e) above,
the date specified in the Notice of Termination which, in the
case of a termination for Cause shall not be less than fifteen
days from the date such Notice of Termination is given, and in
the case of a termination for Good Reason or a termination
pursuant to subsection 6(e)(i)(B) hereof shall not be less than
fifteen (15) nor more than thirty (30) days from the date such
Notice of Termination is given), (iv) if the Executive's
employment is terminated by the Company other than for Cause,
thirty days from the date the Executive is notified of such
termination, or (v) if the Executive terminates his employment
and fails to provide written notice to the Company of such
termination, the date of such termination; provided, however,
that if within fifteen (15) days after any Notice of Termination
is given, or, if later, prior to the Date of Termination (as
determined without regard to this provision), the party receiving
such Notice of Termination notifies the other party that a
dispute exists concerning the termination, then the Date of
Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, by
a binding arbitration award or by a final judgment, order or
decree of a court of competent jurisdiction (which is not
appealable or with respect to which the time for appeal therefrom
has expired and no appeal has been perfected); and provided,
further, that the Date of Termination shall be extended by a
notice of dispute only if such notice is given in good faith and
the party giving such notice pursues the resolution of such
dispute with reasonable diligence. Notwithstanding the
foregoing, if the dispute is resolved in favor of the Company,
the Date of Termination shall not be deemed to have been extended
for purposes of this Agreement. If the Date of Termination is
extended by a notice of dispute, the rights of the parties upon a
final determination shall be governed by the terms of this
Agreement, regardless of whether the Agreement otherwise remains
in effect on the date of such final determination.
Notwithstanding the pendency of any such dispute, the Company
will continue to pay to the Executive his full compensation in
effect when the notice giving rise to the dispute was given
(including, but not limited to, base salary) and continue the
Executive as a participant in all compensation, benefit and
insurance plans in which the Executive was participating when the
notice giving rise to the dispute was given, until the dispute is
finally resolved in accordance with this subsection. Amounts
paid under this subsection are in addition to all other amounts
due under this Agreement or under any other compensation or
benefit plan, agreement or arrangement under which the Executive
is entitled to receive payments or other benefits from the
Company, and shall not be offset against or reduce any other
amounts due under this Agreement or under any other compensation
or benefit plan, agreement or arrangement under which the
Executive is entitled to receive payments or other benefits from
the Company, and shall not be reduced by any compensation earned
by the Executive as the result of employment by another employer.
(h) "Subsidiary" of any Person shall mean (i) any
corporation that is directly or indirectly through one or more
intermediaries, controlled (as such term is defined under the
Securities Act of 1933, as amended) by such Person, (ii) any
corporation more than 50% of the voting capital stock of which is
owned, directly or indirectly, by such Person or (iii) any other
Person that is directly or indirectly controlled (as such term is
defined under the Securities Act) by such Person or in which such
Person holds, directly or indirectly, a majority voting or
ownership interest.
(i) "Person" shall mean any individual, group,
corporation, partnership, joint venture, trust, joint stock
company, unincorporated organization or government or political
department or agency thereof or other entity of whatever nature.
7. Compensation Upon Termination, Death or During
Disability.
(a) During any period that the Executive fails to perform
his duties hereunder as a result of incapacity due to physical or
mental illness the Executive shall continue to receive his full
base salary at the rate then in effect for such period (offset by
any payments to the Executive received pursuant to disability
benefit plans maintained by the Company) until his employment is
terminated pursuant to Section 6(b) hereof, and upon such
termination, the Company shall within ten days following the Date
of Termination, make a lump sum payment to the Executive in an
amount equal to the sum of (A) the Executive's annual base salary
rate in effect as of the date Notice of Termination is given and
(B) the average of the last three annual bonus payments awarded
to the Executive under the Bonus Plans.
(b) If the Executive's employment is terminated by his
death, the Company shall within ten days following the date of
the Executive's death and in accordance with Section 6(a) hereof,
(i) pay any amounts due to the Executive under Section 5 through
the date of his death and (ii) pay to the Executive's legal
representative a lump sum payment in an amount equal to the sum
of (A) the Executive's annual base salary rate in effect as of
the date of the Executive's death and (B) the average of the last
three annual bonus payments awarded to the Executive under the
Bonus Plans.
(c) If the Executive's employment is terminated by the
Company for Cause or by the Executive for other than Good Reason,
the Company shall pay the Executive his full base salary through
the Date of Termination at the rate in effect at the time Notice
of Termination is given and all other unpaid amounts, if any, to
which the Executive is entitled as of the Date of Termination,
including any expenses owed pursuant to Section 4(c) and amounts
under any compensation plan or program of the Company, at the
time such payments are due and the Company shall, thereafter,
have no further obligations to the Executive under this
Agreement.
(d) If (A) the Company shall terminate the Executive's
employment for Convenience (it being understood that a purported
termination for disability pursuant to Section 6(b) hereof or for
Cause which is disputed and finally determined not to have been
proper shall be a termination by the Company for Convenience) or
(B) the Executive shall terminate his employment for Good Reason;
then
(i) the Company shall pay the Executive his full
base salary through the Date of Termination at the rate in effect
at the time Notice of Termination is given and all other unpaid
amounts, if any, to which the Executive is entitled as of the
Date of Termination including any expenses owed pursuant to
Section 4(c) and amounts under any compensation plan or program
of the Company, at the time such payments are due;
(ii) in lieu of any further salary payments to the
Executive for periods subsequent to the Date of Termination, the
Company shall pay as liquidated damages to the Executive an
amount equal to the sum of (A) the product of (1) the sum of (a)
the Executive's annual base salary rate, in effect as of the
date Notice of Termination is given, (b) the average of the last
three annual bonus payments under the Bonus Plans awarded to the
Executive, and (c) the amount contributed or required to be
contributed by the Company, with respect to the Executive, to any
of the Company's qualified defined contribution plans for the
twelve-month period ending on the Date of Termination multiplied
by (2) (w) if the Executive terminates his employment for Good
Reason or the Company terminates the Executive's employment other
than for Cause, in either case within one year after the
occurrence of a Change in Control, the number three or (x) in any
other case, the number two, and (B) the present value, as
determined by the Company's independent accountants or actuaries
(to be reasonably acceptable to the Executive), of any additional
pension the Executive would have accrued under the Company's
defined benefit plan qualified under the Code (as defined in
subsection (f) of this Section 7) if the Executive, following the
Date of Termination, had remained employed by the Company for a
period, and earned compensation during such period at the
Executive's annual base salary rate in effect as of the date of
Notice of Termination, or (y) three years, if the Executive
terminates his employment for Good Reason or the Company
terminates the Executive's employment other than for Cause, in
either case within one year after the occurrence of a Change in
Control or (z) two years in any other case. Any payment to be
made pursuant to this Paragraph shall be made in a lump sum on or
before the tenth day following the Date of Termination;
(iii) the Company shall continue the participation
of the Executive for a period of two years (except, if the
Executive terminates his employment for Good Reason or the
Company terminates the Executive's employment other than for
Cause, in either case within one year after the occurrence of a
Change in Control, such period shall be three years), in all
medical, life and other employee "welfare" benefit plans and
programs in which the Executive was entitled to participate
immediately prior to the Date of Termination provided that the
Executive's continued participation is possible under the general
terms and provisions of such plans and programs. In the event
that the Executive's participation in any such plan or program is
barred, the Company shall arrange to provide the Executive with
benefits substantially similar to those which the Executive would
otherwise have been entitled to receive under such plans and
programs from which his continued participation is barred;
(iv) the Company shall pay to the Executive an
amount equal to the product of (A) the amount of all legal fees
and expenses incurred by the Executive as a result of such
termination, including all such fees and expenses, if any,
incurred in contesting, arbitrating or disputing any such
termination or in seeking to obtain or enforce any right or
benefit provided by this Agreement or in connection with any tax
audit or proceeding to the extent attributable to the application
of Section 4999 of the Code, to any payment or benefit provided
hereunder multiplied by (B) (x) 100% if the Executive shall be
successful in contesting or arbitrating or seeking to enforce
such rights or benefits or (y) 50% if the Executive shall not be
successful, provided that such claim has been brought in good
faith by the Executive; and
(v) if the Company shall fulfill its obligations to
the Executive pursuant to this Section 7(d) plus any amounts
payable pursuant to Section 7(f) hereof, his full base salary
through the Date of Termination at the rate in effect at the time
Notice of Termination is given and all other unpaid amounts, if
any, to which the Executive is entitled as of the Date of
Termination including any expenses owed pursuant to Section 4(c)
and amounts under any compensation plan or program of the
Company, at the time such payments are due and the Company shall,
thereafter, have no further obligations to the Executive under
this Agreement.
(e) For purposes of this Agreement, a "Change in
Control" shall mean (i) a change in control of Crompton, of a
nature that would be required to be reported in response to Item
1(a) of the Current Report on Form 8-K, as in effect on January
1, 1988, pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (the "Exchange Act"); provided that, without
limitation, such a "Change in Control" shall be deemed to have
occurred if: (x) a third person, including a "group" as such term
is used in Section 13(d)(3) of the Exchange Act, other than the
trustee of any employee benefit plan of Crompton, becomes the
beneficial owner, directly or indirectly, of 20% or more of the
combined voting power of Crompton's outstanding voting securities
ordinarily having the right to vote for the election of directors
of Crompton; (y) during any period of 24 consecutive months
individuals who, at the beginning of such consecutive 24-month
period, constitute the Board of Directors of Crompton (the
"Crompton Board" generally and, as of the date of this Agreement,
the "Incumbent Board") cease for any reason (other than
retirement upon reaching normal retirement age, disability, or
death) to constitute at least a majority of the Crompton Board;
provided that any person becoming a director of Crompton
subsequent to the date hereof whose election, or nomination for
election by Crompton's shareholders, was approved by a vote of at
least three quarters of the directors comprising the Incumbent
Board (other than an election or nomination of an individual
whose initial assumption of office is in connection with an
actual or threatened election contest relating to the election of
the directors of Crompton, as such terms are used in Rule 14a-11
of Regulation 14A promulgated under the Exchange Act) shall be,
for purposes of this Agreement, considered as though such person
were a member of the Incumbent Board; or (z) Crompton shall cease
to be a publicly owned corporation having its outstanding Common
Stock listed on the New York Stock Exchange or quoted in the
NASDAQ National Market System; or (ii) the sale or other
disposition to a third person, including a "group" as such term
is used in Section 13(d)(3) of the Exchange Act, other than
Crompton, a direct or indirect wholly-owned Subsidiary of
Crompton, or the trustee of any employee benefit plan of Crompton
or the Company, of (x) a majority of the combined voting power of
the Company's outstanding voting securities ordinarily having the
right to vote for the election of directors of the Company or
(y) the division or subsidiary of the Company by which the
Executive is employed.
(f) If the Executive becomes entitled to any payment
or benefit whether pursuant to the terms of this Agreement or any
other plan, arrangement or agreement with the Company (or any
person whose actions result in a Change in Control or any person
affiliated with the Company or such person) in connection with
any termination of the Executive's employment within one year
following a Change in Control (all such payments being called the
"Severance Payment") which is subject to the tax (the "Excise
Tax") imposed by Section 4999 of the Internal Revenue Code of
1986, as amended (the "Code"), the Company shall pay the
Executive pursuant to the procedures set forth below an
additional amount (the "Gross-Up Payment") such that the net
amount retained by the Executive, after deduction of any Excise
Tax on the Severance Payment and any federal and state and local
income tax and Excise Tax upon such payment shall be equal to the
Severance Payment.
In the event of a Change in Control: (A) the Company
shall in good faith determine the extent to which it believes any
portion of the Severance Payment is subject to the Excise Tax and
shall pay to the Executive on or prior to the thirtieth day
following the Date of Termination an amount the Company believes
to be the applicable Gross-Up Payment; (B) if, thereafter, there
is an assertion by the Internal Revenue Service that any
additional portion of the Severance Payment is subject to the
Excise Tax, promptly upon notice of such assertion the Company
shall determine the extent to which such assertion is contested
and shall (x) pay to the Executive within thirty days of such
determination the Gross-Up Payment appropriate with respect to
amounts not contested, and (y) immediately assume and conduct, at
its own expense, the contest of such assertion. In any case in
which the Company shall contest an assertion, the Company shall,
in good faith, consult with the Executive concerning the
appropriate actions or positions to be taken in contesting such
assertion, including whether any action to contest such assertion
shall initially be by way of judicial or administrative
proceedings, or both, and, if judicial action with respect to
such assertion is undertaken, the court before which such action
shall be commenced. Upon a finding that any additional Excise
Tax must be paid, the Company shall, within thirty days of such
determination, pay to the Executive the Gross-Up Payment
(including any interest, penalties, and other expenses, related
to contesting such assertion).
(g) The Executive shall not be required to mitigate
the amount of any payment provided for in this Section 7 by
seeking other employment or otherwise, nor shall the amount of
any payment or benefit provided for in this Section 7 be reduced
by any compensation earned by the Executive as the result of
employment by another employer, by retirement benefits, by offset
against any amount claimed to be owed by the Executive to the
Company, or otherwise.
(h) Notwithstanding any provision of this Agreement to
the contrary, upon the termination of the Executive's employment
by the Company prior to the date two years following the date
hereof, other than such a termination which is preceded by a
Change of Control of Crompton described in Section 7(e)(i)
hereof, the agreement dated October 30, 1989, between the Company
and the Executive pursuant to which the Executive was employed by
the Company prior to the date of this Agreement (the "Prior
Agreement") shall govern payments by the Company to the Executive
in connection with such termination of the Executive's
employment; provided, that the sign on incentive paid to the
Executive pursuant to Section 4 hereof shall not be considered
for purposes of determining the amount due the Executive under
the Prior Agreement; and, provided further,that any amount due
the Executive from the Company under the Prior Agreement shall be
reduced by the sum of the sign on incentive paid to the Executive
by the Company upon the execution of this Agreement pursuant to
Section 4 hereof less that portion of such sign on incentive paid
with respect to the Company's 1986 LTI Plan.
(i) The obligations of the Company to make payments
and provide benefits under this Section 7 accruing prior to the
termination of this Agreement shall survive such termination.
8. Covenant Not to Compete. The Executive acknowledges
that, as a key management employee, the Executive will be
involved, on a high level, in the development, implementation and
management of the Company's national and international business
strategies and plans, including those which involve the Company's
finances, research, marketing, planning, operations, industrial
relations and acquisitions. By virtue of the Executive's unique
and sensitive position and special background, employment of the
Executive by a competitor of the Company represents a serious
competitive danger to the Company, and the use of the Executive's
talent and knowledge and information about the Company's
business, strategies and plans can and would constitute a
valuable competitive advantage over the Company. In view of the
foregoing, the Executive covenants and agrees that, if the
Executive's employment is terminated (i) for Cause, (ii) pursuant
to an event constituting Good Reason or by the Company for
Convenience, in either case within one year of the occurrence of
a Change in Control; or (iii) in any other case, for a period of
three years in the case of clauses (i) and (ii) of this sentence,
and two years in the case of clause (iii) of this sentence, after
the Date of Termination the Executive will not engage or be
engaged, in any capacity, directly or indirectly, including but
not limited as employee, agent, consultant, manager, executive,
owner or stockholder (except as a passive investor holding less
than a 5% equity interest in any enterprise) in any business
entity engaged in competition with any business conducted by the
Company on the Date of Termination in North America or in any
business entity engaged in direct competition with the business
division of the Company for which the Executive was employed on
the Date of Termination in Europe; provided, that the Executive
may be employed by a competitor of the Company so long as the
Executive's duties and responsibilities do not relate directly or
indirectly to the activities of the new employer which are
competitive with the business segment of the Company in which the
Executive was employed at any time prior to the Date of
Termination.
The covenant not to compete contained in this Section 8
shall survive the termination of this Agreement.
If any court determines that the covenant not to compete
contained in this Section 8, or any part hereof, is unenforceable
because of the duration or geographic scope of such provision,
such court shall have the power to reduce the duration or scope
of such provision as the case may be, and, in its reduced form,
such provision shall then be enforceable.
9. Assignment of Inventions, Patents, Etc. The Executive
agrees that all processes, technologies, designs and inventions
("Inventions"), including new contributions, improvements, ideas
and discoveries, whether patentable or not, conceived, developed,
invented or made by the Executive during the term of this
Agreement shall belong to the Company, provided that such
Inventions grew out of the Executive's work with the Company or
any of its subsidiaries or affiliates, are related in any manner
to the business (commercial or experimental) of the Company or
any of its subsidiaries or affiliates or are conceived or made on
the Company's time or with the use of the Company's facilities or
materials. The Executive, either during the term of this
Agreement or thereafter as required by the Company, shall
further: (a) promptly disclose such Inventions to the Company;
(b) assign the Company, without additional compensation, all
patent and other rights to such Inventions for the United States
and foreign countries; (c) sign all papers necessary to carry out
the foregoing; and (d) give testimony or otherwise take action in
support of the Executive's status as the inventor of such
Inventions.
It is the desire and intent of the parties that the terms,
provisions, covenants and remedies contained in this Section 9
and in Section 10 shall be enforceable to the fullest extent
permitted by applicable law or public policy. If any such term,
provision, covenant or remedy or the application thereof to any
person or circumstance shall, to any extent, be construed to be
invalid or unenforceable in whole or in part, then such term,
provision, covenant or remedy shall be construed in a manner so
as to permit its enforceability to the fullest extent permitted
by applicable law or public policy. In any case, the remaining
provisions of this Agreement or the application thereof to any
person or circumstance other than those to which they have been
held invalid or unenforceable, shall remain in full force and
effect.
10. Confidentiality. In addition to any obligation
regarding inventions, patents, ideas or other intellectual
property set forth in Section 9, the Executive acknowledges that
the Company's trade secrets and confidential and proprietary
information, including without limitation:
(a) unpublished information concerning the Company's:
(i) research activities and plans,
(ii) marketing or sales plans,
(iii) pricing or pricing strategies,
(iv) operational techniques, and
(v) strategic plans;
(b) unpublished financial information, including
information concerning revenues, profits and profit margins;
(c) internal confidential manuals; and
(d) any "material inside information" as such phrase is
used for purposes of the Securities Exchange Act of 1934, as
amended;
all constitute valuable, special and unique information of the
Company. In recognition of this fact, the Executive agrees that
the Executive will not disclose any such trade secrets or
confidential or proprietary information (except (i) information
which becomes publicly available without violation of this
Agreement, (ii) information of which the Executive did not know
and should not have known was disclosed to the Executive in
violation of any other person's confidentiality obligation, (iii)
disclosure required in connection with any legal process and (iv)
disclosure which the Executive reasonably and in good faith
believes to be in or not opposed to the interests of the Company)
to any person, firm, corporation, association or other entity,
for any reason or purpose whatsoever, nor shall the Executive
make use of any such information for the benefit of any person,
firm, corporation or other entity except the Company and its
subsidiaries or affiliates. The Executive's obligation to keep
all of such information confidential shall be in effect during
and for a period of three years after the Date of Termination;
provided, however, that the Executive will keep confidential and
will not disclose any trade secret or similar information
protected under law as intangible property (subject to the same
exceptions set forth in the parenthetical clause above) for so
long as such protection under law is extended.
11. Binding Agreement. This Agreement and all rights of
the Executive hereunder shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive should die while any
amounts would still be payable to him hereunder if he had
continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with he terms of this
Agreement to the Executive's devisee, legatee, or other designee
or, if there be no such designee, to the Executive's estate.
12. Notice. Notices, demands and all other communications
provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered, if delivered
personally, or (unless otherwise specified) mailed by United
States certified or registered mail, return receipt requested,
postage prepaid, and when received if delivered otherwise,
addressed as follows:
If to the Executive:
If to the Company:
Uniroyal Chemical Company, Inc.
Benson Road
Middlebury, CT 06749
Attention: John T. Ferguson II
or to such other address as any party may have furnished to the
other in writing in accordance herewith, except that notices of
change of address shall be effective only upon receipt.
13. General Provisions. No provision of this Agreement
may be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing signed by the
Executive and such officer of the Company as may be specifically
designated by the Board. No waiver by either party hereto at any
time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar
or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral
or otherwise, express or implied, with respect to the subject
matter hereof have been made by either party which are not set
forth expressly in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed
by the laws of the State of Connecticut without regard to its
conflicts of law principles.
14. Validity. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the
validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
15. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an
original but all of which together will constitute one and the
same instrument.
16. Arbitration. Any dispute or controversy arising under
or in connection with this Agreement shall be settled exclusively
by arbitration, conducted before a panel of three arbitrators in
the State of Connecticut, in accordance with the rules of the
American Arbitration Association then in effect. Judgment may be
entered on the arbitrator's award in any court having
jurisdiction; provided, however, that the Company shall be
entitled to seek a restraining order or injunction in any court
of competent jurisdiction to prevent any continuation of any
violation of the provisions of Sections 8, 9 or 10 of this
Agreement and the Executive hereby consents that such restraining
order or injunction may be granted without the necessity of the
Company's posting any bond, and provided further that the
Executive shall be entitled to seek specific performance of his
right to be paid until the Date of Termination during the
pendency of any dispute or controversy arising under or in
connection with this Agreement. The expenses of such arbitration
shall be borne by the Company.
17. Entire Agreement. This Agreement, together with the
Basic Agreements, sets forth the entire agreement of the parties
hereto in respect of the subject matter contained herein and
supersedes all prior agreement, promises, covenants,
arrangements, communications, representations or warranties,
whether oral or written, by any officer, employee or
representative or any party hereto; and any prior agreement of
the parties hereto in respect of the subject matter contained
herein is hereby terminated and canceled.
18. Limitation on Damages. In the event Executive purports
to terminate this employment because of an alleged breach of this
Agreement by the Company, the maximum damages to which executive
will be entitled for a cause of action for such breach shall be
the amounts specified in this Agreement, plus interest and costs
awarded, if any.
19. Injunctive Relief. The Executive agrees that in
addition to any other remedy provided at law or in equity or in
this Agreement, the Company shall be entitled to a temporary
restraining order and both preliminary and permanent injunctions
restraining Executive from violating any provision of Sections 8,
9 and 10 of this Agreement.
20. Consent to Jurisdiction and Forum. The Executive
hereby expressly and irrevocably agrees that the Company may
bring any action, whether at law or in equity, arising out of or
based upon this agreement or the Executive's employment by the
Company in the state of Connecticut or in any federal court
therein. The Executive hereby irrevocably consents to personal
jurisdiction in such court and to accept service of process in
accordance with the provisions of the laws of the State of
Connecticut. In the event the Company commences any such action
in the State of Connecticut or in any Federal court therein, the
Company agrees to reimburse the Executive for the reasonable
expenses incurred by the Executive in his appearance in such
forum which are in addition to the expenses the Executive would
have incurred by appearing in the forum of the Executive's
residence, including but not limited to additional legal fees.
IN WITNESS WHEREOF, the parties have executed this Agreement
on the date and year first above written.
UNIROYAL CHEMICAL COMPANY, INC.
By:_________________________
Name:
Title:
_________________________
SUPPLEMENTAL RETIREMENT AGREEMENT
AGREEMENT dated as of the day of August, 1996 (the
"Agreement") by and between (the "Executive") and
Uniroyal Chemical Company, Inc., a New Jersey corporation (the
"Corporation").
WITNESSETH:
WHEREAS, the Corporation is engaged in the extremely
competitive business of developing, manufacturing and marketing
crop protection chemicals, rubber chemicals, plastic and petroleum
additives, elastomers and urethane prepolymers throughout the
United States, Canada, Western Europe and certain other areas of
the world;
WHEREAS, the Executive, as a result of training, expertise and
personal application over the years, has acquired and will continue
to acquire considerable and unique expertise and knowledge which
are of considerable value to the Corporation;
WHEREAS, the Corporation wishes to induce the Executive to
continue in its employ, recognizing that in the case of the
Executive and a limited number of other key executive employees to
whom similar contracts may be offered, the ordinary retirement
benefits provided under the Corporation's retirement systems do not
afford sufficient incentive in terms of economic security, when
compared with retirement arrangements available from other
prospective employers who have been, are, or may be competing for
such key executive employees' services; and
WHEREAS, the Executive and the Corporation wish to terminate
the Supplemental Executive Retirement Agreement between the
Executive and the Corporation dated the 30th day of October, 1989,
and to enter into this Agreement with respect to supplemental
retirement benefits to be provided the Executive by the
Corporation;
NOW, THEREFORE, in consideration of the continued employment
of the Executive by the Corporation and the benefits to be derived
by the Executive hereunder, the Executive and the Corporation
hereby agree as follows:
1. Nothing herein shall be deemed a contract of
employment for any minimum fixed term, or shall restrict the
freedom of the Corporation or the Executive to terminate the
employment relationship between them at any time.
2. The Supplemental Executive Retirement Agreement between
the Executive and the Corporation dated the 30th day of October,
1989, is terminated effective on the date hereof and shall be of no
further force or effect.
3. For the purposes of this Agreement, the following terms
shall have the following meanings:
(a) CKC" shall mean Crompton & Knowles Corporation and
its Subsidiaries".
(b) "Actuarial Consultants" shall mean the actuarial
consultants employed by Crompton & Knowles Corporation, the parent
of the Corporation, in connection with its employee benefit plans.
(c) "Normal Retirement Date" shall mean the first day of
the month on or next after the Executive's sixty-fifth (65th)
birthday.
(d) "Compensation" shall mean all of the Executive's cash
compensation paid by the Corporation or CKC for a calendar year,
including salary, any amount contributed by the Executive to a cash
or deferred plan under Section 401(k) of the Internal Revenue Code
of 1986, as amended, and any incentive compensation award or bonus
with respect to such year (even if paid in a subsequent year), but
excluding any incentive compensation award or bonus paid during
such year with respect to a prior year and extraordinary earnings
such as the sign on incentive paid to the Executive pursuant to
Section 4 of an employment agreement with the Corporation dated
August 21, 1996, insurance costs or income from the exercise of
stock options.
(e) "Actuarial Equivalent" shall mean an amount of
equivalent value computed on the basis of the actuarial assumptions
used from time to time by the Actuarial Consultants in connection
with the employee benefit plans of CKC, but using an interest
assumption which is not less than the Pension Benefit Guaranty
Corporation's interest assumption, if any, in effect at the
beginning of the month as of which the computation is made.
(f) "Company Plan Benefit" shall mean the amount of
benefit payable to or in respect of the Executive from any defined
benefit pension plan maintained by CKC, calculated in the form of
a straight life annuity (regardless of the form in which such
benefit may actually be payable).
(g) "Cause" shall mean (i) the Executive's willful and
continued failure to substantially perform assigned duties with the
Corporation (other than any such failure resulting from incapacity
due to physical or mental illness or any such actual or anticipated
failure resulting from termination for Good Reason), after a demand
for substantial performance is delivered to the Executive by the
Board of Directors of the Corporation (the "Board"), specifically
identifying the manner in which the Board believes that the duties
have not been substantially performed, or (ii) the Executive's
willful conduct which is demonstrably and materially injurious to
the Corporation. For purposes of this sub-paragraph (e), no act,
or failure to act, shall be considered "willful" unless done, or
omitted to be done, not in good faith and without reasonable belief
that such action or omission was in the best interest of the
Corporation.
(h) "Good Reason" shall mean (i) the assignment to the
Executive of any duties inconsistent in any respect with the
Executive's position (including status, offices, titles, and
reporting requirements), authority, duties, or responsibilities as
contemplated by any employment agreement between the Executive and
the Corporation, or any other action by the Corporation which
results in a diminishment in such position, authority, duties, or
responsibilities, other than an insubstantial and inadvertent
action which is remedied by the Corporation promptly after receipt
of notice thereof given by the Executive; (ii) any failure by the
Corporation to comply with any of the provisions of any employment
agreement between the Executive and the Corporation, other than an
insubstantial and inadvertent failure which is remedied by the
Corporation promptly after receipt of notice thereof given by the
Executive; (iii) any change not concurred in by the Executive in
the location of the office at which the Executive is principally
based, except for a change to a location within a 40 mile radius of
Middlebury, CT, and travel reasonably required in the performance
of the Executive's responsibilities and substantially consistent
with prior business travel obligations of the Executive; or (iv)
any purported termination by the Corporation of the Executive's
employment otherwise than as permitted by any employment agreement
between the Executive and the Corporation.
(i) "Change in Control" shall mean (i) a change in control
of Crompton & Knowles of a nature that would be required to be
reported in response to Item 1(a) of the Current Report on Form
8-K, as in effect on January 1, 1988, pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934 (the "Exchange Act");
provided that, without limitation, such a "Change in Control" shall
be deemed to have occurred if (x) a third person, including a
"group" as such term is used in Section 13(d)(3) of the Exchange
Act, other than the trustee of any employee benefit plan of
Crompton & Knowles, becomes the beneficial owner, directly or
indirectly, of 20% or more of the combined voting power of Crompton
& Knowles' outstanding voting securities ordinarily having the
right to vote for the election of directors of Crompton & Knowles;
(y) during any period of 24 consecutive months individuals who, at
the beginning of such consecutive 24-month period, constitute the
Board of Directors of Crompton & Knowles (the "Crompton & Knowles
Board" generally and, as of the date of this Agreement, the
"Incumbent Board") cease for any reason (other than retirement upon
reaching normal retirement age, disability, or death) to constitute
at least a majority of the Crompton & Knowles Board; provided that
any person becoming a director of Crompton & Knowles subsequent to
the date hereof whose election, or nomination for election by
Crompton & Knowles' shareholders, was approved by a vote of at
least three quarters of the directors comprising the Incumbent
Board (other than an election or nomination of an individual whose
initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the
directors of Crompton & Knowles, as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Exchange Act) shall
be, for purposes of this Agreement, considered as though such
person were a member of the Incumbent Board; or (z) Crompton &
Knowles shall cease to be a publicly owned corporation having its
outstanding Common Stock listed on the New York Stock Exchange or
quoted in the NASDAQ National Market System; or (ii) the sale or
other disposition to a third person, including a "group" as such
term is used in Section 13(d)(3) of the Exchange Act, other than
Crompton & Knowles, a direct or indirect wholly-owned Subsidiary of
Crompton & Knowles, or the trustee of any employee benefit plan of
Crompton & Knowles or the Corporation, of (x) a majority of the
combined voting power of the Corporation's outstanding voting
securities ordinarily having the right to vote for the election of
directors of the Corporation or (y) the division or Subsidiary of
the Corporation by which the Executive is employed.
(j) "Projected Compensation" shall mean (i) for any
calendar year throughout which the Executive is employed by the
Corporation, his Compensation (as defined in paragraph 3(b) hereof)
for such year, and (ii) for any calendar year during or after which
his employment by the Corporation has been terminated, the
compensation the Executive would have received for such year if he
had received (A) salary at a rate determined by projecting his
annual rate of salary at the end of the last full calendar year of
his employment by the Corporation forward at a rate equal to 5%
in excess of the annual percentage change in the Consumer Price
Index as published by the U.S. Bureau of Labor Statistics for such
year and (B) a bonus equal to 40% of his salary as thus projected.
(k) "Alternate Benefit Amount" shall mean the sum of $
, plus interest thereon from the date of this Agreement to
the date of termination of the Executive's employment with the
Corporation, calculated for each six month period commencing on
January 1 and July 1 at an interest rate per annum equal to the six
month London interbank offerred rate for prime banks on deposits in
U.S. dollars as published in a newspaper of daily circulation in
London, England on the day preceding the date of this Agreement
(in the case of the period from the date of this Agreement to and
including December 31, 1996), and, thereafter, on the December 31
or June 30 (or, if no such rate is published on any such date, on
the last day prior thereto that such an interest rate is so
published) immediately preceding each such six month period , plus
0.75%.
(l) "Subsidiary" shall mean, with respect to any Person,
(i) any corporation that is directly or indirectly through one or
more intermediaries, controlled (as such term is defined under the
Securities Act of 1933, as amended) by such Person, (ii) any
corporation more than 50% of the voting capital stock of which is
owned, directly or indirectly, by such Person or (iii) any other
Person that is directly or indirectly controlled (as such term is
defined under the Securities Act) by such Person or in which such
Person holds, directly or indirectly, a majority voting or
ownership interest.
(m) "Person" shall mean any individual, group,
corporation, partnership, joint venture, trust, joint stock
company, unincorporated organization or government or political
department or agency thereof or other entity of whatever nature.
4. Anything in this Agreement to the contrary
notwithstanding, and provided that the Executive has not received
payment pursuant to paragraph 7 of this Agreement and does not
elect pursuant to sub-paragraph 8(b) or paragraph 6 to receive a
benefit described in paragraphs 5 or 6 of this Agreement, upon the
termination of the Executive's employment with CKC for any reason,
the Executive shall be entitled to receive a supplemental
retirement benefit equal to the Alternate Benefit Amount payable in
the forms described in paragraph 8.
5. If the Executive shall remain in the employ of CKC
until and shall reach his Normal Retirement Date and does not
receive the Alternate Benefit Amount as a supplemental retirement
benefit pursuant to paragraph 4 of this Agreement, he shall be
entitled to receive a supplemental retirement benefit under this
Agreement which shall be at an annual rate equal to the amount by
which
(a) Fifty five percent (55%) of the Executive's average
annual Compensation during those five (5) calendar years in which
such Compensation was highest during the ten (10) calendar years
immediately preceding his Normal Retirement Date
exceeds
(b) the annual amount of the Company Plan Benefit payable
to the Executive, determined as of his Normal Retirement Date.
Such supplemental retirement benefit shall commence on the
Executive's actual retirement date and shall be payable in one of
the benefit payment forms described in paragraph 8.
6. If the Executive's employment by CKC shall be
terminated (other than by reason of his death or disability or by
CKC for Cause) prior to his Normal Retirement Date and he does not
receive the Alternate Benefit Amount as a supplemental retirement
benefit pursuant to paragraph 4 of this Agreement, he shall be
entitled to receive a reduced supplemental retirement benefit under
this Agreement which shall be at an annual rate computed as
follows:
(a) There shall first be determined the amount which is
equal to fifty five percent (55%) of the Executive's average annual
Compensation during those five (5) calendar years in which such
Compensation was highest during the ten (10) calendar years
immediately preceding the year in which the termination of his
employment occurs.
(b) The amount thus determined shall be multiplied by a
fraction in which the numerator shall be the number of full years
of continuous service the Executive shall have completed with CKC
(including the Corporation prior to its acquisition by Cromption &
Knowles Corporation and Uniroyal, Inc.) prior to the the
termination of his employment and the denominator shall be the
number of full years of continuous service he would have completed
with CKC (including the Corporation prior to its acquisition by
Crompton & Knowles Corporation and Uniroyal, Inc.) on his Normal
Retirement Date had he remained in the continuous service of CKC
until his Normal Retirement Date.
(c) There shall then be subtracted from the amount thus
determined the annual amount of the Company Plan Benefit payable to
the Executive, determined as of the date of the termination of his
employment.
Such reduced supplemental retirement benefit shall commence on the
first day of the month following the month in which the Executive
attains age 62 and shall be payable in one of the benefit payment
forms described in paragraph 8.
Anything in this paragraph to the contrary notwithstanding,
if, prior to his Normal Retirement Date but after a Change in
Control shall have occurred, the Executive's employment by CKC
shall terminate other than by reason of his death or disability
the Executive shall be entitled to elect to receive a supplemental
retirement benefit under this Agreement in lieu of any benefit he
is entitled to receive under sub-paragraphs (a)-(c), inclusive, of
this paragraph 6 or otherwise under the terms of this Agreement,
which shall be at an annual rate computed as follows:
(d) If the Executive has not attained the age of 55 on the
date his termination of employment occurs, his benefit shall be
equal to the amount by which
(i) Fifty five percent (55%) of the Executive's
average annual Projected Compensation during those five (5)
calendar years in which such Projected Compensation is highest
during the ten (10) calendar years immediately preceding the year
in which he would have attained age 55
exceeds
(ii) the annual amount of the Company Plan Benefit
payable to the Executive, determined as of the date of the
termination of his employment.
(e) If the Executive has attained age 55 on the date his
termination of employment occurs, his benefit shall be equal to the
amount determined under sub-paragraphs (a) and (c) of this
paragraph without the application of sub-paragraph (b) hereof.
Such supplemental retirement benefit under sub-paragraph (d) or (e)
hereof shall commence on the first day of the month following the
month in which the Executive attains age 65 and shall be payable in
one of the benefit payment forms described in paragraph 8.
7. If the Executive is not eligible to receive or, if
eligible, waives his right to any payments and is not receiving any
payments pursuant to this Agreement, if the Executive becomes
qualified for benefits under any long term disability plan
sponsored by CKC as a result of total disability while in the
employment of CKC, CKC, if it has not done so already, shall pay to
the Executive in a lump sum as soon as practicable following the
commencement of such disability the Alternate Benefit Amount.
8. (a) The normal form in which the benefit payable
under this Agreement shall be paid shall be a lump sum payment of
the Alternate Benefit Amount which the Corporation shall pay to the
Executive not later than ten days following the termination of the
Executive's employment by CKC. In lieu of such lump sum payment of
the Alternate Benefit Amount, the Executive may elect to receive
the Actuarial Equivalent of such lump sum payment (as determined by
the Actuarial Consultants) payable either (i) as an annuity
providing for monthly payments for life and without refund, (ii) as
an annuity providing for monthly payments for life with a period
certain of up to 180 months, in the form of a monthly benefit
payable for a period certain, or (iii) in the form of a monthly
benefit payable for life with continuation of such payments (or a
specified percentage thereof) to such beneficiary as the Executive
may designate for the life of such beneficiary.
(b) In lieu of the benefit described in sub-paragraph
8(a) the Executive, if eligible, may elect to receive a benefit as
provided in paragraph 5 or sub-paragraphs 6(a)-(e) of this
Agreement, in the form of a monthly benefit payable for life and
without refund.
(c) The Executive may further elect to receive any
benefit described in sub-paragraph 8(b) in the form of a monthly
benefit payable for life with a period certain of up to 180 months,
in the form of a monthly benefit payable for a period certain, or
in the form of a monthly benefit payable for life with continuation
of such payments (or a specified percentage thereof) to such
beneficiary as the Executive may designate for the life of such
beneficiary. The amount of benefit payable under each such
alternative benefit payment form shall be the Actuarial Equivalent
of the benefit payable in the form to which the Executive would
otherwise be entitled under sub-paragraph 8(b).
(d) The elections described in sub-paragraphs 8(a),
8(b) or 8(c) shall be made in writing delivered to the Secretary of
the corporation employing Executive not less than one year prior to
the termination of the Executive's employment by the corporation
employing Executive and may not be changed or rescinded thereafter.
The Executive shall have the right to designate in writing the
beneficiary or beneficiaries to receive the benefit, if any, which
is payable under any benefit payment form after the Executive's
death and may change his designation of beneficiary from time to
time, at any time prior to the date on which benefit payments are
to commence. If there shall be no beneficiary designated and
surviving at the Executive's death, the estate of the Executive
shall be the beneficiary. Whenever any benefits hereunder become
payable to the beneficiary of the Executive, the Corporation may,
in its discretion, authorize payment of such benefits to the
beneficiary in a single lump sum which is the Actuarial Equivalent
of such benefits.
Anything in this paragraph 8 to the contrary notwithstanding,
at any time after the date on which benefit payments commence, the
Executive may elect to receive his unpaid benefits hereunder in a
single lump sum in an amount which is equal to 90% of the Actuarial
Equivalent of the benefit payable in the form to which the
Executive is otherwise entitled hereunder on the date as of which
such election is made.
9. If the Executive shall die while currently receiving a
benefit under this Agreement and the Executive shall have elected
a benefit payment form other than a monthly benefit payable for
life with no period certain, any benefits payable after his death
shall be paid to his beneficiary in accordance with the provisions
of the benefit payment form elected by the Executive. If the
Executive shall die prior to receiving a benefit under this
Agreement, the Alternate Benefit Amount shall be paid in a lump sum
to his beneficiary as a death benefit as soon as practicable
following the Executive's death in lieu of any other benefit under
this Agreement ; provided that the Beneficiary entitled thereto may
elect to have such benefit paid in any of the forms described in
paragraph 8 in an amount which is the Actuarial Equivalent of the
form of benefit otherwise payable under this paragraph. Such
death benefit shall be in addition to any Company Plan Benefit or
benefits under any group life insurance plan sponsored by the
Corporation which is payable on account of the Executive's death.
10. Anything in this Agreement to the contrary
notwithstanding, if at any time during the five year period
immediately following termination of his employment with the
Corporation the Executive shall directly or indirectly compete with
CKC, whether as an individual proprietor or entrepreneur or as an
officer, employee, partner, stockholder, or in any capacity
connected with any enterprise, in any business in which CKC is
engaged at the time of the termination of the Executive's
employment within any state or possession of the United States of
America or any foreign country within which business is then
specifically planned by CKC to be conducted, CKC may suspend the
payment of any benefits hereunder to the Executive until such
competition shall have ceased, and in the event such competition by
the Executive shall not have ceased to the satisfaction of CKC
within 90 days after CKC shall have given written notice to the
Executive to cease the conduct thereof, CKC may at any time
thereafter terminate its obligations under this Agreement. For the
purpose of the preceding sentence, conducting business, doing
business, or engaging in business shall be deemed to embrace sales
to customers or performance of services for customers who are
within a relevant geographical area, without any necessity of any
presence of CKC therein. Nothing herein, however, shall prohibit
the Executive from acquiring or holding any issue of stock or
securities of any company which has any securities listed on a
national exchange or quoted in the daily listing of
over-the-counter market securities, provided that at any one time
he and members of his immediate family do not own more than five
percent (5%) of the voting securities of any such company.
11. This Agreement is an unfunded plan maintained for the
purpose of providing deferred compensation for one of a select
group of management or highly compensated employees for purposes of
Title I of the Employee Retirement Income Security Act of 1974.
CKC will make all benefit payments hereunder solely on a current
disbursement basis out of the general assets of CKC, including
without limitation from assets held in any grantor trust
established by CKC for the purpose of making some or all of such
payments.
12. This Agreement shall bind and run to the benefit of
the successors and assigns of CKC, including any corporation or
other form of business organization with which it may merge or
consolidate or to which it may transfer substantially all of its
assets.
13. The rights of the Executive under this Agreement shall
not be assigned, hypothecated, or otherwise transferred in any
manner.
14. This Agreement shall be governed by and construed in
accordance with the laws of the State of Connecticut.
IN WITNESS WHEREOF, the Executive has hereunto signed his name
and the Corporation has caused this instrument to be executed in
its name and on its behalf by its duly authorized officer, as of
the day and year first above written.
_____________
Executive
UNIROYAL CHEMICAL COMPANY, INC.
By:
Its:
SUPPLEMENTAL RETIREMENT AGREEMENT
AGREEMENT dated as of the day of August, 1996 (the
"Agreement") by and between (the "Executive") and
Uniroyal Chemical Company, Inc., a New Jersey corporation (the
"Corporation").
WITNESSETH:
WHEREAS, the Corporation is engaged in the extremely
competitive business of developing, manufacturing and marketing
crop protection chemicals, rubber chemicals, plastic and petroleum
additives, elastomers and urethane prepolymers throughout the
United States, Canada, Western Europe and certain other areas of
the world;
WHEREAS, the Executive, as a result of training, expertise and
personal application over the years, has acquired and will continue
to acquire considerable and unique expertise and knowledge which
are of considerable value to the Corporation;
WHEREAS, the Corporation wishes to induce the Executive to
continue in its employ, recognizing that in the case of the
Executive and a limited number of other key executive employees to
whom similar contracts may be offered, the ordinary retirement
benefits provided under the Corporation's retirement systems do not
afford sufficient incentive in terms of economic security, when
compared with retirement arrangements available from other
prospective employers who have been, are, or may be competing for
such key executive employees' services; and
WHEREAS, the Executive and the Corporation wish to terminate
the Supplemental Executive Retirement Agreement between the
Executive and the Corporation dated the first day of July, 1992,
and to enter into this Agreement with respect to supplemental
retirement benefits to be provided the Executive by the
Corporation;
NOW, THEREFORE, in consideration of the continued employment
of the Executive by the Corporation and the benefits to be derived
by the Executive hereunder, the Executive and the Corporation
hereby agree as follows:
1. Nothing herein shall be deemed a contract of employment
for any minimum fixed term, or shall restrict the freedom of the
Corporation or the Executive to terminate the employment
relationship between them at any time.
2. The Supplemental Executive Retirement Agreement between
the Executive and the Corporation dated the first day of July,
1992, is terminated effective on the date hereof and shall be of no
further force or effect.
3. For the purposes of this Agreement, the following terms
shall have the following meanings:
(a) CKC" shall mean Crompton & Knowles Corporation and its
Subsidiaries".
(b) "Actuarial Consultants" shall mean the actuarial consultants
employed by Crompton & Knowles Corporation, the parent of the
Corporation, in connection with its employee benefit plans.
(c) "Normal Retirement Date" shall mean the first day of the
month on or next after the Executive's sixty-fifth (65th) birthday.
(d) "Compensation" shall mean all of the Executive's cash
compensation paid by the Corporation or CKC for a calendar year,
including salary, any amount contributed by the Executive to a cash
or deferred plan under Section 401(k) of the Internal Revenue Code
of 1986, as amended, and any incentive compensation award or bonus
with respect to such year (even if paid in a subsequent year), but
excluding any incentive compensation award or bonus paid during
such year with respect to a prior year and extraordinary earnings
such as the sign on incentive paid to the Executive pursuant to
Section 4 of an employment agreement with the Corporation dated
August 21, 1996, insurance costs or income from the exercise of
stock options.
(e) "Actuarial Equivalent" shall mean an amount of
equivalent value computed on the basis of the actuarial assumptions
used from time to time by the Actuarial Consultants in connection
with the employee benefit plans of CKC, but using an interest
assumption which is not less than the Pension Benefit Guaranty
Corporation's interest assumption, if any, in effect at the
beginning of the month as of which the computation is made.
(f) "Company Plan Benefit" shall mean the amount of benefit
payable to or in respect of the Executive from any defined benefit
pension plan maintained by CKC, calculated in the form of a
straight life annuity (regardless of the form in which such benefit
may actually be payable).
(g) "Cause" shall mean (i) the Executive's willful and
continued failure to substantially perform assigned duties with the
Corporation (other than any such failure resulting from incapacity
due to physical or mental illness or any such actual or anticipated
failure resulting from termination for Good Reason), after a demand
for substantial performance is delivered to the Executive by the
Board of Directors of the Corporation (the "Board"), specifically
identifying the manner in which the Board believes that the duties
have not been substantially performed, or (ii) the Executive's
willful conduct which is demonstrably and materially injurious to
the Corporation. For purposes of this sub-paragraph (e), no act,
or failure to act, shall be considered "willful" unless done, or
omitted to be done, not in good faith and without reasonable belief
that such action or omission was in the best interest of the
Corporation.
(h) "Good Reason" shall mean (i) the assignment to
the Executive of any duties inconsistent in any respect with the
Executive's position (including status, offices, titles, and
reporting requirements), authority, duties, or responsibilities as
contemplated by any employment agreement between the Executive and
the Corporation, or any other action by the Corporation which
results in a diminishment in such position, authority, duties, or
responsibilities, other than an insubstantial and inadvertent
action which is remedied by the Corporation promptly after receipt
of notice thereof given by the Executive; (ii) any failure by the
Corporation to comply with any of the provisions of any employment
agreement between the Executive and the Corporation, other than an
insubstantial and inadvertent failure which is remedied by the
Corporation promptly after receipt of notice thereof given by the
Executive; (iii) any change not concurred in by the Executive in
the location of the office at which the Executive is principally
based, except for a change to a location within a 40 mile radius of
Middlebury, CT, and travel reasonably required in the performance
of the Executive's responsibilities and substantially consistent
with prior business travel obligations of the Executive; or (iv)
any purported termination by the Corporation of the Executive's
employment otherwise than as permitted by any employment agreement
between the Executive and the Corporation.
(i) "Change in Control" shall mean (i) a change in
control of Crompton & Knowles of a nature that would be required
to be reported in response to Item 1(a) of the Current Report on
Form 8-K, as in effect on January 1, 1988, pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934 (the "Exchange
Act"); provided that, without limitation, such a "Change in
Control" shall be deemed to have occurred if (x) a third person,
including a "group" as such term is used in Section 13(d)(3) of the
Exchange Act, other than the trustee of any employee benefit plan
of Crompton & Knowles, becomes the beneficial owner, directly or
indirectly, of 20% or more of the combined voting power of Crompton
& Knowles' outstanding voting securities ordinarily having the
right to vote for the election of directors of Crompton & Knowles;
(y) during any period of 24 consecutive months individuals who, at
the beginning of such consecutive 24-month period, constitute the
Board of Directors of Crompton & Knowles (the "Crompton & Knowles
Board" generally and, as of the date of this Agreement, the
"Incumbent Board") cease for any reason (other than retirement upon
reaching normal retirement age, disability, or death) to constitute
at least a majority of the Crompton & Knowles Board; provided that
any person becoming a director of Crompton & Knowles subsequent to
the date hereof whose election, or nomination for election by
Crompton & Knowles' shareholders, was approved by a vote of at
least three quarters of the directors comprising the Incumbent
Board (other than an election or nomination of an individual whose
initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the
directors of Crompton & Knowles, as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Exchange Act) shall
be, for purposes of this Agreement, considered as though such
person were a member of the Incumbent Board; or (z) Crompton &
Knowles shall cease to be a publicly owned corporation having its
outstanding Common Stock listed on the New York Stock Exchange or
quoted in the NASDAQ National Market System; or (ii) the sale or
other disposition to a third person, including a "group" as such
term is used in Section 13(d)(3) of the Exchange Act, other than
Crompton & Knowles, a direct or indirect wholly-owned Subsidiary of
Crompton & Knowles, or the trustee of any employee benefit plan of
Crompton & Knowles or the Corporation, of (x) a majority of the
combined voting power of the Corporation's outstanding voting
securities ordinarily having the right to vote for the election of
directors of the Corporation or (y) the division or Subsidiary of
the Corporation by which the Executive is employed.
(j) "Projected Compensation" shall mean (i) for any
calendar year throughout which the Executive is employed by the
Corporation, his Compensation (as defined in paragraph 3(b) hereof)
for such year, and (ii) for any calendar year during or after which
his employment by the Corporation has been terminated, the
compensation the Executive would have received for such year if he
had received (A) salary at a rate determined by projecting his
annual rate of salary at the end of the last full calendar year of
his employment by the Corporation forward at a rate equal to 5%
in excess of the annual percentage change in the Consumer Price
Index as published by the U.S. Bureau of Labor Statistics for such
year and (B) a bonus equal to 40 of his salary as thus projected.
(k) "Subsidiary" shall mean, with respect to any
Person, (i) any corporation that is directly or indirectly through
one or more intermediaries, controlled (as such term is defined
under the Securities Act of 1933, as amended) by such Person, (ii)
any corporation more than 50% of the voting capital stock of which
is owned, directly or indirectly, by such Person or (iii) any other
Person that is directly or indirectly controlled (as such term is
defined under the Securities Act) by such Person or in which such
Person holds, directly or indirectly, a majority voting or
ownership interest.
(l) "Person" shall mean any individual, group,
corporation, partnership, joint venture, trust, joint stock
company, unincorporated organization or government or political
department or agency thereof or other entity of whatever nature.
4. If, prior to his Normal Retirement Date, the
Executive's employment with CKC shall be terminated by CKC for
Cause, he shall thereby forfeit all rights and benefits under this
Agreement. If the employment of the Executive shall be terminated
on or after his Normal Retirement Date, this Agreement shall
continue in full force and effect, and the Executive shall become
entitled to the rights and benefits hereinafter set forth upon the
occurrence of the events respectively giving rise thereto.
5. If the Executive shall remain in the employ of CKC
until and shall reach his Normal Retirement Date, he shall be
entitled to receive a supplemental retirement benefit under this
Agreement which shall be at an annual rate equal to the amount by
which
(a) Fifty five percent (55%) of the Executive's
average annual Compensation during those five (5) calendar years in
which such Compensation was highest during the ten (10) calendar
years immediately preceding his Normal Retirement Date
exceeds
(b) the annual amount of the Company Plan Benefit
payable to the Executive, determined as of his Normal Retirement
Date.
Such supplemental retirement benefit shall commence on the
Executive's actual retirement date and shall be payable in one of
the benefit payment forms described in paragraph 8, as the
Executive shall elect.
6. If the Executive's employment by CKC shall be
terminated by CKC or the Executive (other than by reason of his
death or disability) prior to his Normal Retirement Date under
circumstances not resulting in his forfeiture of benefits and
rights under paragraph 4 of this Agreement, he shall be entitled to
receive a reduced supplemental retirement benefit under this
Agreement which shall be at an annual rate computed as follows:
(a) There shall first be determined the amount which
is equal to fifty five percent (55%) of the Executive's average
annual Compensation during those five (5) calendar years in which
such Compensation was highest during the ten (10) calendar years
immediately preceding the year in which the termination of his
employment occurs.
(b) The amount thus determined shall be multiplied by
a fraction in which the numerator shall be the number of full years
of continuous service the Executive shall have completed with CKC
(including the Corporation prior to its acquisition by Crompton &
Knowles Corporation and Uniroyal, Inc.) prior to the the
termination of his employment and the denominator shall be the
number of full years of continuous service he would have completed
with CKC (including the Corporation prior to its acquisition by
Crompton & Knowles Corporation and Uniroyal, Inc.) on his Normal
Retirement Date had he remained in the continuous service of CKC
until his Normal Retirement Date.
(c) There shall then be subtracted from the amount
thus determined the annual amount of the Company Plan Benefit
payable to the Executive, determined as of the date of the
termination of his employment.
Such reduced supplemental retirement benefit shall commence on the
first day of the month following the month in which the Executive
attains age 62 and shall be payable in one of the benefit payment
forms described in paragraph 8, as the Executive shall elect.
Anything in this paragraph or paragraph 4 to the contrary
notwithstanding, if, prior to his Normal Retirement Date but after
a Change in Control shall have occurred, CKC shall terminate the
Executive's employment other than for Cause, disability, or death
or the employment of the Executive shall be terminated voluntarily
by the Executive for Good Reason, he shall be entitled to elect to
receive a supplemental retirement benefit under this Agreement in
lieu of any benefit he is entitled to receive under sub-paragraphs
(a)-(c), inclusive, of this paragraph 6, which shall be at an
annual rate computed as follows:
(d) If the Executive has not attained the age of 55
on the date his termination of employment occurs, his benefit shall
be equal to the amount by which
(i) Fifty five percent (55%) of the Executive's
average annual Projected Compensation during those five (5)
calendar years in which such Projected Compensation is highest
during the ten (10) calendar years immediately preceding the year
in which he would have attained age 55
exceeds
(ii) the annual amount of the Company Plan Benefit
payable to the Executive, determined as of the date of the
termination of his employment.
(e) If the Executive has attained age 55 on the date
his termination of employment occurs, his benefit shall be equal to
the amount determined under sub-paragraphs (a) and (c) of this
paragraph without the application of sub-paragraph (b) hereof.
Such supplemental retirement benefit under sub-paragraph (d) or (e)
hereof shall commence on the first day of the month following the
month in which the Executive attains age 65 and shall be payable in
one of the benefit payment forms described in paragraph 8, as the
Executive shall elect.
7. If the Executive becomes qualified for benefits under
any long term disability plan sponsored by the Corporation as a
result of total disability while in the employment of the
Corporation, but prior to his Normal Retirement Date, he shall
become entitled to a disability benefit hereunder which shall be at
an annual rate computed as follows:
(a) There shall first be determined the amount which
is equal to fifty five percent (55%) of the Executive's average
annual Compensation during those five (5) calendar years in which
such Compensation was highest during the ten (10) calendar years
preceding the year in which his disability occurs.
(b) The amount thus determined shall be multiplied by
a fraction in which the numerator shall be the number of full years
of continuous service the Executive shall have completed with CKC
(including the Corporation prior to its acquisition by Crompton &
Knowles Corporation and Uniroyal, Inc.) prior to the the
termination of his employment and the denominator shall be the
number of full years of continuous service he would have completed
with CKC (including the Corporation prior to its acquisition by
Crompton & Knowles Corporation and Uniroyal, Inc.) on his Normal
Retirement Date had he remained in the continuous service of CKC
until his Normal Retirement Date.
(c) There shall then be subtracted from the amount thus
determined the annual amount of the Company Plan Benefit payable to
the Executive, determined as of the date his disability benefit
hereunder is to commence.
Such disability benefit shall commence on the date the benefits
payable to the Executive under such long term disability plan
sponsored by the Corporation cease, if the Executive is then
living, and shall be payable in one of the benefit payment forms
described in paragraph 8, as the Executive shall elect.
8. The normal form in which the benefit payable under
paragraphs 5, 6, or 7 of this Agreement shall be paid shall be a
monthly benefit payable for life and without refund. In lieu of
such normal benefit payment form, the Executive may elect to
receive his benefit hereunder in the form of a monthly benefit
payable for life with a period certain of up to 180 months, in the
form of a monthly benefit payable for a period certain, or in the
form of a monthly benefit payable for life with continuation of
such payments (or a specified percentage thereof) to such
beneficiary as the Executive may designate for the life of such
beneficiary. The amount of benefit payable under each such
alternative benefit payment form shall be the Actuarial Equivalent
of the benefit payable in the normal form to which the Executive
would otherwise be entitled hereunder. Any election of an
alternative benefit payment form shall be made in writing and may
be changed or rescinded by the Executive at any time prior to the
date on which benefit payments are to commence. The Executive
shall have the right to designate in writing the beneficiary or
beneficiaries to receive the benefit, if any, which is payable
under any benefit payment form after the Executive's death and may
change his designation of beneficiary from time to time, at any
time prior to the date on which benefit payments are to commence.
If there shall be no beneficiary designated and surviving at the
Executive's death, the estate of the Executive shall be the
beneficiary. Whenever any benefits hereunder become payable to the
beneficiary of the Executive, the Corporation may, in its
discretion, authorize payment of such benefits to the beneficiary
in a single lump sum which is the Actuarial Equivalent of such
benefits.
Anything in this paragraph 8 to the contrary notwithstanding,
at any time after the date on which benefit payments commence, the
Executive may elect to receive his benefits hereunder in a single
lump sum in an amount which is equal to 90% of the Actuarial
Equivalent of the benefit payable in the normal form to which the
Executive is otherwise entitled hereunder on the date as of which
such election is made.
9. If the Executive shall die while currently receiving a
benefit under the provisions of paragraphs 5, 6, or 7 of this
Agreement and the Executive shall have elected a benefit payment
form other than a monthly benefit payable for life with no period
certain, any benefits payable after his death shall be paid to his
beneficiary in accordance with the provisions of the benefit
payment form elected by the Executive. If the Executive shall die
after having reached his Normal Retirement Date but prior to his
actual retirement date and the Executive shall have elected a
benefit payment form other than a monthly benefit payable for life
with no period certain, benefits shall be paid to his beneficiary
as if the Executive had commenced to receive benefits hereunder on
the first day of the month in which his death occurred. If the
Executive shall die while in the active employ of the Corporation
but prior to his Normal Retirement Date, or if the Executive shall
die after having become entitled to receive a disability benefit
under paragraph 7 but prior to his Normal Retirement Date, a death
benefit shall be paid to the Executive's beneficiary, in lieu of
any other benefit under this Agreement, which shall be at an annual
rate equal to twenty percent (20%) of the Executive's average
annual Compensation during those five (5) calendar years in which
such Compensation was highest during the ten (10) calendar years
immediately preceding the year in which his death occurs or the
year in which his disability occurred, as the case may be. Such
death benefit, which shall be in addition to any Company Plan
Benefit or benefits under any group life insurance plan sponsored
by the Corporation which is payable on account of the Executive's
death, shall be payable in equal monthly installments beginning on
the first day of the month following that in which the death of the
Executive occurs and continuing thereafter for a period certain of
120 months; provided that the Beneficiary entitled thereto may
elect to have such benefit paid in any of the forms described in
paragraph 8 in an amount which is the Actuarial Equivalent of the
form of benefit otherwise payable under this paragraph.
If the Executive shall die after having become entitled to a
benefit under sub-paragraph (d) or (e) of paragraph 6 hereof but
prior to attaining age 65, a death benefit shall be paid to the
Executive's beneficiary, in lieu of any other benefit under this
Agreement, which shall be the single sum Actuarial Equivalent value
as of the Executive's death of the benefit to which he would have
been entitled had he survived to age 65. Such death benefit shall
be payable in a lump sum as soon as practicable after the
Executive's death; provided that the beneficiary entitled thereto
may elect to have such death benefit paid in any of the forms
described in paragraph 8.
10. Anything in this Agreement to the contrary
notwithstanding, if at any time during the five year period
immediately following termination of his employment with the
Corporation the Executive shall directly or indirectly compete with
CKC, whether as an individual proprietor or entrepreneur or as an
officer, employee, partner, stockholder, or in any capacity
connected with any enterprise, in any business in which CKC is
engaged at the time of the termination of the Executive's
employment within any state or possession of the United States of
America or any foreign country within which business is then
specifically planned by CKC to be conducted, CKC may suspend the
payment of any benefits hereunder to the Executive until such
competition shall have ceased, and in the event such competition by
the Executive shall not have ceased to the satisfaction of CKC
within 90 days after CKC shall have given written notice to the
Executive to cease the conduct thereof, CKC may at any time
thereafter terminate its obligations under this Agreement. For the
purpose of the preceding sentence, conducting business, doing
business, or engaging in business shall be deemed to embrace sales
to customers or performance of services for customers who are
within a relevant geographical area, without any necessity of any
presence of CKC therein. Nothing herein, however, shall prohibit
the Executive from acquiring or holding any issue of stock or
securities of any company which has any securities listed on a
national exchange or quoted in the daily listing of
over-the-counter market securities, provided that at any one time
he and members of his immediate family do not own more than five
percent (5%) of the voting securities of any such company.
11. This Agreement is an unfunded plan maintained for the
purpose of providing deferred compensation for one of a select
group of management or highly compensated employees for purposes of
Title I of the Employee Retirement Income Security Act of 1974.
CKC will make all benefit payments hereunder solely on a current
disbursement basis out of the general assets of CKC, including
without limitation from assets held in any grantor trust
established by CKC for the purpose of making some or all of such
payments.
12. This Agreement shall bind and run to the benefit of
the successors and assigns of the Corporation, including any
corporation or other form of business organization with which it
may merge or consolidate or to which it may transfer substantially
all of its assets.
13. The rights of the Executive under this Agreement shall
not be assigned, hypothecated, or otherwise transferred in any
manner.
14. This Agreement shall be governed by and construed in
accordance with the laws of the State of Connecticut.
IN WITNESS WHEREOF, the Executive has hereunto signed his name
and the Corporation has caused this instrument to be executed in
its name and on its behalf by its duly authorized officer, as of
the day and year first above written.
______________
Executive
UNIROYAL CHEMICAL COMPANY, INC.
By:
Its:
EXHIBIT 12
UNIROYAL CHEMICAL CORPORATION
UNIROYAL CHEMICAL COMPANY, INC.
Computation of earnings to fixed charges ratio
(In thousands of dollars)
Fiscal Years Ended
------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
Earnings (loss)
before fixed
charges:
Income (loss)
from
continuing
operations
before income
taxes (1) ($30,761) $34,369 ($204,925) ($18,259) ($29,809)
Interest and
debt expense 106,456 114,034 128,567 120,567 125,444
Undistributed
(earnings) loss
of less than
50% owned
affiliates 362 149 (32) 884 1,233
Interest
portion of
rent expense 2,705 2,193 2,051 2,012 1,942
-------- -------- -------- -------- --------
Earnings (loss)
before fixed
charges $78,762 $150,745 ($74,339) $105,204 $98,810
======== ======== ======== ======== ========
Fixed charges:
Interest and
debt expense 106,456 114,034 128,567 120,567 125,444
Interest
portion of
rent expense 2,705 2,193 2,051 2,012 1,942
Capitalized
interest 1,677 2,518 378 964 2,397
-------- -------- -------- -------- --------
Fixed
charges $110,838 $118,745 $130,996 $123,543 $129,783
======== ======== ======== ======== ========
Deficiency
in earnings
available to
cover fixed
charges $32,076 $205,335 $18,339 $30,973
======== ======== ======== ========
Ratio of earnings
to fixed charges 1.27
========
___
(1) Includes $52.6 million of merger and related costs and a $30
million special environmental provision in fiscal 1996, and a
$191 million write-off of intangible assets in fiscal 1994.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Form 10-K
for the year ended September 28, 1996 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<CIK> 0000858905
<NAME> UNIROYAL CHEMICAL CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-28-1996
<PERIOD-END> SEP-28-1996
<CASH> 15,615
<SECURITIES> 0
<RECEIVABLES> 162,620
<ALLOWANCES> 3,333
<INVENTORY> 180,414
<CURRENT-ASSETS> 404,957
<PP&E> 624,357
<DEPRECIATION> 252,668
<TOTAL-ASSETS> 1,132,618
<CURRENT-LIABILITIES> 250,691
<BONDS> 893,228
0
0
<COMMON> 0
<OTHER-SE> (335,010)
<TOTAL-LIABILITY-AND-EQUITY> 1,132,618
<SALES> 1,132,746
<TOTAL-REVENUES> 1,132,746
<CGS> 701,104
<TOTAL-COSTS> 1,057,359
<OTHER-EXPENSES> (308)
<LOSS-PROVISION> 1,568
<INTEREST-EXPENSE> 106,456
<INCOME-PRETAX> (30,761)
<INCOME-TAX> 951
<INCOME-CONTINUING> (31,712)
<DISCONTINUED> 0
<EXTRAORDINARY> 441
<CHANGES> 0
<NET-INCOME> (32,153)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Form 10-K
for the year ended September 28, 1996 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<CIK> 0000862612
<NAME> UNIROYAL CHEMICAL COMPANY, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-28-1996
<PERIOD-END> SEP-28-1996
<CASH> 15,615
<SECURITIES> 0
<RECEIVABLES> 162,620
<ALLOWANCES> 3,333
<INVENTORY> 180,414
<CURRENT-ASSETS> 404,957
<PP&E> 624,357
<DEPRECIATION> 252,668
<TOTAL-ASSETS> 1,132,618
<CURRENT-LIABILITIES> 250,691
<BONDS> 893,228
0
0
<COMMON> 1
<OTHER-SE> (335,011)
<TOTAL-LIABILITY-AND-EQUITY> 1,132,618
<SALES> 1,132,746
<TOTAL-REVENUES> 1,132,746
<CGS> 701,104
<TOTAL-COSTS> 1,057,359
<OTHER-EXPENSES> (308)
<LOSS-PROVISION> 1,568
<INTEREST-EXPENSE> 106,456
<INCOME-PRETAX> (30,761)
<INCOME-TAX> 951
<INCOME-CONTINUING> (31,712)
<DISCONTINUED> 0
<EXTRAORDINARY> 441
<CHANGES> 0
<NET-INCOME> (32,153)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
